Exhibit 10.33

EXECUTION COPY

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is made as of November 30,
2011 by and between Zabeel Investments Inc., a Delaware corporation ( “U.S.
Seller”), Zabeel Investments (L.L.C.), a Dubai limited liability company
(“Non-U.S. Seller” and, together with U.S. Seller, “Sellers”), TLG Acquisition
LLC, a Delaware limited liability company (“Purchaser”), and Morgans Group LLC,
a Delaware limited liability company (“MGLLC”). Purchaser, MGLLC, and Sellers
are sometimes referred to herein individually as a “Party” and collectively as
the “Parties”.

WHEREAS, on the date hereof, U.S. Seller is owner of (i) 50% of the equity
interest (the “DDD Equity Interest”) in DDD Holdings, LLC, a Delaware limited
liability company (“DDD”), and (ii) 50% of the equity interest (the “HHH Equity
Interest” and, together with the DDD Equity Interest, the “Equity Interests”) in
HHH Holdings, LLC, a Delaware limited liability company (“HHH”) and, together
with DDD, the “Acquired Companies”).

WHEREAS, on the date hereof, U.S. Seller is owner of 50% of the equity interest
(the “Harmon Equity Interest”) in The Harmon Hotel, LLC, a Nevada limited
liability company (“Harmon”).

WHEREAS, on the date hereof, Non-U.S. Seller is owner of (i) 100 Class A shares
(the “Hospitality Shares”) of Hospitality IP, Ltd., an exempted company
incorporated in the Cayman Islands (“Hospitality”), and (ii) 100 Class A shares
(the “Hotel Shares” and, together with the Hospitality Shares, the “Shares” and,
together with the Equity Interests and the Harmon Equity Interest, the “Acquired
Securities”) of Hotel IP, Ltd., an exempted company incorporated in the Cayman
Islands (“Hotel” and, together with Hospitality, the “Non-U.S. Companies” and,
together with the Acquired Companies and Harmon, the “Companies”).

WHEREAS, Sellers wish to transfer and sell to Purchaser, and Purchaser wishes to
purchase from Sellers, the Acquired Securities (the “Transaction”), and Sellers
and Purchaser desire to make certain other covenants and agreements to each
other, all on such terms and conditions as more fully set forth herein.

NOW THEREFORE, in consideration of the covenants and promises set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF EQUITY INTERESTS

Section 1.1 Purchase and Sale of Equity Interests. Subject to the terms and
conditions contained in this Agreement, and on the basis of the representations,
warranties and covenants set forth herein, on the Closing Date, Sellers shall
sell, assign, transfer and convey to Purchaser (or its designee), and Purchaser
shall, and MGLLC shall cause Purchaser to, acquire and purchase from Sellers,
the Acquired Securities, free and clear of all Liens, for an aggregate purchase
price of Twenty Million Dollars (US$20,000,000) in cash (the “Purchase Price”),
which shall be allocable to the DDD Equity Interests and to the HHH Equity
Interests.

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Section 1.2 Additional Consideration

(a) If a Trigger Event occurs during the Restricted Period, Purchaser shall pay
the Additional Consideration to U.S. Seller on the fifth (5th) business day
after the proceeds of the Trigger Event have been actually received by a member
of the Purchaser’s Group. If all or part of the consideration paid on any
Disposal or Sale is deferred, the Additional Consideration will be deferred in
the same proportion and paid within five (5) business days of the receipt of
such deferred consideration.

(b) As used in this Section 1.2, the following terms are defined as follows:

(i) “Additional Consideration” means such additional consideration as may be
determined and payable under this Section 1.2 and Schedule A hereto.

(ii) “Disposal” means the disposal of all or a substantial part of the business,
assets, property, undertaking of the Acquired Companies (whether in one
transaction or a series of transactions).

(iii) “Purchaser’s Group” means Morgans Hotel Group Co. and each of its direct
and indirect subsidiaries, including MGLLC and the Purchaser.

(iv) “Restricted Period” means a period of twelve (12) months starting on the
Closing Date.

(v) “Sale” means the sale, transfer or other disposal of an interest in any of
the Equity Interests (within the meaning of Sections 820-825 of the United
Kingdom Companies Act 2006) (whether in one transaction or a series of
transactions) to any Person.

(vi) “Trigger Event” means a Sale or a Disposal.

Section 1.3 Tax Treatment. The purchase and sale of the Acquired Securities
pursuant to this Agreement shall be treated as a taxable sale by the relevant
Seller of the relevant Acquired Securities for U.S. federal income tax purposes.

ARTICLE II

CLOSING

Section 2.1 Closing. Subject to the terms and conditions hereof, the closing of
the sale and purchase of the Acquired Securities hereunder and the other
transactions contemplated hereby (the “Closing”) shall take place at the offices
of Hogan Lovells US LLP, 555 13th Street NW, Washington, District of Columbia,
subject to, and concurrently with, the closing under the Master Purchase
Agreement, dated as of the date hereof, by and among Sasson Masi F&B Holdings,
LLC, a Delaware limited liability company, Sasson Masi Nightlife Holdings, LLC,
a Delaware limited liability company, Andrew Sasson and Andy Masi (collectively,
the “Sasson Masi Sellers”), Purchaser, and MGLLC (the “Sasson Masi Purchase
Agreement”), or at such other time, place and date that Sellers and Purchaser
may agree in writing. The date on which the Closing actually occurs is herein
referred to as the “Closing Date”. Unless otherwise agreed by the Parties in
writing, the Closing shall be effective for all purposes as of 4:01 a.m. (PST)
on the Closing Date

 

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Section 2.2 Deliverables of Sellers at Closing. At the Closing, Sellers shall
deliver, or cause to be delivered, the following to Purchaser (or to one or more
Persons designated by Purchaser in writing), or in the case of the Harmon Equity
Interest and the Hospitality Shares and the Hotel Shares, to the designee of
Purchaser specified below:

(a) all of U.S. Seller’s right, title and interest in and to the HHH Equity
Interest and the DDD Equity Interest, free and clear of all Liens, pursuant to
one or more assignment instruments reasonably acceptable to Purchaser and U.S.
Seller, representing the transfer of such Equity Interests in form acceptable
for transfer of such Equity Interests on the books of DDD and HHH;

(b) all of U.S. Seller’s right, title and interest in and to the Harmon Equity
Interest to TLG-H Acquisition LLC, and all of the Non-U.S. Seller’s right title
and interest in and to the Hospitality Shares and the Hotel Shares to TLG-H
Acquisition LLC, in each case free and clear of all Liens, pursuant to one or
more assignment instruments reasonably acceptable to Purchaser and Sellers,
representing the transfer of the Harmon Equity Interest, the Hospitality Shares,
and the Hotel Shares in form acceptable for transfer of the Harmon Equity
Interest, the Hospitality Shares, and the Hotel Shares on the books of Harmon,
Hospitality, or Hotel, as applicable;

(c) a secretary’s certificate of U.S. Seller and an officer’s certificate of
Non-U.S. Seller certifying (i) resolutions duly adopted by the board of
directors or other governing body of each of the Sellers authorizing the
execution of this Agreement and the execution, performance and delivery of all
other agreements, documents and transactions contemplated hereby, and (ii) the
incumbency of the officers or other representatives of the individuals executing
this Agreement and the other agreements, documents and certificates delivered by
Sellers;

(d) the officer’s certificates required of Sellers by Section 5.2(a);

(e) the Termination and Release Agreement (the “Zabeel Termination Agreement”),
substantially in the form attached hereto as Exhibit A, executed by Sellers;

(f) the Waiver of Rights of Purchase and Sale (the “Waiver”), substantially in
the form attached hereto as Exhibit B, executed by Sellers;

(g) a certificate of non-foreign status in customary form duly executed by the
U.S. Seller;

(h) either (i) a deed of release (the “Deed of Release”) providing for the
unconditional and irrevocable discharge and release of the Share Pledge
Agreement dated 8 May 2008 between U.S. Seller and The Royal Bank of Scotland
plc (the “Bank”) in relation to the Equity Interests and the Harmon Equity
Interests (the “Security”) duly executed by the Bank or (ii) a pay off letter in
customary form reasonably satisfactory to Purchaser providing, among other
things, that the Security will be released upon receipt of the Purchase Price,
and the Closing will not be deemed to have concluded until the Security is
released; and

 

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(i) such other agreements, consents, documents, instruments and writings as are
reasonably required to be delivered by Sellers at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith, including all such other instruments as Purchaser or its counsel may
reasonably request in connection with the Transaction.

Section 2.3 Deliverables of Purchaser at Closing. At the Closing, Purchaser
shall deliver, or cause to be delivered, the following to U.S. Seller (or to one
or more Persons designated by the U.S. Seller in writing):

(a) the Purchase Price in immediately available funds by wire transfer to one or
more accounts specified by U.S. Seller pursuant to written instructions provided
by U.S. Seller to Purchaser at least two (2) business days prior to the Closing
Date;

(b) a secretary’s certificate of Morgans Hotel Group Co. certifying
(i) resolutions duly adopted by the Board of Directors of Morgans Hotel Group
Co., or a committee thereof, authorizing the execution of this Agreement by or
on behalf of MGLLC, for itself and in its capacity as the sole member of
Purchaser, and the execution, performance and delivery of all other agreements,
documents and transactions contemplated hereby, and (ii) the incumbency of the
officers or other representatives of the individuals executing this Agreement
and the other agreements, documents and certificates delivered by Purchaser and
MGLLC;

(c) the officer’s certificate required of Purchaser by Section 5.3(a);

(d) an executed copy of the Zabeel Termination Agreement, substantially in the
form attached hereto as Exhibit A, duly executed by the Persons identified on
the signature pages thereof as the Sasson/Masi Parties;

(e) an executed copy of the Waiver of Rights of Purchase and Sale (“Sasson Masi
Waiver”), substantially in the form attached hereto as Exhibit C, executed by
Sasson Masi F&B Holdings, LLC and Sasson Masi Nightlife Holdings, LLC;

(f) a copy of the final signed Sasson Masi Purchase Agreement, together with all
other agreements made or entered into directly or indirectly in connection
therewith, which agreements shall not contain economic terms that differ
materially from the terms contained in the version of the Sasson Masi Purchase
Agreement and related agreements provided by e-mail by counsel for the Purchaser
to counsel for the Sellers on November 15, 2011 and from the description of such
agreements contained in the draft report on Form 8-K with respect to such
agreements provided by e-mail by counsel for the Purchaser to counsel for the
Sellers on November 16, 2011, along with a certificate from authorized officers
of Purchaser to the effect that (i) the condition set forth in this
Section 2.3(f) has been satisfied, and (ii) such copies comprise all agreements
made or entered into directly or indirectly in connection with the Sasson Masi
Purchase Agreement, and that such copies are true, correct and complete and have
not been amended in any respect; and

 

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(g) such other agreements, consents, documents, instruments and writings as are
reasonably required to be delivered by Purchaser at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith, including all such other instruments as Sellers or their counsel may
reasonably request in connection with the Transaction.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLERS

Each Seller, jointly and severally, hereby represents and warrants to Purchaser
on the date of this Agreement and as of the Closing Date as follows:

Section 3.1 Organization; Power and Authorization. Each Seller is duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization. Each Seller has the requisite power and
authority (i) to enter into, deliver and carry out its obligations pursuant to
this Agreement, and (ii) to sell, assign and deliver the respective Acquired
Securities to Purchaser (or its designee). Each Seller’s execution, delivery and
performance of this Agreement has been duly authorized by such Seller and no
other corporate or other proceeding on the part of such Seller is necessary to
authorize this Agreement or the Transaction.

Section 3.2 Binding Effect. This Agreement has been duly executed and delivered
by each Seller. This Agreement constitutes the legal, valid and (assuming due
authorization, execution and delivery by Purchaser) binding obligation of each
Seller, enforceable against such Seller in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors’ rights generally and legal principles of
general applicability governing the availability of equitable remedies (whether
considered in a proceeding in equity or at law or under applicable legal codes).

Section 3.3 Noncontravention. Assuming the receipt and effectiveness of the
consents and approvals set forth in Article V and Section 2.2(h), the execution,
delivery, and performance by each Seller of this Agreement, the consummation of
the Transaction, and the fulfillment of and compliance with the terms hereof by
such Seller do not and shall not (with or without notice or lapse of time or
both): (i) conflict with or result in a breach or violation of the terms,
conditions or provisions of the organizational documents of either Seller,
(ii) result in the imposition of any Lien upon the Acquired Securities;
(iii) result in a breach or violation by such Seller of any of the terms,
conditions or provisions of any material law or order applicable to such Seller
or by which any of its assets or properties (including, without limitation, the
Acquired Securities) is bound or subject; or (iv) require any authorization,
consent, approval, exemption or other action by or declaration or notice to or
registration with any third person or with the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government or any court (each, a “Governmental Authority”).

 

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Section 3.4 Title to Equity Interests. U.S. Seller owns of record and has good
and valid title to the Equity Interests and Harmon Equity Interest free and
clear of any and all liens, charges and other encumbrances (“Liens”) and the
Non-U.S. Seller owns of record and has good and valid title to the Shares, free
and clear of any and all Liens (in each case other than those arising under the
US$70,000,000 term loan facility agreement dated as of May 8, 2008 by and
between, among others, U.S. Seller, as borrower, and the Bank, as original
lender (including all annexes, exhibits and schedules thereto, and as from time
to time amended, restated, supplemented or otherwise modified), which shall be
released at the Closing). Neither Seller has any right, title or interest in any
equity securities or equity interests in the Companies other than the Acquired
Securities. Upon U.S. Seller’s delivery of the Equity Interests and payment
therefor pursuant hereto, and after giving effect to the Zabeel Termination
Agreement and the Sasson Masi Waiver (assuming that each constitutes the legal,
valid and binding obligation of each party thereto other than Sellers,
enforceable against each such party in accordance with its respective terms),
good and valid title to such Equity Interests, free and clear of all Liens,
other than restrictions on transfer under applicable state and federal
securities laws or arising under the Amended and Restated Limited Liability
Company Agreements of each of HHH and DDD will pass to Purchaser. Upon U.S.
Seller’s delivery of the Harmon Equity Interest and the Non-U.S. Seller’s
delivery of the Shares, good and valid title to the Harmon Equity Interest and
the Shares, free and clear of all Liens, other than restrictions on transfer
under applicable state and federal securities laws or arising under the Amended
and Restated Limited Liability Company Agreement of Harmon and the
organizational documents and shareholder agreements of the Non-U.S. Companies
will pass to the respective designees of Purchaser set forth in Section 2.2(b).

Section 3.5 Governmental Authorization; Third Party Consents. Assuming the
receipt and effectiveness of the consents and approvals set forth in Article V
and Section 2.2(h), no approval, consent, exemption, authorization or other
action by, or notice to, or filing with, any Governmental Authority or any other
individual, firm, corporation, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, limited
liability company or other entity of any kind (each, a “Person”), and no lapse
of a waiting period under any law, statute, treaty, rule or regulation, is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, each Seller of this Agreement or the Transaction.

Section 3.6 No Brokers. No broker or finder who has acted directly or indirectly
for any Seller in connection with this Agreement or the Transaction will be
entitled to any brokerage or finder’s fee or other commission in respect thereof
based in any way on agreements, arrangements or understandings made by or on
behalf of such Seller, except for any fees that have been or will be paid in
full by Sellers.

Section 3.7 Transactions with Affiliates. Except with respect to the Purchase
Agreement (as defined in the Zabeel Termination Agreement) and the other
agreements entered into in connection therewith and referenced therein, and the
dividend payable pursuant to Section 6.7 hereof, each Seller and their
respective affiliates (other than the Companies and their subsidiaries) do not
have any direct or indirect interest in (i) any contract, arrangement or
understanding with the Companies or any of their subsidiaries or to which any of
the properties or assets of the Companies or any of their subsidiaries are
subject, involving amounts or property with a fair market value in excess of
$10,000, or (ii) any property (real, personal or mixed), tangible or intangible,
used by the Companies or any of their subsidiaries with a fair market value in
excess of $10,000.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Sellers on the date of this
Agreement and as of the Closing as follows:

Section 4.1 Organization; Power and Authorization. Purchaser is duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Purchaser has the requisite power and authority to enter into, deliver and carry
out its obligations pursuant to this Agreement and to purchase the Equity
Interests from U.S. Seller. Purchaser’s execution, delivery and performance of
this Agreement has been duly authorized by Purchaser and no other corporate
proceeding on the part of Purchaser is necessary to authorize this Agreement or
the Transaction.

Section 4.2 Binding Effect. This Agreement has been duly executed and delivered
by Purchaser. This Agreement constitutes the legal, valid and (assuming due
authorization, execution and delivery by Sellers) binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors’ rights generally and legal principles of
general applicability governing the availability of equitable remedies (whether
considered in a proceeding in equity or at law or under applicable legal codes).

Section 4.3 Noncontravention. The execution, delivery, and performance by
Purchaser of this Agreement, the consummation of the Transaction, and the
fulfillment of and compliance with the terms hereof by Purchaser do not and
shall not (with or without notice or lapse of time or both): (i) conflict with
or result in a breach or violation of the terms, conditions or provisions of the
organizational documents of Purchaser; (ii) result in the imposition of any
material Lien upon the properties or assets of Purchaser; (iii) result in a
breach or violation by Purchaser of any of the terms, conditions or provisions
of any material law or order applicable to Purchaser or by which any of its
assets or properties is bound or subject; or (iv) require any authorization,
consent, approval, exemption or other action by or declaration or notice to or
registration with any third person or with any Governmental Authority.

Section 4.4 Governmental Authorization; Third Party Consents. No approval,
consent, exemption, authorization or other action by, or notice to, or filing
with, any Governmental Authority or any other Person, and no lapse of a waiting
period under any law, statute, treaty, rule or regulation, is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, Purchaser of this Agreement or the Transaction.

 

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Section 4.5 Non-Reliance. Purchaser acknowledges that, in entering into this
Agreement and consummating the Transaction, it has not relied upon, and Sellers
have not made, any representation or warranty to Purchaser, express or implied,
with respect to the Acquired Securities (including the Equity Interests) or the
Companies (including the Acquired Companies), other than the representations and
warranties expressly made by Sellers in this Agreement.

Section 4.6 Financial Capability. Purchaser and MGLLC presently have and will
have at the Closing all funds sufficient to consummate the Closing of the
Transaction.

Section 4.7 No Brokers. No broker or finder who has acted directly or indirectly
for Purchaser in connection with this Agreement or the Transaction will be
entitled to any brokerage or finder’s fee or other commission in respect thereof
based in any way on agreements, arrangements or understandings made by or on
behalf of Purchaser, except for any fees that have been or will be paid in full
by Purchaser.

Section 4.8 Investment Representations.

(a) Purchaser is an “accredited investor” as that term is defined in Rule 501 of
Regulation D under the Securities Act of 1933, as amended, and the rules and
regulations of the SEC thereunder (the “Securities Act”).

(b) Purchaser is acquiring the Equity Interests solely for the purpose of
investment and not with a view to distribution of the Equity Interests Purchaser
acknowledges that the Equity Interests are not registered under the Securities
Act of 1933, as amended (the “Securities Act”), and the Equity Interests may not
be transferred or sold except pursuant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom and subject to
state securities laws and regulations, as applicable.

(c) Purchaser is able to bear the economic risk of holding the Equity Interests
for an indefinite period (including total loss of investment), and has
sufficient knowledge and experience in financial and business matters so as to
be capable for evaluating the merits and risks of its investments.

ARTICLE V

CLOSING CONDITIONS

Section 5.1 Conditions to Obligations of Each Party. The respective obligations
of each Party to consummate the Transaction will be subject to satisfaction at
or before the Closing of each of the following conditions, which to the extent
permitted by law may be waived in a written agreement of Purchaser and Sellers:

(a) No Injunctions or Restraints; Illegality. No order, judgment or injunction
issued, promulgated or entered by any Governmental Authority or other legal or
regulatory restraint or prohibition restraining or preventing the consummation
of the Transaction will be in effect. No action taken by any Governmental
Authority, and no statute, rule or regulation will have been enacted, enforced
or deemed applicable to the Transaction, which makes the consummation of the
Transaction illegal.

 

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(b) Governmental Approvals. Purchaser and Sellers will have timely obtained from
each Governmental Authority all approvals, waivers and consents, if any,
necessary for consummation of, or in connection with, the Transaction.

Section 5.2 Additional Conditions to Obligations of Purchaser. The obligations
of Purchaser to consummate the Transaction will be subject to the satisfaction,
or written waiver by Purchaser, at or before the Closing of each of the
following conditions (each such condition being solely for the benefit of
Purchaser and capable of being waived by Purchaser in its sole discretion
without notice, liability or obligation to any Person):

(a) Representations, Warranties and Covenants of Sellers. Each of the
representations and warranties made by Sellers in this Agreement shall be true
and correct in all material respects, as of the date of this Agreement and at
and as of the Closing Date as if made on that date (except in any case that
representations and warranties that expressly speak as of a specified date or
time need only be true and correct in all material respects as of such specified
date or time, and except where the representations and warranties are qualified
as to materiality, in which case, such representations and warranties shall be
true and correct in all respects). Sellers shall have performed and complied in
all material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by it at or before the
Closing. Purchaser shall have received a certificate to the foregoing effect
from the authorized officers of Sellers.

(b) Receipt of Closing Deliveries. Purchaser shall have received each of the
agreements, instruments and other documents required to have been delivered to
it at or before the Closing, including pursuant to Section 2.2 (including the
Zabeel Termination Agreement and the Waiver), and all such agreements,
instruments and other documents will continue to be effective and will not have
been revoked by the Persons executing same.

(c) Sasson Masi Purchase Agreement. The closing of the acquisition transactions
in accordance with the Sasson Masi Purchase Agreement shall occur concurrently
with the Closing hereunder.

Section 5.3 Additional Conditions to Obligations of Sellers. The obligations of
Sellers to consummate the Transaction will be subject to the satisfaction, or
written waiver by Sellers, at or before the Closing of each of the following
conditions (each such condition being solely for the benefit of Sellers and
capable of being waived by each Seller in its sole discretion without notice,
liability or obligation to any Person):

(a) Representations, Warranties and Covenants of Purchaser. Each of the
representations and warranties made by Purchaser in this Agreement shall be true
and correct in all respects, as of the date of this Agreement and at and as of
the Closing Date as if made on that date (except in any case that
representations and warranties that expressly speak as of a specified date or
time need only be true and correct in all material respects as of such specified
date or time, and except where the representations and warranties are qualified
as to materiality, in which case, such representations and warranties shall be
true and correct in all respects). Purchaser shall have performed and complied
in all material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by it at or before the
Closing. Sellers shall have received a certificate to the foregoing effect from
an authorized officer of Purchaser.

 

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(b) Receipt of Closing Deliveries. Sellers shall have received each of the
agreements, instruments and other documents required to have been delivered to
them at or before the Closing, including pursuant to Section 2.3 (including the
Zabeel Termination Agreement and the Sasson Masi Waiver), and all such
agreements, instruments and other documents will continue to be effective and
will not have been revoked by the Persons executing same.

ARTICLE VI

COVENANTS

Section 6.1 Commercially Reasonable Efforts; Cooperation. Subject to the terms
and conditions herein provided, each of the Parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable law to consummate and make effective, in the most
expeditious manner practicable, the Transaction. Without limiting the foregoing,
the Parties shall use their respective commercially reasonable efforts to make
promptly any required submissions under applicable law that either Party
reasonably determines is required to be made with respect to the Transaction and
to respond as promptly as practicable to all inquiries received from any
Governmental Authority with respect to such submissions for additional
information or documentation.

Section 6.2 Expenses; Transfer Taxes. Except as expressly set forth in this
Agreement, whether or not the Closing occurs, all costs and expenses incurred in
connection with this Agreement or any related document or agreement and the
Transaction and thereby shall be paid by the Party incurring such expense. All
transfer, documentary, sales, use, registration and other such taxes (including
all applicable real estate transfer or gains taxes) and related fees (including
any penalties, interest and additions to tax) incurred in connection with this
Agreement and the Transaction shall be shared equally between Purchaser, on the
one hand, and Sellers, on the other hand, and the Parties shall cooperate in
timely making all filings, returns, reports, and forms as may be required to
comply with the provisions of such tax laws.

Section 6.3 Publicity. From and after the date of this Agreement, no press
release or public announcement concerning this Agreement or the Transaction will
be issued by any Party or any of its affiliates without the prior written
consent of the other Party, which consent shall not be unreasonably withheld,
conditioned or delayed, except for any such release or announcement that any
Party reasonably determines is required by any law or securities exchange
listing requirement applicable to such Party or any of its affiliates, in which
case, the Party required to make the release or announcement will, to the extent
practicable, allow the other Parties reasonable time to comment on the release
or announcement in advance of such issuance.

 

 

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Section 6.4 Purchaser’s Undertakings.

(a) Purchaser undertakes with Sellers:

(i) to notify U.S. Seller of a Trigger Event occurring during the Restricted
Period within ten (10) business days of such Trigger Event occurring;

(ii) in the event a Trigger Event shall have occurred during the Restricted
Period, to supply on demand such evidence as U.S. Seller reasonably requires to
establish whether it is entitled to any Additional Consideration and the amount
thereof;

(iii) during the Restricted Period, not to do or permit any act or event itself
or procure that any of the Acquired Companies or any member of the Purchaser’s
Group does not do or permit any act or event itself which is intended to avoid
or reduce any Additional Consideration payable to Sellers;

(iv) during the Restricted Period, procure that any of the Acquired Companies
does not enter into any transaction with respect to the sale of the outstanding
equity interests or assets in the Acquired Companies other than for full value
consideration to an independent third party acting in good faith;

(v) during the Restricted Period, not to enter into or procure that any of the
Acquired Companies or any member of the Purchaser’s Group does not enter into
any agreement or arrangement with the intention of concluding a Trigger Event on
terms that provide for completion of such Trigger Event wholly or partly after
the expiry of the Restricted Period; and

(vi) during the Restricted Period, not to enter into or procure that any of the
Acquired Companies or any member of the Purchaser’s Group does not enter into
any winding up when any of the Acquired Companies or any member of the
Purchaser’s Group is solvent or to make any proposal for a voluntary arrangement
in relation to any of the Acquired Companies or any member of the Purchaser’s
Group.

Provided that nothing in this Section 6.4 shall prevent a director of any of the
Acquired Companies or of any member of the Purchaser’s Group from taking any
action necessary to fulfill his duties owed to the Acquired Companies or to the
Purchaser’s Group.

(b) Until the end of the Restricted Period, Purchaser shall not and shall
procure that the Acquired Companies do not without the prior written consent of
U.S. Seller (such consent not to be unreasonably withheld or delayed):

(i) change the fiscal year of any of the Acquired Companies;

(ii) declare and pay any dividend or other distribution in excess of 100% of the
pre-tax profit from the operations of the Acquired Companies and their
respective subsidiaries (and excluding any profit from any asset sale,
restructuring, recapitalization or other extraordinary transaction); or

(iii) purchase or redeem any equity securities of any of the Acquired Companies
in excess of one percent (1%) of the membership interests in the Acquired
Companies.

 

11

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Section 6.5 Tax Reporting of Income of Acquired Companies. The Parties agree to
cause the Companies to determine the amount of items of income, gain, loss or
deductions allocable to the Acquired Securities for U.S. federal and state
income tax purposes by closing the books of the Companies as of the Closing Date
and allocating items to the period ending on the Closing Date to Sellers and
allocating items to the period beginning after the Closing Date to Purchaser.

Section 6.6 Non-Solicitation of Employees. For a period of three (3) years from
and after the Closing Date, Sellers shall not, and shall not permit any of their
affiliates to, without the prior written approval of Purchaser, directly or
indirectly hire or solicit any individual who is an employee of any Company or
any of their subsidiaries to terminate his or her employment relationship with
Purchaser, any of the Companies or any of their subsidiaries. The foregoing
shall not be violated by (a) general advertising not specifically targeted at
the prohibited group, (b) providing upon request of an employee or a former
employee a reference to any entity with which Sellers are not affiliated so long
as Sellers are not initially identifying the individual to said entity or
(c) solicitations conducted by an entity that is acquired by or merged with an
affiliate of any Seller so long as such solicitations were conducted prior to
the date of such acquisition or merger.

Section 6.7 Dividends. To the extent the Acquired Companies have not already
distributed to its members the net earnings of DDD and HHH for the third fiscal
quarter of 2011, the Purchaser shall pay, or cause to be paid, on the same basis
as distributions are paid to the Sasson Masi Sellers, on or prior to the later
of (i) November 20, 2011 and (ii) two (2) Business Days after the Acquired
Companies and their subsidiaries receive funds from MGM Resorts International
and Aria Resort & Casino, to the Sellers an amount equal to one hundred
(100%) percent of their pro rata portion of such net earnings. The Sellers shall
not be entitled to receive any distributions with respect to the fiscal quarter
beginning on October 1, 2011, and Purchaser shall be entitled to receive the
amounts that Sellers would have received with respect to such period if the
Closing were not to occur.

ARTICLE VII

MISCELLANEOUS

Section 7.1 Release.

(a) Seller Release. For and in consideration of the amount to be paid to U.S.
Seller under this Agreement, and the additional covenants and promises set forth
herein, effective as of from and after the Closing, each Seller, on behalf of
itself and on behalf of each of its respective past, present and future
affiliates and subsidiaries, and all of their past, present and future
respective stockholders, members, partners, general partners, limited partners,
directors, officers, managers, control persons, employees and administrators and
their respective heirs, executors, agents, representatives, successors

 

12

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and assigns (collectively, the “Zabeel Parties”), hereby absolutely,
unconditionally and irrevocably releases, remits, acquits and forever discharges
each of the Companies and their respective past, present and future affiliates
and subsidiaries (including MGLLC and Purchaser), and all of their past, present
and future respective stockholders, members, partners, general partners, limited
partners, directors, officers, managers, control persons, employees and
administrators and their respective heirs, executors, agents, representatives,
successors and assigns (collectively, the “Company Parties”), with respect to
and from any and all claims, demands, actions, suites, causes of action,
obligations, debts costs, expenses, interests, damages, judgments, orders and
liabilities of any kind or nature whatsoever (upon any legal or equitable
theory, whether contractual, common law, statutory, federal, state, local or
otherwise, and including but not limited to any claims for attorneys’ fees, or
costs or disbursements of any kind), whether known or unknown (collectively,
“Causes of Action”), which any of the Zabeel Parties had, has, or may have had
at any time in the past until and including the Closing against the Company
Parties, excluding Causes of Action related to this the Agreement and the
Transactions, including the dividend payable pursuant to Section 6.7 hereof.

(b) Company Release. For and in consideration of the Sellers entering into this
Agreement and consummating the Transactions, and the additional covenants and
promises set forth herein, effective as of from and after the Closing,
Purchaser, on behalf of itself and on behalf of each Company Party, hereby
absolutely, unconditionally and irrevocably releases, remits, acquits and
forever discharges each of the Zabeel Parties, with respect to and from any and
all Causes of Action which any of the Company Parties had, has, or may have had
at any time in the past until and including the Closing against the Zabeel
Parties, excluding Causes of Action related to this the Agreement and the
Transactions.

Section 7.2 Survival. The representations and warranties of the Parties
contained herein shall survive the Closing hereunder indefinitely.

Section 7.3 Governing Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of New York (as permitted by
Section 5-401 of the New York General Obligations law or any similar successor
provision), without regard to the conflicts of law principles that would require
the application of any other law.

Section 7.4 Jurisdiction; Service of Process. Any action, suit, claim or
proceeding arising out of or relating to this Agreement or the Transaction may
be brought in the federal and state courts located in the Southern District of
the State of New York, and each of the Parties irrevocably submits to the
jurisdiction of such courts in any such action, suit, claim or proceeding,
waives any objection such Party may now or hereafter have to venue or to
convenience of forum, agrees that all claims in respect of any such action,
suit, claim or proceeding shall be heard and determined only in any such court
and agrees not to bring any action, suit, claim or proceeding arising out of or
relating to this Agreement or any Transaction in any other court. The Parties
agree that any or all of them may file a copy of this paragraph with any court
as written evidence of the knowing, voluntary and bargained-for agreement among
the Parties irrevocably to waive any objections to venue or to convenience of
forum. Process in any action, suit, claim or proceeding referred to in the first
sentence of this Section 7.4 may be served on any Party anywhere in the world.

 

13

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Section 7.5 Waiver of Jury Trial. THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT, CLAIM OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTION, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF
THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO
WAIVE TRIAL BY JURY AND THAT ANY ACTION OR PROCEEDING WHATSOEVER BETWEEN THEM
RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY SHALL INSTEAD
BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

Section 7.6 Attorneys’ Fees. If any action, suit, claim or proceeding for the
enforcement of this Agreement is brought with respect to or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions hereof, the successful or prevailing Party shall be entitled to
recover reasonable attorneys’ fees and other costs incurred in that action,
suit, claim or proceeding, in addition to any other relief to which it may be
entitled.

Section 7.7 Waiver; Remedies Cumulative. The rights and remedies of the Parties
under this Agreement are cumulative and not alternative. A waiver of any
provision of this Agreement may only be made in writing by the Party against
whom such waiver is to be effective. Neither any failure nor any delay by any
Party in exercising any right, power or privilege under this Agreement will
operate as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power or privilege will preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
Party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other Parties; (b) no wavier that may be given
by a Party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one Party will be deemed to be a waiver
of any obligation of that Party or of the right of the Party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.

Section 7.8 Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be deemed given to a Party
when (a) delivered by hand or one (1) day after mailing if sent by a nationally
recognized overnight courier service (costs prepaid), or (b) sent by facsimile
with confirmation of transmission by the transmitting equipment, in each case to
the following:

 

14

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If to Purchaser or to MGLLC, to:

TLG Acquisition LLC

c/o Morgans Hotel Group

475 Tenth Avenue

11th Floor

New York, NY 10018, USA

Attention: David Smail

Fax No.: (212) 277-4172

Email (which shall not constitute notice): david.smail@morganshotelgroup.com

with a copy to:

Hogan Lovells US LLP

555 Thirteenth Street, NW

Washington, DC 20004, USA

Attention: Bruce W. Gilchrist, Esq.

Fax No.: (202) 637-5910

Email (which shall not constitute notice): bruce.gilchrist@hoganlovells.com

If to Sellers, to:

Zabeel Investments Inc.

Dubai International Financial Center

Building 4, 7th Floor

P.O. Box 2228

Dubai, United Arab Emirates

Attention: Giovanni Carpenzano

Fax: 971-4363-7293

Email (which shall not constitute notice): Giovanni@zabeelinvestments.com

with a copy to:

Shearman & Sterling LLP

599 Lexington Avenue

New York, NY 10022, USA

Attention: Manuel Orillac, Esq.

                   Michael S. Dorf, Esq.

Fax: (212) 848-7179

Email (which shall not constitute notice): morillac@shearman.com

                                                              
      mdorf@shearman.com

Any Party may change its contact information for notices and other
communications hereunder by notice to the other Parties hereto in accordance
with this Section 7.8.

Section 7.9 Assignment. This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of the Parties hereto and their
respective successors and permitted assigns; provided, however, that this
Agreement and the rights and obligations hereunder shall not be assignable or
transferable by any Party (except for the assignment to its affiliates with
respect to any rights under this Agreement, but not any obligations hereunder)
without the prior written consent of the other Parties hereto.

 

15

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Section 7.10 Specific Performance. The Parties hereby acknowledge and agree that
the failure of any Party to perform its agreements and covenants hereunder,
including its failure to take all actions as are necessary on its part to the
consummation of the Transaction, will cause irreparable injury to the other
Parties for which damages, even if available, will not be an adequate remedy.
Accordingly, each Party hereby consents to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of such Party’s
obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder.

Section 7.11 No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the Parties hereto and their permitted successors and assigns and
nothing herein expressed or implied shall give or be construed to give to any
Person, other than the Parties hereto and such successors and assigns, any legal
or equitable rights, remedy or claim hereunder.

Section 7.12 Amendments. No amendment to this Agreement shall be effective
unless it shall be in writing and signed by the Parties hereto.

Section 7.13 Entire Agreement. This Agreement (including Exhibits and
Attachments hereto) contains the entire agreement and understanding among the
Parties hereto with respect to the subject matter hereof and, except as
explicitly set forth herein, supersedes all prior and contemporaneous oral and
written agreements and understandings relating to such subject matter.

Section 7.14 Severability. If any provision of this Agreement or the application
of any such provision to any Person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.

Section 7.15 Mutual Drafting. The Parties hereto are sophisticated and have been
represented by counsel who have carefully negotiated the provisions hereof. As a
consequence, the Parties do not intend that the presumptions of any laws or
other rules relating to the interpretation of contracts against the drafter of
any particular clause should be applied to this Agreement and therefore waive
their effects.

Section 7.16 Construction of Agreement. Unless the context clearly requires
otherwise, the words “hereof,” “herein” and “hereunder” and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. The terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa. References herein to a specific Article, Section or Schedule shall refer,
respectively, to Articles, Sections or Schedules of this Agreement, unless the
express context otherwise requires. Wherever the word “include,” “includes,” or
“including” is used in this Agreement, it shall be deemed to be followed by the
words “without limitation” unless clearly indicated otherwise.

Section 7.17 Counterparts; Facsimile. This Agreement may be executed in one or
more counterparts, including by facsimile, all of which shall be considered one
and the same agreement, and shall become effective when one or more such
counterparts have been signed by each of the Parties and delivered to the other
Party.

[remainder of page intentionally left blank]

 

16

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IN WITNESS WHEREOF, the Parties have duly executed this Securities Purchase
Agreement or have caused this Securities Purchase Agreement to be duly executed
by their respective authorized officers as of the day and year first above
written.

 

   

PURCHASER

 

TLG ACQUISITION LLC

 

By Morgans Group LLC, its managing member

 

By Morgans Hotel Group Co., its managing member

    By:   /s/ Michael Gross       Name: Michael Gross       Title: Chief
Executive Officer

 

   

MORGANS GROUP LLC

 

By Morgans Hotel Group Co., its managing member

    By:   /s/ Michael Gross       Name: Michael Gross       Title: Chief
Executive Officer

[Zabeel Securities Purchase Agreement Signature Page]

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U.S. SELLER

 

ZABEEL INVESTMENTS INC.

    By:   /s/ Francisco Pineda       Name: Francisco Pineda       Title:
President

 

   

NON-U.S. SELLER

 

ZABEEL INVESTMENTS (L.L.C.)

    By:   /s/ Hezal Azmarri       Name: Hezal Azmarri       Title: Chairman of
the Board

    By:   /s/ Hani Al-Hamli       Name: Hani Al-Hamli       Title: Board
Director

[Zabeel Securities Purchase Agreement Signature Page]

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SCHEDULE A

ADDITIONAL CONSIDERATION

 

1.

Calculation of additional consideration

 

1.1

Subject to the remaining provisions of this paragraph, the Additional
Consideration shall be calculated in accordance with the following formula:

 

AC =   

(A - (B + C)) x D %

AC: the Additional Consideration.

A: the gross consideration due to the relevant member of the Purchaser’s Group
from a Trigger Event (before deducting any fees, commission or other expenses
but deducting any debts of any member of the Purchaser’s Group assumed by
Purchaser in connection with such Trigger Event and including any deferred
consideration) together with such sums as the Parties shall agree as
representing the cash value of any benefit or consideration received or
receivable otherwise than in cash, to the extent such consideration is
attributable to the sale of the Equity Interests;

B: the consideration for the Sale or Disposal of the Equity Interests (or if not
all Equity Interests are subject to a Trigger Event the proportion of the
consideration that is equal to the proportion of the Equity Interests subject to
the Trigger Event);

C: the reasonable costs and expenses incurred by Purchaser or the Acquired
Companies wholly and exclusively in respect of such Trigger Event; and

D: percentage of Additional Consideration that should be paid to Seller being:

50% in the first 6 months;

25% in the next 6 months; and

0% thereafter

provided, that AC shall not be less than zero.

 

1.2

The Additional Consideration shall be paid in accordance with Section 1.2 of
this Agreement.

 

1.3

If more than one Trigger Event occurs during the Restricted Period, then:

 

  (a)

references to a “Trigger Event” or “such Trigger Event” in the definitions of A
and C set out in Paragraph 1.1 of this Schedule A shall be construed as meaning
“all such Trigger Events during the Restricted Period”; and

 

A-1

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  (b)

for the avoidance of doubt, any subsequent payment due to Purchaser in respect
of Additional Consideration shall not include any sum already paid to Purchaser
in accordance with Section 1.2 of this Agreement.

 

1.4

If Purchaser or any member of the Purchaser Group enters into an agreement
during the Restricted Period to conclude a Trigger Event after the expiry of the
Restricted Period, the Restricted Period is deemed extended until such Trigger
Event has occurred.

 

A-2

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EXHIBIT A

TERMINATION AND RELEASE AGREEMENT

This Termination and Release Agreement (this “Agreement”), dated as of November
__, 2011(the “Effective Date”), is entered into by and among Zabeel Investments
Inc., a Delaware corporation (“Zabeel Investments”), Zabeel Investments
(L.L.C.), a Dubai limited liability company (“Zabeel LLC” and, collectively with
Zabeel Investments, the “Zabeel Parties”), Sasson Masi F&B Holdings, LLC, a
Delaware limited liability company (“Sasson Masi F&B”), Sasson Masi Hospitality
Holdings, LLC, a Delaware limited liability company (“Sasson Masi Hospitality”),
Sasson Masi Nightlife Holdings, LLC, a Delaware limited liability company
(“Sasson Masi Nightlife”) and the other parties listed under the signature pages
hereto under the heading “Sasson/Masi Parties” (collectively with Sasson Masi
F&B, Sasson Masi Hospitality and Sasson Masi Nightlife, the “Sasson/Masi
Parties”).

A. On February 20, 2008, Zabeel LLC, Zabeel Investments, TEJ Management, LLC,
Galts Gulch Holding Company LLC, Andrew Sasson and Andy Masi entered into a
Purchase Agreement (the “Purchase Agreement”).

B. Pursuant to the Purchase Agreement and the transactions contemplated thereby,
Zabeel Investments acquired 50% of the equity interests in DDD Holdings, LLC, a
Delaware limited liability company (“DDD”), HHH Holdings, LLC, a Delaware
limited liability company (“HHH”), and The Harmon Hotel, LLC, a Nevada limited
liability company (“Harmon”), and Zabeel LLC acquired 50% of the equity
interests in Hotel IP, Ltd., a Cayman Islands exempted company (“Hotel IP”), and
Hospitality IP, Ltd., a Cayman Islands exempted company (“Hospitality IP).

C. The Zabeel Parties, TLG Acquisition LLC (“Purchaser”), and Morgans Group LLC
(“Morgans”) are parties to a Securities Purchase Agreement dated as of November
    , 2011, pursuant to which, among other things, on this date the Zabeel
Parties are selling to Purchaser (or its designee) the 50% interests that the
Zabeel Parties own, directly or indirectly, in each of DDD and HHH and other
related assets (such acquisition, the “Zabeel Transaction”), and the Sasson Masi
Parties, Purchaser, and Morgans are parties to a Master Purchase Agreement dated
as of November     , 2011, pursuant to which, among other things, on this date
the Sasson Masi Parties are selling to Purchaser (or its designee) the remaining
50% interest in each of DDD and HHH and other related assets (such acquisition,
the “Sasson Masi Transaction”). The closing of each of the Zabeel Transaction
and the Sasson Masi Transaction are conditioned on the contemporaneous closing
of both acquisitions.

NOW, THEREFORE, in consideration of the mutual promises, terms and conditions
herein contained, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. Termination of Purchase Agreement. Effective upon the Effective Date, the
Purchase Agreement is hereby terminated in its entirety and shall be of no
further force or effect, and no party thereto shall have any rights or remedies
or liabilities or obligations of any kind thereunder.

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2. Termination of Buy-Sell Agreement. Effective upon the Effective Date, the
Buy-Sell Agreement, dated as of March 14, 2008 (the “Buy-Sell Agreement”), by
and among Zabeel Investments, Zabeel LLC, Sasson Masi F&B, Sasson Masi
Nightlife, Sasson Masi Hospitality, TEJ Management, LLC, Galts Gulch Holding
Company LLC, Veranda Holdings, LLC, Andrew Sasson and Andy Masi is hereby
terminated in its entirety and shall be of no further force or effect, and no
party thereto shall have any rights or remedies or liabilities or obligations of
any kind thereunder.

 

  3.

Management Committees and Board of Directors.

(a) Effective upon the Effective Date, (i) Zabeel Investments hereby irrevocably
relinquishes its rights under Section 9.2 of the limited company agreements of
DDD, HHH and Harmon, respectively, to appoint three members to represent Zabeel
Investments on the Management Committees of DDD, HHH and Harmon, respectively,
and (ii) the parties agree that, effective as of the Effective Date, all members
of the Management Committees of DDD, HHH and Harmon that were appointed by
Zabeel Investments are hereby deemed to have irrevocably resigned.

(b) Effective upon the Effective Date, (i) Zabeel LLC hereby irrevocably
relinquishes its rights under Section 9.2 of the shareholder agreements of Hotel
IP and Hospitality IP, respectively, to appoint three members to represent
Zabeel LLC on the Board of Directors of Hotel IP and Hospitality IP,
respectively, and (ii) the parties agree that, effective as of the Effective
Date, all members of the Board of Directors of Hotel IP and Hospitality IP that
were appointed by Zabeel LLC are hereby deemed to have irrevocably resigned.

 

  4.

Mutual Release.

(a) Effective upon the Effective Date, each of the Zabeel Parties, on its own
behalf and on behalf of each of their respective past, present and future
affiliates, and all of their past, present and future respective stockholders,
members, partners, general partners, limited partners, directors, officers,
managers, control persons, employees and administrators and their respective
heirs, executors, agents, representatives, successors and assigns (collectively,
the “Zabeel Releasors”), hereby absolutely, unconditionally and irrevocably
releases, remits, acquits and forever discharges each of the Sasson/Masi Parties
and their respective past, present and future affiliates, and all of their past,
present and future respective stockholders, members, partners, general partners,
limited partners, directors, officers, managers, control persons, employees and
administrators and their respective heirs, executors, agents, representatives,
successors and assigns (collectively, the “Zabeel Releasees”), from any and all
claims, demands, causes of actions and liabilities of any kind whatsoever (upon
any legal or equitable theory, whether contractual, common law, statutory,
federal, state, local or otherwise, and including but not limited to any claims
for attorneys’ fees, or costs or disbursements of any kind) which any of the
Zabeel Releasors ever had, now has, or may have had at any time in the past
until and including the Effective Date against the Zabeel Releasees.

(b) Effective upon the Effective Date, each of the Sasson/Masi Parties, on its
own behalf and on behalf of each of their respective past, present and future
affiliates, and all of their past, present and future respective stockholders,
members, partners, general partners,

 

2

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limited partners, directors, officers, managers, control persons, employees and
administrators and their respective heirs, executors, agents, representatives,
successors and assigns (collectively, the “Sasson/Masi Releasors”), hereby
absolutely, unconditionally and irrevocably releases, remits, acquits and
forever discharges each of the Zabeel Parties and their respective past, present
and future affiliates, and all of their past, present and future respective
stockholders, members, partners, general partners, limited partners, directors,
officers, managers, control persons, employees and administrators and their
heirs, executors, agents, representatives, successors and assigns (collectively,
the “Sasson/Masi Releasees”), from any and all claims, demands, causes of
actions and liabilities of any kind whatsoever (upon any legal or equitable
theory, whether contractual, common law, statutory, federal, state, local or
otherwise, and including but not limited to any claims for attorneys’ fees, or
costs or disbursements of any kind) which any of the Sasson/Masi Releasors ever
had, now has, or may have had at any time in the past until and including the
Effective Date against the Sasson/Masi Releasees.

5. Certain Future Events. In the event the Zabeel Transaction is invalidated,
reversed or unwound in any respect, this Agreement shall be of no further force
and effect and the Purchase Agreement and the Buy-Sell Agreement shall be
revived and in full force and effect from and after any such invalidation,
reversal or unwinding, and the parties to the Zabeel Transaction and the Sasson
Masi Transaction shall therafter be restored to the same position they would
have been in with respect to each other the day before the Securities Purchase
Agreement and Master Purchase Agreement referred to in Recital C were entered
into without regard to this Agreement or the waivers entered into in connection
with the Zabeel Transaction and the Sasson Masi Transaction, and none of the
parties hereto shall have any claims against any of the other parties hereto
relating to the Zabeel Transaction or the Sasson Masi Transaction or the
invalidation, reversal or unwinding thereof or any liability associated
therewith, except that Morgans and Purchaser shall continue to be liable for
reimbursement of $350,000 of Seller Expenses (as defined in the Master Purchase
Agreement referred to in Recital C).

6. Governing Law; Jurisdiction. This Agreement shall be enforced, governed by
and construed in accordance with the laws of the State of New York, regardless
of the choice or conflict of laws provisions of New York or any other
jurisdiction. Each of the parties hereto irrevocably submits to the jurisdiction
of the New YorkState courts and the Federal courts sitting in the State of New
York, Borough of Manhattan and agrees that all matters involving this Agreement
shall be heard and determined in such courts. Each of the parties hereto waives
irrevocably the defense of inconvenient forum to the maintenance of such action
or proceeding.

7. Multiple Counterparts. This Agreement may be executed in multiple
counterparts (including by facsimile or pdf transmission), each of which shall
be deemed an original, but all of which shall constitute one and the same
instrument.

8. Severability. If any provision of this Agreement or the application of such
provision to any person or entity or circumstance shall be held invalid, the
remainder of this Agreement or the application of such provision to persons,
entities or circumstances other than those to which it is held invalid shall not
be affected thereby.

 

3

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9. Modification or Waiver. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated, except by an instrument in writing
signed by the party against whom enforcement of such change, waiver, discharge
or termination is sought.

10. Notices. All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if (a) delivered personally, (b) mailed,
certified or registered mail with postage prepaid, (c) sent by next-day or
overnight mail or delivery, (d) sent by fax, or (e) delivered by email to as
follows:

If to any Zabeel Party:

Zabeel Investments

Dubai International Financial Center

Building 4, 7th Floor

P.O. Box 2228

Dubai, United Arab Emirates

Attention: Giovanni Carpenzano

Facsimile: 971-4363-7293 Email:

Giovanni@zabeelinvestments.com

with a copy to:

Shearman & Sterling LLP

599 Lexington Avenue

New York, NY 10022, USA

Attention: Manuel Orillac, Esq.

       Michael S. Dorf, Esq.

Fax: (212) 848-7179

Email: morillac@shearman.com

  mdorf@shearman.com

and

If to any Sasson/Masi Party, to it at:

6276 S. Rainbow Road

Las Vegas, Nevada 89118

Attention: Andrew Sasson, Andy Masi and Michael Rea

Facsimile: (702) 588-5614

Email: 25@lightlv.com

with a copy to:

Proskauer Rose LLP

11 Times Square

New York, New York 10036-8299

Attention: Jeffrey A. Horwitz, Esq.

Facsimile: (212) 969-2900

Email: jhorwitz@proskauer.com

 

4

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or to such other address as to whom a communication is to be given may have
furnished to the other party in writing in accordance herewith. All such
notices, requests, demands, waivers and other communications shall be deemed to
have been given when received (w) by personal delivery, on the day of such
delivery if prior to 5:00 p.m., (x) by next-day or overnight mail or delivery,
on the day delivered (y) by fax, on the business day on which such fax was
received, and (z) by email, on the business day on which such email was
delivered as evidenced by electronic record; provided, however, that the subject
line must contain readily identifiable notice that the email is being delivered
as an official notice pursuant to this Agreement.

11. Entire Agreement. This Agreement constitutes the entire agreement between
the parties and their affiliates with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties or their affiliates with respect to the subject
matter hereof. In the event of any conflict between this Agreement and such
other written or oral agreements, the terms and provisions of this Agreement
shall govern and control.

12. Headings. All headings herein are inserted only for convenience and ease of
reference and shall not be considered in the construction or interpretation of
any provision of this Agreement.

13. Construction. With regard to each and every term and condition of this
Agreement, the parties understand and agree that the same have or has been
mutually negotiated, prepared and drafted, and that if at any time the parties
desire or are required to interpret or construe any such term or condition or
any agreement or instrument subject thereto, no consideration shall be given to
the issue of which party actually prepared, drafted or requested any term or
condition of this Agreement. Each party hereby acknowledges that it has been
represented in negotiations for and in the preparation of this Agreement by
counsel of its own choosing, that it has read this Agreement and has had this
Agreement fully explained to it by such counsel, and that it is fully aware of
the contents of this Agreement and of its legal effect.

14. Expenses. Each of the Zabeel Parties, on the one hand, and the Sasson/Masi
Parties, on the other, shall bear their own costs and expenses in connection
with the negotiation, execution and delivery of this Agreement.

15. Binding Effect. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.

[Signature Page Follows]

 

5

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IN WITNESS WHEREOF, the parties have caused this Termination and Release
Agreement to be duly executed as of the date first written above.

 

    ZABEEL PARTIES:     ZABEEL INVESTMENTS INC.     By:           Name:      
Title:

 

    ZABEEL INVESTMENTS (L.L.C.)     By:           Name:       Title:

 

    By:           Name:       Title:

[Signature page 1 to Zabeel Termination Agreement]

--------------------------------------------------------------------------------

    SASSON/MASI PARTIES:     SASSON MASI HOSPITALITY HOLDINGS, LLC     By:      
    Name:       Title:

 

    SASSON MASI F&B HOLDINGS, LLC     By:           Name:       Title:

 

    SASSON MASI NIGHTLIFE HOLDINGS, LLC     By:           Name:       Title:

 

    TEJ MANAGEMENT, LLC     By:           Name:       Title:

 

    GALTS GULCH HOLDING COMPANY, LLC     By:           Name:       Title:

[Signature page 4 to Zabeel Termination Agreement]

--------------------------------------------------------------------------------

    VERANDA HOLDINGS, LLC     By:           Name:       Title:           Andrew
Sasson          

Andy Masi

[Signature page 3 to Zabeel Termination Agreement]

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The undersigned, as parties to the Zabeel Transaction and the Sasson Masi
Transaction, hereby execute this Agreement solely with respect to the
obligations set forth in Section 5 hereof.

 

    TLG ACQUISITION LLC     By Morgans Group LLC, its managing member     By
Morgans Hotel Group Co., its managing member

 

    By:           Name:       Title:

 

    MORGANS GROUP LLC     By Morgans Hotel Group Co., its managing member

 

    By:           Name:       Title:

[Signature page 4 to Zabeel Termination Agreement]

--------------------------------------------------------------------------------

Exhibit B

November     , 2011

Morgans Group LLC

475 Tenth Avenue

New York, New York 10018

Re: Membership Interest Purchase Agreement—Waiver of Rights of Purchase and Sale

Ladies and Gentlemen:

The undersigned and you are engaged in negotiations regarding an acquisition,
among other things, by one of your subsidiaries of the 50% interests that the
undersigned owns, directly or indirectly, in each of DDD Holdings, LLC, HHH
Holdings, LLC, The Harmon Hotel, LLC, Hospitality IP, Ltd., and Hotel IP, Ltd.
(collectively, “Purchased Entities”) and other related assets (such acquisition,
the “Transaction). You have informed us that you also are negotiating the
acquisition of the remaining 50% interest in each of the Purchased Entities and
other related assets (such acquisition, the “Other Transaction”) from Sasson
Masi Nightlife Holdings, LLC, Sasson Masi F&B Holdings, LLC, and certain of
their affiliates (collectively, the “TLG Parties”) and that the closing of each
of the Transaction and the Other Transaction will be conditioned on the
contemporaneous closing of both acquisitions.

Certain agreements to which the undersigned and the TLG Parties are parties
contain restrictions on transfers of interest in the Purchased Entities and
other related assets, including rights of first refusal, tag along rights, and
consent rights in certain circumstances, and put and call rights that are
triggered in certain circumstances and rights to receive notice of a proposed
transfer and the terms on which a party to such agreement proposes to transfer
its interests in the Purchased Entities and other related assets to another
person or copies of the transaction documentation (such rights, obligations, and
restrictions, collectively, the “Transfer Restrictions”).

In order to facilitate your ability to consummate the Transaction and the Other
Transaction, which will benefit the undersigned, you have asked us to grant a
waiver of the Transfer Restrictions, to the extent applicable, for the benefit
of the TLG Parties, and you have asked the TLG Parties to grant a waiver of the
Transfer Restrictions, to the extent applicable, for the benefit of the
undersigned.

In consideration of the foregoing, and intending to enter into a binding
agreement upon which you and the TLG Parties are entitled to rely, we hereby
waive any requirement that the TLG Parties comply with the Transfer Restrictions
in connection with the Other Transaction, on the conditions that our waiver is
not effective for any purpose unless and until (i) the TLG Parties grant a
waiver of any requirement that the undersigned comply with the Transfer
Restrictions in connection with the Transaction on the same terms and conditions
as are set forth in this letter, (ii) the Transaction closes at the same time as
after the closing of the Other Transaction, and (iii) the closing of the
Transaction and the Other Transaction both occur no later than December 15,
2011.

--------------------------------------------------------------------------------

The undersigned are entering into this waiver in reliance on the accuracy in all
material respects of the certificate to be delivered at closing by Morgans Group
LLC and TLG Acquisition LLC in accordance with Section 2.3(f) of the Securities
Purchase Agreement relating to the Transaction and the undersigned would not
have entered into this waiver if such certificate were inaccurate in any
material respect.

We agree that the TLG Parties shall be intended third party beneficiaries of the
agreements set forth in this letter, so long as we are intended third party
beneficiaries of a substantially identical letter executed by the TLG Parties, a
copy of which shall be attached as an exhibit to the purchase agreement to be
entered into between you and the undersigned in connection with the Transaction.

We acknowledge that no binding agreement to consummate the Transaction shall
arise between you and the undersigned unless and until you and the undersigned
execute and deliver definitive agreements with respect to the Transaction.

This letter agreement may be amended, altered or modified only by a written
instrument duly executed by the parties hereto. This letter may be executed in
counterparts which, when taken together, shall constitute one and the same
document. Delivery of an executed counterpart of a signature page of this letter
by facsimile or electronic transmission shall be effective as delivery of a
manually executed counterpart of this letter.

This letter shall be governed by, and construed in accordance with, the laws of
the State of New York without regard to principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.

[Signatures on following page]

 

2

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Sincerely,

 

ZABEEL INVESTMENTS INC. By:       Name:     Title:  

 

ZABEEL INVESTMENTS (L.L.C.) By:  

 

  Name:     Title:  

 

By:       Name:     Title:  

 

By:       Name:     Title:  

Acknowledged and accepted:

 

MORGANS GROUP LLC By:   Morgans Hotel Group Co.,  

its Managing Member

 

By:       Name:     Title:  

[Zabeel Waiver of Rights of Purchase and Sale]

--------------------------------------------------------------------------------

EXHIBIT C

November     , 2011

Morgans Group LLC

475 Tenth Avenue

New York, New York 10018

Re: Master Purchase Agreement—Waiver of Rights of Purchase and Sale

Ladies and Gentlemen:

The undersigned and you are engaged in negotiations regarding an acquisition,
among other things, by one of your subsidiaries of the 50% interests that the
undersigned own, directly or indirectly, in each of DDD Holdings, LLC and HHH
Holdings, LLC (collectively, “Purchased Entities”) and other related assets
(such acquisition, the “Transaction). You have informed us that you also are
negotiating the acquisition of the remaining 50% interest in each of the
Purchased Entities and other related assets (such acquisition, the “Other
Transaction”) from Zabeel Investments Inc. (“Zabeel”) and that the closing of
each of the Transaction and the Other Transaction will be conditioned on the
contemporaneous closing of both acquisitions.

Certain agreements to which the undersigned and Zabeel are parties contain
restrictions on transfers of interest in the Purchased Entities and other
related assets, including rights of first refusal, tag along rights, and consent
rights in certain circumstances, and put and call rights that are triggered in
certain circumstances and rights to receive notice of a proposed transfer and
the terms on which a party to such agreement proposes to transfer its interests
in the Purchased Entities and other related assets to another person or copies
of the transaction documentation (such rights, obligations, and restrictions,
collectively, the “Transfer Restrictions”).

In order to facilitate your ability to consummate the Transaction and the Other
Transaction, which will benefit the undersigned, you have asked us to grant a
waiver of the Transfer Restrictions, to the extent applicable, for the benefit
of Zabeel, and you have asked Zabeel to grant a waiver of the Transfer
Restrictions, to the extent applicable, for the benefit of the undersigned.

In consideration of the foregoing, and intending to enter into a binding
agreement upon which you and Zabeel are entitled to rely, we hereby waive any
requirement that Zabeel comply with the Transfer Restrictions in connection with
the Other Transaction, on the conditions that (i) our waiver is not effective
for any purpose unless and until Zabeel grants a waiver of any requirement that
the undersigned comply with the Transfer Restrictions in connection with the
Transaction on the same terms and conditions as are set forth in this letter,
(ii) the Transaction closes at the same time or after the closing of the Other
Transaction, and (iii) the closing of the Transaction and the Other Transaction
both occur no later than December 15, 2011.

--------------------------------------------------------------------------------

We agree that Zabeel shall be an intended third party beneficiary of the
agreements set forth in this letter, so long as we are intended third party
beneficiaries of a substantially identical letter executed by Zabeel.

We acknowledge that no binding agreement to consummate the Transaction shall
arise between you and the undersigned unless and until you and the undersigned
execute and deliver definitive agreements with respect to the Transaction.

This letter agreement may be amended, altered or modified only by a written
instrument duly executed by the parties hereto. This letter may be executed in
counterparts which, when taken together, shall constitute one and the same
document. Delivery of an executed counterpart of a signature page of this letter
by facsimile or electronic transmission shall be effective as delivery of a
manually executed counterpart of this letter.

This letter shall be governed by, and construed in accordance with, the laws of
the State of New York without regard to principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.

[Signatures on following page]

 

2

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Sincerely,

 

SASSON MASI F&B HOLDINGS, LLC

(a Delaware limited liability company)

   

SASSON MASI NIGHTLIFE HOLDINGS, LLC

(a Delaware limited liability company)

By:

       

By:

     

Name:

         

Name:

 

 

 

Title:

         

Title:

 

 

   

ANDREW SASSON

 

       

ANDY MASI

 

Acknowledged and accepted:

 

MORGANS GROUP LLC By:   Morgans Hotel Group Co.,   its Managing Member

 

By:       Name:       Title:    

[Signature page to Seller Waiver of Rights of Purchase and Sale]