NorthStar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan Award Notification for Participant

  NORTHSTAR REALTY FINANCE CORP. 2004 LONG-TERM INCENTIVE BONUS PLAN AWARD NOTIFICATION Name of Participant: {{NAME}} Grant Date: October 29, 2004 Performance Period A: The four consecutive calendar quarters beginning with the calendar quarter that begins on October 1, 2005. Performance Period B: The four consecutive calendar quarters beginning with the calendar quarter that begins on October 1, 2006. Performance Period C: The eight consecutive calendar quarters beginning with the calendar quarter that begins on October 1, 2005. Performance Period D: The period from the date of the closing of the Initial Public Offering until the later of the date of a Change in Control or September 30, 2007. Target Incentive Bonus Award: {{AWARD}} Shares plus a number of Shares equal to {{PERCENT}} of the Overallotment IPO Shares; provided that the Target Incentive Bonus Award may not exceed {{MAX}} Shares. Form of Payment: Cash, Shares, LTIP Units, Other Share-Based Awards and/or such other form or forms of payment as determined by the Committee in its sole discretion at the end of the Performance Period; provided that the payment method shall not subject to any additional vesting requirements. Performance Objective: If, during Performance Period A, the annual Return on Paid in Capital equals or exceeds 12.5%, then 50% of the Target Incentive Bonus Award will be payable following the end of Performance Period A. If, during Performance Period B, the annual Return on Paid in Capital equals or exceeds 12.5%, then 50% of the Target Incentive Bonus Award will be payable following the end of Performance Period B. If the performance objective for Performance Period A is not obtained, then if, during Performance Period C, the average annual Return on Paid in Capital equals or exceeds 12.5%, then, in addition to the payment of 50% of the Target Incentive Bonus Award with respect to Performance Period  B, 50% of the Target Incentive Bonus Award will be payable following the end of Performance Period C; provided that under no circumstances shall more than 100% of the Target Incentive Bonus Award be payable hereunder with respect to the above-referenced Performance Periods. If a Change in Control occurs at any time on or after the date of the closing of the Initial Public Offering and prior to September 30, 2007, then (i) 100% of the Target Incentive Bonus Award (less any amount of the Target Incentive Bonus Award previously paid or due for a Performance Period ending on or prior to the Change in Control) will be payable if the Internal Rate of Return for Performance Period D equals or exceeds 12.5% and (ii) the Participant will not be eligible to receive any portion of the Target Incentive Bonus Award with respect any Performance Period that did not end on or prior to the Change in Control. If a Change in Control does not occur on or before September 30, 2007, none of the Target Incentive Bonus Award will be paid with respect to Performance Period D. Pursuant to the Northstar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan, as amended through the date hereof (the "Plan"), the Compensation Committee (the "Committee") of the Board of Directors of Northstar Realty Finance Corp. (the "Company") has selected you as a Participant in the Plan with respect to the Performance Periods specified above. Your Target Incentive Bonus Award, Form of Payment, and Performance Objectives are specified above. Please note that your participation in the Plan is subject to the terms and conditions of the Plan. Pursuant to this Award Notification and Section 8.2 of the Plan, if the Performance Objectives specified above are obtained the Committee may not reduce the amount paid in connection with the Target Incentive Bonus Award specified above. A copy of the Plan is attached hereto and incorporated herein by this reference. NORTHSTAR REALTY FINANCE CORP. By: ------------------------------------ Name: Mark E. Chertok Title: Chief Financial Officer and Treasurer