NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT, is made and effective as of October 29,
2004 (this "AGREEMENT"), by and among NorthStar Capital Investment Corp., a
Maryland corporation ("NCIC"), and NorthStar Partnership, L.P., a Delaware
limited partnership of which NCIC is the sole general partner and holds a
majority of the partnership interests ("NPLP"), in favor of NorthStar Realty
Finance Corp., a Maryland corporation ("NRFC"), and NorthStar Realty Finance
Limited Partnership, a Delaware limited partnership of which NRFC is the sole
general partner ("NRFLP").
WHEREAS, NRFLP has entered into (1) that certain Contribution Agreement
with NPLP and NorthStar Funding Managing Member Holdings LLC ("NFMM HOLDINGS"),
dated as of the date hereof and (2) that certain Contribution Agreement with
NorthStar Funding Managing Member Holdings LLC ("NSA HOLDINGS" and together with
NPLP and NFMM Holdings, the "CONTRIBUTORS"), dated as of the date hereof
(together, the "CONTRIBUTION AGREEMENTS"), pursuant to which NRFLP has agreed to
acquire the Contributed Assets from the Contributors at the Closing in
consideration of the Unit Distribution and $36,120,000 in cash (capitalized
terms used but not defined herein shall have the meaning ascribed to them in the
Contribution Agreements); and
WHEREAS, NRFC and NRFLP have expressly stated that it is a condition of
the closing of the transactions contemplated by the Contribution Agreements that
NCIC and NPLP execute and deliver this Agreement in favor of NRFC and NRFLP.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
foregoing and the respective representations, warranties, covenants, agreements
and conditions contained in the Contribution Agreements and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree, subject
to the terms and conditions of the Contribution Agreements, as follows:
1. DEFINITIONS.
(a) "AFFILIATE" means any Person directly or indirectly
controlled by, or under direct or indirect common control
with, NCIC or NPLP.
(b) "BOARD" means the board of directors of NCIC or similar
governing body of NPLP, as applicable.
(c) "BUSINESSES" means:
(i) the development of or equity investment in net leased
real property or in sale-leaseback transactions
involving build-to-suit or renovated commercial,
retail, office, industrial or warehouse facilities
("Net Lease Investments");
(ii) the acquisition and the origination of or investment in
mezzanine and subordinate real estate debt; and
(iii) investments in commercial mortgage-backed securities,
debt issued by real estate investment trusts, real
estate collateralized debt obligations ("CDOs") or
residential mortgage-backed securities to be financed
by the issuance of CDOs or other similar capital
structures.
PROVIDED THAT in no event shall the "BUSINESSES" mean or
include:
(1) investments in any non-performing or distressed
properties, loans, businesses or securities;
(2) investments by, through or in any venture or equity
opportunity vehicle or fund whose primary objective is
to achieve growth in asset value rather than current
cash flow;
(3) any existing or future debt or equity investments in or
related to assets of NCIC or NPLP or their respective
Subsidiaries and Affiliates existing as of the date
hereof that are not being contributed pursuant to the
Contribution Agreements;
(4) any debt or equity investments in or related to hotel
properties;
(5) any investment related to or through Xxxx Development
Company and its subsidiaries and any successor thereto;
or
(6) any equity investments in or related to properties that
do not constitute Net Lease Investments.
(d) "CONTINUING DIRECTORS" means any member of the Board on the
date hereof and any other member of the Board who shall be
recommended or elected to succeed or become a Continuing
Director by a majority of the Continuing Directors who are
then members of the Board.
(e) "OFFICER" means any officer of NRFC who, on the date hereof
or at any time during the Term, holds any of the following
titles or positions: (1) President; (2) Chief Executive
Officer; (3) Chief Financial Officer; (4) Chief Investment
Officer; (5) Executive Vice President, or (6) any other
executive officer of NRFC, initially including Xx. Xxxxx
Xxxxxxxx, Chief Executive Officer and President, Xx. Xxxx
Xxxxxxx, Chief Financial Officer, Xx. Xxxx-Xxxxxx
Xxxxxxxxxx, Chief Investment Officer and Executive President
and Mr. Xxxxxx Xxxxxxx, Executive Vice President.
(f) "PERSON" means any individual, corporation, association,
partnership, limited liability company, joint venture,
unincorporated organization,
trust, trustee, executor, administrator or other legal
representative, governmental entity, or other entity or
organization.
(g) "SUBSIDIARIES" means, when used with reference to any party
hereto, any corporation, partnership, limited liability
company, or other entity, a majority of the outstanding
voting power of which is owned directly or indirectly by
such party or, in the case of NCIC or NPLP only, of which
NCIC or NPLP or one of their respective Subsidiaries is the
sole managing member or sole general partner; provided,
however, that for purposes of this definition, (i) any
corporation, partnership, limited liability company, or
other entity which is controlled, directly or indirectly, by
NRFC or NRFLP shall be deemed a Subsidiary of NRFC, and (ii)
on or after the date hereof, none of NRFC, NRFLP or any of
their Subsidiaries shall be deemed Subsidiaries of NCIC or
NPLP.
(h) "TERM" has the meaning assigned to it in Section 9.
(i) "TERRITORY" means the United States of America.
2. NON-COMPETITION AND NON-SOLICITATION.
(a) For the Term of this Agreement, none of (i) NCIC, (ii) NPLP,
(iii) any Subsidiary of NCIC or NPLP, or (iv) any successor
or assign of NCIC or NPLP or their respective Subsidiaries,
except for any successor or assign of NCIC or NPLP or their
respective Subsidiaries pursuant to the merger described in
Section 2(c)(i) hereof, shall directly or indirectly, engage
in any of the Businesses within the Territory; provided,
however, that nothing contained herein shall prohibit NCIC
or NPLP from (A) owning, directly or indirectly, less than
5% of any class of voting securities of any company engaged
in any of the Businesses, unless such company would become a
Subsidiary of NCIC or NPLP as a result of the acquisition of
such voting securities, (B) directly or indirectly acquiring
a business which engages in any of the Businesses or in any
portion thereof if the assets of such competing business
constitute 20% or less of the gross assets, on a historical
cost basis, of a larger business so acquired by NCIC or
NPLP, or (C) acquiring a business that engages in any of the
Businesses with the Territory if the assets of such business
constitute more than 20%, but not more than 50% of the gross
assets, on a historical cost basis, of a larger business so
acquired by NCIC or NPLP provided that (1) NCIC or NPLP, as
applicable, disposes of such competitive business within one
(1) year of its acquisition by NCIC or NPLP and (2) NCIC or
NPLP, as applicable, first offers to NRFC in writing the
right to acquire such competitive business before offering
to sell such competitive business to a third party and may
only sell such competitive business to another party if
after thirty days (30) NRFC determines not to acquire such
business, provided that, the terms of the sale to any third
party may not be materially more favorable than the terms
offered to NRFC.
(b) For the Term of this Agreement, NCIC and NPLP shall not and
shall cause any Subsidiary or Affiliate of NCIC or NPLP not
to solicit, raid, entice, induce or contact, or attempt to
solicit, raid, entice, induce or contact, any individual who
currently is or at any time during the Term shall be an
Officer to do anything from which NCIC, NPLP and their
respective Subsidiaries and Affiliates are restricted from
doing by reason of this Agreement, including to terminate
such Officer's employment with NRFC, NFRLP or their
respective Subsidiaries or to become an officer, director or
employee of NCIC, NPLP or their respective Subsidiaries; and
NCIC and NPLP shall not and shall cause any Subsidiary or
Affiliate of NCIC or NPLP not to approach any such Officer
for such purpose or authorize or participate in the taking
of such actions by any other Person or assist or participate
with any such Person in taking such action.
(c) Nothing in this Agreement shall be interpreted as
prohibiting a Person then engaged in any of the Businesses
from (i) merging with NCIC or NPLP or any Subsidiary of NCIC
or NPLP, provided that (1) the holders of NCIC or NPLP's
outstanding equity interests prior to such merger hold, in
their capacity as holders of equity interests of NCIC or
NPLP, as applicable, less than 50% of the voting power of
NCIC or NPLP's outstanding equity interests following such
merger or, if NCIC or NPLP is not the surviving entity of
such merger, the surviving entity's outstanding equity
interests immediately following the merger, and (2) after
the consummation of such merger, (A) a majority of the Board
of NCIC, NPLP or the surviving entity, as applicable, shall
consist of individuals other than Continuing Directors, (B)
the co-chief executive officers of NCIC as of the date
hereof cease to serve in such capacity, and (C) Xxxxx X.
Xxxxxxxx is not a senior executive officer of the entity
surviving the merger, and (ii) thereafter, carrying on its
business in competition with NRFC or NRFLP within the
Territory.
3. EQUITABLE REMEDIES. In the event NCIC or NPLP breaches, or
threatens to breach, any term, provision, covenant or condition
contained in this Agreement, NCIC or NPLP agrees that NRFC and NRFLP
shall be entitled to both temporary and permanent injunctive relief
against any such actual breach or threatened breach. The right of NRFC
and NRFLP to such relief shall not be construed to prevent NRFC or
NRFLP from pursuing, either consecutively or concurrently, any and all
other legal or equitable remedies available for such breach or
threatened breach, specifically including, without limitation, the
recovery of monetary damages.
4. APPLICABLE LAW AND CHOICE OF FORUM. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws
of the State of New York (regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof) as to
all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
5. SEVERABILITY. If any term, provision, covenant or condition of
this Agreement is declared invalid, illegal, unenforceable,
ineffective or inoperative for any reason, such declaration shall not
have the effect of invalidating or voiding the remainder of this
Agreement, and the parties hereto agree that the part or parts of this
Agreement so held to be invalid, illegal, unenforceable, ineffective
or inoperative will be deemed to have been stricken from this
Agreement and the remainder hereof will have the same force and effect
as if such part or parts had never been included herein.
6. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter
hereof and shall not be altered, modified or amended, in whole or in
part, except by the express written authorization and consent of the
parties. In the event of a conflict between the terms hereof and those
contained in the Contribution Agreements, the terms of this Agreement
shall prevail as to the matters set forth herein.
7. WAIVERS. Any waiver by any party, whether express or implied,
of any breach of any term, provision, covenant or condition of this
Agreement shall not constitute a waiver as to any subsequent breach of
the same or of any other term, provision, covenant or condition
hereof. Failure of a party to declare any breach upon the occurrence
thereof, or any delay by any party in taking action with respect to
any breach, shall not waive any such breach.
8. NOTICES. Any and all notices or demands which must or may be
given hereunder or under any other instrument contemplated hereby
shall be given in accordance with the terms and conditions of the
Contribution Agreement.
9. TERMINATION. This Agreement and the rights and obligations of
the parties hereunder shall terminate on the earliest to occur of (a)
the date mutually agreed upon by the parties hereunder; (b) the
occurrence of a merger described in Section 2(c)(i); or (c) the later
to occur of (i) the date that is three (3) years from the date hereof,
or (ii) the date that Xxxxx Xxxxxxxx is no longer a Chief Executive
Officer, President or other senior executive officer employed by (A)
NRFC and (B) NCIC or any successor or assign of NCIC or NPLP or their
respective Subsidiaries, except for any such successor or assign
pursuant to a merger satisfying the conditions described in Section
2(c)(i) (other than the condition described in Section 2(c)(i)(2)(C))
hereof (the "Term"). Upon and following the termination of this
Agreement, no Party to this Agreement shall be required by reason of
any provision of this Agreement to abide by any restriction on its
business activities provided in this Agreement.
10. PARTIES IN INTEREST. This Agreement and all terms,
provisions, covenants and conditions contained herein shall inure to
the benefit of and shall be binding upon the undersigned parties and
their respective successors and assigns.
11. ASSIGNMENT. This Agreement shall not be assignable by a party
without the prior written consent of the other parties hereto.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Non-Competition
Agreement to be executed as of the date first written above.
NORTHSTAR CAPITAL INVESTMENT CORP.
By: /s/ Xxxxxxx X. XxXxxxxx
--------------------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Chief Operating Officer and Secretary
NORTHSTAR PARTNERSHIP, L.P.
By: NORTHSTAR CAPITAL INVESTMENT
CORP., its General Partner
By: /s/ Xxxxxxx X. XxXxxxxx
-------------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Chief Operating Officer and
Secretary
NORTHSTAR REALTY FINANCE CORP.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer and Treasurer
NORTHSTAR REALTY FINANCE LIMITED
PARTNERSHIP
By: NORTHSTAR REALTY FINANCE
CORP., its General Partner
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer and
Treasurer
