UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

Commission File Number: 001-32330

NORTHSTAR REALTY FINANCE CORP.

(Exact Name of Registrant as Specified in its Charter)

Maryland 11-3707493

(State or Other Jurisdiction of
Incorporation or Organization) (IRS Employer
Identification No.)

399 Park Avenue, 18th Floor New York, NY 10022

(Address of Principal Executive Offices, Including Zip Code)

(212) 547-2600

(Registrant’s Telephone Number, Including Area Code)

Indicate by the check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o Accelerated Filer x Non-accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o NO x

The Company has one class of common stock, par value $0.01 per share, with 61,582,344 shares outstanding as of August 8, 2007.

TABLE OF CONTENTS

NORTHSTAR REALTY FINANCE CORP.

QUARTERLY REPORT
For the Three and Six Months Ended June 30, 2007

TABLE OF CONTENTS

Index Page

Part I. Financial Information

Item 1. Financial Statements

   Condensed Consolidated Balance Sheets as of June 30, 2007 (unaudited) and December 31, 2006 1

   Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2007 and June 30, 2006 2

   Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2007 and June 30, 2006 3

   Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and June 30, 2006 4

   Notes to the Condensed Consolidated Financial Statements (unaudited) 5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 25

Item 3. Quantitative and Qualitative Disclosures about Market Risk 38

Item 4. Controls and Procedures 41

Part II. Other Information

Item 4. Submission of Matters to a Vote of Security Holders 42

Item 5. Other Information 42

Item 6. Exhibits 42

Signatures 48

TABLE OF CONTENTS

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Per Share Data)

June 30,
2007 December 31,
2006

   (Unaudited)

ASSETS


Cash and cash equivalents $ 41,386 $ 44,753

Restricted cash 385,007 134,237

Operating real estate, net 1,052,710 468,608

Available for sale securities, at fair value 1,368,125 788,467

CDO deposit and warehouse agreements 15,362 32,649

Collateral held by broker 12,479 —

Real estate debt investments 2,210,387 1,571,510

Corporate loan investments 258,101 —

Investments in and advances to unconsolidated ventures 11,148 11,845

Receivables, net of allowance of $6 and $9 in 2007 and 2006, respectively 34,231 17,477

Unbilled rents receivable 4,196 2,828

Derivative instruments, at fair value 14,708 958

Receivables – related parties 387 378

Deferred costs and intangible assets, net 140,618 90,200

Other assets 34,733 21,710

Total assets $ 5,583,578 $ 3,185,620

LIABILITIES AND STOCKHOLDERS’ EQUITY


Liabilities:


Mortgage notes and loans payable $ 844,499 $ 390,665

Exchangeable senior notes 172,500 —

CDO bonds payable 2,411,845 1,682,229

Credit facilities 692,007 16,000

Secured term loan 101,513 —

Liability to subsidiary trusts issuing preferred securities 286,258 213,558

Repurchase obligations 59,622 80,261

Securities sold, not yet purchased 11,918 —

Obligations under capital leases 3,496 3,454

Accounts payable and accrued expenses 28,104 20,025

Escrow deposits payable 84,514 58,478

Derivative liability, at fair value 6,031 16,012

Other liabilities 41,663 22,308

Total liabilities 4,743,970 2,502,990

Minority interest in operating partnership 12,593 7,655

Minority interest in joint ventures 16,842 15,204

Stockholders’ Equity:


8.75% Series A preferred stock, $0.01 par value, $25 liquidation preference per share, 2,400,000 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively 57,867 57,867

8.25% Series B preferred stock, $0.01 par value, $25 liquidation preference per share, 7,600,000 and 0 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively 183,516 —

Common stock, $0.01 par value, 500,000,000 shares authorized, 61,582,344 and 61,237,781 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively 615 612

Additional paid-in capital 593,949 590,035

Retained earnings (deficit) (9,665 ) 16,570

Accumulated other comprehensive loss (16,109 ) (5,313 )

Total stockholders’ equity 810,173 659,771

Total liabilities and stockholders’ equity $ 5,583,578 $ 3,185,620

See accompanying notes to condensed consolidated financial statements .

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)

Three Months
Ended
June 30, 2007 Three Months
Ended
June 30, 2006 Six Months
Ended
June 30, 2007 Six Months
Ended
June 30, 2006

Revenues and other income:


Interest income $ 79,900 $ 26,296 $ 138,204 $ 45,287

Interest income – related parties 2,966 2,892 5,931 5,819

Rental and escalation income 21,871 7,998 41,203 14,431

Advisory and management fee income – related parties 1,394 1,490 2,815 2,993

Other revenue 1,329 437 3,561 2,353

Total revenues 107,460 39,113 191,714 70,883

Expenses:


Interest expense 64,546 19,833 112,103 34,165

Real estate properties – operating expenses 2,869 2,016 5,626 3,528

General and administrative:


Salaries and equity based compensation ⁽¹⁾ 8,859 5,979 17,650 9,955

Auditing and professional fees 1,298 641 4,003 2,291

Other general and administrative 3,900 2,014 6,933 3,405

Total general and administrative 14,057 8,634 28,586 15,651

Depreciation and amortization 7,841 2,830 14,431 5,325

Total expenses 89,313 33,313 160,746 58,669

Income from operations 18,147 5,800 30,968 12,214

Equity in earnings of unconsolidated/uncombined
ventures (600 ) 104 (584 ) 196

Unrealized gain (loss) on investments and other (887 ) (459 ) (8,178 ) 1,624

Realized gain (loss) on investments and other (14 ) 566 2,527 798

Income from continuing operations before minority interest 16,646 6,011 24,733 14,832

Minority interest in operating partnership (779 ) (851 ) (1,155 ) (2,249 )

Minority interest in joint ventures (136 ) — (136 ) —

Income from continuing operations 15,731 5,160 23,442 12,583

Income (loss) from discontinued operations, net of minority interest (8 ) 84 (56 ) 107

Gain on sale from discontinued operations, net of
minority interest — — — 141

Gain on sale of joint venture interest, net of minority interest — — — 279

Net income 15,723 5,244 23,386 13,110

Preferred stock dividends (4,758 ) — (6,071 ) —

Net income available to common shareholders $ 10,965 $ 5,244 $ 17,315 $ 13,110

Net income per share from continuing operations (basic/diluted) $ 0.18 $ 0.15 $ 0.28 $ 0.39

Income per share from discontinued operations (basic/diluted) — — — —

Gain on sale of discontinued operations and joint venture interest (basic/diluted) — — — 0.01

Net income available to common shareholders $ 0.18 $ 0.15 $ 0.28 $ 0.40

Weighted average number of shares of common stock:


Basic 61,378,154 34,980,352 61,354,049 32,897,222

Diluted 64,419,056 40,744,276 64,398,513 38,562,576

(1) The three months ended June 30, 2007 and 2006 includes $4,158 and $2,743 of equity based compensation expense, respectively. The six months ended June 30, 2007 and 2006 includes $7,889 and $4,456 of equity based compensation expense, respectively.

See accompanying notes to condensed consolidated financial statements .

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands, Except Per Share Data)
(Unaudited)

Three Months Ended June 30, 2007 Three Months Ended June 30, 2006 Six Months Ended June 30, 2007 Six Months Ended
June 30, 2006

Net income available to common shareholders $ 10,965 $ 5,244 $ 17,315 $ 13,110

Unrealized gain (loss) on available for sale securities (38,372 ) 218 (42,108 ) (2,754 )

Change in fair value of derivatives 32,146 632 31,356 2,429

Reclassification adjustment for gains/(losses) included in net income (27 ) (5 ) (43 ) (5 )

Comprehensive Income $ 4,712 $ 6,089 $ 6,520 $ 12,780

See accompanying notes to condensed consolidated financial statements .

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)

Six Months Ended June 30, 2007 Six Months Ended
June 30, 2006

Net cash provided by operating activities $ 51,776 $ 49,023

Cash flows from investing activities:


Acquisition of operating real estate, net (590,797 ) (78,534 )

Net proceeds from disposition of operating real estate — 2,168

Real estate debt investments acquisitions/originations (939,596 ) (523,043 )

Real estate debt investments acquisition costs (2,489 ) —

Real estate debt investments repayments 276,375 102,013

Deferred lease cost — (42 )

Acquisition of available for sale securities (744,237 ) (508,582 )

Proceeds from disposition of securities available for sale 88,225 —

Available for sale securities repayments 46,508 5,019

Corporate loan investment acquisitions (258,270 ) —

Corporate loan investment prepayment 169 —

Increase in CDO warehouse deposits (18,000 ) (18,500 )

Cash receipts from CDO issuer 8,178 20,393

Restricted cash from investing activities (226,563 ) (60,673 )

Acquisition Deposits (7,300 ) (2,833 )

Investment in and advances to unconsolidated ventures (99 ) (8,738 )

Distributions from unconsolidated ventures 247 186

Sale of investment in unconsolidated ventures — 2,905

Net cash used in investing activities (2,367,649 ) (1,068,261 )

Cash flows from financing activities:


Collateral held by broker (12,479 ) —

Securities sold, not yet purchased 28,472 —

Settlement of short sale (16,370 ) —

Mortgage notes and loan borrowings 435,464 53,412

Proceeds from issuance of CDO bonds 806,960 823,876

Settlement of derivative — 632

Mortgage principal repayments (2,615 ) (703 )

Borrowings under credit facilities 1,139,442 437,409

Borrowings under secured term loan 101,513 —

Repayments on credit facilities (463,435 ) (469,591 )

Repurchase obligation borrowings 22,974 57,234

Repurchase obligation repayments (43,612 ) (14,011 )

CDO bonds repayment (53,594 ) —

Other loans payable 13,300 —

Proceeds from exchangeable senior notes 172,500 —

Capital contributions by joint venture 1,562 —

Proceeds from preferred stock offering 190,000 —

Proceeds from common stock offering 564 122,203

Borrowings from subsidiary trusts issuing preferred securities 72,500 50,000

Payment of deferred financing costs (22,172 ) (16,706 )

Dividends (common and preferred)and distributions (51,765 ) (20,799 )

Offering costs (6,703 ) (7,643 )

Net cash provided by financing activities 2,312,506 1,015,313

Net decrease in cash & cash equivalents (3,367 ) (3,925 )

Cash & cash equivalents – beginning of period 44,753 27,898

Cash & cash equivalents – end of period $ 41,386 $ 23,973

Supplemental disclosure of cash flow information:


Supplementary disclosure of non-cash investing and financing activities:


Available for sale securities $ (5,401 ) $ —

CDO warehouse deposits 24,314 —

Real estate debt investments 22,623 4,294

Operating real estate (31,864 ) 43,150

Mortgage notes and loans payable 20,985 (32,363 )

CDO bonds payable (23,750 ) —

See accompanying notes to condensed consolidated financial statements .

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Formation and Organization

NorthStar Realty Finance Corp., a Maryland corporation (the “Company”), is a self-administered and self-managed real estate investment trust (“REIT”), which was formed in October 2003 in order to continue to expand the subordinate real estate debt, real estate securities and net lease businesses conducted by NorthStar Capital Investment Corp. (“NCIC”). Substantially all of the Company’s assets are held by, and it conducts its operations through, NorthStar Realty Finance Limited Partnership, a Delaware limited partnership and the operating partnership of the Company (the “Operating Partnership”). On October 29, 2004, the Company closed its initial public offering (the “IPO”) pursuant to which it issued 20,000,000 shares of common stock, with proceeds to the Company of approximately $160.1 million, net of issuance costs of $19.9 million. On November 19, 2004, the Company issued an additional 1,160,750 shares of common stock pursuant to the exercise of the overallotment option by the underwriters of the IPO, with proceeds to the Company of $9.7 million, net of issuance costs of $0.7 million. In connection with the IPO, the Company also issued 50,000 shares of common stock, as partial compensation for underwriting services, to the lead underwriter of the IPO. In addition, 38,886 shares of restricted common stock were granted to the Company’s non-employee directors. Simultaneously with the closing of the IPO on October 29, 2004, three majority-owned subsidiaries of NCIC (the “NCIC Contributing Subsidiaries”) contributed certain controlling and non-controlling interests in entities through which NCIC conducted its subordinate real estate debt, real estate securities and net lease businesses (collectively the “Initial Investments”) to the Operating Partnership in exchange for an aggregate of 4,705,915 units of limited partnership interest in the Operating Partnership (the “OP Units”) and approximately $36.1 million in cash (the “Contribution Transactions”) and an agreement to pay certain related transfer taxes on behalf of NCIC in the amount of approximately $1.0 million. From their inception through October 29, 2004, neither the Company nor the Operating Partnership had any operations.

The combination of the Initial Investments contributed to the Operating Partnership represents the predecessor of the Company (the “Predecessor”). The Company succeeded to the business of the Predecessor upon the consummation of the IPO and the contribution of the initial investments on October 29, 2004. The ultimate owners of the entities which comprise the Predecessor were NCIC and certain other persons who held minority ownership interests in such entities.

In October 2005, the Company entered into a definitive purchase agreement with Allied Capital (“Allied”) to acquire Timarron Capital Corporation (“Timarron”). Timarron, based in Dallas, Texas, was organized by former senior executives of Principal Financial and other lenders to develop a nationwide commercial mortgage loan origination platform. The Company closed on the transaction on January 19, 2006 for $2.8 million, including closing costs. Timarron was renamed NRF Capital LP (“NRF Capital”) upon the close of the transaction. NRF Capital is a wholly owned subsidiary of the Company and is consolidated in the condensed consolidated financial statement of the Company. The purchase price was allocated to an intangible asset, since Allied had no equity at January 19, 2006 and there were no tangible assets owned by Timarron.

In connection with the acquisition, the Company entered into a management incentive bonus plan with the senior management of NRF Capital. The bonus plan, as defined in the agreement, is based upon the performance of loans originated by NRF Capital and is payable quarterly in cash over the term of the originated loans. As of June 30, 2007, the senior management of NRF Capital has earned $5.2 million related to the bonus plan of which $0.6 million has been paid. These costs are considered a direct cost of originating the loans and, accordingly, are deferred and recognized as a reduction of the related loan yields.

In May 2006, the Company entered into a joint venture with Chain Bridge Capital LLC (“Chain Bridge”) to form Wakefield Capital LLC (“Wakefield). The joint venture will acquire, finance and/or otherwise invest in senior housing and healthcare-related properties. In connection with the formation of the venture, Chain Bridge contributed substantially all of its assets to Wakefield for its $15.1 million membership interest in the joint venture.

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Formation and Organization – (continued)

At June 30, 2007, the Company’s and Chain Bridge’s contributed capital was $199.6 million and $15.1 million, respectively. The Company controls all major decisions; accordingly, the joint venture’s financial statements are consolidated into the Company’s condensed consolidated financial statements and Chain Bridge’s capital is treated as minority interest. Income is allocated as defined in the Wakefield LLC agreement and no income was allocated to Chain Bridge for the three months ended June 30, 2007.

In March 2007, the Company entered into a joint venture with Monroe Capital, LLC (“Monroe Capital”), a Chicago-based firm that originates, acquires and finances middle-market and broadly syndicated corporate loans. The Company owns a 95% controlling interest in Monroe Capital, which is consolidated in the condensed consolidated financial statements. As of June 30, 2007, the joint venture had debt investments of $295.9 million. In conjunction with the formation of the new venture, the Company acquired a 49.9% non-controlling interest of Monroe Capital Management Advisors LLC (“Monroe Management”), a management business that originates, structures and syndicates middle-market corporate loans and provides asset management services for the Company’s interest in Monroe Capital.

Recent Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows for the measurement of certain financial assets and financial liabilities at fair value. Under this statement, an entity may elect the fair value option on an instrument-by-instrument basis and measure the changes in the fair value as unrealized gains and losses in earnings. This statement is effective for the first fiscal year beginning after November 15, 2007. The Company is currently evaluating its options under this statement and any potential impact on earnings.

In June 2007, the Accounting Standards Executive Committee of the AICPA issued Statement of Position 07-1, “Clarification of the Scope of the Audit and Accounting Guide “Investment Companies” and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies” (“SOP 07-1”). SOP 07-1 provides guidance for determining whether an entity meets the definition of an investment company for financial reporting purposes and therefore should apply investment company accounting. In addition, the standard provides guidance to determine whether the specialized industry accounting principles for investment companies should be retained in the consolidated financial statements of a non-investment parent company or of an investor who has the ability to exercise significant influence over the investment company and accounts for its investment under the equity method. In addition, SOP 07-1 includes certain disclosure requirements for parent companies and equity method investors in investment companies that retain investment company accounting in the parent company’s consolidated financial statements or the financial statements of an equity method investor. SOP 07-1 is effective for fiscal years beginning on or after December 15, 2007, with earlier application encouraged. SOP 07-1 is not expected to have a material impact on the Company’s financial condition and results of operations.

2. Summary of Significant Accounting Policies

Basis of Quarterly Presentation

The accompanying condensed consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These financial statements should be read in conjunction with the

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

2. Summary of Significant Accounting Policies – (continued)

Company’s December 31, 2006 consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K, which was filed with the Securities and Exchange Commission. Capitalized terms used herein, and not otherwise defined, are defined in the Company’s December 31, 2006 consolidated financial statements.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries which are either majority-owned or controlled by the Company or variable interest entities (“VIE”) where the Company is the primary beneficiary in accordance with the provisions of FIN 46(R)-6. All significant intercompany balances have been eliminated in consolidation.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Foreign Currency Translation

The Company’s functional currency of its euro-dominated investment is the US dollar. Non-monetary assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at the exchange rates in effect at the end of the reporting period. Statement of operation accounts are translated at the average rates for the reporting period. Any gains and losses from the translation of foreign currency to US dollars are included in the statement of operations. The Company’s foreign currency Euro-dominated investment is 100% financed with Euro-dominated debt, resulting in no net foreign currency translation gains or losses for the three and six months ended June 30, 2007 and 2006.

3. Operating Real Estate

Acquisitions

In February 2007, the Company purchased a 178,213 square foot office property located in Milpitas, CA for $30.0 million. The property is net leased for ten years. The Company financed the acquisition with a $23.3 million non-recourse first mortgage which bears a fixed interest rate of 5.95% and matures on March 6, 2017, and the balance in cash.

In March 2007, the Company purchased a 165,000 square foot office property located in Fort Mill, SC for $34.2 million. The property is net leased with a remaining lease term of 13.6 years. The Company financed the acquisition with a $27.7 million non-recourse first mortgage, bearing a fixed interest rate of 5.63%, a mezzanine loan of $3.4 million which bears a fixed interest rate of 6.21% and both loans mature on April 6, 2017, and the balance in cash.

In June 2007, the Company purchased a 609,000 square foot office property located in Reading, PA for $28.1 million. The property is net leased with a remaining lease term of 10.4 years. The Company assumed the existing financing, a $14.5 million mortgage which bears a fixed interest rate of 5.58% and matures on January 1, 2015 and a $5.0 million mortgage which bears a fixed interest rate of 6.00% and matures on January 1, 2015. The balance of the acquisition was paid in cash.

Wakefield Joint Venture Acquisitions

The Wakefield joint venture made the following acquisitions from January 1, 2007 through June 30, 2007:

A $101.0 million portfolio of 18 assisted living facilities on 15 campuses totaling 372,349 square feet located throughout Wisconsin in January 2007. The properties are net leased to a single tenant under a lease that expires January 2017. The portfolio was financed with 15 non-recourse first mortgages totaling $75.0 million, bearing a fixed interest rate of 6.39%, and matures in February 2017, and the balance in cash.

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

3. Operating Real Estate – (continued)

A $214.9 million acquisition of a portfolio of 28 assisted living facilities totaling 1,063,387 square feet located in California, Georgia, Illinois, Nebraska, Ohio, Oklahoma, Tennessee and Texas, in January 2007. The properties are net leased to a single tenant under a lease that expires in January 2017. The portfolio was financed with a non-recourse first mortgage totaling $160.0 million, which bears a fixed interest rate of 6.49% and matures in January 2017, and the balance in cash.

A $10.5 million acquisition of two assisted living facilities totaling 72,786 square feet located in Illinois, in January 2007. The properties are net leased to a single tenant under a lease that expires in January 2017. The acquisition was financed with a $7.9 million non-recourse first mortgage, which bears a fixed interest rate of 6.59%, and matures in January 2017, and the balance in cash.

A $11.0 million acquisition of a skilled nursing facility totaling 67,706 square feet located in Kentucky, in February 2007. The property is net leased to a single tenant under a lease that expires in January 2022 and contains three, five year extension options. The property was financed with a $7.7 million non-recourse first mortgage, bearing a fixed interest rate of 7.12% maturing in August 2010, and the balance in cash.

A $7.6 million acquisition of a skilled nursing facility and an assisted nursing facility totaling 83,626 square feet located in North Carolina, in April 2007. The properties are each net leased to a single tenant with a lease expiration of April 2022.

A $4.7 million acquisition of a medical office building totaling 26,552 square feet located in Texas, in May 2007. The property is net leased to two tenants with leases expiring in December 2013 and August 2011. The property was financed with a $3.4 million non-recourse first mortgage bearing a fixed interest rate of 5.89% maturing in May 2017, and the balance in cash.

A $27.4 million acquisition of a portfolio of four assisted living facilities totaling 78,990 square feet located in Ohio, in June 2007. The properties are net leased to a single tenant under a lease that expires January 2017. The portfolio was financed with four non-recourse first mortgages totaling $8.3 million bearing fixed interest rates ranging from 5.45% to 6.65%, and maturing in February 2037, February 2038, June 2037 and October 2038. The balance of the acquisition was paid in cash.

A $153.5 million acquisition of a portfolio of 28 skilled nursing and assisted nursing facilities totaling 1,123,109 square feet located throughout Indiana, in June 2007. The properties are net leased to a single tenant under a lease that expires in June 2022 and contains three, five year extension options. The property was financed with a $116.0 million non-recourse first mortgage bearing a fixed interest rate of 7.07% maturing in June 2012, and the balance in cash.

Dispositions

On April 2, 2007 the Wakefield joint venture sold two properties. The Mountainside Manor property located in Dallas, PA was sold for $1.0 million representing a gain on sale of approximately $0.1 million. The sale was 100% financed by Wakefield and accordingly the gain on sale is being deferred and recognized under the installment method in accordance with FAS 66 “Accounting for Sales of Real Estate”. The Pennswood Manor property located in Scranton PA was sold for $0.8 million representing a loss of approximately $45,000.

Discontinued Operations

The condensed consolidated statement of operations for the three and six months ended June 30, 2007 and June 30, 2006, includes results of operations of real estate assets sold or held for sale. These assets include two assisted care living facilities, which were sold in April 2007 and two net lease properties, which were sold in January 2006.

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

3. Operating Real Estate – (continued)

The following table summarizes income from discontinued operations and related gain on sale of discontinued operations, each net of minority interest, for the three and six months ended June 30, 2007 and June 30, 2006 (in thousands):

Three Months
Ended
June 30, 2007 Three Months
Ended
June 30, 2006 Six Months
Ended
June 30, 2007 Six Months
Ended
June 30, 2006

Revenue:


Rental and escalation income $ — $ 112 $ 38 $ 181

Interest and other — — — 1

Total revenue — 112 38 182

Expenses:


Real estate property operating expenses — — — 42

General and administrative expenses — — 1 —

Interest expense 5 2 20 2

Depreciation and amortization 4 13 31 13

Total expenses $ 9 $ 15 $ 52 $ 57

Income (loss) from discontinued operations $ (9 ) $ 97 $ (14 ) $ 125

Gain on disposition of discontinued operations — — (45 ) 167

Income (loss) from discontinued operations before minority interest (9 ) 97 (59 ) 292

Minority interest 1 (13 ) 3 (44 )

Income (loss) from discontinued operations, net of minority interest $ (8 ) $ 84 $ (56 ) $ 248

4. Available for Sale Securities

The following is a summary of the Company’s available for sale securities at June 30, 2007 and December 31, 2006 (in thousands):

June 30, 2007 Carrying
Value Gains in
Accumulated
OCI Losses in
Accumulated
OCI Estimated
Fair Value ⁽¹⁾

CMBS $ 982,901 $ 1,507 $ (22,222 ) $ 962,186

Real estate CDO 86,920 — (6,806 ) 80,114

REIT debt 177,222 552 (1,875 ) 175,899

CDO equity 66,992 8,004 (7,787 ) 67,209

Corporate CLO 49,332 142 (1,757 ) 47,717

Trust preferred securities 35,000 — — 35,000

Total $ 1,398,367 $ 10,205 $ (40,447 ) $ 1,368,125

(1) Approximately $1.1 billion of these investments serve as collateral for the Company’s two consolidated securities CDO issuances and the balance is financed under other borrowing facilities.

At June 30, 2007, the maturities of the available for sale securities range from one to 45 years.

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

4. Available for Sale Securities – (continued)

During the three months ended June 30, 2007 there were no material sales resulting in gains or losses recorded in the period.

During the six months ended June 30, 2007, proceeds from the sale and redemption of available for sale securities was $18.3 million. The realized gain on the redemption was $1.5 million of which $1.4 million was the unrealized gain which was included in other comprehensive income.

December 31, 2006 Carrying
Value Gains in
Accumulated
OCI Losses in
Accumulated
OCI Estimated
Fair Value ⁽¹⁾

CMBS $ 551,194 $ 11,830 $ (1,577 ) $ 561,447

Real estate CDO 58,021 812 (1,427 ) 57,406

REIT debt 82,836 3,480 — 86,316

CDO equity 67,225 3,605 (2,532 ) 68,298

Trust preferred securities 15,000 — — 15,000

Total $ 774,276 $ 19,727 $ (5,536 ) $ 788,467

(1) Approximately $479.2 million of these investments serve as collateral for the Company’s one consolidated securities CDO issuance and the balance is financed under other borrowing facilities.

At December 31, 2006, the maturities of the debt securities available for sale range from 7 to 49 years.

5. CDO Deposit and Warehouse Agreements

Warehouse Agreements

In March 2006, the Company entered into a warehouse arrangement with a major commercial bank whereby the bank had agreed to purchase up to $450 million of CMBS and other real estate debt securities under the Company’s direction with the expectation of selling such securities to the Company’s next real estate securities CDO, CDO IX. In October 2006, the Company amended the warehouse agreement which allowed the Company to borrow up to $750 million under the facility. In February 2007, the Company closed CDO IX and terminated the warehouse agreement.

In February 2007, the Company entered into a new warehouse arrangement with a major commercial bank whereby the bank has agreed to purchase up to $600 million of real estate debt securities under the Company’s direction with the expectation of selling such securities to the Company’s next securities CDO. At June 30, 2007, the Company has made $16.0 million of deposits as security for the purpose of covering a portion of any losses or costs associated with the accumulation of these securities that will be made under the warehouse agreement and will be required to deposit additional equity based on accumulations of securities under the terms of the warehouse agreement. As of June 30, 2007, the bank has accumulated securities under this warehouse agreement with a fair market value of $254.2 million.

These agreements are treated as non-hedge derivatives for accounting purposes and marked-to-market through income. The Company has recorded a $0.2 million and $0.4 million unrealized loss for the three months ended June 30, 2007 and 2006, respectively, and a $0.6 million unrealized loss and a $1.6 unrealized gain for the six months ended June 30, 2007 and 2006, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

6. Real Estate Debt Investments

At June 30, 2007 and December 31, 2006 the Company held the following real estate debt investments (in thousands):

June 30, 2007 Carrying
Value ⁽¹⁾ Allocation by
Investment
Type Average
FixedRate Average Spread Over
LIBOR Number of
Investments

Whole loans, floating rate $ 1,193,006 54.0 % — % 2.98 % 71

Whole loans, fixed rate 110,959 5.0 9.87 — 13

Subordinate mortgage interests, floating rate 114,376 5.2 — 4.69 12

Mezzanine loans, floating rate 539,606 24.5 — 5.25 22

Mezzanine loan, fixed rate 140,316 6.3 11.23 — 16

Preferred equity, fixed rate 29,792 1.3 9.34 — 2

Other loans — floating 40,890 1.8 — 2.30 5

Other loans — fixed 41,442 1.9 7.32 — 9

Total/Weighted average $ 2,210,387 100.0 % 10.09 % 3.72 % 150

(1) Approximately $1.2 billion of these investments serve as collateral for the Company’s three real estate debt CDO issuances and the balance is financed under other borrowing facilities. The Company has future funding commitments totaling $792.8 million related to these investments.

December 31, 2006 Carrying Value ⁽¹⁾ Allocation by Investment Type Average Fixed Rate Average Spread Over LIBOR Number of Investments

Whole loans, floating rate $ 884,340 56.3 % — % 3.09 % 53

Whole loans, fixed rate 90,343 5.7 8.29 — 10

Subordinate mortgage interests, floating rate 97,345 6.2 — 4.53 9

Mezzanine loans, floating rate 293,825 18.7 — 5.43 12

Mezzanine loan, fixed rate 126,448 8.0 10.85 — 11

Preferred equity, fixed rate 29,271 1.9 9.35 — 2

Other loans — floating 42,195 2.7 — 2.47 7

Other loans — fixed 7,743 0.5 5.53 — 1

Total/Weighted average $ 1,571,510 100.0 % 9.60 % 3.70 % 105

(1) Approximately $1.3 billion of these investments serve as collateral for our three real estate debt CDO issuances and the balance is financed under other borrowing facilities, and the Company had future funding commitments totaling $290.8 million related to these investments.

The Company has identified two real estate debt investments as variable interests in a VIE and has determined that the Company is not the primary beneficiaries of these VIEs and as such the VIEs should not be consolidated in the Company’s consolidated financial statements. The Company’s maximum exposure to loss would not exceed the carrying amount of its investments of $56.1 million. For all other investments, the Company has determined they are not VIEs and, as such, the Company has continued to account for these real estate debt investments as loans.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

7. Corporate Loan Investments

At June 30, 2007, Monroe Capital joint venture held the following corporate debt investments which were consolidated upon completion of a financing arrangement described in footnote 9 (in thousands):

June 30, 2007 Carrying Value Allocation by Investment Type Average Spread Over LIBOR/Prime Number of Investments

First Lien note $ 248,113 96.1 % 2.57 % 67

Second Lien note 9,988 3.9 6.85 4

Total/Weighted average $ 258,101 100 % 2.74 % 71

8. Investment in and Advances to Unconsolidated Ventures

Monroe Capital Management Advisors, LLC

In March 2007, the Company entered into a joint venture with Monroe Management, a Chicago-based firm that originates, acquires and finances middle-market and broadly syndicated corporate loans. The Company owns a 49.9% non-controlling interest in Monroe Management that originates, structures and syndicates middle-market corporate loans for Monroe Capital and provides asset management services. The Company accounts for its investment in the management company using the equity method of accounting.

Northstar Realty Finance Trusts

The Company owns all of the common stock of Northstar Realty Finance Trust, Northstar Realty Finance Trust II, NorthStar Realty Finance Trust III, NorthStar Realty Finance Trust IV, NorthStar Realty Finance Trust V, NorthStar Realty Finance Trust VI, Northstar Realty Finance Trust VII and Northstar Realty Finance Trust VIII (collectively, the “Trusts”). The Trusts were formed to issue preferred securities. Under the provisions of FIN 46(R)-6, the Company determined that the holders of the trust preferred securities were the primary beneficiaries of the Trusts. As a result, the Company did not consolidate the Trusts and has accounted for the investment in the common stock of the Trusts under the equity method of accounting. At June 30, 2007 and December 31, 2006, the Company had an investment in the Trusts of approximately $3.8 and $3.5 million, respectively.

9. Borrowings

The following is a table of the Company’s outstanding borrowings as of June 30, 2007 and December 31, 2006 (in thousands

Stated Maturity Interest Rate Balance at June 30, 2007 Balance at
December 31, 2006

Mortgage notes payable
(non-recourse)


Chatsworth 5/1/2015 5.65 % $ 43,361 $ 43,506

Salt Lake City 9/1/2012 5.16 % 16,407 16,584

EDS 10/8/2015 5.37 % 48,695 49,017

Executive Center 1/1/2016 5.85 % 51,480 51,480

Green Pond 4/11/2016 5.68 % 17,480 17,480

Indianapolis 2/1/2017 6.06 % 28,600 28,600

Wakefield GE 8/30/2010 6.93 % 59,210 51,560

Wakefield – Wachovia 2/11/2014 5.94 % 33,300 33,300

Wakefield – GE – WLK 1/11/2017 6.49 % 160,000 —

Wakefield – GE – Tusc & Harrisburg Harmony 1/11/2017 6.59 % 7,875 —

Wakefield Harmony FNMA 2/1/2017 6.39 % 75,000 —

Wakefield – Grove City 2/1/2038 5.45 % 1,900 —

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9. Borrowings – (continued)

Stated Maturity Interest Rate Balance at June 30, 2007 Balance at
December 31, 2006

Wakefield – Lancaster 6/1/2037 6.40 % 2,651 —

Wakefield – Marysville 6/1/2037 6.40 % 1,703 —

Wakefield – Washington 10/1/2038 6.65 % 2,004 —

Wakefield – Miller Merril 6/30/2012 7.07 % 116,000 —

Wakefield – ARL Mob Wachovia 5/11/2017 5.89 % 3,413 —

Wakefield – Ascend Colonial 5/31/2012 7.52 % 6,500 —

Aurora 7/11/2016 6.22 % 33,500 33,500

DSG 10/11/2016 6.17 % 34,843 35,038

Keene 2/1/2016 5.85 % 6,926 6,970

Fort Wayne 1/1/2015 6.41 % 3,591 3,626

Portland 6/17/2014 7.34 % 5,059 5,132

Milpitas 3/6/2017 5.95 % 23,156 —

Fort Mill 4/6/2017 5.63 % 27,700 —

Reading 1/1/2015 5.58 % 14,481 —

Reading 1/1/2015 6.00 % 5,000 —

Mezzanine loan payable
(non-recourse)


Chatsworth 5/1/2014 6.64 % 11,349 11,985

Aurora 5/11/2012 7.37 % — 2,887

Fort Mill 4/6/2017 6.21 % 3,315 —

Exchangeable Senior Notes 6/15/2027 7.25 % 172,500 —

Repurchase obligations See Repurchase
Obligations below LIBOR varies 59,622 80,261

CDO bonds payable

CDO IV 7/1/2040 LIBOR + 0.62%
(average spread) 300,000 300,000

CDO VI 6/1/2041 LIBOR + 0.55%
(average spread) 299,200 312,079

CDO VII 6/22/2051 LIBOR + 0.34%
(average spread) 510,800 510,800

CDO VIII 2/1/2041 LIBOR + 0.58%
(average spread) 542,885 535,600

CDO IX 8/7/2052 LIBOR + 0.32%
(average spread) 758,960 —

Abacus NS2 8/28/2046 LIBOR + 4.41%
(average spread) — 23,750

Credit facilities


DBAG 12/21/2007 LIBOR + 0.75% to
2.25 % — —

VFCC Facility 5/14/2010 Varies 397,854 16,000

Swing Line Facility 6/5/2010 LIBOR + 1.92 % 29,150 —

MC Facility 3/31/2008 LIBOR + 0.75 % 265,003 —

Secured term loan 7/11/2011 Euribor + 1.5 % 101,513 —

Liability to subsidiary trusts issuing preferred securities ⁽¹⁾


Trust I 3/30/2035 8.15 % 41,240 41,240

Trust II 6/30/2035 7.74 % 25,780 25,780

Trust III 1/30/2036 7.81 % 41,238 41,238

Trust IV 6/30/2036 7.95 % 50,100 50,100

Trust V 9/30/2036 3 month LIBOR
+ 2.70 % 30,100 30,100

Trust VI 12/30/2036 3 month LIBOR
+ 2.90 % 25,100 25,100

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9. Borrowings – (continued)

Stated Maturity Interest Rate Balance at June 30, 2007 Balance at
December 31, 2006

Trust VII 4/30/2037 3 month LIBOR
+ 2.50 % 37,600 —

Trust VIII 7/30/2037 3 month LIBOR
+ 2.70 % 35,100

   $ 4,568,244 $ 2,382,713

(1) The liability to subsidiary trusts for Trusts I, II, III and IV have a fixed interest rate for the first ten years after which the interest rate will float and reset quarterly at rates ranging from LIBOR plus 2.70% to 3.25%. The Company entered into interest rate swap agreements on Trusts V, VI, VII and VIII which fix the interest rates for 10 years at 8.16%, 8.02%, 7.60% and 8.29%, respectively.

Scheduled principal payment requirements on the Company’s borrowings are as follows as of June 30, 2007 (in thousands):

Total Mortgage and
Mezzanine Loans Credit Facilities Secured Term Loan Liability to Subsidiary Trusts Issuing Preferred Securities Exchangeable
Senior Notes Repurchase Obligations CDO Bonds Payable

2007 $ 61,708 $ 2,086 $ — $ — $ — $ — $ 59,622 $ —

2008 270,100 5,097 265,003 — — — — —

2009 10,394 10,394 — — — — — —

2010 497,309 70,305 427,004 — — — — —

2011 115,289 13,776 — 101,513 — — — —

Thereafter 3,613,444 742,841 — — 286,258 172,500 — 2,411,845

Total $ 4,568,244 $ 844,499 $ 692,007 $ 101,513 $ 286,258 $ 172,500 $ 59,622 $ 2,411,845

At June 30, 2007, the Company was in compliance with all covenants under its borrowings.

Exchangeable Senior Notes

In June 2007, the Company issued $172.5 million of 7.25% exchangeable senior notes (the “Notes”) which are due in 2027. The Notes were offered in accordance with Rule 144A under the Securities Act of 1933, as amended. The Notes will pay interest semi-annually on June 15 and December 15, at a rate of 7.25% per annum, and mature on June 15, 2027. The Notes have an initial exchange rate representing an exchange price of $16.89 per share of the Company’s common stock. The initial exchange rate is subject to adjustment under certain circumstances. The Notes are senior unsecured obligations of the Company’s operating partnership and may be exchangeable upon the occurrence of specified events, and at any time on or after March 15, 2027, and prior to the close of business on the second business day immediately preceding the maturity date, into cash or a combination of cash and shares of the Company’s common stock, if any, at the Company’s option. The Notes are redeemable, at the Company’s option, on and after June 15, 2014. The Company may be required to repurchase the Notes on June 15, 2012, 2014, 2017 and 2022, and upon the occurrence of certain designated events. The net proceeds from the offering were approximately $167.5 million, after deducting estimated fees and expenses. The proceeds of the offering were used to repay certain of the Company’s existing indebtedness, to make additional investments and for general corporate purposes.

As of June 30, 2007, the Company had outstanding approximately $172.5 million of Notes.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9. Borrowings – (continued)

CDO IX

In February 2007, the Company completed its ninth CDO issuance (“CDO IX”). The Company sold the investment grade rated notes having a face amount of $759.0 million and retained all of the below investment grade securities and income notes. CDO IX was collateralized by $593.4 million of securities and loans and $204.9 million of cash.

Secured Credit Facilities

As of May 14, 2007, the Company entered into a new $400.0 million Master Repurchase Agreement with a major financial institution, which was further amended on May 24, 2007 and June 22, 2007 (the “VFCC Facility”). The VFCC Facility provides for a three year term and may be temporarily increased to $800.0 million for a period not to exceed 10 months in connection with the accumulation of collateral for a commercial real estate CDO securitization transaction.

Additionally, on June 5, 2007 and June 22, 2007, the Company amended its existing Master Repurchase Agreement (“Swing Line Facility” and together with the VFCC Facility, the “WA Facilities”) with the same financial institution. Following the amendments, the Company may borrow up to an additional $100.0 million under such facility.

Advance rates under the WA Facilities range from 50% to 95% of the value of the collateral for which the advance is to be made. Amounts borrowed under the WA Facilities bear interest at spreads of 0.15% to 2.10% over the respective commercial paper rate, depending on the type of collateral for which the amount is borrowed. Additionally, if a securitization transaction with respect to the collateral subject to the VFCC Facility is not consummated by March 14, 2008, certain advances under the VFCC Facility will be subject to commitment and unused fees and the Company’s limited guarantee shall be increased to 10% of the amount outstanding under the VFCC Facility.

In June 2007, Monroe Capital entered into a temporary financing arrangement (“MC Facility”) with a major financial institution whereby it can acquire loans and finance up to an aggregate amount of $400.0 million to accumulate collateral for a potential collateralized loan obligation (“CLO”) securitization transaction. Advance rates range from 40% to 100% of the value of the collateral for which the advance is to be made. Amounts borrowed under the MC Facility bear interest at LIBOR plus 0.75%. The MC Facility terminates on the earlier of March 31, 2008 or a CLO securitized transaction. The financial institution had previously financed 100% of the collateral value under Monroe Capital’s direction and retained all of the net interest income. Upon completion of the MC Facility the Company consolidated all the collateral financed under the prior financing facility.

Secured Term Loan

In March 2007, the Company entered into a non-recourse Euro denominated note purchase agreement with a major financial institution (“Euro Note”), to finance a note collateralized by a €75.0 million participation in a junior mezzanine loan that bears interest at three month EURIBOR plus 3.75%. The Company borrowed approximately €75.0 million under the note purchase agreement. The loan bears interest at three month EURIBOR plus 1.50%. The note purchase agreement is coterminous with the underlying mezzanine loan scheduled to mature on July 8, 2011.

Liability to Subsidiary Trusts Issuing Preferred Securities

In March 2007, a wholly owned subsidiary of the Company, NorthStar Realty Finance Trust VII, completed a private placement of $37.5 million of trust preferred securities. The sole assets of the trust consist of a like amount of junior subordinate notes issued by the Company, which mature on April 30, 2037. The trust preferred securities and the notes have a 30-year term, ending April 30, 2037, and bear interest at a floating

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9. Borrowings – (continued)

rate of three-month LIBOR plus 2.50%. The Company has entered into an interest rate swap agreement, which fixed the interest rate for ten years at 7.60%.

In June 2007, a wholly owned subsidiary of the Company, NorthStar Realty Finance Trust VIII, completed a private placement of $35.0 million of trust preferred securities. The sole assets of the trust consist of a like amount of junior subordinate notes issued by the Company, which mature on July 30, 2037. The trust preferred securities and the notes have a 30-year term, ending July 30, 2027, and bear interest at a floating rate of three-month LIBOR plus 2.70%. The Company has entered into an interest rate swap agreement, which fixed the interest rate for ten years at 8.29%.

Repurchase Obligations

The Company had $59.6 million of repurchase agreements, which are collateralized by $63.9 million of floating rate securities at June 30, 2007. These repurchase agreements are generally used to finance the Company’s floating rate securities, backed primarily by mortgage loans, and other investments prior to obtaining permanent financing. These repurchase obligations mature in less than 30 days, and bear LIBOR interest rates. These repurchase agreements are being accounted for as secured borrowings since the Company maintains effective control of the financed assets.

10. Related Party Transactions

Advisory Fees

The Company has agreements with CDO I, CDO II, CDO III and CDO V, respectively, to perform certain advisory services.

The Company earned total fees of approximately $1.4 million and $1.5 million for the quarters ended June 30, 2007 and 2006, respectively and $2.8 million and $2.9 million for the six months ended June 30, 2007 and 2006, respectively. At June 30, 2007 and December 31, 2006, the Company had $0.3 million for each period of unpaid advisory fees recorded in the condensed consolidated balance sheets as receivables from related parties.

Management Fees

The Company entered into a management agreement in March 2007 with Monroe Management to perform certain management services, as described in footnote 8. The Company has incurred $0.1 million in management fees for the three and six months ended June 30, 2007, which is recorded in other general and administrative expense in the condensed consolidated statement of operations and had $0.1 million of unpaid-management fees recorded in other liabilities in the condensed consolidated balance sheet at June 30, 2007.

NSF Venture

During the first quarter of 2006, the Company sold its joint venture interest and no longer earns advisory fees from this venture. In connection with the sale, the Company recognized incentive income of approximately $1.2 million, which is included in other revenue in the condensed consolidated statement of operations for the six months ended June 30, 2006. The Company also earned and recognized advisory fees from this joint venture of approximately $60,000 for the six months ended June 30, 2006.

Hard Rock Hotel Loan

On March 29, 2007, the Company purchased from Credit Suisse, or CS, a $100 million junior participation in the financing provided by CS in connection the acquisition of the Hard Rock Hotel and Casino in Las Vegas by a joint venture between DLJ Merchant Banking Partners and the Morgans Hotel Group, or Morgans, which is the minority interest in the joint venture. David Hamamoto, the Company’s president and chief executive officer, is the chairman of the board of Morgans, and Edward Scheetz, the Company’s chairman of the board, is the president and chief executive officer of Morgans.

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(Unaudited)

10. Related Party Transactions – (continued)

Sublease

As of April 1, 2007, the Company entered into a sublease with NorthStar Capital pursuant to which it will rent, on a month-to-month basis, its office space currently used by NorthStar Capital’s professionals (currently three people). The sublease rent is calculated as a per person monthly charge, based on a “turn key” office arrangement (computer, network, telephone and furniture supplied) for each person utilizing its facilities.

11. Equity Based Compensation

Omnibus Stock Incentive Plan

For the three and six months ended June 30, 2007 the Operating Partnership granted an aggregate of 3,842 and 1,116,553 LTIP units, respectively, which are units of partnership interests that are structured as profits interests (“LTIP units”), to certain employees of the Company pursuant to the 2004 Omnibus Stock Incentive Plan, as amended. The LTIP units vest to the individual recipient at a rate of one-twelfth of the total amount granted as of the end of each quarter (as defined in the vesting agreement). In addition, the LTIP unit holders are entitled to dividends on the entire grant so long as they are employed by the Company.

The Company has recognized compensation expense of $2.5 million and $1.4 million, respectively, for each of the quarters ended June 30, 2007 and 2006 and $4.6 million and $2.3 million, respectively, for the six months ended June 30, 2007 and 2006 related to the amortization of all awards granted under this plan. As of June 30, 2007, there were approximately 1.4 million unvested LTIP units and there were no forfeitures during the period. The LTIP units will vest over the next 12 respective quarters and the related compensation expense to be recognized over the next 12 respective quarters is $19.1 million, provided there are no forfeitures.

Long-Term Incentive Bonus Plan

In connection with the Company’s initial public offering in 2004, the Compensation Committee adopted the NorthStar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan, which the Company refers to as the Long-Term Incentive Plan. Up to 2.5% of the Company’s total capitalization as of consummation of its initial public offering was available to be paid under the Long-Term Incentive Plan in cash, shares of common stock or other share-based forms at the discretion of the Compensation Committee, if certain return hurdles are met.

The Compensation Committee established the return hurdle for these performance periods as an annual return on paid in capital as defined in the plan, equal to or greater than 12.5%. If the Company achieves the return hurdles, the vested awards are paid. The Company achieved the initial performance hurdle for the one-year period beginning October 1, 2005 and each of the participants that was an employee at the conclusion of the first performance period received LTIP units equal to half of his or her reserved amount. Each of the participants will be entitled to the other half of his or her total reserved amount if the Company meets the return hurdle for the one-year period beginning on October 1, 2006 and such participant is employed through the end of this second performance period. The aggregate numbers of units to be granted is 349,071 of which 33,977 is unallocated under the plan. The total remaining compensation expense to be recognized over the third quarter is $0.6 million.

At June 30, 2007, management estimated it would meet the performance hurdles for the second performance period and in accordance with FASB 123(R), the Company has recognized $0.6 million of compensation expense in the consolidated financial statements for the three months ended June 30, 2007 and 2006 and $1.3 million and $0.9 million for the six months ended June 30, 2007 and 2006, respectively.

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(Unaudited)

11. Equity Based Compensation – (continued)

Employee Outperformance Plan

In connection with the employment agreement of the Company’s chief investment officer, he is eligible to receive incentive compensation equal to 15% of the annual net profits from the Company’s real estate securities business in excess of a 12% return on invested capital (the annual bonus participation amount). The Company will have the option of terminating this incentive compensation arrangement at any time after the third anniversary of the date of its IPO by paying the Company’s chief investment officer an amount based on a multiple of the estimated annual bonus participation amount, at the time it exercises this buyout option. If the Company exercises this buyout option, the fixed amount due for terminating this arrangement will vest ratably and be paid in four installments over a three-year period with 25% paid on termination. If the Company’s chief investment officer voluntarily terminates his employment with the Company prior to any exercise of the Company’s buyout option, he will be eligible to receive future annual payments based on the future real estate securities annual net profits in excess of the 12% return hurdle on invested capital. The portion of the annual benefit to which the chief investment officer is eligible after voluntary termination increases with each year of employment until the fifth anniversary, at which point the chief investment officer is 100% vested in the full amount of the payment that would be due related to the annual bonus participation amount on the real estate securities business income earned on business, initiated five years earlier, over the return hurdle. The Company has recorded compensation expense under this plan of $0.4 million and $0.3 million for the three months ended June 30, 2007 and 2006, respectively, and $1.0 million and $0.4 million for each of the six months ended June 30, 2007 and 2006, respectively.

2006 Outperformance Plan

In January 2006, the Compensation Committee of the Board of Directors approved the NorthStar Realty Finance Corp. 2006 Outperformance Plan (the “2006 Outperformance Plan”), a long-term compensation program to further align the interests of the Company’s stockholders and management. Under the 2006 Outperformance Plan, award recipients will share in a “performance pool” if the Company’s total return to stockholders for the period from January 1, 2006 (measured based on the average closing price of the Company’s common stock for the 20 trading days prior to January 1, 2006) to December 31, 2008 exceeds a cumulative total return to stockholders of 30%, including both share price appreciation and dividends paid. The size of the pool will be 10% of the outperformance amount in excess of the 30% benchmark, subject to a maximum dilution cap equal to $40 million, exclusive of accrued dividends. Each employee’s award under the 2006 Outperformance Plan will be designated as a specified percentage of the aggregate performance pool. Assuming the 30% benchmark is achieved, the performance pool that is established under the 2006 Outperformance Plan will be allocated among the Company’s employees in accordance with the percentage specified in each employee’s award agreement. Although the amount of the awards earned under the 2006 Outperformance Plan will be determined when the performance pool is established, not all of the awards vest at that time. Instead, 50% of the awards vest on December 31, 2008 and 25% of the awards vest on each of the first two anniversaries thereafter based on continued employment. The Company recorded the compensation expense for the 2006 Outperformance Plan in accordance with SFAS 123 (R) “Stock Based Compensation”. The fair value of the 2006 Outperformance Plan on the date of adoption was determined by the Company to be $4.1 million. In connection with its determination, the Company retained a firm that had experience in appraising similar plans and considered such appraisal in its determination of the fair value of the 2006 Outperformance Plan. The Company will amortize 50% of the value into compensation expense over the first three years of the plan, 25% will be amortized over four years and the remaining 25% over five years. The Company recorded compensation expense of $0.3 million for each of the three month periods ended June 30, 2007 and 2006 and $0.6 million for each of the six month periods ended June 30, 2007 and 2006.

A summary of the status of our LTIP grants as of June 30, 2007 and December 31, 2006.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

11. Equity Based Compensation – (continued)

2007 2006

   LTIP Grants Weighted Average Grant Price LTIP Grants Weighted Average Grant Price

Balance at beginning of year 1,989 9.38 5,559 9.05

Granted 1,162 16.46 844 9.72

Converted to Common Stock (116 ) 9.00 (4,404 ) 9.00

Forfeited — — (10 ) 9.00

Balance at end of period 3,035 12.81 1,989 9.38

12. Stockholders’ Equity

Preferred Stock

In February 2007, the Company completed a public offering of 6,200,000 shares of 8.25% Series B Cumulative Redeemable Preferred Stock at a price of $25.00 per share and generated net proceeds of approximately $150.0 million. In May 2007, the Company completed a public offering of an additional 1,400,000 shares of 8.25% Series B Cumulative Redeemable Preferred Stock at a price of $25.00 per share which increased the number of Series B shares outstanding to 7,600,000 and generated additional net proceeds of approximately $33.5 million bringing total net proceeds from the sale of Series B preferred stock to approximately $183.5 million.

Common Stock

Effective as of April 27, 2007, the Company implemented a Dividend Reinvestment and Stock Purchase Plan pursuant to which it registered and reserved for issuance 15,000,000 shares of its common stock. During the second quarter 2007, the Company issued a total of approximately 204,000 common shares for a gross sales price of approximately $2.7 million.

In May 2007, the Company issued 25,088 shares of common stock with a fair value at the date of grant of $ 0.3 million to its Board of Directors as part of their annual grants.

Dividends

On January 23, 2007, the Company declared a cash dividend of $0.35 per share of common stock and of $0.54688 per share of Series A preferred stock. The dividends were paid on February 15, 2007 to the shareholders of record as of the close of business on February 5, 2007.

On April 25, 2007, the Company declared a cash dividend of $0.36 per share of common stock, $0.54688 per share of Series A preferred stock and of $0.55573 per share of Series B preferred stock. The dividends were paid on May 15, 2007 to the shareholders of record as of the close of business on May 7, 2007.

Earnings Per Share

Earnings per share for the three and six months ended June 30, 2007 and 2006 is computed as follows (in thousands):

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

12. Stockholders’ Equity – (continued)

For the three months Ended June 30, For the six months Ended June 30,

   2007 2006 2007 2006

Numerator (Income)


Basic Earnings


Net income available to common share holders $ 10,965 $ 5,244 $ 17,315 $ 13,110

Effect of Dilutive Securities


Income allocated to Minority Interest 779 851 1,155 2,249

Dilutive net income available to share holders $ 11,744 $ 6,095 $ 18,470 $ 15,359

Denominator (Weighted Average Shares)


Basic Earnings:


Shares available to common stockholders 61,378 34,980 61,354 32,898

Effect of Dilutive Securities:


LTIP Units 3,041 5,764 3,045 5,665

Dilutive Shares 64,419 40,744 64,399 38,563

13. Minority Interest in Operating Partnership

Minority interest represents the aggregate limited partnership interests or OP Units in the Operating Partnership held by limited partners (the “Unit Holders”). Income allocated to the minority interest is based on the Unit Holders ownership percentage of the Operating Partnership. The ownership percentage is determined by dividing the numbers of OP Units held by the Unit Holders by the total OP Units and common stock outstanding. The issuance of additional shares of beneficial interest (the “Common Shares” or “Share”) or OP Units changes the percentage ownership of both the Unit Holders and the Company. Since a unit is generally redeemable for cash or shares at the option of the Company, it is deemed to be equivalent to a Share. Therefore, such transactions are treated as capital transactions and result in an allocation between shareholders’ equity and minority interest in the accompanying consolidated balance sheet to account for the change in the ownership of the underlying equity in the Operating Partnership. As of June 30, 2007, minority interest related to the aggregate limited partnership units of 3,034,723 was $12.6 million.

14. Risk Management and Derivative Activities

Derivatives

The Company uses derivatives primarily to manage interest rate risk exposure. These derivatives are typically in the form of interest rate swap agreements and the primary objective is to minimize interest rate risks associated with the Company’s investment and financing activities. The counterparties of these arrangements are major financial institutions with which the Company may also have other financial relationships. The Company is exposed to credit risk in the event of non-performance by these counterparties; however, the Company does not anticipate that any of the counterparties will fail to meet their obligations because of their high credit ratings. The objective in using interest rate derivatives is to add stability to interest expense and to manage exposure to interest rate movements.

The Company has acquired all the notes of a synthetic CMBS CDO that entered into a credit default swap agreement with a major financial institution to sell credit protection on a pool of CMBS securities. As of June 30, 2007, the Company recorded an unrealized loss of $5.1 million in the consolidated statement of operations in connection with the mark-to-market adjustment on the credit default swap. The Company’s maximum exposure to loss on the credit default swap is limited to its $54.2 million initial investment.

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

14. Risk Management and Derivative Activities – (continued)

The following tables summarize the Company’s derivative financial instruments as of June 30, 2007 and December 31, 2006 (in thousands):

Notional Amount Fair Value
Net Asset/
(Liability) Range of
Fixed LIBOR Range of Maturity

Interest rate swaps and basis swaps


As of June 30, 2007 $ 1,239,680 $ 13,796 4.18% – 7.27 % February 2008 – January 2019

As of December 31, 2006 725,533 (15,055 ) 4.18% – 7.31 % March 2010 – August 2018

15. Off Balance Sheet Arrangements

CDO Issuances

The Company has interests in four unconsolidated CDO issuances whose CDO notes are primarily collateralized by investment grade real estate securities. The Company generally purchases the preferred equity or the income notes of each CDO, which are the equity securities of the CDO issuances, and, with the exception of CDO I, all of the below investment grade CDO Notes of each CDO issuance. In addition, the Company earns a fee of 0.35% of the outstanding principal balance of the assets backing each of these CDO issuances as an annual collateral management fee. The Company’s interests in CDO I, CDO II, CDO III and CDO V are each accounted for as a single debt security available for sale pursuant to EITF 99-20.

The following tables describe certain terms of the collateral for and the notes issued by CDO I, CDO II, CDO III and CDO V as of June 30, 2007 and December 31, 2006 (in thousands):

CDO Collateral – June 30, 2007 CDO Debt – June 30, 2007

Issuance Date
Closed Par Value
of CDO Collateral Weighted Average Interest Rate Weighted Average Expected Life (Years) Outstanding CDO Notes ⁽¹⁾ Weighted Average Interest Rate Stated
Maturity

CDO I ⁽²⁾ 8/21/03 $ 328,920 6.62 % 4.98 $ 309,742 6.24 % 8/1/2038

CDO II 7/1/04 351,180 6.29 5.79 314,828 5.80 6/1/2039

CDO III 3/10/05 400,992 6.37 5.39 359,118 5.88 6/1/2040

CDO V 9/22/05 495,937 5.95 7.61 456,319 5.15 9/5/2045

Total $ 1,577,029 6.27 % 6.09 $ 1,440,007 5.71 %

(1) Includes only notes held by third parties.

(2) The Company has an 83.3% interest.

CDO Collateral – December 31, 2006 CDO Notes – December 31, 2006

Issuance Date
Closed Par Value
of CDO Collateral Weighted Average Interest Rate Weighted Average Expected Life (Years) Outstanding CDO Notes ⁽¹⁾ Weighted Average Interest Rate at Stated
Maturity

CDO I ⁽²⁾ 8/21/03 $ 344,769 6.59 % 5.40 $ 325,551 6.22 % 8/1/2038

CDO II 7/1/04 377,911 6.30 % 6.30 341,101 5.78 % 6/1/2039

CDO III 3/10/05 400,963 6.38 % 5.95 359,878 5.90 % 6/1/2040

CDO V 9/22/05 501,021 5.92 % 9.03 461,500 5.17 % 9/5/2045

Total $ 1,624,664 6.27 % 6.86 $ 1,488,030 5.71 %

(1) Includes only notes held by third parties.

(2) The Company has an 83.3% interest.

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

15. Off Balance Sheet Arrangements – (continued)

Monroe CLO Equity Notes

The Company owns a residual equity interest in a CLO originated by Monroe Capital, LLC. The CLO includes collateral of approximately $400 million backed primarily by first lien senior secured loans. The equity is currently yielding an internal rate of return of approximately 15%. The CLO was determined to be a variable interest entity under Fin 46(R)-6 and the Company was determined not to be the primary beneficiary; therefore, the financial statements of the CLO are not consolidated into the condensed financial statements of the Company. The Company’s residual equity interests are accounted for as debt securities available for sale pursuant to EITF 99-20. The fair market value was $17.0 million at June 30, 2007.

Synthetic CMBS CDO

The Company owns all of the notes issued in a synthetic CMBS CDO referred to as SEAWALL 2006-4a. The notes of this CDO bear interest backed by a combination of AAA floating rate securities and a fixed spread earned by the CDO for having sold credit protection on a portfolio of investment grade-rated reference commercial securities. The notes yield a blended spread above LIBOR of approximately 4.41%. Any losses on the reference securities will require the CDO to liquidate a portion of the AAA collateral in order to make payments to credit protection buyers under the credit default swaps. SEAWALL 2006-4a is determined to be a Qualified Special Purpose Entity (“QSPE”) and accordingly is not consolidated. The notes acquired are accounted for as debt securities available for sale and are carried at their fair value with net unrealized gains or losses reported as a component of other comprehensive income. The fair value of the notes was $27.0 million at June 30, 2007.

The Company’s potential loss in its off balance sheet investments is limited to the carrying value of its investment, of $122.4 million and $126.6 million at June 30, 2007 and December 31, 2006, respectively.

16. Segment Reporting

The Company’s real estate debt segment is focused on originating, structuring and acquiring senior and subordinate debt investments secured primarily by commercial real estate properties. The Company generates revenues from this segment by earning interest income from its debt investments and its operating expenses consist primarily of interest costs from financing the assets. This segment generates income from operations by earning a positive spread between the yield on its assets and the interest cost of its debt. The Company evaluates performance and allocates resources to this segment based upon its contribution to income from continuing operations.

The Company’s real estate securities segment is focused on investing in a wide range of commercial real estate debt securities, including commercial mortgage-backed securities (“CMBS”), REIT unsecured debt, credit tenant loans and unsecured subordinate securities of commercial real estate companies. The Company generates revenues from this segment by earning interest income and advisory fees from owning and managing these investments. Its operating expenses consist primarily of interest costs from financing its securities. The segment generates income from operations by earning advisory fees and a positive spread between the yield on its assets and the interest cost of its debt.

The Company’s operating real estate segment is focused on acquiring commercial real estate facilities located throughout the U.S. that are primarily leased under long-term triple-net leases to corporate tenants. Triple-net leases generally require the lessee to pay all costs of operating the facility, including taxes and insurance and maintenance of the facility. The Company’s net-leased facilities are currently located in New York, Ohio, California, Utah, Pennsylvania, New Jersey, Indiana, Illinois, New Hampshire, Massachusetts, Kansas, Maine, South Carolina, Michigan, Colorado, North Carolina, Florida, Washington, Oregon, Wisconsin, Georgia, Oklahoma, Nebraska, Tennessee, Texas and Kentucky. Revenues from these assets are generated from rental income received from lessees of the facilities, and operating expenses include interest costs related

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

16. Segment Reporting – (continued)

to financing the assets, operating expenses, real estate taxes, insurance, ground rent and repairs and maintenance. The segment generates income from operations by leasing these facilities at a higher rate than its costs of owning and financing the assets.

The Company’s corporate loan segment is focused on originating, structuring and acquiring secured first and second lien loans to middle market companies. The Company generates revenues from this segment by earning interest income from its debt investments and its operating expenses consist primarily of interest costs from financing the assets. This segment generates income from operations by earning a positive spread between the yield on its assets and the interest cost of its debt. The Company evaluates performance and allocates resources to this segment based upon its contribution to income from continuing operations.

The following table summarizes segment reporting for the three and six months ended June 30, 2007 and 2006 (in thousands):

Operating Real Estate Real Estate Debt Real Estate Securities Corporate Loans Unallocated ⁽¹⁾ Consolidated Total

Total revenues for the three months ended


June 30, 2007 $ 22,910 $ 53,320 $ 27,824 $ 2,698 $ 708 $ 107,460

June 30, 2006 8,331 26,114 4,606 — 62 39,113

Income (loss) from continuing operations before minority interest for the three months ended


June 30, 2007 982 23,825 6,680 463 (15,304 ) 16,646

June 30, 2006 295 12,977 3,127 — (10,388 ) 6,011

Net income (loss) for the three months ended


June 30, 2007 888 23,825 6,680 412 (16,082 ) 15,723

June 30, 2006 375 12,977 3,127 — (11,235 ) 5,244

Total revenues for the six months ended


June 30, 2007 $ 43,223 $ 94,550 $ 47,985 $ 2,698 $ 3,258 $ 191,714

June 30, 2006 14,898 47,405 8,369 — 211 70,883

Income (loss) from continuing operations before minority interest for the six months ended


June 30, 2007 468 39,808 8,927 1,185 (25,655 ) 24,733

June 30, 2006 181 24,540 8,736 — (18,625 ) 14,832

Net income (loss) for the six months ended


June 30, 2007 327 39,808 8,927 1,134 (26,810 ) 23,386

June 30, 2006 425 24,819 8,736 — (20,870 ) 13,110

Total assets as of June 30, 2007 $ 1,195,069 $ 2,447,321 $ 1,505,733 $ 317,122 $ 118,333 $ 5,583,578

(1) Unallocated includes corporate level interest income, interest expense and general & administrative expenses.

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NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

17. Subsequent Events

Common Dividends

On July 24, 2007, the Company declared a cash dividend of $0.36 per share of common stock. The dividend is payable on August 15, 2007 to the shareholders on record as of the close of business on August 7, 2007.

Preferred Dividend

On July 24, 2007 the Company declared a cash dividend of $0.54688 per share of Series A preferred stock and $0.51563 per share of Series B preferred stock, each payable on August 15, 2007 to shareholders of record on August 7, 2007.

Secured Credit Facilities

In August, the Company entered into a new $350 million Master Repurchase Agreement with a major financial institution (the “JP Facility”). Advance rates under the JP Facility range from 65% to 97% of the value of the collateral for which the advance is to be made. Amounts borrowed under the JP Facility bear interest at spreads of 0.05% to 1.75% over one-month LIBOR, depending on the type of collateral for which the amount is borrowed. The JP Facility has a maximum term of three years.

In July 2007, Monroe Capital, entered into a Master Repurchase Agreement (“MC VFCC”) with a major financial institution whereby it can acquire loans and finance up to an aggregate amount of $400 million to accumulate collateral for a potential collateralized loan obligation (“CLO”) securitization transaction. Advance rates range from 40% to 100% of the value of the collateral for which the advance is to be made. Amounts borrowed under the MC VFCC facility bear interest at a spread of 0.75% over the respective commercial paper rate. The MC VFCC facility has a maximum term of three years.

NorthStar Real Estate Securities Opportunity Fund

In July 2007, the Company closed on $109.0 million of capital for its NorthStar Real Estate Securities Opportunity Fund, an investment vehicle in which the Company intends to prospectively conduct its real estate securities investment business.

The Company is the manager and general partner of the fund. The Company will typically receive base management fees ranging from 1.0% to 2.0% per annum on third party capital, and is entitled to annual incentive management fees ranging from 20% of the increase in the fund's net asset value to 25% of the increase in net asset value in excess of an 8.0% return. Base and incentive fees vary depending on the investor capital lockup periods.

As part of the initial closing, the Company sold to the fund its interests in two synthetic commercial real estate CDOs, its equity interest in its most recent real estate securities CDO – CDO IX, the deposits relating to its off-balance sheet warehouse facility, and an equity interest in a third-party securitization. The Company received approximately $35.6 million of cash proceeds from the initial closing and retained a 25.7% interest in the fund.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements and notes thereto included in this report.

Introduction

We primarily derive revenues from interest income on the real estate debt investments that we originate with borrowers or acquire from third parties, from real estate securities in which we invest and rental income from our net lease investments. We also generate interest revenues from our ownership interest in non-consolidated securities CDOs and advisory fee income, and income from our unconsolidated ventures. Other income comprises a much smaller and more variable source of revenues and is generated principally from fees associated with early loan repayments and gains/losses from sales and redemptions of securities.

We primarily derive income through the difference between the interest and rental income we are able to generate from our investments, and the cost at which we are able to obtain financing for our investments. In order to protect this difference, or “spread”, we seek to match fund our investments using secured sources of long term financing such as CDO and mortgage financings and long-term unsecured subordinate debt. Match funding means that we try to obtain debt with maturities equal to our asset maturities, and borrow funds at interest rate benchmarks similar to our assets. Match funding results in minimal impact to spread when interest rates are rising and falling and minimizes refinancing risk since our asset maturities match those of our debt.

Investors in our securities should read the introduction to Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 for a detailed discussion of the following items:

• Key profitability measures, including adjusted funds from operations and return on average common book equity before and after general and administrative expenses;

• Key factors that affect our profitability, including asset growth, credit risk management, corporate expense management and availability and cost of capital;

• Key trends that we believe may impact our business in the foreseeable future, including that:

• large amounts of competitive capital continue to flow into commercial real estate, driving down risk premiums;

• general economic conditions remain healthy in the U.S.;

• interest rates remain low by historical standards; and

• default rates on mortgages remain low.

Recently, the subprime residential lending markets began to experience significant defaults. Several lending markets, including the commercial real estate finance markets, experienced greater volatility resulting from disruptions in the residential sector. We do not have any direct subprime exposure or direct exposure to the single family mortgage market; however, we believe our and our competitor’s cost of financing as well as overall market-demanded risk premiums in commercial lending have increased and will likely continue to increase for the foreseeable future. There is no assurance that the increased cost of capital and the increase in risk premiums that are demanded by investors will not have a material impact on our future profitability measures. However, we expect that a portion of the impact of increased capital costs will be offset by increased yields on newly-originated assets.

Other than as described above, during the period covered by this report, we experienced no material changes in our key annual profitability measures, key factors that affect our profitability or key trends discussed in the introduction to Managements Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2006.

Investors are also encouraged to read the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2006.

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Critical Accounting Policies

Refer to the section of our Annual Report on Form 10-K for the year ended December 31, 2006 entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting policies” for a discussion of our critical accounting policies.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended June 30, 2007 to Three Months Ended June 30, 2006

Revenues

Interest Income

Interest income for the three months ended June 30, 2007 totaled $79.9 million, representing an increase of $53.6 million, or 204%, compared to $26.3 million for the three months ended June 30, 2006. The increase was primarily attributable to increased investment activity and asset growth. We originated or acquired real estate debt, securities and net lease investments with a net book value of $2.9 billion subsequent to June 30, 2006. Income from new investment activities was slightly offset by approximately $806.5 million of real estate securities and debt repayments and sales since June 30, 2006.

Interest Income — Related Parties

Interest income from related parties for the three months ended June 30, 2007 totaled $3.0 million representing a $0.1 million, or 3%, increase compared to $2.9 million for the three months ended June 30, 2006. This increase is primarily attributable to our investment in the non-investment grade note classes of our unconsolidated CDOs. All of our securities CDOs completed since 2006 have been accounted for as on-balance sheet financings.

Rental and Escalation Income

Rental and escalation income for the three months ended June 30, 2007 totaled $21.9 million, representing a $13.9 million, or 174%, increase compared to $8.0 million for the three months ended June 30, 2006. The increase was attributable to the $806.8 million of real estate acquisitions made subsequent to June 30, 2006. These acquisitions collectively contributed additional rental income of $13.1 million. In addition, properties acquired during the second quarter 2006 contributed additional rental income of $0.8 million as a result of having a full quarter’s benefit of the properties’ income in 2007.

Advisory and Management Fee Income — Related Parties

Advisory fees from related parties for the three months ended June 30, 2007 totaled $1.4 million, representing a decrease of approximately $0.1 million, or 7%, compared to $1.5 million for the three months ended June 30, 2006. The decrease is the result of lower advisory fees on our unconsolidated CDOs as a result of lower collateral balances due to asset paydowns.

Other Revenue

Other revenue for the three months ended June 30, 2007 totaled $1.3 million, representing an increase of $0.9 million, or 225%, compared to $0.4 million for the three months ended June 30, 2006. Other revenue for the second quarter 2007 included $0.9 million of recurring income from premiums received on credit default swaps related to Abacus NS2, a consolidated synthetic CDO we acquired in August 2006 and $0.4 million in prepayment penalties exit fees and loan draw fees from loans in our real estate debt portfolio. Other revenue for the second quarter of 2006 included prepayment fees on the early repayment of one of our real estate debt investments and expense reimbursements at two properties in our net lease portfolio.

Expenses

Interest Expense

Interest expense for the three months ended June 30, 2007 totaled $64.5 million, representing an increase of $44.7 million, or 226%, compared to $19.8 million for the three months ended June 30, 2006. This increase was primarily attributable to an increase in debt outstanding from the financing of our new investments. Our

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on-balance sheet financings of our real estate debt, securities, corporate loans and net lease investments increased from $1.8 billion from June 30, 2006 to $4.6 billion on June 30, 2007 and includes the partial impact of the June 2007 closing of our $172.5 million of our exchangeable notes and $265.0 million from the MC Facility. In addition, there was an increase in our average borrowing rate on our non-hedged variable rate debt due to increased LIBOR rates.

Real Estate Properties – Operating Expenses

Property operating expenses for the three months ended June 30, 2007 totaled $2.9 million, representing an increase of $0.9 million, or 45%, compared to $2.0 million for the three months ended June 30, 2006. The increase was attributable to net lease properties acquired subsequent to June 30, 2006.

General and Administrative

General and administrative expenses for the three months ended June 30, 2007 totaled $14.1 million and increased $5.5 million, or 64%, compared to $8.6 million for the three months ended June 30, 2006. The increase is comprised of the following:

Salaries and equity-based compensation for the three months ended June 30, 2007 totaled $8.9 million, including equity based compensation of $4.2 million, representing an increase of approximately $2.9 million, or 48%, compared to $6.0 million, including equity-based compensation of $2.7 million, for the three months ended June 30, 2006. The increase was primarily attributable to an increase in salaries of $1.5 million due to higher staffing levels to accommodate the expansion of our business throughout 2006 into 2007. Equity-based compensation expense for the three months ended June 30, 2007 increased by $1.4 million from the three months ended June 30, 2006. The increase in equity based compensation was attributable to approximately $1.6 million relating to the vesting of equity based awards issued under our 2004 Omnibus Stock Incentive Plan (which includes additional grants of 1.1 million LTIP units subsequent to June 2006), $0.1 million in additional compensation expense related to our Employee Outperformance Plan and $0.1 million of additional compensation to our board of directors. This increase was offset by the accelerated vesting in 2006 of $0.4 million grants to our former CFO in connection with his termination agreement.

Auditing and professional fees for the three months ended June 30, 2007 totaled $1.3 million, representing an increase of $0.7 million, or 117%, compared to $0.6 million for the three months ended June 30, 2006. The increase was primarily attributable to professional fees relating to legal fees for general corporate work, and investment activities, recruiting fees for new hires, and fees related to agreed upon procedures in connection with CDOs.

Other general and administrative expenses for the three months ended June 30, 2007 totaled $3.9 million, representing an increase of approximately $1.9 million, or 95%, compared to $2.0 million for the three months ended June 30, 2006. These costs include occupancy costs related to the new lease for the relocation of our corporate offices, the lease for our new LA office, printing expenses, public relations, cash management fees, software costs, and licensing fees.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended June 30, 2007 totaled $7.8 million, representing an increase of $5.0 million, or 179%, compared to $2.8 million for the three months ended June 30, 2006. This increase was primarily attributable to $806.8 million of net lease acquisitions made subsequent to June 30, 2006.

Equity in Earnings of Unconsolidated Ventures

Equity in earnings for the three months ended June 30, 2007 totaled a loss of $0.6 million representing a decrease of $0.7 million compared to $0.1 million for the three months ended June 30, 2006. The decrease was attributable to the operations of Monroe Management which generated a loss of $0.7 million, which was partially offset by a net lease joint venture we entered into in February 2006 which had equity in earnings of $0.1 million.

Unrealized Gain (Loss) on Investments and Other

Unrealized gain (loss) on investments and other increased by approximately $0.4 million for the three months ended June 30, 2007 to a loss of $0.9 million from a loss of $0.5 million for the three months ended

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June 30, 2006. The unrealized loss on investments for the three months ended June 30, 2007 consisted of a $0.4 million mark-to-market loss on our CDO warehouse agreement as a result of a decline in the fair market value of collateral held in the warehouses, and a $1.0 million mark-to-market loss on the credit default swaps in our synthetic CDO. Both mark-to-market adjustments resulted from credit spread widening in the commercial real estate securities markets precipitated by credit issues in the residential sub-prime lending markets. We also had a $0.2 million unrealized loss related to the ineffective portion on the hedge of CDO VII. These negative adjustments were slightly offset by a $0.5 million unrealized gain on a US treasury note short sale and a $0.2 million unrealized gain related to the ineffective portion of one of our interest rate swaps in CDO IX. The unrealized loss on investment for the three months ended June 30, 2006 consists of a $0.4 million mark-to-market loss on the securities and $0.5 million gain that represents the net Carry on the accumulated securities held under the CDO VII warehouse agreement. This was offset by a net unrealized mark-to-market loss of $0.6 million related to the closing of CDO VII and the termination of the warehouse agreement.

Realized Gain on Investments and Other

Realized gain for the three months ended June 30, 2007 consisted of a realized loss on the settlement of US treasury note short sale entered into as a hedge offset by a gain on assets sold. The realized gain of $0.6 million for the three months ended June 30, 2006 related to gain on the net Carry in connection with the closing of CDO VII and termination of the warehouse agreement.

Income from Discontinued Operations, Net of Minority Interest

Income from discontinued operations represents the operations of properties sold or held for sale during the period. In April 2007, our Wakefield venture sold two assisted care living facilities. In the first quarter 2006, we sold our leasehold interest in 27 West 34th Street and terminated the leasehold interest in 1372 Broadway in January 2006. Accordingly, these leasehold interests operations were reclassified to income from discontinued operations.

Comparison of the Six Months Ended June 30, 2007 to Six Months Ended June 30, 2006

Revenues

Interest Income

Interest income for the six months ended June 30, 2007 totaled $138.2 million, representing an increase of $92.9 million, or 205%, compared to $45.3 million for the six months ended June 30, 2006. The increase was primarily attributable to increased investment activity and asset growth. We originated or acquired real estate debt, securities and net lease investments with a net book value of $2.9 billion subsequent to June 30, 2006. Income from new investment activities was slightly offset by approximately $806.8 million of real estate securities and debt repayments since June 30, 2006.

Interest Income – Related Parties

Interest income from related parties for the six months ended June 30, 2007 totaled $5.9 million, representing an increase of $0.1 million, or 2%, compared to $5.8 million for the six months ended June 30, 2006. Interest income from related parties is primarily attributable to our investment in the non-investment grade note classes of our unconsolidated CDOs. All of our securities CDOs completed since 2006 have been accounted for as on-balance sheet financings.

Rental and Escalation Income

Rental and escalation income for the six months ended June 30, 2007 totaled $41.2 million, representing a $26.8 million, or 186%, increase compared to $14.4 million for the six months ended June 30, 2006. The increase was attributable to the $806.8 million of real estate acquisitions made subsequent to June 30, 2006. These acquisitions collectively contributed additional rental income of $25.0 million. In addition, properties acquired during the first half 2006 contributed additional rental income of $1.7 million as a result of having two full quarters benefit of the properties income in 2007.

Advisory and Management Fee Income – Related Parties

Advisory fees from related parties for the six months ended June 30, 2007 totaled $2.8 million, representing a decrease of approximately $0.2 million, or 7%, compared to $3.0 million for the six months ended

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June 30, 2006. The decrease is the result of lower advisory fees on our unconsolidated CDOs as a result of lower collateral balances due to asset paydowns.

Other Revenue

Other revenue for the six months ended June 30, 2007 totaled $3.6 million, representing an increase of $1.2 million, or 50%, compared to $2.4 million for the six months ended June 30, 2006. Other revenue for the six months ended June 30, 2007 included $1.9 million of recurring income from premiums received on credit default swaps related to Abacus NS2, a consolidated synthetic CDO we acquired in August 2006, $0.3 million related to a one-time consent fee on the early repayment of one of our real estate securities investment, $1.3 million in prepayment penalties and loan assumption fees from loans in our real estate debt portfolio. Other revenue for the six months ended June 30, 2006 included the recognition of incentive income of $1.2 million in connection with sale of our interest in the NSF venture on February 1, 2006, $0.7 million of prepayment fees on the early repayment of four of our real estate debt investments and $0.3 million related to other reimbursement income from our net lease properties.

Expenses

Interest Expense

Interest expense for the six months ended June 30, 2006 totaled $112.1 million, representing an increase of $77.9 million, or 228%, compared to $34.2 million for the six months ended June 30, 2006. This increase was primarily attributable to an increase in debt outstanding from the financing of our new investments. Our on-balance sheet financings of our real estate debt, securities, corporate loans and net lease investments increased from $1.8 billion as of June 30, 2006 to $4.6 billion in June 30, 2007 and included the partial period impact of the June closing of our $172.5 million of our exchangeable notes and the $265.0 million from our MC facility. In addition there was an increase in our average borrowing rate on our non-hedged variable rate debt due to increased LIBOR rates.

Real Estate Properties – Operating Expenses

Property operating expenses for the six months ended June 30, 2007 totaled $5.6 million, representing an increase of $2.1 million, compared to $3.5 million for the six months ended June 30, 2006. The increase was attributable to net lease properties acquired subsequent to June 30, 2006. These acquisitions collectively contributed $1.9 million of operating expenses. Properties acquired during first and second quarter 2006 contributed additional property operating expenses of $0.2 million as a result of having two full quarter’s expense in 2007.

General and Administrative

General and administrative expenses for the six months ended June 30, 2007 totaled $28.6 million and increased $12.9 million, or 82%, compared to $15.7 million for the three months ended June 30, 2006. The increase is comprised of the following:

Salaries and equity-based compensation for the six months ended June 30, 2007 totaled $17.7 million, including equity based compensation of $7.9 million, representing an increase of approximately $7.7 million, or 77%, compared to $10.0 million, including equity-based compensation of $4.5 million, for the six months ended June 30, 2006. The increase was primarily attributable to an increase in salaries of $4.3 million due to higher staffing levels to accommodate the expansion of our business throughout 2006 into 2007. Equity-based compensation expense for the six months ended June 30, 2007 increased by $3.4 million over the six months ended June 30, 2006. The increase in equity based compensation was attributable to approximately $2.7 million relating to the vesting of equity based awards issued under our 2004 Omnibus Stock Incentive Plan (which includes additional grants of 1.2 million LTIP units in the first half of 2007), $0.3 million in additional compensation expense relating to the 84,755 LTIP units granted under our Long Term Incentive Bonus Plan, $0.3 million in additional compensation expense related to our Employee Outperformance Plan and $0.1 million in additional compensation expense related to our board of directors annual grants.

Auditing and professional fees for the six months ended June 30, 2007 totaled $4.0 million, representing an increase of $1.7 million, or 74%, compared to $2.3 million for the six months ended June 30, 2006. The

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increase was primarily attributable to professional fees relating to legal fees for general corporate work, and investment activities, recruiting fees for new hires, and fees related to agreed upon procedures in connection with CDOs.

Other general and administrative expenses for the six months ended June 30, 2007 totaled $6.9 million, representing an increase of approximately $3.5 million, or 103%, compared to $3.4 million for the six months ended June 30, 2006. These costs include occupancy costs related to new lease for the relocation of our corporate offices, the lease for our new LA office, printing expenses, public relations, cash management fees, software costs, and licensing fees.

Depreciation and Amortization

Depreciation and amortization expense for the six months ended June 30, 2007 totaled $14.4 million, representing an increase of $9.1 million, or 172%, compared to $5.3 million for the six months ended June 30, 2006. This increase was primarily attributable to $806.8 million of net lease acquisitions made subsequent to June 30, 2006.

Equity in Earnings of Unconsolidated Ventures

Equity in earnings for the six months ended June 30, 2007 totaled a loss of $0.6 million representing a decrease of $0.8 million compared to $0.2 million for the six months ended June 30, 2006. The decrease was attributable to the operations of Monroe Management which generated a loss of $0.8 million which was partially offset by a net lease joint venture we entered into in February 2006 which generated equity in earnings of $0.2 million.

Unrealized Gain on Investments and Other

Unrealized gain (loss) on investments and other decreased by approximately $9.8 million for the six months ended June 30, 2007 to a loss of $8.2 million from a gain of $1.6 million for the six months ended June 30, 2006. The unrealized loss on investments for the six months ended June 30, 2007 consisted of a $4.2 million mark-to-market loss on our CDO warehouse agreement as a result of a decline in the fair market value of collateral held in the warehouses, and a $5.1 million mark-to-market loss on the credit default swaps in our synthetic CDO. Both mark-to-market adjustments resulted from credit spread widening in the commercial real estate securities markets precipitated by credit issues in the residential sub-prime lending markets. We also had a $0.2 million unrealized loss related to the ineffective portion of the hedge of CDO VII. These negative adjustments were slightly offset by a $0.5 million unrealized gain on securities sold, not yet purchased and a $0.8 million unrealized gain related to the ineffective portion of one of our interest rate swaps in CDO IX. The unrealized gain on investment for the six months ended June 30, 2006 consists of a $1.5 million mark-to-market gain on the securities of CDO VII warehouse prior to the closing of the CDO on June 22, 2006 and a $0.5 million gain which represents the net Carry on the accumulated securities held under the CDO VIII warehouse agreement offset by a $0.4 million mark-to-market loss on securities.

Realized Gain on Investments and Other

The realized gain of $2.5 million for the six months ended June 30, 2007 is primarily related to the increase in fair value related to the net Carry of securities during the warehouse period of $1.3 million, which was realized at the close of CDO IX and a gain of $1.5 million on the early redemption of REIT debt securities in CDO VII, partially offset by a realized loss of $0.3 million on the closing of short securities position. The realized gain of $0.8 million for the six months ended June 30, 2006 represented the net Carry on securities during the warehouse period on CDO VII and CDO III. This was offset for the six months ended June 30, 2006 by a $0.1 million loss related to the sale of our investments in AAA-rated, short term, floating rate securities.

Income from Discontinued Operations, Net of Minority Interest

Income from discontinued operations represents the operations of properties sold or held for sale during the period. In 2007, our Wakefield venture sold two assisted care living facilities, which closed April 2007. In the first quarter 2006, we sold our leasehold interest in 27 West 34th Street and terminated the leasehold interest in 1372 Broadway in January 2006. Accordingly, these leasehold interests operations were reclassified to income from discontinued operations.

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Gain on Sale from Discontinued Operations, Net of Minority Interest

We sold our leasehold interest in 27 West 34 ^th Street and terminated the leasehold interest in 1372 Broadway in January 2006 and recognized a gain on sale, net of minority interest of $0.1 million for the six months ended June 30, 2006. We had no such gain for the six months ended June 30, 2007.

Gain on Sale of Joint Venture Interest, Net of Minority Interest

On February 1, 2006, we sold our interests in the NSF venture to the NSF venture investor and terminated the associated advisory agreements for total consideration of $2.9 million. We recognized a gain on sale, net of minority interest of $0.3 million for the six months ended June 30, 2006. We had no such gain for the six months ended June 30, 2007.

Liquidity and Capital Resources

We require significant capital to fund our investment activities and operating expenses. Currently, our capital sources include cash flow from operations, borrowings under revolving credit facilities, financings secured by our assets such as first mortgage and CDO financings, long-term senior and subordinate corporate capital such as senior notes, trust preferred securities and the perpetual preferred and common stock.

Our total available liquidity at June 30, 2007 was approximately $581.0 million, including, $41 million of unrestricted cash and cash equivalents, $281.0 million of cash in our CDOs, which is available for reinvestment within the CDO, and $259.0 million of available undrawn liquidity on our credit facilities.

As a REIT, we are required to distribute at least 90% of our annual REIT taxable income to our stockholders, and we intend to distribute all or substantially all of our REIT taxable income in order to comply with the REIT distribution requirements of the Internal Revenue Code and to avoid federal income tax and the non deductible excise tax.

These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital committed to its operations; however, we believe that our access to capital resources and financing will enable us to meet current and anticipated capital requirements. We believe that our existing sources of funds will be adequate for purposes of meeting our short-term liquidity needs. Our ability to meet a long-term (beyond one year) liquidity requirement is subject to obtaining additional debt and equity financing. Any decision by our lenders and investors to provide us with financing will depend upon a number of factors, such as our compliance with the terms of its existing credit arrangements, our financial performance, industry or market trends, the general availability of and rates applicable to financing transactions, such lenders’ and investors’ resources and policies concerning the terms under which they make capital commitments and the relative attractiveness of alternative investment or lending opportunities. On June 30, 2006, we filed a shelf registration statement with the Securities and Exchange Commission on Form S-3 which was amended on April 11, 2006 and declared effective by the Securities and Exchange Commission on April 26, 2006. We completed five offerings since the shelf was declared effective.

Unsecured Exchangeable Senior Notes

In June 2007, we issued $172.5 million of 7.25% exchangeable senior notes (the “Notes”) which are due in 2027. The Notes were offered in accordance with Rule 144A under the Securities Act of 1933, as amended. The Notes will pay interest semi-annually on June 15 and December 15, at a rate of 7.25% per annum, and mature on June 15, 2027. The Notes have an initial exchange rate representing an exchange price of $16.89 per share of our common stock. The initial exchange rate is subject to adjustment under certain circumstances. The Notes are senior unsecured obligations of our operating partnership and may be exchangeable upon the occurrence of specified events, and at any time on or after March 15, 2027, and prior to the close of business on the second business day immediately preceding the maturity date, into cash or a combination of cash and shares of our common stock, if any, at our option. The Notes are Redeemable, at our option on, and after June 15, 2014. We may be required to repurchase the Notes on June 15, 2012, 2014, 2017 and 2022 and upon the occurrence of certain designated events. The net proceeds from the offering were approximately $167.5 million, after deducting estimated fees and expenses. The proceeds of the offering were used to repay certain of our existing indebtedness, to make additional investments and for general corporate purposes.

As of June 30, 2007, we had outstanding approximately $172.5 million of senior unsecured Notes.

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In March 2007, a wholly owned subsidiary of ours, NorthStar Realty Finance Trust VII, completed a private placement of $37.5 million of trust preferred securities. The sole assets of the trust consist of a like amount of junior subordinate notes issued by us, which mature on April 30, 2037. The trust preferred securities and the notes have a 30-year term, ending April 30, 2037, and bear interest at a floating rate of three-month LIBOR plus 2.50%. We have entered into an interest rate swap agreement, which fixed the interest rate for ten years at 7.60%.

In June 2007, a wholly owned subsidiary of ours, NorthStar Realty Finance Trust VIII, completed a private placement of $35.0 million of trust preferred securities. The sole assets of the trust consist of a like amount of junior subordinate notes issued by us, which mature on July 30, 2027. The trust preferred securities and the notes have a 30-year term, ending July 30, 2027, and bear interest at a floating rate of three-month LIBOR plus 2.70%. We have entered into an interest rate swap agreement, which fixed the interest rate for ten years at 8.29%.

Dividend Reinvestment and Stock Purchase Plan

Effective as of April 27, 2007, we implemented a Dividend Reinvestment and Stock Purchase Plan, or the Plan, pursuant to which we registered and reserved for issuance 15,000,000 shares of our common stock. Under the terms of the Plan, stockholders who participate in the Plan may purchase shares of our common stock directly from us, in cash investments up to $10,000. At our sole discretion, we may accept optional cash investments in excess of $10,000 per month, which may qualify for a discount from the market price of 0% to 5%. Plan participants may also automatically reinvest all or a portion of their dividends for additional shares of our stock. We expect to use the proceeds from any dividend reinvestments or stock purchases for general corporate purposes.

During the second quarter 2007, we issued a total of approximately 204,000 common shares for a gross sales price of approximately $2.7 million.

Cash Flows

The net cash flow provided by operating activities of $51.8 million, increased $2.8 million for the six months ended June 30, 2007 from $49.0 million of cash provided by operations for the six months ended June 30, 2006. This was primarily due to the operating cash flows generated from a greater asset base resulting from net origination/acquisition volumes generated by our three business lines.

The net cash flow used in investing activities increased by $1.3 billion for the six months ended June 30, 2007 from $1.1 billion for the six months ended June 30, 2006. Net cash used in investing activities in 2007 consisted primarily of the purchase of operating real estate, funds used to acquire real estate securities and originate or acquire real estate debt investments, corporate loan investments, as well as funding of new warehouse deposits for our CDOs.

The net cash flow provided by financing activities increased by $1.3 billion for the six months ended June 30, 2007 to $2.3 billion from $1.0 billion for the six months ended June 30, 2006. The primary source of cash flow provided by financing activities was the perpetual preferred equity offering, the issuance of exchangable debt, the issuance of CDO bonds, borrowings under credit facilities, operating real estate, acquisition financing and issuing trust preferred securities.

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Contractual Obligations and Commitments

As of June 30, 2007, we had the following contractual commitments and commercial obligations (in thousands):

Payments Due by Period

Contractual Obligations Total Less than
1 Year 1–3
Years 3–5
Years After 5
Years

Mortgage notes net lease $ 829,835 $ 1,322 $ 12,167 $ 80,236 $ 736,110

Mezzanine loan payable 14,664 765 3,324 3,845 6,730

Repurchase agreements 59,622 59,622 — — —

CDO bonds payable 2,411,845 — — — 2,411,845

Exchangeable senior notes 172,500 — — — 172,500

Liability to subsidiary trusts issuing preferred securities 286,258 — — — 286,258

Credit facilities 692,007 — 265,003 427,004 —

Secured term loan 101,513 — — 101,513 —

Capital leases ⁽¹⁾ 17,249 184 934 974 15,157

Operating leases 84,799 2,851 11,142 11,211 59,595

Unfunded commitments ⁽²⁾ 792,837 — 140,956 485,747 166,134

Total contractual obligations $ 5,463,129 $ 64,744 $ 433,526 $ 1,110,530 $ 3,854,329

(1) Includes interest on the capital leases.

(2) This represents unfunded loan commitments on our real estate debt and corporate loan investments. The funding of the commitment is recorded in the period the commitment expires due to the uncertainty of the funding. In accordance with certain loan agreements, we have unfunded commitments of $792.8 million as of June 30, 2007, that we are obligated to fund as borrowers meet certain requirements.

Our debt obligations contain covenants that are both financial and non-financial in nature. Significant financial covenants include a requirement that we maintain a minimum tangible net worth, a minimum level of liquidity and a minimum fixed charge coverage ratio. As of June 30, 2007, we are in compliance with all financial and non-financial covenants in our debt obligations.

Off-Balance Sheet Arrangements

CDO Issuances

We have interests in four unconsolidated CDO issuances, whose CDO notes are primarily collateralized by investment grade real estate securities. We generally purchase the preferred equity or the income notes of each CDO, which are the equity securities of the CDO issuances, and, with the exception of CDO I, all of the below investment grade CDO Notes of each CDO issuance. In addition, we earn a fee of 0.35% of the outstanding principal balance of the assets backing each of these CDO issuances as an annual collateral management fee. Our interests in CDO I, CDO II, CDO III and CDO V are each accounted for as a single debt security available for sale pursuant to EITF 99-20.

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The following tables describe certain terms of the collateral for and the notes issued by CDO I, CDO II, CDO III and CDO V as of June 30, 2007 and December 31, 2006 (in thousands):

CDO Collateral – June 30, 2007 CDO Notes – June 30, 2007

Issuance Date
Closed Par
Value of CDO
Collateral Weighted
Average
Interest
Rate Weighted
Average
Expected
Life
(Years) Outstanding
CDO Notes ⁽¹⁾ Weighted
Average
Interest
Rate Stated
Maturity

CDO I ⁽²⁾ 8/21/03 $ 328,920 6.62 % 4.98 $ 309,742 6.24 % 8/1/2038

CDO II 7/1/04 351,180 6.29 5.79 314,828 5.80 6/1/2039

CDO III 3/10/05 400,992 6.37 5.39 359,118 5.88 6/1/2040

CDO V 9/22/05 495,937 5.95 7.61 456,319 5.15 9/5/2045

Total $ 1,577,029 6.27 % 6.09 $ 1,440,007 5.71 %

(1) Includes only notes held by third parties.

(2) We have an 83.3% interest.

Monroe CLO Equity Notes

We own a residual equity interests in a CLO originated by Monroe Capital, LLC, a specialty finance company. The CLO includes collateral of approximately $400 million backed primarily by first lien senior secured loans. Based on the projected future cash flows the equity is yielding an internal rate of return of approximately 18%. The CLO was determined to be a variable interest entity under Fin 46(R)-6 and we were determined not to be the primary beneficiary therefore the financial statements are not consolidated into our condensed financial statements. Our residual equity interests are accounted for as debt securities available for sale pursuant to EITF 99-20. The fair market value was $17.0 million at June 30, 2007.

Synthetic CMBS CDO

We own all of the notes issued in a synthetic CMBS CDO referred to as SEAWALL 2006-4a. The notes of this CDO bear interest backed by a combination of AAA floating rate securities and a fixed spread earned by the CDO for having sold credit protection on a portfolio of investment grade-rated reference securities. The notes yield a blended spread above LIBOR of approximately 4.41%. Any losses on the reference securities will require the CDO to liquidate a portion of the AAA collateral in order to make payments to credit protection buyer under the credit default swaps. SEAWALL 2006-4a is determined to be a Qualified Special Purpose Entity (“QSPE”) and accordingly is not consolidated. The notes acquired are accounted for as debt securities available for sale and are carried at their fair value with net unrealized gains or loss reported as a component of other comprehensive income. The fair value of the notes was $27.0 million at June 30, 2007.

Our potential loss in our off balance sheet investments was limited to the carrying value of its investment of $122.4 million at June 30, 2007.

Recent Developments

Dividends

Common Dividends

On July 24, 2007, we declared a cash dividend of $0.36 per share of common stock. The dividend is payable on August 15, 2007 to the shareholders on record as of the close of business on August 7, 2007.

Preferred Dividend

On July 24, 2007 we declared a cash dividend of $0.54688 per share of Series A preferred stock and $0.51563 per share of Series B preferred stock, payable on August 15, 2007 to shareholders of record on August 7, 2007.

Secured Credit Facilities

In August, we entered into a new $350 million Master Repurchase Agreement with a major financial institution (the “JP Facility”). Advance rates under the JP Facility range from 65% to 97% of the value of the

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collateral for which the advance is to be made. Amounts borrowed under the JP Facility bear interest at spreads of 0.05% to 1.75% over one-month LIBOR, depending on the type of collateral for which the amount is borrowed. The JP Facility has a maximum term of three years.

In July 2007, Monroe Capital, entered into a Master Repurchase (“MC VFCC”) arrangement with a major financial institution whereby it can acquire loans and finance up to an aggregate amount of $400 million to accumulate collateral for a potential collateralized loan obligation (“CLO”) securitization transaction. Advance rates range from 40% to 100% of the value of the collateral for which the advance is to be made. Amounts borrowed under the MC VFCC facility bear interest at the respective commercial paper rate plus 0.75%. The MC VFCC facility has a maximum term of three years.

NorthStar Real Estate Securities Opportunity Fund

In July 2007, we closed on $109.0 million of capital for our NorthStar Real Estate Securities Opportunity Fund, an investment vehicle in which we intend to prospectively conduct our real estate securities investment business.

We are the manager and general partner of the fund. We will typically receive base management fees ranging from 1.0% to 2.0% per annum on third party capital, and we are entitled to annual incentive management fees ranging from 20% of the increase in the fund's net asset value to 25% of the increase in net asset value in excess of an 8.0% return. Base and incentive fees vary depending on the investor capital lockup periods.

As part of the initial closing, we sold to the fund our interests in two synthetic commercial real estate CDOs, our equity interest in its most recent real estate securities CDO – CDO IX, the deposits relating to our off-balance sheet warehouse facility, and an equity interest in a third-party securitization. We received approximately $35.6 million of cash proceeds from the initial closing and retained a 25.7% interest in the fund.

Tax Treatment of Distributions for the Calendar Year 2006

Dividend income for federal income tax purposes, distributions declared and paid in 2006 of our common stock totaled $1.21 per share, of which $0.17 distributions is considered a return of capital. All distributions are fully (100%) taxable as dividend income at ordinary rates to stockholders and no portion of the dividends are eligible for the 15% dividend rate or the corporate dividends received deduction.

Excess Inclusion

Stockholders will be required to treat 9.57% of our 2006 distributions to the IRS as “excess inclusion income.”

• Tax-exempt stockholders will be required to treat excess inclusion income as unrelated business taxable income (commonly referred to as “UBTI”);

• Non-U.S. stockholders will be subject to the 30 percent U.S. federal withholding tax in this excess inclusion income without reduction under any otherwise applicable income tax treaty; and

• U.S. stockholders, including taxpaying entities, must report taxable income that in no event will be less than the amount of excess inclusion income.

We recommend that stockholders discuss the tax consequences of their investment, including the proper tax treatment of any excess inclusion income with their tax advisor.

Inflation

Our leases for tenants of our net lease properties are generallytriple net or equivalent leases where the tenants are responsible for all real estate taxes, insurance and operating expenses or the leases provide for additional expense reimbursements based on changes in the Consumer Price Index (CPI) or actual increases in expenses.

We believe that inflationary increases in expenses will generally be offset by the expense reimbursements and contractual rent increases described above to the extent of occupancy.

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We believe that the risk associated with an increase in market interest rates on the floating rate debt used to finance our investments in our CDOs, certain of our debt securities available for sale, and our direct investments in real estate debt, is largely offset by our strategy of matching the terms of our assets with the terms of our liabilities and through our use of hedging instruments.

Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)

Management believes that funds from operations, or FFO, and adjusted funds from operations, or AFFO, each of which are non-GAAP measures, are additional appropriate measures of the operating performance of a REIT and NorthStar in particular. We computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT), as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of depreciable properties, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, and after adjustments for unconsolidated/uncombined partnerships and joint ventures. AFFO is a computation often made by REIT industry analysts and investors to measure a real estate company’s cash flow generated from operations. Management believes that FFO and AFFO are additional appropriate measures of our operating performance, and also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash expenses, such as real estate depreciation, which assumes that the value of real estate assets diminishes predictably over time. Since FFO and AFFO are generally recognized as industry standards for measuring the operating performance of a REIT, we also believe that FFO and AFFO provide us and our investors with an additional useful measure to compare our financial performance to other REITs.

We calculate AFFO by subtracting from (or adding) to FFO:

• normalized recurring expenditures that are capitalized by us and then amortized, but which are necessary to maintain our properties and revenue stream, e.g., leasing commissions and tenant improvement allowances;

• an adjustment to reverse the effects of straight-lining of rents and fair value lease revenue under SFAS 141;

• the amortization or accrual of various deferred costs including intangible assets and equity based compensation; and

• an adjustment to reverse the effects of unrealized gains/(losses) relating to: (i) change in the value of our off-balance sheet warehouse facilities caused by changes in interest rates; and (ii) changes in the value of the credit default swaps in our consolidated synthetic CDO equity interests (which would otherwise be recorded as an adjustment to shareholder’s equity if such interests had been unconsolidated.)

Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs.

Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with U.S. GAAP. Furthermore, FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

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Set forth below is a reconciliation of FFO and AFFO to net income from continuing operations before minority interest for the three and six months ended June 30, 2007 and 2006 (in thousands):

Three Months Ended June 30, 2007 Three Months Ended June 30, 2006 Six Months Ended June 30, 2007 Six Months Ended
June 30, 2006

Funds from Operations:


Income from continuing operations before minority interest $ 16,646 $ 6,011 $ 24,733 $ 14,832

Minority interest in joint ventures (136 ) — (136 ) —

Income from continuing operations before minority interest in operating partnership 16,510 6,011 24,597 14,832

Adjustments:


Preferred dividend (4,758 ) — (6,071 ) —

Depreciation and amortization 7,841 2,843 14,431 5,338

Funds from discontinued operations (5 ) 84 17 121

Real estate depreciation and
amortization – unconsolidated
ventures 247 214 496 332

Funds from Operations $ 19,835 $ 9,152 $ 33,470 $ 20,623

Adjusted Funds from Operations:


Funds from Operations $ 19,835 $ 9,152 $ 33,470 $ 20,623

Straight-line rental income, net (663 ) (368 ) (987 ) (673 )

Straight-line rental income, discontinued operations — — 10 —

Straight-line rental income, unconsolidated ventures (53 ) (24 ) (113 ) (32 )

Amortization of equity-based
compensation 4,158 2,743 7,889 4,456

Fair value lease revenue (SFAS 141
adjustment) (164 ) (88 ) (340 ) (115 )

Unrealized (gains)/losses from mark-to-market adjustments 1,828 1,000 9,838 (1,074 )

Adjusted Funds from Operations $ 24,941 $ 12,415 $ 49,767 $ 23,185

Return on Average Common Book Equity

We calculate return on average common book equity (“ROE”) on a consolidated basis and for each of our major business lines. We believe that ROE provides investors and management with a good indication of the performance of the Company and our business lines because it provides the best approximation of cash returns on common equity invested. Management also uses ROE, among other factors, to evaluate profitability and efficiency of equity capital employed, and as a guide in determining where to allocate capital within its business. ROEs may fluctuate from quarter to quarter based upon a variety of factors, including the timing and amount of investment fundings, repayments and asset sales, capital raised and leverage used, and the yield on investments funded.

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Return on Average Common Book Equity (Pre-G&A and Unrealized Mark-to-Market Gain)
($ in thousands)

Northstar Realty Finance Corp.

   Three Months Ended June 30, 2007 Annualized
June 30, 2007 ⁽²⁾ Year Ended
December 31, 2006

Adjusted Funds from Operations (AFFO) 24,941 99,764 ^(A) 59,409

Plus: General & Administrative Expenses 14,057

Plus: General & Administrative Expenses from Unconsolidated Ventures 1,470

Less: Equity-Based Compensation and Straight-Line Rent included in G&A 4,161

AFFO, excluding G&A 36,307 145,228 ^(B) 85,739

Average Common Book Equity & Operating Partnership Minority Interest ⁽¹⁾ $ 586,965 ^(C)    378,628

Return on Average Common Book Equity (including G&A) 17.0% ^(A)/(C)    15.7 %

Return on Average Common Book Equity (excluding G&A) 24.7% ^(B)/(C)    22.6 %

(1) Average Common Book Equity and Operating Partnership Minority Interest computed using beginning and ending of period balances.

(2) Annualized numbers are calculated by taking the current quarter amounts and multiplying by 4.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the exposure to loss resulting from changes in interest rates and asset prices. We are subject to credit risk and interest rate risk with respect to our investments in real estate debt, real estate securities and net leased real estate. The primary market risk that we are exposed to is interest rate risk. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. Our interest rate risk sensitive assets, liabilities and related derivative positions are generally held for non-trading purposes. At June 30, 2007, a hypothetical 100 basis point increase in interest rates applied to our variable rate assets would increase our annual interest income by approximately $25.6 million, offset by an increase in our interest expense of approximately $20.4 million on our variable rate liabilities.

Real Estate Debt

We invest in real estate debt which are generally instruments secured by commercial and multifamily properties, including first lien mortgage loans, junior participations in first lien mortgage loans, which we also refer to as senior mortgage loans, second lien mortgage loans, mezzanine loans, and preferred equity interests in borrowers who own such properties. We generally hold these instruments for investment rather than trading purposes. These investments are either floating or fixed rate. The interest rates on our floating rate investments typically float at a fixed spread over an index such as LIBOR. These instruments typically reprice every 30 days based upon LIBOR in effect at that time. Given the frequent and periodic repricing of our floating rate investments, changes in interest rates are unlikely to materially affect the value of our floating rate portfolio. Changes in short-term rates will, however, affect earnings from our investments. Increases in LIBOR will increase the interest income received by us on our investments and therefore increase our earnings. Decreases in LIBOR have the opposite effect.

We also invest in fixed rate investments. The value of these investments may be affected by changes in long-term interest rates. To the extent that long-term interest rates increase, the value of long-term fixed rate assets is diminished. Any fixed rate real estate debt investments which we hold would be similarly impacted. We do not generally seek to hedge this type of risk unless the asset is leveraged as the costs of such a hedging transaction over the term of such an investment would generally outweigh the benefits. If fixed rate real estate debt is funded with floating rate liabilities, we typically convert the floating rate to fixed through the

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use of interest rate swaps, caps or other hedges. Because the interest rates on our fixed rate investments are generally fixed through maturity of the investment, changes in interest rates do not affect the income we earn from our fixed rate investments.

In our real estate debt business we are also exposed to credit risk, which is the risk that the borrower under our loan agreements cannot repay its obligations to us in a timely manner. While we have not experienced a payment default as of the date of this Quarterly Report on Form 10-Q, our position in the capital structure may expose us to losses as a result of such default in the future. In the event that the borrower cannot repay our loan, we may exercise our remedies under the loan documents, which may include a foreclosure against the collateral if we have a foreclosure right as a real estate debt holder under the loan agreement. The real estate debt that we intend to invest in will often allow us to demand foreclosure as a real estate debt holder if our loan is in default. To the extent the value of our collateral exceeds the amount of our loan (including all debt senior to us) and the expenses we incur in collecting on our loan, we would collect 100% of our loan amount. To the extent that the amount of our loan plus all debt senior to our position exceeds the realizable value of our collateral, then we would incur a loss. We also incur credit risk in our periodically scheduled interest payments which may be interrupted as a result of the operating performance of the underlying collateral.

We seek to manage credit risk through a thorough financial analysis of a transaction before we make such an investment. Our analysis is based upon a broad range of real estate, financial, economic and borrower-related factors which we believe are critical to evaluating the credit risk inherent in a transaction.

We expect our investments to be denominated in U.S. dollars or, if they are denominated in another currency, to be converted back to U.S. dollars through the use of currency swaps. It may not be possible to eliminate all of the currency risk as the payment characteristics of the currency swap may not exactly match the payment characteristics of the investments.

Real Estate Securities

In our real estate securities business, we mitigate credit risk through credit analysis, subordination and diversification. The CMBS we invest in are generally junior in right of payment of interest and principal to one or more senior classes, but benefit from the support of one or more subordinate classes of securities or other form of credit support within a securitization transaction. The senior unsecured REIT debt securities we invest in reflect comparable credit risk. Credit risk refers to each individual borrower’s ability to make required interest and principal payments on the scheduled due dates. We believe that these securities offer attractive risk-adjusted returns with reasonable long-term principal protection under a variety of default and loss scenarios. While the expected yield on these securities is sensitive to the performance of the underlying assets, the more subordinated securities and certain other features of a securitization, in the case of mortgage backed securities, and the issuer’s underlying equity and subordinated debt, in the case of REIT securities, are designed to bear the first risk of default and loss. The real estate securities portfolios of our investment grade CDOs are diversified by asset type, industry, location and issuer. We further minimize credit risk by monitoring the real estate securities portfolios of our investment grade CDOs and the underlying credit quality of their holdings.

The real estate securities underlying our investment grade CDOs are also subject to spread risk. The majority of these securities are fixed rate securities, which are valued based on a market credit spread over the rate payable on fixed rate U.S. Treasuries of like maturity. In other words, their value is dependent on the yield demanded on such securities by the market, as based on their credit relative to U.S. Treasuries. An excessive supply of these securities combined with reduced demand will generally cause the market to require a higher yield on these securities, resulting in the use of a higher or “wider” spread over the benchmark rate (usually the applicable U.S. Treasury security yield) to value these securities. Under these conditions, the value of our real estate securities portfolio would tend to decrease. Conversely, if the spread used to value these securities were to decrease or “tighten,” the value of our real estate securities would tend to increase. Such changes in the market value of our real estate securities portfolio may affect our net equity or cash flow either directly through their impact on unrealized gains or losses on available-for-sale securities by diminishing our ability to realize gains on such securities, or indirectly through their impact on our ability to borrow and access capital.

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Returns on our real estate securities are sensitive to interest rate volatility. If interest rates increase, the funding cost on liabilities that finance the securities portfolio will increase if these liabilities are at a floating rate or have maturities shorter than the assets.

Our general financing strategy focuses on the use of “match-funded” structures. This means that we seek to align the maturities of our debt obligations with the maturities of our investments in order to minimize the risk of being forced to refinance our liabilities prior to the maturities of our assets, as well as to reduce the impact of fluctuating interest rates on earnings. In addition, we generally match interest rates on our assets with like-kind debt, so that fixed rate assets are financed with fixed rate debt and floating rate assets are financed with floating rate debt, directly or through the use of interest rate swaps, caps or other financial instruments or through a combination of these strategies. Our investment grade CDOs utilize interest rate swaps to minimize the mismatch between their fixed rate assets and floating rate liabilities. We expect to hedge the interest rate risk in future investment grade CDOs in a similar manner.

Our financing strategy is dependent on our ability to place the match-funded debt we use to finance our real estate securities at spreads that provide a positive arbitrage. If spreads on the bonds issued by CDOs widen or if demand for these liabilities ceases to exist, then our ability to execute future CDO financings will be severely restricted.

Interest rate changes may also impact our net book value as our investments in debt securities are marked-to-market each quarter with changes in fair value reflected in other comprehensive income (a separate component of owners’ equity). Generally, as interest rates increase, the value of fixed rate securities within the CDO, such as CMBS, decreases and as interest rates decrease, the value of these securities will increase. These swings in value have a corresponding impact on the value of our investment in the CDO. Within the CDO, we seek to hedge against changes in cash flows attributable to changes in interest rates by entering into interest rate swaps/caps and other derivative instruments as allowed by our predecessor’s risk management policy. Such derivatives are designated as cash flow hedge relationships according to SFAS No. 133.

Net Lease Properties

Our ability to manage the interest rate risk and credit risk associated with the assets we acquire is integral to the success of our net lease properties investment strategy. Although we may, in special situations, finance our purchase of net lease assets with floating rate debt, our general policy will be to mitigate our exposure to rising interest rates by financing our purchases with fixed rate mortgages. We seek to match the term of fixed rate mortgages to our expected holding period for the underlying asset. Factors we consider to assess the expected holding period include, among others, the primary term of the lease as well as any extension options that may exist.

In order to ensure that we have as complete an understanding as possible of a tenant’s ability to satisfy its obligations under its lease, we undertake a rigorous credit evaluation of each tenant prior to executing sale/leaseback or net lease asset acquisitions. This analysis includes an extensive due diligence investigation of the tenant’s business as well as an assessment of the strategic importance of the underlying real estate to the tenant’s core business operations. Where appropriate, we may seek to augment the tenant’s commitment to the facility by structuring various credit enhancement mechanisms into the underlying leases. These mechanisms could include security deposit requirements or affiliate guarantees from entities we deem to be creditworthy.

Derivatives and Hedging Activities

We use derivatives primarily to manage interest rate risk exposure. These derivatives are typically in the form of interest rate swap agreements and the primary objective is to minimize interest rate risks associated with the our investment and financing activities. The counterparties of these arrangements are major financial institutions with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties; however, we do not anticipate that any of the counterparties will fail to meet their obligations because of their high credit ratings. The objective in using interest rate derivatives is to add stability to interest expense and to manage exposure to interest rate movements.

We have acquired all the notes of a synthetic CMBS CDO that entered into a credit default swap agreement with a major financial institution to sell credit protections on a pool of CMBS securities. As of June 30, 2007, we recorded an unrealized loss of $5.1 million in the consolidated statement of operations in

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connection with the mark-to-market adjustment on the credit default swap. Our maximum exposure to loss on the credit default swap is limited to its $54.2 million initial investment.

The following tables summarize our derivative financial instruments as of June 30, 2007 (in thousands).

Notional Amount Fair Value Range of Fixed Libor Range of Maturity

Interest rate swaps and basis swaps $ 1,239,680 $ 13,796 4.18% – 7.27 % February 2008 – January 2019

Item 4. Controls and Procedures

As of the end of the period covered by this report, our management conducted an evaluation (as required under Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act), under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures to disclose material information otherwise required to be set forth in our periodic reports.

Internal Control over Financial Reporting

Changes in internal control over financial reporting .  There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

Our Annual Meeting of shareholders was held on May 24, 2007 (the “Meeting”). At the close of business on the record date for the Meeting (which was April 24, 2007), there were 61,344,601 shares of common stock outstanding and entitled to vote at the Meeting. Holders of 57,559,415 shares of common stock (representing a like number of votes) were present at the Meeting, either in person or by proxy.

At the Meeting, the following individuals were elected to our Board of Directors to hold office for a one-year term and until his or her successor is duly elected and qualified, by the following vote:

Nominee In Favor Withheld

William V. Adamski 57,405,779 153,636

Preston Butcher 28,126,268 29,433,147

David T. Hamamoto 56,178,187 1,381,228

Judith A. Hannaway 57,406,039 153,376

Wesley D. Minami 57,371,757 187,658

Louis J. Paglia 57,408,079 151,336

W. Edward Scheetz 56,138,852 1,420,563

Frank V. Sica 28,149,586 29,409,829

At the Meeting, our shareholders ratified the appointment of Grant Thornton LLP as our independent registered public accounting firm for fiscal year 2007, by the following vote:

In Favor Against Abstained

57,457,863 45,364 86,188

At the Meeting, our shareholders approved Amendment No. 2 to the NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan, by the following vote:

In Favor Against Abstained

35,346,707 6,848,155 347,804

Item 5. Other Information

Item 6. Exhibits

(a) Exhibits

Exhibit Number Description

3.1 Articles of Amendment and Restatement of NorthStar Realty Finance Corp., as filed with the State Department of Assessments and Taxation of Maryland on October 20, 2004 (incorporated by reference to Exhibit 3.1 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675))

3.2 Bylaws of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 3.2 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675))

3.3 Amendment No. 1 to the Bylaws of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 3.3 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed on April 27, 2005)

3.4 Articles Supplementary Classifying NorthStar Realty Finance Corp.’s 8.75 % Series A Preferred Stock, liquidation preference $25.00 per share (incorporated by reference to Exhibit 3.2 to NorthStar Realty Finance Corp.’s Registration Statement on Form 8-A, dated September 14, 2006)

3.5 Articles Supplementary Classifying NorthStar Realty Finance Corp.’s 8.25 % Series B Preferred Stock, liquidation preference $25.00 per share (incorporated by reference to Exhibit 3.2 to NorthStar Realty Finance Corp.’s Registration Statement on Form 8-A, dated February 7, 2007)

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Exhibit Number Description

3.6 Articles Supplementary Classifying and Designating Additional Shares of NorthStar Realty Finance Corp.’s 8.25 % Series B Preferred Stock, liquidation preference $25.00 per share

10.1 Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of October 19, 2004, by and among NorthStar Realty Finance Corp., as sole general partner and initial limited partner and the other limited partners a party thereto from time to time (incorporated by reference to Exhibit 10.1 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.2 Non-Competition Agreement, dated as of October 29, 2004, by and among NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership, NorthStar Capital Investment Corp. and NorthStar Partnership, L.P. (incorporated by reference to Exhibit 10.2 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.3 Executive Employment Agreement, dated as of October 22, 2004, between David T. Hamamoto and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.5 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.4 Executive Employment Agreement, dated as of October 22, 2004, between Jean-Michel Wasterlain and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.7 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.5 Executive Employment Agreement, dated as of October 22, 2004, between Daniel R. Gilbert and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.8 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.6 NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 10.9 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.7 Amendment No. 1 to NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 99.2 to the NorthStar Realty Finance Corp. Post-Effective Amendment No. 2 to Form S-8 filed on April 13, 2007)

10.8 Amendment No. 2 to NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 99.3 to the NorthStar Realty Finance Corp. Post-Effective Amendment No. 3 to Form S-8 filed on June 6, 2007)

10.9 LTIP Unit Vesting Agreement under the NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan among NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership and NRF Employee, LLC (incorporated by reference to Exhibit 10.10 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.10 Form of Vesting Agreement for Units of NRF Employee, LLC, each dated as of October 29, 2004, between NRF Employee, LLC and certain employees and co-employees of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.11 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.11 Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.7(a) to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675))

10.12 NorthStar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan (incorporated by reference to Exhibit 10.13 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.13 Form of Notification under NorthStar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan (incorporated by reference to Exhibit 10.14 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.14 Form of Indemnification Agreement for directors and officers of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.15 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675))

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Exhibit Number Description

10.15 Amended and Restated Master Repurchase Agreement, dated as of March 21, 2005, between NRFC DB Holdings, LLC and Deutsche Bank AG, Cayman Islands Branch (incorporated by reference to Exhibit 10.16 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2004)

10.16 Amended and Restated Junior Subordinated Indenture dated as of September 16, 2005, between NorthStar Realty Finance Limited Partnership and JPMorgan Chase Bank, National Association, as trustee (incorporated by reference to Exhibit 10.17 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))

10.17 Second Amended and Restated Trust Agreement, dated as of September 16, 2005, among NorthStar Realty Finance Limited Partnership, as depositor, JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee and Andrew Richardson, David Hamamoto and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.18 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))

10.18 Master Repurchase Agreement, dated as of July 13, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.21 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended June 30, 2005)

10.19 First Amendment to the Master Repurchase Agreement, dated as of August 24, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.22 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))

10.20 Second Amendment to the Master Repurchase Agreement, dated as of September 20, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.23 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))

10.21 Master Loan, Guarantee and Security Agreement, dated as of September 28, 2005, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp., NS Advisors LLC and Bank of America, N.A. (incorporated by reference to Exhibit 10.24 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))

10.22 Third Amendment to the Master Repurchase Agreement, dated as of September 30, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.25 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))

10.23 Omnibus Amendment to the Master Repurchase Agreement, dated as of October 21, 2005, between NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.26 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)

10.24 Agreement of Purchase and Sale, dated as of October 25, 2005, between 1552 Lonsdale LLC and 1552 Bway Owner, LLC (incorporated by reference to Exhibit 10.27 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)

10.25 Fourth Amendment to the Master Repurchase Agreement, dated October 28, 2005, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.28 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)

10.26 Sublease, dated as of November 7, 2005, between NorthStar Realty Finance Limited Partnership and NorthStar Partnership, L.P. (incorporated by reference to Exhibit 10.29 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)

10.27 Junior Subordinated Indenture, dated as of November 22, 2005, between NorthStar Realty Finance Limited Partnership and JPMorgan Chase Bank, National Association, as trustee (incorporated by reference to Exhibit 10.30 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))

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Exhibit Number Description

10.28 Amended and Restated Trust Agreement, dated as of November 22, 2005, between NorthStar Realty Finance Limited Partnership, as depositor, JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee and Andrew Richardson, David Hamamoto and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.31 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))

10.29 Fifth Amendment to the Master Repurchase Agreement, dated February 28, 2006, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.30 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)

10.30 Junior Subordinated Indenture, dated as of March 10, 2006, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.31 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)

10.31 Amended and Restated Trust Agreement, dated as of March 10, 2006, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and Andrew Richardson, David Hamamoto and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.32 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)

10.32 Form of NorthStar Realty Finance Corp. 2006 Outperformance Plan Award Agreement (incorporated by reference to Exhibit 99.3 to the NorthStar Realty Finance Corp. Post-Effective Amendment No. 2 to Form S-8 filed on April 13, 2007)

10.33 Amendment No. 1 to Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of March 14, 2006, by and among NorthStar Realty Finance Corp., as sole general partner and initial limited partner and the other limited partners a party thereto from time to time (incorporated by reference to Exhibit 10.34 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)

10.34 Executive Employment Agreement, dated as of March 14, 2006, between Richard J. McCready and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.35 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)

10.35 Executive Employment Agreement, dated as of March 22, 2006, between Andrew C. Richardson and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 99.1 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed on March 28, 2006)

10.36 Agreement, dated as of April 6, 2006 between Mark E. Chertok and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 99.1 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed on April 10, 2006)

10.37 Second Omnibus Amendment to Repurchase Documents, dated as of June 6, 2006, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings III, LLC, NRFC WA Holdings IV, LLC, NRFC WA Holdings V, LLC, NRFC WA Holdings VI, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings VIII, LLC, and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.38 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)

10.38 Junior Subordinated Indenture, dated as of August 1, 2006, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.39 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)

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Exhibit Number Description

10.39 Amended and Restated Trust Agreement, dated as of August 1, 2006, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.40 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)

10.40 Second Amendment to the Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of September 14, 2006 (incorporated by reference to Exhibit 3.2 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed September 14, 2006)

10.41 Junior Subordinated Indenture, dated as of October 6, 2006, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.42 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)

10.42 Amended and Restated Trust Agreement, dated as of October 6, 2006, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.43 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)

10.43 Revolving Credit Agreement, dated as of November 3, 2006, between NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership, NRFC Sub-REIT Corp., NS Advisors, LLC, Keybanc Capital Markets and Bank of America, N.A. (incorporated by reference to Exhibit 10.44 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)

10.44 Sixth Amendment to the Master Repurchase Agreement, dated as of November 6, 2006, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings III, LLC, NRFC WA Holdings IV, LLC, NRFC WA Holdings V, LLC, NRFC WA Holdings VI, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings VIII, LLC, and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.45 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)

10.45 Third Amendment to the Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of February 7, 2007 (incorporated by reference to Exhibit 3.2 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed February 9, 2007)

10.46 Purchase and Sale Agreement, dated as of February 23, 2007, by and among GIN Housing Partners I, L.L.C. and the persons and entities identified as sellers on the signature pages thereto, portions of which have been omitted pursuant to a request for confidential treatment (incorporated by reference to Exhibit 10.44 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2006)

10.47 Junior Subordinated Indenture, dated as of March 30, 2007, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.46 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)

10.48 Amended and Restated Trust Agreement, dated as of March 30, 2007, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.47 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)

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Exhibit Number Description

10.49 Master Repurchase Agreement, dated as of May 14, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, Variable Funding Capital Company LLC, Wachovia Bank, National Association, Wachovia Capital Markets, LLC, NorthStar Realty Finance Corp., NorthStar Realty Finance L.P. and NRFC Sub-REIT Corp.

10.50 First Amendment to Master Repurchase Agreement, dated as of May 24, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, Variable Funding Capital Company LLC, Wachovia Bank, National Association, Wachovia Capital Markets, LLC, NorthStar Realty Finance Corp., NorthStar Realty Finance L.P. and NRFC Sub-REIT Corp.

10.51 Amended and Restated Master Repurchase Agreement, dated as of June 5, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, and Wachovia Bank, National Association, NorthStar Realty Finance Corp. and NorthStar Realty Finance Limited Partnership

10.52 Junior Subordinated Indenture, dated as of June 7, 2007, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee

10.53 Amended and Restated Trust Agreement, dated as of June 7, 2007, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees

10.54 First Amendment to Amended and Restated Master Repurchase Agreement, dated as of June 22, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, and Wachovia Bank, National Association, NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership and Wells Fargo Bank, National Association

10.55 Second Amendment to the Master Repurchase Agreement, dated as of June 22, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, Variable Funding Capital Company LLC, Wachovia Bank, National Association, Wachovia Capital Markets, LLC, NorthStar Realty Finance Corp., NorthStar Realty Finance L.P., NRFC Sub-REIT Corp. and Wells Fargo Bank, National Association

10.56 Master Repurchase Agreement, dated as of August 8, 2007, by and among NRFC JP Holdings, LLC and JPMorgan Chase Bank, N.A.

31.1 Certification by the Chief Executive Officer pursuant to 17 CFR 240.13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification by the Chief Financial Officer pursuant to 17 CFR 240.13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification by the Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification by the Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NORTHSTAR REALTY FINANCE CORP.

Date: August 9, 2007
By:

/s/ David T. Hamamoto
David T. Hamamoto
Chief Executive Officer


By:

/s/ Andrew C. Richardson
Andrew C. Richardson
Chief Financial Officer

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ARTICLES SUPPLEMENTARY

NorthStar Realty Finance Corp., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland (the “SDAT”) that:

FIRST: 1,610,000 shares of authorized but unissued Preferred Stock (as defined in the charter of the Company (the “Charter”)), are reclassified as shares of Series B Preferred Stock (as defined in the Charter), with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption of the Series B Preferred Stock set forth in the Charter.

SECOND: The additional shares of Series B Preferred Stock have been classified and designated by the Board of Directors under the authority contained in the Charter. After giving effect to the classification and designation of the additional shares of Series B Preferred Stock set forth herein, the Corporation has authority to issue 7,820,000 shares of Series B Preferred Stock.

THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law.

FOURTH: The undersigned Executive Vice President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned officer acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed under seal in its name and on its behalf by its Executive Vice President and attested to by its Assistant Secretary on this 22nd day of May, 2007.

ATTEST:	NORTHSTAR REALTY FINANCE CORP.


/s/ Albert Tylis	By: /s/ Andrew C. Richardson (SEAL)
Albert Tylis	Andrew C. Richardson
General Counsel, Assistant Secretary	Chief Financial Officer, Treasurer and
and Executive Vice President	Executive Vice President

U.S. $400,000,000

MASTER REPURCHASE AGREEMENT (VFCC)

by and among

NRFC WA HOLDINGS, LLC,

NRFC WA HOLDINGS II, LLC,

NRFC WA HOLDINGS VII, LLC,

NRFC WA HOLDINGS X, LLC,

NRFC WA HOLDINGS XI, LLC,

NRFC WA HOLDINGS XII, LLC,

as the Seller

VARIABLE FUNDING CAPITAL COMPANY LLC,

as a Purchaser

WACHOVIA BANK, NATIONAL ASSOCIATION,

as the Swingline Purchaser

WACHOVIA CAPITAL MARKETS, LLC,

as the Deal Agent

and

NORTHSTAR REALTY FINANCE CORP.,

NORTHSTAR REALTY FINANCE L.P.

as the Guarantor

Dated as of May 14, 2007

TABLE OF CONTENTS

		Page

ARTICLE I DEFINITIONS		2
Section 1.1	Certain Defined Terms	2
Section 1.2	Interpretation	38

ARTICLE II PURCHASE OF ELIGIBLE ASSETS		39
Section 2.1	Purchase and Sale	39
Section 2.2	Transaction Mechanics; Related Matters	39
Section 2.3	Optional Repurchase	43
Section 2.4	Extension of Facility Maturity Date and Funding Expiration Date	44
Section 2.5	Payment of Price Differential	44
Section 2.6	[Reserved]	45
Section 2.7	Margin Maintenance	45
Section 2.8	Income Payments	45
Section 2.9	Payment, Transfer and Custody	46
Section 2.10	[Reserved]	47
Section 2.11	Hypothecation or Pledge of Purchased Assets	47
Section 2.12	Fees	48
Section 2.13	Increased Costs; Capital Adequacy; Illegality	48
Section 2.14	Taxes	50
Section 2.15	Obligations Absolute	51
Section 2.16	Swingline Purchasers	51
Section 2.17	Temporary Increases	52

ARTICLE III CONDITIONS TO TRANSACTIONS		52
Section 3.1	Conditions to Closing and Initial Purchase	52
Section 3.2	Conditions Precedent to all Transactions	53

ARTICLE IV REPRESENTATIONS AND WARRANTIES		57
Section 4.1	Representations and Warranties	57

ARTICLE V COVENANTS		65
Section 5.1	Covenants	65

ARTICLE VI ADMINISTRATION AND SERVICING		75
Section 6.1	Servicing	75
Section 6.2	Seller as Servicer	75
Section 6.3	Third Party Servicer	75
Section 6.4	Duties of the Seller	76
Section 6.5	Authorization of the Seller	76
Section 6.6	Event of Default	77
Section 6.7	Inspection	77
Section 6.8	Payment of Certain Expenses by Servicer	77
Section 6.9	Pooling and Servicing Agreements	77
Section 6.10	Servicer Default	78
Section 6.11	Servicer	78

ARTICLE VII [RESERVED]		78

ARTICLE VIII SECURITY INTEREST		78
Section 8.1	Security Interest	78
Section 8.2	Release of Lien on Purchased Assets	81
Section 8.3	Further Assurances	81

Section 8.4	Remedies	81
Section 8.5	Purchaser’s Duty of Care	81

ARTICLE IX [RESERVED]		82

ARTICLE X EVENTS OF DEFAULT		82
Section 10.1	Events of Default	82
Section 10.2	Remedies	84
Section 10.3	Determination of Events of Default	87

ARTICLE XI INDEMNIFICATION		88
Section 11.1	Indemnification by the Seller	88
Section 11.2	After-Tax Basis	89

ARTICLE XII THE DEAL AGENT		89
Section 12.1	Deal Agent	89

ARTICLE XIII MISCELLANEOUS		91
Section 13.1	Amendments and Waivers	91
Section 13.2	Notices and Other Communications	91
Section 13.3	Set-offs	92
Section 13.4	No Waiver; Etc.	92
Section 13.5	Binding Effect	93
Section 13.6	Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue	93
Section 13.7	Jurisdiction; Waiver of Jury Trial	94
Section 13.8	Costs, Expenses and Taxes	94
Section 13.9	Legal Matters	95
Section 13.10	Recourse	95
Section 13.11	Protection of Right, Title and Interest; Further Action Evidencing Transactions	96
Section 13.12	Term of this Agreement	96
Section 13.13	Confidentiality	97
Section 13.14	Execution in Counterparts	98
Section 13.15	Seller’s Waiver of Setoff	99
Section 13.16	Assignments and Participations; Hypothecation of Purchased Assets	99
Section 13.17	Single Agreements	99
Section 13.18	Disclosure Relating to Certain Federal Protections	99
Section 13.19	Intent	100
Section 13.20	Review of Due Diligence and Books and Records	101
Section 13.21	Use of Employee Plan Assets	101
Section 13.22	Time of the Essence	102
Section 13.23	Construction	102
Section 13.24	Joint and Several Obligations	102
Section 13.25	No Proceedings	103
Section 13.26	Third Party Beneficiary	103
Section 13.27	Heading and Exhibits	103

SCHEDULES

Schedule 1		Representations and Warranties Regarding Mortgage Assets
Schedule 2		List of Accounts
Schedule 3		List of Existing Financing Facilities
Schedule 4		Organizational Chart
Schedule 5		List of UCC Filing Locations
Schedule 6		List of Approved Servicers
Schedule 7		Trust Preferred Securities

EXHIBITS

Exhibit I		Form of Transaction Request
Exhibit II		Form of Confirmation
Exhibit III		[Reserved]
Exhibit IV-1		Form of Power of Attorney of Seller
Exhibit IV-2		Form of Power of Attorney of Pledgor
Exhibit V		Form of Account Control Agreement
Exhibit VI		Form of Securities Account Control Agreement
Exhibit VII		Form of Servicer Redirection Notice
Exhibit VIII		Form of Compliance Certificate
Exhibit IX		Form of Purchased Asset Data Summary
Exhibit X		Form of Margin Deficit Notice
Exhibit XI		Form of Assignment
Exhibit XII-A		Form of Seller’s Release Letter
Exhibit XII-B		Form of Warehouse Lender’s Release Letter

iii

MASTER REPURCHASE AGREEMENT (VFCC)

THIS MASTER REPURCHASE AGREEMENT (VFCC) (as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, the “ Agreement ”) is made as of this 14th day of May, 2007, by and among:

( 1 ) NRFC WA HOLDINGS, LLC , a Delaware limited liability company, NRFC WA HOLDINGS II, LLC , a Delaware limited liability company, NRFC WA HOLDINGS VII, LLC , a Delaware limited liability company, NRFC WA HOLDINGS X, LLC , a Delaware limited liability company, NRFC WA HOLDINGS XI, LLC , a Delaware limited liability company, and NRFC WA HOLDINGS XII, LLC , a Delaware limited liability company, as the Seller;

( 2 ) VARIABLE FUNDING CAPITAL COMPANY LLC , a Delaware limited liability company (together with its successors and assigns, “ VFCC ”), as a Purchaser;

( 3 ) WACHOVIA BANK, NATIONAL ASSOCIATION (together with its successors and assigns, “ Wachovia ”), as the Swingline Purchaser;

( 4 ) WACHOVIA CAPITAL MARKETS, LLC , a Delaware limited liability company (together with its successors and assigns, “WCM”), as the deal agent for the Secured Parties (together with its successors and assigns in such capacity, the “Deal Agent”); and

( 5 ) NORTHSTAR REALTY FINANCE CORP. , a Maryland corporation (together with its successor and permitted assigns, “ NorthStar ”), and NORTHSTAR REALTY FINANCE L.P. , a Delaware limited partnership, as the Guarantor.

Acknowledged and agreed to by NRFC SUB-REIT CORP. , a Maryland corporation, as the Pledgor; and

WACHOVIA BANK, NATIONAL ASSOCIATION , a national banking association, as the Swap Counterparty.

R E C I T A L S

WHEREAS , the Seller desires to sell and the Purchaser desires to purchase from time to time Eligible Assets under the terms and conditions stated herein; and

WHEREAS , if the Purchaser purchases one (1) or more Eligible Assets, the parties desire that the Seller repurchase the Purchased Asset(s) on or before the Facility Maturity Date under the terms and conditions stated herein.

NOW, THEREFORE , based upon the foregoing Recitals, the mutual premises and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1 . 1 Certain Defined Terms .

( a ) Certain capitalized terms used throughout this Agreement are defined above or in this Article I .

( b ) As used in this Agreement and the schedules, exhibits and other attachments hereto, unless the context requires a different meaning, the following terms shall have the following meanings:

“ 40 Act ”: The Investment Company Act of 1940, as amended from time to time.

“ AAA IO ”: An “AAA” rated bond that is “interest only,” including any such bond designated “X-C” or “X-P.”

“ Accepted Servicing Practices ”: With respect to each Purchased Item, those mortgage, mezzanine loan and/or secured lending servicing practices, as applicable, of prudent lending institutions that service Purchased Items of the same type, size and structure as such Purchased Items in the jurisdiction where the related Underlying Mortgaged Property is located, as applicable, but in any event, (i) in accordance with the terms of the Repurchase Documents and Applicable Law, (ii) without prejudice to the interests of the Deal Agent, the Purchaser or any other Secured Party, (iii) with a view to the maximization of the recovery on such Purchased Items on a net present value basis and (iv) without regard to (A) any relationship that the Seller, the Guarantor and any Affiliate of the foregoing may have with the related Borrower, mortgagor, the Seller, any servicer, any PSA Servicer or any other party to the Repurchase Documents, the Mortgage Loan Documents or any Affiliate of any of the foregoing; (B) the right of the Seller, the Guarantor or any Affiliate of the foregoing to receive compensation or other fees for its services rendered pursuant to this Agreement, the Repurchase Documents or any other document or agreement; (C) the ownership, servicing or management by the Seller, the Guarantor or any Affiliate of the foregoing for others of any other mortgage loans or mortgaged property; (D) any obligation of the Seller, the Guarantor or any Affiliate of the foregoing to repurchase or substitute a Purchased Item; (E) any obligation of the Seller, the Guarantor or any Affiliate of the foregoing to cure a breach of a representation and warranty with respect to a Purchased Item; and (F) any debt the Seller, the Guarantor or any Affiliate has extended to any Borrower, mortgagor or any Affiliate of such Borrower or mortgagor.

“ Account Agreement ”: A letter agreement, dated as of even date herewith, among the Seller, the Deal Agent and Wachovia in the form of Exhibit V attached hereto.

“ Accrual Period ”: (a) with respect to each Transaction (or portion thereof) funded at a Rate other than the CP Rate (i) with respect to the first Payment Date, the period from and including the applicable Closing Date to but excluding such first Payment Date and (ii) with respect to any subsequent Payment Date, the period from and including the previous Payment Date to but excluding such subsequent Payment Date, and, (b) with respect to each Transaction (or portion thereof) funded at a Rate equal to the CP Rate, (i) with respect to the first Payment Date, the period from and including the Closing Date to and including the last day of the calendar month in which the Closing Date occurs and (ii) with respect to any subsequent Payment Date, the period ending on the last day of the calendar month immediately preceding the month in which the Payment Date occurs and commencing on the first (1st) day of such immediately preceding calendar month.

“ Additional Amount ”: Defined in Subsection 2.14(a) of this Agreement.

“ Additional Purchased Asset ”: An Eligible Asset transferred to the Purchaser or its designee in a satisfaction of a Margin Deficit pursuant to Section 2.7 of this Agreement, which Additional Purchased Asset shall satisfy all requirements of, and be transferred in accordance with the provisions of, this Agreement.

“ Adjusted Eurodollar Rate ”: For any Accrual Period, a rate per annum equal to a fraction, expressed as a percentage and rounded upwards (if necessary) to the nearest 1/100 of 1%, (i) the numerator of which is equal to the LIBOR Rate for such Accrual Period and (ii) the denominator of which is equal to 100% minus the Eurodollar Reserve Percentage for such Accrual Period.

“ Adjusted Total Assets ”: Means the sum of Total Assets plus Off-Balance Sheet Assets.

“ Adjusted Total Liabilities ”: Means, the sum of Total Liabilities plus Off-Balance Sheet Liabilities minus Trust Preferred Securities.

“ Affected Party ”: VFCC, the Swingline Purchaser, all other Purchasers, the Liquidity Banks, the Deal Agent, the Liquidity Agent, the Custodian, any other Secured Party, all successors, assignees, transferees, pledgees and participants of any of the foregoing and any successors to WCM as the Deal Agent and any subagent of the Deal Agent.

“ Affiliate ”: With respect to a Person, means any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person, or is a director of such Person. For purposes of this definition, “control” (including the terms “controlling,” “controlled by” and “under common control with”) when used with respect to any specified Person means the possession, direct or indirect, of the power to vote 20% or more of the voting securities of such Person or to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“ Aggregate Unpaids ”: At any time, an amount equal to the sum of the aggregate Purchase Price outstanding for all Transactions, the aggregate Price Differential outstanding, the aggregate Margin Deficits outstanding, Breakage Costs (if any), Increased Costs (if any), Taxes (if any), Additional Amounts (if any), Late Payment Fees (if any), any fee due under any fee letter or the Repurchase Documents (including, without limitation, the Fee Letter and the Custodial Fee Letter), all other amounts owed by the Seller or any other Person to the Deal Agent, the Purchaser, any Secured Party, any Affected Party, any Indemnified Party or any other Person under or with respect to this Agreement, the Repurchase Documents or any Transaction entered into pursuant thereto and all interest and/or fees that accrue after the commencement by or against the Seller, the Guarantor, the Pledgor or any Affiliate thereof of any proceeding under any Insolvency Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding (whether due or accrued).

“ Agreement ”: Defined in the Preamble of this Agreement.

“ ALTA ”: The American Land Title Association.

“ Alternative Rate ”: A rate per annum equal to the Adjusted Eurodollar Rate; provided , however , that the Alternative Rate shall be the Base Rate if a Eurodollar Disruption Event occurs.

“ Anti-Terrorism Laws ”: Any Applicable Law relating to money laundering or terrorism, including, but not limited to, Executive Order 13224, the OFAC Regulations and the USA Patriot Act.

“ Applicable Law ”: For any Person or Property of such Person, all existing and future applicable laws, rules, regulations (including temporary and final income tax regulations), statutes, treaties, codes, ordinances, permits, certificates, orders and licenses of and interpretations by any Governmental Authority (including, without limitation, usury laws, the Federal Truth in Lending Act, as amended from time to time, and Regulation Z and Regulation B of the Board of Governors of the Federal Reserve System), and applicable judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or other administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction.

“ Asset Schedule and Exception Report ”: Defined in the Custodial Agreement.

“ Asset Value ”: As of any date of determination for each Eligible Asset or Purchased Asset, as applicable, with respect to a Mortgage Asset or Purchased Asset, as applicable, of a certain Class, the lesser of (a) for each Mortgage Asset or Purchased Asset, as applicable, the product of the Book Value of such Mortgage Asset or Purchased Asset, as applicable, times the Advance Rate applicable thereto and (b) for each Mortgage Asset or Purchased Asset, as applicable, the product of the Market Value of such Mortgage Asset or Purchased Asset, as applicable, times the Advance Rate applicable thereto, in all cases under clauses (a) and (b) of this definition taking into account the Maximum LTV percentages, applicable to such Mortgaged Asset or Purchased Asset, as applicable, set forth on Schedule 1 to the Fee Letter (or, in the case of Preferred Equity Interests and Construction Loans, to the extent applicable, as set forth in the related Confirmation); provided , however , the Asset Value may be reduced in the Deal Agent’s discretion by an amount determined by the Deal Agent in its discretion (which amount may, in the Deal Agent’s discretion, be reduced to zero (0)), with respect to each Mortgage Asset or Purchased Asset, as applicable (A) in respect of which one (1) or more eligibility requirements set forth in Schedule 1 to this Agreement is not satisfied in any respect (assuming each such criteria is determined as of the date the Asset Value is determined), in each case without regard to any Seller’s knowledge or lack of knowledge thereof and without regard to any Seller’s representations or warranties with respect to its knowledge or lack of knowledge thereof, and, in the Deal Agent’s determination in its discretion, the same impacts, impairs or affects the Market Value or Book Value of such Mortgage Asset or Purchased Asset, (B) in respect of which the complete Mortgage Asset File has not been delivered to the Custodian within the time period required by the Custodial Agreement, (C) which is a Table Funded Purchased Asset in respect of which the Mortgage Asset File has not been delivered to the Custodian within three (3) Business Days following the Purchase Date, or (D) which has been released from the possession of the Custodian under the Custodial Agreement to a Seller or an Affiliate for a period in excess of twenty (20) calendar days.

“ Assignment ”: The transfer of all of the Seller’s rights and interests under an Eligible Asset pursuant to an assignment agreement executed by the Seller in blank, which agreement shall be in the form of Exhibit XI and is otherwise satisfactory to the Deal Agent in its discretion.

“ Assignment of Leases ”: With respect to any Mortgage, an assignment of leases thereunder, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the Underlying Mortgaged Property is located to reflect the assignment of leases to the Deal Agent as agent for the Secured Parties.

“ Assignment of Mortgage ”: With respect to any Mortgage, an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Underlying Mortgaged Property is located to reflect the assignment of the Mortgage to the Deal Agent as agent for the Secured Parties.

“ Authority Documents ”: As to any Person, as applicable, the articles or certificate of incorporation or formation, by-laws, limited liability company agreement, general partnership agreement, limited partnership agreement, trust agreement, joint venture agreement, resolutions and other applicable organizational or governing documents of such Person.

“ Availability ”: At any time, an amount equal to the positive excess (if any) of (a) the Maximum Amount minus (b) the aggregate Purchase Price outstanding for all Transactions on such day; provided , however , the Availability shall be zero (0) (i) on and after the occurrence of the Funding Expiration Date (including any extensions thereof), (ii) while a Margin Deficit is outstanding, or (iii) after an Event of Default has occurred and is continuing.

“ Bailee ”: With respect to each Table Funded Purchased Asset or Swingline Purchase, the related title company, attorney or settlement agent, in each case, approved in writing by the Deal Agent in its discretion.

“ Bailee Agreement ”: The Bailee Agreement among the Seller, the Deal Agent and the Bailee in the form of Annex 13 to the Custodial Agreement.

“ Bailee’s Trust Receipt ”: A Trust Receipt in the form of Attachment 2 to the Bailee Agreement.

“ Bankruptcy Code ”: The United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq .), as amended from time to time.

“ Base Rate ”: On any date, a fluctuating rate per annum equal to the lesser of (a) the Prime Rate or (b) the Federal Funds Rate, plus 1.0%.

“ Basic Mortgage Loan Documents ”: Defined in the Custodial Agreement.

“ Book Value ”: With respect to any Mortgage Asset at any time, an amount, as certified by the Seller, equal to the lesser of (a) face or par value and (b) the price that the Seller initially paid or advanced for or in respect of such Mortgage Asset, as such Book Value may be marked down by the Seller from time to time, including, as applicable, from any loss/price adjustments, less an amount equal to the sum of all principal payments, prepayments or paydowns paid and realized losses recognized relating to such Mortgage Asset; provided , however , any such markdowns or adjustments must be made in good faith and shall be disclosed contemporaneously therewith in writing to the Deal Agent, which mark downs or adjustments, without a corresponding payment and application of principal, may result in a Margin Deficit.

“ Borrower ”: Collectively (and individually as the context may expressly provide or require), the borrowers, obligors or debtors under a Mortgage Asset, including, but not limited to, any guarantor thereof, the borrowers, obligors or debtors of any debt, including any guarantor thereof, senior to the Mortgage Asset, including obligors, debtors and guarantors with respect to the debt secured by any Underlying Mortgaged Property, and any Person that has not signed the related Mortgage Note, Junior Interest Document, Mezzanine Note or other note, certificate or instrument but owns an interest in the related Underlying Mortgaged Property, which interest has been encumbered to secure such Mortgage Asset.

“ Borrower Reserve Payments ”: Any payments made by a Borrower under the applicable Mortgage Loan Documents which, pursuant to the terms of such Mortgage Loan Documents, are required to be deposited into escrow or into a reserve to be used for a specific purpose (e.g., tax and insurance escrows).

“ Borrowing Capacity ”: The ability to obtain draws or advances at the request of a Guarantor or any Affiliate or Subsidiary of a Guarantor in Dollars and within three (3) Business Days of the request therefor and to use or apply such draws or advances to repay amounts under the Repurchase Documents or Other Credit Facilities.

“ Breakage Costs ”: Any amount or amounts as shall compensate the Purchaser or any other Secured Party for any loss, cost or expense incurred by the Purchaser and any other Secured Party (as determined by the Deal Agent in the Deal Agent’s discretion) as a result of an early repurchase or prepayment of the Repurchase Price or any Price Differential. All Breakage Costs shall be due and payable hereunder upon demand. Breakage Costs shall not be due for payments of the Repurchase Price or any Price Differential on a Payment Date, on the Facility Maturity Date or in connection with any scheduled amortization provided at least two (2) Business Days advance notice (to be received by the Deal Agent no later than 3:00 p.m. two (2) Business Days prior to the repayment date) is given to the Deal Agent.

“ Bridge Loan ”: A performing Whole Loan that is otherwise an Eligible Asset except that the Underlying Mortgaged Property is not stabilized or is otherwise considered to be in a transitional state, which exceptions shall be disclosed in writing to the Deal Agent and such exceptions must be acceptable to the Deal Agent in its discretion, which acceptance may, in the Deal Agent’s discretion, be conditioned on additional terms, conditions and requirements with respect to such Bridge Loan; provided , however , the debt and equity fundings for each Bridge Loan must be sufficient to finance 100% of the completion of the improvements to the related Underlying Mortgaged Property or there must exist sufficient net operating income or interest reserves or guaranties or replenishments to cover the debt service related to the Eligible Asset.

“ Business Day ”: Any day other than a Saturday or a Sunday on which (a) banks are not required or authorized to be closed in Charlotte, North Carolina, and (b) if the term “Business Day” is used in connection with the determination of the LIBOR Rate, dealings in United States dollar deposits are carried on in the London interbank market.

“ Capital Lease Obligations ”: For any Person and its Consolidated Subsidiaries, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

“ Cash Collateral ”: The cash received by the Deal Agent as agent for the Secured Parties in satisfaction of a Margin Deficit or as Income on Purchased Assets.

“ Cash Equivalents ”: As to any Person, (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (ii) time deposits or certificates of deposit of any commercial bank incorporated under the laws of the United States or any state thereof, of recognized standing having capital and unimpaired surplus in excess of $1,000,000,000 and whose short-term commercial paper rating at the time of acquisition is at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s (any such bank, an “ Approved Bank ”), with such deposits or certificates having maturities of not more than one year from the date of acquisition, (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (i) and (ii) above entered into with any Approved Bank, (iv) commercial paper or finance company paper issued by any Person incorporated under the laws of the United States or any state thereof and rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s, and in each case maturing not more than one year after the date of acquisition, and (v) investments in money market funds that are registered under the 40 Act, which have net assets of at least $1,000,000,000 and at least 85% of whose assets consist of securities and other obligations of the type described in clauses (i) through (iv) above. All such Cash Equivalents must be denominated solely for payment in Dollars.

“CDO Securitization Transaction ”: A commercial real estate cash flow CDO securitization transaction involving some or all of the Purchased Assets engaged in by an Affiliate of any of the Guarantors or the Sellers, which transaction and parties are acceptable to the Deal Agent in its discretion.

“ Class ”: With respect to a Mortgage Asset, such Mortgage Asset’s classification as a Whole Loan, a Junior Interest, a Mezzanine Loan, a Bridge Loan, a CMBS Security, a CTL Loan, a Subordinate CTL Loan, Senior Secured Bank Debt or a Preferred Equity Interest.

“ Closing Date ”: May 14, 2007.

“ CMBS Security ”: A performing fixed or floating rate mortgage-backed pass-through certificate, representing a beneficial ownership interest in one or more first lien mortgage loans secured by Commercial Real Estate, rated by at least two (2) Rating Agencies as AAA (including AAA IO), AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B or B-.

“ Code ”: The Internal Revenue Code of 1986, as amended from time to time.

“ Collection Account ”: The deposit account identified on Schedule 2 established in the name of the Seller into which all Income and Cash Collateral shall be deposited, which account shall be subject to the Account Agreement. Funds in the Collection Account may be invested at the direction and in the discretion of the Deal Agent in Permitted Investments for the benefit of the Seller.

“ Commercial Paper Notes ”: On any day, any short-term promissory notes issued in the commercial paper market.

“ Commercial Real Estate ”: Any real estate included in the definition of Type.

“ Commercial Real Estate Loan ”: Any loan secured directly or indirectly by Commercial Real Estate or, as applicable, ownership interests in an entity that owns directly or indirectly Commercial Real Estate.

“ Commitment Fee ”: The “Commitment Fee” payable under the Fee Letter.

“ Compliance Certificate ”: Defined in Subsection 3.2(f) of this Agreement.

“ Confirmation ”: A purchase confirmation in the form attached to this Agreement as Exhibit II duly executed, completed and delivered by the Seller and the Deal Agent in accordance with the provisions of Subsection 2.2(c) of this Agreement.

“ Consolidated Adjusted EBITDA ”: For any period, with respect to any Person, the sum, without duplication, for such period of (a) the Net Income of such Person and its Consolidated Subsidiaries determined on a consolidated basis for such period, (b) the sum of the provisions for such period for income taxes, interest expense, and depreciation and amortization expense used in determining such Net Income for such Person and its Consolidated Subsidiaries, (c) amounts deducted in accordance with GAAP in respect of other non-cash expenses in determining such Net Income for such Person and its Consolidated Subsidiaries and (d) the amount of any aggregate net loss (or minus the amount of any gain) during such period arising from the sale, exchange or other disposition of capital assets by such Person and its Consolidated Subsidiaries determined on a consolidated basis.

“ Consolidated Subsidiaries ”: An as of any date and for any Person, any Subsidiary or other entities that are consolidated with such Person in accordance with GAAP.

“ Construction Loan ”: A performing Whole Loan, the Underlying Mortgaged Property for which has received all necessary entitlements and approvals to develop the Underlying Mortgaged Property and construct improvements thereon in a manner consistent with the applicable Seller’s representations to the Deal Agent regarding such construction, which information shall be set forth in the related Confirmation, such loan and the documents related thereto are otherwise acceptable to the Deal Agent in its discretion and all construction related documents are delivered to the Custodian as a part of the Mortgage Asset File for such Whole Loan.

“ Contingent Liabilities ”: Means, with respect to any Person and its Consolidated Subsidiaries (without duplication): (i) liabilities and obligations (including any Guarantee Obligations) of such Person, any Subsidiary or any other Person in respect of “off-balance sheet arrangements” (as defined in the SEC Off-Balance Sheet Rules), (ii) any obligation, including, without limitation, any Guarantee Obligation, whether or not required to be disclosed in the footnotes to such Person’s financial statements, guaranteeing partially or in whole any Non-Recourse Indebtedness, lease, dividend or other obligation, exclusive of contractual indemnities (including, without limitation, any indemnity or price-adjustment provision relating to the purchase or sale of securities or other assets) and guarantees of non-monetary obligations (other than guarantees of completion, environmental indemnities and guarantees of customary carve-out matters made in connection with Non-Recourse Indebtedness, such as (but not limited to) fraud, misappropriation, bankruptcy and misapplication) which have not yet been called on or quantified, of such Person or of any other Person, and (iii) any forward commitment or obligation to fund or provide proceeds with respect to any loan or other financing which is obligatory and non-discretionary on the part of the lender. The amount of any Contingent Liabilities described in clause (ii) shall be deemed to be, (a) with respect to a guarantee of interest or interest and principal, or operating income guarantee, the sum of all payments required to be made thereunder (which, in the case of an operating income guarantee, shall be deemed to be equal to the debt service for the note secured thereby), through, (x) in the case of an interest or interest and principal guarantee, the stated date of maturity of the obligation (and commencing on the date interest could first be payable thereunder), or (y) in the case of an operating income guarantee, the date through which such guarantee will remain in effect, and (b) with respect to all guarantees not covered by the preceding clause (a) , an amount equal to the stated or determinable amount of the primary obligation in respect of which such guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as recorded on the balance sheet and on the footnotes to the most recent financial statements of such Person. As used in this definition, the term “ SEC Off-Balance Sheet Rules ” means the Disclosure in Management’s Discussion and Analysis About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, Securities Act Release Nos. 33-8182; 34-47264; FR-67 International Series Release No. 1266 File No. S7-42-02, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17 CFR pts. 228, 229 and 249).

“ Contractual Obligation ”: With respect to any Person, any provision of any securities issued by such Person or any indenture, mortgage, deed of trust, contract, undertaking, agreement, instrument or other document to which such Person is a party or by which it or any of its Property is bound or is subject.

“ CP Rate ”: For any day during any Accrual Period, the per annum rate equivalent to the weighted average of the per annum rates paid or payable by VFCC from time to time as interest on or otherwise (by means of interest rate hedges or otherwise taking into consideration any incremental carrying costs associated with short-term promissory notes issued by VFCC maturing on dates other than those certain dates on which VFCC is to receive funds) in respect of the promissory notes issued by VFCC that are allocated, in whole or in part, by the Deal Agent (on behalf of VFCC) to fund or maintain the Transactions funded by VFCC during such period, as determined by the Deal Agent (on behalf of VFCC) and reported to the Seller, which rates shall reflect and give effect to (i) the commissions of placement agents and dealers in respect of such promissory notes, to the extent such commissions are allocated, in whole or in part, to such promissory notes by the Deal Agent (on behalf of VFCC) and (ii) other borrowings by VFCC, including, without limitation, borrowings to fund small or odd dollar amounts that are not easily accommodated in the commercial paper market; provided , however , that if any component of such rate is a discount rate, in calculating the CP Rate, the Deal Agent shall for such component use the rate resulting from converting such discount rate to an interest bearing equivalent rate per annum.

“ CTL Loan ”: A performing Whole Loan secured by a first priority perfected security interest in Commercial Real Estate 100% leased under a Credit Tenant Lease to, or guaranteed in full by, a Credit Tenant and all payments due under such Credit Tenant Lease, and such CTL Loan satisfies such additional underwriting criteria and other terms, conditions and requirements as the Deal Agent may require in its discretion.

“ Credit Tenant ”: The tenant or guarantor under a Credit Tenant Lease with a credit rating of BBB- or better by at least two (2) Rating Agencies.

“ Credit Tenant Lease ”: A financeable lease of Commercial Real Estate, which lease is a triple net lease (i.e., the tenant is responsible for all maintenance, insurance and taxes), a double net lease (i.e., the tenant is responsible for all taxes and insurance) or is a bondable lease.

“ Current Appraisal ”: An appraisal dated within twelve (12) months of the date of determination; provided , however , (i) in the case of the valuation of an Underlying Mortgaged Property, such appraisal shall be a FIRREA Appraisal and (ii) in the case of the valuation of a Mortgage Asset, such appraisal shall be from a nationally recognized appraisal firm (other than the Seller, the Guarantor or any Affiliate of the foregoing) (A) with substantial experience valuing assets similar in type, size and structure to the Mortgage Asset in question, (B) having substantial familiarity with the market for such Mortgage Asset and (C) that is otherwise acceptable to the Deal Agent in its discretion.

“ Custodial Agreement ”: The Custodial Agreement, dated as of even date herewith, by and among the Deal Agent, the Purchaser, the Seller and the Custodian, as the same shall be amended, modified, waived, supplemented, extended, replaced or restated from time to time.

“ Custodial Fee Letter ”: The Custodial Fee Letter (if any), dated as of even date herewith, among the Seller and the Custodian, as such letter may be amended, modified, waived, supplemented, extended, restated or replaced from time to time.

“ Custodial Identification Certificate ”: Defined in the Custodial Agreement.

“ Custodian ”: Wells Fargo Bank, National Association, and its successor in interest as the custodian under the Custodial Agreement, and any successor Custodian under the Custodial Agreement.

“ Deal Agent ”: Defined in the Preamble of this Agreement.

“ Deal Agent’s Account ”: The account of the Purchaser disclosed to the Seller from time to time.

“ Debt Service ”: For any period, the sum of (a) Interest Expense of NorthStar and its Subsidiaries determined on a consolidated basis for such period and (b) all regularly scheduled principal payments made with respect to Indebtedness of NorthStar and its Subsidiaries during such period, other than any balloon, bullet, margin or similar principal payment which repays such Indebtedness in full.

“ Debt Service Coverage Ratio or DSCR ”: With respect to any Mortgage Asset or Purchased Asset, as applicable, as of any date of determination, for the period of time to be determined by the Deal Agent in its reasonable discretion (it being understood that it is the Deal Agent’s intent to make the determination based on the period of twelve (12) consecutive complete calendar months preceding such date (or, if such Mortgage Asset was originated less than twelve (12) months from the date of determination, the number of months from the date of origination) , the ratio of (a) the aggregate Net Cash Flow in respect of the Underlying Mortgaged Properties relating to such Mortgage Asset or Purchased Asset, as applicable, for such period, taking into account (x) any guaranty of the indebtedness under the related Mortgage Asset or Purchased Asset and (y) any applicable interest reserves held during such time by the Seller or any Servicer on its behalf or future funding obligations or monies available to satisfy such obligations with respect to such Mortgage Asset or Purchased Asset and, as applicable, the senior mortgage lender for the related Underlying Mortgaged Property, to (b) the aggregate amount of all amounts due for such period in respect of all Indebtedness that was outstanding from time to time during such period that is secured, directly or indirectly, by such Underlying Mortgaged Properties (including, without limitation, by way of a pledge of the equity of the owner(s) of such Underlying Mortgaged Properties) or that is otherwise owing by the owner(s) of such Underlying Mortgaged Properties, including, without limitation, all scheduled principal and/or interest payments due for such period in respect of each Mortgage Asset or Purchased Asset, as applicable, that is secured or supported by such Underlying Mortgaged Properties, as any of the foregoing elements of DSCR may be adjusted by the Deal Agent as determined by the Deal Agent in its discretion; provided , however , that , with respect to Junior Interests, Mezzanine Loans, Bridge Loans, Preferred Equity Interests and Subordinate CTL Loans that are also Junior Interests or Mezzanine Loans, all such calculations shall be made taking into account any senior or pari passu debt or other obligations, including debt or other obligations secured directly or indirectly by the applicable Underlying Mortgaged Property; provided , further , however , the DSCR shall not be less than the Minimum DSCR.

“ Default ”: Any event which, with, as applicable, the giving of notice or the lapse of time or both, would constitute an Event of Default.

“ Defaulted Mortgage Asset ”: Any Mortgage Asset (a) that is ninety (90) days or more delinquent or (b) for which there is a non-monetary default (beyond any applicable notice and cure period) under the related Mortgage Loan Documents (including, with respect to Preferred Equity Interests, amounts that are not paid current for the relevant period under the terms of the Mortgage Loan Documents).

“ Delinquent Mortgage Asset ”: A Mortgage Asset that is thirty (30) or more days, but less than ninety (90) days, delinquent under the related Mortgage Loan Documents (including, with respect to Preferred Equity Interests, amounts that are not paid current for the relevant period under the terms of the Mortgage Loan Documents).

“ Derivatives Contract ”: Any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement. Not in limitation of the foregoing, the term “ Derivatives Contract ” includes any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement.

“ Derivatives Termination Value ”: Means, in respect of any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Derivatives Contracts, (a) for any date on or after the date such Derivatives Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) , the amount(s) determined as the mark-to-market value(s) for such Derivatives Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Derivatives Contracts (which may include the Deal Agent, the Purchaser, or any of the Secured Parties).

“ Dollars ” and “ $ ”: Lawful money of the United States.

“ EBITDA ”: With respect to NorthStar and its Consolidated Subsidiaries for any period, the net income (or loss) of NorthStar and its Consolidated Subsidiaries for such period determined on a consolidated basis (prior to any impact from minority interests and before deduction of preferred dividends on preferred stock, if any, of NorthStar), in accordance with GAAP, plus the following (but only to the extent actually included in determination of such net income (loss)): (i) income tax expense; (ii) extraordinary or non-recurring gains and losses; (iii) depreciation and amortization expense; (iv) interest expense; and (v) amounts deducted in accordance with GAAP in respect of other non-cash expenses in determining such net income. The EBITDA will be adjusted to remove all impact of FAS 141.

“ Electronic Transmission ”: The delivery of information and executed documents in an electronic format acceptable to the applicable recipient thereof.

“ Eligible Asset ”: A Mortgage Asset that, as of any date of determination, (i) is not a Defaulted Mortgage Asset or Delinquent Mortgage Asset; (ii) satisfies each of the eligibility criteria set forth on Schedule 1 hereto in all material respects; (iii) with respect to the portion of such Mortgage Asset to be acquired by the Purchaser or its designee, the funding obligations have been satisfied in full and there is no unfunded commitment with respect thereto (unless otherwise approved by the Deal Agent in its discretion); (iv) has been approved in writing by the Deal Agent in its discretion; (v) has, to the extent applicable, an LTV not in excess of the Maximum LTV; (vi) has, to the extent applicable, a DSCR equal to or greater than the Minimum DSCR; (vii) is not a loan to an operating business (other than a hotel); (viii) the purchase of such Eligible Asset will not violate any applicable Sub-Limit; (ix) the Underlying Mortgage Property and the Borrower and its Affiliates are domiciled in the United States (unless otherwise approved by the Deal Agent subject to such additional terms and conditions as the Deal Agent may require in its discretion); and (x) such Mortgage Asset is denominated and payable in Dollars; provided , however , notwithstanding a Mortgage Asset’s failure to conform to the criteria set forth above (including, without limitation, a Mortgage Asset with a single or split rating by a Rating Agency), the Deal Agent may, in its discretion and subject to such terms, conditions and requirements and Advance Rate and Pricing Spread adjustments as the Deal Agent may require in its discretion, designate in writing any such non-compliant Mortgage Asset as an Eligible Asset, which designation shall not be deemed a waiver of the requirement that all other Purchased Assets and all other Mortgage Assets submitted for purchase by the Purchaser or its designee, whether existing or in the future, must be Eligible Assets.

“ Engagement Letter ”: That certain letter agreement, dated as of June 2, 2005, among Wachovia and NRFC WA Holdings, LLC, as the same may be amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Environmental Laws ”: Any and all Applicable Laws and all other foreign, federal, state and local laws, statutes, ordinances, rules, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities, relating to the protection of human health or the environment, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of hazardous materials. Environmental Laws include, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq .), the Hazardous Material Transportation Act (49 U.S.C. § 331 et seq .), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq. ), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq .), the Clean Air Act (42 U.S.C. § 7401 et seq .), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq .), the Safe Drinking Water Act (42 U.S.C. § 300, et seq .), the Environmental Protection Agency’s regulations relating to underground storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq .), and the rules and regulations thereunder, each as amended, modified, waived, supplemented, extended, restated or replaced from time to time.

“ Equity Interest ”: With respect to any Person, any share of capital stock of (or other ownership, equity or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership, equity or profit interests in) such Person, any security convertible into or exchangeable for any share of capital stock of (or other ownership, equity or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.

“ ERISA ”: The Employee Retirement Income Security Act of 1974, as the same are amended from time to time, and the regulations promulgated and rulings issued thereunder, as the same are amended from time to time.

“ ERISA Affiliate ”: (a) Any corporation that is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Seller or the Guarantor, (b) a trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Code) with the Seller or the Guarantor, or (c) a member of the same affiliated service group (within the meaning of Section 414(m) of the Code) as the Seller, the Guarantor, any corporation described in clause (a) above or any trade or business described in clause (b) above.

“ Eurocurrency Liabilities ”: Defined in Regulation D of the Board of Governors of the Federal Reserve System, as in effect and amended from time to time.

“ Eurodollar Disruption Event ”: The occurrence of any of the following: (a) any Liquidity Bank or the Swingline Purchaser shall have notified the Deal Agent of a determination by such Liquidity Bank, the Swingline Purchaser or any of their assignees or participants that it would be contrary to law or to the directive of any central bank or other Governmental Authority (whether or not having the force of law) to obtain United States dollars in the London interbank market to fund any Transaction, (b) any Liquidity Bank or the Swingline Purchaser shall have notified the Deal Agent of the inability, for any reason, of such Liquidity Bank, the Swingline Purchaser or any of their assignees or participants to determine the Adjusted Eurodollar Rate, (c) any Liquidity Bank or the Swingline Purchaser shall have notified the Deal Agent of a determination by such Liquidity Bank, the Swingline Purchaser or any of their assignees or participants that the rate at which deposits of United States dollars are being offered to such Liquidity Bank, the Swingline Purchaser or any of their assignees or participants in the London interbank market does not accurately reflect the cost to such Liquidity Bank, the Swingline Purchaser, such assignee or such participant of making, funding or maintaining any Transaction, or (d) any Liquidity Bank or the Swingline Purchaser shall have notified the Deal Agent of the inability of such Liquidity Bank, the Swingline Purchaser or any of their assignees or participants to obtain United States dollars in the London interbank market to make, fund or maintain any Transaction.

“ Eurodollar Reserve Percentage ”: For any period means the percentage, if any, applicable during such period (or, if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, emergency, supplemental, marginal or other reserve requirements) with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term of one (1) month.

“ Event of Default ”: Defined in Section 10.1 of this Agreement.

“ Exception ”: Defined in the Custodial Agreement.

“ Excepted Persons ”: Defined in Subsection 13.13(a) of this Agreement.

“ Exchange Act ”: The Securities Exchange Act of 1934, as amended from time to time.

“ Extension Fee ”: Defined in the Fee Letter.

“ Facility ”: The facility evidenced by and the Transactions contemplated under the Repurchase Documents.

“ Facility Maturity Date ”: Subject to Article X of this Agreement, the earliest of (a) May 14, 2010, as such original Facility Maturity Date may be extended pursuant to Subsection 2.4 of this Agreement, or (b) the date on which this Agreement shall terminate in accordance with the provisions hereof or by operation of Applicable Law.

“ Facility Period ”: The period commencing on the Closing Date and terminating on the Funding Expiration Date.

“ Federal Funds Rate ”: For any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the overnight federal funds rates as in Federal Reserve Board Statistical Release H.15(519) or any successor or substitute publication selected by the Deal Agent (or, if such day is not a Business Day, for the next succeeding Business Day), or, if, for any reason, such rate is not available on any day, the rate determined, in the sole opinion of the Deal Agent, to be the rate at which overnight federal funds are being offered in the national federal funds market at 9:00 a.m., Charlotte, North Carolina time.

“ Fee Letter ”: The Fee Letter, dated as of even date herewith, between the Deal Agent, Purchaser and the Seller, as amended, modified, waived, substituted, supplemented, extended, restated, or replaced from time to time.

“ Financial Covenants ”: The covenants set forth in Subsection 5.1(v) of this Agreement.

“ FIRREA Appraisal ”: An appraisal prepared by an independent third party appraiser approved in writing by the Deal Agent in its discretion and satisfying the requirements of Title XI of the Federal Institutions, Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder (as the foregoing are amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time), as in effect on the date of such appraisal.

“ Fitch ”: Fitch Ratings, Inc., and any successor thereto.

“ Fixed Charge Coverage Ratio ”: For NorthStar and its Consolidated Subsidiaries during any period, EBITDA for such period divided by the Fixed Charges for the same period.

“ Fixed Charges ”: For NorthStar and its Consolidated Subsidiaries determined on a consolidated basis during any period, the sum of (without duplication) (a) Debt Service, (b) all Preferred Dividends required to be paid during such period, (c) Capital Lease Obligations required to be paid during such period, and (d) all payments due under any ground lease.

“ Foreclosed Loan ”: A loan the security for which has been foreclosed upon by the Seller.

“ Funding Expiration Date ”: The earliest of (a) the date that is 3 years immediately following the Closing Date, (b) the date on which an Event of Default occurs or ( c ) the Business Day designated by the Seller to the Deal Agent as the expiration date at any time following two (2) Business Days’ prior written notice to the Deal Agent.

“ GAAP ”: Generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

“ Governmental Authority ”: Any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any body or entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, any court or arbitrator having jurisdiction over such Person, any of its Subsidiaries or any of its Properties, and any accounting board or authority (whether or not a part of government) that is responsible for the establishment or interpretation of national or international accounting principles, in each case whether foreign or domestic.

“ Ground Lease ”: With respect to any Commercial Real Estate Loan for which the Borrower has a leasehold interest in the related Underlying Mortgaged Property or space lease within such Underlying Mortgaged Property, the lease agreement creating such leasehold interest.

“ Guarantee Obligation ”: Means, as to any Person (the “ guaranteeing person ”), without duplication, any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of the obligations for which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends, Contractual Obligation, Derivatives Contract or other obligations (the “ primary obligations ”) of any other third Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided , however , that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the maximum stated amount of the primary obligation relating to such Guarantee Obligation (or, if less, the maximum stated liability set forth in the instrument embodying such Guarantee Obligation); provided , however , that in the absence of any such stated amount or stated liability, the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as reasonably determined by such Person in good faith.

“ Guarantor ”: Individually and collectively, as the context may require, NorthStar Realty Finance Corp., a Maryland corporation (together with its successors and permitted assigns) and NorthStar Realty Finance L.P., a Delaware limited partnership (together with its successors and permitted assigns), as joint and several Guarantors under the Guaranty.

“ Guaranty ”: The Limited Guaranty, dated as of the date hereof, executed by the Guarantor in favor of the Deal Agent as agent for the Secured Parties, as such agreement is amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Income ”: With respect to each Purchased Item, at any time, all of the following: collections, prepayments, recoveries, insurance and condemnation proceeds and all other payments or proceeds on or in respect of the Purchased Assets to which the Seller or the holder thereof is entitled, including, without limitation, any principal thereof then payable and all interest, fees, prepayment fees, premiums, extension fees, exit fees, yield maintenance charges, defeasance fees, transfer fees, penalties, default interest, late fees, late charges, dividends, gains, receipts, allocations, profits, payments in kind, returns or repayment of contributions and all other distributions and payments of any kind or nature whatsoever payable thereon, in connection therewith, or with respect thereto and amounts received from any Interest Rate Protection Agreement, including, without limitation, Net Swap Receipts and Swap Breakage Receipts, provided , however , Income shall not include any Borrower Reserve Payments unless the Seller, a Servicer or a PSA Servicer has exercised rights with respect to such payments under the terms of the related Mortgage Loan Documents, the Servicing Agreements or the Pooling and Servicing Agreements, as applicable.

“ Increased Costs ”: Any amounts required to be paid by the Seller to the Deal Agent, the Purchaser or any Affected Party pursuant to Section 2.13 of this Agreement.

“ Indebtedness ”: Means, with respect to any Person and its Consolidated Subsidiaries determined on a consolidated basis, at the time of computation thereof, all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed (including, without limitation, principal, interest, assumption fees, prepayment fees, yield maintenance charges, penalties, contingent interest and all other monetary obligations whether choate or inchoate); (b) all obligations of such Person, whether or not for money borrowed (i) represented by notes payable, letters of credit, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property or services rendered or (iv) in connection with the issuance of preferred equity or trust preferred securities; (c) Capital Lease Obligations of such Person; (d) all Off-Balance Sheet Obligations of such Person (other than non-recourse indebtedness incurred in connection with any CDO Securitization Transaction); (e) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Mandatory Redeemable Stock issued by such Person or any other Person (inclusive of forward equity contracts), valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (f) as applicable, all obligations of such Person (but not the obligation of others) in respect of any keep well arrangements, credit enhancements, contingent or future funding obligations under any Eligible Asset or any obligation senior to the Eligible Asset, unfunded interest reserve amount under any Eligible Asset or any obligation that is senior to the Eligible Asset, purchase obligation, repurchase obligation, takeout commitment or forward equity commitment, in each case evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be satisfied by the issuance of Equity Interest (other than Mandatory Redeemable Stock)); (g) net obligations under any Derivative Contract not entered into as a hedge against existing Indebtedness, in an amount equal to the Derivatives Termination Value thereof; (h) all Indebtedness of other Persons which such Person has guaranteed or is otherwise recourse to such Person (except for guaranties of customary exceptions for fraud, misapplication of funds, environmental indemnities and other similar exceptions to recourse liability (but not exceptions relating to bankruptcy, insolvency, receivership or other similar events)); (i) all Indebtedness of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien (other than certain Permitted Liens) on property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness or other payment obligation; provided , however , if such Person has not assumed or become liable for the payment of such Indebtedness, then for the purposes of this definition the amount of such Indebtedness shall not exceed the market value of the property subject to such Lien and (j) Contingent Liabilities.

“ Indemnified Amounts ”: Defined in Subsection 11.1(a) of this Agreement.

“ Indemnified Party ”: Defined in Subsection 11.1(a) of this Agreement.

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

“ Insolvency Event ”: With respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in respect of such Person or any substantial part of its Property in an involuntary case under any applicable Insolvency Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its Property, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of sixty (60) consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.

“ Insolvency Laws ”: The Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments or similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

“ Insolvency Proceeding ”: Any case, action or proceeding before any court or other Governmental Authority relating to any Insolvency Event.

“ Interest Expense ”: Means for any period, total interest expense, both expensed and capitalized, of the Seller for such period with respect to all outstanding Indebtedness of the Seller (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under interest rate protection agreements), determined in accordance with GAAP, net of interest income of the Seller for such period (determined in accordance with GAAP).

“ Interest Rate Protection Agreement ”: With respect to any or all of the Mortgage Assets and Purchased Assets, as applicable, (i) any Derivatives Contract required under the terms of the related Mortgage Loan Documents providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, and acceptable to the Deal Agent in its reasonable discretion, which Interest Rate Protection Agreement shall be performed, maintained and in place in accordance with the terms of the Mortgage Loan Documents, and (ii) any Derivatives Contract put in place by the Seller, the Guarantor or any Affiliate of the foregoing with respect to any Mortgage Asset or Purchased Asset, as applicable, including, without limitation, the Swap Documents, which Interest Rate Protection Agreement shall be performed, maintained and in place during the time the related Purchased Asset is subject to a Transaction under this Agreement.

“ Investment Grade Rating ”: A rating of at least BBB- (or the equivalent) by two (2) or more Rating Agencies.

“ Issuer ”: VFCC and any other Purchaser whose principal business consists of issuing commercial paper or other securities to fund its acquisition or maintenance of receivables, accounts, instruments, chattel paper, general intangibles and other similar assets.

“ Junior Interest ”: (a) A senior, pari passu or junior participation interest in a performing Commercial Real Estate Loan or (b) a senior, pari passu or junior note or certificate in an “A/B” or similar structure in a performing Commercial Real Estate Loan.

“ Junior Interest Document ”: The original executed promissory note, Participation Certificate, Participation Agreement and any other evidence of a Junior Interest, as applicable.

“ Late Payment Fee ”: Defined in Subsection 2.5(a) of this Agreement.

“ LIBOR Rate ”: For any day during any Accrual Period and any Transaction or portion thereof, a rate per annum equal to:

( i ) the posted rate for thirty (30) day deposits in United States Dollars appearing on Telerate page 3750 as of 11:00 a.m. (London time) on the Business Day which is the second (2nd) Business Day immediately preceding the applicable Purchase Date (with respect to the initial Accrual Period for such Transaction) and as of the second (2nd) Business Day immediately preceding the first (1st) day of the applicable Accrual Period (with respect to all subsequent Accrual Periods for such Transaction); or

( ii ) if no such rate appears on Telerate page 3750 at such time and day, then the LIBOR Rate shall be determined by Wachovia at its principal office in Charlotte, North Carolina as its rate (each such determination, absent manifest error, to be conclusive and binding on all parties hereto and their assignees) at which thirty (30) day deposits in United States Dollars are being, have been, or would be offered or quoted by Wachovia to major banks in the applicable interbank market for Eurodollar deposits at or about 11:00 a.m. (Charlotte, North Carolina time) on such day.

“ Lien ”: Any mortgage, lien, pledge, charge, right, claim, security interest or encumbrance of any kind of or on any Person’s assets or properties in favor of any other Person (including any UCC financing statement or any similar instrument filed against such Person’s assets or properties).

“ Liquidity ”: An amount equal to the (a) sum of (without duplication) (i) the amount of unrestricted cash and unrestricted Cash Equivalents and (ii) Availability under this Agreement and (iii) the amount of Borrowing Capacity under the Other Credit Facilities less , (b) amounts necessary to satisfy Margin Deficits under this Agreement.

“ Liquidity Agent ”: Wachovia and any successor to Wachovia under the Liquidity Agreement.

“ Liquidity Agreement ”: The Liquidity Purchase Agreement, dated as of an even date herewith, among VFCC, as the seller, the Liquidity Banks named therein, WCM as the deal agent and the documentation agent, and Wachovia, as the Liquidity Agent, and any other liquidity agreement applicable to a Purchaser that is a commercial paper conduit, each as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Liquidity Banks ”: The Person or Persons who provide liquidity support to VFCC or any other Purchaser that is a commercial paper conduit pursuant to the Liquidity Agreement or other liquidity agreement in connection with the issuance of Commercial Paper Notes.

“ Loan-to-Value Ratio ” or “ LTV ”: With respect to any Mortgage Asset or Purchased Asset (other than any CMBS Security), as applicable, as of any date of determination, the ratio of the outstanding principal amount of such Mortgage Asset or Purchased Asset, as applicable, to the market value of the related Underlying Mortgaged Property at such time (or, in the case of the Bridge Loans, the cost of completion of the intended improvements), as determined by the Deal Agent (i) in connection with the initial purchase of a Mortgage Asset only and to the extent a Current Appraisal is available, based on the Current Appraisal, as the LTV may be adjusted by the Deal Agent as the Deal Agent determines in its discretion, and, (ii) in all other cases, as the Deal Agent may determine in its discretion based on such sources of information as the Deal Agent may determine to rely on in its discretion; provided , however , that, with respect to Junior Interests, Mezzanine Loans, Bridge Loans, Preferred Equity Interests and Subordinate CTL Loans that are also Junior Interests or Mezzanine Loans, all such calculations shall be made taking into account any senior or pari passu debt or other obligations, including debt or other obligations secured directly or indirectly by the applicable Underlying Mortgaged Property; provided , further , however , the LTV shall not exceed the Maximum LTV.

“ Mandatory Redeemable Stock ”: Means, with respect to any Person and any Subsidiary thereof, any Equity Interest of such Person which by the terms of such Equity Interest (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable), upon the happening of any event or otherwise (a) matures or is required to be redeemed, pursuant to a sinking fund obligation or otherwise (other than an Equity Interest to the extent redeemable in exchange for common stock or other equivalent common Equity Interest), (b) is convertible into or exchangeable or exercisable for Indebtedness or Mandatory Redeemable Stock, or (c) is redeemable at the option of the holder thereof, in whole or in part (other than any Equity Interest which is redeemable solely in exchange for common stock or other equivalent common Equity Interest); in each case, on or prior to the Facility Maturity Date.

“ Margin Base ”: On any day, the aggregate Asset Value of all Purchased Assets or certain specified Purchased Assets, as applicable.

“ Margin Correction Deadline ”: 3 p.m. on the second Business Day after any Margin Deficit Notice is delivered by the Deal Agent.

“ Margin Deficit ”: Defined in Section 2.7 of this Agreement.

“ Margin Deficit Notice ”: Defined in Section 2.7 of this Agreement.

“ Market Value ”: As of any date in respect of any Mortgage Asset or Purchased Asset, as applicable, the price at which such Mortgage Asset or Purchased Asset, as applicable, could readily be sold, as determined by the Deal Agent (i) in connection with the initial purchase of a Mortgage Asset only and to the extent a Current Appraisal is available, based on the Current Appraisal value, and, (ii) in all other cases, as the Deal Agent may determine in its discretion and in good faith based on such sources and information as the Deal Agent may determine to rely on in its discretion (which value may be determined to be zero), as such Market Value may be adjusted by the Deal Agent as the Deal Agent determines in its discretion.

“ Material Adverse Effect ”: A material adverse effect on (a) the financial condition or credit quality of the Seller or the Guarantor, (b) the ability of the Seller, the Guarantor or the Pledgor to perform its obligations under any of the Repurchase Documents or Mortgage Loan Documents to which it is a party, (c) the validity or enforceability of any of the Repurchase Documents, (d) the rights and remedies of the Deal Agent, the Purchaser, the Swap Counterparty or any other Secured Party under any of the Repurchase Documents, (e) the timely payment of any amounts payable under the Repurchase Documents or Mortgage Loan Documents, or (f) the Asset Value of the Purchased Assets; provided , however , the occurrence of an event under clause (e) or (f) of this definition of Material Adverse Effect shall not, in and of itself, constitute an Event of Default under Subsection 10.1(e) , but such occurrence may be or form the basis for an Event of Default under other provisions of Section 10 other than Subsection 10.1(e) .

“ Materials of Environmental Concern ”: Any mold, petroleum (including, without limitation, crude oil or any fraction thereof) or petroleum products (including, without limitation, gasoline), or any hazardous or toxic substances, materials or wastes, defined as such in or regulated under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

“ Maximum Amount ”: Means $400,000,000, provided that, during the Temporary Increase Period, upon the written request of the Seller, the Deal Agent may, in its discretion (and in all cases subject to the Deal Agent obtaining internal credit approval), increase the Maximum Amount one (1) or more times to an aggregate amount not to exceed $800,000,000, which increase(s) shall be set forth in writing and acknowledged by the Seller and the Guarantor; provided , however , after the Temporary Increase Period, (a) in the event Purchased Assets are repurchased and sold into the CDO Securitization Transaction on or prior to the Temporary Increase Expiration Date and the Seller repays the Temporary Increase Indebtedness plus all accrued and unpaid Price Differential thereon and all related Breakage Costs on or before the Temporary Increase Expiration Date, the Maximum Amount shall be $400,000,000 and (b) in the event the Seller does not satisfy clause (a) of this definition, the Maximum Amount shall equal the sum of $400,000,000 and the highest Temporary Increase Amount, provided that such Maximum Amount shall be reduced to (i) within six (6) months of the Temporary Increase Expiration Date, $600,000,000, (ii) within twelve (12) months of the Temporary Increase Expiration Date, $550,000,000 and (iii) within eighteen (18) months of the Temporary Increase Expiration Date, $500,000,000; provided , further , however , on and after the Facility Maturity Date, the Maximum Amount shall mean the aggregate Purchase Price outstanding for all Transactions.

“ Maximum LTV ”: With respect to any Eligible Asset (other than any CMBS Security) at any time, the Loan-to-Value Ratio for the related Underlying Mortgaged Property set forth on Schedule 1 to the Fee Letter under the heading “End LTV” or “End LTC” (or, if not set forth therein in the case of Preferred Equity Interests and Construction Loans to the extent applicable, as set forth in the related Confirmation under the same or similar headings); provided , however , in no event shall the Maximum LTV for a Construction Loan exceed 85%) for the applicable Class of such Mortgage Asset and, as applicable, the applicable Type of Underlying Mortgaged Property; provided , however , the Maximum LTV shall take into account any senior or pari passu debt or other obligations , including debt or other obligations secured directly or indirectly by the applicable Underlying Mortgaged Property.

“ Mezzanine Loan ”: A performing mezzanine loan secured by a first priority perfected lien and pledge of the Equity Interest of the Person that owns directly or indirectly income producing Commercial Real Estate that is performing; provided , however , on a case by case basis, and in the Deal Agent’s discretion and subject to such terms, conditions and requirements and Advance Rate and Pricing Spread adjustments as the Deal Agent may require in its discretion, the Deal Agent may (but is not required to) consider purchasing a Mezzanine Loan that is secured by less than all of the Equity Interest of the Person that owns directly or indirectly income producing Commercial Real Estate.

“ Mezzanine Note ”: The original executed promissory note or other evidence of Mezzanine Loan indebtedness.

“ Minimum DSCR ”: With respect to any Mortgage Asset or Purchased Asset (other than any CMBS Security), as applicable, at any time, the DSCR for the related Underlying Mortgaged Property set forth on Schedule 1 to the Fee Letter under the heading “In-Place DSCR” (or, if not set forth therein in the case of Preferred Equity Interests and Construction Loans to the extent applicable, as set forth in the related Confirmation under the same or similar headings) for the applicable Class of such Mortgage Asset and, as applicable, the applicable Type of Underlying Mortgaged Property; provided , however , the Minimum DSCR shall take into account any senior or pari passu debt or other obligations , including debt or other obligations secured directly or indirectly by the applicable Underlying Mortgaged Property.

“ Moody’s ”: Moody’s Investors Services, Inc., and any successor thereto.

“ Mortgage ”: Each mortgage, assignment of rents, security agreement and fixture filing, or deed of trust, assignment of rents, security agreement and fixture filing, or similar instrument creating and evidencing a Lien on real property, fixtures and other property and rights incidental thereto.

“ Mortgage Asset ”: A Whole Loan, a Junior Interest, a Mezzanine Loan, a Bridge Loan, a CMBS Security, a CTL Loan, a Subordinate CTL Loan, Senior Secured Bank Debt or a Preferred Equity Interest, (i) the Underlying Mortgaged Property for which is included in the categories for Types of Mortgage Assets, (ii) that is listed on a Confirmation and (iii) for which the Custodian has been instructed by a Seller to hold the related Mortgage Asset File for the Deal Agent as agent for the Secured Parties pursuant to the Custodial Agreement; provided , however , Mortgage Assets shall not include any Retained Interest (if any) (unless approved by the Deal Agent in its discretion).

“ Mortgage Asset File ”: Defined in the Custodial Agreement.

“ Mortgage Asset File Checklist ”: Defined in the Custodial Agreement.

“ Mortgage Loan Documents ”: Defined in the Custodial Agreement.

“ Mortgage Note ”: The original executed promissory note or other evidence of the Indebtedness of a Borrower with respect to a Mortgage Asset.

“ Mortgaged Property ”: The Commercial Real Estate (including all improvements, buildings, fixtures, building equipment and personal property thereon and all additions, alterations and replacements made at any time with respect to the foregoing and any Credit Tenant Lease to which such real property is subject) and all other collateral securing repayment of the related debt evidenced by a Mortgage Note, a Junior Interest Document or other note, certificate or debt instrument.

“ Net Cash Flow ”: With respect to any Underlying Mortgaged Property, for any period, the net income (or deficit) attributable to such Underlying Mortgaged Property for such period, determined in accordance with GAAP (and if such Property is subject to a Credit Tenant Lease, the net rents paid during such period under such lease), less the amount of all (a) capital expenditures incurred, (b) reserves established, (c) leasing commissions paid (other than commissions paid from reserves held under the Mortgage Loan Documents) and (d) tenant improvements paid during such period (other than tenant improvements paid from reserves held under the Mortgage Loan Documents) in each case attributable to such Underlying Mortgaged Property, plus all non-cash charges deducted in the calculation of such net income.

“ Net Income ”: With respect to any Person and its Consolidated Subsidiaries for any period, the net income of such Person and its Consolidated Subsidiaries determined on a consolidated basis for such period as determined in accordance with GAAP.

“ Net Swap Payments ”: With respect to each Payment Date, the excess, if any, of (a) the monthly payments by the Seller to the Swap Counterparty under the Swap Documents and any interest accrued thereon over (b) the monthly payments by the Swap Counterparty to the Seller under the Swap Documents and any interest accrued thereon.

“ Net Swap Receipts ”: With respect to each Payment Date, the excess, if any, of (a) the monthly payments by the Swap Counterparty to the Seller under the Swap Documents and any interest accrued thereon over (b) the monthly payments by the Seller to the Swap Counterparty under the Swap Documents and any interest accrued thereon.

“ Non-Recourse Indebtedness ”: Means, with respect to any Person, Indebtedness for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, and other similar exceptions to non-recourse provisions (but not exceptions relating to bankruptcy, insolvency, receivership or other similar events)) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness.

“ Non-Table Funded Purchased Asset ”: A Purchased Asset that is not a Table Funded Purchased Asset.

“ Non-Wachovia Assets ”: Any Mortgage Asset issued or extended by a Person other than Wachovia Corporation or an Affiliate of Wachovia Corporation.

“ NorthStar ”: Defined in the Preamble of this Agreement.

“ Note Purchase Agreement ”: The Note Purchase Agreement, dated as of March 29, 2007, between NRF-Reindeer Ltd., a Cayman Islands exempted limited liability company, and Wachovia Bank, N.A. (London Branch), as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, together with all other documents executed in connection therewith, as the same are amended modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Obligations ”: Defined in Subsection 8.1(b) of this Agreement.

“ OFAC ”: The U.S. Department of the Treasury’s Office of Foreign Assets Control.

“ OFAC Regulations ”: The regulations promulgated by OFAC, as amended from time to time.

“ Off-Balance Sheet Assets ”: Means, with respect to any Person, any asset that is subject to an off-balance sheet financing, and as a result of such transaction such asset does not (and is not required pursuant to GAAP) to appear as an asset on the balance sheet of such Person.

“ Off-Balance Sheet Liabilities ”: Means, with respect to any Person, any (a) repurchase obligation or liability, contingent or otherwise, of such Person with respect to any mortgages, mortgage notes, accounts or notes receivable sold, transferred or otherwise disposed of by such Person, (b) repurchase obligation or liability, contingent or otherwise, of such Person with respect to Property or assets leased by such Person as lessee and (c) obligations, contingent or otherwise, of such Person under any Off Balance Sheet Transaction, in each case, if the transaction giving rise to such obligation (i) is considered Indebtedness for borrowed money for tax purposes, and (ii) does not (and is not required pursuant to GAAP) to appear as a liability on the balance sheet of such Person.

“ Off-Balance Sheet Obligations ”: With respect to any Person and its Consolidated Subsidiaries determined on a consolidated basis as of any date of determination thereof, without duplication and to the extent not included as a liability on the consolidated balance sheet of such Person and its Consolidated Subsidiaries in accordance with GAAP: (a) the monetary obligations under any financing lease or so-called “synthetic,” tax retention or off-balance sheet lease transaction which, upon the application of any Insolvency Laws to such Person or any of its Consolidated Subsidiaries, would be characterized as indebtedness; (b) the monetary obligations under any sale and leaseback transaction which does not create a liability on the consolidated balance sheet of such Person and its Consolidated Subsidiaries; or (c) any other monetary obligation arising with respect to any other transaction which (i) is characterized as indebtedness for tax purposes but not for accounting purposes in accordance with GAAP or (ii) is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheet of such Person and its Consolidated Subsidiaries (for purposes of this clause (c) , any transaction structured to provide tax deductibility as interest expense of any dividend, coupon or other periodic payment will be deemed to be the functional equivalent of a borrowing).

“ Off-Balance Sheet Transaction ”: Means, with respect to any Person, any synthetic lease, tax retention operating lease, commercial mortgage backed securities transaction, securitization transaction, collateralized debt obligation transaction, off balance sheet loan or similar off balance sheet financing.

“ Officer’s Certificate ”: A certificate signed by a Responsible Officer of the Seller, the Guarantor or the Pledgor, as applicable.

“ Operating Company ”: An “operating company” within the meaning of 29 C.F.R. 2510.3-101(c) of the regulations of the U.S. Department of Labor.

“ Opinion of Counsel ”: A written opinion of counsel, which opinion and counsel are acceptable to the Deal Agent in its reasonable discretion.

“ Originator ”: With respect to each Mortgage Asset, the Person who originated such Mortgage Asset.

“ Other Costs ”: Defined in Subsection 13.8(c) of this Agreement.

“ Other Credit Facilities ”: Any warehouse, repurchase, loan or credit facility provided by a national banking association or any syndicate thereof (or any other financial institution approved by the Purchaser in its reasonable discretion) to a Guarantor or any Affiliate or Subsidiary of a Guarantor (including the Unsecured Credit Facility).

“ Participation Agreement ”: With respect to any Junior Interest, any executed participation agreement, sub-participation agreement or similar agreement under which the Junior Interest is created, evidenced, issued and/or guaranteed.

“ Participation Certificate ”: With respect to any Junior Interest, an executed certificate, note, instrument or other document representing the participation interest or sub-participation interest granted under a Participation Agreement.

“ paying Seller ”: Defined in Subsection 13.24(b) .

“ Payment Date ”: The 1 ^st day of each calendar month, or, if such day is not a Business Day (i) if the next Business Day occurs during the succeeding month, the previous Business Day and (ii) if the next Business Day does not occur during the succeeding month, the next succeeding Business Day.

“ Periodic Advance Repurchase Payment ”: Defined in Subsection 2.5(a) of this Agreement.

“ Permitted Indebtedness ”: With respect to Preferred Equity Interests, Indebtedness that is permitted under the related Mortgage Loan Documents and disclosed in writing to the Deal Agent in a Transaction Request and a Confirmation.

“ Permitted Investments ”: Investments of any one or more of the following types: (a) marketable obligations of the United States, the full and timely payment of which are backed by the full faith and credit of the United States of America and that have a maturity of not more than 270 days from the date of acquisition; (b) marketable obligations, the full and timely payment of which are directly and fully guaranteed by the full faith and credit of the United States and that have a maturity of not more than 270 days from the date of acquisition; (c) bankers’ acceptances and certificates of deposit and other interest-bearing obligations (in each case having a maturity of not more than 270 days from the date of acquisition) denominated in Dollars and issued by any bank with capital, surplus and undivided profits aggregating at least $100,000,000, the short-term obligations of which are rated of least A-1 by S&P and P-1 by Moody’s; (d) repurchase obligations with a term of not more than ten (10) days for underlying securities of the types described in clauses (a) , (b) and (c) above entered into with any bank of the type described in clause (c) above; (e) commercial paper rated at least A-1 by S&P and P-1 by Moody’s; (f) demand deposits, time deposits or certificates of deposit (having original maturities of no more than 365 days) of depository institutions or trust companies incorporated under the laws of the United States of America or any state thereof (or domestic branches of any foreign bank) and subject to supervision and examination by federal or state banking or depository institution authorities; provided , however , that at the time such investment, or the commitment to make such investment, is entered into, the short-term debt rating of such depository institution or trust company shall be at least A-1 by S&P and P-1 by Moody’s; and (g) money market mutual funds possessing the highest available rating from S&P and Moody’s.

“ Permitted Liens ”: Any of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced or threatened: (a) Liens for federal, state, municipal or other local or other Governmental Authority taxes if such taxes shall not at the time be due and payable, (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens, arising in the ordinary course of business securing obligations that are not overdue for a period of more than thirty (30) days, and (c) Liens granted pursuant to or by the Repurchase Documents.

“ Person ”: An individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, sole proprietorship, joint venture, government (or any agency or political subdivision thereof) or other entity.

“ Plan ”: Any plan, including single employer and multi-employer plans, to which section 4021(a) of ERISA applies or any retirement medical plan, each as established or maintained for employees of the Seller, the Guarantor or any ERISA Affiliate of the Seller or the Guarantor to which Section 4021(a) of ERISA applies.

“ Plan Asset Regulations ”: 29 C.F.R. 2510.3-101, et. seq.

“ Plan Assets ”: “Plan assets” within the meaning of the Plan Asset Regulations.

“ Pledge and Security Agreement ”: The Pledge and Security Agreement, dated as of even date herewith, between the Deal Agent, the Purchaser and NRFC Sub-REIT Corp., a Maryland corporation, as such agreement is amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Pledged Collateral ”: Defined in the Pledge and Security Agreement.

“ Pledged Preferred Equity Collateral ”: Defined in the Preferred Equity Pledge and Security Agreement.

“ Pledgor ”: NRFC Sub-REIT Corp., a Maryland corporation, as the Pledgor under the Pledge and Security Agreement, together with its successors and permitted assigns.

“ Pooling and Servicing Agreements ”: Any and all pooling and servicing agreements, trust agreements or indentures governing servicing and other matters entered into in connection with a (i) CMBS Security or (ii) a securitization of a senior interest in a Mortgage Asset, where such securitization transaction is rated by one (1) or more Rating Agencies.

“ Post-Default Rate ”: In respect of any day a Transaction is outstanding or any other amount under this Agreement or any other Repurchase Document is not paid when due to the Deal Agent, the Purchaser, any Secured Party or any Affected Party at the stated Repurchase Date or otherwise when due, a rate per annum determined on a 360 day per year basis during the period from and including the due date to but excluding the date on which such amount is paid in full equal to the applicable Rate plus 500 basis points.

“ Preferred Dividends ”: Means, for any period and without duplication, all Restricted Payments paid or required to be paid during such period on Preferred Securities issued by NorthStar or any Consolidated Subsidiary. Preferred Dividends shall not include dividends or distributions (a) paid or payable solely in Equity Interests (other than Mandatory Redeemable Stock) payable to holders of such class of Equity Interests; (b) paid or payable to NorthStar or any Consolidated Subsidiary; or (c) constituting or resulting in the redemption of Preferred Securities, other than scheduled redemptions not constituting balloon, bullet or similar redemptions in full.

“ Preferred Equity Grantor ”: The entity in which a Preferred Equity Interest represents an investment.

“ Preferred Equity Interest ”: The entire Equity Interest representing the preferred equity interest in an entity that owns directly or indirectly Commercial Real Estate, including, but not limited to, all equity interests representing a dividend on any of the Equity Interest of the Preferred Equity Grantor or representing a distribution or return of capital upon or in respect of the Equity Interest of the Preferred Equity Grantor, in each case as it relates to a Preferred Equity Interest; provided , however , (i) such Preferred Equity Interest must contain a synthetic maturity feature acceptable to the Deal Agent in its discretion, (ii) the Purchaser’s funding of the Preferred Equity Interest is subject to regulatory and compliance criteria, (iii) the Deal Agent reserves the right in its reasonable discretion to require that each Preferred Equity Interest be acquired by and transferred to the Purchaser or its designee by a special purpose entity as a co-Seller under the Agreement and for the co-Seller to execute the Deal Agent’s then current form of joinder agreement as a condition to the purchase of the Preferred Equity Interest and (iv) the Preferred Equity Interest is structured so as to avoid consolidation of the Preferred Equity Interest and the other equity interests in the Preferred Equity Grantor, as required by customary legal and GAAP accounting requirements applicable to the Seller and the Deal Agent. All references to, and calculations required to be made in respect of, any principal and/or interest associated with any Preferred Equity Interest shall be deemed to refer to the face amount of such Preferred Equity Interest and the preferred return or yield (however such terms are denominated, as set forth in the related Mortgage Loan Documents), whether payable or accrued.

“ Preferred Equity Interest Documents ”: The related Authority Documents of the Preferred Equity Grantor together with any certificate, instrument or other tangible evidence of the Equity Interest in the Preferred Equity Grantor.

“ Preferred Equity Pledge and Security Agreement ”: The Preferred Equity Interest Pledge and Security Agreement, dated as of even date herewith, between the Seller, the Purchaser and Deal Agent relating to the Preferred Equity Interests, as such agreement is amended, modified, waived, supplemented, extended, restated or replaced from time to time.

“ Preferred Securities ”: Means, with respect to any Person, Equity Interest in such Person that are entitled to preference or priority over any other Equity Interest in such Person in respect of the payment (or accrual) of dividends or distribution of assets upon liquidation, or both.

“ Price Differential ”: For each Accrual Period or portion thereof and each Transaction outstanding, the sum of the products (for each day during such Accrual Period or portion thereof) of:

		PR x PP x	1
			D
where:
PR	=	the Pricing Rate applicable on such day;
PP	=	the Purchase Price for such Transaction on such day; and
D	=	360 or, to the extent the Rate is based on the Base Rate, 365 or 366 days, as applicable;

provided , however , that (i) no provision of this Agreement shall require the payment or permit the collection of any Price Differential in excess of the maximum permitted by Applicable Law and (ii) the Price Differential shall not be considered paid by any distribution if at any time such distribution is rescinded or must otherwise be returned for any reason.

“ Pricing Rate ”: With respect to each Transaction, at any date of determination, a rate per annum equal to the sum of (a) the applicable Rate on such date plus (b) the applicable Pricing Spread for such Eligible Asset on such date, as such Pricing Spreads are set forth in the Fee Letter (or, if not set forth therein in the case of the Preferred Equity Interests and Construction Loans, as set forth in the related Confirmation).

“ Pricing Spread ”: Subject to the Refinance Option, the financing spreads set forth on Schedule 1 to the Fee Letter (or, in the case of the Preferred Equity Interests and Construction Loans, as set forth in the related Confirmation) corresponding to the Classes and, as applicable, Types of Mortgage Assets set forth therein; provided , however , from and after an Event of Default, the Pricing Spread for each Transaction shall automatically be increased by an additional 500 basis points above and beyond the applicable Pricing Spread set forth in the Fee Letter (or, in the case of the Preferred Equity Interests and Construction Loans, as set forth in the Confirmation).

“ Prime Rate ”: The rate announced by Wachovia from time to time as its prime rate in the United States, such rate to change as and when such designated rate changes. The Prime Rate is not intended to be the lowest rate of interest charged by Wachovia in connection with extensions of credit to debtors.

“ Prohibited Person ”: Means (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (iii) a Person with whom the Seller, the Guarantor and/or the Pledgor is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (iv) a Person who commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, (v) an agency of the government of, an organization directly or indirectly controlled by, or a Person resident in, a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html , or as otherwise published from time to time, as such program may be applicable to such agency, organization or person, (vi) a Person that is named as a “specially designated national or blocked person” on the most current list maintained or published by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sdn.index.html or at any replacement website or in any other official publication of such list, and (vii) a Person who is affiliated with a Person described in clauses (i) - (vi) above.

“ Property ”: Any right or interest in or to property of any kind whatsoever, whether real, personal or mixed, and whether tangible or intangible.

“ PSA Servicer ”: A third party servicer (other than the Seller, the Guarantor or any Affiliates of the foregoing) servicing all or a portion of the Purchased Assets under a Pooling and Servicing Agreement.

“ Purchase Agreement ”: Any purchase agreement by and between the Seller and any third party, including, without limitation, any Affiliate of the Seller, pursuant to which the Seller has purchased Mortgage Assets subsequently sold to the Purchaser or its designee hereunder.

“ Purchase Date ”: The date on which Eligible Assets are transferred by the Seller to the Purchaser or its designee (including, without limitation, any First Refinance Purchase Date or Second Refinance Purchase Date), or, as applicable, the date on which additional advances (if any) are made to the Seller in connection with an existing Purchased Asset in accordance with Subsection 2.2(j) of this Agreement.

“ Purchase Price ”: On each Purchase Date, the price at which Purchased Assets are transferred by the Seller to the Purchaser or its designee, which amount shall be equal (unless the Seller requests a lesser amount) to the Asset Value for each such Eligible Asset on the Purchase Date, (i) decreased by the amount of any cash transferred by the Seller to the Deal Agent as agent for the Secured Parties pursuant to Section 2.3 or 2.7 of this Agreement or applied to reduce the Seller’s obligations in respect of principal under Section 2.8 hereof, or otherwise in accordance with, this Agreement and (ii) increased by the amount of any additional advances (if any) under Article II of the Agreement.

“ Purchased Asset Data Summary ”: Defined in Subsection 5.1(q)(iii) of this Agreement.

“ Purchased Assets ”: The Eligible Assets transferred by the Seller to the Purchaser or its designee pursuant to a Transaction in accordance with the terms of this Agreement, including Additional Purchased Assets.

“ Purchased Items ”: Defined in Subsection 8.1(a) of this Agreement.

“ Purchaser ”: Individually or collectively as the context requires, VFCC, the Swingline Purchaser, the Deal Agent and the successors and assigns of the foregoing. The only designee of the Purchaser hereunder or under the other Repurchase Documents shall be the Deal Agent and the Deal Agent shall be required to reconvey Purchased Assets to the Seller on the same terms and conditions as the Purchaser.

“ Rate ”: For any Accrual Period and for each Transaction outstanding and for each day during such Accrual Period:

( a ) to the extent the Purchaser has funded the applicable Transaction through the issuance of commercial paper, a rate equal to the applicable CP Rate; or

( b ) to the extent the Purchaser did not fund the applicable Transaction through the issuance of commercial paper, a rate equal to the Alternative Rate;

provided , however , the Rate shall be the Base Rate for any Accrual Period and for any Transaction as to which VFCC has funded the making or maintenance thereof by a sale of an interest therein to any Liquidity Bank under the Liquidity Agreement on any day other than the first (1st) day of such Accrual Period and without giving such Liquidity Bank(s) at least two (2) Business Days’ prior notice of such assignment.

“ Rating Agency ”: Each of S&P, Moody’s, Fitch and any other nationally recognized statistical rating agency that has been requested to issue a rating with respect to the commercial paper notes issued by the Issuer in connection with the matter at issue, including successors of the foregoing.

“ Ratings Confirmation ”: With respect to VFCC and any other Purchaser that is a commercial paper conduit, a confirmation by each of the Rating Agencies that a proposed amendment, waiver or other modification shall not result in a downgrade or withdrawal of such Rating Agencies’ then current rating of the Commercial Paper Notes.

“ Refinance Option ”: Subject to the other provisions of this Agreement, the Seller shall repurchase each Purchased Asset no later than 364 calendar days from the related Purchase Date; provided , however , (i) with respect to any Purchased Asset purchased during the first or second year of the Facility and which is still outstanding under the Facility at the end of the applicable 364 calendar day period, upon the written request of the Seller delivered to the Deal Agent at anytime but no later than ten (10) Business Days prior to the applicable Repurchase Date, the Deal Agent agrees, concurrently with the Seller’s repurchase of any such Purchased Asset, to enter into a new Transaction to purchase any such Purchased Asset for an additional 364 calendar day period pursuant to a Transaction documented as a repurchase by the Seller and a purchase by the Purchaser, respectively, in book entry form (the date of such purchase under clause (i) of this definition of Refinance Option being referred to herein as the “ First Refinance Purchase Date ”), provided , that , in connection with and as a condition to any such new purchase, (1) at the time of such request by the Seller and up to the time of such purchase, the following shall be true and the Seller shall provide the Deal Agent with a written certification that: (A) no Event of Default has occurred and is continuing, (B) the related Purchased Asset is not a Delinquent Mortgage Asset or Defaulted Mortgage Asset, (C) the related Purchased Asset, the related Underlying Mortgaged Property and/or the value or Market Value of any of the foregoing has not deteriorated materially (as determined by the Deal Agent in its discretion) from the original Purchase Date, (D) the related Purchased Asset, the Underlying Mortgaged Property and any applicable development plan are performing as expected at the Purchase Date, including, but not limited to, with respect to such matters as construction progress, re-leasing, zoning, reserve balances and servicing, as determined by the Deal Agent in its discretion, (E) no Margin Deficit exists, (F) the outstanding principal amount of the Purchased Asset (including amounts not advanced against by the Purchaser) does not exceed $50,000,000 and (G) the Purchased Asset and/or the related Underlying Mortgaged Property do not involve condominiums (or condominium conversions), Construction Loans or land loans, (2) the new Repurchase Date is not later than the Facility Maturity Date (not including any extensions thereof under Subsection 2.4(a) of this Agreement), (3) notwithstanding anything contained in the Repurchase Documents to the contrary, the Advance Rate for the Purchased Asset shall initially be the lesser of 80% and the Advance Rate otherwise applicable to such Purchased Asset, but such Advance Rate shall automatically decrease by 5% every six (6) months after the First Refinance Purchase Date and the Seller shall, after each such decrease in the Advance Rate, make principal payments to the Deal Agent in an amount necessary so that the Purchase Price outstanding for the related Purchased Asset is equal to or less than the Purchase Price based on the reduced Advance Rate and, in connection with such principal payments, pay any Price Differential due thereon and any Breakage Costs payable in connection therewith, (4) notwithstanding anything contained in the Repurchase Documents to the contrary, the applicable Pricing Spread for the Purchased Asset shall initially be the Pricing Spread then in effect for such Purchased Asset, but such Pricing Spread shall automatically increase an additional ten (10) basis points (above and beyond the Pricing Spread otherwise applicable to such Purchased Asset) every three (3) months after the First Refinance Purchase Date, and (5) the Deal Agent and the Seller execute a new Confirmation with respect to such Purchased Asset reflecting the new Repurchase Date (which shall be no later than 364 calendar days after such First Refinance Purchase Date) and any additional terms as the Deal Agent may require in its discretion and (ii) the Seller shall thereafter repurchase each Purchased Asset that was purchased by the Purchaser in accordance with clause (i) of this definition of Refinance Option no later than 364 calendar days from the Repurchase Date; provided , further , however , (x) with respect to any Purchased Asset purchased during the first year of the Facility and subsequently repurchased by the Seller and purchased by the Purchaser in accordance with clause (i) of this definition of Refinance Option and which are still outstanding under the Facility as of the Repurchase Date, upon the written request of the Seller delivered to the Deal Agent at anytime but no later than ten (10) Business Days prior to the applicable Repurchase Date, the Deal Agent agrees, concurrently with the Seller’s repurchase of any such Purchased Asset, to enter into a new Transaction to purchase any such Purchased Asset for an additional 364 calendar day period pursuant to a Transaction documented as a repurchase by the Seller and a purchase by the Purchaser, respectively, in book entry form (the date of such purchase under clause (x) of this definition of Refinance Option being referred to herein as the “ Second Refinance Purchase Date ”), provided , that , in connection with and as a condition to any such new purchase, (1) at the time of such request by the Seller and up to the time of such purchase, the following shall be true and the Seller shall provide the Deal Agent with a written certification that: (A) no Event of Default has occurred and is continuing, (B) the related Purchased Asset is not a Delinquent Mortgage Asset or Defaulted Mortgage Asset, (C) the related Purchased Asset, the related Underlying Mortgaged Property and/or the value or Market Value of any of the foregoing has not deteriorated materially (as determined by the Deal Agent in its discretion) from the First Refinance Purchase Date in accordance with clause (i) of this definition of Refinance Option, (D) the related Purchased Asset, the Underlying Mortgaged Property and any applicable development plan are performing as expected at the Purchase Date, including, but not limited to, with respect to such matters as construction progress, re-leasing, zoning, reserve balances and servicing, as determined by the Deal Agent in its discretion, (E) no Margin Deficit exists, (F) the outstanding principal amount of the Purchased Asset (including amounts not advanced against by the Purchaser) does not exceed $50,000,000 and (G) the Purchased Asset and/or the related Underlying Mortgaged Property do not involve condominiums (or condominium conversions), Construction Loans or land loans, (2) the new Repurchase Date is not later than the Facility Maturity Date (not including any extensions thereof under Subsection 2.4(a) of this Agreement), (3) notwithstanding anything contained in the Repurchase Documents to the contrary, the Advance Rate for the Purchased Asset shall initially be the Advance Rate in effect prior to the Second Refinance Purchase Date (as determined under clause (i)(3) of this definition of Refinance Option), but such Advance Rate shall automatically decrease by 5% every six (6) months after the Second Refinance Purchase Date and the Seller shall, after each such decrease in the Advance Rate, make principal payments to the Deal Agent in an amount necessary so that the Purchase Price outstanding for the related Purchased Asset is equal to or less than the Purchase Price based on the reduced Advance Rate and, in connection with such principal payments, pay any Price Differential due thereon and any Breakage Costs payable in connection therewith, (4) notwithstanding anything contained in the Repurchase Documents to the contrary, the applicable Pricing Spread for the Purchased Asset shall initially be the Pricing Spread in effect prior to the Second Refinance Purchase Date (as determined under clause (i)(4) of this definition of Refinance Option), but automatically increase an additional ten (10) basis points (above and beyond the Pricing Spread otherwise applicable to such Purchased Asset) every three (3) months after the Second Refinance Purchase Date, and (5) the Deal Agent and the Seller execute a new Confirmation with respect to such Purchased Asset reflecting the new Repurchase Date (which shall be no later than 364 calendar days after such Second Refinance Purchase Date) and any additional terms as the Deal Agent may require in its discretion and (y) the Seller shall repurchase each Purchased Asset that was purchased by the Purchaser in accordance with clause (x) of this definition of Refinance Option no later than 364 calendar days from the Repurchase Date. For the avoidance of doubt, in no event may any Repurchase Date extended under this definition of Refinance Option or otherwise under this Agreement be later than the Facility Maturity Date (not including any extensions thereof under Subsection 2.4(a) of this Agreement).

“ Regulations T, U and X ”: Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be amended from time to time.

“ REIT ”: A Person qualifying for treatment as a “real estate investment trust” under the Code.

“ Related Party Loan ”: Any loan, Indebtedness or preferred equity investment identified or presented as a related party loan in such Person’s and its Consolidated Subsidiaries’ consolidated financial statements or in the notes to the consolidated financial statements, in accordance with GAAP; provided , however , the term Related Party Loan shall not include negotiated, arms-length, market standard loan transactions with third parties.

“ Release ”: Any generation, treatment, use, storage, transportation, manufacture, refinement, handling, production, removal, remediation, disposal, presence or migration of Materials of Environmental Concern on, about, under or within all or any portion of any Property or Underlying Mortgaged Property.

“ Remedial Work ”: Any investigation, inspection, site monitoring, containment, clean-up, removal, response, corrective action, mitigation, restoration or other remedial work of any kind or nature because of, or in connection with, the current or future presence, suspected presence, Release or threatened Release in or about the air, soil, ground water, surface water or soil vapor at, on, about, under or within all or any portion of any Property or Underlying Mortgaged Property of any Materials of Environmental Concern, including any action to comply with any applicable Environmental Laws or directives of any Governmental Authority with regard to any Environmental Laws.

“ REMIC ”: A real estate mortgage investment conduit.

“ REO Property ”: Real property acquired by the Seller, including a Mortgaged Property, acquired through foreclosure of a Mortgage Asset or by deed in lieu of such foreclosure.

“ Reportable Event ”: Any of the events set forth in Section 4043(c) of ERISA or a successor provision thereof, other than those events as to which the notice requirement has been waived by regulation.

“ Repurchase Date ”: The earliest of (i) the Facility Maturity Date, (ii) the date that is 364 days from the Purchase Date, subject to the Refinance Option or (iii) the Business Day on which any Seller is to repurchase the Purchased Assets from the Purchaser or its designee (a) as specified by any Seller and agreed to by the Deal Agent in the related Confirmation or (b) if a Transaction is terminable by any Seller on demand, the date determined in accordance with Subsection 2.2(i) of this Agreement, as such dates in clauses (i) , (ii) and (iii) above may be modified by application of the provisions of Articles II or X of this Agreement.

“ Repurchase Documents ”: This Agreement, the Custodial Agreement, the Pledge and Security Agreement, the Account Agreement, the Security Account Control Agreement, the Fee Letter, the Guaranty, the Assignments, the Confirmations, the Custodial Fee Letter, all UCC financing statements (and amendments thereto) filed pursuant to the terms of this Agreement or any other Repurchase Document, the Preferred Equity Pledge and Security Agreement, any joinder agreement executed by a Seller and any additional document, certificate or agreement, the execution of which is necessary or incidental to or desirable for performing or carrying out the terms of the foregoing documents, as each of the foregoing documents is amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Repurchase Obligations ”: Defined in Subsection 8.1(b) of this Agreement.

“ Repurchase Price ”: The price at which Purchased Assets are to be transferred from the Purchaser or its designee (including the Custodian) to the Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price, the accrued and unpaid Price Differential applicable to each such Transaction as of the date of such determination plus any related Breakage Costs and other amounts owed with respect thereto.

“ Responsible Officer ”: With respect to any Person, any duly authorized officer of such Person with direct responsibility for the administration of the Repurchase Documents and also, with respect to a particular matter, any other duly authorized officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“ Restricted Payment ”: Means (a) any dividend or other distribution, direct or indirect, on account of any Equity Interest of NorthStar or any Consolidated Subsidiary now or hereafter outstanding, except a dividend payable solely in Equity Interests of identical class to the holders of that class; (b) any redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interest of NorthStar or any Consolidated Subsidiary now or hereafter outstanding; and (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Equity Interest of NorthStar or any Consolidated Subsidiary now or hereafter outstanding.

“ Retained Interest ”: (a) With respect to any Mortgage Asset with an unfunded commitment on the part of the Seller, all of the obligations, if any, to provide additional funding, contributions, payments or credits with respect to such Mortgage Asset, (b) all duties, obligations and liabilities of the Seller under any Mortgage Asset or any related Interest Rate Protection Agreement, including but not limited to any payment or indemnity obligations, and, (c) with respect to any Mortgage Asset that is transferred by the Seller to the Purchaser or its designee, (i) all of the obligations, if any, of the agent(s), trustee(s), servicer(s) or other similar persons under the documentation evidencing such Mortgage Asset and (ii) the applicable portion of the interests, rights and obligations under the documentation evidencing such Mortgage Asset that relate to such portion(s) of the Indebtedness that is owned by another lender or is being retained by the Seller pursuant to clause (a) of this definition.

“ S&P ”: Standard & Poor’s, a division of The McGraw Hill Companies, Inc., and any successor thereto.

“ Secured Parties ”: (i) VFCC, (ii) the Swingline Purchaser, (iii) all other Purchasers, (iv) the Deal Agent, (v) the Liquidity Banks, (vi) the Liquidity Agent, (vii) the Swap Counterparty, and (viii) successors and assigns of any of the foregoing.

“ Securities Account ”: The securities account set forth on Schedule 2 established in the name of the Seller into which all CMBS Securities that are Purchased Assets and other Purchased Items related thereto shall be deposited (except those CMBS Securities that are certificated securities within the meaning of Article 8 of the UCC), which Securities Account shall be subject to the Securities Account Control Agreement. Any Income on deposit or credited to the Securities Account shall be transferred by the Deal Agent from the Securities Account to the Collection Account on or prior to each Payment Date.

“ Securities Account Control Agreement ”: A letter agreement, dated as of even date herewith, among the Seller, the Deal Agent, the Purchaser and Wachovia in the form of Exhibit VI attached hereto.

“ Security Agreement ”: With respect to any Mortgage Asset, any contract, instrument or other document related to security for repayment thereof (other than the related Mortgage, Mortgage Note, Mezzanine Note or any other note, certificate or instrument) executed by the Borrower and/or others in connection with such Mortgage Asset, including, without limitation, any security agreement, UCC financing statement, Liens, warranties, guaranty, title insurance policy, hazard insurance policy, chattel mortgage, letter of credit, accounts, bank accounts or certificates of deposit or other pledged accounts, and any other documents and records relating to any of the foregoing.

“ Seller” : Individually and collectively as the context requires, NRFC WA Holdings, LLC, a Delaware limited liability company, NRFC WA Holdings II, LLC, a Delaware limited liability company, NRFC WA Holdings VII, LLC, a Delaware limited liability company, NRFC WA Holdings X, LLC, a Delaware limited liability company, NRFC WA Holdings XI, LLC, a Delaware limited liability company, NRFC WA Holdings XII, LLC, a Delaware limited liability company, and any other Person that becomes a party to the Repurchase Documents as a Seller, in each such case, together with their successors and permitted assigns. Each Seller shall be jointly and severally liable under the Repurchase Documents.

“ Seller Asset Schedule ”: Defined in the Custodial Agreement.

“ Seller-Related Obligations ”: Any obligations, liabilities and/or Indebtedness of the Seller and/or any Indebtedness of the Guarantor or the Pledgor under any other arrangement between the Seller, the Guarantor and/or the Pledgor on the one hand and the Deal Agent, the Purchaser, any Affiliate or any Subsidiary of the Deal Agent or the Purchaser (including, without limitation the obligations, liabilities and Indebtedness under the Swap Documents) and/or any commercial paper conduit for which Wachovia or an Affiliate or Subsidiary of Wachovia acts as a liquidity provider, administrator or agent on the other hand; provided , however , Seller-Related Obligations shall be deemed to include the obligations, liabilities and Indebtedness of (i) NRF-Reindeer Ltd. and the Guarantor under the Note Purchase Agreement and (ii) the Seller and Guarantor under the Wachovia Repurchase Facility.

“ Seller’s Release Letter ”: A letter, substantially in the form of Exhibit XII-A hereto, delivered by the Seller when no Warehouse Lender has an interest in an Eligible Asset, releasing, subject to the terms of this Agreement, all of the Seller’s right, title and interest in such Eligible Asset upon receipt of the related Purchase Price by the Seller.

“ Senior Secured Bank Debt ”: An assignment of or participation in all or a portion of a secured senior term loan to a Borrower, which loan (a) is rated B- or better by at least two (2) Rating Agencies, (b) is senior or pari passu with other secured obligations of such Borrower and (c) is secured by (i) 100% of the Equity Interest of each existing and subsequently acquired or organized direct or indirect domestic Subsidiary of the Borrower and (ii) substantially all tangible and intangible assets (including, but not limited to, inventory, accounts receivable, plant, machinery, equipment, fixtures, Commercial Real Estate, leasehold interests, intellectual property, contracts, license rights and other general intangibles and investment property) of the Borrower. Each Senior Secured Bank Debt is subject to such additional underwriting criteria and other terms, conditions and requirements as the Deal Agent may require in its discretion.

“ Servicer ”: A Person (other than the Seller) servicing all or a portion of the Purchased Assets under a Servicing Agreement, which Servicer shall be acceptable to the Deal Agent in its discretion.

“ Servicer Account ”: Any account established by a Servicer or a PSA Servicer in connection with the servicing of the Purchased Assets.

“ Servicer Default ”: Defined in Section 6.10 of this Agreement.

“ Servicer Redirection Notice ”: The notice from the Seller to a Servicer or PSA Servicer, as applicable, substantially in the form of Exhibit VII attached hereto.

“ Servicing Agreement ”: An agreement entered into by the Seller and a third party for the servicing of the Purchased Assets, the form and substance of which has been approved in writing by the Deal Agent in its reasonable discretion.

“ Servicing File ”: With respect to each Purchased Asset, the file retained by the Seller consisting of the originals of all documents that are not required to be delivered to the Custodian and copies of all documents in the Mortgage Asset File set forth in Section 3.1 of the Custodial Agreement, which Servicing File shall be held by the Seller or Servicer on behalf of the Deal Agent as agent for the Secured Parties.

“ Servicing Records ”: Defined in Section 6.2 of this Agreement.

“ Solvent ”: As to any Person at any time, having a state of affairs such that all of the following conditions are met: (a) the fair value of the Property of such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code; (b) the present fair salable value of the Property of such Person in an orderly liquidation of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its Property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s Property would constitute unreasonably small capital.

“Sub-Limit” : With respect to the characteristics of the Mortgage Assets or Purchased Assets, as applicable:

( a ) the aggregate Purchase Price for all outstanding Transactions involving Mezzanine Loans shall not exceed 67% of the Maximum Amount;

( b ) the aggregate Purchase Price for all outstanding Transactions involving CTL Loans and/or Subordinate CTL Loans shall not exceed 50% of the Maximum Amount;

( c ) the aggregate Purchase Price for all outstanding Transactions involving Ground Leases shall not exceed 35% of the Maximum Amount;

( d ) the aggregate Purchase Price for all outstanding Transactions involving hotels shall not exceed 45% of the Maximum Amount;

( e ) the aggregate Purchase Price for all outstanding Transactions involving Construction Loans shall not exceed 35% of the Maximum Amount;

( f ) the aggregate Purchase Price for all outstanding Transactions involving Underlying Mortgage Properties located in the same metropolitan statistical area shall not exceed 50% of the Maximum Amount;

( g ) the aggregate Purchase Price for any single outstanding Transaction or for multiple Transactions to a single Borrower (including any Affiliate of a Borrower) shall not exceed 40% of the Maximum Amount;

( h ) the aggregate Purchase Price for all outstanding Transactions involving CMBS Securities or Senior Secured Bank Debt rated BB- or below by any Rating Agency shall not exceed 25% of the Maximum Amount; and

( i ) the aggregate Purchase Price for all outstanding Transactions involving Preferred Equity Interests shall not exceed 25% of the Maximum Amount.

“ Subordinate CTL Loan ”: (i) A loan that is a CTL Loan in all respects except for the failure to satisfy the ratings requirements for a Credit Tenant or (ii) a performing Junior Interest or Mezzanine Loan in which the related senior loan is secured by a first priority perfected security interest in Commercial Real Estate 100% leased to, or guaranteed in full by, a Credit Tenant, and such Junior Interest or Mezzanine Loan, as applicable, itself is secured by a first priority perfected security interest in and to the payments under the Credit Tenant Lease; provided , however , in the case of both clauses (i) and (ii) , such Subordinate CTL Loan satisfies such additional underwriting criteria and other terms, conditions and requirements as the Deal Agent may require in its discretion.

“ Subsidiary ”: With respect to any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions of such corporation, partnership, limited liability company or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person.

“ Swap Breakage Costs ”: For any Swap Transaction, any amount (other than Net Swap Payments) payable by the Seller to the Swap Counterparty for the early termination of that Swap Transaction or any portion thereof.

“ Swap Breakage Receipts ”: For any Swap Transaction, any amount (other than Net Swap Receipts) payable by the Swap Counterparty to the Seller for the early termination of that Swap Transaction or any portion thereof.

“ Swap Counterparty ”: Wachovia Bank, National Association and/or any Affiliate thereof, together with its successors and assigns.

“ Swap Documents ”: The Interest Rate Protection Agreements entered into by the Seller and the Swap Counterparty with respect to the Facility or any Purchased Asset, including all obligations, liabilities and Indebtedness thereunder, as such Swap Documents are amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Swap Transaction ”: Any interest rate swap transaction between the Seller and the Swap Counterparty that is governed by the Swap Documents.

“ Swingline Availability ”: The positive difference between the Swingline Maximum Amount and the aggregate Purchase Price of all outstanding Transactions funded by the Swingline Purchaser as Swingline Purchases.

“ Swingline Fee ”: Defined in the Fee Letter.

“ Swingline Funding Request ”: Defined in Section 2.16 of this Agreement.

“ Swingline Maximum Amount ”: 10% of the then Maximum Amount.

“ Swingline Purchase ”: The purchase of an Eligible Asset from the Seller by the Swingline Purchaser pursuant to the provisions of Articles II and III of this Agreement.

“ Swingline Purchaser ”: Wachovia Bank, National Association, together with its successors and assigns.

“ Table Funded Purchased Asset ”: A Purchased Asset which is sold to the Purchaser or its designee simultaneously with the origination or acquisition thereof, which origination or acquisition, pursuant to the Seller’s request, is financed with the Purchase Price and paid directly to a title company, settlement agent or other Person (including the Seller if the Deal Agent determines to fund to the Seller in the Deal Agent’s discretion) in trust for the current holder of the Mortgage Asset, in each case, approved in writing by the Deal Agent in its reasonable discretion, for disbursement to the parties entitled thereto in connection with such origination or acquisition. A Purchased Asset shall cease to be a Table Funded Purchased Asset after the Custodian has delivered a Trust Receipt (along with a completed Mortgage Asset File Checklist attached thereto) to the Deal Agent certifying its receipt of the Mortgage Asset File therefor.

“ Table Funded Trust Receipt ”: Defined in the Custodial Agreement.

“ Tangible Net Worth ”: As of a particular date and as to any Person:

( a ) all amounts that would be included under stockholder equity (or the equivalent) on a balance sheet of such Person and its Consolidated Subsidiaries (including minority interests relating to NorthStar Realty Finance L.P.) determined on a consolidated basis at such date determined in accordance with GAAP, less

( b ) in each case with respect to such Person and its Consolidated Subsidiaries determined on a consolidated basis (i) amounts owing to such Person from Affiliates, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or its respective Affiliates, (ii) intangible assets of such Person, as determined in accordance with GAAP, (iii) the value of REO Property and Foreclosed Loans of such Person, (iv) prepaid taxes and expenses, (v) unamortized hedging positions under Derivatives Contracts, and (vi) (without duplication) Related Party Loans.

“ Taxes ”: Any present or future taxes, levies, imposts, duties, charges, assessments or fees of any nature (including interest, penalties, and additions thereto) that are imposed by any Governmental Authority.

“ Temporary Increase Amount ”: Defined in the Fee Letter.

“ Temporary Increase Expiration Date ”: Defined in the Fee Letter.

“ Temporary Increase Indebtedness ”: Defined in the Fee Letter.

“ Temporary Increase Period ”: Defined in the Fee Letter.

“ Temporary Increase Provisions ”: Defined in the Fee Letter.

“ Temporary Ramp-Up Asset ”: Defined in the Fee Letter.

“ Temporary Ramp-Up Pricing Terms ”: Defined in the Fee Letter.

“ Test Period ”: The most recent calendar quarter.

“ Title Exception ”: Defined in Schedule 1 , Part I of this Agreement.

“ Total Assets ”: At any time, an amount equal to the aggregate book value of (a) all assets owned by any Person(s) (on a consolidated basis) and (b) the proportionate share of assets owned by non-consolidated Subsidiaries of such Person(s), less (i) amounts owing to such Person(s) from any Affiliates thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person(s) or their respective Affiliates, (ii) intangible assets (other than Interest Rate Protection Agreements specifically related to the Purchased Assets) and (iii) prepaid taxes and/or expenses.

“ Total Liabilities ”: Means all Indebtedness and Contingent Liabilities of any Person (without duplication) and all Subsidiaries thereof determined on a consolidated basis in accordance with GAAP.

“ Transaction ”: Defined in Section 2.1 of this Agreement.

“ Transaction Request ”: A request in the form of Exhibit I to this Agreement duly completed and executed by the Seller.

“ Transferor ”: The seller of mortgage assets under a Purchase Agreement.

“ True Sale Opinion ”: An Opinion of Counsel to the Seller opining that the subject transaction constitutes a “true sale”.

“ Trust Preferred Securities ”: Means those REIT trust preferred securities issued by NorthStar or its Affiliates identified on Schedule 7 attached hereto and such other REIT trust preferred securities issued by NorthStar and/or an Affiliate which are approved by the Deal Agent in its discretion, in each case which are expressly subordinated to all other Indebtedness of NorthStar and its Affiliates. REIT trust preferred securities issued by NorthStar and/or its Affiliates shall be deemed approved by the Deal Agent if such securities are issued on terms substantially similar to those securities listed on Schedule 7 , as determined by the Deal Agent in its reasonable discretion.

“ Trust Receipt ”: Defined in the Custodial Agreement.

“ Type ”: With respect to a Mortgage Asset, the classification of the Underlying Mortgaged Property as one of the following: multifamily, mobile home park, retail, office, industrial, hotel, self-storage facility, condominium conversions and entitled land.

“ UCC-9 Policy ”: Defined in Schedule 1 , Part II of this Agreement.

“ Underlying Mortgaged Property ”: (a) In the case of a Whole Loan, the Mortgaged Property securing the Whole Loan, (b) in the case of a Junior Interest, the Mortgaged Property securing such Junior Interest (if the Junior Interest is of the type described in clause (b) of the definition thereof), or the Mortgaged Property securing the mortgage loan in which such Junior Interest represents a participation (if the Junior Interest is of the type described in clause (a) of the definition thereof), (c) in the case of a Mezzanine Loan or a Junior Interest in a Mezzanine Loan, the Mortgaged Property that secures the senior mortgage loan, (d) in the case of a Bridge Loan, CTL Loan or Subordinate CTL Loan, the Mortgaged Property securing the Whole Loan, Junior Interest or Mezzanine Loan, as applicable, (e) in the case of a CMBS Security, the Mortgaged Properties backing such CMBS Securities, (f) in the case of Senior Secured Bank Debt, the Mortgaged Property, if any, securing such Senior Secured Bank Debt and (g) in the case of a Preferred Equity Interest, the Mortgaged Property owned directly or indirectly by the Preferred Equity Grantor.

“ Underwriting Package ”: With respect to any Mortgage Asset (other than a CMBS Security), the Underwriting Package shall include, to the extent applicable, (i) a copy of the Current Appraisal or, if unavailable, any other recent appraisal, (ii) the current rent roll, (iii) a minimum of two (2) years of property level financial statements to the extent available, (iv) the current financial statements of the Borrowers under the Mortgage Asset, and, if such Mortgage Asset is not a Whole Loan, the Borrower under the Commercial Real Estate Loan to the extent provided to or reasonably available to the applicable Seller upon request, (v) the loan documents, Authority Documents and title commitment/policy to be included in the Mortgage Asset File, together with copies of any appraisals, environmental reports, studies or assessments (to include, at a minimum, a phase I report), evidence of zoning compliance, property management agreements, assignments of property management agreements, contracts, licenses and permits, in each case to the extent in the Seller’s possession or reasonably available to the Seller and, if the Mortgage Asset is purchased by the Purchaser or its designee, assignments of such documents by the Seller in blank to the extent covered by assignments in blank delivered to the Custodian, (vi) any financial analysis, site inspection, market studies, environmental reports and any other diligence conducted by or provided to the Seller and (vii) such further documents or information as the Deal Agent may reasonably request. With respect to any CMBS Security, the Underwriting Package shall consist of, to the extent applicable, (i) the related prospectus or offering circular, (ii) all structural and collateral term sheets and all other computational or other similar materials provided to the Seller in connection with its acquisition of such CMBS Security, (iii) all distribution date statements issued in respect thereof during the immediately preceding twelve (12) months (or, if less, since the date such CMBS Security was issued), (iv) all monthly reporting packages issued in respect of such CMBS Security during the immediately preceding twelve (12) months (or, if less, since the date such CMBS Security was issued), (v) all Rating Agency pre-sale reports, (vi) all asset summaries and any other due diligence materials, including, without limitation, reports prepared by third parties, provided to the Seller in connection with its acquisition of such CMBS Security, and (vii) such further documents or information as the Deal Agent may reasonably request.

“ Uniform Commercial Code ” or “ UCC ”: The Uniform Commercial Code as in effect on the date hereof in the State of New York; provided that if by reason of mandatory provisions of Applicable Law, the perfection or the effect of perfection or non-perfection of the security interest in any Purchased Asset is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection.

“ United States ”: The United States of America.

“ Unsecured Credit Facility ”: The credit facility represented by the Revolving Credit Agreement, dated as of November 3, 2006, among NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership, NRFC Sub-REIT Corp. and NS Advisors, LLC, as borrowers, the lenders from time to time party thereto, KeyBank National Association, as administrative agent, Keybanc Capital Markets and Bank of America, N.A., as co-lead arrangers, KeyBank Capital Markets, as sole book manager, Bank of America, N.A., as syndication agent, and Citicorp North America, Inc., as documentation agent, as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, together with all other documents executed in connection therewith, as the same are amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Unused Fee ”: The “Unused Fee” payable under the Fee Letter.

“ Upsize Fee ”: The “Upsize Fee” payable under the Fee Letter.

“ USA Patriot Act ”: The “United and Strengthening America by providing Tools Required to Intercept and Obstruct Terrorism Act of 2001” (Public Law 107-56), as amended from time to time.

“ VFCC ”: Defined in the Preamble of this Agreement.

“ Wachovia ”: Wachovia Bank, National Association, a national banking association in its individual capacity, and its successors and assigns.

“ Wachovia Assets ”: Any Mortgage Asset issued or extended by Wachovia Corporation or an Affiliate of Wachovia Corporation.

“ Wachovia Repurchase Facility ”: The repurchase facility represented by the Amended and Restated Master Repurchase Agreement, dated as of even date herewith, among the Seller, the Guarantor and Wachovia, as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, together with all other documents executed in connection therewith, as the same are amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Warehouse Lender ”: Any lender (a) providing financing to the Seller for the purpose of warehousing, originating or purchasing Eligible Assets, or (b) providing financing to a party from whom the Seller is purchasing the Eligible Assets simultaneously with the purchase by the Purchaser or its designee.

“ Warehouse Lender’s Release Letter ”: A letter, substantially in the form of Exhibit XII-B hereto (or such other form acceptable to the Deal Agent in its discretion), from a Warehouse Lender to the Deal Agent, unconditionally releasing all of Warehouse Lender’s right, title and interest in certain Eligible Assets identified therein upon receipt of payment therefor by the Warehouse Lender.

“ WCM ”: Defined in the Preamble of this Agreement.

“ Whole Loan ”: A performing Commercial Real Estate whole loan (including, without limitation, a Construction Loan) secured by a first priority perfected security interest in the Underlying Mortgaged Property.

Section 1 . 2 Interpretation .

In each Repurchase Document, unless a contrary intention appears:

( i ) the singular number includes the plural number and vice versa ;

( ii ) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by the Repurchase Documents;

( iii ) reference to any gender includes each other gender;

( iv ) reference to day or days without further qualification means calendar days;

( v ) reference to any time means Charlotte, North Carolina time;

( vi ) reference to any agreement (including any Repurchase Document), document or instrument means such agreement, document or instrument as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time in accordance with the terms thereof and, if applicable, the terms of the other Repurchase Documents, and reference to any promissory note, certificate, instrument or trust receipt includes any promissory note, certificate, instrument or trust receipt that is an extension or renewal thereof or a substitute or replacement therefor;

( vii ) reference to any Applicable Law means such Applicable Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any Section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such Section or other provision;

( viii ) unless otherwise expressly provided in this Agreement, reference to any notice, request, approval, consent or determination provided for, permitted or required under the terms of the Repurchase Documents with respect to the Seller, the Guarantor, the Pledgor, the Deal Agent, the Purchaser or any other Secured Party means, in order for such notice, request, approval, consent or determination to be effective hereunder, such notice, request, approval or consent must be in writing and, with respect to notice to the Swap Counterparty only, such notice shall contain an acknowledgement of receipt signed by the Swap Counterparty; and

( ix ) reference herein or in any Repurchase Document to the Deal Agent’s, the Purchaser’s or any other Secured Party’s discretion shall mean, unless otherwise stated herein or therein, the Deal Agent’s, the Purchaser’s or the other Secured Party’s sole and absolute discretion, and the exercise of such discretion shall be final and conclusive. In addition, whenever the Deal Agent, the Purchaser or any other Secured Party has a decision or right of determination or request, exercises any right given to it to agree, disagree, accept, consent, grant waivers, take action or no action or to approve or disapprove, or any arrangement or term is to be satisfactory or acceptable (or any similar language or terms) to the Deal Agent, the Purchaser or any other Secured Party, the decision of the Deal Agent, the Purchaser or any other Secured Party with respect thereto shall be in the sole and absolute discretion of the Deal Agent, the Purchaser or any other Secured Party, and such decision shall be final and conclusive, except as may be otherwise specifically provided herein.

ARTICLE II

PURCHASE OF ELIGIBLE ASSETS

Section 2 . 1 Purchase and Sale .

Subject to the terms and conditions hereof, from time to time during the Facility Period (but at no time thereafter) and at the written request of the Seller, the parties hereto may enter into transactions in which the Seller transfers Eligible Assets to the Purchaser or its designee in a sales transaction against the transfer of funds by the Purchaser representing the Purchase Price for such Purchased Assets, with a simultaneous agreement by the Purchaser or its designee to transfer to the Seller and the Seller to repurchase such Purchased Assets in a repurchase transaction at a date certain not later than the Facility Maturity Date, against the transfer of funds by the Seller representing the Repurchase Price for such Purchased Assets. Each such transaction hereunder, including, without limitation, a Swingline Purchase and transfers of Additional Purchased Assets, shall be referred to herein as a “ Transaction ” and shall be governed by this Agreement, unless otherwise agreed to in writing.

Section 2 . 2 Transaction Mechanics; Related Matters .

( a ) From time to time during the Facility Period but no more frequently than once per week (other than Swingline Purchases which shall not be limited), the Purchaser may in the Deal Agent’s discretion purchase from the Seller the Seller’s rights and interests (but none of its obligations) under certain Eligible Assets; provided , however , (i) at no time shall the aggregate Purchase Price of the outstanding Transactions and any proposed Transactions exceed the Maximum Amount and (ii) at no time shall the Purchaser or its designee enter into Transactions after the Facility Period. The Seller shall request a Transaction by delivering to the Deal Agent, via Electronic Transmission, a written Transaction Request, together with, via Electronic Transmission (to the extent available in such form and otherwise by overnight delivery), a Seller Asset Schedule, a draft Confirmation and an Underwriting Package. Each Transaction Request shall be irrevocable. The Transaction Request shall set forth, among other things, (i) the proposed Purchase Date, that, except with respect to the initial Transaction, shall be at least ten (10) Business Days (or such additional reasonable time as the Deal Agent may reasonably request) after the delivery of the Transaction Request, the Seller Asset Schedule, the draft Confirmation, the complete Underwriting Package and any supplemental requests by the Deal Agent (requested orally or in writing) relating to the proposed Mortgage Assets, (ii) the proposed Purchase Price, which shall be a minimum amount of $5,000,000 for the initial advance of the Purchase Price and $500,000 for all subsequent advances of the Purchase Price, (iii) the proposed Repurchase Date, (iv) the applicable Class and Type for each such Mortgage Asset, and (v) such other additional terms and conditions requested by the Deal Agent in its reasonable discretion. The Deal Agent shall have ten (10) Business Days (or such additional reasonable time as the Deal Agent may reasonably request) from the receipt thereof to review the Transaction Request, the Seller Asset Schedule, the draft Confirmation, the Underwriting Package and any supplemental requests (requested orally or in writing) relating to the proposed Mortgage Assets.

( b ) The Deal Agent shall notify the Seller in writing of the Deal Agent’s tentative approval (and the proposed Purchase Price for each Mortgage Asset) or final disapproval of each proposed Mortgage Asset within ten (10) Business Days (or such additional reasonable time as the Deal Agent may reasonably request) after its receipt of the Transaction Request, the Seller Asset Schedule, the draft Confirmation, the complete Underwriting Package and any supplemental requests (requested orally or in writing) relating to such proposed Mortgage Asset. Unless the Deal Agent notifies the Seller in writing of the Deal Agent’s approval of such proposed Mortgage Asset within the applicable period, the Deal Agent shall be deemed not to have approved the purchase of such proposed Mortgage Asset.

( c ) Provided that the Deal Agent on behalf of the Purchaser has tentatively agreed to purchase the Mortgage Assets described in the Transaction Request and the proposed Purchase Price is acceptable to the Seller, the Seller shall forward to the Deal Agent, via Electronic Transmission, at least two (2) Business Days prior to the requested Purchase Date (which must be received by the Deal Agent no later than 5:00 p.m. two (2) Business Days prior to the requested Purchase Date) a completed and executed Confirmation with respect to each Transaction, which shall be irrevocable by the Seller, and a copy of the executed Assignment by the Seller; provided , however , if the Seller has requested in writing that the Swingline Purchaser fund the Mortgage Asset on an expedited basis, the executed Confirmation for the related Mortgage Asset shall be delivered to the Deal Agent no later than 2:00 p.m. on the related Purchase Date (unless such time period is modified by the Swingline Purchaser in its discretion). The Confirmation delivered by the Seller to the Deal Agent may specify any additional terms or conditions of the Transaction not inconsistent with this Agreement. Delivery of a Confirmation to the Deal Agent shall be deemed to be a certification by the Seller, among other things, that all conditions precedent to such Transaction set forth in Article III of this Agreement have been satisfied (except the Deal Agent’s consent). Unless otherwise agreed in writing, upon receipt of the Confirmation and Assignment, the Purchaser or its designee may, in the Deal Agent’s discretion, agree to enter into the requested Transaction with respect to a Mortgage Asset, with such additional terms, conditions and requirements contained in the Confirmation as the Deal Agent may require in its discretion (if additional terms, conditions or requirements are required by the Deal Agent, the Seller shall include such terms, conditions and/or requirements in the Confirmation to the extent it approves of same, and provide a re-executed Confirmation to the Deal Agent), and the Deal Agent’s agreement on behalf of the Purchaser to purchase the Mortgage Asset on the terms, conditions and requirements as the Deal Agent may require in its discretion shall be evidenced by the Deal Agent’s execution of the Confirmation. Any Confirmation executed by the Deal Agent shall be deemed to have been received by the Seller on the date actually received by the Seller.

( d ) (A) The Seller shall release or cause to be released to the Custodian in accordance with the Custodial Agreement (1) in the case of a single Non-Table Funded Purchased Asset, no later than 1:00 p.m. one (1) Business Day (for more than one (1) Non-Table Funded Purchased Asset, two (2) Business Days) prior to the requested Purchase Date, and, (2) in the case of a Table Funded Purchased Asset or a Swingline Purchase, no later than 1:00 p.m. three (3) Business Days following the applicable Purchase Date, the Mortgage Asset File pertaining to each Eligible Asset to be purchased by the Purchaser or its designee , and (B) the Seller shall deliver to the Custodian, in connection with the applicable delivery under clause (A) above, a Custodial Identification Certificate and a completed Mortgage Asset File Checklist required under Section 3.2 of the Custodial Agreement.

( e ) Pursuant to the Custodial Agreement, the Custodian shall deliver to the Deal Agent and the Seller by 1:00 p.m. on the Purchase Date for each Non-Table Funded Purchased Asset a Trust Receipt (along with a completed Mortgage Asset File Checklist attached thereto) and an Asset Schedule and Exception Report with respect to the Basic Mortgage Loan Documents for the Eligible Assets that the Seller has requested the Purchaser purchase on such Purchase Date. With respect to each Table Funded Purchased Asset and each Swingline Purchase, the Seller shall cause the Bailee to deliver to the Custodian, with a copy to the Deal Agent, no later than 1:00 p.m. on the Purchase Date, by Electronic Transmission, copies of the related Basic Mortgage Loan Documents, a fully executed Bailee Agreement, a Bailee’s Trust Receipt issued by the Bailee thereunder and such other evidence satisfactory to the Deal Agent in its reasonable discretion that all documents necessary to effect a transfer of the Eligible Assets to the Purchaser or its designee have been delivered to Bailee. With respect to each Table Funded Purchased Asset and each Swingline Purchase, the Custodian shall deliver to the Deal Agent with a copy to the Seller a Table Funded Trust Receipt no later than 3:00 p.m. on the Purchase Date, which receipt and all other documents delivered to the Bailee shall be acceptable to the Deal Agent in its reasonable discretion. In the case of a Table Funded Purchased Asset or a Swingline Purchase, no later than 3:00 p.m. on the second (2nd) Business Day following the Custodian’s receipt of the related Mortgage Loan Documents comprising the Mortgage Asset File, the Custodian shall deliver to the Deal Agent a Trust Receipt (along with a completed Mortgage Asset File Checklist attached thereto) certifying its receipt of the documents required to be delivered pursuant to the Custodial Agreement, together with an Asset Schedule and Exception Report relating to the Basic Mortgage Loan Documents, with any Exceptions identified by the Custodian as of the date and time of delivery of such Asset Schedule and Exception Report. The Custodian shall deliver to the Deal Agent an Asset Schedule and Exception Report relating to all of the Mortgage Loan Documents within five (5) Business Days of its receipt of the Mortgage Asset Files.

( f ) On the Purchase Date for each Eligible Asset to be purchased on such date, and provided the requirements set forth in this Agreement and the other Repurchase Documents are satisfied, including, without limitation, the delivery to the Deal Agent of a Trust Receipt or Table Funded Trust Receipt, as applicable, pursuant to Subsection 2.2(e) of this Agreement, ownership of the Purchased Assets shall be transferred to the Purchaser or its designee (subject to the terms of this Agreement) against the simultaneous transfer of the least of (A) Purchase Price, (B) the Availability to the Seller not later than 5:00 p.m. on such date, or (C) in the case of a Swingline Purchase, an amount equal to the Swingline Availability on such Purchase Date. The Seller hereby sells, transfers, conveys and assigns to the Purchaser or its designee all the right, title and interest (but none of the obligations) of the Seller in and to the Purchased Assets together with all right, title and interest in and to the proceeds of any related Purchased Assets (subject to the terms of this Agreement).

( g ) Each Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed between the Deal Agent and the Seller with respect to the Transaction to which the Confirmation relates. The Seller’s acceptance of the related proceeds shall, to the extent the Confirmation is not for any reason executed by the Seller, constitute the Seller’s agreement to the terms of such Confirmation. It is the intention of the parties that each Confirmation shall not be separate from this Agreement but shall be made a part of this Agreement.

( h ) In no event shall a Transaction be entered into when any Default or Event of Default has occurred and is continuing or when the Repurchase Date for such Transaction would be later than the Facility Maturity Date.

( i ) In the case of individual Transactions terminable upon demand (if any), such demand shall be made by the Deal Agent or the Seller no later than such time as is customary in accordance with market practice, by telephone or otherwise, at least two (2) Business Days prior to the Business Day on which such termination will be effective. The Seller shall repurchase the Purchased Assets by no later than 1:00 p.m. on the Repurchase Date. On a Repurchase Date, termination of a Transaction will be effected by transfer to the Seller or its designee of the Purchased Assets after the Deal Agent as agent for the Secured Parties receives the Repurchase Price for the Purchased Asset. In connection with the termination of a Transaction, any Income in respect of any Purchased Assets received by the Deal Agent as agent for the Secured Parties and not previously credited or transferred to, or applied to the obligations of, the Seller pursuant to Section 2.8 of this Agreement shall be netted against the Repurchase Price by the Deal Agent as agent for the Secured Parties. To the extent a net amount is owed to one party, the other party shall pay such amount to such party.

( j ) Subject to the terms and conditions of this Agreement, during the term of this Agreement, the Seller may sell to the Purchaser or its designee, repurchase from the Purchaser or its designee and resell to the Purchaser or its designee, Eligible Assets hereunder; provided , however , the Seller shall have no right to substitute an Eligible Asset for a Purchased Asset. To the extent the Seller requests less than the Purchase Price that it would otherwise be entitled to receive under the terms of this Agreement in connection with the purchase of any Eligible Asset, and such amount exceeds $500,000, and provided (A) no Default or Event of Default exists, (B) the Purchased Asset continues to be a Purchased Asset, (C) such Purchased Asset is not a Defaulted Mortgage Asset or Delinquent Mortgage Asset and (D) each applicable eligibility criteria set forth in Schedule 1 to this Agreement is satisfied in all material respects, the Seller may, by giving at least two (2) Business Days prior written notice (which notice must be received by the Deal Agent no later than 3:00 p.m. two (2) Business Days prior to the date of the requested Transaction), request an additional advance of the Purchase Price against such Purchased Asset in an amount not to exceed the positive difference (if any) between the current Purchase Price (calculated as if such Purchased Asset were purchased on such day) and the Purchase Price originally advanced by the Purchaser with respect thereto; provided , however , in no event shall the aggregate amounts advanced against such Purchased Asset exceed the maximum Purchase Price that the Purchaser was prepared to advance on the date the Purchased Asset was acquired by the Purchaser or its designee under this Agreement. If the Purchaser has advanced the full amount of the Purchase Price that is then available to the Seller on the Purchase Date for the purchase of the Purchased Asset, the Seller may request in writing that the Deal Agent reunderwrite the Purchased Asset and/or redetermine the Asset Value of such Purchased Asset (in each case in accordance with the same standards used by the Deal Agent with respect thereto at the time the Purchased Asset was originally purchased on the Purchase Date) for the purposes of obtaining additional advances of the Purchase Price with respect to such Purchased Asset, and, provided (A) no Default or Event of Default exists, (B) the Purchased Asset continues to be a Purchased Asset, (C) such Purchased Asset is not a Defaulted Mortgage Asset or Delinquent Mortgage Asset and (D) each applicable eligibility criteria set forth in Schedule 1 to this Agreement is satisfied in all material respects, the Deal Agent may, in its discretion, consider such request and may take such action (or no action) in response thereto as the Deal Agent may determine in its discretion.

( k ) All of the Seller’s right, title and interest in the Purchased Assets that constitute CMBS Securities shall pass to the Purchaser or its designee on the applicable Purchase Date. The Seller shall deliver to the Custodian on behalf of the Deal Agent as agent for the Secured Parties a complete set of all transfer documents to be completed by the Deal Agent as agent for the Secured Parties and executed copies of any transfer documents to be completed by the Seller, in either case in blank, but in form sufficient to allow transfer and registration of such Purchased Assets to the Deal Agent as agent for the Secured Parties no later than the proposed Purchase Date for the relevant Purchased Asset, and such CMBS Securities shall be medallion guaranteed. All transfers of certificated securities from the Seller to the Deal Agent as agent for the Secured Parties shall be effected by physical delivery to the Custodian of the Purchased Assets (duly endorsed by the Seller, in blank), together with a stock power executed by the Seller, in blank. With respect to Purchased Assets that shall be delivered through the DTC or the National Book Entry System of the Federal Reserve or any similar firm or agency, as applicable, in book-entry form and credited to or otherwise held in an account, the Seller shall take such actions necessary to provide instruction to the relevant financial institution, clearing corporation, securities intermediary or other entity to effect and perfect a legally valid delivery of the relevant interest granted herein to the Deal Agent as agent for the Secured Parties hereunder to be held in the Securities Account. Purchased Assets delivered in book-entry form shall be under the custody of and held in the name of the Deal Agent as agent for the Secured Parties in the Securities Account. With respect to any Mortgage Asset or collateral for a Mortgage Asset that is an uncertificated security (as defined in the UCC), securities entitlement (as defined in the UCC) or is held in a securities account (as defined in the UCC), the Seller shall provide to the Deal Agent as agent for the Secured Parties a control agreement, which shall be acceptable to the Deal Agent in its discretion and shall be delivered to the Custodian under the Custodial Agreement, executed by the issuer of the Mortgage Asset or the collateral for the Mortgage Asset or the related securities intermediary (as defined in the UCC), as applicable, granting control (as defined in the UCC) of such Mortgage Asset or collateral for such Mortgage Asset to the Deal Agent as agent for the Secured Parties and providing that, after an Event of Default, the Deal Agent shall be entitled to notify the issuer or securities intermediary, as applicable, that such issuer or securities intermediary shall comply exclusively with the instructions or entitlement orders (as defined in the UCC), as applicable, of the Deal Agent as agent for the Secured Parties without the consent of the Seller or any other Person and no longer follow the instructions or entitlement orders, as applicable, of the Seller or any other Person (other than the Deal Agent).

( l ) Notwithstanding anything contained in this Agreement to the contrary, the weighted average Advance Rates for all Purchased Assets (on a portfolio basis), as determined by the Deal Agent in its discretion, shall not exceed the advance rates for a CDO securitization transaction that involves similar Mortgage Assets and has an Investment Grade Rating. The Deal Agent may, in its discretion, adjust any or all Advance Rates set forth in Schedule 1 to the Fee Letter (or the Confirmations as applicable) with respect to the existing Purchased Assets to such Advance Rates which, when considered on a portfolio basis, would result in an Investment Grade Rating in a rated CDO securitization transaction for such Purchased Assets, and, if such adjustment is made, the Seller shall make principal payments to the Deal Agent as necessary so that the Purchase Price outstanding for all Purchased Assets is equal to or less than the Purchase Price for all Purchased Assets based on the adjusted Advance Rates, which principal payments shall be applied to the outstanding Purchase Price of one (1) or more Purchased Assets, as determined by the Deal Agent in its discretion, and, in connection with such principal payments, pay any Price Differential due thereon and any Breakage Costs payable in connection therewith.

Section 2 . 3 Optional Repurchase .

The Seller may, upon two (2) Business Days’ prior written notice or such shorter period as the Deal Agent may agree in its discretion (such notice to the Deal Agent, which notice shall be irrevocable and shall be received by the Deal Agent, no later than 5:00 p.m. (Charlotte, North Carolina time) on such day) to the Deal Agent and the Swap Counterparty, reduce the aggregate Repurchase Price of all Purchased Assets (or, prior to an Event of Default, any portion of all Purchased Assets or any individual Purchased Asset) currently outstanding by remitting (1) to the Collection Account cash in the amount of the principal reduction plus accrued and unpaid Price Differential and any related Breakage Costs owed in connection with such reduction and (2) to the Deal Agent instructions to reduce such Repurchase Price, provided that (A) in connection with such reduction the Seller shall comply with the terms of any related Interest Rate Protection Agreement requiring that the Interest Rate Protection Agreement be terminated in whole or in part as the result of any such reduction of the Repurchase Price and the Seller has paid all amounts due to the applicable parties in connection with any such termination and (B) after giving effect to such reduction, the Seller shall be in compliance with all Sub-Limits and all other terms, conditions and requirements contained in the Repurchase Documents and (c) each such reduction shall be in a minimum amount of $500,000.

Section 2 . 4 Extension of Facility Maturity Date and Funding Expiration Date .

Extension of Facility Maturity Date . At the written request of the Seller delivered to the Deal Agent no earlier than ninety (90) days and no later than thirty (30) days prior to the Facility Maturity Date, the Deal Agent may in its discretion grant one extension of the Facility Maturity Date for a period not to exceed one (1) year by giving written notice of such extension to the Seller no later than fifteen (15) days before the expiration of the Facility Maturity Date. Any failure by the Deal Agent to deliver such notice of extension on a timely basis shall be deemed to be the Deal Agent’s determination not to extend the original Facility Maturity Date. An extension of the Facility Maturity Date is subject to the following requirements: (i) no Default or Event of Default shall have occurred and is continuing, (ii) the Seller shall pay to the Deal Agent as agent for the Secured Parties an Extension Fee as set forth in the Fee Letter, (iii) no additional Transactions shall be permitted to be entered into after the original Facility Maturity Date, (iv) the Seller must, in addition to other amounts owed by the Seller hereunder, amortize and pay to the Deal Agent as agent for the Secured Parties the aggregate Repurchase Price for all Transactions then outstanding in equal quarterly installments over the term of the extension commencing with the original Facility Maturity Date and on the Payment Date for each quarter thereafter, (v) the Liquidity Agreement is extended for the same term, (vi) not later than the Facility Maturity Date (as extended in accordance with the terms of this Agreement), the Seller shall pay to Deal Agent as agent for the Secured Parties an amount equal to the aggregate Repurchase Price then outstanding, together with all other Aggregate Unpaids and any other amounts then owing to the Purchaser and the Affected Parties by the Seller pursuant to this Agreement or any other Repurchase Document, and (vii) if for any reason the Facility Maturity Date were extended beyond four (4) years from the Closing Date (by extensions of the Facility Maturity Date, amendments to the Facility or otherwise), to which the Deal Agent makes no promise or commitment whatsoever, continuation statements have been filed with respect to any outstanding UCC financing statement in favor of the Deal Agent as agent for the Secured Parties with respect to this Facility. The Seller confirms that the Deal Agent, in its discretion, without regard to the value or performance of the Purchased Assets or any other factor, may elect not to extend the Facility Maturity Date.

Section 2 . 5 Payment of Price Differential .

( a ) Notwithstanding that the Purchaser and the Seller intend that the Transactions hereunder be sales to the Purchaser or its designee of the Purchased Assets, the Seller shall pay to the Deal Agent as agent for the Secured Parties an amount equal to the accrued value of the Price Differential of each Transaction for the most recently ended Accrual Period (each such payment, a “ Periodic Advance Repurchase Payment ”) on each Payment Date less any portion thereof previously paid, if any. The Deal Agent shall deliver to the Seller, via Electronic Transmission, notice of the required Periodic Advance Repurchase Payment on or prior to the second (2nd) Business Day preceding each Payment Date; provided , however , the Deal Agent’s failure to timely deliver such notice shall not affect the Seller’s obligations to pay the Periodic Advance Repurchase Payment due. If the Seller fails to make all or part of the Periodic Advance Repurchase Payment by 11:00 a.m., Charlotte, North Carolina time, on the Payment Date, the Seller shall be obligated to pay to the Deal Agent as agent for the Secured Parties (in addition to, and together with, the Periodic Advance Repurchase Payment) interest on the unpaid amount of the Periodic Advance Repurchase Payment at a rate per annum equal to the Post-Default Rate (the “ Late Payment Fee ”) until the overdue Periodic Advance Repurchase Payment is received in full by the Deal Agent.

( b ) The Seller shall be responsible for the payment of all Breakage Costs incurred in connection with any repurchase or prepayment of the Repurchase Price or Price Differential. The Deal Agent shall deliver to the Seller a statement setting forth the amount and basis of determination of any Breakage Costs, it being agreed that such statement and the method of its calculation shall be conclusive and binding upon the Seller absent manifest error. This Subsection 2.5(b) shall survive termination of this Agreement and the repurchase of all Purchased Assets subject to Transactions hereunder.

Section 2 . 6 [ Reserved ].

Section 2 . 7 Margin Maintenance .

If at any time the Deal Agent determines in good faith (based on such factors as the Deal Agent determines to rely on in its discretion, including, but not limited to, a credit analysis of the Underlying Mortgaged Properties and/or the current market conditions for the Purchased Assets) that the Margin Base for all Purchased Assets (as determined by the Deal Agent in its good faith discretion on such date) is less than the aggregate Purchase Price for all outstanding Transactions (in each case a “ Margin Deficit ”), then the Deal Agent may by notice to the Seller in the form of Exhibit X (a “ Margin Deficit Notice ”) require the Seller to transfer to the Deal Agent as agent to the Secured Parties cash or Additional Purchased Assets in the amount of the Margin Deficit to the Deal Agent by no later than the Margin Correction Deadline. All cash transferred to the Deal Agent as agent for the Secured Parties pursuant to this Section 2.7 shall be deposited in the Collection Account and shall be attributed to such Transaction or Transactions that caused the Margin Deficit to reduce the outstanding Purchase Price to which it has been attributed. Transfers of Eligible Assets to the Purchaser or its designee under this Section 2.7 shall be subject to the same conditions and requirements that are applicable to the transfers of Eligible Assets under Section 2.2 . The Deal Agent’s election, in its discretion, not to deliver a Margin Deficit Notice at any time there is a Margin Deficit shall not waive the Margin Deficit or in any way limit or impair the Deal Agent’s right to deliver a Margin Deficit Notice at any time the same or any other Margin Deficit exists.

Section 2 . 8 Income Payments.

The Deal Agent as agent for the Secured Parties shall be entitled to receive for application in accordance with the provisions of this Agreement an amount equal to all Income paid or distributed on or in respect of the Purchased Items, which amount shall be deposited by the Seller, each Servicer and each PSA Servicer and all other applicable Persons into the Collection Account. The Seller hereby agrees to instruct each Servicer, PSA Servicer, Swap Counterparty, each counterparty under any other Interest Rate Protection Agreement and all other applicable Persons to transfer all Income with respect to the Purchased Items in accordance with Subsection 5.1(e) of this Agreement, who shall hold any funds so received pending application pursuant to the following sentence. On each Payment Date, any amounts received by the Deal Agent and deposited to the Collection Account since the immediately preceding Payment Date shall be applied as follows: first , to the extent not paid, to the payment of all outstanding fees, costs and expenses due to the Custodian under the Custodial Fee Letter; second , pari passu and pro-rata (based on the amounts owed to such Persons under this clause second ), to the payment of all fees, costs, expenses and advances then due to the Purchaser or the Swingline Purchaser, as applicable, pursuant to the Repurchase Documents, other than the items covered in third through ninth ; third , pari passu and pro-rata (based on the amounts owed to such Persons under this clause third ), to the payment of outstanding Late Payment Fees and Price Differential at the Post-Default Rate; fourth , pari passu and pro-rata (based on the amounts owed to such Persons under this clause fourth ), to the payment of accrued and unpaid Price Differential on the Purchased Assets then due to the Purchaser and to the Swap Counterparty any Net Swap Payments then due to the Swap Counterparty for the current and any prior Payment Dates (other than Swap Breakage Costs); fifth , pari passu and pro-rata (based on the amounts owed to such Persons under this clause fifth ), to the extent not previously paid by the Seller, to pay the Repurchase Price for Purchased Assets then subject to a request to repurchase in accordance with the terms of Section 2.3 of this Agreement or required to be repaid in accordance with Section 2.16 of this Agreement; sixth , pari passu and pro-rata (based on the amounts owed to such Persons under this clause sixth ), without limiting the Seller’s obligations to cure Margin Deficits in a timely manner in accordance with Section 2.7 of this Agreement, to the Purchaser for the payment of, as applicable, any Margin Deficit outstanding; seventh , pari passu and pro-rata (based on the amounts owed to such Persons under this clause seventh ), to the extent any Income includes payments or prepayments of principal on the underlying Purchased Assets, such payments shall be applied to reduce the aggregate Repurchase Price outstanding; provided , however , prior to an Event of Default and provided no Margin Deficit is outstanding, only an amount equal to the product of the Advance Rate and the amount of such principal payment or prepayment shall be applied to reduce the Repurchase Price outstanding for the related Transaction; eighth , pari passu and pro-rata (based on the amounts owed to such Persons under this clause eighth ), without limiting the Seller’s obligations under Section 2.4 of this Agreement and to the extent not paid previously by the Seller, to the Purchaser for the reduction of the Purchase Price outstanding in accordance with Section 2.4 of this Agreement; ninth , pari passu and pro-rata (based on the amounts owed to such Persons under this clause ninth ), to the payment of Breakage Costs, if any, Swap Breakage Costs, if any, Indemnified Amounts, if any, Increased Costs, if any, Additional Amounts, if any, and all other amounts then due and owing to the Purchaser, the Swap Counterparty, any Affected Party or any other Person pursuant to the Repurchase Documents; and tenth , the remainder to the Seller, for such purposes as the Seller shall determine in its discretion, subject to the Financial Covenants and other requirements of the Repurchase Documents; provided , however , that if a Margin Deficit, Default or Event of Default has occurred and is continuing, amounts collected pursuant to this Section 2.8 of this Agreement shall not be transferred to the Seller but shall be retained by the Deal Agent as agent for the Secured Parties and applied in reduction of the Obligations.

Section 2 . 9 Payment, Transfer and Custody .

( a ) Unless otherwise expressly provided herein, all amounts to be paid or deposited by the Seller hereunder shall be paid or deposited in accordance with the terms of this Agreement no later than 1:00 p.m. (EST) on the day when due in lawful money of the United States, in immediately available funds and without deduction, set-off or counterclaim to the Deal Agent’s Account and if not received before such time shall be deemed to be received on the next Business Day. The Seller shall, to the extent permitted by Applicable Law, pay to the Deal Agent as agent for the Secured Parties interest on any amounts not paid when due hereunder or under the Repurchase Documents at the Post-Default Rate, payable on demand; provided , however , that such interest rate shall not at any time exceed the maximum rate permitted by Applicable Law. Such interest shall be for the account of, and distributed to, the Purchaser. All computations of interest, Price Differential and fees hereunder or under the Fee Letter shall be made on the basis of a year consisting of 360 days (other than calculations with respect to the Base Rate which shall be based on a year consisting of 365 or 366 days, as applicable) for the actual number of days (including the first but excluding the last day) elapsed. All fees payable hereunder or under the Fee Letter shall accrue on the same basis as the CP Rate. The Seller acknowledges that it has no rights of withdrawal from the foregoing Deal Agent’s Account or from the Collection Account or the Securities Account.

( b ) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of the Price Differential or any fee payable hereunder or under the Fee Letter, as the case may be.

( c ) If any Transaction requested by the Seller and approved in writing by the Deal Agent pursuant to Sections 2.2 or 2.3 is not, for any reason, made or effectuated, as the case may be, on the date specified therefor, the Seller shall indemnify the Deal Agent, the Purchaser and each Secured Party against any reasonable loss, cost or expense incurred by the Deal Agent, the Purchaser and each Secured Party including, without limitation, any loss (including loss of anticipated profits, net of anticipated profits, if any, in the reemployment of such funds in the manner determined by the Deal Agent in its discretion), cost and expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Deal Agent, the Purchaser and any Secured Party to fund or maintain such Transaction. For the avoidance of doubt, (i) if the Purchaser issues Commercial Paper Notes in reliance on a Confirmation executed by the Seller, which Confirmation is irrevocable, and the Transaction is not consummated on the date specified therefor for any reason (including the failure to receive a Trust Receipt or a Table Funded Trust Receipt, as applicable, in a timely manner), the Seller shall be responsible for the amounts referred to in the preceding sentence (including, without limitation, interest and Breakage Costs) in connection with the Purchaser’s repayment, holding or any other disposition of such Commercial Paper Notes and (ii) even if the Purchaser issues Commercial Paper Notes in reliance on an irrevocable Confirmation executed by the Seller, the Purchaser will not fund any Purchased Price until the conditions of this Agreement are satisfied, including, without limitation, the delivery to the Deal Agent of a Trust Receipt or Table Funded Trust Receipt, as applicable, as provided in Subsection 2.2(e) of this Agreement.

( d ) Any Mortgage Asset Files not delivered to the Purchaser or its designee (including the Deal Agent or Custodian) are and shall be held in trust by the Seller or its agent for the benefit of the Purchaser as the owner thereof. The Seller or its agent shall maintain a copy of the Mortgage Asset File and the originals of the Mortgage Asset File not delivered to the Purchaser or its designee (including the Deal Agent or Custodian). The possession of the Mortgage Asset File by the Seller or its agent is at the will of the Purchaser for the sole purpose of servicing the related Purchased Asset, and such retention and possession by the Seller or its agent is in a custodial capacity only. Each Mortgage Asset File retained or held by the Seller or its agent shall be segregated on the Seller’s books and records from the other assets of the Seller or its agent, and the books and records of the Seller or its agent shall be marked appropriately to reflect clearly the sale of the related Purchased Asset to the Purchaser or its designee. The Seller or its agent shall release custody of the Mortgage Asset File only in accordance with written instructions from the Deal Agent, unless such release is required as incidental to the servicing of the Purchased Assets or is in connection with a repurchase of any Purchased Asset by the Seller, in each case in accordance with the terms of the Custodial Agreement.

( e ) Notwithstanding anything contained in this Agreement to the contrary, all Repurchase Price and all other Obligations shall be paid in full on or before the Facility Maturity Date.

Section 2 . 10 [ Reserved ].

Section 2 . 11 Hypothecation or Pledge of Purchased Assets .

Title to all Purchased Items shall pass to the Purchaser or its designee, and the Purchaser or its designee shall have free and unrestricted use of all Purchased Items subject to the terms of this Agreement. Nothing in this Agreement shall preclude the Purchaser or its designee from engaging in repurchase transactions with the Purchased Items or otherwise selling, pledging, syndicating, repledging, transferring, hypothecating, or rehypothecating the Purchased Items, all on terms that the Deal Agent may determine in its discretion subject, however, to the Deal Agent’s and the Purchaser’s obligations to apply Income and reconvey the Purchased Assets to the Seller in accordance with the terms hereof. Notwithstanding the foregoing, the Purchaser or its designee shall reconvey, without recourse, representation or warranty, the Purchased Items to the Seller free and clear of all Liens created by the Purchaser or any party claiming by or through the Purchaser or its designee, in accordance with the terms of this Agreement.

Section 2 . 12 Fees .

( a ) On or prior to the Closing Date, the Seller shall pay to the Deal Agent on behalf of the Purchaser the Commitment Fee agreed to by the Seller and the Purchaser in the Fee Letter.

( b ) To the extent not separately paid by the Seller under the Fee Letter, the Price Differential, the Unused Fee, the Swingline Fee and all other fees and amounts payable under the Fee Letter shall be paid to the Purchaser from the Collection Account to the extent funds are available on each Payment Date pursuant to Section 2.8 of this Agreement.

( c ) To the extent not separately paid by the Seller, the Custodian’s fees and expenses shall be paid to the Custodian from the Collection Account to the extent funds are available on each Payment Date pursuant to Section 2.8 of this Agreement.

( d ) The Seller shall pay to Moore & Van Allen PLLC, as counsel to the Deal Agent and Purchaser, on the Closing Date, its estimated, but reasonable, fees and out-of-pocket expenses in immediately available funds and shall pay all additional fees and out-of-pocket expenses of Moore & Van Allen PLLC (including reasonable fees and expenses incurred in reviewing proposed Mortgage Assets for purchase by the Purchaser or its designee, within ten (10) days after receiving an invoice for such amounts.

Section 2 . 13 Increased Costs; Capital Adequacy; Illegality .

( a ) If either (i) the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements) in or in the interpretation of any law or regulation, or (ii) the compliance by the Purchaser and/or any other Affected Party with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) shall (1) subject the Purchaser and/or any other Affected Party to any Tax (except for Taxes on the overall net income or franchise of the Purchaser and/or any other Affected Party), duty or other charge with respect to any ownership interest in the Purchased Items, or any right to enter into Transactions hereunder, or on any payment made hereunder, (2) impose, modify or deem applicable any reserve requirement (including, without limitation, any reserve requirement imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve requirement, if any, included in the determination of the Price Differential), special deposit or similar requirement against assets of, deposits with or for the amount of, or credit extended by, the Purchaser and/or any other Affected Party or (3) impose any other condition affecting the ownership interest in the Purchased Items conveyed to the Purchaser hereunder or the Deal Agent’s, the Purchaser’s and/or any other Affected Party’s rights hereunder, the result of which is to increase the cost to the Deal Agent, the Purchaser and/or any other Affected Party or to reduce the amount of any sum received or receivable by the Purchaser and/or any other Affected Party under this Agreement, then within ten (10) days after demand by the Deal Agent, the Purchaser and/or any other Affected Party (which demand shall be accompanied by a statement setting forth the basis for such demand), the Seller shall pay directly to the Deal Agent, the Purchaser and/or any other Affected Party such additional amount or amounts as will compensate the Purchaser and/or any other Affected Party for such additional or increased cost incurred or such reduction suffered.

( b ) If either (i) the introduction of or any change in or in the interpretation of any law, guideline, rule, regulation, directive or request or (ii) compliance by the Purchaser and/or any other Affected Party with any law, guideline, rule, regulation, directive or request from any central bank or other Governmental Authority or agency (whether or not having the force of law), including, without limitation, compliance by the Purchaser and/or any other Affected Party with any request or directive regarding capital adequacy, has or would have the effect of reducing the rate of return on the capital of the Purchaser and/or any other Affected Party as a consequence of its obligations hereunder or arising in connection herewith to a level below that which the Purchaser and/or any other Affected Party could have achieved but for such introduction, change or compliance (taking into consideration the policies of the Purchaser and/or any other Affected Party with respect to capital adequacy) by an amount deemed by the Purchaser and/or any other Affected Party to be material, then from time to time, within ten (10) days after demand by the Deal Agent on behalf of the Purchaser and/or any other Affected Party (which demand shall be accompanied by a statement setting forth the basis for such demand), the Seller shall pay directly to the Deal Agent on behalf of the Purchaser and/or any other Affected Party such additional amount or amounts as will compensate the Purchaser and/or any other Affected Party for such reduction. For the avoidance of doubt, any interpretation of Accounting Research Bulletin No. 51 by the Financial Accounting Standards Board shall constitute an adaptation, change, request or directive subject to this Subsection 2.13(b) .

( c ) If as a result of any event or circumstance similar to those described in Subsections (a) or (b) of this Section 2.13 , the Purchaser or any Affected Party is required to compensate a bank or other financial institution providing liquidity support, credit enhancement or other similar support to such Purchaser or any Affected Party in connection with this Agreement or the other Repurchase Documents or the funding or maintenance of Purchased Items hereunder, then within ten (10) days after demand by the Deal Agent on behalf of the Purchaser and any such Affected Party, the Seller shall pay to the Deal Agent on behalf of the Purchaser and any such Affected Party such additional amount or amounts as may be necessary to reimburse the Purchaser and any such Affected Party for any amounts payable or paid by it.

( d ) In determining any amount provided for in this Section 2.13 , the Deal Agent, the Purchaser and/or any other Affected Party may use any reasonable averaging and attribution methods. The Deal Agent, the Purchaser and/or any other Affected Party making a claim under this Section 2.13 shall submit to the Seller a written description as to such additional or increased cost or reduction and the calculation thereof, which written description shall be conclusive absent demonstrable error. Notwithstanding anything to the contrary contained in subsections (a) or (b) of this Section 2.13 , the Purchaser and/or any other Affected Party shall not seek to impose any such Increased Costs on the Seller unless the Purchaser and/or any other Affected Party is imposing such Increased Costs on similarly situated sellers or borrowers. To the extent possible, the Deal Agent will use its best efforts to give prior notice to the Seller that there will be Increased Costs incurred. If the Deal Agent gives notice of Increased Costs and the Seller either accepts such Increased Costs or continues to utilize the Facility with knowledge of such Increased Costs, the Seller shall be obligated to pay such Increased Costs before exercising the termination option set forth in the next sentence. If the proposed Increased Costs exceed 7.5% of the Seller’s Facility costs for the preceding year, the Seller shall have the option to terminate the Agreement by giving three (3) Business Days prior written notice to the Deal Agent and remitting to the Deal Agent on or before the effective date of the termination all outstanding Obligations (including any Breakage Costs incurred in connection with such termination) due to the Purchaser and/or any other Affected Party under the Repurchase Documents. If the Seller terminates the Agreement in accordance with the preceding sentence, the Seller shall be entitled to a pro-rata rebate of the Commitment Fee based on the portion of the three (3) year Facility that was not used by the Seller.

( e ) If an Affected Party shall notify the Deal Agent that a Eurodollar Disruption Event as described in clause (a) of the definition of “Eurodollar Disruption Event” has occurred, the Deal Agent shall in turn so notify the Seller, whereupon all Transactions in respect of which the Price Differential accrues at the Adjusted Eurodollar Rate shall immediately be converted into Transactions in respect of which the Price Differential accrues at the Base Rate.

( f ) To the extent possible, the Deal Agent shall use its best efforts to give thirty (30) days notice to the Seller that the Purchaser or an Affected Party will incur increased costs or other amounts under this Section 2.13 .

( g ) Without prejudice to the survival of any other agreement of the Seller hereunder, the agreements and obligations of the Seller contained in this Section 2.13 shall survive the termination of this Agreement until the expiration of the applicable statute of limitations.

Section 2 . 14 Taxes .

( a ) All payments made by a Borrower or the Seller, the Guarantor or the Pledgor under the Repurchase Documents will be made free and clear of and without deduction or withholding for or on account of any Taxes. If any Taxes are required to be withheld from any amounts payable to the Deal Agent, the Purchaser and/or any other Affected Party, then the amount payable to such Person will be increased (such increase, the “ Additional Amount ”) such that every net payment made under the Repurchase Documents after withholding for or on account of any Taxes (including, without limitation, any Taxes on such increase) is not less than the amount that would have been paid had no such deduction or withholding been deducted or withheld. The foregoing obligation to pay Additional Amounts, however, will not apply with respect to net income or franchise taxes imposed on the Deal Agent, the Purchaser and/or any other Affected Party, with respect to payments required to be made by the Seller, the Guarantor or the Pledgor under the Repurchase Documents, by a taxing jurisdiction in which the Deal Agent, the Purchaser and/or any other Affected Party is organized, conducts business or is paying taxes (as the case may be).

( b ) The Seller will indemnify the Deal Agent, the Purchaser and/or any other Affected Party for the full amount of Taxes payable by such Person in respect of Additional Amounts and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. All payments in respect of this indemnification shall be made within ten (10) days from the date a written invoice therefor is delivered to either Seller.

( c ) Within thirty (30) days after the date of any payment by the Seller of any Taxes, the Seller will furnish to the Deal Agent, at its address set forth under its name on the signature pages of this Agreement, appropriate evidence of payment thereof.

( d ) If, in connection with an agreement or other document providing liquidity support, credit enhancement or other similar support to the Purchaser or any Affected Party in connection with this Agreement or the other Repurchase Documents or the funding or maintenance of Purchased Items hereunder, the Purchaser or any Affected Party is required to compensate a bank or other financial institution in respect of Taxes under circumstances similar to those described in this Section 2.14 , then, within ten (10) days after demand by the Deal Agent on behalf of the Purchaser and any Affected Party, the Seller shall pay to the Deal Agent on behalf of the Purchaser and any Affected Party such additional amount or amounts as may be necessary to reimburse the Purchaser and any Affected Party for any amounts paid by it.

( e ) Without prejudice to the survival of any other agreement of the Seller hereunder, the agreements and obligations of the Seller contained in this Section 2.14 shall survive the termination of this Agreement until the expiration of the applicable statute of limitations.

Section 2 . 15 Obligations Absolute .

Except as set forth to the contrary in the Repurchase Documents, all sums payable by the Seller and/or the Guarantor hereunder shall be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of the Seller and the Guarantor hereunder shall in no way be released, discharged, or otherwise affected (except as expressly provided herein) by reason of: (a) any damage to or destruction of or any taking of any Property, any Underlying Mortgaged Property, any other collateral for a Purchased Asset or any portion of the foregoing; (b) any restriction or prevention of or interference with any use of any Property, Underlying Mortgaged Property, any other collateral for a Purchased Asset or any portion of the foregoing; (c) any title defect or encumbrance or any eviction from any Property, Underlying Mortgaged Property, any other collateral for a Purchased Asset or any portion of the foregoing by title paramount or otherwise; (d) any Insolvency Proceeding relating to any of the Seller, the Guarantor, a Borrower or any obligor, account debtor or indemnitor under the Mortgage Loan Documents or any Affiliate of the foregoing, or any action taken with respect to this Agreement or any other Repurchase Document by any trustee or receiver of any of the Seller, the Guarantor, a Borrower or any obligor, account debtor or indemnitor under the Mortgage Loan Documents or any Affiliate of the foregoing, or by any court, in any such proceeding; (e) any claim that the Seller has or might have against the Deal Agent, the Purchaser, and/or any Affected Party or any Affiliate; (f) any default or failure on the part of the Deal Agent, the Purchaser, and/or any Affected Party or any Affiliate to perform or comply with any of the terms of this Agreement, the Repurchase Documents, the Engagement Letter or of any other agreement with the Seller, the Guarantor or any Affiliate of the foregoing; (g) the invalidity or unenforceability of any Purchased Asset or any of the Mortgage Loan Documents; (h) any failure, refusal or inability of a Borrower to pay any obligation due under the Mortgage Loan Documents; or (i) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not any of the Seller, the Guarantor or any Affiliate of the foregoing shall have notice or knowledge of any of the foregoing.”

Section 2 . 16 Swingline Purchasers .

( a ) During the Facility Period, the Seller may request a Swingline Purchase by delivering a written request therefor (which may be by email) to the Deal Agent and the Swingline Purchaser (a “ Swingline Funding Request ”) by 2:00 p.m. on the proposed Purchase Date. Each purchase by the Swingline Purchaser shall be in a minimal amount of $500,000 and shall be irrevocable. Provided the Deal Agent has determined in its discretion to enter into the related Transaction that is the subject of the Swingline Funding Request, the Swingline Purchaser determines in its discretion to make such Swingline Purchase and all other terms and conditions set forth in Articles II and III are satisfied on the proposed Purchase Date or waived by the Deal Agent or the Purchaser in their discretion, the Swingline Purchaser shall fund the Swingline Purchase by 5:00 p.m. on the proposed Purchase Date in the manner provided in Subsection 2.2(f) . If any Swingline Funding Request is received by the Deal Agent and the Swingline Purchaser after 2:00 p.m. on the Business Day for which such Swingline Purchase is requested or on a day that is not a Business Day, such Swingline Funding Request shall be deemed to be received by the Deal Agent and the Swingline Purchaser at 9:00 a.m. on the next following Business Day. The Seller shall deliver no more than two (2) Swingline Funding Requests in any calendar week. The aggregate Purchase Price for all outstanding Transactions subject to Swingline Purchases shall not at any time exceed the Swingline Maximum Amount. In the event the Swingline Purchaser funds more than three (3) Swingline Purchases in any calendar month, the Seller shall pay to the Deal Agent on behalf of the Swingline Purchaser a Swingline Fee. Swingline Purchases are revolving and may be repaid and readvanced in the Swingline Purchaser’s discretion.

( b ) Notwithstanding Articles II and III of this Agreement, VFCC hereby agrees that if the Swingline Purchaser funds any Swingline Purchase, VFCC shall acquire the related Purchased Asset from the Swingline Purchaser by reimbursing the Swingline Purchaser the Repurchase Price for such Swingline Purchase not later than 5:00 p.m. one (1) Business Day after the Swingline Purchaser funds such Swingline Purchase. The Seller hereby authorizes and instructs VFCC to acquire the related Purchased Asset from the Swingline Purchaser by reimbursing the Swingline Purchaser in the manner described in this Subsection 2.16(b) . Upon the payment of the Repurchase Price for a Swingline Purchase to the Swingline Purchaser, such Purchased Asset shall continue to be a Purchased Asset under the Repurchase Documents and VFCC shall thereafter be the Purchaser thereof, and the Seller shall have no further liability to the Swingline Purchaser on account of such purchase.

Section 2 . 17 Temporary Increases .

During the Temporary Increase Period, provided there exists no Event of Default and the Purchaser has agreed in its discretion to a Temporary Increase Amount of the Maximum Amount in accordance with the definition thereof, the Temporary Increase Provisions shall be applicable in accordance with the terms thereof.

ARTICLE III

CONDITIONS TO TRANSACTIONS

Section 3 . 1 Conditions to Closing and Initial Purchase .

Neither the Deal Agent nor the Purchaser shall not be obligated to enter into any Transaction hereunder nor shall the Deal Agent or the Purchaser be obligated to take, fulfill or perform any other action hereunder until the following conditions have been satisfied, in the discretion of, or waived in writing by, the Deal Agent:

( a ) The Deal Agent shall be in receipt of good standing certificates, secretary certificates (or the equivalent) and copies of the Authority Documents and applicable resolutions of the Seller, the Guarantor and the Pledgor evidencing, as applicable, the corporate or other authority for the Seller, the Guarantor and the Pledgor with respect to the execution, delivery and performance of the Repurchase Documents and each of the other documents to be delivered by the Seller, the Guarantor and the Pledgor from time to time in connection herewith;

( b ) This Agreement, the Guaranty and each other Repurchase Document shall have been duly executed by, and delivered to, the parties thereto and such documents shall be in form and substance satisfactory to the Deal Agent;

( c ) UCC financing statements shall have been filed against the Seller and the Pledgor in the appropriate filing office;

( d ) Each of the Seller and the Pledgor shall have delivered to the Deal Agent a duly executed Power of Attorney in the form of Exhibit IV ;

( e ) The Deal Agent shall be in receipt of such Opinions of Counsel from the counsel to the Seller, the Guarantor and the Pledgor and an Opinion of Counsel from in-house counsel to the Custodian as the Deal Agent may require, each in form and substance satisfactory to the Deal Agent in its reasonable discretion, including, without limitation, corporate opinions and perfection opinions;

( f ) The Deal Agent shall be in receipt of the Servicing Agreements and the Pooling and Servicing Agreements (if any), certified as true, correct and complete copies of the originals, together with the Servicer Redirection Notices, fully executed by the Seller and any applicable Servicer;

( g ) The Deal Agent as agent for the Secured Parties shall have received payment from the Seller of the fees payable under the Fee Letter and the amount of actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to the Deal Agent and Purchaser as contemplated by Section 2.12 and Section 13.8 of this Agreement, incurred by the Deal Agent and/or Purchaser in connection with the development, preparation and execution of this Agreement, the other Repurchase Documents and any other documents prepared in connection herewith or therewith;

( h ) The Deal Agent shall have completed to its satisfaction such due diligence as it may require in its discretion and obtained internal credit approval of the Facility;

( i ) the Deal Agent shall have received UCC searches with respect to the Seller and the Pledgor, which search results shall be satisfactory to the Deal Agent in its discretion;

( j ) The Deal Agent shall have received all such other and further documents, certifications, reports, approvals and legal opinions as the Deal Agent may reasonably require and which are customary for a transaction of this type;

( k ) no Applicable Law shall prohibit or render it unlawful, and no order, judgment or decree of Governmental Authority shall prohibit, enjoin or render it unlawful, to enter into the Facility or any Transaction;

( l ) the Seller, the Guarantor and the Pledgor shall each be in compliance in all material respects with all Applicable Laws (including Anti-Terrorism Laws), Contractual Obligations and all Indebtedness, each shall have obtained all required consents, approvals and/or waivers of all necessary Persons, if any, including all requisite Governmental Authorities, if any, to the execution, delivery and performance of this Agreement and the other Repurchase Documents to which each is a party and the consummation of the transactions contemplated hereby or thereby;

( m ) any and all consents, approvals and waivers applicable to the Purchased Items shall have been obtained;

( n ) the Deal Agent is in receipt of pro-forma Financial Covenant calculations; and

( o ) no Material Adverse Effect has occurred.

Section 3 . 2 Conditions Precedent to all Transactions .

The Deal Agent’s and the Purchaser’s agreement to enter into each Transaction (including the initial Transaction) is subject to the satisfaction of the following further conditions precedent, both immediately prior to entering into such Transaction and also after giving effect to the consummation thereof and the intended use of the proceeds of the sale:

( a ) no Applicable Law shall prohibit or render it unlawful, and no order, judgment or decree of Governmental Authority shall prohibit, enjoin or render it unlawful, to enter into such Transaction by the Deal Agent or the Purchaser in accordance with the provisions of this Agreement or any other transaction contemplated herein;

( b ) the Seller, the Guarantor, each Servicer and each PSA Servicer shall have delivered to the Deal Agent all reports and other information required to be delivered as of the date of such Transaction;

( c ) the Deal Agent shall have received a written Transaction Request, the related Underwriting Package and the related Seller Asset Schedule;

( d ) the Seller shall have delivered a Confirmation, via Electronic Transmission, in accordance with the procedures set forth in Section 2.2 of this Agreement, the Mortgage Asset shall be an Eligible Asset (unless waived by the Deal Agent in its discretion) and the Deal Agent shall have approved in writing the purchase of the Eligible Asset to be included in such Transaction in its discretion and shall have obtained all necessary internal credit and other approvals for such Transaction;

( e ) no Default or Event of Default shall have occurred and be continuing, no Margin Deficits are outstanding (unless the Transaction shall eliminate the Margin Deficit), and no Material Adverse Effect has occurred;

( f ) the Deal Agent shall have received a Compliance Certificate in the form of Exhibit VIII attached hereto (“ Compliance Certificate ”) from a Responsible Officer of the Seller and the Guarantor that, among other things: (A) shows in detail the calculations demonstrating that, after giving effect to the requested Transaction, the aggregate Purchase Price of the Transactions outstanding shall not exceed the Maximum Amount, (B) the Seller, the Guarantor and the Pledgor have in all material respects observed or performed all of their covenants and other agreements, and satisfied in all material respects every condition, contained in this Agreement, the Repurchase Documents and the related documents to be observed, performed or satisfied by them, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate, (C) states that all representations and warranties contained in the Repurchase Documents are true and correct in all material respects on and as of such day as though made on and as of such day and shall be deemed to be made on such day, (D) shows that the Seller and NorthStar are in compliance with the Financial Covenants and, on a quarterly basis as provided in Subsection 5.1(q)(i)(B) of this Agreement, showing in detail the calculations supporting the certification of the Seller’s and NorthStar’s compliance with the Financial Covenants, (E) and discloses the status of each Interest Rate Protection Agreement described under clause (ii) of the definition thereof;

( g ) subject to the Deal Agent’s right to perform one or more due diligence reviews pursuant to Section 13.20 of this Agreement, the Deal Agent shall have completed, in accordance with Section 2.2 of this Agreement, its due diligence review of the Mortgage Asset, the Mortgage Asset File and the Underwriting Package for each proposed Mortgage Asset and such other documents, records, agreements, instruments, mortgaged properties or information relating to such Mortgage Asset as the Deal Agent in its discretion deems appropriate to review, and such reviews shall be satisfactory to the Deal Agent in its discretion;

( h ) with respect to any Eligible Asset to be purchased hereunder on the related Purchase Date that is not serviced by the Seller, the Seller shall have provided to the Deal Agent copies of the related Servicing Agreements and the Pooling and Servicing Agreements, certified as true, correct and complete copies of the originals, together with Servicer Redirection Notices fully executed by the Seller and the Servicer;

( i ) the Deal Agent as agent for the Secured Parties shall have received all reasonable fees and expenses of the Deal Agent and the Purchaser and counsel to the Deal Agent and the Purchaser as contemplated by Section 2.12 and Section 13.8 of this Agreement and the Fee Letter, and the Deal Agent as agent for the Secured Parties shall have received the reasonable costs and expenses incurred by them in connection with the entering into of any Transaction hereunder, including, without limitation, costs associated with due diligence recording or other administrative expenses necessary or incidental to the execution of any Transaction hereunder, which amounts, at the Deal Agent’s option, may be withheld from the sale proceeds of any Transaction hereunder;

( j ) for each Non-Table Funded Purchased Asset, the Deal Agent shall have received from the Custodian on each Purchase Date a Trust Receipt (along with a completed Mortgage Asset File Checklist attached thereto) and an Asset Schedule and Exception Report with respect to each Eligible Asset, each dated the Purchase Date, duly completed and, in the case of the Asset Schedule and Exception Report, with exceptions acceptable to the Deal Agent in its discretion in respect of Eligible Assets to be purchased hereunder on such Business Day. In the case of a Table Funded Purchased Asset or Swingline Purchase, the Deal Agent shall have received on the related Purchase Date the Table Funded Trust Receipt and all other items described in the second (2nd) sentence of Subsection 2.2(e) , each in form and substance satisfactory to the Deal Agent in its discretion, provided that the Deal Agent subsequently receives the items described in Subsection 2.2(d) and (e) and the other delivery requirements under the Custodial Agreement on or before the date and time specified herein and therein, which items shall be in form and substance satisfactory to the Deal Agent in its discretion;

( k ) the Deal Agent shall have received from the Seller a Warehouse Lender’s Release Letter, if applicable, or a Seller’s Release Letter covering each Eligible Asset to be sold to the Purchaser or its designee;

( l ) prior to the purchase of any Eligible Asset acquired (by purchase or otherwise) by the Seller from any Affiliate of Seller, the Deal Agent shall have received certified copies of the applicable Purchase Agreements (if any) and, if requested by the Deal Agent in its reasonable discretion, a True Sale Opinion;

( m ) on and as of such day, the Seller, the Guarantor, the Pledgor and the Custodian shall have performed all of the covenants and agreements contained in the Repurchase Documents to be performed by such Person at or prior to such day;

( n ) the Repurchase Date for such Transaction is not later than the earlier of (i) Facility Maturity Date and (ii) 364 calendar days from the Purchase Date (subject to the Refinance Option);

( o ) the Deal Agent shall have received evidence satisfactory to the Deal Agent that the Seller has delivered an irrevocable instruction to each Servicer, PSA Servicer or other applicable Person to pay Income with respect to the Purchased Items directly to the Collection Account, as provided herein, which instructions may not be modified without the prior written consent of the Deal Agent, and the Seller shall have delivered all notices and instructions and obtained all certifications, acknowledgments, agreements and registrations required to perfect any CMBS Security;

( p ) both immediately prior to the requested Transaction and also after giving effect thereto and to the intended use thereof, all representations and warranties made by each of the Seller, the Guarantor and the Pledgor shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date;

( q ) the Deal Agent shall be in receipt of the evidence of insurance (if any) required by Section 9.1 of the Custodial Agreement;

( r ) none of the following shall have occurred and/or be continuing:

( i ) an event or events shall have occurred in the good faith determination of the Deal Agent resulting in the effective absence of a “repo market” or related “lending market” for purchasing (subject to repurchase) or financing debt obligations secured by commercial mortgage loans or securities, or an event or events shall have occurred resulting in the Purchaser not being able to finance Mortgage Assets through the “repo market” or “lending market” with traditional counterparties at rates that would have been reasonable prior to the occurrence of such event or events;

( ii ) an event or events shall have occurred resulting in the effective absence of a “securities market” for securities backed by Mortgage Assets or commercial or multifamily real property, or an event or events shall have occurred resulting in the Purchaser not being able to sell securities backed by Mortgage Assets or commercial or multifamily real property at prices that would have been reasonable prior to such event or events; or

( iii ) there shall have occurred a material adverse change in the financial condition of the Purchaser that affects (or can reasonably be expected to affect) materially and adversely the ability of the Purchaser to fund its obligations under this Agreement;

( s ) after giving effect to the requested Transaction, the aggregate outstanding Purchase Price of the Transactions outstanding shall not exceed the Asset Value of all the Purchased Assets subject to outstanding Transactions or the Maximum Amount;

( t ) [ Reserved ] ;

( u ) the Deal Agent shall have received all such other and further documents, reports, certifications, approvals and legal opinions as the Deal Agent in its discretion shall reasonably require; and

( v ) for each Preferred Equity Interest, the applicable Seller has executed and delivered all instruments and documents and has taken all further action reasonably necessary and desirable or that the Deal Agent has reasonably requested in order to (i) perfect and protect the security interest of the Deal Agent as agent for the Secured Parties in such Preferred Equity Interest (including, without limitation, execution and delivery of one or more control agreements reasonably acceptable to the Deal Agent, and any and all other actions reasonably necessary to satisfy the Deal Agent that the Deal Agent as agent to the Secured Parties has obtained a first priority perfected security interest in such Preferred Equity Interest); (ii) enable the Deal Agent as agent to the Secured Parties to exercise and enforce its rights and remedies hereunder in respect of such Preferred Equity Interest; and (iii) otherwise effect the purposes of this Agreement, including, without limitation and if requested by the Deal Agent, having delivered to the Deal Agent irrevocable proxies in respect of such Preferred Equity Interest.

( w ) to the extent the Mortgage Loan Documents for the related Eligible Asset contain notice, cure and other provisions in favor of a pledgee of the Eligible Asset under a repurchase or warehouse facility, and without prejudice to the sale treatment of the Eligible Asset to the Purchaser or its designee, the Seller shall provide evidence to the Deal Agent that the Seller has given notice to the applicable Persons of the Deal Agent’s and the Purchaser’s or its designee’s interest in such Eligible Asset and otherwise satisfied any other applicable requirements under such pledgee provisions so that the Deal Agent and the Purchaser or its designee are entitled to receive the benefits and exercise the rights of a pledgee under the terms of such pledgee provisions contained in the related Mortgage Loan Documents;

The failure of the Seller or the Guarantor, as applicable, to satisfy any of the foregoing conditions precedent in respect of any Transaction shall, unless such failure was expressly waived in writing by the Deal Agent on or prior to the related Purchase Date, give rise to a right of the Deal Agent, which right may be exercised at any time on the demand of the Deal Agent, to rescind the related Transaction and direct the Seller to pay to the Deal Agent as agent for the Secured Parties an amount equal to the Purchase Price, the Price Differential, Breakage Costs and other amounts due in connection therewith during any such time that any of the foregoing conditions precedent were not satisfied.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4 . 1 Representations and Warranties .

The Seller represents and warrants, as of the date of this Agreement and any Transaction hereunder and at all times while any Repurchase Document and any Transaction hereunder is in full force and effect, as follows:

( a ) Organization and Good Standing . Each of the Seller and the Guarantor has been duly organized, and is validly existing as a limited liability company, with respect to each Seller, and as a corporation or limited partnership, as applicable, with respect to the Guarantor, in good standing, under the laws of the state of its organization or formation, with all requisite power and authority to own or lease its Properties and conduct its business as such business is presently conducted, and had, at all relevant times, and now has, all necessary power, authority and legal right to acquire, own, sell and pledge the Purchased Items.

( b ) Due Qualification . Each of the Seller and the Guarantor is duly qualified to do business and is in good standing as a limited liability company, corporation or partnership, as applicable, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of its Property or the conduct of its business requires such qualification, licenses or approvals.

( c ) Power and Authority; Due Authorization; Execution and Delivery . Each of the Seller and the Guarantor (i) has all necessary power, authority and legal right (A) to execute and deliver the Repurchase Documents to which it is a party, (B) to carry out and perform the terms of the Repurchase Documents to which it is a party, and (C) to sell, assign and pledge the Purchased Items on the terms and conditions provided herein but subject to the terms of the Mortgage Loan Documents, and (ii) has duly authorized by all necessary corporate or limited liability company action, as applicable, (A) the execution, delivery and performance of the Repurchase Documents to which it is a party, and (B) the sale, assignment and pledge of the Purchased Items on the terms and conditions herein provided. The Repurchase Documents to which the Seller or the Guarantor is a party have been duly executed and delivered by the Seller and the Guarantor.

( d ) Binding Obligation . Each of the Repurchase Documents to which each of the Seller and the Guarantor is a party constitutes a legal, valid and binding obligation of the Seller and the Guarantor, enforceable against the Seller and the Guarantor in accordance with its respective terms, except as such enforceability may be limited by Insolvency Laws and by general principles of equity (whether considered in a suit at law or in equity).

( e ) No Violation or Defaults . The consummation of the transactions contemplated by the Repurchase Documents to which each of the Seller and the Guarantor is a party and the fulfillment of the terms of the Repurchase Documents will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, the Seller’s or the Guarantor’s, as applicable, Authority Documents or any material Indebtedness, Guarantee Obligation or Contractual Obligation of the Seller or the Guarantor, as applicable, (ii) result in the creation or imposition of any Lien (other than Permitted Liens) upon any of the Seller’s or the Guarantor’s Properties pursuant to the terms of any such Indebtedness, Contractual Obligation or Guarantee Obligation other than this Agreement, or (iii) violate any Applicable Law.

( f ) No Proceedings . There is no litigation, proceeding or investigation pending or, to the best knowledge of the Seller or the Guarantor, threatened in writing against the Seller or the Guarantor, before any Governmental Authority (i) asserting the invalidity of the Repurchase Documents, (ii) seeking to prevent the consummation of any of the transactions contemplated by the Repurchase Documents to which the Seller or the Guarantor is a party, or (iii) seeking any determination or ruling that could reasonably be expected to have Material Adverse Effect.

( g ) All Consents Required . All approvals, authorizations, consents, orders or other actions of any Person or of any Governmental Authority (if any) required for the due execution, delivery and performance by the Seller and the Guarantor of the Repurchase Documents to which each is a party (including the transfer of and the grant of a security interest in the Purchased Items) have been obtained, effected, waived or given and are in full force and effect.

( h ) Bulk Sales . The execution, delivery and performance of this Agreement and the other Repurchase Documents and the transactions contemplated hereby and thereby do not require compliance with any “bulk sales” act or similar law by the Seller or the Guarantor.

( i ) Solvency . None of this Agreement, any other Repurchase Document or any Transaction hereunder is entered into in contemplation of insolvency or with intent to hinder, delay or defraud any of the Seller’s or the Guarantor’s creditors. The transfer of the Purchased Items subject hereto, the obligation to repurchase such Purchased Items and the entering into of the Repurchase Documents (including the Guaranty) are not undertaken with the intent to hinder, delay or defraud any of the Seller’s or the Guarantor’s creditors. As of each Purchase Date, the Seller and the Guarantor are and will be Solvent, and the transfer and sale of the Purchased Items pursuant hereto, the obligation to repurchase such Purchased Items and the entering into of the Repurchase Documents (including the Guaranty) will not render any such party not Solvent. No petition in bankruptcy has been filed against either Seller or the Guarantor in the last ten (10) years, and neither the Seller nor the Guarantor has in the last ten (10) years made an assignment for the benefit of creditors or taken advantage of any debtor relief laws.

( j ) Tax Liens . Each of the Seller and the Guarantor have timely filed returns for and, subject to the next sentence, paid all applicable federal, state, and local Taxes. The Seller and the Guarantor represents and warrants that there are no delinquent federal, state, city, county or other Taxes relating to such Person, the Purchased Items or any arrangement pursuant to which the Purchased Items are issued, except those relating to the Seller or Guarantor that are being contested by such Person, in good faith and with respect to which payment has been stayed by a court of competent jurisdiction.

( k ) Exchange Act Compliance; Regulations T, U and X . None of the Transactions contemplated herein (including, without limitation, the use of the proceeds from the sale of the Purchased Items) will violate or result in a violation of Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including, without limitation, Regulations T, U and X. Neither the Seller nor the Guarantor owns or intends to carry or purchase, and no proceeds from the Transactions will be used to carry or purchase, any “margin stock” within the meaning of Regulation U or to extend “purpose credit” within the meaning of Regulation U.

( l ) Environmental Matters . With respect to Properties of the Seller or the Guarantor other than Purchased Assets:

( i ) No Properties owned or leased by the Seller or the Guarantor and, to the knowledge of the Seller and the Guarantor, no Properties formerly owned or leased by the Seller or the Guarantor, or any Subsidiaries thereof, contain, or have previously contained, any Materials of Environmental Concern in amounts or concentrations that constitute or constituted a violation of, or reasonably could be expected to give rise to liability under, Environmental Laws;

( ii ) Each of the Seller and the Guarantor is in compliance, and has in the last five (5) years (or such shorter period as the Seller and/or the Guarantor shall have been in existence) been in compliance, with all applicable Environmental Laws, and, to the knowledge of the Seller and the Guarantor, there is no violation of any Environmental Laws that reasonably could be expected to interfere with the continued operations of the Seller or the Guarantor;

( iii ) Neither the Seller nor the Guarantor has received any notice of violation, alleged violation, non-compliance, liability or potential liability under any Environmental Law, nor does the Seller or the Guarantor have knowledge that any such notice will be received or is being threatened;

( iv ) Materials of Environmental Concern have not been transported or disposed of by the Seller or the Guarantor (including any employee or agent of either the Seller or the Guarantor) in violation of, or in a manner or to a location that reasonably could be expected to give rise to liability under, any applicable Environmental Law, nor has any of them generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that reasonably could be expected to give rise to liability under, any applicable Environmental Law;

( v ) No judicial proceedings or governmental or administrative action is pending, or, to the knowledge of the Seller or the Guarantor, threatened, under any Environmental Law to which the Seller or the Guarantor is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements arising out of judicial proceedings or governmental or administrative actions, outstanding under any Environmental Law to which the Seller or the Guarantor is a party;

( vi ) There has been no release or, to the best knowledge of the Seller and the Guarantor, threat of release of Materials of Environmental Concern in violation of or in amounts or in a manner that reasonably could be expected to give rise to liability under any Environmental Law for which the Seller or the Guarantor may become liable; and

( vii ) To the best knowledge of the Seller and the Guarantor, each of the representations and warranties set forth in the preceding clauses (i) through (vi) is true and correct with respect to each parcel of real property owned or operated by the Seller or the Guarantor.

( m ) Security Interest .

( i ) This Agreement and the other Repurchase Documents constitute a valid transfer to the Purchaser or its designee of all right, title and interest of the Seller in, to and under all Purchased Items, free and clear of any Lien of any Person claiming through or under the Seller, the Guarantor, the Pledgor or any of their Affiliates, except for Permitted Liens and the Seller’s repurchase rights described herein, and is enforceable against creditors of and purchasers from the Seller. If the conveyances contemplated by this Agreement are determined to be transfers for security, then this Agreement constitutes a grant of a security interest in all Purchased Items to the Deal Agent as agent for the Secured Parties, that, upon the delivery of the Confirmations, the Assignments and Mortgage Asset Files to the Custodian and the filing of the financing statements described in Subsection 3.1(c) , shall be a first priority perfected security interest in all Purchased Items to the extent such Purchased Items can be perfected by possession, by filing or control, subject only to Permitted Liens. Neither the Seller nor any Person claiming through or under the Seller shall have any claim to or interest in the Collection Account or the Securities Account, except for the interest of the Seller in such property as a debtor for purposes of the UCC;

( ii ) Other than the Lien and transfers contemplated hereunder, the Seller has not sold, assigned, pledged, encumbered or otherwise conveyed any of the Purchased Items to any Person, and, immediately prior to the sale to the Purchaser or its designee, the Seller was the sole owner of such Purchased Items, and the Seller owns and has good and marketable title to the Purchased Items free and clear of any Lien (other than Permitted Liens);

( iii ) The Seller has received all consents and approvals, if any, required by the terms of any Purchased Items to the sale and granting of a security interest in the Purchased Items hereunder to the Deal Agent as agent for the Secured Parties;

( iv ) Upon execution and delivery of the Account Agreement and the Securities Account Agreement, the Purchaser or its designee shall either be the owner of, or have a valid and fully perfected first priority security interest in, the Collection Account and the Securities Account and the securities , deposits, investment property and other Purchased Items contained therein;

( v ) The Seller has not authorized the filing of and is not aware of any financing statements against the Seller as debtor that include a description of collateral covering the Purchased Items other than any financing statement (A) that has been terminated, or (B) granted pursuant to this Agreement. The Seller is not aware of the filing of any judgment or tax Lien filings against the Seller;

( vi ) None of the Mortgage Loan Documents has any marks or notations indicating that it has been pledged, assigned or otherwise conveyed to any Person other than the Deal Agent as agent for the Secured Parties.

( n ) Tradenames . The exact legal name of each of the Seller is set forth on the signature pages to this Agreement. The Seller has no trade names, fictitious names, assumed names or “doing business as” names or other names under which it has done or is doing business.

( o ) Value Given . The Seller shall have given reasonably equivalent value to each Transferor in consideration for the transfer to the Seller of the Purchased Items under the applicable Purchase Agreement, no such transfer shall have been made for or on account of an antecedent debt owed by the Transferor thereunder to the Seller, and no such transfer is or may be voidable or subject to avoidance under any section of the Bankruptcy Code.

( p ) Certain Tax Matters . Each of the Seller and the Guarantor represents, warrants, acknowledges and agrees, that it does not intend to treat any Transaction or any related transactions hereunder as being a “reportable transaction” (within the meaning of United States Treasury Department Regulation Section 1.6011-4). In the event that the Seller or the Guarantor determines to take any action inconsistent with such intention, it will promptly notify the Deal Agent. If the Seller or the Guarantor so notifies the Deal Agent, the Seller or Guarantor, as applicable, acknowledges and agrees that the Deal Agent, the Purchaser and each Affected Party may treat each Transaction as part of a transaction that is subject to United States Treasury Department Regulation Section 301.6112-1, and the Deal Agent will maintain the lists and other records required by such Treasury Regulation.

( q ) Compliance with Anti-Terrorism Laws . Neither the Seller, the Guarantor nor the Pledgor (i) is or will be in violation of any Anti-Terrorism Law, (ii) is or will be a Prohibited Person, (iii) conducts any business or engages in any transaction or dealing with any Prohibited Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Prohibited Person, (iv) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224, (v) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, (vi) has more than 10% of its assets in a Prohibited Person or derives more than 10% of its operating income from direct or indirect investments in, or transactions with, any Prohibited Person, and (vii) engages in or will engage in any of the foregoing activities in the future. To the extent applicable, each of the Seller, the Guarantor and the Pledgor has established an adequate anti-money laundering compliance program as required by the Anti-Terrorism Laws, has conducted the requisite due diligence in connection with the origination or acquisition of each Mortgage Asset and each Purchased Asset for purposes of the Anti-Terrorism Laws, including with respect to the legitimacy of the applicable Borrower and the origin of the assets used by the said Borrower to purchase the property in question, and maintains, and will maintain, sufficient information to identify the applicable Borrower for purposes of the Anti-Terrorism Laws. No Mortgage Asset or Purchased Asset is subject to nullification pursuant to any Anti-Terrorism Law, no Mortgage Asset is in violation of any Anti-Terrorism Law, and no Borrower is in violation of or adversely affected by the provisions of any Anti-Terrorism Law nor listed as a Prohibited Person. The proceeds of any Purchase Price have not been used and shall not be used to fund any operations in, finance any investments or activities in or make any payments to a Prohibited Person.

( r ) Compliance with FCPA . Each of the Seller, the Guarantor and the Pledgor are in compliance with the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq. , and any foreign counterpart thereto. Neither the Seller, the Guarantor nor the Pledgor has made a payment, offering or promise to pay, or authorized the payment of, money or anything of value (a) in order to assist in obtaining or retaining business for or with, or directing business to, any foreign official, foreign political party, party official or candidate for foreign political office, (b) to a foreign official, foreign political party or party official or any candidate for foreign political office, and (c) with the intent to induce the recipient to misuse his or her official position to direct business wrongfully to such Seller, the Guarantor, the Pledgor or to any other Person, in violation of the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.

( s ) Investment Company Act . Neither of the Seller nor the Guarantor is required to register as or is controlled by an entity required to register as an “investment company” within the meaning of the 40 Act.

( t ) ERISA Compliance . (A) Neither the Seller nor Guarantor has established nor maintained any Plan; and (B) each of Seller and Guarantor either (1) qualifies as an Operating Company; (2) complies with an exception set forth in the Plan Asset Regulations such that the assets of such Person would not be subject to Title I of ERISA or Section 4975 of the Internal Revenue Code; or (3) does not hold any Plan Assets that are subject to ERISA.

( u ) Compliance . Each of the Seller and the Guarantor has complied in all material respects (i) with all Applicable Laws to which it may be subject, and no Purchased Item contravenes any Applicable Laws (including, without limitation, laws, rules and regulations relating to licensing, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and (ii) all Contractual Obligations, Indebtedness and Guarantee Obligations.

( v ) Income . The Seller acknowledges that all Income received by it or its Affiliates and the Servicers and PSA Servicers with respect to the Purchased Items sold hereunder are held in trust and shall be held in trust for the benefit of the Deal Agent as agent for the Secured Parties until deposited into the Collection Account as required herein.

( w ) Set-Off, etc . No Purchased Item has been compromised, adjusted, extended, satisfied, subordinated, rescinded, set-off or modified by the Seller, the Guarantor or any Affiliate of the foregoing, and no Purchased Item is subject to compromise, adjustment, extension (except as set forth in the related Mortgage Asset File), satisfaction, subordination, rescission, set-off, counterclaim, defense, abatement, suspension, deferment, deduction, reduction, termination or modification, whether arising out of transactions concerning the Purchased Item or otherwise, by the Seller, the Guarantor or any Affiliate of the foregoing, except for amendments to such Purchased Items otherwise permitted under Subsection 6.5(c) of this Agreement.

( x ) Full Payment . The Seller or the Guarantor has knowledge of any fact that should lead it to expect that any Purchased Asset will not be paid in full.

( y ) Ongoing Representations . On the Purchase Date for each Transaction and on each day that a Purchased Asset remains subject to this Agreement, the Seller shall be deemed to restate and make each of the representations and warranties made by it in this Section 4.1 of this Agreement.

( z ) Eligibility of Purchased Assets . With respect to each Purchased Asset, to the Seller’s actual knowledge, except as disclosed to the Deal Agent, the Seller is not aware of any material exception to or non-compliance with the eligibility criteria set forth on Schedule 1 to this Agreement applicable to such Purchased Asset.

( aa ) Acting as Principal . The Seller will engage in such Transactions as principal, or, if agreed in writing in advance of any Transaction by the Deal Agent, as agent for a disclosed principal.

( bb ) No Broker . Neither the Seller, the Guarantor nor any Affiliate of the foregoing has dealt with any broker, investment banker, agent or other Person, except for the Deal Agent or the Purchaser (or an Affiliate of the Deal Agent or the Purchaser), who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to this Agreement.

( cc ) Ability to Perform . Neither the Seller nor the Guarantor believes, nor do they have any reason or cause to believe, that it cannot perform each and every agreement and covenant contained in the Repurchase Documents applicable to it and to which it is a party.

( dd ) No Event of Default . No Default or Event of Default has occurred and is continuing hereunder.

( ee ) Financial Condition . The audited consolidated balance sheet of NorthStar and its Consolidated Subsidiaries as of the fiscal year ending December 31, 2006 provided to the Deal Agent and the related audited consolidated statements of income and retained earnings and of cash flows for the year then ended, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification arising out of the scope of the audit conducted by Grant Thornton, copies of which have heretofore been furnished to the Deal Agent, are complete and correct and present fairly in all material respects the consolidated financial condition of NorthStar and its Consolidated Subsidiaries of the foregoing as of such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended. All such financial statements, including the related schedules and notes thereto (if any), have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as disclosed therein). Neither NorthStar nor any of its Consolidated Subsidiaries had, as of the date of the most recent balance sheet referred to above, any material contingent liability or liability for taxes, or any long term lease or unusual forward or long term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction or other financial derivative, that is not reflected in the foregoing statements or in the notes thereto. Except as otherwise disclosed publicly, during the period from December 31, 2006 to and including the date hereof, there has been no sale, transfer or other disposition by the Seller, the Guarantor or any Consolidated Subsidiaries of the foregoing of any material part of their business or Property and no purchase or other acquisition of any business or Property (including any Equity Interest of any other Person) material in relation to the consolidated financial condition of the Seller, the Guarantor or any Consolidated Subsidiaries of the foregoing on the date hereof.

( ff ) Servicing Agreements . The Seller has delivered to the Deal Agent all Servicing Agreements and all Pooling and Servicing Agreements with respect to the Purchased Assets, and, to the best of the Seller’s knowledge, no material default or event of default exists thereunder.

( gg ) True and Complete Disclosure . Each of the Seller and the Guarantor represents and warrants that the information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Seller or the Guarantor to the Deal Agent, the Purchaser or the other Affected Parties in connection with the negotiation, preparation or delivery of this Agreement and the other Repurchase Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole, do not contain any untrue statement of material fact or knowingly omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. There is no fact known to the Seller or the Guarantor, after due inquiry, that would reasonably be expected to have a Material Adverse Effect that has not been disclosed herein or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Deal Agent, the Purchaser or the other Affected Parties for use in connection with the transactions contemplated hereby or thereby. All written information furnished after the date hereof by or on behalf of the Seller or the Guarantor to the Deal Agent, the Purchaser or the other Affected Parties in connection with this Agreement or the other Repurchase Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in all material respects, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified.

( hh ) No Reliance . Each of the Seller and the Guarantor has made its own independent decisions to enter into the Repurchase Documents and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including, without limitation, legal counsel and accountants) as it has deemed necessary. Each of the Seller and the Guarantor is not relying upon any advice from the Deal Agent, the Purchaser or any Affected Party as to any aspect of the Transactions, including, without limitation, the legal, accounting or tax treatment of such Transactions.

( ii ) Seller’s Indebtedness . The Seller has no Indebtedness or Contractual Obligations other than (i) ordinary trade payables, (ii) in connection with Mortgage Assets originated or acquired for this Facility, (iii) the Repurchase Documents and (i vii ) the Wachovia Repurchase Facility. The Seller has no Guarantee Obligations.

( jj ) Insurance . Each of the Seller and the Guarantor has and maintains, with respect to its Properties and business, insurance which meets the requirements of Subsection 5.1(y) of this Agreement. In addition, the Seller shall maintain the insurance required by Section 5.7 of the Custodial Agreement.

( kk ) Purchased Assets . (i) There are no outstanding rights, options, warrants or agreements for the purchase, sale or issuance of the Purchased Assets created by, through, or as a result of the Seller’s or the Guarantor’s actions or inactions; (ii) there are no agreements on the part of the Seller or the Guarantor to issue, sell or distribute the Purchased Assets, other than this Agreement, and (iii) other than this Agreement, the Seller has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any securities or any interest therein or to pay any dividend or make any distribution in respect of the Purchased Assets.

( ll ) Subsidiaries . The Seller is a Subsidiary of the Guarantor. The Seller does not have any Subsidiaries.

( mm ) Separateness . As of the date hereof, the Seller (i) owns no assets, and does not engage in any business, other than the assets and transactions intended to be transferred to the Purchaser or its designee under this Agreement; (ii) has not incurred any indebtedness or obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (A) with respect to Retained Interests, (B) commitments to make loans which may become Eligible Assets, and (C) as permitted herein; (iii) has not made any loans or advances to any Affiliate other than loans to the Guarantor that have been disclosed in writing to and approved in writing by the Deal Agent, and has not acquired obligations or securities of its Affiliates; (iv) has paid its debts and liabilities (including, as applicable, shared personnel and overhead expenses) only from its own assets; (v) complies with the provisions of its organizational documents; (vi) does all things necessary to observe organizational formalities and to preserve its existence, and has not amended, modified or otherwise changed its Authority Documents other than as the same have been heretofore amended, or suffered same to be amended, modified or otherwise changed other than as the same have been heretofore amended; (vii) maintains all of its books, records, financial statements and bank accounts separate from those of its Affiliates (except that such financial statements may be consolidated to the extent consolidation is required under GAAP consistently applied or as a matter of Applicable Law); (viii) is, and at all times holds itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate), corrects any known misunderstanding regarding its status as a separate entity, conducts business in its own name, and does not identify itself or any of its Affiliates as a division or part of the other; (ix) maintains adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; (x) does not engage in or suffer any direct change of ownership, dissolution, winding up, liquidation, consolidation or merger in whole or in part; (xi) does not commingle its funds or other assets with those of any Affiliate or any other Person; (xii) maintains its accounts separately from those of any Affiliate or any other Person; (xiii) does not hold itself out to be responsible for the debts or obligations of any other Person; (xiv) has not (A) filed or consented to the filing of any Insolvency Proceeding with respect to the Seller, instituted any proceedings under any applicable Insolvency Law or otherwise sought any relief under any laws relating to the relief from debts or the protection of debtors generally with respect to the Seller, (B) sought or consented to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for the Seller or a substantial portion of its properties or (C) made any assignment for the benefit of the Seller’s creditors; (xv) has at least one (1) Independent Director or such greater number as required by the Deal Agent or any Rating Agency; (xvi) maintains an arm’s length relationship with its Affiliates; (xvii) uses separate stationary, invoices and checks; and (xviii) allocates fairly and reasonably any overhead for shared office space.

( nn ) No Defenses . To the actual knowledge of the Seller and the Guarantor, there are no defenses, offsets, counterclaims, abatements, rights of rescission or other claims, legal or equitable, available to the Seller or the Guarantor or any other Person with respect to this Agreement, the Engagement Letter, the Repurchase Documents, any other instrument, document and/or agreement described herein or therein (including, without limitation, the validity or enforceability of any of the foregoing) or with respect to the obligation of the Seller and the Guarantor to repay the Aggregate Unpaids and other amounts due hereunder.

( oo ) REIT Status . Subject to Subsection 5.1(kk) to the Agreement, NorthStar qualifies as a REIT.

( pp ) Financial Statements . Each of the Seller and the Guarantor represents and warrants that, since the date of the financial statements heretofore most recently delivered by such Person (which such Person represents and warrants to be the most recent financial statement), there has been no development or event (or prospective development or event), that would constitute a Material Adverse Effect.

( qq ) Interest Rate Protection Agreements . Each of the Seller and the Guarantor represents and warrants that no “default” has occurred or is continuing under any Interest Rate Protection Agreement.

( rr ) Assignments . The Assignments do not violate any provisions of the underlying Mortgage Loan Documents , such documents do not contain any express or implied prohibitions on sales or assignments of the Purchased Assets to national banks, and such agreements are valid, binding and enforceable against the Seller.

ARTICLE V

COVENANTS

Section 5 . 1 Covenants .

( a ) Compliance with Laws and Contractual Obligations . The Seller and the Guarantor shall comply in all material respects with all Applicable Laws (including Environmental Laws), including those with respect to the Purchased Assets or any part thereof, and shall comply, and perform all duties and obligations under, all Contractual Obligations, Indebtedness and Guarantee Obligations (including, without limitation, its duties and obligations under the Mortgage Loan Documents). No part of the proceeds of any Transaction shall be used for any purpose which violates, or would be inconsistent with, the provisions of Regulation T, U or X.

( b ) Corporate Existence . The Seller and the Guarantor shall continue to engage in business of the same general type as now conducted by it and shall preserve and maintain its company existence, rights, franchises and privileges in the jurisdiction of its formation and will qualify and remain qualified in good standing as a corporation or other entity in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification has had, or could reasonably be expected to have, a Material Adverse Effect.

( c ) Performance and Compliance with Purchased Assets. The Seller will, at its expense, timely and fully perform and comply (or as applicable cause the Transferors, Servicers and PSA Servicers to perform and comply) with all provisions, covenants, duties, agreements, obligations and other promises required to be observed under the Purchased Items, all other agreements related to such Purchased Items, including the Mortgage Loan Documents, and the Retained Interests.

( d ) Keeping of Records and Books of Account . Subject to the Seller’s document retention policy, the Seller will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing the Purchased Items in the event of the destruction of the originals thereof) and will keep and maintain all documents, books, records and other information reasonably necessary or advisable in which complete entries are made in accordance with GAAP and Applicable Laws.

( e ) Delivery of Income . The Seller will deposit and cause all Servicers and other applicable Persons to deposit all Income received in respect of the Purchased Items into the Collection Account within two (2) Business Days of receipt thereof. The Seller shall instruct all PSA Servicers and other applicable Persons under the Pooling and Servicing Agreements to deposit into the Collection Account within two (2) Business Days of the date the PSA Servicer is obligated to disburse the same under the Pooling and Servicing Agreements all Income in respect of the Purchased Items and the Seller shall take reasonable steps necessary to enforce such instructions. The Seller will instruct the Swap Counterparty under the Swap Documents and all other counterparties under other Interest Rate Protection Agreements to deposit any payments due to the Seller from time to time under the Swap Documents and the other Interest Rate Protection Agreements into the Collection Account within two (2) Business Days of the date such Person is obligated to disburse same and the Seller shall take reasonable steps to enforce such instructions. Furthermore, the Seller shall remit or cause to be remitted to the Deal Agent via Electronic Transmission sufficient detail to enable the Deal Agent to appropriately identify the Purchased Asset to which any full or partial principal payment or prepayment applies.

( f ) Notices . The Seller and the Guarantor will furnish written notice to the Deal Agent and the Swap Counterparty with respect to the following:

( i ) Representations . Promptly upon notice or knowledge thereof, notice of (A) any representation or warranty set forth in Section 4.1 of this Agreement was incorrect at the time it was given or deemed to have been given or (B) any eligibility criteria set forth in Schedule 1 to this Agreement is or was not satisfied in any material respect at any time;

( ii ) Covenants . Promptly upon notice or knowledge thereof, notice of any material default with respect to any covenant, duty or agreement of the Seller, the Guarantor or the Pledgor under any Repurchase Document;

( iii ) Material Events . Promptly upon becoming aware thereof, notice of any material change in the Asset Value of any Purchased Asset, any material change in the market value of any or all of the Seller’s or Guarantor’s assets or any other event or circumstance that, in the reasonable judgment of the Seller or the Guarantor, is likely to have a Material Adverse Effect;

( iv ) Event of Default . The Seller and the Guarantor shall immediately notify the Deal Agent upon the Seller or the Guarantor becoming aware of any event which would constitute a Default or an Event of Default;

( v ) Casualty . With respect to any Purchased Asset hereunder, promptly upon notice or knowledge thereof that the Underlying Mortgaged Property has been damaged by waste, fire, earthquake or earth movement, flood, tornado or other casualty, or otherwise damaged so as to affect materially and adversely the Asset Value of such Purchased Asset;

( vi ) Liens . Promptly upon notice or knowledge of any Lien or security interest on, or claim asserted against, any Purchased Asset or the Pledged Collateral other than Permitted Liens;

( vii ) Defaults . Promptly upon notice or knowledge thereof, notice of (A) any material default (beyond any applicable notice and cure period) related to any Purchased Items or the Mortgage Loan Documents, or (B) any default (beyond any applicable notice and cure period) under any Contractual Obligation, Indebtedness or Guarantee Obligation of the Seller or the Guarantor, which, if not cured, could reasonably be expected to have a Material Adverse Effect;

( viii ) Servicers . Promptly upon notice or knowledge thereof, notice of the resignation or termination of any Servicer under any Servicing Agreement with respect to any Purchased Items or any PSA Servicer under a Pooling and Servicing Agreement;

( ix ) Losses . Promptly upon notice or knowledge thereof, notice of any loss or expected loss in respect of any Purchased Item, or any other event or change in circumstances or expected event or change in circumstances that could be reasonably be expected to result in a material decline in value or cash flow of any Purchased Item or any Underlying Mortgaged Property;

( x ) [ Reserved ] ; and

( xi ) Proceedings . As soon as possible and in any event within five (5) Business Days after the Seller or the Guarantor receives notice or obtains knowledge thereof, notice of any settlement of, material judgment (including a material judgment with respect to the liability phase of a bifurcated trial) in or commencement of any labor controversy (of a material nature), litigation, action, suit, arbitration or proceeding before any court or governmental department, commission, board, bureau, agency, arbitrator, investigation or instrumentality, domestic or foreign, affecting (A) the Purchased Items, (B) the Repurchase Documents, (C) the Purchaser’s interest in the Purchased Items, or (D) the Seller or the Guarantor and, with respect to this clause (D) only, the amount in controversy exceeds $250,000 with respect to the Seller and/or $1,000,000 with respect to the Guarantor.

Each notice pursuant to this Subsection 5.1(f) shall be accompanied by an Officer’s Certificate from the Seller and/or the Guarantor, as applicable, setting forth details of the occurrence referred to therein and stating what action the Seller or the Guarantor has taken or proposes to take with respect thereto.

( g ) Purchased Items Not to be Evidenced by Instruments . Neither the Seller nor the Guarantor will take any action to cause any Purchased Item that is not, as of the applicable Purchase Date, evidenced by an Instrument to be so evidenced except in connection with the enforcement or collection of such Purchased Items.

( h ) Limitations on Liens . Without the prior written consent of the Deal Agent, the Seller will not: (i) except in connection with the sale of any Purchased Asset in the ordinary course of business prior to an Event of Default, assign, sell, transfer, pledge, grant, create, incur, assume or suffer or permit to exist any security interest in or Lien on any of the Purchased Items to anyone except the Deal Agent as agent for the Secured Parties, (ii) permit any financing statement (except any financing statements in favor of the Deal Agent as agent for the Secured Parties) or assignment (except for any assignments in favor of the Deal Agent as agent for the Secured Parties) to be on file in any public office with respect thereto, (iii) permit or suffer to exist any Lien or right of others to attach to any of the Purchased Items (or any portion thereof), except as contemplated by this Agreement, or (iv) consent to any amendment or supplement to the Mortgage Loan Documents pursuant to which the Purchased Assets were issued or created that would materially and adversely affect the interests of the Deal Agent or the Secured Parties hereunder or with respect to the Purchased Items without the prior written consent of Deal Agent or (v) sell, pledge, transfer, assign, participate or grant a Lien on its interest under the Repurchase Documents or the Purchased Items.

( i ) Lien Covenants . With respect to each Purchased Item acquired by the Purchaser or its designee, the Seller will (i) take all action reasonably requested by the Deal Agent to perfect, protect and more fully evidence the Purchaser’s or its designee’s ownership of and first priority perfected security interest in such Purchased Item, including, without limitation, executing or causing to be executed such other instruments or notices as may be necessary or appropriate and (ii) taking all additional action that the Deal Agent may reasonably request to perfect, protect and more fully evidence the respective interests of the parties to this Agreement and the Repurchase Documents in such Purchased Items. Immediately upon notice to the Seller of a Lien or any circumstance which, if adversely determined would be reasonably likely to give rise to a Lien (other than in favor of the Deal Agent as agent for the Secured Parties or created by or through the Purchaser or the Deal Agent), on any of the Purchased Items, the Seller shall notify the Deal Agent and the Seller shall further defend the Purchased Items against, and will take such other action as is necessary to remove, any Lien or claim on or to the Purchased Items (other than any Lien created under this Agreement), and the Seller will defend the right, title and interest of the Deal Agent as agent for the Secured Parties and the Purchaser in and to any of the Purchased Items against the claims and demands of all Persons whomsoever.

( j ) Deposits . The Seller will not deposit or otherwise credit, or cause or permit to be so deposited or credited, to the Collection Account cash or cash proceeds other than Income in respect of Purchased Items. The Seller will not deposit or otherwise credit, or cause or permit to be so deposited or credited, to the Securities Account any item except uncertificated CMBS Securities that are Purchased Assets and all cash, property, proceeds, securities or investment property with respect to such Purchased Assets. The Seller shall perform all of its obligations under the Account Control Agreement and Securities Account Control Agreement.

( k ) Change of Name or Location of Asset Files . The Seller shall not (i) change its name, organizational number, identity, structure or jurisdiction of formation, move the location of its principal place of business and chief executive office, or change the offices where it keeps the records (as defined in the UCC) from the location referred to in on the signature page to this Agreement, or (ii) move, or consent to the Custodian moving, the Mortgage Asset Files from the location thereof on the Closing Date, unless the Seller has given at least thirty (30) days’ prior written notice to the Deal Agent and its counsel.

( l ) Exceptions . The Seller shall promptly correct any and all Exceptions set forth on any Asset Schedule and Exception Report to the extent same are able to be cured by the Seller in a commercially reasonable manner.

( m ) ERISA Matters . Each of the Seller and the Guarantor will not without the prior approval of the Deal Agent, establish or maintain any Plan, nor take any action that would (i) cause it to fail to qualify as an Operating Company or (ii) cause it to fail to otherwise meet an exception under the Plan Asset Regulations which would prevent the assets of such Person from being subject to Title I of ERISA or Section 4975 of the Code.

( n ) Purchase Agreements; Servicing Agreements . The Seller or the Guarantor will not materially amend, modify, waive or terminate any provision of any Purchase Agreement, Servicing Agreement or Pooling and Servicing Agreement without the prior written consent of the Deal Agent, which consent shall not be unreasonably withheld.

( o ) Compliance with Anti-Terrorism Laws . The Seller, the Guarantor and the Pledgor shall comply with all applicable Anti-Terrorism Laws. The Seller shall conduct the requisite due diligence in connection with the origination or acquisition of each Mortgage Asset for purposes of complying with the Anti-Terrorism Laws, including with respect to the legitimacy of the applicable Borrower, obligor or account debtor and the origin of the assets used by the said Borrower, obligor or account debtor to purchase the property in question, and will maintain sufficient information to identify the applicable Borrower, obligor or account debtor for purposes of the Anti-Terrorism Laws. Neither the Seller, the Guarantor nor the Pledgor shall engage in any conduct described in Subsections 4.1(q) and (r) . The Seller, the Guarantor and the Pledgor shall, upon the request of the Deal Agent from time to time, provide certification and other evidence of the Seller’s, the Guarantor’s and the Pledgor’s compliance with this Subsection 5.1(o) .

( p ) Financial Statements . The Seller and the Guarantor shall deliver to the Deal Agent:

( i ) as soon as available, and in any event within forty-five (45) calendar days after the end of the first three fiscal quarters of the Seller and the Guarantor , the unaudited consolidated balance sheets for the Seller and the Guarantor as at the end of such period and the related unaudited consolidated statements of income and retained earnings and of cash flows for the Seller and the Guarantor for such period and the portion of the fiscal year through the end of such period, accompanied by an Officer’s Certificate from the Seller and the Guarantor , which certificate shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of the Seller or the Guarantor, as applicable, in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);

( ii ) as soon as available, and in any event within ninety (90) days after the end of each fiscal year of the Seller and the Guarantor, the audited (in the case of the Guarantor only) or the signed (in the case of the Seller only) consolidated balance sheets of the Seller and the Guarantor, as applicable, as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for the Seller and the Guarantor for such year, and, in the case of the Guarantor only, setting forth in each case in comparative form the figures for the previous year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall not be qualified as to scope of audit or going concern and shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Guarantor as at the end of, and for, such fiscal year in accordance with GAAP;

( iii ) with respect to each Purchased Asset, if provided to the Seller, the Guarantor or any Servicer or PSA Servicer by any Borrower under any Purchased Asset, as soon as available, but in any event not later than forty-five (45) days after the end of each fiscal quarter of the Seller, the operating statement and rent roll for each Underlying Mortgaged Property; provided , however , the Deal Agent reserves the right in its discretion to request such information on a monthly basis (to be provided no later than thirty (30) days after the end of each month) but the Seller’s failure to obtain such information shall not be a breach of this covenant provided the related Purchased Asset with respect to which information was not provided is included in the Facility for less than six (6) months;

( iv ) with respect to each Purchased Asset, if provided to the Seller or the Guarantor by any Borrower under any Purchased Asset, as soon as available, but in any event not later than thirty (30) days after receipt thereof, the annual balance sheet with respect to such Borrower ;

( v ) with respect to each Purchased Asset, as soon as available but in any event not later than thirty (30) days after receipt thereof, (A) the related monthly securitization report, if any, and any other reports delivered under the Pooling and Servicing Agreements to the Seller or the Guarantor, if any, and, (B) within forty-five (45) days after the end of each quarter, a copy of the standard monthly exception report (if any), prepared by the Seller in the ordinary course of its business in respect of the related Purchased Asset or Underlying Mortgaged Property; and

( vi ) from time to time such other information regarding the financial condition, operations or business of the Seller and the Guarantor as the Deal Agent may reasonably request.

All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein); provided , that any financial statements delivered by the Seller or the Guarantor with respect to any Borrower under any Underlying Mortgage Loan shall be delivered to the Deal Agent in the form received by the Seller or the Guarantor.

( q ) Certificates; Other Information . The Seller and the Guarantor shall furnish to the Deal Agent:

( i ) (A) concurrently with the delivery of the annual financial statements referred to in Subsection 5.1(p) above, a certification from the independent certified public accountant reporting on such financial statements stating that, in making the examination necessary therefore, no information was obtained of any Defaults or Events of Default except as specified in such certificate, and (B) concurrently with the delivery of the financial statements referred to in Subsection 5.1(p) above and in connection with the delivery of each Confirmation, a Compliance Certificate from a Responsible Officer of the Seller and the Guarantor, which Compliance Certificate shall, among other things, describe in detail, on a quarterly basis, the calculations supporting the Responsible Officer’s certification of the Seller’s and NorthStar’s compliance with the Financial Covenants;

( ii ) (A) within thirty (30) days of the end of each calendar quarter, the Seller shall provide the Deal Agent with a quarterly report, which report shall include, among other items, a summary of the Seller’s delinquency and loss experience with respect to Purchased Assets serviced by the Seller, any Servicer, any PSA Servicer or any designee of the foregoing, the Seller’s internal risk rating, the Seller’s and any Servicer’s or PSA Servicer’s surveillance reports on the Purchased Assets, and the operating statements, occupancy status and other property level information with respect to each Purchased Asset, (B) within ten (10) days of receipt thereof by the Seller, any Servicer or PSA Servicer, any remittance reports with respect to the servicing of any Purchased Items and (C) promptly, any such additional reports as the Deal Agent may reasonably request with respect to the Seller, any Servicer or PSA Servicer servicing the portfolio, or pending originations of Mortgage Assets;

( iii ) no later than the fifteenth (15th) day of each month, with respect to each Purchased Asset, a Purchased Asset Data Summary, substantially in the form of Exhibit IX (“ Purchased Asset Data Summary ”), properly completed;

( iv ) the Seller shall promptly deliver or cause to be delivered to the Deal Agent (i) any report or material notice received by the Seller from any Borrower or obligor under the Purchased Items promptly following receipt thereof and (ii) any other such document or information relating to the Purchased Items as the Deal Agent may reasonably request in writing from time to time;

( v ) promptly, any modifications or additions to the items contained in the Underwriting Package; and

( vi ) promptly, such additional financial and other information as the Deal Agent may from time to time reasonably request.

( r ) Prohibition of Fundamental Changes . The Seller or the Guarantor shall not enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) or sell all or substantially all of its assets; provided , however , that the Seller or the Guarantor may merge or consolidate with (i) any wholly owned Subsidiary of such Person, or (ii) any other Person if (A) the Seller or the Guarantor is the surviving corporation or (B) if the surviving entity is not in the Deal Agent’s reasonable opinion materially weaker in its financial condition (in the aggregate) than the prior entities pre-merger or pre-consolidation; provided , that , (x) if after giving effect thereto, no Event of Default would exist hereunder, (y) if such merger or consolidation would adversely affect the Swap Counterparty, the Swap Counterparty has consented thereto, and (z) the new entity (if any) assumes the obligations, liabilities and Indebtedness under the Repurchase Documents and the Swap Documents.

( s ) Transactions with Affiliates . The Seller may enter into any transaction with an Affiliate, provided that such transaction is upon fair and reasonable terms no less favorable to the Seller than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate; provided , however , that in no event shall the Seller transfer to the Purchaser or its designee hereunder any Eligible Asset acquired by the Seller from an Affiliate of the Seller unless the Seller shall have delivered a certified copy of the related Purchase Agreement and, if requested by the Deal Agent in its reasonable discretion, a True Sale Opinion has been delivered to the Deal Agent prior to such sale.

( t ) Sub-Limit . The Seller shall not sell to the Purchaser or its designee any Eligible Asset if, after giving effect to such Transaction, a Sub-Limit would be exceeded, unless waived in advance in writing by the Deal Agent in its discretion.

( u ) Limitation on Distributions . The Seller or the Guarantor shall not declare or make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of the Seller or the Guarantor, as applicable, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller or the Guarantor, as applicable, except that the Seller and the Guarantor, as applicable, each may declare and pay dividends in accordance with its respective Authority Documents, and without restriction as to amount, so long as, in the case of the Seller and the Guarantor, (i) no Default or Event of Default shall have occurred, (ii) no Margin Deficit is outstanding and (iii) the distribution of such funds will not violate any Financial Covenant. Notwithstanding the preceding sentence and irrespective of the occurrence of the events described in clauses (i) , (ii) or (iii) of the immediately preceding sentence, the Guarantor may at all times pay dividends either (A) as required by Applicable Law to maintain its REIT status and/or (B) to its preferred equity holders.

( v ) Financial Covenants .

( i ) Maintenance of Liquidity . For each Test Period, NorthStar shall not permit its Liquidity for such Test Period to be less than $15,000,000, at least $7,500,000 of which shall consist of cash or Cash Equivalents.

( ii ) Maintenance of Tangible Net Worth . For each Test Period, NorthStar shall not permit NorthStar’s and its Consolidated Subsidiaries’ Tangible Net Worth at any time to be less than the sum of (A) $750,000,000 plus (B) an amount equal to 75% of the aggregate net proceeds after costs and expenses received by NorthStar or any Consolidated Subsidiaries of NorthStar in connection with the offering or issuance of any Equity Interest of NorthStar or any Consolidated Subsidiaries of NorthStar (in each case only to the extent such Equity Interests would be included in Tangible Net Worth) after the Closing Date.

( iii ) Interest Coverage . For each Test Period, the Sellers shall not permit the ratio of (A) the sum of Consolidated Adjusted EBITDA for all Sellers for such Test Period to (B) Interest Expense for all Sellers for such Test Period to be less than 1:5 to 1:0.

( iv ) Leverage Ratio . For each Test Period, NorthStar shall not permit the ratio of (A) NorthStar’s and its Consolidated Subsidiaries’ Adjusted Total Liabilities to (B) NorthStar’s and its Consolidated Subsidiaries’ Adjusted Total Assets to exceed 0.90 to 1.00.

( v ) Recourse Debt Ratio . For each Test Period, NorthStar shall not permit the ratio of (A) NorthStar’s and its Consolidated Subsidiaries’ Indebtedness (excluding Non-Recourse Indebtedness, borrowings under the Unsecured Credit Facility and Trust Preferred Securities) to (B) Adjusted Total Assets of NorthStar and its Consolidated Subsidiaries to exceed .10 to 1.00.

( vi ) Fixed Charge Coverage . For each Test Period, NorthStar shall maintain a minimum Fixed Charge Coverage Ratio of 1.3x.

( w ) Extension or Amendment of Purchased Items . The Seller shall not, except as otherwise permitted in Subsection 6.5(c) of this Agreement, extend, amend, waive or otherwise modify, or permit any Servicer or PSA Servicer to extend, amend, waive or otherwise modify, the material terms of any Purchased Item.

( x ) Inconsistent Agreements . The Seller and the Guarantor shall not, and shall not permit the Pledgor to, directly or indirectly, enter into any agreement containing any provision that would be violated or breached by any Transaction hereunder or by the performance by the Seller, the Guarantor or the Pledgor of its obligations under any Repurchase Document.

( y ) Maintenance of Property; Insurance . The Seller and the Guarantor shall keep all Property useful and necessary in its business in good working order and condition, shall maintain with financially sound and reputable insurance companies insurance on all its Property in at least such amounts and against at least such risks as are usually and customarily insured against in the same general area by companies acting prudently and engaged in the same or a similar business, and furnish to the Deal Agent, upon written request, full information as to the insurance carried.

( z ) Interest Rate Protection Agreements . Each of the Seller and the Guarantor shall perform its duties and obligations and make all payments due under and shall otherwise maintain any existing Interest Rate Protection Agreements.

( aa ) Payment of Taxes . The Seller and the Guarantor shall pay and discharge all Taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained in accordance with GAAP.

( bb ) Distributions in Respect of Purchased Items . If the Seller shall receive any rights, whether in addition to, in substitution of, as a conversion of, or in exchange for any Purchased Items, or otherwise in respect thereof, the Seller shall accept the same as the Deal Agent’s and the Secured Parties’ agent, hold the same in trust for the Deal Agent as agent for the Secured Parties and deliver the same forthwith to the Deal Agent as agent for the Secured Parties in the exact form received, together with duly executed instruments of transfer or assignment in blank and such other documentation as the Deal Agent shall reasonably request. If any sums of money or property are paid or distributed in respect of the Purchased Items and received by the Seller (other than the Borrower Reserve Payments), the Seller shall promptly pay or deliver such money or property to the Deal Agent as agent to the Secured Parties and, until such money or property is so paid or delivered to the Deal Agent as agent for the Secured Parties, hold such money or property in trust for the Deal Agent as agent to the Secured Parties, segregated from other funds of the Seller.

( cc ) Limitation on Indebtedness . The Seller shall not create, incur, assume or suffer to exist any Indebtedness (including, but not limited to, any credit or repurchase facility), Guarantee Obligation or Contractual Obligation of the Seller, except Indebtedness, Guarantee Obligations and Contractual Obligations of the Seller permitted under this Agreement.

( dd ) Unrelated Activities . The Seller shall not engage in any activity other than activities specifically permitted by this Section 5 , including, but not limited to, investment in real estate related assets and the purchasing, financing and holding of commercial mortgage-backed securities and activities incident thereto.

( ee ) Separateness . The Seller shall not take any action or fail to take any action that would cause it to violate or be inconsistent with the representations and warranties in Subsection 4.1(mm) of the Agreement.

( ff ) Pledge and Security Agreement . Neither the Seller nor the Guarantor shall take any direct or indirect action inconsistent with the Pledge and Security Agreement or the security interest granted thereunder to the Deal Agent as agent for the Secured Parties in the Pledged Collateral.

( gg ) Independence of Covenants . All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of an Default or Event of Default if such action is taken or condition exists.

( hh ) Investments . The Seller, the Guarantor or any of their Affiliates shall not acquire or maintain any right or interest in any Purchased Asset that is senior to or pari passu with the rights and interests of the Deal Agent or the Secured Parties therein under this Agreement unless such Mortgage Asset is also a Purchased Asset.

( ii ) Seller Subsidiaries . The Seller shall not create, form or permit to exist any Subsidiary prior to the later of (i) the Facility Maturity Date (as it may be extended in accordance with this Agreement) and (ii) the indefeasible payment in full of the Obligations.

( jj ) Negative Pledge . The Seller shall not contract, create, incur, assume or permit to exist any Lien on or with respect to any of its Property or assets of any kind (whether real or personal, tangible or intangible), whether now owned or hereafter acquired, except for Permitted Liens.

( kk ) NorthStar Status . NorthStar shall remain listed on a nationally recognized securities exchange in good standing. NorthStar may change its status as a REIT provided it remains in compliance with the Financial Covenants in all respects.

( ll ) Registration of Securities . In the case of any Purchased Asset not physically delivered to the Deal Agent as agent for the Secured Parties (or the Custodian on its behalf) unless otherwise consented to by the Deal Agent, the Seller shall maintain, or cause to be maintained, each of the Securities with either DTC or with the National Book Entry System of the Federal Reserve, DTC or any similar firm or agency, as applicable, in the name of the Deal Agent as agent of the Secured Parties.

( mm ) Payment of Obligations . The Seller and the Guarantor shall pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations in excess of $250,000 with respect to the Seller and $1,000,000 with respect to the Guarantor, including, without limitation, all Indebtedness, Contractual Obligations and Guarantee Obligations, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Seller, the Guarantor or any of their Subsidiaries, as the case may be.

( nn ) Authority Documents . The Seller shall comply with its Authority Documents and shall not amend its Authority Documents in any material respect without the prior written consent of the Deal Agent.

( oo ) Preferred Equity Interests . The Seller shall not permit any Equity Interest that is the subject of a Preferred Equity Interest to consist of an interest in an entity other than a partnership or limited liability company and, with respect to such limited partnership and limited liability company interests, shall not permit any such interest to: (i) be dealt in or traded on a securities exchange or in a securities market or (ii) be held in a Securities Account. The Seller shall execute and deliver, or cause to be executed or delivered, to the Deal Agent as agent for the Secured Parties (or the Custodian on its behalf) such agreements, documents and instruments as the Deal Agent may reasonably require to perfect its security interest in any such Equity Interest.

( pp ) Termination of Securities Account . Upon the Seller’s receipt of notice from any securities intermediary (as defined in the UCC) of its intent to terminate any securities account (as defined in the UCC) of the Seller held by such securities intermediary and relating to a Purchased Asset or collateral for a Purchased Asset, prior to the termination of such securities account the collateral in such account (i) shall be transferred to a new securities account, upon the request of the Deal Agent, which shall be subject to an executed control agreement as provided in Subsection 2.2(k) of this Agreement or (ii) transferred to an account held by the Deal Agent as agent for the Secured Parties in which such collateral will be held until a new securities account is established with an executed control agreement acceptable to the Deal Agent in its discretion.

ARTICLE VI

ADMINISTRATION AND SERVICING

Section 6 . 1 Servicing .

( a ) Appointment . The Purchaser hereby appoints the Seller as its agent to service the Purchased Items and enforce its rights in and under such Purchased Items. The Seller hereby accepts such appointment and agrees to perform the duties and obligations with respect thereto as set forth herein.

( b ) Servicing Standard . The Seller covenants to maintain or cause the servicing of the Purchased Items to be maintained in conformity with Accepted Servicing Practices. In the event that the preceding language is interpreted as constituting one or more servicing contracts, each such servicing contract shall terminate automatically upon the earliest of (i) an Event of Default, (ii) the date on which this Agreement terminates or the Seller repurchases any related Purchased Asset, or (iii) the transfer of servicing approved in writing by the Deal Agent.

Section 6 . 2 Seller as Servicer .

If the Purchased Assets are serviced by the Seller, the Seller agrees that, until the repurchase of a Purchased Asset on a Repurchase Date, the Purchaser or its designee is the owner of all servicing records for the period that the Purchaser or its designee owns the Purchased Items, including, but not limited to, any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, computer programs, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of such Purchased Assets (the “ Servicing Records ”). The Seller covenants to safeguard such Servicing Records and to deliver them promptly to the Deal Agent or its designee (including the Custodian) at the Deal Agent’s request.

Section 6 . 3 Third Party Servicer .

If the Purchased Assets are serviced by a Servicer or a PSA Servicer pursuant to a Servicing Agreement or Pooling and Servicing Agreement, as applicable, the Seller (i) shall, in accordance with Subsection 3.2 of this Agreement, provide to the Deal Agent (subject to the last sentence of this Subsection 6.3 ) a copy of each Servicing Agreement (which agreements shall be in form and substance reasonably acceptable to the Deal Agent), each Pooling and Servicing Agreement and a Servicer Redirection Notice substantially in the form of Exhibit VII hereto and fully executed by the Seller and the related Servicer or PSA Servicer (in the case of a Pooling and Servicing Agreement for a Mortgage Asset that is not a Whole Loan, the Deal Agent may in its discretion waive the requirement of an executed Servicer Redirection Notice), and (ii) hereby irrevocably assigns to the Deal Agent as agent for the Secured Parties all right, title and interest of the Seller in, to and under, and the benefits of (but not the obligations of), each Servicing Agreement and each Pooling and Servicing Agreement with respect to the Purchased Items. Notwithstanding the fact that the Seller has contracted with a Servicer or PSA Servicer to service the Purchased Items, the Seller shall remain liable to the Deal Agent, the Purchaser and other Secured Parties for the acts of the Servicers and the PSA Servicer and for the performance of the duties and obligations set forth herein. The Seller agrees that no Person shall assume the servicing obligations with respect to the Purchased Assets as successor to a Servicer or PSA Servicer unless such successor is approved in writing by the Deal Agent prior to such assumption of servicing obligations. Unless otherwise approved in writing by the Deal Agent, if the Purchased Assets are serviced by a Servicer or PSA Servicer, such servicing shall be performed pursuant to a written Servicing Agreement or Pooling and Servicing Agreement approved by the Deal Agent.

Section 6 . 4 Duties of the Seller .

( a ) Duties . The Seller shall take or cause to be taken all such actions as may be necessary or advisable to collect all Income and all other amounts due or recoverable with respect to the Purchased Items from time to time, all in accordance with Applicable Laws, with reasonable care and diligence, and in accordance with the standard set forth in Subsection 6.1(b) of this Agreement.

( b ) Deal Agent’s Rights . Notwithstanding anything to the contrary contained herein, the exercise by the Deal Agent as agent for the Secured Parties of its rights hereunder shall not release the Seller from any of its duties or responsibilities with respect to the Purchased Items. The Deal Agent as agent for the Secured Parties shall not have any obligation or liability with respect to any Purchased Items, nor shall any of them be obligated to perform any of the obligations of the Seller hereunder.

Section 6 . 5 Authorization of the Seller .

( a ) The Purchaser hereby authorizes the Seller (including any successor thereto) to take any and all reasonable steps in its name and on its behalf necessary or desirable and not inconsistent with the sale of the Purchased Items to the Purchaser or its designee to collect all amounts due under any and all Purchased Items, including, without limitation, endorsing checks and other instruments representing Income, executing and delivering any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Purchased Items and, after the delinquency of any Purchased Item and to the extent permitted under and in compliance with Applicable Law, to commence proceedings with respect to enforcing payment thereof, to the same extent as the Seller could have done if it had continued to own such Purchased Items. The Deal Agent as agent for the Secured Parties shall furnish the Seller (and any successors thereto) with any powers of attorney and other documents necessary or appropriate to enable the Seller to carry out its servicing and administrative duties hereunder and shall cooperate with the Seller to the fullest extent in order to ensure the collectability of the Purchased Items. In no event shall the Seller be entitled to make the Deal Agent, the Purchaser or any Secured Party a party to any litigation without such Person’s express prior written consent.

( b ) Subject to all other rights of the Deal Agent as agent for the Secured Parties contained herein, after an Event of Default has occurred and is continuing, at the direction of the Deal Agent, the Seller shall take such action as the Deal Agent as agent for the Secured Parties may deem necessary or advisable to enforce collection of the Purchased Items; provided , however , subject to all other rights of the Deal Agent as agent for the Secured Parties contained herein, the Deal Agent may, at any time that an Event of Default has occurred and is continuing, notify any Borrower with respect to any Purchased Items of the assignment of such Purchased Items to the Purchaser or its designee and direct that payments of all amounts due or to become due be made directly to the Deal Agent as agent for the Secured Parties or any servicer, collection agent or lock-box or other account designated by the Deal Agent and, upon such notification and at the expense of the Seller, the Deal Agent as agent for the Secured Parties may enforce collection of any such Purchased Items and adjust, settle or compromise the amount or payment thereof.

( c ) With respect to each Purchased Asset and to the extent not otherwise specifically addressed otherwise in this Agreement, (i) prior to an Event of Default, the Seller (and any Servicer or PSA Service on its behalf) shall not exercise any material rights of a holder of a Purchased Item under any document or agreement governing such Purchased Items (including amendments, modifications, waivers and alterations of any of the material terms of any Purchased Item) that affects the Market Value of such Purchased Item without first consulting with the Deal Agent prior to taking any action and, in the event the Deal Agent and the Seller cannot agree on a course of action, the Seller shall take only those actions as agreed to by the Deal Agent, and, (ii) after an Event of Default, the Seller shall not exercise any rights of a holder of such Purchased Items under any document or agreement governing such Purchased Items without the prior written consent of the Deal Agent.

Section 6 . 6 Event of Default .

If the servicer of the Purchased Items is the Seller, upon the occurrence of an Event of Default, the Deal Agent as agent for the Secured Parties shall have the right to terminate the Seller as the servicer of the Purchased Items and transfer servicing to its designee, at no cost or expense to the Deal Agent, at any time thereafter. If the servicer of the Purchased Items is not the Seller, the Deal Agent as agent for the Secured Parties shall have the right, as contemplated in the applicable Servicer Redirection Notice, upon the occurrence of an Event of Default, to terminate any applicable Servicing Agreement and any Pooling and Servicing Agreement to the extent the PSA Servicer signed a Servicer Redirection Notice and to transfer servicing to the Deal Agent or the Deal Agent’s designee, at no cost or expense to the Deal Agent, it being agreed that the Seller will pay any and all fees required to terminate such Servicing Agreements and Pooling and Servicing Agreements and to effectuate the transfer of servicing to the designee of the Deal Agent. The Seller shall fully cooperate and shall cause all Servicers and applicable PSA Servicers to fully cooperate with the Deal Agent in transferring the servicing of the Purchased Items to the Deal Agent’s designee.

Section 6 . 7 Inspection .

In the event the Seller or its Affiliates are servicing the Purchased Items, the Seller shall permit the Deal Agent to inspect the Seller’s or any of its Affiliate’s servicing facilities, books and records and related documents and information, as the case may be, for the purpose of satisfying the Deal Agent that the Seller or its Affiliates, as the case may be, have the ability to service and are servicing the Purchased Items as provided in this Agreement. If a Servicer or PSA Servicer is servicing a Purchased Item, the Seller shall cooperate with the Deal Agent in causing each Servicer and PSA Servicer to permit inspections of the Servicer’s and PSA’s facilities, books and records and related documents and information related to the Purchased Items.

Section 6 . 8 Payment of Certain Expenses by Servicer .

The Seller and any Servicer will be required to pay all expenses incurred by them in connection with their activities under the Repurchase Documents, including fees and disbursements of independent accountants, Taxes imposed on the Seller or the Servicers, expenses incurred in connection with payments and reports pursuant to the Repurchase Documents, and all other fees and expenses not expressly stated under the Repurchase Documents for the account of the Seller. The Seller shall be required to pay all reasonable fees and expenses owing to any bank or trust company in connection with the maintenance of the Collection Account, the Securities Account and all other collection, reserve or lock-box accounts related to the Purchased Items. The Seller shall be required to pay such expenses for its own account and shall not be entitled to any payment therefor other than the Servicing Fee.

Section 6 . 9 Pooling and Servicing Agreements .

Notwithstanding the other provisions of this Section 6.9 , to the extent the Purchased Items (or portions thereof) are serviced by a PSA Servicer (other than the Seller or any Servicer) under a Pooling and Servicing Agreement, (a) the standards for servicing those Purchased Items shall be those set forth in the applicable Pooling and Servicing Agreement, (b) the Seller shall enforce its rights and interests under such agreements for and on behalf of the Deal Agent as agent for the Secured Parties, (c) the Seller shall instruct the applicable PSA Servicer to deposit all Income received in respect of the Purchased Items into the Collection Account in accordance with Subsection 5.1(e) , (d) prior to an Event of Default, the Seller shall not take any action or fail to take any action or consent to any action or inaction under any Pooling and Servicing Agreement where the effect of such action or inaction would prejudice the interests of the Deal Agent as agent for the Secured Parties, (e) the Seller will not consent to any change or modification to any Pooling and Servicing Agreement, including, without limitation, any payment dates, interests rates, fees, payments of principal or interest, maturity dates, restrictions on Indebtedness or any monetary term or release any Borrower, guarantor or collateral without the prior written consent of the Deal Agent as agent for the Secured Parties, and, (f) following an Event of Default, the Deal Agent as agent for the Secured Parties shall be entitled to exercise any and all rights of the Seller under such Pooling and Servicing Agreements as such rights relate to the Purchased Items. In addition, with respect to a CMBS Security, the Seller shall not exercise any material rights of a holder of a CMBS Security under any other document or agreement governing such CMBS Security without the prior written consent of the Deal Agent.

Section 6 . 10 Servicer Default .

Any material breach by any Seller of the obligations contained in Article VI of this Agreement shall constitute a “ Servicer Default ”.

Section 6 . 11 Servicer .

The Seller shall not permit or cause the Purchased Items to be serviced by a third party other than pursuant to the Servicing Agreements or the Pooling and Servicing Agreements or, if not serviced thereunder, by any Servicer other than a Servicer expressly approved in writing by the Deal Agent (including those pre-approved Servicers set forth on Schedule 6 hereto).

ARTICLE VII

[RESERVED]

ARTICLE VIII

SECURITY INTEREST

Section 8 . 1 Security Interest .

( a ) Each of the following items or types of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter collectively referred to as the Purchased Items (the “ Purchased Items ”): (A) all Purchased Assets; (B) all Income and Cash Collateral, if any; (C) all Mortgage Loan Documents; (D) all Mortgage Asset Files, including, without limitation, all promissory notes, notes, certificates, instruments, negotiable documents, Security Agreements, chattel mortgages and all other loan, security or other documents relating to such Purchased Items, together with all files, documents, instruments, surveys, certificates, correspondence, appraisals, licenses, contracts, computer programs, computer storage media, accounting records and other books and records relating thereto; (E) all collateral, security interests, rights and other interests under or with respect to each Purchased Item; (F) all Purchase Agreements and the collateral, security interests, rights and other interests thereunder; (G) all mortgage guaranties and insurance (issued by governmental agencies or otherwise) and any mortgage insurance certificate, policy or other document evidencing such mortgage guaranties or insurance relating to any Purchased Items and all claims, payments and proceeds thereunder; (H) all servicing fees to which the Seller is entitled and servicing and other rights relating to the Purchased Items; (I) all Servicing Agreements, Servicing Records and Servicing Files with respect to the Purchased Items and the rights and interests of the Seller thereunder or with respect thereto; (J) all Servicer Accounts established pursuant to any Servicing Agreement, Pooling and Servicing Agreement or otherwise with respect to the Purchased Items and all amounts on deposit therein from time to time related to the Purchased Items; (K) all Pooling and Servicing Agreements relating to the Purchased Items and all rights of the Seller thereunder or with respect thereto; (L) all other agreements, instruments or contracts relating to, constituting, or otherwise governing, any or all of the foregoing to the extent they relate to the Purchased Items, including the right to receive principal and interest payments and any related fees, breakage fees, late fees and penalties with respect to the Purchased Items and the right to enforce such payments; (M) insurance policies, certificates of insurance, insurance proceeds and the rights to enforce payment of insurance proceeds, in each case to the extent they relate to the Purchased Items; (N) the Collection Account and all monies, cash, deposits, securities or investment property from time to time on deposit in the Collection Account; (O) the Securities Account and all monies, cash, deposits, securities or investment property from time to time on deposit in the Securities Account; (P) any collection account, escrow account, reserve account, collateral account or lock-box account related to the Purchased Items to the extent of any Seller’s or the holder’s interest therein, including all moneys, cash, deposits, securities or investment property from time to time on deposit therein; (Q) rights of the Seller under any letter of credit, guarantee or other credit support or enhancement related to the Purchased Items; (R) any Interest Rate Protection Agreements relating to the Purchased Assets, including all payments due to the Seller, the Guarantor or any Affiliates of the foregoing thereunder; (S) all purchase or take-out commitments relating to or constituting any of the foregoing; (T) all collateral, however defined, under any of the agreements between a Borrower or an Affiliate on the one hand and the Seller on the other hand; (U) all “general intangibles”, “accounts”, “chattel paper”, “deposit accounts”, “securities accounts”, “instruments”, “securities”, “financial assets”, “uncertified securities”, “securities entitlements” and “investment property” as defined in the Uniform Commercial Code as in effect from time to time relating to or constituting any and all of the foregoing; and (V) any and all replacements, substitutions, conversions, distributions on or proceeds of, from or on any and all of the foregoing; provided , however , none of the foregoing Purchased Items shall include any obligations; provided , further , however , notwithstanding the foregoing, (i) no account, instrument, chattel paper or other obligation or Property of any kind due from, owed by, or belonging to, a Person described in the definition of Prohibited Person or (ii) any lease in which the lessee is a Person described in the definition of Prohibited Person, shall be collateral under the Repurchase Documents.

( b ) The Purchaser and the Seller intend that the Transactions hereunder be sales to the Purchaser or its designee of the Purchased Assets and not loans from the Purchaser to the Seller secured by the Purchased Assets. However, in order to preserve the Purchaser’s rights under this Agreement in the event that a court or other forum recharacterizes the Transactions hereunder as loans and as security for (A) the repayment of the Aggregate Unpaids and performance by the Seller of all of the Seller’s obligations to the Deal Agent as agent for the Secured Parties hereunder and under the Repurchase Documents and the Transactions entered into hereunder (collectively, the “ Repurchase Obligations ”), (B) the Seller-Related Obligations and (C) all expenses and charges, legal or otherwise, incurred in collecting or enforcing, realizing on or protecting any security for, the Repurchase Obligations and/or the Seller-Related Obligations (the amounts described in the foregoing clauses A-C are collectively referred to as the “ Obligations ”), (a) the Seller hereby assigns, pledges and grants a security interest in all of its right, title and interest in, to and under the Purchased Items to the Deal Agent as agent for the Secured Parties to secure the Obligations, (b) it is the express intent of the parties that conveyance of the Purchased Items be deemed a pledge of the Purchased Items by the Seller to the Deal Agent as agent for the Secured Parties to secure a debt or other obligation of the Seller, and (c) (i) this Agreement shall also be deemed to be a security agreement within the meaning of Article 9 of the UCC of the applicable jurisdiction; (ii) the conveyance provided for herein shall be deemed to be a grant by the Seller to the Deal Agent as agent for the Secured Parties of a security interest in all of the Seller’s right, title and interest in and to the Purchased Items; (iii) the assignment by the Deal Agent as agent for the Secured Parties of the interest of the Deal Agent as agent for the Secured Parties as contemplated herein shall be deemed to be an assignment of any security interest created hereunder; (iv) the possession by the Deal Agent as agent of the Secured Parties or any of its agents, including, without limitation, the Custodian, of the Mortgage Loan Documents, the Purchased Items and such other items of Property as constitute instruments, money, negotiable documents or chattel paper shall be deemed to be possession by the secured party for purposes of perfecting the security interest pursuant to the UCC; and (v) notifications to Persons other than the Deal Agent as agent for the Secured Parties holding such Property, and acknowledgments, receipts or confirmations from Persons other than the Deal Agent as agent for the Secured Parties holding such Property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of the secured party for the purpose of perfecting such security interest under the UCC and Applicable Law. The assignment, pledge and grant of security interest contained herein shall be, and the Seller hereby represents and warrants to the Deal Agent, the Purchaser and the Secured Parties that it is, a first priority perfected security interest. All Purchased Items shall secure the payment of all Obligations now or hereafter existing, including, without limitation, the Seller’s obligation to repurchase Purchased Assets, or if such obligation is so recharacterized as a loan, to repay such loan for the Repurchase Price and to pay the Aggregate Unpaids and any and all other Obligations. For the avoidance of doubt and not by way of limitation of the foregoing, (A) each Purchased Item, including all Income related thereto, secures the obligations of each Seller with respect to all other Transactions and the obligations with respect to all other Purchased Items, including those Purchased Assets that are junior in priority to the Purchased Item in question, (B) an Event of Default by any Seller is a default by all Sellers and the Deal Agent, the Purchaser and/or any other Secured Party may pursue its remedies in connection therewith against any of the Purchased Items and/or against the assets and Properties of any or all Sellers, and (C) if an Event of Default has occurred and is continuing, no Purchased Item will be released from the Deal Agent’s Lien or transferred to the Seller until the Obligations are indefeasibly paid in full. Notwithstanding the foregoing, the Indebtedness of the Seller under the Obligations shall be full recourse to the Seller. Notwithstanding anything contained herein to the contrary, during the time that VFCC is a Purchaser hereunder, VFCC shall not share payments with or receive the benefit of any payments from any other Indebtedness under the Seller-Related Obligations (other than the Indebtedness under the Repurchase Documents). The preceding sentence is for the benefit of VFCC only and may not be invoked or enforced by any other Person.

( c ) Pursuant to the Custodial Agreement, the Custodian shall hold the Mortgage Asset Files as exclusive bailee pursuant to the terms of the Custodial Agreement and shall deliver the Trust Receipts (along with completed Mortgage Asset File Checklists attached thereto) to the Deal Agent (with a copy to the Seller), each such Trust Receipt to reflect that the Custodian has reviewed such Mortgage Asset Files in the manner and to the extent required by the Custodial Agreement and identifying any deficiencies in such Mortgage Asset Files as so reviewed.

( d ) The assignment under this Section 8.1 does not constitute and is not intended to result in the creation or an assumption by the Deal Agent, the Purchaser or any Secured Party o f any obligation of the Seller or any other Person in connection with any or all of the Purchased Items or under any agreement or instrument relating thereto. Anything herein to the contrary notwithstanding, (i) the Seller shall remain liable under the Purchased Items to the extent set forth therein to perform all of their duties and obligations thereunder to the same extent as if the Repurchase Documents had not been executed, (ii) the exercise by the Deal Agent as agent for the Secured Parties of any of its rights under, in or to the Purchased Items shall not release the Seller from any of its duties or obligations under the Purchased Items unless such parties effectuate a transfer of such Purchased Items to the Deal Agent as agent for the Secured Parties after any Event of Default hereunder but only to the extent of the obligations and duties so transferred, and (iii) the Deal Agent, the Purchaser and the other Secured Parties shall not have any obligations or liability under the Purchased Items by reason of the Repurchase Documents or otherwise, nor shall the Deal Agent, the Purchaser or other Secured Parties be obligated to perform any of the obligations or duties of the Seller or any other Person thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

Section 8 . 2 Release of Lien o n Purchased Assets.

Except as otherwise provided in a Repurchase Document, at such time as any Purchased Asset is repurchased in accordance with this Agreement, and the Repurchase Price and all other amounts due with respect thereto have been paid in full, the Deal Agent as agent for the Secured Parties shall release its interest in such Purchased Asset and any related Purchased Items; provided , that , the Deal Agent as agent for the Secured Parties will make no representation or warranty, express or implied, with respect to any such Purchased Asset or Purchased Items in connection with such release (other than with respect to Liens created by the Purchaser), and any transfer of such Purchased Items shall be without recourse to or the expense of the Deal Agent, the Purchaser or the other Secured Parties.

Section 8 . 3 Further Assurances .

The provisions of Section 13.11 of this Agreement shall apply to the security interest granted under Section 8.1 of this Agreement as well as to the Transactions hereunder.

Section 8 . 4 Remedies .

Upon the occurrence of an Event of Default, the Deal Agent as agent for the Secured Parties shall have, with respect to the security interest in the Purchased Items granted pursuant to Section 8.1 of this Agreement, and in addition to all other rights and remedies available to the Deal Agent, Purchaser and the other Secured Parties under this Agreement, the Repurchase Documents and other Applicable Law, all rights and remedies of a secured party upon default under the UCC.

Section 8 . 5 Purchaser’s Duty of Care.

Except as herein provided in this Section 8.5 of this Agreement, Deal Agent’s (or, on its behalf, the Custodian) sole duty with respect to the Purchased Items shall be to use reasonable care in the custody, use, operation and preservation of the Purchased Items in its possession or control. Neither the Deal Agent, the Purchaser nor the Secured Parties shall incur any liability to the Seller, the Guarantor or any other Person for any act of government, act of God or other such destruction in whole or in part or negligence or wrongful act of custodians or agents selected by and supervised by the Deal Agent with reasonable care, or the Deal Agent’s failure to provide adequate protection or insurance for the Purchased Items. Neither the Deal Agent, the Purchaser nor the Secured Parties shall have any obligation to take any action to preserve any rights of the Seller in any of the Purchased Items against prior parties, and the Seller hereby agrees to take such action. The Seller shall defend the Purchased Items against all such claims and demands of all Persons (other than claims and demands resulting from interests created by the Deal Agent as agent for the Secured Parties or the Purchaser), at all times, as are adverse to the Deal Agent as agent for the Secured Parties and the Purchaser. Neither the Deal Agent, the Purchaser nor the Secured Parties shall have any obligation to realize upon any Purchased Item, except through proper application of any distributions with respect to the Purchased Items made directly to the Deal Agent as agent for the Secured Parties or its agent(s). So long as the Deal Agent as agent for the Secured Parties (or the Custodian, on the Deal Agent’s behalf) shall act in good faith in its handling of the Purchased Items, each of the Seller and the Guarantor hereby waives the defense of impairment of the Purchased Items by the Deal Agent as agent for the Secured Parties.

ARTICLE IX

[RESERVED]

ARTICLE X

EVENT S OF DEFAULT

Section 10 . 1 Events of Default .

Each of the following events shall be an Event of Default (“ Event of Default ”) hereunder:

( a ) the aggregate Repurchase Price for all Transactions outstanding on any day exceeds the Maximum Amount and the same continues unremedied for two (2) Business Days after notice from the Deal Agent; or

( b ) a Servicer Default occurs and is continuing and the same continues unremedied for twenty (20) calendar days; or

( c ) an Insolvency Event relating to the Seller, the Guarantor or the Pledgor shall have occurred, or any Insolvency Event shall have occurred with respect to any Affiliate of the Seller, the Guarantor or the Pledgor and the same affects, impacts or impairs (A) any Lien, right or other interest of the Deal Agent, the Purchaser or any other Secured Party under any of the Repurchase Documents or (B) the Seller’s, the Guarantor’s or the Pledgor’s performance, or ability to perform, its obligations, duties or agreements under any of the Repurchase Documents; or

( d ) the Seller, the Guarantor or the Pledgor shall become required to register as an “investment company” within the meaning of the 40 Act or the arrangements contemplated by the Repurchase Documents shall require registration as an “investment company” within the meaning of the 40 Act; or

( e ) there shall exist any event or occurrence that has caused or resulted in a Material Adverse Effect with respect to clauses (a), (b), (c) or (d) of the definition of Material Adverse Effect; or

( f ) (A) any Repurchase Document, or any Lien or security interest granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of the Seller, the Guarantor or the Pledgor, (B) the Seller, the Guarantor, the Pledgor, or any other Person shall, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability of any Repurchase Document or any Lien or security interest thereunder, (C) the Purchased Items shall not have been sold to the Purchaser or its designee, or the Liens contemplated under the Repurchase Documents shall cease or fail to be first priority perfected Liens on any Purchased Items or the Pledged Collateral or shall be Liens in favor of any Person other than the Deal Agent as agent for the Secured Parties or (D) the Seller, the Guarantor, the Pledgor or any of their Affiliates shall grant, or suffer to exist, any Lien on any Purchased Item or the Pledged Collateral (except Permitted Liens); or

( g ) the Seller, the Guarantor or the Pledgor shall have failed to observe or perform in any material respect any of the covenants or agreements of the Seller, the Guarantor or the Pledgor set forth in this Agreement or the other Repurchase Documents to which the Seller, the Guarantor or the Pledgor is a party and the same continues unremedied for a period of twenty (20) calendar days after the earlier to occur of (A) the date on which written notice of such failure requiring the same to be remedied shall have been given to the Seller, the Guarantor or the Pledgor by the Deal Agent, and (B) the date on which the Seller, the Guarantor or the Pledgor becomes aware thereof; or

( h ) any representation, warranty or certification made by the Seller, the Guarantor or the Pledgor in this Agreement or any Repurchase Document or in any certificate or other document or agreement delivered pursuant to this Agreement or any Repurchase Document (in each case other than the eligibility criteria contained in Schedule 1 to this Agreement unless the Seller shall have affirmed or confirmed any such criteria with actual knowledge that it was not satisfied in any material respect) shall prove to have been incorrect in any material respect when made or deemed made and the same continues unremedied for a period of twenty (20) calendar days after the earlier to occur of (A) the date on which written notice of such failure requiring the same to be remedied shall have been given to the Seller, the Guarantor or the Pledgor by the Deal Agent, and (B) the date on which the Seller, the Guarantor or the Pledgor becomes aware thereof; or

( i ) (A) the Seller, the Guarantor or the Pledgor shall have failed to make any payment due with respect to any material Indebtedness in excess of (1) $5,000,000 in the case of the Guarantor and the Pledgor, and (2) $1,000,000 in the case of the Seller (in each case including, without limitation, recourse debt), any Guarantee Obligations or any material Contractual Obligation in excess of $5,000,000 in the case of the Guarantor and the Pledgor, and $1,000,000 in the case of the Seller, to which the Seller, the Guarantor or the Pledgor as applicable, is a party, or a default or an event or condition shall have occurred that would permit acceleration of any of the foregoing whether or not such event or condition has been waived, (B) the Seller, the Guarantor or the Pledgor shall be in default of any monetary obligation with respect to any Seller-Related Obligation (other than the Swap Documents) or (C) the Seller, the Guarantor or the Pledgor shall be in default with respect to any obligation under the Swap Documents; or

( j ) (A) the Seller shall default in the payment of (1) any Repurchase Price due (including, without limitation, pursuant to Article II of the Agreement) or (2) any amount due under Section 2.8 of this Agreement or any other provision of this Agreement or the Repurchase Documents when due (whether at stated maturity, upon acceleration or at mandatory or optional prepayment), or (B) the failure of the Seller, the Guarantor, the Pledgor, any Affiliate of the forgoing, any Servicer, any PSA Servicer or any other Person to timely deposit to the Collection Account all Income as required by Subsection 5.1(e) of this Agreement or the failure of the Seller to deposit or credit to the Securities Account any uncertificated CMBS Security and related Purchased Items required to be deposited or credited to such account; or

( k ) the Seller shall have failed to pay any Margin Deficit due under Section 2.7 of this Agreement by the Margin Correction Deadline; or

( l ) the Seller, the Guarantor or the Pledgor shall default in the payment of any other amount payable by it hereunder or under any other Repurchase Document after notification by the Purchaser of such default, and such default shall have continued unremedied for two (2) Business Days; or

( m ) a final non-appealable judgment or judgments for the payment of money in excess of (1) $5,000,000 in the case of the Guarantor and the Pledgor, and (2) $1,000,000 in the case of the Seller, in the aggregate shall be rendered against the Seller, the Guarantor or the Pledgor, as applicable, by one (1) or more courts, administrative tribunals or other bodies or any Governmental Authority having jurisdiction, and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within thirty (30) days from the date of entry thereof; or

( n ) the Seller, the Guarantor, the Pledgor or an ERISA Affiliate shall engage in a non-exempt prohibited transaction (as defined in Section 406 of ERISA or Section 4975 of the Code); or

( o ) the Seller fails to repurchase Purchased Assets on the applicable Repurchase Date, including, without limitation the Facility Maturity Date, and to pay all amounts due in connection therewith; or

( p ) NRFC Sub-REIT Corp. shall cease to own directly 100% of the issued and outstanding Equity Interest of the Seller; or

( q ) the Seller, the Guarantor or the Pledgor shall admit its inability to, or its intentions not to, perform its obligations, covenants or agreements under any Repurchase Document or admit that it is not Solvent; or

( r ) the Seller, the Guarantor or the Pledgor shall merge or consolidate into any entity, and such entity is, in the Deal Agent’s reasonable opinion, materially weaker in its financial condition (in the aggregate) than such Person pre-merger or consolidation; or

( s ) any Seller and/or any Guarantor fails to comply with or violates in any respect Section 2.17 to the Agreement or any related provisions contained in the Fee Letter and the same continues unremedied for a period of (a) two (2) Business Days, with respect to any monetary obligation, and (b) in all other cases, five (5) Business Days, after notice from the Deal Agent.

Section 10 . 2 Remedies .

( a ) If an Event of Default occurs, the following rights and remedies are available to the Deal Agent as agent for the Secured Parties:

( i ) At the option of the Deal Agent, exercised by written notice to the Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Insolvency Event of the Seller, the Guarantor, the Pledgor or, subject to Subsection 10.1(c) of this Agreement, any of their Affiliates), the Repurchase Date for each Transaction hereunder, if it has not already occurred, shall be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately cancelled without any liability to the Deal Agent). The Deal Agent shall (except upon the occurrence of an Insolvency Event of the Seller, the Guarantor, the Pledgor or, subject to Subsection 10.1(c) of this Agreement, any of their Affiliates) give notice to the Seller of the exercise of such option as promptly as practicable.

( ii ) If the Deal Agent exercises or is deemed to have exercised the option referred to in Subsection 10.2(a)(i) of this Agreement,

( A ) (1) the Seller’s obligations in such Transactions to repurchase all Purchased Items, at the Repurchase Price therefor on the Repurchase Date, and, without duplication, to pay the Aggregate Unpaids and all other Obligations hereunder and under the other Repurchase Documents, shall thereupon become immediately due and payable, (2) all Income paid after such exercise or deemed exercise shall be retained by the Deal Agent as agent for the Secured Parties and applied to the aggregate unpaid Repurchase Price, the Aggregate Unpaids and any other Obligations, and (3) the Seller shall immediately deliver to the Deal Agent as agent for the Secured Parties any Purchased Items subject to such Transactions then in the Seller’s possession or control; and

( B ) all Income actually received by the Deal Agent as agent for the Secured Parties pursuant to Section 2.8 of this Agreement (excluding any Late Payment Fees paid pursuant to Section 2.5 of this Agreement) shall be applied to the aggregate unpaid Repurchase Price and Aggregate Unpaids and any other Obligations, in such order as the Deal Agent shall determine in its discretion.

( iii ) Upon the occurrence of one or more Events of Default, and subject to Section 6.9 of this Agreement, the Deal Agent as agent for the Secured Parties shall have the right to obtain physical possession of the Servicing Records (subject to the provisions of the Custodial Agreement), the Servicing Files, the Servicing Agreements and all other files of the Seller or any third party acting for the Seller relating to the Purchased Items and all documents relating to the Purchased Items which are then or may thereafter come into the possession of the Seller or any third party acting for the Seller, and the Seller shall deliver to the Deal Agent such assignments as the Deal Agent shall request (all of the foregoing being at the expense of the Seller), and the Deal Agent shall have the right to appoint any Person to act as the Servicer for the Purchased Assets.

( iv ) At any time after the second (2nd) Business Day following notice to the Seller (which notice may be the notice given under Subsection 10.2(a)(i) of this Agreement), in the event the Seller have not repurchased all Purchased Items, the Deal Agent as agent for the Secured Parties may (A) immediately sell, without demand or further notice of any kind, at a public or private sale and at such price or prices as the Deal Agent may deem reasonably satisfactory any or all Purchased Items subject to such Transactions hereunder and apply the proceeds thereof to the aggregate unpaid Repurchase Price, the Aggregate Unpaids and all other Obligations, or (B) in its discretion, elect, in lieu of selling all or a portion of such Purchased Items, to give the Seller credit for such Purchased Items in an amount equal to the Market Value (as determined by the Deal Agent in its discretion but subject to good faith) of the Purchased Items against the aggregate unpaid Repurchase Price, the Aggregate Unpaids and all other Obligations. The proceeds of any disposition of Purchased Items shall be applied first to the costs and expenses incurred by the Deal Agent in connection with the Seller’s default; second to the costs of related covering and/or related hedging transactions; third to the Repurchase Price; fourth to the Aggregate Unpaids and any other Obligations; and fifth, to the Seller.

( v ) Each party hereto agrees that the other party may obtain an injunction or an order of specific performance to compel such other party to fulfill any of its obligations as set forth in the Repurchase Documents if such other party fails or refuses to perform its obligations as set forth therein.

( vi ) The Seller shall be liable to the Deal Agent as agent for the Secured Parties, payable as and when incurred by the Deal Agent, for (A) the amount of all reasonable actual out-of-pocket expenses, including legal or other expenses incurred by the Deal Agent in connection with or as a consequence of an Event of Default, and (B) all reasonable costs incurred in connection with hedging or covering transactions.

( vii ) The Deal Agent as agent for the Secured Parties shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or Applicable Law.

( b ) The Deal Agent as agent for the Secured Parties may exercise one or more of the remedies available to the Deal Agent immediately upon the occurrence of an Event of Default and, except to the extent provided in Subsection 10.2(a)(i) and 10.2(a)(iv) of this Agreement, at any time thereafter without notice to the Seller. All rights and remedies arising under this Agreement and the other Repurchase Documents, as amended from time to time, are cumulative and not exclusive of any other rights or remedies that the Deal Agent as agent for the Secured Parties may have.

( c ) The Deal Agent as agent for the Secured Parties may enforce its rights and remedies hereunder without prior judicial process or hearing, and the Seller and the Guarantor hereby expressly waives any defenses the Seller, the Guarantor or the Pledgor might otherwise have to require the Deal Agent as agent for the Secured Parties to enforce its rights by judicial process. The Seller and the Guarantor also waives any defense (other than a defense of payment or performance) the Seller, the Guarantor and/or the Pledgor might otherwise have arising from the use of non-judicial process, enforcement and sale of all or any portion of the Purchased Items, or from any other election of remedies. The Seller, the Guarantor and the Pledgor recognize that non-judicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s-length.

( d ) To the extent permitted by Applicable Law, the Seller shall be liable to the Deal Agent as agent for the Secured Parties for interest on any amounts owing by the Seller hereunder, from the date the Seller becomes liable for such amounts hereunder until such amounts are (i) paid in full by the Seller or (ii) satisfied in full by the exercise of the Deal Agent’s rights hereunder. Interest on any sum payable by the Seller to the Deal Agent as agent for the Secured Parties under this Subsection 10.2(d) shall accrue interest from and after the date of the Event of Default and while such Event of Default is continuing at a rate equal to the Post-Default Rate.

( e ) In addition to the rights under this Section 10.2 , during the continuance of an Event of Default, the Purchaser shall no longer be obligated to enter into any additional Transactions pursuant to any outstanding Confirmation and the Deal Agent as agent for the Secured Parties shall have the following additional rights if an Event of Default exists:

( i ) The Deal Agent as agent for the Secured Parties, the Purchaser, the Seller and the Guarantor agree and acknowledge that the Purchased Assets constitute collateral that may decline rapidly in value. Accordingly, notwithstanding anything to the contrary in this Agreement, the Deal Agent as agent for the Secured Parties shall not be required to give notice to the Seller or the Guarantor prior to exercising any remedy in respect of an Event of Default. If no prior notice is given, the Deal Agent shall give notice to the Seller of the remedies effected by the Deal Agent as agent for the Secured Parties promptly thereafter. The Deal Agent shall act in good faith in exercising its rights pursuant to this Subsection 10.2(e) .

( ii ) The Deal Agent as agent for the Secured Parties may, in its discretion, elect to hold any Purchased Asset for its own account and earn the related interest on the full face amount thereof.

( f ) Notwithstanding anything contained in the Repurchase Documents to the contrary, neither the Seller, the Guarantor, the Pledgor nor any other Person shall be permitted to cure an Event of Default after the acceleration of any of the Obligations.

( g ) Subject to Subsections 2.15 , 13.3 , 13.4(d) , and 13.10 and other similar provisions contained in the Repurchase Documents, the Seller and the Guarantor shall have all remedies available to them at law or equity for any breach of this Agreement by the Deal Agent as agent for the Secured Parties.

Section 10 . 3 Determination of Events of Default .

In making a determination as to whether an Event of Default has occurred, the Deal Agent shall be entitled to rely on reports published or broadcast by media sources believed by the Deal Agent to be generally reliable and on information provided to it by any other sources believed by it to be generally reliable, provided that the Deal Agent reasonably and in good faith believes such information to be accurate.

ARTICLE XI

INDEMNIFICATION

Section 11 . 1 Indemnification by the Seller .

( a ) The Seller agrees to hold the Purchaser, the Deal Agent, the Swap Counterparty, any Secured Party, any Affected Party and any Affiliates of the Purchaser, the Deal Agent, Swap Counterparty, any Secured Party and any Affected Party and the Purchaser’s, the Deal Agent’s, any Secured Party’s, any Affected Party’s and their Affiliates’ officers, directors, shareholders, partners, members, owners, employees, agents, attorneys, Affiliates and advisors (each an “ Indemnified Party ” and collectively the “ Indemnified Parties ”) harmless from and indemnify any Indemnified Party against all out-of-pocket liabilities, out-of-pocket losses, out-of-pocket damages, judgments, out-of-pocket costs, out-of-pocket expenses, penalties or fines of any kind that may be imposed on, incurred by or asserted against such Indemnified Party (collectively, the “ Indemnified Amounts ”) in any way relating to, arising out of or resulting from (i) the Facility, this Agreement, the Repurchase Documents, the Mortgage Loan Documents, any Purchased Item, the Pledged Collateral and any other collateral for the Facility or any transaction or Transaction contemplated hereby or thereby, or any amendment, supplement, extension or modification of, or any waiver or consent under or in respect of, this Agreement, the Repurchase Documents, the Mortgage Loan Documents, any Purchased Item, the Pledged Collateral and any other collateral for the Facility, or any transaction or Transaction contemplated hereby or thereby, (ii) any Mortgage Asset, any Purchased Item, any Pledged Collateral or any other collateral for the Facility, (iii) any violation or alleged violation of, non-compliance with or liability under any Applicable Law (including, without limitation, violation of securities laws and Environmental Laws), (iv) ownership of, Liens on, security interests in or the exercise of rights and/or remedies under the Repurchase Documents, the Mortgage Loan Documents, the Purchased Items, the Pledged Collateral, any other collateral for the Facility, the Underlying Mortgaged Property, any other related Property or collateral or any part thereof or any interest therein or receipt of any Income or rents, (v) any accident, injury to or death of any person or loss of or damage to property occurring in, on or about any Underlying Mortgaged Property, any other related Property or collateral or any part thereof, the Purchased Items or on the adjoining sidewalks, curbs, parking areas, streets or ways, (vi) any use, nonuse or condition in, on or about, or possession, alteration, repair, operation, maintenance or management of, any Underlying Mortgaged Property, any other related Property or collateral or any part thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways, (vii) any failure on the part of the Seller, the Guarantor or the Pledgor to perform or comply with any of the terms of the Mortgage Loan Documents, the Repurchase Documents, the Purchased Items, the Pledged Collateral or any other collateral for the Facility, (viii) performance of any labor or services or the furnishing of any materials or other property in respect of the Underlying Mortgaged Property, any other related Property or collateral, the Purchased Items or any part thereof, (ix) any claim by brokers, finders or similar Persons claiming to be entitled to a commission in connection with any lease or other transaction involving any Underlying Mortgaged Property, any other related Property or collateral, the Purchased Items or any part thereof or the Repurchase Documents, (x) any Taxes including, without limitation, any Taxes attributable to the execution, delivery, filing or recording of any Repurchase Document, any Mortgage Loan Document or any memorandum of any of the foregoing, (xi) any Lien or claim arising on or against the Underlying Mortgaged Property, any other related Property or collateral, the Pledged Collateral, the Purchased Items or any part thereof under any Applicable Law or any liability asserted against the Deal Agent, the Purchaser, any Secured Party or any Affected Party with respect thereto, (xii) the claims of any lessee or any Person acting through or under any lessee or otherwise arising under or as a consequence of any leases with respect to any Underlying Mortgaged Property, related Property or collateral, or any claims of a Borrower, (xiii) any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in connection with the defense thereof, by any Indemnified Party as a result of conduct of the Seller, the Pledgor or the Guarantor that violates any sanction enforced by OFAC, (xiv) any and all Indemnified Amounts arising out of, attributable or relating to, accruing out of, or resulting from (1) a past, present or future violation or alleged violation of any Environmental Laws in connection with any Property or Underlying Mortgaged Property by any Person or other source, whether related or unrelated to the Seller, the Pledgor, the Guarantor or any Borrower, (2) any presence of any Materials of Environmental Concern in, on, within, above, under, near, affecting or emanating from any Property or Underlying Mortgaged Property, (3) the failure to timely perform any Remedial Work, (4) any past, present or future activity by any Person or other source, whether related or unrelated to the Seller, the Pledgor, the Guarantor or any Borrower in connection with any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or other release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling, transfer or transportation to or from any Property or Underlying Mortgaged Property of any Materials of Environmental Concern at any time located in, under, on, above or affecting any Property or Underlying Mortgaged Property, (5) any past, present or future actual Release (whether intentional or unintentional, direct or indirect, foreseeable or unforeseeable) to, from, on, within, in, under, near or affecting any Property or Underlying Mortgaged Property by any Person or other source, whether related or unrelated to the Seller, the Guarantor, the Pledgor or any Borrower, (6) the imposition, recording or filing or the threatened imposition, recording or filing of any Lien on any Property or Underlying Mortgaged Property with regard to, or as a result of, any Materials of Environmental Concern or pursuant to any Environmental Law, or (7) any misrepresentation or inaccuracy in any representation or warranty in any material respect or material breach or failure to perform any covenants or other obligations pursuant to this Agreement, the other Repurchase Documents or any of the Mortgage Loan Documents or relating to environmental matters in any way including, without limitation, under any of the Mortgage Loan Documents or (xv) any representation or warranty made or deemed made by the Seller, the Guarantor or any of their respective officers under or in connection with this Agreement or any other Repurchase Document, that shall have been false or incorrect in any material respect when made or deemed made or delivered, (xvi) the failure by the Seller, the Guarantor or any Servicer to comply with any term, provision or covenant contained in this Agreement, the Repurchase Documents, any Servicing Agreement or any agreement executed in connection with the foregoing agreements, or with any Applicable Law or with respect to any Purchased Items, or the nonconformity of any Purchased Items with any such Applicable Law, (xvii) the failure to vest and maintain vested in the Purchaser or Deal Agent as agent for the Secured Parties an undivided ownership interest in the Purchased Assets, together with all Income, free and clear of any Lien (other than Permitted Liens) whether existing at the time of any Transaction or at any time thereafter, (xviii) the aggregate Repurchase Price for all Transactions exceeding the Maximum Amount on any Business Day, (xix) the failure to maintain perfection under the UCC of any applicable jurisdiction or other Applicable Laws with respect to any Purchased Items, whether at the time of any Transaction or at any subsequent time, (xx) any dispute, claim, offset or defense (other than the discharge in bankruptcy of the Borrower ) of the Borrower to the payment with respect to any Purchased Item (including, without limitation, a defense based on the Purchased Item not being a legal, valid and binding obligation of such Borrower enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or services related to such Purchased Item or the furnishing or failure to furnish such merchandise or services, (xxi) any failure of the Seller, the Guarantor or any Servicer to perform its duties or obligations in accordance with the provisions of this Agreement, any Servicing Agreement or any of the other Repurchase Documents or any failure by the Seller, the Guarantor, any Servicer or any Affiliate of the Seller or the Guarantor to perform its respective duties under any Purchased Item, (xxii) the failure of the Seller, the Guarantor or any Servicer to remit any Income due hereunder to the Collection Account on or before the date such Income is required to be deposited therein (whether by the exercise of setoff rights or otherwise), (xxiii) any inability to obtain any judgment in, or utilize the court or other adjudication system of, any state in which a Borrower may be located as a result of the failure of the Seller to qualify to do business or file any notice or business activity report or any similar report, (xxiv) any action taken by the Seller, the Guarantor or any Servicer in the enforcement, collection or foreclosure of any Purchased Item, (xxv) any products liability claim or personal injury or property damage suit or other similar or related claim or action of whatever sort arising out of or in connection with the Purchased Assets or services that are the subject of any Purchased Item, (xxvi) any claim, suit or action of any kind or nature whatsoever arising out of or in connection with Environmental Laws including any vicarious liability, (xxvii) the failure by the Seller or the Guarantor to pay when due any Taxes for which the Seller or the Guarantor is liable, including, without limitation, sales, excise or personal property taxes payable in connection with the Purchased Items, (xxviii) any repayment by the Deal Agent, the Purchaser, any Secured Party or any Affected Party of any amount previously distributed in payment of the Repurchase Price, payment of Price Differential or the Aggregate Unpaids or any other amount due hereunder or under any Interest Rate Protection Agreement, in each case which amount the Deal Agent, the Purchaser, any Secured Party or any Affected Party believes in good faith is required to be repaid, (xxix) the commingling of Income on the Purchased Items at any time with other funds, (xxx) any investigation, litigation or proceeding related to this Agreement or the use of proceeds of Transactions or the security interest in the Purchased Items, (xxxi) any failure by the Seller to give reasonably equivalent value to the Transferors in consideration for the transfer by the Transferors to the Seller of any item of the Purchased Items or any attempt by any Person to void or otherwise avoid any such transfer under any statutory provision or common law or equitable action, including, without limitation, any provision of the Bankruptcy Code, (xxxii) the use of the proceeds of any Transaction in a manner other than as provided in this Agreement and the Purchase Agreements, (xxxiii) any Purchased Asset treated as or represented as an Eligible Asset or as satisfying the representations and warranties set forth in Schedule 1 that, at the applicable time, does not satisfy the foregoing criteria, (xxxiv) the exercise by any Borrower of any rights of setoff against the Seller, the Guarantor or any of their Affiliates or the exercise of any rights by a Borrower that impacts, impairs, reduces or diminishes any Income or any Purchased Asset, or (xxxv) the Seller’s, the Guarantor’s and/or the Pledgor’s conduct, activities, actions and/or inactions in connection with, relating to or arising out of any of the foregoing clauses of this Subsection 11.1(a) , that, in each case, results from anything other than any Indemnified Party’s gross negligence, bad faith or willful misconduct. In any suit, proceeding or action brought by an Indemnified Party in connection with any Purchased Item, the Pledged Collateral or any other collateral for the Facility for any sum owing thereunder, or to enforce any provisions of any Purchased Item, the Pledged Collateral or any other collateral for the Facility, the Seller shall save, indemnify and hold such Indemnified Party harmless from and against all expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction of liability whatsoever of the account debtor, obligor or Borrower thereunder arising out of a breach by the Seller, the Guarantor or the Pledgor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor, obligor or Borrower or its successors from the Seller, the Guarantor or the Pledgor. The Seller also agrees to reimburse an Indemnified Party as and when billed by such Indemnified Party for all such Indemnified Party’s costs, expenses and fees incurred in connection with the enforcement or the preservation of such Indemnified Party’s rights under this Agreement, the Repurchase Documents, the Mortgage Loan Documents and any transaction or Transaction contemplated hereby or thereby, including, without limitation, the reasonable fees and disbursements of its counsel. In the case of an investigation, litigation or other proceeding to which the indemnity in this Subsection 11.1(a) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Seller, the Guarantor, the Pledgor and/or any of their officers, directors, shareholders, employees or creditors, an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not any transaction contemplated hereby is consummated. Notwithstanding the foregoing, if an Indemnified Amount is incurred under clause (xxxiii) above relating to a breach of any representation or warranty in Schedule 1 of this Agreement, the Deal Agent shall first pursue such loss under the provisions of Section 2.7 of this Agreement before pursuing such loss under this Article 11 .

( b ) Any amounts subject to the indemnification provisions of this Section 11.1 shall be paid by the Seller to the Indemnified Party within thirty (30) Business Days following such Person’s demand therefor. For the avoidance of doubt, an Indemnified Party may seek payment of any Indemnified Amount at any time and regardless of whether a Default or an Event of Default then exists or is continuing.

( c ) If for any reason the indemnification provided in this Section 11.1 is unavailable to the Indemnified Party or is insufficient to hold an Indemnified Party harmless, then the Seller shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Indemnified Party on the one hand and the Seller and the Guarantor on the other hand but also the relative fault of such Indemnified Party as well as any other relevant equitable considerations.

( d ) The obligations of the Seller under this Article XI shall survive the resignation or removal of the Deal Agent and the termination of this Agreement.

Section 11 . 2 After-Tax Basis .

Indemnification under Section 11.1 shall be in an amount necessary to make the Indemnified Party whole after taking into account any tax consequences to the Indemnified Party of the receipt of the indemnity provided hereunder, including the effect of such tax or refund on the amount of tax measured by net income or profits that is or was payable by the Indemnified Party.

ARTICLE XII

THE DEAL AGENT

Section 12 . 1 Deal Agent .

( a ) Authorization and Action . The Purchasers hereby designate and appoint WCM as the Deal Agent hereunder and authorize the Deal Agent to act as agent and bailee and take such actions as agent and bailee on behalf of the Purchasers and the other Secured Parties and to exercise such powers as are delegated to the Deal Agent by the terms of this Agreement, together with such powers as are reasonably incidental thereto. The Deal Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with VFCC or the other Secured Parties, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Deal Agent shall be read into this Agreement or otherwise exist for the Deal Agent. In performing its functions and duties hereunder, the Deal Agent shall act solely as an agent for VFCC and the other Secured Parties and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Seller, the Guarantor, the Pledgor or any of their successors or assigns. The Deal Agent shall not be required to take any action that exposes the Deal Agent to personal liability or that is contrary to this Agreement or Applicable Law. The appointment and authority of the Deal Agent hereunder shall terminate at the indefeasible payment in full of the Obligations.

( b ) Delegation of Duties . The Deal Agent may execute any of its duties under this Agreement or the other Repurchase Documents by or through agents, bailees or attorneys-in-fact and shall be entitled to the advice of counsel concerning all matters pertaining to such duties. The Deal Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

( c ) Exculpatory Provisions . Neither the Deal Agent nor any of its directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement (except for its, their or such Person’s own gross negligence or willful misconduct or, in the case of the Deal Agent, the breach of its obligations expressly set forth in this Agreement), or (ii) responsible in any manner to VFCC or any other Secured Party for any recitals, statements, representations or warranties made by the Seller contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other document furnished in connection herewith, for any failure of the Seller to perform its obligations hereunder, or for the satisfaction of any condition specified in Article III . The Deal Agent shall not be under any obligation to VFCC or any other Secured Party to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement, or to inspect the Properties, books or records of the Seller. The Deal Agent shall not be deemed to have knowledge of any Default, Event of Default or Servicer Default unless the Deal Agent has received notice from the Seller or a Secured Party.

( d ) Reliance . The Deal Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel, independent accountants and other experts selected by the Deal Agent. The Deal Agent shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other document furnished in connection herewith unless it shall first receive such advice or concurrence of VFCC and the other Secured Parties, as it deems appropriate, or it shall first be indemnified to its satisfaction by VFCC and the other Secured Parties; provided , that , unless and until the Deal Agent shall have received such advice, the Deal Agent may take or refrain from taking any action as the Deal Agent shall deem advisable and in the best interests of VFCC and the other Secured Parties. The Deal Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of VFCC and the other Secured Parties, and such request and any action taken or failure to act pursuant thereto shall be binding upon VFCC and the other Secured Parties.

( e ) Non-Reliance on the Deal Agent and Other Purchaser . VFCC and the other Secured Parties expressly acknowledge that neither the Deal Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Deal Agent hereafter taken, including, without limitation, any review of the affairs of the Seller, shall be deemed to constitute any representation or warranty by the Deal Agent. Each of the VFCC and the other Secured Parties represent and warrant to the Deal Agent that it has made and will make, independently and without reliance upon the Deal Agent, and based on such documents and information as it has deemed appropriate, its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller and has made its own decision to enter into this Agreement.

( f ) The Deal Agent in its Individual Capacity . The Deal Agent and any of its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Seller or any Affiliate of the Seller as though the Deal Agent were not the Deal Agent hereunder. With respect to the Transactions entered into pursuant to this Agreement, the Deal Agent and each of its Affiliates shall have the same rights and powers under this Agreement as the Purchaser and may exercise the same as though it were not the Deal Agent and the terms “Purchaser” shall include the Deal Agent in its individual capacity.

( g ) Successor Deal Agent . The Deal Agent may, upon five (5) Business Days’ notice to the Seller and VFCC, and the Deal Agent will, upon the direction of VFCC, resign as Deal Agent. If the Deal Agent shall resign, then VFCC shall give notice of the proposed replacement Deal Agent to the Seller. The proposed replacement Deal Agent shall be subject to the Seller’s consent, which consent shall be in writing and shall not be unreasonably withheld, conditioned or delayed (the “Consent Standard”). If the Seller fails to respond to the Deal Agent within two (2) Business Days following notice from VFCC referred to above, the Seller shall be deemed to consent to the proposed replacement Deal Agent (without the need for such consent to be in writing). Any refusal by the Seller to consent to a proposed replacement Deal Agent shall be in writing and shall be accompanied by the specific reasons therefor. If the Seller timely responds and refuses to consent to the proposed replacement Deal Agent in accordance with the Consent Standard, VFCC shall propose alternative replacement Deal Agents until the Seller consents in accordance with the Consent Standard. If for any reason no successor Deal Agent is appointed by VFCC during such five (5) Business Day period, then effective upon the expiration of such five (5) Business Day period, the Seller shall make all payments it otherwise would have made to the Deal Agent in respect of the Obligations or under the Fee Letter directly to VFCC and for all purposes shall deal directly with VFCC until the Seller consents to a proposed replacement Deal Agent in accordance with the Consent Standard. After any retiring Deal Agent’s resignation hereunder as Deal Agent, the provisions of Article XI and Article XII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Deal Agent under this Agreement.

ARTICLE XIII

MISCELLANEOUS

Section 13 . 1 Amendments and Waivers .

No amendment, waiver or other modification of any provision of this Agreement shall be effective without the written agreement of each of the Seller, the Deal Agent, the Purchaser, the Guarantor and, to the extent the proposed amendment, waiver or other modification materially and adversely affects the Swap Counterparty, the Swap Counterparty; provided , however , that, no such amendment, waiver or modification that is material shall be effective unless (if and to the extent required by the commercial paper program of the Purchaser) the Rating Agencies shall have provided Ratings Confirmations. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

Section 13 . 2 Notices and Other Communications .

All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including telex communication and communication by facsimile copy) and mailed, telexed, transmitted or delivered, as to each party hereto, at its address set forth under its name on the signature pages of this Agreement or at such other address as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, upon receipt, or in the case of (a) notice by telex, when telexed against receipt of answer back, or (b) notice by facsimile copy, when verbal communication of receipt is obtained. Neither the Seller, the Guarantor nor the Pledgor shall be entitled to any notices of any nature whatsoever from the Deal Agent, the Purchaser, any Secured Party or any Affected Party, except with respect to matters for which this Agreement or the Repurchase Documents specifically and expressly provide for the giving of notice by the Deal Agent, the Purchaser, any Secured Party or any Affected Party to the Seller, the Guarantor and/or the Pledgor and, except with respect to matters for which the Seller, the Guarantor or the Pledgor is not, pursuant to Applicable Law, permitted to waive the giving of notice.

Section 13 . 3 Set-offs .

( a ) In addition to any rights and remedies of the Deal Agent, the Purchaser or any Secured Party provided by this Agreement , the Repurchase Documents and by Applicable Law, the Purchaser and the Deal Agent as agent for the Secured Parties shall have the right, without prior notice to the Seller or the Guarantor, any such notice being expressly waived by the Seller and the Guarantor to the extent permitted by Applicable Law, upon any amount becoming due and payable by the Seller to the Deal Agent, the Purchaser or any Secured Party hereunder, under the Repurchase Documents or otherwise (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all monies and other property of the Seller, any and all deposits (general or special, time or demand, provisional or final), in any currency, and any and all other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, and in each case at any time held or owing by the Deal Agent, the Purchaser, any Secured Party or any Affiliate thereof to or for the credit or the account of the Seller. The Deal Agent agrees promptly to notify the Seller and the Guarantor after any such set-off and application made by the Deal Agent as agent for the Secured Parties or the Purchaser, provided that the failure to give such notice shall not affect the validity of such set-off and application. The Seller and the Guarantor hereby waive any right of setoff it may have or to which it may be entitled under this Agreement from time to time against the Deal Agent, the Purchaser and any Secured Party or their assets.

( b ) If any Secured Party, whether by setoff or otherwise, has payment made to it with respect to any portion of the Obligations owing to such Secured Party (other than payments received pursuant to Section 11.1 ) in a greater proportion than that received by any other Secured Party, such Secured Party agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of the Obligations held by the other Secured Parties so that after such purchase each Secured Party will hold its ratable proportion of the Obligations; provided , however , that if all or any portion of such excess amount is thereafter recovered from such Secured Party, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

Section 13 . 4 No Waiver; E tc.

( a ) Upon the occurrence and during the continuance of an Event of Default, the Deal Agent, the Purchaser, a Secured Party or an Affected Party shall have, with respect to the security interest in the Purchased Assets granted pursuant to Article VIII of this Agreement, and in addition to all other rights and remedies available to the Deal Agent and Purchaser under this Agreement or other Applicable Law, all rights and remedies of a secured party upon default under the UCC.

( b ) The Seller and the Guarantor agree, to the full extent that it may lawfully so agree, that neither it nor anyone claiming through or under it will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in force in any locality where any Purchased Items may be situated in order to prevent, hinder or delay the enforcement or foreclosure of this Agreement, or the absolute sale of any of the Purchased Items or any part thereof, or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereof, and the Seller and the Guarantor, each for itself and all who may at any time claim through or under it, hereby waives, to the full extent that it may be lawful so to do, the benefit of all such laws and any and all right to have any of the properties or assets constituting the Purchased Items marshaled upon any such sale, and agrees that the Deal Agent as agent to the Secured Parties or any court having jurisdiction to foreclose the security interests granted in this Agreement may sell the Purchased Items as an entirety or in such parcels as the Purchaser or such court may determine.

( c ) No failure on the part of the Deal Agent, the Purchaser, a Secured Party or an Affected Party to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy hereunder preclude any further exercise thereof or the exercise of any other right. The rights and remedies herein provided are cumulative and not exclusive of any rights and remedies provided by Applicable Law . Application of the Post-Default Rate or increased Pricing Spread after a Default or Event of Default shall not be deemed to constitute a waiver of any Default or Event of Default or any rights or remedies of the Deal Agent, the Purchaser, the Secured Parties or from any other Affected Party under this Agreement, any other Repurchase Documents or Applicable Law, or a consent to any extension of time for the payment or performance of any obligation with respect to which the Post-Default Rate or increase in Pricing Spread after an Event of Default may be invoked.

( d ) In the event that a claim or adjudication is made that the Deal Agent, the Purchaser, a Secured Party or an Affected Party has acted unreasonably or unreasonably delayed acting in any case where by Applicable Law or under this Agreement or the other Repurchase Documents it has an obligation to act reasonably or promptly, neither the Deal Agent, the Purchaser, the Secured Parties nor the Affected Parties shall be liable for any punitive, consequential, indirect or special damages in connection therewith or any other breach or default by the Deal Agent, the Purchaser, a Secured Party or an Affected Party, and the Seller’s and the Guarantor’s sole remedies shall be limited to commencing an action seeking injunctive relief, actual damages or declaratory judgment .

Section 13 . 5 Binding Effect .

This Agreement shall be binding upon and inure to the benefit of the Seller, the Deal Agent, the Purchaser, the Secured Parties, the Affected Parties and the Guarantor and their respective successors and permitted assigns.

Section 13 . 6 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue .

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF). EACH OF THE PARTIES HERETO HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

Section 13 . 7 Jurisdiction; Waiver of Jury Trial .

( a ) EACH OF THE PARTIES HERETO HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

( b ) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

Section 13 . 8 Costs, Expenses and Taxes .

( a ) The Seller agrees to pay as and when billed by the Deal Agent, the Purchaser, the Secured Parties or any Affected Party all of the reasonable out-of-pocket costs and expenses incurred by the Deal Agent, the Purchaser, the Secured Parties and/or any Affected Party in connection with the development, preparation, execution and delivery of, and any amendment, supplement, renewal, extension or modification to or waiver of, this Agreement, the Repurchase Documents, any Transaction hereunder and any other documents and agreements prepared in connection herewith or therewith. The Seller agrees to pay as and when billed by the Deal Agent, the Purchaser, any Secured Party and/or any Affected Party all of the reasonable out-of-pocket costs and expenses incurred in connection with the consummation and administration of the transactions contemplated hereby and thereby including, without limitation, (i) all the reasonable fees and out-of-pocket expenses of counsel for the Deal Agent, the Purchaser, the Secured Parties and the Affected Parties with respect thereto and with respect to advising the Deal Agent, the Purchaser, the Secured Parties and the Affected Parties as to their respective rights and remedies under this Agreement, the Repurchase Documents and the other documents to be delivered hereunder or in connection herewith, (ii) all costs and expenses, if any (including reasonable counsel fees and expenses) incurred by the Deal Agent, the Purchaser, the Secured Parties and the Affected Parties in connection with the enforcement of this Agreement, the Repurchase Documents and the other documents to be delivered hereunder or thereunder or in connection herewith or therewith and (iii) all the due diligence, inspection, audit, testing, review, recording, travel, lodging or other administrative costs and expenses incurred by the Deal Agent, the Purchaser, the Secured Parties and/or any Affected Party with respect to such Person’s review, consideration and purchase or proposed purchase of any Mortgage Asset, any Purchased Asset or any Purchased Item under this Agreement and the other Repurchase Documents (including any costs necessary or incidental to the execution of any Transaction under this Agreement), including, but not limited to, those costs and expenses incurred by the Deal Agent, the Purchaser, the Secured Parties and/or any Affected Party and reimbursable by the Seller pursuant to Subsection 11.1(a) of this Agreement.

( b ) The Seller shall pay on demand any and all stamp, sales, excise and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the Repurchase Documents or the other documents to be delivered hereunder or thereunder or any agreement or other document providing liquidity support, credit enhancement or other similar support to the Purchaser in connection with this Agreement or the funding or maintenance of Transactions hereunder.

( c ) The Seller shall pay on demand all other reasonable costs, expenses and Taxes (excluding income, franchise and similar taxes) incurred by the Deal Agent, the Purchaser, the Secured Parties and the Affected Parties (“ Other Costs ”), including, without limitation, all reasonable costs and expenses incurred by the Deal Agent, the Purchaser, the Secured Parties and the Affected Parties in connection with periodic audits of the Seller’s, the Guarantor’s, the Pledgor’s or any Servicer’s books and records.

Section 13 . 9 Legal Matters .

( a ) In the event of any conflict between the terms of this Agreement, any other Repurchase Document and any Confirmation, the documents shall control in the following order of priority: first , the terms of the Confirmation shall prevail, then the terms of this Agreement shall prevail, and then the terms of the other Repurchase Documents shall prevail.

( b ) Each of the Seller and the Guarantor hereby acknowledges that:

( i ) it has been advised by counsel of its choosing in the negotiation, execution and delivery of the Repurchase Documents;

( ii ) it has no fiduciary relationship with the Deal Agent, the Purchaser or any Secured Party (including under any Repurchase Document); and

( iii ) no joint venture exists with the Purchaser.

Section 13 . 10 Recourse .

( a ) No recourse under or with respect to any obligation, covenant or agreement (including, without limitation, the payment of any fees or any other obligations) of the Deal Agent, the Purchaser, any Secured Party, any Affected Party, the Seller or the Guarantor as contained in this Agreement or any other Repurchase Document entered into by any such party pursuant hereto or thereto or in connection herewith or therewith shall be had against any administrator of the Deal Agent, the Purchaser, the Secured Parties, any Affected Party, the Seller, the Pledgor or the Guarantor or any incorporator, Affiliate, owner, member, partner, stockholder, officer, director, employee, agent or attorney of the Deal Agent, the Purchaser, the Secured Parties, any Affected Party, the Seller, the Pledgor or the Guarantor, or of any such administrator, as such, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood that the agreements of each of the Deal Agent, the Purchaser, the Secured Parties, the Affected Parties, the Seller, the Pledgor and the Guarantor contained in this Agreement and all of the other agreements, instruments and documents entered into by any such party pursuant hereto or thereto or in connection herewith or therewith are, in each case, solely the corporate obligations of the Deal Agent, the Purchaser, the Secured Parties, the Affected Parties, the Seller, the Pledgor and the Guarantor, and that no personal liability whatsoever shall attach to or be incurred by any administrator of the Deal Agent, the Purchaser, the Secured Parties, the Affected Parties, the Seller, the Pledgor or the Guarantor or any incorporator, owner, member, partner, stockholder, Affiliate, officer, director, employee, agent or attorney of the Deal Agent, the Purchaser, the Secured Parties, the Affected Parties, the Seller, the Pledgor or the Guarantor, or of any such administrator, as such, or any other of them, under or by reason of any of the obligations, covenants or agreements of the Deal Agent, the Purchaser, the Secured Parties or the Affected Parties, the Seller, the Pledgor or the Guarantor contained in this Agreement, the Repurchase Documents or in any other such instruments, documents or agreements, or that are implied therefrom, and that any and all personal liability of every such administrator of the Deal Agent, the Purchaser, the Secured Parties, any Affected Party, the Seller, the Pledgor and the Guarantor and each incorporator, owner, member, partner, stockholder, Affiliate, officer, director, employee, agent or attorney of the Deal Agent, the Purchaser, the Secured Parties or the Affected Parties, the Seller, the Pledgor and the Guarantor, or of any such administrator, or any of them, for breaches by the Deal Agent, the Purchaser, the Secured Parties or any Affected Party, the Seller, the Pledgor or the Guarantor of any such obligations, covenants or agreements, which liability may arise either at common law or at equity, by statute or constitution, or otherwise, is hereby expressly waived as a condition of and in consideration for the execution of this Agreement. The provisions of this Section 13.10(a) shall survive the termination of this Agreement until the expiration of the applicable statute of limitations.

( b ) Notwithstanding anything in this Agreement to the contrary, neither VFCC nor any other Purchaser that is a commercial paper conduit shall have any obligation to pay any amount required to be paid by it hereunder in excess of any amount available to VFCC or any other Purchaser that is a commercial paper conduit after paying or making provision for the payment of its Commercial Paper Notes. All payment obligations of VFCC and the other Purchasers that are commercial paper conduits hereunder are contingent on the availability of funds to such Purchaser in excess of the amounts necessary to pay its Commercial Paper Notes; and each of the other parties hereto agrees that it shall not have a claim under Section 101(5) of the Bankruptcy Code if and to the extent that any such payment obligation owed to it by VFCC or any other Purchaser that is a commercial paper conduit, as applicable, exceeds the amount available to VFCC or any other Purchaser that is a commercial paper conduit, as applicable, to pay such amount after paying or making provision for the payment of its Commercial Paper Notes.

Section 13 . 11 Protection of Right, Title and Interest; Further Action Evidencing Transactions .

( a ) The Seller agrees that, from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that the Deal Agent and the Purchaser may reasonably request in order to perfect, protect or more fully evidence the Transactions hereunder and the security interest granted in the Purchased Items, or to enable the Deal Agent as agent for the Secured Parties and the Purchaser to exercise and enforce its rights and remedies hereunder, under any Repurchase Document or under any Purchased Item.

( b ) If the Seller fails to perform any of its obligations hereunder, the Deal Agent or the Purchaser may (but shall not be required to) perform, or cause performance of, such obligation; and the Deal Agent’s or the Purchaser’s reasonable costs and expenses incurred in connection therewith shall be payable by the Seller. The Seller irrevocably appoints the Deal Agent and the Purchaser as its attorney-in-fact and authorizes the Deal Agent and the Purchaser to act on behalf of the Seller to file financing statements necessary or desirable in the Deal Agent’s and Purchaser’s discretion to perfect and to maintain the perfection and priority of the security interest in the Purchased Items. This appointment is coupled with an interest and is irrevocable.

Section 13 . 12 Term of this Agreement .

This Agreement, including, without limitation, the Seller’s, the Guarantor’s, and the Pledgor’s representations, agreements, covenants, obligations and duties set forth herein, creates and constitutes the continuing obligation of the parties hereto in accordance with its terms and shall remain in full force and effect until the Obligations are paid in full; provided , however , notwithstanding the repayment in full of the Obligations and/or the termination of this Agreement, the indemnification and payment provisions of Article XI , the provisions of Subsections 2.5(b) , 2.13 , 2.14 , 13.7 , 13.8 , 13.10(a) and 13.13 , and any other provision that by its terms expressly survives termination, shall each be continuing and shall survive any termination of this Agreement until the expiration of the statute of limitations applicable thereto. This Agreement and the other Repurchase Documents shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Obligations is rescinded or must otherwise be restored or returned by the Deal Agent as agent for the Secured Parties or the Purchaser as a preference, fraudulent conveyance or otherwise under any Insolvency Law, all as though such payment had not been made; provided that in the event payment of all or any part of the Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including, without limitation, any reasonable legal fees and disbursements) incurred by the Deal Agent as agent for the Secured Parties or the Purchaser in defending and enforcing such reinstatement shall be deemed to be included as a part of the Obligations.

Section 13 . 13 Confidentiality .

( a ) Each of the Deal Agent, the Purchasers, the Secured Parties, the Affected Parties, the Liquidity Agent, the Custodian, the Seller, the Guarantor, the Pledgor, and each Servicer shall maintain and shall cause each of its employees and officers to maintain the confidentiality of this Agreement, the other Repurchase Documents and all information with respect to the other parties, including all information regarding the business of the Seller, the Guarantor and the Pledgor and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that each such party and its directors, officers and employees may (i) disclose such information to its external accountants, attorneys, investors, potential investors and credit enhancers to the Purchasers (including the directors, officers, external accountants, and attorneys of such credit enhancers) and the agents or advisors of such Persons (“ Excepted Persons ”) who have a need to know such information, provided that each Excepted Person shall be advised by the party disclosing such information of the confidential nature of the information being disclosed, (ii) disclose the existence of this Agreement, but not the financial terms thereof, (iii) disclose such information as is required by Applicable Law and (iv) disclose this Agreement and such information in any suit, action, proceeding or investigation (whether in law or in equity or pursuant to arbitration) involving any of the Repurchase Documents or any Interest Rate Protection Agreement for the purpose of defending itself, reducing its liability or protecting or exercising any of its claims, rights, remedies or interests under or in connection with any of the Repurchase Documents or any Interest Rate Protection Agreement, provided that the Persons permitted to make such disclosures under clauses (iii) and (iv) shall also include credit enhancers to the Purchasers. It is understood that the financial terms that may not be disclosed except in compliance with this Subsection 13.13(a) include, without limitation, all fees and other pricing terms, and all Events of Default, Servicer Defaults and priority of payment provisions.

( b ) Anything herein to the contrary notwithstanding, the Seller, the Guarantor, the Pledgor and each Servicer each hereby consents to the disclosure of any nonpublic information with respect to it (i) to the Deal Agent, the Purchasers, the Liquidity Agent, the Custodian, the Secured Parties and the Affected Parties by each other, (ii) by the Deal Agent or the Purchasers to any prospective or actual assignee or participant of any of them or (iii) by the Deal Agent, the Liquidity Agent or a Purchaser to any Rating Agency, commercial paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to a Purchaser and to any officers, directors, employees, outside accountants, advisors and attorneys of any of the foregoing, provided each such Person is informed of and agrees to for NorthStar the confidential nature of such information. In addition, the Secured Parties, the Liquidity Agent, the Purchasers, any credit enhancers to the Purchasers and the Deal Agent may disclose any such nonpublic information as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law).

( c ) Notwithstanding anything herein to the contrary, the foregoing shall not be construed to prohibit (i) disclosure of any and all information that is or becomes publicly known, (ii) disclosure of any and all information (A) if required to do so by any applicable statute, law, rule or regulation, (B) to any government agency or regulatory body having or claiming authority to regulate or oversee any respects of any of the Purchasers, the Secured Parties, the Affected Parties, the Liquidity Agent, the Seller’s, the Guarantors or the Custodian’s business or that of their Affiliates, (C) pursuant to any subpoena, civil investigative demand or similar demand or request of any court, regulatory authority, arbitrator or arbitration to which any of the Purchasers, the Secured Parties, the Affected Parties, the Liquidity Agent, the Seller’s, the Guarantors or the Custodian or an Affiliate or an officer, director, employer or shareholder thereof is a party, (D) in any preliminary or final offering circular, registration statement or contract or other document pertaining to the transactions contemplated herein approved in advance by the Purchaser, the Deal Agent, the Seller, the Guarantor, the Pledgor or any Servicer or (E) to any Affiliate, independent or internal auditor, agent, employee or attorney of the Custodian having a need to know the same, provided that the Custodian advises such recipient of the confidential nature of the information being disclosed or (iii) any other disclosure authorized by the Seller, the Guarantor, the Pledgor or any Servicer.

( d ) Notwithstanding anything to the contrary contained herein, the Repurchase Documents or in any related document, all Persons may disclose to any and all Persons, without limitation of any kind, the federal income tax treatment of any of the transactions contemplated by this Agreement, the Repurchase Documents or any other related document, any fact relevant to understanding the federal tax treatment of such transactions and all materials of any kind (including opinions or other tax analyses) relating to such federal income tax treatment.

( e ) Notwithstanding anything to the contrary contained herein or in any Repurchase Document, Guarantor and any Affiliate of Guarantor shall be entitled to disclose any and all terms of any Repurchase Document (including the public filing thereof) if the Guarantor, in its sole discretion, deems it necessary or appropriate under the rules or regulations of the Securities and Exchange Commission and/or the New York Stock Exchange.

Section 13 . 14 Execution in Counterparts .

( a ) This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts (including by facsimile), each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

( b ) Each provision of this Agreement shall be valid, binding and enforceable to the fullest extent permitted by Applicable Law. In case any provision in or obligation, duty, covenant or agreement under this Agreement or the other Repurchase Documents shall be invalid, illegal or unenforceable in any jurisdiction (either in its entirety or as applied to any Person, fact, circumstance, action or inaction), the validity, legality and enforceability of the remaining provisions, obligations, duties, covenants and agreements, or of such provision, obligation, duty, covenant or agreement in any other jurisdiction or as applied to any Person, fact, circumstance, action or inaction, shall not in any way be affected or impaired thereby.

( c ) This Agreement and any other Repurchase Document executed in connection herewith contain the final and complete integration of all prior expressions by the parties hereto and thereto with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties hereto and thereto with respect to the subject matter hereof and thereof, superseding all prior oral or written understandings.

Section 13 . 15 Seller’s Waiver of Setoff .

Each of the parties hereto (other than VFCC and any Affected Party) hereby waives any right of setoff it may have or to which it may be entitled under this Agreement and the other Repurchase Documents from time to time against VFCC and any Affected Party or their assets or Properties.

Section 13 . 16 Assignments and Participations; Hypothecation of Purchased Assets .

Neither the Seller nor the Guarantor may assign, delegate, grant any interest in, permit any Lien to exist on or otherwise transfer in any way any of its rights, duties, covenants or obligations under this Agreement or the other Repurchase Documents without the prior written consent of the Deal Agent in its discretion and any attempt by the Seller or the Guarantor to do any of the foregoing without the prior written consent of the Deal Agent in its discretion shall be null and void. The Deal Agent, the Purchaser and any Secured Party may sell, transfer, assign, pledge or grant participation interests to any Person (other than to competitors of NorthStar that are disclosed in writing from time to time to the Deal Agent, provided that Wachovia, any Secured Party, any commercial paper conduit administered or managed by Wachovia and any Affiliate of the foregoing shall not be deemed to be competitors of NorthStar) in all or any portion of any Transaction, its interest in all or any portion of any Purchased Item and/or any other interest of the Purchaser or any Secured Party under this Agreement and the other Repurchase Documents but no such assignment or participation shall affect or obviate a Purchaser’s or Deal Agent’s obligation to transfer Purchased Assets back to the Seller or to apply income to or for the benefit of the Seller to the extent expressly provided by this Agreement (any such entity, a “ Transferee ”), provided that the Deal Agent shall give concurrent notice to the Seller of any assignment (the failure to give such notice, however, shall not affect the validity or enforceability of such assignment). Each of the Seller and the Guarantor agrees to cooperate, at the Deal Agent’s expense, with the Deal Agent, the Purchaser and each Secured Party in connection with any such assignment, transfer, pledge, participation or sale, and to enter into such restatements of, and amendments, supplements and other modifications to, this Agreement, in order to give effect to such assignment, transfer, pledge, participation or sale. The parties to any such transfer, assignment, pledge or participation shall execute and deliver to the Deal Agent, for its acceptance and recording in its books and records, such agreement as shall be satisfactory to such parties and the Deal Agent.

Section 13 . 17 Single Agreements .

The Deal Agent, the Purchaser and the Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of the Seller and the Guarantor agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, and (ii) that payments, deliveries and other transfers made by it or others on its behalf in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.

Section 13 . 18 Disclosure Relating to Certain Federal Protections .

The parties acknowledge that they have been advised that:

( a ) in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“ SEC ”) under Section 15 of the Securities Exchange Act of 1934 (“ 1934 Act ”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“ SIPA ”) do not protect the other party with respect to any Transaction hereunder;

( b ) in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and

( c ) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable; and

( d ) in the case of Transactions in which one of the parties is an “insured depository institution” as that term is defined in Section 1813(c)(2) of Title 12 of the United States Code, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund or the Bank Insurance Fund, as applicable.

Section 13 . 19 Intent .

( a ) The parties recognize that each Transaction is a “ Repurchase Agreement ” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Purchased Assets subject to such Transaction or the term of such Transaction would render such definition inapplicable) and a “ Securities Contract ” as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of Purchased Assets subject to such Transaction would render such definition inapplicable).

( b ) The parties agree and acknowledge that if a party hereto is an “ Insured Depository Institution ,” as such term is defined in the Federal Deposit Insurance Act, as amended (“ FDIA ”), then each Transaction hereunder is a “ Qualified Financial Contract ,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of Purchased Assets subject to such Transaction would render such definition inapplicable).

( c ) It is understood and agreed that this Agreement constitutes a “Master Netting Agreement” as that term is defined in Section 101 of Title 11 of the United States Code.

( d ) It is understood that this Agreement constitutes a “ Netting Contract ” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“ FDICIA ”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “ Covered Contractual Payment Entitlement ” or “ Covered Contractual Payment Obligation ”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “ Financial Institution ” as that term is defined in FDICIA or regulations promulgated thereunder).

( e ) It is understood that any party’s right to liquidate Purchased Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Section 10.2 is a contractual right to liquidate such Transaction as described in Sections 555, 559 and 561 of Title 11 of the United States Code, as amended.

100

Section 13 . 20 Review of Due Diligence and Books and Records .

Each of the Seller and the Guarantor acknowledge that each of the Deal Agent, the Purchaser and the other Secured Parties has the right to perform continuing due diligence reviews with respect to the Purchased Items and the Seller and the Guarantor for purposes of verifying compliance with the representations, warranties, covenants, agreements and specifications made hereunder, under the Repurchase Documents or otherwise, and each of the Seller and the Guarantor agree that, upon reasonable (but no less than one (1) Business Day’s) prior notice, unless an Event of Default shall have occurred, in which case no notice is required, to the Seller or the Guarantor, as applicable, the Deal Agent, the Purchaser, the other Secured Parties or their authorized representatives shall be permitted during normal business hours to examine, inspect, and make copies and extracts of, the books and records of the Seller and the Guarantor, the Mortgage Asset Files and any and all documents, records, agreements, instruments or information relating to the Purchased Items in the possession or under the control of the Seller, the Guarantor, and/or the Custodian. Each of the Seller and the Guarantor also shall make available to the Deal Agent, the Purchaser and the other Secured Parties a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Seller, the Guarantor, the Mortgage Asset Files and the Purchased Items. Each of the Seller and the Guarantor shall also make available to the Deal Agent, the Purchaser and the other Secured Parties any accountants or auditors of the Seller and the Guarantor to answer any questions or provide any documents as the Deal Agent, the Purchaser and the other Secured Parties may require. The Seller and the Guarantor shall also cause each of the Servicers and PSA Servicers (to the extent permitted under the applicable Pooling and Servicing Agreement) to cooperate with the Deal Agent, the Purchaser and the other Secured Parties by permitting the Deal Agent, the Purchaser and the other Secured Parties to conduct due diligence reviews of files of each such Servicer and PSA Servicer. Without limiting the generality of the foregoing, each of the Seller and the Guarantor acknowledge that the Deal Agent, the Purchaser and the other Secured Parties may purchase Purchased Items from the Seller based solely upon the information provided by the Seller or the Guarantor to the Deal Agent in the Seller Asset Schedule and the representations, warranties and covenants contained herein, and that the Deal Agent, the Purchaser and the other Secured Parties, at their option, have the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Items purchased in a Transaction, including, without limitation, ordering new credit reports and new appraisals on the related Underlying Mortgaged Properties and otherwise re-generating the information used to originate such Purchased Items. The Deal Agent, the Purchaser and the other Secured Parties may underwrite such Purchased Items itself or engage a mutually agreed upon third party underwriter to perform such underwriting. Each of the Seller and the Guarantor agrees to cooperate with the Deal Agent, the Purchaser and the other Secured Parties and any third party underwriter in connection with such underwriting, including, but not limited to, providing the Deal Agent, the Purchaser and the other Secured Parties and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Items in the possession, or under the control, of the Seller or the Guarantor. The Seller shall pay all out-of-pocket costs and expenses incurred by the Deal Agent, the Purchaser and the other Secured Parties in connection with the Deal Agent’s, the Purchaser’s and the other Secured Parties ‘activities pursuant to this Section 13.20 .

Section 13 . 21 Use of Employee Plan Assets .

If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 (“ ERISA ”) are intended to be used by either party hereto (the “ Plan Party ”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed.

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Section 13 . 22 Time of the Essence .

Time is of the essence with respect to all obligations, duties, covenants, agreements, notices or actions or inactions of the Deal Agent, the Purchaser, the Seller and the Guarantor under this Agreement and the other Repurchase Documents.

Section 13 . 23 Construction .

This Agreement shall be construed fairly as to the parties hereto and not in favor of or against any party, regardless of which party or which party’s counsel prepared this Agreement.

Section 13 . 24 Joint and Several Obligations .

( a ) At all times during which there is more than one (1) Seller under this Agreement, the liability of each Seller shall be joint and several and the joint and several obligations of each Seller under the Repurchase Documents (a) (i) shall be absolute and unconditional and shall remain in full force and effect (or be reinstated) until all the Obligations shall have been paid in full and the expiration of any applicable preference or similar period pursuant to any bankruptcy, insolvency, reorganization, moratorium or similar law, or at law or in equity, without any claim having been made before the expiration of such period asserting an interest in all or any part of any payment(s) received by the Deal Agent as agent for the Secured Parties, and (ii) until such payment has been made, shall not be discharged, affected, modified or impaired on the happening from time to time of any event, including, without limitation, any of the following, whether or not with notice to or the consent of any Seller, the Guarantor or the Pledgor, (A) the waiver, compromise, settlement, release, termination or amendment (including, without limitation, any extension or postponement of the time for payment or performance or renewal or refinancing) of any or all of the obligations or agreements of any Seller, the Guarantor or the Pledgor under the Agreement or any Repurchase Document, (B) the failure to give notice to any Seller, the Guarantor or the Pledgor of the occurrence of an Event of Default under any of the Repurchase Documents, (C) the release, substitution or exchange by the Deal Agent as agent for the Secured Parties of any or all of the Purchased Items (whether with or without consideration) or the acceptance by the Deal Agent as agent for the Secured Parties of any additional collateral or the availability or claimed availability of any other collateral or source of repayment or any nonperfection or other impairment of collateral, (D) the release of any Person primarily or secondarily liable for all or any part of the Obligations, whether by the Deal Agent as agent for the Secured Parties or in connection with any voluntary or involuntary liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors or similar event or proceeding affecting any or all of any Seller, the Guarantor, the Pledgor or any other Person who, or any of whose Property, shall at the time in question be obligated in respect of the Obligations or any part thereof, or (E) to the extent permitted by Applicable Law, any other event, occurrence, action or circumstance that would, in the absence of this Section 13.24 , result in the release or discharge of any or all of any Seller from the performance or observance of any obligation, covenant or agreement contained in the Agreement or the Repurchase Documents; (b) each Seller expressly agrees that the Deal Agent as agent for the Secured Parties shall not be required first to initiate any suit or to exhaust its remedies against any Seller, the Guarantor, the Pledgor or any other Person to become liable, or against any of the Purchased Items or the Pledged Collateral, in order to enforce this Agreement or the Repurchase Documents and each Seller, the Guarantor and the Pledgor expressly agree that, notwithstanding the occurrence of any of the foregoing, each Seller shall be and remain directly and primarily liable for all sums due under the Agreement or any of the Repurchase Documents; and, (c) on disposition by the Deal Agent as agent for the Secured Parties of any Property encumbered by any Purchased Items, each Seller shall be and shall remain jointly and severally liable for any deficiency.

( b ) Each Seller hereby agrees that, to the extent another Seller shall have paid more than its proportionate share of any payment made hereunder, the Seller shall be entitled to seek and receive contribution from and against any other Seller which has not paid its proportionate share of such payment; provided , however , that the provisions of this Section 13.24 shall in no respect limit the obligations and liabilities of any Seller to the Deal Agent, the Purchaser, or any Secured Party , and, notwithstanding any payment or payments made by any Seller (the “ paying Seller ”) hereunder or any set-off or application of funds of the paying Seller by the Deal Agent on behalf of the Secured Parties, the paying Seller shall not be entitled to be subrogated to any of the rights of the Deal Agent, the Purchaser or any Secured Party against any other Seller or any collateral security or guarantee or right of offset held by the Deal Agent, the Purchaser or any Secured Party , nor shall the paying Seller seek or be entitled to seek any contribution or reimbursement from the other Seller in respect of payments made by the paying Seller hereunder, until all amounts owing to the Deal Agent, the Purchaser or any Secured Party by the Seller under the Repurchase Documents are paid in full. If any amount shall be paid to the paying Seller on account of such subrogation rights at any time when all such amounts shall not have been paid in full, such amount shall be held by the paying Seller in trust for the Deal Agent on behalf of the Secured Parties, segregated from other funds of the paying Seller, and shall, forthwith upon receipt by the paying Seller, be turned over to the Deal Agent on behalf of the Secured Parties in the exact form received by the paying Seller (duly indorsed by the paying Seller to the Deal Agent on behalf of the Secured Parties, if required), to be applied against amounts owing to the Deal Agent, the Purchaser or any Secured Party by the Seller under the Repurchase Documents, whether matured or unmatured, in such order as the Deal Agent may determine in its discretion.

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Section 13 . 25 No Proceedings .

Each of the Seller, the Guarantor and the Pledgor hereby agrees that it will not institute against, or join any other Person in instituting against, VFCC, the Deal Agent, any other Purchaser or any Secured Party any Insolvency Proceeding so long as any commercial paper issued by VFCC or any other Purchaser shall be outstanding and there shall not have elapsed one (1) year and one (1) day since the last day on which any such commercial paper shall have been outstanding.

Section 13 . 26 Third Party Beneficiary .

Each of the Secured Parties shall be a third party beneficiary of the terms and provisions of this Agreement and the other Repurchase Documents. Notwithstanding anything contained herein to the contrary, all representations, warranties, duties and covenants of the Seller and the Guarantor to or for the benefit of the Deal Agent, the Purchaser or any Affected Party shall also be to and for the benefit of the Secured Parties, regardless of whether the same is expressly stated in each instance.

Section 13 . 27 Heading and Exhibits .

The headings herein are for purposes of references only and shall not otherwise affect the meaning or interpretation of any provision hereof. The schedules and exhibits attached hereto and referred to herein shall constitute a part of this Agreement and are incorporated into this Agreement for all purposes.

[Remainder of Page Intentionally Left Blank.]

103

IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.


THE SELLERS:	NRFC WA HOLDINGS, LLC, a Delaware limited liability company

	By:	/s/ Daniel R. Gilbert
		Name: Daniel R. Gilbert
		Title: Executive Vice President

	NRFC WA Holdings, LLC c/o NorthStar Realty Finance Corp. 527 Madison Avenue New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 208-2651 (212) 319-4558
	Confirmation No.:	(212) 319-2618 (212) 319-4327 (212) 319-3679

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-1


THE SELLERS (cont.):	NRFC WA HOLDINGS II, LLC, a Delaware limited liability company

	By:	/s/ Daniel R. Gilbert
		Name: Daniel R. Gilbert
		Title: Executive Vice President

	NRFC WA Holdings II, LLC c/o NorthStar Realty Finance Corp. 527 Madison Avenue New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 208-2651 (212) 319-4558
	Confirmation No.:	(212) 319-2618 (212) 319-4327 (212) 319-3679

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-2


THE SELLERS (cont.):	NRFC WA HOLDINGS VII, LLC, a Delaware limited liability company

	By:	/s/ Daniel R. Gilbert
		Name: Daniel R. Gilbert
		Title: Executive Vice President

	NRFC WA Holdings VII, LLC c/o NorthStar Realty Finance Corp. 527 Madison Avenue New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 208-2651 (212) 319-4558
	Confirmation No.:	(212) 319-2618 (212) 319-4327 (212) 319-3679

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-3


THE SELLERS (cont.):	NRFC WA HOLDINGS X, LLC, a Delaware limited liability company

	By:	/s/ Daniel R. Gilbert
		Name: Daniel R. Gilbert
		Title: Executive Vice President

	NRFC WA Holdings X, LLC c/o NorthStar Realty Finance Corp. 527 Madison Avenue New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 208-2651 (212) 319-4558
	Confirmation No.:	(212) 319-2618 (212) 319-4327 (212) 319-3679

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-4


THE SELLERS (cont.):	NRFC WA HOLDINGS XI, LLC, a Delaware limited liability company

	By:	/s/ Daniel R. Gilbert
		Name: Daniel R. Gilbert
		Title: Executive Vice President

	NRFC WA Holdings XI, LLC c/o NorthStar Realty Finance Corp. 527 Madison Avenue New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 208-2651 (212) 319-4558
	Confirmation No.:	(212) 319-2618 (212) 319-4327 (212) 319-3679

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-5


THE SELLERS (cont.):	NRFC WA HOLDINGS XII, LLC, a Delaware limited liability company

	By:	/s/ Daniel R. Gilbert
		Name: Daniel R. Gilbert
		Title: Executive Vice President

	NRFC WA Holdings XII, LLC c/o NorthStar Realty Finance Corp. 527 Madison Avenue New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 208-2651 (212) 319-4558
	Confirmation No.:	(212) 319-2618 (212) 319-4327 (212) 319-3679

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-6


THE PURCHASERS:	VARIABLE FUNDING CAPITAL COMPANY LLC, as a Purchaser

	By:	Wachovia Capital Markets, LLC,
		as attorney-in-fact


	By:	/s/ Douglas R. Wilson, Sr.
		Name: Douglas R. Wilson, Sr.
		Title: Director

	Variable Funding Capital Company LLC
	c/o Wachovia Capital Markets, LLC
	One Wachovia Center, Mail Code: TW10
	301 South College Street
	Charlotte, North Carolina	28288
	Attention:	Conduit Administration
	Facsimile No.:	(704) 383-9579
	Confirmation No.:	(704) 374-2520

	with a copy to:

	Wachovia Capital Markets, LLC
	One Wachovia Center, Mail Code: NC0166
	301 South College Street
	Charlotte, North Carolina	28288
	Attention:	Joseph F. Cannon
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 383-2324

With respect to notices required pursuant to Section 13.1 , a copy of notices sent to VFCC shall be sent to:

	Lord Securities Corp.
	2 Wall Street, 19th Floor
	New York, New York 10005
	Attention:	Vice President
	Facsimile No.:	(212) 346-9012
	Confirmation No.:	(212) 346-9008

[Signatures Continued on the Following Page]

S-7


THE PURCHASERS (cont.):	WACHOVIA BANK, NATIONAL ASSOCIATION as the Swingline Purchaser

	By:	/s/ Joseph F. Cannon
		Name: Joseph F. Cannon
		Title: Vice President

	Wachovia Bank, National Association
	One Wachovia Center, Mail Code: NC0166
	301 South College Street
	Charlotte, North Carolina 28288
	Attention:	Joseph F. Cannon
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 383-2324

[Signatures Continued on the Following Page]

S-8


THE DEAL AGENT:	WACHOVIA CAPITAL MARKETS, LLC

	By:	/s/ Joseph F. Cannon
		Name: Joseph F. Cannon
		Title: Vice President

	Wachovia Capital Markets, LLC
	One Wachovia Center, Mail Code: NC0166
	301 South College Street
	Charlotte, North Carolina 28288
	Attention:	Joseph F. Cannon
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 383-2324

[Signatures Continued on the Following Page]

S-9


THE GUARANTORS:	NORTHSTAR REALTY FINANCE CORP., a Maryland corporation

	By:	/s/ Daniel R. Gilbert
		Name: Daniel R. Gilbert
		Title: Executive Vice President

	NorthStar Realty Finance Corp.
	527 Madison Avenue
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 208-2651
		(212) 319-4558
	Confirmation No.:	(212) 319-2618
		(212) 319-4327
		(212) 319-3679

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-10


THE GUARANTORS (cont.):	NORTHSTAR REALTY FINANCE L.P., a Delaware limited partnership,

	By:	NorthStar Realty Finance Corp., a Maryland corporation, its general partner

	By:	/s/ Daniel R. Gilbert
		Name: Daniel R. Gilbert
		Title: Executive Vice President

	NorthStar Realty Finance L.P.
	527 Madison Avenue
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 208-2651
		(212) 319-4558
	Confirmation No.:	(212) 319-2618
		(212) 319-4327
		(212) 319-3679

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-11


Acknowledged and Agreed to:

THE PLEDGOR:	NRFC SUB-REIT CORP., a Maryland corporation

	By:	/s/ Daniel R. Gilbert
		Name: Daniel R. Gilbert
		Title: Executive Vice President

	NRFC Sub-REIT Corp.
	c/o NorthStar Realty Finance Corp.
	527 Madison Avenue
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 208-2651
		(212) 319-4558
	Confirmation No.:	(212) 319-2618
		(212) 319-4327
		(212) 319-3679

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-12


THE SWAP COUNTERPARTY:	WACHOVIA BANK, NATIONAL ASSOCIATION , a national banking association

	By:	/s/ John Miechkowski
		Name: John Miechkowski
		Title: Director

	Wachovia Bank, National Association
	One Wachovia Center, Mail Code: NC0166
	301 South College Street
	Charlotte, North Carolina	28202-0600
	Attention:	Bruce M. Young, Senior Vice President, Risk Management
	Facsimile No.:	(704) 383-0575
	Confirmation No.:	(704) 383-8778

S-13

FIRST AMENDMENT TO MASTER REPURCHASE AGREEMENT

(VFCC/NorthStar)

THIS FIRST AMENDMENT TO MASTER REPURCHASE AGREEMENT , dated as of May 24, 2007 (this “ Amendment No. 1 ”), is entered into by and among NRFC WA HOLDINGS, LLC , as a seller (together with its successors and permitted assigns, “ NRFC ”), NRFC WA HOLDINGS II, LLC , as a seller (together with its successors and permitted assigns, “ NRFC II ”), NRFC WA HOLDINGS VII, LLC , as a seller (together with its successors and permitted assigns, “ NRFC VII ”), NRFC WA HOLDINGS X, LLC , as a seller (together with its successors and permitted assigns, “ NRFC X ”), NRFC WA HOLDINGS XI, LLC , as a seller (together with its successors and permitted assigns, “ NRFC XI ”), NRFC WA HOLDINGS XII, LLC , as a seller (together with its successors and permitted assigns, “ NRFC XII ”, and, together with NRFC, NRFC II, NRFC VII, NRFC X and NRFC XI, the “ Seller ”), VARIABLE FUNDING CAPITAL COMPANY LLC , as a purchaser (together with its successors and assigns, “ VFCC ”), WACHOVIA BANK, NATIONAL ASSOCIATION , as the swingline purchaser (together with its successors and assigns in such capacity, the “ Swingline Purchaser ”, and, together with VFCC, the “ Purchaser ”), WACHOVIA CAPITAL MARKETS, LLC , as the deal agent for the Secured Parties (together with its successors and assigns in such capacity, the “ Deal Agent ”), NORTHSTAR REALTY FINANCE CORP , as a guarantor (together with its successors and permitted assigns, “ NorthStar ”), and NORTHSTAR REALTY FINANCE L.P. , as a guarantor (together with its successors and permitted assigns, the “ Operating Partnership ”, and, together with NorthStar, the “ Guarantor ”), and consented to by NRFC SUB-REIT CORP. , as the pledgor (together with its successors and permitted assigns, the “ Pledgor ”). Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Repurchase Agreement (as defined below).

R E C I T A L S

WHEREAS , the Seller, the Guarantor, the Purchaser and the Deal Agent are parties to that certain Master Repurchase Agreement, dated as of May 14, 2007, (as amended by this Amendment No. 1, the “ Repurchase Agreement ”);

WHEREAS , the Seller and the Guarantor desire to make certain modifications to the Repurchase Documents;

WHEREAS , the Purchaser and the Deal Agent are willing to modify the Repurchase Documents as requested by the Seller and the Guarantor on the terms and conditions specified herein; and

WHEREAS , the Pledgor is a party to other Repurchase Documents and related agreements that may be affected, directly or indirectly, by this Amendment No. 1 and desires to evidence its agreement to the amendments and modifications set forth herein.

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

Section 1 . Amendment to Repurchase Agreement .

The definition of “Maximum Amount” contained in Subsection 1.1(b) to the Repurchase Agreement is hereby amended and restated in its entirety as follows:

““ Maximum Amount ”: Means $800,000,000; provided , however , after the Temporary Increase Period, (a) in the event Purchased Assets are repurchased and sold into the CDO Securitization Transaction on or prior to the Temporary Increase Expiration Date and the Seller repays the Temporary Increase Indebtedness plus all accrued and unpaid Price Differential thereon and all related Breakage Costs on or before the Temporary Increase Expiration Date, the Maximum Amount shall be $400,000,000 and (b) in the event the Seller does not satisfy clause (a) of this definition, the Maximum Amount shall equal the sum of $400,000,000 and the highest Temporary Increase Amount, provided that such Maximum Amount shall be reduced to (i) within six (6) months of the Temporary Increase Expiration Date, $600,000,000, (ii) within twelve (12) months of the Temporary Increase Expiration Date, $550,000,000 and (iii) within eighteen (18) months of the Temporary Increase Expiration Date, $500,000,000; provided , further , however , on and after the Facility Maturity Date, the Maximum Amount shall mean the aggregate Purchase Price outstanding for all Transactions.”

Section 2 . [ Reserved ].

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

Except as specifically modified hereby, the Repurchase Documents shall remain in full force and effect. All references to any Repurchase Document shall be deemed to mean each Repurchase Document as modified by this Amendment No. 1. This Amendment No. 1 shall not constitute a novation of the Repurchase Documents, but shall constitute a modification thereof. The parties hereto agree to be bound by the terms and conditions of the Repurchase Documents, as modified by this Amendment No. 1, as though such terms and conditions were set forth herein.

Section 4 . Representations .

Each of the Seller, the Guarantor and the Pledgor represent and warrant, as of the date of this Amendment No. 1, as follows:

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

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

( c ) no consent, license, permit, approval or authorization of, or registration, filing or declaration with, any Governmental Authority or other Person is required in connection with the execution, delivery, performance, validity or enforceability by or against it of this Amendment No. 1;

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

( e ) this Amendment No. 1, as well as each of the Repurchase Documents as modified by this Amendment No. 1, constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity;

( f ) no Default or Event of Default exists or will exist after giving effect to this Amendment No. 1; and

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

Section 5 . Conditions Precedent .

The effectiveness of this Amendment No. 1 is subject to the following conditions precedent: ( i ) delivery to the Deal Agent of this Amendment No. 1 duly executed by each of the parties hereto; (ii) the payment of all reasonable legal fees and expenses of Moore & Van Allen PLLC, as counsel to the Deal Agent, in the amount to be set forth on a separate invoice; and (iii) such other documents, agreements or certifications as the Deal Agent may reasonably require.

Section 6 . Miscellaneous .

( a ) This Amendment No. 1 may be executed in any number of counterparts (including by facsimile), and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument but all of which together shall constitute one and the same agreement.

( b ) The descriptive headings of the various sections of this Amendment No. 1 are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

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

( d ) The interpretive provisions of Section 1.2 of the Repurchase Agreement are incorporated herein mutatis mutandis .

( e ) This Amendment No. 1 represents the final agreement among the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements between the parties. There are no unwritten oral agreements between the parties.

( f ) THIS AMENDMENT NO. 1 AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be executed by their respective officers thereunto duly authorized, as of the date first above written.


THE SELLERS:	NRFC WA HOLDINGS, LLC,
	a Delaware limited liability company

	By: /s/ Daniel R. Gilbert
	Name: Daniel R. Gilbert
	Title: Executive Vice President

	Address for Notices: NRFC WA Holdings, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022

	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to: Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-1


THE SELLERS (cont.):	NRFC WA HOLDINGS II, LLC,
	a Delaware limited liability company

	By: /s/ Daniel R. Gilbert
	Name: Daniel R. Gilbert
	Title: Executive Vice President

	Address for Notices: NRFC WA Holdings II, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022

	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to: Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-2


THE SELLERS (cont.):	NRFC WA HOLDINGS VII, LLC, a Delaware limited liability company

	By: /s/ Daniel R. Gilbert
	Name: Daniel R. Gilbert
	Title: Executive Vice President

	Address for Notices: NRFC WA Holdings VII, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-3


THE SELLERS (cont.):	NRFC WA HOLDINGS X, LLC, a Delaware limited liability company

	By: /s/ Daniel R. Gilbert
	Name: Daniel R. Gilbert
	Title: Executive Vice President

	Address for Notices: NRFC WA Holdings X, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022

	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to: Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-4


THE SELLERS (cont.):	NRFC WA HOLDINGS XI, LLC, a Delaware limited liability company

	By: /s/ Daniel R. Gilbert
	Name: Daniel R. Gilbert
	Title: Executive Vice President

	Address for Notices: NRFC WA Holdings XI, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022

	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to: Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-5


THE SELLERS (cont.):	NRFC WA HOLDINGS XII, LLC, a Delaware limited liability company

	By: /s/ Daniel R. Gilbert
	Name: Daniel R. Gilbert
	Title: Executive Vice President

	Address for Notices: NRFC WA Holdings XII, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022

	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to: Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-6


THE PURCHASERS:	VARIABLE FUNDING CAPITAL COMPANY LLC,
	as a Purchaser

	By: Wachovia Capital Markets, LLC, as attorney-in-fact

	By: /s/ Douglas R. Wilson, Sr.
	Name: Douglas R. Wilson, Sr. Title: Director

	Variable Funding Capital Company LLC c/o Wachovia Capital Markets, LLC One Wachovia Center, Mail Code: TW10 301 South College Street Charlotte, North Carolina 28288
	Attention:	Conduit Administration
	Facsimile No.:	(704) 383-9579
	Confirmation No.:	(704) 374-2520

	with a copy to: Wachovia Capital Markets, LLC One Wachovia Center, Mail Code: NC0166 301 South College Street Charlotte, North Carolina 28288
	Attention:	Joseph F. Cannon
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 383-2324

[Signatures Continued on the Following Page]

S-7


THE PURCHASERS (cont.):	WACHOVIA BANK, NATIONAL ASSOCIATION
	as the Swingline Purchaser

	By: /s/ Joseph F. Cannon
	Name: Joseph F. Cannon Title: Vice President

	Wachovia Bank, National Association One Wachovia Center, Mail Code: NC0166 301 South College Street Charlotte, North Carolina 28288
	Attention:	Joseph F. Cannon
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 383-2324

[Signatures Continued on the Following Page]

S-8


THE DEAL AGENT:	WACHOVIA CAPITAL MARKETS, LLC

	By: /s/ Joseph F. Cannon
	Name: Joseph F. Cannon Title: Vice President

	Wachovia Capital Markets, LLC One Wachovia Center, Mail Code: NC0166 301 South College Street Charlotte, North Carolina 28288
	Attention:	Joseph F. Cannon
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 383-2324

[Signatures Continued on the Following Page]

S-9


THE GUARANTORS:	NORTHSTAR REALTY FINANCE CORP., a Maryland corporation

	By: /s/ Daniel R. Gilbert
	Name: Daniel R. Gilbert Title: Executive Vice President

	NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680
	with a copy to: Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-10


THE GUARANTORS (cont.):	NORTHSTAR REALTY FINANCE L.P., a Delaware limited partnership,

	By: NorthStar Realty Finance Corp., a Maryland corporation, its general partner

	By: /s/ Daniel R. Gilbert
	Name: Daniel R. Gilbert Title: Executive Vice President

	NorthStar Realty Finance L.P. c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680
	with a copy to: Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-11

Acknowledged and Agreed to:


THE PLEDGOR:	NRFC SUB-REIT CORP., a Maryland corporation

	By: /s/ Daniel R. Gilbert
	Name: Daniel R. Gilbert Title: Executive Vice President

	NRFC Sub-REIT Corp. c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to: Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

S-12

U.S. $100,000,000

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

by and among

NRFC WA HOLDINGS, LLC,

NRFC WA HOLDINGS II, LLC,

NRFC WA HOLDINGS VII, LLC,

NRFC WA HOLDINGS X, LLC,

NRFC WA HOLDINGS XI, LLC,

and

NRFC WA HOLDINGS XII, LLC,

as the Seller

WACHOVIA BANK, NATIONAL ASSOCIATION,

as the Purchaser

and

NORTHSTAR REALTY FINANCE CORP.,

and

NORTHSTAR REALTY FINANCE L.P.

as the Guarantor

Dated as of June 5, 2007

TABLE OF CONTENTS

			Page
ARTICLE I DEFINITIONS			2
	Section 1.1	Certain Defined Terms	2
	Section 1.2	Interpretation	36
ARTICLE II PURCHASE OF ELIGIBLE ASSETS			37
	Section 2.1	Purchase and Sale	37
	Section 2.2	Transaction Mechanics; Related Matters	38
	Section 2.3	Optional Repurchase	41
	Section 2.4	Extension of Facility Maturity Date and Funding Expiration Date	41
	Section 2.5	Payment of Price Differential	42
	Section 2.6	[Reserved]	43
	Section 2.7	Margin Maintenance	43
	Section 2.8	Income Payments	43
	Section 2.9	Payment, Transfer and Custody	44
	Section 2.10	Reserved	45
	Section 2.11	Hypothecation or Pledge of Purchased Assets	45
	Section 2.12	Fees	45
	Section 2.13	Increased Costs; Capital Adequacy; Illegality	45
	Section 2.14	Taxes	47
	Section 2.15	Obligations Absolute	47
	Section 2.16	Over-Advances	48
ARTICLE III CONDITIONS TO TRANSACTIONS			48
	Section 3.1	Conditions to Closing and Initial Purchase	48
	Section 3.2	Conditions Precedent to all Transactions	49
ARTICLE IV REPRESENTATIONS AND WARRANTIES			53
	Section 4.1	Representations and Warranties	53
ARTICLE V COVENANTS			61
	Section 5.1	Covenants	61
ARTICLE VI ADMINISTRATION AND SERVICING			70
	Section 6.1	Servicing	70
	Section 6.2	Seller as Servicer	71
	Section 6.3	Third Party Servicer	71
	Section 6.4	Duties of the Seller	71
	Section 6.5	Authorization of the Seller	72
	Section 6.6	Event of Default	72
	Section 6.7	Inspection	73
	Section 6.8	Payment of Certain Expenses by Servicer	73
	Section 6.9	Pooling and Servicing Agreements	73
	Section 6.10	Servicer Default	74
	Section 6.11	Servicer	74
ARTICLE VII [RESERVED]			74
ARTICLE VIII SECURITY INTEREST			74
	Section 8.1	Security Interest	74
	Section 8.2	Release of Lien on Purchased Assets	76
	Section 8.3	Further Assurances	77
	Section 8.4	Remedies	77
	Section 8.5	Purchaser’s Duty of Care	77
ARTICLE IX [RESERVED]			77

ARTICLE X EVENTS OF DEFAULT			77
	Section 10.1	Events of Default	77
	Section 10.2	Remedies	80
	Section 10.3	Determination of Events of Default	82
ARTICLE XI INDEMNIFICATION			83
	Section 11.1	Indemnification by the Seller	83
	Section 11.2	After-Tax Basis	84
ARTICLE XII [RESERVED]			85
ARTICLE XIII MISCELLANEOUS			85
	Section 13.1	Amendments and Waivers	85
	Section 13.2	Notices and Other Communications	85
	Section 13.3	Set-offs	85
	Section 13.4	No Waiver; Etc.	86
	Section 13.5	Binding Effect	86
	Section 13.6	Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue	86
	Section 13.7	Jurisdiction; Waiver of Jury Trial	87
	Section 13.8	Costs, Expenses and Taxes	87
	Section 13.9	Legal Matters	88
	Section 13.10	Recourse	88
	Section 13.11	Protection of Right, Title and Interest; Further Action Evidencing Transactions	89
	Section 13.13	Confidentiality	89
	Section 13.14	Execution in Counterparts	91
	Section 13.15	Entire Agreement; Severability	91
	Section 13.16	Non-assignability; Termination	91
	Section 13.17	Single Agreements	92
	Section 13.18	Disclosure Relating to Certain Federal Protections	92
	Section 13.19	Intent	93
	Section 13.20	Review of Due Diligence and Books and Records	93
	Section 13.21	Use of Employee Plan Assets	94
	Section 13.22	Time of the Essence	94
	Section 13.23	Construction	94
	Section 13.25	Swap Counterparty	95
	Section 13.26	Amendment and Restatement	95
	Section 13.27	Heading and Exhibits	96

SCHEDULES

Schedule 1		Representations and Warranties Regarding Mortgage Assets
Schedule 2		List of Accounts
Schedule 3		List of Existing Financing Facilities
Schedule 4		Organizational Chart
Schedule 5		List of UCC Filing Locations
Schedule 6		List of Approved Servicers
Schedule 7		Trust Preferred Securities

EXHIBITS

Exhibit I		Form of Transaction Request
Exhibit II		Form of Confirmation
Exhibit III		[Reserved]
Exhibit IV		Form of Power of Attorney of Seller
Exhibit V		Form of Account Control Agreement
Exhibit VI		Form of Securities Account Control Agreement
Exhibit VII		Form of Servicer Redirection Notice
Exhibit VIII		Form of Compliance Certificate
Exhibit IX		Form of Purchased Asset Data Summary
Exhibit X		Form of Margin Deficit Notice
Exhibit XI		Form of Assignment
Exhibit XII-A		Form of Seller’s Release Letter
Exhibit XII-B		Form of Warehouse Lender’s Release Letter

iii

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

THIS AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT (as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, the “ Agreement ”) is made as of this 5th day of June, 2007, by and among:

(1) NRFC WA HOLDINGS, LLC , a Delaware limited liability company, NRFC WA HOLDINGS II, LLC , a Delaware limited liability company, NRFC WA HOLDINGS VII, LLC , a Delaware limited liability company, NRFC WA HOLDINGS X, LLC , a Delaware limited liability company, NRFC WA HOLDINGS XI, LLC , a Delaware limited liability company, and NRFC WA HOLDINGS XII, LLC , a Delaware limited liability company, as the Seller;

(2) WACHOVIA BANK, NATIONAL ASSOCIATION , a national banking association (together with its successors and assigns, “ Wachovia ”), as the Purchaser; and

(3) NORTHSTAR REALTY FINANCE CORP. , a Maryland corporation (together with its successors and assigns, “ NorthStar ”), and NORTHSTAR REALTY FINANCE L.P. , a Delaware limited partnership, as the Guarantor.

Acknowledged and agreed to by EACH OF THE PLEDGORS THAT BECOMES A PARTY HERETO , each as a Pledgor; and

WACHOVIA BANK, NATIONAL ASSOCIATION , a national banking association, as the Swap Counterparty.

R E C I T A L S

WHEREAS , the Seller, the Purchaser, the Guarantor and other Persons are parties to that certain Master Repurchase Agreement, dated as of July 13, 2005, as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time (as heretofore amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, the “ Existing Agreement ”);

WHEREAS , the Seller, the Purchaser and the Guarantor wish to amend and restate the Existing Agreement upon the terms and subject to the conditions set forth herein;

WHEREAS , the Seller desires to sell and the Purchaser desires to purchase from time to time Eligible Assets under the terms and conditions stated herein; and

ARTICLE I

DEFINITIONS

Section 1.1 Certain Defined Terms .

(a) Certain capitalized terms used throughout this Agreement are defined above or in this Article I .

(b) As used in this Agreement and the schedules, exhibits and other attachments hereto, unless the context requires a different meaning, the following terms shall have the following meanings:

“ 40 Act ”: The Investment Company Act of 1940, as amended from time to time.

“ AAA IO ”: An “AAA” rated bond that is “interest only,” including any such bond designated “X-C” or “X-P.”

“ Accepted Servicing Practices ”: With respect to each Purchased Item, those mortgage, mezzanine loan and/or secured lending servicing practices, as applicable, of prudent lending institutions that service Purchased Items of the same type, size and structure as such Purchased Items in the jurisdiction where the related Underlying Mortgaged Property is located, as applicable, but in any event, (i) in accordance with the terms of the Repurchase Documents and Applicable Law, (ii) without prejudice to the interests of the Purchaser, (iii) with a view to the maximization of the recovery on such Purchased Items on a net present value basis, and (iv) without regard to (A) any relationship that the Seller, the Guarantor and any Affiliate of the foregoing may have with the related Borrower, mortgagor, the Seller, any servicer, any PSA Servicer or any other party to the Repurchase Documents, the Mortgage Loan Documents or any Affiliate of any of the foregoing; (B) the right of the Seller, the Guarantor or any Affiliate of the foregoing to receive compensation or other fees for its services rendered pursuant to this Agreement, the Repurchase Documents or any other document or agreement; (C) the ownership, servicing or management by the Seller, the Guarantor or any Affiliate of the foregoing for others of any other mortgage loans or mortgaged property; (D) any obligation of the Seller, the Guarantor or any Affiliate of the foregoing to repurchase or substitute a Purchased Item; (E) any obligation of the Seller, the Guarantor or any Affiliate of the foregoing to cure a breach of a representation and warranty with respect to a Purchased Item; and (F) any debt the Seller, the Guarantor or any Affiliate has extended to any Borrower, mortgagor or any Affiliate of such Borrower or mortgagor.

“ Account Agreement ”: A letter agreement, dated as of even date herewith, among the Seller, the Purchaser and Wachovia in the form of Exhibit V attached hereto.

“ Accrual Period ”: With respect to the first Payment Date, the period from and including the applicable Purchase Date to but excluding such first Payment Date, and, with respect to any subsequent Payment Date, the period from and including the previous Payment Date to but excluding such subsequent Payment Date.

“ Additional Amount ”: Defined in Subsection 2.14(a) of this Agreement.

“ Additional Purchased Asset ”: An Eligible Asset transferred to the Purchaser in a satisfaction of a Margin Deficit pursuant to Section 2.7 of this Agreement, which Additional Purchased Asset shall satisfy all requirements of, and be transferred in accordance with the provisions of, this Agreement.

“ Adjusted Eurodollar Rate ”: For any Eurodollar Period, a rate per annum equal to a fraction, expressed as a percentage and rounded upwards (if necessary) to the nearest 1/100 of 1%, (i) the numerator of which is equal to the Eurodollar Rate for such Eurodollar Period and (ii) the denominator of which is equal to 100% minus the Eurodollar Reserve Percentage for such Eurodollar Period.

“ Adjusted Total Assets ”: Means the sum of Total Assets plus Off-Balance Sheet Assets.

“ Adjusted Total Liabilities ”: Means, the sum of Total Liabilities plus Off-Balance Sheet Liabilities minus Trust Preferred Securities.

“ Advance Rate ”: Subject to the Refinance Option, with respect to a Mortgage Asset of a certain Class and, as applicable, the applicable Type of Underlying Mortgaged Property, the “Maximum Advance Rate” set forth in the applicable column on Schedule 1 to the Fee Letter or, if not set forth therein with respect to Preferred Equity Interests and Construction Loans, the “Advance Rate” set forth in the related Confirmation; provided , however , during the time that any amount is outstanding under the Note Purchase Agreement, the Advance Rates for one (1) or more Purchased Assets may be reduced and/or adjusted in such manner as the Purchaser shall determine in its discretion from time to time so that the Margin Base is equal to or less than the aggregate Purchase Price for all outstanding Transactions plus the Note Purchase Margin.

“ Affected Party ”: The Purchaser and all assignees, pledgees and participants of the Purchaser.

“ Aggregate Unpaids ”: At any time, an amount equal to the sum of the aggregate Purchase Price outstanding for all Transactions, the aggregate Price Differential outstanding, the aggregate Margin Deficits outstanding, Breakage Costs (if any), Increased Costs (if any), Taxes (if any), Additional Amounts (if any), Late Payment Fees (if any), any fee due under any fee letter or the Repurchase Documents (including, without limitation, the Fee Letter and the Custodial Fee Letter), all other amounts owed by the Seller or any other Person to the Purchaser, any Affected Party, any Indemnified Party or any other Person under or with respect to this Agreement, the Repurchase Documents or any Transaction entered into pursuant thereto and all interest and/or fees that accrue after the commencement by or against the Seller, the Guarantor, the Pledgor or any Affiliate thereof of any proceeding under any Insolvency Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding (whether due or accrued).

“ Agreement ”: Defined in the Preamble of this Agreement.

“ ALTA ”: The American Land Title Association.

“ Anti-Terrorism Laws ”: Any Applicable Law relating to money laundering or terrorism, including, but not limited to, Executive Order 13224, the OFAC Regulations and the USA Patriot Act.

“ Asset Schedule and Exception Report ”: Defined in the Custodial Agreement.

“ Asset Value ”: As of any date of determination for each Eligible Asset or Purchased Asset, as applicable, with respect to a Mortgage Asset or Purchased Asset, as applicable, of a certain Class, the lesser of (a) (i) for each Mortgage Asset or Purchased Asset, as applicable, other than as provided in clause (a)(ii) of this definition, the product of the Book Value of such Mortgage Asset or Purchased Asset, as applicable, times the Advance Rate applicable thereto and (ii) subject to Section 2.16 of this Agreement, for each Over-Advance Purchased Asset prior to an Event of Default, the Book Value of such Over-Advance Purchased Asset and (b) (i) for each Mortgage Asset or Purchased Asset, as applicable, other than as provided in clause (b)(ii) of this definition, the product of the Market Value of such Mortgage Asset or Purchased Asset, as applicable, times the Advance Rate applicable thereto and (ii) subject to Section 2.16 of this Agreement, for each Over-Advance Purchased Asset prior to an Event of Default, the Market Value of such Over-Advance Purchased Asset, in all cases under clauses (a) and (b) of this definition taking into account the Maximum LTV percentages, applicable to such Mortgaged Asset or Purchased Asset, as applicable, set forth on Schedule 1 to the Fee Letter (or, in the case of Preferred Equity Interests and Construction Loans, to the extent applicable, as set forth in the related Confirmation); provided , however , the Asset Value may be reduced in the Purchaser’s discretion by an amount determined by the Purchaser in its discretion (which amount may, in the Purchaser’s discretion, be reduced to zero (0)), with respect to each Mortgage Asset or Purchased Asset, as applicable (A) in respect of which one (1) or more eligibility requirements set forth in Schedule 1 to this Agreement is not satisfied in any respect (assuming each such criteria is determined as of the date the Asset Value is determined), in each case without regard to any Seller’s knowledge or lack of knowledge thereof and without regard to any Seller’s representations or warranties with respect to its knowledge or lack of knowledge thereof, and, in the Purchaser’s determination in its discretion, the same impacts, impairs or affects the Market Value or Book Value of such Mortgage Asset or Purchased Asset, (B) in respect of which the complete Mortgage Asset File has not been delivered to the Custodian within the time period required by the Custodial Agreement, (C) which is a Table Funded Purchased Asset in respect of which the Mortgage Asset File has not been delivered to the Custodian within three (3) Business Days following the Purchase Date, or (D) which has been released from the possession of the Custodian under the Custodial Agreement to a Seller or an Affiliate for a period in excess of twenty (20) calendar days.

“ Bailee ”: With respect to each Table Funded Purchased Asset, the related title company, attorney or settlement agent, in each case, approved in writing by the Purchaser in its discretion.

“ Bailee Agreement ”: The Bailee Agreement among the Seller, the Purchaser and the Bailee in the form of Annex 13 to the Custodial Agreement.

“ Bailee’s Trust Receipt ”: A Trust Receipt in the form of Attachment 2 to the Bailee Agreement.

“ Bankruptcy Code ”: The United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq .), as amended from time to time.

“ Base Rate ”: On any date, a fluctuating rate per annum equal to the lesser of (a) the Prime Rate or (b) the Federal Funds Rate, plus 1.0%.

“ Basic Mortgage Loan Documents ”: Defined in the Custodial Agreement.

“ Book Value ”: With respect to any Mortgage Asset at any time, an amount, as certified by the Seller, equal to the lesser of (a) face or par value and (b) the price that the Seller initially paid or advanced for or in respect of such Mortgage Asset, as such Book Value may be marked down by the Seller from time to time, including, as applicable, from any loss/price adjustments, less an amount equal to the sum of all principal payments, prepayments or paydowns paid and realized losses recognized relating to such Mortgage Asset; provided , however , any such markdowns or adjustments must be made in good faith and shall be disclosed contemporaneously therewith in writing to the Purchaser, which mark downs or adjustments, without a corresponding payment and application of principal, may result in a Margin Deficit.

“ Borrowing Capacity ”: The ability to obtain draws or advances at the request of a Guarantor or any Affiliate or Subsidiary of a Guarantor in Dollars and within two (2) Business Days of the request therefor and to use or apply such draws or advances to repay amounts under the Repurchase Documents or Other Credit Facilities.

“ Breakage Costs ”: Any amount or amounts as shall compensate the Purchaser or any Affected Party for any loss, cost or expense incurred by the Purchaser or any Affected Party (as determined by the Purchaser in its discretion) as a result of a prepayment by the Seller or the Guarantor of all or any portion of any Repurchase Price and any losses, costs and/or expenses that the Purchaser or any Affected Party may sustain or incur arising from the reemployment of funds obtained by the Purchaser or any Affected Party hereunder or from fees payable to terminate the deposits from which such funds were obtained.

“ Bridge Loan ”: A performing Whole Loan that is otherwise an Eligible Asset except that the Underlying Mortgaged Property is not stabilized or is otherwise considered to be in a transitional state, which exceptions shall be disclosed in writing to the Purchaser and such exceptions must be acceptable to the Purchaser in its discretion, which acceptance may, in the Purchaser’s discretion, be conditioned on additional terms, conditions and requirements with respect to such Bridge Loan; provided , however , the debt and equity fundings for each Bridge Loan must be sufficient to finance 100% of the completion of the improvements to the related Underlying Mortgaged Property or there must exist sufficient net operating income or interest reserves or guaranties or replenishments to cover the debt service related to the Eligible Asset.

“ Business Day ”: Any day other than a Saturday or a Sunday on which (a) banks are not required or authorized to be closed in Charlotte, North Carolina, and (b) if the term “Business Day” is used in connection with the determination of the Eurodollar Rate, dealings in United States dollar deposits are carried on in the London interbank market.

“ Cash Collateral ”: The cash received by the Purchaser in satisfaction of a Margin Deficit or as Income on Purchased Assets.

“ Closing Date ”: June 5, 2007.

“ Code ”: The Internal Revenue Code of 1986, as amended from time to time.

“ Collection Account ”: The deposit account identified on Schedule 2 established in the name of the Seller into which all Income and Cash Collateral shall be deposited, which account shall be subject to the Account Agreement. Funds in the Collection Account may be invested at the direction and in the discretion of the Purchaser in Permitted Investments for the benefit of the Seller.

“ Commercial Real Estate ”: Any real estate included in the definition of Type.

“ Compliance Certificate ”: Defined in Subsection 3.2(f) of this Agreement.

“ Confirmation ”: A purchase confirmation in the form attached to this Agreement as Exhibit II duly executed, completed and delivered by the Seller in accordance with the provisions of Subsection 2.2(c) of this Agreement.

“ Consolidated Subsidiaries ”: An as of any date and for any Person, any Subsidiary or other entities that are consolidated with such Person in accordance with GAAP.

“ Construction Loan ”: A performing Whole Loan, the Underlying Mortgaged Property for which has received all necessary entitlements and approvals to develop the Underlying Mortgaged Property and construct improvements thereon in a manner consistent with the applicable Seller’s representations to the Purchaser regarding such construction, which information shall be set forth in the related Confirmation, such loan and the documents related thereto are otherwise acceptable to the Purchaser in its discretion and all construction related documents are delivered to the Custodian as a part of the Mortgage Asset File for such Whole Loan.

“ Credit Tenant ”: The tenant or guarantor under a Credit Tenant Lease with a credit rating of BBB- or better by at least two (2) Rating Agencies.

“ Custodial Agreement ”: The Amended and Restated Custodial Agreement, dated as of even date herewith, by and among the Purchaser, the Seller and the Custodian, as the same shall be amended, modified, waived, supplemented, extended, replaced or restated from time to time.

“ Custodial Identification Certificate ”: Defined in the Custodial Agreement.

“ Custodian ”: Wells Fargo Bank, National Association, and its successor in interest as the custodian under the Custodial Agreement, and any successor Custodian under the Custodial Agreement.

“ Deal Agent’s Account ”: The account of the Purchaser disclosed to the Seller from time to time.

“ Debt Service Coverage Ratio or DSCR ”: With respect to any Mortgage Asset or Purchased Asset, as applicable, as of any date of determination, for the period of time to be determined by the Purchaser in its reasonable discretion (it being understood that it is the Purchaser’s intent to make the determination based on the period of twelve (12) consecutive complete calendar months preceding such date (or, if such Mortgage Asset was originated less than twelve (12) months from the date of determination, the number of months from the date of origination) , the ratio of (a) the aggregate Net Cash Flow in respect of the Underlying Mortgaged Properties relating to such Mortgage Asset or Purchased Asset, as applicable, for such period, taking into account (x) any guaranty of the indebtedness under the related Mortgage Asset or Purchased Asset and (y) any applicable interest reserves held during such time by the Seller or any Servicer on its behalf or future funding obligations or monies available to satisfy such obligations with respect to such Mortgage Asset or Purchased Asset and, as applicable, the senior mortgage lender for the related Underlying Mortgaged Property, to (b) the aggregate amount of all amounts due for such period in respect of all Indebtedness that was outstanding from time to time during such period that is secured, directly or indirectly, by such Underlying Mortgaged Properties (including, without limitation, by way of a pledge of the equity of the owner(s) of such Underlying Mortgaged Properties) or that is otherwise owing by the owner(s) of such Underlying Mortgaged Properties, including, without limitation, all scheduled principal and/or interest payments due for such period in respect of each Mortgage Asset or Purchased Asset, as applicable, that is secured or supported by such Underlying Mortgaged Properties, as any of the foregoing elements of DSCR may be adjusted by the Purchaser as determined by the Purchaser in its discretion; provided , however , that , with respect to Junior Interests, Mezzanine Loans, Bridge Loans, Preferred Equity Interests and Subordinate CTL Loans that are also Junior Interests or Mezzanine Loans, all such calculations shall be made taking into account any senior or pari passu debt or other obligations, including debt or other obligations secured directly or indirectly by the applicable Underlying Mortgaged Property; provided , further , however , the DSCR shall not be less than the Minimum DSCR.

“ Default ”: Any event which, with, as applicable, the giving of notice or the lapse of time or both, would constitute an Event of Default.

“ Dollars ” and “ $ ”: Lawful money of the United States.

“ Electronic Transmission ”: The delivery of information and executed documents in an electronic format acceptable to the applicable recipient thereof.

“ Eligible Asset ”: A Mortgage Asset that, as of any date of determination, (i) is not a Defaulted Mortgage Asset or Delinquent Mortgage Asset; (ii) satisfies each of the eligibility criteria set forth on Schedule 1 hereto in all material respects; (iii) with respect to the portion of such Mortgage Asset to be acquired by the Purchaser, the funding obligations have been satisfied in full and there is no unfunded commitment with respect thereto (unless otherwise approved by the Purchaser in its discretion); (iv) has been approved in writing by the Purchaser in its discretion; (v) has, to the extent applicable, an LTV not in excess of the Maximum LTV; (vi) has, to the extent applicable, a DSCR equal to or greater than the Minimum DSCR; (vii) is not a loan to an operating business (other than a hotel); (viii) the purchase of such Eligible Asset will not violate any applicable Sub-Limit; (ix) the Underlying Mortgage Property and the Borrower and its Affiliates are domiciled in the United States (unless otherwise approved by the Purchaser subject to such additional terms and conditions as the Purchaser may require in its discretion); and (x) such Mortgage Asset is denominated and payable in Dollars; provided , however , notwithstanding a Mortgage Asset’s failure to conform to the criteria set forth above (including, without limitation, a Mortgage Asset with a single or split rating by a Rating Agency), the Purchaser may, in its discretion and subject to such terms, conditions and requirements and Advance Rate and Pricing Spread adjustments as the Purchaser may require in its discretion, designate in writing any such non-compliant Mortgage Asset as an Eligible Asset, which designation shall not be deemed a waiver of the requirement that all other Purchased Assets and all other Mortgage Assets submitted for purchase by the Purchaser, whether existing or in the future, must be Eligible Assets.

“ Engagement Letter ”: That certain letter agreement, dated as of June 2, 2005, among the Purchaser and NRFC WA Holdings, LLC, as the same may be amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Eurocurrency Liabilities ”: Defined in Regulation D of the Board of Governors of the Federal Reserve System, as in effect and amended from time to time.

“ Eurodollar Disruption Event ”: The occurrence of any of the following: (a) the Purchaser or any other Affected Party has determined that it would be contrary to law or to the directive of any central bank or other Governmental Authority (whether or not having the force of law) to obtain United States dollars in the London interbank market to fund any Transaction, (b) the inability, for any reason, of the Purchaser or any other Affected Party to determine the Adjusted Eurodollar Rate, (c) the Purchaser or any other Affected Party shall have determined that the rate at which deposits of United States dollars are being offered to the Purchaser or any other Affected Party in the London interbank market does not accurately reflect the cost to the Purchaser or such other Affected Party of making, funding or maintaining any Transaction, or (d) the inability of the Purchaser or any other Affected Party to obtain United States dollars in the London interbank market to make, fund or maintain any Transaction.

“ Eurodollar Period ”: With respect to any Transaction, (i) initially, the period commencing on the Purchase Date with respect to such Transaction and ending on the earlier of (x) the related Repurchase Date or (y) the first Payment Date following the Purchase Date, and (ii) thereafter, each period commencing on the day following the last day of the preceding Eurodollar Period applicable to such Transaction and ending on the earliest of (x) the related Repurchase Date, (y) the date that is one-month thereafter, or (z) the Facility Maturity Date.

“ Eurodollar Rate ”: With respect to each Eurodollar Period during which a Transaction is outstanding, the rate per annum equal to the rate appearing at Reuters Screen LIBOR01 Page as one-month LIBOR, at or about 9:00 a.m., Charlotte, North Carolina time, three (3) Business Days prior to the beginning of such Eurodollar Period (and if such date is not a Business Day, the Eurodollar Rate in effect on the Business Day immediately preceding such date), or, if no such rate appears on Reuters Screen LIBOR01 Page at such time and day, then the Eurodollar Rate shall be determined by Wachovia at its principal office in Charlotte, North Carolina as its rate (each such determination, absent manifest error, to be conclusive and binding on all parties hereto and their assignees) at which thirty (30) day deposits in United States Dollars are being, have been, or would be offered or quoted by Wachovia to major banks in the applicable interbank market for Eurodollar deposits at or about 11:00 a.m. on such day. The Purchaser’s determination of Eurodollar Rate shall be conclusive upon the parties absent manifest error on the part of the Purchaser.

“ Event of Default ”: Defined in Section 10.1 of this Agreement.

“ Exception ”: Defined in the Custodial Agreement.

“ Excepted Persons ”: Defined in Subsection 13.13(a) of this Agreement.

“ Excess Purchase Price ”: Defined in the Fee Letter.

“ Exchange Act ”: The Securities Exchange Act of 1934, as amended from time to time.

“ Existing Agreement ”: Defined in the Recitals to this Agreement.

“ Existing Seller ”: The sellers under the Existing Agreement.

“ Extension Fee ”: Defined in the Fee Letter.

“ Facility ”: The facility evidenced by and the Transactions contemplated under the Repurchase Documents.

“ Facility Maturity Date ”: Subject to Article X of this Agreement, the earlier of (a) June 5, 2010, as such original Facility Maturity Date may be extended pursuant to Subsection 2.4(a) of this Agreement or (b) the date on which this Agreement shall terminate in accordance with the provisions hereof or by operation of Applicable Law.

“ Facility Period ”: The period commencing on the Closing Date terminating on the Funding Expiration Date.

“ Federal Funds Rate ”: For any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the overnight federal funds rates as in Federal Reserve Board Statistical Release H.15(519) or any successor or substitute publication selected by the Purchaser (or, if such day is not a Business Day, for the next succeeding Business Day), or, if, for any reason, such rate is not available on any day, the rate determined, in the sole opinion of the Purchaser, to be the rate at which overnight federal funds are being offered in the national federal funds market at 9:00 a.m., Charlotte, North Carolina time.

“ Fee Letter ”: The Second Amended and Restated Fee Letter, dated as of even date herewith, between the Purchaser and the Seller, as amended, modified, waived, substituted, supplemented, extended restated or replaced from time to time.

“ Financial Covenants ”: The covenants set forth in Subsection 5.1(v) of this Agreement.

“ FIRREA Appraisal ”: An appraisal prepared by an independent third party appraiser approved in writing by the Purchaser in its discretion and satisfying the requirements of Title XI of the Federal Institutions, Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder (as the foregoing are amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time), as in effect on the date of such appraisal.

“ Fitch ”: Fitch Ratings, Inc. and any successor thereto.

“ Fixed Charge Coverage Ratio ”: For NorthStar and its Consolidated Subsidiaries during any period, EBITDA for such period divided by the Fixed Charges for the same period.

“ Foreclosed Loan ”: A loan the security for which has been foreclosed upon by the Seller.

“ Funding Expiration Date ”: The earlier of (a) the date that is 364 days immediately following the Closing Date, as the same may be extended in accordance with the terms of Subsection 2.4(b) of this Agreement, or (b) the Business Day designated by the Seller to the Purchaser as the expiration date at any time following two (2) Business Days’ prior written notice to the Purchaser.

“ GAAP ”: Generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

“ Guaranty ”: The Amended and Restated Limited Guaranty, dated as of the date hereof, executed by the Guarantor in favor of the Purchaser, as such agreement is amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Increased Costs ”: Any amounts required to be paid by the Seller to the Purchaser or any Affected Party pursuant to Section 2.13 of this Agreement.

“ Indebtedness ”: Means, with respect to any Person and its Consolidated Subsidiaries determined on a consolidated basis, at the time of computation thereof, all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed (including without limitation principal, interest, assumption fees, prepayment fees, yield maintenance charges, penalties, contingent interest and all other monetary obligations whether choate or inchoate); (b) all obligations of such Person, whether or not for money borrowed (i) represented by notes payable, letters of credit, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property or services rendered or (iv) in connection with the issuance of preferred equity or trust preferred securities; (c) Capital Lease Obligations of such Person; (d) all Off-Balance Sheet Obligations of such Person (other than non-recourse indebtedness incurred in connection with any CDO Securitization Transaction); (e) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Mandatory Redeemable Stock issued by such Person or any other Person (inclusive of forward equity contracts), valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (f) as applicable, all obligations of such Person (but not the obligation of others) in respect of any keep well arrangements, credit enhancements, contingent or future funding obligations under any Eligible Asset or any obligation senior to the Eligible Asset, unfunded interest reserve amount under any Eligible Asset or any obligation that is senior to the Eligible Asset, purchase obligation, repurchase obligation, takeout commitment or forward equity commitment, in each case evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be satisfied by the issuance of Equity Interest (other than Mandatory Redeemable Stock)); (g) net obligations under any Derivative Contract not entered into as a hedge against existing Indebtedness, in an amount equal to the Derivatives Termination Value thereof; (h) all Indebtedness of other Persons which such Person has guaranteed or is otherwise recourse to such Person (except for guaranties of customary exceptions for fraud, misapplication of funds, environmental indemnities and other similar exceptions to recourse liability (but not exceptions relating to bankruptcy, insolvency, receivership or other similar events)); (i) all Indebtedness of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien (other than certain Permitted Liens) on property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness or other payment obligation; provided , however , if such Person has not assumed or become liable for the payment of such Indebtedness, then for the purposes of this definition the amount of such Indebtedness shall not exceed the market value of the property subject to such Lien and (j) Contingent Liabilities.

“ Indemnified Amounts ”: Defined in Subsection 11.1(a) of this Agreement.

“ Indemnified Party ”: Defined in Subsection 11.1(a) of this Agreement.

“ Insolvency Proceeding ”: Any case, action or proceeding before any court or other Governmental Authority relating to any Insolvency Event.

“ Interest Rate Protection Agreement ”: With respect to any or all of the Mortgage Assets and Purchased Assets, as applicable, (i) any Derivatives Contract required under the terms of the related Mortgage Loan Documents providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, and acceptable to the Purchaser in its reasonable discretion, which Interest Rate Protection Agreement shall be performed, maintained and in place in accordance with the terms of the Mortgage Loan Documents, and (ii) any Derivatives Contract put in place by the Seller, the Guarantor or any Affiliate of the foregoing with respect to any Mortgage Asset or Purchased Asset, as applicable, including, without limitation, the Swap Documents, which Interest Rate Protection Agreement shall be performed, maintained and in place during the time the related Purchased Asset is subject to a Transaction under this Agreement.

“ Junior Interest Document ”: The original executed promissory note, Participation Certificate, Participation Agreement and any other evidence of a Junior Interest, as applicable.

“ Late Payment Fee ”: Defined in Subsection 2.5(a) of this Agreement.

“ Loan-to-Value Ratio ” or “ LTV ”: With respect to any Mortgage Asset or Purchased Asset (other than any CMBS Security), as applicable, as of any date of determination, the ratio of the outstanding principal amount of such Mortgage Asset or Purchased Asset, as applicable, to the market value of the related Underlying Mortgaged Property at such time (or, in the case of the Bridge Loans, the cost of completion of the intended improvements), as determined by the Purchaser, (i) in connection with the initial purchase of a Mortgage Asset only and to the extent a Current Appraisal is available, based on the Current Appraisal, as the LTV may be adjusted by the Purchaser as the Purchaser determines in its discretion, and, (ii) in all other cases, as the Purchaser may determine in its discretion based on such sources of information as the Purchaser may determine to rely on in its discretion; provided , however , that, with respect to Junior Interests, Mezzanine Loans, Bridge Loans, Preferred Equity Interests and Subordinate CTL Loans that are also Junior Interests or Mezzanine Loans, all such calculations shall be made taking into account any senior or pari passu debt or other obligations, including debt or other obligations secured directly or indirectly by the applicable Underlying Mortgaged Property; provided , further , however , the LTV shall not exceed the Maximum LTV.

“ Margin Base ”: On any day, the aggregate Asset Value of all Purchased Assets or certain specified Purchased Assets, as applicable.

“ Margin Correction Deadline ”: 3 p.m. on the second Business Day after any Margin Deficit Notice is delivered by the Purchaser.

“ Margin Deficit ”: Defined in Section 2.7 of this Agreement.

“ Margin Deficit Notice ”: Defined in Section 2.7 of this Agreement.

“ Market Value ”: As of any date in respect of any Mortgage Asset or Purchased Asset, as applicable, the price at which such Mortgage Asset or Purchased Asset, as applicable, could readily be sold, as determined by the Purchaser (i) in connection with the initial purchase of a Mortgage Asset only and to the extent a Current Appraisal is available, based on the Current Appraisal value, and, (ii) in all other cases, as the Purchaser may determine in its discretion and in good faith based on such sources and information as the Purchaser may determine to rely on in its discretion (which value may be determined to be zero), as such Market Value may be adjusted by the Purchaser as the Purchaser determines in its discretion.

“ Material Adverse Effect ”: A material adverse effect on (a) the financial condition or credit quality of the Seller or the Guarantor, (b) the ability of the Seller, the Guarantor or the Pledgor to perform its obligations under any of the Repurchase Documents or Mortgage Loan Documents to which it is a party, (c) the validity or enforceability of any of the Repurchase Documents, (d) the rights and remedies of the Purchaser or the Swap Counterparty under any of the Repurchase Documents, (e) the timely payment of any amounts payable under the Repurchase Documents or Mortgage Loan Documents, or (f) the Asset Value of the Purchased Assets; provided , however , the occurrence of an event under clause (e) or (f) of this definition of Material Adverse Effect shall not, in and of itself, constitute an Event of Default under Subsection 10.1(e) , but such occurrence may be or form the basis for an Event of Default under other provisions of Section 10 other than Subsection 10.1(e) .

“ Maximum Aggregate Over-Advance Purchase Price Amount ”: Defined in the Fee Letter.

“ Maximum Amount ”: Means $100,000,000; provided , however , on and after the Facility Maturity Date, the Maximum Amount shall mean the aggregate Purchase Price outstanding for all Transactions.

“ Mezzanine Loan ”: A performing mezzanine loan secured by a first priority perfected lien and pledge of the Equity Interest of the Person that owns directly or indirectly income producing Commercial Real Estate that is performing; provided , however , on a case by case basis, and in the Purchaser’s discretion and subject to such terms, conditions and requirements and Advance Rate and Pricing Spread adjustments as the Purchaser may require in its discretion, the Purchaser may (but is not required to) consider purchasing a Mezzanine Loan that is secured by less than all of the Equity Interest of the Person that owns directly or indirectly income producing Commercial Real Estate.

“ Mezzanine Note ”: The original executed promissory note or other evidence of Mezzanine Loan indebtedness.

“ Moody’s ”: Moody’s Investors Services, Inc., and any successor thereto.

“ Mortgage Asset ”: A Whole Loan, a Junior Interest, a Mezzanine Loan, a Bridge Loan, a CMBS Security, a CTL Loan, a Subordinate CTL Loan, Senior Secured Bank Debt or a Preferred Equity Interest, (i) the Underlying Mortgaged Property for which is included in the categories for Types of Mortgage Assets, (ii) that is listed on a Confirmation and (iii) for which the Custodian has been instructed by a Seller to hold the related Mortgage Asset File for the Purchaser pursuant to the Custodial Agreement; provided , however , Mortgage Assets shall not include any Retained Interest (if any) (unless approved by the Purchaser in its discretion).

“ Mortgage Asset File ”: Defined in the Custodial Agreement.

“ Mortgage Asset File Checklist ”: Defined in the Custodial Agreement.

“ Mortgage Loan Documents ”: Defined in the Custodial Agreement.

“ Mortgage Note ”: The original executed promissory note or other evidence of the Indebtedness of a Borrower with respect to a Mortgage Asset.

“ Non-Table Funded Purchased Asset ”: A Purchased Asset that is not a Table Funded Purchased Asset.

“ Non-Wachovia Assets ”: Any Mortgage Asset issued or extended by a Person other than Wachovia Corporation or an Affiliate of Wachovia Corporation.

“ NorthStar ”: Defined in the Preamble of this Agreement.

“ Note Purchase Margin ”: The difference between the Note Purchase Price and the Note Purchase Price that would be outstanding if an 80% Advance Rate (as defined in the Note Purchase Agreement) were in effect under the Note Purchase Agreement, as determined by the Purchaser on at least a weekly basis and as converted by the Purchaser in its discretion to Dollars.

“ Note Purchase Price ”: The Purchase Price (as defined in the Note Purchase Agreement) outstanding under the Note Purchase Agreement.

“ Obligations ”: Defined in Subsection 8.1(b) of this Agreement.

“ OFAC ”: The U.S. Department of the Treasury’s Office of Foreign Assets Control.

“ OFAC Regulations ”: The regulations promulgated by OFAC, as amended from time to time.

“ Off-Balance Sheet Liabilities ”: Means, with respect to any Person, any (a) repurchase obligation or liability, contingent or otherwise, of such Person with respect to any mortgages, mortgage notes, accounts or notes receivable sold, transferred or otherwise disposed of by such Person, (b) repurchase obligation or liability, contingent or otherwise, of such Person with respect to Property or assets leased by such Person as lessee and (c) obligations, contingent or otherwise, of such Person under any Off-Balance Sheet Transaction, in each case, if the transaction giving rise to such obligation (i) is considered Indebtedness for borrowed money for tax purposes, and (ii) does not (and is not required pursuant to GAAP) to appear as a liability on the balance sheet of such Person.

“ Officer’s Certificate ”: A certificate signed by a Responsible Officer of the Seller, the Guarantor or the Pledgor, as applicable.

“ Operating Company ”: An “operating company” within the meaning of 29 C.F.R. 2510.3-101(c) of the regulations of the U.S. Department of Labor.

“ Opinion of Counsel ”: A written opinion of counsel, which opinion and counsel are acceptable to the Purchaser in its reasonable discretion.

“ Originator ”: With respect to each Mortgage Asset, the Person who originated such Mortgage Asset.

“ Other Costs ” Defined in Subsection 13.8(c) of this Agreement.

“ Over-Advance Advance Rate ”: Defined in the Fee Letter.

“ Over-Advance Draw Fee ”: Defined in the Fee Letter.

“ Over-Advance Pricing Spread ”: Defined in the Fee Letter.

“ Over-Advance Provisions ”: Defined in the Fee Letter.

“ Over-Advance Purchase Price” : Defined in the Fee Letter.

“ Over-Advance Purchased Asset ”: Defined in the Fee Letter.

“ Over-Advance Repayment Date ”: Defined in the Fee Letter.

“ paying Seller ”: Defined in Subsection 13.24(b) .

“ Periodic Advance Repurchase Payment ”: Defined in Subsection 2.5(a) of this Agreement.

“ Permitted Indebtedness ”: With respect to Preferred Equity Interests, Indebtedness that is permitted under the related Mortgage Loan Documents and disclosed in writing to the Purchaser in a Transaction Request and a Confirmation.

“ Plan Asset Regulations ”: 29 C.F.R. 2510.3-101, et. seq.

“ Plan Assets ”: “Plan assets” within the meaning of the Plan Asset Regulations.

“ Pledge and Security Agreement ”: The Pledge and Security Agreement to be entered into pursuant to Subsection 5.1(ff) of this Agreement between the Purchaser and the Pledgor, as such agreement is amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Pledged Collateral ”: Defined in the Pledge and Security Agreement.

“ Pledged Preferred Equity Collateral ”: Defined in the Preferred Equity Pledge and Security Agreement.

“ Pledgor ”: Each Person that becomes a Pledgor under the Pledge and Security Agreement and the other Repurchase Documents, together with their successors and assigns.

“ Post-Default Rate ”: In respect of any day a Transaction is outstanding or any other amount under this Agreement or any other Repurchase Document is not paid when due to the Purchaser at the stated Repurchase Date or otherwise when due, a rate per annum determined on a 360 day per year basis during the period from and including the due date to but excluding the date on which such amount is paid in full equal to the applicable Rate plus 500 basis points.

“ Pre-Approved Purchaser ”: A bank, financial institution or similar Person having a rating assigned by S&P of BBB or better (or an equivalent rating assigned by another Rating Agency), Variable Funding Capital Corporation, Atlas Capital Funding, Ltd., Blue Ridge Asset Funding Corporation or any other off-balance sheet vehicle; provided , however , a Pre-Approved Purchaser shall not include competitors of NorthStar that are disclosed in writing from time to time to Wachovia, provided that Wachovia and any of its Affiliates shall not be deemed to be competitors of NorthStar .

“ Preferred Equity Grantor ”: The entity in which a Preferred Equity Interest represents an investment.

“ Preferred Equity Interest ”: The entire Equity Interest representing the preferred equity interest in an entity that owns directly or indirectly Commercial Real Estate, including, but not limited to, all equity interests representing a dividend on any of the Equity Interest of the Preferred Equity Grantor or representing a distribution or return of capital upon or in respect of the Equity Interest of the Preferred Equity Grantor, in each case as it relates to a Preferred Equity Interest; provided , however , (i) such Preferred Equity Interest must contain a synthetic maturity feature acceptable to the Purchaser in its discretion, (ii) the Purchaser’s funding of the Preferred Equity Interest is subject to regulatory and compliance criteria, (iii) the Purchaser reserves the right in its reasonable discretion to require that each Preferred Equity Interest be acquired by and transferred to the Purchaser by a special purpose entity as a co-Seller under the Agreement and for the co-Seller to execute the Purchaser’s then current form of joinder agreement as a condition to the purchase of the Preferred Equity Interest and (iv) the Preferred Equity Interest is structured so as to avoid consolidation of the Preferred Equity Interest and the other equity interests in the Preferred Equity Grantor, as required by customary legal and GAAP accounting requirements applicable to the Seller and the Purchaser. All references to, and calculations required to be made in respect of, any principal and/or interest associated with any Preferred Equity Interest shall be deemed to refer to the face amount of such Preferred Equity Interest and the preferred return or yield (however such terms are denominated, as set forth in the related Mortgage Loan Documents), whether payable or accrued.

“ Preferred Equity Pledge and Security Agreement ”: The Second Amended and Restated Preferred Equity Interest Pledge and Security Agreement, dated as of even date herewith, between the Seller and Purchaser relating to the Preferred Equity Interests, as such agreement is amended, modified, waived, supplemented, extended, restated or replaced from time to time.

“ Price Differential ”: For each Accrual Period or portion thereof and each Transaction outstanding, the sum of the products (for each day during such Accrual Period or portion thereof) of:

		PR x PP x	1
			D
where:
PR	=	the Pricing Rate applicable on such day;

PP	=	the Purchase Price for such Transaction on such day; and

D	=	360,

“ Prohibited Person ”: Means (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (iii) a Person with whom the Seller, the Guarantor and/or the Pledgor is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (iv) a Person who commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, (v) an agency of the government of, an organization directly or indirectly controlled by, or a Person resident in, a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published from time to time, as such program may be applicable to such agency, organization or person, (vi) a Person that is named as a “specially designated national or blocked person” on the most current list maintained or published by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sdn.index.html or at any replacement website or in any other official publication of such list, and (vii) a Person who is affiliated with a Person described in clauses (i) - (vi) above.

“ Property ”: Any right or interest in or to property of any kind whatsoever, whether real, personal or mixed, and whether tangible or intangible.

“ Purchase Date ”: The date on which Eligible Assets are transferred by the Seller to the Purchaser (including, without limitation, any First Refinance Purchase Date or Second Refinance Purchase Date) or, as applicable, the date on which additional advances (if any) are made to the Seller in connection with an existing Purchased Asset in accordance with Subsection 2.2(j) of this Agreement.

“ Purchase Price ”: On each Purchase Date, the price at which Purchased Assets are transferred by the Seller to the Purchaser, which amount shall be equal (unless the Seller requests a lesser amount) to the Asset Value for each such Eligible Asset on the Purchase Date, (i) decreased by the amount of any cash transferred by the Seller to the Purchaser pursuant to Section 2.3 or 2.7 of this Agreement or applied to reduce the Seller’s obligations in respect of principal under Section 2.8 hereof, or otherwise in accordance with, this Agreement and (ii) increased by the amount of any additional advances (if any) under Article II of the Agreement.

“ Purchased Asset Data Summary ”: Defined in Subsection 5.1(q)(iii) of this Agreement.

“ Purchased Assets ”: The Eligible Assets transferred by the Seller to the Purchaser pursuant to a Transaction in accordance with the terms of this Agreement, including Additional Purchased Assets.

“ Purchased Items ”: Defined in Subsection 8.1(a) of this Agreement.

“ Purchaser ”: Individually or collectively as the context requires, Wachovia and the successors and assigns of the foregoing.

“ Purchaser’s Account ”: The account of the Purchaser disclosed to the Seller from time to time.

“ Rate ”: For any Accrual Period and for each Transaction outstanding and for each day during such Accrual Period, the rate per annum equal to the Adjusted Eurodollar Rate; provided , however , the Rate for any Accrual Period shall be the Base Rate if a Eurodollar Disruption Event occurs.

“ Rating Agency ”: Each of S&P, Moody’s, Fitch and any other nationally recognized statistical rating agency that has been requested to issue a rating in connection with the matter at issue, including successors of the foregoing.

“ Refinance Option ”: Subject to the other provisions of this Agreement, the Seller shall repurchase each Purchased Asset no later than 364 calendar days from the related Purchase Date; provided , however , (i) with respect to any Purchased Asset purchased during the first or second year of the Facility and which is still outstanding under the Facility at the end of the applicable 364 calendar day period, upon the written request of the Seller delivered to the Purchaser at least ten (10) Business Days prior to the applicable Repurchase Date, the Purchaser agrees, concurrently with the Seller’s repurchase of any such Purchased Asset, to enter into a new Transaction to purchase any such Purchased Asset for an additional 364 calendar day period pursuant to a Transaction documented as a repurchase by the Seller and a purchase by the Purchaser, respectively, in book entry form (the date of such purchase under clause (i) of this definition of Refinance Option being referred to herein as the “ First Refinance Purchase Date ”), provided , that , in connection with and as a condition to any such new purchase, (1) at the time of such request by the Seller and up to the time of such purchase, the following shall be true and the Seller shall provide the Purchaser with a written certification that: (A) no Event of Default has occurred and is continuing, (B) the related Purchased Asset is not a Delinquent Mortgage Asset or Defaulted Mortgage Asset, (C) the related Purchased Asset, the related Underlying Mortgaged Property and/or the value or Market Value of any of the foregoing has not deteriorated materially (as determined by the Purchaser in its discretion) from the original Purchase Date, (D) the related Purchased Asset, the Underlying Mortgaged Property and any applicable development plan are performing as expected at the Purchase Date, including, but not limited to, with respect to such matters as construction progress, re-leasing, zoning, reserve balances and servicing, as determined by the Purchaser in its discretion, (E) no Margin Deficit exists, (F) the outstanding principal amount of the Purchased Asset (including amounts not advanced against by the Purchaser) does not exceed $50,000,000 and (G) the Purchased Asset and/or the related Underlying Mortgaged Property do not involve condominiums (or condominium conversions), Construction Loans or land loans, (2) the new Repurchase Date is not later than the Facility Maturity Date (not including any extensions thereof under Subsection 2.4(a) of this Agreement), (3) notwithstanding anything contained in the Repurchase Documents to the contrary, the Advance Rate for the Purchased Asset shall initially be the lesser of 80% and the Advance Rate otherwise applicable to such Purchased Asset, but such Advance Rate shall automatically decrease by 5% every six (6) months after the First Refinance Purchase Date and the Seller shall, after each such decrease in the Advance Rate, make principal payments to the Purchaser in an amount necessary so that the Purchase Price outstanding for the related Purchased Asset is equal to or less than the Purchase Price based on the reduced Advance Rate and, in connection with such principal payments, pay any Price Differential due thereon and any Breakage Costs payable in connection therewith, (4) notwithstanding anything contained in the Repurchase Documents to the contrary, the applicable Pricing Spread for the Purchased Asset shall initially be the Pricing Spread then in effect for such Purchased Asset, but such Pricing Spread shall automatically increase an additional ten (10) basis points (above and beyond the Pricing Spread otherwise applicable to such Purchased Asset) every three (3) months after the First Refinance Purchase Date, and (5) the Purchaser and the Seller execute a new Confirmation with respect to such Purchased Asset reflecting the new Repurchase Date (which shall be no later than 364 calendar days after such First Refinance Purchase Date) and any additional terms as the Purchaser may require in its discretion and (ii) the Seller shall thereafter repurchase each Purchased Asset that was purchased by the Purchaser in accordance with clause (i) of this definition of Refinance Option no later than 364 calendar days from the Repurchase Date; provided , further , however , (x) with respect to any Purchased Asset purchased during the first year of the Facility and subsequently repurchased by the Seller and purchased by the Purchaser in accordance with clause (i) of this definition of Refinance Option and which are still outstanding under the Facility as of the Repurchase Date, upon the written request of the Seller delivered to the Purchaser at least ten (10) Business Days prior to the applicable Repurchase Date, the Purchaser agrees, concurrently with the Seller’s repurchase of any such Purchased Asset, to enter into a new Transaction to purchase any such Purchased Asset for an additional 364 calendar day period pursuant to a Transaction documented as a repurchase by the Seller and a purchase by the Purchaser, respectively, in book entry form (the date of such purchase under clause (x) of this definition of Refinance Option being referred to herein as the “ Second Refinance Purchase Date ”), provided , that , in connection with and as a condition to any such new purchase, (1) at the time of such request by the Seller and up to the time of such purchase, the following shall be true and the Seller shall provide the Purchaser with a written certification that: (A) no Event of Default has occurred and is continuing, (B) the related Purchased Asset is not a Delinquent Mortgage Asset or Defaulted Mortgage Asset, (C) the related Purchased Asset, the related Underlying Mortgaged Property and/or the value or Market Value of any of the foregoing has not deteriorated materially (as determined by the Purchaser in its discretion) from the First Refinance Purchase Date in accordance with clause (i) of this definition of Refinance Option, (D) the related Purchased Asset, the Underlying Mortgaged Property and any applicable development plan are performing as expected at the Purchase Date, including, but not limited to, with respect to such matters as construction progress, re-leasing, zoning, reserve balances and servicing, as determined by the Purchaser in its discretion, (E) no Margin Deficit exists, (F) the outstanding principal amount of the Purchased Asset (including amounts not advanced against by the Purchaser) does not exceed $50,000,000 and (G) the Purchased Asset and/or the related Underlying Mortgaged Property do not involve condominiums (or condominium conversions), Construction Loans or land loans, (2) the new Repurchase Date is not later than the Facility Maturity Date (not including any extensions thereof under Subsection 2.4(a) of this Agreement), (3) notwithstanding anything contained in the Repurchase Documents to the contrary, the Advance Rate for the Purchased Asset shall initially be the Advance Rate in effect prior to the Second Refinance Purchase Date (as determined under clause (i)(3) of this definition of Refinance Option), but such Advance Rate shall automatically decrease by 5% every six(6) months after the Second Refinance Purchase Date and the Seller shall, after each such decrease in the Advance Rate, make principal payments to the Purchaser in an amount necessary so that the Purchase Price outstanding for the related Purchased Asset is equal to or less than the Purchase Price based on the reduced Advance Rate and, in connection with such principal payments, pay any Price Differential due thereon and any Breakage Costs payable in connection therewith, (4) notwithstanding anything contained in the Repurchase Documents to the contrary, the applicable Pricing Spread for the Purchased Asset shall initially be the Pricing Spread in effect prior to the Second Refinance Purchase Date (as determined under clause (i)(4) of this definition of Refinance Option), but automatically increase an additional ten (10) basis points (above and beyond the Pricing Spread otherwise applicable to such Purchased Asset) every three (3) months after the Second Refinance Purchase Date, and (5) the Purchaser and the Seller execute a new Confirmation with respect to such Purchased Asset reflecting the new Repurchase Date (which shall be no later than 364 calendar days after such Second Refinance Purchase Date) and any additional terms as the Purchaser may require in its discretion and (y) the Seller shall repurchase each Purchased Asset that was purchased by the Purchaser in accordance with clause (x) of this definition of Refinance Option no later than 364 calendar days from the Repurchase Date. For the avoidance of doubt, in no event may any Repurchase Date extended under this definition of Refinance Option or otherwise under this Agreement be later than the Facility Maturity Date (not including any extensions thereof under Subsection 2.4(a) of this Agreement).

“ Regulations T, U and X ”: Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be amended from time to time.

“ REIT ”: A Person qualifying for treatment as a “real estate investment trust” under the Code.

“ REMIC ”: A real estate mortgage investment conduit.

“ REO Property ”: Real property acquired by the Seller, including a Mortgaged Property, acquired through foreclosure of a Mortgage Asset or by deed in lieu of such foreclosure.

“ Repurchase Date ”: The earliest of (i) the Facility Maturity Date, (ii) the date that is 364 days from the Purchase Date, subject to the Refinance Option or (iii) the Business Day on which any Seller is to repurchase the Purchased Assets from the Purchaser (a) as specified by any Seller and agreed to by the Purchaser in the related Confirmation or (b) if a Transaction is terminable by any Seller on demand, the date determined in accordance with Subsection 2.2(i) of this Agreement, as such dates in clauses (i) , (ii) and (iii) above may be modified by application of the provisions of Articles II or X of this Agreement.

“ Repurchase Obligations ”: Defined in Subsection 8.1(b) of this Agreement.

“ Retained Interest ”: (a) With respect to any Mortgage Asset with an unfunded commitment on the part of the Seller, all of the obligations, if any, to provide additional funding, contributions, payments or credits with respect to such Mortgage Asset, (b) all duties, obligations and liabilities of the Seller under any Mortgage Asset or any related Interest Rate Protection Agreement, including but not limited to any payment or indemnity obligations, and, (c) with respect to any Mortgage Asset that is transferred by the Seller to the Purchaser, (i) all of the obligations, if any, of the agent(s), trustee(s), servicer(s) or other similar persons under the documentation evidencing such Mortgage Asset and (ii) the applicable portion of the interests, rights and obligations under the documentation evidencing such Mortgage Asset that relate to such portion(s) of the Indebtedness that is owned by another lender or is being retained by the Seller pursuant to clause (a) of this definition.

“ S&P ”: Standard & Poor’s, a division of The McGraw Hill Companies, Inc., and any successor thereto.

“ Securities Account ”: The securities account set forth on Schedule 2 established in the name of the Purchaser into which all CMBS Securities that are Purchased Assets and other Purchased Items related thereto shall be deposited (except those CMBS Securities that are certificated securities within the meaning of Article 8 of the UCC), which Securities Account shall be subject to the Securities Account Control Agreement. Any Income on deposit or credited to the Securities Account shall be transferred by the Purchaser from the Securities Account to the Collection Account on or prior to each Payment Date.

“ Securities Account Control Agreement ”: A letter agreement, dated as of even date herewith, among the Seller, the Purchaser and Wachovia in the form of Exhibit VI attached hereto.

“ Seller Asset Schedule ”: Defined in the Custodial Agreement.

“ Seller-Related Obligations ”: Any obligations, liabilities and/or Indebtedness of the Seller and/or any Indebtedness of the Guarantor or the Pledgor under any other arrangement between the Seller, the Guarantor and/or the Pledgor on the one hand and the Purchaser, any Affiliate or any Subsidiary of the Purchaser (including, without limitation the obligations, liabilities and Indebtedness under the Swap Documents) and/or any commercial paper conduit for which the Purchaser or any Affiliate or Subsidiary of the Purchaser acts as a liquidity provider, administrator or agent on the other hand; provided , however , Seller-Related Obligations shall be deemed to include the obligations, liabilities and Indebtedness of (i) NRF-Reindeer Ltd. and the Guarantor under the Note Purchase Agreement and (ii) the Seller and Guarantor under the VFCC Repurchase Facility.

“ Servicer ”: A Person (other than the Seller) servicing all or a portion of the Purchased Assets under a Servicing Agreement, which Servicer shall be acceptable to the Purchaser in its discretion.

“ Servicer Account ”: Any account established by a Servicer or a PSA Servicer in connection with the servicing of the Purchased Assets.

“ Servicer Default ”: Defined in Section 6.10 of this Agreement.

“ Servicer Redirection Notice ”: The notice from the Seller to a Servicer or PSA Servicer, as applicable, substantially in the form of Exhibit VII attached hereto.

“ Servicing Records ”: Defined in Section 6.2 of this Agreement.

“Sub-Limit” : With respect to the characteristics of the Mortgage Assets or Purchased Assets, as applicable:

(a) the aggregate Purchase Price for all outstanding Transactions involving Mezzanine Loans shall not exceed 67% of the Maximum Amount;

(b) the aggregate Purchase Price for all outstanding Transactions involving CTL Loans and/or Subordinate CTL Loans shall not exceed 50% of the Maximum Amount;

(c) the aggregate Purchase Price for all outstanding Transactions involving Ground Leases shall not exceed 35% of the Maximum Amount;

(d) the aggregate Purchase Price for all outstanding Transactions involving hotels shall not exceed 45% of the Maximum Amount;

(e) the aggregate Purchase Price for all outstanding Transactions involving Construction Loans shall not exceed 35% of the Maximum Amount;

(f) the aggregate Purchase Price for all outstanding Transactions involving Underlying Mortgage Properties located in the same metropolitan statistical area shall not exceed 50% of the Maximum Amount;

(g) the aggregate Purchase Price for any single outstanding Transaction or for multiple Transactions to a single Borrower (including any Affiliate of a Borrower) shall not exceed 40% of the Maximum Amount;

(h) the aggregate Purchase Price for all outstanding Transactions involving CMBS Securities or Senior Secured Bank Debt rated BB- or below by any Rating Agency shall not exceed 25% of the Maximum Amount;

(i) the aggregate Purchase Price for all outstanding Transactions involving Preferred Equity Interests shall not exceed 25% of the Maximum Amount; and

(j) the aggregate Over-Advance Purchase Price for all Over-Advance Purchased Assets shall not exceed $50,000,000.

“ Swap Counterparty ”: Wachovia Bank, National Association and/or any Affiliate thereof, together with its successors and assigns.

“ Swap Transaction ”: Any interest rate swap transaction between the Seller and the Swap Counterparty that is governed by the Swap Documents.

“ Table Funded Purchased Asset ”: A Purchased Asset which is sold to the Purchaser simultaneously with the origination or acquisition thereof, which origination or acquisition, pursuant to the Seller’s request, is financed with the Purchase Price and paid directly to a title company, settlement agent or other Person (including the Seller if the Purchaser determines to fund to the Seller in Purchaser’s discretion) in trust for the current holder of the Mortgage Asset, in each case, approved in writing by the Purchaser in its reasonable discretion, for disbursement to the parties entitled thereto in connection with such origination or acquisition. A Purchased Asset shall cease to be a Table Funded Purchased Asset after the Custodian has delivered a Trust Receipt (along with a completed Mortgage Asset File Checklist attached thereto) to the Purchaser certifying its receipt of the Mortgage Asset File therefor.

“ Table Funded Trust Receipt ”: Defined in the Custodial Agreement.

“ Tangible Net Worth ”: As of a particular date and as to any Person:

(a) all amounts that would be included under stockholder equity (or the equivalent) on a balance sheet of such Person and its Consolidated Subsidiaries (including minority interests relating to NorthStar Realty Finance L.P.) determined on a consolidated basis at such date determined in accordance with GAAP, less

(b) in each case with respect to such Person and its Consolidated Subsidiaries determined on a consolidated basis (i) amounts owing to such Person from Affiliates, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or its respective Affiliates, (ii) intangible assets of such Person, as determined in accordance with GAAP, (iii) the value of REO Property and Foreclosed Loans of such Person, (iv) prepaid taxes and expenses, (v) unamortized hedging positions under Derivatives Contracts, and (vi) (without duplication) Related Party Loans.

“ Test Period ”: The most recent calendar quarter.

“ Title Exception ”: Defined in Schedule 1 , Part 1 of this Agreement.

“ Transaction ”: Defined in Section 2.1 of this Agreement.

“ Transaction Request ”: A request in the form of Exhibit I to this Agreement duly completed and executed by the Seller.

“ Transferor ”: The seller of mortgage assets under a Purchase Agreement.

“ True Sale Opinion ”: An Opinion of Counsel to the Seller opining that the subject transaction constitutes a “true sale”.

“ Trust Preferred Securities ”: Means those REIT trust preferred securities issued by NorthStar or its Affiliates identified on Schedule 7 attached hereto and such other REIT trust preferred securities issued by NorthStar and/or an Affiliate which are approved by the Purchaser in its discretion, in each case which are expressly subordinated to all other Indebtedness of NorthStar and its Affiliates. REIT trust preferred securities issued by NorthStar and/or its Affiliates shall be deemed approved by the Purchaser if such securities are issued on terms substantially similar to those securities listed on Schedule 7 , as determined by the Purchaser in its reasonable discretion.

“ Trust Receipt ”: Defined in the Custodial Agreement.

“ UCC-9 Policy ”: Defined in Schedule 1 , Part II of this Agreement.

“ Underwriting Package ”: With respect to any Mortgage Asset (other than a CMBS Security), the Underwriting Package shall include, to the extent applicable, (i) a copy of the Current Appraisal or, if unavailable, any other recent appraisal, (ii) the current rent roll, (iii) a minimum of two (2) years of property level financial statements to the extent available, (iv) the current financial statements of the Borrowers under the Mortgage Asset, and, if such Mortgage Asset is not a Whole Loan, the Borrower under the Commercial Real Estate Loan to the extent provided to or reasonably available to the applicable Seller upon request, (v) the loan documents, Authority Documents and title commitment/policy to be included in the Mortgage Asset File, together with copies of any appraisals, environmental reports, studies or assessments (to include, at a minimum, a phase I report), evidence of zoning compliance, property management agreements, assignments of property management agreements, contracts, licenses and permits, in each case to the extent in the Seller’s possession or reasonably available to the Seller and, if the Mortgage Asset is purchased by the Purchaser, assignments of such documents by the Seller in blank to the extent covered by assignments in blank delivered to the Custodian, (vi) any financial analysis, site inspection, market studies, environmental reports and any other diligence conducted by or provided to the Seller and (vii) such further documents or information as the Purchaser may reasonably request. With respect to any CMBS Security, the Underwriting Package shall consist of, to the extent applicable, (i) the related prospectus or offering circular, (ii) all structural and collateral term sheets and all other computational or other similar materials provided to the Seller in connection with its acquisition of such CMBS Security, (iii) all distribution date statements issued in respect thereof during the immediately preceding twelve (12) months (or, if less, since the date such CMBS Security was issued), (iv) all monthly reporting packages issued in respect of such CMBS Security during the immediately preceding twelve (12) months (or, if less, since the date such CMBS Security was issued), (v) all Rating Agency pre-sale reports, (vi) all asset summaries and any other due diligence materials, including, without limitation, reports prepared by third parties, provided to the Seller in connection with its acquisition of such CMBS Security, and (vii) such further documents or information as the Purchaser may reasonably request.

“ United States ”: The United States of America.

“ Unused Fee ”: The “Unused Fee” payable under the Fee Letter.

“ Upsize Fee ”: The “Upsize Fee” payable under the Fee Letter.

“ USA Patriot Act ”: The “United and Strengthening America by providing Tools Required to Intercept and Obstruct Terrorism Act of 2001” (Public Law 107-56), as amended from time to time.

“ VFCC ”: Variable Funding Capital Company LLC, together with its successors and assigns.

“ VFCC Repurchase Facility ”: The repurchase facility represented by the Master Repurchase Agreement (VFCC), dated as of May 14, 2007, among the Sellers, the Guarantors, VFCC and others as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, together with all other documents and agreements executed in connection therewith, as such documents and agreements are amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Wachovia ”: Wachovia Bank, National Association, a national banking association in its individual capacity, and its successors and assigns.

“ Wachovia Assets ”: Any Mortgage Asset issued or extended by Wachovia Corporation or an Affiliate of Wachovia Corporation.

“ Warehouse Lender’s Release Letter ”: A letter, substantially in the form of Exhibit XII-B hereto (or such other form acceptable to the Purchaser in its discretion), from a Warehouse Lender to the Purchaser, unconditionally releasing all of Warehouse Lender’s right, title and interest in certain Eligible Assets identified therein upon receipt of payment therefor by the Warehouse Lender.

Section 1.2 Interpretation .

In each Repurchase Document, unless a contrary intention appears:

(i) the singular number includes the plural number and vice versa ;

(ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by the Repurchase Documents;

(iii) reference to any gender includes each other gender;

(iv) reference to day or days without further qualification means calendar days;

(v) reference to any time means Charlotte, North Carolina time;

(vi) reference to any agreement (including any Repurchase Document), document or instrument means such agreement, document or instrument as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time in accordance with the terms thereof and, if applicable, the terms of the other Repurchase Documents, and reference to any promissory note, certificate, instrument or trust receipt includes any promissory note, certificate, instrument or trust receipt that is an extension or renewal thereof or a substitute or replacement therefor;

(vii) reference to any Applicable Law means such Applicable Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any Section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such Section or other provision;

(viii) unless otherwise expressly provided in this Agreement, reference to any notice, request, approval, consent or determination provided for, permitted or required under the terms of the Repurchase Documents with respect to the Seller, the Guarantor, the Pledgor or the Purchaser means, in order for such notice, request, approval, consent or determination to be effective hereunder, such notice, request, approval or consent must be in writing and, with respect to notice to the Swap Counterparty only, such notice shall contain an acknowledgement of receipt signed by the Swap Counterparty; and

(ix) reference herein or in any Repurchase Document to the Purchaser’s discretion shall mean, unless otherwise stated herein or therein, the Purchaser’s sole and absolute discretion, and the exercise of such discretion shall be final and conclusive. In addition, whenever the Purchaser has a decision or right of determination or request, exercises any right given to it to agree, disagree, accept, consent, grant waivers, take action or no action or to approve or disapprove, or any arrangement or term is to be satisfactory or acceptable (or any similar language or terms) to the Purchaser, the decision of the Purchaser with respect thereto shall be in the sole and absolute discretion of the Purchaser, and such decision shall be final and conclusive, except as may be otherwise specifically provided herein.

ARTICLE II

PURCHASE OF ELIGIBLE ASSETS

Section 2.1 Purchase and Sale .

Subject to the terms and conditions hereof, from time to time during the Facility Period (but at no time thereafter) and at the written request of the Seller, the parties hereto may enter into transactions in which the Seller transfers Eligible Assets to the Purchaser in a sales transaction against the transfer of funds by the Purchaser representing the Purchase Price for such Purchased Assets, with a simultaneous agreement by the Purchaser to transfer to the Seller and the Seller to repurchase such Purchased Assets in a repurchase transaction at a date certain not later than the Facility Maturity Date, against the transfer of funds by the Seller representing the Repurchase Price for such Purchased Assets. Each such transaction, including transfers of Additional Purchased Assets, shall be referred to herein as a “ Transaction ” and shall be governed by this Agreement, unless otherwise agreed to in writing.

Section 2.2 Transaction Mechanics; Related Matters .

(a) From time to time during the Facility Period but no more frequently than once per week, the Purchaser may in its discretion purchase from the Seller the Seller’s rights and interests (but none of its obligations) under certain Eligible Assets; provided , however , (i) at no time shall the aggregate Purchase Price of the outstanding Transactions and any proposed Transactions exceed the Maximum Amount and (ii) at no time shall the Purchaser enter into Transactions after the Facility Period. The Seller shall request a Transaction by delivering to the Purchaser, via Electronic Transmission, a written Transaction Request, together with, via Electronic Transmission (to the extent available in such form and otherwise by overnight delivery), a Seller Asset Schedule, a draft Confirmation and an Underwriting Package. The Transaction Request shall set forth, among other things, (i) the proposed Purchase Date, that, except with respect to the initial Transaction, shall be at least ten (10) Business Days (or such additional reasonable time as the Purchaser may reasonably request) after the delivery of the Transaction Request, the Seller Asset Schedule, the draft Confirmation, the complete Underwriting Package and any supplemental requests (requested orally or in writing) relating to the proposed Mortgage Assets, (ii) the proposed Purchase Price, which shall be in a minimum amount of $1,000,000, (iii) the proposed Repurchase Date, (iv) the applicable Class and Type for each such Mortgage Asset, and (v) such other additional terms and conditions requested by the Purchaser in its reasonable discretion. The Purchaser shall have ten (10) Business Days (or such additional reasonable time as the Purchaser may reasonably request) from the receipt thereof to review the Transaction Request, the Seller Asset Schedule, the draft Confirmation, the Underwriting Package and any supplemental requests (requested orally or in writing) relating to the proposed Mortgage Assets.

(b) The Purchaser shall notify the Seller in writing of the Purchaser’s tentative approval (and the proposed Purchase Price for each Mortgage Asset) or final disapproval of each proposed Mortgage Asset within ten (10) Business Days (or such additional reasonable time as the Purchaser may reasonably request) after its receipt of the Transaction Request, the Seller Asset Schedule, the draft Confirmation, the complete Underwriting Package and any supplemental requests (requested orally or in writing) relating to such proposed Mortgage Asset. Unless the Purchaser notifies the Seller in writing of the Purchaser’s approval of such proposed Mortgage Asset within the applicable period, the Purchaser shall be deemed not to have approved the purchase of such proposed Mortgage Asset.

(c) Provided that the Purchaser has tentatively agreed to purchase the Mortgage Assets described in the Transaction Request and the proposed Purchase Price is acceptable to the Seller, the Seller shall forward to the Purchaser, via Electronic Transmission, on the requested Purchase Date a completed and executed Confirmation with respect to each Transaction, and a copy of the executed Assignment. The Confirmation delivered by the Seller to the Purchaser may specify any additional terms or conditions of the Transaction not inconsistent with this Agreement. Delivery of a Confirmation to the Purchaser shall be deemed to be a certification by the Seller, among other things, that all conditions precedent to such Transaction set forth in Article III of this Agreement have been satisfied (except the Purchaser’s consent). Unless otherwise agreed in writing, upon receipt of the Confirmation and Assignment, the Purchaser may, in its discretion, agree to enter into the requested Transaction with respect to a Mortgage Asset, with such additional terms, conditions and requirements contained in the Confirmation as the Purchaser may require in its discretion (if additional terms, conditions or requirements are required by the Purchaser, the Seller shall include such terms, conditions and/or requirements in the Confirmation to the extent it approves of same, and provide a re-executed Confirmation to the Purchaser), and the Purchaser’s agreement to purchase the Mortgage Asset on the terms, conditions and requirements as the Purchaser may require in its discretion shall be evidenced by the Purchaser’s signature on the Confirmation. Any Confirmation executed by the Purchaser shall be deemed to have been received by the Seller on the date actually received by the Seller.

(d) (A) The Seller shall release or cause to be released to the Custodian in accordance with the Custodial Agreement (1) in the case of a single Non-Table Funded Purchased Asset, no later than 1:00 p.m. one (1) Business Day (for more than one (1) Non-Table Funded Purchased Asset, two (2) Business Days) prior to the requested Purchase Date, and, (2) in the case of a Table Funded Purchased Asset, no later than 1:00 p.m. three (3) Business Days following the applicable Purchase Date, the Mortgage Asset File pertaining to each Eligible Asset to be purchased by the Purchaser , and (B) the Seller shall deliver to the Custodian, in connection with the applicable delivery under clause (A) above, a Custodial Identification Certificate and a completed Mortgage Asset File Checklist required under Section 3.2 of the Custodial Agreement.

(e) Pursuant to the Custodial Agreement, the Custodian shall deliver to the Purchaser and the Seller by 1:00 p.m. on the Purchase Date for each Non-Table Funded Purchased Asset a Trust Receipt (along with a completed Mortgage Asset File Checklist attached thereto) and an Asset Schedule and Exception Report with respect to the Basic Mortgage Loan Documents for the Eligible Assets that the Seller has requested the Purchaser purchase on such Purchase Date. With respect to each Table Funded Purchased Asset, the Seller shall cause the Bailee to deliver to the Custodian, with a copy to the Purchaser, no later than 1:00 p.m. on the Purchase Date, by Electronic Transmission, copies of the related Basic Mortgage Loan Documents, a fully executed Bailee Agreement, a Bailee’s Trust Receipt issued by the Bailee thereunder and such other evidence satisfactory to the Purchaser in its reasonable discretion that all documents necessary to effect a transfer of the Eligible Assets to the Purchaser have been delivered to Bailee. With respect to each Table Funded Purchased Asset, the Custodian shall deliver to the Purchaser with a copy to the Seller a Table Funded Trust Receipt no later than 3:00 p.m. on the Purchase Date, which receipt and all other documents delivered to the Bailee shall be acceptable to the Purchaser in its reasonable discretion. In the case of a Table Funded Purchased Asset, no later than 3:00 p.m. on the second (2nd) Business Day following the Custodian’s receipt of the related Mortgage Loan Documents comprising the Mortgage Asset File, the Custodian shall deliver to the Purchaser a Trust Receipt (along with a completed Mortgage Asset File Checklist attached thereto) certifying its receipt of the documents required to be delivered pursuant to the Custodial Agreement, together with an Asset Schedule and Exception Report relating to the Basic Mortgage Loan Documents, with any Exceptions identified by the Custodian as of the date and time of delivery of such Asset Schedule and Exception Report. The Custodian shall deliver to the Purchaser an Asset Schedule and Exception Report relating to all of the Mortgage Loan Documents within five (5) Business Days of its receipt of the Mortgage Asset Files.

(f) On the Purchase Date for each Eligible Asset to be purchased on such date, and provided the requirements set forth in this Agreement and the other Repurchase Documents are satisfied, including, without limitation, the delivery to the Purchaser of a Trust Receipt pursuant to Subsection 2.2(e) of this Agreement, ownership of the Purchased Assets shall be transferred to the Purchaser (subject to the terms of this Agreement) against the simultaneous transfer of the lesser of (A) Purchase Price and (B) the Availability to the Seller not later than 5:00 p.m. on such date. The Seller hereby sells, transfers, conveys and assigns to the Purchaser all the right, title and interest (but none of the obligations) of the Seller in and to the Purchased Assets together with all right, title and interest in and to the proceeds of any related Purchased Assets (subject to the terms of this Agreement).

(g) Each Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed between the Purchaser and the Seller with respect to the Transaction to which the Confirmation relates. The Seller’s acceptance of the related proceeds shall, to the extent the Confirmation is not for any reason executed by the Seller, constitute the Seller’s agreement to the terms of such Confirmation. It is the intention of the parties that each Confirmation shall not be separate from this Agreement but shall be made a part of this Agreement.

(h) In no event shall a Transaction be entered into when any Default or Event of Default has occurred and is continuing or when the Repurchase Date for such Transaction would be later than the Facility Maturity Date.

(i) In the case of individual Transactions terminable upon demand (if any), such demand shall be made by the Purchaser or the Seller no later than such time as is customary in accordance with market practice, by telephone or otherwise, on or prior to the Business Day on which such termination will be effective. The Seller shall repurchase the Purchased Assets by no later than 3:00 p.m. on the Repurchase Date. On a Repurchase Date, termination of a Transaction will be effected by transfer to the Seller or its designee of the Purchased Assets after the Purchaser receives the Repurchase Price for the Purchased Asset. In connection with the termination of a Transaction, any Income in respect of any Purchased Assets received by the Purchaser and not previously credited or transferred to, or applied to the obligations of, the Seller pursuant to Section 2.8 of this Agreement shall be netted against the Repurchase Price by the Purchaser. To the extent a net amount is owed to one party, the other party shall pay such amount to such party.

(j) Subject to the terms and conditions of this Agreement, during the term of this Agreement, the Seller may sell to the Purchaser, repurchase from the Purchaser and resell to the Purchaser, Eligible Assets hereunder; provided , however , the Seller shall have no right to substitute an Eligible Asset for a Purchased Asset. To the extent the Seller requests less than the Purchase Price that it would otherwise be entitled to receive under the terms of this Agreement in connection with the purchase of any Eligible Asset, and provided (A) no Default or Event of Default exists, (B) the Purchased Asset continues to be a Purchased Asset, (C) such Purchased Asset is not a Defaulted Mortgage Asset or Delinquent Mortgage Asset and (D) each applicable eligibility criteria set forth in Schedule 1 to this Agreement is satisfied in all material respects, the Seller may request an additional advance of the Purchase Price against such Purchased Asset in an amount not to exceed the positive difference (if any) between the current Purchase Price (calculated as if such Purchased Asset were purchased on such day) and the Purchase Price originally advanced by the Purchaser with respect thereto; provided , however , in no event shall the aggregate amounts advanced against such Purchased Asset exceed the maximum Purchase Price that the Purchaser was prepared to advance on the date the Purchased Asset was acquired by the Purchaser under this Agreement. If the Purchaser has advanced the full amount of the Purchase Price that is then available to the Seller on the Purchase Date for the purchase of the Purchased Asset, the Seller may request in writing that the Purchaser reunderwrite the Purchased Asset and/or redetermine the Asset Value of such Purchased Asset (in each case in accordance with the same standards used by the Purchaser with respect thereto at the time the Purchased Asset was originally purchased on the Purchase Date) for the purposes of obtaining additional advances of the Purchase Price with respect to such Purchased Asset, and, provided (A) no Default or Event of Default exists, (B) the Purchased Asset continues to be a Purchased Asset, (C) such Purchased Asset is not a Defaulted Mortgage Asset or Delinquent Mortgage Asset and (D) each applicable eligibility criteria set forth in Schedule 1 to this Agreement is satisfied in all material respects, the Purchaser may, in its discretion, consider such request and may take such action (or no action) in response thereto as the Purchaser may determine in its discretion.

(k) All of the Seller’s right, title and interest in the Purchased Assets that constitute CMBS Securities shall pass to the Purchaser on the applicable Purchase Date. The Seller shall deliver to the Custodian on behalf of the Purchaser a complete set of all transfer documents to be completed by the Purchaser and executed copies of any transfer documents to be completed by the Seller, in either case in blank, but in form sufficient to allow transfer and registration of such Purchased Assets to the Purchaser no later than the proposed Purchase Date for the relevant Purchased Asset, and such CMBS Securities shall be medallion guaranteed. All transfers of certificated securities from the Seller to the Purchaser shall be effected by physical delivery to the Custodian of the Purchased Assets (duly endorsed by the Seller, in blank), together with a stock power executed by the Seller, in blank. With respect to Purchased Assets that shall be delivered through the DTC or the National Book Entry System of the Federal Reserve or any similar firm or agency, as applicable, in book-entry form and credited to or otherwise held in an account, the Seller shall take such actions necessary to provide instruction to the relevant financial institution, clearing corporation, securities intermediary or other entity to effect and perfect a legally valid delivery of the relevant interest granted herein to the Purchaser hereunder to be held in the Securities Account. Purchased Assets delivered in book-entry form shall be under the custody of and held in the name of the Purchaser in the Securities Account. With respect to any Mortgage Asset or collateral for a Mortgage Asset that is an uncertificated security (as defined in the UCC), securities entitlement (as defined in the UCC) or is held in a securities account (as defined in the UCC), the Seller shall provide to the Purchaser a control agreement, which shall be acceptable to the Purchaser in its discretion and shall be delivered to the Custodian under the Custodial Agreement, executed by the issuer of the Mortgage Asset or the collateral for the Mortgage Asset or the related securities intermediary (as defined in the UCC), as applicable, granting control (as defined in the UCC) of such Mortgage Asset or collateral for such Mortgage Asset to the Purchaser and providing that, after an Event of Default, the Purchaser shall be entitled to notify the issuer or securities intermediary, as applicable, that such issuer or securities intermediary shall comply exclusively with the instructions or entitlement orders (as defined in the UCC), as applicable, of the Purchaser without the consent of the Seller or any other Person and no longer follow the instructions or entitlement orders, as applicable, of the Seller or any other Person (other than the Purchaser).

Section 2.3 Optional Repurchase .

The Seller may, upon two (2) Business Days’ prior written notice or such shorter period as the Purchaser may agree in its discretion (such notice to be received by the Purchaser no later than 5:00 p.m. (Charlotte, North Carolina time) on such day) to the Purchaser and the Swap Counterparty, reduce the aggregate Repurchase Price of all Purchased Assets (or, prior to an Event of Default, any portion of all Purchased Assets or any individual Purchased Asset) currently outstanding by remitting (1) to the Collection Account cash in the amount of the principal reduction plus accrued and unpaid Price Differential and any related Breakage Costs owed in connection with such reduction and (2) to the Purchaser instructions to reduce such Repurchase Price, provided that (A) in connection with such reduction the Seller shall comply with the terms of any related Interest Rate Protection Agreement requiring that the Interest Rate Protection Agreement be terminated in whole or in part as the result of any such reduction of the Repurchase Price and the Seller has paid all amounts due to the applicable parties in connection with any such termination and (B) after giving effect to such reduction, the Seller shall be in compliance with all Sub-Limits and all other terms, conditions and requirements contained in the Repurchase Documents.

Section 2.4 Extension of Facility Maturity Date and Funding Expiration Date .

(a) Extension of Facility Maturity Date . At the written request of the Seller delivered to the Purchaser no earlier than ninety (90) days and no later than thirty (30) days prior to the Facility Maturity Date, the Purchaser may in its discretion grant one extension of the Facility Maturity Date for a period not to exceed one (1) year by giving written notice of such extension to the Seller no later than fifteen (15) days before the expiration of the Facility Maturity Date. Any failure by the Purchaser to deliver such notice of extension on a timely basis shall be deemed to be the Purchaser’s determination not to extend the original Facility Maturity Date. An extension of the Facility Maturity Date is subject to the following requirements: (i) no Default or Event of Default shall have occurred and is continuing, (ii) the Seller shall pay to the Purchaser an Extension Fee as set forth in the Fee Letter, (iii) no additional Transactions shall be permitted to be entered into after the original Facility Maturity Date, (iv) the Seller must, in addition to other amounts owed by the Seller hereunder, amortize and pay to the Purchaser the aggregate Repurchase Price for all Transactions then outstanding in equal quarterly installments over the term of the extension commencing with the original Facility Maturity Date and on the Payment Date for each quarter thereafter, (v) not later than the Facility Maturity Date (as extended in accordance with the terms of this Agreement), the Seller shall pay to Purchaser an amount equal to the aggregate Repurchase Price then outstanding, together with all other Aggregate Unpaids and any other amounts then owing to the Purchaser and the Affected Parties by the Seller pursuant to this Agreement or any other Repurchase Document, and (vi) if for any reason the Facility Maturity Date were extended beyond four (4) years from the Closing Date (by extensions of the Facility Maturity Date, amendments to the Facility or otherwise), to which the Purchaser makes no promise or commitment whatsoever, continuation statements have been filed with respect to any outstanding UCC financing statement in favor of the Purchaser with respect to this Facility. The Seller confirms that the Purchaser, in its discretion, without regard to the value or performance of the Purchased Assets or any other factor, may elect not to extend the Facility Maturity Date.

(b) Extension of Funding Expiration Date . The Seller may, by written notice to the Purchaser at any time prior to the Funding Expiration Date then in effect, make written request for the Purchaser to extend the Funding Expiration Date for a period not to exceed 364 days from the then current Funding Expiration Date. Provided no Event of Default has occurred and is continuing on the date of the Funding Expiration Date then in effect, the Funding Expiration Date shall be extended to the date that is not greater than 364 days immediately following the Funding Expiration Date then in effect; provided , that the Funding Expiration Date shall in no event be extended beyond the third one-year anniversary of the Closing Date or beyond the Facility Maturity Date.

Section 2.5 Payment of Price Differential .

(a) Notwithstanding that the Purchaser and the Seller intend that the Transactions hereunder be sales to the Purchaser of the Purchased Assets, the Seller shall pay to the Purchaser an amount equal to the accrued value of the Price Differential of each Transaction for the most recently ended Accrual Period (each such payment, a “ Periodic Advance Repurchase Payment ”) on each Payment Date less any portion thereof previously paid, if any. The Purchaser shall deliver to the Seller, via Electronic Transmission, notice of the required Periodic Advance Repurchase Payment on or prior to the second (2nd) Business Day preceding each Payment Date; provided , however , the Purchaser’s failure to timely deliver such notice shall not affect the Seller’s obligations to pay the Periodic Advance Repurchase Payment due. If the Seller fails to make all or part of the Periodic Advance Repurchase Payment by 11:00 a.m., Charlotte, North Carolina time, on the Payment Date, the Seller shall be obligated to pay to the Purchaser (in addition to, and together with, the Periodic Advance Repurchase Payment) interest on the unpaid amount of the Periodic Advance Repurchase Payment at a rate per annum equal to the Post-Default Rate (the “ Late Payment Fee ”) until the overdue Periodic Advance Repurchase Payment is received in full by the Purchaser.

(b) If the Seller repurchases Purchased Assets on any day prior to the last day of a Eurodollar Period or if the Seller repurchases Purchased Assets on any day that is not a Repurchase Date for such Purchased Assets, the Seller shall indemnify the Purchaser and hold the Purchaser harmless from any Breakage Costs actually incurred by the Purchaser for the remainder of the Eurodollar Period. The Purchaser shall deliver to the Seller a statement setting forth the amount and basis of determination of any Breakage Costs, it being agreed that such statement and the method of its calculation shall be conclusive and binding upon the Seller, absent manifest error. This Subsection 2.5(b) shall survive termination of this Agreement and the repurchase of all Purchased Assets subject to Transactions hereunder until the expiration of the applicable statute of limitations.

Section 2.6 [Reserved]

Section 2.7 Margin Maintenance .

If at any time the Purchaser determines in good faith (based on such factors as the Purchaser determines to rely on in its discretion, including, but not limited to, a credit analysis of the Underlying Mortgaged Properties and/or the current market conditions for the Purchased Assets) that the Margin Base for all Purchased Assets (as determined by the Purchaser in its good faith discretion on such date) is less than the aggregate Purchase Price for all outstanding Transactions plus the Note Purchase Margin (in each case a “ Margin Deficit ”), then the Purchaser may by notice to the Seller in the form of Exhibit X (a “ Margin Deficit Notice ”) require the Seller to transfer to the Purchaser cash or Additional Purchased Assets in the amount of the Margin Deficit to the Purchaser by no later than the Margin Correction Deadline. All cash transferred to the Purchaser pursuant to this Section 2.7 shall be deposited in the Collection Account and shall be attributed to such Transaction or Transactions that caused the Margin Deficit to reduce the outstanding Purchase Price to which it has been attributed. Transfers of Eligible Assets to the Purchaser under this Section 2.7 shall be subject to the same conditions and requirements that are applicable to the transfers of Eligible Assets under Section 2.2 . The Purchaser’s election, in its discretion, not to deliver a Margin Deficit Notice at any time there is a Margin Deficit shall not waive the Margin Deficit or in any way limit or impair the Purchaser’s right to deliver a Margin Deficit Notice at any time the same or any other Margin Deficit exists.

Section 2.8 Income Payments.

The Purchaser shall be entitled to receive for application in accordance with the provisions of this Agreement an amount equal to all Income paid or distributed on or in respect of the Purchased Items, which amount shall be deposited by the Seller, each Servicer and each PSA Servicer and all other applicable Persons into the Collection Account. The Seller hereby agrees to instruct each Servicer, PSA Servicer, Swap Counterparty, each counterparty under any other Interest Rate Protection Agreement and all other applicable Persons to transfer all Income with respect to the Purchased Items in accordance with Subsection 5.1(e) of this Agreement, who shall hold any funds so received pending application pursuant to the following sentence. On each Payment Date, any amounts received by the Purchaser and deposited to the Collection Account since the immediately preceding Payment Date shall be applied as follows: first , to the extent not paid, to the payment of all outstanding fees, costs and expenses due to the Custodian under the Custodial Fee Letter, second , to the payment of all fees, costs, expenses and advances then due to the Purchaser pursuant to the Repurchase Documents, other than the items covered in third through ninth ; third , to the payment of outstanding Late Payment Fees and Price Differential at the Post-Default Rate, fourth , pari passu and pro-rata (based on the amounts owed to such Persons under this clause fourth ), to the payment of accrued and unpaid Price Differential on the Purchased Assets then due to the Purchaser and to the Swap Counterparty any Net Swap Payments then due to the Swap Counterparty for the current and any prior Payment Dates (other than Swap Breakage Costs); fifth , to the extent not previously paid by the Seller, to pay the Repurchase Price for Purchased Assets then subject to a request to repurchase in accordance with the terms of Section 2.3 of this Agreement; sixth , without limiting the Seller’s obligations to cure Margin Deficits in a timely manner in accordance with Section 2.7 of this Agreement, to the Purchaser for the payment of, as applicable, any Margin Deficit outstanding; seventh , to the extent any Income includes payments or prepayments of principal on the underlying Purchased Assets, such payments shall be applied to reduce the aggregate Repurchase Price outstanding; provided , however , prior to an Event of Default and provided no Margin Deficit is outstanding, only an amount equal to the product of the Advance Rate and the amount of such principal payment or prepayment shall be applied to reduce the Repurchase Price outstanding for the related Transaction; eighth , without limiting the Seller’s obligations under Section 2.4 of this Agreement and to the extent not paid previously by the Seller, to the Purchaser for the reduction of the Purchase Price outstanding in accordance with Section 2.4 of this Agreement; ninth , pari passu and pro-rata (based on the amounts owed to such Persons under this clause ninth ), to the payment of Breakage Costs, if any, Swap Breakage Costs, if any, Indemnified Amounts, if any, Increased Costs, if any, Additional Amounts, if any, and all other amounts then due and owing to the Purchaser, the Swap Counterparty, any Affected Party or any other Person pursuant to the Repurchase Documents; and tenth , the remainder to the Seller, for such purposes as the Seller shall determine in its discretion, subject to the Financial Covenants and other requirements of the Repurchase Documents; provided , however , that if a Margin Deficit, Default or Event of Default has occurred and is continuing, amounts collected pursuant to this Section 2.8 of this Agreement shall not be transferred to the Seller but shall be retained by the Purchaser and applied in reduction of the Obligations.

Section 2.9 Payment, Transfer and Custody .

(a) Unless otherwise expressly provided herein, all amounts to be paid or deposited by the Seller hereunder shall be paid or deposited in accordance with the terms of this Agreement no later than 3:00 p.m. on the day when due in lawful money of the United States, in immediately available funds and without deduction, set-off or counterclaim to the Purchaser’s Account and if not received before such time shall be deemed to be received on the next Business Day. The Seller shall, to the extent permitted by Applicable Law, pay to the Purchaser interest on any amounts not paid when due hereunder or under the Repurchase Documents at the Post-Default Rate, payable on demand; provided , however , that such interest rate shall not at any time exceed the maximum rate permitted by Applicable Law. Such interest shall be for the account of, and distributed to, the Purchaser. All computations of interest, Price Differential and fees hereunder or under the Fee Letter shall be made on the basis of a year consisting of 360 days for the actual number of days (including the first but excluding the last day) elapsed. The Seller acknowledges that it has no rights of withdrawal from the foregoing Purchaser’s Account or from the Collection Account or the Securities Account.

(b) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of the Price Differential or any fee payable hereunder or under the Fee Letter, as the case may be.

(c) Any Mortgage Asset Files not delivered to the Purchaser or its designee (including the Custodian) are and shall be held in trust by the Seller or its agent for the benefit of the Purchaser as the owner thereof. The Seller or its agent shall maintain a copy of the Mortgage Asset File and the originals of the Mortgage Asset File not delivered to the Purchaser or its designee (including the Custodian). The possession of the Mortgage Asset File by the Seller or its agent is at the will of the Purchaser for the sole purpose of servicing the related Purchased Asset, and such retention and possession by the Seller or its agent is in a custodial capacity only. Each Mortgage Asset File retained or held by the Seller or its agent shall be segregated on the Seller’s books and records from the other assets of the Seller or its agent, and the books and records of the Seller or its agent shall be marked appropriately to reflect clearly the sale of the related Purchased Asset to the Purchaser. The Seller or its agent shall release custody of the Mortgage Asset File only in accordance with written instructions from the Purchaser, unless such release is required as incidental to the servicing of the Purchased Assets or is in connection with a repurchase of any Purchased Asset by the Seller, in each case in accordance with the terms of the Custodial Agreement.

(d) Notwithstanding anything contained in this Agreement to the contrary, all Repurchase Price and all other Obligations shall be paid in full on or before the Facility Maturity Date.

Section 2.10 Reserved .

Section 2.11 Hypothecation or Pledge of Purchased Assets .

Title to all Purchased Items shall pass to the Purchaser, and the Purchaser shall have free and unrestricted use of all Purchased Items subject to the terms of this Agreement. Nothing in this Agreement shall preclude the Purchaser from engaging in repurchase transactions with the Purchased Items or otherwise selling, pledging, syndicating, repledging, transferring, hypothecating, or rehypothecating the Purchased Items, all on terms that the Purchaser may determine in its discretion subject, however, to the Purchaser’s obligations to apply Income and reconvey the Purchased Assets to the Seller in accordance with the terms hereof. Notwithstanding the foregoing, Purchaser shall reconvey, without recourse, representation or warranty, the Purchased Items to the Seller free and clear of all Liens created by the Purchaser or any party claiming by or through the Purchaser, in accordance with the terms of this Agreement.

Section 2.12 Fees .

(a) To the extent not separately paid by the Seller under the Fee Letter, the Price Differential, the Unused Fee and all other fees and amounts payable under the Fee Letter shall be paid to the Purchaser from the Collection Account to the extent funds are available on each Payment Date pursuant to Section 2.8 of this Agreement.

(b) To the extent not separately paid by the Seller, the Custodian’s fees and expenses shall be paid to the Custodian from the Collection Account to the extent funds are available on each Payment Date pursuant to Section 2.8 of this Agreement.

(c) The Seller shall pay to Moore & Van Allen PLLC, as counsel to the Purchaser, on the Closing Date, its estimated, but reasonable, fees and out-of-pocket expenses in immediately available funds and shall pay all additional fees and out-of-pocket expenses of Moore & Van Allen PLLC (including reasonable fees and expenses incurred in reviewing proposed Mortgage Assets for purchase by the Purchaser within ten (10) days after receiving an invoice for such amounts.

Section 2.13 Increased Costs; Capital Adequacy; Illegality .

(a) If either (i) the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements) in or in the interpretation of any law or regulation, or (ii) the compliance by the Purchaser and/or any other Affected Party with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) shall (1) subject the Purchaser and/or any other Affected Party to any Tax (except for Taxes on the overall net income or franchise of the Purchaser and/or any other Affected Party), duty or other charge with respect to any ownership interest in the Purchased Items, or any right to enter into Transactions hereunder, or on any payment made hereunder, (2) impose, modify or deem applicable any reserve requirement (including, without limitation, any reserve requirement imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve requirement, if any, included in the determination of the Price Differential), special deposit or similar requirement against assets of, deposits with or for the amount of, or credit extended by, the Purchaser and/or any other Affected Party or (3) impose any other condition affecting the ownership interest in the Purchased Items conveyed to the Purchaser hereunder or the Purchaser’s and/or any other Affected Party’s rights hereunder, the result of which is to increase the cost to the Purchaser and/or any other Affected Party or to reduce the amount of any sum received or receivable by the Purchaser and/or any other Affected Party under this Agreement, then within ten (10) days after demand by the Purchaser and/or any other Affected Party (which demand shall be accompanied by a statement setting forth the basis for such demand), the Seller shall pay directly to the Purchaser and/or any other Affected Party such additional amount or amounts as will compensate the Purchaser and/or any other Affected Party for such additional or increased cost actually incurred or such reduction actually suffered.

(b) If either (i) the introduction of or any change in or in the interpretation of any law, guideline, rule, regulation, directive or request or (ii) compliance by the Purchaser and/or any other Affected Party with any law, guideline, rule, regulation, directive or request from any central bank or other Governmental Authority or agency (whether or not having the force of law), including, without limitation, compliance by the Purchaser and/or any other Affected Party with any request or directive regarding capital adequacy, has or would have the effect of reducing the rate of return on the capital of the Purchaser and/or any other Affected Party as a consequence of its obligations hereunder or arising in connection herewith to a level below that which the Purchaser and/or any other Affected Party could have achieved but for such introduction, change or compliance (taking into consideration the policies of the Purchaser and/or any other Affected Party with respect to capital adequacy) by an amount deemed by the Purchaser and/or any other Affected Party to be material, then from time to time, within ten (10) days after demand by the Purchaser and/or any other Affected Party (which demand shall be accompanied by a statement setting forth the basis for such demand), the Seller shall pay directly to the Purchaser and/or any other Affected Party such additional amount or amounts as will compensate the Purchaser and/or any other Affected Party for such reduction. For the avoidance of doubt, any interpretation of Accounting Research Bulletin No. 51 by the Financial Accounting Standards Board shall constitute an adaptation, change, request or directive subject to this Subsection 2.13(b) .

(c) In determining any amount provided for in this Section 2.13 , the Purchaser and/or any other Affected Party may use any reasonable averaging and attribution methods. The Purchaser and/or any other Affected Party making a claim under this Section 2.13 shall submit to the Seller a written description as to such additional or increased cost or reduction and the calculation thereof, which written description shall be conclusive absent demonstrable error. Notwithstanding anything to the contrary contained in subsections (a) or (b) of this Section 2.13 , the Purchaser and/or any other Affected Party shall not seek to impose any such Increased Costs on the Seller unless the Purchaser and/or any other Affected Party is imposing such Increased Costs on similarly situated sellers or borrowers. To the extent possible, the Purchaser will use its best efforts to give prior notice to the Seller that there will be Increased Costs incurred. If the Purchaser gives notice of Increased Costs and the Seller either accepts such Increased Costs or continues to utilize the Facility with knowledge of such Increased Costs, the Seller shall be obligated to pay such Increased Costs before exercising the termination option set forth in the next sentence. If the proposed Increased Costs exceed 7.5% of the Seller’s Facility costs for the preceding year, the Seller shall have the option to terminate the Agreement by giving three (3) Business Days prior written notice to the Purchaser and remitting to the Purchaser on or before the effective date of the termination all outstanding Obligations (including any Breakage Costs incurred in connection with such termination) due to the Purchaser and/or any other Affected Party under the Repurchase Documents.

(d) If the Purchaser and/or any other Affected Party shall notify the Seller that a Eurodollar Disruption Event as described in clause (a) of the definition of “Eurodollar Disruption Event” has occurred, all Transactions in respect of which the Price Differential accrues at the Adjusted Eurodollar Rate shall immediately be converted into Transactions in respect of which the Price Differential accrues at the Base Rate.

(e) To the extent possible, the Purchaser shall use its best efforts to give thirty (30) days notice to the Seller that the Purchaser or an Affected Party will incur increased costs or other amounts under this Section 2.13 .

(f) Without prejudice to the survival of any other agreement of the Seller hereunder, the agreements and obligations of the Seller contained in this Section 2.13 shall survive the termination of this Agreement until the expiration of the applicable statute of limitations.

Section 2.14 Taxes .

(a) All payments made by a Borrower or the Seller, the Guarantor or the Pledgor under the Repurchase Documents will be made free and clear of and without deduction or withholding for or on account of any Taxes. If any Taxes are required to be withheld from any amounts payable to the Purchaser and/or any other Affected Party, then the amount payable to such Person will be increased (such increase, the “ Additional Amount ”) such that every net payment made under the Repurchase Documents after withholding for or on account of any Taxes (including, without limitation, any Taxes on such increase) is not less than the amount that would have been paid had no such deduction or withholding been deducted or withheld. The foregoing obligation to pay Additional Amounts, however, will not apply with respect to net income or franchise taxes imposed on the Purchaser and/or any other Affected Party, with respect to payments required to be made by the Seller, the Guarantor or the Pledgor under the Repurchase Documents, by a taxing jurisdiction in which the Purchaser and/or any other Affected Party is organized, conducts business or is paying taxes (as the case may be).

(b) The Seller will indemnify the Purchaser and any other Affected Party for the full amount of Taxes payable by such Person in respect of Additional Amounts and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. All payments in respect of this indemnification shall be made within ten (10) days from the date a written invoice therefor is delivered to either Seller.

(c) Within thirty (30) days after the date of any payment by the Seller of any Taxes, the Seller will furnish to the Purchaser, at its address set forth under its name on the signature pages of this Agreement, appropriate evidence of payment thereof.

(d) Without prejudice to the survival of any other agreement of the Seller hereunder, the agreements and obligations of the Seller contained in this Section 2.14 shall survive the termination of this Agreement until the expiration of the applicable statute of limitations.

Section 2.15 Obligations Absolute .

Except as set forth to the contrary in the Repurchase Documents, all sums payable by the Seller and/or the Guarantor hereunder shall be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of the Seller and the Guarantor hereunder shall in no way be released, discharged, or otherwise affected (except as expressly provided herein) by reason of: (a) any damage to or destruction of or any taking of any Property, any Underlying Mortgaged Property, any other collateral for a Purchased Asset or any portion of the foregoing; (b) any restriction or prevention of or interference with any use of any Property, Underlying Mortgaged Property, any other collateral for a Purchased Asset or any portion of the foregoing; (c) any title defect or encumbrance or any eviction from any Property, Underlying Mortgaged Property, any other collateral for a Purchased Asset or any portion of the foregoing by title paramount or otherwise; (d) any Insolvency Proceeding relating to any of the Seller, the Guarantor, a Borrower or any obligor, account debtor or indemnitor under the Mortgage Loan Documents or any Affiliate of the foregoing, or any action taken with respect to this Agreement or any other Repurchase Document by any trustee or receiver of any of the Seller, the Guarantor, a Borrower or any obligor, account debtor or indemnitor under the Mortgage Loan Documents or any Affiliate of the foregoing, or by any court, in any such proceeding; (e) any claim that the Seller has or might have against the Purchaser or any Affiliate; (f) any default or failure on the part of the Purchaser or any Affiliate to perform or comply with any of the terms of this Agreement, the Repurchase Documents, the Engagement Letter or of any other agreement with the Seller, the Guarantor or any Affiliate of the foregoing; (g) the invalidity or unenforceability of any Purchased Asset or any of the Mortgage Loan Documents; (h) any failure, refusal or inability of a Borrower to pay any obligation due under the Mortgage Loan Documents; or (i) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not any of the Seller, the Guarantor or any Affiliate of the foregoing shall have notice or knowledge of any of the foregoing.”

Section 2.16 Over-Advances .

During the Facility Period and provided no Event of Default is then existing, the Purchaser may, in its discretion, purchase certain Over-Advance Purchased Assets using the Over-Advance Advance Rate, subject to the satisfaction of the Over-Advance Provisions.

ARTICLE III

CONDITIONS TO TRANSACTIONS

Section 3.1 Conditions to Closing and Initial Purchase .

The Purchaser shall not be obligated to enter into any Transaction hereunder nor shall the Purchaser be obligated to take, fulfill or perform any other action hereunder until the following conditions have been satisfied, in the discretion of, or waived in writing by, the Purchaser:

(a) The Purchaser shall be in receipt of good standing certificates, secretary certificates (or the equivalent) and copies of the Authority Documents and applicable resolutions of the Seller, the Guarantor and the Pledgor evidencing, as applicable, the corporate or other authority for the Seller, the Guarantor and the Pledgor with respect to the execution, delivery and performance of the Repurchase Documents and each of the other documents to be delivered by the Seller, the Guarantor and the Pledgor from time to time in connection herewith;

(b) This Agreement, the Guaranty and each other Repurchase Document shall have been duly executed by, and delivered to, the parties thereto and such documents shall be in form and substance satisfactory to the Purchaser;

(d) The Seller shall have delivered to the Purchaser a duly executed Power of Attorney in the form of Exhibit IV ;

(e) The Purchaser shall be in receipt of such Opinions of Counsel from the counsel to the Seller, the Guarantor and the Pledgor and an Opinion of Counsel from in-house counsel to the Custodian as the Purchaser may require, each in form and substance satisfactory to the Purchaser in its reasonable discretion, including, without limitation, corporate opinions and perfection opinions;

(f) The Purchaser shall be in receipt of the Servicing Agreements and the Pooling and Servicing Agreements (if any), certified as true, correct and complete copies of the originals, together with the Servicer Redirection Notices, fully executed by the Seller and any applicable Servicer;

(g) The Purchaser shall have received payment from the Seller of the fees payable under the Fee Letter and the amount of actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to the Purchaser as contemplated by Section 2.12 and Section 13.8 of this Agreement, incurred by the Purchaser in connection with the development, preparation and execution of this Agreement, the other Repurchase Documents and any other documents prepared in connection herewith or therewith;

(h) The Purchaser shall have completed to its satisfaction such due diligence as it may require in its discretion and obtained internal credit approval of the Facility;

(i) The Purchaser shall have received UCC searches with respect to the Seller and the Pledgor, which search results shall be satisfactory to the Purchaser in its discretion;

(j) The Purchaser shall have received all such other and further documents, certifications, reports, approvals and legal opinions as the Purchaser may reasonably require and which are customary for a transaction of this type;

(k) no Applicable Law shall prohibit or render it unlawful, and no order, judgment or decree of Governmental Authority shall prohibit, enjoin or render it unlawful, to enter into the Facility or any Transaction;

(l) the Seller, the Guarantor and the Pledgor shall each be in compliance in all material respects with all Applicable Laws (including Anti-Terrorism Laws), Contractual Obligations and all Indebtedness, each shall have obtained all required consents, approvals and/or waivers of all necessary Persons, if any, including all requisite Governmental Authorities, if any, to the execution, delivery and performance of this Agreement and the other Repurchase Documents to which each is a party and the consummation of the transactions contemplated hereby or thereby;

(m) any and all consents, approvals and waivers applicable to the Purchased Items shall have been obtained;

(n) the Purchaser is in receipt of pro-forma Financial Covenant calculations; and

(o) no Material Adverse Effect has occurred.

Section 3.2 Conditions Precedent to all Transactions .

The Purchaser’s agreement to enter into each Transaction (including the initial Transaction) is subject to the satisfaction of the following further conditions precedent, both immediately prior to entering into such Transaction and also after giving effect to the consummation thereof and the intended use of the proceeds of the sale:

(a) no Applicable Law shall prohibit or render it unlawful, and no order, judgment or decree of Governmental Authority shall prohibit, enjoin or render it unlawful, to enter into such Transaction by the Purchaser in accordance with the provisions of this Agreement or any other transaction contemplated herein;

(b) the Seller, the Guarantor, each Servicer and each PSA Servicer shall have delivered to the Purchaser all reports and other information required to be delivered as of the date of such Transaction;

(c) the Purchaser shall have received a written Transaction Request, the related Underwriting Package and the related Seller Asset Schedule;

(d) the Seller shall have delivered a Confirmation, via Electronic Transmission, in accordance with the procedures set forth in Section 2.2 of this Agreement, the Mortgage Asset shall be an Eligible Asset (unless waived by the Purchaser in its discretion) and the Purchaser shall have approved in writing the purchase of the Eligible Asset to be included in such Transaction in its discretion and shall have obtained all necessary internal credit and other approvals for such Transaction;

(e) no Default or Event of Default shall have occurred and be continuing, no Margin Deficits are outstanding (unless the Transaction shall eliminate the Margin Deficit), and no Material Adverse Effect has occurred;

(f) the Purchaser shall have received a Compliance Certificate in the form of Exhibit VIII attached hereto (“ Compliance Certificate ”) from a Responsible Officer of the Seller and the Guarantor that, among other things: (A) shows in detail the calculations demonstrating that, after giving effect to the requested Transaction, the aggregate Purchase Price of the Transactions outstanding shall not exceed the Maximum Amount, (B) the Seller, the Guarantor and the Pledgor have in all material respects observed or performed all of their covenants and other agreements, and satisfied in all material respects every condition, contained in this Agreement, the Repurchase Documents and the related documents to be observed, performed or satisfied by them, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate, (C) states that all representations and warranties contained in the Repurchase Documents are true and correct in all material respects on and as of such day as though made on and as of such day and shall be deemed to be made on such day, (D) shows that the Seller and NorthStar are in compliance with the Financial Covenants and, on a quarterly basis as provided in Subsection 5.1(q)(i)(B) of this Agreement, showing in detail the calculations supporting the certification of the Seller’s and NorthStar’s compliance with the Financial Covenants, (E) and discloses the status of each Interest Rate Protection Agreement described under clause (ii) of the definition thereof;

(g) subject to the Purchaser’s right to perform one or more due diligence reviews pursuant to Section 13.20 of this Agreement, the Purchaser shall have completed, in accordance with Section 2.2 of this Agreement, its due diligence review of the Mortgage Asset, the Mortgage Asset File and the Underwriting Package for each proposed Mortgage Asset and such other documents, records, agreements, instruments, mortgaged properties or information relating to such Mortgage Asset as the Purchaser in its discretion deems appropriate to review, and such reviews shall be satisfactory to the Purchaser in its discretion;

(h) with respect to any Eligible Asset to be purchased hereunder on the related Purchase Date that is not serviced by the Seller, the Seller shall have provided to the Purchaser copies of the related Servicing Agreements and the Pooling and Servicing Agreements, certified as true, correct and complete copies of the originals, together with Servicer Redirection Notices fully executed by the Seller and the Servicer;

(i) the Purchaser shall have received all reasonable fees and expenses of the Purchaser and counsel to the Purchaser as contemplated by Section 2.12 and Section 13.8 of this Agreement and the Fee Letter and the Purchaser shall have received the reasonable costs and expenses incurred by them in connection with the entering into of any Transaction hereunder, including, without limitation, costs associated with due diligence recording or other administrative expenses necessary or incidental to the execution of any Transaction hereunder, which amounts, at the Purchaser’s option, may be withheld from the sale proceeds of any Transaction hereunder;

(j) for each Non-Table Funded Purchased Asset, the Purchaser shall have received from the Custodian on each Purchase Date a Trust Receipt (along with a completed Mortgage Asset File Checklist attached thereto) and an Asset Schedule and Exception Report with respect to each Eligible Asset, each dated the Purchase Date, duly completed and, in the case of the Asset Schedule and Exception Report, with exceptions acceptable to the Purchaser in its discretion in respect of Eligible Assets to be purchased hereunder on such Business Day. In the case of a Table Funded Purchased Asset, the Purchaser shall have received on the related Purchase Date the Table Funded Trust Receipt and all other items described in the second (2nd) sentence of Subsection 2.2(e) , each in form and substance satisfactory to the Purchaser in its discretion, provided that the Purchaser subsequently receives the items described in Subsection 2.2(d) and (e) and the other delivery requirements under the Custodial Agreement on or before the date and time specified herein and therein, which items shall be in form and substance satisfactory to the Purchaser in its discretion;

(k) the Purchaser shall have received from the Seller a Warehouse Lender’s Release Letter, if applicable, or a Seller’s Release Letter covering each Eligible Asset to be sold to the Purchaser;

(l) prior to the purchase of any Eligible Asset acquired (by purchase or otherwise) by the Seller from any Affiliate of Seller, the Purchaser shall have received certified copies of the applicable Purchase Agreements (if any) and, if requested by the Purchaser in its reasonable discretion, a True Sale Opinion;

(m) on and as of such day, the Seller, the Guarantor, the Pledgor and the Custodian shall have performed all of the covenants and agreements contained in the Repurchase Documents to be performed by such Person at or prior to such day;

(n) the Repurchase Date for such Transaction is not later than the earlier of (i) Facility Maturity Date and (ii) 364 calendar days from the Purchase Date (subject to the Refinance Option);

(o) the Purchaser shall have received evidence satisfactory to the Purchaser that the Seller has delivered an irrevocable instruction to each Servicer, PSA Servicer or other applicable Person to pay Income with respect to the Purchased Items directly to the Collection Account, as provided herein, which instructions may not be modified without the prior written consent of the Purchaser, and the Seller shall have delivered all notices and instructions and obtained all certifications, acknowledgments, agreements and registrations required to perfect any CMBS Security;

(p) both immediately prior to the requested Transaction and also after giving effect thereto and to the intended use thereof, all representations and warranties made by each of the Seller, the Guarantor and the Pledgor shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date;

(q) the Purchaser shall be in receipt of the evidence of insurance (if any) required by Section 9.1 of the Custodial Agreement;

(r) none of the following shall have occurred and/or be continuing:

(i) an event or events shall have occurred in the good faith determination of the Purchaser resulting in the effective absence of a “repo market” or related “lending market” for purchasing (subject to repurchase) or financing debt obligations secured by commercial mortgage loans or securities, or an event or events shall have occurred resulting in the Purchaser not being able to finance Mortgage Assets through the “repo market” or “lending market” with traditional counterparties at rates that would have been reasonable prior to the occurrence of such event or events;

(ii) an event or events shall have occurred resulting in the effective absence of a “securities market” for securities backed by Mortgage Assets or commercial or multifamily real property, or an event or events shall have occurred resulting in the Purchaser not being able to sell securities backed by Mortgage Assets or commercial or multifamily real property at prices that would have been reasonable prior to such event or events; or

(iii) there shall have occurred a material adverse change in the financial condition of the Purchaser that affects (or can reasonably be expected to affect) materially and adversely the ability of the Purchaser to fund its obligations under this Agreement;

(s) after giving effect to the requested Transaction, the aggregate outstanding Purchase Price of the Transactions outstanding shall not exceed the Asset Value of all the Purchased Assets subject to outstanding Transactions or the Maximum Amount;

(t) the Purchaser shall have received all such other and further documents, reports, certifications, approvals and legal opinions as the Purchaser in its discretion shall reasonably require; and

(u) for each Preferred Equity Interest, the applicable Seller has executed and delivered all instruments and documents and has taken all further action reasonably necessary and desirable or that the Purchaser has reasonably requested in order to (i) perfect and protect the Purchaser’s security interest in such Preferred Equity Interest (including, without limitation, execution and delivery of one or more control agreements reasonably acceptable to the Purchaser, and any and all other actions reasonably necessary to satisfy the Purchaser that the Purchaser has obtained a first priority perfected security interest in such Preferred Equity Interest); (ii) enable the Purchaser to exercise and enforce its rights and remedies hereunder in respect of such Preferred Equity Interest; and (iii) otherwise effect the purposes of this Agreement, including, without limitation and if requested by the Purchaser, having delivered to the Purchaser irrevocable proxies in respect of such Preferred Equity Interest.

(v) to the extent the Mortgage Loan Documents for the related Eligible Asset contain notice, cure and other provisions in favor of a pledgee of the Eligible Asset under a repurchase or warehouse facility, and without prejudice to the sale treatment of the Eligible Asset to the Purchaser, the Seller shall provide evidence to the Purchaser that the Seller has given notice to the applicable Persons of the Purchaser’s interest in such Eligible Asset and otherwise satisfied any other applicable requirements under such pledgee provisions so that the Purchaser is entitled to receive the benefits and exercise the rights of a pledgee under the terms of such pledgee provisions contained in the related Mortgage Loan Documents;

The failure of the Seller or the Guarantor, as applicable, to satisfy any of the foregoing conditions precedent in respect of any Transaction shall, unless such failure was expressly waived in writing by the Purchaser on or prior to the related Purchase Date, give rise to a right of the Purchaser, which right may be exercised at any time on the demand of the Purchaser, to rescind the related Transaction and direct the Seller to pay to the Purchaser for the benefit of the Purchaser an amount equal to the Purchase Price, the Price Differential, Breakage Costs and other amounts due in connection therewith during any such time that any of the foregoing conditions precedent were not satisfied.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.1 Representations and Warranties .

(a) Organization and Good Standing . Each of the Seller and the Guarantor has been duly organized, and is validly existing as a limited liability company, with respect to each Seller, and as a corporation or limited partnership, as applicable, with respect to the Guarantor, in good standing, under the laws of the state of its organization or formation, with all requisite power and authority to own or lease its Properties and conduct its business as such business is presently conducted, and had, at all relevant times, and now has, all necessary power, authority and legal right to acquire, own, sell and pledge the Purchased Items.

(b) Due Qualification . Each of the Seller and the Guarantor is duly qualified to do business and is in good standing as a limited liability company, corporation or partnership, as applicable, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of its Property or the conduct of its business requires such qualification, licenses or approvals.

(c) Power and Authority; Due Authorization; Execution and Delivery . Each of the Seller and the Guarantor (i) has all necessary power, authority and legal right (A) to execute and deliver the Repurchase Documents to which it is a party, (B) to carry out and perform the terms of the Repurchase Documents to which it is a party, and (C) to sell, assign and pledge the Purchased Items on the terms and conditions provided herein but subject to the terms of the Mortgage Loan Documents, and (ii) has duly authorized by all necessary corporate or limited liability company action, as applicable, (A) the execution, delivery and performance of the Repurchase Documents to which it is a party, and (B) the sale, assignment and pledge of the Purchased Items on the terms and conditions herein provided. The Repurchase Documents to which the Seller or the Guarantor is a party have been duly executed and delivered by the Seller and the Guarantor.

(d) Binding Obligation . Each of the Repurchase Documents to which each of the Seller and the Guarantor is a party constitutes a legal, valid and binding obligation of the Seller and the Guarantor, enforceable against the Seller and the Guarantor in accordance with its respective terms, except as such enforceability may be limited by Insolvency Laws and by general principles of equity (whether considered in a suit at law or in equity).

(e) No Violation or Defaults . The consummation of the transactions contemplated by the Repurchase Documents to which each of the Seller and the Guarantor is a party and the fulfillment of the terms of the Repurchase Documents will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, the Seller’s or the Guarantor’s, as applicable, Authority Documents or any material Indebtedness, Guarantee Obligation or Contractual Obligation of the Seller or the Guarantor, as applicable, (ii) result in the creation or imposition of any Lien (other than Permitted Liens) upon any of the Seller’s or the Guarantor’s Properties pursuant to the terms of any such Indebtedness, Contractual Obligation or Guarantee Obligation other than this Agreement, or (iii) violate any Applicable Law.

(f) No Proceedings . There is no litigation, proceeding or investigation pending or, to the best knowledge of the Seller or the Guarantor, threatened in writing against the Seller or the Guarantor, before any Governmental Authority (i) asserting the invalidity of the Repurchase Documents, (ii) seeking to prevent the consummation of any of the transactions contemplated by the Repurchase Documents to which the Seller or the Guarantor is a party, or (iii) seeking any determination or ruling that could reasonably be expected to have Material Adverse Effect.

(g) All Consents Required . All approvals, authorizations, consents, orders or other actions of any Person or of any Governmental Authority (if any) required for the due execution, delivery and performance by the Seller and the Guarantor of the Repurchase Documents to which each is a party (including the transfer of and the grant of a security interest in the Purchased Items) have been obtained, effected, waived or given and are in full force and effect.

(h) Bulk Sales . The execution, delivery and performance of this Agreement and the other Repurchase Documents and the transactions contemplated hereby and thereby do not require compliance with any “bulk sales” act or similar law by the Seller or the Guarantor.

(i) Solvency . None of this Agreement, any other Repurchase Document or any Transaction hereunder is entered into in contemplation of insolvency or with intent to hinder, delay or defraud any of the Seller’s or the Guarantor’s creditors. The transfer of the Purchased Items subject hereto, the obligation to repurchase such Purchased Items and the entering into of the Repurchase Documents (including the Guaranty) are not undertaken with the intent to hinder, delay or defraud any of the Seller’s or the Guarantor’s creditors. As of each Purchase Date, the Seller and the Guarantor are and will be Solvent, and the transfer and sale of the Purchased Items pursuant hereto, the obligation to repurchase such Purchased Items and the entering into of the Repurchase Documents (including the Guaranty) will not render any such party not Solvent. No petition in bankruptcy has been filed against either Seller or the Guarantor in the last ten (10) years, and neither the Seller nor the Guarantor has in the last ten (10) years made an assignment for the benefit of creditors or taken advantage of any debtor relief laws.

(j) Tax Liens . Each of the Seller and the Guarantor have timely filed returns for and, subject to the next sentence, paid all applicable federal, state, and local Taxes. The Seller and the Guarantor represents and warrants that there are no delinquent federal, state, city, county or other Taxes relating to such Person, the Purchased Items or any arrangement pursuant to which the Purchased Items are issued, except those relating to the Seller or Guarantor that are being contested by such Person, in good faith and with respect to which payment has been stayed by a court of competent jurisdiction.

(k) Exchange Act Compliance; Regulations T, U and X . None of the Transactions contemplated herein (including, without limitation, the use of the proceeds from the sale of the Purchased Items) will violate or result in a violation of Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including, without limitation, Regulations T, U and X. Neither the Seller nor the Guarantor owns or intends to carry or purchase, and no proceeds from the Transactions will be used to carry or purchase, any “margin stock” within the meaning of Regulation U or to extend “purpose credit” within the meaning of Regulation U.

(l) Environmental Matters . With respect to Properties of the Seller or the Guarantor other than Purchased Assets:

(i) No Properties owned or leased by the Seller or the Guarantor and, to the knowledge of the Seller and the Guarantor, no Properties formerly owned or leased by the Seller or the Guarantor, or any Subsidiaries thereof, contain, or have previously contained, any Materials of Environmental Concern in amounts or concentrations that constitute or constituted a violation of, or reasonably could be expected to give rise to liability under, Environmental Laws;

(ii) Each of the Seller and the Guarantor is in compliance, and has in the last five (5) years (or such shorter period as the Seller and/or the Guarantor shall have been in existence) been in compliance, with all applicable Environmental Laws, and, to the knowledge of the Seller and the Guarantor, there is no violation of any Environmental Laws that reasonably could be expected to interfere with the continued operations of the Seller or the Guarantor;

(iii) Neither the Seller nor the Guarantor has received any notice of violation, alleged violation, non-compliance, liability or potential liability under any Environmental Law, nor does the Seller or the Guarantor have knowledge that any such notice will be received or is being threatened;

(iv) Materials of Environmental Concern have not been transported or disposed of by the Seller or the Guarantor (including any employee or agent of either the Seller or the Guarantor) in violation of, or in a manner or to a location that reasonably could be expected to give rise to liability under, any applicable Environmental Law, nor has any of them generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that reasonably could be expected to give rise to liability under, any applicable Environmental Law;

(v) No judicial proceedings or governmental or administrative action is pending, or, to the knowledge of the Seller or the Guarantor, threatened, under any Environmental Law to which the Seller or the Guarantor is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements arising out of judicial proceedings or governmental or administrative actions, outstanding under any Environmental Law to which the Seller or the Guarantor is a party;

(vi) There has been no release or, to the best knowledge of the Seller and the Guarantor, threat of release of Materials of Environmental Concern in violation of or in amounts or in a manner that reasonably could be expected to give rise to liability under any Environmental Law for which the Seller or the Guarantor may become liable; and

(vii) To the best knowledge of the Seller and the Guarantor, each of the representations and warranties set forth in the preceding clauses (i) through (vi) is true and correct with respect to each parcel of real property owned or operated by the Seller or the Guarantor.

(m) Security Interest .

(i) This Agreement and the other Repurchase Documents constitute a valid transfer to the Purchaser of all right, title and interest of the Seller in, to and under all Purchased Items, free and clear of any Lien of any Person claiming through or under the Seller, the Guarantor, the Pledgor or any of their Affiliates, except for Permitted Liens and the Seller’s repurchase rights described herein, and is enforceable against creditors of and purchasers from the Seller. If the conveyances contemplated by this Agreement are determined to be transfers for security, then this Agreement constitutes a grant of a security interest in all Purchased Items to the Purchaser, that, upon the delivery of the Confirmations, the Assignments and Mortgage Asset Files to the Custodian and the filing of the financing statements described in Subsection 3.1(c) , shall be a first priority perfected security interest in all Purchased Items to the extent such Purchased Items can be perfected by possession, by filing or control, subject only to Permitted Liens. Neither the Seller nor any Person claiming through or under the Seller shall have any claim to or interest in the Collection Account or the Securities Account, except for the interest of the Seller in such property as a debtor for purposes of the UCC;

(ii) Other than the Lien and transfers contemplated hereunder, the Seller has not sold, assigned, pledged, encumbered or otherwise conveyed any of the Purchased Items to any Person, and, immediately prior to the sale to the Purchaser, the Seller was the sole owner of such Purchased Items, and the Seller owns and has good and marketable title to the Purchased Items free and clear of any Lien (other than Permitted Liens);

(iii) The Seller has received all consents and approvals, if any, required by the terms of any Purchased Items to the sale and granting of a security interest in the Purchased Items hereunder to the Purchaser;

(iv) Upon execution and delivery of the Account Agreement and the Securities Account Agreement, the Purchaser shall either be the owner of, or have a valid and fully perfected first priority security interest in, the Collection Account and the Securities Account and the securities , deposits, investment property and other Purchased Items contained therein;

(v) The Seller has not authorized the filing of and is not aware of any financing statements against the Seller as debtor that include a description of collateral covering the Purchased Items other than any financing statement (A) that has been terminated, or (B) granted pursuant to this Agreement. The Seller is not aware of the filing of any judgment or tax Lien filings against the Seller;

(vi) None of the Mortgage Loan Documents has any marks or notations indicating that it has been pledged, assigned or otherwise conveyed to any Person other than the Purchaser.

(n) Tradenames . The exact legal name of each of the Seller is set forth on the signature pages to this Agreement. The Seller has no trade names, fictitious names, assumed names or “doing business as” names or other names under which it has done or is doing business.

(o) Value Given . The Seller shall have given reasonably equivalent value to each Transferor in consideration for the transfer to the Seller of the Purchased Items under the applicable Purchase Agreement, no such transfer shall have been made for or on account of an antecedent debt owed by the Transferor thereunder to the Seller, and no such transfer is or may be voidable or subject to avoidance under any section of the Bankruptcy Code.

(p) Certain Tax Matters . Each of the Seller and the Guarantor represents, warrants, acknowledges and agrees, that it does not intend to treat any Transaction or any related transactions hereunder as being a “reportable transaction” (within the meaning of United States Treasury Department Regulation Section 1.6011-4). In the event that the Seller or the Guarantor determines to take any action inconsistent with such intention, it will promptly notify the Purchaser. If the Seller or the Guarantor so notifies the Purchaser, the Seller or Guarantor, as applicable, acknowledges and agrees that the Purchaser may treat each Transaction as part of a transaction that is subject to United States Treasury Department Regulation Section 301.6112-1, and the Purchaser will maintain the lists and other records required by such Treasury Regulation.

(q) Compliance with Anti-Terrorism Laws . Neither the Seller, the Guarantor nor the Pledgor (i) is or will be in violation of any Anti-Terrorism Law, (ii) is or will be a Prohibited Person, (iii) conducts any business or engages in any transaction or dealing with any Prohibited Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Prohibited Person, (iv) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224, (v) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, (vi) has more than 10% of its assets in a Prohibited Person or derives more than 10% of its operating income from direct or indirect investments in, or transactions with, any Prohibited Person, and (vii) engages in or will engage in any of the foregoing activities in the future. To the extent applicable, each of the Seller, the Guarantor and the Pledgor has established an adequate anti-money laundering compliance program as required by the Anti-Terrorism Laws, has conducted the requisite due diligence in connection with the origination or acquisition of each Mortgage Asset and each Purchased Asset for purposes of the Anti-Terrorism Laws, including with respect to the legitimacy of the applicable Borrower and the origin of the assets used by the said Borrower to purchase the property in question, and maintains, and will maintain, sufficient information to identify the applicable Borrower for purposes of the Anti-Terrorism Laws. No Mortgage Asset or Purchased Asset is subject to nullification pursuant to any Anti-Terrorism Law, no Mortgage Asset is in violation of any Anti-Terrorism Law, and no Borrower is in violation of or adversely affected by the provisions of any Anti-Terrorism Law nor listed as a Prohibited Person. The proceeds of any Purchase Price have not been used and shall not be used to fund any operations in, finance any investments or activities in or make any payments to a Prohibited Person.

(r) Compliance with FCPA . Each of the Seller, the Guarantor and the Pledgor are in compliance with the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq. , and any foreign counterpart thereto. Neither the Seller, the Guarantor nor the Pledgor has made a payment, offering or promise to pay, or authorized the payment of, money or anything of value (a) in order to assist in obtaining or retaining business for or with, or directing business to, any foreign official, foreign political party, party official or candidate for foreign political office, (b) to a foreign official, foreign political party or party official or any candidate for foreign political office, and (c) with the intent to induce the recipient to misuse his or her official position to direct business wrongfully to such Seller, the Guarantor, the Pledgor or to any other Person, in violation of the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.

(s) Investment Company Act . Neither of the Seller nor the Guarantor is required to register as or is controlled by an entity required to register as an “investment company” within the meaning of the 40 Act.

(t) ERISA Compliance . (A) Neither the Seller nor Guarantor has established nor maintained any Plan; and (B) each of Seller and Guarantor either (1) qualifies as an Operating Company; (2) complies with an exception set forth in the Plan Asset Regulations such that the assets of such Person would not be subject to Title I of ERISA or Section 4975 of the Internal Revenue Code; or (3) does not hold any Plan Assets that are subject to ERISA.

(u) Compliance . Each of the Seller and the Guarantor has complied in all material respects (i) with all Applicable Laws to which it may be subject, and no Purchased Item contravenes any Applicable Laws (including, without limitation, laws, rules and regulations relating to licensing, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and (ii) all Contractual Obligations, Indebtedness and Guarantee Obligations.

(v) Income . The Seller acknowledges that all Income received by it or its Affiliates and the Servicers and PSA Servicers with respect to the Purchased Items sold hereunder are held in trust and shall be held in trust for the benefit of the Purchaser until deposited into the Collection Account as required herein.

(w) Set-Off, etc . No Purchased Item has been compromised, adjusted, extended, satisfied, subordinated, rescinded, set-off or modified by the Seller, the Guarantor or any Affiliate of the foregoing, and no Purchased Item is subject to compromise, adjustment, extension (except as set forth in the related Mortgage Asset File), satisfaction, subordination, rescission, set-off, counterclaim, defense, abatement, suspension, deferment, deduction, reduction, termination or modification, whether arising out of transactions concerning the Purchased Item or otherwise, by the Seller, the Guarantor or any Affiliate of the foregoing, except for amendments to such Purchased Items otherwise permitted under Subsection 6.5(c) of this Agreement.

(x) Full Payment . The Seller or the Guarantor has knowledge of any fact that should lead it to expect that any Purchased Asset will not be paid in full.

(y) Ongoing Representations . On the Purchase Date for each Transaction and on each day that a Purchased Asset remains subject to this Agreement, the Seller shall be deemed to restate and make each of the representations and warranties made by it in this Section 4.1 of this Agreement.

(z) Eligibility of Purchased Assets . With respect to each Purchased Asset, to the Seller’s actual knowledge, except as disclosed to the Purchaser, the Seller is not aware of any material exception to or non-compliance with the eligibility criteria set forth on Schedule 1 to this Agreement applicable to such Purchased Asset.

(aa) Acting as Principal . The Seller will engage in such Transactions as principal, or, if agreed in writing in advance of any Transaction by the Purchaser, as agent for a disclosed principal.

(bb) No Broker . Neither the Seller, the Guarantor nor any Affiliate of the foregoing has dealt with any broker, investment banker, agent or other Person, except for the Purchaser (or an Affiliate of the Purchaser), who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to this Agreement.

(cc) Ability to Perform . Neither the Seller nor the Guarantor believes, nor do they have any reason or cause to believe, that it cannot perform each and every agreement and covenant contained in the Repurchase Documents applicable to it and to which it is a party.

(dd) No Event of Default . No Default or Event of Default has occurred and is continuing hereunder.

(ee) Financial Condition .

(i) The audited consolidated balance sheet of NorthStar and its Consolidated Subsidiaries as of the fiscal year ending December 31, 2006 provided to the Purchaser and the related audited consolidated statements of income and retained earnings and of cash flows for the year then ended, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification arising out of the scope of the audit conducted by Grant Thornton, copies of which have heretofore been furnished to the Purchaser, are complete and correct and present fairly in all material respects the consolidated financial condition of NorthStar and its Consolidated Subsidiaries of the foregoing as of such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended. All such financial statements, including the related schedules and notes thereto (if any), have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as disclosed therein). Neither NorthStar nor any of its Consolidated Subsidiaries had, as of the date of the most recent balance sheet referred to above, any material contingent liability or liability for taxes, or any long term lease or unusual forward or long term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction or other financial derivative, that is not reflected in the foregoing statements or in the notes thereto. Except as otherwise disclosed publicly, during the period from December 31, 2006 to and including the date hereof, there has been no sale, transfer or other disposition by the Seller, the Guarantor or any Consolidated Subsidiaries of the foregoing of any material part of their business or Property and no purchase or other acquisition of any business or Property (including any Equity Interest of any other Person) material in relation to the consolidated financial condition of the Seller, the Guarantor or any Consolidated Subsidiaries of the foregoing on the date hereof.

(ff) Servicing Agreements . The Seller has delivered to the Purchaser all Servicing Agreements and all Pooling and Servicing Agreements with respect to the Purchased Assets, and, to the best of the Seller’s knowledge, no material default or event of default exists thereunder.

(gg) True and Complete Disclosure . Each of the Seller and the Guarantor represents and warrants that the information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Seller or the Guarantor to the Purchaser in connection with the negotiation, preparation or delivery of this Agreement and the other Repurchase Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole, do not contain any untrue statement of material fact or knowingly omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. There is no fact known to the Seller or the Guarantor, after due inquiry, that would reasonably be expected to have a Material Adverse Effect that has not been disclosed herein or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Purchaser for use in connection with the transactions contemplated hereby or thereby. All written information furnished after the date hereof by or on behalf of the Seller or the Guarantor to the Purchaser in connection with this Agreement or the other Repurchase Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in all material respects, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified.

(hh) No Reliance . Each of the Seller and the Guarantor has made its own independent decisions to enter into the Repurchase Documents and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including, without limitation, legal counsel and accountants) as it has deemed necessary. Each of the Seller and the Guarantor is not relying upon any advice from the Purchaser as to any aspect of the Transactions, including, without limitation, the legal, accounting or tax treatment of such Transactions.

(ii) Seller’s Indebtedness . The Seller has no Indebtedness or Contractual Obligations other than (i) ordinary trade payables, (ii) in connection with Mortgage Assets originated or acquired for this Facility, (iii) the Repurchase Documents and (iv) the VFCC Repurchase Facility. The Seller has no Guarantee Obligations.

(jj) Insurance . Each of the Seller and the Guarantor has and maintains, with respect to its Properties and business, insurance which meets the requirements of Subsection 5.1(y) of this Agreement. In addition, the Seller shall maintain the insurance required by Section 5.7 of the Custodial Agreement.

(kk) Purchased Assets . (i) There are no outstanding rights, options, warrants or agreements for the purchase, sale or issuance of the Purchased Assets created by, through, or as a result of the Seller’s or the Guarantor’s actions or inactions; (ii) there are no agreements on the part of the Seller or the Guarantor to issue, sell or distribute the Purchased Assets, other than this Agreement, and (iii) other than this Agreement, the Seller has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any securities or any interest therein or to pay any dividend or make any distribution in respect of the Purchased Assets.

(ll) Subsidiaries . The Seller is a Subsidiary of the Guarantor. The Seller does not have any Subsidiaries.

(mm) Separateness . As of the date hereof, the Seller (i) owns no assets, and does not engage in any business, other than the assets and transactions intended to be transferred to the Purchaser under this Agreement; (ii) has not incurred any indebtedness or obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (A) with respect to Retained Interests, (B) commitments to make loans which may become Eligible Assets, and (C) as permitted herein; (iii) has not made any loans or advances to any Affiliate other than loans to the Guarantor that have been disclosed in writing to and approved in writing by the Purchaser, and has not acquired obligations or securities of its Affiliates; (iv) has paid its debts and liabilities (including, as applicable, shared personnel and overhead expenses) only from its own assets; (v) complies with the provisions of its organizational documents; (vi) does all things necessary to observe organizational formalities and to preserve its existence, and has not amended, modified or otherwise changed its Authority Documents other than as the same have been heretofore amended, or suffered same to be amended, modified or otherwise changed other than as the same have been heretofore amended; (vii) maintains all of its books, records, financial statements and bank accounts separate from those of its Affiliates (except that such financial statements may be consolidated to the extent consolidation is required under GAAP consistently applied or as a matter of Applicable Law); (viii) is, and at all times holds itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate), corrects any known misunderstanding regarding its status as a separate entity, conducts business in its own name, and does not identify itself or any of its Affiliates as a division or part of the other; (ix) maintains adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; (x) does not engage in or suffer any direct change of ownership, dissolution, winding up, liquidation, consolidation or merger in whole or in part; (xi) does not commingle its funds or other assets with those of any Affiliate or any other Person; (xii) maintains its accounts separately from those of any Affiliate or any other Person; (xiii) does not hold itself out to be responsible for the debts or obligations of any other Person; (xiv) has not (A) filed or consented to the filing of any Insolvency Proceeding with respect to the Seller, instituted any proceedings under any applicable Insolvency Law or otherwise sought any relief under any laws relating to the relief from debts or the protection of debtors generally with respect to the Seller, (B) sought or consented to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for the Seller or a substantial portion of its properties or (C) made any assignment for the benefit of the Seller’s creditors; (xv) has at least one (1) Independent Director or such greater number as required by the Purchaser or any Rating Agency; (xvi) maintains an arm’s length relationship with its Affiliates; (xvii) uses separate stationary, invoices and checks; and (xviii) allocates fairly and reasonably any overhead for shared office space.

(nn) No Defenses . To the actual knowledge of the Seller and the Guarantor, there are no defenses, offsets, counterclaims, abatements, rights of rescission or other claims, legal or equitable, available to the Seller or the Guarantor or any other Person with respect to this Agreement, the Engagement Letter, the Repurchase Documents, any other instrument, document and/or agreement described herein or therein (including, without limitation, the validity or enforceability of any of the foregoing) or with respect to the obligation of the Seller and the Guarantor to repay the Aggregate Unpaids and other amounts due hereunder.

(oo) REIT Status . Subject to Subsection 5.1(kk) to the Agreement, NorthStar qualifies as a REIT.

(pp) Financial Statements . Each of the Seller and the Guarantor represents and warrants that, since the date of the financial statements heretofore most recently delivered by such Person (which such Person represents and warrants to be the most recent financial statement), there has been no development or event (or prospective development or event), that would constitute a Material Adverse Effect.

(qq) Interest Rate Protection Agreements . Each of the Seller and the Guarantor represents and warrants that no “default” has occurred or is continuing under any Interest Rate Protection Agreement.

(rr) Assignments . The Assignments do not violate any provisions of the underlying Mortgage Loan Documents , such documents do not contain any express or implied prohibitions on sales or assignments of the Purchased Assets to national banks, and such agreements are valid, binding and enforceable against the Seller.

ARTICLE V

COVENANTS

Section 5.1 Covenants .

(a) Compliance with Laws and Contractual Obligations . The Seller and the Guarantor shall comply in all material respects with all Applicable Laws (including Environmental Laws), including those with respect to the Purchased Assets or any part thereof, and shall comply, and perform all duties and obligations under, all Contractual Obligations, Indebtedness and Guarantee Obligations (including, without limitation, its duties and obligations under the Mortgage Loan Documents). No part of the proceeds of any Transaction shall be used for any purpose which violates, or would be inconsistent with, the provisions of Regulation T, U or X.

(b) Corporate Existence . The Seller and the Guarantor shall continue to engage in business of the same general type as now conducted by it and shall preserve and maintain its company existence, rights, franchises and privileges in the jurisdiction of its formation and will qualify and remain qualified in good standing as a corporation or other entity in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification has had, or could reasonably be expected to have, a Material Adverse Effect.

(c) Performance and Compliance with Purchased Assets. The Seller will, at its expense, timely and fully perform and comply (or as applicable cause the Transferors, Servicers and PSA Servicers to perform and comply) with all provisions, covenants, duties, agreements, obligations and other promises required to be observed under the Purchased Items, all other agreements related to such Purchased Items, including the Mortgage Loan Documents, and the Retained Interests.

(d) Keeping of Records and Books of Account . Subject to the Seller’s document retention policy, the Seller will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing the Purchased Items in the event of the destruction of the originals thereof) and will keep and maintain all documents, books, records and other information reasonably necessary or advisable in which complete entries are made in accordance with GAAP and Applicable Laws.

(e) Delivery of Income . The Seller will deposit and cause all Servicers and other applicable Persons to deposit all Income received in respect of the Purchased Items into the Collection Account within two (2) Business Days of receipt thereof. The Seller shall instruct all PSA Servicers and other applicable Persons under the Pooling and Servicing Agreements to deposit into the Collection Account within two (2) Business Days of the date the PSA Servicer is obligated to disburse the same under the Pooling and Servicing Agreements all Income in respect of the Purchased Items and the Seller shall take reasonable steps necessary to enforce such instructions. The Seller will instruct the Swap Counterparty under the Swap Documents and all other counterparties under other Interest Rate Protection Agreements to deposit any payments due to the Seller from time to time under the Swap Documents and the other Interest Rate Protection Agreements into the Collection Account within two (2) Business Days of the date such Person is obligated to disburse same and the Seller shall take reasonable steps to enforce such instructions. Furthermore, the Seller shall remit or cause to be remitted to the Purchaser via Electronic Transmission sufficient detail to enable the Purchaser to appropriately identify the Purchased Asset to which any full or partial principal payment or prepayment applies.

(f) Notices . The Seller and the Guarantor will furnish written notice to the Purchaser and the Swap Counterparty with respect to the following:

(i) Representations . Promptly upon notice or knowledge thereof, notice of (A) any representation or warranty set forth in Section 4.1 of this Agreement was incorrect at the time it was given or deemed to have been given or (B) any eligibility criteria set forth in Schedule 1 to this Agreement is or was not satisfied in any material respect at any time;

(ii) Covenants . Promptly upon notice or knowledge thereof, notice of any material default with respect to any covenant, duty or agreement of the Seller, the Guarantor or the Pledgor under any Repurchase Document;

(iii) Material Events . Promptly upon becoming aware thereof, notice of any material change in the Asset Value of any Purchased Asset, any material change in the market value of any or all of the Seller’s or Guarantor’s assets or any other event or circumstance that, in the reasonable judgment of the Seller or the Guarantor, is likely to have a Material Adverse Effect;

(iv) Event of Default . The Seller and the Guarantor shall immediately notify the Purchaser upon the Seller or the Guarantor becoming aware of any event which would constitute a Default or an Event of Default;

(v) Casualty . With respect to any Purchased Asset hereunder, promptly upon notice or knowledge thereof that the Underlying Mortgaged Property has been damaged by waste, fire, earthquake or earth movement, flood, tornado or other casualty, or otherwise damaged so as to affect materially and adversely the Asset Value of such Purchased Asset;

(vi) Liens . Promptly upon notice or knowledge of any Lien or security interest on, or claim asserted against, any Purchased Asset or the Pledged Collateral other than Permitted Liens;

(vii) Defaults . Promptly upon notice or knowledge thereof, notice of (A) any material default (beyond any applicable notice and cure period) related to any Purchased Items or the Mortgage Loan Documents, or (B) any default (beyond any applicable notice and cure period) under any Contractual Obligation, Indebtedness or Guarantee Obligation of the Seller or the Guarantor, which, if not cured, could reasonably be expected to have a Material Adverse Effect;

(viii) Servicers . Promptly upon notice or knowledge thereof, notice of the resignation or termination of any Servicer under any Servicing Agreement with respect to any Purchased Items or any PSA Servicer under a Pooling and Servicing Agreement;

(ix) Losses . Promptly upon notice or knowledge thereof, notice of any loss or expected loss in respect of any Purchased Item, or any other event or change in circumstances or expected event or change in circumstances that could be reasonably be expected to result in a material decline in value or cash flow of any Purchased Item or any Underlying Mortgaged Property;

(x) [Reserved] ; and

(xi) Proceedings . As soon as possible and in any event within five (5) Business Days after the Seller or the Guarantor receives notice or obtains knowledge thereof, notice of any settlement of, material judgment (including a material judgment with respect to the liability phase of a bifurcated trial) in or commencement of any labor controversy (of a material nature), litigation, action, suit, arbitration or proceeding before any court or governmental department, commission, board, bureau, agency, arbitrator, investigation or instrumentality, domestic or foreign, affecting (A) the Purchased Items, (B) the Repurchase Documents, (C) the Purchaser’s interest in the Purchased Items, or (D) the Seller or the Guarantor and, with respect to this clause (D) only, the amount in controversy exceeds $250,000 with respect to the Seller and/or $1,000,000 with respect to the Guarantor.

(g) Purchased Items Not to be Evidenced by Instruments . Neither the Seller nor the Guarantor will take any action to cause any Purchased Item that is not, as of the applicable Purchase Date, evidenced by an Instrument to be so evidenced except in connection with the enforcement or collection of such Purchased Items.

(h) Limitations on Liens . Without prior written consent of the Purchaser, the Seller will not: (i) except in connection with the sale of any Purchased Asset in the ordinary course of business prior to an Event of Default, assign, sell, transfer, pledge, grant, create, incur, assume or suffer or permit to exist any security interest in or Lien on any of the Purchased Items to anyone except Purchaser, (ii) permit any financing statement (except any financing statements in favor of Purchaser) or assignment (except for any assignments in favor of Purchaser) to be on file in any public office with respect thereto, (iii) permit or suffer to exist any Lien or right of others to attach to any of the Purchased Items (or any portion thereof), except as contemplated by this Agreement, or (iv) consent to any amendment or supplement to the Mortgage Loan Documents pursuant to which the Purchased Assets were issued or created that would materially and adversely affect Purchaser’s interests hereunder or with respect to the Purchased Items without the prior written consent of Purchaser or (v) sell, pledge, transfer, assign, participate or grant a Lien on its interest under the Repurchase Documents or the Purchased Items.

(i) Lien Covenants . With respect to each Purchased Item acquired by the Purchaser, the Seller will (i) take all action reasonably requested by the Purchaser to perfect, protect and more fully evidence the Purchaser’s ownership of and first priority perfected security interest in such Purchased Item, including, without limitation, executing or causing to be executed such other instruments or notices as may be necessary or appropriate and (ii) taking all additional action that the Purchaser may reasonably request to perfect, protect and more fully evidence the respective interests of the parties to this Agreement and the Repurchase Documents in such Purchased Items. Immediately upon notice to the Seller of a Lien or any circumstance which, if adversely determined would be reasonably likely to give rise to a Lien (other than in favor of the Purchaser or created by or through the Purchaser), on any of the Purchased Items, the Seller shall notify the Purchaser and the Seller shall further defend the Purchased Items against, and will take such other action as is necessary to remove, any Lien or claim on or to the Purchased Items (other than any Lien created under this Agreement), and the Seller will defend the right, title and interest of the Purchaser in and to any of the Purchased Items against the claims and demands of all Persons whomsoever.

(j) Deposits . The Seller will not deposit or otherwise credit, or cause or permit to be so deposited or credited, to the Collection Account cash or cash proceeds other than Income in respect of Purchased Items. The Seller will not deposit or otherwise credit, or cause or permit to be so deposited or credited, to the Securities Account any item except uncertificated CMBS Securities that are Purchased Assets and all cash, property, proceeds, securities or investment property with respect to such Purchased Assets. The Seller shall perform all of its obligations under the Account Control Agreement and Securities Account Control Agreement.

(k) Change of Name or Location of Asset Files . The Seller shall not (i) change its name, organizational number, identity, structure or jurisdiction of formation, move the location of its principal place of business and chief executive office, or change the offices where it keeps the records (as defined in the UCC) from the location referred to in on the signature page to this Agreement, or (ii) move, or consent to the Custodian moving, the Mortgage Asset Files from the location thereof on the Closing Date, unless the Seller has given at least thirty (30) days’ prior written notice to the Purchaser and its counsel.

(l) Exceptions . The Seller shall promptly correct any and all Exceptions set forth on any Asset Schedule and Exception Report to the extent the same are able to be cured by the Seller in a commercially reasonable manner.

(m) ERISA Matters . Each of the Seller and the Guarantor will not without the prior approval of the Purchaser, establish or maintain any Plan, nor take any action that would (i) cause it to fail to qualify as an Operating Company or (ii) cause it to fail to otherwise meet an exception under the Plan Asset Regulations which would prevent the assets of such Person from being subject to Title I of ERISA or Section 4975 of the Code.

(n) Purchase Agreements; Servicing Agreements . The Seller or the Guarantor will not materially amend, modify, waive or terminate any provision of any Purchase Agreement, Servicing Agreement or Pooling and Servicing Agreement without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld.

(o) Compliance with Anti-Terrorism Laws . The Seller, the Guarantor and the Pledgor shall comply with all applicable Anti-Terrorism Laws. The Seller shall conduct the requisite due diligence in connection with the origination or acquisition of each Mortgage Asset for purposes of complying with the Anti-Terrorism Laws, including with respect to the legitimacy of the applicable Borrower, obligor or account debtor and the origin of the assets used by the said Borrower, obligor or account debtor to purchase the property in question, and will maintain sufficient information to identify the applicable Borrower, obligor or account debtor for purposes of the Anti-Terrorism Laws. Neither the Seller, the Guarantor nor the Pledgor shall engage in any conduct described in Subsections 4.1(q) and (r) . The Seller, the Guarantor and the Pledgor shall, upon the request of the Purchaser from time to time, provide certification and other evidence of the Seller’s, the Guarantor’s and the Pledgor’s compliance with this Subsection 5.1(o) .

(p) Financial Statements . The Seller and the Guarantor shall deliver to the Purchaser:

(i) as soon as available, and in any event within forty-five (45) calendar days after the end of the first three fiscal quarters of the Seller and the Guarantor , the unaudited consolidated balance sheets for the Seller and the Guarantor as at the end of such period and the related unaudited consolidated statements of income and retained earnings and of cash flows for the Seller and the Guarantor for such period and the portion of the fiscal year through the end of such period, accompanied by an Officer’s Certificate from the Seller and the Guarantor , which certificate shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of the Seller or the Guarantor, as applicable, in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);

(ii) as soon as available, and in any event within ninety (90) days after the end of each fiscal year of the Seller and the Guarantor, the audited (in the case of the Guarantor only) or the signed (in the case of the Seller only) consolidated balance sheets of the Seller and the Guarantor, as applicable, as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for the Seller and the Guarantor for such year, and, in the case of the Guarantor only, setting forth in each case in comparative form the figures for the previous year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall not be qualified as to scope of audit or going concern and shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Guarantor as at the end of, and for, such fiscal year in accordance with GAAP;

(iii) with respect to each Purchased Asset, if provided to the Seller, the Guarantor or any Servicer or PSA Servicer by any Borrower under any Purchased Asset, as soon as available, but in any event not later than forty-five (45) days after the end of each fiscal quarter of the Seller, the operating statement and rent roll for each Underlying Mortgaged Property; provided , however , the Purchaser reserves the right in its discretion to request such information on a monthly basis (to be provided no later than thirty (30) days after the end of each month) but the Seller’s failure to obtain such information shall not be a breach of this covenant provided the related Purchased Asset with respect to which information was not provided is included in the Facility for less than six (6) months;

(iv) with respect to each Purchased Asset, if provided to the Seller or the Guarantor by any Borrower under any Purchased Asset, as soon as available, but in any event not later than thirty (30) days after receipt thereof, the annual balance sheet with respect to such Borrower ;

(v) with respect to each Purchased Asset, as soon as available but in any event not later than thirty (30) days after receipt thereof, (A) the related monthly securitization report, if any, and any other reports delivered under the Pooling and Servicing Agreements to the Seller or the Guarantor, if any, and, (B) within forty-five (45) days after the end of each quarter, a copy of the standard monthly exception report (if any) , prepared by the Seller in the ordinary course of its business in respect of the related Purchased Asset or Underlying Mortgaged Property; and

(vi) from time to time such other information regarding the financial condition, operations or business of the Seller and the Guarantor as the Purchaser may reasonably request.

All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein); provided , that any financial statements delivered by the Seller or the Guarantor with respect to any Borrower under any Underlying Mortgage Loan shall be delivered to the Purchaser in the form received by the Seller or the Guarantor.

(q) Certificates; Other Information . The Seller and the Guarantor shall furnish to the Purchaser:

(i) (A) concurrently with the delivery of the annual financial statements referred to in Subsection 5.1(p) above, a certification from the independent certified public accountant reporting on such financial statements stating that, in making the examination necessary therefore, no information was obtained of any Defaults or Events of Default except as specified in such certificate, and (B) concurrently with the delivery of the financial statements referred to in Subsection 5.1(p) above and in connection with the delivery of each Confirmation, a Compliance Certificate from a Responsible Officer of the Seller and the Guarantor, which Compliance Certificate shall, among other things, describe in detail, on a quarterly basis, the calculations supporting the Responsible Officer’s certification of the Seller’s and NorthStar’s compliance with the Financial Covenants;

(ii) (A) within thirty (30) days of the end of each calendar quarter, the Seller shall provide the Purchaser with a quarterly report, which report shall include, among other items, a summary of the Seller’s delinquency and loss experience with respect to Purchased Assets serviced by the Seller, any Servicer, any PSA Servicer or any designee of the foregoing, the Seller’s internal risk rating, the Seller’s and any Servicer’s or PSA Servicer’s surveillance reports on the Purchased Assets, and the operating statements, occupancy status and other property level information with respect to each Purchased Asset, (B) within ten (10) days of receipt thereof by the Seller, any Servicer or PSA Servicer, any remittance reports with respect to the servicing of any Purchased Items and (C) promptly, any such additional reports as the Purchaser may reasonably request with respect to the Seller, any Servicer or PSA Servicer servicing the portfolio, or pending originations of Mortgage Assets;

(iii) no later than the fifteenth (15th) day of each month, with respect to each Purchased Asset, a Purchased Asset Data Summary, substantially in the form of Exhibit IX (“ Purchased Asset Data Summary ”), properly completed;

(iv) the Seller shall promptly deliver or cause to be delivered to the Purchaser (i) any report or material notice received by the Seller from any Borrower or obligor under the Purchased Items promptly following receipt thereof and (ii) any other such document or information relating to the Purchased Items as the Purchaser may reasonably request in writing from time to time;

(v) promptly, any modifications or additions to the items contained in the Underwriting Package; and

(vi) promptly, such additional financial and other information as the Purchaser may from time to time reasonably request.

(r) Prohibition of Fundamental Changes . The Seller or the Guarantor shall not enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) or sell all or substantially all of its assets; provided , however , that the Seller or the Guarantor may merge or consolidate with (i) any wholly owned Subsidiary of such Person, or (ii) any other Person if (A) the Seller or the Guarantor is the surviving corporation or (B) if the surviving entity is not in the Purchaser’s reasonable opinion materially weaker in its financial condition (in the aggregate) than the prior entities pre-merger or pre-consolidation; provided , that , (x) if after giving effect thereto, no Event of Default would exist hereunder, (y) if such merger or consolidation would adversely affect the Swap Counterparty, the Swap Counterparty has consented thereto, and (z) the new entity (if any) assumes the obligations, liabilities and Indebtedness under the Repurchase Documents and the Swap Documents.

(s) Transactions with Affiliates . The Seller may enter into any transaction with an Affiliate, provided that such transaction is upon fair and reasonable terms no less favorable to the Seller than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate; provided , however , that in no event shall the Seller transfer to the Purchaser hereunder any Eligible Asset acquired by the Seller from an Affiliate of the Seller unless the Seller shall have delivered a certified copy of the related Purchase Agreement and, if requested by the Purchaser in its reasonable discretion, a True Sale Opinion has been delivered to the Purchaser prior to such sale.

(t) Sub-Limit . The Seller shall not sell to the Purchaser any Eligible Asset if, after giving effect to such Transaction, a Sub-Limit would be exceeded, unless waived in advance in writing by the Purchaser in its discretion.

(u) Limitation on Distributions . The Seller or the Guarantor shall not declare or make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of the Seller or the Guarantor, as applicable, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller or the Guarantor, as applicable, except that the Seller and the Guarantor, as applicable, each may declare and pay dividends in accordance with its respective Authority Documents, and without restriction as to amount, so long as, in the case of the Seller and the Guarantor, (i) no Default or Event of Default shall have occurred, (ii) no Margin Deficit is outstanding and (iii) the distribution of such funds will not violate any Financial Covenant. Notwithstanding the preceding sentence and irrespective of the occurrence of the events described in clauses (i) , (ii) or (iii) of the immediately preceding sentence, the Guarantor may at all times pay dividends either (A) as required by Applicable Law to maintain its REIT status and/or (B) to its preferred equity holders.

(v) Financial Covenants .

(i) Maintenance of Liquidity . Subject to Section 2.16 of this Agreement and the related provisions in the Fee Letter for each Test Period, NorthStar shall not permit its Liquidity for such Test Period to be less than $15,000,000, at least $7,500,000 of which shall consist of cash or Cash Equivalents.

(ii) Maintenance of Tangible Net Worth . For each Test Period, NorthStar shall not permit NorthStar’s and its Consolidated Subsidiaries’ Tangible Net Worth at any time to be less than the sum of (A) $750,000,000 plus (B) an amount equal to 75% of the aggregate net proceeds after costs and expenses received by NorthStar or any Consolidated Subsidiaries of NorthStar in connection with the offering or issuance of any Equity Interest of NorthStar or any Consolidated Subsidiaries of NorthStar (in each case only to the extent such Equity Interests would be included in Tangible Net Worth) after the Closing Date.

(iii) Interest Coverage . For each Test Period, the Sellers shall not permit the ratio of (A) the sum of Consolidated Adjusted EBITDA for all Sellers for such Test Period to (B) Interest Expense for all Sellers for such Test Period to be less than 1:5 to 1:0.

(iv) Leverage Ratio . For each Test Period, NorthStar shall not permit the ratio of (A) NorthStar’s and its Consolidated Subsidiaries’ Adjusted Total Liabilities to (B) NorthStar’s and its Consolidated Subsidiaries’ Adjusted Total Assets to exceed 0.90 to 1.00.

(v) Recourse Debt Ratio . For each Test Period, NorthStar shall not permit the ratio of (A) NorthStar’s and its Consolidated Subsidiaries’ Indebtedness (excluding Non-Recourse Indebtedness, borrowings under the Unsecured Credit Facility and Trust Preferred Securities) to (B) Adjusted Total Assets of NorthStar and its Consolidated Subsidiaries to exceed .10 to 1.00.

(vi) Fixed Charge Coverage . For each Test Period, NorthStar shall maintain a minimum Fixed Charge Coverage Ratio of 1.3x.

(w) Extension or Amendment of Purchased Items . The Seller shall not, except as otherwise permitted in Subsection 6.5(c) of this Agreement, extend, amend, waive or otherwise modify, or permit any Servicer or PSA Servicer to extend, amend, waive or otherwise modify, the material terms of any Purchased Item.

(x) Inconsistent Agreements . The Seller and the Guarantor shall not, and shall not permit the Pledgor to, directly or indirectly, enter into any agreement containing any provision that would be violated or breached by any Transaction hereunder or by the performance by the Seller, the Guarantor or the Pledgor of its obligations under any Repurchase Document.

(y) Maintenance of Property; Insurance . The Seller and the Guarantor shall keep all Property useful and necessary in its business in good working order and condition, shall maintain with financially sound and reputable insurance companies insurance on all its Property in at least such amounts and against at least such risks as are usually and customarily insured against in the same general area by companies acting prudently and engaged in the same or a similar business, and furnish to the Purchaser, upon written request, full information as to the insurance carried.

(z) Interest Rate Protection Agreements . Each of the Seller and the Guarantor shall perform its duties and obligations and make all payments due under and shall otherwise maintain any existing Interest Rate Protection Agreements.

(aa) Payment of Taxes . The Seller and the Guarantor shall pay and discharge all Taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained in accordance with GAAP.

(bb) Distributions in Respect of Purchased Items . If the Seller shall receive any rights, whether in addition to, in substitution of, as a conversion of, or in exchange for any Purchased Items, or otherwise in respect thereof, the Seller shall accept the same as the Purchaser’s agent, hold the same in trust for the Purchaser and deliver the same forthwith to the Purchaser (or its designee) in the exact form received, together with duly executed instruments of transfer or assignment in blank and such other documentation as the Purchaser shall reasonably request. If any sums of money or property are paid or distributed in respect of the Purchased Items and received by the Seller (other than the Borrower Reserve Payments), the Seller shall promptly pay or deliver such money or property to the Purchaser and, until such money or property is so paid or delivered to the Purchaser, hold such money or property in trust for the Purchaser, segregated from other funds of the Seller.

(cc) Limitation on Indebtedness . The Seller shall not create, incur, assume or suffer to exist any Indebtedness (including, but not limited to, any credit or repurchase facility), Guarantee Obligation or Contractual Obligation of the Seller, except the VFCC Repurchase Facility and any other Indebtedness, Guarantee Obligations and Contractual Obligations of the Seller permitted under this Agreement.

(dd) Unrelated Activities . The Seller shall not engage in any activity other than activities specifically permitted by this Section 5 , including, but not limited to, investment in real estate related assets and the purchasing, financing and holding of commercial mortgage-backed securities and activities incident thereto.

(ee) Separateness . The Seller shall not take any action or fail to take any action that would cause it to violate or be inconsistent with the representations and warranties in Subsection 4.1(mm) of the Agreement.

(ff) Pledge and Security Agreement . If the VFCC Repurchase Facility is terminated at any time and all amounts due thereunder are paid in full, the Pledgor shall enter into the Pledge and Security Agreement pledging to the Purchaser the Equity Interests in the Seller and all other Pledged Collateral pledged thereunder and, in connection therewith, the Pledgor shall take such other actions and provide such other agreements and documents as shall be reasonably required by the Purchaser. Neither the Seller nor the Guarantor shall take any direct or indirect action inconsistent with the Pledge and Security Agreement or the security interest granted thereunder to the Purchaser in the Pledged Collateral.

(gg) Independence of Covenants . All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of an Default or Event of Default if such action is taken or condition exists.

(hh) Investments . The Seller, the Guarantor or any of their Affiliates shall not acquire or maintain any right or interest in any Purchased Asset that is senior to or pari passu with the rights and interests of the Purchaser therein under this Agreement unless such Mortgage Asset is also a Purchased Asset.

(ii) Seller Subsidiaries . The Seller shall not create, form or permit to exist any Subsidiary prior to the later of (i) the Facility Maturity Date (as it may be extended in accordance with this Agreement) and (ii) the indefeasible payment in full of the Obligations.

(jj) Negative Pledge . The Seller shall not contract, create, incur, assume or permit to exist any Lien on or with respect to any of its Property or assets of any kind (whether real or personal, tangible or intangible), whether now owned or hereafter acquired, except for Permitted Liens.

(kk) NorthStar Status . NorthStar shall remain listed on a nationally recognized securities exchange in good standing. NorthStar may change its status as a REIT provided it remains in compliance with the Financial Covenants in all respects.

(ll) Registration of Securities . In the case of any Purchased Asset not physically delivered to the Purchaser or its designee, unless otherwise consented to by the Purchaser, the Seller shall maintain, or cause to be maintained, each of the Securities with either DTC or with the National Book Entry System of the Federal Reserve, DTC or any similar firm or agency, as applicable, in the Purchaser’s name.

(mm) Payment of Obligations . The Seller and the Guarantor shall pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations in excess of $250,000 with respect to the Seller and $1,000,000 with respect to the Guarantor, including, without limitation, all Indebtedness, Contractual Obligations and Guarantee Obligations, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Seller, the Guarantor or any of their Subsidiaries, as the case may be.

(nn) Authority Documents . The Seller shall comply with its Authority Documents and shall not amend its Authority Documents in any material respect without the prior written consent of the Purchaser.

(oo) Preferred Equity Interests . The Seller shall not permit any Equity Interest that is the subject of a Preferred Equity Interest to consist of an interest in an entity other than a partnership or limited liability company and, with respect to such limited partnership and limited liability company interests, shall not permit any such interest to: (i) be dealt in or traded on a securities exchange or in a securities market or (ii) be held in a Securities Account. The Seller shall execute and deliver, or cause to be executed or delivered, to the Purchaser (or the Custodian on its behalf) such agreements, documents and instruments as the Purchaser may reasonably require to perfect its security interest in any such Equity Interest.

(pp) Termination of Securities Account . Upon the Seller’s receipt of notice from any securities intermediary (as defined in the UCC) of its intent to terminate any securities account (as defined in the UCC) of the Seller held by such securities intermediary and relating to a Purchased Asset or collateral for a Purchased Asset, prior to the termination of such securities account the collateral in such account (i) shall be transferred to a new securities account, upon the request of the Purchaser, which shall be subject to an executed control agreement as provided in Subsection 2.2(k) of this Agreement or (ii) transferred to an account held by the Purchaser in which such collateral will be held until a new securities account is established with an executed control agreement acceptable to the Purchaser in its discretion.

ARTICLE VI

ADMINISTRATION AND SERVICING

Section 6.1 Servicing .

(a) Appointment . The Purchaser hereby appoints the Seller as its agent to service the Purchased Items and enforce its rights in and under such Purchased Items. The Seller hereby accepts such appointment and agrees to perform the duties and obligations with respect thereto as set forth herein.

(b) Servicing Standard . The Seller covenants to maintain or cause the servicing of the Purchased Items to be maintained in conformity with Accepted Servicing Practices. In the event that the preceding language is interpreted as constituting one or more servicing contracts, each such servicing contract shall terminate automatically upon the earliest of (i) an Event of Default, (ii) the date on which this Agreement terminates or the Seller repurchases any related Purchased Asset, or (iii) the transfer of servicing approved in writing by the Purchaser.

Section 6.2 Seller as Servicer .

If the Purchased Assets are serviced by the Seller, the Seller agrees that, until the repurchase of a Purchased Asset on a Repurchase Date, the Purchaser is the owner of all servicing records for the period that the Purchaser owns the Purchased Items, including, but not limited to, any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, computer programs, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of such Purchased Assets (the “ Servicing Records ”). The Seller covenants to safeguard such Servicing Records and to deliver them promptly to Purchaser or its designee (including the Custodian) at the Purchaser’s request.

Section 6.3 Third Party Servicer .

If the Purchased Assets are serviced by a Servicer or a PSA Servicer pursuant to a Servicing Agreement or Pooling and Servicing Agreement, as applicable, the Seller (i) shall, in accordance with Subsection 3.2 of this Agreement, provide to the Purchaser (subject to the last sentence of this Subsection 6.3 ) a copy of each Servicing Agreement (which agreements shall be in form and substance reasonably acceptable to the Purchaser), and each Pooling and Servicing Agreement and a Servicer Redirection Notice substantially in the form of Exhibit VII hereto and fully executed by the Seller and the related Servicer or PSA Servicer (in the case of a Pooling and Servicing Agreement for a Mortgage Asset that is not a Whole Loan, the Purchaser may in its discretion waive the requirement of an executed Servicer Redirection Notice), and (ii) hereby irrevocably assigns to the Purchaser and the Purchaser’s successors and assigns all right, title and interest of the Seller in, to and under, and the benefits of (but not the obligations of), each Servicing Agreement and each Pooling and Servicing Agreement with respect to the Purchased Items. Notwithstanding the fact that the Seller has contracted with a Servicer or PSA Servicer to service the Purchased Items, the Seller shall remain liable to the Purchaser for the acts of the Servicers and the PSA Servicer and for the performance of the duties and obligations set forth herein. The Seller agrees that no Person shall assume the servicing obligations with respect to the Purchased Assets as successor to a Servicer or PSA Servicer unless such successor is approved in writing by the Purchaser prior to such assumption of servicing obligations. Unless otherwise approved in writing by the Purchaser, if the Purchased Assets are serviced by a Servicer or PSA Servicer, such servicing shall be performed pursuant to a written Servicing Agreement or Pooling and Servicing Agreement approved by the Purchaser.

Section 6.4 Duties of the Seller .

(a) Duties . The Seller shall take or cause to be taken all such actions as may be necessary or advisable to collect all Income and all other amounts due or recoverable with respect to the Purchased Items from time to time, all in accordance with Applicable Laws, with reasonable care and diligence, and in accordance with the standard set forth in Subsection 6.1(b) of this Agreement.

(b) Purchaser’s Rights . Notwithstanding anything to the contrary contained herein, the exercise by the Purchaser of its rights hereunder shall not release the Seller from any of its duties or responsibilities with respect to the Purchased Items. The Purchaser shall not have any obligation or liability with respect to any Purchased Items, nor shall any of them be obligated to perform any of the obligations of the Seller hereunder.

Section 6.5 Authorization of the Seller .

(a) The Purchaser hereby authorizes the Seller (including any successor thereto) to take any and all reasonable steps in its name and on its behalf necessary or desirable and not inconsistent with the sale of the Purchased Items to the Purchaser, to collect all amounts due under any and all Purchased Items, including, without limitation, endorsing checks and other instruments representing Income, executing and delivering any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Purchased Items and, after the delinquency of any Purchased Item and to the extent permitted under and in compliance with Applicable Law, to commence proceedings with respect to enforcing payment thereof, to the same extent as the Seller could have done if it had continued to own such Purchased Items. The Purchaser shall furnish the Seller (and any successors thereto) with any powers of attorney and other documents necessary or appropriate to enable the Seller to carry out its servicing and administrative duties hereunder and shall cooperate with the Seller to the fullest extent in order to ensure the collectability of the Purchased Items. In no event shall the Seller be entitled to make the Purchaser a party to any litigation without the Purchaser’s express prior written consent.

(b) Subject to all other rights of the Purchaser contained herein, after an Event of Default has occurred and is continuing, at the direction of the Purchaser, the Seller shall take such action as the Purchaser may deem necessary or advisable to enforce collection of the Purchased Items; provided , however , subject to all other rights of the Purchaser contained herein, the Purchaser may, at any time that an Event of Default has occurred and is continuing, notify any Borrower with respect to any Purchased Items of the assignment of such Purchased Items to the Purchaser and direct that payments of all amounts due or to become due be made directly to the Purchaser or any servicer, collection agent or lock-box or other account designated by the Purchaser and, upon such notification and at the expense of the Seller, the Purchaser may enforce collection of any such Purchased Items and adjust, settle or compromise the amount or payment thereof.

(c) With respect to each Purchased Asset and to the extent not otherwise specifically addressed otherwise in this Agreement, (i) prior to an Event of Default, the Seller (and any Servicer or PSA Service on its behalf) shall not exercise any material rights of a holder of a Purchased Item under any document or agreement governing such Purchased Items (including amendments, modifications, waivers and alterations of any of the material terms of any Purchased Item) that affects the Market Value of such Purchased Item without first consulting with the Purchaser prior to taking any action and, in the event the Purchaser and the Seller cannot agree on a course of action, the Seller shall take only those actions as agreed to by the Purchaser, and, (ii) after an Event of Default, the Seller shall not exercise any rights of a holder of such Purchased Items under any document or agreement governing such Purchased Items without the prior written consent of the Purchaser.

Section 6.6 Event of Default .

If the servicer of the Purchased Items is the Seller, upon the occurrence of an Event of Default, the Purchaser shall have the right to terminate the Seller as the servicer of the Purchased Items and transfer servicing to its designee, at no cost or expense to the Purchaser, at any time thereafter. If the servicer of the Purchased Items is not the Seller, the Purchaser shall have the right, as contemplated in the applicable Servicer Redirection Notice, upon the occurrence of an Event of Default, to terminate any applicable Servicing Agreement and any Pooling and Servicing Agreement to the extent the PSA Servicer signed a Servicer Redirection Notice and to transfer servicing to the Purchaser or the Purchaser’s designee, at no cost or expense to the Purchaser, it being agreed that the Seller will pay any and all fees required to terminate such Servicing Agreements and Pooling and Servicing Agreements and to effectuate the transfer of servicing to the designee of the Purchaser. The Seller shall fully cooperate and shall cause all Servicers and applicable PSA Servicers to fully cooperate with the Purchaser in transferring the servicing of the Purchased Items to the Purchaser’s designee.

Section 6.7 Inspection .

In the event the Seller or its Affiliates are servicing the Purchased Items, the Seller shall permit the Purchaser to inspect the Seller’s or its Affiliate’s servicing facilities, books and records and related documents and information, as the case may be, for the purpose of satisfying the Purchaser that the Seller or its Affiliates, as the case may be, have the ability to service and are servicing the Purchased Items as provided in this Agreement. If a Servicer or PSA Servicer is servicing a Purchased Item, the Seller shall cooperate with the Purchaser in causing each Servicer and PSA Servicer to permit inspections of the Servicer’s and PSA’s facilities, books and records and related documents and information related to the Purchased Items.

Section 6.8 Payment of Certain Expenses by Servicer .

Section 6.9 Pooling and Servicing Agreements .

Notwithstanding the other provisions of this Section 6.9 , to the extent the Purchased Items (or portions thereof) are serviced by a PSA Servicer (other than the Seller or any Servicer) under a Pooling and Servicing Agreement, (a) the standards for servicing those Purchased Items shall be those set forth in the applicable Pooling and Servicing Agreement, (b) the Seller shall enforce its rights and interests under such agreements for and on behalf of the Purchaser, (c) the Seller shall instruct the applicable PSA Servicer to deposit all Income received in respect of the Purchased Items into the Collection Account in accordance with Subsection 5.1(e) , (d) prior to an Event of Default, the Seller shall not take any action or fail to take any action or consent to any action or inaction under any Pooling and Servicing Agreement where the effect of such action or inaction would prejudice the interests of the Purchaser, (e) the Seller will not consent to any change or modification to any Pooling and Servicing Agreement, including, without limitation, any payment dates, interests rates, fees, payments of principal or interest, maturity dates, restrictions on Indebtedness or any monetary term or release any Borrower, guarantor or collateral without the prior written consent of the Purchaser, and, (f) following an Event of Default, the Purchaser shall be entitled to exercise any and all rights of the Seller under such Pooling and Servicing Agreements as such rights relate to the Purchased Items. In addition, with respect to a CMBS Security, the Seller shall not exercise any material rights of a holder of a CMBS Security under any other document or agreement governing such CMBS Security without the prior written consent of the Purchaser.

Section 6.10 Servicer Default .

Any material breach by any Seller of the obligations contained in Article VI of this Agreement shall constitute a “ Servicer Default ”.

Section 6.11 Servicer .

The Seller shall not permit or cause the Purchased Items to be serviced by a third party other than pursuant to the Servicing Agreements or the Pooling and Servicing Agreements or, if not serviced thereunder, by any Servicer other than a Servicer expressly approved in writing by the Purchaser (including those pre-approved Servicers set forth on Schedule 6 hereto).

ARTICLE VII

[RESERVED]

ARTICLE VIII

SECURITY INTEREST

Section 8.1 Security Interest .

(a) Each of the following items or types of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter collectively referred to as the Purchased Items (the “ Purchased Items ”): (A) all Purchased Assets; (B) all Income and Cash Collateral, if any; (C) all Mortgage Loan Documents; (D) all Mortgage Asset Files, including, without limitation, all promissory notes, notes, certificates, instruments, negotiable documents, Security Agreements, chattel mortgages and all other loan, security or other documents relating to such Purchased Items, together with all files, documents, instruments, surveys, certificates, correspondence, appraisals, licenses, contracts, computer programs, computer storage media, accounting records and other books and records relating thereto; (E) all collateral, security interests, rights and other interests under or with respect to each Purchased Item; (F) all Purchase Agreements and the collateral, security interests, rights and other interests thereunder; (G) all mortgage guaranties and insurance (issued by governmental agencies or otherwise) and any mortgage insurance certificate, policy or other document evidencing such mortgage guaranties or insurance relating to any Purchased Items and all claims, payments and proceeds thereunder; (H) all servicing fees to which the Seller is entitled and servicing and other rights relating to the Purchased Items; (I) all Servicing Agreements, Servicing Records and Servicing Files with respect to the Purchased Items and the rights and interests of the Seller thereunder or with respect thereto; (J) all Servicer Accounts established pursuant to any Servicing Agreement, Pooling and Servicing Agreement or otherwise with respect to the Purchased Items and all amounts on deposit therein from time to time related to the Purchased Items; (K) all Pooling and Servicing Agreements relating to the Purchased Items and all rights of the Seller thereunder or with respect thereto; (L) all other agreements, instruments or contracts relating to, constituting, or otherwise governing, any or all of the foregoing to the extent they relate to the Purchased Items, including the right to receive principal and interest payments and any related fees, breakage fees, late fees and penalties with respect to the Purchased Items and the right to enforce such payments; (M) insurance policies, certificates of insurance, insurance proceeds and the rights to enforce payment of insurance proceeds, in each case to the extent they relate to the Purchased Items; (N) the Collection Account and all monies, cash, deposits, securities or investment property from time to time on deposit in the Collection Account; (O) the Securities Account and all monies, cash, deposits, securities or investment property from time to time on deposit in the Securities Account; (P) any collection account, escrow account, reserve account, collateral account or lock-box account related to the Purchased Items to the extent of any Seller’s or the holder’s interest therein, including all moneys, cash, deposits, securities or investment property from time to time on deposit therein; (Q) rights of the Seller under any letter of credit, guarantee or other credit support or enhancement related to the Purchased Items; (R) any Interest Rate Protection Agreements relating to the Purchased Assets, including all payments due to the Seller, the Guarantor or any Affiliates of the foregoing thereunder; (S) all purchase or take-out commitments relating to or constituting any of the foregoing; (T) all collateral, however defined, under any of the agreements between a Borrower or an Affiliate on the one hand and the Seller on the other hand; (U) all “general intangibles”, “accounts”, “chattel paper”, “deposit accounts”, “securities accounts”, “instruments”, “securities”, “financial assets”, “uncertified securities”, “securities entitlements” and “investment property” as defined in the Uniform Commercial Code as in effect from time to time relating to or constituting any and all of the foregoing; and (V) any and all replacements, substitutions, conversions, distributions on or proceeds of, from or on any and all of the foregoing; provided , however , none of the foregoing Purchased Items shall include any obligations; provided , further, however, notwithstanding the foregoing, (i) no account, instrument, chattel paper or other obligation or Property of any kind due from, owed by, or belonging to, a Person described in the definition of Prohibited Person or (ii) any lease in which the lessee is a Person described in the definition of Prohibited Person, shall be collateral under the Repurchase Documents.

(b) The Purchaser and the Seller intend that the Transactions hereunder be sales to the Purchaser of the Purchased Assets and not loans from the Purchaser to the Seller secured by the Purchased Assets. However, in order to preserve the Purchaser’s rights under this Agreement in the event that a court or other forum recharacterizes the Transactions hereunder as loans and as security for (A) the repayment of the Aggregate Unpaids and performance by the Seller of all of the Seller’s obligations to the Purchaser hereunder and under the Repurchase Documents and the Transactions entered into hereunder (collectively, the “ Repurchase Obligations ”), (B) the Seller -Related Obligations and (C) all expenses and charges, legal or otherwise, incurred in collecting or enforcing, realizing on or protecting any security for, the Repurchase Obligations and/or the Seller-Related Obligations (the amounts described in the foregoing clauses A-C are collectively referred to as the “ Obligations ”), (a) the Seller hereby assigns, pledges and grants a security interest in all of its right, title and interest in, to and under the Purchased Items to the Purchaser (on behalf of the Purchaser and the Swap Counterparty) to secure the Obligations, (b) it is the express intent of the parties that conveyance of the Purchased Items be deemed a pledge of the Purchased Items by the Seller to the Purchaser (on behalf of the Purchaser and the Swap Counterparty) to secure a debt or other obligation of the Seller, and (c) (i) this Agreement shall also be deemed to be a security agreement within the meaning of Article 9 of the UCC of the applicable jurisdiction; (ii) the conveyance provided for herein shall be deemed to be a grant by the Seller to the Purchaser (on behalf of the Purchaser and the Swap Counterparty) of a security interest in all of the Seller’s right, title and interest in and to the Purchased Items; (iii) the assignment by the Purchaser (on behalf of the Purchaser and the Swap Counterparty) of the interest of the Purchaser as contemplated herein shall be deemed to be an assignment of any security interest created hereunder; (iv) the possession by the Purchaser or any of its agents, including, without limitation, the Custodian, of the Mortgage Loan Documents, the Purchased Items and such other items of Property as constitute instruments, money, negotiable documents or chattel paper shall be deemed to be possession by the secured party for purposes of perfecting the security interest pursuant to the UCC; and (v) notifications to Persons (other than the Purchaser and the Swap Counterparty) holding such Property, and acknowledgments, receipts or confirmations from Persons (other than the Purchaser and the Swap Counterparty) holding such Property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of the secured party for the purpose of perfecting such security interest under the UCC and Applicable Law. The assignment, pledge and grant of security interest contained herein shall be, and the Seller hereby represents and warrants to the Purchaser and the Swap Counterparty that it is, a first priority perfected security interest. All Purchased Items shall secure the payment of all Obligations now or hereafter existing, including, without limitation, the Seller’s obligation to repurchase Purchased Assets, or if such obligation is so recharacterized as a loan, to repay such loan for the Repurchase Price and to pay the Aggregate Unpaids and any and all other Obligations. For the avoidance of doubt and not by way of limitation of the foregoing, (A) each Purchased Item, including all Income related thereto, secures the obligations of each Seller with respect to all other Transactions and the obligations with respect to all other Purchased Items, including those Purchased Assets that are junior in priority to the Purchased Item in question, (B) an Event of Default by any Seller is a default by all Sellers and the Purchaser may pursue its remedies in connection therewith against any of the Purchased Items and/or against the assets and Properties of any or all Sellers, and (C) if an Event of Default has occurred and is continuing, no Purchased Item will be released from the Purchaser’s Lien or transferred to the Seller until the Obligations are indefeasibly paid in full. All references in this Agreement and the other Repurchase Documents to the Purchaser as the secured party or the rights of the Purchaser as the secured party shall be deemed to include the Swap Counterparty as a secured party and the rights of the Swap Counterparty as a secured party. The Swap Counterparty hereby designates and appoints the Purchaser as its agent and bailee hereunder and under the other Repurchase Documents and takes such actions as agent and bailee on behalf of the Swap Counterparty and to exercise such powers as are delegated to the Purchaser by the terms of this Agreement, together with such powers as are reasonably incidental thereto. Notwithstanding the foregoing, during the time that VFCC is a purchaser under the VFCC Repurchase Facility, the Indebtedness of the Seller under the Obligations shall be full recourse to the Seller. Notwithstanding anything contained herein to the contrary, during the time that VFCC is a purchaser under the VFCC Repurchase Facility, there will be no sharing of payments or other amounts with or from VFCC.

(c) Pursuant to the Custodial Agreement, the Custodian shall hold the Mortgage Asset Files as exclusive bailee pursuant to the terms of the Custodial Agreement and shall deliver the Trust Receipts (along with completed Mortgage Asset File Checklists attached thereto) to the Purchaser (with a copy to the Seller), each such Trust Receipt to reflect that the Custodian has reviewed such Mortgage Asset Files in the manner and to the extent required by the Custodial Agreement and identifying any deficiencies in such Mortgage Asset Files as so reviewed.

(d) The assignment under this Section 8.1 does not constitute and is not intended to result in the creation or an assumption by the Purchaser o f any obligation of the Seller or any other Person in connection with any or all of the Purchased Items or under any agreement or instrument relating thereto. Anything herein to the contrary notwithstanding, (i) the Seller shall remain liable under the Purchased Items to the extent set forth therein to perform all of their duties and obligations thereunder to the same extent as if the Repurchase Documents had not been executed, (ii) the exercise by the Purchaser of any of its rights under, in or to the Purchased Items shall not release the Seller from any of its duties or obligations under the Purchased Items unless such parties effectuate a transfer of such Purchased Items to the Purchaser after any Event of Default hereunder but only to the extent of the obligations and duties so transferred, and (iii) the Purchaser shall not have any obligations or liability under the Purchased Items by reason of the Repurchase Documents or otherwise, nor shall the Purchaser be obligated to perform any of the obligations or duties of the Seller or any other Person thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

Section 8.2 Release of Lien o n Purchased Assets.

Except as otherwise provided in a Repurchase Document, at such time as any Purchased Asset is repurchased in accordance with this Agreement, and the Repurchase Price and all other amounts due with respect thereto have been paid in full, the Purchaser shall release its interest in such Purchased Asset and any related Purchased Items; provided , that , the Purchaser will make no representation or warranty, express or implied, with respect to any such Purchased Asset or Purchased Items in connection with such release (other than with respect to Liens created by the Purchaser), and any transfer of such Purchased Items shall be without recourse to or the expense of the Purchaser.

Section 8.3 Further Assurances .

The provisions of Section 13.11 of this Agreement shall apply to the security interest granted under Section 8.1 of this Agreement as well as to the Transactions hereunder.

Section 8.4 Remedies .

Upon the occurrence of an Event of Default, the Purchaser shall have, with respect to the security interest in the Purchased Items granted pursuant to Section 8.1 of this Agreement, and in addition to all other rights and remedies available to the Purchaser under this Agreement, the Repurchase Documents and other Applicable Law, all rights and remedies of a secured party upon default under the UCC.

Section 8.5 Purchaser’s Duty of Care.

Except as herein provided in this Section 8.5 of this Agreement, Purchaser’s (or, on its behalf, the Custodian) sole duty with respect to the Purchased Items shall be to use reasonable care in the custody, use, operation and preservation of the Purchased Items in its possession or control. The Purchaser shall incur no liability to the Seller, the Guarantor or any other Person for any act of government, act of God or other such destruction in whole or in part or negligence or wrongful act of custodians or agents selected by and supervised by Purchaser with reasonable care, or Purchaser’s failure to provide adequate protection or insurance for the Purchased Items. Purchaser shall have no obligation to take any action to preserve any rights of the Seller in any of the Purchased Items against prior parties, and the Seller hereby agrees to take such action. The Seller shall defend the Purchased Items against all such claims and demands of all Persons (other than claims and demands resulting from interests created by Purchaser), at all times, as are adverse to Purchaser. Purchaser shall have no obligation to realize upon any Purchased Item, except through proper application of any distributions with respect to the Purchased Items made directly to Purchaser or its agent(s). So long as Purchaser (or the Custodian, on the Purchaser’s behalf) shall act in good faith in its handling of the Purchased Items, each of the Seller and the Guarantor hereby waives the defense of impairment of the Purchased Items by Purchaser.

ARTICLE IX

[RESERVED]

ARTICLE X

EVENT S OF DEFAULT

Section 10.1 Events of Default .

Each of the following events shall be an Event of Default (“ Event of Default ”) hereunder:

(a) the aggregate Repurchase Price for all Transactions outstanding on any day exceeds the Maximum Amount and the same continues unremedied for two (2) Business Days after notice from the Purchaser; or

(b) a Servicer Default occurs and is continuing and the same continues unremedied for twenty (20) calendar days; or

(c) an Insolvency Event relating to the Seller, the Guarantor or the Pledgor shall have occurred, or any Insolvency Event shall have occurred with respect to any Affiliate of the Seller, the Guarantor or the Pledgor and the same affects, impacts or impairs (A) any Lien, right or other interest of the Purchaser under any of the Repurchase Documents or (B) the Seller’s, the Guarantor’s or the Pledgor’s performance, or ability to perform, its obligations, duties or agreements under any of the Repurchase Documents; or

(d) the Seller, the Guarantor or the Pledgor shall become required to register as an “investment company” within the meaning of the 40 Act or the arrangements contemplated by the Repurchase Documents shall require registration as an “investment company” within the meaning of the 40 Act; or

(e) there shall exist any event or occurrence that has caused or resulted in a Material Adverse Effect with respect to clauses (a), (b), (c) or (d) of the definition of Material Adverse Effect; or

(f) (A) any Repurchase Document, or any Lien or security interest granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of the Seller, the Guarantor or the Pledgor, (B) the Seller, the Guarantor, the Pledgor, or any other Person shall, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability of any Repurchase Document or any Lien or security interest thereunder, (C) the Purchased Items shall not have been sold to the Purchaser, or the Liens contemplated under the Repurchase Documents shall cease or fail to be first priority perfected Liens on any Purchased Items or the Pledged Collateral or shall be Liens in favor of any Person other than the Purchaser or (D) the Seller, the Guarantor, the Pledgor or any of their Affiliates shall grant, or suffer to exist, any Lien on any Purchased Item or the Pledged Collateral (except Permitted Liens); or

(g) the Seller, the Guarantor or the Pledgor shall have failed to observe or perform in any material respect any of the covenants or agreements of the Seller, the Guarantor or the Pledgor set forth in this Agreement or the other Repurchase Documents to which the Seller, the Guarantor or the Pledgor is a party and the same continues unremedied for a period of twenty (20) calendar days after the earlier to occur of (A) the date on which written notice of such failure requiring the same to be remedied shall have been given to the Seller, the Guarantor or the Pledgor by the Purchaser, and (B) the date on which the Seller, the Guarantor or the Pledgor becomes aware thereof; or

(h) any representation, warranty or certification made by the Seller, the Guarantor or the Pledgor in this Agreement or any Repurchase Document or in any certificate or other document or agreement delivered pursuant to this Agreement or any Repurchase Document (in each case other than the eligibility criteria contained in Schedule 1 to this Agreement unless the Seller shall have affirmed or confirmed any such criteria with actual knowledge that it was not satisfied in any material respect) shall prove to have been incorrect in any material respect when made or deemed made and the same continues unremedied for a period of twenty (20) calendar days after the earlier to occur of (A) the date on which written notice of such failure requiring the same to be remedied shall have been given to the Seller, the Guarantor or the Pledgor by the Purchaser, and (B) the date on which the Seller, the Guarantor or the Pledgor becomes aware thereof; or

(i) (A) the Seller, the Guarantor or the Pledgor shall have failed to make any payment due with respect to any material Indebtedness in excess of (1) $5,000,000 in the case of the Guarantor and the Pledgor, and (2) $1,000,000 in the case of the Seller (in each case including, without limitation, recourse debt), any Guarantee Obligations or any material Contractual Obligation in excess of $5,000,000 in the case of the Guarantor and the Pledgor, and $1,000,000 in the case of the Seller, to which the Seller, the Guarantor or the Pledgor as applicable, is a party, or a default or an event or condition shall have occurred that would permit acceleration of any of the foregoing whether or not such event or condition has been waived, (B) the Seller, the Guarantor or the Pledgor shall be in default of any monetary obligation with respect to any Seller-Related Obligation (other than the Swap Documents) or (C) the Seller, the Guarantor or the Pledgor shall be in default with respect to any obligation under the Swap Documents; or

(j) (A) the Seller shall default in the payment of (1) any Repurchase Price due (including, without limitation, pursuant to Article II of the Agreement) or (2) any amount due under Section 2.8 of this Agreement or any other provision of this Agreement or the Repurchase Documents when due (whether at stated maturity, upon acceleration or at mandatory or optional prepayment), or (B) the failure of the Seller, the Guarantor, the Pledgor, any Affiliate of the forgoing, any Servicer, any PSA Servicer or any other Person to timely deposit to the Collection Account all Income as required by Subsection 5.1(e) of this Agreement or the failure of the Seller to deposit or credit to the Securities Account any uncertificated CMBS Security and related Purchased Items required to be deposited or credited to such account; or

(k) the Seller shall have failed to pay any Margin Deficit due under Section 2.7 of this Agreement by the Margin Correction Deadline; or

(l) the Seller, the Guarantor or the Pledgor shall default in the payment of any other amount payable by it hereunder or under any other Repurchase Document after notification by the Purchaser of such default, and such default shall have continued unremedied for two (2) Business Days; or

(m) a final non-appealable judgment or judgments for the payment of money in excess of (1) $5,000,000 in the case of the Guarantor and the Pledgor, and (2) $1,000,000 in the case of the Seller, in the aggregate shall be rendered against the Seller, the Guarantor or the Pledgor, as applicable, by one (1) or more courts, administrative tribunals or other bodies or any Governmental Authority having jurisdiction, and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within thirty (30) days from the date of entry thereof; or

(n) the Seller, the Guarantor, the Pledgor or an ERISA Affiliate shall engage in a non-exempt prohibited transaction (as defined in Section 406 of ERISA or Section 4975 of the Code); or

(o) the Seller fails to repurchase Purchased Assets on the applicable Repurchase Date, including, without limitation the Facility Maturity Date, and to pay all amounts due in connection therewith; or

(p) NRFC Sub-REIT Corp. shall cease to own directly 100% of the issued and outstanding Equity Interest of the Seller; or

(q) the Seller, the Guarantor or the Pledgor shall admit its inability to, or its intentions not to, perform its obligations, covenants or agreements under any Repurchase Document or admit that it is not Solvent; or

(r) the Seller, the Guarantor or the Pledgor shall merge or consolidate into any entity, and such entity is, in the Purchaser’s reasonable opinion, materially weaker in its financial condition (in the aggregate) than such Person pre-merger or consolidation; or

(s) any Seller and/or any Guarantor fails to comply with or violates in any respect Section 2.16 to the Agreement or any related provisions contained in the Fee Letter and the same continues unremedied for a period of (a) two (2) Business Days, with respect to any monetary obligation, and (b) in all other cases, five (5) Business Days, after notice from the Purchaser.

Section 10.2 Remedies .

(a) If an Event of Default occurs, the following rights and remedies are available to the Purchaser:

(i) At the option of the Purchaser, exercised by written notice to the Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Insolvency Event of the Seller, the Guarantor, the Pledgor or, subject to Subsection 10.1(c) of this Agreement, any of their Affiliates), the Repurchase Date for each Transaction hereunder, if it has not already occurred, shall be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately cancelled without any liability to the Purchaser). The Purchaser shall (except upon the occurrence of an Insolvency Event of the Seller, the Guarantor, the Pledgor or, subject to Subsection 10.1(c) of this Agreement, any of their Affiliates) give notice to the Seller of the exercise of such option as promptly as practicable.

(ii) If the Purchaser exercises or is deemed to have exercised the option referred to in Subsection 10.2(a)(i) of this Agreement,

(A) (1) the Seller’s obligations in such Transactions to repurchase all Purchased Items, at the Repurchase Price therefor on the Repurchase Date, and, without duplication, to pay the Aggregate Unpaids and all other Obligations hereunder and under the other Repurchase Documents, shall thereupon become immediately due and payable, (2) all Income paid after such exercise or deemed exercise shall be retained by the Purchaser and applied to the aggregate unpaid Repurchase Price, the Aggregate Unpaids and any other Obligations, and (3) the Seller shall immediately deliver to the Purchaser any Purchased Items subject to such Transactions then in the Seller’s possession or control; and

(B) all Income actually received by the Purchaser pursuant to Section 2.8 of this Agreement (excluding any Late Payment Fees paid pursuant to Section 2.5 of this Agreement) shall be applied to the aggregate unpaid Repurchase Price and Aggregate Unpaids and any other Obligations, in such order as the Purchaser shall determine in its discretion.

(iii) Upon the occurrence of one or more Events of Default, and subject to Section 6.9 of this Agreement, the Purchaser shall have the right to obtain physical possession of the Servicing Records (subject to the provisions of the Custodial Agreement), the Servicing Files, the Servicing Agreements and all other files of the Seller or any third party acting for the Seller relating to the Purchased Items and all documents relating to the Purchased Items which are then or may thereafter come into the possession of the Seller or any third party acting for the Seller, and the Seller shall deliver to the Purchaser such assignments as the Purchaser shall request (all of the foregoing being at the expense of the Seller), and the Purchaser shall have the right to appoint any Person to act as the Servicer for the Purchased Assets.

(iv) At any time after the second (2nd) Business Day following notice to the Seller (which notice may be the notice given under Subsection 10.2(a)(i) of this Agreement), in the event the Seller have not repurchased all Purchased Items, the Purchaser may (A) immediately sell, without demand or further notice of any kind, at a public or private sale and at such price or prices as the Purchaser may deem reasonably satisfactory any or all Purchased Items subject to such Transactions hereunder and apply the proceeds thereof to the aggregate unpaid Repurchase Price, the Aggregate Unpaids and all other Obligations, or (B) in its discretion, elect, in lieu of selling all or a portion of such Purchased Items, to give the Seller credit for such Purchased Items in an amount equal to the Market Value (as determined by the Purchaser in its discretion but subject to good faith) of the Purchased Items against the aggregate unpaid Repurchase Price, the Aggregate Unpaids and all other Obligations. The proceeds of any disposition of Purchased Items shall be applied first to the costs and expenses incurred by the Purchaser in connection with the Seller’s default; second to the costs of related covering and/or related hedging transactions; third to the Repurchase Price; fourth to the Aggregate Unpaids and any other Obligations; and fifth, to the Seller.

(v) Each party hereto agrees that the other party may obtain an injunction or an order of specific performance to compel such other party to fulfill any of its obligations as set forth in the Repurchase Documents if such other party fails or refuses to perform its obligations as set forth therein.

(vi) The Seller shall be liable to the Purchaser, payable as and when incurred by the Purchaser, for (A) the amount of all reasonable actual out-of-pocket expenses, including legal or other expenses incurred by the Purchaser in connection with or as a consequence of an Event of Default, and (B) all reasonable costs incurred in connection with hedging or covering transactions.

(vii) The Purchaser shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or Applicable Law.

(b) The Purchaser may exercise one or more of the remedies available to the Purchaser immediately upon the occurrence of an Event of Default and, except to the extent provided in Subsection 10.2(a)(i) and 10.2(a)(iv) of this Agreement, at any time thereafter without notice to the Seller. All rights and remedies arising under this Agreement and the other Repurchase Documents, as amended from time to time, are cumulative and not exclusive of any other rights or remedies that the Purchaser may have.

(c) The Purchaser may enforce its rights and remedies hereunder without prior judicial process or hearing, and the Seller and the Guarantor hereby expressly waives any defenses the Seller, the Guarantor or the Pledgor might otherwise have to require the Purchaser to enforce its rights by judicial process. The Seller and the Guarantor also waives any defense (other than a defense of payment or performance) the Seller, the Guarantor and/or the Pledgor might otherwise have arising from the use of non-judicial process, enforcement and sale of all or any portion of the Purchased Items, or from any other election of remedies. The Seller, the Guarantor and the Pledgor recognize that non-judicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s-length.

(d) To the extent permitted by Applicable Law, the Seller shall be liable to the Purchaser for interest on any amounts owing by the Seller hereunder, from the date the Seller becomes liable for such amounts hereunder until such amounts are (i) paid in full by the Seller or (ii) satisfied in full by the exercise of the Purchaser’s rights hereunder. Interest on any sum payable by the Seller to the Purchaser under this Subsection 10.2(d) shall accrue interest from and after the date of the Event of Default and while such Event of Default is continuing at a rate equal to the Post-Default Rate.

(e) In addition to the rights under this Section 10.2 , during the continuance of an Event of Default, the Purchaser shall no longer be obligated to enter into any additional Transactions pursuant to any outstanding Confirmation and the Purchaser shall have the following additional rights if an Event of Default exists:

(i) The Purchaser, the Seller and the Guarantor agree and acknowledge that the Purchased Assets constitute collateral that may decline rapidly in value. Accordingly, notwithstanding anything to the contrary in this Agreement, the Purchaser shall not be required to give notice to the Seller or the Guarantor prior to exercising any remedy in respect of an Event of Default. If no prior notice is given, the Purchaser shall give notice to the Seller of the remedies effected by the Purchaser promptly thereafter. The Purchaser shall act in good faith in exercising its rights pursuant to this Subsection 10.2(e) .

(ii) The Purchaser may, in its discretion, elect to hold any Purchased Asset for its own account and earn the related interest on the full face amount thereof.

(f) Notwithstanding anything contained in the Repurchase Documents to the contrary, neither the Seller, the Guarantor, the Pledgor nor any other Person shall be permitted to cure an Event of Default after the acceleration of any of the Obligations.

(h) Subject to Subsections 2.15 , 13.3 , 13.4(d) , and 13.10 and other similar provisions contained in the Repurchase Documents, the Seller and the Guarantor shall have all remedies available to them at law or equity for any breach of this Agreement by the Purchaser.

Section 10.3 Determination of Events of Default .

In making a determination as to whether an Event of Default has occurred, the Purchaser shall be entitled to rely on reports published or broadcast by media sources believed by the Purchaser to be generally reliable and on information provided to it by any other sources believed by it to be generally reliable, provided that the Purchaser reasonably and in good faith believes such information to be accurate.

ARTICLE XI

INDEMNIFICATION

Section 11.1 Indemnification by the Seller .

(a) The Seller agrees to hold the Purchaser, the Swap Counterparty and their Affiliates and the Purchaser’s, the Swap Counterparty’s and their Affiliates’ officers, directors, shareholders, partners, members, owners, employees, agents, attorneys, Affiliates and advisors (each an “ Indemnified Party ” and collectively the “ Indemnified Parties ”) harmless from and indemnify any Indemnified Party against all out-of-pocket liabilities, out-of-pocket losses, out-of-pocket damages, judgments, out-of-pocket costs, out-of-pocket expenses, penalties or fines of any kind that may be imposed on, incurred by or asserted against such Indemnified Party (collectively, the “ Indemnified Amounts ”) in any way relating to, arising out of or resulting from (i) the Facility, this Agreement, the Repurchase Documents, the Mortgage Loan Documents, any Purchased Item, the Pledged Collateral and any other collateral for the Facility or any transaction or Transaction contemplated hereby or thereby, or any amendment, supplement, extension or modification of, or any waiver or consent under or in respect of, this Agreement, the Repurchase Documents, the Mortgage Loan Documents, any Purchased Item, the Pledged Collateral and any other collateral for the Facility, or any transaction or Transaction contemplated hereby or thereby, (ii) any Mortgage Asset, any Purchased Item, any Pledged Collateral or any other collateral for the Facility, (iii) any violation or alleged violation of, non-compliance with or liability under any Applicable Law (including, without limitation, violation of securities laws and Environmental Laws), (iv) ownership of, Liens on, security interests in or the exercise of rights and/or remedies under the Repurchase Documents, the Mortgage Loan Documents, the Purchased Items, the Pledged Collateral, any other collateral for the Facility, the Underlying Mortgaged Property, any other related Property or collateral or any part thereof or any interest therein or receipt of any Income or rents, (v) any accident, injury to or death of any person or loss of or damage to property occurring in, on or about any Underlying Mortgaged Property, any other related Property or collateral or any part thereof, the Purchased Items or on the adjoining sidewalks, curbs, parking areas, streets or ways, (vi) any use, nonuse or condition in, on or about, or possession, alteration, repair, operation, maintenance or management of, any Underlying Mortgaged Property, any other related Property or collateral or any part thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways, (vii) any failure on the part of the Seller, the Guarantor or the Pledgor to perform or comply with any of the terms of the Mortgage Loan Documents, the Repurchase Documents, the Purchased Items, the Pledged Collateral or any other collateral for the Facility, (viii) performance of any labor or services or the furnishing of any materials or other property in respect of the Underlying Mortgaged Property, any other related Property or collateral, the Purchased Items or any part thereof, (ix) any claim by brokers, finders or similar Persons claiming to be entitled to a commission in connection with any lease or other transaction involving any Underlying Mortgaged Property, any other related Property or collateral, the Purchased Items or any part thereof or the Repurchase Documents, (x) any Taxes including, without limitation, any Taxes attributable to the execution, delivery, filing or recording of any Repurchase Document, any Mortgage Loan Document or any memorandum of any of the foregoing, (xi) any Lien or claim arising on or against the Underlying Mortgaged Property, any other related Property or collateral, the Pledged Collateral, the Purchased Items or any part thereof under any Applicable Law or any liability asserted against the Purchaser with respect thereto, (xii) the claims of any lessee or any Person acting through or under any lessee or otherwise arising under or as a consequence of any leases with respect to any Underlying Mortgaged Property, related Property or collateral, or any claims of a Borrower, (xiii) any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in connection with the defense thereof, by any Indemnified Party as a result of conduct of the Seller, the Pledgor or the Guarantor that violates any sanction enforced by OFAC, (xiv) any and all Indemnified Amounts arising out of, attributable or relating to, accruing out of, or resulting from (1) a past, present or future violation or alleged violation of any Environmental Laws in connection with any Property or Underlying Mortgaged Property by any Person or other source, whether related or unrelated to the Seller, the Pledgor, the Guarantor or any Borrower, (2) any presence of any Materials of Environmental Concern in, on, within, above, under, near, affecting or emanating from any Property or Underlying Mortgaged Property, (3) the failure to timely perform any Remedial Work, (4) any past, present or future activity by any Person or other source, whether related or unrelated to the Seller, the Pledgor, the Guarantor or any Borrower in connection with any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or other release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling, transfer or transportation to or from any Property or Underlying Mortgaged Property of any Materials of Environmental Concern at any time located in, under, on, above or affecting any Property or Underlying Mortgaged Property, (5) any past, present or future actual Release (whether intentional or unintentional, direct or indirect, foreseeable or unforeseeable) to, from, on, within, in, under, near or affecting any Property or Underlying Mortgaged Property by any Person or other source, whether related or unrelated to the Seller, the Guarantor, the Pledgor or any Borrower, (6) the imposition, recording or filing or the threatened imposition, recording or filing of any Lien on any Property or Underlying Mortgaged Property with regard to, or as a result of, any Materials of Environmental Concern or pursuant to any Environmental Law, or (7) any misrepresentation or inaccuracy in any representation or warranty in any material respect or material breach or failure to perform any covenants or other obligations pursuant to this Agreement, the other Repurchase Documents or any of the Mortgage Loan Documents or relating to environmental matters in any way including, without limitation, under any of the Mortgage Loan Documents or (xv) any of the Seller’s, the Guarantor’s and/or any of their Affiliate’s conduct, activities, actions and/or inactions in connection with, relating to or arising out of any of the foregoing clauses of this Subsection 11(a) , that, in each case, results from anything other than any Indemnified Party’s gross negligence, bad faith or willful misconduct. Without limiting the generality of the foregoing, the Seller agrees to hold any Indemnified Party harmless from and indemnify such Indemnified Party against all Indemnified Amounts with respect to all Purchased Items and Mortgage Assets relating to or arising out of any violation or alleged violation of, noncompliance with or liability under any Applicable Law (including, without limitation, securities laws and Environmental Laws) that, in each case, results from anything other than such Indemnified Party’s gross negligence or willful misconduct. In any suit, proceeding or action brought by an Indemnified Party in connection with any Purchased Item, the Pledged Collateral or any other collateral for the Facility for any sum owing thereunder, or to enforce any provisions of any Purchased Item, the Pledged Collateral or any other collateral for the Facility, the Seller shall save, indemnify and hold such Indemnified Party harmless from and against all expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction of liability whatsoever of the account debtor, obligor or Borrower thereunder arising out of a breach by the Seller, the Guarantor, the Pledgor or an Affiliate of any of the foregoing of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor, obligor or Borrower or its successors from the Seller, the Guarantor, the Pledgor or an Affiliate of any of the foregoing. The Seller also agrees to reimburse an Indemnified Party as and when billed by such Indemnified Party for all such Indemnified Party’s costs, expenses and fees incurred in connection with the enforcement or the preservation of such Indemnified Party’s rights under this Agreement, the Repurchase Documents, the Mortgage Loan Documents and any transaction or Transaction contemplated hereby or thereby, including, without limitation, the reasonable fees and disbursements of its counsel. In the case of an investigation, litigation or other proceeding to which the indemnity in this Subsection 11.1(a) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Seller, the Guarantor, the Pledgor and/or any of their officers, directors, shareholders, employees or creditors, an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not any transaction contemplated hereby is consummated.

(b) Any amounts subject to the indemnification provisions of this Section 11.1 shall be paid by the Seller to the Indemnified Party within thirty (30) Business Days following such Person’s demand therefor. For the avoidance of doubt, an Indemnified Party may seek payment of any Indemnified Amount at any time and regardless of whether a Default or an Event of Default then exists or is continuing.

(c) The obligations of the Seller under this Article XI shall survive the termination of this Agreement until the expiration of the applicable statute of limitations.

Section 11.2 After-Tax Basis .

ARTICLE XII

[RESERVED]

ARTICLE XIII

MISCELLANEOUS

Section 13.1 Amendments and Waivers .

No amendment, waiver or other modification of any provision of this Agreement shall be effective without the written agreement of each of the Seller, the Purchaser, the Guarantor and the Swap Counterparty to the extent the proposed amendment, waiver or other modification materially and adversely affects the Swap Counterparty. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

Section 13.2 Notices and Other Communications .

All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including telex communication and communication by facsimile copy) and mailed, telexed, transmitted or delivered, as to each party hereto, at its address set forth under its name on the signature pages of this Agreement or at such other address as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, upon receipt, or in the case of (a) notice by telex, when telexed against receipt of answer back, or (b) notice by facsimile copy, when verbal communication of receipt is obtained. Neither the Seller, the Guarantor nor the Pledgor shall be entitled to any notices of any nature whatsoever from the Purchaser except with respect to matters for which this Agreement or the Repurchase Documents specifically and expressly provide for the giving of notice by the Purchaser to the Seller, the Guarantor and/or the Pledgor and, except with respect to matters for which the Seller, the Guarantor or the Pledgor is not, pursuant to Applicable Law, permitted to waive the giving of notice.

Section 13.3 Set-offs .

In addition to any rights and remedies of the Purchaser provided by this Agreement , the Repurchase Documents and by Applicable Law, the Purchaser shall have the right, without prior notice to the Seller or the Guarantor, any such notice being expressly waived by the Seller and the Guarantor to the extent permitted by Applicable Law, upon any amount becoming due and payable by the Seller to the Purchaser hereunder, under the Repurchase Documents or otherwise (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all monies and other property of the Seller, any and all deposits (general or special, time or demand, provisional or final), in any currency, and any and all other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, and in each case at any time held or owing by the Purchaser or any Affiliate thereof to or for the credit or the account of the Seller. The Purchaser agrees promptly to notify the Seller and the Guarantor after any such set-off and application made by the Purchaser, provided that the failure to give such notice shall not affect the validity of such set-off and application. The Seller and the Guarantor hereby waive any right of setoff it may have or to which it may be entitled under this Agreement from time to time against the Purchaser or its assets.

Section 13.4 No Waiver; E tc.

(a) Upon the occurrence and during the continuance of an Event of Default, the Purchaser shall have, with respect to the security interest in the Purchased Assets granted pursuant to Article VIII of this Agreement, and in addition to all other rights and remedies available to the Purchaser under this Agreement or other Applicable Law, all rights and remedies of a secured party upon default under the UCC.

(b) The Seller and the Guarantor agree, to the full extent that it may lawfully so agree, that neither it nor anyone claiming through or under it will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in force in any locality where any Purchased Items may be situated in order to prevent, hinder or delay the enforcement or foreclosure of this Agreement, or the absolute sale of any of the Purchased Items or any part thereof, or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereof, and the Seller and the Guarantor, each for itself and all who may at any time claim through or under it, hereby waives, to the full extent that it may be lawful so to do, the benefit of all such laws and any and all right to have any of the properties or assets constituting the Purchased Items marshaled upon any such sale, and agrees that the Purchaser or any court having jurisdiction to foreclose the security interests granted in this Agreement may sell the Purchased Items as an entirety or in such parcels as the Purchaser or such court may determine.

(c) No failure on the part of the Purchaser to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy hereunder preclude any further exercise thereof or the exercise of any other right. The rights and remedies herein provided are cumulative and not exclusive of any rights and remedies provided by Applicable Law . Application of the Post-Default Rate or increased Pricing Spread after a Default or Event of Default shall not be deemed to constitute a waiver of any Default or Event of Default or any rights or remedies of the Purchaser under this Agreement, any other Repurchase Documents or Applicable Law, or a consent to any extension of time for the payment or performance of any obligation with respect to which the Post-Default Rate or increase in Pricing Spread after an Event of Default may be invoked.

(d) In the event that a claim or adjudication is made that the Purchaser has acted unreasonably or unreasonably delayed acting in any case where by Applicable Law or under this Agreement or the other Repurchase Documents it has an obligation to act reasonably or promptly, the Purchaser shall not be liable for any punitive, consequential, indirect or special damages in connection therewith or any other breach or default by the Purchaser, and the Seller’s and the Guarantor’s sole remedies shall be limited to commencing an action seeking injunctive relief, actual damages or declaratory judgment .

Section 13.5 Binding Effect .

This Agreement shall be binding upon and inure to the benefit of the Purchaser, the Swap Counterparty, the Seller and the Guarantor and their respective successors and permitted assigns.

Section 13.6 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue .

Section 13.7 Jurisdiction; Waiver of Jury Trial .

(a) EACH OF THE PARTIES HERETO HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

Section 13.8 Costs, Expenses and Taxes .

(a) The Seller agrees to pay as and when billed by the Purchaser all of the reasonable out-of-pocket costs and expenses incurred by the Purchaser in connection with the development, preparation, execution and delivery of, and any amendment, supplement, renewal, extension or modification to or waiver of, this Agreement, the Repurchase Documents, any Transaction hereunder and any other documents and agreements prepared in connection herewith or therewith. The Seller agrees to pay as and when billed by the Purchaser all of the reasonable out-of-pocket costs and expenses incurred in connection with the consummation and administration of the transactions contemplated hereby and thereby including, without limitation, (i) all the reasonable fees and out-of-pocket expenses of counsel for the Purchaser with respect thereto and with respect to advising the Purchaser as to its respective rights and remedies under this Agreement, the Repurchase Documents and the other documents to be delivered hereunder or in connection herewith, (ii) all costs and expenses, if any (including reasonable counsel fees and expenses) incurred by the Purchaser in connection with the enforcement of this Agreement, the Repurchase Documents and the other documents to be delivered hereunder or thereunder or in connection herewith or therewith and (iii) all the due diligence, inspection, audit, testing, review, recording, travel, lodging or other administrative costs and expenses incurred by the Purchaser with respect to such Person’s review, consideration and purchase or proposed purchase of any Mortgage Asset, any Purchased Asset or any Purchased Item under this Agreement and the other Repurchase Documents (including any costs necessary or incidental to the execution of any Transaction under this Agreement), including, but not limited to, those costs and expenses incurred by the Purchaser and reimbursable by the Seller pursuant to Subsection 11.1(a) of this Agreement.

(c) The Seller shall pay on demand all other reasonable costs, expenses and Taxes (excluding income, franchise and similar taxes) incurred by the Purchaser (“ Other Costs ”), including, without limitation, all reasonable costs and expenses incurred by the Purchaser in connection with periodic audits of the Seller’s, the Guarantor’s, the Pledgor’s or any Servicer’s books and records.

Section 13.9 Legal Matters .

(a) In the event of any conflict between the terms of this Agreement, any other Repurchase Document and any Confirmation, the documents shall control in the following order of priority: first , the terms of the Confirmation shall prevail, then the terms of this Agreement shall prevail, and then the terms of the other Repurchase Documents shall prevail.

(b) Each of the Seller and the Guarantor hereby acknowledges that:

(i) it has been advised by counsel of its choosing in the negotiation, execution and delivery of the Repurchase Documents;

(ii) it has no fiduciary relationship with the Purchaser (including under any Repurchase Document); and

(iii) no joint venture exists with the Purchaser.

Section 13.10 Recourse .

No recourse under or with respect to any obligation, covenant or agreement (including, without limitation, the payment of any fees or any other obligations) of the Purchaser, the Seller or the Guarantor as contained in this Agreement or any other Repurchase Document entered into by any such party pursuant hereto or thereto or in connection herewith or therewith shall be had against any administrator of the Purchaser, the Seller, the Pledgor or the Guarantor or any incorporator, Affiliate, owner, member, partner, stockholder, officer, director, employee, agent or attorney of the Purchaser, the Seller, the Pledgor or the Guarantor, or of any such administrator, as such, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood that the agreements of the Purchaser, the Seller, the Pledgor and the Guarantor contained in this Agreement and all of the other agreements, instruments and documents entered into by any such party pursuant hereto or thereto or in connection herewith or therewith are, in each case, solely the corporate obligations of the Purchaser, the Seller, the Pledgor and the Guarantor, and that no personal liability whatsoever shall attach to or be incurred by any administrator of the Purchaser, the Seller, the Pledgor or the Guarantor or any incorporator, owner, member, partner, stockholder, Affiliate, officer, director, employee, agent or attorney of the Purchaser, the Seller, the Pledgor or the Guarantor, or of any such administrator, as such, or any other of them, under or by reason of any of the obligations, covenants or agreements of the Purchaser, the Seller, the Pledgor or the Guarantor contained in this Agreement, the Repurchase Documents or in any other such instruments, documents or agreements, or that are implied therefrom, and that any and all personal liability of every such administrator of the Purchaser, the Seller, the Pledgor and the Guarantor and each incorporator, owner, member, partner, stockholder, Affiliate, officer, director, employee, agent or attorney of the Purchaser, the Seller, the Pledgor and the Guarantor, or of any such administrator, or any of them, for breaches by the Purchaser, the Seller, the Pledgor or the Guarantor of any such obligations, covenants or agreements, which liability may arise either at common law or at equity, by statute or constitution, or otherwise, is hereby expressly waived as a condition of and in consideration for the execution of this Agreement. The provisions of this Section 13.10 shall survive the termination of this Agreement until the expiration of the applicable statute of limitations.

Section 13.11 Protection of Right, Title and Interest; Further Action Evidencing Transactions .

(a) The Seller agrees that, from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that the Purchaser may reasonably request in order to perfect, protect or more fully evidence the Transactions hereunder and the security interest granted in the Purchased Items, or to enable the Purchaser to exercise and enforce its rights and remedies hereunder, under any Repurchase Document or under any Purchased Item.

(b) If the Seller fails to perform any of its obligations hereunder, the Purchaser may (but shall not be required to) perform, or cause performance of, such obligation; and the Purchaser’s reasonable costs and expenses incurred in connection therewith shall be payable by the Seller. The Seller irrevocably appoints the Purchaser as its attorney-in-fact and authorizes the Purchaser to act on behalf of the Seller to file financing statements necessary or desirable in the Purchaser’s discretion to perfect and to maintain the perfection and priority of the security interest in the Purchased Items. This appointment is coupled with an interest and is irrevocable.

Section 13.12 Term of this Agreement

This Agreement, including, without limitation, the Seller’s, the Guarantor’s, and the Pledgor’s representations, agreements, covenants, obligations and duties set forth herein, creates and constitutes the continuing obligation of the parties hereto in accordance with its terms and shall remain in full force and effect until the Obligations are paid in full; provided , however , notwithstanding the repayment in full of the Obligations and/or the termination of this Agreement, the indemnification and payment provisions of Article XI , the provisions of Subsections 2.5(b) , 2.13 , 2.14 , 13.7 , 13.8 , 13.10 and 13.13 , and any other provision that by its terms expressly survives termination, shall each be continuing and shall survive any termination of this Agreement until the expiration of the statute of limitations applicable thereto. This Agreement and the other Repurchase Documents shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Obligations is rescinded or must otherwise be restored or returned by the Purchaser as a preference, fraudulent conveyance or otherwise under any Insolvency Law, all as though such payment had not been made; provided that in the event payment of all or any part of the Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including, without limitation, any reasonable legal fees and disbursements) incurred by the Purchaser in defending and enforcing such reinstatement shall be deemed to be included as a part of the Obligations.

Section 13.13 Confidentiality .

(a) Each of the Purchaser, the Seller, the Guarantor, the Pledgor and their Affiliates shall maintain and shall cause each of its employees, officers, directors, managers, partners, owners, agents, members and shareholders to maintain the confidentiality of this Agreement, the Repurchase Documents and all information with respect to the other parties, including all information regarding the business of such other parties obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that the Purchaser, the Seller, the Guarantor, the Pledgor and their respective employees, officers, directors, managers, partners, owners, agents, members and shareholders may (i) disclose such information to its external accountants, attorneys, investors, potential investors, advisors and the agents of such Persons (“ Excepted Persons ”) who have a need to know such information; provided , however , that each Excepted Person shall, as a condition to any such disclosure, agree that such information shall be used solely in connection with such Excepted Person’s evaluation of, or relationship with, the Purchaser, the Seller, the Guarantor, the Pledgor and their Affiliates, (ii) disclose such information as is required by Applicable Law, and (iii) disclose this Agreement, the Repurchase Documents and such information in any suit, action, proceeding or investigation (whether in law or in equity or pursuant to arbitration) involving this Agreement, the Repurchase Documents or any Interest Rate Protection Agreement for the purpose of defending itself, reducing its liability, or protecting or exercising any of its claims, rights, remedies or interests under or in connection with this Agreement, the Repurchase Documents or any Interest Rate Protection Agreement. It is understood that the financial terms that may not be disclosed except in compliance with this Section 13.13 include, without limitation, all fees and other pricing terms, and all Events of Default and priority of payment provisions.

(b) Anything herein to the contrary notwithstanding, each of the Purchaser, the Seller, the Guarantor and the Pledgor hereby consents to the disclosure of any nonpublic information with respect to it (i) to any other party, (ii) to any permitted prospective or actual assignee, participant or pledgee of any of them , or (iii) to any officers, directors, employees, agents, outside accountants and attorneys of any of the foregoing, provided each such Person is informed of the confidential nature of such information. In addition, the Purchaser, the Seller and the Guarantor may disclose any such nonpublic information as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law).

(c) Notwithstanding anything herein to the contrary, the foregoing shall not be construed to prohibit (i) disclosure of any and all information that is or becomes publicly known; (ii) disclosure of any and all information (A) if required to do so by any Applicable Law, (B) to any Government Authority having or claiming authority to regulate or oversee any respects of the Purchaser’s, the Seller’s, the Guarantor’s or the Pledgor’s business or that of their Affiliates, (C) pursuant to any subpoena, civil investigative demand or similar demand or request of any court, regulatory authority, arbitrator or arbitration to which the Purchaser, the Seller, the Guarantor, the Pledgor or an officer, director, employer, shareholder, owner, member, partner, agent, employee or Affiliate of the Purchaser, the Seller, the Guarantor or the Pledgor is a party, (D) in any preliminary or final offering circular, registration statement or contract or other document approved in advance by the Purchaser, the Seller or the Guarantor, as applicable, or (E) to any Affiliate, independent or internal auditor, agent, employee or attorney of any custodian appointed by the Purchaser, the Seller or the Guarantor having a need to know the same, provided that such custodian advises such recipient of the confidential nature of the information being disclosed; or (iii) any other disclosure authorized by the Purchaser, the Seller, the Guarantor or the Pledgor.

(d) Notwithstanding anything to the contrary contained herein, the Repurchase Documents or in any related document, all Persons may disclose to any and all Persons, without limitation of any kind, the federal income tax treatment of any of the transactions contemplated by this Agreement, the Repurchase Documents or any other related document, any fact relevant to understanding the federal tax treatment of such transactions and all materials of any kind (including opinions or other tax analyses) relating to such federal income tax treatment.

(e) Notwithstanding anything to the contrary contained herein or in any Repurchase Document, Guarantor and any Affiliate of Guarantor shall be entitled to disclose any and all terms of any Repurchase Document (including the public filing thereof) if the Guarantor, in its sole discretion, deems it necessary or appropriate under the rules or regulations of the Securities and Exchange Commission and/or the New York Stock Exchange.

Section 13.14 Execution in Counterparts .

(a) This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts (including by facsimile), each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

(b) Each provision of this Agreement shall be valid, binding and enforceable to the fullest extent permitted by Applicable Law. In case any provision in or obligation, duty, covenant or agreement under this Agreement or the other Repurchase Documents shall be invalid, illegal or unenforceable in any jurisdiction (either in its entirety or as applied to any Person, fact, circumstance, action or inaction), the validity, legality and enforceability of the remaining provisions, obligations, duties, covenants and agreements, or of such provision, obligation, duty, covenant or agreement in any other jurisdiction or as applied to any Person, fact, circumstance, action or inaction, shall not in any way be affected or impaired thereby.

(c) This Agreement and any other Repurchase Document executed in connection herewith contain the final and complete integration of all prior expressions by the parties hereto and thereto with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties hereto and thereto with respect to the subject matter hereof and thereof, superseding all prior oral or written understandings.

Section 13.15 Entire Agreement; Severability .

This Agreement shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

Section 13.16 Non-assignability; Termination .

(a) The Purchaser may at any time and without the permission of, but with contemporaneous notice to, the Seller, sell, assign, transfer, pledge or grant a security interest or sell a participation interest in, its rights and interests under the Repurchase Documents (or any portion thereof) to any Person; provided , however , that (i) if the Purchaser is assigning or selling a participation interest in more than 50% of the Maximum Amount to a Person that is not a Pre-Approved Purchaser and there is no Default or Event of Default, then the Seller must first approve such assignment or participation (which approval shall not be unreasonably withheld, conditioned or delayed), (ii) provided there is no Event of Default, the Purchaser will retain control over decisions relating to waivers and consents (including, without limitation, Market Value determinations, margin calls, term extensions and approval of Eligible Assets) expressly contemplated under the Repurchase Documents and (iii) assignments by the Purchaser shall be in a minimum amount of $5,000,000 unless the Purchaser is assigning all of its remaining interests under this Agreement. The parties to any such assignment, grant or sale of participation interest shall execute and deliver to the Purchaser, for its acceptance and recording in its books and records, such agreement or document as may be satisfactory to such parties and the Purchaser. Notwithstanding anything contained in this Section 13.16 to the contrary, after an Event of Default that is continuing, the Purchaser may sell any Purchased Asset (or portion thereof) without the consent of the Seller in accordance with the Purchaser’s exercise of remedies under this Agreement.

(b) The Seller agrees to cooperate with the Purchaser at the Purchaser’s cost in connection with any such sale, assignment, transfer, pledge or participation and to enter into such restatements of, and amendments, supplements and other modifications to, the Repurchase Documents in order to give effect to such assignment, transfer or sale.

(c) The Seller shall not assign or delegate, or grant or transfer any interest in, or permit any Lien to exist upon, the Seller’s rights, obligations or duties under this Agreement or the Repurchase Documents without the prior written consent of the Purchaser (which consent may be withheld in the Purchaser’s discretion). Any attempt by the Seller to assign any of its rights or obligations under this Agreement without the prior written consent of the Purchaser (which consent may be withheld in the Purchaser’s discretion) shall be null and void.

Section 13.17 Single Agreements .

Purchaser and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of the Seller and the Guarantor agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, and (ii) that payments, deliveries and other transfers made by it or others on its behalf in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.

Section 13.18 Disclosure Relating to Certain Federal Protections .

The parties acknowledge that they have been advised that:

(a) in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“ SEC ”) under Section 15 of the Securities Exchange Act of 1934 (“ 1934 Act ”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“ SIPA ”) do not protect the other party with respect to any Transaction hereunder;

(b) in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and

(c) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable; and

(d) in the case of Transactions in which one of the parties is an “insured depository institution” as that term is defined in Section 1813(c)(2) of Title 12 of the United States Code, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund or the Bank Insurance Fund, as applicable.

Section 13.19 Intent .

(a) The parties recognize that each Transaction is a “ Repurchase Agreement ” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Purchased Assets subject to such Transaction or the term of such Transaction would render such definition inapplicable) and a “ Securities Contract ” as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of Purchased Assets subject to such Transaction would render such definition inapplicable).

(b) The parties agree and acknowledge that if a party hereto is an “ Insured Depository Institution ,” as such term is defined in the Federal Deposit Insurance Act, as amended (“ FDIA ”), then each Transaction hereunder is a “ Qualified Financial Contract ,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of Purchased Assets subject to such Transaction would render such definition inapplicable).

(c) It is understood and agreed that this Agreement constitutes a “Master Netting Agreement” as that term is defined in Section 101 of Title 11 of the United States Code.

(d) It is understood that this Agreement constitutes a “ Netting Contract ” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“ FDICIA ”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “ Covered Contractual Payment Entitlement ” or “ Covered Contractual Payment Obligation ”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “ Financial Institution ” as that term is defined in FDICIA or regulations promulgated thereunder).

(e) It is understood that any party’s right to liquidate Purchased Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Section 10.2 is a contractual right to liquidate such Transaction as described in Sections 555, 559 and 561 of Title 11 of the United States Code, as amended.

Section 13.20 Review of Due Diligence and Books and Records .

Each of the Seller and the Guarantor acknowledge that the Purchaser has the right to perform continuing due diligence reviews with respect to the Purchased Items and the Seller and the Guarantor for purposes of verifying compliance with the representations, warranties, covenants, agreements and specifications made hereunder, under the Repurchase Documents or otherwise, and each of the Seller and the Guarantor agree that, upon reasonable (but no less than one (1) Business Day’s) prior notice, unless an Event of Default shall have occurred, in which case no notice is required, to the Seller or the Guarantor, as applicable, the Purchaser or its authorized representatives shall be permitted during normal business hours to examine, inspect, and make copies and extracts of, the books and records of the Seller and the Guarantor, the Mortgage Asset Files and any and all documents, records, agreements, instruments or information relating to the Purchased Items in the possession or under the control of the Seller, the Guarantor, and/or the Custodian. Each of the Seller and the Guarantor also shall make available to the Purchaser a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Seller, the Guarantor, the Mortgage Asset Files and the Purchased Items. Each of the Seller and the Guarantor shall also make available to the Purchaser any accountants or auditors of the Seller and the Guarantor to answer any questions or provide any documents as the Purchaser may require. The Seller and the Guarantor shall also cause each of the Servicers and PSA Servicers (to the extent permitted under the applicable Pooling and Servicing Agreement) to cooperate with the Purchaser by permitting the Purchaser to conduct due diligence reviews of files of each such Servicer and PSA Servicer. Without limiting the generality of the foregoing, each of the Seller and the Guarantor acknowledge that the Purchaser may purchase Purchased Items from the Seller based solely upon the information provided by the Seller or the Guarantor to the Purchaser in the Seller Asset Schedule and the representations, warranties and covenants contained herein, and that the Purchaser, at its option, has the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Items purchased in a Transaction, including, without limitation, ordering new credit reports and new appraisals on the related Underlying Mortgaged Properties and otherwise re-generating the information used to originate such Purchased Items. The Purchaser may underwrite such Purchased Items itself or engage a mutually agreed upon third party underwriter to perform such underwriting. Each of the Seller and the Guarantor agrees to cooperate with the Purchaser and any third party underwriter in connection with such underwriting, including, but not limited to, providing the Purchaser and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Items in the possession, or under the control, of the Seller or the Guarantor. The Seller shall pay all out-of-pocket costs and expenses incurred by the Purchaser in connection with the Purchaser’s activities pursuant to this Section 13.20 .

Section 13.21 Use of Employee Plan Assets .

Section 13.22 Time of the Essence .

Time is of the essence with respect to all obligations, duties, covenants, agreements, notices or actions or inactions of the Purchaser, the Seller and the Guarantor under this Agreement and the other Repurchase Documents.

Section 13.23 Construction .

This Agreement shall be construed fairly as to the parties hereto and not in favor of or against any party, regardless of which party or which party’s counsel prepared this Agreement.

Section 13.24 Joint and Several Obligations .

(a) At all times during which there is more than one (1) Seller under this Agreement, the liability of each Seller shall be joint and several and the joint and several obligations of each Seller under the Repurchase Documents (a) (i) shall be absolute and unconditional and shall remain in full force and effect (or be reinstated) until all the Obligations shall have been paid in full and the expiration of any applicable preference or similar period pursuant to any bankruptcy, insolvency, reorganization, moratorium or similar law, or at law or in equity, without any claim having been made before the expiration of such period asserting an interest in all or any part of any payment(s) received by the Purchaser, and (ii) until such payment has been made, shall not be discharged, affected, modified or impaired on the happening from time to time of any event, including, without limitation, any of the following, whether or not with notice to or the consent of any Seller, the Guarantor or the Pledgor, (A) the waiver, compromise, settlement, release, termination or amendment (including, without limitation, any extension or postponement of the time for payment or performance or renewal or refinancing) of any or all of the obligations or agreements of any Seller, the Guarantor or the Pledgor under the Agreement or any Repurchase Document, (B) the failure to give notice to any Seller, the Guarantor or the Pledgor of the occurrence of an Event of Default under any of the Repurchase Documents, (C) the release, substitution or exchange by the Purchaser of any or all of the Purchased Items (whether with or without consideration) or the acceptance by the Purchaser of any additional collateral or the availability or claimed availability of any other collateral or source of repayment or any nonperfection or other impairment of collateral, (D) the release of any Person primarily or secondarily liable for all or any part of the Obligations, whether by the Purchaser or in connection with any voluntary or involuntary liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors or similar event or proceeding affecting any or all of any Seller, the Guarantor, the Pledgor or any other Person who, or any of whose Property, shall at the time in question be obligated in respect of the Obligations or any part thereof, or (E) to the extent permitted by Applicable Law, any other event, occurrence, action or circumstance that would, in the absence of this Section 13.24 , result in the release or discharge of any or all of any Seller from the performance or observance of any obligation, covenant or agreement contained in the Agreement or the Repurchase Documents; (b) each Seller expressly agrees that the Purchaser shall not be required first to initiate any suit or to exhaust its remedies against any Seller, the Guarantor, the Pledgor or any other Person to become liable, or against any of the Purchased Items or the Pledged Collateral, in order to enforce this Agreement or the Repurchase Documents and each Seller, the Guarantor and the Pledgor expressly agree that, notwithstanding the occurrence of any of the foregoing, each Seller shall be and remain directly and primarily liable for all sums due under the Agreement or any of the Repurchase Documents; and, (c) on disposition by the Purchaser of any Property encumbered by any Purchased Items, each Seller shall be and shall remain jointly and severally liable for any deficiency.

(b) Each Seller hereby agrees that, to the extent another Seller shall have paid more than its proportionate share of any payment made hereunder, the Seller shall be entitled to seek and receive contribution from and against any other Seller which has not paid its proportionate share of such payment; provided however , that the provisions of this Section 13.24 shall in no respect limit the obligations and liabilities of any Seller to the Purchaser, and, notwithstanding any payment or payments made by any Seller (the “ paying Seller ”) hereunder or any set-off or application of funds of the paying Seller by the Purchaser, the paying Seller shall not be entitled to be subrogated to any of the rights of the Purchaser against any other Seller or any collateral security or guarantee or right of offset held by the Purchaser, nor shall the paying Seller seek or be entitled to seek any contribution or reimbursement from the other Seller in respect of payments made by the paying Seller hereunder, until all amounts owing to the Purchaser by the Seller under the Repurchase Documents are paid in full. If any amount shall be paid to the paying Seller on account of such subrogation rights at any time when all such amounts shall not have been paid in full, such amount shall be held by the paying Seller in trust for the Purchaser, segregated from other funds of the paying Seller, and shall, forthwith upon receipt by the paying Seller, be turned over to the Purchaser in the exact form received by the paying Seller (duly indorsed by the paying Seller to the Purchaser, if required), to be applied against amounts owing to the Purchaser by the Seller under the Repurchase Documents, whether matured or unmatured, in such order as the Purchaser may determine in its discretion.

Section 13.25 Swap Counterparty .

The Swap Counterparty shall be a third party beneficiary of the terms and provisions of this Agreement and the other Repurchase Documents. Notwithstanding anything contained herein to the contrary, all representations, warranties, duties and covenants of the Seller and the Guarantor to or for the benefit of the Purchaser shall also be to and for the benefit of the Swap Counterparty, regardless of whether the same is expressly stated in each instance.

Section 13.26 Amendment and Restatement .

This Agreement amends, restates and supersedes in its entirety the Existing Agreement. Notwithstanding the amendment and restatement of the Existing Agreement by this Agreement: (a) each Transaction outstanding on the date hereof under the Existing Agreement (other than those refinanced under a separate facility) shall continue in effect as a Transaction hereunder, without any transfer, conveyance, diminution or other modification thereto or effect thereon occurring or being deemed to occur by reason of the amendment and restatement of the Existing Agreement hereby and (b) the Existing Seller shall continue to be liable to the Purchaser for (i) all “Obligations” (under and as defined in the Existing Agreement) accrued to the date hereof under the Existing Agreement and (ii) all agreements on the part of the Existing Seller under the Existing Agreement to indemnify the Purchaser or any Affected Party in connection with events or conditions arising or existing prior to the effective date of this Agreement, including, but not limited to, those events and conditions set forth in Section 11 thereof. This Agreement is given in substitution for the Existing Agreement and not as payment of any of the obligations of the Existing Seller thereunder, and is in no way intended to constitute a novation of the Existing Agreement. Nothing contained herein is intended to amend, modify or otherwise affect any obligation of the Existing Seller, the Guarantor or the Pledgor existing prior to the date hereof. Upon the effectiveness of this Agreement, each reference to the Existing Agreement in any other Repurchase Document, or document, instrument or agreement executed and/or delivered in connection therewith shall mean and be a reference to this Agreement unless the context otherwise requires. Upon the effectiveness of this Agreement, the terms of this Agreement shall govern all aspects of the Facility, including, without limitation, the eligibility of Purchased Assets purchased under the Existing Agreement (other than those refinanced under a separate facility) and any settlements to be made with respect thereto. Any Existing Seller not party to this Agreement as a Seller shall no longer be a Seller and shall not be liable for the Obligations under this Agreement and the other Repurchase Documents.

Section 13.27 Heading and Exhibits .

[Remainder of Page Intentionally Left Blank.]

IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.


THE SELLERS:	NRFC WA HOLDINGS, LLC,
	a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS II, LLC,
	a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings II, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS VII, LLC,
	a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings VII, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS X, LLC,
	a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings X, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS XI, LLC,
	a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings XI, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS XII, LLC,
	a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings XII, LLC c/o NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE PURCHASER:	WACHOVIA BANK, NATIONAL ASSOCIATION

	By:	/s/ Joseph F. Cannon
		Name: Joseph F. Cannon Title: Vice President

	Wachovia Bank, National Association One Wachovia Center, Mail Code: NC0166 301 South College Street Charlotte, North Carolina 28288
	Attention:	Joseph F. Cannon
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 383-2324
	Email Address: Joe.Cannon@wachovia.com

[Signatures Continued on the Following Page]


THE GUARANTORS:	NORTHSTAR REALTY FINANCE CORP.,
	a Maryland corporation

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary

	NorthStar Realty Finance Corp. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE GUARANTORS (cont.):	NORTHSTAR REALTY FINANCE L.P.,
	a Delaware limited partnership,

	By:	NorthStar Realty Finance Corp., a Maryland corporation, its general partner

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary

	NorthStar Realty Finance L.P. 399 Park Avenue, 18th floor New York, New York 10022
	Attention:	Andy Richardson Al Tylis, Esq. Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650 (212) 547-2641 (212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP 75 East 55 ^th Street New York, New York 10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SWAP COUNTERPARTY:	WACHOVIA BANK, NATIONAL ASSOCIATION ,
	a national banking association

	By:	/s/ John Miechkowski
		Name: John Miechkowski Title: Director

	Wachovia Bank, National Association One Wachovia Center, Mail Code: NC0166 301 South College Street Charlotte, North Carolina 28202-0600
	Attention:	Bruce M. Young, Senior Vice President, Risk Management
	Facsimile No.:	(704) 383-0575
	Confirmation No.:	(704) 383-8778

JUNIOR SUBORDINATED INDENTURE

between

NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP,

as Issuer,

NORTHSTAR REALTY FINANCE CORP.,

as Guarantor,

and

WILMINGTON TRUST COMPANY

as Trustee

Dated as of June 7, 2007

TABLE OF CONTENTS

		Page
	ARTICLE I

	Definitions and Other Provisions of General Application

SECTION 1.1.	Definitions.	1
SECTION 1.2.	Compliance Certificate and Opinions.	11
SECTION 1.3.	Forms of Documents Delivered to Trustee.	12
SECTION 1.4.	Acts of Holders.	12
SECTION 1.5.	Notices, Etc.	14
SECTION 1.6.	Notice to Holders; Waiver.	15
SECTION 1.7.	Effect of Headings and Table of Contents.	15
SECTION 1.8.	Successors and Assigns.	15
SECTION 1.9.	Separability Clause.	15
SECTION 1.10.	Benefits of Indenture.	16
SECTION 1.11.	Governing Law.	16
SECTION 1.12.	Submission to Jurisdiction.	16
SECTION 1.13.	Non-Business Days.	16

ARTICLE II

Security Forms

SECTION 2.1.	Form of Security.	17
SECTION 2.2.	Restricted Legend.	17
SECTION 2.3.	Form of Trustee’s Certificate of Authentication.	17
SECTION 2.4.	Temporary Securities.	17
SECTION 2.5.	Definitive Securities.	18

ARTICLE III

The Securities

SECTION 3.1.	Payment of Principal and Interest.	18
SECTION 3.2.	Denominations.	20
SECTION 3.3.	Execution, Authentication, Delivery and Dating.	20
SECTION 3.4.	Global Securities.	21
SECTION 3.5.	Registration, Transfer and Exchange Generally.	23
SECTION 3.6.	Mutilated, Destroyed, Lost and Stolen Securities.	24

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SECTION 3.7.	Persons Deemed Owners.	25
SECTION 3.8.	Cancellation.	25
SECTION 3.9.	RESERVED.	25
SECTION 3.10.	Right of Set-Off.	25
SECTION 3.11.	Agreed Tax Treatment.	25
SECTION 3.12.	CUSIP Numbers.	25

ARTICLE IV

Satisfaction and Discharge

SECTION 4.1.		Satisfaction and Discharge of Indenture.		26
SECTION 4.2.		Application of Trust Money.		27

ARTICLE V

Remedies

SECTION 5.1.	Events of Default.	27
SECTION 5.2.	Acceleration of Maturity; Rescission and Annulment.	28
SECTION 5.3.	Collection of Indebtedness and Suits for Enforcement by Trustee.	29
SECTION 5.4.	Trustee May File Proofs of Claim.	30
SECTION 5.5.	Trustee May Enforce Claim Without Possession of Securities.	31
SECTION 5.6.	Application of Money Collected.	31
SECTION 5.7.	Limitation on Suits.	31
SECTION 5.8.	Unconditional Right of Holders to Receive Principal, Premium	32
	and Interest; Direct Action by Holders of Preferred Securities.	32
SECTION 5.9.	Restoration of Rights and Remedies.	32
SECTION 5.10.	Rights and Remedies Cumulative.	32
SECTION 5.11.	Delay or Omission Not Waiver.	33
SECTION 5.12.	Control by Holders.	33
SECTION 5.13.	Waiver of Past Defaults.	33
SECTION 5.14.	Undertaking for Costs.	34
SECTION 5.15.	Waiver of Usury, Stay or Extension Laws.	34

ARTICLE VI

The Trustee

SECTION 6.1.	Corporate Trustee Required.	34
SECTION 6.2.	Certain Duties and Responsibilities.	35
SECTION 6.3.	Notice of Defaults.	36
SECTION 6.4.	Certain Rights of Trustee.	36

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SECTION 6.5.	May Hold Securities.	38
SECTION 6.6.	Compensation; Reimbursement; Indemnity.	38
SECTION 6.7.	Resignation and Removal; Appointment of Successor.	39
SECTION 6.8.	Acceptance of Appointment by Successor.	40
SECTION 6.9.	Merger, Conversion, Consolidation or Succession to Business.	41
SECTION 6.10.	Not Responsible for Recitals or Issuance of Securities.	41
SECTION 6.11.	Appointment of Authenticating Agent.	41

ARTICLE VII

Holders' Lists and Reports by Trustee and Company

SECTION 7.1.	Company to Furnish Trustee Names and Addresses of Holders.	43
SECTION 7.2.	Preservation of Information, Communications to Holders.	43
SECTION 7.3.	Reports by Company and Trustee.	43

ARTICLE VIII

Consolidation, Merger, Conveyance, Transfer or Lease

SECTION 8.1.	Company and Guarantor May Consolidate, Etc.,
	Only on Certain Terms.	44
SECTION 8.2.	Successor Company or Guarantor Substituted.	45

ARTICLE IX

Supplemental Indentures

SECTION 9.1.	Supplemental Indentures without Consent of Holders.	46
SECTION 9.2.	Supplemental Indentures with Consent of Holders.	47
SECTION 9.3.	Execution of Supplemental Indentures.	48
SECTION 9.4.	Effect of Supplemental Indentures.	48
SECTION 9.5.	Reference in Securities to Supplemental Indentures.	48

ARTICLE X

Covenants

SECTION 10.1.	Payment of Principal, Premium and Interest.	49
SECTION 10.2.	Money for Security Payments to be Held in Trust.	49
SECTION 10.3.	Statement as to Compliance.	50
SECTION 10.4.	Calculation Agent.	50
SECTION 10.5.	Additional Tax Sums.	51
SECTION 10.6.	Additional Covenants.	51

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SECTION 10.7.		Waiver of Covenants.		53
SECTION 10.8.		Treatment of Securities.		53

ARTICLE XI

Redemption of Securities

SECTION 11.1.	Optional Redemption.	53
SECTION 11.2.	Special Event Redemption.	53
SECTION 11.3.	Election to Redeem; Notice to Trustee.	54
SECTION 11.4.	Selection of Securities to be Redeemed.	54
SECTION 11.5.	Notice of Redemption.	54
SECTION 11.6.	Deposit of Redemption Price.	55
SECTION 11.7.	Payment of Securities Called for Redemption.	55

ARTICLE XII

Subordination of Securities

SECTION 12.1.	Securities Subordinate to Senior Debt of the Company.	56
SECTION 12.2.	No Payment When Senior Debt of the Company in Default;
	Payment Over of Proceeds Upon Dissolution, Etc.	56
SECTION 12.3.	Payment Permitted If No Default.	58
SECTION 12.4.	Subrogation to Rights of Holders of Senior Debt of the Company.	58
SECTION 12.5.	Provisions Solely to Define Relative Rights.	58
SECTION 12.6.	Trustee to Effectuate Subordination.	59
SECTION 12.7.	No Waiver of Subordination Provisions.	59
SECTION 12.8.	Notice to Trustee.	59
SECTION 12.9.	Reliance on Judicial Order or Certificate of Liquidating Agent.	60
SECTION 12.10.	Trustee Not Fiduciary for Holders of Senior Debt of the Company.	60
SECTION 12.11.	Rights of Trustee as Holder of Senior Debt of the Company;
	Preservation of Trustee’s Rights.	61
SECTION 12.12.	Article Applicable to Paying Agents.	61

ARTICLE XIII

Guarantee

SECTION 13.1.	The Guarantee.	61
SECTION 13.2.	Guarantee Unconditional, etc.	61
SECTION 13.3.	Reinstatement.	62
SECTION 13.4.	Subrogation.	62

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ARTICLE XIV

Subordination of Guarantee

SECTION 14.1.	Securities Subordinate to Senior Debt of the Guarantor.	63
SECTION 14.2.	No Payment When Senior Debt of the Guarantor in Default;
	Payment Over of Proceeds Upon Dissolution, Etc.	63
SECTION 14.3.	Payment Permitted If No Default.	64
SECTION 14.4.	Subrogation to Rights of Holders of Senior Debt of the Guarantor.	65
SECTION 14.5.	Provisions Solely to Define Relative Rights.	65
SECTION 14.6.	Trustee to Effectuate Subordination.	66
SECTION 14.7.	No Waiver of Subordination Provisions.	66
SECTION 14.8.	Notice to Trustee.	66
SECTION 14.9.	Reliance on Judicial Order or Certificate of Liquidating Agent.	67
SECTION 14.10.	Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor.	67
SECTION 14.11.	Rights of Trustee as Holder of Senior Debt of the Guarantor;
	Preservation of Trustee’s Rights.	67
SECTION 14.12.	Article Applicable to Paying Agents.	68

SCHEDULES

Schedule A		Determination of LIBOR

Exhibit A		Form of Junior Subordinated Note
Exhibit B		Form of Officer’s Financial Certificate
Exhibit C		Form of Officer’s Certificate pursuant to Section 10.3

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J UNIOR S UBORDINATED I NDENTURE , dated as of June 7, 2007, between NorthStar Realty Finance Limited Partnership, a Delaware limited partnership (the “ Company ”), NorthStar Realty Finance Corp., a Maryland corporation (the “ Guarantor ”), and Wilmington Trust Company, a Delaware banking corporation, as Trustee (in such capacity, the “ Trustee ”).

R ECITALS OF THE C OMPANY

W HEREAS , the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the “ Securities ”) issued to evidence loans made to the Company of the proceeds from the issuance by NorthStar Realty Finance Trust VIII, a Delaware statutory trust (the “ Trust ”), of undivided preferred beneficial interests in the assets of the Trust (the “ Preferred Securities ”) and undivided common beneficial interests in the assets of the Trust (the “ Common Securities ” and, collectively with the Preferred Securities, the “ Trust Securities ”), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and the Guarantor has duly authorized the issuance of its guarantee of the Securities (the “ Guarantee ”) under this Indenture; and

W HEREAS , all things necessary to make this Indenture a valid agreement of the Company and the 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 I

Definitions and Other Provisions of General Application

SECTION 1.1. Definitions.

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

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

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

(d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;

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

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

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

“ Act ” when used with respect to any Holder, has the meaning specified in Section 1.4 .

“ Additional Interest ” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.

“ Additional Tax Sums ” has the meaning specified in Section 10.5 .

“ Additional Taxes ” means taxes, duties or other governmental charges imposed on the Trust as a result of a Tax Event (which, for the sake of clarity, does not include amounts required to be deducted or withheld by the Trust from payments made by the Trust to or for the benefit of the Holder of, or any Person that acquires a beneficial interest in, the Securities).

“ Administrative Trustee ” means, with respect to the Trust, a Person identified as an “Administrative Trustee” in the Trust Agreement, solely in its capacity as Administrative Trustee of the Trust under the Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor Administrative Trustee appointed as therein provided.

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

“ Applicable Depositary Procedures ” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.

“ Authenticating Agent ” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.

“ Board of Directors ” means the board of directors of the Company or the Guarantor, as the context requires, or any duly authorized committee of that board.

“ Board Resolution ” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the context requires, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

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

“ Calculation Agent ” has the meaning specified in Section 10.4 .

“Change of Control” shall be deemed to have occurred at such a time as

(i) the date a “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the ultimate “beneficial owner” (as defined in Rule 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have beneficial ownership of all shares of Voting Stock that such a person or group has the right to acquire regardless of when such right is first exercisable), directly or indirectly, of Voting Stock representing more than 50% of the total voting power of the total Voting Stock of the Guarantor;

(ii) the date the Guarantor sells, transfers or otherwise disposes of all or substantially all of its assets; or

(iii) the date of the consummation of a merger or share exchange of the Guarantor with another entity where stockholders of the Guarantor immediately prior to the merger or share exchange would not beneficially own, immediately after the merger or share exchange, Voting Stock representing 50% or more of all votes (without consideration of the rights of any class of stock to elect directors by a separate group vote) to which all stockholders of the entity issuing cash or securities in the merger or share exchange would be entitled in the election of directors, or where members of the Board of Directors of the Guarantor immediately prior to the merger or share exchange would not immediately after the merger or share exchange constitute a majority of the board of directors of the entity issuing cash or securities in the merger or share exchange.

“Change of Control Event” means the occurrence of a Change of Control immediately following which securities of the Surviving Entity are not listed on a national securities exchange registered pursuant to Section 6 of the Exchange Act.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Commission ” means the Securities and Exchange Commission.

“ Common Securities ” has the meaning specified in the first recital of this Indenture.

“ Company ” means the Person named as the “ Company ” 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 “ Company ” shall mean such successor Person.

“ Company Request ” and “ Company Order ” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, its President, its Chief Financial Officer, its Treasurer, its Secretary, a Vice President, an Assistant Treasurer or an Assistant Secretary, and delivered to the Trustee.

“ Corporate Trust Office ” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets.

“ Debt ” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).

“ Defaulted Interest ” has the meaning specified in Section 3.1 .

“ Delaware Trustee ” means, with respect to the Trust, the Person identified as the “Delaware Trustee” in the Trust Agreement, solely in its capacity as Delaware Trustee of the Trust under the Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware Trustee appointed as therein provided.

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

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

“ Distributions ” means amounts payable in respect of the Trust Securities as provided in the Trust Agreement and referred to therein as “Distributions.”

“ Dollar ” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.

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

“ EDGAR” means the Commission’s Electronic Data Gathering, Analysis and Retrieval system.

“ Equity Interests ” means any of (a) the partnership interests (general or limited) in a partnership, (b) the membership interests in a limited liability company or (c) the shares or stock interests (both common stock and preferred stock) in a corporation.

“ Event of Default ” has the meaning specified in Section 5.1 .

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

“ Expiration Date ” has the meaning specified in Section 1.4 .

“ GAAP ” means United States generally accepted accounting principles, consistently applied, from time to time in effect.

“ Global Security ” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.

“ Government Obligation ” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided , that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

“ Guarantee ” has the meaning specified in the first recital of this Indenture.

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

“ Holder ” means a Person in whose name a Security is registered in the Securities Register.

“ Indenture ” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.

“ Interest Payment Date ” means January 30 ^th , April 30 ^th , July 30 ^th and October 30 ^th of each year, commencing on July 30, 2007, during the term of this Indenture.

“Interest Period” means any period from (but excluding) an Interest Payment Date to (but including) the next succeeding Interest Payment Date.

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

“ Investment Company Event ” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation (including any announced prospective change) or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or, within ninety (90) days of the date of such opinion will be, considered an “investment company” that is required to be registered under the Investment Company Act, which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Securities.

“ LIBOR ” has the meaning specified in Schedule A .

“ LIBOR Business Day ” has the meaning specified in Schedule A .

“ LIBOR Determination Date ” has the meaning specified in Schedule A .

“Liquidation Amount” has the meaning specified in the Trust Agreement.

“Margin” means, for any Interest Period prior to and during which a Change of Control Event has occurred, 2.70% and for any Interest Period thereafter, 3.70%; provided that if following a Change of Control Event, securities of the Surviving Entity are listed on a national securities exchange registered pursuant to Section 6 of the Exchange Act, the Margin shall be 2.70% for the Interest Period in which such securities are listed on a national securities exchange registered pursuant to Section 6 of the Exchange Act and thereafter, and if at any time thereafter such securities are not so listed, the Margin shall once again be 3.70%.

“ Maturity ,” when used with respect to any Security, means the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

“ Notice of Default ” means a written notice of the kind specified in Section 5.1(d) .

“ Officer’s Certificate ” means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, the Secretary, a Vice President, an Assistant Treasurer or an Assistant Secretary, of the Company or the Guarantor, as applicable, and delivered to the Trustee.

“ Opinion of Counsel ” means a written opinion of counsel, who may be counsel for or an employee of the Company or the Guarantor or any Affiliate of the Company or the Guarantor.

“ Original Issue Date ” means the date of original issuance of each Security.

“ Outstanding ” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company or the Guarantor) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided , that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and

(iii) Securities that have been paid, or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;

provided , that, in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company, the Guarantor or any other obligor upon the Securities or any Affiliate of the Company, the Guarantor or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company, the Guarantor or any other obligor upon the Securities or any Affiliate of the Company, the Guarantor or such other obligor. Notwithstanding anything herein to the contrary, Securities initially issued to the Trust that are owned by the Trust shall be deemed to be Outstanding notwithstanding the ownership by the Company or an Affiliate of any beneficial interest in the Trust.

“ Paying Agent ” means the Trustee or any Person authorized by the Company to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.

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

“ Place of Payment ” means, with respect to the Securities, the Corporate Trust Office of the Trustee.

“ Preferred Securities ” has the meaning specified in the first recital of this Indenture.

“ Predecessor Security ” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under Section 3.6 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

“ Proceeding ” has the meaning specified in Section 12.2 .

“ Property Trustee ” means the Person identified as the “Property Trustee” in the Trust Agreement, solely in its capacity as Property Trustee of the Trust under the Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor Property Trustee appointed as therein provided.

“ Purchase Agreement ” means the Purchase Agreement, dated June 7, 2007, among the Company, the Guarantor, the Trust and the Purchaser.

“ Purchaser ” means Obsidian CDO Warehouse LLC, as purchaser of the Preferred Securities pursuant to the Purchase Agreement.

“ Redemption Date ” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.

“ Redemption Price ” means, when used with respect to any Security to be redeemed, in whole or in part, the price at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.

“ Reference Banks ” has the meaning specified in Schedule A .

“ Regular Record Date ” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).

“ Responsible Officer ” means, with respect to the Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust Officer, or any other officer in the Corporate Trust Office 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 of the Trustee to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.

“ Rights Plan ” means a plan of the Company or the Guarantor providing for the issuance by the Company or the Guarantor to all holders of its Equity Interests of rights entitling the holders thereof to subscribe for or purchase Equity Interests of the Company or the Guarantor, as applicable, which rights (i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of future issuances of such Equity Interests, in each case until the occurrence of a specified event or events.

“ Securities ” or “ Security ” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.

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

“ Securities Register ” and “ Securities Registrar ” have the respective meanings specified in Section 3.5 .

“ Senior Credit Facility ” means the Revolving Credit Agreement, dated as of November 3, 2006, between NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership, NRFC Sub-REIT Corp., NS Advisors, LLC, Keybanc Capital Markets and Bank of America, N.A., as in effect on the date hereof and as such agreement may be amended, extended, refinanced or replaced from time to time.

“ Senior Debt ” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, or the Guarantor, as the context requires, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, or the Guarantor, as the context requires, (including, without limitation, the Senior Credit Facility) whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities; provided, however, that Senior Debt shall not include any other debt securities, and guarantees in respect of such debt securities, issued to any trust other than the Trust (or a trustee of such trust), partnership or other entity affiliated with the Company or the Guarantor that is a financing vehicle of the Company or the Guarantor (a “financing entity”), in connection with the issuance by such financing entity of equity securities or other securities that rank pari passu with or junior in right of payment to the Securities, including, without limitation, (i) the debt securities of the Company issued under the Indenture, dated April 12, 2005, between the Company and JPMorgan Chase Bank, National Association, as trustee, (ii) the debt securities of the Company issued under the Indenture, dated May 25, 2005, between the Company and JPMorgan Chase Bank, National Association, as trustee, (iii) the debt securities of the Company issued under the Indenture, dated November 22, 2005, between the Company and JPMorgan Chase Bank, National Association, as trustee, (iv) the debt securities of the Company issued under the Indenture, dated March 10, 2006, between the Company and Wilmington Trust Company, as trustee, (v) the debt securities of the Company issued under the Indenture, dated August 1, 2006, between the Company and Wilmington Trust Company, as trustee, (vi) debt securities of the Company issued under the Indenture, dated October 6, 2006, between the Company and Wilmington Trust Company, as trustee, and (vii) the debt securities of the Company issued under the Indenture, dated March 30, 2007, between the Company and Wilmington Trust Company, as trustee.

“ Special Event ” means the occurrence of an Investment Company Event or a Tax Event.

“ Special Event Redemption Price ” has the meaning specified in Section 11.2 .

“ Special Record Date ” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1 .

“ Stated Maturity ” means July 30, 2037.

“ Subsidiary ” means a Person more than fifty percent (50%) of the outstanding voting stock or other voting interests of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes of this definition, “voting stock” means stock that ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

“Surviving Entity” means the Guarantor, the entity to which the Guarantor has sold, transferred or otherwise disposed of all or substantially all of its assets, or the entity surviving a merger or share exchange transaction with the Guarantor described in clause (iii) of the definition of Change of Control.

“ Tax Event ” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an “Administrative Action”), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company or the Trust and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the date of issuance of the Securities, there is more than an insubstantial risk that (i) the Trust is, or will be within ninety (90) days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Securities, (ii) interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (iii) the Trust is, or will be within ninety (90) days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

“ Trust ” has the meaning specified in the first recital of this Indenture.

“ Trust Agreement ” means the Amended and Restated Trust Agreement executed and delivered by the Company, the Guarantor, the Property Trustee, the Delaware Trustee and the Administrative Trustees named therein, contemporaneously with the execution and delivery of this Indenture, for the benefit of the holders of the Trust Securities, as amended or supplemented from time to time.

“ Trustee ” means the Person named as the “ Trustee ” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “ Trustee ” shall mean or include each Person who is then a Trustee hereunder.

“ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.

“ Trust Securities ” has the meaning specified in the first recital of this Indenture.

“Voting Stock” means the stock of any class or kind of the Guarantor having the power to vote generally in the election of directors.

SECTION 1.2. Compliance Certificate and Opinions.

(a) Upon any application or request by the Company or the Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or the Guarantor shall, if requested by the Trustee, furnish to the Trustee an Officer’s Certificate stating that all conditions precedent (including 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 an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

(b) Every certificate delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to Section 10.3 ) shall include:

(i) a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;

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

(iii) a statement that, in the opinion of such individual, 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

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

SECTION 1.3. Forms of Documents Delivered to Trustee.

(a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

(b) Any certificate or opinion of an officer of the Company or the Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or the Guarantor stating that the information with respect to such factual matters is in the possession of the Company or the Guarantor, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.

(c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

(d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officer’s Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.

SECTION 1.4. Acts of Holders.

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company or the Guarantor. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “ Act ” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company or the Guarantor, if made in the manner provided in this Section 1.4 .

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

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

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

(f) Except as set forth in paragraph (g) of this Section 1.4 , the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided , that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined below) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.6 .

(g) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in Section 5.2 , (iii) any request to institute proceedings referred to in Section 5.7(b) or (iv) any direction referred to in Section 5.12 . If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided , that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.6 .

(h) With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4 , the party hereto that sets such record date may designate any day as the “ Expiration Date ” and from time to time may change the Expiration Date to any earlier or later day; provided , that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in Section 1.6 , on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4 , the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90 ^th ) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred and eightieth (180 ^th ) day after the applicable record date.

SECTION 1.5. Notices, Etc.

Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(a) the Trustee by any Holder, any holder of Preferred Securities, the Company or the Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office,

(b) the Company or the Guarantor by the Trustee, any Holder or any holder of Preferred Securities shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at c/o NorthStar Realty Finance Corp., 399 Park Avenue, 18 ^th Floor, New York, New York 10022, Attn: Chief Financial Officer, or at any other address previously furnished in writing to the Trustee by the Company, or to the Guarantor addressed to it at 399 Park Avenue, 18 ^th Floor, New York, New York 10022, Attn: Chief Financial Officer, or at any other address previously furnished in writing to the Trustee by the Guarantor, or

(c) the Purchaser by the Trustee, the Company, the Guarantor, any Holder or any holder or beneficial owner of the Preferred Securities, shall be sufficient for every purpose hereunder if in writing and mailed first-class postage prepaid to the Purchaser at Obsidian CDO Warehouse LLC, Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711, Attention: Donald Puglisi, or any other address previously furnis hed by the Purchaser.

SECTION 1.6. Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

SECTION 1.7. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.

SECTION 1.8. Successors and Assigns.

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

SECTION 1.9. Separability Clause.

If any provision 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, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

SECTION 1.10. Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt, the Holders of the Securities and, to the extent expressly provided in Sections 5.2 , 5.8 , 5.9 , 5.11 , 5.13 , 9.2 and 10.7 , the holders of Preferred Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 1.11. Governing Law.

This Indenture and the rights and obligations of each of the Holders, the Company, the Guarantor and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

SECTION 1.12. Submission to Jurisdiction.

ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.

SECTION 1.13. Non-Business Days.

If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.

ARTICLE II

Security Forms

SECTION 2.1. Form of Security.

Any Security issued hereunder shall be in substantially the form attached hereto as Exhibit A .

SECTION 2.2. Restricted Legend.

(a) Any Security issued hereunder shall bear a legend in substantially the form contained in Exhibit A attached hereto.

(b) Such legend shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, at the written direction of the Company, a Security that does not bear the legend.

SECTION 2.3. Form of Trustee’s Certificate of Authentication.

The Trustee’s certificates of authentication shall be in substantially the form contained in Exhibit A attached hereto.

SECTION 2.4. Temporary Securities.

(a) Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

(b) If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.

SECTION 2.5. Definitive Securities.

The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.

ARTICLE III

The Securities

SECTION 3.1. Payment of Principal and Interest.

(a) The unpaid principal amount of the Securities shall bear interest at a variable rate per annum, reset quarterly, equal to LIBOR plus the Margin until paid or duly provided for, such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for, and any overdue principal, premium, if any, or Additional Tax Sums and any overdue installment of interest shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at a variable rate per annum, reset quarterly, equal to LIBOR plus the Margin, from the dates such amounts are due until they are paid or funds for the payment thereof are made available for payment.

(b) Interest and Additional 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 (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.

(c) Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “ Defaulted Interest ”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:

(i) The Company 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 special record date for the payment of such Defaulted Interest (a “ Special Record Date ”), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company 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 Company 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. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, 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 a Security at the address of such Holder as it appears in the Securities Register not less than ten (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 on such Special Record Date; or

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

(d) Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. The amount of interest payable for any interest period shall be computed and paid on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period.

(e) Payment of principal of, premium, if any, and interest on the Securities shall be made 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. Payments of principal, premium, if any, and interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register. Notwithstanding the foregoing, so long as the holder of the Security is the Property Trustee, the payment of the principal of (and premium if any) and interest (including any overdue installment of interest and Additional Tax Sums, if any) on the Security will be made at such place and to such account as may be designated by the Property Trustee.

(f) Subject to the foregoing provisions of this Section 3.1 , each Security delivered under this Indenture upon 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, that were carried by such other Security.

SECTION 3.2. Denominations.

The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.

SECTION 3.3. Execution, Authentication, Delivery and Dating.

(a) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of $35,100,000 executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:

(i) a copy of any Board Resolution relating thereto; and

(ii) an Opinion of Counsel stating that (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; and (3) the Securities are not required to be registered under the Securities Act.

(b) The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

(c) No Security 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 the manual signature of one of its authorized officers, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.8 , for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

(d) Each Security shall be dated the date of its authentication.

SECTION 3.4. Global Securities.

(a) Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustees shall recognize such holders of beneficial interests as Holders.

(c) If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Article III or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.

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

(e) Securities distributed to holders of Book-Entry Preferred Securities (as defined in the Trust Agreement) upon the dissolution of the Trust shall be distributed in the form of one or more Global Securities registered in the name of a Depositary or its nominee, and deposited with the Securities Registrar, as custodian for such Depositary, or with such Depositary, for credit by the Depositary to the respective accounts of the beneficial owners of the Securities represented thereby (or such other accounts as they may direct). Securities distributed to holders of Preferred Securities other than Book-Entry Preferred Securities upon the dissolution of the Trust shall not be issued in the form of a Global Security or any other form intended to facilitate book-entry trading in beneficial interests in such Securities.

(f) The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.

(g) The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.

(h) No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantor, the Trustee or any agent of the Company, the Guarantor or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.

SECTION 3.5. Registration, Transfer and Exchange Generally.

(a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the “ Securities Register ”) in which the registrar and transfer agent with respect to the Securities (the “ Securities Registrar ”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of Article VI shall apply to the Trustee in its role as Securities Registrar.

(b) Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.

(c) At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and upon receipt thereof the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.

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

(e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.

(f) No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.

(g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5 (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.

(h) The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.

SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.

(a) If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Company or the Trustee to save each of them harmless, the Company shall execute and upon receipt thereof the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.

(b) If there shall be delivered to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.

(c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

(d) Upon the issuance of any new Security under this Section 3.6 , the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

(e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

(f) The provisions of this Section 3.6 are 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.

SECTION 3.7. Persons Deemed Owners.

The Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by notice to the contrary.

SECTION 3.8. Cancellation.

All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 3.8 , except as expressly permitted by this Indenture. All canceled Securities shall be disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.

SECTION 3.9. RESERVED.

SECTION 3.10. RESERVED.

SECTION 3.11. Agreed Tax Treatment.

Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree to treat such Security as indebtedness of the Company for United States Federal, state and local tax purposes and to treat the Preferred Securities (including but not limited to all payments and proceeds with respect to the Preferred Securities) as an undivided beneficial ownership interest in the Securities (and payments and proceeds therefrom, respectively) for United States Federal, state and local tax purposes. The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.

SECTION 3.12. CUSIP Numbers.

The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided , that any such notice or other materials 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 redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

ARTICLE IV

Satisfaction and Discharge

SECTION 4.1. Satisfaction and Discharge of Indenture.

This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1 ) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(a) either

(i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or

(ii) all such Securities not theretofore delivered to the Trustee for cancellation

(A)

have become due and payable, or

(B)

will become due and payable at their Stated Maturity within one year of the date of deposit, or

(C)

are to be called for redemption within one year 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 Company,

and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium, if any, and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;

(b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(c) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel each 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 Company to the Trustee under Section 6.6 , the obligations of the Company to any Authenticating Agent under Section 6.11 and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this Section 4.1 , the obligations of the Trustee under Section 4.2 and Section 10.2(e) shall survive.

SECTION 4.2. Application of Trust Money.

Subject to the provisions of Section 10.2(e) , all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with Section 3.1 , either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium, if any, and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee. Moneys held by the Trustee under this Section 4.2 shall not be subject to the claims of holders of Senior Debt under Article XII .

ARTICLE V

Remedies

SECTION 5.1. Events of Default.

“ Event of Default ” means, wherever used herein with respect to the Securities, 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 or regulation of any administrative or governmental body):

(a) default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; or

(b) default in the payment of the principal of or any premium, if any, on any Security at its Maturity; or

(c) default in the performance, or breach, of any covenant or warranty of the Company or the Guarantor in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company and the Guarantor by the Trustee or to the Company, the Guarantor and the Trustee by the Holders of at least twenty five percent (25%) in aggregate principal amount of the Outstanding 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

(d) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company or the Guarantor a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or the Guarantor under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or the Guarantor or 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 sixty (60) consecutive days; or

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

(f) the Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up its business or otherwise terminated its existence, except in connection with (1) the distribution of the Securities to holders of the Preferred Securities in liquidation of their interests in the Trust, (2) the redemption of all of the outstanding Preferred Securities or (3) certain mergers, consolidations or amalgamations, each as and to the extent permitted by the Trust Agreement; or

(g) the Guarantee shall cease to be in full force and effect or the Guarantor shall, in writing to the Trustee, to a Holder or a holder of the Preferred Securities or to any governmental agency or regulatory authority, deny or disaffirm its obligations under the Guarantee.

SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.

(a) If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty five percent (25%) in principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company and the Guarantor (and to the Trustee if given by Holders), provided, that if, upon an Event of Default, the Trustee or the Holders of not less than twenty five percent (25%) in principal amount of the Outstanding Securities fail to declare the principal of all the Outstanding Securities to be immediately due and payable, the holders of at least twenty five percent (25%) in aggregate Liquidation Amount of the Preferred Securities then outstanding shall have the right to make such declaration by a notice in writing to the Property Trustee, the Company and the Guarantor and the Trustee; and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.

(b) At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article V , the Holders of a majority in principal amount of the Outstanding Securities, by written notice to the Indenture Trustee, or the holders of a majority in aggregate Liquidation Amount of the Preferred Securities, by written notice to the Property Trustee, the Company, the Guarantor and the Trustee, may rescind and annul such declaration and its consequences if:

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

(A)

all overdue installments of interest on all Securities,

(B)

any accrued Additional Interest on all Securities,

(C)

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

(D)

all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, the Property Trustee and their agents and counsel; and

(ii) all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in Section 5.13 ;

provided , that if the Holders of such Securities fail to annul such declaration and waive such default, the holders of not less than a majority in aggregate Liquidation Amount of the Preferred Securities then outstanding shall also have the right to rescind and annul such declaration and its consequences by written notice to the Property Trustee, the Company, the Guarantor and the Trustee, subject to the satisfaction of the conditions set forth in paragraph (b) of this Section 5.2 . No such rescission shall affect any subsequent default or impair any right consequent thereon.

SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.

(a) Each of the Company and the Guarantor covenants that if:

(i) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, or

(ii) default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,

the Company and the Guarantor will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under Section 6.6 .

(b) If the Company or the Guarantor fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company, the Guarantor or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, the Guarantor or any other obligor upon the Securities, wherever situated.

(c) If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 5.4. Trustee May File Proofs of Claim.

In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company or the Guarantor (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such 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 first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6 .

SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to Article XII and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6 , be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

SECTION 5.6. Application of Money Collected.

Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6 ;

SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII or by Article XIV .

THIRD: Subject to Article XII and Article XIV , to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and

FOURTH: The balance, if any, to the Person or Persons entitled thereto.

SECTION 5.7. Limitation on Suits.

Subject to Section 5.8 , no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:

(a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;

(b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

(d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and

(e) no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.

SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Preferred Securities.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. Any registered holder of the Preferred Securities shall have the right, upon the occurrence of an Event of Default described in Section 5.1(a) or Section 5.1(b) to institute a suit directly against the Company or the Guarantor for enforcement of payment to such holder of principal of and any premium and interest (including any Additional Interest) on the Securities having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities held by such holder.

SECTION 5.9. Restoration of Rights and Remedies.

If the Trustee, any Holder or any holder of Preferred Securities has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee, such Holder or such holder of Preferred Securities, then and in every such case the Company, the Guarantor, the Trustee, such Holders and such holder of Preferred Securities shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee, such Holder and such holder of Preferred Securities shall continue as though no such proceeding had been instituted.

SECTION 5.10. Rights and Remedies Cumulative.

Except as otherwise provided in Section 3.6(f) , no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 5.11. Delay or Omission Not Waiver.

No delay or omission of the Trustee, any Holder of any Securities or any holder of any Preferred Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Trustee or to the Holders and the right and remedy given to the holders of Preferred Securities by Section 5.8 may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, the Holders or the holders of Preferred Securities, as the case may be.

SECTION 5.12. Control by Holders.

The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities (or, as the case may be, the holders of a majority in aggregate Liquidation Amount of the Preferred Securities) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided , that:

(a) such direction shall not be in conflict with any rule of law or with this Indenture,

(b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and

(c) subject to the provisions of Section 6.2 , the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.

SECTION 5.13. Waiver of Past Defaults.

(a) The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities and the holders of not less than a majority in aggregate Liquidation Amount of the Preferred Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:

(i) in the payment of the principal of or any premium or interest (including any Additional Interest) on any Security (unless such Event of Default has been cured and the Company or the Guarantor has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or

(ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.

(b) Any such waiver shall be deemed to be on behalf of the Holders of all the Securities or, in the case of a waiver by holders of Preferred Securities issued by such Trust, by all holders of Preferred Securities.

(c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

SECTION 5.14. Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, 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, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.

SECTION 5.15. Waiver of Usury, Stay or Extension Laws.

Each of the Company and the Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each of the Company and the Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not 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.

ARTICLE VI

The Trustee

SECTION 6.1. Corporate Trustee Required.

There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this Section 6.1 , the combined capital and surplus of such corporation 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 6.1 , it shall resign immediately in the manner and with the effect hereinafter specified in this Article VI .

SECTION 6.2. Certain Duties and Responsibilities.

(a) Except during the continuance of an Event of Default:

(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) 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 and conforming to the requirements of this Indenture; provided , that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.

(b) If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities (or, if applicable, from the holders of a majority in aggregate Liquidation Amount of the Preferred Securities), 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 such person’s own affairs.

(c) 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 for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2 . To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture. 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 by the Company and the Holders to replace such other duties and liabilities of the Trustee.

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

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

(ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities (or, if applicable, from the holders of a majority in aggregate Liquidation Amount of the Preferred Securities), relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee under this Indenture; and

(iii) the Trustee shall be under no liability for interest on any money received by it hereunder and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.

SECTION 6.3. Notice of Defaults.

Within ninety (90) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided , that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of holders of Securities; and provided further , that in the case of any default of the character specified in Section 5.1(c) , no such notice to Holders shall be given until at least thirty (30) days after the occurrence thereof. For the purpose of this Section 6.3 , the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.

SECTION 6.4. Certain Rights of Trustee.

Subject to the provisions of Section 6.2 :

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

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

(c) any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company, the Guarantor or any of their Affiliates, and may include any of its employees) and the advice of such counsel 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;

(e) 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 or any holder of Preferred Securities pursuant to this Indenture, unless such Holders (or such holders of Preferred Securities) shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;

(f) 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, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company and the Guarantor, personally or by agent or attorney;

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

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

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

(j) without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;

(k) 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 (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officer’s Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company or the Guarantor;

(l) the Trustee shall not be charged with knowledge of any default or Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company, the Guarantor or a Holder; and

(m) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent or Securities Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article VI shall also be afforded such Paying Agent, Authenticating Agent, or Securities Registrar.

SECTION 6.5. May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company and the Guarantor with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.

SECTION 6.6. Compensation; Reimbursement; Indemnity.

(a) The Company agrees

(i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(ii) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and

(iii) to the fullest extent permitted by applicable law, to indemnify the Trustee (including in its individual capacity) and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the advancement of funds to cover the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

(b) To secure the Company’s payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have 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.

(c) The obligations of the Company and the Guarantor under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.

(d) In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

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

SECTION 6.7. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under Section 6.8 .

(b) The Trustee may resign at any time by giving written notice thereof to the Company.

(c) Unless an Event of Default shall have occurred and be continuing, the Trustee may be removed at any time by the Company by a Board Resolution. If an Event of Default shall have occurred and be continuing, the Trustee may be removed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company and to the Guarantor.

(d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, at a time when no Event of Default shall have occurred and be continuing, the Company, by a Board Resolution, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8 . If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, at a time when an Event of Default shall have occurred and be continuing, the Holders, by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8 . If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8 , any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(e) The Company shall give notice to all Holders in the manner provided in Section 1.6 of each resignation and each removal of the Trustee and each appointment of a successor Trustee. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

SECTION 6.8. Acceptance of Appointment by Successor.

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

(b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8 .

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

SECTION 6.9. Merger, Conversion, Consolidation or Succession to Business.

Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided , that such Person shall be otherwise qualified and eligible under this Article VI . In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9 to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.

SECTION 6.10. Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company or the Guarantor, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.

SECTION 6.11. Appointment of Authenticating Agent.

(a) The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6 , and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.11 the combined capital and surplus of such Authenticating Agent 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 an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11 , such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 6.11 .

(b) Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this Section 6.11 , without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

(c) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11 , the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this Section 6.11 , which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.

(d) The Company or the Guarantor agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.11 in such amounts as the Company and the Authenticating Agent shall agree from time to time.

(e) If an appointment of an Authenticating Agent is made pursuant to this Section 6.11 , the Securities may have endorsed thereon an alternative certificate of authentication in the following form:

This represents Securities designated therein and referred to in the within mentioned Indenture.

Dated:

	WILMINGTON TRUST COMPANY , not in its individual capacity, but solely as Trustee

	Authenticating Agent


	By:
		Authorized Officer

ARTICLE VII

Holders’ Lists and Reports by Trustee and Company

SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the Trustee:

(a) semi-annually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and

(b) at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished, in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.

SECTION 7.2. Preservation of Information, Communications to Holders.

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.

(b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.

(c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.

SECTION 7.3. Reports by Company and Trustee.

(a) The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act.

(b) The Company shall furnish to (i) the Holders and to subsequent holders of Securities reasonably identified to the Company, (ii) the Purchaser, (iii) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or the Purchaser) and (iv) any designee of (i), (ii) or (iii) above, a duly completed and executed certificate in the form attached hereto as Exhibit A, including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.

(c) If the Company intends to file its annual and quarterly information with the Commission in electronic form pursuant to Regulation S-T of the Commission using the EDGAR system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this Section 7.3(c) shall be solely for purposes of compliance with this Section 7.3 and, if applicable, with Section 314(a) of the Trust Indenture Act, but shall not relieve the Company of the requirement to deliver the certificate referred to in Section 7.3(b) . The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the contents thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officer’s Certificates.

(d) The Trustee shall receive all reports, certificates and information, which it is entitled to receive under each of the Operative Documents (as defined in the Trust Agreement), and deliver to the Purchaser, or its designees, as identified in writing to the Trustee, all such reports, certificates or information promptly upon receipt thereof.

ARTICLE VIII

Consolidation, Merger, Conveyance, Transfer or Lease

SECTION 8.1. Company and Guarantor May Consolidate, Etc., Only on Certain Terms.

(a) The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:

(i) if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;

(ii) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and

(iii) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officer’s Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1 .

(b) The Guarantor shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Guarantor or convey, transfer or lease its properties and assets substantially as an entirety to the Guarantor, unless:

(i) if the Guarantor shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Guarantor is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Guarantor substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Guarantor to be performed or observed;

(iii) the Guarantor has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officer’s Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1 .

SECTION 8.2. Successor Company or Guarantor Substituted.

(a) Upon any consolidation or merger by the Company or the Guarantor with or into any other Person, or any conveyance, transfer or lease by the Company or Guarantor of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1 and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1(a) , the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Guarantor under this Indenture with the same effect as if such successor Person had been named as the Company or the Guarantor herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company or the Guarantor shall be discharged from all obligations and covenants under the Indenture and the Securities.

(b) Such successor Person to the Company may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.

(c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.

ARTICLE IX

Supplemental Indentures

SECTION 9.1. Supplemental Indentures without Consent of Holders.

Without the consent of any Holders, the Company and the Guarantor, when authorized by Board Resolutions, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:

(a) to evidence the succession of another Person to the Company or the Guarantor, and the assumption by any such successor of the covenants of the Company or the Guarantor herein and in the Securities; or

(b) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided , that such action pursuant to this clause (b) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities; or

(c) to add to the covenants, restrictions or obligations of the Company or the Guarantor or to add to the Events of Default, provided , that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities; or

(d) to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided , that such action pursuant to this clause (d) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities; or

(e) to evidence and provide for the acceptance of appointment hereunder by a successor trustee, provided , that such action pursuant to this clause (e) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities; or

(f) to comply with the rules and regulations of any securities exchange or automatic quotation system on which any of the Securities may be listed, traded or quoted, provided , that such action pursuant to this clause (f) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities.

SECTION 9.2. Supplemental Indentures with Consent of Holders.

(a) With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company, the Guarantor and the Trustee, the Company and the Guarantor, when authorized by Board Resolutions, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided , that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,

(i) change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or

(ii) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or

(iii) modify any of the provisions of this Section 9.2 , Section 5.13 or Section 10.7 , except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security;

provided, further, that, so long as any Preferred Securities remain outstanding, no amendment under this Section 9.2 shall be effective until the holders of a majority in Liquidation Amount of the Trust Securities shall have consented to such amendment; provided, further, that if the consent of the Holder of each Outstanding Security is required for any amendment under this Indenture, such amendment shall not be effective until the holder of each Outstanding Trust Security shall have consented to such amendment.

(b) It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 9.3. Execution of Supplemental Indentures.

In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder, and, if the Trustee is the Property Trustee, to each holder of Preferred Securities, promptly after the execution thereof.

SECTION 9.4. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article IX , 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.

SECTION 9.5. Reference in Securities to Supplemental Indentures.

Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and the Guarantor and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

ARTICLE X

Covenants

SECTION 10.1. Payment of Principal, Premium and Interest.

The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.

SECTION 10.2. Money for Security Payments to be Held in Trust.

(a) If the Company shall at any time act as its own Paying Agent with respect to the Securities, it will, on or before each due date of the principal of and any premium or interest (including any Additional Interest) on the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium or interest (including Additional 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 in writing of its failure so to act.

(b) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act.

(c) The Company will cause each Paying Agent for the 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 provisions of this Section 10.2 , that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, 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.

(d) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company 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.

(e) Any money deposited with the Trustee or any Paying Agent, or then held by the Company in trust for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company 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 Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

SECTION 10.3. Statement as to Compliance.

The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officer’s Certificate (substantially in the form attached hereto as Exhibit B ) covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.

SECTION 10.4. Calculation Agent.

(a) The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of Schedule A (the “ Calculation Agent ”). The Company has initially appointed the Property Trustee as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Company at any time. Except as described in the immediately preceding sentence, so long as the Property Trustee holds any of the Securities, the Calculation Agent shall be the Property Trustee. If the Calculation Agent is unable or unwilling to act as such or is removed by the Company, the Company will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.

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

SECTION 10.5. Additional Tax Sums.

So long as no Event of Default has occurred and is continuing, if (a) the Trust is the Holder of all of the Outstanding Securities and (b) a Tax Event described in clause (i) or (iii) in the definition of Tax Event in Section 1.1 hereof has occurred and is continuing, the Company shall pay to the Trust (and its permitted successors or assigns under the related Trust Agreement) for so long as the Trust (or its permitted successor or assignee) is the registered holder of the Outstanding Securities, such amounts as may be necessary in order that the amount of Distributions (including any Additional Interest Amount (as defined in the Trust Agreement)) then due and payable by the Trust on the Preferred Securities and Common Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any Additional Taxes arising from such Tax Event (additional such amounts payable by the Company to the Trust, the “ Additional Tax Sums ”). Whenever in this Indenture or the Securities there is a reference in any context to the payment of principal of or interest on the Securities, such mention shall be deemed to include mention of the payments of the Additional Tax Sums provided for in this Section 10.5 to the extent that, in such context, Additional Tax Sums are, were or would be payable in respect thereof pursuant to the provisions of this Section 10.5 and express mention of the payment of Additional Tax Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Tax Sums in those provisions hereof where such express mention is not made.

SECTION 10.6. Additional Covenants.

(a) The Company and Guarantor covenant and agree with each Holder of Securities that if an Event of Default shall have occurred and be continuing, it shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Company’s or the Guarantor’s Equity Interests, (ii) vote in favor of or permit or otherwise allow any of its respective Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to or otherwise retire, any shares of any such Subsidiary’s preferred stock or other Equity Interests entitling the holders thereof to a stated rate of return, other than dividends or distributions on Equity Interests payable to the Guarantor, the Company or any Subsidiary thereof (for the avoidance of doubt, whether such preferred stock or other Equity Interests are perpetual or otherwise), or (iii) make any payment of principal of or any interest or premium on or repay, repurchase or redeem any debt securities of the Company or Guarantor that rank pari passu in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of shares of Equity Interests of the Company or Guarantor in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of Equity Interests of the Company or Guarantor (or securities convertible into or exercisable for such Equity Interests) as consideration in an acquisition transaction entered into prior to the applicable Event of Default, (B) as a result of an exchange or conversion of any class or series of the Company’s or the Guarantor’s Equity Interests (or any Equity Interests of a Subsidiary of the Company or Guarantor) for any class or series of the Company’s or the Guarantor’s Equity Interests or of any class or series of the Company’s or the Guarantor’s indebtedness for any class or series of the Company’s or the Guarantor’s Equity Interests, (C) the purchase of fractional interests in shares of the Company’s or the Guarantor’s Equity Interests pursuant to the conversion or exchange provisions of such Equity Interests or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, or (E) any dividend in the form of Equity Interests, warrants, options or other rights where the dividend Equity Interest or the Equity Interest issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or rank pari passu with or junior to such Equity Interests).

(b) The Company also covenants with each Holder of Securities (i) to hold, directly or indirectly, one hundred percent (100%) of the Common Securities of the Trust, provided , that any permitted successor of the Company hereunder may succeed to the Company’s ownership of such Common Securities, (ii) as holder of such Common Securities, not to voluntarily dissolve, wind-up or liquidate the Trust other than (A) in connection with a distribution of the Securities to the holders of the Preferred Securities in liquidation of the Trust or (B) in connection with certain mergers, consolidations or amalgamations permitted by the Trust Agreement and (iii) to use its reasonable commercial efforts, consistent with the terms and provisions of the Trust Agreement, to cause the Trust to continue to be taxable as a grantor trust and not as a corporation for United States Federal income tax purposes.

(c) The Guarantor agrees that the Guarantor will use its commercially reasonable efforts to meet the requirements to qualify as a REIT under Sections 856 through 860 of the Code for the taxable year ending December 31, 2007, and unless and until the Board of Directors of the Guarantor determines that it is in the best interests of the Guarantor not to be organized as a REIT, the Guarantor will be organized in conformity with the requirements for qualification as a REIT under the Code.

(d) The Surviving Entity shall notify in writing the Trustee and each holder of Securities of the occurrence of a Change of Control Event not more than twenty (20) Business Days following the occurrence thereof.

SECTION 10.7. Waiver of Covenants.

The Company may omit in any particular instance to comply with any covenant or condition contained in Section 10.6 if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, and at least a majority of the aggregate Liquidation Amount of the Preferred Securities then outstanding, by consent of such holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.

SECTION 10.8. Treatment of Securities.

The Company will treat the Securities as indebtedness, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes. All payments in respect of the Securities will be made free and clear of U.S. withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W-9 or W-8BEN (or any substitute or successor form) establishing its U.S. or non-U.S. status for U.S. federal income tax purposes and establishing that no withholding is required for U.S. federal income tax purposes, or any other applicable form establishing an exemption from U.S. withholding tax.

ARTICLE XI

Redemption of Securities

SECTION 11.1. Optional Redemption.

The Company may, at its option, on any Interest Payment Date, on or after the earlier to occur of (i) a Change of Control Event or (ii) July 30, 2012, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, to but excluding the date fixed for redemption.

SECTION 11.2. Special Event Redemption.

Upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at a redemption price equal to one hundred five percent (105%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, to but excluding the date fixed for redemption (the “Special Event Redemption Price”) .

SECTION 11.3. Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than thirty (30) days and not more than sixty (60) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee and the Property Trustee under the Trust Agreement in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by Section 11.5 . In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officer’s Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.

SECTION 11.4. Selection of Securities to be Redeemed.

(a) If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided , that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

(b) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.

(c) The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

SECTION 11.5. Notice of Redemption.

(a) Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to each Holder of Securities to be redeemed, in whole or in part (unless a shorter notice shall be satisfactory to the Property Trustee under the related Trust Agreement).

(b) With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:

(i) the Redemption Date;

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

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

(iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and

(v) the place or places where such Securities are to be surrendered for payment of the Redemption Price.

(c) Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

SECTION 11.6. Deposit of Redemption Price.

Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5 , the Company will deposit with the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 10.2 ) an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.

SECTION 11.7. Payment of Securities Called for Redemption.

(a) If any notice of redemption has been given as provided in Section 11.5 , the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.

(b) Upon presentation of any Security redeemed in part only, the Company shall execute and upon receipt thereof the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.

(c) If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

ARTICLE XII

Subordination of Securities

SECTION 12.1. Securities Subordinate to Senior Debt of the Company.

The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XII , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Company. Notwithstanding anything herein to the contrary, the Securities shall be senior to the trade debt of the Company incurred in the ordinary course of business.

SECTION 12.2. No Payment When Senior Debt of the Company in Default; Payment Over of Proceeds Upon Dissolution, Etc.

(a) In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt of the Company (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt of the Company or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

(b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt of the Company (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Company at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt of the Company in accordance with the priorities then existing among such holders until all Senior Debt of the Company (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

(c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt of the Company, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and premium, if any, and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Company at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt of the Company shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt of the Company at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt of the Company remaining unpaid, to the extent necessary to pay all such Senior Debt of the Company (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt of the Company is hereby irrevocably authorized to endorse or assign the same.

(d) The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt of the Company or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt of the Company at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.

(e) The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.

(f) The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.

SECTION 12.3. Payment Permitted If No Default.

Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of Section 12.2 or of any Proceeding referred to in Section 12.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 12.8 ) that such payment would have been prohibited by the provisions of this Article XII , except as provided in Section 12.8 .

SECTION 12.4. Subrogation to Rights of Holders of Senior Debt of the Company.

Subject to the payment in full of all amounts due or to become due on all Senior Debt of the Company, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt of the Company, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt of the Company pursuant to the provisions of this Article XII (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt of the Company and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt of the Company) to the rights of the holders of such Senior Debt of the Company to receive payments and distributions of cash, property and securities applicable to the Senior Debt of the Company until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of the Company of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII , and no payments made pursuant to the provisions of this Article XII to the holders of Senior Debt of the Company by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt of the Company, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt of the Company.

SECTION 12.5. Provisions Solely to Define Relative Rights.

The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt of the Company on the other hand. Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt of the Company or (c) prevent the Trustee or the Holder of any Security (or to the extent expressly provided herein, the holder of any Preferred Security) from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt of the Company to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.

SECTION 12.6. Trustee to Effectuate Subordination.

Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XII and appoints the Trustee his or her attorney-in-fact for any and all such purposes.

SECTION 12.7. No Waiver of Subordination Provisions.

(a) No right of any present or future holder of any Senior Debt of the Company to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

(b) Without in any way limiting the generality of paragraph (a) of this Section 12.7 , the holders of Senior Debt of the Company may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XII or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt of the Company, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt of the Company, or otherwise amend or supplement in any manner Senior Debt of the Company or any instrument evidencing the same or any agreement under which Senior Debt of the Company is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt of the Company, (iii) release any Person liable in any manner for the payment of Senior Debt of the Company and (iv) exercise or refrain from exercising any rights against the Company and any other Person.

SECTION 12.8. Notice to Trustee.

(a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt of the Company or from any trustee, agent or representative therefor; provided , that if the Trustee shall not have received the notice provided for in this Section 12.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.

(b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt of the Company (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt of the Company (or a trustee, agent, representative or attorney-in-fact therefor). With respect to any Senior Debt that is a syndicated loan, all rights of the holders of such Senior Debt (including, without limitation, the rights to give and receive notices) may be taken or exercised on behalf of the holders of such Senior Debt by an administrative agent for such holders or an equivalent party to the extent set forth therein. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt of the Company to participate in any payment or distribution pursuant to this Article XII , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt of the Company held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XII , and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Company referred to in this Article XII , the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt of the Company and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII .

SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Debt of the Company.

The Trustee, in its capacity as trustee under this Indenture, shall not owe or be deemed to owe any fiduciary duty to the holders of Senior Debt of the Company and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt of the Company shall be entitled by virtue of this Article XII or otherwise.

SECTION 12.11. Rights of Trustee as Holder of Senior Debt of the Company; Preservation of Trustee’s Rights.

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt of the Company that may at any time be held by it, to the same extent as any other holder of Senior Debt of the Company, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Company, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this Article XII, and no implied covenants or obligations with respect to the holders of such Senior Debt of the Company shall be read into this Indenture against the Trustee. Nothing in this Article XII shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.

SECTION 12.12. Article Applicable to Paying Agents.

If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “ Trustee ” as used in this Article XII shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XII in addition to or in place of the Trustee; provided , that Sections 12.8 and 12.11 shall not apply to the Company or any Affiliate of the Company if the Company or such Affiliate acts as Paying Agent.

ARTICLE XIII

Guarantee

SECTION 13.1. The Guarantee.

The Guarantor hereby fully, unconditionally and irrevocably guarantees to each holder of a Security authenticated and delivered by the Trustee the due and punctual payment of the principal of and premium, if any, and interest (including Additional Interest) on such Security, when and as the same shall become due and payable, whether at maturity, by acceleration, upon redemption or otherwise, in accordance with the terms of such Security and this Indenture, as well as the due and punctual performance of all other obligations contained in the Securities and this Indenture. In case of the failure of the Company to punctually pay its obligations on any Security, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at maturity, by acceleration, upon redemption or otherwise, and as if such payment were made by the Company.

SECTION 13.2. Guarantee Unconditional, etc.

The Guarantor hereby agrees that it shall be liable as principal and as debtor hereunder with respect to its obligations under this Article. This Article creates a guarantee of payment and not of collection on the part of the Guarantor. The Guarantor’s obligations hereunder shall be absolute, irrevocable and unconditional, irrespective of, 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 Company 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. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, 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 and premium, if any, and interest (including Additional Interest) on the Securities and the complete performance of all other obligations contained in the Securities and this Indenture. The Guarantor further agrees, to the fullest extent that it lawfully may do so, that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, the maturity of the Securities shall or may, as the case may be, be accelerated as provided in this Indenture for purposes of the Guarantor’s obligations under this Guarantee, notwithstanding any stay, injunction or prohibition existing under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction preventing such acceleration in respect of the obligations guaranteed hereby.

SECTION 13.3. Reinstatement.

This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time a payment in respect of any Security, in whole or in part, is rescinded or must otherwise be restored to the Company or the Guarantor upon the bankruptcy, liquidation or reorganization of the Company or otherwise.

SECTION 13.4. Subrogation.

The Guarantor shall be subrogated to all rights of the Holder of any Security against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided , however , that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation as a result of payment under this Guarantee, if, after giving effect to any such payment, any amounts are due and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay such amount to the Holders.

ARTICLE XIV

Subordination of Guarantee

SECTION 14.1. Securities Subordinate to Senior Debt of the Guarantor.

The Guarantor covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XIV , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Guarantor. Notwithstanding anything herein to the contrary, the guarantee of the Securities shall be senior to the trade debt of the Guarantor incurred in the ordinary course of business.

SECTION 14.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc.

(a) In the event and during the continuation of any default by the Guarantor in the payment of any principal of or any premium or interest on any Senior Debt of the Guarantor (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Guarantor by the holders of such Senior Debt of the Guarantor or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

(b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt of the Guarantor in accordance with the priorities then existing among such holders until all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

(c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt of the Guarantor, the Holders of the Securities, together with the holders of any obligations of the Guarantor ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Guarantor the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Guarantor ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt of the Guarantor shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt of the Guarantor at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt of the Guarantor remaining unpaid, to the extent necessary to pay all such Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt of the Guarantor is hereby irrevocably authorized to endorse or assign the same.

(d) The Trustee and the Holders, at the expense of the Guarantor, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt of the Guarantor or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt of the Guarantor at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.

(e) The provisions of this Section 14.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Guarantor in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.

(f) The securing of any obligations of the Guarantor, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.

SECTION 14.3. Payment Permitted If No Default.

Nothing contained in this Article XIV or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Guarantor, at any time, except during the pendency of the conditions described in paragraph (a) of Section 14.2 or of any Proceeding referred to in Section 14.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 14.8 ) that such payment would have been prohibited by the provisions of this Article XIV , except as provided in Section 14.8 .

SECTION 14.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor.

Subject to the payment in full of all amounts due or to become due on all Senior Debt of the Guarantor, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt of the Guarantor, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt of the Guarantor pursuant to the provisions of this Article XIV (equally and ratably with the holders of all indebtedness of the Guarantor that by its express terms is subordinated to Senior Debt of the Guarantor to substantially the same extent as the Securities are subordinated to the Senior Debt of the Guarantor and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt of the Guarantor) to the rights of the holders of such Senior Debt of the Guarantor to receive payments and distributions of cash, property and securities applicable to the Senior Debt of the Guarantor until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of the Guarantor of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XIV , and no payments made pursuant to the provisions of this Article XIV to the holders of Senior Debt of the Guarantor by Holders of the Securities or the Trustee, shall, as among the Guarantor, its creditors other than holders of Senior Debt of the Guarantor, and the Holders of the Securities, be deemed to be a payment or distribution by the Guarantor to or on account of the Senior Debt of the Guarantor.

SECTION 14.5. Provisions Solely to Define Relative Rights.

The provisions of this Article XIV are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt of the Guarantor on the other hand. Nothing contained in this Article XIV or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Guarantor and the Holders of the Securities, the obligations of the Guarantor, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Guarantor of the Holders of the Securities and creditors of the Guarantor other than their rights in relation to the holders of Senior Debt of the Guarantor or (c) prevent the Trustee or the Holder of any Security (or to the extent expressly provided herein, the holder of any Preferred Security) from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XIV of the holders of Senior Debt of the Guarantor to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.

SECTION 14.6. Trustee to Effectuate Subordination.

Each Holder of a Security by such Holder’s acceptance thereof authorizes and directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XIV and appoints the Trustee such Holder’s attorney-in-fact for any and all such purposes.

SECTION 14.7. No Waiver of Subordination Provisions.

(a) No right of any present or future holder of any Senior Debt of the Guarantor to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

(b) Without in any way limiting the generality of paragraph (a) of this Section 14.7 , the holders of Senior Debt of the Guarantor may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XIV or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt of the Guarantor, take or fail to take any action, including without limitation: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt of the Guarantor, or otherwise amend or supplement in any manner Senior Debt of the Guarantor or any instrument evidencing the same or any agreement under which Senior Debt of the Guarantor is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt of the Guarantor, (iii) release any Person liable in any manner for the payment of Senior Debt of the Guarantor and (iv) exercise or refrain from exercising any rights against the Guarantor and any other Person.

SECTION 14.8. Notice to Trustee.

(a) The Guarantor shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Guarantor that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XIV or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Guarantor or a holder of Senior Debt of the Guarantor or from any trustee, agent or representative therefor; provided , that if the Trustee shall not have received the notice provided for in this Section 14.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.

(b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt of the Guarantor to participate in any payment or distribution pursuant to this Article XIV , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt of the Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XIV , and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

SECTION 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Guarantor referred to in this Article XIV , the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt of the Guarantor and other indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XIV .

SECTION 14.10. Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor.

The Trustee, in its capacity as trustee under this Indenture, shall not owe or be deemed to owe any fiduciary duty to the holders of Senior Debt of the Guarantor and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Guarantor or to any other Person cash, property or securities to which any holders of Senior Debt of the Guarantor shall be entitled by virtue of this Article XIV or otherwise.

SECTION 14.11. Rights of Trustee as Holder of Senior Debt of the Guarantor; Preservation of Trustee’s Rights.

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XIV with respect to any Senior Debt of the Guarantor that may at any time be held by it, to the same extent as any other holder of Senior Debt of the Guarantor, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Guarantor, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this Article XIV, and no implied covenants or obligations with respect to the holders of such Senior Debt of the Guarantor shall be read into this Indenture against the Trustee. Nothing in this Article XIV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.

SECTION 14.12. Article Applicable to Paying Agents.

If at any time any Paying Agent other than the Trustee shall have been appointed by the Guarantor and be then acting hereunder, the term “ Trustee ” as used in this Article XIV shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XIV in addition to or in place of the Trustee; provided , that Sections 14.8 and 14.11 shall not apply to the Guarantor or any Affiliate of the Guarantor if the Guarantor or such Affiliate acts as Paying Agent.

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed signature page of this Indenture by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

* * * *

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.


	NorthStar Realty Finance Limited Partnership, as Issuer

	By:	NorthStar Realty Finance Corp., its General Partner


	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General
		Counsel and Assistant Secretary


	NorthStar Realty Finance Corp., as Guarantor

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General
		Counsel and Assistant Secretary


	WILMINGTON TRUST COMPANY , as Trustee

	By:	W. Thomas Morris, II
		Name: W. Thomas Morris, II
		Title: Assistant Vice President

AMENDED AND RESTATED TRUST AGREEMENT

among

NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP ,

as Depositor

NORTHSTAR REALTY FINANCE CORP. ,

as Guarantor

WILMINGTON TRUST COMPANY

as Property Trustee

WILMINGTON TRUST COMPANY

as Delaware Trustee

and

THE ADMINISTRATIVE TRUSTEES NAMED HEREIN

as Administrative Trustees

Dated as of June 7, 2007

NORTHSTAR REALTY FINANCE TRUST VIII

TABLE OF CONTENTS

Page

ARTICLE I.		Defined Terms	1
	SECTION 1.1.	Definitions.	1
ARTICLE II.		The Trust	10
	SECTION 2.1.	Name.	10
	SECTION 2.2.	Office of the Delaware Trustee; Principal Place of Business.	10
	SECTION 2.3.	Initial Contribution of Trust Property; Fees, Costs and Expenses.	10
	SECTION 2.4.	Purposes of Trust.	11
	SECTION 2.5.	Authorization to Enter into Certain Transactions.	11
	SECTION 2.6.	Assets of Trust.	14
	SECTION 2.7.	Title to Trust Property.	14
ARTICLE III.		Payment Account; Paying Agents	14
	SECTION 3.1.	Payment Account.	14
	SECTION 3.2.	Appointment of Paying Agents.	15
ARTICLE IV.		Distributions; Redemption	15
	SECTION 4.1.	Distributions.	15
	SECTION 4.2.	Redemption.	16
	SECTION 4.3.	Subordination of Common Securities.	19
	SECTION 4.4.	Payment Procedures.	20
	SECTION 4.5.	Withholding Tax.	20
	SECTION 4.6.	Tax Returns and Other Reports.	20
	SECTION 4.7.	Payment of Taxes, Duties, Etc. of the Trust.	21
	SECTION 4.8.	Payments under Indenture or Pursuant to Direct Actions.	21
	SECTION 4.9.	Exchanges.	21
	SECTION 4.10.	Calculation Agent.	22
	SECTION 4.11.	Certain Accounting Matters.	22
ARTICLE V.		Securities	23
	SECTION 5.1.	Initial Ownership.	23
	SECTION 5.2.	Authorized Trust Securities.	23
	SECTION 5.3.	Issuance of the Common Securities; Subscription and Purchase of Notes.	23
	SECTION 5.4.	The Securities Certificates.	24
	SECTION 5.5.	Rights of Holders.	25
	SECTION 5.6.	Book-Entry Preferred Securities.	25
	SECTION 5.7.	Registration of Transfer and Exchange of Preferred Securities Certificates.	27
	SECTION 5.8.	Mutilated, Destroyed, Lost or Stolen Securities Certificates.	28
	SECTION 5.9.	Persons Deemed Holders.	29
	SECTION 5.10.	Cancellation.	29
	SECTION 5.11.	Ownership of Common Securities by Depositor.	29
	SECTION 5.12.	Restricted Legends.	30
	SECTION 5.13.	Form of Certificate of Authentication.	32

ARTICLE VI.		Meetings; Voting; Acts of Holders	33
	SECTION 6.1.	Notice of Meetings.	33
	SECTION 6.2.	Meetings of Holders of the Preferred Securities.	33
	SECTION 6.3.	Voting Rights.	33
	SECTION 6.4.	Proxies, Etc.	34
	SECTION 6.5.	Holder Action by Written Consent.	34
	SECTION 6.6.	Record Date for Voting and Other Purposes.	34
	SECTION 6.7.	Acts of Holders.	34
	SECTION 6.8.	Inspection of Records.	35
	SECTION 6.9.	Limitations on Voting Rights.	35
	SECTION 6.10.	Acceleration of Maturity; Rescission of Annulment; Waivers of Past Defaults.	36
ARTICLE VII.		Representations and Warranties	39
	SECTION 7.1.	Representations and Warranties of the Property Trustee and the Delaware Trustee.	39
	SECTION 7.2.	Representations and Warranties of Depositor.	40
ARTICLE VIII.		The Trustees	41
	SECTION 8.1.	Number of Trustees.	41
	SECTION 8.2.	Property Trustee Required.	41
	SECTION 8.3.	Delaware Trustee Required.	41
	SECTION 8.4.	Appointment of Administrative Trustees.	42
	SECTION 8.5.	Duties and Responsibilities of the Trustees.	42
	SECTION 8.6.	Notices of Defaults and Extensions.	44
	SECTION 8.7.	Certain Rights of Property Trustee.	44
	SECTION 8.8.	Delegation of Power.	46
	SECTION 8.9.	May Hold Securities.	47
	SECTION 8.10.	Compensation; Reimbursement; Indemnity.	47
	SECTION 8.11.	Resignation and Removal; Appointment of Successor.	48
	SECTION 8.12.	Acceptance of Appointment by Successor.	49
	SECTION 8.13.	Merger, Conversion, Consolidation or Succession to Business.	49
	SECTION 8.14.	Not Responsible for Recitals or Issuance of Securities.	50
	SECTION 8.15.	Property Trustee May File Proofs of Claim.	50
	SECTION 8.16.	Reports to and from the Property Trustee.	51
ARTICLE IX.		Termination, Liquidation and Merger	51
	SECTION 9.1.	Dissolution Upon Expiration Date.	51
	SECTION 9.2.	Early Termination.	51
	SECTION 9.3.	Termination.	52
	SECTION 9.4.	Liquidation.	52
	SECTION 9.5.	Mergers, Consolidations, Amalgamations or Replacements of Trust.	53
ARTICLE X.		Information to Purchaser	55
	SECTION 10.1.	Depositor Obligations to Purchaser.	55
	SECTION 10.2.	Property Trustee’s Obligations to Purchaser.	55
ARTICLE XI.		Miscellaneous Provisions	55
	SECTION 11.1.	Limitation of Rights of Holders.	55
	SECTION 11.2.	Agreed Tax Treatment of Trust and Trust Securities.	55
	SECTION 11.3.	Amendment.	56
	SECTION 11.4.	Separability.	57

SECTION 11.5.	Governing Law.	57
SECTION 11.6.	Successors.	57
SECTION 11.7.	Headings.	58
SECTION 11.8.	Reports, Notices and Demands.	58
SECTION 11.9.	Agreement Not to Petition.	58

Exhibit A	Certificate of Trust of NorthStar Realty Finance Trust VIII
Exhibit B	Form of Common Securities Certificate
Exhibit C	Form of Preferred Securities Certificate
Exhibit D	Junior Subordinated Indenture
Exhibit E	Form of Transferee Certificate to be Executed by Transferees other than QIBs
Exhibit F	Form of Transferor Certificate to be Executed by QIBs
Exhibit G	Form of Officer’s Financial Certificate
Exhibit H	Form of Officer’s Certificate pursuant to Section 8.16(a)

Schedule A	Calculation of LIBOR

iii

AMENDED AND RESTATED TRUST AGREEMENT, dated as of June 7, 2007, among (i) NorthStar Realty Finance Limited Partnership, a Delaware limited partnership (including any successors or permitted assigns, the “Depositor”), (ii) NorthStar Realty Finance Corp., a Maryland corporation (including any successors or permitted assigns, the “Guarantor”), (iii) Wilmington Trust Company, a Delaware banking corporation, as property trustee (in such capacity, the “Property Trustee”), (iv) Wilmington Trust Company, a Delaware banking corporation, as Delaware trustee (in such capacity, the “Delaware Trustee”), (v) David T. Hamamoto, an individual, Richard J. McCready, an individual, and Andrew C. Richardson, an individual, each of whose address is c/o NorthStar Realty Finance Limited Partnership, c/o NorthStar Realty Finance Corp., 399 Park Avenue, 18 ^th Floor, New York, NY 10022, as administrative trustees (in such capacities, each an “Administrative Trustee” and, collectively, the “Administrative Trustees” and, together with the Property Trustee and the Delaware Trustee, the “Trustees”) and (vi) the several Holders, as hereinafter defined.

W ITNESSETH

Whereas , the Depositor, the Property Trustee and the Delaware Trustee have heretofore created a Delaware statutory trust pursuant to the Delaware Statutory Trust Act by entering into a Trust Agreement, dated as of May 31, 2007 (the “Original Trust Agreement”), and by executing and filing with the Secretary of State of the State of Delaware the Certificate of Trust, substantially in the form attached as Exhibit A ; and

Whereas, the Depositor and the Trustees desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the issuance of the Common Securities by the Trust to the Depositor, (ii) the issuance and sale of the Preferred Securities by the Trust pursuant to the Purchase Agreement and (iii) the acquisition by the Trust from the Depositor of all of the right, title and interest in and to the Notes;

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

ARTICLE I.

D EFINED T ERMS

SECTION 1.1. Definitions.

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

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

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

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

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

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

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

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

“Act” has the meaning specified in Section 6.7 .

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

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

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

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

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

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

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

“Bankruptcy Event” means, with respect to any Person:

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

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

“Bankruptcy Law” means all Federal and state bankruptcy, insolvency, reorganization and other similar laws, including the United States Bankruptcy Code.

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

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

“Calculation Agent” has the meaning specified in Section 4.10 .

“Change of Control” has the meaning specified in the Indenture.

“Closing Date” has the meaning specified in the Purchase Agreement.

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

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

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

“Common Security” means a common security of the Trust, denominated as such and representing an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $1,000 and having the terms provided therefor in this Trust Agreement.

“Corporate Trust Office” means the principal office of the Property Trustee at which any particular time its corporate trust business shall be administered, which office at the date of this Trust Agreement is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets.

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

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

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

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

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

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

“Depositor Affiliate” has the meaning specified in Section 4.9 .

“Distribution Date” has the meaning specified in Section 4.1(a)(i) .

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

“DTC” means The Depository Trust Company or any successor thereto.

“Early Termination Event” has the meaning specified in Section 9.2 .

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

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

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

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

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

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

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

“Expiration Date” has the meaning specified in Section 9.1 .

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

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

“Guarantor” has the meaning specified in the preamble to this Trust Agreement and any successors and permitted assigns.

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

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

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

“Indenture Redemption Price” has the meaning specified in Section 4.2(c) .

“Interest Payment Date” has the meaning specified in Section 1.1 of the Indenture.

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

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

“LIBOR” has the meaning specified in Schedule A .

“LIBOR Business Day” has the meaning specified in Schedule A .

“LIBOR Determination Date” has the meaning specified in Schedule A .

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

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

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

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

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

“Majority in Liquidation Amount of the Preferred Securities” means Preferred Securities representing more than fifty percent (50%) of the aggregate Liquidation Amount of all (or a specified group of) then Outstanding Preferred Securities.

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

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

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

“Notes” means the Depositor’s Junior Subordinated Notes issued pursuant to the Indenture.

“Officer’s Certificate” means a certificate signed by the Chief Executive Officer, the President, an Executive Vice President, the Chief Financial Officer, the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, of the Depositor or the Guarantor, as applicable, and delivered to the Trustees. Any Officer’s Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement (other than the certificate provided pursuant to Section 8.16(a) ) shall include:

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

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

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

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

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

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

“Original Issue Date” means the date of original issuance of the Trust Securities.

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

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

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

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

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

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

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

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

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

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

“Preferred Security” means a preferred security of the Trust, denominated as such and representing an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $1,000 and having the terms provided therefor in this Trust Agreement.

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

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

“Purchase Agreement” means the Purchase Agreement, dated as of June 7, 2007, executed and delivered by the Trust, the Depositor, the Guarantor, and the Purchaser.

“Purchaser” means Obsidian CDO Warehouse LLC, whose address is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711, Attention: Donald Puglisi, as purchaser of the Preferred Securities pursuant to the Purchase Agreement.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A under the Securities Act.

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

“Redemption Price” means, with respect to any Trust Security, the Liquidation Amount of such Trust Security, plus accumulated and unpaid Distributions to the Redemption Date, plus the related amount of the premium, if any, paid by the Depositor upon the concurrent redemption or payment at maturity of a Like Amount of Notes.

“Reference Banks” has the meaning specified in Schedule A .

“Responsible Officer” means, with respect to the Property Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust Officer or any other officer in the Corporate Trust Office of the Property Trustee with direct responsibility for the administration of this Trust Agreement and also means, with respect to a particular corporate trust matter, any other officer of the Property Trustee to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.

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

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

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

“Special Event Redemption Price” has the meaning specified in Section 11.2 of the Indenture.

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

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

“Trust” means the Delaware statutory trust known as “NorthStar Realty Finance Trust VIII,” which was created on May 31, 2007, under the Delaware Statutory Trust Act pursuant to the Original Trust Agreement and the filing of the Certificate of Trust, and continued pursuant to this Trust Agreement.

“Trust Agreement” means this Amended and Restated Trust Agreement, including all Schedules and Exhibits (other than Exhibit D), as the same may be modified, amended or supplemented from time to time in accordance with the applicable provisions hereof.

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

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

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

ARTICLE II.

T HE T RUEST

SECTION 2.1. Name.

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

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

The address of the Delaware Trustee in the State of Delaware is Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets, or such other address in the State of Delaware as the Delaware Trustee may designate by written notice to the Holders, the Depositor, the Guarantor, the Property Trustee and the Administrative Trustees. The principal executive office of the Trust is c/o NorthStar Realty Finance Corp., 399 Park Avenue, 18 ^th Floor, New York, NY 10022, Attention: Chief Financial Officer, as such address may be changed from time to time by the Administrative Trustees following written notice to the Holders and the other Trustees.

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

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

SECTION 2.4. Purposes of Trust.

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

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

SECTION 2.5. Authorization to Enter into Certain Transactions.

(a) The Trustees shall conduct the affairs of the Trust in accordance with and subject to the terms of this Trust Agreement. In accordance with the following provisions (i) and (ii), the Trustees shall have the authority to enter into all transactions and agreements determined by the Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Trustees, under this Trust Agreement, and to perform all acts in furtherance thereof, including the following:

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

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

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

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

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

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

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

(G) execution and delivery of closing certificates, if any, pursuant to the Purchase Agreement;

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

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

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

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

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

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

(B) the establishment of the Payment Account;

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

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

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

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

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

(H) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust and the preparation, execution and filing of the certificate of cancellation of the Trust with the Secretary of State of the State of Delaware;

(I) application for a taxpayer identification number for the Trust;

(J) the authentication of the Preferred Securities as provided in this Trust Agreement; and

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

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

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

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

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

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

SECTION 2.6. Assets of Trust.

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

SECTION 2.7. Title to Trust Property.

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

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

ARTICLE III.

PAYMENT ACCOUNT; P AYING AGENTS

SECTION 3.1. Payment Account.

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

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

SECTION 3.2. Appointment of Paying Agents.

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

ARTICLE IV.

DISTRIBUTIONS; REDEMPTION

SECTION 4.1. Distributions.

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

(i) Distributions on the Trust Securities shall be cumulative, and shall accumulate whether or not there are funds of the Trust available for the payment of Distributions. Distributions shall accumulate from June 7, 2007, and, except as provided in clause (ii) below, shall be payable quarterly in arrears on January 30 ^th , April 30 ^th , July 30 ^th and October 30 ^th of each year, commencing on July 30, 2007. If any date on which a Distribution is otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after each such date until the next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date (each date on which Distributions are payable in accordance with this Section 4.1(a)(i), a “Distribution Date”);

(ii) Distributions shall accumulate in respect of the Trust Securities at a variable rate per annum, reset quarterly, equal to LIBOR plus the Margin (as defined in the Indenture) of the Liquidation Amount of the Trust Securities, such rate being the rate of interest payable on the Notes. LIBOR shall be determined by the Calculation Agent in accordance with Schedule A . The amount of Distributions payable for any Distribution period shall be computed and paid on the basis of a 360-day year and the actual number of days elapsed in the relevant Distribution period. The amount of Distributions payable for any period shall include any Additional Interest Amounts in respect of such period; and

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

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

(c) As a condition to the payment of any principal of or interest on the Trust Securities without the imposition of withholding tax, the Administrative Trustees shall require the previous delivery of properly completed and signed applicable U.S. federal income tax certifications (generally, an Internal Revenue Service Form W-9 (or applicable successor form) in the case of a person that is a “United States person” within the meaning of Section 7701(a)(30) of the Code or an Internal Revenue Service Form W-8 (or applicable successor form) in the case of a person that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code) and any other certification acceptable to it to enable the Paying Agent to determine its duties and liabilities with respect to any taxes or other charges that it may be required to pay, deduct or withhold in respect of such Trust Securities.

SECTION 4.2. Redemption.

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

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

(i) the Redemption Date;

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

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

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

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

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

(c) The Trust Securities (or portion thereof) redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption or payment at maturity of Notes. Redemptions of the Trust Securities (or portion thereof) shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Redemption Price. Under the Indenture, the Notes may be redeemed by the Depositor on any Interest Payment Date, at the Depositor’s option, on or after the earlier to occur of (i) a Change of Control Event (as defined in the Indenture) or (ii) July 30, 2012, in whole or in part, from time to time at a redemption price equal to one hundred percent (100%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, to but excluding the date fixed for redemption (the “Indenture Redemption Price”). The Notes may also be redeemed by the Depositor, at its option, in whole but not in part, upon the occurrence of an Investment Company Event or a Tax Event at the Special Event Redemption Price (as set forth in the Indenture).

(d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then by 10:00 A.M., New York City time, on the Redemption Date, the Depositor shall deposit sufficient funds with the Property Trustee to pay the Redemption Price. If such deposit has been made by such time, then by 12:00 noon, New York City time, on the Redemption Date, the Property Trustee will, with respect to Book-Entry Preferred Securities, irrevocably deposit with the Depositary for such Book-Entry Preferred Securities, to the extent available therefor, funds sufficient to pay the applicable Redemption Price and will give such Depositary irrevocable instructions and authority to pay the Redemption Price to the Holders of the Preferred Securities. With respect to Preferred Securities that are not Book-Entry Preferred Securities, the Property Trustee will irrevocably deposit with the Paying Agent, to the extent available therefor, funds sufficient to pay the applicable Redemption Price and will give the Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders of the Preferred Securities upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities (or portion thereof) called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of Holders holding Trust Securities (or portion thereof) so called for redemption will cease, except the right of such Holders to receive the Redemption Price and any Distribution payable in respect of the Trust Securities on or prior to the Redemption Date, but without interest, and, in the case of a partial redemption, the right of such Holders to receive a new Trust Security or Securities of authorized denominations, in aggregate Liquidation Amount equal to the unredeemed portion of such Trust Security or Securities, and such Securities (or portion thereof) called for redemption will cease to be Outstanding. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after each such date until the next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of any Trust Securities (or portion thereof) called for redemption is improperly withheld or refused and not paid either by the Trust or by the Depositor or the Guarantor pursuant to the Indenture, Distributions on such Trust Securities (or portion thereof) will continue to accumulate, as set forth in Section 4.1 , from the Redemption Date originally established by the Trust for such Trust Securities(or portion thereof) to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the Redemption Price.

(e) Subject to Section 4.3 (a), if less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated pro rata to the Common Securities and the Preferred Securities based upon the relative aggregate Liquidation Amounts of the Common Securities and the Preferred Securities. The Preferred Securities to be redeemed shall be selected on a pro rata basis based upon their respective Liquidation Amounts not more than sixty (60) days prior to the Redemption Date by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption; provided, however, that with respect to Holders that would be required to hold less than one hundred (100) but more than zero (0) Trust Securities as a result of such redemption, the Trust shall redeem Trust Securities of each such Holder so that after such redemption such Holder shall hold either one hundred (100) Trust Securities or such Holder no longer holds any Trust Securities, and shall use such method (including, without limitation, by lot) as the Trust shall deem fair and appropriate; and provided, further, that so long as the Preferred Securities are Book-Entry Preferred Securities, such selection shall be made in accordance with the Applicable Depositary Procedures for the Preferred Securities by such Depositary. The Property Trustee shall promptly notify the Securities Registrar in writing of the Preferred Securities (or portion thereof) selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities redeemed or to be redeemed only in part, to the portion of the aggregate Liquidation Amount of Preferred Securities that has been or is to be redeemed.

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

SECTION 4.3. Subordination of Common Securities.

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

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

SECTION 4.4. Payment Procedures.

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

SECTION 4.5. Withholding Tax.

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

SECTION 4.6. Tax Returns and Other Reports.

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

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

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

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

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

SECTION 4.9. Exchanges.

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

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

SECTION 4.10. Calculation Agent.

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

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

SECTION 4.11. Certain Accounting Matters.

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

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

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

ARTICLE V.

SECURITIES

SECTION 5.1. Initial Ownership.

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

SECTION 5.2. Authorized Trust Securities.

The Trust shall be authorized to issue one series of Preferred Securities having an aggregate Liquidation Amount of thirty-five million dollars ($35,000,000) and one series of Common Securities having an aggregate Liquidation Amount of one hundred thousand dollars ($100,000).

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

On the Closing Date, an Administrative Trustee, on behalf of the Trust, shall execute and deliver to the Depositor Common Securities Certificates, registered in the name of the Depositor, evidencing an aggregate of 100 Common Securities having an aggregate Liquidation Amount of one hundred thousand dollars ($100,000), against receipt by the Trust of the aggregate purchase price of such Common Securities of one hundred thousand dollars ($100,000). Contemporaneously therewith and with the sale by the Trust to the Holders of an aggregate of thirty-five thousand (35,000) Preferred Securities having an aggregate Liquidation Amount of thirty-five million dollars ($35,000,000), an Administrative Trustee, on behalf of the Trust, shall subscribe for and purchase from the Depositor Notes, to be registered in the name of the Property Trustee on behalf of the Trust and having an aggregate principal amount equal to thirty-five million one hundred thousand dollars ($35,100,000), and, in satisfaction of the purchase price for such Notes, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of thirty-five million one hundred thousand dollars ($35,100,000) (being the aggregate amount paid by the Holders for the Preferred Securities and the amount paid by the Depositor for the Common Securities).

SECTION 5.4. The Securities Certificates.

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

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

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

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

(e) Upon issuance of the Trust Securities as provided in this Trust Agreement, the Trust Securities so issued shall be deemed to be validly issued, fully paid and nonassessable, and each Holder thereof shall be entitled to the benefits provided by this Trust Agreement.

SECTION 5.5. Rights of Holders.

The Trust Securities shall have no, and the issuance of the Trust Securities is not subject to, preemptive or similar rights and when issued and delivered to Holders against payment of the purchase price therefor will be fully paid and non-assessable by the Trust. Except as provided in Section 5.11(b) , the Holders of the Trust Securities, in their capacities as such, shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware.

SECTION 5.6. Book-Entry Preferred Securities.

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

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

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

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

(e) The rights of the Owners of the Book-Entry Preferred Securities shall be exercised only through the Depositary and shall be limited to those established by law, the Applicable Depositary Procedures and agreements between such Owners and the Depositary and/or the Depositary Participants; provided, that, solely for the purpose of determining whether the Holders of the requisite amount of Preferred Securities have voted on any matter provided for in this Trust Agreement, to the extent that Preferred Securities are represented by a Global Preferred Security, the Trustees may conclusively rely on, and shall be fully protected in relying on, any written instrument (including a proxy) delivered to the Property Trustee by the Depositary setting forth the Owners’ votes or assigning the right to vote on any matter to any other Persons either in whole or in part. To the extent that Preferred Securities are represented by a Global Preferred Security, the Depositary will make book-entry transfers among the Depositary Participants and receive and transmit payments on the Preferred Securities that are represented by a Global Preferred Security to such Depositary Participants, and none of the Depositor or the Trustees shall have any responsibility or obligation with respect thereto.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(g) With respect to Preferred Securities issued to QIBs in the form of one or more Definitive Preferred Securities Certificates as provided in Section 5.4(c), and any subsequent transfers thereof, the Depositor and the Trust shall use all commercially reasonable efforts to make such Preferred Securities eligible for clearance and settlement as Book-Entry Preferred Securities through the facilities of the Depositary and listed for trading through the PORTAL Market, and will execute, deliver and comply with all representations made to, and agreements with, the Depositary and the PORTAL Market in connection therewith.

SECTION 5.9. Persons Deemed Holders.

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

SECTION 5.10. Cancellation.

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

SECTION 5.11. Ownership of Common Securities by Depositor.

(a) On the Closing Date, the Depositor shall acquire, and thereafter shall retain, beneficial and record ownership of the Common Securities. Neither the Depositor nor any successor Holder of the Common Securities may transfer less than all the Common Securities, and the Depositor or any such successor Holder may transfer the Common Securities only (i) in connection with a consolidation or merger of the Depositor into another Person, or any conveyance, transfer or lease by the Depositor of its properties and assets substantially as an entirety to any Person (in which event such Common Securities will be transferred to such surviving entity, transferee or lessee, as the case may be), pursuant to Section 8.1 of the Indenture or (ii) to the Depositor or an Affiliate of the Depositor, in each such case in compliance with applicable law (including the Securities Act, and applicable state securities and blue sky laws). To the fullest extent permitted by law, any attempted transfer of the Common Securities other than as set forth in the immediately preceding sentence shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating substantially “THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT.”

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

SECTION 5.12. Restricted Legends .

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

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

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

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

THE HOLDER OF THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT (A) SUCH PREFERRED SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE TRUST, (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND, IN THE CASE OF (III), SUBJECT TO THE RIGHT OF THE TRUST AND THE DEPOSITOR TO REQUIRE AN OPINION OF COUNSEL ADDRESSING COMPLIANCE WITH THE U.S. SECURITIES LAWS, AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY PREFERRED SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

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

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS PREFERRED SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER SECTION 408(b)(17) OF ERISA, U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY, OR ANY INTEREST THEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER AN APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

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

SECTION 5.13. Form of Certificate of Authentication.

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

This represents Preferred Securities referred to in the within-mentioned Trust Agreement.


Dated:	WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Property Trustee

	By:
		Authorized officer

ARTICLE VI.

M EETINGS ; V OTING ; A CTS OF H OLDERS

SECTION 6.1. Notice of Meetings.

Notice of all meetings of the Holders of the Preferred Securities, stating the time, place and purpose of the meeting, shall be given by the Property Trustee pursuant to Section 11.8 to each Holder of Preferred Securities, at such Holder’s registered address, at least fifteen (15) days and not more than ninety (90) days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice.

SECTION 6.2. Meetings of Holders of the Preferred Securities.

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

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

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

SECTION 6.3. Voting Rights.

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

SECTION 6.4. Proxies, Etc.

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

SECTION 6.5. Holder Action by Written Consent.

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

SECTION 6.6. Record Date for Voting and Other Purposes.

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

SECTION 6.7. Acts of Holders.

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

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

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

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

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

SECTION 6.8. Inspection of Records.

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

SECTION 6.9. Limitations on Voting Rights.

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

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

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

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

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

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

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

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

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

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

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

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

(b) For so long as any Preferred Securities remain Outstanding, to the fullest extent permitted by law and subject to the terms of this Trust Agreement and the Indenture, upon a Note Event of Default specified in paragraph (a) or (b) of Section 5.1 of the Indenture, any Holder of Preferred Securities shall have the right to institute a proceeding directly against the Depositor or the Guarantor, pursuant to Section 5.8 of the Indenture, for enforcement of payment to such Holder of any amounts payable in respect of Notes having an aggregate principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such Holder. Except as set forth in Section 6.10(a) and this Section 6.10(b) , the Holders of Preferred Securities shall have no right to exercise directly any right or remedy available to the holders of, or in respect of, the Notes.

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

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

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

ARTICLE VII.

R EPRESENTATIONS AND W ARRANTIES

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

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

(a) the Property Trustee is a Delaware banking corporation with trust powers, duly organized, validly existing and in good standing under the laws of the State of Delaware;

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

(c) the Delaware Trustee is a Delaware banking corporation, duly organized with trust powers, validly existing and in good standing under the laws of the State of Delaware and with its principal place of business in the State of Delaware;

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

(e) this Trust Agreement has been duly authorized, executed and delivered by the Property Trustee and the Delaware Trustee and constitutes the legal, valid and binding agreement of each of the Property Trustee and the Delaware Trustee enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity and the discretion of the court (regardless of whether considered in a proceeding in equity or at law);

(f) the execution, delivery and performance of this Trust Agreement have been duly authorized by all necessary corporate or other action on the part of the Property Trustee and the Delaware Trustee and do not require any approval of stockholders of the Property Trustee and the Delaware Trustee and such execution, delivery and performance will not (i) violate the Charter or By-laws of the Property Trustee or the Delaware Trustee or (ii) violate any applicable law, governmental rule or regulation of the United States or the State of Delaware, as the case may be, governing the banking and trust powers of the Property Trustee or the Delaware Trustee or any order, judgment or decree applicable to the Property Trustee or the Delaware Trustee;

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

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

SECTION 7.2. Representations and Warranties of Depositor.

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

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

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

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

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

(e) the execution, delivery and performance of this Trust Agreement have been duly authorized by all necessary action on the part of the Depositor and do not require any approval of equity owners of the Depositor and such execution, delivery and performance will not (i) violate the organizational documents of the Depositor or (ii) violate any applicable law, governmental rule or regulation governing the Depositor or any material portion of its property or any order, judgment or decree applicable to the Depositor or any material portion of its property;

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

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

ARTICLE VIII.

T HE T RUSTEES

SECTION 8.1. Number of Trustees.

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

SECTION 8.2. Property Trustee Required.

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

SECTION 8.3. Delaware Trustee Required.

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

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

SECTION 8.4. Appointment of Administrative Trustees.

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

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

SECTION 8.5. Duties and Responsibilities of the Trustees.

(a) The rights, immunities, duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and there shall be no other duties (including fiduciary duties) or obligations, express or implied, at law or in equity, of the Trustees; provided, however, that if an Event of Default known to the Property Trustee has occurred and is continuing, the Property Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a Majority in Liquidation Amount of the Preferred Securities, exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. Notwithstanding the foregoing, no provision of this Trust Agreement shall require any of the Trustees to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its or their rights or powers, if it or they shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not herein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section 8.5 . To the extent that, at law or in equity, a Trustee has duties (including fiduciary duties) to the Trust or to the Holders, such Trustee’s duties may be restricted or eliminated by the provisions in this Trust Agreement, except that this Trust Agreement may not eliminate the implied contractual covenant of good faith and fair dealing. A Trustee shall not be liable to the Trust or a Holder or another Person that is party to or is otherwise bound by this Trust Agreement for breach of fiduciary duty if the Trustee has relied in good faith on the provisions of this Trust Agreement. The provisions of this Trust Agreement, to the extent that they limit or eliminate the liabilities of the Trustees otherwise existing at law or in equity, are agreed by the Depositor and the Holders to replace such other liabilities of the Trustees, except that no provision of this Trust Agreement may limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing.

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

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

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

(ii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee hereunder or under the Indenture, or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement;

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

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

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

SECTION 8.6. Notices of Defaults and Extensions.

(a) Within ninety (90) days after the occurrence of a default actually known to the Property Trustee, the Property Trustee shall transmit notice of such default to the Holders, the Administrative Trustees, the Guarantor and the Depositor, unless such default shall have been cured or waived; provided, that, except in the case of a default in the payment of the principal of or any premium or interest (including any Additional Interest) on any Trust Security, the Property Trustee shall be fully protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Trust Securities. For the purpose of this Section 8.6 , the term “default” means any event that is, or after notice or lapse of time or both would become, an Event of Default.

(b) RESERVED.

(c) The Property Trustee shall not be deemed to have knowledge of any default or Event of Default unless the Property Trustee shall have received written notice thereof from the Depositor, the Guarantor, any Administrative Trustee or any Holder or unless a Responsible Officer of the Property Trustee shall have obtained actual knowledge of such default or Event of Default.

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

SECTION 8.7. Certain Rights of Property Trustee.

Subject to the provisions of Section 8.5 :

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

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

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

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

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

(f) the Property Trustee may consult with counsel (which counsel may be counsel to the Property Trustee, the Depositor or the Guarantor or any of the Depositor’s or the Guarantor’s Affiliates, and may include any of its employees) and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and in accordance with such advice; the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction;

(g) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Holders pursuant to this Trust Agreement, unless such Holders shall have offered to the Property Trustee reasonable security or indemnity against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Property Trustee;

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

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

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

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

(l) without prejudice to any other rights available to the Property Trustee under applicable law, when the Property Trustee incurs expenses or renders services in connection with a Bankruptcy Event, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Law or law relating to creditors rights generally; and

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

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

SECTION 8.8. Delegation of Power.

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

SECTION 8.9. May Hold Securities.

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

SECTION 8.10. Compensation; Reimbursement; Indemnity.

The Depositor agrees:

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

(b) to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of their agents and counsel), except any such expense, disbursement or advance as may be attributable to their gross negligence, bad faith or willful misconduct; and

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

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

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

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

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

SECTION 8.11. Resignation and Removal; Appointment of Successor.

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

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

(c) Unless an Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed (with or without cause) at any time by Act of the Holder of Common Securities. If an Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed (with or without cause) at such time by Act of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities, delivered to the removed Trustee (in its individual capacity and on behalf of the Trust). An Administrative Trustee may be removed (with or without cause) only by Act of the Holder of the Common Securities at any time.

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

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

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

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

SECTION 8.12. Acceptance of Appointment by Successor.

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

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

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

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

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

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

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

SECTION 8.15. Property Trustee May File Proofs of Claim.

(a) In case of any Bankruptcy Event (or event that with the passage of time would become a Bankruptcy Event) relative to the Trust or any other obligor upon the Trust Securities or the property of the Trust or of such other obligor or their creditors, the Property Trustee (irrespective of whether any Distributions on the Trust Securities shall then be due and payable and irrespective of whether the Property Trustee shall have made any demand on the Trust for the payment of any past due Distributions) shall be entitled and empowered, to the fullest extent permitted by law, by intervention in such proceeding or otherwise:

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

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

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

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

SECTION 8.16. Reports to and from the Property Trustee.

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

(b) The Depositor and the Guarantor shall furnish to (i) the Property Trustee, (ii) the Purchaser, (iii) any Owner of the Preferred Securities reasonably identified to the Depositor, the Guarantor or the Trust (which identification may be made either by such Owner or by the Purchaser) and (iv) any designee of (i), (ii) or (iii) above, a duly completed and executed certificate in the form attached hereto as Exhibit G, including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Depositor and the Guarantor not later than forty five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Depositor and the Guarantor and not later than ninety (90) days after the end of each fiscal year of the Depositor and the Guarantor.

(c) The Property Trustee shall receive all reports, certificates and information, which it is entitled to obtain under each of the Operative Documents, and deliver to (i) the Purchaser, or a designee thereof, as identified in writing to the Property Trustee, copies of all such reports, certificates or information promptly upon receipt thereof.

ARTICLE IX.

T ERMINATION , L IQUIDATION A ND M ERGER

SECTION 9.1. Dissolution Upon Expiration Date.

Unless earlier dissolved, the Trust shall automatically dissolve on July 30, 2042 (the “Expiration Date”), and the Trust Property shall be liquidated in accordance with Section 9.4 .

SECTION 9.2. Early Termination.

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

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

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

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

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

SECTION 9.3. Termination.

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

SECTION 9.4. Liquidation.

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

(i) state the Liquidation Date;

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

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

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

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

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

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

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

(a) such successor entity either (i) expressly assumes all of the obligations of the Trust under this Trust Agreement with respect to the Preferred Securities or (ii) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (such other Securities, the “Successor Securities”) so long as the Successor Securities have the same priority as the Preferred Securities with respect to distributions and payments upon liquidation, redemption and otherwise;

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

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

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

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

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

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

(h) the Depositor or its permitted transferee owns all of the common securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Indenture.

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

ARTICLE X.

I NFORMATION TO P URCHASER

SECTION 10.1. Depositor Obligations to Purchaser.

Notwithstanding any other provision herein, the Depositor and the Guarantor shall furnish to (a) the Purchaser, (b) any Owner of the Preferred Securities reasonably identified to the Depositor, the Guarantor, or the Trust (which identification may be made either by such Owner or by the Purchaser) and (c) any designee of (a) or (b) above, copies of all correspondence, notices, forms, filings, reports and other documents required to be provided by the Depositor or the Guarantor, whether acting through an Administrative Trustee or otherwise, to the Property Trustee or Delaware Trustee under this Trust Agreement.

SECTION 10.2. Property Trustee’s Obligations to Purchaser.

Notwithstanding any other provision herein, the Property Trustee shall furnish to the Purchaser, and any a designee thereof as identified in writing to the Property Trustee, copies of all (i) correspondence, notices, forms, filings, reports and other documents received by the Property Trustee or Delaware Trustee from the Depositor, whether acting through an Administrative Trustee or otherwise, under this Trust Agreement, and (ii) all correspondence, notices, forms, filings, reports and other documents required to be provided to the Depositor or a Holder by the Property Trustee or Delaware Trustee under this Trust Agreement.

ARTICLE XI.

M ISCELLANEOUS P ROVISIONS

SECTION 11.1. Limitation of Rights of Holders.

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

SECTION 11.2. Agreed Tax Treatment of Trust and Trust Securities.

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

SECTION 11.3. Amendment.

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

(b) Except as provided in Section 11.3(c) , any provision of this Trust Agreement may be amended by the Property Trustee, the Administrative Trustees and the Holder of all of the Common Securities and with (i) the consent of Holders of at least a Majority in Liquidation Amount of the Preferred Securities and (ii) receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not cause the Trust to be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes or affect the treatment of the Notes as indebtedness of the Depositor for United States federal income tax purposes or affect the Trust’s exemption from status (or from any requirement to register) as an “investment company” under the Investment Company Act.

(c) Notwithstanding any other provision of this Trust Agreement, without the consent of each Holder, this Trust Agreement may not be amended to (i) change the accrual rate, amount, currency or timing of any Distribution on or the redemption price of the Trust Securities or otherwise adversely affect the amount of any Distribution or other payment required to be made in respect of the Trust Securities as of a specified date, (ii) restrict or impair the right of a Holder to institute suit for the enforcement of any such payment on or after such date, (iii) reduce the percentage of aggregate Liquidation Amount of Outstanding Preferred Securities, the consent of whose Holders is required for any such amendment, or the consent of whose Holders is required for any waiver of compliance with any provision of this Trust Agreement or of defaults hereunder and their consequences provided for in this Trust Agreement; (iv) impair or adversely affect the rights and interests of the Holders in the Trust Property, or permit the creation of any Lien on any portion of the Trust Property; or (v) modify the definition of “Outstanding,” this Section 11.3(c) , Sections 4.1 , 4.2 , 4.3 , 6.10(e) or Article IX .

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

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

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

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

SECTION 11.4. Separability.

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

SECTION 11.5. Governing Law.

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

SECTION 11.6. Successors.

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

SECTION 11.7. Headings.

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

SECTION 11.8. Reports, Notices and Demands.

(a) Any report, notice, demand or other communication that by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Holder, the Depositor or the Guarantor may be given or served in writing delivered in person, or by reputable, overnight courier, by telecopy or by deposit thereof, first-class postage prepaid, in the United States mail, addressed, (a) in the case of a Holder of Preferred Securities, to such Holder as such Holder’s name and address may appear on the Securities Register; (b) in the case of the Holder of all the Common Securities or the Depositor, to NorthStar Realty Finance Limited Partnership c/o NorthStar Realty Finance Corp., 399 Park Avenue, 18 ^th Floor, New York, NY 10022, Attention: Chief Financial Officer, or to such other address as may be specified in a written notice by the Holder of all the Common Securities or the Depositor, as the case may be, to the Property Trustee; and (c) in the case of the Guarantor, to NorthStar Realty Finance Corp., 399 Park Avenue, 18 ^th Floor, New York, NY 10022, Attention: Chief Financial Officer, or to such other address as may be specified in a written notice by the Guarantor to the Property Trustee. Such report, notice, demand or other communication to or upon a Holder, the Depositor or the Guarantor shall be deemed to have been given when received in person, within one (1) Business Day following delivery by overnight courier, when telecopied with receipt confirmed, or within three (3) Business Days following delivery by mail, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver.

(b) Any notice, demand or other communication that by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Property Trustee, the Delaware Trustee, the Administrative Trustees or the Trust shall be given in writing by deposit thereof, first-class postage prepaid, in the U.S. mail, personal delivery or facsimile transmission, addressed to such Person as follows: (a) with respect to the Property Trustee and the Delaware Trustee to Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets, facsimile no. (302) 636-4140; (b) with respect to the Administrative Trustees, to them at the address above for notices to the Depositor, marked “Attention: Administrative Trustees of NorthStar Realty Finance Trust VIII,” and (c) with respect to the Trust, to its principal executive office specified in Section 2.2 , with a copy to the Property Trustee. Such notice, demand or other communication to or upon the Trust, the Property Trustee or the Administrative Trustees shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the Trust, the Property Trustee or the Administrative Trustees.

SECTION 11.9. Agreement Not to Petition.

Each of the Trustees and the Depositor agree for the benefit of the Holders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX , they shall not file, or join in the filing of, a petition against the Trust under any Bankruptcy Law or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. If the Depositor takes action in violation of this Section 11.9 , the Property Trustee agrees, for the benefit of Holders, that at the expense of the Depositor, it shall file an answer with the applicable bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as counsel for the Property Trustee or the Trust may assert.

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed signature page of this instrument by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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

	NorthStar Realty Finance Limited Partnership, as Depositor

	By: NorthStar Realty Finance Corp., its General Partner


	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary


	NorthStar Realty Finance Corp., as Guarantor

	By:	/s/ Albert Tylis
		Name: Albert Tylis
		Title: Executive Vice President, General Counsel and Assistant Secretary

Wilmington Trust Company, as Property Trustee		Wilmington Trust Company, as Delaware Trustee
By: /s/ W. Thomas Morris, II		By: /s/ W. Thomas Morris, II
Name: W. Thomas Morris, II		Name: W. Thomas Morris, II
Title: Assistant Vice President		Title: Assistant Vice President


/s/ David T. Hamamoto		/s/ Richard J. McCready
Administrative Trustee Name: David T. Hamamoto		Administrative Trustee Name: Richard J. McCready


/s/ Andrew C. Richardson
Administrative Trustee Name: Andrew C. Richardson

FIRST AMENDMENT TO

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

(NorthStar Entities)

THIS FIRST AMENDMENT TO AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT , dated as of June 22, 2007 (this “ Amendment No. 1 ”), is entered into by and among NRFC WA HOLDINGS, LLC , as a seller (together with its successors and permitted assigns, “ NRFC ”), NRFC WA HOLDINGS II, LLC , as a seller (together with its successors and permitted assigns, “ NRFC II ”), NRFC WA HOLDINGS VII, LLC , as a seller (together with its successors and permitted assigns, “ NRFC VII ”), NRFC WA HOLDINGS X, LLC , as a seller (together with its successors and permitted assigns, “ NRFC X ”), NRFC WA HOLDINGS XI, LLC , as a seller (together with its successors and permitted assigns, “ NRFC XI ”), NRFC WA HOLDINGS XII, LLC , as a seller (together with its successors and permitted assigns, “ NRFC XII ”, and, together with NRFC, NRFC II, NRFC VII, NRFC X and NRFC XI, the “ Seller ”), WACHOVIA BANK, NATIONAL ASSOCIATION , as the purchaser (together with its successors and assigns in such capacity, the “ Purchaser ”), NORTHSTAR REALTY FINANCE CORP. , as a guarantor (together with its successors and assigns, “ NorthStar ”), and NORTHSTAR REALTY FINANCE L.P. , a Delaware limited partnership, as a guarantor (together with its successors and permitted assigns, the “ Operating Partnership ”, and, together with NorthStar, the “ Guarantor ”), and consented to by WELLS FARGO BANK, NATIONAL ASSOCIATION (together with its successors and permitted assigns, the “ Custodian ”). Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Repurchase Agreement (as defined below).

R E C I T A L S

WHEREAS , the Seller, the Guarantor and the Purchaser are parties to that certain Amended and Restated Master Repurchase Agreement, dated as of June 5, 2007 (as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, including this Amendment No. 1, the “ Repurchase Agreement ”);

WHEREAS , the Seller and the Guarantor desire to make certain modifications to the Repurchase Documents;

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

WHEREAS , the Custodian is a party to other Repurchase Documents and related agreements that may be affected, directly or indirectly, by this Amendment No. 1 and desires to evidence its agreement to the amendments and modifications set forth herein.

Section 1 . Amendment to Repurchase Agreement .

(a) The definition of “Eurodollar Rate” contained in Subsection1.1 (b) of the Repurchase Agreement is hereby amended and restated as follows:

““ Eurodollar Rate ”: With respect to each Eurodollar Period during which a Transaction is outstanding, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the rate appearing at Reuters Screen LIBORO1 Page (or any successor page) as the London interbank offered rate for deposits in Dollars at or about 9:00 a.m., Charlotte, North Carolina time, two (2) Business Days prior to the beginning of such Eurodollar Period (and if such date is not a Business Day, the Eurodollar Rate in effect on the Business Day immediately preceding such date) for a term comparable to such Eurodollar Period, or, if no such rate appears on Reuters Screen LIBORO1 Page (or any successor page) at such time and day, then the Eurodollar Rate shall be determined by Wachovia at its principal office in Charlotte, North Carolina as its rate (each such determination, absent manifest error, to be conclusive and binding on all parties hereto and their successors and assignees) at which thirty (30) day deposits in United States Dollars are being, have been, or would be offered or quoted by Wachovia to major banks in the applicable interbank market for Eurodollar deposits at or about 11:00 a.m. on such day. The Purchaser’s determination of Eurodollar Rate shall be conclusive upon the parties absent manifest error on the part of the Purchaser.”

(b) Clause (vi) of Subsection 5.1(v) to the Repurchase Agreement is hereby amended and restated as follows:

“( i ) Fixed Charge Coverage . For each Test Period, NorthStar shall maintain a minimum Fixed Charge Coverage Ratio of 1.25x.”

Section 2 . [ Reserved ].

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

Section 4 . Representations .

Each of the Seller and the Guarantor represent and warrant, as of the date of this Amendment No. 1, as follows:

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

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

( f ) no Default or Event of Default exists or will exist after giving effect to this Amendment No. 1; and

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

Section 5 . Conditions Precedent .

The effectiveness of this Amendment No. 1 is subject to the following conditions precedent: ( i ) delivery to the Purchaser of this Amendment No. 1 duly executed by each of the parties hereto; (ii) the payment of all reasonable legal fees and expenses of Moore & Van Allen PLLC, as counsel to the Purchaser, in the amount to be set forth on a separate invoice; and (iii) such other documents, agreements or certifications as the Purchaser may reasonably require.

Section 6 . Miscellaneous .

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

( d ) The interpretive provisions of Section 1.2 of the Repurchase Agreement are incorporated herein mutatis mutandis .

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF , the parties have caused this Amendment No. 1 to be executed by their respective officers thereunto duly authorized, as of the date first above written.


THE SELLERS:	NRFC WA HOLDINGS, LLC, a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS II, LLC, a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings II, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS VII, LLC, a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings VII, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS X, LLC, a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings X, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS XI, LLC, a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings XI, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE SELLERS (cont.):	NRFC WA HOLDINGS XII, LLC, a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC WA Holdings XII, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

THE PURCHASER:


	WACHOVIA BANK, NATIONAL ASSOCIATION

	By:	/s/ H. Lee Goins III
		Name: H. Lee Goins III Title: Vice President

	Wachovia Bank, National Association
	One Wachovia Center, Mail Code: NC0166
	301 South College Street
	Charlotte, North Carolina 28288
	Attention:	Lee Goins
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 715-7655

[Signatures Continued on the Following Page]


THE GUARANTORS:	NORTHSTAR REALTY FINANCE CORP., a Maryland corporation

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]


THE GUARANTORS (cont.):	NORTHSTAR REALTY FINANCE L.P., a Delaware limited partnership,

	By:	NorthStar Realty Finance Corp., a Maryland corporation, its general partner

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NorthStar Realty Finance L.P.
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

Acknowledged and Agreed to:


THE CUSTODIAN:	WELLS FARGO BANK, NATIONAL ASSOCIATION

	By:	/s/ Christina Hatfield
		Name: Christina Hatfield Title: Assistant Vice President

	Wells Fargo Bank, National Association
	1055 10th Avenue SE
	Minneapolis, Minnesota	55414
	Attention:	Tina Hatfield,
		Assistant Vice President
	Facsimile: No:	(612) 466-5416
	Confirmation No:	(612) 466-5252

SECOND AMENDMENT TO MASTER REPURCHASE AGREEMENT

(VFCC/NorthStar)

THIS SECOND AMENDMENT TO MASTER REPURCHASE AGREEMENT , dated as of June 22, 2007 (this “ Amendment No. 2 ”), is entered into by and among NRFC WA HOLDINGS, LLC , as a seller (together with its successors and permitted assigns, “ NRFC ”), NRFC WA HOLDINGS II, LLC , as a seller (together with its successors and permitted assigns, “ NRFC II ”), NRFC WA HOLDINGS VII, LLC , as a seller (together with its successors and permitted assigns, “ NRFC VII ”), NRFC WA HOLDINGS X, LLC , as a seller (together with its successors and permitted assigns, “ NRFC X ”), NRFC WA HOLDINGS XI, LLC , as a seller (together with its successors and permitted assigns, “ NRFC XI ”), NRFC WA HOLDINGS XII, LLC , as a seller (together with its successors and permitted assigns, “ NRFC XII ”, and, together with NRFC, NRFC II, NRFC VII, NRFC X and NRFC XI, the “ Seller ”), VARIABLE FUNDING CAPITAL COMPANY LLC , as a purchaser (together with its successors and assigns, “ VFCC ”), WACHOVIA BANK, NATIONAL ASSOCIATION , as the swingline purchaser (together with its successors and assigns in such capacity, the “ Swingline Purchaser ”, and, together with VFCC, the “ Purchaser ”), WACHOVIA CAPITAL MARKETS, LLC , as the deal agent for the Secured Parties (together with its successors and assigns in such capacity, the “ Deal Agent ”), NORTHSTAR REALTY FINANCE CORP , as a guarantor (together with its successors and permitted assigns, “ NorthStar ”), and NORTHSTAR REALTY FINANCE L.P. , as a guarantor (together with its successors and permitted assigns, the “ Operating Partnership ”, and, together with NorthStar, the “ Guarantor ”), and consented to by NRFC SUB-REIT CORP. , as the pledgor (together with its successors and permitted assigns, the “ Pledgor ”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (together with it successors and permitted assigns, the “ Custodian ”). Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Repurchase Agreement (as defined below).

R E C I T A L S

WHEREAS , the Seller, the Guarantor, the Purchaser and the Deal Agent are parties to that certain Master Repurchase Agreement, dated as of May 14, 2007, as amended by the First Amendment to Master Repurchase Agreement, dated as of May 24, 2007 (“ Amendment No. 1 ”) (as such Master Repurchase Agreement is amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, including pursuant to Amendment No. 1 and this Amendment No. 2, the “ Repurchase Agreement ”);

WHEREAS , the Seller and the Guarantor desire to make certain modifications to the Repurchase Documents;

WHEREAS , the Purchaser and the Deal Agent are willing to modify the Repurchase Documents as requested by the Seller and the Guarantor on the terms and conditions specified herein; and

WHEREAS , the Pledgor and the Custodian are parties to other Repurchase Documents and related agreements that may be affected, directly or indirectly, by this Amendment No. 2 and desires to evidence its agreement to the amendments and modifications set forth herein.

Section 1 . Amendment to Repurchase Agreement .

( a ) The definition of “LIBOR Rate” contained in Subsection1.1 (b) of the Repurchase Agreement is hereby amended and restated as follows:

““ LIBOR Rate ”: For any day during any Accrual Period and any Transaction or portion thereof, a rate per annum equal to:

( i ) the posted rate for thirty (30) day deposits in United States Dollars appearing on Reuters Screen LIBORO1 Page (or any successor page) as of 11:00 a.m. (London time) on the Business Day which is the second (2nd) Business Day immediately preceding the applicable Purchase Date (with respect to the initial Accrual Period for such Transaction) and as of the second (2nd) Business Day immediately preceding the first (1st) day of the applicable Accrual Period (with respect to all subsequent Accrual Periods for such Transaction); or

( ii ) if no such rate appears on Reuters Screen LIBORO1 Page (or any successor page) at such time and day, then the LIBOR Rate shall be determined by Wachovia at its principal office in Charlotte, North Carolina as its rate (each such determination, absent manifest error, to be conclusive and binding on all parties hereto and their assignees) at which thirty (30) day deposits in United States Dollars are being, have been, or would be offered or quoted by Wachovia to major banks in the applicable interbank market for Eurodollar deposits at or about 11:00 a.m. (Charlotte, North Carolina time) on such day.”

( b ) Clause (vi) of Subsection 5.1(v) to the Repurchase Agreement is hereby amended and restated as follows:

“( iii ) Fixed Charge Coverage . For each Test Period, NorthStar shall maintain a minimum Fixed Charge Coverage Ratio of 1.25x.”

Section 2 . [ Reserved ].

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

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

Section 4 . Representations .

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

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

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

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

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

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

( g ) each of the Repurchase Documents is in full force and effect and neither the Seller, the Guarantor nor the Pledgor has any defense, offset, counterclaim, abatement, right of rescission or other claims, legal or equitable, available to the Seller, the Guarantor, the Pledgor or any other Person with respect to this Amendment No. 2, the Repurchase Agreement, the Repurchase Documents or any other instrument, document and/or agreement described herein or therein, as modified and amended hereby, or with respect to the obligation of the Seller and the Guarantor to repay the Obligations and other amounts due under the Repurchase Documents.

Section 5 . Conditions Precedent .

The effectiveness of this Amendment No. 2 is subject to the following conditions precedent: ( i ) delivery to the Deal Agent of this Amendment No. 2 duly executed by each of the parties hereto; (ii) the payment of all reasonable legal fees and expenses of Moore & Van Allen PLLC, as counsel to the Deal Agent, in the amount to be set forth on a separate invoice; and (iii) such other documents, agreements or certifications as the Deal Agent may reasonably require.

Section 6 . Miscellaneous .

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

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

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

( d ) The interpretive provisions of Section 1.2 of the Repurchase Agreement are incorporated herein mutatis mutandis .

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

( f ) THIS AMENDMENT NO. 2 AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT NO. 2 SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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


THE SELLERS:	NRFC WA HOLDINGS, LLC , a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	Address for Notices:

	NRFC WA Holdings, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-1


THE SELLERS (cont.):	NRFC WA HOLDINGS II , LLC , a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	Address for Notices:

	NRFC WA Holdings II, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-2


THE SELLERS (cont.):	NRFC WA HOLDINGS VII, LLC , a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	Address for Notices:

	NRFC WA Holdings VII, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-3


THE SELLERS (cont.):	NRFC WA HOLDINGS X, LLC , a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	Address for Notices:

	NRFC WA Holdings X, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-4


THE SELLERS (cont.):	NRFC WA HOLDINGS XI, LLC , a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	Address for Notices:

	NRFC WA Holdings XI, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-5


THE SELLERS (cont.):	NRFC WA HOLDINGS XII, LLC , a Delaware limited liability company

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	Address for Notices:

	NRFC WA Holdings XII, LLC
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[ SIGNATURES CONTINUED ON FOLLOWING PAGE ]

S-6


THE PURCHASERS:	VARIABLE FUNDING CAPITAL COMPANY LLC , as a Purchaser
	By: Wachovia Capital Markets, LLC, as attorney-in-fact

	By:	/s/ Douglas R. Wilson, Sr.
		Name: Douglas R. Wilson, Sr. Title: Director

	Variable Funding Capital Company LLC
	c/o Wachovia Capital Markets, LLC
	One Wachovia Center, Mail Code: TW10
	301 South College Street
	Charlotte, North Carolina 28288
	Attention:	Conduit Administration
	Facsimile No.:	(704) 383-9579
	Confirmation No.:	(704) 374-2520

	with a copy to:

	Wachovia Capital Markets, LLC
	One Wachovia Center, Mail Code: NC0166
	301 South College Street
	Charlotte, North Carolina 28288
	Attention:	Lee Goins
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 715-7655

[Signatures Continued on the Following Page]

S-7


THE PURCHASERS (cont.):	WACHOVIA BANK, NATIONAL ASSOCIATION , as the Swingline Purchaser
	By:	/s/ H. Lee Goins III
		Name: H. Lee Goins III Title: Vice President

	Wachovia Bank, National Association
	One Wachovia Center, Mail Code: NC0166
	301 South College Street
	Charlotte, North Carolina 28288
	Attention:	Lee Goins
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 715-7655

[Signatures Continued on the Following Page]

S-8


THE DEAL AGENT:	WACHOVIA CAPITAL MARKETS, LLC

	By:	/s/ Christina Hatfield
		Name: Christina Hatfield Title: Assistant Vice President

	Wachovia Capital Markets, LLC
	One Wachovia Center, Mail Code: NC0166
	301 South College Street
	Charlotte, North Carolina 28288
	Attention:	Lee Goins
	Facsimile No.:	(704) 715-0066
	Confirmation No.:	(704) 715-7655

[Signatures Continued on the Following Page]

S-9


THE GUARANTORS:	NORTHSTAR REALTY FINANCE CORP. , a Maryland corporation

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-10


THE GUARANTORS (cont.):	NORTHSTAR REALTY FINANCE L.P. , a Delaware limited partnership,

	By:	NorthStar Realty Finance Corp., a Maryland corporation, its general partner

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NorthStar Realty Finance L.P.
	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

[Signatures Continued on the Following Page]

S-11

Acknowledged and Agreed to:


THE PLEDGOR:	NRFC SUB-REIT CORP. , a Maryland corporation

	By:	/s/ Albert Tylis
		Name: Albert Tylis Title: Executive Vice President, General Counsel and Assistant Secretary

	NRFC Sub-REIT Corp.

	c/o NorthStar Realty Finance Corp.
	399 Park Avenue, 18th floor
	New York, New York 10022
	Attention:	Andy Richardson
		Al Tylis, Esq.
		Daniel R. Gilbert
	Facsimile No.:	(212) 547-2700
	Confirmation No.:	(212) 547-2650
		(212) 547-2641
		(212) 547-2680

	with a copy to:

	Paul Hastings Janofsky & Walker LLP
	75 East 55 ^th Street
	New York, New York	10022
	Attention:	Robert J. Grados, Esq.
	Facsimile No.:	(212) 230-7830
	Confirmation No.:	(212) 318-6923

S-12


THE CUSTODIAN:	WELLS FARGO BANK, NATIONAL ASSOCIATION

	By:	/s/ Christina Hatfield
		Name: Christina Hatfield Title: Assistant Vice President


	Wells Fargo Bank, National Association
	1055 10th Avenue SE
	Minneapolis, Minnesota 55414
	Attention:	Tina Hatfield,
		Assistant Vice President
	Facsimile: No:	(612) 466-5416
	Confirmation No:	(612) 466-5252

S-13

$350,000,000

MASTER REPURCHASE AGREEMENT

Dated as of August 8, 2007

among

NRFC JP HOLDINGS, LLC

as Seller,

and

JPMORGAN CHASE BANK, N.A.,

as Buyer

TABLE OF CONTENTS

Page

ARTICLE 1. APPLICABILITY	1
ARTICLE 2. DEFINITIONS	1
ARTICLE 3. INITIATION; CONFIRMATION; TERMINATION; FEES; REDUCTION OF FACILITY AMOUNT	23
ARTICLE 4. MARGIN MAINTENANCE	36
ARTICLE 5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS	37
ARTICLE 6. SECURITY INTEREST	41
ARTICLE 7. PAYMENT, TRANSFER AND CUSTODY	42
ARTICLE 8. SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS	50
ARTICLE 9. [Reserved]	51
ARTICLE 10. REPRESENTATIONS AND WARRANTIES OF SELLER	51
ARTICLE 11. NEGATIVE COVENANTS OF SELLER	59
ARTICLE 12. AFFIRMATIVE COVENANTS OF SELLER	61

-i-

ARTICLE 13. EVENTS OF DEFAULT; REMEDIES	65
ARTICLE 14. SINGLE AGREEMENT	70
ARTICLE 15. RECORDING OF COMMUNICATIONS	71
ARTICLE 16. NOTICES AND OTHER COMMUNICATIONS	71
ARTICLE 17. ENTIRE AGREEMENT; SEVERABILITY	71
ARTICLE 18. NON-ASSIGNABILITY	72
ARTICLE 19. GOVERNING LAW	72
ARTICLE 20. NO WAIVERS, ETC.	73
ARTICLE 21. USE OF EMPLOYEE PLAN ASSETS	73
ARTICLE 22. INTENT	73
ARTICLE 23. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS	74
ARTICLE 24. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL	75
ARTICLE 25. NO RELIANCE	75
ARTICLE 26. INDEMNITY	76
ARTICLE 27. DUE DILIGENCE	77

-ii-

ARTICLE 28. SERVICING	78
ARTICLE 29. MISCELLANEOUS	79

-iii-

ANNEXES, EXHIBITS AND SCHEDULES

ANNEX I	Names and Addresses for Communications between Parties
SCHEDULE I	Advance Rates and Applicable Pricing Rates
EXHIBIT I	Form of Confirmation
EXHIBIT II	Authorized Representatives of Seller
EXHIBIT III	Monthly Reporting Package
EXHIBIT IV	Form of Custodial Delivery
EXHIBIT V	Form of Power of Attorney
EXHIBIT VI	Representations and Warranties Regarding Individual Purchased Assets
EXHIBIT VII	Asset Information
EXHIBIT VIII	Advance Procedures
EXHIBIT IX	Excluded Transferees
EXHIBIT X	Form of Bailee Letter
EXHIBIT XI	Form of Interim Servicing Agreement
EXHIBIT XII	Form of Margin Deficit Notice
EXHIBIT XIII	UCC Filing Jurisdictions
EXHIBIT XIV	Form of Future Funding Confirmation
EXHIBIT XV	Additional Eligible Collateral
EXHIBIT XVI	Form of Servicer Notice
EXHIBIT XVII	Form of Release Letter
EXHIBIT XVIII	Future Funding Advance Procedures
EXHIBIT XIX	Covenant Compliance Certificate
EXHIBIT XX	Form of Depository Agreement
EXHIBIT XXI	Form of Custodial Agreement

-iv-

EXHIBIT XXII

Form of Officers’ Certificate

-v-

MASTER REPURCHASE AGREEMENT

MASTER REPURCHASE AGREEMENT, dated as of August 8, 2007, by and among NRFC JP HOLDINGS, LLC, a Delaware limited liability company (the “ Seller ” with respect to the Eligible Assets that it sells to Buyer) and JPMORGAN CHASE BANK, N.A., a banking association organized under the laws of the United States (the “ Buyer ”).

ARTICLE 1.

APPLICABILITY

From time to time the parties hereto may enter into transactions in which Seller and Buyer agree to the transfer from Seller to Buyer all of its rights, title and interest to certain Eligible Assets (as defined herein) or other assets and, in each case, the other related Purchased Items (as defined herein) (collectively, the “ Assets ”) against the transfer of funds by Buyer to Seller, with a simultaneous agreement by Buyer to transfer back to Seller such Assets at a date certain or on demand, against the transfer of funds by Seller to Buyer. Each such transaction shall be referred to herein as a “ Transaction ” and, unless otherwise agreed in writing, shall be governed by this Agreement, including any supplemental terms or conditions contained in any exhibits identified herein as applicable hereunder. Each individual transfer of an Eligible Asset shall constitute a distinct Transaction.

ARTICLE 2.

DEFINITIONS

“ Accelerated Repurchase Date ” shall have the meaning specified in Article 13(b)(i) of this Agreement.

“ Accepted Servicing Practices ” shall mean with respect to any applicable Purchased Asset, those mortgage servicing practices of prudent mortgage lending institutions that service mortgage and/or mezzanine loans of the same type as such Purchased Asset in the state where the related underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

“ Acceptable Attorney ” means an attorney-at-law that has delivered at Seller’s request a Bailee Letter, with the exception of an attorney whom Buyer has notified Seller is not satisfactory to Buyer.

“ Act of Insolvency ” shall mean, with respect to any Person, (i) the filing of a petition, commencing, or authorizing the commencement of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, or suffering any such petition or proceeding to be commenced by another which is consented to, not timely contested or results in entry of an order for relief; (ii) the seeking or consenting to the appointment of a receiver, trustee, custodian or similar official for such Person or any substantial part of the property of such Person; (iii) the appointment of a receiver, conservator, or manager for such Person by any governmental agency or authority having the jurisdiction to do so; (iv) the making of a general assignment for the benefit of creditors; (v) the admission by such Person of its inability to pay its debts or discharge its obligations as they become due or mature; or (vi) that any Governmental Authority or agency or any person, agency or entity acting or purporting to act under Governmental Authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the property of such Person, or shall have taken any action to displace the management of such Person or to curtail its authority in the conduct of the business of such Person.

“ Additional Eligible Collateral ” shall mean any of the items indicated on Exhibit XV hereto.

“ Adjusted Total Assets ” shall mean the sum of Total Assets plus Off-Balance Sheet Assets.

“ Adjusted Total Liabilities ” shall mean, the sum of Total Liabilities plus Off-Balance Sheet Liabilities minus Trust Preferred Securities.

“ Advance Rate ” shall mean, with respect to each Transaction and any Pricing Rate Period, the initial Advance Rate selected by Seller for such Transaction as shown in the related Confirmation, unless otherwise agreed to by Buyer and Seller.

“ Affiliate ” shall mean, when used with respect to any specified Person, (i) any other Person directly or indirectly controlling, controlled by, or under common control with, such Person. Control shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise and “controlling” and “controlled” shall have meanings correlative thereto, or (ii) any “affiliate” of such Person, as such term is defined in the Bankruptcy Code.

“ Affiliated Hedge Counterparty ” shall mean JPMorgan Chase Bank, N.A., or any Affiliate thereof, in its capacity as a party to any Hedging Transaction with Seller.

“ Agreement ” shall mean this Master Repurchase Agreement, dated as of August 8, 2007 by and among NRFC JP Holdings, LLC and JPMorgan Chase Bank, N.A., as such agreement may be modified or supplemented from time to time.

“ Alternative Rate ” shall have the meaning specified in Article 3(h) of this Agreement.

“ Alternative Rate Transaction ” shall mean, with respect to any Pricing Rate Period, any Transaction with respect to which the Pricing Rate for such Pricing Rate Period is determined with reference to the Alternative Rate.

“ Applicable Spread ” shall mean, with respect to a Transaction involving a Purchased Asset in any Asset Type Grouping:

(i) so long as no Event of Default shall have occurred and be continuing, the incremental per annum rate (expressed as a number of “basis points”, each basis point being equivalent to 1/100 of 1%) specified in Schedule I attached to this Agreement as being the “Applicable Spread” for Purchased Assets in such Asset Type Grouping for the applicable loan-to-cost ratio, the applicable net operating income debt yields or Rating Agency ratings shown on Schedule I , as applicable, or such lower rate as may be determined by Buyer in its sole discretion, in the event that the Advance Rate applicable to any Purchased Asset is less than the related Maximum Advance Rate, in each case as determined by Buyer on each Pricing Rate Determination Date in accordance with Article 3(d) , and

(ii) after the occurrence and during the continuance of an Event of Default, the applicable incremental per annum rate described in clause (i) of this definition, plus 400 basis points (4.00%).

“ Asset Information ” shall mean, with respect to each Purchased Asset, the information set forth in Exhibit VII attached hereto.

“ Asset Type Grouping ” shall mean, with respect to the Eligible Assets, any of the types of Eligible Assets listed in Schedule I attached to this Agreement.

“ Assets ” shall have the meaning specified in Article 1 .

“ B-Note ” means the original promissory note, if any, that was executed and delivered in connection with the subordinate portion of a Senior Mortgage Loan.

“ Bailee Letter ” means a letter from an Acceptable Attorney or from a Title Company, in the form attached to this Agreement as Exhibit X , wherein such Acceptable Attorney or Title Company in possession of a Purchased Asset File (i) acknowledges receipt of such Purchased Asset File, (ii) confirms that such Acceptable Attorney, Title Company, or other Person acceptable to Buyer is holding the same as bailee of Buyer under such letter and (iii) agrees that such Acceptable Attorney or Title Company shall deliver such Purchased Asset File to the Custodian by not later than the third (3rd) Business Day following the Purchase Date for the related Purchased Asset.

“ Bankruptcy Code ” shall mean The United States Bankruptcy Code of 1978, as amended from time to time.

“ Breakage Costs ” shall have the meaning assigned thereto in Article 3(m) .

“ Business Day ” shall mean a day other than (i) a Saturday or Sunday, or (ii) a day in which the New York Stock Exchange or banks in the State of New York are authorized or obligated by law or executive order to be closed. Notwithstanding the foregoing sentence, when used with respect to the determination of LIBOR, “Business Day” shall only be a day on which commercial banks are open for international business (including dealings in U.S. Dollar deposits) in London, England.

“ Buyer ” shall mean JPMorgan Chase Bank, N.A., or any successor.

“ Buyer’s Margin Amount ” shall mean with respect to any Transaction and any Purchased Asset on any date, the Maximum Advance Rate available for such Purchased Asset, multiplied by the Market Value of such Purchased Asset as of the date of determination.

“ Capitalized Lease Obligations ” shall mean obligations under a lease that are required to be capitalized for financial reporting purposes in accordance with GAAP. The amount of a Capitalized Lease Obligation is the capitalized amount of such obligation as would be required to be reflected on the balance sheet prepared in accordance with GAAP of the applicable Person as of the applicable date.

“ CF Sweep Event ” shall mean a determination by Buyer, in accordance with Article 4 of this Agreement, that a Margin Deficit exists.

“ Closing Date ” shall mean August 8, 2007.

“ CMBS ” shall mean p ass-through certificates representing beneficial ownership interests in one or more first lien mortgage loans secured by commercial and/or multifamily properties rated B- (or its equivalent) or higher by the Rating Agencies.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

“ Collateral ” shall have the meaning specified in Article 6 of this Agreement.

“ Collection Period ” shall mean with respect to the Remittance Date in any month, the period beginning on the Cut-off Date in the month preceding the month in which such Remittance Date occurs and continuing to but excluding the Cut-off Date immediately preceding such Remittance Date.

“ Concentration Limit ” shall mean, on any date of determination (i) the limit on the maximum concentration on such Business Day that may be represented by a particular type of Purchased Asset. With respect to Construction Loans, the applicable Concentration Limit is 40% of the Facility Amount, of which 50% of such Concentration Limit may be represented by Construction Loans structured as a “B-note”, “mezzanine loan” or “junior participation” in such Construction Loan (but in no event greater than 20% of the Facility Amount). With respect to Land Loans, the applicable Concentration Limit is 15% of the Facility Amount. With respect to fixed-rate Purchased Assets that are not subject to a Hedging Transaction, the applicable Concentration Limit is 10% of the aggregate Repurchase Price for all Purchased Assets.

“ Condo Conversion Loan ” shall mean a performing first-priority mortgage loan secured by properties that have been, or are expected to be, converted or built from the ground up to a condominium form of ownership for the purpose of re-development as, in whole or in part, residential apartments, commercial, office or industrial buildings or time share units.

“ Confirmation ” shall have the meaning specified in Article 3(b) of this Agreement.

“ Consolidated Adjusted EBITDA ” shall mean, for any period, with respect to any Person, the sum, without duplication, for such period of (a) the Net Income of such Person and its consolidated Subsidiaries determined on a consolidated basis for such period, (b) the sum of the provisions for such period for income taxes, interest expense, and depreciation and amortization expense used in determining such Net Income for such Person and its consolidated Subsidiaries, (c) amounts deducted in accordance with GAAP in respect of other non-cash expenses in determining such Net Income for such Person and its consolidated Subsidiaries and (d) the amount of any aggregate net loss (or minus the amount of any gain) during such period arising from the sale, exchange or other disposition of capital assets by such Person and its consolidated Subsidiaries determined on a consolidated basis, in each event excluding unrealized gains/losses, any fees payable to advisors for raising private equity capital, amortization of financing fees and amortization of bond discount associated with convertible debt outstanding.

“ Construction Loan ” shall mean a performing first priority commercial real estate mortgage loan (either structured as an “A-note”, “senior participation”, “B-note”, “mezzanine loan” or “junior participation” in such a mortgage loan) secured by a Core Property Type that provides for periodic advances for construction of improvements on the real estate securing such mortgage loan for which a substantial portion of the proceeds of the mortgage loan may be for “ground up” construction.

“ Core Property Types ” shall mean the following types of properties: multi-family, mixed-use, retail, industrial, office building and hospitality, or such other types of properties that Buyer may agree to in its sole and absolute discretion.

“ Contingent Liabilities ” shall mean, with respect to any Person and its consolidated Subsidiaries (without duplication): (i) liabilities and obligations (including any Guarantee Obligations) of such Person, any Subsidiary or any other Person in respect of “off-balance sheet arrangements” (as defined in the SEC Off-Balance Sheet Rules), (ii) any obligation, including, without limitation, any Guarantee Obligation, whether or not required to be disclosed in the footnotes to such Person’s financial statements, guaranteeing partially or in whole any Non-Recourse Indebtedness, lease, dividend or other obligation, exclusive of contractual indemnities (including, without limitation, any indemnity or price-adjustment provision relating to the purchase or sale of securities or other assets) and guarantees of non-monetary obligations (other than guarantees of completion, environmental indemnities and guarantees of customary carve-out matters made in connection with Non-Recourse Indebtedness, such as (but not limited to) fraud, misappropriation, bankruptcy and misapplication) which have not yet been called on or quantified, of such Person or of any other Person, and (iii) any forward commitment or obligation to fund or provide proceeds with respect to any loan or other financing which is obligatory and non-discretionary on the part of the lender. The amount of any Contingent Liabilities described in clause (ii) shall be deemed to be, (a) with respect to a guarantee of interest or interest and principal, or operating income guarantee, the sum of all payments required to be made thereunder (which, in the case of an operating income guarantee, shall be deemed to be equal to the debt service for the note secured thereby), through, (x) in the case of an interest or interest and principal guarantee, the stated date of maturity of the obligation (and commencing on the date interest could first be payable thereunder), or (y) in the case of an operating income guarantee, the date through which such guarantee will remain in effect, and (b) with respect to all guarantees not covered by the preceding clause (a), an amount equal to the stated or determinable amount of the primary obligation in respect of which such guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as recorded on the balance sheet and on the footnotes to the most recent financial statements of such Person. As used in this definition, the term “SEC Off-Balance Sheet Rules” means the Disclosure in Management’s Discussion and Analysis About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, Securities Act Release Nos. 33-8182; 34-47264; FR-67 International Series Release No. 1266 File No. S7-42-02, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17 CFR pts. 228, 229 and 249).

“ Covenant Compliance Certificate ” shall have the meaning specified in Article 12(j)(ii) hereof.

“ CRE CDO ” shall mean commercial real estate collateralized debt obligations rated BB- (or its equivalent) or higher by the Rating Agencies.

“ Custodial Agreement ” shall mean the Custodial Agreement, dated as of the date hereof, by and among the Custodian, Seller and Buyer, the form of which is attached hereto as Exhibit XXI .

“ Custodial Delivery ” shall mean the form executed by Seller in order to deliver the Purchased Asset Schedule and the Purchased Asset File to Buyer or its designee (including the Custodian) pursuant to Article 7 of this Agreement, a form of which is attached hereto as Exhibit IV .

“ Custodian ” shall mean Wells Fargo Bank, N.A., or any successor Custodian appointed by Buyer with the consent of Seller.

“ Cut-off Date ” shall mean the first (1st) calendar day of any month.

“ Default ” shall mean any event which, with the giving of notice, the passage of time, or both, would constitute an Event of Default.

“ Defaulted Mortgage Asset ” shall mean any loan (a) that is sixty (60) days or more delinquent in the payment of principal, interest, fees or other amounts payable under the terms of the related loan documents, (b) as to which an Act of Insolvency shall have occurred with respect to the Borrower or (c) as to which a material non-monetary event of default shall have occurred under any document included in the Purchased Asset File for such Purchased Asset.

“ Deferred Financing Costs ” shall mean the aggregate amount of deferred financing or similar costs incurred by a Person or any Subsidiary of such Person that have not been accounted for as expenses in accordance with GAAP.

“ Delinquent Mortgage Asset ” shall mean a loan that is thirty (30) or more days, but less than sixty (60) days, delinquent in the payment of principal, interest, fees or other amounts payable under the terms of the related loan documents.

“ Depository ” shall mean Wells Fargo Bank, N.A., or any successor Depository appointed by Buyer with the prior written consent of Seller (such consent to not be unreasonably withheld or delayed).

“ Depository Account ” shall mean a segregated interest bearing account, in the name of Buyer, established at the Depository pursuant to the Depository Agreement.

“ Depository Agreement ” shall mean that certain Depository Agreement, dated as of the date hereof, among Buyer, Seller and the Depository, in the form attached hereto as Exhibit XX .

“ Draft Appraisal ” shall mean a short form appraisal, “letter opinion of value,” or any other form of draft appraisal acceptable to Buyer.

“ Early Repurchase ” shall mean a repurchase of a Purchased Asset as described in Article 3(f) of this Agreement.

“ Early Repurchase Date ” shall have the meaning specified in Article 3(f) of this Agreement.

“ EBITDA ” shall mean, for any period, the sum, without duplication, for such period of (a) Net Income of Seller for such period, (b) the sum of provisions for such period for income taxes, interest expense, and depreciation and amortization expense used in determining such Net Income, (c) amounts deducted in accordance with GAAP in respect of other non cash expenses in determining such Net Income and (d) the amount of any aggregate net loss (or minus the amount of any gain) during such period arising from the sale, exchange or other disposition of capital assets (determined in accordance with GAAP) by Seller, excluding any reporting implications of Financial Interpretations No. 45 and 46 and FASB 150, in each event excluding unrealized gains/losses, any fees payable to advisors for raising private equity capital, amortization of financing fees and amortization of bond discount associated with convertible debt outstanding.

“ Eligible Assets ” shall mean any of the following types of assets or loans (i) that are acceptable to Buyer in its sole and absolute discretion exercised in good faith, (ii) with respect to which the representations and warranties set forth in this Agreement (including the exhibits hereto) are true and correct in all material respects, and (iii) that are secured directly or indirectly by properties that are Core Property Types (or any other property type acceptable to Buyer in its sole discretion) and is located in the United States of America, its territories or possessions (or elsewhere, in the sole discretion of Buyer):

(i) Senior Mortgage Loans;

(ii) Construction Loans;

(iii) B-Notes/Junior Interests;

(iv) Mezzanine Loans ;

(v) Condo Conversion Loans;

(vi) CMBS rated B- (or its equivalent) or higher by the Rating Agencies and CRE CDO rated BB- (or its equivalent) or higher by the Rating Agencies;

(vii) Land Loans;

(viii) any Additional Eligible Collateral transferred to Buyer in connection with a Margin Deficit; and

(ix) any other asset types or classifications that are acceptable to Buyer, subject to its consent on all necessary and appropriate modifications to this Agreement and each of the Transaction Documents, as determined by Buyer in its sole and absolute discretion.

Notwithstanding anything to the contrary contained in this Agreement, the following shall not be Eligible Assets for purposes of this Agreement: (i) Non-performing loans; (ii) loans that are Defaulted Mortgage Assets or Delinquent Mortgage Assets; or (iii) assets secured directly or indirectly by loans described in the preceding clauses (i) through (ii).

“ Eligible Loans ” shall mean any Senior Mortgage Loans, Construction Loans, B-Notes/Junior Interests, Mezzanine Loans, Condo Conversion Loans and Land Loans that are also Eligible Assets.

“ Environmental Law ” shall mean any federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guideline, written policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq .; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq .; the Clean Air Act, 42 U.S.C. § 7401 et seq .; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq .; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq .; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq .; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq . and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq .; and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.

“ Environmental Site Assessment ” shall have the meaning specified in paragraph 30 of the section of Exhibit VI dealing with Eligible Loans.

“ Equity Interest ” shall mean, with respect to any Person, any share of capital stock of (or other ownership, equity or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership, equity or profit interests in) such Person, any security convertible into or exchangeable for any share of capital stock of (or other ownership, equity or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder. Article references to ERISA are to ERISA, as in effect at the date of this Agreement and, as of the relevant date, any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

“ ERISA Affiliate ” shall mean any corporation or trade or business that is a member of any group of organizations (i) described in Article 414(b) or (c) of the Code of which Seller is a member and (ii) solely for purposes of potential liability under Article 302(c)(11) of ERISA and Article 412(c)(11) of the Code and the lien created under Article 302(f) of ERISA and Article 412(n) of the Code, described in Article 414(m) or (o) of the Code of which Seller is a member.

“ Event of Default ” shall have the meaning specified in Article 13 of this Agreement.

“ Extension Period ” shall have the meaning specified in Article 3(n)(i) of this Agreement.

“ Facility Amount ” shall mean $350,000,000.

“ Federal Funds Rate ” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by Buyer from three (3) federal funds brokers of recognized standing selected by it.

“ Filings ” shall have the meaning specified in Article 6(d) of this Agreement.

“ Final Maturity Date ” shall have the meaning specified in the definition of “ Maturity Date ”.

“ Financing Lease ” shall mean any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee.

“ Fixed Charge Coverage Ratio ” shall mean, for Guarantor and its consolidated Subsidiaries during any period, EBITDA for such period divided by the Fixed Charges for the same period.

“ Fixed Charges ” shall mean, for Guarantor and its consolidated Subsidiaries determined on a consolidated basis during any period, the sum of (without duplication) (a) Debt Service, (b) all Preferred Dividends required to be paid during such period, (c) Capital Lease Obligations required to be paid during such period, and (d) all payments due under any ground lease.

“ Foreclosed Loan ” shall mean an Eligible Loan with respect to which the Underlying Mortgaged Property has been foreclosed upon by Seller or, in the case of a B-Note, Junior Interest, Mezzanine Loan, CMBS or CRE CDO, by the Servicer of the Underlying Mortgage Loan.

“ Future Funding Amount ” shall mean, (i) with respect to any Construction Loan or Senior Mortgage Loan, the amount of additional funding obligations that were expressly identified to and approved by Buyer in connection with the initial Transaction or (ii) with respect to any Purchased Asset where Seller elected to apply a percentage lower than the Advance Rate set forth in Schedule I in connection with the initial Transaction, the amount of additional funds available to be advanced against such Purchased Asset.

“ Future Funding Confirmation ” shall have the meaning specified in Article 3(c)(i) .

“ Future Funding Date ” shall mean, with respect to any Purchased Asset with respect to which a Future Funding Amount is outstanding, the date on which Buyer advances any portion of such Future Funding Amount.

“ Future Funding Due Diligence ” shall have the meaning set forth in Article 3(c)(ii) hereof.

“ Future Funding Due Diligence Package ” shall have the meaning set forth in Exhibit XVIII hereto.

“ Future Funding Loan ” shall mean any Purchased Asset for which there is a Future Funding Amount outstanding.

“ Future Funding Transaction ” shall mean (i) an additional Transaction requested with respect to any Construction Loan or Senior Mortgage Loan to provide for the advance of additional funds that were expressly identified to and approved by Buyer in connection with the initial Transaction entered into in respect of such Construction Loan or Senior Mortgage Loan or (ii) an additional Transaction requested with respect to any Purchased Asset to provide for the advance of additional funds in the event that Seller elected to apply a percentage lower than the Advance Rate set forth in Schedule I in connection with the initial Transaction.

“ GAAP ” shall mean United States generally accepted accounting principles consistently applied as in effect from time to time.

“ Governmental Authority ” shall mean any national or federal government, any state, regional, local or other political subdivision thereof with jurisdiction and any Person with jurisdiction exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“ Guarantee Agreement ” shall mean the Guarantee Agreement, dated as of the date hereof, from Guarantor in favor of Buyer, in form and substance acceptable to Buyer, which shall cause Guarantor to be jointly and severally liable with Seller to Buyer for up to 10% of the maximum Facility Amount.

“ Guarantee Obligation ” shall mean, as to any Person (the “ guaranteeing person ”), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the “ primary obligations ”) of any other third Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided , however , that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The terms “ guarantee ” and “ guaranteed ” used as a verb shall have a correlative meaning. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined in good faith.

“ Guarantor ” shall mean NorthStar Realty Finance Corp., a Maryland corporation.

“ Hedge-Required Asset ” shall mean any Eligible Asset that is a fixed rate Eligible Asset.

“ Hedging Transactions ” shall mean, with respect to any or all of the Purchased Assets, any short sale of U.S. Treasury Securities or mortgage-related securities, futures contract (including Eurodollar futures) or options contract or any interest rate swap, cap or collar agreement or similar arrangements providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, entered into by any Affiliated Hedge Counterparty or Qualified Hedge Counterparty with Seller, either generally or under specific contingencies that is required by Buyer, or otherwise pursuant to this Agreement (subject to the definition of Concentration Limit), to hedge a Hedge-Required Asset, or that Seller has elected to pledge or transfer to Buyer pursuant to this Agreement.

“ Income ” shall mean, with respect to any Purchased Asset at any time, (x) any collections of principal, interest, dividends, receipts or other distributions or collections, (y) all net sale proceeds received by Seller or any Affiliate of Seller in connection with a sale or liquidation of such Purchased Asset and (z) all payments actually received by Buyer on account of Hedging Transactions.

“ Indebtedness ” shall mean, for any Person, (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a lien on the property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (e) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements; (f) Indebtedness of others guaranteed by such Person; (g) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (h) Indebtedness of general partnerships of which such Person is secondarily or contingently liable (other than by endorsement of instruments in the course of collection), whether by reason of any agreement to acquire such indebtedness to supply or advance sums or otherwise; (i) Capitalized Lease Obligations of such Person; (j) all net liabilities or obligations under any interest rate, interest rate swap, interest rate cap, interest rate floor, interest rate collar, or other hedging instrument or agreement; and (k) all obligations of such Person under Finance Leases.

“ Indemnified Amounts ” and “ Indemnified Parties ” shall have the meaning specified in Article 26 of this Agreement.

“ Interim Servicing Agreement ” shall mean the Interim Servicing Agreement, dated as of the date hereof, by and among the Servicer, Seller and Buyer, the form of which is attached hereto as Exhibit XI .

“ Internal Revenue Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ Interest Expense ” shall mean, for any period, the total of all interest expense with respect to all outstanding Indebtedness including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under all Hedge Transactions with respect to interest rates to the extent such net costs are allocable to such period in accordance with GAAP, excluding amortization of deferred financing fees and amortization of bond discounts associated with convertible debt to the extent included in GAAP Interest Expense.

“ Junior Certificate ” shall mean the original participation certificate, if any, that was executed and delivered in connection with a Junior Interest that is a junior participation.

“ Junior Interest ” shall mean a performing junior participation interest in a stabilized or transitional senior commercial, multifamily fixed or floating rate mortgage loan secured by a first lien on multifamily and commercial properties or a subordinate portion of a Senior Mortgage Loan evidenced by a Junior Certificate.

“ Land Loan ” shall mean a performing first priority mortgage loan secured by undeveloped real estate intended to be developed into retail, hospitality, commercial, multi-family or condominium property.

“ Legal Fee Cap ” shall mean the maximum amount of legal fees related to due diligence of Eligible Assets for which Seller shall be obligated to pay. With respect to Senior Mortgage Loans such amount shall equal $3,500. With respect to B-Notes and Mezzanine Loans such amount shall equal $5,000. With respect to Construction Loans (or any Junior Interest or B-Note in a Construction Loan) and Land Loans such amount shall equal $6,000.

“ Leverage ” shall mean, for any Person, the aggregate amount of indebtedness for money borrowed (included purchase money mortgage loans) outstanding at any time, both secured and unsecured.

“ LIBOR ” shall mean the rate per annum calculated as set forth below:

(i) On each Pricing Rate Determination Date, LIBOR for the next Pricing Rate Period will be the rate for deposits in United States dollars for a one-month period that appears on page BBAM of Bloomberg, L.P. as of 11:00 a.m., London time, on such date; or

(ii) On any Pricing Rate Determination Date on which no such rate appears on page BBAM of Bloomberg, L.P. as described above, LIBOR for the next Pricing Rate Period will be determined on the basis of the arithmetic mean of the rates at which deposits in United States dollars are offered by the Reference Banks at approximately 11:00 a.m., London time, on such date to prime banks in the London interbank market for a one-month period.

All percentages resulting from any calculations or determinations referred to in this definition will be rounded upwards, if necessary, to the nearest multiple of 1/100 of 1% and all U.S. dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent or more being rounding upwards).

“ LIBO Rate ” shall mean, with respect to any Pricing Rate Period pertaining to a Transaction, a rate per annum determined for such Pricing Rate Period in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

LIBOR

1 - Reserve Requirement

“ LIBOR Transaction ” shall mean, with respect to any Pricing Rate Period, any Transaction with respect to which the Pricing Rate for such Pricing Rate Period is determined with reference to the LIBO Rate.

“ Lien ” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any financing lease having substantially the same economic effect as any of the foregoing), and the filing of any financing statement under the UCC or comparable law of any jurisdiction in respect of any of the foregoing.

“ Liquidity ” shall mean, at any time, the amount equal to the sum of (i) funds standing to the credit of the Depository Account; plus (ii) cash or cash equivalents (excluding (x) cash or cash equivalents consisting of Additional Eligible Collateral pledged hereunder or pledged to secure a “margin deficit” or “borrowing base deficiency” (or the equivalent, however designated, under another warehouse facility) and (y) cash or cash equivalents standing to the credit of a deposit account or other account that is the subject of a “control agreement” (or the equivalent, however designated) at a time when Seller does not have the right unilaterally to direct the withdrawal of funds from such account (e.g., because a “default” or “event of default” (or the equivalent, however designated) exists)); plus (iii) the unused excess, if any, of the Facility Amount or “borrowing base” (or the equivalent, however designated) of assets held under this Agreement, in all other warehouse facilities to which Seller is a party at such time and the Unsecured Credit Facility over the Purchase Price (less any prepayments thereof) or “unpaid principal balance” (or the equivalent, however designated) of such assets under this Agreement or such other warehouse facilities.

“ Margin Deadline ” has the meaning specified in Article 4(a) .

“ Margin Deficit ” shall have the meaning specified in Article 4(a) .

“ Market Value ” shall mean, with respect to any Purchased Asset as of any relevant date, the market value for such Purchased Asset on such date as determined by Buyer in its sole and absolute discretion, exercised in good faith. The Market Value shall, at Buyer’s option, be deemed to be zero with respect to each Purchased Asset (i) subject to Article 7(d) , in respect of which the complete Purchased Asset File has not been delivered to the Custodian in accordance with the terms of the Custodial Agreement and (ii) that has been released from the possession of the Custodian under the Custodial Agreement to Seller for a period in excess of twenty (20) calendar days (except as may have been consented to by Buyer in its sole and absolute discretion).

The Market Value of each Purchased Asset may be determined by Buyer in good faith, in its sole discretion, on each Business Day during the term of this Agreement.

“ Material Adverse Effect ” shall mean a material adverse effect on (a) the financial condition of Seller or Guarantor, (b) the ability of Seller or Guarantor to perform its obligations under any of the Transaction Documents, (c) the validity or enforceability of any of the Transaction Documents or (d) the rights and remedies of Buyer under any of the Transaction Documents.

“ Materials of Environmental Concern ” shall mean any toxic mold, any petroleum (including, without limitation, crude oil or any fraction thereof) or petroleum products (including, without limitation, gasoline) or any hazardous or toxic substances, materials or wastes, defined as such in or regulated under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls, and urea-formaldehyde insulation.

“ Maturity Date ” shall mean the day that is 364 calendar days after the Closing Date, or such later date as may be in effect pursuant to Article 3(n) hereof. For the sake of clarity, the Maturity Date shall not be any date beyond three (3) years from the Closing Date (the “ Final Maturity Date ”), except with respect to the exercise of the Wind Down Period option described in Article 3(n)(ii) .

“ Maximum Advance Rate ” shall mean, with respect to each Purchased Asset, the “Advance Rate” specified for the applicable Asset Type Grouping in Schedule I attached to this Agreement for the applicable loan-to-cost ratio, the applicable net operating income debt yields or Rating Agency ratings shown on Schedule I , as applicable, or if not shown in Schedule I or otherwise agreed to by Seller and Buyer, as determined by Buyer in its sole and absolute discretion.

“ Mezzanine Loan ” shall mean a performing loan (or a participation therein) primarily secured by a pledge of full or partial equity ownership interests in one or more entities that own directly or indirectly multifamily or commercial properties that serve as collateral for Senior Mortgage Loans.

“ Mezzanine Note ” shall mean the original promissory note that was executed and delivered in connection with a particular Mezzanine Loan.

“ Minimum Transfer Amount ” shall mean, with respect to Seller, $500,000; provided , however , that if a Default or an Event of Default has occurred and is continuing hereunder, the Minimum Transfer Amount shall be U.S. $0.

“ Moody’s ” shall mean Moody’s Investors Service , Inc.

“ Mortgage ” shall mean a mortgage, deed of trust, deed to secure debt or other instrument, creating a valid and enforceable first Lien on or a first priority ownership interest in an estate in fee simple in real property and the improvements thereon, securing a Mortgage Note or similar evidence of indebtedness.

“ Mortgage Note ” shall mean a note or other evidence of indebtedness of a Mortgagor secured by a Mortgage, including any A-Note, B-Note or Junior Certificate that is a Purchased Asset.

“ Mortgagor ” shall mean the obligor on a Mortgage Note and the grantor of the related Mortgage, or the obligor on a Mezzanine Note or Junior Interest.

“ Multiemployer Plan ” shall mean a multiemployer plan defined as such in Article 3(37) of ERISA to which contributions have been, or were required to have been, made by Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.

“ Net Assets ” shall mean, for any Person, total assets (other than intangibles) at cost, before deducting depreciation, reserves for bad debts or other non-cash reserves, less total liabilities.

“ Net Income ” shall mean, with respect to any Person for any period, the net income of such Person for such period as determined in accordance with GAAP.

“ Net Operating Income ” shall mean, with respect to any Underlying Mortgaged Property, for any period, the actual net operating income (including, but not limited to, any net income from Hedging Transactions) calculated in accordance with customary Commercial Mortgage Securities Association (CMSA) criteria for commercial mortgaged properties.

“ New Asset ” shall mean an Eligible Asset that a Seller proposes to be included as a Purchased Item.

“ Non-Recourse Indebtedness ” shall mean, with respect to any Person, Indebtedness for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, and other similar exceptions to non-recourse provisions (but not exceptions relating to bankruptcy, insolvency, receivership or other similar events)) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness.

“ Off-Balance Sheet Liabilities ” shall mean, with respect to any Person, any (a) repurchase obligation or liability, contingent or otherwise, of such Person with respect to any mortgages, mortgage notes, accounts or notes receivable sold, transferred or otherwise disposed of by such Person, (b) repurchase obligation or liability, contingent or otherwise, of such Person with respect to Property or assets leased by such Person as lessee and (c) obligations, contingent or otherwise, of such Person under any Off-Balance Sheet Transaction, in each case, if the transaction giving rise to such obligation does not (and is not required pursuant to GAAP to) appear as a liability on the balance sheet of such Person.

“ Off-Balance Sheet Transaction ” shall mean, with respect to any Person, any synthetic lease, tax retention operating lease, commercial mortgage backed securities transaction, securitization transaction, collateralized debt obligation transaction, off balance sheet loan or similar off balance sheet financing.

“ Originated Asset ” shall mean any Eligible Asset originated by Seller.

“ Other Warehouse Facilities ” shall mean loan and security agreements, repurchase agreements and similar agreements entered into from time to time by Seller with respect to financial assets similar to Eligible Assets, excluding this Agreement.

“ Permitted Liens ” shall have the meaning specified in Article 11(e) hereof.

“ Person ” shall mean an individual, corporation, limited liability company, business trust, partnership, joint tenant or tenant-in-common, trust, joint stock company, joint venture, unincorporated organization, or any other entity of whatever nature, or a Governmental Authority.

“ Plan ” shall mean an employee benefit or other plan established or maintained by Seller or any ERISA Affiliate during the five year period ended prior to the date of this Agreement or to which Seller or any ERISA Affiliate makes, is obligated to make or has, within the five year period ended prior to the date of this Agreement, been required to make contributions and that is covered by Title IV of ERISA or Article 302 of ERISA or Article 412 of the Code, other than a Multiemployer Plan.

“ Plan Party ” shall have the meaning set forth in Article 21(a) of this Agreement.

“ Potential Event of Default ” shall mean any condition or event that, after notice or lapse of time, would constitute an Event of Default.

“ Pre-Existing Asset ” shall mean any Eligible Asset that is not an Originated Asset.

“ Pre-Purchase Due Diligence ” shall have the meaning set forth in Article 3(b)(iii) hereof.

“ Pre-Purchase Legal Fees ” shall mean all of the reasonable and necessary out of pocket legal fees (subject to any Legal Fee Cap), costs and expenses incurred by Buyer in connection with the Pre-Purchase Due Diligence associated with Buyer’s decision as to whether or not to enter into a particular Transaction.

“ Price Differential ” shall mean, with respect to any Purchased Asset as of any date, the aggregate amount obtained by daily application of the applicable Pricing Rate for such Purchased Asset to the Purchase Price of such Purchased Asset on a 360-day-per-year basis for the actual number of days during each Pricing Rate Period commencing on (and including) the Purchase Date for such Purchased Asset and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Purchased Asset).

“ Pricing Rate ” shall mean, for any Pricing Rate Period, an annual rate equal to the sum of (i) the LIBO Rate and (ii) the relevant Applicable Spread, in each case, for the applicable Pricing Rate Period for the related Purchased Asset. The Pricing Rate shall be subject to adjustment and/or conversion as provided in the Transaction Documents.

“ Pricing Rate Determination Date ” shall mean with respect to any Pricing Rate Period with respect to any Transaction, the second (2nd) Business Day preceding the first day of such Pricing Rate Period.

“ Pricing Rate Period ” shall mean, with respect to any Transaction and any Remittance Date (a) in the case of the first Pricing Rate Period, the period commencing on and including the Purchase Date for such Transaction and ending on and excluding the following Remittance Date, and (b) in the case of any subsequent Pricing Rate Period, the period commencing on and including the immediately preceding Remittance Date and ending on and excluding such Remittance Date; provided , however , that in no event shall any Pricing Rate Period for a Purchased Asset end subsequent to the Repurchase Date for such Purchased Asset.

“ Principal Payment ” shall mean, with respect to any Purchased Asset, any payment or prepayment received by the Depository in respect thereof.

“ Purchase Date ” shall mean, with respect to any Purchased Asset, the date on which Buyer purchases such Purchased Asset from Seller hereunder.

“ Purchase Price ” shall mean, with respect to any Purchased Asset, the price at which such Purchased Asset is transferred by Seller to Buyer on the applicable Purchase Date, adjusted after the Purchase Date as set forth below. The Purchase Price as of the Purchase Date for any Purchased Asset shall be an amount (expressed in dollars) equal to the product obtained by multiplying (i) the Market Value of such Purchased Asset (or the par amount of such Purchased Asset, if lower than Market Value) by (ii) the “Advance Rate” for such Purchased Asset, as set forth in Schedule I attached to this Agreement; provided , that notwithstanding the foregoing, Seller may request that the Purchase Price set forth in a Confirmation be determined by applying a percentage lower than the Advance Rate set forth in Schedule I attached to this Agreement and, in such event, such lower percentage shall be deemed the “Advance Rate” for purposes of this Agreement. The Purchase Price of any Purchased Asset shall be (x) increased by any Future Funding Amounts disbursed by Buyer to Seller or the related borrower with respect to such Purchased Asset and (y) decreased by (i) the portion of any Principal Payments on such Purchased Asset that are applied pursuant to Article 5 hereof to reduce such Purchase Price and (ii) any other amounts paid to Buyer by Seller to reduce such Purchase Price.

“ Purchased Asset Documents ” shall mean, with respect to a Purchased Asset, the documents comprising the Purchased Asset File for such Purchased Asset.

“ Purchased Asset File ” shall mean the documents specified as the “Purchased Asset File” in Article 7(b) , together with any additional documents and information required to be delivered to Buyer or its designee (including the Custodian) pursuant to this Agreement; provided that to the extent that Buyer waives, including pursuant to Article 7(c) , receipt of any document in connection with the purchase of an Eligible Asset (but not if Buyer merely agrees to accept delivery of such document after the Purchase Date), such document shall not be a required component of the Purchased Asset File until such time as Buyer determines in good faith that such document is necessary or appropriate for the servicing of the applicable Purchased Asset.

“ Purchased Asset ” shall mean (i) with respect to any Transaction, the Eligible Asset sold by Seller to Buyer in such Transaction and (ii) with respect to the Transactions in general, all Eligible Assets sold by Seller to Buyer and any Additional Eligible Collateral delivered by Seller to Buyer pursuant to Article 4(a) of this Agreement (other than Eligible Assets or Additional Eligible Collateral that have been repurchased by Seller).

“ Purchased Asset Schedule ” shall mean a schedule of Purchased Assets attached to each Trust Receipt and Custodial Delivery containing information substantially similar to the Asset Information.

“ Purchased Items ” shall have the meaning specified in Article 6(a) of this Agreement.

“ Qualified Hedge Counterparty ” shall mean, with respect to any Hedging Transaction, any entity, other than an Affiliated Hedge Counterparty, that (a) qualifies as an “eligible contract participant” as such term is defined in the Commodity Exchange Act (as amended by the Commodity Futures Modernization Act of 2000), (b) the long-term debt of which is rated no less than “A+” by Standard & Poor’s Ratings Group, a division of the McGraw-Hill Companies, and “A1” by Moody’s Investors Service, Inc and (c) is reasonably acceptable to Buyer; provided , that with respect to clause (c), if Buyer has approved an entity as a counterparty, it may not thereafter deem such counterparty unacceptable with respect to any previously outstanding Transaction unless clause (a) or clause (b) applies.

“ Rating Agency ” shall mean any of Fitch Inc., Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Group, a division of the McGraw-Hill Companies.

“ Reference Banks ” shall mean banks each of which shall (i) be a leading bank engaged in transactions in Eurodollar deposits in the international Eurocurrency market and (ii) have an established place of business in London. Initially, the Reference Banks shall be JPMorgan Chase Bank, N.A., Barclays Bank, Plc and Deutsche Bank AG. If any such Reference Bank should be unwilling or unable to act as such or if Buyer shall terminate the appointment of any such Reference Bank or if any of the Reference Banks should be removed from the Reuters Monitor Money Rates Service or in any other way fail to meet the qualifications of a Reference Bank, Buyer, in its sole discretion exercised in good faith, may designate alternative banks meeting the criteria specified in clauses (i) and (ii) above.

“ Release Letter ” shall mean a letter substantially in the form of Exhibit XVII hereto (or such other form as may be acceptable to Buyer).

“ Relevant System ” shall mean (a) The Depository Trust Company in New York, New York, or (b) such other clearing organization or book-entry system as is designated in writing by Buyer.

“ REMIC ” shall mean a real estate mortgage investment conduit, within the meaning of Section 860D(a) of the Internal Revenue Code.

“ Remittance Date ” shall mean the fourth (4th) calendar day of each month, or the immediately succeeding Business Day, if such calendar day shall not be a Business Day, or such other day as is mutually agreed to by Seller and Buyer.

“ REO Property ” shall mean real property acquired by Seller, including a mortgaged property acquired through foreclosure of an Eligible Asset or by deed in lieu of such foreclosure.

“ Repurchase Date ” shall mean, with respect to a Purchased Asset, the earliest to occur of (i) the Termination Date, (ii) the date set forth in the applicable Confirmation or (iii) the Accelerated Repurchase Date.

“ Repurchase Price ” shall mean, with respect to any Purchased Asset as of any Repurchase Date or any date on which the Repurchase Price is required to be determined hereunder, the price at which such Purchased Asset is to be transferred from Buyer to Seller; such price will be determined in each case as the sum of the (i) Purchase Price of such Purchased Asset (as increased by any additional funds advanced in connection with such Purchased Asset); (ii) the accreted and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination (other than, with respect to calculations in connection with the determination of a Margin Deficit, accreted and unpaid Price Differential for the current Pricing Rate Period); (iii) any other amounts due and owing by Seller to Buyer and its Affiliates pursuant to the terms of this Agreement as of such date; (iv) any amounts that would be payable to (a positive amount) a Qualified Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination; (v) any amounts that would be payable to (a positive amount) or by (a negative amount) an Affiliated Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, which amounts will be determined pursuant to the “Credit Support Annex” of any Hedging Transaction, if such determination is in connection with any calculation of Margin Deficit; and (vi) if such Repurchase Date is not a Remittance Date, any Breakage Costs payable in connection with such Repurchase other than with respect to the determination of a Margin Deficit.

“ Requested Exceptions Report ” shall have the meaning assigned thereto in Article 3(b)(iii)(E) .

“ Requirement of Law ” shall mean any law, treaty, rule, regulation, code, directive, policy, order or requirement or determination of an arbitrator or a court or other Governmental Authority whether now or hereafter enacted or in effect.

“ Reserve Requirement ” shall mean, with respect to any Pricing Rate Period, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect during such Pricing Rate Period (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of such Board of Governors) maintained by Buyer.

“ Responsible Officer ” shall mean any executive officer of Seller.

“ Seller ” shall mean the entity identified as “Seller” in the Recitals hereto, and such other sellers as may be approved by Buyer in its sole discretion from time to time.

“ Senior Mortgage Loans ” shall mean performing senior commercial or multifamily fixed or floating rate mortgage loans, A-notes or senior participation interests in those mortgage loans, in each case secured by first liens on multifamily or commercial properties.

“ Servicer ” shall mean Midland Loan Services, Inc.

“ Servicer Notice ” shall mean a notice substantially in the form of Exhibit XVI hereto, as amended, supplemented or otherwise modified from time to time.

“ Servicing Agreement ” shall have the meaning specified in Article 28(b) .

“ Servicing Records ” shall have the meaning specified in Article 28(b) .

“ Structuring Fee ” shall have the meaning specified in Article 3(a)(xiii) of this Agreement.

“ Subordinate Eligible Assets ” shall mean Eligible Assets described in items (iii) and (iv) of the definition of Eligible Assets.

“ Subsidiary ” shall mean, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Seller.

“ Survey ” shall mean a certified ALTA/ACSM (or applicable state standards for the state in which the collateral is located) survey of the underlying real estate directly or indirectly securing or supporting such Purchased Asset prepared by a registered independent surveyor or engineer and in form and content satisfactory to Buyer and the company issuing the Title Policy for such Property.

“ Tangible Net Worth ” shall mean, as of a particular date and as to any Person: (a) all amounts that would be included under stockholder equity (or the equivalent) on a balance sheet of such Person and its consolidated subsidiaries (including minority interests relating to Guarantor) determined on a consolidated basis at such date determined in accordance with GAAP, plus accumulated depreciation on owned real estate assets, less (b) in each case with respect to such Person and its consolidated subsidiaries determined on a consolidated basis (i) amounts owing to such Person from Affiliates, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or its respective Affiliates, (ii) intangible assets of such Person, as determined in accordance with GAAP, except for FAS 141 intangible assets, (iii) the value of REO Property and Foreclosed Loans of such Person, (iv) prepaid taxes and expenses, (v) unamortized hedging positions under Derivatives Contracts, and (vi) (without duplication) Related Party Loans.

“ Target Price ” shall mean, with respect to any Purchased Asset as of any date, the amount (expressed in dollars) obtained by multiplying (i) the Market Value of such Purchased Asset as of such date by (ii) the then-applicable Maximum Advance Rate for such Purchased Asset.

“ Termination Date ” means, with respect to any Transaction, the earlier of (a) 364 days from the date of such Transaction, or if such Transaction is extended, the date to which it is extended; (b) any Early Repurchase Date for such Transaction; (c) the Maturity Date (unless extended pursuant to the Wind Down Period in Article 3(n)(ii) ) ; or (d) the date of the occurrence of an Event of Default.

“ Termination Date Extension Conditions ” shall have the meaning specified in Article 3(g) of this Agreement.

“ Title Company ” shall mean a nationally-recognized title insurance company acceptable to Buyer.

“ Title Policy ” shall have the meaning specified in paragraph 9 of the section of Exhibit VI dealing with Eligible Loans.

“ Total Assets ” shall mean, at any time, an amount equal to the aggregate undepreciated book value of (a) all assets owned by any Person(s) (on a consolidated basis) and (b) the proportionate share of assets owned by non-consolidated Subsidiaries of such Person(s), less (i) amounts owing to such Person(s) from any Affiliates thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person(s) or their respective Affiliates, (ii) intangible assets (other than Interest Rate Protection Agreements specifically related to the Purchased Assets, excluding FAS 141 intangible assets) and (iii) prepaid taxes and/or expenses.

“ Total Liabilities ” shall mean all Indebtedness and contingent liabilities of any Person (without duplication) and all Subsidiaries thereof determined on a consolidated basis in accordance with GAAP.

“ Transaction ” shall mean a Transaction, as specified in Article 1 of this Agreement.

“ Transaction Documents ” shall mean, collectively, this Agreement, any applicable Annexes to this Agreement, the Custodial Agreement, the Servicing Agreement, the Depository Agreement, all Hedging Transactions and all Confirmations and assignment documentation executed pursuant to this Agreement in connection with specific Transactions.

“ Trust Receipt ” shall mean a trust receipt issued by Custodian to Buyer confirming the Custodian’s possession of certain Purchased Asset Files that are the property of and held by Custodian for the benefit of Buyer (or any other holder of such trust receipt) or a bailment arrangement with counsel or other third party acceptable to Buyer in its sole discretion.

“ UCC ” shall have the meaning specified in Article 6(d) of this Agreement.

“ Underlying Mortgage Loan ” shall mean, with respect to any B-Note, Junior Interest, Mezzanine Loan, CMBS or CRE CDO, a mortgage loan made in respect of the related Underlying Mortgaged Property.

“ Underlying Mortgaged Property ” shall mean, in the case of:

(a) a Senior Mortgage Loan or Condo Conversion Loan, the Mortgaged Property securing such Senior Mortgage Loan or Condo Conversion Loan, as applicable;

(b) a Junior Interest, the Mortgaged Property securing such Junior Interest, or the Mortgaged Property securing the Mortgage Loan in which such Junior Interest represents a junior participation, as applicable;

(d) a Mezzanine Loan, the Mortgaged Property that is owned by the Person the equity of which is pledged as collateral security for such Mezzanine Loan;

(e) a CMBS, the Mortgaged Property securing the mortgage loans related to such security;

(f) a CRE CDO, the Mortgaged Property securing the mortgage loans related to such security; and

(g) a Construction Loan or Land Loan, the real estate and any improvements securing such Construction Loan or Land Loan, as applicable.

“ Underwriting Issues ” shall mean, with respect to any Purchased Asset as to which Seller intends to request a Transaction, all material information that has come to Seller’s attention that, based on the making of reasonable inquiries and the exercise of reasonable care and diligence under the circumstances, would be considered a materially “negative” factor (either separately or in the aggregate with other information), or a material defect in loan documentation or closing deliveries (such as any absence of any material Purchased Asset Document(s)), to a reasonable institutional mortgage buyer in determining whether to originate or acquire the Purchased Asset in question.

“ Unsecured Credit Facility ” shall mean the credit facility represented by the Revolving Credit Agreement, dated as of November 3, 2006, among NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership, NRFC Sub-REIT Corp. and NS Advisors, LLC, as borrowers, the lenders from time to time party thereto, KeyBank National Association, as administrative agent, Keybanc Capital Markets and Bank of America, N.A., as co-lead arrangers, KeyBank Capital Markets, as sole book manager, Bank of America, N.A., as syndication agent, and Citicorp North America, Inc., as documentation agent, as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, together with all other documents executed in connection therewith, as the same are amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“ Wind Down Period ” shall have the meaning specified in Article 3(n)(ii) of this Agreement.

All references to articles, schedules and exhibits are to articles, schedules and exhibits in or to this Agreement unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles. References to “good faith” in this Agreement shall mean “good faith” as defined in Section 1-201(19) of the UCC as in effect in the State of New York as of the date of the Agreement.

ARTICLE 3.

INITIATION; CONFIRMATION; TERMINATION; FEES ; REDUCTION OF FACILITY AMOUNT

Buyer’s agreement to enter into the initial Transaction hereunder is subject to the satisfaction, immediately prior to or concurrently with the making of such Transaction, of the condition precedent that Buyer shall have received from Seller payment of an amount equal to all fees and expenses payable hereunder, and all of the following documents, each of which shall be satisfactory in form and substance to Buyer and its counsel:

(a) The following Transaction Documents, as well as certain other documents, delivered to Buyer:

(i) this Agreement, duly completed and executed by each of the parties hereto;

(ii) a Custodial Agreement, duly executed and delivered by each of the parties thereto;

(iii) a Depository Agreement, duly completed and executed by each of the parties thereto;

(iv) a Guarantee Agreement, duly completed and executed by each of the parties thereto;

(v) an Interim Servicing Agreement, duly completed and executed by each of the parties thereto;

(vi) any and all consents and waivers applicable to Seller or to the Purchased Assets;

(vii) UCC Financing Statements for filing in each of the UCC Filing Jurisdictions described on Exhibit XIII hereto, each naming Seller as “Debtor” and Buyer as “Secured Party” and describing as “Collateral” all of the items set forth in the definition of Collateral and Purchased Items in this Agreement, together with any other documents necessary or requested by Buyer to perfect the security interests granted by Seller in favor of Buyer under this Agreement or any other Transaction Document;

(viii) any documents relating to any Hedging Transactions;

(ix) opinions of outside counsel to Seller;

(x) good standing certificates and certified copies of the charters and by-laws (or equivalent documents) of Seller and Guarantor and of all corporate or other authority for Seller and Guarantor with respect to the execution, delivery and performance of the Transaction Documents and each other document to be delivered by Seller and Guarantor from time to time in connection herewith (and Buyer may conclusively rely on such certificate until it receives notice in writing from Seller to the contrary);

(xi) with respect to any Eligible Asset to be purchased hereunder on the related Purchase Date that is not serviced by Seller, Seller shall have provided to Buyer a copy of the related Servicing Agreement, certified as a true, correct and complete copy of the original, together with a Servicer Notice, fully executed by Seller and Servicer;

(xii) Buyer shall have received payment from Seller of an amount equal to the amount of actual costs and expenses, including the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with the development, preparation and execution of this Agreement, the other Transaction Documents and any other documents prepared in connection herewith or therewith;

(xiii) Buyer shall have received payment from Seller, as consideration for Buyer’s agreement to enter into this Agreement, an up-front structuring fee in an amount equal to $350,000 (calculated as ten (10) basis points (0.10%) multiplied by the Facility Amount), such amount to be paid to Buyer in U.S. Dollars on the Closing Date, in immediately available funds, without deduction, set-off or counterclaim (the “ Structuring Fee ”); and

(xiv) all such other and further documents, documentation and legal opinions as Buyer in its discretion shall reasonably require.

(b) Buyer’s agreement to enter into each Transaction (including the initial Transaction) is subject to the satisfaction of the following further conditions precedent, both immediately prior to entering into such Transaction and also after giving effect to the consummation thereof and the intended use of the proceeds of the sale:

(i) The sum of (A) the unpaid Repurchase Price for all prior outstanding Transactions, (B) the requested Purchase Price for the pending Transaction and (C) all available and unfunded Future Funding Amounts under all prior outstanding Transactions shall not exceed an amount equal to the Facility Amount.

(ii) Seller shall give Buyer no less than one (1) Business Day prior written notice of each Transaction (including the initial Transaction), together with a signed, properly completed, written confirmation in the form of Exhibit I attached hereto prior to each Transaction (a “ Confirmation ”) signed by a Responsible Officer of Seller. Each Confirmation shall describe the Purchased Assets, shall identify Buyer and Seller and shall be executed by both Buyer and Seller; provided , however , that Buyer shall not be liable to Seller if it inadvertently acts on a Confirmation that has not been signed by a Responsible Officer; and

(iii) Buyer shall have the right to review, as described in Exhibit VIII hereto, the Eligible Assets Seller proposes to sell to Buyer in any Transaction and to conduct its own due diligence investigation of such Eligible Assets as Buyer determines (“ Pre-Purchase Due Diligence ”). Buyer shall be entitled to make a determination, in the exercise of its sole discretion, that, in the case of a Transaction, it shall or shall not purchase any or all of the assets proposed to be sold to Buyer by Seller. On the Purchase Date for the Transaction, which shall be not less than one (1) Business Day following the final approval of an Eligible Asset by Buyer in accordance with Exhibit VIII hereto, the Eligible Assets shall be transferred to Buyer or the Custodian against the transfer of the Purchase Price to an account of Seller. Buyer shall inform Seller of its determination with respect to any such proposed Transaction solely in accordance with Exhibit VIII attached hereto. Upon the approval by Buyer of a particular proposed Transaction, Buyer shall deliver to Seller a signed copy of the related Confirmation described in clause (i) above, on or before the scheduled date of the underlying proposed Transaction. Prior to the approval of each proposed Transaction by Buyer:

(A) Buyer shall have (i) determined, in its sole and absolute discretion, that the asset proposed to be sold to Buyer by Seller in such Transaction is an Eligible Asset and (ii) obtained internal credit approval, to be granted or denied in Buyer’s sole and absolute discretion, for the inclusion of such Eligible Asset as a Purchased Asset in a Transaction, without regard for any prior credit decisions by Buyer or any Affiliate of Buyer, and with the understanding that Buyer shall have the absolute right to change any or all of its internal underwriting criteria at any time, without notice of any kind to Seller;

(B) Buyer shall have fully completed all external legal due diligence ;

(C) Buyer shall have determined the Pricing Rate applicable to the Transaction (including the Applicable Spread) in accordance with Schedule I hereto or as otherwise agreed by Buyer and Seller;

(D) no Default or Event of Default shall have occurred and be continuing under this Agreement or any other Transaction Document and no event shall have occurred which has, or would reasonably be expected to have, a Material Adverse Effect;

(E) Seller shall have delivered to Buyer a list of all exceptions to the representations and warranties relating to the Purchased Asset and any other eligibility criteria for such Purchased Asset (the “ Requested Exceptions Report ”) and, except as specifically set forth therein, all such representations and warranties shall be true, correct and complete;

(F) Buyer shall have waived all exceptions in the Requested Exceptions Report;

(G) both immediately prior to the requested Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by Seller in Article 10 (other than Article 10(b)(x)(D) ) , as applicable, shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

(H) subject to Buyer’s right to perform one or more due diligence reviews pursuant to Article 27 , Buyer shall have completed its due diligence review of the Purchased Asset File, and such other documents, records, agreements, instruments, mortgaged properties or information relating to such Purchased Asset as Buyer in its sole discretion deems appropriate to review and such review shall be satisfactory to Buyer in its sole discretion and Buyer has consented in writing to the Eligible Asset becoming a Purchased Asset; provided , that if Buyer’s diligence review of the Purchased Asset File requires the delivery of a mortgage file or the equivalent, Seller shall have the benefit of such delayed delivery provisions as are customary in pooling and servicing agreements (e.g., while a promissory note (or analogous document directly evidencing the obligation) must be delivered as a condition of closing, an ancillary document or estoppels may be delivered within a reasonable time frame thereafter);

(I) with respect to any Eligible Asset to be purchased hereunder on the related Purchase Date which is not serviced by Seller or an Affiliate thereof, Seller shall have provided to Buyer a copy of the related Servicing Agreement, certified as a true, correct and complete copy of the original, together with a Servicer Notice, fully executed by Seller and Servicer;

(J) Seller shall have paid to Buyer all reasonable legal fees (subject to any Legal Fee Cap) and expenses and the reasonable costs and expenses incurred by Buyer in connection with the entering into of any Transaction hereunder, including, without limitation, costs associated with due diligence, recording or other administrative expenses necessary or incidental to the execution of any Transaction hereunder, which amounts, at Buyer’s option, may be withheld from the sale proceeds of any Transaction hereunder;

(K) Buyer shall have determined, in its sole and absolute discretion, that no Margin Deficit shall exist, either immediately prior to or after giving effect to the requested Transaction;

(L) Buyer shall have received from Custodian on each Purchase Date an Asset Schedule and Exception Report (as defined in the Custodial Agreement) with respect to each Purchased Asset, dated the Purchase Date, duly completed and with exceptions acceptable to Buyer in its sole discretion in respect of Eligible Assets to be purchased hereunder on such Business Day;

(M) Buyer shall have received from Seller a Release Letter covering each Eligible Asset to be sold to Buyer;

(N) Buyer shall not have reasonably determined that the introduction of, or a change in, any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Buyer to enter into Transactions;

(O) the Repurchase Date for such Transaction is not later than the Maturity Date (unless extended pursuant to the Wind Down Period in Article 3(n)(ii) );

(P) Seller shall have taken such other action as Buyer shall have reasonably requested in order to transfer the Purchased Assets pursuant to this Agreement and to perfect all security interests granted under this Agreement or any other Transaction Document in favor of Buyer with respect to the Purchased Assets;

(Q) with respect to any Eligible Asset to be purchased hereunder, if such Eligible Asset was acquired by Seller, Seller shall have disclosed to Buyer the acquisition cost of such Eligible Asset (including therein reasonable supporting documentation required by Buyer, if any);

(R) Buyer shall have received all such other and further documents, documentation and legal opinions (including, without limitation, opinions regarding the perfection of Buyer’s security interests) as Buyer in its reasonable discretion shall reasonably require;

(S) Buyer shall have received a copy of any documents relating to any Hedging Transaction, and Seller shall have pledged and assigned to Buyer, pursuant to Article 6 hereunder, all of Seller’s rights under each Hedging Transaction included within a Purchased Asset, if any;

(T) no “Termination Event”, “Event of Default”, “Potential Event of Default” or any similar event by Seller, however denominated, shall have occurred and be continuing under any Hedging Transaction; and

(U) the counterparty to Seller in any Hedging Transaction shall be an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty, and, in the case of a Qualified Hedge Counterparty, in the event that such counterparty no longer qualifies as a Qualified Hedging Counterparty, then, at the election of Buyer, Seller shall ensure that such counterparty posts Additional Eligible Collateral in an amount satisfactory to Buyer under all its Hedging Transactions with Seller, or Seller shall immediately terminate the Hedging Transactions with such counterparty and enter into new Hedging Transactions with a Qualified Hedge Counterparty.

(c) Buyer’s agreement to enter into each Future Funding Transaction described in part (i) of the definition thereof is subject to the satisfaction of the following conditions precedent, both immediately prior to entering into such Future Funding Transaction and also after giving effect to the consummation thereof:

(i) Seller shall give Buyer written notice of each Future Funding Transaction, together with a signed, properly completed, written confirmation in the form of Exhibit XIV attached hereto prior to each Future Funding Transaction (a “ Future Funding Confirmation ”) signed by a Responsible Officer of Seller. Each Future Funding Confirmation shall identify the related Future Funding Loan, shall identify Buyer and Seller and shall be executed by both Buyer and Seller; provided , however , that Buyer shall not be liable to Seller if it inadvertently acts on a Future Funding Confirmation that has not been signed by a Responsible Officer; and

(ii) Buyer shall have the right to, as described in Exhibit XVIII hereto, conduct an additional due diligence investigation of the related Future Funding Loan as Buyer determines (“ Future Funding Due Diligence ”). On the Future Funding Date for the Future Funding Transaction, which shall occur following the final approval of the Future Funding Transaction by Buyer in accordance with Exhibit XVIII hereto, the Future Funding Amount shall be transferred by Buyer to Seller or, at Seller’s direction, to the related borrower. Buyer shall inform Seller of its determination with respect to any such proposed Future Funding Transaction solely in accordance with Exhibit XVIII attached hereto. Upon the approval by Buyer of a particular Future Funding Transaction, Buyer shall deliver to Seller a signed copy of the related Future Funding Confirmation described in clause (i) above, on or before the scheduled date of the underlying proposed Future Funding Transaction. Prior to the approval of each proposed Future Funding Transaction by Buyer:

(A) Buyer shall have (i) determined, in its sole and absolute discretion, that the related Future Funding Loan is not a Defaulted Mortgage Asset and (ii) fully completed all external legal due diligence;

(B) no Default or Event of Default shall have occurred and be continuing under this Agreement or any other Transaction Document and no event shall have occurred which has, or would reasonably be expected to have, a Material Adverse Effect;

(C) both immediately prior to the requested Future Funding Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by Seller in E xhibit VI with respect to the related Future Funding Loan and Article 10 (other than Article 10(b)(x)(D) ) of this Agreement , as applicable, shall be true, correct and complete on and as of such Future Funding Date with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

(D) Buyer shall have completed its Future Funding Due Diligence, and its review of any documents, records, agreements, instruments, mortgaged properties or information relating to such Future Funding Loan as Buyer in its sole discretion deems appropriate to review and such review shall be satisfactory to Buyer in its sole discretion and Buyer has consented in writing to the advance of funds;

(E) Seller shall have paid to Buyer all legal fees and expenses and the reasonable costs and expenses incurred by Buyer in connection with the entering into of any Future Funding Transaction hereunder, including, without limitation, costs associated with due diligence, recording or other administrative expenses necessary or incidental to the execution of any Future Funding Transaction hereunder;

(F) Buyer shall have determined, in its sole and absolute discretion, that no Margin Deficit shall exist, either immediately prior to or after giving effect to the requested Future Funding Transaction;

(G) Buyer shall not have reasonably determined that the introduction of, or a change in, any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Buyer to enter into Transactions;

(H) Seller shall have taken any other action as Buyer shall have reasonably requested in order to perfect all security interests granted under this Agreement or any other Transaction Document in favor of Buyer with respect to the funds to be advanced;

(I) Buyer shall have received all such other and further documents, documentation and legal opinions (including, without limitation, opinions regarding the perfection of Buyer’s security interests) as Buyer in its reasonable discretion shall reasonably require; and

(J) Seller shall have delivered to Buyer a certificate of a Responsible Officer of Seller, certifying that the related borrower has met all conditions required under the related loan documents to be entitled to the advance of the Future Funding Amount.

Buyer’s agreement to enter into each Future Funding Transaction described in part (ii) of the definition thereof is subject to the satisfaction of the following conditions precedent, both immediately prior to entering into such Future Funding Transaction and also after giving effect to the consummation thereof:

(i) Seller shall give Buyer written notice of each Future Funding Transaction, identifying the related Future Funding Loan; and

(ii) Prior to the approval of each proposed Future Funding Transaction by Buyer:

(A) Buyer shall have (i) determined, in its sole and absolute discretion, that the related Future Funding Loan is not a Defaulted Mortgage Asset and (ii) completed any additional due diligence or review of any documents, records, agreements, instruments, mortgaged properties or information relating to such Future Funding Loan as Buyer deems reasonably appropriate;

(D) Seller shall have paid to Buyer all legal fees and expenses and the reasonable costs and expenses incurred by Buyer in connection with the entering into of any Future Funding Transaction hereunder, including, without limitation, costs associated with due diligence, recording or other administrative expenses necessary or incidental to the execution of any Future Funding Transaction hereunder;

(E) Buyer shall have determined, in its sole and absolute discretion, that no Margin Deficit shall exist, either immediately prior to or after giving effect to the requested Future Funding Transaction;

(F) Buyer shall not have reasonably determined that the introduction of, or a change in, any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Buyer to enter into Transactions;

(G) Seller shall have taken any other action as Buyer shall have reasonably requested in order to perfect all security interests granted under this Agreement or any other Transaction Document in favor of Buyer with respect to the funds to be advanced; and

(H) Buyer shall have received all such other and further documents, documentation and legal opinions (including, without limitation, opinions regarding the perfection of Buyer’s security interests) as Buyer in its reasonable discretion shall reasonably require.

(d) With respect to any Transaction, the Pricing Rate shall be determined initially on the Pricing Rate Determination Date applicable to the first Pricing Rate Period for such Transaction, and shall be reset on the Pricing Rate Determination Date for all of the next succeeding Pricing Rate Periods for such Transaction. Buyer or its agent shall determine in accordance with the terms of this Agreement the Pricing Rate on each Pricing Rate Determination Date for the related Pricing Rate Period taking into account any changes in the applicable loan-to-cost ratio, the applicable net operating income debt yields or Rating Agency ratings shown on Schedule I , as applicable, determined to be applicable to such Transaction in Buyer’s sole and absolute discretion, exercised in good faith, and notify Seller of such rate for such period each such Pricing Rate Determination Date; provided , however , that Buyer shall have no affirmative obligation to determine whether there has been any change in the related terms or quality of the Purchased Asset to cause any change in the related loan-to-cost ratio, the applicable net operating income debt yields or Rating Agency ratings shown on Schedule I .

(e) Each Confirmation and Future Funding Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the Transaction or Future Funding Transaction, as applicable, covered thereby. In the event of any conflict between the terms of such Confirmation or Future Funding Confirmation and the terms of this Agreement, other than with respect to the Advance Rate or the applicable Price Differential set forth in the related Confirmation, this Agreement shall prevail.

(f) Seller shall be entitled to terminate a Transaction on demand and repurchase the Purchased Asset subject to a Transaction on any Business Day prior to the Repurchase Date (an “ Early Repurchase Date ”); provided , however , that:

(i) Seller notifies Buyer in writing of its intent to terminate such Transaction and repurchase such Purchased Asset, setting forth the Early Repurchase Date and identifying with particularity the Purchased Asset to be repurchased on such Early Repurchase Date, no later than two (2) Business Days prior to such Early Repurchase Date; and

(ii) on such Early Repurchase Date, Seller pays to Buyer an amount equal to the sum of the Repurchase Price for the applicable Purchased Asset and any other amounts payable under this Agreement (including, without limitation, Article 3(j) of this Agreement) with respect to such Purchased Asset against transfer to Seller or its agent of such Purchased Assets and any related Hedging Transactions.

Subject to its right to make determinations of Market Value with respect to any Purchased Asset that would trigger the obligation of Seller to repurchase a Purchased Asset prior to the scheduled Repurchase Date, or any other contractual right of Buyer under this Agreement to do so, Buyer shall not terminate a Transaction prior to the scheduled Termination Date unless an Event of Default has occurred.

(g) On the Termination Date for any Transaction, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Assets being repurchased and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Article 5 of this Agreement) against the simultaneous transfer of the Repurchase Price to an account of Buyer. Notwithstanding the definition of Repurchase Price herein, with respect to any determination of Repurchase Price that is made other than in connection with any calculation of a Margin Deficit, the Repurchase Price shall be determined without giving effect to clause (iv) or (v) of the definition of Repurchase Price herein. Notwithstanding the foregoing, provided that all of the extension conditions listed in clauses (i) through (iv) of this Article 3(g) (collectively, the “ Termination Date Extension Conditions ”) shall have been satisfied, as determined by Buyer in its sole and absolute discretion, Seller may request to extend such Termination Date by no more than 364 days from the date of such extension request by giving written notice to Buyer of such request. Any failure by Buyer, in its sole and absolute discretion, to deliver to Seller an objection, rejection or consent to such extension request in writing within thirty (30) days of such request shall be deemed consent to Seller’s request to extend such Termination Date. Notwithstanding anything to the contrary in this Article 3(g) , in no event shall the Termination Date be extended beyond the Final Maturity Date. For purposes of the preceding sentence, the Termination Date Extension Conditions shall be deemed to have been satisfied if:

(i) Seller shall have given Buyer written notice, not less than thirty (30) days prior but no more than one hundred and eighty (180) days prior to the originally scheduled Termination Date, of Seller’s desire to extend the Termination Date; and if Seller fails to give such notice, Seller shall be deemed to have elected not to extend the Termination Date;

(ii) no Material Adverse Effect, Margin Deficit, Default or Event of Default under this Agreement shall have occurred and be continuing as of the date notice is given under subclause (i) above or as of the originally scheduled Termination Date and no “Termination Event,” “Event of Default” or “Potential Event of Default” or any similar event by Seller, however denominated, shall have occurred and be continuing under any Hedging Transaction;

(iii) (A) with respect to a Purchased Asset subject to an extension described above, all representations and warranties contained in Exhibit VI shall be true, correct, complete and accurate in all material respects as of the scheduled Repurchase Date, subject to the applicable cure rights described below in Article 13(a)(xv) , and (B) all representations and warranties regarding Seller contained in Article 10 shall be true, correct, complete and accurate in all material respects as of the scheduled Repurchase Date; and

(iv) on the originally scheduled Termination Date, Seller pays to Buyer, on account of each Purchased Asset, an amount sufficient to reduce the Repurchase Price for each Purchased Asset to an amount equal to the applicable Advance Rate used to calculate the Purchase Price of such Purchased Asset multiplied by the Market Value for each such Purchased Asset then subject to a Transaction.

(h) If prior to the first day of any Pricing Rate Period with respect to any Transaction, (i) Buyer shall have determined in the exercise of its reasonable business judgment (which determination shall be conclusive and binding upon Seller) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Pricing Rate Period, or (ii) the LIBO Rate determined or to be determined for such Pricing Rate Period will not adequately and fairly reflect the cost to Buyer (as determined and certified by Buyer) of making or maintaining Transactions during such Pricing Rate Period, Buyer shall give telecopy or telephonic notice thereof to Seller as soon as practicable thereafter. If such notice is given, the Pricing Rate with respect to such Transaction for such Pricing Rate Period, and for any subsequent Pricing Rate Periods until such notice has been withdrawn by Buyer, shall be a per annum rate equal to the Federal Funds Rate plus the Applicable Spread (the “ Alternative Rate ”).

(i) Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for Buyer to enter into or maintain Transactions as contemplated by the Transaction Documents, (a) the commitment of Buyer hereunder to enter into new Transactions and to continue Transactions as such shall forthwith be canceled, and (b) the Transactions then outstanding shall be converted automatically to Alternative Rate Transactions on the last day of the then current Pricing Rate Period or within such earlier period as may be required by law.

(j) Upon demand by Buyer, Seller shall indemnify Buyer and hold Buyer harmless from any actual, out-of-pocket loss, cost or expense (including, without limitation, reasonable attorneys’ fees and disbursements, but which shall exclude any lost opportunity costs) that Buyer may sustain or incur as a consequence of (i) any payment of the Repurchase Price on any day other than a Remittance Date, including Breakage Costs, (ii) a default by Seller in selling Eligible Assets after Seller has notified Buyer of a proposed Transaction and Buyer has agreed to purchase such Eligible Assets in accordance with the provisions of this Agreement, (iii) Buyer’s enforcement of the terms of any of the Transaction Documents, (iv) any actions taken to perfect or continue any lien created under any Transaction Documents, and/or (v) Buyer entering into any of the Transaction Documents or owning any Purchased Item, other than, in each case, any loss, cost or expense sustained by Buyer as a result of Buyer’s gross negligence, bad faith or willful misconduct. A certificate as to such costs, losses, damages and expenses, setting forth the calculations therefor shall be submitted promptly by Buyer to Seller and shall be prima facie evidence of the information set forth therein.

(k) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by any Governmental Authority or compliance by Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority having jurisdiction over Buyer made subsequent to the date hereof:

(i) shall subject Buyer to any tax of any kind whatsoever with respect to the Transaction Documents, any Purchased Asset or any Transaction, or change the basis of taxation of payments to Buyer in respect thereof (except for income taxes and any changes in the rate of tax on Buyer’s overall net income);

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of Buyer that is not otherwise included in the determination of the LIBO Rate hereunder; or

(iii) shall impose on Buyer any other condition;

and the result of any of the foregoing is to increase the cost to Buyer, by an amount that Buyer deems, in the exercise of its reasonable business judgment, to be material, of entering into, continuing or maintaining Transactions or to reduce any amount receivable under the Transaction Documents in respect thereof; then, in any such case, Seller shall promptly pay Buyer, upon its demand, any additional amounts necessary to compensate Buyer for such increased cost or reduced amount receivable. Such notification as to the calculation of any additional amounts payable pursuant to this subsection shall be submitted by Buyer to Seller and shall be prima facie evidence of such additional amounts. This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.

(l) If Buyer shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by Buyer or any corporation controlling Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by Buyer, in the exercise of its reasonable business judgment, to be material, then from time to time, after submission by Buyer to Seller of a written request therefor, Seller shall pay to Buyer such additional amount or amounts as will compensate Buyer for such reduction. Such notification as to the calculation of any additional amounts payable pursuant to this subsection shall be submitted by Buyer to Seller and shall be prima facie evidence of such additional amounts. This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.

(m) If Seller repurchases Purchased Assets on a day other than the last day of a Pricing Rate Period, Seller shall indemnify Buyer and hold Buyer harmless from any actual losses, costs and/or expenses which Buyer sustains as a direct consequence thereof (“ Breakage Costs ”), in each case for the remainder of the applicable Pricing Rate Period. Buyer shall deliver to Seller a statement setting forth the amount and basis of determination of any Breakage Costs in reasonable detail, it being agreed that such statement and the method of its calculation shall be conclusive and binding upon Seller absent manifest error. This Article 3(m) shall survive termination of this Agreement and the repurchase of all Purchased Assets subject to Transactions hereunder.

(n) (i) Notwithstanding the definition of Maturity Date herein, provided that all of the extension conditions listed in clauses (i) through (iv) of this Article 3(n)(i) (collectively, the “ Maturity Date Extension Conditions ”) shall have been satisfied, as determined by Buyer in its sole and absolute discretion, Seller may request to extend such Maturity Date by no more than 364 days from the date of such extension request by giving written notice to Buyer of such request (such extension, an “ Extension Period ”). Any failure by Buyer, in its sole and absolute discretion, to deliver to Seller an objection, rejection or consent to such extension request in writing within thirty (30) days of such request shall be deemed consent to Seller’s request to extend such Maturity Date. Notwithstanding anything to the contrary in Article 3(n)(i) hereof, in no event shall Seller be permitted to extend the Maturity Date for more than two (2) Extension Periods. For purposes of the preceding sentence, the Maturity Date Extension Conditions shall be deemed to have been satisfied if:

(A) Seller shall have given Buyer written notice, not less than forty-five (45) days prior but no more than one hundred and eighty (180) days prior to the originally scheduled Termination Date, of Seller’s desire to extend the Termination Date; and if Seller fails to give such notice, Seller shall be deemed to have elected not to extend the Termination Date;

(B) no Material Adverse Effect, Margin Deficit, Default or Event of Default under this Agreement shall have occurred and be continuing as of the date notice is given under subclause (i) above or as of the originally scheduled Termination Date and no “Termination Event,” “Event of Default” or “Potential Event of Default” or any similar event by Seller, however denominated, shall have occurred and be continuing under any Hedging Transaction;

(C) all representations and warranties shall be true, correct, complete and accurate in all material respects as of the existing Maturity Date; and

(D) on the originally scheduled Termination Date, Seller pays to Buyer, on account of each Purchased Asset, an amount sufficient to reduce the Repurchase Price for each Purchased Asset to an amount equal to the applicable Advance Rate used to calculate the Purchase Price of such Purchased Asset multiplied by the Market Value for each such Purchased Asset then subject to a Transaction.

(ii) Upon written request of Seller delivered to Buyer at least thirty (30) days, but in no event earlier than sixty (60) days, prior to the then current Final Maturity Date (provided each extension has occurred in accordance with the terms of this Agreement), and so long as no Margin Deficit, Default or Event of Default and no event which has a Material Adverse Effect shall have occurred and be continuing on the then current Final Maturity Date, Buyer may in its sole discretion agree to extend the Final Maturity Date, for a period not to exceed 364 additional days (the “ Wind Down Period ”) by giving notice to Seller of such extension and of the end of the Wind Down Period determined by Buyer; provided , that any failure by Buyer to deliver notice to Seller of any objection or rejection to such Wind Down Period within fifteen (15) days from the date first received by Buyer shall be deemed to be Buyer’s consent to extend the Final Maturity Date. In no event shall the Final Maturity Date be extended for more than one (1) Wind Down Period. Prior to the Wind Down Period, Seller shall pay down 10% of the drawn Facility Amount on the Final Maturity Date. During the Wind Down Period, (i) Buyer shall not finance any additional Eligible Assets from Seller and (ii) for each of the four (4) successive calendar quarters, Seller is required to pay down 25% of the drawn Facility Amount (measured by the drawn amount of the Facility once Seller pays down the Facility Amount by 10% as specified above) at the end of each calendar quarter. Notwithstanding any other provision of this Article 3(n)(ii) or otherwise herein, neither Buyer nor any of its Affiliates shall be under any obligation to extend the original Maturity Date, as the same may have been extended pursuant to this Article 3(n)(ii) .

ARTICLE 4.

MARGIN MAINTENANCE

(a) If at any time Buyer’s Margin Amount for all Purchased Assets is less than the Repurchase Price for all Purchased Assets (a “ Margin Deficit ”), then Buyer may by notice to Seller in the form of Exhibit XII (a “ Margin Deficit Notice ”) require Seller to, at Seller’s option, no later than three (3) Business Days following the receipt of a Margin Deficit Notice (the “ Margin Deadline ”) to the extent such Margin Deficit equals or exceeds the Minimum Transfer Amount, (i) transfer to Buyer for no additional consideration (by transfer to Buyer or its designee (including the Custodian) Additional Eligible Collateral, (ii) repurchase some or all of the Purchased Assets at their respective Repurchase Prices, (iii) make a payment in reduction of the Purchase Price (which payment may be paid by the withdrawal by Buyer of funds held in the Depository Account after allocation and payment of any allocated amounts then due and payable to Buyer and its Affiliates), or (iv) choose any combination of the foregoing, such that, after giving effect to such transfers, repurchases and payments, Buyer’s Margin Amount for all Purchased Assets, shall be equal to or greater than the related Repurchase Price for all Purchased Assets.

(b) If at any time the aggregate Repurchase Price of all Purchased Assets subject to Transactions then outstanding exceeds the Facility Amount, then Buyer may, by delivery to Seller of a Margin Deficit Notice, require Seller to, at Seller’s option, no later than the Margin Deadline, (i) repurchase Purchased Assets at the Repurchase Price, (ii) make a payment in reduction of the Repurchase Price of one or more Purchased Assets, or (iii) choose any combination of the foregoing, so that, after giving effect to such repurchases and payments, the aggregate Repurchase Price of all Purchased Assets subject to Transactions then outstanding does not exceed the Facility Amount.

(c) The failure of Buyer, on any one or more occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions to which this Agreement is subject or limit the right of Buyer to do so at a later date. Seller and Buyer each agree that a failure or delay by Buyer to exercise its rights hereunder shall not limit or waive Buyer’s rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller.

ARTICLE 5.

INCOME PAYMENTS AND PRINCIPAL PAYMENTS

(a) The Depository Account shall be established at the Depository pursuant to the Depository Agreement concurrently with the execution and delivery of this Agreement by Seller and Buyer. Buyer shall have sole dominion and control over the Depository Account, which shall be subject to the Depository Agreement. All Income in respect of the Purchased Assets and any payments made to Seller in respect of associated Hedging Transactions, as well as any interest received from the reinvestment of such Income, shall be deposited directly into the Depository Account and shall be remitted by the Depository in accordance with the applicable provisions of Articles 5(b) , 5(c) , 5(d) , 5(e) , 5(f) , 5(g) and 5(h) of this Agreement.

(b) With respect to Purchased Assets, each Mortgagor, issuer of a participation, servicer and trustee with respect to the Purchased Asset or borrower under a Purchased Asset shall have previously received from Seller an irrevocable direction letter, instructing, as applicable, the Mortgagor, issuer of a participation, servicer or trustee with respect to the Purchased Asset or borrower to pay all amounts payable under the related Purchased Asset to Servicer pursuant to the Servicing Agreement, for immediate deposit by Servicer into the Depository Account pursuant to the Servicing Agreement. If a Mortgagor, issuer of a participation, servicer or trustee with respect to the Purchased Asset or borrower forwards any Income with respect to a Purchased Asset to Seller or any Affiliate of Seller rather than directly to the Depository Account, Seller shall, or shall cause such Affiliate to, (i) deliver an additional irrevocable direction letter to the applicable Mortgagor, issuer of a participation, servicer or trustee with respect to the Purchased Asset or borrower and make other best efforts to cause such Mortgagor, issuer of a participation, servicer or trustee with respect to the Purchased Asset or borrower to forward such amounts directly to the Depository Account and (ii) immediately deposit in the Depository Account any such amounts.

(c) So long as no Event of Default or CF Sweep Event with respect to any Purchased Asset shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Assets (other than scheduled or unscheduled Principal Payments and net sale proceeds) and the associated Hedging Transactions during each Collection Period shall be applied by the Depository on the related Remittance Date in the following order of priority:

(i) first , pro rata , (i) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding as of such Remittance Date and (ii) to any Affiliated Hedge Counterparty, any amount then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to a Purchased Asset;

(ii) second , to Buyer, an amount equal to any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

(iii) third , to Seller, the remainder, if any.

(d) So long as no Event of Default or CF Sweep Event shall have occurred and be continuing, any unscheduled Principal Payments and any Principal Payment due on the maturity date of a Purchased Asset shall be applied by the Depository on the Business Day next following the Business Day on which such funds are deposited in the Depository Account in the following order of priority:

(i) first , pro rata , to Buyer, until the Purchase Price for such Purchased Asset has been reduced to the Target Price for such Purchased Asset as of the date of such payment (as determined by Buyer after giving effect to such Principal Payment and application of net sales proceeds, if applicable) and, solely with respect to any Hedging Transaction with an Affiliated Hedge Counterparty related to such Purchased Asset, an amount equal to any accrued and unpaid breakage costs under such Hedging Transaction related to such Purchased Asset;

(ii) second , to Buyer, until the related Purchase Price for any other Purchased Asset as to which the Repurchase Price exceeds the Target Price (for this purpose, making such payment in the order of those Purchased Assets with the largest to smallest excess of Repurchase Price over Target Price), until the aggregate Repurchase Price for all of such Purchased Assets has been reduced to the aggregate Target Price for all of the Purchased Assets, respectively as of the date of such payment (as determined by Buyer after giving effect to such Principal Payment and application of net sale proceeds, if applicable);

(iii) third , to make payment to Buyer of any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

(iv) fourth , to Seller, the remainder of such Principal Payments or net sale proceeds, if applicable.

(e) So long as no Event of Default or CF Sweep Event shall have occurred and be continuing, any scheduled Principal Payments and any net sale proceeds in excess of the related Repurchase Price in respect of any Purchased Assets that is a portion of the Income received by the Depository during each Collection Period shall be applied by the Depository on the Remittance Date in the following order of priority:

(iii) third , to make payment to Buyer of any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

(iv) fourth , to Seller, the remainder of such Principal Payments or net sale proceeds, if applicable.

(f) If Buyer shall have determined that a CF Sweep Event shall have occurred, but no Event of Default shall have occurred and be continuing, all Income (excluding Principal Payments and any net sale proceeds in excess of the related Repurchase Price) received by the Depository in respect of the Purchased Assets and the associated Hedging Transactions shall be applied by the Depository on the related Remittance Date in the following order of priority:

(i) first , pro rata , (i) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all of the Purchased Assets as of such Business Day and (ii) to any Affiliated Hedge Counterparty, any amounts then due and payable to such Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset;

(ii) second , to Buyer, an amount equal to the Repurchase Price of each Purchased Asset until the Repurchase Price for such Purchased Asset has been reduced to the Target Price for such Purchased Asset as of the date of such payment (as determined by Buyer after giving effect to such Principal Payment and application of net sale proceeds, if any);

(iii) third , to Buyer, an amount equal to any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

(iv) fourth , to Seller, any remainder.

(g) Upon the occurrence and continuance of a CF Sweep Event, but no Event of Default shall have occurred and be continuing, all Principal Payments and any net sale proceeds in excess of the related Repurchase Price received by the Depository in respect of the Purchased Assets and the associated Hedging Transactions shall be applied by the Depository on the related Remittance Date in the following order of priority:

(i) first , pro rata , to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all of the Purchased Assets as of such Business Day and any amounts then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset;

(ii) second , to Buyer, on account of the Repurchase Price of each Purchased Asset until the Repurchase Price for such Purchased Asset has been reduced to the Target Price for such Purchased Asset as of the date of such payment (as determined by Buyer after giving effect to such Principal Payment and application of net sale proceeds, if any);

(iii) third , to Buyer, an amount equal to any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

(iv) fourth , to remit to Seller any remainder.

(h) If an Event of Default shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Assets and the associated Hedging Transactions shall be applied by the Depository on the Business Day next following the Business Day on which such funds are deposited in the Depository Account in the following order of priority:

(i) first , pro rata , (i) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all of the Purchased Assets as of such Business Day and (ii) to any Affiliated Hedge Counterparty, any amounts then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset;

(ii) second , to Buyer on account of the Repurchase Price of the Purchased Assets until the Repurchase Price for all of the Purchased Assets has been reduced to zero;

(iii) third , to Buyer, an amount equal to any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

(iv) fourth , to remit to Seller any remainder.

(i) Notwithstanding the provisions of this Article 5 , in no event shall any Income or other amounts be distributed to Seller pursuant to Article 5 if there is a Margin Deficit or an Event of Default, without regard to any applicable cure period, or any event which, over the passage of time, could cause a Margin Deficit or an Event of Default.

ARTICLE 6.

SECURITY INTEREST

(a) Buyer and Seller intend that the Transactions hereunder be sales to Buyer of the Purchased Assets and not loans from Buyer to Seller secured by the Purchased Assets. However, in order to preserve Buyer’s rights under this Agreement in the event that a court or other forum re-characterizes the Transactions hereunder as loans and as security for the performance by Seller of all of Seller’s obligations to Buyer under the Transaction Documents and the Transactions entered into hereunder, or in the event that a transfer of a Purchased Asset is otherwise ineffective to effect an outright transfer of such Purchased Asset to Buyer, Seller hereby assigns, pledges and grants a security interest in all of its right, title and interest in, to and under the Purchased Items (as defined below) to Buyer to secure the payment of the Repurchase Price on all Transactions to which it is a party and all other amounts owing by it to Buyer hereunder, including, without limitation, amounts owing pursuant to Article 26 , and under the other Transaction Documents, including any obligations of Seller under any Hedging Transaction entered into with any Affiliated Hedge Counterparty (including, without limitation, all amounts anticipated to be paid to Buyer by an Affiliated Hedge Counterparty as provided for in the definition of Repurchase Price) (collectively, the “ Repurchase Obligations ”). All of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter referred to as the “ Purchased Items ”:

(i) the Purchased Assets and all “securities accounts” (as defined in Article 8-501(a) of the UCC) to which any or all of the Purchased Assets are credited;

(ii) any and all Additional Eligible Collateral transferred to Buyer in accordance with Article 4(a) ;

(iii) the Purchased Asset Documents, Servicing Agreements, Servicing Records, insurance relating to the Purchased Assets, and collection and escrow accounts and letters of credit relating to the Purchased Assets;

(iv) all “general intangibles”, “accounts”, “chattel paper”, “investment property”, “instruments” and “deposit accounts”, each as defined in the UCC, relating to or constituting any and all of the foregoing; and

(v) all replacements, substitutions or distributions on or proceeds, payments, Income and profits of, and records (but excluding any financial models or other proprietary information) and files relating to any and all of any of the foregoing.

(b) Without limiting Article 6(a) hereto, to secure payment of the Repurchase Obligations owing to Buyer, Seller hereby grants to Buyer a security interest in all of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, hereinafter referred to as the “ Collateral ”:

(i) the Depository Account and all monies from time to time on deposit in the Depository Account;

(ii) the Purchased Items;

(iii) any and all Additional Eligible Collateral transferred to Buyer in accordance with Article 4(a) ;

(iv) any and all replacements, substitutions, distributions on, income relating to or proceeds of any and all of the foregoing; and

(v) Seller’s right under each Hedging Transaction, if any, relating to the Purchased Assets to secure the Repurchase Obligations.

(c) Buyer agrees to act as agent for and on behalf of the Affiliated Hedge Counterparties with respect to the security interest granted hereby to secure the obligations owing to the Affiliated Hedge Counterparties under any Hedging Transactions, including, without limitation, with respect to the Purchased Assets and the Purchased Asset Files held by the Custodian pursuant to the Custodial Agreement.

(d) Buyer’s security interest in the Collateral and Purchased Items shall terminate only upon termination of Seller’s obligations under this Agreement, all Hedging Transactions and the documents delivered in connection herewith and therewith. Upon such termination, Buyer shall deliver to Seller such UCC termination statements and other release documents as may be commercially reasonable and return the Purchased Assets to Seller and reconvey the Purchased Items to Seller and release its security interest in the Collateral. For purposes of the grant of the security interest pursuant to this Article 6 , this Agreement shall be deemed to constitute a security agreement under the New York Uniform Commercial Code (the “ UCC ”). Buyer shall have all of the rights and may exercise all of the remedies of a secured creditor under the UCC and the other laws of the State of New York. In furtherance of the foregoing, (a) Buyer, at Seller’s sole cost and expense, shall cause to be filed in such locations as may be necessary to perfect and maintain perfection and priority of the security interest granted hereby, UCC financing statements and continuation statements (collectively, the “ Filings ”), and shall forward copies of such Filings to Seller upon completion thereof, and (b) Seller shall from time to time take such further actions as may be requested by Buyer to maintain and continue the perfection and priority of the security interest granted hereby (including marking its records and files to evidence the interests granted to Buyer hereunder).

ARTICLE 7.

PAYMENT, TRANSFER AND CUSTODY

(a) On the Purchase Date for each Transaction, ownership of the Purchased Asset shall be transferred to Buyer or its designee (including the Custodian) against the simultaneous transfer of the Purchase Price to an account of Seller specified in the Confirmation relating to such Transaction.

(b) On or before each Purchase Date, Seller shall deliver or cause to be delivered to Buyer or its designee the Custodial Delivery in the form attached hereto as Exhibit IV , provided , that notwithstanding the foregoing, upon request of Seller, Buyer in its sole but good faith discretion may elect to permit Seller to make such delivery by not later than the third (3rd) Business Day after the related Purchase Date, so long as Seller causes an Acceptable Attorney, Title Company or other Person acceptable to Buyer to deliver to Buyer and the Custodian a Bailee Letter on or prior to such Purchase Date. Subject to Article 7(c) , in connection with each sale, transfer, conveyance and assignment of a Purchased Asset, on or prior to each Purchase Date with respect to such Purchased Asset, Seller shall deliver or cause to be delivered and released to the Custodian the following original documents (collectively, the “ Purchased Asset File ”), pertaining to each of the Purchased Assets identified in the Custodial Delivery delivered therewith, together with any other documentation in respect of such Purchased Asset requested by Buyer, in Buyer’s sole but good faith discretion:

With respect to each Purchased Asset that is a Senior Mortgage Loan, Condo Conversion Loan or Land Loan:

(i) The original Mortgage Note (and if applicable, one or more allonges) bearing all intervening endorsements, endorsed “Pay to the order of _________ without recourse” and signed in the name of the last endorsee (the “ Last Endorsee ”) by an authorized Person (in the event that the Purchased Asset was acquired by the Last Endorsee in a merger, the signature must be in the following form: “[Last Endorsee], successor by merger to [name of predecessor]”; in the event that the Purchased Asset was acquired or originated by the Last Endorsee while doing business under another name, the signature must be in the following form: “[Last Endorsee], formerly known as [previous name]”).

(ii) An original of any guarantee executed in connection with the Mortgage Note (if any).

(iii) The original Mortgage with evidence of recording thereon, or a copy thereof together with an officer’s certificate of Seller certifying that such represents a true and correct copy of the original and that such original has been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

(iv) The originals of all assumption, modification, consolidation or extension agreements with evidence of recording thereon, or copies thereof together with an officer’s certificate of Seller certifying that such represent true and correct copies of the originals and that such originals have each been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

(v) The original Assignment of Mortgage in blank for each Purchased Asset, in form and substance acceptable for recording and otherwise acceptable to Buyer and signed in the name of the Last Endorsee (in the event that the Purchased Asset was acquired by the Last Endorsee in a merger, the signature must be in the following form: “[Last Endorsee], successor by merger to [name of predecessor]”; in the event that the Purchased Asset was acquired or originated while doing business under another name, the signature must be in the following form: “[Last Endorsee], formerly known as [previous name]”).

(vi) The originals of all intervening assignments of mortgage with evidence of recording thereon, or copies thereof together with an officer’s certificate of Seller certifying that such represent true and correct copies of the originals and that such originals have each been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

(vii) The original attorney’s opinion of title and abstract of title or the original mortgagee title insurance policy, or if the original mortgagee title insurance policy has not been issued, the irrevocable marked commitment to issue the same.

(viii) The original of any security agreement, chattel mortgage or equivalent document executed in connection with the Purchased Asset.

(ix) The original assignment of leases and rents, if any, with evidence of recording thereon, or a copy thereof together with an officer’s certificate of Seller, certifying that such copy represents a true and correct copy of the original and that such original has been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

(x) The originals of all intervening assignments of assignment of leases and rents, if any, or copies thereof, with evidence of recording thereon.

(xi) A copy of the UCC financing statements, certified as true and correct by Seller, and all necessary UCC continuation statements with evidence of filing thereon or copies thereof certified by Seller that such financing statements have been sent for filing, and UCC assignments, which UCC assignments shall be in form and substance acceptable for filing.

(xii) An environmental indemnity agreement (if any).

(xiii) An omnibus assignment in blank (if any).

(xiv) A disbursement letter from the Mortgagor to the original mortgagee (if any).

(xv) Mortgagor’s certificate or title affidavit (if any).

(xvi) A survey of the underlying real estate directly or indirectly securing or supporting such Purchased Asset (if any) as accepted by the title company for issuance of the Title Policy.

(xvii) A copy of the Mortgagor’s opinion of counsel (if any).

(xviii) An assignment of permits, contracts and agreements (if any).

With respect to each Purchased Asset that is a Construction Loan (or, at Buyer’s discretion, that is a Condo Conversion Loan or Land Loan), in addition to items (i) through (xviii) above:

(i) A copy of the original general contractor consent.

(ii) A copy of the original architect consent.

(iii) Copies of the original trade contractors consents.

(iv) A copy of the initial draw request (including the borrower’s affidavit and other backup documentation).

(v) A copy of a feasibility study conducted by an independent architectural and/or engineering consultant as to the feasibility, both structural and financial, of the proposed construction.

(vi) Certified copies of final plans, specifications and drawings (including existing change orders).

(vii) A copy of the construction schedule.

(viii) A certified copy of the guaranteed maximum price construction contract.

(ix) Copies of exhibits to the general contractor contract.

(x) A copy of the general contractor letter of intent.

(xi) Copies of construction permits.

(xii) A copy of the form of management agreement.

(xiii) A certified copy of the architect contract.

(xiv) Copies of each existing trade contract.

(xv) A copy of the trade payment breakdown and schedule of other project costs.

(xvi) A copy of the zoning evidence or zoning report.

(xvii) Copies of certificates of occupancy and other permits, approvals and licenses, as applicable.

(xviii) Copies of engineer’s reports on soil condition and plans and specifications (including any seismic reports).

(xix) Copies of environmental reports.

(xx) Evidence of insurance (including for general contractor and major trade contractors).

(xxi) A copy of the tract map and current survey.

(xxii) A copy of flood hazard certifications.

(xxiii) A copy of any memorandum regarding results of environmental assessment.

(xxiv) Evidence satisfactory to Buyer relating to utility services, electric, gas, water, telephone and sewerage and utility letters.

(xxv) A copy of approvals of plans by zoning board, any architectural control committee, and tenant under any existing lease.

With respect to each Purchased Asset that is a B-Note/Junior Interest:

(i) with respect to a B-Note, the original Mortgage Note or participation certificate (or assignment, if a syndicated loan) and guarantee, if any, described in the second paragraph of this Article 7(b) , and with respect to a B-Note or a junior participation interest, to the extent applicable, a copy of all of the documents described in clauses (iii), (iv), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii) and (xviii) of the second paragraph of this Article 7(b) with respect to a Purchased Asset.

(ii) with respect to a junior participation, the original participation certificate, if any, together with the original of any participation agreement, intercreditor agreement and/or servicing agreement executed in connection with the Purchased Asset.

(iii) the assignment of Purchased Asset, in blank, sufficient to transfer to Buyer all of Seller’s rights, title and interest in and to the Purchased Asset.

With respect to each Purchased Asset that is a Mezzanine Loan:

(i) The original Mezzanine Note (and if applicable, one or more allonges) signed in connection with the Purchased Asset bearing all intervening endorsements, endorsed “Pay to the order of __________ without recourse” and signed in the name of the Last Endorsee by an authorized Person (in the event that the Mezzanine Note was acquired by the Last Endorsee in a merger, the signature must be in the following form: “[Last Endorsee], successor by merger to [name of predecessor]”; in the event that the Purchased Asset was acquired or originated by the Last Endorsee while doing business under another name, the signature must be in the following form: “[Last Endorsee], formerly known as [previous name]”).

(ii) The original of the loan agreement and the guarantee, if any, executed in connection with the Purchased Asset.

(iii) The original intercreditor or loan coordination agreement, if any, executed in connection with the Purchased Asset.

(iv) The original security agreement executed in connection with the Purchased Asset.

(v) Copies of all documents relating to the formation and organization of the borrower of such Purchased Asset, together with all consents and resolutions delivered in connection with such borrower’s obtaining the Purchased Asset.

(vi) All other documents and instruments evidencing, guaranteeing, insuring or otherwise constituting or modifying or otherwise affecting such Purchased Asset, or otherwise executed or delivered in connection with, or otherwise relating to, such Purchased Asset, including all documents establishing or implementing any lockbox pursuant to which Seller is entitled to receive any payments from cash flow of the underlying real property.

(vii) The assignment of Purchased Asset sufficient to transfer to Buyer all of Seller’s rights, title and interest in and to the Purchased Asset.

(viii) A copy of the borrower’s opinion of counsel (if any).

(ix) A copy of the UCC financing statements, certified as true and correct by Seller, and all necessary UCC continuation statements with evidence of filing thereon or copies thereof certified by Seller that such financing statements have been sent for filing, and UCC assignments, which UCC assignments shall be in form and substance acceptable for filing.

(x) The original certificates representing the pledged equity interests (if any).

(xi) Stock powers (or their equivalent) relating to each pledged equity interest, executed in blank, if an original stock certificate (or its equivalent) is provided.

(xii) Assignment of any agreements among equity interest holders or other material contracts.

(xiii) If no original stock certificate (or its equivalent) is provided, evidence (which may be an officer’s certificate confirming such circumstances) that the pledged ownership interests have been transferred to, or otherwise made subject to a first priority security interest in favor of, Seller.

With respect to each Purchased Asset that is a CMBS:

(i) With respect to (A) any CMBS that is in physical form, the original certificate, bond or other physical form of such CMBS, which shall (1) be endorsed (either on the face thereof or pursuant to a separate allonge) by the most recent endorsee prior to Seller, without recourse, to the order of Seller and further reflect a complete, unbroken chain of endorsement from the originator to Seller and (2) be accompanied by a separate allonge pursuant to which Seller has endorsed such certificate, without recourse, in blank, or, (B) with respect to any CMBS registered with DTC, evidence of re-registration to the securities intermediary in Buyer’s name, denoting same with a “repo” code.

(ii) to the extent in Seller’s possession, true and correct copies of the pooling and servicing agreement or indenture and all other material documents (including, without limitation, opinions of counsel) or agreements related to the creation or issuance of the CMBS or otherwise affecting the rights (including, without limitation, the security interests) of any holder thereof.

(iii) to the extent in Seller’s possession, as applicable, true and correct copies of any assignment, assumption, modification, consolidation or extension made prior to the Purchase Date in respect of any document or agreement referred to in clause (ii) above, in each case, if the document or agreement being assigned, assumed, modified, consolidated or extended is recordable, with evidence of recording thereon (unless the particular item has not been returned from the applicable recording office).

(iv) as applicable, an original assignment of each agreement referred to in clause (iii) above, in recordable form if the agreement being assigned is a recordable document, executed in blank by Seller.

(v) with respect to any CMBS that is in physical form, a blank endorsement which, when properly completed and delivered, is sufficient to cause Buyer to become the registered holder of the CMBS.

(vi) any other documents that Buyer may request Seller to deliver to Custodian from time to time with respect to any CMBS.

With respect to each Purchased Asset that is a CRE CDO:

(i) With respect to any (A) CRE CDO that is in physical form, the original certificate, bond or other physical form of such CRE CDO, which shall (1) be endorsed (either on the face thereof or pursuant to a separate allonge) by the most recent endorsee prior to Seller, without recourse, to the order of Seller and further reflect a complete, unbroken chain of endorsement from the originator to Seller and (2) be accompanied by a separate allonge pursuant to which Seller has endorsed such certificate, without recourse, in blank, or, (B) with respect to any CRE CDO registered with DTC, evidence of re-registration to the securities intermediary in Buyer’s name denoting same with a “repo” code.

(ii) to the extent in Seller’s possession, true and correct copies of the indenture and all other material documents (including, without limitation, opinions of counsel) or agreements related to the creation or issuance of the CRE CDO or otherwise affecting the rights (including, without limitation, the security interests) of any holder thereof.

(v) with respect to any CRE CDO that is in physical form, a blank endorsement which, when properly completed and delivered, is sufficient to cause Buyer to become the registered holder of the CRE CDO.

(vi) copies of any notices, distributions, consents or other documents received by Seller relating to clause (v) above.

(vii) any other documents that Buyer may request Seller to deliver to Custodian from time to time with respect to any CRE CDO.

With respect to each Purchased Asset that is of the type described in clause (viii) or (ix) of the definition of Eligible Asset: any of the documentation referred to above in this Article 7(b) or other documentation with respect to such Eligible Asset that is determined by Buyer to be necessary to effectuate the sale, transfer, conveyance and assignment of such Eligible Asset.

From time to time, Seller shall forward to the Custodian additional original documents or additional documents evidencing any assumption, modification, consolidation or extension of a Purchased Asset approved in accordance with the terms of this Agreement, and upon receipt of any such other documents, the Custodian shall hold such other documents as Buyer shall request from time to time. With respect to any documents that have been delivered or are being delivered to recording offices for recording and have not been returned to Seller in time to permit their delivery hereunder at the time required, in lieu of delivering such original documents, Seller shall deliver to Buyer a true copy thereof with an officer’s certificate certifying that such copy is a true, correct and complete copy of the original, which has been transmitted for recordation. Seller shall deliver such original documents to the Custodian promptly when they are received. With respect to all of the Purchased Assets delivered by Seller to Buyer or its designee (including the Custodian), Seller shall execute an omnibus power of attorney substantially in the form of Exhibit V attached hereto irrevocably appointing Buyer its attorney-in-fact with full power to (i) complete and record each Assignment of Mortgage, (ii) complete the endorsement of each Mortgage Note or Mezzanine Note, (iii) take any action (including exercising voting and/or consent rights) with respect to CMBS, Junior Interests, or intercreditor or participation agreements, (iv) the preparation and filing, in form and substance satisfactory to Buyer, of such financing statements, continuation statements, and other uniform commercial code forms, as Buyer may from time to time, reasonably consider necessary to create, perfect, and preserve Buyer's security interest in the Purchased Assets and (v) take such other steps as may be necessary or desirable to enforce Buyer’s rights against, under or with respect to such Purchased Assets and the related Purchased Asset Files and the Servicing Records. Buyer shall deposit the Purchased Asset Files representing the Purchased Assets, or direct that the Purchased Asset Files be deposited directly, with the Custodian. The Purchased Asset Files shall be maintained in accordance with the Custodial Agreement. Any Purchased Asset Files not delivered to Buyer or its designee (including the Custodian) are and shall be held in trust by Seller or its designee for the benefit of Buyer as the owner thereof. Seller or its designee shall maintain a copy of the Purchased Asset File and the originals of the Purchased Asset File not delivered to Buyer or its designee. The possession of the Purchased Asset File by Seller or its designee is at the will of Buyer for the sole purpose of servicing the related Purchased Asset, and such retention and possession by Seller or its designee is in a custodial capacity only. The books and records (including, without limitation, any computer records or tapes) of Seller or its designee shall be marked appropriately to reflect clearly the sale of the related Purchased Asset to Buyer. Seller or its designee (including the Custodian) shall release its custody of the Purchased Asset File only in accordance with written instructions from Buyer, unless such release is required as incidental to the servicing of the Purchased Assets, is in connection with a repurchase of any Purchased Asset by Seller or as otherwise required by law.

(c) Upon the occurrence and during the continuation of an Event of Default, and in each case subject to the provisions of the Purchased Asset Documents, after notice to Seller, Buyer shall be entitled to exercise all voting and corporate rights with respect to the Purchased Assets without regard to Seller’s instructions (including, but not limited to, if an Act of Insolvency shall occur with respect to Seller, to the extent Seller controls or is entitled to control selection of any servicer, Buyer may transfer any or all of such servicing to an entity satisfactory to Buyer).

(d) Notwithstanding the provisions of Article 7(b) above requiring the execution of the Custodial Delivery and corresponding delivery of the Purchased Asset File to the Custodian on or prior to the related Purchase Date, with respect to each Transaction involving a Purchased Asset that is identified in the related Confirmation as a “Table Funded” Transaction, Seller shall, in lieu of effectuating the delivery of all or a portion of the Purchased Asset File on or prior to the related Purchase Date, (i) deliver to the Custodian by facsimile on or before the related Purchase Date for the Transaction (A) the promissory note(s), original stock certificate or participation certificate in favor of Seller evidencing the making of the Purchased Asset, with Seller’s endorsement of such instrument to Buyer, (B) such other components of the Purchased Asset File as Buyer may require on a case by case basis with respect to the particular Transaction, and (C) evidence satisfactory to Buyer that all documents necessary to perfect Seller’s (and, by means of assignment to Buyer on the Purchase Date, Buyer’s) interest in the Collateral for the Purchased Asset, and (ii) not later than the third (3rd) Business Day following the Purchase Date, deliver to Buyer the Custodial Delivery and to the Custodian the entire Purchased Asset File.

ARTICLE 8.

SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

(a) Title to all Purchased Assets shall pass to Buyer on the applicable Purchase Date, and Buyer shall have free and unrestricted use of all Purchased Assets, subject, however, to the terms of this Agreement. Nothing in this Agreement or any other Transaction Document shall preclude Buyer from engaging in repurchase transactions with the Purchased Assets or otherwise selling, transferring, pledging, repledging, hypothecating, or rehypothecating the Purchased Assets, but no such transaction shall relieve Buyer of its obligations to transfer the Purchased Assets to Seller pursuant to Article 3 of this Agreement or of Buyer’s obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Article 5 hereof.

(b) Nothing contained in this Agreement or any other Transaction Document shall obligate Buyer to segregate any Purchased Assets delivered to Buyer by Seller. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, no Purchased Asset shall remain in the custody of Seller or an Affiliate of Seller.

ARTICLE 9.

[RESERVED]

ARTICLE 10.

REPRESENTATIONS AND WARRANTIES

(a) Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in writing, in the form of an annex hereto or otherwise, in advance of any Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal), (iv) it has obtained all authorizations of any governmental body required in connection with this Agreement and the Transactions hereunder and such authorizations are in full force and effect and (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance or rule applicable to it or its organizational documents or any agreement by which it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction for the purchase of any Purchased Assets by Buyer from Seller and any Transaction thereunder and covenants that at all times while this Agreement and any Transaction thereunder is in effect, Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it.

(b) In addition to the representations and warranties in subsection (a) above, Seller represents and warrants to Buyer as of the date of this Agreement and will be deemed to represent and warrant to Buyer as of the Purchase Date for the purchase of any Purchased Assets by Buyer from Seller and any Transaction thereunder and covenants that at all times while this Agreement and any Transaction thereunder is in effect , unless otherwise stated herein:

(i) Organization . Seller is duly organized, validly existing and in good standing under the laws and regulations of the state of Seller’s incorporation and is duly licensed, qualified, and in good standing in every state where such licensing or qualification is necessary for the transaction of Seller’s business, except where failure to so qualify could not be reasonably likely to have a Material Adverse Effect. Seller has the power to own and hold the assets it purports to own and hold, and to carry on its business as now being conducted and proposed to be conducted, and has the power to execute, deliver, and perform its obligations under this Agreement and the other Transaction Documents.

(ii) Due Execution; Enforceability . The Transaction Documents have been or will be duly executed and delivered by Seller, for good and valuable consideration. The Transaction Documents constitute the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms subject to bankruptcy, insolvency, and other limitations on creditors’ rights generally and to equitable principles.

(iii) Ability to Perform . Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in the Transaction Documents applicable to it to which it is a party.

(iv) Non-Contravention . Neither the execution and delivery of the Transaction Documents, nor consummation by Seller of the transactions contemplated by the Transaction Documents (or any of them), nor compliance by Seller with the terms, conditions and provisions of the Transaction Documents (or any of them) will conflict with or result in a breach of any of the terms, conditions or provisions of (i) the organizational documents of Seller, (ii) any contractual obligation to which Seller is now a party or the rights under which have been assigned to Seller or the obligations under which have been assumed by Seller or to which the assets of Seller are subject or constitute a default thereunder, or result thereunder in the creation or imposition of any lien upon any of the assets of Seller, other than pursuant to the Transaction Documents, (iii) any judgment or order, writ, injunction, decree or demand of any court applicable to Seller, or (iv) any applicable Requirement of Law, in the case of clauses (ii)-(iii) above, to the extent that such conflict or breach would have a Material Adverse Effect upon Seller’s ability to perform its obligations hereunder.

(v) Litigation; Requirements of Law . As of the date hereof and as of the Purchase Date for any Transaction hereunder, there is no action, suit, proceeding, investigation, or arbitration pending or, to the best knowledge of Seller, threatened against Seller or any of its assets, nor is there any action, suit, proceeding, investigation, or arbitration pending or threatened against Seller that may result in any Material Adverse Effect. Seller and Guarantor are in compliance in all material respects with all Requirements of Law. Neither Seller nor Guarantor is in default in any material respect with respect to any judgment, order, writ, injunction, decree, rule or regulation of any arbitrator or Governmental Authority.

(vi) No Broker . Seller has not dealt with any broker, investment banker, agent, or other Person (other than Buyer or an Affiliate of Buyer) who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to any of the Transaction Documents.

(vii) Good Title to Purchased Assets . Immediately prior to the purchase of any Purchased Assets by Buyer from Seller, such Purchased Assets are free and clear of any lien, encumbrance or impediment to transfer (including any “ adverse claim ” as defined in Article 8-102(a)(1) of the UCC), and Seller is the record and beneficial owner of and has good and marketable title to and the right to sell and transfer such Purchased Assets to Buyer and, upon transfer of such Purchased Assets to Buyer, Buyer shall be the owner of such Purchased Assets free of any adverse claim. In the event the related Transaction is recharacterized as a secured financing of the Purchased Assets, the provisions of this Agreement are effective to create in favor of Buyer a valid security interest in all rights, title and interest of Seller in, to and under the Purchased Assets and Buyer shall have a valid, perfected first priority security interest in the Purchased Assets (and without limitation on the foregoing, Buyer, as entitlement holder, shall have a “security entitlement” to the Purchased Assets).

(viii) No Decline in Market Value; No Margin Deficit; No Defaults . Seller is not aware of any material post-Transaction facts or circumstances that are reasonably likely to cause or have caused a decline in the Market Value of any Purchased Asset. No Margin Deficit exists and no Default or Event of Default has occurred or exists under or with respect to the Transaction Documents.

(ix) Authorized Representatives . The duly authorized representatives of Seller are listed on, and true signatures of such authorized representatives are set forth on, Exhibit II attached to this Agreement.

(x) Representations and Warranties Regarding Purchased Assets; Delivery of Purchased Asset File .

(A) As of the date hereof, Seller has not assigned, pledged, or otherwise conveyed or encumbered any Purchased Asset to any other Person, and immediately prior to the sale of such Purchased Asset to Buyer, Seller was the sole owner of such Purchased Asset and had good and marketable title thereto, free and clear of all liens, in each case except for (1) liens to be released simultaneously with the sale to Buyer hereunder and (2) liens granted by Seller in favor of the counterparty to any Hedging Transaction, solely to the extent such liens are expressly subordinate to the rights and interests of Buyer hereunder.

(B) The provisions of this Agreement and the related Confirmation are effective to either constitute a sale of Purchased Items to Buyer or to create in favor of Buyer a legal, valid and enforceable security interest in all right, title and interest of Seller in, to and under the Purchased Items.

(C) Upon receipt by the Custodian of each Mortgage Note, Mezzanine Loan note, B-Note or Junior Interest certificate, endorsed in blank by a duly authorized officer of Seller, either a purchase shall have been completed by Buyer of such Mezzanine Loan note, B-Note or Junior Interest certificate, as applicable, or Buyer shall have a valid and fully perfected first priority security interest in all right, title and interest of Seller in the Purchased Items described therein.

(D) Each of the representations and warranties made in respect of the Purchased Assets pursuant to Exhibit VI are true, complete and correct in all material respects, except to the extent disclosed in a Requested Exceptions Report.

(E) Upon the filing of financing statements on Form UCC-1 naming Buyer as “ Secured Party ”, Seller as “ Debtor ” and describing the Purchased Items, in the jurisdiction and recording office listed on Exhibit XIII attached hereto, the security interests granted hereunder in that portion of the Purchased Items which can be perfected by filing under the Uniform Commercial Code will constitute fully perfected security interests under the Uniform Commercial Code in all right, title and interest of Seller in, to and under such Purchased Items.

(F) Upon execution and delivery of the Depository Agreement, Buyer shall either be the owner of, or have a valid and fully perfected first priority security interest in, the “investment property” and all “deposit accounts” (each as defined in the Uniform Commercial Code) comprising Purchased Items or any after-acquired property related to such Purchased Items. Except to the extent disclosed in a Requested Exceptions Report, Seller or its designee is in possession of a complete, true and accurate Purchased Asset File with respect to each Purchased Asset, except for such documents the originals of which have been delivered to the Custodian.

(xi) Adequate Capitalization; No Fraudulent Transfer . Seller has, as of such Purchase Date, adequate capital for the normal obligations foreseeable in a business of its size and character and in light of its contemplated business operations. Seller is generally able to pay, and as of the date hereof is paying, its debts as they come due. Seller has not become, or is presently, financially insolvent nor will Seller be made insolvent by virtue of Seller’s execution of or performance under any of the Transaction Documents within the meaning of the bankruptcy laws or the insolvency laws of any jurisdiction. Seller has not entered into any Transaction Document or any Transaction pursuant thereto in contemplation of insolvency or with intent to hinder, delay or defraud any creditor.

(xii) No Conflicts or Consents . Neither the execution and delivery of this Agreement and the other Transaction Documents by Seller, nor the consummation of any of the transactions by it herein or therein contemplated, nor compliance with the terms and provisions hereof or with the terms and provisions thereof, will contravene or conflict with or result in the creation or imposition of (or the obligation to create or impose) any lien upon any of the property or assets of Seller pursuant to the terms of any indenture, mortgage, deed of trust, or other agreement or instrument to which Seller is a party or by which Seller may be bound, or to which Seller may be subject, other than liens created pursuant to the Transaction Documents. No consent, approval, authorization, or order of any third party is required in connection with the execution and delivery by Seller of the Transaction Documents to which it is a party or to consummate the transactions contemplated hereby or thereby which has not already been obtained.

(xiii) Governmental Approvals . No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any Governmental Authority is required to authorize, or is required in connection with, (i) the execution, delivery and performance of any Transaction Document to which Seller is or will be a party, (ii) the legality, validity, binding effect or enforceability of any such Transaction Document against Seller or (iii) the consummation of the transactions contemplated by this Agreement (other than the filing of certain financing statements in respect of certain security interests).

(xiv) Organizational Documents . Seller has delivered to Buyer certified copies of its organization documents, together with all amendments thereto, if any.

(xv) No Encumbrances . There are (i) no outstanding rights, options, warrants or agreements on the part of Seller for a purchase, sale or issuance, in connection with the Purchased Assets, (ii) no agreements on the part of Seller to issue, sell or distribute the Purchased Assets, and (iii) no obligations on the part of Seller (contingent or otherwise) to purchase, redeem or otherwise acquire any securities or interest therein, except as contemplated by the Transaction Documents

(xvi) Federal Regulations . Seller is not required to register as an “investment company,” or a company “controlled by an investment company,” within the meaning of the Investment Company Act of 1940, as amended. Seller is not a “holding company,” or a “subsidiary company of a holding company,” or an “affiliate” of either a “holding company” or a “subsidiary company of a holding company,” as such terms are defined in the Public Utility Holding Company Act of 1935, as amended.

(xvii) Taxes . Seller has filed or caused to be filed all tax returns that, to the knowledge of Seller, would be delinquent if they had not been filed on or before the date hereof and has paid all taxes shown to be due and payable on or before the date hereof on such returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it and any of its assets by any Governmental Authority except for any such taxes as (A) are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided in accordance with GAAP or (B) are de minimis in amount; no tax liens have been filed against any of Seller’s assets and, no claims are being asserted with respect to any such taxes, fees or other charges.

(xviii) Judgments/Bankruptcy . Except as disclosed in writing to Buyer, there are no judgments against Seller unsatisfied of record or docketed in any court located in the United States of America and no Act of Insolvency has ever occurred with respect to Seller.

(xix) Solvency . Neither the Transaction Documents nor any Transaction thereunder are entered into in contemplation of insolvency or with intent to hinder, delay or defraud any of Seller’s creditors. The transfer of the Purchased Assets subject hereto and the obligation to repurchase such Purchased Assets is not undertaken with the intent to hinder, delay or defraud any of Seller’s creditors. As of the Repurchase Date, Seller is not insolvent within the meaning of 11 U.S.C. Section 101(32) or any successor provision thereof and the transfer and sale of the Purchased Assets pursuant hereto and the obligation to repurchase such Purchased Asset (i) will not cause the liabilities of Seller to exceed the assets of Seller, (ii) will not result in Seller having unreasonably small capital, and (iii) will not result in debts that would be beyond Seller’s ability to pay as the same mature. No petition in bankruptcy has been filed against Seller in the last ten (10) years, and Seller has not in the last ten (10) years made an assignment for the benefit of creditors or taken advantage of any debtors relief laws. Seller has only entered into agreements on terms that would be considered arm’s length and otherwise on terms consistent with other similar agreements with other similarly situated entities.

(xx) Use of Proceeds; Margin Regulations . All proceeds of each Transaction shall be used by Seller for purposes permitted under Seller’s governing documents, provided that no part of the proceeds of any Transaction will be used by Seller to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. Neither the entering into of any Transaction nor the use of any proceeds thereof will violate, or be inconsistent with, any provision of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

(xxi) Full and Accurate Disclosure . No information contained in the Transaction Documents, or any written statement furnished by or on behalf of Seller pursuant to the terms of the Transaction Documents, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made.

(xxii) Financial Information . All financial data concerning Seller and the Purchased Assets that has been delivered by or on behalf of Seller to Buyer is true, complete and correct in all material respects. All financial data concerning Seller has been prepared fairly in accordance with GAAP. All financial data concerning the Purchased Assets has been prepared in accordance with standard industry practices. Since the delivery of such data, except as otherwise disclosed in writing to Buyer, there has been no change in the financial position of Seller or the Purchased Assets, or in the results of operations of Seller, which change is reasonably likely to have in a Material Adverse Effect on Seller.

(xxiii) Hedging Transactions . To the actual knowledge of Seller, as of the Purchase Date for any Purchased Asset that is subject to a Hedging Transaction, each such Hedging Transaction is in full force and effect in accordance with its terms, each counterparty thereto is an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty, and no “Termination Event”, “Event of Default”, “Potential Event of Default” or any similar event, however denominated, has occurred and is continuing with respect thereto.

(xxiv) Servicing Agreements . Seller has delivered to Buyer all Servicing Agreements pertaining to the Purchased Assets and to the actual knowledge of Seller, as of the date of this Agreement and as of the Purchase Date for the purchase of any Purchased Assets subject to a Servicing Agreement, each such Servicing Agreement is in full force and effect in accordance with its terms and no default or event of default exists thereunder.

(xxv) No Reliance . Seller has made its own independent decisions to enter into the Transaction Documents and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including without limitation, legal counsel and accountants) as it has deemed necessary. Seller is not relying upon any advice from Buyer as to any aspect of the Transactions, including without limitation, the legal, accounting or tax treatment of such Transactions.

(xxvi) Patriot Act . Seller is in compliance, in all material respects, with the (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other applicable enabling legislation or executive order relating thereto, and (ii) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of any Transaction will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

(xxvii) Environmental Matters .

(a) No properties owned or leased by Seller and no properties formerly owned or leased by Seller, its predecessors, or any former Subsidiaries or predecessors thereof (the “ Properties ”), contain, or have previously contained, any Materials of Environmental Concern in amounts or concentrations which constitute or constituted a violation of, or reasonably could be expected to give rise to liability under, Environmental Laws;

(b) Seller is in compliance with all applicable Environmental Laws, and there is no violation of any Environmental Laws which reasonably would be expected to interfere with the continued operations of Seller;

(c) Seller has not received any notice of violation, alleged violation, non-compliance, liability or potential liability under any Environmental Law, nor does Seller have knowledge that any such notice will be received or is being threatened;

(d) Materials of Environmental Concern have not been transported or disposed by Seller in violation of, or in a manner or to a location which reasonably would be expected to give rise to liability under, any applicable Environmental Law, nor has Seller generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that reasonably would be expected to give rise to liability under, any applicable Environmental Law;

(e) No judicial proceedings or governmental or administrative action is pending, or, to the knowledge of Seller, threatened, under any Environmental Law which Seller is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements arising out of judicial proceedings or governmental or administrative actions, outstanding under any Environmental Law to which Seller is a party;

(f) There has been no release or threat of release of Materials of Environmental Concern in violation of or in amounts or in a manner that reasonably would be expected to give rise to liability under any Environmental Law for which Seller may become liable; and

(g) Each of the representations and warranties set forth in the preceding clauses (A) through (F) is true and correct with respect to each parcel of real property owned or operated by Seller.

(xxviii) Insider . Seller is not an “executive officer,” “director,” or “person who directly or indirectly or acting through or in concert with one or more persons owns, controls, or has the power to vote more than 10% of any class of voting securities” (as those terms are defined in 12 U.S.C. § 375(b) or in regulations promulgated pursuant thereto) of Buyer, of a bank holding company of which Buyer is a Subsidiary, or of any Subsidiary, of a bank holding company of which Buyer is a Subsidiary, of any bank at which Buyer maintains a correspondent account or of any lender which maintains a correspondent account with Buyer.

(xxix) Office of Foreign Assets Control . Seller is not a person (i) whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) who engages in any dealings or transactions prohibited by Section 2 of such executive order, or to the best of Seller’s knowledge, is otherwise associated with any such person in any manner in violation of Section 2 of such executive order, or (iii) on the current list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order.

(xxx) Notice Address; Jurisdiction of Organization . On the date of this Agreement, Seller’s address for notices is as specified on Annex I . Seller’s jurisdiction of organization is Delaware. The location where Seller keeps its books and records, including all computer tapes and records relating to the Collateral and Purchased Items, is its notice address. Seller may change its address for notices and for the location of its books and records by giving Buyer written notice of such change.

(xxxi) Ownership . Seller is and shall remain at all times an indirect wholly-owned subsidiary of Guarantor.

ARTICLE 11.

NEGATIVE COVENANTS OF SELLER

On and as of the date hereof and each Purchase Date and until this Agreement is no longer in force with respect to any Transaction, Seller shall not without the prior written consent of Buyer:

(a) take any action that would directly or indirectly impair or adversely affect Buyer’s title to the Purchased Assets;

(b) transfer, assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose of, or pledge or hypothecate, directly or indirectly, any interest in the Purchased Assets (or any of them) to any Person other than Buyer, or engage in repurchase transactions or similar transactions with respect to the Purchased Assets (or any of them) with any Person other than Buyer;

(c) modify in any material adverse respect any Servicing Agreements to which it is a party, without the consent of Buyer in its reasonable discretion;

(d) create, incur or permit to exist any lien, encumbrance or security interest in or on any of the Purchased Assets, the other Collateral or Purchased Items, other than the security interest granted by Seller pursuant to Article 6 of this Agreement;

(e) create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for the following, hereinafter referred to as the “ Permitted Liens ”:

(i) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the related borrower or its subsidiaries, as the case may be, in conformity with GAAP;

(ii) Liens created pursuant to the Transaction Documents;

(iii) Liens created pursuant to or in connection with Other Warehouse Facilities on the financial assets that are the subject of such Other Warehouse Facilities, solely to secure the obligations of Seller under such Other Warehouse Facilities; and

(iv) Liens on the rights of Seller created pursuant to or in connection with subscription facilities under subscription agreements or other agreements related thereto, including Seller's rights to call capital from its investors;

(f) enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution), sell all or substantially all of its assets without the consent of Buyer in its sole and absolute discretion;

(g) consent or assent to any material amendment or supplement to, or termination of, any note, loan agreement, mortgage or guarantee relating to the Purchased Assets or other material agreement or instrument relating to the Purchased Assets other than in accordance with Article 28 ;

(h) permit the organizational documents or organizational structure of Seller to be amended in any material respect without the prior written consent of Buyer in its sole and absolute discretion;

(i) acquire or maintain any right or interest in any Purchased Asset or Underlying Mortgaged Property that is senior to or pari passu with the rights and interests of Buyer therein under this Agreement and the other Transaction Documents unless the same becomes a Purchased Asset hereunder;

(j) use any part of the proceeds of any Transaction hereunder for any purpose which violates, or would be inconsistent with, the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System;

(k) permit the ratio of (A) the sum of Consolidated Adjusted EBITDA for Seller for such period to (B) Interest Expense for Seller for such period to be less than 1:5 to 1:0 ;

(l) permit Guarantor’s Liquidity to be less than $15,000,000 (at least $7,500,000 of which shall consist of cash or cash equivalents);

(m) permit Guarantor’s and its consolidated subsidiaries’ Tangible Net Worth at any time to be less than the sum of (A) $700,000,000 plus (B) an amount equal to 75% of the aggregate net proceeds after costs and expenses received by Guarantor or any consolidated subsidiaries of Guarantor in connection with the offering or issuance of any Equity Interest of Guarantor or any consolidated subsidiaries of Guarantor (in each case only to the extent such Equity Interests would be included in Tangible Net Worth) after the Closing Date;

(n) permit the ratio of (A) the sum of Consolidated Adjusted EBITDA for the Guarantor for such period to (B) Interest Expense for the Guarantor for such period to be less than 1:5 to 1:0;

(o) permit the ratio of (A) Guarantor’s and its consolidated Subsidiaries’ Adjusted Total Liabilities to (B) Guarantor’s and its consolidated Subsidiaries’ Adjusted Total Assets to exceed 0.90 to 1.00 ;

(p) permit the ratio of (A) Guarantor’s and its consolidated Subsidiaries’ Indebtedness (excluding Non-Recourse Indebtedness, borrowings under the Unsecured Credit Facility and trust preferred securities) to (B) Adjusted Total Assets of Guarantor and its consolidated Subsidiaries to exceed 0.10 to 1.00 ;

(q) permit Guarantor’s minimum Fixed Charge Coverage Ratio at any time to be less than 1.20x; and

(r) enter into any Hedging Transaction with respect to any Purchased Asset with any entity that is not an Affiliated Hedging Counterparty or a Qualified Hedging Counterparty.

Compliance with covenants (k) through (q) in this Article 11 shall be evidenced by financial statements and by a compliance certificate furnished together therewith as further provided in Article 12(j)(ii) below, and compliance with all such covenants are subject to verification by Buyer.

ARTICLE 12.

AFFIRMATIVE COVENANTS OF SELLER

(a) Seller shall promptly notify Buyer of any material adverse change in its business operations and/or financial condition; provided , however , that nothing in this Article 12 shall relieve Seller of its obligations under this Agreement.

(b) Seller shall provide Buyer with copies of such documents as Buyer may reasonably request evidencing the truthfulness of the representations set forth in Article 10 .

(c) Seller shall (1) defend the right, title and interest of Buyer in and to the Collateral and Purchased Items against, and take such other action as is necessary to remove, the Liens, security interests, claims and demands of all Persons (other than security interests by or through Buyer) and (2) at Buyer’s reasonable request, take all action necessary to ensure that Buyer will have a first priority security interest in the Purchased Assets subject to any of the Transactions in the event such Transactions are recharacterized as secured financings.

(d) Seller shall notify Buyer and the Depository of the occurrence of any Default or Event of Default with respect to Seller as soon as possible but in no event later than the immediately succeeding Business Day after obtaining actual knowledge of such event.

(e) Seller shall cause the special servicer rating of the special servicer with respect to all mortgage loans underlying Purchased Assets to be no lower than “average” by Standard & Poor’s Ratings Group to the extent Seller controls or is entitled to control the selection of the special servicer. In the event the special servicer rating with respect to any Person acting as special servicer for any mortgage loans underlying Purchased Assets shall be below “average” by Standard & Poor’s Rating Group, or if an Act of Insolvency occurs with respect to Seller or Guarantor, Buyer shall be entitled to transfer special servicing with respect to all Purchased Assets to an entity satisfactory to Buyer, to the extent Seller controls or is entitled to control the selection of the special servicer.

(f) Seller shall promptly (and in any event not later than two (2) Business Days following receipt) deliver to Buyer (i) any notice of the occurrence of an Event of Default under or report received by Seller pursuant to the Purchased Asset Documents; (ii) any notice of transfer of servicing under the Purchased Asset Documents and (iii) any other information with respect to the Purchased Assets that may be requested by Buyer from time to time.

(g) Seller will permit Buyer or its designated representative to inspect Seller’s records with respect to the Collateral and the Purchased Items and the conduct and operation of its business related thereto upon reasonable prior written notice from Buyer or its designated representative, at such reasonable times and with reasonable frequency, and to make copies of extracts of any and all thereof, subject to the terms of any confidentiality agreement between Buyer and Seller. Buyer shall act in a commercially reasonable manner in requesting and conducting any inspection relating to the conduct and operation of Seller’s business.

(h) If Seller shall at any time become entitled to receive or shall receive any rights, whether in addition to, in substitution of, as a conversion of, or in exchange for a Purchased Asset, or otherwise in respect thereof, Seller shall accept the same as Buyer’s agent, hold the same in trust for Buyer and deliver the same forthwith to Buyer (or the Custodian, as appropriate) in the exact form received, duly endorsed by Seller to Buyer, if required, together with an undated bond power covering such certificate duly executed in blank to be held by Buyer hereunder as additional collateral security for the Transactions. If any sums of money or property so paid or distributed in respect of the Purchased Assets shall be received by Seller, Seller shall, until such money or property is paid or delivered to Buyer, hold such money or property in trust for Buyer, segregated from other funds of Seller, as additional collateral security for the Transactions.

(i) At any time from time to time upon the reasonable request of Buyer, at the sole expense of Seller, Seller will promptly and duly execute and deliver such further instruments and documents and take such further actions as Buyer may request for the purposes of obtaining or preserving the full benefits of this Agreement including the first priority security interest granted hereunder and of the rights and powers herein granted (including, among other things, filing such UCC financing statements as Buyer may request). If any amount payable under or in connection with any of the Collateral or Purchased Items shall be or become evidenced by any promissory note, other instrument or chattel paper, such note, instrument or chattel paper shall be immediately delivered to Buyer, duly endorsed in a manner satisfactory to Buyer, to be itself held as a Purchased Item and/or Collateral, as applicable, pursuant to this Agreement, and the documents delivered in connection herewith.

(j) Seller or Guarantor, as applicable, shall provide, or to cause to be provided, to Buyer the following financial and reporting information:

(i) Within fifteen (15) calendar days after each month-end, a monthly reporting package substantially in the form of Exhibit III attached hereto;

(ii) Within forty-five (45) calendar days after the last day of each of the first three fiscal quarters in any fiscal year, consolidated unaudited financial statements of Guarantor presented fairly in accordance with GAAP or, if such financial statements being delivered have been filed with the SEC pursuant to the requirements of the 1934 Act, or similar state securities laws, presented in accordance with applicable statutory and/or regulatory requirements and delivered to Buyer within the same time frame as are required to be filed in accordance with such applicable statutory or regulatory requirements, in either case accompanied by a properly completed and executed Officers’ Certificate in the form attached hereto as Exhibit XXII , including a statement of operations and a statement of changes in cash flows for such quarter and statement of net assets as of the end of such quarter, also certified as being true and correct by an Officers’ Certificate in the form attached hereto as Exhibit XXII , which shall also include a properly completed and executed Covenant Compliance Certificate in the form attached hereto as Exhibit XIX ;

(iii) Within ninety (90) calendar days after the last day of its fiscal year, Guarantor’s consolidated audited financial statements, prepared by a nationally recognized independent certified public accounting firm and presented fairly in accordance with GAAP or, if such financial statements being delivered have been filed with the SEC pursuant to the requirements of the 1934 Act, or similar state securities laws, presented in accordance with applicable statutory and/or regulatory requirements and delivered to Buyer within the same time frame as are required to be filed in accordance with such applicable statutory and/or regulatory requirements, in either case accompanied by a properly completed and executed Officers’ Certificate in the form attached hereto as Exhibit XXII , including a statement of operations and a statement of changes in cash flows for such quarter and statement of net assets as of the end of such quarter accompanied by an unqualified report of the nationally recognized independent certified public accounting firm that prepared them, which shall also include a properly completed and executed Covenant Compliance Certificate in the form attached hereto as Exhibit XIX ; and

(iv) Copies of Guarantor’s Federal Income Tax returns, if any, delivered within thirty (30) days after the earlier of (A) filing or (B) the last filing extension period.

(k) Seller shall make a representative available to Buyer every month for attendance at a telephone conference, the date of which to be mutually agreed upon by Buyer and Seller, regarding the status of each Purchased Asset, Seller’s compliance with the requirements of Articles 11 and 12 , and any other matters relating to the Transaction Documents or Transactions that Buyer wishes to discuss with Seller.

(l) Seller and Guarantor shall at all times (i) comply with all contractual obligations, (ii) comply in all material respects with all laws, ordinances, rules, regulations and orders (including, without limitation, environmental laws) of any Governmental Authority or any other federal, state, municipal or other public authority having jurisdiction over Seller and Guarantor or any of its assets and Seller and Guarantor shall do or cause to be done all things necessary to preserve and maintain in full force and effect its legal existence, and all licenses material to its business and (iii) maintain and preserve its legal existence and all of its material rights, privileges, licenses and franchises necessary for the operation of its business (including, without limitation, preservation of all lending licenses held by Seller and of Seller’s status as a “qualified transferee” (however denominated) under all documents which govern the Purchased Assets).

(m) Seller and Guarantor shall at all times keep proper books of records and accounts in which full, true and correct entries shall be made of its transactions fairly in accordance with GAAP, and set aside on its books from its earnings for each fiscal year all such proper reserves in accordance with GAAP.

(n) Seller shall observe, perform and satisfy all the terms, provisions, covenants and conditions required to be observed, performed or satisfied by it, and shall pay when due all costs, fees and expenses required to be paid by it, under the Transaction Documents. Seller shall pay and discharge all taxes, levies, liens and other charges on its assets and on the Collateral that, in each case, in any manner would create any lien or charge upon the Collateral, other than any such taxes that are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided in accordance with GAAP.

(o) Seller will maintain records with respect to the Collateral and Purchased Items and the conduct and operation of its business with no less a degree of prudence than if the Collateral and Purchased Items were held by Seller for its own account and will furnish Buyer, upon reasonable request by Buyer or its designated representative, with reasonable information obtainable by Seller with respect to the Collateral and Purchased Items and the conduct and operation of its business.

(p) Seller shall provide Buyer with reasonable access plus any such additional reports as Buyer may reasonably request. Upon reasonable notice (unless a Default shall have occurred and is continuing, in which case, no prior notice shall be required), during normal business hours, Seller shall allow Buyer to (i) review any operating statements, occupancy status and other property level information with respect to the underlying real estate directly or indirectly securing or supporting the Purchased Assets that either is in Seller’s possession or is available to Seller, (ii) examine, copy (at Buyer’s expense) and make extracts from its books and records, to inspect any of its Properties, and (iii) discuss Seller’s business and affairs with its officers.

(q) Seller shall enter into Hedging Transactions with respect to each of the Hedge-Required Assets (subject to the definition of Concentration Limit) to the extent necessary to hedge interest rate risk associated with the Purchase Price on such Hedge-Required Assets, in a manner reasonably acceptable to Buyer, to the extent that such Hedging Transactions will not give rise to non-qualifying REIT income under section 856 of the Code.

(r) Seller shall take all such steps as Buyer deems necessary to perfect the security interest granted pursuant to Article 6 in the Hedging Transactions, shall take such action as shall be necessary or advisable to preserve and protect Seller’s interest under all such Hedging Transactions (including, without limitation, requiring the posting of any required Additional Eligible Collateral thereunder, and hereby authorizes Buyer to take any such action that Seller fails to take after demand therefor by Buyer. Seller shall provide the Custodian with copies of all documentation relating to Hedging Transactions with Qualified Hedge Counterparties promptly after entering into same. All Hedging Transactions, if any, entered into by Seller with Buyer or any of its Affiliates in respect of any Purchased Asset shall be terminated contemporaneously with the repurchase of such Purchased Asset on the Repurchase Date therefor.

(s) Seller shall:

(i) not, unless it shall have provided Buyer thirty (30) days’ prior written notice of such change and shall have first taken all action required by Buyer for the purpose of perfecting or protecting the lien and security interest of Buyer established hereunder, (A) cause or permit any change to be made to its name, organizational identification number, identity or corporate structure, (B) cause or permit any change to its jurisdiction of organization, (C) cause or permit the opening of any new chief executive office or the closing any such office of Seller, or (D) cause or permit any change in the places where the books and records pertaining to the Purchased Assets are held;

(ii) pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained; and

(iii) not cause or permit any change of control of Seller without providing Buyer with at least ten (10) Business Days prior written notice thereof.

(t) At any time that a Purchased Asset is no longer an Eligible Asset, Seller shall repurchase such Purchased Asset no later than three (3) Business Days, subject to the applicable cure rights set forth in Article 13(a)(xv) , after receiving notice or gaining knowledge that such Purchased Asset is no longer an Eligible Asset.

ARTICLE 13.

EVENTS OF DEFAULT; REMEDIES

(a) Each of the following events shall constitute an “ Event of Default ” under this Agreement:

(i) Seller or Guarantor shall fail to repurchase Purchased Assets (including, if applicable, any Future Funding Amounts related to a Future Funding Transaction) upon the applicable Repurchase Date;

(ii) Buyer shall fail to receive on any Remittance Date the accreted value of the Price Differential (less any amount of such Price Differential previously paid by Seller to Buyer) (including, without limitation, in the event the Income paid or distributed on or in respect of the Purchased Assets is insufficient to make such payment and Seller does not make such payment or cause such payment to be made) (except that such failure shall not be an Event of Default by Seller if sufficient Income, including Principal Payments (solely to the extent (A) such Principal Payments are otherwise payable to Seller and not Buyer or its Affiliates as of such date in accordance with the terms of this Agreement, (B) there is no outstanding, uncured Margin Deficit or Event of Default and (C) no event shall have occurred that could, in Buyer’s sole determination, lead to a future Margin Deficit or Event of Default (in each case, without regard to any cure periods)), is on deposit in the Depository Account and the Depository fails to remit such funds to Buyer);

(iii) Seller or Guarantor shall fail to cure any Margin Deficit, to the extent such Margin Deficit equals or exceeds the Minimum Transfer Amount, in accordance with Article 4 of this Agreement;

(iv) Seller or Guarantor shall fail to make any payment not otherwise addressed under this Article 13(a) owing to Buyer that has become due, whether by acceleration or otherwise under the terms of this Agreement, which failure is not remedied within three (3) Business Days of notice thereof;

(v) Seller shall default in the observance or performance of any agreement contained in Article 11 of this Agreement and, such default shall not be cured within five (5) Business Days after notice by Buyer to Seller thereof;

(vi) an Act of Insolvency occurs with respect to Seller or Guarantor;

(vii) Seller or Guarantor shall admit to any Person its inability to, or its intention not to, perform any of its obligations hereunder;

(viii) the Custodial Agreement, the Depository Agreement or any other Transaction Document or a replacement therefor reasonably acceptable to Buyer shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by Seller;

(ix) Guarantor shall be in default under (i) any Indebtedness of Guarantor, which default (1) involves the failure to pay a matured obligation in excess of $50,000,000 with respect to Guarantor or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness, if the aggregate amount of the Indebtedness in respect of which such default or defaults shall have occurred is at least $50,000,000 with respect to Guarantor; or (ii) any other material contract to which Guarantor is a party which default (1) involves the failure to pay a matured obligation of at least $50,000,000 or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary of such contract if the aggregate amount of such obligations is $50,000,000 with respect to Guarantor;

(x) (i) Seller or an ERISA Affiliate shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan that is not exempt from such Sections of ERISA and the Code, (ii) any material “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of Seller or any ERISA Affiliate, (iii) a Reportable Event (as referenced in Section 4043(b)(3) of ERISA) shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of Buyer, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Plan shall terminate for purposes of Title IV of ERISA, (v) Seller or any ERISA Affiliate shall, or in the reasonable opinion of Buyer is likely to, incur any liability in connection with a withdrawal from, or the insolvency or reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect;

(xi) either (A) the Transaction Documents shall for any reason not cause, or shall cease to cause, Buyer to be the owner free of any adverse claim of any of the Purchased Assets, and such condition is not cured by Seller within five (5) Business Days after notice thereof from Buyer to Seller, or (B) if a Transaction is recharacterized as a secured financing, and the Transaction Documents with respect to any Transaction shall for any reason cease to create and maintain a valid first priority security interest in favor of Buyer in any of the Purchased Assets and the same is not cured within five (5) Business Days;

(xii) an “Event of Default,” “Termination Event,” “Potential Event of Default” or other default or breach, however denominated, occurs under any Hedging Transaction on the part of Seller, or the counterparty to Seller on any such Hedging Transaction with a Qualified Hedge Counterparty ceases to be a Qualified Hedge Counterparty, that is otherwise not cured within any applicable cure period thereunder or, if no cure period exists thereunder, which is not cured by Seller within five (5) Business Days after notice thereof from an Affiliated Hedge Counterparty or Qualified Hedge Counterparty to Seller;

(xiii) any governmental, regulatory, or self-regulatory authority shall have taken any action to remove, limit, restrict, suspend or terminate the rights, privileges, or operations of Seller or Guarantor, which suspension has a Material Adverse Effect in the determination of Buyer and that is not cured by Seller or Guarantor, as applicable, within five (5) Business Days after notice thereof from Buyer to Seller or Guarantor, as applicable;

(xiv) any condition shall exist that constitutes a Material Adverse Effect in Buyer’s sole discretion exercised in good faith that is not cured by Seller or Guarantor, as applicable, within three (3) Business Days after notice thereof from Buyer to Seller or Guarantor, as applicable;

(xv) any representation made by Seller to Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated (other than the representations and warranties of Seller set forth in Articles 10(b)(xxi) or 10(b)(xxii) ) by Seller, which shall not be considered an Event of Default if incorrect or untrue in any material respect, provided Seller terminates the related Transaction, as applicable, and repurchases the related Purchased Assets on an Early Repurchase Date no later than three (3) Business Days after receiving notice of such incorrect or untrue representation; unless Seller shall have made any such representation with knowledge that it was materially incorrect or untrue at the time made; provided , however , if Buyer and Seller have agreed in good faith that (i) a breach of a representation is curable, (ii) such breach is non-monetary in nature and (iii) such breach is related only to the Purchased Assets, Seller shall have a fifteen (15) Business Day period to cure the breach after notice thereof from Buyer. To the extent the breach remains uncured after such fifteen (15) Business Day period, Seller must immediately repurchase the related Purchased Asset within one (1) Business Day; provided , that if Buyer determines that Seller is diligently seeking a cure to such breach, Buyer may, in its sole and absolute discretion, provide Seller with an additional fifteen (15) Business Day period to cure such breach, after which Seller must immediately repurchase the related Purchased Asset if its attempt to cure such breach by the expiration of such second cure period is unsuccessful;

(xvi) a final non-appealable judgment by any competent court in the United States of America for the payment of money (a) rendered against Seller in an amount greater than $250,000 or (b) rendered against Guarantor in an amount greater than $50,000,000, and remained undischarged and unpaid for a period of sixty (60) days, during which period execution of such judgment is not effectively stayed by bonding over or other means acceptable to Buyer;

(xvii) if Seller shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement, other than as specifically otherwise referred to in this definition of “ Event of Default ”, and such breach or failure to perform is not remedied within the earlier of seven (7) days after (a) delivery of notice thereof to Seller by Buyer, or (b) actual knowledge on the part of Seller of such breach or failure to perform;

(xviii) if the Guarantor shall breach or fail to perform any of the terms, covenants, obligations or conditions of the Guarantee Agreement, and such breach or failure to perform is not remedied within the earlier of three (3) Business Days after (a) delivery of notice thereof to any Guarantor by Buyer, or (b) actual knowledge on the part of any Guarantor of such breach or failure to perform; and

(xix) the Guarantee Agreement or a replacement therefor acceptable to Buyer shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by either Guarantor or Seller.

(b) After the occurrence and during the continuance of an Event of Default, Seller hereby appoints Buyer as attorney-in-fact of Seller for the purpose of carrying out the provisions of this Agreement and taking any action and executing or endorsing any instruments that Buyer may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. If an Event of Default shall occur and be continuing with respect to Seller, the following rights and remedies shall be available to Buyer:

(i) At the option of Buyer, exercised by written notice to Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency with respect to Seller or Guarantor), the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (the date on which such option is exercised or deemed to have been exercised being referred to hereinafter as the “ Accelerated Repurchase Date ”).

(ii) If Buyer exercises or is deemed to have exercised the option referred to in Article 13(b)(i) of this Agreement:

(A) Seller’s obligations hereunder to repurchase all Purchased Assets shall become immediately due and payable on and as of the Accelerated Repurchase Date; and

(B) to the extent permitted by applicable law, the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall be increased by the aggregate amount obtained by daily application of, on a 360-day per year basis for the actual number of days during the period from and including the Accelerated Repurchase Date to but excluding the date of payment of the Repurchase Price (as so increased), (x) the Pricing Rate for such Transaction multiplied by (y) the Repurchase Price for such Transaction (decreased by (I) any amounts actually remitted to Buyer by the Depository or Seller from time to time pursuant to Article 5 of this Agreement and applied to such Repurchase Price, and (II) any amounts applied to the Repurchase Price pursuant to Article 13(b)(iii) of this Agreement); and

(C) the Custodian shall, upon the request of Buyer, deliver to Buyer all instruments, certificates and other documents then held by the Custodian relating to the Purchased Assets.

(iii) Upon the occurrence of an Event of Default with respect to Seller, Buyer may (A) immediately sell, at a public or private sale in a commercially reasonable manner and at such price or prices as Buyer may deem satisfactory any or all of the Purchased Assets, and/or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Assets, to give Seller credit for such Purchased Assets in an amount equal to the Market Value of such Purchased Assets against the aggregate unpaid Repurchase Price for such Purchased Assets and any other amounts owing by Seller under the Transaction Documents. The proceeds of any disposition of Purchased Assets effected pursuant to this Article 13(b)(iii) shall be applied, (v) first, to the costs and expenses incurred by Buyer in connection with Seller’s default; (w) second, to actual, out-of-pocket expenses, including, but not limited to, costs of cover and/or Hedging Transactions, if any; (x) third, to the Repurchase Price; (y) fourth, to any Breakage Costs; and (z) fifth, to return any excess to Seller. Seller may bid in any public or private sale of the Purchased Assets.

(iv) The parties recognize that it may not be possible to purchase or sell all of the Purchased Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets may not be liquid. In view of the nature of the Purchased Assets, the parties agree that liquidation of a Transaction or the Purchased Assets does not require a public purchase or sale and that a good faith private purchase or sale shall be deemed to have been made in a commercially reasonable manner. Accordingly, Buyer may elect, in its sole discretion, the time and manner of liquidating any Purchased Assets, and nothing contained herein shall (A) obligate Buyer to liquidate any Purchased Assets on the occurrence and during the continuance of an Event of Default or to liquidate all of the Purchased Assets in the same manner or on the same Business Day or (B) constitute a waiver of any right or remedy of Buyer.

(v) Seller shall be liable to Buyer for (A) the amount of all actual out-of-pocket expenses, including reasonable legal fees and expenses, actually incurred by Buyer in connection with or as a consequence of an Event of Default with respect to Seller and (B) all costs incurred by Buyer in connection with Hedging Transactions in the event that Seller, from and after an Event of Default, takes any action to impede or otherwise affect Buyer’s remedies under this Agreement.

(vi) Buyer shall have, in addition to its rights and remedies under the Transaction Documents, all of the rights and remedies provided by applicable federal, state, foreign (where relevant), and local laws (including, without limitation, if the Transactions are recharacterized as secured financings, the rights and remedies of a secured party under the UCC of the State of New York, to the extent that the UCC is applicable, and the right to offset any mutual debt and claim), in equity, and under any other agreement between Buyer and Seller. Without limiting the generality of the foregoing, Buyer shall be entitled to set off the proceeds of the liquidation of the Purchased Assets against all of Seller’s obligations to Buyer under this Agreement, without prejudice to Buyer’s right to recover any deficiency.

(vii) Subject to the notice and cure periods contained herein, where applicable, Buyer may exercise any or all of the remedies available to Buyer immediately upon the occurrence of an Event of Default with respect to Seller and at any time during the continuance thereof. All rights and remedies arising under the Transaction Documents, as amended from time to time, are cumulative and not exclusive of any other rights or remedies that Buyer may have.

(viii) Buyer may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives any defenses Seller might otherwise have to require Buyer to enforce its rights by judicial process. Seller also waives, to the extent permitted by law, any defense Seller might otherwise have arising from the use of nonjudicial process, disposition of any or all of the Purchased Assets, or from any other election of remedies. Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s length.

ARTICLE 14.

SINGLE AGREEMENT

Buyer and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.

ARTICLE 15.

RECORDING OF COMMUNICATIONS

EACH OF BUYER AND SELLER SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) FROM TIME TO TIME TO MAKE OR CAUSE TO BE MADE TAPE RECORDINGS OF COMMUNICATIONS BETWEEN ITS EMPLOYEES, IF ANY, AND THOSE OF THE OTHER PARTY WITH RESPECT TO TRANSACTIONS; PROVIDED , HOWEVER , THAT SUCH RIGHT TO RECORD COMMUNICATIONS SHALL BE LIMITED TO COMMUNICATIONS OF EMPLOYEES TAKING PLACE ON THE TRADING FLOOR OF THE APPLICABLE PARTY. EACH OF BUYER AND SELLER HEREBY CONSENTS TO THE ADMISSIBILITY OF SUCH TAPE RECORDINGS IN ANY COURT, ARBITRATION, OR OTHER PROCEEDINGS, AND AGREES THAT A DULY AUTHENTICATED TRANSCRIPT OF SUCH A TAPE RECORDING SHALL BE DEEMED TO BE A WRITING CONCLUSIVELY EVIDENCING THE PARTIES’ AGREEMENT.

ARTICLE 16.

NOTICES AND OTHER COMMUNICATIONS

Unless otherwise provided in this Agreement, all notices, consents, approvals and requests required or permitted hereunder shall be given in writing and shall be effective for all purposes if hand delivered or sent by (a) hand delivery, with proof of delivery, (b) certified or registered United States mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of delivery or (d) by telecopier (with answerback acknowledged) provided that such telecopied notice must also be delivered by one of the means set forth in (a), (b) or (c) above, to the address specified in Annex I hereto or at such other address and person as shall be designated from time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided for in this Article 16 . A notice shall be deemed to have been given: (w) in the case of hand delivery, at the time of delivery, (x) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day, (y) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day, or (z) in the case of telecopier, upon receipt of answerback confirmation, provided that such telecopied notice was also delivered as required in this Article 16 . A party receiving a notice that does not comply with the technical requirements for notice under this Article 16 may elect to waive any deficiencies and treat the notice as having been properly given.

ARTICLE 17.

ENTIRE AGREEMENT; SEVERABILITY

ARTICLE 18.

NON-ASSIGNABILITY

(a) Subject to Article 18(b) below, Seller may not assign any of its rights or obligations under this Agreement without the prior written consent of Buyer (not to be unreasonably withheld or delayed) and any attempt by Seller to assign any of its rights or obligations under this Agreement without the prior written consent of Buyer shall be null and void. Buyer may, upon notice to Seller, without consent of Seller, sell to one or more banks, financial institutions or other entities (“ Participants ”) participating interests in any Transaction, its interest in the Purchased Assets, or any other interest of Buyer under this Agreement. Buyer may, at any time and from time to time, assign to any Person (an “ Assignee ” and together with Participants, each a “ Transferee ” and collectively, the “ Transferees ”) all or any part of its rights its interest in the Purchased Assets, or any other interest of Buyer under this Agreement, except that, prior to an Event of Default, no such Transferee shall be one of the Prohibited Transferees set forth on Exhibit IX hereto. Seller and Guarantor agree to cooperate with Buyer in connection with any such assignment, transfer or sale of participating interest, and to enter into such restatements of, and amendments, supplements and other modifications to, this Agreement in order to give effect to such assignment, transfer or sale.

(b) Title to all Purchased Assets and Purchased Items shall pass to Buyer and Buyer shall have free and unrestricted use of all Purchased Assets. Nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Assets and Purchased Items or otherwise selling, pledging, repledging, transferring, hypothecating, or rehypothecating the Purchased Assets and Purchased Items, all on terms that Buyer may determine in its sole discretion; provided , however , that Buyer shall (i) provide Seller with the identity of any third party involved in such transaction, (ii) transfer the Purchased Assets to Seller on the applicable Repurchase Date free and clear of any pledge, lien, security interest, encumbrance, charge or other adverse claim on any of the Purchased Assets and (iii) credit Income and principal payments to Seller in accordance with Article 5 hereof. Nothing contained in this Agreement shall obligate Buyer to segregate any Purchased Assets or Purchased Items transferred to Buyer by Seller.

(c) In the event that Buyer sells a participating interest in any Transaction, or assigns any of its rights or interests in the Purchased Asset or other interests under this Agreement, Buyer shall retain certain decision-making rights and duties under this Agreement, including, among other things, that Buyer shall have the right to approve in its sole discretion any future Transactions and Future Funding Transactions.

ARTICLE 19.

GOVERNING LAW

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

ARTICLE 20.

NO WAIVERS, ETC.

No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pursuant to Articles 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date.

ARTICLE 21.

USE OF EMPLOYEE PLAN ASSETS

(a) If assets of an employee benefit plan subject to any provision of ERISA are intended to be used by either party hereto (the “ Plan Party ”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed.

(b) Subject to the last sentence of subparagraph (a) of this Article 21 , any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition.

(c) By entering into a Transaction, pursuant to this Article 21 , Seller shall be deemed (i) to represent to Buyer that since the date of Seller’s latest such financial statements, there has been no material adverse change in Seller’s financial condition that Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is Seller in any outstanding Transaction involving a Plan Party.

ARTICLE 22.

INTENT

(a) The parties recognize that each Transaction is a “repurchase agreement” as that term is defined in Section 101(47) of Title 11 of the United States Code, as amended (except insofar as the type of Assets subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

(b) It is understood that either party’s right to liquidate Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Article 13 hereof is a contractual right to liquidate such Transaction as described in Sections 555, 559 and 561 of Title 11 of the United States Code, as amended.

(c) The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“ FDIA ”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in the FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

(d) It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“ FDICIA ”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “ financial institution ” as that term is defined in FDICIA).

(e) It is understood that this Agreement constitutes a “master netting agreement” as defined in Section 101(38A) of Title 11 of the United States Code, as amended, and as used in Section 561 of Title 11 of the United States Code, as amended.

(f) It is the intention of the parties that, for U.S. Federal, state and local income and franchise tax purposes and for accounting purposes, each Transaction constitute a financing, and that Seller be (except to the extent that Buyer shall have exercised its remedies following an Event of Default) the owner of the Purchased Assets for such purposes. Unless prohibited by applicable law, Seller and Buyer agree to treat the Transactions as described in the preceding sentence on any and all filings with any U.S. Federal, state, or local taxing authority.

ARTICLE 23.

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

The parties acknowledge that they have been advised that:

(a) in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“ SEC ”) under Section 15 of the Securities Exchange Act of 1934 (“ 1934 Act ”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“ SIPA ”) do not protect the other party with respect to any Transaction hereunder;

(b) in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and

(c) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.

ARTICLE 24.

CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

(a) Each party irrevocably and unconditionally (i) submits to the non-exclusive jurisdiction of any United States Federal or New York State court sitting in Manhattan, and any appellate court from any such court, solely for the purpose of any suit, action or proceeding brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement and (ii) waives, to the fullest extent it may effectively do so, any defense of an inconvenient forum to the maintenance of such action or proceeding in any such court and any right of jurisdiction on account of its place of residence or domicile.

(b) To the extent that either party has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set off or any legal process (whether service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, such party hereby irrevocably waives and agrees not to plead or claim such immunity in respect of any action brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement.

(c) The parties hereby irrevocably consent to the service of any summons and complaint and any other process by the mailing of copies of such process to them at their respective address specified herein. The parties hereby agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Article 24 shall affect the right of Buyer to serve legal process in any other manner permitted by law or affect the right of Buyer to bring any action or proceeding against Seller or its property in the courts of other jurisdictions.

(d) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.

ARTICLE 25.

NO RELIANCE

Each of Buyer and Seller hereby acknowledges, represents and warrants to the other that, in connection with the negotiation of, the entering into, and the performance under, the Transaction Documents and each Transaction thereunder:

(a) It is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the other party to the Transaction Documents, other than the representations expressly set forth in the Transaction Documents;

(b) It has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and it has made its own investment, hedging and trading decisions (including decisions regarding the suitability of any Transaction) based upon its own judgment and upon any advice from such advisors as it has deemed necessary and not upon any view expressed by the other party;

(c) It is a sophisticated and informed Person that has a full understanding of all the terms, conditions and risks (economic and otherwise) of the Transaction Documents and each Transaction thereunder and is capable of assuming and willing to assume (financially and otherwise) those risks;

(d) It is entering into the Transaction Documents and each Transaction thereunder for the purposes of managing its borrowings or investments or hedging its underlying assets or liabilities and not for purposes of speculation; and

(e) It is not acting as a fiduciary or financial, investment or commodity trading advisor for the other party and has not given the other party (directly or indirectly through any other Person) any assurance, guarantee or representation whatsoever as to the merits (either legal, regulatory, tax, business, investment, financial accounting or otherwise) of the Transaction Documents or any Transaction thereunder.

ARTICLE 26.

INDEMNITY

Seller hereby agrees to indemnify Buyer, Buyer’s designee, Buyer’s Affiliates and each of its officers, directors, employees and agents (“ Indemnified Parties ”) from and against any and all actual out-of-pocket liabilities, obligations, losses, damages, penalties, actions, judgments, suits, taxes (including stamp, excise, sales or other taxes that may be payable or determined to be payable with respect to any of the Purchased Assets, Purchased Items or Collateral or in connection with any of the transactions contemplated by this Agreement and the documents delivered in connection herewith, other than income, withholding or other taxes imposed upon Buyer), fees, costs, expenses (including attorneys fees and disbursements) or disbursements (all of the foregoing, collectively “ Indemnified Amounts ”) that may at any time (including, without limitation, such time as this Agreement shall no longer be in effect and the Transactions shall have been repaid in full) be imposed on or asserted against any Indemnified Party in any way whatsoever arising out of or in connection with, or relating to, this Agreement or any Transactions hereunder or any action taken or omitted to be taken by any Indemnified Party under or in connection with any of the foregoing other than, in each case, any amounts that fall within the above definition but result from the gross negligence, bad faith, willful misconduct, or breach of this Agreement by any Indemnified Party. Without limiting the generality of the foregoing, Seller agrees to hold Buyer harmless from and indemnify Buyer against all Indemnified Amounts with respect to all Purchased Assets relating to or arising out of any violation or alleged violation of any environmental law, rule or regulation or any consumer credit laws, including without limitation ERISA, the Truth in Lending Act and/or the Real Estate Settlement Procedures Act other than those resulting from the gross negligence, bad faith, willful misconduct, or breach of this Agreement by any Indemnified Party. In any suit, proceeding or action brought by Buyer in connection with any Purchased Asset for any sum owing thereunder, or to enforce any provisions of any Purchased Asset, Seller will save, indemnify and hold Buyer harmless from and against all expense (including reasonable attorney’s fees), loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from Seller. Seller also agrees to reimburse Buyer as and when billed by Buyer for all Buyer’s reasonable costs and out-of-pocket expenses incurred in connection with Buyer’s due diligence reviews with respect to the Purchased Assets (including, without limitation, those incurred pursuant to Article 27 and Article 3 ) which, for Senior Mortgage Loans shall not exceed the applicable Legal Fee Cap (including all Pre-Purchase Legal Expenses, even if the underlying prospective Transaction for which they were incurred does not take place for any reason). Seller hereby acknowledges that, the obligation of Seller hereunder is a recourse obligation of Seller.

ARTICLE 27.

DUE DILIGENCE

Seller acknowledges that Buyer has the right to perform continuing due diligence reviews with respect to the Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and Seller agrees that upon reasonable prior notice to Seller, Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Purchased Asset Files, Servicing Records and any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession or under the control of Seller, any other servicer or subservicer and/or the Custodian. Seller agrees to reimburse Buyer for any and all out-of-pocket costs and expenses incurred by Buyer with respect to continuing due diligence on the Purchased Assets during the term of this Agreement, which shall be paid by Seller to Buyer within (10) days after receipt of an invoice therefor. Seller also shall make available to Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Purchased Asset Files and the Purchased Assets. Without limiting the generality of the foregoing, Seller acknowledges that Buyer may enter into Transactions with Seller based solely upon the information provided by Seller to Buyer and the representations, warranties and covenants contained herein, and that Buyer, at its option, has the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Assets. Buyer may underwrite such Purchased Assets itself or engage a third party underwriter to perform such underwriting. Seller agrees to cooperate with Buyer and any third party underwriter in connection with such underwriting, including, but not limited to, providing Buyer and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession, or under the control, of Seller. Seller further agrees that Seller shall reimburse Buyer for any and all reasonable attorneys’ fees, costs and expenses incurred by Buyer in connection with continuing due diligence on Eligible Assets and Purchased Assets.

ARTICLE 28.

SERVICING

(a) Notwithstanding the purchase and sale of the Purchased Assets hereby, Seller, Servicer or a third party servicer reasonably approved by Buyer shall service the Purchased Assets that are Eligible Loans (such Purchased Assets, “ Serviced Assets ”) for the benefit of Buyer and, if Buyer shall exercise its rights to pledge or hypothecate the Serviced Assets prior to the Repurchase Date pursuant to Article 8 , for the benefit of Buyer’s assigns. Seller shall service or cause Servicer to service the Serviced Assets at Seller’s sole cost and for the benefit of Buyer in accordance with Accepted Servicing Practices approved by Buyer in the exercise of its reasonable business judgment and maintained by other prudent mortgage or mezzanine lenders with respect to mortgage and/or mezzanine loans similar to the Serviced Assets, provided , however , that the obligations of Seller to service any of the Serviced Assets shall cease, at Buyer’s option, upon the earliest of (i) an Event of Default, or (ii) the delivery by Buyer to Seller of at least five (5) days’ prior written notice of the decision by Buyer to transfer the servicing rights of any or all of the Serviced Assets to either Servicer or another third party servicer selected by Buyer. In either case, Seller shall take all actions necessary to effectuate the underlying servicing transfer as expeditiously as possible. Notwithstanding the foregoing, neither Seller nor Servicer shall take any material action or effect any modification or amendment to any Purchased Asset without first having given prior notice thereof to Buyer in each such instance and receiving the prior written consent of Buyer.

(b) Seller agrees that Buyer is the owner of all servicing records, including but not limited to any and all servicing agreements and pooling and servicing agreements (including, without limitation any “Interim Servicing Agreement” with Servicer) (collectively, the “ Servicing Agreements ”), files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of Purchased Assets (the “ Servicing Records ”) so long as the Purchased Assets are subject to this Agreement. Seller grants Buyer a security interest in all servicing fees and rights relating to the Purchased Assets and all Servicing Records to secure the obligation of Seller or its designee to service in conformity with this Article 28 and any other obligation of Seller to Buyer. Seller covenants to safeguard such Servicing Records and to deliver them promptly to Buyer or its designee (including the Custodian) at Buyer’s request.

(c) Upon the occurrence and during the continuance of an Event of Default, Buyer may, in its sole discretion, (i) sell its right to the Purchased Assets on a servicing released basis or (ii) terminate Seller, Servicer or any sub-servicer of the Purchased Assets with or without cause, in each case without payment of any termination fee.

(d) Seller shall not employ sub-servicers to service the Purchased Assets without the prior written approval of Buyer not to be unreasonably withheld. If the Purchased Assets are serviced by a sub-servicer, Seller shall irrevocably assign all rights, title and interest (if any) in the Servicing Agreements in the Purchased Assets to Buyer.

(e) Seller shall cause Servicer or any sub-servicers engaged by Seller to execute a letter agreement with Buyer acknowledging Buyer’s security interest and agreeing that it shall deposit all Income with respect to the Purchased Assets in the Depository Account, and so long as a Purchased Asset is subject to a Transaction, following notice from Buyer to Seller of an Event of Default under this Agreement, Servicer shall take no action under this Agreement with regard to such Purchased Asset other than as specifically directed by Buyer.

(f) The payment of servicing fees shall be subordinate to payment of amounts outstanding under any Transaction and this Agreement.

ARTICLE 29.

MISCELLANEOUS

(a) All rights, remedies and powers of Buyer hereunder and in connection herewith are irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all other rights, remedies and powers of Buyer whether under law, equity or agreement. In addition to the rights and remedies granted to it in this Agreement, to the extent this Agreement is determined to create a security interest, Buyer shall have all rights and remedies of a secured party under the UCC.

(b) The Transaction Documents may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.

(c) The headings in the Transaction Documents are for convenience of reference only and shall not affect the interpretation or construction of the Transaction Documents.

(d) Without limiting the rights and remedies of Buyer under the Transaction Documents, Seller shall pay Buyer’s reasonable actual out-of-pocket costs and expenses, including reasonable fees and expenses of accountants, attorneys and advisors, incurred in connection with the preparation, negotiation, execution and consummation of, and any amendment, supplement or modification to, the Transaction Documents and the Transactions thereunder, whether or not such Transaction Document (or amendment thereto) or Transaction is ultimately consummated. Seller agrees to pay Buyer on demand all costs and expenses (including reasonable expenses for legal services of every kind) of any subsequent enforcement of any of the provisions hereof, or of the performance by Buyer of any obligations of Seller in respect of the Purchased Assets, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement in respect of any of the Collateral or Purchased Items and for the custody, care or preservation of the Collateral or Purchased Items (including insurance costs) and defending or asserting rights and claims of Buyer in respect thereof, by litigation or otherwise. In addition, Seller agrees to pay Buyer on demand all reasonable costs and expenses (including reasonable expenses for legal services) incurred in connection with the maintenance of the Depository Account and registering the Collateral and Purchased Items in the name of Buyer or its nominee. All such expenses shall be recourse obligations of Seller to Buyer under this Agreement.

(e) In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of such rights, Seller hereby grants to Buyer and its Affiliates a right of offset, to secure repayment of all amounts owing to Buyer or its Affiliates by Seller under the Transaction Documents, upon any and all monies, securities, collateral or other property of Seller and the proceeds therefrom, now or hereafter held or received by Buyer or its Affiliates or any entity under the control of Buyer or its Affiliates and its respective successors and assigns (including, without limitation, branches and agencies of Buyer, wherever located), for the account of Seller, whether for safekeeping, custody, pledge, transmission, collection, or otherwise, and also upon any and all deposits (general or specified) and credits of Seller at any time existing. Buyer and its Affiliates are hereby authorized at any time and from time to time upon the occurrence and during the continuance of an Event of Default, without notice to Seller, to offset, appropriate, apply and enforce such right of offset against any and all items hereinabove referred to against any amounts owing to Buyer or its Affiliates by Seller under the Transaction Documents, irrespective of whether Buyer or its Affiliates shall have made any demand hereunder and although such amounts, or any of them, shall be contingent or unmatured and regardless of any other collateral securing such amounts. Seller shall be deemed directly indebted to Buyer and its Affiliates in the full amount of all amounts owing to Buyer and its Affiliates by Seller under the Transaction Documents, and Buyer and its Affiliates shall be entitled to exercise the rights of offset provided for above. ANY AND ALL RIGHTS TO REQUIRE BUYER OR ITS AFFILIATES TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL OR PURCHASED ITEMS THAT SECURE THE AMOUNTS OWING TO BUYER OR ITS AFFILIATES BY SELLER UNDER THE TRANSACTION DOCUMENTS, PRIOR TO EXERCISING THEIR RIGHT OF OFFSET WITH RESPECT TO SUCH MONIES, SECURITIES, COLLATERAL, DEPOSITS, CREDITS OR OTHER PROPERTY OF SELLER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER.

(f) Each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or be invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

(g) This Agreement contains a final and complete integration of all prior expressions by the parties with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties with respect to such subject matter, superseding all prior oral or written understandings.

(h) The parties understand that this Agreement is a legally binding agreement that may affect such party’s rights. Each party represents to the other that it has received legal advice from counsel of its choice regarding the meaning and legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received from it.

(i) Should any provision of this Agreement require judicial interpretation, it is agreed that a court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against any Person by reason of the rule of construction that a document is to be construed more strictly against the Person who itself or through its agent prepared the same, it being agreed that all parties have participated in the preparation of this Agreement.

(j) Wherever pursuant to this Agreement, Buyer exercises any right given to it to consent or not consent, or to approve or disapprove, or any arrangement or term is to be satisfactory to, Buyer in its sole discretion, Buyer shall decide to consent or not consent, or to approve or disapprove or to decide that arrangements or terms are satisfactory or not satisfactory, in its sole and absolute discretion and such decision by Buyer shall be final and conclusive.

(k) Each Affiliated Hedge Counterparty is an intended third party beneficiary of this Agreement and the parties hereto agree that this Agreement shall not be amended or otherwise modified without the written consent of each Affiliated Hedge Counterparty, such consent not to be unreasonably withheld.

(l) Notwithstanding anything to the contrary contained herein or in any Repurchase Document, Guarantor and any Affiliate of Guarantor shall be entitled to disclose any and all terms of any Repurchase Document, including the public filing thereof, if the Guarantor, in its sole discretion, deems it necessary or appropriate under the rules or regulations of the Securities and Exchange Commission and/or the New York Stock Exchange.

[REMAINDER OF PAGE LEFT BLANK]

IN WITNESS WHEREOF, the parties have executed this Agreement as a deed as of the day first written above.

BUYER :

JPMORGAN CHASE BANK, N.A., a national banking association

By: /s/ Kanul K. Singh

Name: Kunal K. Singh

Title: Vice President

SELLER :

NRFC JP HOLDINGS, LLC , a Delaware limited liability company

By: /s/ Daniel R. Gilbert

Name: Daniel R. Gilbert

Title: Executive Vice President

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, David T. Hamamoto, certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of NorthStar Realty Finance Corp.;

	2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: August 9, 2007	By:	/s/ David T. Hamamoto
		David T. Hamamoto
		Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Andrew C. Richardson, certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of NorthStar Realty Finance Corp.;

	2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: August 9, 2007	By:	/s/ Andrew C. Richardson
		Andrew C. Richardson
		Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION OF CEO PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of NorthStar Realty Finance Corp. (the “Company”) for the quarterly period ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), David T. Hamamoto, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 9, 2007	By:	/s/ David T. Hamamoto
		David T. Hamamoto
		Chief Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2

CERTIFICATION OF CFO PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of NorthStar Realty Finance Corp. (the “Company”) for the quarterly period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Andrew C. Richardson, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 9, 2007	By:	/s/ Andrew C. Richardson
		Andrew C. Richardson
		Chief Financial Officer


Maryland		11-3707493
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)


Large Accelerated Filer o		Accelerated Filer x		Non-accelerated Filer o


Index		Page
Part I.	Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2007 (unaudited) and December 31, 2006	1
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2007 and June 30, 2006	2
	Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2007 and June 30, 2006	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and June 30, 2006	4
	Notes to the Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	41
Part II.	Other Information
Item 4.	Submission of Matters to a Vote of Security Holders	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
Signatures		48


	June 30, 2007			December 31, 2006
	(Unaudited)
ASSETS
Cash and cash equivalents	$	41,386		$	44,753
Restricted cash		385,007			134,237
Operating real estate, net		1,052,710			468,608
Available for sale securities, at fair value		1,368,125			788,467
CDO deposit and warehouse agreements		15,362			32,649
Collateral held by broker		12,479			—
Real estate debt investments		2,210,387			1,571,510
Corporate loan investments		258,101			—
Investments in and advances to unconsolidated ventures		11,148			11,845
Receivables, net of allowance of $6 and $9 in 2007 and 2006, respectively		34,231			17,477
Unbilled rents receivable		4,196			2,828
Derivative instruments, at fair value		14,708			958
Receivables – related parties		387			378
Deferred costs and intangible assets, net		140,618			90,200
Other assets		34,733			21,710
Total assets	$	5,583,578		$	3,185,620
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgage notes and loans payable	$	844,499		$	390,665
Exchangeable senior notes		172,500			—
CDO bonds payable		2,411,845			1,682,229
Credit facilities		692,007			16,000
Secured term loan		101,513			—
Liability to subsidiary trusts issuing preferred securities		286,258			213,558
Repurchase obligations		59,622			80,261
Securities sold, not yet purchased		11,918			—
Obligations under capital leases		3,496			3,454
Accounts payable and accrued expenses		28,104			20,025
Escrow deposits payable		84,514			58,478
Derivative liability, at fair value		6,031			16,012
Other liabilities		41,663			22,308
Total liabilities		4,743,970			2,502,990
Minority interest in operating partnership		12,593			7,655
Minority interest in joint ventures		16,842			15,204
Stockholders’ Equity:
8.75% Series A preferred stock, $0.01 par value, $25 liquidation preference per share, 2,400,000 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively		57,867			57,867
8.25% Series B preferred stock, $0.01 par value, $25 liquidation preference per share, 7,600,000 and 0 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively		183,516			—
Common stock, $0.01 par value, 500,000,000 shares authorized, 61,582,344 and 61,237,781 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively		615			612
Additional paid-in capital		593,949			590,035
Retained earnings (deficit)		(9,665	)		16,570
Accumulated other comprehensive loss		(16,109	)		(5,313	)
Total stockholders’ equity		810,173			659,771
Total liabilities and stockholders’ equity	$	5,583,578		$	3,185,620


	Three Months Ended June 30, 2007			Three Months Ended June 30, 2006			Six Months Ended June 30, 2007			Six Months Ended June 30, 2006
Revenues and other income:
Interest income	$	79,900		$	26,296		$	138,204		$	45,287
Interest income – related parties		2,966			2,892			5,931			5,819
Rental and escalation income		21,871			7,998			41,203			14,431
Advisory and management fee income – related parties		1,394			1,490			2,815			2,993
Other revenue		1,329			437			3,561			2,353
Total revenues		107,460			39,113			191,714			70,883
Expenses:
Interest expense		64,546			19,833			112,103			34,165
Real estate properties – operating expenses		2,869			2,016			5,626			3,528
General and administrative:
Salaries and equity based compensation ⁽¹⁾		8,859			5,979			17,650			9,955
Auditing and professional fees		1,298			641			4,003			2,291
Other general and administrative		3,900			2,014			6,933			3,405
Total general and administrative		14,057			8,634			28,586			15,651
Depreciation and amortization		7,841			2,830			14,431			5,325
Total expenses		89,313			33,313			160,746			58,669
Income from operations		18,147			5,800			30,968			12,214
Equity in earnings of unconsolidated/uncombined ventures		(600	)		104			(584	)		196
Unrealized gain (loss) on investments and other		(887	)		(459	)		(8,178	)		1,624
Realized gain (loss) on investments and other		(14	)		566			2,527			798
Income from continuing operations before minority interest		16,646			6,011			24,733			14,832
Minority interest in operating partnership		(779	)		(851	)		(1,155	)		(2,249	)
Minority interest in joint ventures		(136	)		—			(136	)		—
Income from continuing operations		15,731			5,160			23,442			12,583
Income (loss) from discontinued operations, net of minority interest		(8	)		84			(56	)		107
Gain on sale from discontinued operations, net of minority interest		—			—			—			141
Gain on sale of joint venture interest, net of minority interest		—			—			—			279
Net income		15,723			5,244			23,386			13,110
Preferred stock dividends		(4,758	)		—			(6,071	)		—
Net income available to common shareholders	$	10,965		$	5,244		$	17,315		$	13,110
Net income per share from continuing operations (basic/diluted)	$	0.18		$	0.15		$	0.28		$	0.39
Income per share from discontinued operations (basic/diluted)		—			—			—			—
Gain on sale of discontinued operations and joint venture interest (basic/diluted)		—			—			—			0.01
Net income available to common shareholders	$	0.18		$	0.15		$	0.28		$	0.40
Weighted average number of shares of common stock:
Basic		61,378,154			34,980,352			61,354,049			32,897,222
Diluted		64,419,056			40,744,276			64,398,513			38,562,576


	Three Months Ended June 30, 2007			Three Months Ended June 30, 2006			Six Months Ended June 30, 2007			Six Months Ended June 30, 2006
Net income available to common shareholders	$	10,965		$	5,244		$	17,315		$	13,110
Unrealized gain (loss) on available for sale securities		(38,372	)		218			(42,108	)		(2,754	)
Change in fair value of derivatives		32,146			632			31,356			2,429
Reclassification adjustment for gains/(losses) included in net income		(27	)		(5	)		(43	)		(5	)
Comprehensive Income	$	4,712		$	6,089		$	6,520		$	12,780


	Six Months Ended June 30, 2007			Six Months Ended June 30, 2006
Net cash provided by operating activities	$	51,776		$	49,023
Cash flows from investing activities:
Acquisition of operating real estate, net		(590,797	)		(78,534	)
Net proceeds from disposition of operating real estate		—			2,168
Real estate debt investments acquisitions/originations		(939,596	)		(523,043	)
Real estate debt investments acquisition costs		(2,489	)		—
Real estate debt investments repayments		276,375			102,013
Deferred lease cost		—			(42	)
Acquisition of available for sale securities		(744,237	)		(508,582	)
Proceeds from disposition of securities available for sale		88,225			—
Available for sale securities repayments		46,508			5,019
Corporate loan investment acquisitions		(258,270	)		—
Corporate loan investment prepayment		169			—
Increase in CDO warehouse deposits		(18,000	)		(18,500	)
Cash receipts from CDO issuer		8,178			20,393
Restricted cash from investing activities		(226,563	)		(60,673	)
Acquisition Deposits		(7,300	)		(2,833	)
Investment in and advances to unconsolidated ventures		(99	)		(8,738	)
Distributions from unconsolidated ventures		247			186
Sale of investment in unconsolidated ventures		—			2,905
Net cash used in investing activities		(2,367,649	)		(1,068,261	)
Cash flows from financing activities:
Collateral held by broker		(12,479	)		—
Securities sold, not yet purchased		28,472			—
Settlement of short sale		(16,370	)		—
Mortgage notes and loan borrowings		435,464			53,412
Proceeds from issuance of CDO bonds		806,960			823,876
Settlement of derivative		—			632
Mortgage principal repayments		(2,615	)		(703	)
Borrowings under credit facilities		1,139,442			437,409
Borrowings under secured term loan		101,513			—
Repayments on credit facilities		(463,435	)		(469,591	)
Repurchase obligation borrowings		22,974			57,234
Repurchase obligation repayments		(43,612	)		(14,011	)
CDO bonds repayment		(53,594	)		—
Other loans payable		13,300			—
Proceeds from exchangeable senior notes		172,500			—
Capital contributions by joint venture		1,562			—
Proceeds from preferred stock offering		190,000			—
Proceeds from common stock offering		564			122,203
Borrowings from subsidiary trusts issuing preferred securities		72,500			50,000
Payment of deferred financing costs		(22,172	)		(16,706	)
Dividends (common and preferred)and distributions		(51,765	)		(20,799	)
Offering costs		(6,703	)		(7,643	)
Net cash provided by financing activities		2,312,506			1,015,313
Net decrease in cash & cash equivalents		(3,367	)		(3,925	)
Cash & cash equivalents – beginning of period		44,753			27,898
Cash & cash equivalents – end of period	$	41,386		$	23,973
Supplemental disclosure of cash flow information:
Supplementary disclosure of non-cash investing and financing activities:
Available for sale securities	$	(5,401	)	$	—
CDO warehouse deposits		24,314			—
Real estate debt investments		22,623			4,294
Operating real estate		(31,864	)		43,150
Mortgage notes and loans payable		20,985			(32,363	)
CDO bonds payable		(23,750	)		—


June 30, 2007	Carrying Value		Gains in Accumulated OCI		Losses in Accumulated OCI			Estimated Fair Value ⁽¹⁾
CMBS	$	982,901	$	1,507	$	(22,222	)	$	962,186
Real estate CDO		86,920		—		(6,806	)		80,114
REIT debt		177,222		552		(1,875	)		175,899
CDO equity		66,992		8,004		(7,787	)		67,209
Corporate CLO		49,332		142		(1,757	)		47,717
Trust preferred securities		35,000		—		—			35,000
Total	$	1,398,367	$	10,205	$	(40,447	)	$	1,368,125


December 31, 2006	Carrying Value		Gains in Accumulated OCI		Losses in Accumulated OCI			Estimated Fair Value ⁽¹⁾
CMBS	$	551,194	$	11,830	$	(1,577	)	$	561,447
Real estate CDO		58,021		812		(1,427	)		57,406
REIT debt		82,836		3,480		—			86,316
CDO equity		67,225		3,605		(2,532	)		68,298
Trust preferred securities		15,000		—		—			15,000
Total	$	774,276	$	19,727	$	(5,536	)	$	788,467


June 30, 2007	Carrying Value ⁽¹⁾		Allocation by Investment Type		Average FixedRate		Average Spread Over LIBOR		Number of Investments
Whole loans, floating rate	$	1,193,006		54.0 %		— %		2.98 %		71
Whole loans, fixed rate		110,959		5.0		9.87		—		13
Subordinate mortgage interests, floating rate		114,376		5.2		—		4.69		12
Mezzanine loans, floating rate		539,606		24.5		—		5.25		22
Mezzanine loan, fixed rate		140,316		6.3		11.23		—		16
Preferred equity, fixed rate		29,792		1.3		9.34		—		2
Other loans — floating		40,890		1.8		—		2.30		5
Other loans — fixed		41,442		1.9		7.32		—		9
Total/Weighted average	$	2,210,387		100.0 %		10.09 %		3.72 %		150


December 31, 2006	Carrying Value ⁽¹⁾		Allocation by Investment Type		Average Fixed Rate		Average Spread Over LIBOR		Number of Investments
Whole loans, floating rate	$	884,340		56.3 %		— %		3.09 %		53
Whole loans, fixed rate		90,343		5.7		8.29		—		10
Subordinate mortgage interests, floating rate		97,345		6.2		—		4.53		9
Mezzanine loans, floating rate		293,825		18.7		—		5.43		12
Mezzanine loan, fixed rate		126,448		8.0		10.85		—		11
Preferred equity, fixed rate		29,271		1.9		9.35		—		2
Other loans — floating		42,195		2.7		—		2.47		7
Other loans — fixed		7,743		0.5		5.53		—		1
Total/Weighted average	$	1,571,510		100.0 %		9.60 %		3.70 %		105


June 30, 2007	Carrying Value		Allocation by Investment Type		Average Spread Over LIBOR/Prime		Number of Investments
First Lien note	$	248,113		96.1 %		2.57 %		67
Second Lien note		9,988		3.9		6.85		4
Total/Weighted average	$	258,101		100 %		2.74 %		71


	Stated Maturity		Interest Rate			Balance at June 30, 2007		Balance at December 31, 2006
Mortgage notes payable (non-recourse)
Chatsworth		5/1/2015		5.65	%	$	43,361	$	43,506
Salt Lake City		9/1/2012		5.16	%		16,407		16,584
EDS		10/8/2015		5.37	%		48,695		49,017
Executive Center		1/1/2016		5.85	%		51,480		51,480
Green Pond		4/11/2016		5.68	%		17,480		17,480
Indianapolis		2/1/2017		6.06	%		28,600		28,600
Wakefield GE		8/30/2010		6.93	%		59,210		51,560
Wakefield – Wachovia		2/11/2014		5.94	%		33,300		33,300
Wakefield – GE – WLK		1/11/2017		6.49	%		160,000		—
Wakefield – GE – Tusc & Harrisburg Harmony		1/11/2017		6.59	%		7,875		—
Wakefield Harmony FNMA		2/1/2017		6.39	%		75,000		—
Wakefield – Grove City		2/1/2038		5.45	%		1,900		—


	Total		Mortgage and Mezzanine Loans		Credit Facilities		Secured Term Loan		Liability to Subsidiary Trusts Issuing Preferred Securities		Exchangeable Senior Notes		Repurchase Obligations		CDO Bonds Payable
2007	$	61,708	$	2,086	$	—	$	—	$	—	$	—	$	59,622	$	—
2008		270,100		5,097		265,003		—		—		—		—		—
2009		10,394		10,394		—		—		—		—		—		—
2010		497,309		70,305		427,004		—		—		—		—		—
2011		115,289		13,776		—		101,513		—		—		—		—
Thereafter		3,613,444		742,841		—		—		286,258		172,500		—		2,411,845
Total	$	4,568,244	$	844,499	$	692,007	$	101,513	$	286,258	$	172,500	$	59,622	$	2,411,845


	2007					2006
	LTIP Grants			Weighted Average Grant Price		LTIP Grants			Weighted Average Grant Price
Balance at beginning of year		1,989			9.38		5,559			9.05
Granted		1,162			16.46		844			9.72
Converted to Common Stock		(116	)		9.00		(4,404	)		9.00
Forfeited		—			—		(10	)		9.00
Balance at end of period		3,035			12.81		1,989			9.38


	For the three months Ended June 30,				For the six months Ended June 30,
	2007		2006		2007		2006
Numerator (Income)
Basic Earnings
Net income available to common share holders	$	10,965	$	5,244	$	17,315	$	13,110
Effect of Dilutive Securities
Income allocated to Minority Interest		779		851		1,155		2,249
Dilutive net income available to share holders	$	11,744	$	6,095	$	18,470	$	15,359
Denominator (Weighted Average Shares)
Basic Earnings:
Shares available to common stockholders		61,378		34,980		61,354		32,898
Effect of Dilutive Securities:
LTIP Units		3,041		5,764		3,045		5,665
Dilutive Shares		64,419		40,744		64,399		38,563


	Notional Amount		Fair Value Net Asset/ (Liability)			Range of Fixed LIBOR			Range of Maturity
Interest rate swaps and basis swaps
As of June 30, 2007	$	1,239,680	$	13,796			4.18% – 7.27	%		February 2008 – January 2019
As of December 31, 2006		725,533		(15,055	)		4.18% – 7.31	%		March 2010 – August 2018


	CDO Collateral – June 30, 2007									CDO Debt – June 30, 2007
Issuance	Date Closed		Par Value of CDO Collateral		Weighted Average Interest Rate			Weighted Average Expected Life (Years)		Outstanding CDO Notes ⁽¹⁾		Weighted Average Interest Rate			Stated Maturity
CDO I ⁽²⁾		8/21/03	$	328,920		6.62	%		4.98	$	309,742		6.24	%		8/1/2038
CDO II		7/1/04		351,180		6.29			5.79		314,828		5.80			6/1/2039
CDO III		3/10/05		400,992		6.37			5.39		359,118		5.88			6/1/2040
CDO V		9/22/05		495,937		5.95			7.61		456,319		5.15			9/5/2045
Total			$	1,577,029		6.27	%		6.09	$	1,440,007		5.71	%


	CDO Collateral – December 31, 2006									CDO Notes – December 31, 2006
Issuance	Date Closed		Par Value of CDO Collateral		Weighted Average Interest Rate			Weighted Average Expected Life (Years)		Outstanding CDO Notes ⁽¹⁾		Weighted Average Interest Rate at			Stated Maturity
CDO I ⁽²⁾		8/21/03	$	344,769		6.59	%		5.40	$	325,551		6.22	%		8/1/2038
CDO II		7/1/04		377,911		6.30	%		6.30		341,101		5.78	%		6/1/2039
CDO III		3/10/05		400,963		6.38	%		5.95		359,878		5.90	%		6/1/2040
CDO V		9/22/05		501,021		5.92	%		9.03		461,500		5.17	%		9/5/2045
Total			$	1,624,664		6.27	%		6.86	$	1,488,030		5.71	%


	Operating Real Estate		Real Estate Debt		Real Estate Securities		Corporate Loans		Unallocated ⁽¹⁾			Consolidated Total
Total revenues for the three months ended
June 30, 2007	$	22,910	$	53,320	$	27,824	$	2,698	$	708		$	107,460
June 30, 2006		8,331		26,114		4,606		—		62			39,113
Income (loss) from continuing operations before minority interest for the three months ended
June 30, 2007		982		23,825		6,680		463		(15,304	)		16,646
June 30, 2006		295		12,977		3,127		—		(10,388	)		6,011
Net income (loss) for the three months ended
June 30, 2007		888		23,825		6,680		412		(16,082	)		15,723
June 30, 2006		375		12,977		3,127		—		(11,235	)		5,244
Total revenues for the six months ended
June 30, 2007	$	43,223	$	94,550	$	47,985	$	2,698	$	3,258		$	191,714
June 30, 2006		14,898		47,405		8,369		—		211			70,883
Income (loss) from continuing operations before minority interest for the six months ended
June 30, 2007		468		39,808		8,927		1,185		(25,655	)		24,733
June 30, 2006		181		24,540		8,736		—		(18,625	)		14,832
Net income (loss) for the six months ended
June 30, 2007		327		39,808		8,927		1,134		(26,810	)		23,386
June 30, 2006		425		24,819		8,736		—		(20,870	)		13,110
Total assets as of June 30, 2007	$	1,195,069	$	2,447,321	$	1,505,733	$	317,122	$	118,333		$	5,583,578

FORM 10-Q

Commission File Number: 001-32330

NORTHSTAR REALTY FINANCE CORP.

(212) 547-2600

NORTHSTAR REALTY FINANCE CORP.

QUARTERLY REPORT For the Three and Six Months Ended June 30, 2007

TABLE OF CONTENTS

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands, Except Per Share Data)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands, Except Per Share Data) (Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in Thousands, Except Per Share Data) (Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands, Except Per Share Data) (Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Formation and Organization

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Formation and Organization – (continued)

Recent Accounting Pronouncements

2. Summary of Significant Accounting Policies

Basis of Quarterly Presentation

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

2. Summary of Significant Accounting Policies – (continued)

Principles of Consolidation

Reclassifications

Foreign Currency Translation

3. Operating Real Estate

Acquisitions

Wakefield Joint Venture Acquisitions

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

3. Operating Real Estate – (continued)

Dispositions

Discontinued Operations

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

3. Operating Real Estate – (continued)

4. Available for Sale Securities

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

4. Available for Sale Securities – (continued)

5. CDO Deposit and Warehouse Agreements

Warehouse Agreements

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

6. Real Estate Debt Investments

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

7. Corporate Loan Investments

8. Investment in and Advances to Unconsolidated Ventures

Monroe Capital Management Advisors, LLC

Northstar Realty Finance Trusts

9. Borrowings

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

9. Borrowings – (continued)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

9. Borrowings – (continued)

Exchangeable Senior Notes

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

9. Borrowings – (continued)

CDO IX

Secured Credit Facilities

Secured Term Loan

Liability to Subsidiary Trusts Issuing Preferred Securities

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

9. Borrowings – (continued)

Repurchase Obligations

10. Related Party Transactions

Advisory Fees

Management Fees

NSF Venture

Hard Rock Hotel Loan

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

10. Related Party Transactions – (continued)

Sublease

11. Equity Based Compensation

Omnibus Stock Incentive Plan

Long-Term Incentive Bonus Plan

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

11. Equity Based Compensation – (continued)

Employee Outperformance Plan

2006 Outperformance Plan

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

11. Equity Based Compensation – (continued)

12. Stockholders’ Equity

Preferred Stock

Common Stock

Dividends

QUARTERLY REPORT
For the Three and Six Months Ended June 30, 2007

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Per Share Data)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands, Except Per Share Data)
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NORTHSTAR REALTY FINANCE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1–3 Years		3–5 Years		After 5 Years
Mortgage notes net lease	$	829,835	$	1,322	$	12,167	$	80,236	$	736,110
Mezzanine loan payable		14,664		765		3,324		3,845		6,730
Repurchase agreements		59,622		59,622		—		—		—
CDO bonds payable		2,411,845		—		—		—		2,411,845
Exchangeable senior notes		172,500		—		—		—		172,500
Liability to subsidiary trusts issuing preferred securities		286,258		—		—		—		286,258
Credit facilities		692,007		—		265,003		427,004		—
Secured term loan		101,513		—		—		101,513		—
Capital leases ⁽¹⁾		17,249		184		934		974		15,157
Operating leases		84,799		2,851		11,142		11,211		59,595
Unfunded commitments ⁽²⁾		792,837		—		140,956		485,747		166,134
Total contractual obligations	$	5,463,129	$	64,744	$	433,526	$	1,110,530	$	3,854,329


	CDO Collateral – June 30, 2007								CDO Notes – June 30, 2007
Issuance	Date Closed		Par Value of CDO Collateral		Weighted Average Interest Rate		Weighted Average Expected Life (Years)		Outstanding CDO Notes ⁽¹⁾		Weighted Average Interest Rate		Stated Maturity
CDO I ⁽²⁾		8/21/03	$	328,920		6.62 %		4.98	$	309,742		6.24 %		8/1/2038
CDO II		7/1/04		351,180		6.29		5.79		314,828		5.80		6/1/2039
CDO III		3/10/05		400,992		6.37		5.39		359,118		5.88		6/1/2040
CDO V		9/22/05		495,937		5.95		7.61		456,319		5.15		9/5/2045
Total			$	1,577,029		6.27 %		6.09	$	1,440,007		5.71 %


	Northstar Realty Finance Corp.
	Three Months Ended June 30, 2007			Annualized June 30, 2007 ⁽²⁾		Year Ended December 31, 2006
Adjusted Funds from Operations (AFFO)		24,941			99,764 ^(A)		59,409
Plus: General & Administrative Expenses		14,057
Plus: General & Administrative Expenses from Unconsolidated Ventures		1,470
Less: Equity-Based Compensation and Straight-Line Rent included in G&A		4,161
AFFO, excluding G&A		36,307			145,228 ^(B)		85,739
Average Common Book Equity & Operating Partnership Minority Interest ⁽¹⁾	$	586,965	^(C)				378,628
Return on Average Common Book Equity (including G&A)		17.0% ^(A)/(C)					15.7 %
Return on Average Common Book Equity (excluding G&A)		24.7% ^(B)/(C)					22.6 %


Nominee	In Favor	Withheld
William V. Adamski	57,405,779	153,636
Preston Butcher	28,126,268	29,433,147
David T. Hamamoto	56,178,187	1,381,228
Judith A. Hannaway	57,406,039	153,376
Wesley D. Minami	57,371,757	187,658
Louis J. Paglia	57,408,079	151,336
W. Edward Scheetz	56,138,852	1,420,563
Frank V. Sica	28,149,586	29,409,829


Exhibit Number		Description
3.1		Articles of Amendment and Restatement of NorthStar Realty Finance Corp., as filed with the State Department of Assessments and Taxation of Maryland on October 20, 2004 (incorporated by reference to Exhibit 3.1 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675))
3.2		Bylaws of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 3.2 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675))
3.3		Amendment No. 1 to the Bylaws of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 3.3 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed on April 27, 2005)
3.4		Articles Supplementary Classifying NorthStar Realty Finance Corp.’s 8.75 % Series A Preferred Stock, liquidation preference $25.00 per share (incorporated by reference to Exhibit 3.2 to NorthStar Realty Finance Corp.’s Registration Statement on Form 8-A, dated September 14, 2006)
3.5		Articles Supplementary Classifying NorthStar Realty Finance Corp.’s 8.25 % Series B Preferred Stock, liquidation preference $25.00 per share (incorporated by reference to Exhibit 3.2 to NorthStar Realty Finance Corp.’s Registration Statement on Form 8-A, dated February 7, 2007)


Exhibit Number		Description
3.6		Articles Supplementary Classifying and Designating Additional Shares of NorthStar Realty Finance Corp.’s 8.25 % Series B Preferred Stock, liquidation preference $25.00 per share
10.1		Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of October 19, 2004, by and among NorthStar Realty Finance Corp., as sole general partner and initial limited partner and the other limited partners a party thereto from time to time (incorporated by reference to Exhibit 10.1 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.2		Non-Competition Agreement, dated as of October 29, 2004, by and among NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership, NorthStar Capital Investment Corp. and NorthStar Partnership, L.P. (incorporated by reference to Exhibit 10.2 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.3		Executive Employment Agreement, dated as of October 22, 2004, between David T. Hamamoto and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.5 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.4		Executive Employment Agreement, dated as of October 22, 2004, between Jean-Michel Wasterlain and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.7 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.5		Executive Employment Agreement, dated as of October 22, 2004, between Daniel R. Gilbert and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.8 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.6		NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 10.9 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.7		Amendment No. 1 to NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 99.2 to the NorthStar Realty Finance Corp. Post-Effective Amendment No. 2 to Form S-8 filed on April 13, 2007)
10.8		Amendment No. 2 to NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 99.3 to the NorthStar Realty Finance Corp. Post-Effective Amendment No. 3 to Form S-8 filed on June 6, 2007)
10.9		LTIP Unit Vesting Agreement under the NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan among NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership and NRF Employee, LLC (incorporated by reference to Exhibit 10.10 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.10		Form of Vesting Agreement for Units of NRF Employee, LLC, each dated as of October 29, 2004, between NRF Employee, LLC and certain employees and co-employees of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.11 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.11		Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.7(a) to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675))
10.12		NorthStar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan (incorporated by reference to Exhibit 10.13 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.13		Form of Notification under NorthStar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan (incorporated by reference to Exhibit 10.14 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
10.14		Form of Indemnification Agreement for directors and officers of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.15 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675))


Exhibit Number		Description
10.15		Amended and Restated Master Repurchase Agreement, dated as of March 21, 2005, between NRFC DB Holdings, LLC and Deutsche Bank AG, Cayman Islands Branch (incorporated by reference to Exhibit 10.16 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2004)
10.16		Amended and Restated Junior Subordinated Indenture dated as of September 16, 2005, between NorthStar Realty Finance Limited Partnership and JPMorgan Chase Bank, National Association, as trustee (incorporated by reference to Exhibit 10.17 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))
10.17		Second Amended and Restated Trust Agreement, dated as of September 16, 2005, among NorthStar Realty Finance Limited Partnership, as depositor, JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee and Andrew Richardson, David Hamamoto and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.18 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))
10.18		Master Repurchase Agreement, dated as of July 13, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.21 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended June 30, 2005)
10.19		First Amendment to the Master Repurchase Agreement, dated as of August 24, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.22 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))
10.20		Second Amendment to the Master Repurchase Agreement, dated as of September 20, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.23 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))
10.21		Master Loan, Guarantee and Security Agreement, dated as of September 28, 2005, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp., NS Advisors LLC and Bank of America, N.A. (incorporated by reference to Exhibit 10.24 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))
10.22		Third Amendment to the Master Repurchase Agreement, dated as of September 30, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.25 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))
10.23		Omnibus Amendment to the Master Repurchase Agreement, dated as of October 21, 2005, between NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.26 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)
10.24		Agreement of Purchase and Sale, dated as of October 25, 2005, between 1552 Lonsdale LLC and 1552 Bway Owner, LLC (incorporated by reference to Exhibit 10.27 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)
10.25		Fourth Amendment to the Master Repurchase Agreement, dated October 28, 2005, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.28 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)
10.26		Sublease, dated as of November 7, 2005, between NorthStar Realty Finance Limited Partnership and NorthStar Partnership, L.P. (incorporated by reference to Exhibit 10.29 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)
10.27		Junior Subordinated Indenture, dated as of November 22, 2005, between NorthStar Realty Finance Limited Partnership and JPMorgan Chase Bank, National Association, as trustee (incorporated by reference to Exhibit 10.30 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))


Exhibit Number		Description
10.28		Amended and Restated Trust Agreement, dated as of November 22, 2005, between NorthStar Realty Finance Limited Partnership, as depositor, JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee and Andrew Richardson, David Hamamoto and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.31 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962))
10.29		Fifth Amendment to the Master Repurchase Agreement, dated February 28, 2006, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.30 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)
10.30		Junior Subordinated Indenture, dated as of March 10, 2006, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.31 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)
10.31		Amended and Restated Trust Agreement, dated as of March 10, 2006, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and Andrew Richardson, David Hamamoto and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.32 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)
10.32		Form of NorthStar Realty Finance Corp. 2006 Outperformance Plan Award Agreement (incorporated by reference to Exhibit 99.3 to the NorthStar Realty Finance Corp. Post-Effective Amendment No. 2 to Form S-8 filed on April 13, 2007)
10.33		Amendment No. 1 to Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of March 14, 2006, by and among NorthStar Realty Finance Corp., as sole general partner and initial limited partner and the other limited partners a party thereto from time to time (incorporated by reference to Exhibit 10.34 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)
10.34		Executive Employment Agreement, dated as of March 14, 2006, between Richard J. McCready and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.35 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005)
10.35		Executive Employment Agreement, dated as of March 22, 2006, between Andrew C. Richardson and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 99.1 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed on March 28, 2006)
10.36		Agreement, dated as of April 6, 2006 between Mark E. Chertok and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 99.1 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed on April 10, 2006)
10.37		Second Omnibus Amendment to Repurchase Documents, dated as of June 6, 2006, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings III, LLC, NRFC WA Holdings IV, LLC, NRFC WA Holdings V, LLC, NRFC WA Holdings VI, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings VIII, LLC, and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.38 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)
10.38		Junior Subordinated Indenture, dated as of August 1, 2006, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.39 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)


Exhibit Number		Description
10.39		Amended and Restated Trust Agreement, dated as of August 1, 2006, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.40 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)
10.40		Second Amendment to the Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of September 14, 2006 (incorporated by reference to Exhibit 3.2 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed September 14, 2006)
10.41		Junior Subordinated Indenture, dated as of October 6, 2006, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.42 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)
10.42		Amended and Restated Trust Agreement, dated as of October 6, 2006, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.43 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)
10.43		Revolving Credit Agreement, dated as of November 3, 2006, between NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership, NRFC Sub-REIT Corp., NS Advisors, LLC, Keybanc Capital Markets and Bank of America, N.A. (incorporated by reference to Exhibit 10.44 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)
10.44		Sixth Amendment to the Master Repurchase Agreement, dated as of November 6, 2006, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings III, LLC, NRFC WA Holdings IV, LLC, NRFC WA Holdings V, LLC, NRFC WA Holdings VI, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings VIII, LLC, and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.45 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)
10.45		Third Amendment to the Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of February 7, 2007 (incorporated by reference to Exhibit 3.2 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed February 9, 2007)
10.46		Purchase and Sale Agreement, dated as of February 23, 2007, by and among GIN Housing Partners I, L.L.C. and the persons and entities identified as sellers on the signature pages thereto, portions of which have been omitted pursuant to a request for confidential treatment (incorporated by reference to Exhibit 10.44 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2006)
10.47		Junior Subordinated Indenture, dated as of March 30, 2007, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.46 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)
10.48		Amended and Restated Trust Agreement, dated as of March 30, 2007, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.47 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)


Exhibit Number		Description
10.49		Master Repurchase Agreement, dated as of May 14, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, Variable Funding Capital Company LLC, Wachovia Bank, National Association, Wachovia Capital Markets, LLC, NorthStar Realty Finance Corp., NorthStar Realty Finance L.P. and NRFC Sub-REIT Corp.
10.50		First Amendment to Master Repurchase Agreement, dated as of May 24, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, Variable Funding Capital Company LLC, Wachovia Bank, National Association, Wachovia Capital Markets, LLC, NorthStar Realty Finance Corp., NorthStar Realty Finance L.P. and NRFC Sub-REIT Corp.
10.51		Amended and Restated Master Repurchase Agreement, dated as of June 5, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, and Wachovia Bank, National Association, NorthStar Realty Finance Corp. and NorthStar Realty Finance Limited Partnership
10.52		Junior Subordinated Indenture, dated as of June 7, 2007, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee
10.53		Amended and Restated Trust Agreement, dated as of June 7, 2007, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees
10.54		First Amendment to Amended and Restated Master Repurchase Agreement, dated as of June 22, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, and Wachovia Bank, National Association, NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership and Wells Fargo Bank, National Association
10.55		Second Amendment to the Master Repurchase Agreement, dated as of June 22, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, Variable Funding Capital Company LLC, Wachovia Bank, National Association, Wachovia Capital Markets, LLC, NorthStar Realty Finance Corp., NorthStar Realty Finance L.P., NRFC Sub-REIT Corp. and Wells Fargo Bank, National Association
10.56		Master Repurchase Agreement, dated as of August 8, 2007, by and among NRFC JP Holdings, LLC and JPMorgan Chase Bank, N.A.
31.1		Certification by the Chief Executive Officer pursuant to 17 CFR 240.13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification by the Chief Financial Officer pursuant to 17 CFR 240.13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification by the Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification by the Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002