NorthStar Realty Finance

The LP Agreement expressly states that in conflicts between the General Partner's stockholders and the Limited Partners, the General Partner may resolve the conflict in favor of its stockholders, with no monetary liability to the Limited Partners for such decisions.

“for so long as the General Partner directly owns a controlling interest in the Partnership, any such conflict that the General Partner, in its sole and absolute discretion, determines cannot be resolved in a manner not adverse to either its stockholders or the Limited Partner shall be resolved in favor of the stockholders. The General Partner shall not be liable for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Limited Partners in connection with such decisions, provided that the General Partner has acted in good faith.”

The LP Agreement expressly permits the General Partner to resolve conflicts between its stockholders and the Limited Partners in favor of stockholders, creating a structural conflict of interest for Limited Partners.

“for so long as the General Partner directly owns a controlling interest in the Partnership, any such conflict that the General Partner, in its sole and absolute discretion, determines cannot be resolved in a manner not adverse to either its stockholders or the Limited Partner shall be resolved in favor of the stockholders.”

The Special Limited Partner (NorthStar OP Holdings II, LLC) is an Affiliate of the Advisor and is entitled to a 15% promote above the 7% hurdle. The General Partner is expressly permitted to employ or retain Affiliates and transact with them on terms it alone deems fair. The General Partner may resolve conflicts between its stockholders and Limited Partners in favor of its stockholders.

“Any Affiliate of the General Partner may be employed or retained by the Partnership and may otherwise deal with the Partnership (whether as a buyer, lessor, lessee, manager, furnisher of goods or services, broker, agent, lender or otherwise) and may receive from the Partnership any compensation, price, or other payment therefor which the General Partner determines to be fair and reasonable.”

The Special Limited Partner (NorthStar OP Holdings, LLC) is an affiliate of the Advisor and receives a 15% promote on all distributions after investors achieve an 8% cumulative non-compounded return. The Special LP Units were issued to this affiliate in exchange for a cash contribution and services, creating a direct economic conflict between the Advisor affiliate and Limited Partners.

“The General Partner issued Special Limited Partnership Units to an Affiliate of the Advisor in exchange for the cash contribution reflected on Exhibit A hereto and for services performed or to be performed for the Partnership and its Subsidiaries, and admitted such Person as the Special Limited Partner. The Special Limited Partner shall be entitled to certain distributions as provided in Section 5.2”