NORTHSTAR REALTY FINANCE LIMITED
PARTNERSHIP
First Amendment to the
Agreement of Limited Partnership of
NorthStar Realty Finance Limited Partnership
This Amendment is made as of March 14, 2006, by
NORTHSTAR REALTY FINANCE CORP., a Maryland corporation, as general
partner (the “ General Partner ”), of NORTHSTAR
REALTY FINANCE LIMITED PARTNERSHIP, a Delaware limited partnership
(the “ Partnership ”), for the purpose of
further amending the Agreement of Limited Partnership of the
Partnership dated October 19, 2004 (the “ Partnership
Agreement ”). All capitalized terms used herein and not
defined shall have the respective meanings ascribed to them in the
Partnership Agreement.
WHEREAS, pursuant to Section 4.2 of the
Partnership Agreement, the General Partner is establishing an
additional series of LTIP Units, to be referred to as the
“OPP Units” with the rights, preferences and privileges
set forth in the Partnership Unit Designation attached hereto, to
certain persons who provide services for the benefit of the
Partnership (the “Grantees”).
NOW, THEREFORE, in consideration of the mutual
covenants set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the General Partner hereby amends the Partnership
Agreement as follows:
1.
Issuance of LTIP Units .
A. Pursuant to Section 4.2
of the Partnership Agreement, the Partnership may from time to time
issue OPP Units to the Grantees in the respective amounts set forth
on Schedule A hereto. The
holder of any OPP Units shall have the benefits and obligations
under the Partnership Agreement to which the holder of such a
Limited Partner Interest may be entitled or obliged under the
Partnership Agreement, as supplemented and amended by the rights,
powers, privileges, restrictions, qualifications and limitations
specified in Exhibit B to the Partnership
Agreement as added by this Amendment.
B. The admission of the
Grantees as Additional Limited Partners of the Partnership shall
become effective as of the date of this Amendment, which shall also
be the date upon which the names of the Grantees are recorded on
the books and records of the Partnership, and Exhibit A to the
Partnership Agreement is amended to reflect such
admission.
2.
Amendments to Partnership
Agreement .
The General Partner, as general partner of the
Partnership and as attorney-in-fact for its Limited Partners,
hereby amends the Partnership Agreement as follows:
A. Article I of the
Partnership Agreement is amended by inserting the following
definitions in alphabetical order:
“ Liquidating Losses ” has
the meaning set forth in Section 6.3(b) hereof.
“ LTIP Unit ” means a
Partnership Unit which is designated as an LTIP Unit, with such
further designation as the General Partner may assign to
distinguish any series of LTIP Units from other series, and which
has the rights, preferences and other privileges designated in
Section 4.5 hereof, in any Partnership Unit Designation
establishing an additional series of LTIP Units and elsewhere in
this Agreement in respect of Holders of LTIP Units. The allocation
of LTIP Units among the Partners shall be set forth on
Exhibit A , as may be amended from time to
time.
B. Section
6.3(b) of the Partnership Agreement is amended by replacing the
existing text with the following:
E. Special Allocations Regarding LTIP
Units . Notwithstanding
the provisions of Section 6.2 above, but subject to the prior
allocation of income, gain, deduction and loss under paragraph (a)
above and to the terms of any Partnership Unit Designation in
respect of any class of Partnership Interests ranking senior to the
LTIP Units with respect to return of capital or any preferential or
priority return, any Liquidating Gains shall first be allocated to
the Holders of LTIP Units until the Economic Capital Account
Balances of such Holders, to the extent attributable to their
ownership of LTIP Units, are equal to (i) the Partnership
Common Unit Economic Balance, multiplied by (ii) the number of
their LTIP Units; provided that no such Liquidating Gains
will be allocated with respect to any particular LTIP Unit unless
and to the extent that such Liquidating Gains, when aggregated with
other Liquidating Gains realized since the issuance of such LTIP
Unit, exceed Liquidating Losses realized since the issuance of such
LTIP Unit. Notwithstanding the provisions of Section 6.2 above, but
subject to the prior allocation of income, gain, deduction and loss
under paragraph (a) above and to the terms of any Partnership Unit
Designation in respect of any class of Partnership Interests
ranking senior to the LTIP Units with respect to return of capital
or any preferential or priority return, in the event that, due to
distributions with respect to Common Units in which the LTIP Units
do not participate or otherwise, the Economic Capital Account
Balance of any present or former Holder of LTIP Units, to the
extent attributable to the Holder’s ownership of LTIP Units,
exceeds the target balance specified above, then Liquidating Losses
shall be allocated to such Holder to the extent necessary to reduce
or eliminate the disparity. In the event that Liquidating Gains or
Liquidating Losses are allocated under this Section 6.3(b), Net
Income and Net Loss shall be recomputed without regard to the
Liquidating Gains or Liquidating Losses so allocated (subject to
any prior allocation of Net Income or Net Loss otherwise provided
for). For this purpose, “ Liquidating Gains ”
means any net capital gain realized in connection with the actual
or hypothetical sale of all or substantially all of the assets of
the Partnership, including but not limited to net capital gain
realized in connection with an adjustment to the Gross Asset Value
of Partnership Assets under paragraph (b) of the definition of
“Gross Asset Value.” Similarly, “ Liquidating
Losses ” means any net capital loss realized in
connection with any such event. The “ Economic Capital
Account Balances ” of the Holders of LTIP Units will be
equal to their Capital Account balances, plus the amount of their
shares of any Partner Minimum Gain or Partnership Minimum Gain, in
either case to the extent attributable to their ownership of LTIP
Units. Similarly, the “ Partnership Common Unit Economic
Balance ” shall mean (i) the Capital Account balance of
the General Partner, plus the amount of the General Partner’s
share of any Partner Minimum Gain or Partnership Minimum Gain, in
either case to the extent attributable to the General
Partner’s ownership of Partnership Common Units and computed
on a hypothetical basis after taking into account all allocations
through the date on which any allocation is made under this Section
6.3(b), divided by (ii) the number of the General Partner’s
Partners
