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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(t)             “ Effective Date ” means July 21, 2008, the date this Plan was approved by the Committee.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3.              Administration

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

(i)             to select Participants under the Plan;

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

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

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

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

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

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

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

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

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

(e)            If the Company is required to prepare a material accounting restatement with respect to any Plan Year and such restatement (i) would have reduced the amount paid under the Plan to the executive officers with respect to such Plan Year and (ii) was due to an untrue statement of a material fact by an executive officer or an omission by an executive officer to state a material fact necessary to make the statements made, in light of t