Document:

Exhibit 10.2

Exhibit 10.2

ROYALTON NEW YORK

PURCHASE AND SALE AGREEMENT

BETWEEN

Royalton, LLC,

a Delaware limited liability company,

AS SELLER

AND

Royalton 44 Hotel, L.L.C.

a Delaware limited liability company,

AS PURCHASER

As of April 3, 2011

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I PURCHASE AND SALE
	 	 	1	 
	1.1 Agreement of Purchase and Sale
	 	 	1	 
	1.2 Property Defined
	 	 	4	 
	1.3 Permitted Exceptions
	 	 	5	 
	1.4 Purchase Price
	 	 	5	 
	1.5 Payment of Purchase Price
	 	 	5	 
	1.6 Earnest Money
	 	 	6	 
	1.7 Management Agreement
	 	 	6	 
	ARTICLE II TITLE AND SURVEY
	 	 	6	 
	2.1 Title Report
	 	 	6	 
	2.2 Survey
	 	 	6	 
	2.3 Approval of Title
	 	 	7	 
	2.4 Conveyance of Title
	 	 	8	 
	2.5 Title Policy
	 	 	10	 
	ARTICLE III INSPECTION
	 	 	11	 
	3.1 Right of Inspection
	 	 	11	 
	3.2 Seller Due Diligence Materials
	 	 	13	 
	ARTICLE IV CLOSING
	 	 	13	 
	4.1 Time and Place; Pre-Closing
	 	 	13	 
	4.2 Seller’s Closing Obligations and Deliveries
	 	 	14	 
	4.3 Purchaser’s Closing Obligations and Deliveries
	 	 	17	 
	4.4 Prorations, Credits and Other Adjustments
	 	 	17	 
	4.5 Closing Costs
	 	 	22	 
	4.6 Conditions Precedent to Obligation of Purchaser
	 	 	23	 
	4.7 Conditions Precedent to Obligation of Seller
	 	 	24	 
	4.8 Conditions Precedent to Obligation of Seller and Purchaser
	 	 	24	 
	4.9 Failure or Waiver of Conditions Precedent
	 	 	25	 
	4.10 Alcoholic Beverage License 
	 	 	25	 
	4.11 No New Management Agreement Election
	 	 	26	 
	ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	26	 
	5.1 Representations and Warranties of Seller
	 	 	26	 
	5.2 Knowledge Defined
	 	 	33	 
	5.3 Covenants of Seller
	 	 	33	 
	5.4 Representations and Warranties of Purchaser
	 	 	34	 
	5.5 Covenants of Purchaser and/or of Seller
	 	 	35	 
	5.6 Employees
	 	 	37	 
	ARTICLE VI DEFAULT
	 	 	41	 
	6.1 Default by Purchaser
	 	 	41	 
	6.2 Default by Seller
	 	 	42	 
	6.3 Seller’s Right to Cure Defaults
	 	 	42	 

 

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	 	 	Page	 
	 
	 	 	 	 
	ARTICLE VII SURVIVAL, INDEMNIFICATION, AND LIMITATIONS ON LIABILITY
	 	 	42	 
	7.1 Survival
	 	 	42	 
	7.2 Seller’s Indemnification
	 	 	43	 
	7.3 Purchaser’s Indemnification
	 	 	43	 
	7.4 Notice and Resolution of Claims
	 	 	44	 
	7.5 Limitations on Liability
	 	 	45	 
	7.6 Other Matters Regarding Indemnification
	 	 	46	 
	ARTICLE VIII RISK OF LOSS
	 	 	46	 
	8.1 Minor Damage
	 	 	46	 
	8.2 Major Damage
	 	 	47	 
	8.3 Definition of “Major” Loss or Damage
	 	 	47	 
	ARTICLE IX COMMISSIONS
	 	 	47	 
	9.1 Brokerage Commissions
	 	 	47	 
	ARTICLE X DISCLAIMERS AND WAIVERS
	 	 	48	 
	10.1 No Reliance on Documents
	 	 	48	 
	10.2 DISCLAIMERS
	 	 	48	 
	10.3 Repairs, Reserves, and Capital Expenditures
	 	 	50	 
	10.4 Effect and Survival of Disclaimers
	 	 	50	 
	ARTICLE XI MISCELLANEOUS
	 	 	50	 
	11.1 Confidentiality
	 	 	50	 
	11.2 Public Disclosure
	 	 	51	 
	11.3 Assignment
	 	 	52	 
	11.4 Notices
	 	 	52	 
	11.5 Modifications
	 	 	53	 
	11.6 Calculation of Time Periods; Time is of the Essence
	 	 	53	 
	11.7 Successors and Assigns
	 	 	54	 
	11.8 Entire Agreement
	 	 	54	 
	11.9 Further Assurances
	 	 	54	 
	11.10 Counterparts; Facsimile Signatures
	 	 	54	 
	11.11 Severability
	 	 	54	 
	11.12 Applicable Law
	 	 	54	 
	11.13 No Third Party Beneficiary
	 	 	55	 
	11.14 Exhibits and Schedules
	 	 	55	 
	11.15 Captions
	 	 	55	 
	11.16 Construction
	 	 	56	 
	11.17 Termination of Agreement
	 	 	56	 
	11.18 Attorneys Fees
	 	 	56	 
	11.19 No Waiver
	 	 	56	 
	11.20 No Reservation of Property
	 	 	56	 
	11.21 No Recordation
	 	 	56	 

 

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PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of April 3, 2011 (the
“Effective Date”), by and among Royalton, LLC, a Delaware limited liability company
(“Seller”), and Royalton 44 Hotel, L.L.C., a Delaware limited liability company (such
entity or any assignee permitted under Section 11.3 below, “Purchaser”). Unless
otherwise noted, all capitalized terms set forth in this Agreement shall have the meanings ascribed
to them in Annex A attached hereto.

W I T N E S S E T H:

WHEREAS, Seller is the owner and holder of the fee simple estate in and to that certain plot,
piece and parcel of land located at 44 West 44th Street, New York, New York, County of
New York and more particularly described in Schedule 1.1(a) attached hereto (the
“Land”), together with the hotel and all other improvements and fixtures (collectively, the
“Improvements”) located on the Land (the Improvements and the Land are hereinafter
sometimes collectively referred to as the “Real Property”) together with all Personal
Property (as defined below); and

WHEREAS, Seller operates on the Real Property the hotel known as “Royalton” (the
“Hotel”);

WHEREAS, Seller desires to cause the sale, assignment and transfer of its interests in and to
the Property (as defined below), including the Personal Property, and Seller’s affiliate’s
interests in and to the Trademarks (as defined below) to Purchaser in accordance with the terms and
provisions of this Agreement, and Purchaser desires to purchase such interests from Seller and
assume certain liabilities related to the Property upon the terms more particularly set forth in
this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties, Purchaser and Seller agree as follows:

ARTICLE I

PURCHASE AND SALE

1.1 Agreement of Purchase and Sale. Subject to the terms and conditions hereinafter set
forth, Seller agrees to sell and convey, and Purchaser agrees to purchase, the entire fee simple
estate in (a) and (b) below and all of Seller’s (or of any other subsidiaries of Morgans Group
(collectively, and together with Seller, the “Seller Group”)) right, title and interest in and to
the balance of the following:

(a) The Land as described in Schedule 1.1(a) attached hereto.

(b) The Improvements.

 

 

 

(c) All tangible personal property owned by Seller or any member of Seller Group that is (i)
used solely in connection with the operation of the Real Property (including without
limitation appliances, furniture, furnishings, equipment, signage, carpeting, draperies and
curtains, tools and supplies, decorations, china, glassware, linens, silver, utensils, computers,
computer equipment and manuals, all owned vehicles and other similar items of personal property)
and (ii) located at the Hotel as of the Effective Date or added to the Real Property after the
Effective Date but prior to the Closing Date, subject to use and depletion of such tangible
personal property in the ordinary course, but specifically excluding the personal property listed
on Schedule 1.1(c) attached hereto (the “Excluded Personal Property”). The
tangible personal property described in this Section 1.1(c) exclusive of the Excluded
Personal Property, is hereinafter referred to collectively as the “Personal Property”.

(d) All contracts or reservations for the use of guest rooms, ballroom and banquet facilities,
conference facilities, meeting rooms or other facilities of the Hotel or located within the
Improvements for the Closing Date and the period from and after the Closing Date (collectively, the
“Bookings”), and any deposits held by Seller Group in connection with the Bookings and not
previously applied as of the Effective Date (or between the Effective Date and the Closing Date in
accordance with the provisions of this Agreement).

(e) All contracts and agreements that are assignable without the consent of the counterparty
thereto or additional costs or liability to Seller relating to the upkeep, repair, maintenance or
operation of the Real Property or the Personal Property, including all deposits and credits
thereunder (collectively, the “Service Contracts”), which are:

(i) listed on Schedule 1.1(e)-1 attached hereto (but specifically excluding (A)
Bookings, (B) Space Leases, (C) insurance policies, (D) the Management Agreement, and (E)
any contract or agreement listed on such Schedule 1.1(e)-1 which (I) is terminated on
or before Closing pursuant to the terms of this Agreement, (II) expires pursuant to its terms
on or before the Closing Date or (III) is terminated by the applicable counterparty thereto
on or before the Closing Date);

(ii) listed on Schedule 1.1(e)-2 (the “Equipment Leases”, but
specifically excluding any contract or agreement listed on such Schedule 1.1(e)-2
which (A) is terminated on or before Closing pursuant to the terms of this Agreement, (B)
expires pursuant to its terms on or before the Closing Date or (C) is terminated by the
applicable counterparty thereto on or before the Closing Date); or

(iii) entered into after the Effective Date in accordance with the terms of this
Agreement;

provided, however, Purchaser will not acquire those Service Contracts and those Equipment Leases
entered into after the Effective Date as to which it notifies Seller in writing at least five (5)
business days prior to the Closing Date that it does not intend to assume at Closing; provided,
further, however, that for any Service Contract and Equipment Leases entered into within five
business days prior to the Closing Date, Purchaser will not acquire those Service Contracts or
Equipment Leases unless it affirmatively elects to do so in writing prior to the Closing Date.

 

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(f) All names, marks, logos and designs used in the operation or ownership of the Property or
any part thereof listed on Schedule 1.1(f) (collectively, the “Trademarks”),
provided that Purchaser expressly acknowledges and agrees that the following items are specifically
excluded and shall not be transferred hereunder: (i) all right, title or interest of any kind
or nature whatsoever in and to, and intellectual property in any way relating to, the Manager’s
Materials or Manager’s Tradenames (it being understood that certain rights with respect to certain
of the foregoing items shall be granted to Purchaser pursuant to the New Management Agreement);
(ii) all websites and domains used for the Hotel, including access to the FTP files of the websites
(other than www.royaltonhotel.com, which shall be transferred to Purchaser); and (iii) any
information or reports that relate solely to the period prior to the Closing (all such items not to
be transferred hereunder being collectively referred to as the “Retained IP”).

(g) To the extent the same are assignable as of the Closing Date without (i) consent of a
third party that refuses, after use of commercially reasonable efforts, to provide consent or (ii)
additional costs or liability to Seller that Purchaser is unwilling to pay, and to the extent
Purchaser elects in writing to assume same, in its sole discretion, all transferable licenses,
franchises and permits owned by the Seller Group and used in or relating to the ownership,
occupancy or operation of the Property or any part thereof, subject to Purchaser’s compliance with
any limitations or restrictions on transfer or assignment of any computer-related materials or
software which are contained in any license or similar agreement (collectively, the
“Permits”), provided that the term Permits specifically excludes any and all
non-transferable permits and licenses held by Seller in connection with the Property, including,
without limitation, the liquor license and the permits and approvals required for the preparation,
sale and service of food and beverage (collectively, such excluded Permits, the “Excluded
Permits”).

(h) To the extent the same are assignable as of the Closing Date without (i) consent of a
third party that refuses, after use of commercially reasonable efforts, to provide consent or (ii)
additional costs or liability to Seller that Purchaser is unwilling to pay, and to the extent
Purchaser elects in writing to assume same, in its sole discretion, all assignable telephone
numbers, TWX numbers, post office boxes, signage rights, utility and development rights and
privileges, site plans, surveys, environmental and other physical reports, plans and specifications
pertaining to the Real Property, the Personal Property or both (all of the property described in
clauses (f), (g) and (h) of this Section 1.1 that is not specifically deemed excluded being
herein referred to, together with any goodwill of Seller Group in connection with the operation of
the Hotel, collectively as the “Intangibles”).

(i) All: (i) food and beverages (subject to any legal restrictions pertaining to the sale or
transfer of alcoholic beverages) that are in the Hotel as of the Closing Date; (ii) inventory held
for sale by Seller to Hotel guests and others in the ordinary course of business including all
opened and unopened retail inventory in any area at the Hotel conducting retail sales that is in
the Hotel as of the Closing Date (provided, that Purchaser’s use of any such inventory that bears
any Retained IP shall be subject to the use restrictions, if any, contained in the New Management
Agreement) (collectively, “Retail Inventory”); (iii) engineering, maintenance and
housekeeping supplies (including soap and cleaning materials, fuel and materials, stationery and
printing items) that are in the Hotel as of the Closing Date (provided, that Purchaser’s use of any
such inventory that bears any Retained IP shall be subject to the use restrictions, if any,
contained in the New Management Agreement); and (iv) other supplies, whether used, unused or held
in reserve storage for future use in connection with the maintenance and operation of the Real
Property or the Personal Property that are in the Hotel as of the Closing Date (provided, that
Purchaser’s use of any such inventory that bears any Retained IP shall be subject to the use
restrictions, if any,
contained in the New Management Agreement) (all of the foregoing being referred to herein as
the “Consumable Inventory” and, to the extent contained in unopened boxes, bottles, jars or
containers of any type as of the Closing Date, shall collectively be referred to, together with
unopened packages of china, glass, silver and linens, as the “Unopened Inventory”).

 

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(j) [Intentionally Omitted]

(k) Subject to Section 4.4.9 hereof, Seller’s interest in the cash funds contained in
“house banks” for the Hotel as of the Cut-Off Time, whether held in the name of Seller, the Hotel
or Manager (defined below) and owned by Seller (collectively, the “House Bank Funds”).
Purchaser expressly acknowledges and agrees that the Property to be transferred to Purchaser
pursuant to this Agreement does not include any reserve or other accounts created or maintained by
or on behalf of Seller or Manager in connection with the ownership or operation of the Hotel.

(l) The Receivables assigned pursuant to Section 4.4.4(c).

(m) Any deposits made by Seller with utility companies or governmental agencies or authorities
relating to the Real Property to the extent apportionment is made therefor pursuant to Section
4.4.

1.2 Property Defined.

(a) The Real Property, the Personal Property, the Bookings, the Service Contracts, the
Intangibles, the Consumable Inventory, the House Bank Funds, the Receivables referred to in
Section 1.1(l) and the deposits referred to in Section 1.1(m) are hereinafter
sometimes referred to collectively as the “Property”. The Purchase Price does not include,
and shall be adjusted with respect to the House Bank Funds, the Receivables, the Unopened Inventory
(solely to the extent such Unopened Inventory consists of items that are currently in use in the
operation of the Hotel in the ordinary course and are not obsolete), and the other adjustment items
described in Section 4.4 below.

(b) Notwithstanding anything to the contrary in Section 1.1 or Section 1.2(a)
above, the following items are expressly excluded from the Property:

(i) All cash on hand or on deposit in any operating account or other account or reserve,
security deposits held by Seller with respect to any Booking as of the Closing Date, utility and
governmental agency deposits, deposits held by Seller in connection with any Service Contract to be
assumed by Purchaser and the House Bank Funds, all of which are to be transferred at Closing
subject to the terms of this Agreement.

(ii) The Excluded Personal Property.

(iii) The Retained IP.

(iv) The Excluded Permits.

(v) Any tangible or intangible property (including, without limitations, fixtures, personal
property or intellectual property) owned by: (A) the supplier, vendor, licensor, lessor or other
party under any Service Contracts; (B) the tenant under the Space Lease, which excluded
tangible or intangible property does not include any tangible personal property located
outside of the premises subject to the Space Lease, other than supplies and equipment stored
elsewhere in the Property and incidental tangible personal property that may be temporarily located
outside such premises; (C) Manager; (D) any employees; (E) any guests or customers of the Hotel; or
(F) any other third party.

 

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(vi) The lease described on Schedule 1.2(b)(vi) attached hereto (the “Space
Lease”), including any deposits relating to such Space Lease held by Seller and not applied to
the tenant’s obligations as of the Effective Date. The parties acknowledge that Seller shall be
required to terminate the Space Lease as of Closing.

1.3 Permitted Exceptions. The Property shall be conveyed subject to all matters which are,
or are deemed to be, Permitted Exceptions pursuant to Article II below.

1.4 Purchase Price. Seller is to sell and Purchaser is to purchase the Property for a total
of EIGHTY EIGHT MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($88,200,000.00) (the “Purchase
Price”).

1.5 Payment of Purchase Price.

(a) On the Closing Date, Purchaser shall deliver to Escrow Agent, by wire transfer of
immediately available federal funds to the bank account designated in the Escrow Agreement, an
amount equal to the Purchase Price, as increased or decreased by prorations and adjustments as
herein provided, less the sum of the Earnest Money previously delivered to Escrow Agent and all
interest accrued thereon.

(b) The Purchase Price (including the Earnest Money previously delivered to Escrow Agent), as
increased or decreased by prorations and adjustments as herein provided, shall be payable in full
at Closing in cash by wire transfer of immediately available federal funds to a bank account
designated by Seller in writing to Purchaser and Escrow Agent prior to the Closing.

(c) Prior to Closing, Seller will notify Purchaser in writing of the proposed allocation of
the Purchase Price among the Real Property and various items of personal property (i.e. the
Property other than the Real Property) and such allocation shall be subject to Purchaser’s
approval. Seller and Purchaser agree to file federal, state and local tax returns consistent with
such allocations as may be agreed upon between the parties. If Purchaser and Seller cannot agree
upon an allocation of the Purchase Price, each party shall file federal, state and local returns
based on each party’s own determination of the proper allocations of the Purchase Price, bearing
its own consequences of any discrepancies. Notwithstanding the foregoing, prior to Closing, Seller
and Purchaser will agree upon an allocation between Real Property and Personal Property for the
sole purpose of, and as necessary to complete and file, the required transfer tax reports and
returns.

 

5

 

1.6 Earnest Money.

(a) Within one (1) business day following the full execution and delivery of this Agreement by
Seller and Purchaser, Purchaser shall deposit with First American Title Insurance Company (“Escrow
Agent”) having its office at 633 Third Avenue, New York, NY 10017, Attention: Andrew Jaeger or
Anthony Ruggeri, the sum of FOUR MILLION FOUR HUNDRED TEN THOUSAND AND NO/100 DOLLARS
($4,410,000.00) (together with accrued interest thereon, the “Earnest Money”) by wire
transfer of immediately available federal funds to the bank account designated in the Escrow
Agreement. The Earnest Money may be increased by an additional ONE MILLION EIGHT HUNDRED NINETY
THOUSAND AND NO/100 DOLLARS ($1,890,000.00) in the event Purchaser elects to adjourn the Closing
pursuant to Section 4.10(b). The full amount of the Earnest Money is fully non-refundable
to Purchaser except in the event that this Agreement is timely terminated as a result of
Purchaser’s election to terminate strictly in accordance with and pursuant to the terms and
provisions of this Agreement (including without limitation Section 2.3(b), Section
4.9, Section 6.2 or Section 8.2), in which case the Escrow Agent shall be
obligated to refund the full amount of the Earnest Money to Purchaser pursuant to the terms of the
Escrow Agreement.

(b) Escrow Agent shall hold the Earnest Money in a segregated, interest-bearing account in
accordance with the terms and conditions of the Deposit Escrow Instructions attached hereto as
Exhibit J (the “Escrow Agreement”). All interest accruing on such sums shall become
a part of the Earnest Money and shall be distributed or applied as Earnest Money in accordance with
the terms of the Escrow Agreement.

(c) Time is of the essence for the delivery of Earnest Money under this Agreement and the
failure of Purchaser to timely deliver any portion of the same shall be a material default, and
shall entitle Seller, at Seller’s sole option, to terminate this Agreement immediately and to
pursue all remedies available to Seller under this Agreement.

1.7 Management Agreement. Purchaser acknowledges that the Hotel is being operated and
managed by Morgans Hotel Group Management LLC, a Delaware limited liability company
(“Manager”) (formerly known as Ian Schrager Hotel Management LLC), pursuant to that certain
Hotel Management Agreement dated as of June 30, 1999, by and between Seller and Manager (the
“Management Agreement”). At Closing, the Management Agreement will be terminated effective
as of the Closing Date at Seller’s sole cost and expense and Purchaser (or its affiliate) and
Manager will enter into a hotel management agreement in the form agreed to by the parties prior to
the Effective Date (the “New Management Agreement”).

ARTICLE II

TITLE AND SURVEY

2.1 Title Report. Seller has obtained and delivered to Purchaser, a title report dated
January 18, 2011 (Title No. 3008-342365NY1) (the “Title Report”) covering the Real Property
from First American Title Insurance Company (the “Title Company”) and, has caused the Title
Company to deliver to Purchaser a copy of each document referenced in the Title Report as an
exception to title to the Real Property. Purchaser shall deliver to Seller, within five (5) days
after receipt by Purchaser, a
copy of any updates (each a “Title Update”) to the Title Report issued by the Title
Company, provided that if Purchaser shall receive a Title Update less than five (5) days prior to
the then scheduled Closing Date, then Purchaser shall deliver same to Seller prior to the Closing.

2.2 Survey. Seller has obtained and delivered to Purchaser and the Title Company, at
Purchaser’s sole cost and expense, a survey of the Real Property prepared by Earl B. Lovell-S.P.
Belcher, Inc. dated March 15, 1996, last brought up to date with a visual examination by Earl B.
Lovell-S.P. Belcher, Inc. on March 29, 2011 (the “Survey”).

 

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2.3 Approval of Title.

(a) Except for Monetary Encumbrances and as reflected in the pro forma policy attached hereto
as Exhibit I, Purchaser has approved all matters disclosed by the Title Report and the
Survey.

(b) Purchaser shall have five (5) business days after receipt of a Title Update, if any, to
notify Seller, in writing, of such objections as Purchaser may have to anything contained in such
Title Update other than Permitted Exceptions (and if Purchaser receives a Title Update less than
(5) business days prior to a scheduled Closing Date, then Purchaser shall deliver such written
notice to Seller prior to the Closing). In the event Purchaser shall notify Seller, in writing, of
objections to title or to matters shown on a Title Update, Seller shall have the right, but not the
obligation (other than as explicitly set forth in this Agreement with respect to Monetary
Encumbrances and certain other objections), to cure such objections. Within five (5) business days
after receipt of Purchaser’s notice of objections (or, if sooner, two (2) business days prior
Closing), Seller shall notify Purchaser in writing whether Seller elects to attempt to cure any or
all of such objections. If Seller elects to attempt to cure any or all of such objections, Seller
shall have the right to attempt to remove, satisfy or cure the same and for this purpose Seller
shall, at Seller’s election, be entitled to reasonable adjournments of the Closing if additional
time is required, but in no event shall the adjournments, in the aggregate, exceed thirty (30) days
after the Outside Closing Date. If Seller elects not to attempt to cure any objections specified in
Purchaser’s notice, or if Seller fails (for any reason or no reason) to effect a cure of those
objections which it elected to attempt to cure prior to the Closing (or any date to which the
Closing has been adjourned) and so notifies Purchaser in writing, or if Seller fails to respond to
Purchaser’s notice within said five (5) business day period, Purchaser shall have the following
options: (i) to accept a conveyance of the Property subject to the Permitted Exceptions and any
matter objected to by Purchaser which Seller is unwilling or unable to cure (each of which shall
also be deemed to be Permitted Exceptions), without reduction of the Purchase Price; or (ii) to
terminate this Agreement by sending written notice thereof to Seller, and upon delivery of such
notice of termination, (x) this Agreement shall terminate, (y) the Earnest Money shall be returned
to Purchaser, and (z) thereafter neither party hereto shall have any further rights, obligations or
liabilities hereunder except to the extent that any right, obligation or liability set forth herein
expressly survives termination of this Agreement If: (A) Seller notifies Purchaser that Seller
does not intend to attempt to cure any title objection; (B) Seller fails to respond to Purchaser’s
notice within said five (5) business day period; (C) if, having commenced attempts to cure any
objection, Seller later notifies Purchaser in writing that Seller will not effect a cure thereof or
(D) Seller fails to timely cure any such title objection, then, in any such event, Purchaser shall,
within
five (5) business days after such notice has been given (or within five (5) business days
after Seller’s five (5) business day period to respond to Purchaser’s objection notice has
expired), notify Seller in writing whether Purchaser shall elect to accept the conveyance under
clause (i) of the immediately preceding sentence or to terminate this Agreement under clause (ii)
of the immediately preceding sentence. Purchaser’s failure to notify Seller of termination of this
Agreement within such five (5) business day period shall be deemed to be an irrevocable election
under clause (ii) above to terminate this Agreement and, in such event, (1) this Agreement shall
terminate, (2) the Earnest Money shall be returned to Purchaser, and (3) thereafter neither party
hereto shall have any further rights, obligations or liabilities hereunder except to the extent
that any right, obligation or liability set forth herein expressly survives termination of this
Agreement. If any time period contained in this Section 2.3(b) would end after the Outside
Closing Date, same shall be automatically adjourned to the business day immediately after the
expiration of such time period.

 

7

 

(c) In no event and under no circumstances shall Seller have any responsibility or obligation
of any kind or nature whatsoever (express or implied) to cure any title matter objected to by
Purchaser other than as set forth in this Section 2.3(c). Notwithstanding the foregoing
sentence or anything else to the contrary contained in this Agreement, if any of the objections set
forth in a written notice from Purchaser (A) consist of delinquent taxes, mortgages, deeds of
trust, security agreements, construction or mechanics’ liens, fines arising from outstanding
violations, tax liens or other liens or charges in a fixed sum (or capable of computation as a
fixed sum), or (B) were caused, assumed, consented to or created by Seller (collectively,
“Monetary Encumbrances”), then Seller shall be obligated to pay and discharge (or cause the
Title Company to insure over in a manner reasonably satisfactory to Purchaser) such Monetary
Encumbrances without limitation as to the cost thereof. Seller shall use its commercially
reasonable efforts to cure any title matter objected to by Purchaser other than Monetary
Encumbrances, provided that Seller’s obligation to incur costs and expenses in connection with
paying and/or discharging any such title objections other than Monetary Encumbrances is limited to
Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) in the aggregate. Notwithstanding
anything to the contrary contained herein, if Seller does not pay or discharge (i) a Monetary
Encumbrance, Purchaser can elect to either consummate the transactions contemplated hereby and
receive a credit to the Purchase Price in the amount required to remove, release and satisfy in
full such Monetary Encumbrance or terminate this Agreement (in which event this Agreement shall
terminate and the Earnest Money shall be returned to Purchaser) or (ii) a title matter other than a
Monetary Encumbrance, Purchaser can elect to either consummate the transactions contemplated hereby
(in which event it will receive a credit to the Purchase Price in the amount required to remove,
release or satisfy in full such title matter, such credit not to exceed $250,000 less the aggregate
amount theretofore expended by Seller to discharge title matters other than Monetary Encumbrances)
or terminate this Agreement (in which event this Agreement shall terminate and the Earnest Money
shall be returned to Purchaser).

(d) If Purchaser terminates this Agreement pursuant to this Section 2.3 by reason of (x) a
Title Objection that related to a matter that first arose after the Effective Date by reason of an
action by Seller in violation of this Agreement or (y) a Monetary Encumbrance that Seller fails to
discharge in accordance with Section 2.3(c), then Purchaser shall be reimbursed by Seller for all
of Purchaser’s documented third party costs incurred in connection with the transactions
contemplated by this Agreement, including the negotiation of this Agreement, in an aggregate
amount not to exceed $250,000.00.

2.4 Conveyance of Title. Notwithstanding anything contained herein to the contrary, at
Closing, Seller shall convey and transfer to Purchaser its interest in the Real Property subject to
the following exceptions to title (the “Permitted Exceptions”):

(a) Those matters specifically set forth on Schedule B to Exhibit I.

 

8

 

(b) Any state of facts shown on the Survey.

(c) The lien of all ad valorem real estate taxes not yet due and payable as of the Closing
Date, subject to adjustment as herein provided.

(d) All laws, ordinances, rules and regulations of the United States, the State of New York,
any city or other subdivision or any agency, department, commission, bureau or instrumentality of
any of the foregoing having jurisdiction over the Real Property or the Hotel, as the same may now
exist or may be hereafter modified, supplemented or promulgated (collectively, the “Legal
Requirements”); excluding in all cases any violation of which Seller has received notice and
which is outstanding as of the Closing Date.

(e) All covenants, restrictions and utility company rights, easements and franchises relating
to electricity, water, steam, gas, telephone, sewer or other service or the right to use and
maintain poles, lines, wires, cables, pipes, boxes and other fixtures and facilities in, over,
under and upon the Real Property or the Hotel, provided that, in the case of any of the foregoing
items which shall not be of record as of the date hereof, the same do not materially adversely
affect the present use of the Real Property or the Hotel.

(f) Any matters over which the Title Company is willing to insure at no additional cost,
subject to the approval of Purchaser regarding the basis on which Title Company is willing to
provide such coverage, which approval shall not to be unreasonably withheld unless the sole basis
for the Title Company providing such coverage is an indemnity from Seller Group, in which event
Purchaser shall be entitled to withhold approval in its sole and absolute discretion.

(g) Any matters against which the Title Company is willing to provide affirmative insurance
against collection from the Real Property or interference with the current use of the Real Property
at no additional cost, subject to the approval of Purchaser regarding the basis on which the Title
Company is willing to provide such coverage, which approval shall not to be unreasonably withheld
unless the sole basis for the Title Company providing such coverage is an indemnity from Seller
Group, in which event Purchaser shall be entitled to withhold approval in its sole and absolute
discretion.

(h) Any other matter or thing affecting title to the Real Property disclosed by a Title Update
that was not objected to by Purchaser or waived or deemed waived by Purchaser in accordance with
Section 2.3 hereof.

(i) [Intentionally Omitted.]

(j) All violations of laws, rules, regulations, statutes, ordinances, orders or requirements
of law and/or conditions giving rise to the same first issued after the Effective Date; provided,
however, same does not affect or limit in any manner the representations and warranties made by
Seller under this Agreement nor Purchaser’s rights under this Agreement with respect to a breach of
such representations and warranties including without limitation Purchaser’s ability to terminate
this Agreement and receive a return of the Earnest Money in connection therewith;

(k) Occupancy by transient guests of the Hotel and Bookings.

 

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(l) The rights of the tenant under the Space Lease and any person claiming by, through or
under such tenants to occupy the space as a tenant only, and without any rights of first offer,
rights of first refusal, purchase options or any other rights other than as a mere tenant;
provided, however, that this exception to title does not affect or limit in any manner the
representations and warranties made by Seller elsewhere in this Agreement nor Purchaser’s rights
under this Agreement with respect to a breach of such representations and warranties, including
Purchaser’s right to terminate this Agreement and receive a return of the Earnest Money in
connection therewith.

2.5 Title Policy. At Closing, Seller and Purchaser shall direct the Title Company to issue
an ALTA Owner’s Policy 2006 in the form of the pro forma policy attached hereto as Exhibit
I including without limitation all endorsements available with such ALTA Owner’s Policy 2006 in
New York (the “Title Policy”), at Purchaser’s sole cost and expense, insuring Purchaser’s
interest in and to the Real Property as of the Closing Date, subject to only to the Permitted
Exceptions.

2.6 Sidewalk Violations. Seller (i) represents that, prior to the Effective Date, Seller
has commenced the process of resolving the alleged sidewalk violations set forth on Schedule
2.6 attached hereto such that the notices of such alleged sidewalk violations (the
“Sidewalk Notices”) can be removed from the applicable land records and (ii) covenants and
agrees, prior to Closing, to pay any and all fines and penalties related to, in connection with, or
arising out of such Sidewalk Notices or the underlying conditions relating thereto (the
“Sidewalk Violation Fines”) at its sole cost and expense (such costs associated therewith
shall not be subject to the limitation set forth in Section 2.3(c) or otherwise in this Agreement).
Seller agrees to diligently pursue the removal of such Sidewalk Notices prior to Closing. In the
event that the Sidewalk Notices are not removed from the land records prior to Closing, Seller
shall (i) use reasonable efforts, at Seller’s expense, subsequent to Closing to cause the Sidewalk
Notices to be removed from the land records (such costs associated therewith shall not be subject
to the limitation set forth in Section 2.3(c) or otherwise in this Agreement) and shall pay such
Sidewalk Violation Fines and (ii) indemnify Purchaser with respect to such Sidewalk Notices and
Sidewalk Violation Fines. If Seller fails to remove such Sidewalk Notices from the land records
and pay any Sidewalk Violation Fines within 90 days following the Closing, Purchaser shall be
entitled, at Seller’s sole cost and expense, to cause such Sidewalk Notices to be removed and such
Sidewalk Violation Fines to be paid. Notwithstanding anything in this Agreement to the contrary,
Purchaser shall not have the
right to adjourn the Closing or terminate this Agreement if the Sidewalk Notices are not removed
from the land records or any Sidewalk Violation Fines are not paid on or prior to the Closing Date.

 

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ARTICLE III

INSPECTION

3.1 Right of Inspection

(a) Purchaser shall, subject to the rights of guests of the Hotel and the tenant under the
Space Lease, have the right to make physical inspections of the Real Property and to examine at
such place or places at the Hotel or elsewhere as the same may be located, any operating files
maintained by or for the benefit of Seller in connection with the leasing, operation, current
maintenance and/or management of the Property (“Property Information”), including, without
limitation, the Space Lease, the Service Contracts, insurance policies, bills, invoices, receipts
and other general records relating to the income and expenses of the Hotel, correspondence, tax
certiorari, filings and papers including records used to prepare financial statements and documents
relating to the amortization or depreciation of furniture, fixtures and equipment or other capital
improvements, surveys, plans and specifications, warranties for services and materials provided to
the Hotel, environmental audits and similar materials, materials related to Hotel Employees (as
defined below) and the Union (as defined below), to the extent Seller is not prohibited by
applicable contracts or law from disclosing such materials, and any other documents relating to the
Property in Seller’s or Manager’s possession or control including without limitation the materials
identified on Schedule 3.1(a) annexed hereto, but in all cases excluding (i) materials not
directly related to the maintenance, operation and/or management of the Property solely to the
extent same relate to Seller’s business and not the Property and (ii) attorney client privileged
material. Purchaser and its accountants shall have the right to inspect and perform a review or
audit of the books and records for the Property for the three (3) most recent full fiscal years,
which shall be supplemented up to the month ending immediately prior to the Closing Date.

(b) Purchaser shall keep all Property Information strictly confidential as and to the extent
required by Section 11.1 below and the confidentiality agreement in effect between
Purchaser and Morgans Hotel Group Co., provided that Purchaser may, subject to the terms
and conditions of the Confidentiality Agreement, deliver copies of Property Information to its
attorneys, accountants and other advisors in connection with the acquisition of the Property and to
current and prospective lenders and partners provided that such parties agree to maintain the
confidentiality of such Property Information.

(c) Purchaser understands and agrees that any on-site inspections of the Property shall only
be conducted during business hours with not less than one (1) day’s prior notice to Seller (which
may be telephonic). Seller may have its respective representatives attend any such inspections.
Such physical inspection shall not disturb Hotel guests or the tenant under the Space Lease nor
unreasonably interfere with the use of the Property by Seller or Manager. Such physical inspection
shall not be invasive in any respect without Seller’s prior consent (which shall not be
unreasonably withheld), and in any event shall be conducted in accordance with standards
customarily employed in the industry and in compliance with all governmental laws, rules and
regulations. Following each entry by Purchaser with respect to inspections and/or tests on the Real
Property, Purchaser shall repair any damage to the Property caused by Purchaser or any of its
agents, consultants or representatives in connection with Purchaser’s diligence activities at the
Property, and restore the Property to the original condition as existed prior to any such
inspections and/or tests, at Purchaser’s sole cost and expense; provided that (i) Purchaser shall
not be required to fix, and shall not be responsible for, any pre-existing conditions at the
Property or exacerbations thereof (other than any exacerbation caused by the gross negligence or
willful misconduct of Purchaser or any of its agents, consultants, or representatives) and (ii) if
Seller does not provide consent to any reasonable request for invasive testing, Purchaser shall
have the right to terminate this Agreement (in which event the Earnest Money shall be returned to
Purchaser).

 

11

 

(d) Seller shall reasonably cooperate with Purchaser in its due diligence but shall not be
obligated to incur any out -of -pocket liability (other than legal and administrative costs and
other de minimis costs) in connection therewith unless Purchaser agrees to be responsible for same.
Purchaser shall not disrupt Seller’s, Manager’s or any tenant’s or guest’s activities on the Real
Property and, except as provided in the immediately following sentence, shall not contact Manager’s
on-site managers or on-site employees, or any other employees working at the Hotel, any guests of
the Property, any party to a Service Contract, the tenant under the Space Lease, any lender
providing financing secured by the Real Property or any governmental authority without in each
instance obtaining Seller’s prior consent, which consent may not be unreasonably withheld and shall
be deemed to have been refused if Seller does not respond to a request made hereunder within 24
hours. Purchaser shall be permitted to contact the general manager and the controller of the Hotel.

(e) Purchaser shall indemnify, defend, protect and hold Seller harmless from and against any
claim for liabilities, losses, costs, expenses (including reasonable attorneys’ fees actually
incurred), damages or injuries directly arising out of or directly resulting from the inspection of
the Property by Purchaser or its agents, employees, representatives, consultants or contractors and
notwithstanding anything to the contrary in this Agreement, such obligation to indemnify, defend,
protect and hold harmless Seller shall survive Closing or any termination of this Agreement;
provided, however, that Purchaser shall not be required to indemnify or hold Seller harmless from
any such liability, loss, cost, damage or injury resulting from the gross negligence or willful
misconduct of Seller or any of its Affiliates, agents or employees or with respect to any condition
existing at the Property prior to the Effective Date (or the exacerbation of any such condition)
(other than any exacerbation caused by the gross negligence, or willful misconduct of Purchaser or
any of its agents, consultants, or representatives). Purchaser agrees (i) that prior to entering
the Property to conduct any inspection, Purchaser shall obtain and maintain, and shall cause each
of its contractors and agents to maintain (and shall deliver evidence thereof in the form of a
policy certificate satisfactory to Seller thereof), at no cost or expense to Seller, commercial
general liability insurance from an insurer reasonably acceptable to Seller in the amount of Two
Million Dollars ($2,000,000) with combined single limit for personal injury or property damage per
occurrence, such policies to name Seller and Manager as additional insured parties, which insurance
shall provide coverage against any claim for personal injury or property damage caused by Purchaser
or its agents, employees, representatives or consultants in connection with any such tests and
investigations, and (ii) to keep the Property free from all liens and encumbrances on account of
any inspections and/or tests made by or for the benefit of Purchaser
(other than inchoate liens that secure amounts that are paid prior to delinquency).
Purchaser’s insurance may not be canceled or amended prior to Closing except upon not less than
thirty (30) days’ prior written notice to Seller. Purchaser’s obligations under this Section
3.1 shall survive a termination of this Agreement.

 

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3.2 Seller Due Diligence Materials. PURCHASER ACKNOWLEDGES THAT INFORMATION RELATED TO THE
PROPERTY CONTAINED IN THE SECURE WEBSITE (THE “E-ROOM”) TO WHICH PURCHASER HAS PREVIOUSLY
BEEN GRANTED ACCESS HAS BEEN MADE AVAILABLE TO PURCHASER IN THE E-ROOM BY SELLER. BY EXECUTING
THIS AGREEMENT, PURCHASER ACKNOWLEDGES ITS RECEIPT THEREOF OR THE AVAILABILITY THEREOF AND THAT (1)
PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL, ENGINEERING, SOILS AND OTHER REPORTS REGARDING
THE CONDITION OF THE PROPERTY (COLLECTIVELY, THE “REPORTS”) LISTED ON SCHEDULE 3.2 ATTACHED HERETO,
AND (2) ANY REPORTS OR OTHER DOCUMENTS DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR
CONSULTANTS TO PURCHASER ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND
WITHOUT ANY REPRESENTATION OR WARRANTY OF SELLER AS TO THEIR ACCURACY OR COMPLETENESS OF FACTS OR
OPINIONS SET FORTH THEREIN EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THAT ANY RELIANCE BY
PURCHASER ON SUCH REPORTS OR OTHER DOCUMENTS IN CONNECTION WITH THE PURCHASE OF THE PROPERTY IS
UNDERTAKEN AT PURCHASER’S SOLE RISK. SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH
IN THIS AGREEMENT, PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER
FOR ANY UNINTENTIONAL INACCURACY IN OR OMISSION FROM THE OFFERING MATERIALS PREPARED IN CONNECTION
WITH THE SALE OF THE PROPERTY OR ANY REPORTS OR OTHER DOCUMENTS MADE AVAILABLE TO PURCHASER OR ITS
REPRESENTATIVES. PURCHASER HAS CONDUCTED ITS OWN INVESTIGATION OF THE CONDITION OF THE PROPERTY TO
THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE. For purposes of
this Agreement, the term “Seller Due Diligence Materials” shall mean (i) the Reports, the Property
Information and all other documents and materials provided or otherwise made available by Seller to
Purchaser in the E-Room or pursuant to Section 3.1 and the other provisions of this
Agreement or otherwise, together with any copies or reproductions of such documents or materials,
or any summaries, abstracts, compilations, or other analyses made by Purchaser based on the
information in such documents or materials, and (ii) all information set forth in this Agreement
and the exhibits and schedules attached hereto and hereby made a part hereof.

ARTICLE IV

CLOSING

4.1 Time and Place; Pre-Closing.

4.1.1 Subject to the provisions of Sections 4.6, 4.7, and 4.8
below, the consummation of the transaction contemplated hereby (“Closing”), as evidenced
by the payment and release of the Purchase Price by Escrow Agent to Seller in accordance with
the terms of this
Agreement and the release by Escrow Agent of the deed executed by Seller for recording,
shall occur on or before 4:00 p.m. (New York time) on May 17, 2011, as such date may be
adjourned from time to time in accordance with this Agreement (“Outside Closing Date”,
with the actual date of Closing being referred to herein as the “Closing Date”). The
Closing shall occur through an escrow administered by Escrow Agent and the Purchase Price and
all documents (unless otherwise mutually agreed in writing) shall be deposited with Escrow Agent
as escrowee. At Closing, Seller and Purchaser shall perform the obligations set forth in,
respectively, Section 4.2 and Section 4.3, the performance of which obligations
shall be concurrent conditions.

 

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4.1.2 Notwithstanding anything herein to the contrary, the parties shall “pre-close” the
sale of the Property on the last business day immediately prior to the Closing Date (the
“Pre-Closing Date”). The term “pre-close” shall mean that each of the parties shall
deliver to Escrow Agent no later than 4:00 p.m. (New York time) on the Pre-Closing Date all of
the documents and other items (other than the Purchase Price and other funds) required to be
delivered by such party for Closing, including all of the closing documents required pursuant to
Sections 4.2 and 4.3 hereof. With respect to the closing adjustments to be made
between the parties pursuant to Section 4.4 hereof, the adjustments shall continue to be
made effective as of the Cut-Off Time, but on the closing statement executed by the parties on
the Pre-Closing Date, the parties shall in good faith estimate those adjustments which are not
capable of being finalized prior to the Cut-Off Time, and the parties shall reconcile said
estimated adjustments pursuant to Section 4.4.14 hereof.

4.2 Seller’s Closing Obligations and Deliveries. At Closing, subject to Section 4.1
above, Seller shall through Escrow Agent make the following deliveries and take the following
actions:

(a) Execute and deliver to Purchaser one (1) original counterpart of a bargain and sale deed
(“Deed”), in the form attached hereto as Exhibit A and made part hereof.

(b) Execute and deliver to Purchaser two (2) original counterparts of a bill of sale in the
form attached hereto as Exhibit B and made a part hereof conveying all of Seller’s right
title and interest in and to the Personal Property, Consumable Inventory (other than any Consumable
Inventory that consists of alcoholic beverages) and Receivables (in each case solely to the extent
included in the term, Property) without, except as expressly set forth in this Agreement, warranty
of use and without warranty, expressed or implied, as to merchantability and fitness for any
purpose, together with evidence of payment by Seller of any sales tax payable in connection
therewith.

(c) Execute and deliver to Purchaser two (2) original counterparts of an assignment and
assumption agreement relating to Seller’s interest in the Service Contracts, the Bookings and the
other Intangibles (in each case to the extent assignable and excluding those Service Contracts as
to which Purchaser provides notice in accordance with Section 1.1(e) that it does not
intend to assume) (“Assignment of Contracts”) in the form attached hereto as Exhibit
C and made a part hereof.

(d) Intentionally Omitted.

(e) Deliver to Purchaser a certificate, dated as of the Closing Date and executed on behalf of
Seller by a duly authorized officer thereof, stating that all of the representations and warranties
of Seller contained in this Agreement are true and correct in all material respects, other than any
such representations and warranties that are qualified as to materiality, which (to the extent so
qualified) shall be true and correct in all respects as of the Closing Date (with appropriate
modifications of any representations and warranties made in Section 5.1 hereof to reflect
any changes therein, including without limitation any changes resulting from actions under
Section 5.3 hereof) or identifying any representation or warranty which is not, or no
longer is, true and correct. In no event shall Seller be liable to Purchaser for, or be deemed to
be in default hereunder by reason of, any breach of representation or warranty which results from
any change that (i) occurs between the Effective Date and the Closing Date and (ii) is permitted
under the terms of this Agreement or is beyond the reasonable control of Seller; provided, however,
that the occurrence of any change that is not expressly permitted hereunder shall, if materially
adverse to Purchaser, constitute the non-fulfillment of the condition set forth in Section
4.6(a) and Purchaser may elect to terminate this Agreement pursuant to Section 4.9. If,
despite changes or other matters described in such certificate, the Closing occurs, Seller’s
representations and warranties set forth in this Agreement shall be deemed to have been modified by
all statements made in such certificate.

 

14

 

(f) Deliver to Purchaser and the Title Company such evidence as the Title Company may
reasonably require as to the authority of the person or persons executing documents on behalf of
Seller.

(g) Deliver to Purchaser an affidavit duly executed by Seller stating that Seller is not a
“foreign person” as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and
the 1984 Tax Reform Act, in the form attached hereto as Exhibit E.

(h) If not already delivered to Purchaser, deliver to Purchaser, originals, or, if
unavailable, a copy of the Space Lease, the Service Contracts and the licenses and permits, if any,
in the possession or control of Seller or Seller’s agents, together with such leasing and property
files and records which are in the possession or control of Seller or Seller’s agents, and any keys
to security deposit boxes and to the Hotel. For a period of four (4) years after Closing in case
of Seller’s need in response to any legal requirement, a tax audit, tax return preparation or
litigation threatened or brought against Seller, Purchaser shall keep the books and records for the
Property with respect to the period of Seller’s ownership (to the extent that such records were
provided to Purchaser and Seller did not retain copies thereof), at Purchaser’s expense, and allow
Seller and its agents or representatives reasonable access, upon reasonable advance notice (which
notice shall identify the nature of the information sought by Seller), at all reasonable times to
examine and make copies of any and all books and records at Seller’s cost and expense, which right
shall survive the Closing. The location of such items at the Hotel on the Closing Date in a
location identified in a writing from Seller to Purchaser shall constitute delivery to Purchaser.

(i) Deliver to Escrow Agent an executed counterpart closing statement consistent with this
Agreement and in a customary form.

(j) Deliver a copy of the termination agreement executed by Seller and Manager, which has the
effect of terminating the Management Agreement effective as of the Closing Date, and evidence of
Seller’s termination of any Service Contract or Equipment Lease that are not
being assumed by Purchaser in accordance with this Agreement (which evidence may consist of
copies of any notices provided by Seller terminating, as of or prior to the Closing Date, such
Service Contracts and Equipment Leases) and evidence of the removal of the Hotel from the scope of
all barter agreements to which the Seller is a party.

(k) Deliver to Escrow Agent two (2) original executed counterpart copies of the Combined Real
Estate Transfer Tax Return and Credit Line Mortgage Certificate (Form TP-584) completed by Seller
with respect to the Deed.

(l) Deliver to Escrow Agent two (2) original executed counterpart copies of the New York City
Real Property Transfer Tax Return completed by Seller with respect to the Deed.

(m) Deliver to Escrow Agent two (2) original executed counterpart copies of the New York State
Real Property Transfer Report (Form RP-5217) completed by Seller with respect to the Deed.

 

15

 

(n) Deliver to Title Company a title affidavit generally in the form attached hereto as
Exhibit F (the “Title Affidavit”).

(o) Deliver to Escrow Agent two (2) original executed counterpart copies of the IWA Assumption
Agreement in the form attached hereto as Exhibit G (“IWA Assumption Agreement”),
including any required consents of other parties thereto.

(p) Deliver to Purchaser the Intangibles in Seller’s possession or control. The location of
such items at the Hotel on the Closing Date in a location identified in a writing from Seller to
Purchaser shall constitute delivery to Purchaser.

(q) Deliver to Purchaser two (2) original counterpart copies of the New Management Agreement.

(r) Deliver to Escrow Agent an instrument or document, in a form reasonable approved by
Purchaser, required in order to transfer the domain name www.royaltonhotel.com to Purchaser.

(s) Deliver to Escrow Agent two (2) original executed counterpart copies of an agreement
regarding post-closing capital projects in the form agreed to by the parties prior to the Effective
Date (the “Capital Repairs Escrow Agreement”).

(t) Deliver to the operating lessee of the Property (or other holder of the temporary liquor
license for the Hotel) designated by Purchaser two (2) original counterparts of a bill of sale in
the form attached hereto as Exhibit B-2 and made a part hereof conveying all of Seller’s
right title and interest in and to any Unopened Inventory that consists of alcoholic beverages,
together with evidence of payment by Seller of any sales tax payable in connection therewith.

(u) Deliver to the operating lessee of the Property (or other holder of the temporary liquor
license for the Hotel) designated by Purchaser two (2) original counterparts of a bill of sale in
the form attached hereto as Exhibit B-3 and made a part hereof conveying all of
43rd Restaurant LLC’s right title and interest in and to any Unopened Inventory that
consists of alcoholic
beverages, together with evidence of payment by 43rd Restaurant LLC of any sales
tax payable in connection therewith.

(v) Deliver to Purchaser two (2) original executed counterpart copies of an assignment of
Seller’s affiliate’s interests in the Trademarks, in the form attached hereto as Exhibit K
and made a part hereof (the “Trademark Assignment”).

(w) Deliver to Purchaser evidence of the termination of the Space Lease.

(x) Deliver such additional documents as are provided for under this Agreement, or that
otherwise shall be reasonably requested by Purchaser, Title Company or any third party in order to
consummate the transaction expressly contemplated by this Agreement. For avoidance of doubt, the
possession or retention by Manager of possession of certain records, documents and assets that
constitute a portion of the Property both before and after the Closing Date shall not mean that
such records, documents and assets were not sold and transferred to Purchaser in accordance with
the terms of this Agreement if this Agreement otherwise provides for such sale and transfer.

 

16

 

4.3 Purchaser’s Closing Obligations and Deliveries. At Closing, Purchaser shall through
Escrow Agent make the following deliveries and take the following actions:

(a) Pay the Purchase Price, as increased or decreased by prorations and adjustments as herein
provided, in immediately available wire transferred funds pursuant to Section 1.5 above, it
being agreed that at Closing the Earnest Money shall be applied towards payment of the Purchase
Price.

(b) Deliver a written direction to Escrow Agent that it is to disburse the Earnest Money to
Seller in accordance with the Escrow Agreement.

(c) Deliver the same number of original executed counterparts of the instruments described in
clauses (b), (c), (i), (k), (l), (m), (s), and (v) of Section 4.2 above to Escrow Agent.

(d) Deliver to Escrow Agent two (2) original executed counterpart copies of the IWA Assumption
Agreement executed by Purchaser.

(e) Deliver to Seller a certificate, dated as of the Closing Date and executed on behalf of
Purchaser by a duly authorized officer thereof, stating that, to the best knowledge of such duly
authorized officer, the representations and warranties of Purchaser contained in this Agreement are
true and correct as of the Closing Date.

(f) Deliver to Title Company such evidence as Title Company may reasonably require as to the
authority of the person or persons executing documents on behalf of Purchaser.

(g) Deliver to Escrow Agent, for distribution upon Closing to Manager, two (2) original
executed counterpart copies of the New Management Agreement.

(h) Deliver such additional documents as shall be reasonably required to consummate the
transaction contemplated by this Agreement.

4.4 Prorations, Credits and Other Adjustments. At Closing, Purchaser and Seller shall
prorate all items of income and expense which are customarily prorated between a purchaser and
seller for a hotel. For clarification it is the intent of the parties that unless specifically
outlined differently below that Seller is responsible for all revenues and expenses attributable to
the time prior to Cutoff Time and Purchaser is responsible for all revenues and expenses
attributable to the time after the Cutoff time. At Closing, Purchaser and Seller shall make the
prorations, credits, and other adjustments provided for below in, and in accordance with the
procedures set forth in, this Section 4.4. Beginning as close to the anticipated Closing
Date as practicable, Seller shall, in consultation with Purchaser and with Purchaser’s reasonable
cooperation, cause to be prepared a prorations and credit statement (the “Preliminary
Statement”) which shall reflect all of the prorations, credits and other adjustments to the
Purchase Price at Closing required under this Section 4.4 or under any other provision of
this Agreement. As soon as Purchaser and Seller have agreed upon the Preliminary Statement, they
shall jointly deliver a mutually signed copy thereof to Escrow Agent. The net amount shown as owing
to Seller or Purchaser in the Preliminary Statement shall be added to or subtracted from the
proceeds of the Purchase Price payable to Seller through Escrow at Closing.

 

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4.4.1 Proration of Taxes.

(a) All real estate ad valorem taxes, general assessments and special assessments and all
personal property ad valorem taxes assessed against the Hotel (collectively, “Taxes”) with
respect to the tax year in which Closing occurs shall be prorated between Purchaser and Seller as
of the Closing Date. If the amount of any such Taxes is not ascertainable on the Closing Date, the
proration for such Taxes shall be based on the tax rates set forth in the most recent available
bill and the latest assessed valuation of the Property; provided, however, that after the Closing,
Seller and Purchaser shall re-prorate the Taxes in accordance with Section 4.4.14 below and
pay any deficiency in the original proration to the other party promptly upon receipt of the actual
bill for the relevant taxable period. Purchaser shall give Seller written notice of the actual
amounts of any such bills within five (5) business days after receipt thereof. If, at the time of
the Closing, the Hotel is subject to a special assessment or assessments which are payable by
Seller and which are or may become payable in installments, then, for the purposes of this
Agreement, all of the installments of any such special assessment or assessments which are not
delinquent on the Closing Date and which may be paid thereafter shall be equitably apportioned
between Seller and Purchaser based upon their respective periods of ownership.

(b) Seller retains the right to continue and settle any proceeding pending as of the Effective
Date to contest any Taxes for any taxable period which encompasses any period prior to the date of
the Closing, and shall be entitled to any refunds or abatements of Taxes awarded in such
proceedings or in any proceedings instituted by Purchaser to the extent the Taxes, refunds or
abatements relate to periods of time prior to the Closing Date. Seller shall not, after the
Effective Date, without the prior written consent of Purchaser, institute any proceeding to contest
any Taxes after and shall not, from and after the Effective Date, settle any pending proceeding
without the prior approval of Purchaser; provided, that Purchase shall not unreasonably withhold
its consent if such settlement would not adversely affect the liability of Purchaser for Taxes for
any taxable
period following the Closing. Prior to Closing Seller shall not settle or discontinue any
assessment review challenge for the 2011/12 tax year without written approval of Purchaser.
However at Closing, Seller shall assign to Purchaser the Application to Review the 2011/12 tax
assessments filed with the New York City Tax Commission and any Petition to Review that assessment
and Purchaser shall have sole authority to settle or discontinue any such applications or
proceeding. Seller shall be responsible for any fees or charges that may now or in the future be
billed by its tax certiorari attorneys for services performed prior to the Closing Date (whether
with respect to the 2011/12 tax year or any prior tax year). In addition, Seller shall instruct
its tax certiorari attorneys to turn over all files and materials relating to the 2011/12 tax year.

4.4.2 General Proration of Expenses.

(a) Unless otherwise set forth below, Seller shall receive credit for any pre-paid expenses
Purchaser will receive credit for any unpaid expenses payable post-Closing with respect to period
prior to the Closing based on actual usage or if actual usage is not determinable on a per-diem
calculation. The following items of expense with respect to any portion or aspect of the Hotel
shall be prorated between Seller and Purchaser as of the Closing Date:

(i) All charges and expenses under any Service Contracts being assumed by Purchaser.

 

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(ii) All utility charges (but excluding any utility deposits). To the extent reasonably
practicable, though, in lieu of prorating the charges for any metered utility service, Purchaser
and Seller shall endeavor to have the utility read the meter as close as practicable to the Closing
Date, render a final bill to Seller based on such reading, Seller shall pay a per diem for any day
prior to closing that does not show on such meter reading and Purchaser shall thereafter be
responsible for all subsequent bills relating to such service.

(iii) Prepaid expenses of the Hotel, excluding insurance but including without limitation, (A)
amounts incurred to pay for natural gas (if any) held in storage pending use at the Hotel and (B)
the expense of all transferable licenses and permits obtained in connection with the operation of
the Hotel.

(iv) All other Hotel operating expenses, other than employment expenses (which are covered by
Section 4.4.3 below).

4.4.3 Employment Expenses. All salaries, bonuses, other compensation and employment
benefits for unused vacation, holiday, sick leave and personal days if, and to the extent, that
amounts are accrued and vested and unused prior to the Closing Date, and contributions for
retirement and welfare benefits required under a collective bargaining agreement, together with
F.I.C.A., unemployment and other payroll taxes and benefits due with respect to the employment of
such Employees by Manager, shall be prorated between Seller and Purchaser as of the Closing Date,
with accrued vacation and other benefits due to employees covered by the Collective Bargaining
Agreement being determined in accordance with the Collective Bargaining Agreement and such matters
for other employees in accordance with past practices. Seller and/or Manager shall be current at
the time of Closing with any contribution obligation to any employee benefit plans pursuant to the
Collective Bargaining Agreement, and any proration will be limited to amounts accrued but not
yet due to such employee benefit plans at the time of Closing Manager shall pay the salaries and
related benefits that are payable to any Hotel Employees for work performed at the Hotel on the
Closing Date, whether prior to or following the time of Closing, and such costs for the Closing
Date shall be for the account of Purchaser except to the extent incurred in connection with
operations the revenue from which is allocated to Seller in the event that the Cut-Off Time with
respect to such items being extended until the early morning of the Closing Date.

4.4.4 Hotel Revenues.

(a) At Closing, Purchaser shall receive one-half (1/2) of all revenues from the Hotel guest
rooms and facilities occupied on the evening immediately preceding the Closing Date, including
without limitation any sales taxes, room taxes, occupancy taxes and other taxes charged to guests
in such rooms that Seller is obligated to remit to the applicable taxing authorities, all parking
charges, sales from mini-bars, in-room food and beverage, telephone, facsimile and data
communications, in-room movie, laundry, and other service charges allocable to such rooms with
respect to the evening immediately preceding the Closing Date. All revenues from restaurants, bars,
lounges, vending machines and other service operations conducted at the Property shall be allocated
based on whether the same accrued before or after the Cut-Off Time, and Seller shall cause the
Manager to separately record sales occurring before and after the Cut-Off Time at the Property.
Notwithstanding the foregoing, all revenues from any bars and lounges at the Property shall be
prorated based on the actual closing time for such bar or lounge. For example, if such bar or
lounge closes at 2 a.m. on the Closing Date, Seller shall retain the revenues from, and be
responsible for the operating costs reasonably attributable to, such services and operations even
though such revenues were generated two (2) hours after the Cut-Off Time.

 

19

 

(b) Revenues from conferences, receptions, meetings, and other functions occurring in any
conference, banquet or meeting rooms in the Hotel, or in any adjacent facilities owned or operated
by Seller, including usage charges and related taxes, food and beverage sales, valet parking
charges, equipment rentals, and telecommunications charges, shall be allocated between Seller and
Purchaser, based on when the function therein commenced, with: (i) one-day functions commencing
prior to the Cut-Off Time being allocable to Seller; (ii) functions commencing after the Cut-Off
Time being allocable to Purchaser; and (iii) multi-day functions being allocated on a pro rata
basis between Seller and Purchaser according to when the event commences and is scheduled to end in
relation to the Cut-Off Time.

(c) At Closing, all accounts receivable of the Hotel and all related operations (other than
Rent) which are maintained on the guest ledger (as opposed to the city ledger) and relate to guests
that have not been at the hotel for a period in excess of seven (7) consecutive days and are
outstanding (collectively, the “Receivables”) shall be assigned to Purchaser and Seller
shall receive a proration credit in an amount equal to the face value (without further adjustment
or allowance for uncollectible accounts) of such receivables as set forth on Manager’s books
(including, without limitation, receivables accrued in connection with hotel reservations, the use
of guest rooms, as reflected on the guest ledger). Purchaser shall have no right to any adjustment
to the prorations with respect to the Receivables on or after Closing for inability to collect
outstanding Receivables or otherwise. All other account receivables of the Hotel and related
operations (other than Rent) shall remain the property of the Seller (“Retained
Receivables”) and
shall not be sold to Purchaser hereunder. There shall be no proration at closing for Retained
Receivables and (i) Purchaser shall have no right or obligation to make efforts to collect the
Retained Receivables and (ii) Purchaser and its manager shall deliver to Seller any amounts
received by them after the Closing Date on account of the Retained Receivables (if the reasonably
ascertainable intent of the payor thereof is that the payment thereof pertains to a Retained
Receivable) reasonably promptly following receipt by Purchaser or its manager. Notwithstanding the
foregoing, Seller may take such action, in the name of Seller or Seller’s designee and not in the
name of Purchaser or the Hotel, in respect of the collection of any such Retained Receivables as
Seller deems appropriate.

(d) Any operating revenues not otherwise provided for in this Section 4.4, shall be
prorated between Purchaser and Seller as of Closing.

4.4.5 [Intentionally omitted.]

4.4.6 Hotel Payables. At Closing, Purchaser shall receive a proration credit equal to the
aggregate amount of all outstanding accounts payable for the Hotel as of the Closing Date
(“Hotel Payables”) as set forth in a schedule attached to the Preliminary Statement.
Purchaser shall: (a) assume the obligation to satisfy all Hotel Payables for which Purchaser
received such credit at Closing; (b) indemnify, defend and hold Seller harmless against any claim
for such Hotel Payables; and (c) assume all obligations of Seller to pay for any (i) consumables or
other items ordered by or for the benefit of Seller in the ordinary course of business but which
are not yet received as of the Closing Date and (ii) items or services listed on a purchase order
log prepared by Manager which are not yet received as of the Closing Date, which list shall be
updated by Manager immediately prior to Closing. There shall not be any adjustment to the Purchase
Price in connection with Purchaser’s assumption of the liabilities described in clauses (i) and
(ii) above.

 

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4.4.7 [Intentionally Omitted]

4.4.8 Credit for Reservation Deposits. Purchaser shall receive a proration credit
equal to the aggregate amount of advance deposits that shall have been received by Seller prior to
the Cut-Off Time on account of reservations for use or occupancy of the Property after the Cut-Off
Time.

4.4.9 Credit for Cash Banks. Seller shall receive a credit at Closing in an amount
equal to all House Bank Funds actually received by Purchaser.

4.4.10 [Intentionally Omitted]

4.4.11 Regarding Hotel Prorations Generally. Unless this Section 4.4 expressly
provides otherwise: (a) all prorations hereunder with respect to the Hotel shall be made as of
12:00:01 a.m., local time at the Hotel (“Cut-Off Time”) on the Closing Date; (b) all
prorations shall be made on an actual daily basis; and (c) for purposes of such prorations, all
items of revenue and expense with respect to the Hotel’s operations shall be classified and
determined in accordance with the Uniform System of Accounts for the Lodging Industry, as
reasonably modified by Manager for use at the Hotel consistent with past practices within the
twelve (12) months preceding the Closing, and otherwise in accordance with generally accepted
accounting principles. Except as otherwise expressly provided herein, in any case in which
Purchaser receives a credit at Closing on account of any obligation of Seller hereunder, Seller
shall have no further liability for such obligation to the extent of the credit so given, Purchaser
shall pay and discharge the same, and Purchaser shall indemnify, defend and hold Seller harmless
Seller with respect thereto.

4.4.12 Vouchers. Purchaser shall: (a) honor all outstanding unexpired gift
certificates, coupons or other writings issued by Seller or its affiliates prior to the Closing
Date that entitles the holder or bearer thereof to a credit (whether in a specified dollar amount
or for a specified item, such as room night or meals) to be applied against the usual charge for
rooms, meals and/or goods and services at the Hotel (collectively, “Vouchers”) and shall
assume all liability, if any, for all outstanding Vouchers as of the Closing Date; (b) receive a
credit against the Purchase Price payable at Closing in the amount set forth on the Vouchers
Schedule, with respect to the Vouchers listed thereon, as updated as of the Closing Date; (c) be
reimbursed by Manager for any other Vouchers presented by holders thereof in accordance with
Section 4.6 of the New Management Agreement (the “Manager Reimbursement Obligation”); and
(d) indemnify, defend and hold Seller harmless from and against all claims, liabilities, costs and
expenses arising out of a violation of this Section 4.4.12 with respect to the Vouchers
from and after the Closing Date.

 

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4.4.13 Utility and Other Deposits. At Closing, Seller shall be entitled to receive and
retain all refundable cash or other deposits posted with utility companies serving the Property or
any governmental agencies or authorities or posted pursuant to any Service Contract

4.4.14 Final Statement; Post-Closing Adjustments. Except for prorations for Taxes,
which shall be adjusted within fifteen (15) business days of receipt of the tax bill for the tax
year in which the Closing occurs, and prorations of Percentage Rent in accordance with Section
4.4.5 hereof, Purchaser and Seller shall make a one-time post-Closing adjustment of any item of
income and expense subject to adjustment as provided above which was either incomplete or incorrect
(whether as a result of an error in calculation or a lack of complete and accurate information) as
of the Closing. Purchaser will prepare and deliver to Seller for its review and approval a
statement of prorations (the “Final Statement”) on or before March 31, 2012, and the party
in whose favor the original incorrect adjustment or error was made (“Adjusting Party”)
shall pay to the other party (“Requesting Party”) the sum necessary to correct such prior
incorrect adjustment or error within ten (10) days after
completion of the Final Statement. Such adjustment shall be final and no further adjustment
to the prorations or the Purchase Price shall be made.

4.4.15 Resolution of Disputes. In the case of a dispute, the parties shall attempt to
resolve such dispute, but if for any reason such dispute is not resolved by the date that is thirty
(30) days after the delivery of the original notice of the claimed adjustment by Purchaser or
Seller, but not to exceed ninety (90) days after Closing, then the parties shall, upon the written
request of either party to the other, submit such dispute to Deloitte (“Outside
Accountants”), and the determination of the Outside Accountants, which shall be made within a
period of fifteen (15) days after such submittal by the parties, shall be conclusive. The fees and
expenses of the Outside Accountants shall be paid equally by Purchaser and Seller. At such time as
the amount of any adjustment or dispute shall be determined (either by agreement or by
determination of the Outside Accountants), any amount that shall be payable by the Requesting Party
to the Adjusting Party as a result of such adjustment or determination shall be paid within ten
(10) business days after the date on which such agreement or determination shall have been made.

4.4.16 Survival. The provisions of this Section 4.4 shall survive Closing.

4.5 Closing Costs.

4.5.1 State Transfer Tax. At Closing, Seller and Purchaser shall complete, sign and
acknowledge any and all forms required for this transaction with respect to Article 31 of the New
York State Tax Law, as the same may be amended from time to time (the “State Transfer Tax
Law”). Seller shall pay the taxes imposed under the State Transfer Tax Law in connection with
the consummation of the transactions contemplated by this Agreement on the Closing Date.

4.5.2 City Transfer Tax. At Closing, Seller and Purchaser shall complete, sign and
acknowledge any and all forms required for this transaction with respect to Chapter 21 of Title 11
of the Administrative Code of the City of New York, as the same may be amended from time to time
(the “City Transfer Tax Law”). Seller shall pay the taxes imposed under the City Transfer
Tax Law in connection with the consummation of the transactions contemplated by this Agreement and
any filing fees in connection therewith on the Closing Date.

 

22

 

4.5.3 Seller Closing Costs. At Closing, Seller shall also pay: (a) the fees of any
counsel representing it in connection with this transaction; (b) all bulk sales taxes, sales tax on
the sale of the Personal Property (or any part thereof) and any other sales or use taxes and
occupancy, hotel or other taxes payable with respect to the operation of the Hotel through the
Cut-Off Time (as it may be adjusted for certain activities in the Hotel pursuant to Section
4.4.4(a); (c) one-half of the escrow fees
charged by Escrow Agent; and (d) all recording and filing fees relating to clearance of any
title matter which is not a Permitted Exception. The parties acknowledge and agree that Seller may
use the Purchase Price to pay Seller’s closing costs.

4.5.4 Purchaser Closing Costs. At Closing, Purchaser shall also pay: (a) the fees of
any counsel representing Purchaser in connection with this transaction; (b) 100% of the (i) premium
for the Title Policy, (ii) cost of any endorsements to the Title Policy, and (iii) cost of any
title insurance provided to Purchaser’s lender; (c) the cost of the Survey and any modifications or
updates to the Survey; (d) one-half of the escrow fees charged by Escrow Agent; (e) the cost of any
updates obtained by Purchaser to the property condition report and the Phase I environmental
report; and (f) the fees for recording the Deed and any other recordable documents (other than
documents relating to clearance of any title matter which is not a Permitted Exception).

4.5.5 Other Costs. All other costs and expenses incident to this transaction and the
closing thereof shall be paid in a manner consistent with custom for similar transactions in the
city where the Hotel is located. Notwithstanding the foregoing, in the event that this Agreement is
terminated as a result of a party’s default, such defaulting party shall pay all escrow and title
cancellation fees charged in connection with such cancellation.

4.6 Conditions Precedent to Obligation of Purchaser. The obligation of Purchaser to
consummate the transaction hereunder shall be subject to the fulfillment on or before the Closing
Date of all of the following conditions, any or all of which may be waived by Purchaser in its sole
discretion:

(a) All of the representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects, other than any such representations and warranties that
are qualified as to materiality, which (to the extent so qualified) shall be true and correct in
all respects, as of the Closing Date (in each case with appropriate modifications permitted under
Section 4.2(e) above).

(b) Seller shall have performed and observed in all material respects all covenants,
obligations and agreements of this Agreement to be performed and observed by Seller as of the
Closing Date, other than any such covenants, obligations or agreements that are qualified as to
materiality, which (to the extent so qualified) Seller shall have performed and observed in all
respects.

(c) Seller shall have delivered to Purchaser or deposited with Escrow Agent all of the items
required to be delivered to Purchaser or deposited with Escrow Agent pursuant to the terms of
Section 4.2.

(d) Title Company shall have issued, or be irrevocably committed to issue subject to payment
of title premiums, the Title Policy.

 

23

 

(e) Seller shall have delivered to Purchaser more than ten (10) days in advance of the Closing
Date an assumption agreement in the form of the IWA Assumption Agreement attached hereto as
Exhibit G executed by Seller and Manager.

4.7 Conditions Precedent to Obligation of Seller. The obligation of Seller to consummate
the transaction hereunder shall be subject to the fulfillment on or before the Closing Date of all
of the following conditions, any or all of which may be waived by Seller in writing in its sole
discretion:

(a) Purchaser shall have deposited with Escrow Agent the Purchase Price as adjusted pursuant
to and payable in the manner provided for in this Agreement, subject to fulfillment or waiver of
the conditions to Purchaser’s obligation to consummate the transaction hereunder on or before the
Closing Date as set forth in Sections 4.6 and 4.8. All of the representations and warranties of
Purchaser contained in this Agreement shall be true and correct in all material respects, other
than any such representations and warranties that are qualified as to materiality, which (to the
extent so qualified) shall be true and correct in all respects, as of the Closing Date (in each
case with modifications which are not materially adverse to Seller).

(b) Purchaser shall have performed and observed, in all material respects, all covenants and
agreements of this Agreement to be performed and observed by Purchaser as of the Closing Date,
other than any such covenants, obligations or agreements that are qualified as to materiality,
which (to the extent so qualified) Purchaser shall have performed and observed in all respects.

(c) Purchaser shall have deposited with Escrow Agent all of the items required to be delivered
to Seller or deposited with Escrow Agent pursuant to the terms of Section 4.3.

(d) Purchaser shall have delivered to Seller more than ten (10) days in advance of the Closing
Date an assumption agreement in the form of the IWA Assumption Agreement attached hereto as
Exhibit G executed by Purchaser.

4.8 Conditions Precedent to Obligation of Seller and Purchaser. Notwithstanding anything
herein to the contrary but subject to the remainder of this Section 4.8, the obligation of Seller
and Purchaser to consummate the transaction hereunder shall be subject to the substantially
simultaneous consummation of the transaction described in that certain Purchase and Sale Agreement,
dated as of the date hereof, by and between Morgans Holdings LLC, as seller, and 237 Madison Hotel,
L.L.C., a Delaware limited liability company regarding the purchase and sale of the hotel known as
the Morgans located in New York, New York (the “Morgans PSA”). This condition precedent
may only be waived by both Seller and Purchaser in writing.

(a) Notwithstanding anything to the contrary contained in this Agreement or the Morgans PSA,
if the Morgans PSA is not consummated due to (i) a casualty or condemnation that occurs with
respect to the property described therein, or (ii) (x) the failure of the conditions to the
obligation of the purchaser to consummate the transaction contemplated set forth in section 4.6(a)
or (b) thereof to be fulfilled or (y) the failure of the seller thereunder to make the deliveries
required at the closing thereunder upon satisfaction of all conditions to the seller’s
obligations to close thereunder, or (iii) the failure of any other condition precedent to the
obligation of the purchaser thereunder to close thereunder to be satisfied, Purchaser may elect, in
its sole discretion, to waive the condition precedent set forth in this Section 4.8 for
both Seller and Purchaser; provided that, if Purchaser elects to waive the condition
precedent set forth in this Section 4.8 for both Seller and Purchaser upon the occurrence
of an event set forth in subsection (ii) above and such event resulted from the bad faith or an
intentional breach by the seller under the Morgans PSA, Purchaser shall have the right to make the
No New Management Agreement Election described in Section 4.11.

 

24

 

(b) Notwithstanding anything to the contrary contained in this Agreement or the Morgans PSA,
if the Morgans PSA is not consummated due to (x) conditions to the obligation of the seller to
consummate the transaction contemplated set forth in section 4.7(a) or (b) thereof to be fulfilled
or (y) the failure of the purchaser thereunder to make the deliveries required at the closing
thereunder upon satisfaction of all conditions to the purchaser’s obligations to close thereunder, in each case only to the extent such failure resulted from the bad faith or an intentional breach
by such purchaser, Seller may elect, in its sole discretion, to waive the condition precedent set
forth in this Section 4.8 for both Seller and Purchaser.

4.9 Failure or Waiver of Conditions Precedent. If any of the conditions set forth in
Sections 4.6, 4.7, or 4.8 are not fulfilled (other than as a result of a default or breach by
either party of their obligations hereunder (in which case the provisions of Article VI
shall apply)), or waived on or before the Outside Closing Date, the sole and exclusive remedy
available to the party benefited by such conditions shall be to terminate this Agreement by written
notice to the other party, whereupon the Earnest Money shall be refunded to Purchaser (less
Purchaser’s share of any escrow charges) and all rights and obligations hereunder of each party
shall be at an end except those that expressly survive any termination of this Agreement. Either
party benefited by a condition set forth in Section 4.6 or 4.7 above, as
applicable, may, at its election, at any time or times on or before the date specified for the
satisfaction of the condition, waive in writing the benefit of such condition. The parties’
consummation of the Closing pursuant to this Agreement shall waive any remaining unfulfilled
conditions and any liability on the part of the other party for breaches of representations and
warranties of which such party had actual knowledge as of the Closing.

4.10 Alcoholic Beverage License.

(a) Purchaser acknowledges that Seller and 43rd Restaurant LLC are the current
licensees under the existing alcoholic beverage licenses for the Hotel (the “Existing Liquor
Licenses”). Seller shall cooperate with Purchaser in arranging for Purchaser to obtain all
licenses and approvals required under any Legal Requirements for the continued sale of alcoholic
beverages at the Hotel from and after the Closing Date (including temporary permits) consistent
with the customary practices and procedures of the Hotel in effect as of the Effective Date
(collectively, “Liquor Licenses”), provided that such cooperation shall (i) not create any
potential liability for Seller or 43rd Restaurant LLC greater than is in existence on
the Effective Date (to the extent same is not covered by the present insurance policy at the
Property) and (ii) be at no cost or
expense to Seller or 43rd Restaurant LLC. In no event shall Seller or
43rd Restaurant LLC be required to transfer to Purchaser any alcoholic beverage
inventory which is located at or held for use in the Hotel unless and until Purchaser has obtained
a valid and effective license entitling Purchaser to sell alcoholic beverages at the Hotel and only
to the extent that Seller or 43rd Restaurant LLC is permitted to transfer such
inventories pursuant to applicable law.

 

25

 

(b) Promptly following the Effective Date but in no event sooner than 30 days after the notice
to the Community Board, Purchaser shall file all necessary applications and supporting materials
with the New York State Liquor Authority as may be required for the issuance of all Liquor
Licenses, and shall thereafter use commercially reasonable efforts to diligently pursue and obtain
the issuance of such Liquor Licenses or a temporary permit prior to, or contemporaneously with, the
Closing. If Purchaser has not secured a Liquor License or temporary permit as of the Outside
Closing Date, then Purchaser shall be entitled to adjourn the Outside Closing Date by no more than
30 days upon giving notice of such election to Seller and depositing an additional ONE MILLION
EIGHT HUNDRED NINETY THOUSAND AND NO/100 DOLLARS ($1,890,000.00) with the Escrow Agent to be held
as, and which shall become a part of, the Earnest Money, in each case prior to the Outside Closing
Date. If Purchaser has not secured a Liquor License or temporary permit as of the Outside Closing
Date, so adjourned, Purchaser’s obligation to close the purchase of the Hotel shall not be excused
or delayed or in any other way be affected thereby, the Purchase Price shall not be reduced and
Seller shall have no additional obligation as a result thereof. Purchaser shall keep Seller
informed of the status of such applications, and shall promptly respond to Seller’s inquiries
regarding the status of the same.

(c) If this Agreement is terminated and Purchaser has filed an application or otherwise
commenced the process of obtaining the Liquor Licenses or obtaining any new licenses and permits,
Purchaser shall withdraw all such applications and cease all other activities with respect to such
transfer or such new licenses and permits.

4.11 No New Management Agreement Election. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence of the event described in Section
4.8(a)(ii) and such event resulted from the bad faith or an intentional breach by the seller
under the Morgans PSA, Purchaser shall have the right to elect to Close hereunder and not enter
into the New Management Agreement at Closing (and entry into same shall not be a condition
precedent in favor of Seller) (such election, the “No New Management Agreement Election”).
In the event that Purchaser elects the No New Management Agreement Election, the Purchase Price
shall be increased by FIVE MILLION DOLLARS ($5,000,000).

ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS

5.1 Representations and Warranties of Seller. Seller hereby makes the following
representations and warranties to Purchaser as of the Effective Date, subject to the qualifications
and exceptions set forth below:

(a) Organization and Authority. Seller has been duly organized and is validly existing
and in good standing under the laws of Delaware and is qualified to do business in the State of New
York. Seller has the full right, power and authority to enter into this Agreement and to transfer
all of the Property to be conveyed by Seller pursuant hereto and to consummate or cause to be
consummated the transactions contemplated herein to be made or consummated by Seller. The person
signing this Agreement on behalf of Seller is authorized to do so.

 

26

 

(b) No Breach. The execution, delivery and performance of this Agreement by Seller and
the consummation of the transactions contemplated herein will not: (i) result in a breach or
acceleration of or constitute a default or event of termination under the provisions of any
agreement or instrument by which the Property is bound which would have a material adverse impact
on the ownership and operation of the Property by Purchaser or the ability of Seller to consummate
the transaction contemplated hereby; or (ii) constitute or result in the violation or breach by
Seller of any judgment, order, writ, injunction or decree issued against or imposed upon Seller or
result in the violation of any applicable law, rule or regulation of any governmental authority
which, with respect to any of the foregoing, would have a material adverse impact on the ownership
or operation of the Property by Purchaser or the ability of Seller to consummate the transactions
contemplated hereby.

(c) Litigation/Condemnation. Except as set forth on schedule entitled “Litigation”
annexed to the Property Information Letter, Seller has not received written notice of any
litigation which is pending against (or is threatened to be filed against) Seller that arises out
of the ownership of the Property, or that affects the Property, an adverse determination of which
would, individually or in the aggregate, reasonably be expected to materially and adversely affect
the Property or use thereof, or Seller’s ability to perform its obligation hereunder. Seller has
not received written notice of any condemnation proceedings against the Property nor, to Seller’s
knowledge, are any such proceedings threatened.

(d) Space Leases. Other than the Space Lease, there are no leases or other agreements
currently affecting the Hotel (other than Bookings) pursuant to which any party has a right to
occupy all or any portion of the Property, and Seller has made available to Purchaser a true,
correct and complete copy of the Space Lease. Seller has complied with all of its obligations under
the Space Lease with respect to tenant improvements and there are no leasing commissions that are
or may become payable with respect to the Space Lease from and after the Closing Date. The tangible
and intangible property (including, without limitations, fixtures, personal property or
intellectual property) owned by the tenant under the Space Lease and located at the Property does
not include any tangible personal property located outside of the premises subject to the Space
Lease, other than supplies and equipment stored elsewhere in the Property and incidental tangible
personal property that may be temporarily located outside such premises.

(e) Service Contracts and Equipment Leases. There are no material Service Contracts,
including without limitation Equipment Leases, which will affect the Property after the Closing
Date except (i) as set forth on Schedule 1.1(e)-1 or Schedule 1.1(e)-2 or (ii)
Service Contracts entered into after the Effective Date which Seller is permitted to enter into
under the terms of this Agreement and has disclosed by written notice to Purchaser, and provided
true, correct and complete copies of, to Purchaser at least five (5) business days prior to the
Closing Date. No material Service Contracts, including without limitation Equipment Leases, have
been amended in
any material respect except (i) as set forth in said Schedules or (ii) as otherwise permitted
pursuant to this Agreement to be amended after the Effective Date and disclosed to Purchaser (along
with true, correct and complete copies thereof). As of the Effective Date and the Closing Date, no
written notice of material default has been delivered by Seller or received by Seller with respect
to any Service Contracts or Equipment Leases that remains uncured (and to Seller’s knowledge, no
party is in default in any material respect under any material Service Contract or Equipment
Lease). The copies of Service Contracts and Equipment Leases made available to Purchaser by Seller
are true, correct and complete in all material respects as to each Service Contract or Equipment
Lease. For purposes of this Section 5.1(e), a “material” Service Contract is a Service
Contract that is reasonably likely to require payments in excess of $25,000.00 in any 12 month
period or is not terminable on 3 months notice or less.

 

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(f) Personal Property. Seller or a member of Seller Group owns good and marketable
title to the Personal Property free and clear of all liens and encumbrances. Following the
Closing, Purchaser will own the Personal Property free and clear of all liens and encumbrance other
than any liens or encumbrances created by Purchaser.

(g) No Consents. Other than those that will be obtained, filed or given, as
applicable, prior to Closing, no material consent, approval or action of, filing with or notice to
any governmental or regulatory authority or any other person or entity is required to be obtained
or made by Seller or Manager in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby, other than those required of
Purchaser.

(h) Patriot Act Compliance. Neither Seller nor any entity controlled by Seller: (i) is
a person or entity listed on the Specially Designated Nationals and Blocked Persons List maintained
by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) pursuant to
Executive Order No. 13224, 66 Fed. Reg. 49079 (September 25, 2001) (the “Order”) and/or on
any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and
regulations of OFAC or pursuant to any other applicable orders (such lists are collectively
referred to as the “Lists”); (ii) is a person or entity who has been determined by
competent authority to be subject to the prohibitions contained in the Order; or (iii) is owned or
controlled by, or acts for or on behalf of, any person or entity on the Lists or any other person
or entity who has been determined by competent authority to be subject to the prohibitions
contained in the Order.

(i) Employees. There are no employees of the Hotel other than those employees who are
employed by Manager with respect to the Hotel (“Employees”). Except as otherwise set forth
on Schedule 5.1(i) attached hereto, Seller is not a party to or bound by any collective
bargaining agreement or union agreement with respect to the Property, and Seller has provided true
and correct copies of all such agreements to Purchaser. To Seller’s knowledge, neither Seller,
Manager nor any Affiliate is in default under any such agreements. Except as set forth in part (1)
of the schedule entitled “Employee Matters” attached to that certain letter from Seller to
Purchaser dated as of the Effective Date (the “Property Information Letter”) (such schedule, the
“Employee Schedule”) or on the Litigation schedule, no current or former employee of the Property,
no governmental agency and no other person, agency or entity has made a formal charge, complaint or
request for a grievance or an arbitration proceeding against Seller that has not been resolved
alleging a breach or default under any such agreement or a violation of
applicable law relating to personnel or employment matters and, to Seller’s knowledge, neither
Seller nor Manager is in default in any material respect under any such agreement or in violation
in any material respect of any such law. To Seller’s knowledge, the information regarding
employees at the Property set forth in part (2) of the Employee Schedule, including their names,
union status, salaries, benefits, job titles, and seniority, is true, correct and complete in all
material respects, except for any information excluded in accordance with privacy rules established
under the Collective Bargaining Agreement; and part (3) of the Employee Schedule identifies all
material employee benefit plans and employee benefit programs (including any multi-employer plans),
excluding such plans and programs set out or arising under any collective bargaining agreement or
union agreement, maintained by or on behalf of Seller or Manager with respect to the Hotel, of
which Seller has knowledge, for the health, welfare or benefit of a majority of the employees of
the Property and/or their spouses, dependents or other qualified beneficiaries to which Seller or
Manager contributes (the “Plans”).

 

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(j) Violations of Law. Except for violations shown in or disclosed by the Title
Report or any Title Update and any violations disclosed on the schedule entitled “Violations of
Law” annexed to the Property Information Letter, Seller has not received any written notice of, nor
does Seller have any knowledge of, any violation in any material respect of law (including fire,
health, building, use, occupancy, rent control or stabilization, environmental or zoning codes)
with respect to all or any part of the Property that remains uncured. Seller has not received any
written notice of, nor does Seller have any knowledge of, any New York State Liquor Authority
violations (and no events that with the giving of notice or passage of time or both would lead to
New York State Liquor Authority violations) with respect to the Existing Liquor Licenses.

(k) Deposits.

(i) Part (1) of the schedule entitled “Deposits” annexed to the Property Information Letter
(the “Deposits Schedule”) contains a complete list of all deposits held by Seller pursuant to
Service Contracts, Bookings, the Space Lease or otherwise in connection with the ownership or
operation of the Hotel and sets forth, as of the Effective Date, all portions of any such deposit
that have been applied by the Seller.

(ii) Part (2) of the Deposits Schedule contains a complete list of all deposits made by Seller
to utility companies or governmental agencies or authorities relating to the Hotel and sets forth,
as of the Effective Date, to Seller’s knowledge, all portions of any such deposit that have been
applied by such entities.

(l) Vouchers; Barter Agreements. The schedule entitled “Vouchers and Barter
Agreements” annexed to the Property Information Letter (the “Vouchers Schedule”) contains,
to the knowledge of Seller, a true, correct and complete list, as of the Effective Date, of (x) all
outstanding, unexpired gift certificates, coupons or other writings issued by Seller or Manager
that entitle the holder or bearer thereof to a credit (whether in a specified dollar amount or for
a specified item, such as room night or meals) to be applied against the charge for rooms, meals
and/or goods and services at the Hotel, except as provided in below in this Section 5.1(l),
and (y) all barter agreements to which Seller is a party. In addition to the above vouchers,
Seller and its affiliates have issued writings entitling the holder of such writing to a credit
(whether in a specified dollar amount or for a specified item), including, but not limited to,
credits for room
nights, meals at the Hotel’s restaurant(s), and charitable donations, all of which are subject
to the Manager Reimbursement Obligation.

(m) Reward Plans. Schedule 5.1(m) contains a true, correct and complete list
and description of all reward points plans in which the Hotel participates.

(n) Intellectual Property. Schedule 1.1(f) contains a true, correct, and
complete list of all names, marks, logos and designs, used in the operation or ownership of the
Property or any part thereof (other than the Retained IP) and all registered trademarks relating to
the name “Royalton” that are owned by any member of the Seller Group.

 

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(o) Permits. Schedule 5.1(o) contains a true, correct and complete list of
all transferable licenses, franchises and permits held by Seller and used in or relating to the
ownership, occupancy or operation of the Property or any part thereof as of the Effective Date.
Except as otherwise disclosed to Purchaser on Schedule 5.1(o), Seller has not received any
written notice of any uncured violations of any Permit, and to Seller’s knowledge, all of the
Permits described on Schedule 5.1(o) are in full force and effect. To Seller’s knowledge,
all Permits necessary for the operation of the Hotel are set forth in Schedule 5.1(o).

(p) Tax Returns. Seller has, or has caused Manager to, file all tax returns with
respect to the ownership, operation or maintenance of the Property and/or the Hotel that were
required to be filed on or prior to the Effective Date and Seller has paid all taxes (including
without limitation Taxes) due with respect to the ownership, operation or maintenance of the
Property and/or the Hotel. Seller has not received written notice of any special tax assessment
relating to the Hotel, the Property or any portion thereof, and there are no agreements between
Seller and any governmental authority relating to Taxes affecting the Hotel or the Property except
as set forth on Schedule 5.1(p).

(q) Bookings. Except as set forth on the schedule entitled “Bookings” annexed to the
Property Information Letter as Schedule 5.1(q), no Bookings or reservations for rooms, food and
beverages, meetings or other customary Hotel uses have been made with respect to any period
commencing on or after the one year anniversary of the Effective Date.

(r) Tax Contests. Except as set forth in the schedule entitled “Tax Contests”
annexed to the Property Information Letter, Seller is not contesting any taxes (including without
limitation Taxes or tax certiorari) with respect to the Property or the operation, maintenance or
ownership of the Hotel. Seller has provided all material information and documentation within its
possession, control or knowledge related to tax contests, tax appeals and/or tax certiorari to
Purchaser, Seller has duly filed a 2011/2012 tax appeal with respect to all assessments in
connection with the Hotel (and same have not been rescinded or settled and are being prosecuted
with diligence).

(s) Insurance. Seller has not received any written notice from any insurance company
or board of fire underwriters of a requirement that has not been addressed in any material respect
relating to any defects or inadequacies regarding the physical condition or operation of the
Property that would have a material adverse effect on the current use or insurability of the
Property or that would cause any material increase in the premiums for insurance for the Property,
except for any such defects or inadequacies that have been cured or repaired.

(t) Suits and Proceedings. There are no legal actions, suits, audits by municipal,
State or Federal tax authorities that would be binding on a purchaser of the Property or similar
proceedings pending and served, or, to Seller’s knowledge, threatened in writing against Seller or
the Property except as set forth in Section 4.4.1(b).

(u) Non-Foreign Entity. Seller is not a “foreign person” or “foreign corporation” as
those terms are defined in the Internal Revenue Code of 1986, as
amended, and the regulations.

 

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(v) Bankruptcy. Seller has not (i) commenced a voluntary case, or had entered against
it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree
under any federal or state law or statute relative to bankruptcy, insolvency or other relief for
debtors, (ii) caused, suffered or consented to the appointment of a receiver, trustee,
administrator, conservator, liquidator or similar official in any federal, state or foreign
judicial or non-judicial proceedings, to hold, administer and/or liquidate all or substantially all
of its property, or (iii) made an assignment for the benefit of creditors.

(w) Financial Statements. Seller has provided to Purchaser financial statements for
the Hotel consisting of unaudited financial statements for the last three (3) fiscal years and
year-to-date financial statements and operating budgets prepared for the Hotel for the current
year. To Seller’s knowledge, all of these financial statements are in all material respects true
and complete and fairly represent the financial condition of the Hotel as of the dates stated
therein and such statements have been prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and the Uniform System of Accounts for the Lodging Industry, Tenth Revised
Edition, 2006.

(x) No Options. Seller has not granted in writing any option, right of first offer or
refusal or similar right in favor of any person to purchase or otherwise acquire the Property, or
any direct or indirect interest in the Property, that is in effect.

(y) Unrecorded Contracts. Except as shown in or disclosed by the Title Policy, the
Property is not subject to or bound or affected by any material contract, agreement, proffer or
dedication with any municipal, State or Federal government agency to which Seller or Manager is a
party or, to Seller’s knowledge, to which anyone else is a party, except to the extent that such
contract, agreement, proffer or dedication would not be binding on Purchaser following the purchase
of the Property hereunder or can be terminated within 30 days of notice without a termination fee.

(z) ERISA.

(i) Seller either: (A) is not an “employee benefit plan” as defined in ERISA, whether or not
subject to ERISA, or a “plan” as defined in Section 4975 of the Internal Revenue Code of 1986, as
amended (the “Code”), and none of Seller’s assets constitutes (or is deemed to constitute
for purposes of ERISA or Section 4975 of the Code, or any substantially similar Federal, State or
municipal law) “plan assets” for purposes of 29 CFR Section 2510.3-101 or otherwise for purposes of
ERISA or Section 4975 of the Code; or (B) is an “employee benefit plan” as defined in ERISA (an
“Employee Benefit Plan,” which term shall not be deemed to include the Retirement Plan or
any employee benefit plan administered pursuant to the Collective Bargaining Agreement), but not
subject to ERISA or to Section 4975 of the Code, or it is an
entity the assets of which are not considered to be “plan assets” or an “employee benefit
plan” which is subject to ERISA or Section 4975 of the Code, and the consummation of the
transaction contemplated by this Agreement will not constitute a non-exempt prohibited transaction
or otherwise result in a violation of any Federal, State or municipal law that is substantially
similar to Section 406 of ERISA or Section 4975 of the Code.

 

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(ii) With respect to each plan subject to, or previously subject to Title IV of ERISA to which
Seller or any entity aggregated with Seller under Section 414(b) or (c) of the Code or Section 4001
of ERISA (each, an “ERISA Affiliate”) or Manager, sponsors, maintains or contributes to, or
has had any liability or obligation to contribute to with respect to the Employees (the “Title
IV Plans”), to Seller’s knowledge (1) no lien in favor of any Title IV Plan, the Internal
Revenue Service or the Pension Benefit Guaranty Corporation has arisen or been threatened against
Seller or Manager; (2) neither Seller nor Manager has incurred or reasonably expects to incur prior
to the Closing Date any liability under Title IV of ERISA arising in connection with the
termination of, or complete or partial withdrawal from, any Title IV Plan; and (3) no plan
withdrawal has occurred for which liability has been assessed; and (4) no potential withdrawal
liability exists from any action of Seller occurring prior to closing with respect to any Title IV
Plan covering employees of any Property.

(iii) To Seller’s knowledge, all contributions and premiums that are required to have been
made by Seller or Manager to any Title IV Plan or Multiemployer Pension Plan, or by any ERISA
Affiliate of the Seller with respect to any Title IV Plan, under the terms of such Plan or Title IV
Plan, applicable law, or an applicable collective bargaining agreement, for all complete and
partial periods up to and including the Closing Date, have been made or will be made to the
appropriate Plan or Title IV Plan on or before the Closing Date.

(iv) No portion of the Property is subject to a lien arising under ERISA or, in so far as it
relates to an Employee Benefit Plan, the Code. Each Employee Benefit Plan sponsored, established
or maintained by Seller and under which any Hotel Employee benefits has been operated by Seller in
conformity with the terms of such plan and in conformity with ERISA and the Code and regulations
and other published rulings or guidance of the U.S. Department of Labor, the Internal Revenue
Service (the “IRS”), or the Pension Benefit Guaranty Corporation (the “PBGC”), as applicable.
Neither Seller nor any other “disqualified person” or “party in interest” as defined in Section
4975 of the Code and Section 3(14) of ERISA, respectively, has engaged in any “prohibited
transaction”, as defined in Section 4975 of the Code or Section 406 of ERISA, with respect to any
Employee Benefit Plan, nor have there been any fiduciary violations under ERISA, which in either
case could subject Seller (or any officer, director or employee thereof) to any material Taxes
under Section 502(i) of ERISA or Sections 4971 and 4975 of the Code. There is no filing,
application or other matter pending with the IRS, the PBGC or the U. S. Department of Labor or any
other governmental body regarding any such Employee Benefit Plans.

(v) Seller and Manager have complied in all material respects with all obligations under COBRA
regarding any of the Employee Benefit Plans.

(vi) Except as provided in Schedule 5.1(z)(vi), neither Seller nor Manager is a party
to, and does not sponsor or maintain any plan, program or agreement applicable to any of the Hotel
Employees that constitutes a non-qualified deferred compensation plan under Section
409A of the Code, nor does either sponsor or maintain any plan fund or program that provides
health insurance benefits for retirees, except to the extent required by COBRA.

(vii) Seller and Manager have complied with all of their contribution obligations to the
Employee Benefit Plans to which they are obligated to contribute pursuant to the Collective
Bargaining Agreement applicable to the Bargaining Unit Employees, and will remain current up to and
including the Closing.

 

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Notwithstanding the foregoing, if Purchaser has actual knowledge of a breach of any representation
or warranty made by Seller in this Agreement prior to Closing and Purchaser nevertheless proceeds
to close the purchase of the Property, such representation or warranty by Seller shall be deemed to
be qualified or modified to reflect Purchaser’s knowledge of such breach and Seller shall have no
liability whatsoever respecting the same.

5.2 Knowledge Defined. For purposes of this Agreement, “knowledge” means (a) with
respect to Seller, the actual knowledge of Richard Szymanski (provided that, in no event shall such
person have any personal liability arising under this Agreement), without any duty of inquiry or
investigation other than a duty to inquire of the general manager of the Hotel, and expressly
excluding the knowledge of any other shareholder, partner, member, trustee, beneficiary, director,
officer, employee, agent or representative of Seller or any of its affiliates, and (b) with respect
to Purchaser: (i) the actual knowledge of Michael DeNicola and Jan Kuehnemann (provided that, in no
event shall such person(s) have any personal liability arising under this Agreement); (ii) any
matter disclosed in any exhibits or schedules to this Agreement; (iii) any matter disclosed in any
of the Seller Due Diligence Materials or any other documents or materials provided or made
available by Seller or its agents to Purchaser prior to Closing; and (iv) any matter disclosed by
Purchaser’s inspections or investigations of the Property.

5.3 Covenants of Seller.

(a) Seller hereby covenants as follows (and covenants not to permit or suffer to exist same by
Manager):

(i) From the Effective Date hereof until the Closing or earlier termination of this Agreement,
Seller shall cause Manager to operate and maintain the Hotel in a manner generally consistent with
the manner in which Manager has operated and maintained the Hotel during the twelve (12) month
period prior to the date hereof, in good condition consistent with past practice, reasonable wear
and tear excepted and so as to maintain levels of Consumable Inventory consistent with past
practice, subject in all events to force majeure and other circumstances or events outside of
control of Seller. This covenant shall terminate at Closing but Seller shall remain liable,
post-Closing for any breach that occurs pre-Closing.

(ii) From and after the Effective Date, not to sell, assign or enter into any agreement to (or
negotiate, or entertain any offers to) sell or transfer the Hotel or any portion thereof, except
for the provision of hotel rooms and facilities in the ordinary course. This
covenant shall terminate at Closing but Seller shall remain liable, post-Closing for any
breach that occurs pre-Closing.

(iii) From and after the Effective Date, Seller shall not (i) enter into any new, management
agreement or Service Contracts or other agreement or encumbrance with respect to the Property, nor
shall Seller enter into any agreements modifying the Service Contracts, Permitted Exceptions or the
Space Lease unless: (1) (A) any such agreement or modification will not bind Purchaser or the
Property after the Closing Date; (B) any such agreement or modification will be terminated
effective as of the Closing Date if requested by Purchaser to do so; or (C) Seller has obtained
Purchaser’s prior written consent to such agreement or modification, which consent may be granted
or withheld by Purchaser in its sole discretion, and (2) Seller provides Purchaser with prior
written notice of its intent to execute any such agreement or (ii) grant its consent to any action
described in clause (i) above by Manager. Contracts and agreements entered into after the
Effective Date in accordance with this Section 5.3(a)(iii) shall constitute, as applicable,
“Service Contracts” or the “Space Lease” and be scheduled on, and (other than with respect to the
Space Lease) assigned pursuant to, the Assignment of Contracts. This covenant shall terminate at
Closing but Seller shall remain liable, post-Closing for any breach that occurs pre-Closing.
Notwithstanding anything to the contrary contained in this Agreement, following the Effective Date,
Seller shall not make any Bookings (other than bookings for individual rooms) for a date more than
1 year after the Effective Date, permit Seller or the Hotel (but same shall not apply to Manager)
to have any employees, or allow any deposits under any Service Contract, Space Lease or other
agreement affecting or related to the Property to be applied, utilized or refunded, without the
consent of Purchaser.

 

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(b) On or before the Closing Date, Seller shall remove the Hotel from the scope of all barter
agreements to which Seller, Manager or any member of the Seller Group is a party (whether or not
same are included on the Vouchers and Barter Agreements Schedule).

(c) Subject to Section 4.4, Seller shall promptly pay and discharge any taxes that are
imposed, arise or are billed prior to Closing as and when such taxes shall become due. Seller
shall promptly advise Purchaser of any notices it receives from governmental agencies relating to
taxes (including without limitation Taxes). The provisions of this Section 5.3(c) shall
survive the Closing.

(d) Seller shall cure any late or defective RPIE filing with the Department of Finance (to the
extent not cured prior to the Effective Date) and shall be fully responsible and indemnify
Purchaser for any penalties imposed with respect to such late or defective filings. Seller shall
instruct its Tax Certiorari attorneys to correct and remove any penalties relating to such RPIE
matters at its sole cost and expense and provide adequate proof of the satisfaction and dismissal
of any fees or penalties. The provisions of this Section 5.3(d) shall survive the Closing.

5.4 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants
to Seller:

(a) ERISA. Purchaser is not acquiring the Property with the assets of an employee
benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974.

(b) Organization and Authority. Purchaser has been duly organized and is validly
existing and in good standing under the laws of the State of Delaware and it, or its assignee, will
be qualified to do business in New York by the Closing Date. Purchaser has the full right, power
and authority to purchase the Property as provided in this Agreement and to carry out Purchaser’s
obligations hereunder, and all requisite action necessary to authorize Purchaser to enter into this
Agreement and to carry out its obligations hereunder have been, or by the Closing will have been,
taken. The person signing this Agreement on behalf of Purchaser is authorized to do so, and this
Agreement is enforceable against Purchaser in accordance with its terms, subject to bankruptcy,
insolvency and similar laws.

(c) No Breach. The execution, delivery and performance of this Agreement by Purchaser
and the consummation of the transaction contemplated herein will not: (i) result in a breach or
acceleration of or constitute a default under any agreement or instrument by which Purchaser is
bound or affected which would have a material adverse impact on the ability of Purchaser to timely
close the acquisition of the Property pursuant to the terms of this Agreement; or (ii) constitute
or result in the violation or breach by Purchaser of any judgment, order, writ, injunction or
decree issued against or imposed upon Purchaser or result in the violation of any applicable law,
rule or regulation of any governmental authority which, with respect to any of the foregoing, would
have a material adverse impact on the ability of Purchaser to timely complete the acquisition of
the Property pursuant to this Agreement.

 

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(d) No Consents. Other than those that will be obtained, filed or given, as
applicable, prior to Closing, no consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part of Purchaser is
required in connection with the execution, delivery and performance of Agreement or the
consummation of the transactions contemplated.

(e) Pending Actions. There is no action, suit, arbitration, unsatisfied order or
judgment, government investigation or proceeding pending against Purchaser an adverse determination
of which would, individually or in the aggregate, reasonably be expected to materially and
adversely 12 interfere with the consummation of the transaction contemplated by this Agreement.

(f) Patriot Act Compliance. Neither Purchaser nor any entity controlled by Purchaser
(i) is in violation of any applicable anti-money laundering or anti-bribery laws and regulations,
(ii) is a person or entity listed on the Lists; (iii) is a person or entity who has been determined
by competent authority to be subject to the prohibitions contained in the Order; or (iv) is owned
or controlled by, or acts for or on behalf of, any person or entity on the Lists or any other
person or entity who has been determined by competent authority to be subject to the prohibitions
contained in the Order.

(g) Tax Identification Number. Purchaser’s valid tax identification number is
45-1137592.

(h) Bankruptcy. No petition in bankruptcy (voluntary or otherwise), assignment for the
benefit of creditors, or petition seeking reorganization or arrangement or other action under
federal or state bankruptcy laws is pending against or contemplated by Purchaser or its general
partner(s) or controlling shareholders or members.

5.5 Covenants of Purchaser and/or of Seller.

(a) [Intentionally Omitted.]

(b) Purchaser may at its election (but subject to the limitations of Section 3.1
above), inspect the Property for the presence of Hazardous Substances (as defined below), and, at
Seller’s request, shall furnish to Seller without representation or warranty copies of any reports
received by Purchaser in connection with any such inspection. Upon receipt of written request,
Purchaser shall also furnish to Seller without representation or warranty copies of any other
reports received by Purchaser relating to any other physical inspections of the Property conducted
on Purchaser’s behalf, if any (including, specifically, without limitation, any reports analyzing
compliance of the Property with the provisions of the Americans with Disabilities Act, 42 U.S.C.
§12101, et seq., if applicable). As used herein, “Hazardous Substances” means all
hazardous or toxic materials, substances, pollutants, contaminants, or wastes currently or
hereafter identified as a hazardous substance or waste in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (commonly known as “CERCLA”), as amended, the Superfund
Amendments and Reauthorization Act (commonly known as “SARA”), the Resource Conservation and
Recovery Act (commonly known as “RCRA”), or any other federal, state or local legislation or
ordinances applicable to the Property (collectively, “Environmental Laws”).

 

35

 

Purchaser hereby assumes full responsibility for its inspections of the Property regarding
Hazardous Substances and irrevocably waives any claim against Seller and releases Seller from all
liability arising from the presence of Hazardous Substances on the Property. Notwithstanding the
foregoing, Purchaser does not waive and hereby retains the right to recover from Seller in
connection with any claim by any third party (other than a governmental authority) for personal
injury arising from or relating to any alleged exposure to Hazardous Substances at, on, under,
about, within or migrating to or from the Property prior to the Closing, but not to assert claims
in addition to such claims asserted against Purchaser.

(c) Not later than three (3) days prior to the Closing, Seller shall send, or cause the
Manager to send, written notice to guests or other persons who have safe deposit boxes at the Hotel
advising of the sale of the Hotel and requesting verification or removal of the contents within two
(2) days. The safe deposit boxes of guests or other persons not responding to said written notice
shall be opened only in the presence of the Manager or representatives of both Seller and
Purchaser. The contents of all boxes opened as aforesaid shall be listed at the time such boxes
are opened and each such list shall be signed by or on behalf of the Manager or by or on behalf of
Seller and Purchaser, and Purchaser shall not be liable or responsible for any items claimed to
have been in said boxes unless such items are included in such list. Seller agrees to indemnify,
defend and hold Purchaser harmless from and against any liability or responsibility for any items
claimed to have been in said boxes but not included on such list and Purchaser agrees to indemnify,
defend and hold Seller harmless from and against any liability or responsibility for items claimed
to have been in said boxes and included in such list and all claims, losses and liabilities with
respect thereto arising out of the acts or omissions of Purchaser after the Closing Date.

(d) All baggage or other property of guests of the Hotel which has been checked with or left
in the care of Seller and remains in Seller’s care as of the Cut-Off Time shall be inventoried and
tagged jointly by Seller and Purchaser. Purchaser hereby agrees to defend, indemnify and
hold harmless Seller against any claims, losses or liabilities in connection with such tagged
baggage and property arising out of the acts or omissions of Purchaser from and after the Closing
Date. Seller hereby agrees to defend, indemnify and hold harmless Purchaser against all claims,
losses and liabilities with respect to such tagged baggage and property arising out of the acts or
omissions of Seller prior to the Closing Date.

(e) Purchaser shall honor (and shall cause its manager to honor) all reservations made in the
ordinary course of business at the Hotel and in accordance with this Agreement (including honoring
the rates at which such reservations were made, including reservations made on a wholesale, reward
points redemption, or other basis), or for any related conference, banquet, or meeting space or any
other facilities in connection with the Hotel made by Seller on or prior to the Cut-Off Time for
periods on or after the Closing Date.

The provisions of this Section 5.5 shall survive Closing or any earlier termination of
this Agreement.

 

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5.6 Employees.

(a) For purposes of this Agreement, (i) “Hotel Employees” means, collectively, all
individuals employed at the Hotel by Manager or Seller as of the Closing Date, irrespective of
whether such individuals are active or on leaves of absence or otherwise inactive but still
employed at the Hotel, and (ii) “Bargaining Unit Employees” means all employees of Seller
or Manager who work at the Hotel and are covered by the Collective Bargaining Agreement (defined
below). The provisions of this Agreement set forth in Sections 5.6(b) through Section
5.6(f) will apply to Purchaser or Manager, as applicable, to the extent and only to the extent
that Seller immediately before the Closing has a corresponding and direct obligation to Hotel
Employees or to Bargaining Unit Employees and to their union representatives, and the obligation of
Purchaser or Manager, as applicable, thereunder will be only to the same extent as the obligation
of Seller. The provisions of Section 5.6(f), and any obligation of Purchaser or Manager
thereunder shall be to the same extent and have the same nature as that of Seller immediately
before the Closing. The provisions of Section 5.6(h) will operate and be applied, if and
only to the extent that Seller has an obligation to contribute to the Retirement Plan that runs
directly to such plan. Nothing in this Section 5.6 is intended by its own force and
without the consent of Purchaser to enlarge any obligation or commitment of Purchaser or Manager
beyond the obligation or commitment that Seller has immediately before the Closing.

(b) Purchaser agrees that it will cause the Manager to continue to employ, following the
Closing, the Hotel Employees (the “Continuing Employees”) so that Seller shall not be
required to give any layoff, closing or other termination notices or otherwise incur any liability
pursuant to the provisions of the Federal Worker Adjustment and Retraining Notification Act. 29
U.S.C. 2101-2109 (the “Federal WARN Act”), the New York State Worker Adjustment and
Retraining Notification Act, N.Y. Labor Law §860 et seq. and 12 NYCRR Part 921 (“New
York WARN Act”). Purchaser further agrees that (i) all Bargaining Unit Employees shall be
offered employment in accordance with Section 5.6(e) below, (ii) Purchaser or, as the case
may be, the Manager shall be required to assume and discharge, in accordance with their terms, all
obligations and liabilities of Seller or Manager with respect to costs of termination of any Hotel
Employee incurred after the Closing including,
without limitation, any severance claim made after the Closing or arising from the
transactions contemplated by this Agreement.

(c) From and after the Closing, Purchaser or Manager (i) shall be solely responsible for
complying or causing compliance with all applicable provisions of federal, state and municipal laws
and regulations relating to Continuing Employees, including Purchaser’s covenants set forth in this
Section 5.6, including without limitation compliance with any applicable provisions of the
Federal WARN Actor the New York WARN Act, and (ii) other than with respect to acts or omissions of
Seller and/or Manager (whether same occur prior to or following the Closing Date), hereby agrees to
indemnify, defend, protect and hold Seller, Manager, and their respective affiliates harmless from
and against any and all liabilities, debts, costs, expenses, damages, attorneys’ fees and
disbursements arising out of any violation of the Federal WARN Act or the New York WARN Act in
connection with the transaction contemplated by this Agreement. Seller agrees to indemnify,
defend, protect and hold Purchaser and its affiliates harmless from and against any and all
liabilities, debts, costs, expenses, damages, attorneys’ fees and disbursements arising out of any
violation of the Federal WARN Act or the New York WARN Act for (A) any period prior to the Closing
and (B) with respect to all acts or omissions of Seller and/or Manger (whether same occur prior to
or following the Closing Date).

 

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(d) During the period prior to Closing, the parties agree to reasonably cooperate and also to
consult on a regular basis and coordinate their activities relating to employee matters so as to
facilitate a smooth transition of Hotel operations and the continued proper performance by the
Hotel Employees of their respective duties up to Closing. Between the Effective Date and Closing,
other than in the ordinary course of operations, Seller and/or Manager shall not replace, layoff or
terminate any of the Hotel Employees, without Purchaser’s prior written consent, which consent may
not be unreasonably withheld. Seller shall promptly deliver to Purchaser copies of any written
materials delivered or received relating to Union representation of Hotel Employees, and Seller
shall keep Purchaser updated with respect to the status of any discussions with respect thereto.

(e) Purchaser or Manager shall: (i) credit the Continuing Employees whose terms and conditions
of employment are not covered by the Collective Bargaining Agreement with their original date of
hire with the Hotel by the Seller or Manager or their predecessors for purposes of any length of
service requirements, waiting periods, vesting periods, or differential benefits based on length of
service in any benefit plan established or maintained by or on behalf of Purchaser (or Purchaser’s
manager) for which such Hotel Employees may be eligible after the Closing; (ii) provide, subject to
the consent of any third-party insurer or other similar third party having liability for benefit
payments, that any pre-existing conditions, restrictions or waiting periods under any benefit plan
established by or on behalf of Purchaser or Manager providing medical, dental, vision, or
prescription drug coverage or benefits are waived to the extent necessary and possible under the
applicable plans to provide immediate coverage for Hotel employees who are hired for the Hotel
following termination of such Hotel Employees’ coverage under the benefit plans maintained by or on
behalf of Seller.

(f) Without limiting any other provision of this Section 5.6, (i) Seller has informed
Purchaser that Seller is a party to and is bound by the terms of that certain Collective Bargaining
Agreement between Hotel Association of New York, Inc. and New York Hotel and Motel Trades
Council, AFL-CIO (“Union”) dated as of July 1, 2006, (the “Collective Bargaining
Agreement”), (ii) a copy of the Collective Bargaining Agreement has previously been delivered
or made available to Purchaser for its review, and (iii) Purchaser shall cause Manager to retain
all Bargaining Unit Employees following the Closing on an uninterrupted basis, without loss of
seniority, compensation, benefits or other terms and conditions of employment subject to the
Collective Bargaining Agreement and applicable law, and (iv) the Purchaser will cause Manager to
recognize the Union and assume and be bound by the Collective Bargaining Agreement from and after
the Closing Date.

(g) Under the Collective Bargaining Agreement, Seller currently contributes, on a monthly
basis, various amounts under the (A) New York Hotel Trades Council and Hotel Association of New
York City, Inc. Health Benefits Fund, (B) New York Hotel Trades Council and Hotel Association of
New York City, Inc. Pension Fund, (C) New York Hotel Trades Council and Hotel Association of New
York City, Inc. Prepaid Legal Services Fund, and (D) New York Hotel Trades Council and Hotel
Association of New York City, Inc. Training and Scholarship Fund (collectively, the “Union
Employee Benefit Funds”). At Closing, accrued but not yet payable with respect to the Union
Employee Benefit Funds shall be prorated, with the appropriate party receiving a credit to the
Purchase Price, on a pro rata basis base on the date Closing occurs.

 

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(h) Retirement Plan.

(i) The Seller and the Manager are currently “employers” with respect to the Hotel for
purposes of Title IV of ERISA, and subsequent to the Closing Date, the Seller and Manager might
otherwise have had an obligation to contribute to the New York Hotel Trades Council and Hotel
Association of New York City, Inc. Pension Fund (the “Retirement Plan”) with respect to the
Hotel, and accordingly, the parties have agreed to include provisions herein sufficient to comply
with Section 4204 of ERISA. Seller and Purchaser agree that during the Contribution Period (as
defined below), Purchaser (to the extent Seller and Manager have had an obligation to contribute)
shall, either directly or through Manager, make contributions to the Retirement Plan in accordance
with the Collective Bargaining Agreement, for substantially the same number of contribution base
units, within the meaning of Section 4001(a)(11) of ERISA, for which Seller or Manager had an
obligation to contribute with respect to the Hotel. If, as a result of a failure to comply with
the foregoing requirements or as a result of any other action by Purchaser, Seller or Manager
incurs any withdrawal liability under the Retirement Plan with respect to the Hotel, the Purchaser
shall indemnify, defend, and hold Seller and any of its ERISA affiliates harmless from and against
any such liability and all related costs and expenses, including reasonable attorneys’ fees.
Purchaser agrees to reasonably cooperate with Seller, Manager and/or Retirement Plan
representatives with respect to any inquiry or reasonable request for information and assistance in
order to facilitate the transfer of the contribution obligation with respect to the Retirement Plan
from Seller and Manager to Purchaser or Manager. The parties agree that they will notify the
Retirement Plan of their intention that this transaction comply with Section 4204 of ERISA. Subject
to Section 5.6(h)(ii), during the period commencing on the first day of the plan year
following the Closing Date and ending on the expiration of the fifth such plan year (the
“Contribution Period”), Purchaser or Manager shall provide to the Retirement Plan either a
bond,
letter of credit, or an escrow in an amount and manner meeting the requirements of Section
4204 of ERISA. The cost of any bond, letter of credit, or escrow provided under this Section
5.6(h)(i) shall be paid by Purchaser.

(ii) To the extent required pursuant to Section 4204(a)(3) of ERISA, Seller and Manager shall
provide to the Retirement Plan a bond or escrow equal to the present value of the withdrawal
liability Seller would have had to the Retirement Plan with respect to the assets acquired by
Purchaser pursuant to this Agreement (but for the provisions of Section 4204 of ERISA) or, if
greater, an amount determined under Section 4204(a)(1)(B) of ERISA, reduced to the extent provided
under Section 4204(a)(3) of ERISA in the event only a portion of Seller’s or Manager’s assets are
distributed during the Contribution Period. If Purchaser or Manager at any time withdraws from the
Retirement Plan in a complete or partial withdrawal with respect to the assets acquired by
Purchaser pursuant to this Agreement during the Contribution Period, Purchaser shall be primarily
liable and pay, and Seller and Manager shall be secondarily liable for, any withdrawal liability
Seller or Manager would have had to the Retirement Plan with respect to the Hotel (but for the
provisions of Section 4204 of ERISA) if any withdrawal liability of Purchaser with respect to such
Retirement Plan is not paid. Purchaser shall indemnify and hold Seller and Manager harmless for
any withdrawal liability incurred by

 

39

 

 Seller or Manager pursuant to the preceding sentence.  Purchaser agrees to provide Seller and Manager with reasonable advance notice of any action or
event which could result in the imposition of any withdrawal liability contemplated by this
Section 5.6(h)(ii), and in any event Purchaser shall immediately furnish Seller and Manager
with a copy of any notice including, but not limited to a notice of withdrawal liability, it may
receive with respect to the Retirement Plan, together with all the pertinent details. If any such
withdrawal liability shall be assessed against Purchaser, Purchaser further agrees to provide
Seller and Manager with reasonable advance notice of any intention on the part of Purchaser not to
make full payment of any withdrawal liability when the same shall become due. Any proposed notice
or communication to the Retirement Plan relating to Purchaser’s obligations under this Section
shall be provided to Seller and Manager at least ten (10) days before such notice is provided to
the Retirement Plan, and the form of such notice and communication shall be subject to Seller’s and
Manager’s written approval, which approval shall not be unreasonably withheld. Notwithstanding
anything contained in this Section 5.6(h)(ii) to the contrary, Purchaser shall not be
obligated to provide any bond, letter of credit, or escrow in the event and to the extent Purchaser
obtains from the Retirement Plan or the Pension Benefit Guaranty Corporation a proper variance or
exemption under Section 4204(c) of ERISA and the applicable regulations thereunder, provided any
and all requirements of said variance or exemption are met and Purchaser approves such exception.
Upon Purchaser’s request, Seller and Manager agree to reasonably cooperate with Purchaser in
providing the Retirement Plan with notice of the parties’ intention that this transaction be
covered by Section 4204 of ERISA and in providing Purchaser with Seller’s and Manager’s annual
contributions to the Retirement Plan for the current plan year and the last three complete plan
years of the Retirement Plan.

(i) Purchaser agrees to indemnify, defend and hold harmless Seller, Manager and their
respective officers, directors, members, owners and affiliates (herein, the “Seller-Related
Parties”) from and against any liability, or judgment asserted against any of the
Seller-Related Parties on account of or with respect to any of the following: (i) any causes of
action, damages, complaints, judgments, orders whatsoever, and all costs and expenses (including,
without limitation, reasonable attorneys’ fees and costs) incurred in
connection therewith, which may be asserted against any of the Seller-Related Parties on
account of any violation of the National Labor Relations Act, Title VII of the Civil Rights Act,
the Fair Labor Standards Act, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Vocational Rehabilitation Act of 1973, the
Federal WARN Act and/or the New York WARN Act, New York Labor Law, New York State and City Human
Rights Law, and/or any other applicable federal, state or city employment statutes, laws, rules and
regulations (collectively, “Employment Laws”) by Purchaser, or any designee or management
company engaged by Purchaser to employ Hotel personnel (other than Manager), except to the extent
such are based on the acts of any Seller Related Parties, and (ii) any claims or liabilities
arising (A) under ERISA and/or any other applicable federal or state law or regulation concerning
employee benefit plans with respect to the employment of employees by Purchaser or such designee or
management company from and after the Closing or from the transactions contemplated by the
Agreement, or (B) from or under any employee benefit plan applicable to any Continuing Employee or
any other employee hired by Purchaser or such designee or management company to perform services at
or for the Hotel, to the extent that any such claim or liability relates to any period of
employment from and after the Closing.

 

40

 

(j) Seller agrees to indemnify, defend and hold harmless Purchaser, or any designee or
management company engaged by Purchaser to employ Hotel personnel and their respective officers,
directors, members, owners and affiliates (herein, the “Purchaser-Related Parties”) from
and against any claim, liability, or judgment asserted against any of the Purchaser-Related Parties
on account of or with respect to any of the following: (i) any causes of action, damages,
complaints, judgments, orders and/or claims, whatsoever, and all costs and expenses (including,
without limitation, reasonable attorneys’ fees and costs) incurred in connection therewith, which
may be asserted against any of the Purchaser-Related Parties on account of any violation of the
Employment Laws occurring up to and including the Closing by Seller-Related Parties, except to the
extent such are based on the acts of any Purchaser-Related Parties and (ii) any claims or
liabilities arising (A) under ERISA and/or any other applicable federal or state law or regulation
concerning employee benefit plans with respect to the employment of employees by Seller-Related
Parties up to and including the Closing, or (B) from or under any employee benefit plan applicable
to any Continuing Employee or any other employee hired by Purchaser or such designee or management
company to perform services at or for the Hotel, to the extent that any such claim or liability
relates to any period of employment up to and including the Closing.

(k) Purchaser’s and Seller’s obligations under this Section 5.6 shall survive Closing
without limitation.

ARTICLE VI

DEFAULT

6.1 Default by Purchaser. If the sale of the Property as contemplated hereunder is not
consummated due to Purchaser’s default hereunder, Seller shall be entitled, as its sole and
exclusive remedy to terminate this Agreement and receive the Earnest Money as liquidated damages
for the breach of this Agreement, it being agreed between the parties hereto that the actual
damages to Seller in the
event of such breach are impractical to ascertain and the amount of the Earnest Money is a
reasonable estimate thereof. THEREFORE, SUBJECT TO THE PRECEDING SENTENCE, BY PLACING THEIR
INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OF SELLER’S DAMAGES AND AS SELLER’S EXCLUSIVE
REMEDY AGAINST PURCHASER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT ON
THE PART OF PURCHASER. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT
INTENDED AS A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER.

INITIALS: Seller YG      Purchaser LM

Nothing contained in this Section 6.1 shall limit or prevent Seller, after Closing has
occurred, from: (a) asserting any legal or equitable claims against Purchaser for Purchaser’s
obligation to pay attorneys’ fees and other amounts under Section 11.18; (b) enforcing any
indemnity obligation of Purchaser under this Agreement or preclude Seller from obtaining a damage
award in connection therewith; or (c) enforcing Purchaser’s other obligations and liabilities which
survive Closing.

 

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6.2 Default by Seller. If (x) the sale of the Property as contemplated hereunder is not
consummated due to Seller’s default hereunder, or (y) prior to Closing Seller defaults hereunder
and, with respect to any default under this clause (y) only, such default shall continue for five
(5) days after notice to Seller, then Purchaser shall be entitled, as its sole and exclusive
remedy, to terminate this Agreement, receive the return of the Earnest Money and be reimbursed by
Seller for all of Purchaser’s documented third party costs incurred in connection with the
transactions contemplated by this Agreement, including without limitation the negotiation of this
Agreement, in an aggregate amount not to exceed $250,000.00, in which event Seller shall be
released from any and all other liability hereunder. Purchaser expressly waives its rights to seek
monetary or other damages in the event of Seller’s default hereunder other than as expressly
provided in the preceding sentence. Notwithstanding the foregoing, if Purchaser is ready, willing
and able to close and Seller is obligated to close pursuant to the terms of this Agreement, then
Purchaser shall have the right to file suit for specific performance against Seller in a court
having jurisdiction in the country and state in which the Property is located, on or before sixty
(60) days following the date upon which Closing was to have occurred (subject to the provisions of
Section 4.11). Purchaser shall be deemed to have elected to waive such right to seek
specific performance if it fails to file suit within such period. As material consideration to
Seller’s entering into this Agreement with Purchaser, Purchaser expressly waives any right under
statutory or common law or otherwise to record or file a lis pendens or a notice of pendency of
action or similar notice against all of any portion of the Property unless all conditions precedent
to Seller’s obligation to proceed to Closing have been satisfied or waived and Seller defaults in
its obligation to proceed to Closing.

Nothing contained in this Section 6.2 shall limit or prevent Purchaser, after Closing has
occurred, from: (a) asserting any legal or equitable claims against Seller for Seller’s obligation
to pay attorneys’ fees and other amounts under Section 11.18; (b) enforcing any indemnity
obligation of
Seller under this Agreement or preclude Purchaser from obtaining a damage award in connection
therewith; or (c) enforcing Seller’s other obligations and liabilities which survive Closing.

6.3 Seller’s Right to Cure Defaults. Notwithstanding anything to the contrary in this
Agreement, neither party shall not have the right to exercise its remedies under Section
6.1 or 6.2, as applicable, for a default unless the party seeking to exercise remedies
has provided written notice to the other party specifying in reasonable detail the nature of the
default, and the other party has not cured the same within ten (10) business days after the other
party’s receipt of such notice (the “Cure Period”), in which case the Outside Closing Date
shall be extended until the date which is five (5) business days after the expiration of the Cure
Period.

ARTICLE VII

SURVIVAL, INDEMNIFICATION, AND LIMITATIONS ON LIABILITY 

7.1 Survival. The representations and warranties of Seller set forth in Section 5.1
of this Agreement, as updated by the certificate of Seller to be delivered to Purchaser at Closing
in accordance with Section 4.2(e) hereof, and any other representations and warranties of
Seller contained herein or in any other instrument delivered to Purchaser in connection herewith
shall survive Closing (i) indefinitely with respect to the representations and warranties contained
in subsections (a), (d), (f), (h), (j)(solely with respect to Environmental Laws), (n), (q), (w),
and (z) of Section 5.1, (ii) for a period equal to the applicable statute of limitations with
respect to the representations and warranties contained in subsections (i), (p), (r)and (u) of
Section 5.1, and (iii) for a period of six (6) months with respect to the remaining
representations and warranties contained in Section 5.1. The representations and
warranties of Purchaser set forth in Section 5.4, as updated by the certificate of
Purchaser to be delivered to Seller at Closing in accordance with Section 4.3(d) hereof,
and any other representations and warranties of Purchaser contained herein or in any other
instrument delivered to Seller in connection herewith shall survive the Closing (i) indefinitely
with respect to the representations and warranties contained in subsections (a), (b) and (f) of
Section 5.4, (ii) for a period equal to the applicable statute of limitations with respect
to the representations and warranties contained in subsection (g) of Section 5.4, and (iii)
for a period of six (6) months from the Closing Date with respect to the remaining representations
and warranties contained in Section 5.4.

 

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7.2 Seller’s Indemnification. From and after the Closing, Seller shall, subject to the
provisions of this Section 7.2, defend, indemnify and save harmless Purchaser and its
Affiliates, and their respective employees, contractors, officers, directors, and agents
(collectively, “Purchaser Indemnitees”) from and against any and all losses, injuries,
claims, penalties, liabilities, fines, damages, costs or expenses (including, without limitation,
reasonable attorneys’ fee and costs) (collectively, “Losses”) arising out of, resulting
from or relating to:

(a) the inaccuracy of any representation or warranty of Seller;

(b) any charge, complaint or request for a grievance or an arbitration proceeding
against Seller alleging a breach or default under any employment agreement or a violation of
applicable law relating to personnel or employment matters made by or on behalf of any
current or former employee at the Property to the extent such alleged breach, default, or
violation pertains to any time period prior to the Closing Date; or

(c) the failure by Seller to perform or fulfill any covenant or agreement of Seller
contained in this Agreement other than any such failure as to which Purchaser had knowledge
on or before the Closing Date; or

(d) (i) any physical or personal injury or death caused to any person, or damage to
property of unaffiliated third parties, to the extent such injury, death or damage occurred
prior to the Closing Date in connection with the Property, and (ii) except (x) as may be the
obligation of Purchaser pursuant to an express provision of this Agreement or (y) for any
item for which Purchaser receives a credit at Closing (to the extent of such credit), any
claims brought by any unaffiliated third party to the extent arising from acts, omissions or
occurrences that occurred or accrued in connection with the Property prior to the Closing
Date, including, without limitation, with respect to Service Contracts and leases.
Notwithstanding the foregoing, unless otherwise specified in this Agreement neither claims
for change to or remediation of the physical, structural or environmental condition of the
Property nor claims of any government or governmental agency or authority relating to the
physical, structural or environmental condition of the Property are subject to
indemnification by Seller under clause (ii) above.

The provisions of this Section 7.2 shall survive the Closing without limitation.

7.3 Purchaser’s Indemnification. From and after the Closing, Purchaser shall, subject to
the provisions of this Section 7.3, defend, indemnify and save harmless Seller and its
Affiliates, and their respective employees, contractors, officers, directors, and agents
(collectively, “Seller Indemnitees”) from and against any and all Losses arising out of,
resulting from or relating to:

(a) the inaccuracy of any representation or warranty of Purchaser; or

 

43

 

(b) the failure by Purchaser to perform or fulfill any covenant or agreement of
Purchaser contained in this Agreement other than any such failure as to which Seller had
knowledge on or before the Closing Date; or

(c) (i) any physical or personal injury or death caused to any person, or damage to
property of unaffiliated third parties, to the extent such injury, death or damage occurred
on or after the Closing Date in connection with the Property, and (ii) except (x) as may be
the obligation of Seller pursuant to an express provision of this Agreement and with respect
to which Purchaser did not receive a credit at Closing or (y) for any item for which Seller
receives a credit at Closing (to the extent of such credit), any claims brought by an
unaffiliated third party to the extent arising from acts, omissions, or occurrences that
occur or accrue in connection with the Property on or after the Closing Date,
including, without limitation, with respect to Service Contracts assumed by Purchaser at
Closing.

The provisions of this Section 7.3 shall survive the Closing without limitation.

7.4 Notice and Resolution of Claims.

(a) Notice. Each Person entitled to indemnification pursuant to Section 7.2
or 7.3 (an “Indemnitee”) shall give written notice to the indemnifying party or
parties from whom indemnity is sought (the “Indemnifying Party”) promptly after obtaining
knowledge of any claim that it may have under Section 7.2 or 7.3, as applicable.
The notice shall set forth in reasonable detail the claim and the basis for indemnification.
Failure to give the notice in a timely manner shall not release the Indemnifying Party from its
obligations under Section 7.2 or 7.3, as applicable, except to the extent that the
failure materially prejudices the ability of the Indemnifying Party to contest that claim.

(b) Defense of Third Party Claims. If a claim for indemnification pursuant to
Section 7.2 or 7.3 shall arise from any action made or brought by a third party
that would reasonably be expected to result in indemnifiable Losses (a “Third Party
Claim”), the Indemnifying Party may assume the defense of the Third Party Claim. If the
Indemnifying Party assumes the defense of the Third Party Claim, the defense shall be conducted by
counsel chosen by the Indemnifying Party, who shall be reasonably acceptable to Indemnitee,
provided that the Indemnitee shall retain the right to employ its own counsel and participate in
the defense of the Third Party Claim at its own expense (which shall not be recoverable from the
Indemnifying Party under this ARTICLE VII unless (i) the Indemnitee is advised by counsel
reasonably satisfactory to the Indemnifying Party that use of counsel of the Indemnifying Party’s
choice would be expected to give rise to a conflict of interest, (ii) the Indemnifying Party shall
not have employed counsel to represent the Indemnitee within a reasonable time after notice of the
assertion of any such claim or institution of any such action or proceeding, or (iii) the
Indemnifying Party shall authorize the Indemnitee in writing to employ separate counsel at the
expense of the Indemnifying Party, in each of which cases the reasonable expenses of counsel to the
Indemnitee shall be reimbursed by the Indemnifying Party). In no event shall the Indemnifying
Party be obligated to pay the fees and expenses of more than one counsel (other than local counsel)
for all Indemnitees with respect to any claim indemnified under this ARTICLE VII; provided
that an Indemnitee shall be entitled to employ separate counsel at the expense of the Indemnifying
Party if the Indemnitee is advised by counsel reasonably satisfactory to the Indemnifying Party
that use of such other counsel would give rise to a conflict of interest, in which case the
reasonable expenses of counsel to such Indemnitee shall be reimbursed by the Indemnifying Party.
Notwithstanding the foregoing provisions of this Section 7.4(b), (i) no Indemnifying Party
shall be entitled to settle any Third Party Claim for which indemnification is sought under
Section 7.2 or 7.3 without the Indemnitee’s prior written consent, which shall not
be unreasonably withheld, conditioned or delayed, unless it has assumed the defense of such Third
Party Claim and as part of the settlement the Indemnitee is released from all liability with
respect to the Third Party Claim and the settlement does not impose any equitable remedy on the
Indemnitee or require the Indemnitee to admit any fault, culpability or failure to act by or on
behalf of the Indemnitee, and (ii) no Indemnitee shall be entitled to settle any Third Party Claim
for which indemnification is sought under Section 7.2 or 7.3 without the
Indemnifying Party’s prior

 

44

 

written consent, which shall not be unreasonably withheld, conditioned or delayed, unless the Third Party claim is for money
damages only and such settlement does not include a statement as to, or an admission of fault,
culpability or a failure to act by or on behalf of the Indemnifying Party and as part of such
settlement the Indemnifying Party is released from all liability (for indemnification pursuant to
this ARTICLE VII and otherwise) with respect to such Third Party Claim. If the
Indemnifying Party does not notify the Indemnitee within twenty (20) Business Days after receipt of
the Indemnitee’s notice of a Third Party Claim of indemnity hereunder that it elects to assume the
control of the defense of any Third Party Claim, the Indemnitee shall have the right to contest the
Third Party Claim but shall not thereby waive any right to indemnity therefor pursuant to this
Agreement and the costs of such actions by the Indemnitee shall be paid by the Indemnifying Party.

7.5 Limitations on Liability.

(a) Deductible.

(i) Seller shall not have any obligation or liability to any Purchaser Indemnitee under
Section 7.2(a) unless and until the aggregate amount of Losses incurred or suffered
by the Purchaser Indemnitees arising out of the matters referred to in Section
7.2(a) shall have exceeded $75,000, in which case Seller shall be obligated and liable
under Section 7.2(a) only with respect to such excess. Notwithstanding the
foregoing, Seller shall be liable for unpaid taxes and Losses incurred with respect to the
existence of any leases other than the Space Lease without a dollar threshold.

(ii) Purchaser shall not have any obligation or liability to any Seller Indemnitee
under Section 7.3(a) unless and until the aggregate amount of Losses suffered by the
Seller Indemnitees arising out of the matters referred to in Section 7.3(a) shall
have exceeded $75,000, in which case Purchaser shall be obligated and liable under
Section 7.3(a) only with respect to such excess.

(b) Limit of Liability. The aggregate liability of Seller or Purchaser, as
applicable—

(i) under Section 7.2(a) or 7.3(a) shall not exceed three percent (3%)
of the Purchase Price (notwithstanding the foregoing, Seller shall be liable for unpaid
taxes, unpaid employee compensation with respect to the period ending on the Closing Date,
and Losses incurred with respect to the existence of any leases other than the Space Lease,
without a dollar ceiling and any amounts of liability described in this parenthetical shall
not count toward such three percent (3%)); and

 

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(ii) under Section 7.2(b), 7.2(c), 7.2(d), 7.3(b), or
7.3(c) shall not be subject to any limits.

(c) Limit on Time for Assertion of Claims. Neither Seller nor Purchaser shall have
any obligation or liability pursuant to Section 7.2 or 7.3, respectively, for any
breach of any representation or warranty unless notice of a claim asserting such breach shall have
been given in accordance with Section 7.4 prior to the termination of the survival period
applicable to such representation or warranty as set forth in Section 7.1.

7.6 Other Matters Regarding Indemnification.

(a) In the event either Seller or Purchaser (the “Claiming Party”) has actual
knowledge on or before the Closing that any representation or warranty of the other is incorrect
(either through independent investigation or through information and materials provided to the
Claiming Party) or that a covenant of the other has been breached and the Claiming Party proceeds
to Closing, then the Claiming Party shall not be permitted to assert a claim for such matters
following the Closing Date.

(b) The right to be indemnified for Losses, on the terms and subject to the limitations set
forth in this ARTICLE VII, shall be the exclusive remedy available to the Parties and the
Indemnitees for the matters set forth in Sections 7.2 and 7.3.

ARTICLE VIII

RISK OF LOSS

8.1 Minor Damage. In the event of loss or damage to the Real Property or any portion
thereof (other than loss or damage of a nature that occurs in the ordinary course that is not
expected to cost more than $100,000 to repair) Seller shall promptly inform Purchaser thereof. In
the event of loss or damage to the Real Property or any portion thereof which is not “major” (as
hereinafter defined), this Agreement shall remain in full force and effect provided Seller shall,
at Seller’s option, either (a) perform any necessary repairs (to return the Real Property to
substantially the condition in which it existed immediately prior to such loss or damage), or (b)
assign to Purchaser all of Seller’s right, title and interest to any claims and proceeds Seller may
have with respect to any casualty insurance policies or condemnation awards relating to the
premises in question (other than business interruption proceeds attributable to the period prior to
Closing and proceeds in respect of amounts expended by or on behalf of Seller prior to Closing to
restore the Property). In the event that Seller elects to perform repairs upon the Real Property,
Seller shall use reasonable efforts to complete such repairs promptly and the Outside Closing Date
shall be extended a reasonable time, not to exceed thirty (30) days, in order to allow for the
completion of such repairs. If Seller elects to assign a casualty claim to Purchaser, the Purchase
Price shall be reduced by an amount equal to the deductible amount under Seller’s insurance policy
with respect to such loss or damage and not paid by Seller prior to Closing and Seller shall assign
all of its rights to proceeds under the applicable policy with respect to any claim for the
applicable loss (other than business interruption proceeds attributable to the period prior to
Closing and proceeds in respect of amounts expended by or on behalf of Seller prior to Closing to
restore the Property). Upon Closing, full risk of loss with respect to the Property shall pass to
Purchaser.

 

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8.2 Major Damage. In the event of a “major” loss or damage to the Real Property, Purchaser
may, upon notice in writing to Seller delivered within ten (10) days after Seller sends Purchaser
written notice of the occurrence of such major loss or damage, terminate this Agreement by written
notice to Seller, in
which event the Earnest Money shall be returned to Purchaser and neither Seller nor Purchaser shall
have any further rights or obligations under this Agreement except any obligations that expressly
survive the termination of this Agreement. If Purchaser fails for any reason to deliver written
notice of termination to Seller within ten (10) days after Seller sends Purchaser written notice of
the occurrence of major loss or damage, then Purchaser shall be deemed to have elected to terminate
this Agreement. If Purchaser elects to proceed with Closing, (x) Seller shall assign to Purchaser
all of Seller’s right, title and interest to any claims and proceeds Seller may have with respect
to any casualty insurance policies or condemnation awards relating to the premises in question
(other than business interruption proceeds attributable to the period prior to Closing and proceeds
in respect of amounts, if any, expended by or on behalf of Seller prior to Closing to make any
reasonably necessary emergency repairs to the Property), and (y) the Purchase Price shall be
reduced by an amount equal to the deductible amount under Seller’s insurance policy with respect to
such loss or damage that has not been paid or expended by Seller prior to Closing in connection
with reasonably necessary emergency repairs to the Property. Upon Closing, full risk of loss with
respect to the Property shall pass to Purchaser. If Purchaser does not or is not entitled to
terminate this Agreement with respect to a casualty, Seller, with Purchaser’s approval, will
diligently commence and pursue initial emergency restoration of the Property so as to minimize the
loss of business and good will of the Property.

8.3 Definition of “Major” Loss or Damage. For purposes of Sections 8.1 and
8.2, “major” loss or damage refers to the following (a) loss or damage to the Real Property
or any portion thereof such that the cost of repairing or restoring the premises in question to a
condition substantially identical to that of the premises in question prior to the event of damage
would be, in the opinion of a licensed independent architect or registered professional engineer
with a minimum of ten (10) years experience related to commercial real estate construction selected
by Seller and approved by Purchaser, equal to or greater than ten percent (10%) of the Purchase
Price or (b) any loss due to a condemnation which permanently and materially adversely modifies or
impairs the continued operation of the Hotel in substantially the same manner as the Hotel is
operated on the Effective Date. The provisions of this Section 8.3 are intended to
supersede those of Section 5-1311 of the General Obligations Law of New York.

ARTICLE IX

COMMISSIONS

9.1 Brokerage Commissions. In the event the transaction contemplated by this Agreement is
consummated, but not otherwise, Seller agrees to pay to Jones Lang LaSalle Hotels
(“Broker”) at Closing a brokerage commission pursuant to a separate written agreement
between Seller and Broker and Seller shall indemnify and hold Purchaser harmless with respect to
any payments due and owing to Broker in connection with this transaction under such agreement.
Each party agrees that should any claim be made for brokerage commissions or finder’s fees by any
broker or finder other than the Broker by, through or on account of any acts of said party or its
representatives, said party will indemnify, defend, protect and hold the other party free and
harmless from and against any and all loss, liability, cost, damage and expense in connection
therewith. The provisions of this Section 9.1 shall survive Closing or earlier termination
of this Agreement.

 

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ARTICLE X

DISCLAIMERS AND WAIVERS

10.1 No Reliance on Documents. Except as expressly set forth in this Agreement, Seller
makes no representation or warranty as to the truth, accuracy or completeness of any materials,
data or information delivered by or on behalf of Seller or its brokers to Purchaser in connection
with the transaction contemplated hereby including, without limitation, the Reports, material
available in the E-Room, and other Seller Due Diligence Materials, provided, however, that Seller
shall not intentionally alter any material, data or information for the purpose of misleading
Purchaser. Purchaser acknowledges and agrees that all materials, data and information delivered by
Seller to Purchaser in connection with the transaction contemplated hereby are provided to
Purchaser as a convenience only and that any reliance on or use of such materials, data or
information by Purchaser shall be at the sole risk of Purchaser, except as otherwise expressly
stated herein. Without limiting the generality of the foregoing provisions, Purchaser acknowledges
and agrees that (a) any environmental or other report with respect to the Property which is
delivered by Seller to Purchaser shall be for general informational purposes only, (b) Purchaser
shall not have any right to rely on any such report delivered by Seller to Purchaser, but rather
will rely on its own inspections and investigations of the Property and any reports commissioned by
Purchaser with respect thereto, and (c) except for matters expressly set forth in this Agreement,
neither Seller nor any affiliate of Seller nor the person or entity which prepared any such report
delivered by Seller to Purchaser shall have any liability to Purchaser for any inaccuracy in or
omission from any such report or other materials provided to Purchaser in connection with this
Agreement.

10.2 DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY AGREEMENTS
EXECUTED AND DELIVERED BY SELLER AT CLOSING: IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING
AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED
OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR
REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, PROFITABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR ENVIRONMENTAL CONDITION,
UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF
THE PROPERTY WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY DOCUMENTS
OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR ANY OTHER MATTER OR
THING REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL
AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY “AS IS, WHERE IS, WITH ALL FAULTS”,
EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT OR ANY AGREEMENTS EXECUTED AND
DELIVERED BY SELLER AT CLOSING. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS

 

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NOT
LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR RELATING
THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH
RESPECT TO THE PROPERTY AND ANY ACTUAL OR PROPOSED BUDGETS FOR THE REAL PROPERTY) MADE OR FURNISHED
BY SELLER, THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN
WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT OR ANY AGREEMENTS EXECUTED AND DELIVERED
BY SELLER AT CLOSING. PURCHASER REPRESENTS TO SELLER THAT PURCHASER IS A SOPHISTICATED
INSTITUTIONAL INVESTOR WITH SUBSTANTIAL EXPERIENCE AND EXPERTISE WITH INVESTMENT PROPERTIES AND HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO
SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE
ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE
PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF
SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES
AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE DOCUMENTS DELIVERED AT
CLOSING. UPON CLOSING AND SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET
FORTH IN THIS AGREEMENT AND THE DOCUMENTS DELIVERED AT CLOSING, PURCHASER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S INVESTIGATIONS, AND PURCHASER,
UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER’S
OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS
AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN
OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER’S OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY
LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS
RELATING TO THE CONDITION OF THE PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS)
AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY
EXCEPT FOR FRAUD AND OBLIGATIONS OF SELLER UNDER THIS AGREEMENT OR ANY AGREEMENTS EXECUTED AND
DELIVERED BY SELLER AT CLOSING. EXCEPT FOR FRAUD AND OBLIGATIONS OF SELLER UNDER THIS AGREEMENT OR
ANY AGREEMENTS EXECUTED AND DELIVERED BY SELLER AT CLOSING, PURCHASER AGREES THAT SHOULD ANY
CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL
CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE CLOSING DATE, SUCH CLEAN-UP, REMOVAL OR
REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF
PURCHASER.

 

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The waivers and releases set forth in Sections 5.5(a)
and 5.5(c) and in the
immediately preceding paragraph include claims of which Purchaser is presently unaware or which
Purchaser does not presently suspect to exist which, if known by Purchaser, would materially affect
Purchaser’s waiver or release of Seller and the other parties referenced in this Section.

10.3 Repairs, Reserves, and Capital Expenditures. Purchaser acknowledges and agrees that
except as provided in this Agreement, (a) Seller shall have no obligation to make any repairs,
replacements, improvements or alterations to the Property or to expend any funds therefor,
including, without limitation, any reserves that may be held for such purpose, and (b) Purchaser
shall not be entitled to a credit to the Purchase Price at Closing in the event capital
expenditures actually made at the Hotel for any year are less than the budgeted amount as of the
date of the Closing.

10.4 Effect and Survival of Disclaimers. Seller and Purchaser acknowledge that the
compensation to be paid to Seller for the Property has been decreased to take into account that the
Property is being sold subject to the provisions of this Article X. Seller and Purchaser
agree that the provisions of this Article X shall survive Closing.

ARTICLE XI

MISCELLANEOUS

11.1 Confidentiality.

(a)  Prior to the Closing, and subject to the provisions of
Section 11.2, this Agreement, the terms hereof and the Property Information shall be treated as
“Evaluation Material” in accordance with that certain Confidentiality Agreement dated October 26,
2010 executed by Purchaser in favor of Seller (the “Confidentiality Agreement”).”).
Notwithstanding anything to the contrary contained in the Confidentiality Agreement, as of the
Effective Date, the Confidentiality Agreement is hereby amended to provide that the terms of the
transfers contemplated in this Agreement, including the Purchase Price and all other financial
terms, shall be deemed to be “Evaluation Material” for purposes of the Confidentiality Agreement
and that Purchaser shall be entitled to disclose the Evaluation Material (1) to Purchaser’s
affiliates, officers, directors, lenders, investors and prospective investors, employees, agents
and representatives (including legal counsel, accountants and similar professionals to the extent
Purchaser deems it reasonably necessary to inform such party, in which case Purchaser shall inform
each of the foregoing parties of such party’s obligations under this Section and shall secure the
agreement of such parties to be bound by the terms hereof); or (2) as otherwise required by law,
rule or regulation, including the rules or regulations promulgated by the Securities and Exchange
Commission (“SEC”) or the New York Stock Exchange (“NYSE”) to the extent such SEC or NYSE rules or
regulations are applicable to a party. In no event shall the foregoing preclude Purchaser from
providing information regarding the terms of the transfers contemplated in this Agreement to
Purchaser’s direct or indirect owners (excluding any
shareholders or unitholders of the Purchaser’s publicly traded parent entity or the operating
partnership that is a subsidiary of such parent entity), provided that Purchaser informs each of
the foregoing parties of the confidentiality of such information. The parties acknowledge and agree
that effective as of the Closing, the Confidentiality Agreement shall terminate and be of no
further force or effect. Purchaser shall indemnify, defend and hold Seller harmless from and
against any claims arising from a breach by it of this Section 11.1(a).

 

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(b) The terms of the transfers contemplated in this Agreement, including the Purchase Price
and all other financial terms, as well as the non-public information known by Seller relating to
the Property or Purchaser and its affiliates shall remain confidential and shall not be disclosed
by Seller without the written consent of Purchaser except (1) to Seller’s affiliates, officers,
directors, employees, agents and representatives (including legal counsel, accountants and similar
professionals to the extent Seller deems it reasonably necessary to inform such party, in which
case Seller shall inform each of the foregoing parties of such party’s obligations under this
Section and shall secure the agreement of such parties to be bound by the terms hereof); or (2) as
otherwise required by law, rule or regulation, including the rules or regulations promulgated by
the SEC or Nasdaq, to the extent such SEC or Nasdaq rules or regulations are applicable to a party,
it being acknowledged by Purchaser that Seller’s parent entity will file a report on Form 8-K with
the SEC following the Effective Date relating to this Agreement and that Seller shall be entitled
to describe the material terms of this Agreement in its communications with investors. In no event
shall the foregoing preclude Seller from providing information regarding the terms of the transfers
contemplated in this Agreement to Seller’s direct or indirect owners (excluding any shareholders of
the Seller’s publicly traded parent entity), provided that Seller informs each of the foregoing
parties of the confidentiality of such information. Seller shall indemnify, defend and hold
Purchaser harmless from and against any claims arising from a breach by it of this Section 11.1(b).
The restrictions in this Section 11.1(b) shall terminate as of the Closing Date.

(c) Either party shall be entitled to an injunction restraining the other party or its agents
or representatives from disclosing, in whole or in part, the confidential information governed by
this Section 11.1 in violation of the provisions hereof. Nothing herein shall be construed as
prohibiting either party from pursuing damages or any other available remedy at law or in equity
for such breach or threatened breach of this Section 11.1 by the other party.

(d) From and after the Closing, Seller and its affiliates shall hold in confidence, and shall
not disclose to third parties without the prior written consent of Purchaser, any non-public
proprietary information regarding the Hotel and the Property. The foregoing shall not be deemed to
restrict the ability of Seller and its affiliates to comply with their disclosure and reporting
obligations under applicable law. This Section 11.1(d) shall survive the Closing.

11.2 Public Disclosure Prior to Closing, any press releases with respect to the sale
contemplated herein or any matters set forth in this Agreement will be made only in the form
approved by Purchaser and Seller, such approval not to be unreasonably withheld, conditioned or
delayed. If a party fails to respond with specific comments or objections to the other party
within two Business Days after such party is notified of and has received the proposed press
release, such failure to respond shall be deemed
to constitute a party’s approval of such press release. Purchaser and Seller shall mutually agree
on the content of the initial press release regarding the consummation of the transaction
contemplated by this Agreement following the Closing. The provisions of this Section 11.2
shall survive the Closing.

 

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11.3 Assignment. Purchaser may not assign or otherwise transfer this Agreement or any of
its rights or obligations under this Agreement without first obtaining Seller’s written approval
which may be given or withheld in Seller’s sole discretion; provided that Purchaser may assign all
or any portion of this Agreement to one or more entities in which it holds, directly or indirectly,
all of the equity interests. Any assignment by Purchaser of this Agreement shall not relieve
Purchaser of its obligations under this Agreement and any permitted assignee must expressly assume
the obligations of Purchaser in writing. Without limiting the foregoing, in no event shall
Purchaser assign this Agreement to any assignee which, in the reasonable judgment of Seller, will
cause the transaction contemplated hereby or any party thereto to violate the requirements of
ERISA.

11.4 Notices. Any notice pursuant to this Agreement shall be given in writing by (a)
personal delivery, or (b) reputable overnight delivery service with proof of delivery, or (c)
legible facsimile transmission or PDF transmission completed before 5:00 p.m. (New York time) on a
business day sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have designated by written
notice sent in accordance herewith, and shall be deemed to have been given either at the time of
personal delivery, or, in the case of expedited delivery service, as of the date actually received,
or, in the case of facsimile transmission or PDF transmission, as of the date of the facsimile
transmission or PDF transmission provided that an original of such facsimile or PDF is also sent to
the intended addressee by means described in clauses (a), or (b) above. Notices may be given by a
party’s counsel on behalf of such party as if such party had given such notice itself. Unless
changed in accordance with the preceding sentence, the addresses for notices given pursuant to this
Agreement shall be as follows:

If to Seller:

Royalton, LLC

c/o Morgans Group, LLC

475 Tenth Avenue

New York, NY 10018

Attention: David Smail, Executive Vice President & Chief Legal Officer

Facsimile No.: (212) 277-4172

Email: david.smail@morganshotelgroup.com

With a copy to:

Hogan Lovells US LLP

555 13th Street NW

Washington, DC 20004

Attention: Bruce W. Gilchrist

Facsimile No.: (202) 637-5600

Email: bruce.gilchrist@hoganlovells.com

 

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And to:

Hogan Lovells US LLP

875 Third Avenue

New York, New York 10022

Attention: Mitchell R. Lubart, Esq.

Facsimile no. (212) 918-3100

Email: mitchell.lubart@hoganlovells.com

If to Purchaser

c/o FelCor Lodging Trust Incorporated

545 E. John Carpenter Freeway

Suite 1300

Irving, TX 75062

Attention: Charlie Nye

Facsimile no. 972 444 4949

Email: cnye@felcor.com

With a copy to:

c/o FelCor Lodging Trust Incorporated

545 E. John Carpenter Freeway

Suite 1300

Irving, TX 75062

Attention: Michael DeNicola

Facsimile no. 972 444 4949

Email: mdenicola@felcor.com

With a copy to:

Gibson, Dunn & Crutcher LLP

200 Park Avenue

New York, NY 10166-0193

Attention: Andrew Lance, Esq.

Facsimile no. 212.351.4035

Email: alance@gibsondunn.com

11.5 Modifications. This Agreement cannot be changed orally, and no agreement shall be effective to waive, change,
modify or discharge it in whole or in part unless such agreement is in writing and is signed by
Seller and Purchaser.

11.6 Calculation of Time Periods; Time is of the Essence. Unless otherwise specified, in
computing any period of time described in this Agreement, the day of the act or event after which
the designated period of time begins to run is not to be included and the last day of the period so
computed is to be included, unless such last day is a Saturday, Sunday or legal holiday under the
laws of the State in which the Real Property is located, in which event the period shall run until
the end of the next day which is neither a Saturday, Sunday or legal holiday. The final day of any
such period shall be deemed to end at 5:00 p.m., New York time. Subject to the right of adjournment
granted in Section 4.10(b),   time shall be of the essence with respect to the
obligations of the parties to consummate the Closing on or before the Outside Closing Date.

 

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11.7 Successors and Assigns. Subject to the limitations on assignment set forth in
Section 11.3 above, the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto.

11.8 Entire Agreement. This Agreement, including the Exhibits, the Schedules and the
Confidentiality Agreement contain the entire agreement between the parties pertaining to the
subject matter hereof and fully supersedes all prior written or oral agreements and understandings
between the parties pertaining to such subject matter.

11.9 Further Assurances. Each party agrees that it will without further consideration
execute and deliver such other documents and take such other action, whether prior or subsequent to
Closing, as may be reasonably requested by the other party to consummate more effectively the
purposes or subject matter of this Agreement. Without limiting the generality of the foregoing,
Purchaser shall, if requested by Seller, (a) execute acknowledgments of receipt with respect to any
materials delivered by Seller to Purchaser with respect to the Property, and (b) obtain sellers’
permits for any sales activities conducted at the Property prior to Closing and/or obtain “sale for
resale certificates” for any Personal Property that may be sold after the Closing. The provisions
of this Section 11.9 shall survive Closing.

11.10 Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts,
and all such executed counterparts shall constitute the same agreement. It shall be necessary to
account for only one such counterpart in proving this Agreement. In order to expedite the
transaction contemplated herein, telecopied, facsimile or PDF signatures may be used in place of
original signatures on this Agreement. Seller and Purchaser intend to be bound by the signatures
on the telecopied, facsimile or PDF
document, are aware that the other party will rely on the telecopied, facsimile or PDF signatures,
and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form
of signature.

11.11 Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall
nonetheless remain in full force and effect.

11.12 Applicable Law. THIS AGREEMENT IS PERFORMABLE IN THE STATE OF NEW YORK AND SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE FEDERAL LAWS OF THE
UNITED STATES AND THE LAWS OF SUCH STATE. SELLER AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN A STATE OR FEDERAL
COURT SITTING IN THE STATE OF NEW YORK. PURCHASER AND SELLER AGREE THAT THE PROVISIONS OF THIS
SECTION 11.12 SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.

 

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11.13 No Third Party Beneficiary. The provisions of this Agreement and of the documents to
be executed and delivered at Closing are and will be for the benefit of Seller and Purchaser only
and are not for the benefit of any third party, and accordingly, no third party shall have the
right to enforce the provisions of this Agreement or of the documents to be executed and delivered
at Closing.

11.14 Exhibits and Schedules. The following schedules or exhibits attached hereto shall be
deemed to be an integral part of this Agreement:

Schedule 1.1(a)  — Legal Description of Land

Schedule 1.1(c)  — Excluded Personal Property

Schedule 1.1(e)-1  — Service Contracts

Schedule 1.1(e)-2 — Equipment Leases

Schedule 1.1(f) — Intellectual Property

Schedule 1.2(b)(vi) — Space Lease

Schedule 2.6 — Sidewalk Violation Notices

Schedule 3.1(a) — Due Diligence Items

Schedule 3.2  —  Reports

Schedule 5.1(i) — Employee Matters: Collective Bargaining and Union Agreements

Schedule 5.1(m) — Reward Plans

Schedule 5.1(o) — Permits

Schedule 5.1(p) — Special Tax Assessments and Agreements Relating to Taxes

Schedule 5.1(z)(vi) — Non-Qualified Deferred Compensation Plans

Exhibit A  — Deed

Exhibit B — Bill of Sale

Exhibit B-2 — Bill of Sale for Alcoholic Beverages (Seller)

Exhibit B-3 — Bill of Sale for Alcoholic Beverages (43rd Restaurant LLC)

Exhibit C — Assignment of Contracts

Exhibit D — [Intentionally Omitted]

Exhibit E — FIRPTA Certificate

Exhibit F — Title Affidavit

Exhibit G — IWA Assumption Agreement

Exhibit H —  [Intentionally Omitted]

Exhibit I — Pro Forma Title Policy

Exhibit J — Escrow Agreement

Exhibit K —Trademark Assignment

11.15 Captions. The section headings appearing in this Agreement are for convenience of
reference only and are not intended, to any extent and for any purpose, to limit or define the text
of any section or any subsection hereof.

 

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11.16 Construction. The parties acknowledge that the parties and their counsel have
reviewed and revised this Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any exhibits, schedules or amendments hereto. Singular words
shall connote the plural as well as the singular, and plural words shall connote the singular as
well as the plural, and the masculine shall include the feminine and the neuter, as the context may
require. The words “include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”

11.17 Termination of Agreement. It is understood and agreed that if either Purchaser or
Seller terminates this Agreement pursuant to a right of termination granted hereunder, such
termination shall operate to relieve Seller and Purchaser from all obligations under this
Agreement, except for such obligations as are specifically stated herein to survive the termination
of this Agreement.

11.18 Attorneys Fees. If any action or proceeding is commenced by either party to enforce
their rights under this Agreement or to collect damages as a result of the breach of any of the
provisions of this Agreement, the prevailing party in such action or proceeding, including any
bankruptcy, insolvency or appellate proceedings, shall be entitled to recover all reasonable costs
and expenses,
including, without limitation, reasonable attorneys’ fees and court costs, in addition to any other
relief awarded by the court.

11.19 No Waiver. Failure of either party at any time to require performance of any
provision of this Agreement shall not limit the party’s right to enforce the provision. Waiver of
any breach of any provision shall not be a waiver of any succeeding breach of the provision or a
waiver of the provision itself or any other provision.

11.20 No Reservation of Property. The preparation and/or delivery of unsigned drafts of
this Agreement shall not create any legally binding rights in the Property and/or obligations of
the parties, and Purchaser and Seller acknowledge that this Agreement shall be of no effect until
it is duly executed by both Purchaser and Seller. Purchaser understands and agrees that Seller
shall have the right to continue to market the Property and/or to negotiate with other potential
purchasers of the Property until the satisfaction or waiver in writing of all conditions to the
obligations of Purchaser under this Agreement.

11.21 Exclusivity. Seller agrees neither it, nor any other member of the Seller Group will solicit, accept, negotiate,
or otherwise pursue any offer related to the sale or other transfer or conveyance of the Property
unless and until this Agreement is terminated in accordance with the provisions contained herein.

11.22 No Recordation. Purchaser shall not record this Agreement, nor any memorandum or
other notice of this Agreement, in any public records.

[SIGNATURE PAGE FOLLOWS]

 

56

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective
Date.

	 	 	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ROYALTON, LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By: Morgans Group LLC, its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By: Morgans Hotel Group Co., its
Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Yoav Gery	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Yoav Gery	 	 
	 	 	 	 	Title:   Authorized Signatory	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ROYALTON 44 HOTEL, L.L.C.,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Larry J. Mundy	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Larry J. Mundy	 	 
	 	 	 	 	Title:   Senior Vice President	 	 

Signature Page to Royalton Purchase and Sale Agreement

 

 

 

Parent Guaranty

MORGANS GROUP LLC, a Delaware limited liability company (“Guarantor”) (which by its execution
of this Parent Guaranty acknowledges to Purchaser that it is under common control with Seller and
will derive substantial benefit from the sale of the Property pursuant to the Agreement), agrees to
and does hereby absolutely and unconditionally guarantee the payment and performance of (i)
Seller’s obligations under the Agreement prior to Closing and (ii) after the Closing, each of the
obligations of Seller under the Agreement which survive Closing, each of which obligations of
Seller in clauses (i) and (ii) being subject to any limitations set forth in the Agreement, if
applicable, on the remedies against Seller which are available to Purchaser upon the occurrence of
a default by Seller under the Agreement (each, an “Obligation” and collectively, the
“Obligations”). The term “Closing” as used in this Parent Guaranty shall include a closing of the
sale of the Property resulting from a suit for specific performance.

Guarantor hereby waives any right to require Purchaser to (i) proceed against Seller or pursue
any rights or remedies with respect to the Agreement, or (ii) pursue any other remedy whatsoever in
Purchaser’s power. Purchaser shall have the right, subject to the limitations set forth in the
Agreement, to enforce this Parent Guaranty regardless of the release or discharge of Seller by
operation of law.

The liability of Guarantor under this Parent Guaranty shall not be deemed to have been waived,
released, discharged, impaired or affected by reason of the release or discharge of Seller in any
receivership, bankruptcy, winding-up or other creditors’ proceedings or the rejection,
disaffirmance or disclaimer of the Agreement by any party in any such action or proceeding.

Guarantor authorizes Seller, without notice or consent and without affecting, impairing or
discharging Guarantor’s liability hereunder, to from time to time (a) renew, modify, amend, extend
or discharge the provisions of the Obligations, or of any other term contained within the
Agreement, and (b) exercise or refrain from exercising any of its rights or obligations under the
Agreement, at law or in equity. Guarantor’s liability hereunder shall not be impaired by
Purchaser’s release in whole or in part of Seller or any member in Seller (other than Guarantor)
from liability. Guarantor may not assign its obligations under this Parent Guaranty.

Reasonable attorneys’ fees and all other costs and expenses that may be incurred in the
enforcement, or in defending the enforcement, of this Parent Guaranty and/or the Agreement shall
be paid by the prevailing party. The parties agree that the obligation of the prevailing party to
pay all attorneys’ fees and other costs and expenses incurred in pursuing or enforcing rights under
this Parent Guaranty, or in defending any such action, whether in litigation, or with respect to
the Obligations or this Parent Guaranty, or in administrative, bankruptcy or reorganization
proceedings, shall not be subject to any cap on liability set forth in the Agreement (nor be
counted toward any such cap), and, if the Purchaser is the prevailing party, shall constitute
obligations which are guaranteed hereunder.

 

 

 

Guarantor represents and warrants to Purchaser that (i) it is a Delaware limited liability
company, duly organized, validly existing and in good standing under the laws of the state in
which it was formed, (ii) it has the power, right, authority and legal capacity to execute and
deliver this Parent Guaranty and to fully perform and observe the terms hereof, (iii) the
execution, delivery and performance by it of this Parent Guaranty has been duly authorized by all
necessary action on behalf of Guarantor, (iv) all of the persons who execute and deliver this
Parent Guaranty on behalf of Guarantor have been duly authorized and empowered on behalf of
Guarantor so to do, (v) this Parent Guaranty is the valid and binding obligation of Guarantor
enforceable against it in accordance with its terms, (vi) the execution, delivery and performance
by it of this Parent Guaranty will not (A) violate any provision of any of its organizational
documents, (B) require it to obtain any consent, approval or action of, or make any filing with or
give any notice to, any person, (C) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of the effect of, otherwise give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a
default (by way of substitution, novation or otherwise) under, any agreement to which it or any of
its affiliates (whether now or formerly existing) is a party or by or to which any of them or any
of their properties may be bound or subject, (D) violate any order, judgment, injunction, award,
decree or writ of any governmental body, entity or authority against, or binding upon, it or any of
its affiliates or upon any of its or their properties or the business of Guarantor or (E) violate
any law, statute, code, ordinance, regulation or other requirement of any governmental body, entity
or authority, and (vii) there is no provision in the organizational documents of Guarantor that
would prevent or limit, or is otherwise inconsistent with, Guarantor’s execution and delivery of,
and performance under, this Parent Guaranty.

All notices to be delivered to Guarantor in respect of this Parent Guaranty shall be delivered
to Guarantor at the address specified for Seller in the Agreement to which this Parent Guaranty is
attached.

Guarantor hereby absolutely, irrevocably and unconditionally covenants and agrees that it is
liable for the Obligations as a primary obligor and not merely as a surety, and that Guarantor
shall fully perform each and every term and provision this Parent Guaranty. This Parent Guaranty
is a guaranty of payment and performance and is not a guaranty of collection. If all or any part
of the Obligations shall not be paid by Seller when the same became due and payable Guarantor
shall, promptly upon written notice by Purchaser, pay in lawful money of the United States of
America, the amount due on the Obligations to Purchaser at Purchaser’s address as set forth in the
Agreement. Such demand(s) may be made at any time coincident with or after the time for payment of
all or part of the Obligations, and may be made from time to time with respect to the same or
different items of Obligations. It shall not be necessary for Purchaser (and Guarantor hereby
waives any rights which Guarantor may have to require Purchaser), in order to enforce this Parent
Guaranty or the obligations of Guarantor hereunder, first to (a) institute suit or exhaust its
remedies against Seller, (b) join Seller or any others liable on the Obligations in any action
seeking to enforce this Parent Guaranty or the obligations of Guarantor hereunder, or (c) resort to
any other means of obtaining payment of the Obligations. Purchaser shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the Obligations.

The obligations of Guarantor under this Parent Guaranty shall remain in full force and effect
without regard to, and shall not be impaired or affected by: (a) any exercise or nonexercise by
Purchaser or its successors or assigns of any right, power or remedy or the waiver of any such
right, power or remedy (except to the extent any such action, inaction, delay or omission gives
Purchaser a valid and enforceable defense against the Obligation); or (b) any action or inaction,
or any delay or omission in the exercise of any power or remedy on the part of Purchaser (except to
the extent any such action, inaction, delay or omission gives Purchaser a valid and enforceable
defense against the Obligation).

 

 

 

Further, the obligations of Guarantor under this Parent Guaranty shall remain in full force
and effect without regard to, and shall not be impaired or affected by any bankruptcy, insolvency,
reorganization, liquidation, or similar transaction affecting Seller.

As of the date hereof, and after giving effect to this Parent Guaranty and the contingent
obligation evidenced hereby and all of Guarantor’s other obligations (whether or not contingent),
Guarantor is, and will be, solvent, and will not be dissolved or wound-up.

If any term or provision of this Parent Guaranty or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Parent
Guaranty, or the application of such term or provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term
and provision of this Parent Guaranty shall be valid and be enforced to the fullest extent
permitted by law, provided that the rights and obligations of the parties are not materially
altered.

This Parent Guaranty shall be binding upon and inure to the benefit of the Purchaser and
Guarantor and their respective successors, assigns and legal representatives.

Other than notices required to be given under the Agreement, Purchaser shall not be required
to take any action of any kind or nature against Seller or its property, or resort to any security,
at any time, before Purchaser may proceed against Guarantor under this Parent Guaranty.

Nothing in this Parent Guaranty shall give the Purchaser any right to set off any amounts due
to Purchaser with respect to any Obligations or any cost of enforcement of the Agreement or this
Parent Guaranty against any amounts owed by Purchaser (or its affiliates) under the New Management
Agreement or otherwise.

 

 

 

Except to the extent any of the following rights, defenses, protections, and claims are
available to Seller by the Agreement, by law or otherwise, Guarantor hereby expressly waives,
relinquishes and releases any right, defense, protection, claim of exoneration or other claim, and
any right to assert any right, defense, protection, claim of exoneration or other claim, in any
action brought on, arising out of or relating to this Parent Guaranty or otherwise: (i) requiring
Purchaser to proceed against or exhaust any security held from Seller, (ii) any defense based on
any legal disability or other defense of Seller or other person or by reason of the cessation or
limitation of the liability of Seller from any cause; (iii) any defense based on any lack of
authority of the officers, directors, partners, or agents purporting to act on behalf of Seller or
any principal of Seller or any defect in the formation of Seller or any principal of Seller; (iv)
any defense based on any Purchaser’s failure to disclose to Guarantor any information or
circumstances bearing on Seller’s financial condition or ability to perform the Obligations; and
(v) all rights and defenses
arising out of any election of remedies by Purchaser, even if/though that election of remedies has
destroyed Guarantor’s rights of subrogation and reimbursement against Seller. Without
limiting the generality of the foregoing, Guarantor hereby expressly waives (a) notice of the
acceptance of this Parent Guaranty by any person or entity and (b) notice of any adverse change in
the financial condition of Seller or of any other fact that might increase Guarantor’s risk
hereunder.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	MORGANS GROUP LLC, a Delaware limited liability comany	 	 
	 
	 	 	 	 	By: Morgans Hotel Group Co., its managing member	 	 
	 
	 

	 	 	 	 	 	By:
	 	/s/ Yoav Gery
 

Name: Yoav Gery
	 	 
	 

	 	 	 	 	 	 	 	Title:   Authorized Signatory	 	 

Signature Page to Royalton Parent Guaranty

 

 

 

Annex I

Definitions

(a) As used in this Agreement, the following terms have the meanings ascribed thereto below:

“Guest Records” shall mean guest records, profiles, histories, contact information and
preferences gathered by Manager based on the guest’s stay or information provided by the guest
during, prior to or after such stay at the Hotel.

“Operating Equipment” shall mean chinaware, glassware, linens, silverware, and other items
of a comparable nature, and all replacements, additions and substitutions therefor.

“Manager’s Materials” shall mean materials, files, lists, records, compilations and methods
of operation which constitute valuable proprietary information, trade secrets and Manager’s work
product, including, by way of example and not of limitation, Guest Records, marketing techniques,
customer and mailing lists and reservation systems.

“Manager’s Tradenames” shall mean the marks “Morgans”, “A Morgans Hotel”, and “Asia de
Cuba” or any other tradenames, trademarks, service marks, symbols, logos or designs owned or
licensed by Manager or any of its affiliates including, without limitation, the name of any
restaurant, bar and/or lounge at any Morgans Hotel, and any words or designs, marketing materials,
concepts and trade dress (such as the menu and the items thereon) related thereto; provided that
the Trademarks shall be specifically excluded from this definition.

 

 

 

(b) The following terms are defined in the Section of this Agreement set forth after such term
below:

	 	 	 	 	 
	Additional Earnest Money
	 	Section 1.6(b)
	Adjusting Party
	 	Section 4.4.14
	Agreement
	 	Introduction
	Assignment of Contracts
	 	Section 4.2(c)
	Bargaining Unit Employees
	 	Section 5.6(a)
	Bookings
	 	Section 1.1(d)
	Broker
	 	Section 9.1
	City Transfer Tax Law
	 	Section 4.5.2
	Claiming Party
	 	Section 7.6(a)
	Closing
	 	Section 4.1.1
	Closing Date
	 	Section 4.1.1
	Code
	 	Section 5.1(x)(i)
	Collective Bargaining Agreement
	 	Section 5.6(f)
	Confidentiality Agreement
	 	Section 11.1
	Consumable Inventory
	 	Section 1.1(i)
	Continuing Employees
	 	Sections 5.6(b)
	Contribution Period
	 	Section 5.6(h)(i)
	Cut-Off Time
	 	Section 4.4.11
	Deed
	 	Section 4.2(a)
	Earnest Money
	 	Section 1.6(b)
	Effective Date
	 	Introduction
	Employees
	 	Section 5.1(i)
	Employment Laws
	 	Section 5.6(i)
	Environmental Laws
	 	Section 5.5(b)
	Equipment Leases
	 	Section 1.1(e)
	ERISA Affiliate
	 	Section 5.1(x)(ii)
	Escrow Agent
	 	Section 1.6(a)
	Escrow Agreement
	 	Section 1.6(c)
	Excluded Permits
	 	Section 1.1(g)
	Excluded Personal Property
	 	Section 1.1(c)
	Existing Liquor Licenses
	 	Section 4.10(a)
	Federal WARN Act
	 	Sections 5.6(b)
	Final Statement
	 	Section 4.4.14
	Hazardous Substances
	 	Section 5.5(b)
	Hotel
	 	Recitals
	Hotel Employees
	 	Section 5.6(a)
	Hotel Payables
	 	Section 4.4.6
	House Bank Funds
	 	Section 1.1(k)
	Improvements
	 	Recitals
	Initial Earnest Money
	 	Section 1.6(a)
	Intangibles
	 	Section 1.1(h)
	IWA Assumption Agreement
	 	Section 4.2(o)
	knowledge
	 	Section 5.2
	Land
	 	Recitals

 

 

 

	 	 	 	 	 
	Lease Year
	 	Section 4.4.5(d)
	Legal Requirements
	 	Section 2.4(d)
	Liquor Licenses
	 	Section 4.10(b)
	Lists
	 	Section 5.1(h)
	Losses
	 	Section 7.2
	Management Agreement
	 	Section 1.7
	Manager
	 	Section 1.7
	Monetary Encumbrances
	 	Section 2.3(c)
	Morgans PSA
	 	Section 1.8
	New Management Agreement
	 	Section 1.7
	New York WARN Act
	 	Sections 5.6(b)
	No New Management Agreement Election
	 	Section 4.11
	OFAC
	 	Section 5.1(h)
	Order
	 	Section 5.1(h)
	Outside Accountants
	 	Section 4.4.15
	Outside Closing Date
	 	Section 4.1.1
	Percentage Rent
	 	Section 4.4.5(d)
	Permits
	 	Section 1.1(g)
	Permitted Exceptions
	 	Section 2.4
	Personal Property
	 	Section 1.1(c)
	Plans
	 	Section 5.1(i)
	Pre-Closing Date
	 	Section 4.1.2
	Preliminary Statement
	 	Section 4.4
	Property
	 	Section 1.2(a)
	Property Information
	 	Section 3.1(a)
	Purchase Price
	 	Section 1.4
	Purchaser
	 	Introduction
	Purchaser Indemnitees
	 	Section 7.2
	Purchaser-Related Parties
	 	Section 5.6(j)
	Real Property
	 	Recitals
	Receivables
	 	Section 4.4.4(c)
	Rent
	 	Section 4.4.5
	Requesting Party
	 	Section 4.4.14
	Retail Inventory
	 	Section 1.1(i)
	Retained IP
	 	Section 1.1(f)
	Retained Receivables
	 	Section 4.4.4(c)
	Retirement Plan
	 	Section 5.6(h)(i)
	Seller
	 	Introduction
	Seller Cure Period
	 	Section 6.3
	Seller Indemnitees
	 	Section 7.3
	Seller-Related Parties
	 	Section 5.6(i)
	Service Contracts
	 	Section 1.1(e)
	Sidewalk Notices
	 	Section 2.6
	Sidewalk Violation Fines
	 	Section 2.6
	Space Lease
	 	Section 1.1(j)
	State Transfer Tax Law
	 	Section 4.5.1

 

 

 

	 	 	 	 	 
	Survey
	 	Section 2.2
	Taxes
	 	Section 4.4.1(a)
	Tenant Estoppel
	 	Section 5.3(b)
	Title Affidavit
	 	Section 4.2(n)
	Title Company
	 	Section 2.1
	Title IV Plans
	 	Section 5.1(x)(ii)
	Title Policy
	 	Section 2.5
	Title Report
	 	Section 2.1
	Title Update
	 	Section 2.1
	Union
	 	Section 5.6(f)
	Union Employee Benefit Funds
	 	Section 5.6(f)
	Unopened Inventory
	 	Section 1.1(i)
	Vouchers
	 	Section 4.4.12

 

 

 

Schedule 1.1(a)

Legal Description of Land

ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough of
MANHATTAN, County of NEW YORK, City and State of NEW YORK, bounded and described as follows:

BEGINNING at a point on the northerly side of WEST 43RD STREET distant 240 feet easterly from the
corner formed by the intersection of the northerly side of WEST 43RD STREET and the easterly side
of the AVENUE OF AMERICA’S;

running thence northerly parallel with the AVENUE OF AMERICA’S, 200 feet 10 inches to the southerly
side of WEST 44TH STREET;

thence easterly along the southerly side of WEST 44TH STREET, 49 feet 10-1/2 inches;

thence southerly along a line form an angle of 90 degrees 02 minutes 10 seconds on its easterly
side with the southerly side of WEST 44TH STREET, 200 feet 10 inches to the northerly side of WEST
43RD STREET;

thence westerly along the northerly side of WEST 43RD STREET, 49 feet 9 inches to the point or
place of BEGINNING.

 

 

 

Schedule 1.1(c)

Excluded Personal Property

None.

 

 

 

Schedule 1.1(e)-1

Service Contracts

	1.	 	License Agreement — Hotels and Motels, dated as of March 22, 2010, between Royalton,
LLC and American Society of Composers, Authors and Publishers

	2.	 	Dean & Deluca Private Label Mini Bar Purchasing Guidelines and Restrictions, effective
as of March 2, 2009, between Royalton, LLC and Dean & Deluca Brands, Inc.

	3.	 	Elavon Payment Delivery Service Billing Authorization, dated as of May 7, 2010, between
Royalton, LLC and Elavon, Inc.

	4.	 	Service Agreement, dated as of August 31, 2009, between Royalton, LLC and PAETEC

	5.	 	Service Maintenance Agreement, dated as of October 7, 2010, between Micros Retail
Systems, Inc. and Royalton Hotel/44 Restaurant, LLC

	6.	 	Music Performance Agreement, dated as of January 24, 2003, between Royalton, LLC and
Broadcast Music, Inc.

	7.	 	Master Agreement for the Supply of Equipment, Software, Maintenance Services and
Professional Services, dated as of December 20, 2000, between Royalton Hotel and MAI
Systems Corporation

	8.	 	Operating Agreement, dated as of June 1, 2008, between Royalton Hotel and 1114 Sixth
[Avenue] LLC

	9.	 	LodgeNet Free-to-Guest License Agreement and Addendum thereto, dated as of January 4,
2010, between LodgeNet Interactive Corporation and Royalton, LLC

	10.	 	LodgeNet Content and System Maintenance Agreement and Addendum thereto, dated as of
January 4, 2010, between LodgeNet Interactive Corporation and Royalton, LLC

	11.	 	LodgeNet Work Order (FTG Receiving Equipment), dated as of January 4, 2010, between
LodgeNet Interactive Corporation and Royalton, LLC

	12.	 	LodgeNet Work Order (Headend Investment), dated as of January 4, 2010, between LodgeNet
Interactive Corporation and Royalton, LLC

	13.	 	Consulting Agreement, dated as of August 31, 2010 (effective as of July 1, 2010),
between 43rd Restaurant LLC and Contemporary Cocktails, Inc.

	14.	 	Master Services Agreement, dated as of July 30, 2010, between RCN Telecom Services,
Inc. and Royalton, LLC

	15.	 	Computer Services Agreement, dated as of November 8, 2010, between Eleven Wireless,
Inc. and Royalton, LLC

 

 

 

	16.	 	(iPad) Software License and Maintenance Agreement, dated as of June
 _____, 2010, between
Intelity Solutions, LLC and Morgans Group Management LLC

	17.	 	Linen Service Agreement, dated as of November 9, 2010, between Prestige Hospitality
Services and Morgans Hotel Group

	18.	 	Customer Care Services Agreement, dated as of November 2, 2009, between Sunray
Technology Ventures Inc. and Royalton Hotel

	19.	 	The TeleManager Program Services Modification Agreement, dated as of October 28, 2010,
between Royalton and Systems Design & Development, Inc.

	20.	 	Avero Slingshot Master Subscription Agreement, dated as of September 11, 2007, between
Morgans Hotel Group and Avero

	21.	 	Consultant Services Agreement (Interior Design), dated as of February 28, 2006, between
Royalton, LLC and Roman and Williams Building Interiors

	22.	 	Consultant Services Agreement (Interior Design), dated as of October 16, 2006, between
Royalton, LLC and Studio CMP

	23.	 	Consultant Services Agreement (Interior Design), dated as of January 2, 2007, between
Royalton, LLC and Roman and Williams Building Interiors

	24.	 	Consultant Services Agreement (Interior Design), dated as of April 30, 2010, between
Royalton, LLC and Own Entity, LLC

	25.	 	Music Services Agreement, dated as of March 19, 2008, between Morgans Hotel Group and
Sauce Industries, LLC (d/b/a Gray V)

	26.	 	Agreement between Owner and Executive Architect, dated as of September 22, 2006,
between Royalton, LLC and R Wade Johnson Design Inc.

	27.	 	OpenTable Client Agreement, dated as of September 11, 2007, between OpenTable, Inc. and
Brasserie Forty-Four, including Exhibit C to OpenTable Client Agreement — Product &
Services Order Form, dated as of July 22, 2008

	28.	 	SESAC LLC Hotel, Motel & Resort Performance License, effective as of January 1, 2008,
between SESAC LLC and Royalton, LLC

	29.	 	Document Storage Agreement, dated as of February 27, 2006, between GRM Information
Management Services and Royalton Hotel

	30.	 	Contract for the Removal of Non-Hazardous Trade Waste, effective as of April 1, 2009,
between Royalton Hotel and IESI NY Corporation

	31.	 	Self-Service Storage Facility Occupancy Agreement, dated as of March 31, 2011, between
Manhattan Mini Storage LLC and Brasserie 44

	32.	 	Automatic Payment Non-Participation Addendum, dated as of November 29, 2007, between
43rd Restaurant LLC dba Brasserie 44 and Shift4 Corporation

	33.	 	Armored Car Service Agreement, dated as of February 1, 2010, between Garda CL Atlantic,
Inc. and The Royalton Hotel

 

 

 

Schedule 1.1(e)-2

Equipment Leases

	1.	 	Lease Agreement, dated as of August 23, 2010, between Royalton, LLC and LDI Color
Toolbox

	2.	 	Pitney Bowes Agreement, dated as of May 9, 2007, between 44th Hotel
Associates and Pitney Bowes Credit Corporation

	3.	 	(iPad) Software License and Maintenance Agreement, dated as of June
 _____, 2010, between
Intelity Solutions, LLC and Morgans Group Management LLC

 

 

 

Schedule 1.1(f)

Intellectual Property

	 	 	 	 	 
	 	 	REGISTRATION NUMBER	 	 
	TRADEMARK	 	(APPLICATION NUMBER)	 	COUNTRY
	ROYALTON
	 	1974811
(74/641687)	 	USA
	ROYALTON
	 	3829913
(76/698270)	 	USA
	44
	 	N/A
(85/110574)	 	USA
	FORTY FOUR
	 	N/A [Common Law Mark]	 	USA
	BAR 44 44 & Design

	 	3484470
(77/369297)	 	USA
	BRASSERIE 44 44 & DESIGN

	 	3484475
(77/369393)	 	USA
	ROYALTON
	 	000806752
(000806752)	 	European Community
	ROYALTON
	 	000865147
(000865147)	 	European Community
	ROYALTON
	 	2148931
(2148931)	 	United Kingdom
	ROYALTON
	 	2168832
(2168832)	 	United Kingdom
	THE ROYALTON HOTEL
	 	2130038
(2130038)	 	United Kingdom
	ROYALTON
	 	393139
(2008730766)	 	Russian Federation

 

 

 

Schedule 1.2(b)(vi)

Space Lease

Amended and Restated Lease Agreement between Royalton, LLC and 43rd Restaurant LLC
dated as of August 31, 2000 (for leased restaurant)

 

 

 

Schedule 2.6

Sidewalk Violations

	1.	 	Sidewalk Violation Number 42542, filed July 23, 1987.

	 
	2.	 	Sidewalk Violation Number 76402, filed May 15, 2000.

 

 

 

Schedule 3.1(a)

Due Diligence Items

	1.	 	Hotel Contracts. As applicable, hotel specific purchasing agreements,
maintenance contracts, union contracts, and other labor agreements.

	2.	 	Licenses and Permits. Copies of all requested operating licenses including the
liquor license and related documents.

	3.	 	Leases. Copies of all leases affecting the Property or any portion thereof
including, but not limited to, ground, equipment and capital leases.

	4.	 	Reports. If available, copies of most current reports on toxic materials to
include hazardous waste, asbestos and PCBs. Copies of most current reports related to the
physical condition of the Property.

	5.	 	Plans. All available plans, specifications, permits and certificates of
occupancy.

	6.	 	Capital Expenditures. Listing of all capital expenditures and improvements
made to the Property during the last three years including date of expenditures and cost.
Capital budget, if available, covering current year. Status of all capital expenditure
programs and projects currently underway.

	7.	 	Financials. All requested books, files, financial statements, group sales and
reservation reports and records relating to the operation of the Property, including, but
not limited to:

	 	•	 	Operating budgets for the current year and previous year.

	 	•	 	Monthly financial statements for the current year to date and the three (3)
prior years, with comparisons of actual to budget to prior year results (audited,
if available). These reports should include a detailed market segmentation
summary.

	 	•	 	Projected year-end operating results (shown monthly and year-end) for the
current calendar year.

	 	•	 	Copies of the current year and previous year marketing plans.

	 	•	 	Copies of all group-booking reports and pace reports.

	 	•	 	Schedule of aged accounts receivable as of the most recent month and year-end
with explanations for any accounts over $1,000 and 60 days old.

	 	•	 	Schedule of accounts payable and accrued liabilities as of the most recent
month-end and year-end.

	 	•	 	Detail of any amounts due from/to management company, including but not limited
to, fees, corporate charges, and any reimbursable.

 

 

 

	 	•	 	Schedule of any known security deposits, advance deposits, prepaid rent, gift
certificates, tenant security deposits and unearned income as of the most recent
month-end.

	 	•	 	Bank reconciliations for the past six months.

	 	•	 	Schedule of existing insurance coverage and historic loss runs for the last
three (3) full policy years and current stub year.

	8.	 	Employees.

	 	•	 	List of employees, subject to union restrictions, to include position, tenure
and compensation and any employee contracts and benefits.

	 	•	 	Collective bargaining agreements.

	 	•	 	Employee handbook.

	 	•	 	Record of recent written grievances.

	 	•	 	Recent historic and pending written Workmen’s Comp claims.

	9.	 	Guest Satisfactions. Copies of most recent guest satisfaction surveys.

	10.	 	Utility Bills. Copies of the most recent utility bills relating to the Real
Property.

	11.	 	Tax Bills. Copies of the most recent tax bills relating to the Real Property
and a description of any items in dispute. Any tax abatement proceedings in progress.

	 
	12.	 	Tax Filings. Copies of business/gross receipt tax or other local tax filings.

	13.	 	Existing Title Commitment/Policy. Copies of the most recent title policy or
commitment with copies of all exception documents (including unrecorded leases), and UCC
searches (with copies of financing statements).

	14.	 	Survey. A copy of the most current on-the-ground as-built survey of the Real
Property.

	15.	 	Litigation. List of all threatened (in writing), pending and existing
litigation involving the Real Property and/or the Seller or the property manager. If
available, summary of crime and accident reports for the most recent twelve-month period.

	16.	 	Compliance. Correspondence from any governmental authority regarding legal
compliance.

	17.	 	Star Reports. Updated STAR Competitive Set Reports.

 

 

 

Schedule 3.2

Reports

	1.	 	Zoning Report, dated as of June 21, 2005, prepared by Zoning Info, Inc. for Wachovia
Bank, N.A., its successors and assigns

	2.	 	LL11/98 Report of Periodic Inspection of Exterior Walls and Appurtenances for Cycle 6
Examinations at 44 West 44th Street, Manhattan, filed as of January 31, 2007,
prepared by Hugh Robotham, Architect, P.C.

	3.	 	Property Condition Report, dated as of January 31, 2011, prepared by EMG, Inc. for
Morgans Group LLC

	4.	 	Phase I Environmental Site Assessment, dated as of January 31, 2011, prepared by EMG,
Inc. for Morgans Group LLC

 

 

 

Schedule 5.1(i)

Employee Matters

Collective Bargaining and Union Agreements

	 	1.	 	Collective Bargaining Agreement, for the period of July 1, 2006 through June 30, 2012,
by and between Hotel Association of New York City, Inc. and the New York Hotel & Motel
Trades Council, AFL-CIO

	 	2.	 	Agreement, dated as of February 2011, by and between the New York Hotel & Motel Trades
Council, AFL-CIO and Morgans Hotel Group on behalf of the Royalton Hotel

	 	3.	 	Agreement, dated as of September 22, 2010, by and between The Royalton Hotel and the
New York Hotel & Motel Trades Council, AFL-CIO

	 	4.	 	Agreement, dated as of March 28, 2008, by and between the New York Hotel & Motel Trades
Council, AFL-CIO and Morgans Hotel Group

	 	5.	 	Agreement, dated as of July 7, 2010, by and between Morgans Hotel Group on behalf of
the Royalton Hotel and the New York Hotel and Motel Trades Council, AFL-CIO

	 	6.	 	Agreement, dated as of May 25, 2007, by and between the New York Hotel & Motel Trades
Council, ALF-CIO and the Royalton Hotel

	 	7.	 	Me Too Agreement, dated as of August 9, 2005, by and between the Morgans Hotel Group,
LLC and the New York Hotel & Motel Trades Council, AFL-CIO

 

 

 

Schedule 5.1(m)

Reward Points Plans

	1.	 	Rewards Participation Agreement, dated as of June 1, 2009 by and between American
Express Travel Related Services Company, Inc. and Morgans Group LLC

 

 

 

Schedule 5.1(o)

Transferable Licenses, Franchises and Permits

Permits

	 	1.	 	The City of New York Department of Buildings Certificate of Occupancy #108520 issued on
December 20, 1995, for a cellar, mezzanine, penthouse, roof, and twelve story fireproof
building hotel

	 	2.	 	The City of New York Department of Buildings Place of Assembly/Certificate of Operation
No. 104635600 for an eating and drinking establishment

	 	3.	 	Department of Buildings of New York City, Elevator Inspection/Test Report for Nos.
1P6824, 1P6825 and 1P6826 Passenger Elevators, dated as of November 29, 2010

	 	4.	 	Department of Buildings, Freight & Sidewalk Elevator Inspection Certificate #1S2964,
dated as of November 29, 2010

	 	5.	 	Isseks Bros., Inc. Certificate of Compliance with local law regarding water tank
sanitization and chlorination, dated November 3, 2010

	 	6.	 	Fire Department, City of New York, Bureau of Fire Prevention, FPIMS Account No.
98072812, Fire Safety Test Certificate for 2 Stand Pipe Siamese Connections, dated as of
March 9, 2011

	 	7.	 	The City of New York Department of Health and Mental Hygiene, Food Service
Establishment Permit with FDM, ordered as of March 16, 2011 by Royalton, LLC

	 	8.	 	Fire Department, City of New York, Bureau of Fire Prevention AC Permit Roof/Ceiling,
issued November 17, 2010

Uncured Violations

None.

 

 

 

Schedule 5.1(p)

Special Tax Assessments and Agreements Relating to Taxes

None.

 

 

 

Schedule 5.1(z)(vi)

Non-Qualified Deferred Compensation Plans

None.

 

 

 

Exhibit A

Form of Deed

(see attached)

 

 

 

BARGAIN AND SALE DEED

FROM

ROYALTON, LLC

TO

ROYALTON 44 HOTEL, L.L.C.

Location of Property:

	 	 	 
	Street Address:
	 	44 West 44th Street
	County:
	 	New York
	State:
	 	New York
	Block:
	 	1259
	Lot:
	 	0011

Record and Return to:

Gibson, Dunn & Crutcher LLP

200 Park Avenue

New York, New York 10166

Attention: Andrew A. Lance, Esq.

Telecopy: 212-351-4035

	 	 	 	 	 	 	 
	Tax Notices to:	 	 
	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 
	 	 	 
	Attention:
 
	 	 
	Telecopy:
 
	 	 

 

 

 

BARGAIN AND SALE DEED

THIS INDENTURE, made as of the
 _____ 
day of
 _____, 2011 by ROYALTON, LLC, a Delaware limited
liability company, having an address at
 _____ 
(“Grantor”), in favor of
ROYALTON 44 HOTEL, L.L.C., a Delaware limited liability company, having an address at

 _____ 
(“Grantee”),

WITNESSETH, that Grantor, in consideration of Ten Dollars ($10.00) and other good and valuable
consideration paid by Grantee, the receipt and sufficiency of which are hereby acknowledged, does
hereby grant and release unto Grantee and its successors and assigns, forever, all that certain
plot, piece or parcel of land lying and being in the County of New York, State of New York, as more
particularly described on Exhibit A attached hereto and made a part hereof (the
“Land”) (being the same premises conveyed to the Grantor by deed recorded on April 11, 1996
in Reel 2312, page 1835) and all buildings, structures and other improvements located on the Land
(collectively with the Land, the “Property”);

TOGETHER with all right, title and interest, if any, of Grantor in and to any strips or gores
adjoining the Property, any streets and roads abutting the Property to the center lines thereof;
and

TOGETHER with the appurtenances and all the estate and rights of Grantor in and to the
Property;

TO HAVE AND TO HOLD the Property unto Grantee and its successors and assigns, forever.

Grantor, in compliance with Section 13 of the Lien Law, covenants that Grantor will receive
the consideration for this conveyance and will hold the right to receive such consideration as a
trust fund to be applied first for the purpose of paying the cost of the improvement and will apply
the same first to the payment of the cost of the improvement before using any part of the total of
the same for any other purpose.

[Remainder of page intentionally left blank]

 

 

 

IN WITNESS WHEREOF, Grantor has duly executed this indenture as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	ROYALTON, LLC
a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

	 	 	 	 	 
	STATE OF NEW YORK

	 	)		 
	 

	 	)     ss:

	COUNTY OF NEW YORK

	 	)		 

On the
 _____ 
day of in the year 2011, before me, the undersigned, a Notary Public in and for the
above referenced State, personally appeared
 _____, personally known to me or proved to
me on the basis of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person on behalf of which the individual acted,
executed the instrument.

	 	 	 	 	 
	 

	 	 

Notary Public
	 	 

 

 

 

Exhibit A to Deed

Description of Land

44 West 44th Street, Block 1259, Lot 0011

ALL THAT CERTAIN PLOT, PIECE OR PARCEL OF LAND, SITUATE, LYING AND BEING IN
THE BOROUGH OF MANHATTAN, COUNTY, CITY AND STATE OF NEW YORK, BOUNDED AND
DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE NORTHERLY SIDE OF WEST 43RD STREET, DISTANT 240
FEET EASTERLY FROM THE CORNER FORMED BY THE INTERSECTION OF THE NORTHERLY
SIDE OF WEST 43RD STREET AND THE EASTERLY SIDE OF AVENUE OF THE AMERICAS;

RUNNING THENCE NORTHERLY PARALLEL WITH THE AVENUE OF THE AMERICAS, 200 FEET
10 INCHES TO THE SOUTHERLY SIDE OF WEST 44TH STREET;

THENCE EASTERLY ALONG THE SOUTHERLY SIDE OF WEST 44TH STREET, 49 FEET 10-1/2
INCHES;

THENCE SOUTHERLY ALONG A LINE FORMING AN ANGLE OF 90° 02’ 10” ON ITS
EASTERLY SIDE WITH THE SOUTHERLY SIDE OF WEST 44TH STREET, 200 FEET 10
INCHES TO THE NORTHERLY SIDE OF WEST 43RD STREET;

THENCE WESTERLY ALONG THE NORTHERLY SIDE OF WEST 43RD STREET, 49 FEET 9
INCHES TO THE POINT OR PLACE OF BEGINNING.

 

 

 

Exhibit B

Form of Bill of Sale

BILL OF SALE

For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ROYALTON,
LLC, a Delaware limited liability company (“Seller”), in connection with the sale of
certain real property located in New York, New York, which is more particularly described in that
certain Purchase and Sale Agreement dated as of
 _____, 2011 (“Purchase
Agreement”), between Seller and ROYALTON 44 HOTEL, L.L.C., a Delaware limited liability company
(“Purchaser”), hereby grants, assigns, transfers, conveys and delivers to Purchaser,
without recourse and without any representation or warranty (including warranty of use and
warranty, express or implied, as to merchantability and fitness for any purpose) except as
expressly set forth in the Purchase Agreement, all of Seller’s right, title and interest in and to
the “Personal Property”, “Consumable Inventory” and the “Receivables” assigned pursuant to Section
4.4.4(c) of the Purchase Agreement, as such terms are defined in the Purchase Agreement and, in
each case, solely to the extent the “Personal Property”, “Consumable Inventory” and “Receivables”
are included in the definition of “Property” in the Purchase Agreement. This Bill of Sale shall be
governed by the laws of the State of New York.

[Signature on following page]

 

 

 

IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of
 _____, 2011.

	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	ROYALTON, LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

Exhibit B-2

Form of Bill of Sale for Alcoholic Beverages (Seller)

BILL OF SALE (LIQUOR INVENTORY)

For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ROYALTON,
LLC, a Delaware limited liability company (“Seller”), in connection with the sale of
certain real property located in New York, New York, which is more particularly described in that
certain Purchase and Sale Agreement dated as of
 _____, 2011 (“Purchase
Agreement”), between Seller and ROYALTON 44 HOTEL, L.L.C., a Delaware limited liability company
(“Purchaser”), hereby grants, assigns, transfers, conveys and delivers to
 _____,
without recourse and without any representation or warranty (including warranty of use and
warranty, express or implied, as to merchantability and fitness for any purpose) except as
expressly set forth in the Purchase Agreement, all of Seller’s right, title and interest in and to
the “Unopened Inventory” (as such term is defined in the Purchase Agreement) that consists of
alcoholic beverages. Attached hereto as Exhibit A is evidence of payment by Seller of any
sales tax payable with respect to the Unopened Inventory being transferred hereunder. This Bill of
Sale shall be governed by the laws of the State of New York.

[Signature on following page]

 

 

 

IN WITNESS WHEREOF, Seller has executed this Bill of Sale (Liquor Inventory) as of
 _____,
2011.

	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	ROYALTON, LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

Exhibit A

Evidence of Payment of Sales Tax

 

 

 

Exhibit B-3

Form of Bill of Sale for Alcoholic Beverages (43rd Restaurant LLC)

BILL OF SALE (LIQUOR INVENTORY)

For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, in
connection with the sale of certain real property located in New York, New York, which is more
particularly described in that certain Purchase and Sale Agreement dated as of

 _____, 2011 (“Purchase Agreement”), between ROYALTON, LLC, a Delaware
limited liability company and ROYALTON 44 HOTEL, L.L.C., a Delaware limited liability company
(“Purchaser”), 43RD RESTAURANT LLC, a Delaware limited liability company hereby
grants, assigns, transfers, conveys and delivers to
 _____, without recourse and without any
representation or warranty (including warranty of use and warranty, express or implied, as to
merchantability and fitness for any purpose) except as expressly set forth in the Purchase
Agreement, all of 43rd Restaurant LLC’s right, title and interest in and to the
“Unopened Inventory” (as such term is defined in the Purchase Agreement) that consists of alcoholic
beverages. Attached hereto as Exhibit A is evidence of payment by 43rd
Restaurant LLC of any sales tax payable with respect to the Unopened Inventory being transferred
hereunder. This Bill of Sale shall be governed by the laws of the State of New York.

[Signature on following page]

 

 

 

IN WITNESS WHEREOF, Seller has executed this Bill of Sale (Liquor Inventory) as of
 _____,
2011.

	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	43RD RESTAURANT LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

Exhibit A

Evidence of Payment of Sales Tax

 

 

 

Exhibit C

Form of Assignment of Contracts

ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS,

BOOKINGS AND INTANGIBLES 

THIS ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS, BOOKINGS AND INTANGIBLES (this
“Assignment”) is made as of
 _____, 2011, by ROYALTON, LLC, a Delaware limited
liability company (“Seller”), in favor of ROYALTON 44 HOTEL, L.L.C., a Delaware limited
liability company (“Purchaser”).

RECITALS

A. Seller is the owner of certain property commonly known as the “Royalton” located at 44 West
44th Street, New York, New York.

B. Seller and Purchaser have entered into that certain Purchase and Sale Agreement dated as of

 _____, 2011 (as may be amended, the “Purchase Agreement”), pursuant to which Seller
has agreed to sell and Purchaser has agreed to purchase the real property described in Schedule
1.1(a) attached thereto and the improvements located thereon, on the terms and conditions stated in
the Purchase Agreement. All terms not otherwise defined herein shall have the meaning assigned to
them in the Purchase Agreement.

C. Pursuant to the Purchase Agreement, Seller has agreed to assign to Purchaser all of
Seller’s right, title and interest to (a) the Service Contracts that Purchaser has elected to
assume under the Purchase Agreement (the “Assumed Service Contracts”), as set forth on
Annex 1 attached hereto (b) the Bookings, and (c) the Intangibles.

NOW, THEREFORE, Seller and Purchaser agree as follows:

1. Assignment. Seller hereby sells, assigns, transfers and conveys to Purchaser,
without recourse and without representation or warranty (except to the extent expressly provided in
the Purchase Agreement, as to which all of the limitations set forth in the Purchase Agreement
shall apply), all of Seller’s right, title and interest in and to (a) the Assumed Service
Contracts, (b) the Bookings and (c) the Intangibles.

2. Assumption. Purchaser hereby assumes the benefits of Seller and assumes and agrees
to be bound by all of the covenants, obligations, liabilities, and burdens of Seller that arise or
accrue from and after the date of this Assignment under or in connection with (a) the Assumed
Service Contracts, (b) the Bookings, and (c) the Intangibles. This Assignment is made by Seller
without recourse and without any express or implied representation or warranty whatsoever (except
to the extent expressly provided in the Purchase Agreement, as to which all of the limitations set
forth in the Purchase Agreement shall apply).

3. Successors. This Assignment shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives, successors and assigns.

 

 

 

4. Governing Law. This Assignment shall be governed by the laws of the State of New
York.

5. Further Assurances. Seller and Purchaser agree to execute such other documents and
perform such other acts as may be reasonably necessary or proper and usual to effect this
Assignment.

6. Counterparts. This Assignment may be executed in counterparts, each of which shall
be deemed an original, and both of which together shall constitute one and the same instrument.

[signature page follows]

 

 

 

IN WITNESS WHEREOF, Purchaser and Seller have executed this Assignment as of the date first
above written.

	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	ROYALTON, LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 
	 	 	ROYALTON 44 HOTEL, L.L.C.,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

Annex 1

Assumed Service Contracts

[to be completed at Closing]

 

 

 

Exhibit D

[Intentionally Omitted]

 

 

 

Exhibit E

Form of FIRPTA Certificate

CERTIFICATION OF NON-FOREIGN STATUS

	A.	 	Federal FIRPTA Certificate

Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”) provides
that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign
person. For U.S. tax purposes (including Code Section 1445), the owner of a disregarded entity
(which has legal title to a U.S. real property interest under local law) will be the transferor of
the property and not the disregarded entity. To inform the transferee that withholding of tax is
not required upon the disposition of a U.S. real property interest by
 _____ 
(the
“Transferor”) the undersigned hereby certifies the following on behalf of the Transferor:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign
estate (as those terms are defined in the Code and the Income Tax Regulations promulgated
thereunder);

2. Transferor’s U.S. tax identification number is
 _____; and

3. Transferor’s office address is
 _____.

Transferor understands that this certification may be disclosed to the Internal Revenue
Service by Transferee and that any false statement contained herein could be punished by fine,
imprisonment, or both.

Transferor understands that Transferee is relying on this certification in determining whether
withholding is required upon said transfer.

 

 

 

Under penalty of perjury the undersigned declare that they have examined this certification and to
the best of their knowledge and belief it is true, correct and complete, and they further declare
that they have authority to sign this certification on behalf of Transferor.

Dated as of ___________, 2011

	 	 	 	 	 	 	 
	 	 	TRANSFEROR:	 	 
	 
	 	 	 	 	 	 
	 	 	____________________________________________________________,	 	 
	 	 	a ___________________________________________________________	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

Exhibit F

Form of Title Affidavit

TITLE AFFIDAVIT

Title No. 3111-00129

The undersigned (“Owner”) hereby certifies that, to the best of its knowledge:

1. That there are no leases or occupancy agreements (recorded or unrecorded) affecting the
premises described on Exhibit A (the “Real Property”), or other parties in
possession, except as shown on the attached Exhibit B. As to those items set forth
on Exhibit B, there are no options to purchase, rights of first refusal or rights of
first offer to purchase the Real Property or similar rights with respect to the Real
Property contained in the respective leases and/or agreements other then specifically
indicated on Exhibit B or as may be set forth in the leases or occupancy agreements.

2. There are no unrecorded claims against the Real Property, nor any set of facts by reason
of which title to the Real Property might be disputed or questioned, and Owner has been in
peaceable and undisputed possession of the Real Property since title was acquired.

3. There has not been any construction, repairs, alterations or improvements made, ordered
or contracted to be made on or to the Real Property, nor materials ordered therefor within
the last one hundred twenty (120) days, which has not been paid for; nor are there any
fixtures attached to the Real Property which have not been paid for in full; and that there
are no outstanding or disputed claims for any such work or item; except as shown on attached
Exhibit C.

4. There has been no work done upon the Real Property by the City of New York, nor has the
City of New York made any demand for any such work that may result in charges by the New
York City Department of Rent and Housing Maintenance, or charges by the New York City
Department of Environmental Protection for water tap closings or any related work, whether
or not such charges are liens against the property which this policy insures.

5. No fee for an inspection, re-inspection, examination or service performed by the New York
City Department of Buildings have been levied, charged, created or incurred that may become
a lien on the Real Property. (See Section 26-128 of the Administrative Code of New York).

6. There are no other liens issued pursuant to the Administrative Code of the City of New
York which may affect the Real Property.

 

 

 

7. The unrecorded lease between Royalton, LLC and Ian Schrager Hotel Management LLC, dated
July 28, 1998 (as described in Exception 4 of Schedule B-1 to the title report dated
February 24, 2011) is terminated/expired and the tenant no longer remains in possession of
space at the Real Property.

This affidavit is made for the purpose of aiding Chicago Title Insurance Company and First American
Title Insurance Companies (the “Title Companies”) in determining the insurability of title
to the Real Property and to induce the Title Companies to issue a policy of title insurance to
ROYALTON 44 HOTEL, L.L.C., a Delaware limited liability company (“Purchaser”), in
connection with Purchaser’s acquisition of the Real Property from Owner. The undersigned avers the
foregoing statements are true and correct to the best of its knowledge; provided that, the
foregoing statements are made by the undersigned solely as of
 _____, 2011, and the
accuracy of such statements shall not be extended beyond such date.

As used herein, “to the best of its knowledge” shall mean the actual knowledge of Richard Szymanski
(provided that, in no event shall such person have any personal liability arising under this
affidavit), without any duty of inquiry or investigation, and expressly excluding the knowledge of
any other shareholder, partner, member, trustee, beneficiary, director, officer, manager, employee,
agent or representative of Owner or any of its affiliates.

[signature page follows]

 

 

 

EXECUTED this
 _____ 
day of
 _____, 2011.

	 	 	 	 	 	 	 
	 	 	OWNER:	 	 
	 
	 	 	 	 	 	 
	 	 	ROYALTON, LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

	 	 	 	 	 
	STATE OF NEW YORK

	 	)		 
	 

	 	)     ss:

	COUNTY OF NEW YORK

	 	)		 

On the
 _____ 
day of in the year 2011, before me, the undersigned, a Notary Public in and for the
above referenced State, personally appeared
 _____, personally known to me or proved to
me on the basis of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person on behalf of which the individual acted,
executed the instrument.

	 	 	 	 	 
	 

	 	 

Notary Public
	 	 

 

 

 

Exhibit A

Real Property

ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough of
MANHATTAN, County of NEW YORK, City and State of NEW YORK, bounded and described as follows:

BEGINNING at a point on the northerly side of WEST 43RD STREET distant 240 feet easterly from the
corner formed by the intersection of the northerly side of WEST 43RD STREET and the easterly side
of the AVENUE OF AMERICA’S;

running thence northerly parallel with the AVENUE OF AMERICA’S, 200 feet 10 inches to the southerly
side of WEST 44TH STREET;

thence easterly along the southerly side of WEST 44TH STREET, 49 feet 10-1/2 inches;

thence southerly along a line form an angle of 90 degrees 02 minutes 10 seconds on its easterly
side with the southerly side of WEST 44TH STREET, 200 feet 10 inches to the northerly side of WEST
43RD STREET;

thence westerly along the northerly side of WEST 43RD STREET, 49 feet 9 inches to the point or
place of BEGINNING.

 

 

 

Exhibit B

Leases on Real Property

None.

 

 

 

Exhibit G

Form of IWA Assumption Agreement

IWA ASSUMPTION AGREEMENT

This IWA Assumption Agreement ( “IWA AA”) is made and entered into as of this
 _____ 
day
of
 _____, 2011, by and among Royalton, LLC, a Delaware limited liability company (the
“Seller”), which owns the hotel located at 44 West 44th Street, New York, NY
commonly known as “Royalton” (the “Hotel”), whose manager, Morgans Hotel Group Management
LLC, a Delaware limited liability company (the “Manager”), is the employer of the bargaining unit
employees employed at the Hotel (the “Employees”), Royalton 44 Hotel, L.L.C., a Delaware
limited liability company (“Buyer”), and New York Hotel and Motel Trades Council, AFL-CIO
(the “Union”).

WHEREAS, Buyer has agreed to purchase the Hotel from Seller pursuant to that certain Purchase
and Sale Agreement date as of
 ____________, 2011, (the “Purchase Agreement”) and Manager
shall operate the Hotel for Buyer and shall employ the Employees;

WHEREAS, Seller and Manager are bound to a collective bargaining agreement known as the
Industry Wide Agreement between the Union and the Hotel Association of New York City, Inc. for a
term of July 1, 2006 through June 30, 2012 (“IWA”);

WHEREAS, Article 59 of the IWA also provides that an owner of a hotel that is not the employer
shall be bound by the Successor and Assigns provisions of the IWA and the arbitration provisions
thereof as they relate to any dispute regarding the Successor and Assigns provision and shall agree
to retain all bargaining unit employees, whose employment will continue uninterrupted without loss
of seniority, compensation, benefits, or other terms and conditions of employment, subject to the
IWA and applicable law;

 

 

 

IT IS NOW THEREFORE AGREED THAT:

	 	1.	 	Effective at the closing of the sale of the Hotel from Seller to Buyer
(“Closing”), Buyer, which will not be the employer of any Employees, agrees
that it has assumed and adopted, and is bound by, the Successors and Assigns provisions
of the IWA and the arbitration provisions thereof as they relate to any dispute
regarding the Successors and Assigns provisions and agrees to cause Manager to retain
all bargaining unit employees, whose employment will continue uninterrupted without
loss of seniority, compensation, benefits, or other terms and conditions of employment,
subject to the IWA and applicable law.

	 	2.	 	Manager, as the employer of the Employees following the Closing, agrees that
effective at Closing, it will continue to be bound by all terms and conditions, both
economic and non-economic, of the IWA.

	 	3.	 	Nothing herein shall modify or limit the rights and obligations between Buyer
and Seller that survive the Closing as set forth in their Purchase and Sale Agreement.

	 	4.	 	Effective immediately, any and all disputes between the Union and any party
hereto regarding this IWA AA shall be subject to Article 26 of the IWA, the entirety of
which is incorporated herein by reference.

	 	5.	 	This Agreement may be signed in counterparts, each of which shall be deemed an
original.

 

 

 

IN WITNESS THEREOF, the parties have duly executed this IWA AA as of the date set forth above.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	ROYALTON 44 HOTEL, L.L.C.	 	ROYALTON, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	NEW YORK HOTEL AND MOTEL	 	MORGANS HOTEL GROUP	 	 
	TRADES COUNCIL, AFL-CIO	 	MANAGEMENT LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 	 	 	 	 

	 	 

Assumption Agreement\IWA Assumption Agreement

 

 

 

Exhibit H

[Intentionally Omitted]

 

 

 

Exhibit I

Pro Forma Title Policy

			
	 	 	 
	American Land Title Association
	 	Owner’s Policy
	 	 	 
	 
	 	Policy No: 3111-00129

OWNER’S POLICY OF TITLE INSURANCE

Issued by

CHICAGO TITLE INSURANCE COMPANY

Any notice of claim and any other notice or statement in writing required to be given the
Company under this Policy must be given to the Company at the address shown in Section 18 of the
Conditions.

COVERED RISKS

SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B, AND
THE CONDITIONS, CHICAGO TITLE INSURANCE COMPANY, a Nebraska corporation (the “Company”) insures, as
of Date of Policy and, to the extent stated in Covered Risks 9 and 10, after Date of Policy,
against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the Insured
by reason of:

	1.	 	Title being vested other than as stated in Schedule A.

	2.	 	Any defect in or lien or encumbrance on the Title. This Covered Risk includes but is
not limited to insurance against loss from

	 	(a)	 	A defect in the Title caused by

	 	(i)	 	forgery, fraud, undue influence, duress
incompetency, incapacity, or impersonation; 

	 	(ii)	 	failure of any
person or Entity to have authorized a transfer or conveyance;

	 	(iii)	 	a document affecting Title not properly created, executed, witnessed,
sealed, acknowledged, notarized, or delivered;

	 	(iv)	 	failure to perform those acts necessary to create a document by
electronic means authorized by law; 

	 	(v)	 	a document executed under a
falsified, expired, or otherwise invalid power of attorney;

	 	(vi)	 	a document not properly filed, recorded, or indexed in the Public Records
including failure to perform those acts by electronic means authorized by law; or

	 	(vii)	 	a defective judicial or administrative proceeding.

	 	(b)	 	The lien of real estate taxes or assessments imposed on the Title by a
governmental authority due or payable, but unpaid.

	 	(c)	 	Any encroachment, encumbrance, violation, variation, or adverse circumstance
affecting the Title that would be disclosed by an accurate and complete land survey of
the Land. The term “encroachment” includes encroachments of existing improvements
located on the Land onto adjoining land, and encroachments onto the Land of existing
improvements located on adjoining land.

	3.	 	Unmarketable Title.

	4.	 	No right of access to and from the Land.

	5.	 	The violation or enforcement of any law, ordinance, permit, or governmental regulation
(including those relating to building and zoning) restricting, regulating, prohibiting, or
relating to

	 	(a)	 	the occupancy, use, or enjoyment of the Land;

	 	(b)	 	the character, dimensions, or location of any improvement erected on the Land;

 

 

 

			
	 	 	 
	American Land Title Association
	 	Owner’s Policy
	 	 	 
	 
	 	Policy No: 3111-00129

	 	(c)	 	the subdivision of land; or

	 
	 	(d)	 	environmental protection

	 	 	if a notice, describing any part of the Land, is recorded in the Public Records setting
forth the violation or intention to enforce, but only to the extent of the violation or
enforcement referred to in that notice.

	6.	 	An enforcement action based on the exercise of a governmental police power not
covered by Covered Risk 5 if a notice of the enforcement action, describing any part
of the Land, is recorded in the Public Records, but only to the extent of the
enforcement referred to in that notice.

	7.	 	The exercise of the rights of eminent domain if a notice of the exercise,
describing any part of the Land, is recorded in the Public Records.

	8.	 	Any taking by a governmental body that has occurred and is binding on the rights
of a purchaser for value without Knowledge.

	9.	 	Title being vested other than as stated Schedule A or being defective

	 	(a)	 	as a result of the avoidance in whole or in part, or from a court order
providing an alternative remedy, of a transfer of all or any part of the title to
or any interest in the Land occurring prior to the transaction vesting Title as
shown in Schedule A because that prior transfer constituted a fraudulent or
preferential transfer under federal bankruptcy, state insolvency, or similar
creditors’ rights laws; or

	 	(b)	 	because the instrument of transfer vesting Title as shown in Schedule A
constitutes a preferential transfer under federal bankruptcy, state insolvency,
or similar creditors’ rights laws by reason of the failure of its recording in
the Public Records

	 	(i)	 	to be timely, or

	 	(ii)	 	to impart notice of its existence to a purchaser for value or to a judgment or lien
creditor.

	10.	 	Any defect in or lien or encumbrance on the Title or other matter included in
Covered Risks 1 through 9 that has been created or attached or has been filed or
recorded in the Public Records subsequent to Date of Policy and prior to the recording
of the deed or other instrument of transfer in the Public Records that vests Title as
shown in Schedule A.

The
Company will also pay the costs, attorneys’ fees, and expenses incurred in defense of
any matter insured against by this Policy, but only to the extent provided in the
Conditions.

IN WITNESS WHEREOF, CHICAGO TITLE INSURANCE COMPANY has caused this policy to be signed and
sealed by its duly authorized officers.

	 	 	 	 	 	 	 

	Issued by:

CHICAGO TITLE INSURANCE COMPANY

711 3RD AVE, 5TH FLOOR
NEW YORK, NY 10017-4014

Tel (212) 880-1200    Fax (212) 880-1400

Countersigned

	 	 	 	CHICAGO TITLE INSURANCE COMPANY

	 	 	 	 	 
	 	 	By:	 	/s/ Raymond R. Quirk
	 	 	 	 	 
	 	 	 	 	Raymond R. Quirk 
President
	 	 	 	 	 
	 	 	By: 	 	/s/ Michael L. Gravelle
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Michael L. Gravelle 

Secretary

	 	 	 

	 

Authorized Signatory
	 	 

 

 

 

			
	 	 	 
	American Land Title Association
	 	Owner’s Policy
	 	 	 
	 
	 	Policy No: 3111-00129

EXCLUSIONS FROM COVERAGE

The following matters are expressly excluded from the coverage of this policy, and the
Company will not pay loss or damage, costs, attorneys’ fees, or expenses that arise by reason of:

	1.	 	(a) 	Any law, ordinance, permit, or governmental regulation (including those relating to
building and zoning) restricting, regulating, prohibiting, or
relating to

	 	(i)	 	the occupancy, use, or enjoyment of the Land;

	 	(ii)	 	the character, dimensions or location of any improvement erected on the Land;

	 	(iii)	 	the subdivision of land; or

	 	(iv)	 	environmental protection; 

	 	or the effect of any violation of these laws, ordinances,
or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage
provided under Covered Risk 5.

	 	(b)	 	Any governmental police power. This Exclusion 1(b)
does not modify or limit the coverage provided under Covered Risk 6.

	2.	 	Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under
Covered Risk 7 or 8.

	3.	 	Defects, liens, encumbrances, adverse claims, or other matters:

	 	(a)	 	created, suffered, assumed, or agreed to by the Insured Claimant;

	 	(b)	 	not Known to the Company, not recorded in the Public Records at Date of Policy, but
Known to the Insured Claimant and not disclosed in writing to the Company by the Insured
Claimant prior to the date the Insured Claimant became an Insured under this policy;

	 	(c)	 	resulting in no loss or damage to the Insured Claimant;

	 	(d)	 	attaching or created subsequent to Date of Policy (however, this does not modify or
limit the coverage provided under Covered Risk 9 and 10); or

	 	(e)	 	resulting in loss or damage that would not have been sustained if the Insured Claimant had
paid value for the Title.

	4.	 	Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar
creditors’ rights laws, that the transaction vesting the Title as shown in Schedule A, is

	 	(a)	 	a fraudulent conveyance or fraudulent transfer; or

	 	(b)	 	a preferential transfer for any reason not stated in Covered Risk 9 of this policy.

	5.	 	Any lien on the Title for real estate taxes or assessments imposed by governmental
authority and created or attaching between Date of Policy and the date of recording of the
deed or other instrument of transfer in the Public Records that vests Title as shown in
Schedule A.

CONDITIONS

	1.	 	DEFINITION OF TERMS

	 
	 	 	The following terms when used in this policy mean:

	 	(a)	 	“Amount of Insurance”: The amount stated in
Schedule A, as may be increased or decreased by
endorsement to this policy, increased by Section
8(b), or decreased by Sections 10 and 11 of these
Conditions.

	 
	 	(b)	 	“Date of Policy”: The date designated as “Date of
Policy” in Schedule A.

	 
	 	(c)	 	“Entity”: A corporation, partnership, trust,
limited liability company, or other similar legal
entity.

	 
	 	(d)	 	“Insured”: The Insured named in Schedule A.

	 	(i)	 	The term “Insured” also includes

	 	(A)	 	successors to the Title of the Insured by
operation of law as distinguished from purchase,
including heirs, devisees, survivors, personal
representatives, or next of kin;

	 
	 	(B)	 	successors to an Insured by dissolution, merger,
consolidation, distribution, or reorganization;

	 
	 	(C)	 	successors to an Insured by its conversion to
another kind of Entity;

	 
	 	(D)	 	a grantee of an Insured under a deed delivered
without payment of actual valuable consideration
conveying the Title

	 	(1)	 	if the stock, shares, memberships, or other
equity interests of the grantee are wholly-owned by
the named Insured,

	 
	 	(2)	 	if the grantee wholly owns the named Insured,     

	 
	 	(3)	 	if the grantee is wholly-owned by an
affiliated Entity of the named
Insured, provided the affiliated
Entity and the
named Insured are
both wholly-owned
by the same person
or Entity, or

	 
	 	(4)	 	if the grantee
is a trustee or
beneficiary of a
trust created by a
written instrument
established by the
Insured named in
Schedule A for
estate planning
purposes.

	 	(ii)	 	With regard to
(A), (B), (C), and
(D) reserving,
however, all rights
and defenses as to
any successor that
the Company would
have had against
any predecessor
Insured.

	 	(e)	 	“Insured
Claimant”: An
Insured claiming
loss or damage.

	 
	 	(f)	 	“Knowledge” or
“Known”: Actual
knowledge, not
constructive
knowledge or notice
that may be imputed
to an Insured by
reason of the
Public Records or
any other records
that impart
constructive notice
of matters
affecting the
Title.

	 
	 	(g)	 	“Land”: The
land described in
Schedule A, and
affixed
improvements that
by law constitute
real property. The
term “Land” does
not include any
property beyond the
lines of the area
described in
Schedule A, nor any
right, title,
interest, estate,
or easement in
abutting streets,
roads, avenues,
alleys, lanes,
ways, or waterways,
but this does not
modify or limit the
extent that a right
of access to and
from the Land is
insured by this
policy.

	 
	 	(h)	 	“Mortgage”: Mortgage,
deed of trust,
trust deed, or other
security instrument,
including one evidenced by
electronic means authorized
by law.

	 
	 	(i)	 	“Public Records”:
Records established under
state statutes at Date of
Policy for the purpose of
imparting constructive
notice of matters relating
to real property to
purchasers for value and
without Knowledge. With
respect to Covered Risk 5(d), “Public Records”
shall also include
environmental protection
liens filed in the records
of the clerk of the United
States District Court for
the district where the Land
is located.

	 
	 	(j)	 	“Title”: The estate or
interest described in
Schedule A.

	 
	 	(k)	 	“Unmarketable Title”:
Title affected by an
alleged or apparent matter
that would permit a
prospective purchaser or
lessee of the Title or
lender on the Title to be
released from the
obligation to purchase,
lease, or lend if there is
a contractual condition
requiring the delivery of
marketable title.

	2.	 	CONTINUATION OF INSURANCE

	 
	 	 	The coverage of this policy
shall continue in force as
of Date of Policy in favor
of an Insured, but only so
long as the Insured retains
an estate or interest in
the Land, or holds an
obligation secured by a
purchase money Mortgage
given by a purchaser from
the Insured, or only so
long as the Insured shall
have liability by reason of
warranties in any transfer
or conveyance of the Title.
This policy shall not
continue in force in favor
of any purchaser from the
Insured of either (i) an
estate or interest in the
Land, or (ii) an obligation
secured by a purchase money
Mortgage given to the
Insured.

 

 

 

CHICAGO TITLE INSURANCE COMPANY

AMERICAN LAND TITLE ASSOCIATION OWNERS POLICY (6/17/06)

WITH NEW YORK COVERAGE ENDORSEMENT APPENDED (A.L.T.A.)

SCHEDULE A

	 	 	 	 	 	 	 

	Policy No.:

	 	Effective Date
	 	Amount of Insurance:

	3111-00129

	 	 	 	 	$88,200,000.00	 

	1.	 	Name of Insured:

	 
	 	 	ROYALTON 44 HOTEL, L.L.C.

	2.	 	The estate or interest in the land which is covered by this Policy is:

	 
	 	 	FEE SIMPLE

	3.	 	Title to the estate or interest in the land is vested in the insured by:

	 
	 	 	Deed made by ROYALTON LLC -to- ROYALTON 44 HOTEL, L.L.C, dated                     , 2011, to be
recorded.

	4.	 	The Land referred to in this policy is described as follows: — SEE ATTACHED DESCRIPTION —

	 	 	 

	 
	 
	 
	 	Authorized Signatory

 

 

 

SCHEDULE A DESCRIPTION

Policy No.: 3111-00129

ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough of
MANHATTAN, County of NEW YORK, City and State of NEW YORK, bounded and described as follows:

BEGINNING at a point on the northerly side of WEST 43RD STREET distant 240 feet easterly from
the corner formed by the intersection of the northerly side of WEST 43RD STREET and the
easterly side of the AVENUE OF AMERICA’S;

running thence northerly parallel with the AVENUE OF AMERICA’S, 200 feet 10 inches to the
southerly side of WEST 44TH STREET;

thence easterly along the southerly side of WEST 44TH STREET, 49 feet 10-1/2 inches;

thence southerly along a line form an angle of 90 degrees 02 minutes 10 seconds on its easterly
side with the southerly side of WEST 44TH STREET, 200 feet 10 inches to the northerly side of
WEST 43RD STREET;

thence westerly along the northerly side of WEST 43RD STREET, 49 feet 9 inches to the point or
place of BEGINNING.

 

 

 

SCHEDULE B

Policy No.: 3111-00129

This policy does not insure against loss or damage (and the Company will not pay
costs, attorney’s fees or expenses) which arise by reason of:

NOTE: THIS IS A PRO FORMA POLICY AND DOES NOT REFLECT THE PRESENT STATE OF THE TITLE
NOR IS IT A COMMITMENT TO (i) INSURE THE TITLE, OR (ii) ISSUE ANY OF THE ATTACHED
ENDORSEMENTS.

	1.	a. 	 	Former window sills project 1-1/2 inches onto westerly adjoining premises.

	 	b.	 	Independent wall encroaches upon the westerly adjoining premises.

	 	c.	 	Building on westerly adjoining premises leans l/2 inch east onto premises herein
described at 2nd floor.

	 	d.	 	Building on premises herein described leans 1-1/2 inches west of the westerly line.

	 	e.	 	Roof cornice, ledges, window sills, trim, planters, stand pipes, entrance cornice, and
entrance columns and trim, hand rails and water meters project upon West 44th Street.

	 	f.	 	Canopy at third floor, iron grating and steps encroach upon west 44th Street.

	 	g.	 	Return cornices and ledges project upon the easterly and westerly adjoining premises.

	 	h.	 	Ends of walls encroach upon West 44th Street.

	 	i.	 	Window sills, air conditioner and air conditioner vents project upon the easterly
adjoining premises.

	 	j.	 	Independent walls on easterly adjoining premises encroach upon the premises herein
described and lean 3/4 inch west.

	 	k.	 	Brick chiminies and flue pipe on westerly wall of buildings adjoining on the east are
fastened to the easterly wall of the building on the premises herein described and carried
to the roof thereof.

	 	l.	 	Lamps, vents, vent pipe, roof cornice, ledges, window sills, trim, stand pipes, entrance
cornice, entrance columns and trim project upon West 43rd Street.

	 	m.	 	Iron cellar doors and step encroach upon West 43rd Street.

	 	n.	 	Independent wall encroaches upon West 43rd Street by 1/4 inch.

	 	 	As shown on a survey made by Earl B. Lovell-S.P. Belcher, Inc. dated 03/15/1996 and last
brought to date by the same on 03/29/2011.

	 	 	With respect to 1b, d, h and n Policy insures that each building or

- SCHEDULE B -

 

 

SCHEDULE B (Continued)

Policy No.: 3111-00129

	 	 	improvement may remain in its present location as long as it shall stand and the
Company hereby insures the Insured against any loss or damage that Insured shall sustain as
a result of a final judicial determination of a court of competent jurisdiction as to the
forced removal of the building or improvements as a result of the aforementioned
encroachments.

	2.	 	Agreements recorded in Liber 4540 cp 280 and Liber 5035 cp 159. Policy insures that a
violation of te foregoing Agreements will not result in a reversion or forfeiture of
title.

	3.	 	Lot Line Window Declaration made by 44TH BUILDING CORPORATION dated 1/27/1989,
recorded 2/10/1989 in Reel 1535 Page 16. Policy insures that a violation of the foregoing
Declaration will not result in a reversion or forfeiture of title.

	4.	 	The policy to be issued hereunder will contain the following:

	 	 	This policy is issued contemporaneously with Policy No. Y 3008-342365NY1 of FIRST
AMERICAN TITLE INSURANCE COMPANY for ~ (50%).

	 	 	At the time liability for any loss shall have been fixed pursuant to the conditions of this
policy, this Company shall not be liable to the insured for a greater portion of the loss
than the amount that this policy bears to the whole amount of insurance held by the
insured under this and the said policy.

- SCHEDULE B (Continued) -

 

 

			
	Issued by	 	 
	 
	 	 
	CHICAGO TITLE INSURANCE COMPANY
	 	ENDORSEMENT

STANDARD NEW YORK ENDORSEMENT

(OWNER’S POLICY)

Attached to and made a part of Policy Number: 3111-00129

The following is added as a Covered Risk:

	 	“11. 	 	Any statutory lien for services, labor or materials furnished prior to the date
hereof, and which has now gained or which may hereafter gain priority over the estate or
interest of the insured as shown in Schedule A of this policy.”

	1.	 	Exclusion Number 5 is deleted, and the following is substituted:

	 	5.	 	Any lien on the Title for real estate taxes, assessments, water charges or sewer
rents imposed by governmental authority and created or attaching between Date of Policy
and the date of recording of the deed or other instrument of transfer in the Public
Records that vests Title as Shown in Schedule A.

This endorsement is issued as part of the policy. Except as it expressly states, it does not (i)
modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii)
extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of
the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the
terms and provisions of the policy and of any prior endorsements.

	 	 	 	 	 	 	 

	Dated:

	 	 	 	CHICAGO TITLE INSURANCE COMPANY

	 	 	 	 	 
	 	 	By:	 	/s/ Raymond R. Quirk
	 	 	 	 	 
	 	 	 	 	Raymond R. Quirk 
President
	 	 	 	 	 
	 	 	By: 	 	/s/ Michael L. Gravelle
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Michael L. Gravelle 

Secretary

	 	 	 

	 

Authorized Signatory
	 	 
	 
	Note: This endorsement shall not be
valid or binding until countersigned
by an authorized signatory.
	 	 
	 
	STANDARD NEW YORK ENDORSEMENT (11/1/08)	 	 
	FOR USE WITH ALTA OWNER’S POLICY (6-17-06)	 	 

 

 

 

			
	 	 	 
	Issued by	 	 
	 
	 	 
	CHICAGO TITLE INSURANCE COMPANY
	 	ENDORSEMENT

LAND SAME AS SURVEY ENDORSEMENT

Attached to and made a part of Policy Number: 3111-00129

The Company hereby assures the Insured that said Land is the same as that delineated on the
plat of a survey made by (SURVEY READING TO FOLLOW).

The Company hereby insures said Assured against loss which said Assured shall sustain in the
event said assurances herein shall prove to be incorrect.

The total liability of the Company under said policy and any endorsement therein shall not
exceed, in the aggregate, the face amount of said policy and costs which the Company is obligated
under the Conditions thereof to pay.

This endorsement is made a part of the policy and is subject to all of the terms and provisions
thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither
modifies any of the terms and provisions of the Policy and any prior endorsements, nor does it
extend the effective date of the policy and any prior endorsements, nor does it increase the face
amount thereof.

	 	 	 	 	 	 	 

	Dated:

	 	 	 	CHICAGO TITLE INSURANCE COMPANY

	 	 	 	 	 
	 	 	By:	 	/s/ Raymond R. Quirk
	 	 	 	 	 
	 	 	 	 	Raymond R. Quirk 
President
	 	 	 	 	 
	 	 	By: 	 	/s/ Michael L. Gravelle
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Michael L. Gravelle 

Secretary

	 	 	 

	 

Authorized Signatory
	 	 
	 
	Note: This endorsement shall not be
valid or binding until countersigned
by an authorized signatory.
	 	 
	 	 	 
	TIRSA LAND SAME AS SURVEY ENDORSEMENT (5/1/07)	 	 

 

 

 

			
	 	 	 
	Issued by	 	 
	 
	 	 
	CHICAGO TITLE INSURANCE COMPANY (“Issuing Co-Insurer”)
	 	ENDORSEMENT

Attached to and made a part of Policy Number: 3111-00129

CO-INSURANCE ENDORSEMENT

Attached to and made a part of Chicago Title Insurance Company (“Issuing
Co-Insurer”) Policy No. 311100129 (“Co-Insurance Policy”). Issuing Co-Insurer and any
other co-insurers are collectively referred to as “Co-Insurers.”

	1.	 	Co-Insurer issues this endorsement as evidence of Co-Insurer’s liability under Co-Insurance
Policy and directs that this endorsement be attached to the Co-Insurance Policy adopting its
Covered Risks, Exclusions, Conditions, Schedules and Endorsements, as follows:

	 
	 	 	Amount and proportion of insurance and Aggregate Amount of Insurance under the
Co-Insurance Policy:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount of	 	Proportion of	 
	Co-Insurers	 	Name and Address	 	Policy Number	 	Insurance	 	Liability	 
	Issuing Co-

Insurer
	 	Chicago Title Insurance Company

P.O. Box 45023

Jacksonville, FL 32232-5023

	 	3111-00129
	 	$~
	 	 	50	%
	 	 	 
	 	 	 	 	 	 	 	 
	Co-Insurer
	 	First American Title Insurance Company

1 First American Way 
Santa Ana, CA 92707

	 	Y 3008-342365NY1
	 	$~
	 	 	50	%
	 	 	 
	 	 	 	 	 	 	 	 
	AGGREGATE
POLICY
	 	 

	 	 	 	$~
	 	 	100	%

	2.	 	Each Co-Insurer shall be liable to the Insured under the Co-Insurance Policy only for the
total of the loss and costs multiplied by its Proportion of Liability.

	3.	 	Any notice of claim and any other notice or statement in writing required to be given under
the Co-Insurance Policy must be given to Co-Insurer at its address set forth above.

	4.	 	Any endorsement to the Co-Insurance Policy issued after the date of this Co-Insurance
Endorsement must be signed on behalf of the Co-Insurer by its authorized officer or agent.

	5.	 	This Co-Insurance Endorsement is effective as of the Date of Policy of the Co-Insurance
Policy. This Co-Insurance Endorsement may be executed in counterparts.

	This endorsement is issued as part of the Co-Insurance Policy. Except as it expressly states, it
does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior
endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of insurance. To the
extent a provision of the policy or a previous endorsement is inconsistent with an express
provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject
to all of the terms and provisions of the policy and of any prior endorsements.

	 	 	 	 	 	 	 	 	 

	DATED:                     	 	 	 	DATED:                     
	Issuing Co-Insurer	 	 	 	Issuing Co-Insurer
	Chico Title Insurance Company	 	 	 	First American Title Insurance Company
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 

TIRSA Co-Insurance Endorsement (11/1/08)

 

 

 

			
	American Land Title Association
	 	Owner’s Policy
	 	 	 
	 
	 	Policy No: 3111-00129

	3.	 	NOTICE OF CLAIM TO BE GIVEN
BY INSURED
CLAIMANT 

	 
	 	 	The Insured shall
notify the Company
promptly in
writing (i) in
case of any
litigation as set
forth in Section
5(a) of these
Conditions, (ii)
in case Knowledge
shall come to an
Insured hereunder
of any claim of
title or interest
that is adverse to
the Title, as
insured, and that
might cause loss
or damage for
which the Company
may be liable by
virtue of this
policy, or (iii)
if the Title, as
insured, is
rejected as
Unmarketable
Title. If the
Company is
prejudiced by the
failure of the
Insured Claimant
to provide prompt
notice, the
Company’s
liability to the
Insured Claimant
under the policy
shall be reduced
to the extent of
the prejudice.

	 
	4.	 	PROOF OF LOSS

	 
	 	 	In the event the
Company is unable
to determine the
amount of loss or
damage, the
Company may, at
its option,
require as a
condition of
payment that the
Insured Claimant
furnish a signed
proof of loss. The
proof of loss must
describe the
defect, lien,
encumbrance, or
other matter
insured against by
this policy that
constitutes the
basis of loss or
damage and shall
state, to the
extent possible,
the basis of
calculating the
amount of the loss
or damage.

	 
	5.	 	DEFENSE AND
PROSECUTION OF
ACTIONS

	 	(a)	 	Upon written
request by the
Insured, and
subject to the
options contained
in Section 7 of
these Conditions,
the Company, at
its own cost and
without
unreasonable
delay, shall
provide for the
defense of an
Insured in
litigation in
which any third
party asserts a
claim covered by
this policy
adverse to the
Insured. This
obligation is
limited to only
those stated
causes of action
alleging matters
insured against by
this policy. The
Company shall have
the right to
select counsel of
its choice
(subject to the
right of the
Insured to object
for reasonable
cause) to
represent the
Insured as to
those stated
causes of action.
It shall not be
liable for and
will not pay the
fees of any other
counsel. The
Company will not
pay any fees,
costs, or expenses
incurred by the
Insured in the
defense of those
causes of action
that allege
matters not
insured against by
this policy.

	 
	 	(b)	 	The Company
shall have the
right, in addition
to the options
contained in
Section 7 of these
Conditions, at its
own cost, to
institute and
prosecute any
action or proceeding or to
do any other act
that in its
opinion may be
necessary or
desirable to
establish the
Title, as insured,
or to prevent or
reduce loss or
damage to the
Insured. The
Company may take
any appropriate
action under the
terms of this
policy, whether or
not it shall be
liable to the
Insured. The
exercise of these
rights shall not
be an admission of
liability or
waiver of any
provision of this
policy. If the
Company exercises
its rights under
this subsection,
it must do so
diligently.

	 
	 	(c)	 	Whenever the
Company brings an
action or asserts
a defense as
required or
permitted by this
policy, the
Company may pursue
the
litigation to a
final determination
by a court of
competent
jurisdiction, and
it expressly
reserves the right,
in its sole
discretion, to
appeal any adverse
judgment or order.

	6.	 	DUTY OF INSURED
CLAIMANT TO
COOPERATE

	 	(a)	 	In all cases
where this policy
permits or requires
the Company to
prosecute or
provide for the
defense of any
action or
proceeding and any
appeals, the
Insured shall
secure to the
Company the right
to so prosecute or
provide defense in
the action or
proceeding,
including the right
to use, at its
option, the name of
the Insured for
this purpose.
Whenever requested
by the Company, the
Insured, at the
Company’s expense,
shall give the
Company all
reasonable aid (i)
in securing
evidence, obtaining
witnesses,
prosecuting or
defending the
action or
proceeding, or
effecting
settlement, and
(ii) in any other
lawful act that in
the opinion of the
Company may be
necessary or
desirable to
establish the Title
or any other matter
as insured. If the
Company is
prejudiced by the
failure of the
Insured to furnish
the required
cooperation, the
Company’s
obligations to the
Insured under the
policy shall
terminate,
including any
liability or
obligation to
defend, prosecute,
or
continue any
litigation, with
regard to the
matter or matters
requiring such
cooperation.

	 
	 	(b)	 	The Company may
reasonably require
the Insured
Claimant to submit
to examination
under oath by any
authorized
representative of
the Company and to
produce for
examination,
inspection, and
copying, at such
reasonable times
and places as may
be designated by
the authorized
representative of
the Company, all
records, in
whatever medium maintained,
including books,
ledgers, checks, memoranda,
correspondence,
reports, e-mails,
disks, tapes, and
videos whether
bearing a date
before or after
Date of Policy,
that reasonably
pertain to the loss
or damage. Further,
if requested by any
authorized
representative of
the Company, the
Insured Claimant
shall grant its
permission, in
writing, for any
authorized
representative of
the Company to
examine, inspect,
and copy all of
these records in
the custody or
control of a third
party that
reasonably pertain
to the loss or
damage. All
information
designated as
confidential by the
Insured Claimant
provided to the
Company pursuant to
this Section shall
not be disclosed to
others unless, in
the reasonable
judgment of the
Company, it is
necessary in the
administration of
the claim. Failure
of the Insured
Claimant to submit
for examination
under oath, produce
any reasonably
requested
information, or
grant permission to
secure reasonably
necessary
information from
third parties as
required in this
subsection, unless
prohibited by law
or
governmental
regulation, shall terminate
any liability of the
Company under this policy as
to that claim.

	7.	 	OPTIONS TO PAY OR OTHERWISE
SETTLE CLAIMS; TERMINATION OF
LIABILITY

	 
	 	 	In case of a claim under this
policy, the Company shall have
the following additional
options:

	 	(a)	 	To Pay or Tender Payment
of the Amount of Insurance.

	 
	 	 	 	To
pay or tender payment of the
Amount of Insurance under this
policy together with any
costs, attorneys’ fees, and
expenses incurred by the
Insured Claimant that were
authorized by the Company up
to the time of payment or
lender of payment and that the Company is obligated to pay.

	 
	 	 	 	Upon the exercise by the
Company of this option, all
liability and obligations of
the Company to the Insured
under this policy, other than
to make the payment required
in this subsection, shall
terminate, including any
liability or obligation to
defend, prosecute, or continue
any litigation.

	 
	 	(b)	 	To Pay or Otherwise
Settle With Parties Other Than
the Insured or With the
Insured Claimant.

	 	(i)	 	to pay or otherwise settle
with other parties for or in
the name of an Insured
Claimant any claim insured
against under this policy. In
addition, the Company will pay
any costs, attorneys’ fees,
and expenses incurred by the
Insured Claimant that were
authorized by the Company up
to the time of payment and
that the Company is obligated
to pay; or

	 
	 	(ii)	 	to pay or otherwise
settle with the Insured
Claimant the loss or damage
provided for under this
policy, together with any
costs, attorneys’ fees, and
expenses incurred by the
Insured Claimant that were
authorized by the Company up
to the time of payment and
that the Company is obligated
to pay.

Upon the exercise by the
Company of either of the
options provided for in
subsections (b)(i) or (ii),
the Company’s obligations to
the Insured under this policy
for the claimed loss or
damage, other than the
payments required to be made,
shall terminate, including any
liability or obligation to
defend, prosecute, or continue
any litigation.

	8.	 	DETERMINATION AND EXTENT OF
LIABILITY

	 
	 	 	This policy is a contract of
indemnity against actual
monetary loss or damage
sustained or incurred by the
Insured Claimant who has
suffered loss or damage by
reason of matters insured
against by this policy.

	 	(a)	 	The extent of liability of
the Company for loss or damage
under this policy shall not
exceed the lesser of

	 	(i)	 	the Amount of Insurance; or

	 
	 	(ii)	 	the difference between
the value of the Title as
insured and the value of the
Title subject to the risk
insured against by this
policy.

 

 

 

			
	 	 	 
	American Land Title Association
	 	Owner’s Policy
	 	 	 
	 
	 	Policy No: 3111-00129

	 	(b)	 	If the Company pursues
its rights under
Section 5 of these
Conditions and is
unsuccessful in
establishing the Title, as
insured,

	 	(i)	 	the Amount of
Insurance shall be
increased by 10%, and

	 
	 	(ii)	 	the Insured Claimant
shall have the right to
have the loss or damage
determined either as of
the date the claim was
made by the Insured
Claimant or as of the date
it is settled and paid.

	 	(c)	 	In addition to the
extent of liability under
(a) and (b), the Company
will also pay those costs,
attorneys’ fees, and
expenses incurred in
accordance with Sections 5
and 7 of these Conditions.

	9.	 	LIMITATION OF LIABILITY

	 	(a)	 	If the Company
establishes the Title, or
removes the alleged
defect, lien or
encumbrance, or cures the
lack of a right of access
to or from the Land, or
cures the claim of
Unmarketable Title, all as
insured, in a reasonably
diligent manner by any
method, including
litigation and the
completion of any appeals,
it shall have fully
performed its obligations
with respect to that
matter and shall not be
liable for any loss or
damage caused to the
Insured.

	 
	 	(b)	 	In the event of any
litigation, including
litigation by the Company
or with the Company’s
consent, the Company shall
have no liability for loss
or damage until there has
been a final determination
by a court of competent
jurisdiction, and
disposition of all
appeals, adverse to the
Title, as insured.

	 
	 	(c)	 	The Company shall not
be liable for loss or
damage to the Insured for
liability voluntarily
assumed by the Insured in
settling any claim or suit
without the prior written
consent of the Company.

	10.	 	REDUCTION OF
INSURANCE; REDUCTION OR
TERMINATION OF LIABILITY

	 
	 	 	All payments under this
policy, except payments
made for costs,
attorneys’ fees, and
expenses, shall reduce the
Amount of Insurance by the
amount of the payment.

	 
	11.	 	LIABILITY NONCUMULATIVE

	 
	 	 	The Amount of Insurance
shall be reduced by any
amount the Company pays
under any policy insuring
a Mortgage to which
exception is taken in
Schedule B or to which the
Insured has agreed,
assumed, or taken subject,
or which is executed by an
Insured after Date of
Policy and which is a
charge or lien on the
Title, and the amount so
paid shall be deemed a
payment to the Insured
under this policy.

	 
	12.	 	PAYMENT OF LOSS

	 
	 	 	When liability and the
extent of loss or damage
have been definitely fixed
in accordance with these
Conditions, the payment
shall be made within 30
days.

	 
	13.	 	RIGHTS OF RECOVERY UPON
PAYMENT OR SETTLEMENT

	 	(a)	 	Whenever the Company
shall have settled and paid
a claim under this policy,
it shall be subrogated and
entitled to the rights of
the Insured Claimant in the
Title and all other rights
and remedies in respect to
the claim that the Insured
Claimant has against any
person or property, to the
extent of the amount of any
loss, costs, attorneys’
fees, and expenses paid by
the Company. If requested by
the Company, the Insured
Claimant shall execute
documents to evidence the
transfer to the Company of
these rights and remedies.
The Insured Claimant shall
permit the Company to sue,
compromise, or settle in the
name of the Insured Claimant
and to use the name of the
Insured Claimant in any
transaction or litigation
involving these rights and
remedies.

	 
	 	 	 	If a payment on
account of a claim does not
fully cover the loss of the
Insured Claimant, the
Company shall defer the
exercise of its right to
recover until after the
Insured Claimant shall have
recovered its loss.

	 
	 	(b)	 	The Company’s right of
subrogation includes the
rights of the Insured to
indemnities, guaranties,
other policies of insurance, or bonds, notwithstanding
any terms or conditions
contained in those
instruments that address
subrogation rights.

	14.	 	ARBITRATION     

	 
	 	 	Either the Company or the
Insured may demand that the claim or
controversy shall be
submitted to arbitration
pursuant to the Title
Insurance Arbitration Rules
of the American Land Title
Association (“Rules”).
Except as provided in the
Rules, there shall be no
joinder or consolidation
with claims or controversies
of other persons. Arbitrable
matters may include, but are
not limited to, any
controversy or claim between
the Company and the Insured
arising out of or relating
to this policy, any service
in connection with its
issuance or the breach of a
policy provision, or to any
other controversy or claim
arising out of the
transaction giving rise to
this policy. All arbitrable
matters when the Amount of
Insurance is $2,000,000 or
less shall be arbitrated at
the option of either the
Company or the Insured. All
arbitrable matters when the
Amount of Insurance is in
excess of $2,000,000 shall
be arbitrated only when
agreed to by both the
Company and the Insured.
Arbitration pursuant to this
policy and under the Rules
shall be binding upon the
parties. Judgment upon the
award rendered by the
Arbitrator(s) may be entered
in any court of competent
jurisdiction.

	15.	 	LIABILITY LIMITED TO THIS
POLICY; POLICY ENTIRE
CONTRACT

	 	(a)	 	This policy together with
all endorsements, if any,
attached to it by the Company
is the entire policy and
contract between the Insured
and the Company. In
interpreting any provision of
this policy, this policy shall
be construed as a whole.

	 
	 	(b)	 	Any claim of loss or damage
that arises out of the status
of the Title or by any action
asserting such claim shall be
restricted to this policy.

	 
	 	(c)	 	Any amendment of or
endorsement to this policy must
be in writing and authenticated
by an authorized person, or
expressly incorporated by
Schedule A of this policy.

	 
	 	(d)	 	Each endorsement to this
policy issued at any time is
made a part of this policy and
is subject to all of its terms
and provisions. Except as the
endorsement expressly states,
it does not (i) modify any of
the terms and provisions of the
policy, (ii) modify any prior
endorsement, (iii) extend the
Date of Policy, or (iv) increase
the Amount of Insurance.

	16.	 	SEVERABILITY

	 
	 	 	In the event any provision of
this policy, in whole or in
part, is held invalid or
unenforceable under applicable
law, the policy shall be deemed
not to include that provision
or such part held to be
invalid, but all other
provisions shall remain in full
force and effect.

	 
	17.	 	CHOICE OF LAW; FORUM

	 	(a)	 	Choice of Law: The Insured
acknowledges the Company has
underwritten the risks covered
by this policy and determined
the premium charged therefor in
reliance upon the law affecting
interests in real property and
applicable to the
interpretation, rights,
remedies, or enforcement of
policies of title insurance of
the jurisdiction where the Land
is located. Therefore, the
court or an arbitrator shall
apply the law of the
jurisdiction where the Land is
located to determine the
validity of claims against the
Title that are adverse to the
Insured and to interpret and
enforce the terms of this
policy. In neither case shall
the court or arbitrator apply
its conflicts of law principles
to determine the applicable
law.

	 
	 	(b)	 	Choice of Forum: Any
litigation or other proceeding
brought by the Insured against
the Company must be filed only
in a state or federal court
within the United States of
America or its territories
having appropriate
jurisdiction.

	18.	 	NOTICES, WHERE SENT

	 
	 	 	Any notice of claim and any
other notice or statement in
writing required to be given to
the Company under this policy
must be given to the Company
at:

	 
	 	 	Chicago Title Insurance Company

	 
	 	 	Attn: Claims Department

	 
	 	 	P.O. Box 45023

	 
	 	 	Jacksonville, FL 32232-5023

 

 

 

Exhibit J

Form of Escrow Agreement

DEPOSIT ESCROW INSTRUCTIONS

______________, 2011

First American Title Insurance Company

633 Third Avenue

New York, New York 10017

Attention: Andrew Jaeger

Attention:

	 	 	 	 	 
	 

	 	Re:
	 	Deposit under that certain Purchase and Sale Agreement dated
 _____, 2011
(the “Agreement”), by and between Royalton, LLC, a Delaware limited liability company
(“Seller”), and Royalton 44 Hotel, L.L.C., a Delaware limited liability company
(“Purchaser”); Escrow No.
 _____ 
(“Escrow”).

Gentlemen and Ladies:

Purchaser and Seller have entered into the Agreement pursuant to which Purchaser agrees to
purchase the Property (as defined in the Agreement). A copy of the Agreement has been delivered to
you concurrently herewith.

In accordance with Section 1.6 of the Agreement, within one (1) business day following the
execution of the Agreement, Purchaser will be delivering by wire transfer of immediately available
federal funds in the amount of Four Million Four Hundred Ten Thousand and 00/100 Dollars
($4,410,000.00), which may be increased by an amount equal to One Million Eight Hundred Ninety
Thousand and 00/100 ($1,890,000.00) pursuant to Section 4.10(b) of the Agreement (collectively and
together with any interest earned thereon, the “Earnest Money”), for deposit in the Escrow. You are
to place the Earnest Money in an interest bearing account (for this purpose, Purchaser’s Federal
Employer I.D. number is 45-1137592) and hold the Earnest Money in the Escrow and deliver it to
Seller or Purchaser in accordance with these instructions. An executed IRS Form W-9 for Purchaser
has been delivered to you to enable the Earnest Money to be invested.

In the event that (i) you receive written notice from Seller or Purchaser (the party that
delivers such written notice is referred to herein as the “Notice Party”), which notice shall be
delivered concurrently to the other party (the “Other Party”), stating that the Notice Party is
terminating the Agreement and is entitled to the Earnest Money under the terms of the Agreement,
and (ii) you have received written confirmation from the Other Party of its receipt of such written
notice from the Notice Party, you shall, on the tenth (10th) business day after the Other Party’s
receipt of such written notice from the Notice Party, deliver the Earnest Money (by delivering
cash, certified check or some other form of immediately available funds, to the Notice
Party at the address or pursuant to the wiring instructions provided in such written notice
from the Notice Party); provided that, if you receive written notice from the Other Party or the
Other Party’s counsel within nine (9) business days after the Other Party’s receipt of the such
written notice from the Notice Party that the Other Party disputes the Notice Party’s right to
receive the Earnest Money and directs you not to make the foregoing delivery, you shall not deliver
the Earnest Money to the Notice Party but shall instead retain it or, if appropriate, interplead
the Earnest Money in a court of competent jurisdiction in the State of New York. All notices
delivered pursuant to these instructions shall be made in accordance with the provisions of Section
11.4 of the Agreement. Notices to Escrow Agent will be delivered to the attention of Andrew
Jaeger, Esq. and Michael Berey, Esq., reference Title No [_____].

 

 

 

You are not to disclose to any person (other than the parties hereto, their employees, agents
or independent contractors) any information about the Agreement or its existence or this letter of
instructions (except if requested by either party or as may be required by court in any litigation
or by law).

You are to maintain the Earnest Money in a federally-insured interest-bearing account at JP
Morgan Chase and all interest accruing thereon shall be paid to the party entitled to the Earnest
Money in accordance with this deposit escrow instruction letter. We understand that you shall not
be responsible for any penalties, loss of principal or interest, or the consequences of a delay in
withdrawal of the Deposit and interest accrued thereon, if any, which may be imposed as a result of
the making or the redeeming of the above investment, as the case may be. Seller and Purchaser also
agree that Escrow Agent shall not be liable for any loss or impairment of the Deposit while the
Deposit is in the course of collection or of the Escrow if such loss or impairment results from the
failure, insolvency or suspension of the financial institution in which the Deposit is deposited.
Nor shall you be required to institute legal proceedings of any kind pursuant to these
instructions, nor be required to defend any legal proceedings which may be instituted against you
with respect to the subject matter of these instructions unless you are requested to do so by
Purchaser or Seller and arrangements reasonably satisfactory to you have been made to indemnify you
against the cost and expense of such defense by the party making such request. If any dispute shall
arise with respect to these instructions, whether such dispute arises between the parties hereto or
between the parties hereto and other persons, you may interplead such disputants. You shall be
responsible only for the performance of such duties as are strictly set forth herein and in no
event shall you be liable for any act or failure to act under the provisions of this letter except
where such action or inaction is the result of your willful misconduct or gross negligence.

Seller and Purchaser each hereby agrees, jointly and severally, to indemnify you and hold you
harmless against any loss, liability or damage (including the cost of litigation and reasonable
counsel fees) incurred in connection with the performance of your duties hereunder except as a
result of your willful misconduct or negligence.

In the event of any dispute between Seller and Purchaser respecting these instructions, Seller
and Purchaser may elect to submit such dispute to any court of competent jurisdiction in the State
of New York in accordance with Section 11.12 of the Agreement. The prevailing party in any such
dispute shall be entitled to recover its legal fees and expenses incurred in connection with such
dispute.

 

 

 

Please indicate your agreement to comply with the foregoing instructions by executing at least
three (3) copies of this letter and returning, by overnight courier, one to Hogan Lovells US LLP,
as counsel for Seller, and one to Gibson, Dunn & Crutcher LLP, as counsel for Purchaser.

Very truly yours,

	 	 	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ROYALTON, LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By: Morgans Group LLC, its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By: Morgans Hotel Group Co., its
Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ROYALTON 44 HOTEL, L.L.C.,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 

ACKNOWLEDGED AND AGREED:

First American Title Insurance Company

	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Michael J. Berey	 	 
	 

	 	Title:
	 	Senior Vice-President and 

Senior Underwriting Counsel	 	 

Date: ______________, 2011

 

 

 

Exhibit K

Form of Trademark Assignment

TRADEMARK ASSIGNMENT

THIS TRADEMARK ASSIGNMENT (this “Assignment”) is made and entered into as of March
 _____,
2011 (“Effective Date”) by and between Morgans Group LLC, a Delaware limited liability
company, with its principal office at 475 10th Avenue, New York, New York 10018, USA
(“Assignor”), and [INSERT ASSIGNEE] (“Assignee”).

WHEREAS, Assignor is the owner of the trademarks, trademark registrations and trademark
applications set forth on Schedule A hereto (the “Trademarks”), including the pending Trademark
Application filed as an intent-to-use application (the “ITU Mark”).

WHEREAS, Assignor has a bona fide intent to use the ITU Mark in connection with the services
for which the application for an ITU Mark has been filed;

WHEREAS, Assignor and Assignee are parties to that certain Purchase and Sale Agreement
dated
 _____ 
(the “Purchase Agreement”);

WHEREAS, pursuant to the Purchase Agreement, Assignee agreed to purchase (i) that portion of
Assignor’s business in which Assignor has a bona fide intent to use the ITU Mark, and (ii) all of
Assignor’s right, title and interest in and to the Trademarks and any and all goodwill of the
business symbolized by the Trademarks; and

NOW, THEREFORE, for the consideration set forth in the Purchase Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

1. Assignment. Effective upon the Closing, Assignor hereby assigns, conveys, grants,
and transfers to Assignee, in perpetuity, all of Assignor’s right, title and interest in and to the
Trademarks, including but not limited to any and all common law rights in the Trademarks, and any
and all goodwill of the business symbolized by the Trademarks, including all rights therein
provided by international conventions and treaties, and all rights to sue for past, present and
future infringement of the rights being assigned hereby which Assignor may have, throughout the
world, including, without limitation, the right to retain the proceeds from such infringement
claims. Assignee is hereby empowered to bring, prosecute, defend, and appear in suits, actions,
and proceedings of any nature under or concerning the Trademarks, and any applications,
registrations, and renewals thereof, in its own name as Trademark proprietor.

2. Further Assurances. Assignor shall, at the cost and expense of Assignee, take all
actions and execute all documents necessary or desirable to record and perfect the interest of
Assignee in and to the Trademarks, and shall not enter into any agreement in conflict with this
Assignment.

 

 

 

IN WITNESS WHEREOF, each Party has caused this Assignment to be executed as of the date first
written above by its duly authorized officer. The Parties state that they and/or their authorized
representative have carefully read, been advised upon, understand and agree upon each and every
term of this Assignment, to which execute below.

Assignor hereby requests the Commissioner of Patents and Trademarks, and the corresponding entities
or agencies in any applicable foreign countries, to record Assignee as the assignee and owner of
the Marks.

* * * * *

	 	 	 	 	 	 	 
	 	 	MORGANS GROUP LLC	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	[INSERT ASSIGNEE]	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

 

 

 

SCHEDULE A

	 	 	 	 	 	 	 
	 	 	REGISTRATION NUMBER	 	 	 	 
	TRADEMARK	 	(APPLICATION NUMBER)	 	COUNTRY	 	GOODS AND SERVICES
	ROYALTON

	 	1974811

(74/641687)
	 	USA
	 	Class 42: Hotel services
	 
	 	 	 	 	 	 
	ROYALTON

	 	3829913

(76/698270)
	 	USA
	 	Class 43: Providing temporary accommodations; hotel, bar and restaurant services; providing a website for making hotel and restaurant reservations; making hotel and restaurant reservations for others; providing social meeting, banquet, social function, conference, exhibition
and meeting facilities; catering services; spa services, namely, providing temporary accommodations and meals to clients of a health or beauty spa; consulting services in the field of hospitality; providing personalized information about hotels via the internet; providing
information in the field of restaurant dining via the internet
	 
	 	 	 	 	 	 
	44

	 	N/A

(85/110574)
	 	USA
	 	Class 41: Bar and restaurant services
	 
	 	 	 	 	 	 
	FORTY FOUR

	 	N/A

(Common Law Mark)
	 	USA	 	 
	 
	 	 	 	 	 	 
	BAR 44 44 & Design

	 	3484470

(77/369297)
	 	USA
	 	Class 43: Bar and restaurant services
	 
	 	 	 	 	 	 
	BRASSERIE 44 44 & DESIGN

	 	3484475

(77/369393)
	 	USA
	 	Class 43: Bar and restaurant services

 

 

 

	 	 	 	 	 	 	 
	 	 	REGISTRATION NUMBER	 	 	 	 
	TRADEMARK	 	(APPLICATION NUMBER)	 	COUNTRY	 	GOODS AND SERVICES
	ROYALTON

	 	000806752

(000806752)
	 	European Community
	 	Class 20: Furniture; cots; beds; mirrors; picture frames; pillows; curtain rings, rods and rails; non-metal doorknobs and drawer pulls

Class 42: Providing of food and drink; temporary accommodation; medical, hygienic and beauty care; veterinary and agricultural services; legal services; scientific and industrial research; computer programming; hotel services; reservation services for hotel accommodation; room
hire; provision of conference and exhibition facilities; banqueting services; bar, café and restaurant services; cocktail lounge and coffee shop services; food cooking services; beauty salon services; hairdressing salon services; creche services; photography, printing and
lithographic services; health club services; professional consultations relating to hotel franchising
	 
	 	 	 	 	 	 
	ROYALTON

	 	000865147

(000865147)
	 	European Community
	 	Class 3: Cleaning, polishing, scouring and abrasive preparations for personal use; shoe cleaning and shoe polishing preparations, make-up removers, pumice stones for personal use; soaps, foam bath, shower and bath gels, bath oils, bath beads, bath salts; hair care preparations,
shampoos, hair conditioners, hair gels, hair lotions and hair styling preparations; perfumes, colognes, splashes, and toilet waters; essential oils and aromatherapy oils; body oils, shaving preparations, shaving lotions, shaving creams and shaving gels, suntan and sun screen
lotions, creams, oils and gels; cosmetics; make-up, concealers, eye shadows, eye and eyebrow pencils, facial powders, mascara; cotton wool for cosmetic purposes; hand and nail care preparations, namely nail polishes and varnishes, bases and top coats, hand and cuticle creams,
lotions and oils, nail polish removers, cuticle creams, gels and removers

Class 16: Paper, cardboard; stationery, letterhead, envelopes, post cards, headed note paper, cards, headed writing paper, corporate forms, paper bags, paper boxes, signage, brochures, posters, printed advertisement; pencils, pens, markers, pen and pencil cases; wrapping paper;
books; cookery books; menus; address books; calendars; diaries; date books; paper plates; paper cups, paper napkins, paper place mats; playing cards

Class 21: Dishes; plates; bowls; serving dishes; cups; mugs; glasses; glassware; dish covers; dish stands; kitchen, cooking and serving utensils; earthenware; wine decanters; wine bottles; wine buckets; vases; china, crystal, earthenware, glass porcelain and terracotta objects
d’art; coffee and tea services of non-precious metal; non-electric coffee and tea pots; infusers of non-precious metal; meal trays; pots; pans; cookware; kettles; flower pots and baskets; shaving pots; shaving brushes; shaving brush stands; hair combs and brushes; cosmetic
brushes; applicators and sponges; toothbrushes; perfume atomizers and bottles; containers for burning and diffusing incense, perfume and oils; candle holders and candlesticks of non-precious metal; trash and rubbish cans and bins; tissue holders and dispensers; toilet paper
holders and dispensers; ceramic door knobs

 

 

 

	 	 	 	 	 	 	 
	 	 	REGISTRATION NUMBER	 	 	 	 
	TRADEMARK	 	(APPLICATION NUMBER)	 	COUNTRY	 	GOODS AND SERVICES
	 

	 	 	 	 	 	Class 24: Bedding, blankets, comforters, sheets, bed linens, bed spreads and covers, duvet covers; pillows; shams and covers; dust ruffles; fabrics, none being textile piece goods for making up into suits, dresses, jackets or trousers; upholstery fabrics; window and shower
curtains; window dressings; table linens, table cloths, cloth napkins, table runners; potholders; place mats; bath mats; bath and kitchen towels; washcloths; textile tapestries

Class 39: Valet parking, car and van transportation services; ticket reservation services; travel guide services
	 
	 	 	 	 	 	 
	ROYALTON

	 	2148931

(2148931)
	 	United Kingdom
	 	Class 08: Hand tools and implements (hand operated); cutlery; side arms; razors

Class 16: Paper, cardboard, stationery; letterhead, envelopes, post cards, note paper, cards, writing paper, corporate forms, paper bags, paper boxes, signage, brochures, posters, printed advertisements; pencils, pens, markers; pen and pencil cases; wrapping paper; books;
cookery books; menus; address books; calendars; diaries; date books; paper plates, paper cups, paper napkins, paper place mats; plying cards

Class 20: Furniture; cots; beds; mirrors; picture frames; pillows; curtain rings, rods and rails; non-metal doorknobs and drawer pulls

Class 21: Dishes; plates; bowls; serving dishes; cups; mugs; glasses; glassware; dish covers; dish stands; kitchen, cooking and serving utensils; earthenware; wine decanters; wine bottles; wine buckets; vases; china, crystal, earthenware, glass, porcelain and terracotta objects
d’art; coffee and tea services of non-precious metal; non-electric coffee and tea pots; infusers of non-precious metal; meal trays; pots; pans; cookware; kettles; flower pots and baskets; shaving pots; shaving brushes; shaving brush stands; hair combs and brushes; cosmetic
brushes; applicators and sponges; toothbrushes; perfume atomizers and bottles; containers for burning and diffusing incense, perfume and oils; candle holders and candlesticks of non-precious metal; trash rubbish cans and bins; tissue holders and dispensers; toilet paper holders
and dispensers; ceramic door knobs

 

 

 

	 	 	 	 	 	 	 
	 	 	REGISTRATION NUMBER	 	 	 	 
	TRADEMARK	 	(APPLICATION NUMBER)	 	COUNTRY	 	GOODS AND SERVICES
	 

	 	 	 	 	 	Class 25: Clothing; footwear; headgear; exercise wear; sports wear; shirts, polo shirts, golf shirts, t-shirts; shorts; pants; golf pants; boxer shorts; night shirts, nightgowns, pajamas; lingerie; undergarments; bathrobes; caps, hats, visors; scarves; socks; aprons; shower caps

Class 27: Carpet, rugs, mats and matting; linoleums and other materials for covering existing floors; wall hangings

Class 42: Hotel services; hotel accommodation services; housekeeping services; reservation services for hotel accommodation; room hire; provision of conference and exhibition services; catering services; banqueting services; bar, restaurant, cocktail lounge, café’, cafeteria,
and coffee bar services; food cooking services; beauty and salon services; hairdressing salon services; concierge services
	 
	 	 	 	 	 	 
	ROYALTON

	 	2168832

(2168832)
	 	United Kingdom
	 	Class 03: Cleaning, polishing, scouring and abrasive preparations for personal use; shoe cleaning and shoe polishing preparations, make-up removers, pumice stones for personal use; soaps; foam bath, shower and bath gels, bath oil, bath beads, bath salts; hair care preparations;
shampoos, hair conditioners, hair gels, hair lotions and hair styling preparations; perfumes; colognes, splashes, and toilet waters; essential oils and aromatherapy oils; body oils, shaving preparations, shaving lotions, shaving creams and shaving gels, suntan and sun screen
lotions, creams, oils and gels; cosmetics, make-up, concealers, eye shadows, eye and eyebrow pencils, facial powders, mascara; cotton wool for cosmetic purposes; hand and nail care preparations, nail polishes and varnishes, bases and top coats, hand and cuticle creams, lotions
and oils, nail polish removers, cuticle creams, gels and removers

Class 14: Precious metals and their alloys and goods in precious metals or coated therewith, not included in other classes; jewelry, precious stones; horological and chronometric instruments; silverware

Class 26: Lace and embroidery, ribbons and braid; buttons, hooks and eyes, pins and needles; artificial flowers

Class 28: Games and playthings; gymnastic and sporting articles not included in other classes; decorations for christmas trees

Class 32: Beers; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages

 

 

 

	 	 	 	 	 	 	 
	 	 	REGISTRATION NUMBER	 	 	 	 
	TRADEMARK	 	(APPLICATION NUMBER)	 	COUNTRY	 	GOODS AND SERVICES
	 

	 	 	 	 	 	Class 33: Alcoholic beverages (except beers)
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Class 34: Tobacco; smokers’ articles; matches
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Class 39: Valet parking services; car and van transportation services; transport reservation services; travel guide services
	 
	 	 	 	 	 	 
	THE ROYALTON HOTEL

	 	2130038

(2130038)
	 	United Kingdom
	 	Class 42: Hotel services
	 
	 	 	 	 	 	 
	ROYALTON

	 	393139

(2008730766)
	 	Russian Federation
	 	Class 35: Providing real estate management services in connection with condominium and hotel properties

Class 37: Real estate development services, namely the development of mixed use hotel, condominium and commercial properties

Class 43: Services for providing food and drink; temporary accommodations; hotels; hotel, bar and restaurant services; making hotel reservations for others; providing banquet and social function facilities for special occasions; consulting services in the field of hospitality,
provision of food and drink and temporary accommodationExhibit 10.3

Exhibit 10.3

MONDRIAN LOS ANGELES

PURCHASE AND SALE AGREEMENT

BETWEEN

MONDRIAN HOLDINGS LLC,

A DELAWARE LIMITED LIABILITY COMPANY

AS SELLER

AND

WOLVERINES OWNER LLC,

A DELAWARE LIMITED LIABILITY COMPANY

AS PURCHASER

As of April 22, 2011

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I PURCHASE AND SALE
	 	 	1	 
	1.1 Agreement of Purchase and Sale
	 	 	1	 
	1.2 Property Defined
	 	 	4	 
	1.3 Permitted Exceptions
	 	 	5	 
	1.4 Purchase Price
	 	 	5	 
	1.5 Payment of Purchase Price
	 	 	5	 
	1.6 Earnest Money
	 	 	5	 
	1.7 Management Agreement
	 	 	6	 
	ARTICLE II TITLE AND SURVEY
	 	 	6	 
	2.1 Title Report
	 	 	6	 
	2.2 Survey
	 	 	6	 
	2.3 Approval of Title
	 	 	6	 
	2.4 Conveyance of Title
	 	 	8	 
	2.5 Title Policy
	 	 	8	 
	ARTICLE III INSPECTION
	 	 	9	 
	3.1 Right of Inspection
	 	 	9	 
	3.2 Seller Due Diligence Materials
	 	 	10	 
	ARTICLE IV CLOSING
	 	 	11	 
	4.1 Time and Place; Pre-Closing
	 	 	11	 
	4.2 Seller’s Closing Obligations and Deliveries
	 	 	12	 
	4.3 Purchaser’s Closing Obligations and Deliveries
	 	 	14	 
	4.4 Prorations, Credits and Other Adjustments
	 	 	14	 
	4.5 Closing Costs
	 	 	21	 
	4.6 Conditions Precedent to Obligation of Purchaser
	 	 	21	 
	4.7 Conditions Precedent to Obligation of Seller
	 	 	22	 
	4.8 Failure or Waiver of Conditions Precedent
	 	 	22	 
	ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	24	 
	5.1 Representations and Warranties of Seller
	 	 	24	 
	5.2 Knowledge Defined
	 	 	26	 
	5.3 Covenants of Seller
	 	 	26	 
	5.4 Representations and Warranties of Purchaser
	 	 	27	 
	5.5 Covenants of Purchaser and/or of Seller
	 	 	29	 
	5.6 Employees
	 	 	30	 
	5.7 Independent Audit
	 	 	32	 
	ARTICLE VI DEFAULT
	 	 	32	 
	6.1 Default by Purchaser
	 	 	32	 
	6.2 Default by Seller
	 	 	33	 
	6.3 Seller’s Right to Cure Defaults
	 	 	33	 
	6.4 Purchaser’s Right to Cure Defaults
	 	 	33	 
	ARTICLE VII SURVIVAL, INDEMNIFICATION, AND LIMITATIONS ON LIABILITY
	 	 	34	 
	7.1 Survival
	 	 	34	 
	7.2 Seller’s Indemnification
	 	 	34	 
	7.3 Purchaser’s Indemnification
	 	 	34	 
	7.4 Notice and Resolution of Claims
	 	 	34	 
	7.5 Limitations on Liability
	 	 	36	 
	7.6 Other Matters Regarding Indemnification
	 	 	36	 

 

i

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE VIII RISK OF LOSS
	 	 	37	 
	8.1 Minor Damage
	 	 	37	 
	8.2 Major Damage
	 	 	37	 
	8.3 Definition of “Major” Loss or Damage
	 	 	38	 
	ARTICLE IX COMMISSIONS
	 	 	38	 
	9.1 Brokerage Commissions
	 	 	38	 
	ARTICLE X DISCLAIMERS AND WAIVERS
	 	 	38	 
	10.1 No Reliance on Documents
	 	 	38	 
	10.2 DISCLAIMERS
	 	 	39	 
	10.3 Repairs, Reserves, and Capital Expenditures
	 	 	40	 
	10.4 Effect and Survival of Disclaimers
	 	 	41	 
	ARTICLE XI MISCELLANEOUS
	 	 	41	 
	11.1 Confidentiality
	 	 	41	 
	11.2 Public Disclosure
	 	 	41	 
	11.3 Assignment
	 	 	42	 
	11.4 Notices
	 	 	42	 
	11.5 Modifications
	 	 	43	 
	11.6 Calculation of Time Periods; Time is of the Essence
	 	 	43	 
	11.7 Successors and Assigns
	 	 	43	 
	11.8 Entire Agreement
	 	 	43	 
	11.9 Further Assurances
	 	 	44	 
	11.10 Counterparts; Facsimile Signatures
	 	 	44	 
	11.11 Severability
	 	 	44	 
	11.12 Applicable Law
	 	 	44	 
	11.13 No Third Party Beneficiary
	 	 	44	 
	11.14 Exhibits and Schedules
	 	 	45	 
	11.15 Captions
	 	 	45	 
	11.16 Construction
	 	 	45	 
	11.17 Termination of Agreement
	 	 	45	 
	11.18 Attorneys Fees
	 	 	45	 
	11.19 No Waiver
	 	 	46	 
	11.20 No Reservation of Property
	 	 	46	 
	11.21 No Recordation
	 	 	46	 

 

ii

 

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of April 22, 2011 (the
“Effective Date”), by and between Mondrian Holdings LLC, a Delaware limited liability
company (“Seller”), and Wolverines Owner LLC, a Delaware limited liability company
(“Purchaser”). Unless otherwise noted, all capitalized terms set forth in this Agreement
shall have the meanings ascribed to them in Annex A attached hereto.

W I T N E S S E T H:

WHEREAS, Seller is the owner and holder of the fee simple estate in and to that certain plot,
piece and parcel of land located at 8440 Sunset Boulevard, West Hollywood, California, County of
Los Angeles and more particularly described in Schedule 1.1(a) attached hereto (the
“Land”), together with the 237 room hotel, restaurants, bars, spas, lounges, meeting rooms
and all other improvements and fixtures (collectively, the “Improvements”) located on the
Land (the Improvements and the Land are hereinafter sometimes collectively referred to as the
“Real Property”); and

WHEREAS, Seller operates on the Real Property the hotel known as “Mondrian” (the
“Hotel”);

WHEREAS, Seller desires to cause the sale, assignment and transfer of its interests in and to
the Property (as defined below) to Purchaser in accordance with the terms and provisions of this
Agreement, and Purchaser desires to purchase such interests from Seller and assume certain
liabilities related to the Property upon the terms more particularly set forth in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties, Purchaser and Seller agree as follows:

ARTICLE I

PURCHASE AND SALE

1.1 Agreement of Purchase and Sale. Subject to the terms and conditions hereinafter set
forth, Seller agrees to sell and convey, and Purchaser agrees to purchase, all of the right, title
and interest of Seller or any affiliate of Seller (which shall not include 8440 LLC or Sunset
Restaurant LLC) in and to the following:

(a) The Land as described in Schedule 1.1(a) attached hereto.

(b) The Improvements.

 

 

(c) All tangible personal property owned by Seller or any affiliate of Seller and located on
the Real Property, used solely in connection with the operation of the Real Property (including
appliances, furniture, fixtures (other than those which constitute Improvements), furnishings,
equipment, machinery, building systems, security systems, key cards (together with all devices for
coding and monogramming such key cards), vehicles, appliances, carpeting, draperies and curtains,
tools and supplies, decorations, china, glassware, linens, silver, utensils, computers, computer
equipment and manuals, computer software and programs, uniforms, works of art, materials, supplies
and other similar items of personal property) and that are located at the Hotel as of the Closing
Date, but specifically excluding the personal property listed on Schedule 1.1(c) attached
hereto (the “Excluded Personal Property”). The tangible personal property described in
this Section 1.1(c), exclusive of the Excluded Personal Property, is hereinafter referred
to collectively as the “Personal Property”).

(d) All contracts or reservations for the use of spas, guest rooms, ballroom and banquet
facilities, conference facilities, meeting rooms or other facilities of the Hotel or located within
the Improvements, for the Closing Date and the period from and after the Closing Date
(collectively, the “Bookings”), and any deposits held by Seller in connection with the
Bookings and not previously applied as of the Closing Date.

(e) All contracts, agreements and warranties to which Seller is a party that are assignable
without the consent of the counterparty thereto or additional costs or liability to Seller, or with
respect to which Seller obtains consent to an assignment hereunder from the applicable
counterparty, relating to the upkeep, repair, maintenance or operation of the Real Property or
the Personal Property, including all deposits and credits thereunder (to the extent the obligation
to apply or return such deposits or credits is assumed by Purchaser) (collectively, the
“Service Contracts”), including the contracts and agreements: (i) listed on Schedules
1.1(e)-1(a) attached hereto (which sets forth the Service Contracts assignable without the
consent of the counterparty thereto or additional costs or liability to Seller) and 1.1(e)-1(b)
attached hereto (which sets forth the Service Contracts in effect as of the Effective Date that
are not assignable without the consent of the counterparty thereto or additional costs or liability
to Seller) (but specifically excluding (A) Bookings, (B) Space Leases, (C) insurance policies, (D)
the Management Agreement, and (E) any contract or agreement listed on such Schedule
1.1(e)-1 which (1) is terminated on or before Closing pursuant to the terms of this Agreement,
(2) expires pursuant to its terms on or before the Closing Date or (3) is terminated by the
applicable counterparty thereto on or before the Closing Date); (ii) providing for the lease of
equipment or other personal property listed on Schedule 1.1(e)-2(a) (which sets forth any
such leases assignable without the consent of the counterparty thereto or additional costs or
liability to Seller) and 1.1(e)-2(b) attached hereto (which sets forth any such leases in
effect as of the Effective Date that are not assignable without the consent of the counterparty
thereto or additional costs or liability to Seller) (collectively, the “Equipment Leases”,
but specifically excluding any contract or agreement listed on such Schedule 1.1(e)-2(a) or
Schedule 1.1(e)-2(b) which (A) is terminated on or before Closing pursuant to the terms of
this Agreement, (B) expires pursuant to its terms on or before the Closing Date or (C) is
terminated by the applicable counterparty thereto on or before the Closing Date); and (iii) entered
into after the Effective Date and which Seller is permitted to enter into under the terms of this
Agreement.

 

2

 

(f) All names, marks, logos and designs, used in the operation or ownership of the Property or
any part thereof listed on Schedule 1.1(f), provided that Purchaser expressly acknowledges
and agrees that the following items are specifically excluded and shall not be transferred
hereunder: (i) all right, title or interest of any kind or nature whatsoever in and to, and
intellectual property in any way relating to, the Manager’s Materials or Manager’s Tradenames (it
being understood that certain rights with respect to certain of the foregoing items shall be
granted to Purchaser pursuant to the Management Agreement); (ii) all websites and domains used for
the Hotel, including access to the FTP files of the websites; and (iii) any information or reports
that relate solely to the period prior to the Closing (all such items not to be transferred
hereunder being collectively referred to as the “Retained IP”).

(g) To the extent the same are assignable as of the Closing Date without consent of a third
party or additional costs or liability to Seller and to the extent assumed by Purchaser, all
transferable licenses, franchises and permits owned by Seller and used in or relating to the
ownership, occupancy or operation of the Property or any part thereof as listed on Schedule
1.1(g), subject to Purchaser’s compliance with any limitations or restrictions on transfer or
assignment of any computer-related materials or software which are contained in any license or
similar agreement (collectively, the “Permits”), provided that the term Permits
specifically excludes any and all non-transferable permits and licenses held by Seller in
connection with the Property, including, without limitation, the liquor license and the permits and
approvals required for the preparation, sale and service of food and beverage (it being
acknowledged that the Existing Liquor License will be transferred pursuant to the Liquor Assets
Escrow Agreement) (collectively, such excluded Permits, the “Excluded Permits”).

(h) To the extent the same are assignable as of the Closing Date without consent of a third
party or additional costs or liability to Seller, all assignable telephone numbers, TWX numbers,
post office boxes, signage rights, utility and development rights and privileges, site plans,
surveys, environmental and other physical reports, plans and specifications pertaining to the Real
Property and the Personal Property (all of the property described in clauses (f), (g), and (h) of
this Section 1.1 that is not specifically deemed excluded being herein referred to
collectively as the “Intangibles”).

(i) All: (i) food and beverages (excluding alcoholic beverages) that are in the Hotel as of
the Closing Date; (ii) inventory held for sale by Seller to Hotel guests and others in the ordinary
course of business including all opened and unopened retail inventory in any area at the Hotel
conducting retail sales that is in the Hotel as of the Closing Date (collectively, “Retail
Inventory”); (iii) engineering, maintenance and housekeeping supplies (including soap and
cleaning materials, fuel and materials, stationery and printing items) that are in the Hotel as of
the Closing Date; and (iv) other supplies, whether used, unused or held in reserve storage for
future use in connection with the maintenance and operation of the Real Property or the Personal
Property that are in the Hotel as of the Closing Date (all of the foregoing being referred to
herein as the “Consumable Inventory” and, to the extent contained in unopened boxes,
bottles, jars or containers of any type as of the Closing Date, shall collectively be referred to,
together with unopened packages of china, glass, silver and linens (but excluding any bottles of
alcoholic beverages), as the “Unopened Inventory”).

 

3

 

(j) To the extent the same are in effect on the Closing Date, all leases or licenses for the
lease and occupancy of space at the Hotel listed and described on Schedule 1.1(j) attached
hereto (collectively, the “Space Leases”), including any deposits relating to such Space
Leases held by Seller and not applied to the tenant’s obligations as of the Closing Date. For
purposes of this Agreement, the term “Space Leases” does not include Bookings.

(k) Subject to Section 4.4.9 hereof, Seller’s interest in the funds contained in
“house banks” for the Hotel as of the Cut-Off Time, whether held in the name of Seller, the Hotel
or Manager (defined below) and owned by Seller (collectively, the “House Bank Funds”).
Purchaser expressly acknowledges and agrees that the Property to be transferred to Purchaser
pursuant to this Agreement does not include any reserve or other accounts created or maintained by
or on behalf of Seller or Manager in connection with the ownership or operation of the Hotel.

(l) Any deposits made by Seller with utility companies or governmental agencies or authorities
relating to the Real Property to the extent apportionment is made therefor pursuant to Section
4.4.

1.2 Property Defined. 

(a) The Real Property, the Personal Property, the Permits, the Bookings, the Service
Contracts, the Intangibles, the Unopened Inventory, the Retail Inventory, the Consumable Inventory,
the Space Leases and the House Bank Funds are hereinafter sometimes referred to collectively as the
“Property”. The Purchase Price is generally subject to adjustment pursuant to
Section 4.4, and specifically does not include payment for, and shall be adjusted with
respect to (among other things), the House Bank Funds, and certain of the Unopened Inventory and
the Retail Inventory, as described in Section 4.4 below.

(b) Notwithstanding anything to the contrary in Section 1.1 or Section 1.2(a)
above, the following items are expressly excluded from the Property:

(i) All cash on hand or on deposit in any operating account or other account or reserve,
except for security deposits held by Seller as landlord with respect to any Space Lease as of the
Closing Date, security deposits held by Seller with respect to any Booking as of the Closing Date,
utility and governmental agency deposits, deposits held by Seller in connection with any Service
Contract to be assumed by Purchaser and the House Bank Funds, all of which are to be transferred at
Closing subject to the terms of this Agreement.

(ii) The Excluded Personal Property.

(iii) The Retained IP.

(iv) The Excluded Permits.

(v) All accounts receivable of the Hotel and all related operations (collectively, the
“Receivables”).

 

4

 

(vi) Any tangible or intangible property (including, without limitations, fixtures, personal
property or intellectual property) owned by: (A) the supplier, vendor, licensor, lessor or other
party under any Service Contracts; (B) the tenants under any Space Leases; (C) Manager (but solely
with respect to the types of tangible and intangible property that Manager would retain upon
termination of the New Management Agreement); (D)  any employees; (E) any guests or customers of
the Hotel; or (F) any other third party.

1.3 Permitted Exceptions. The Property shall be conveyed subject only to the matters which
are, or are deemed to be, Permitted Exceptions pursuant to Article II below.

1.4 Purchase Price. Seller is to sell and Purchaser is to purchase the Property for a total
of ONE HUNDRED THIRTY SEVEN MILLION AND NO/100 DOLLARS ($137,000,000.00) (the “Purchase
Price”).

1.5 Payment of Purchase Price. 

(a) On the Closing Date, Purchaser shall deliver to Escrow Agent, by wire transfer of
immediately available federal funds to the bank account designated in the Escrow Agreement, an
amount equal to the Purchase Price, as increased or decreased by prorations and adjustments as
herein provided, less the Earnest Money previously delivered to Escrow Agent.

(b) The Purchase Price (including the Earnest Money previously delivered to Escrow Agent), as
increased or decreased by prorations and adjustments as herein provided, shall be payable in full
at Closing in cash by wire transfer of immediately available federal funds to a bank account
designated by Seller in writing to Purchaser and Escrow Agent prior to the Closing.

(c) Seller and Purchaser agree that attached hereto as Schedule 1.5(c) is an
allocation of the Purchase Price among the Real Property and various items of personal
property (i.e., the Property other than the Real Property). Each party agrees to file federal,
state and local tax returns consistent with such allocations agreed upon between the parties.

1.6 Earnest Money.

(a) Within one (1) business day following the full execution and delivery of this Agreement by
Seller and Purchaser, Purchaser shall deposit with First American Title Insurance Company (“Escrow
Agent”) having its office at 633 Third Avenue, New York, NY 10017, Attention: Andrew Jaeger or
Anthony Ruggeri, the sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) (together with accrued
interest thereon, the “Earnest Money”) by wire transfer of immediately available federal
funds to the bank account designated in the Escrow Agreement. The full amount of the Earnest Money
is deemed earned by Seller when the Additional Earnest Money is delivered pursuant hereto by
Purchaser and is non-refundable to Purchaser except in the event that this Agreement is timely
terminated as a result of Purchaser’s election to terminate in accordance with and pursuant to
Section 2.3(b), Section 4.8, Section 6.2 or Section 8.2 below, in
which case the Escrow Agent shall be obligated to refund the full amount of the Earnest Money to
Purchaser pursuant to the terms of the Escrow Agreement.

 

5

 

(b) Escrow Agent shall hold the Earnest Money in a segregated, interest-bearing account in
accordance with the terms and conditions of the Deposit Escrow Instructions attached hereto as
Exhibit G (the “Escrow Agreement”). All interest accruing on such sums shall become
a part of the Earnest Money and shall be distributed or applied as Earnest Money in accordance with
the terms of the Escrow Agreement.

(c) Time is of the essence for the delivery of Earnest Money under this Agreement and the
failure of Purchaser to timely deliver any portion of the same shall be a material default, and
shall entitle Seller, at Seller’s sole option, to terminate this Agreement immediately and to
pursue all remedies available to Seller under this Agreement.

1.7
Management Agreement. Purchaser acknowledges that the Hotel is being operated
and managed by Morgans Hotel Group Management LLC, a Delaware limited liability company
(“Manager”) (formerly known as Ian Schrager Hotel Management LLC), pursuant to that certain
Property Management Agreement dated as of June 30, 1999, by and between Seller and Manager (the
“Management Agreement”). At Closing, the Management Agreement will be terminated effective
as of the Closing Date at Seller’s sole cost and expense and Purchaser and Manager will enter into
a hotel management agreement in the form agreed to by the parties prior to the Effective Date (the
“New Management Agreement”).

ARTICLE II

TITLE AND SURVEY

2.1 Title Report. Seller has obtained and delivered to Purchaser, a title report dated
March 14, 2011 (Title No. NCS — 48012 — NY) (the “Title Report”) covering the Real
Property from First American Title Insurance Company (the “Title Company”) and, has caused
the Title Company to deliver to Purchaser a copy of each document referenced in the Title Report as
an exception to title to the Real Property. Purchaser shall deliver to Seller, within five (5)
days after receipt by Purchaser, a copy of any updates (each a “Title Update”) to the Title
Report issued by the Title Company, provided that if Purchaser shall receive a Title Update less
than five (5) days prior to the then scheduled Closing Date, then Purchaser shall deliver same to
Seller prior to the Closing.

2.2 Survey. Purchaser has obtained a survey of the Real Property prepared by Scott E.
Ohana. P.L.S. with a visual examination update April 15, 2011 (Reference No. J.N. 113-11) (as so
updated, the “Survey”).

2.3 Approval of Title. 

(a) Purchaser has approved all title exceptions and survey matters set forth on Schedule
2.4(a) attached hereto.

 

6

 

(b) Purchaser shall have five (5) business days after receipt of a Title Update, if any, to
notify Seller, in writing, of such objections as Purchaser may have to anything contained in such
Title Update other than Permitted Exceptions (and if Purchaser receives a Title Update less than
(5) days prior to a scheduled Closing Date, then Purchaser shall deliver such written notice to
Seller prior to the Closing). In the event Purchaser shall notify Seller, in writing, of objections
to title or to matters shown on a Title Update, Seller shall have the right, but not the
obligation, to cure such objections. Within five (5) business days after receipt of Purchaser’s
notice of objections, Seller shall notify Purchaser in writing whether Seller elects to attempt to
cure any or all of such objections. If Seller elects to attempt to cure any or all of such
objections, Seller shall have the right to attempt to remove, satisfy or cure the same and for this
purpose Seller shall, at Seller’s election, be entitled to reasonable adjournments of the Closing
if additional time is required, but in no event shall the adjournments, in the aggregate, exceed
sixty (60) days after the Outside Closing Date. If Seller elects not to attempt to cure any
objections specified in Purchaser’s notice, or if Seller fails (despite using reasonable commercial
efforts) to effect a cure of those objections which it elected to attempt to cure prior to the
Closing (or any date to which the Closing has been adjourned) and so notifies Purchaser in writing,
or if Seller fails to respond to Purchaser’s notice within said five (5) business day period,
Purchaser shall have the following options: (i) to accept a conveyance of the Property subject to
the Permitted Exceptions and any matter objected to by Purchaser which Seller is unwilling or
unable to cure (each of which shall also be deemed to be Permitted Exceptions), without reduction
of the Purchase Price; or (ii) to terminate this Agreement by sending written notice thereof to
Seller, and upon delivery of such notice of termination, this Agreement shall terminate and the
Earnest Money shall be returned to Purchaser, and thereafter neither party hereto shall have any
further rights, obligations or liabilities hereunder except to the extent that any right,
obligation or liability set forth herein expressly survives termination of this Agreement. If: (A)
Seller notifies Purchaser that Seller does not intend to attempt to cure any title objection; (B)
Seller fails to respond to Purchaser’s notice within said five (5) business day period; or (C) if,
having commenced attempts to cure any objection, Seller later notifies Purchaser in writing that
Seller will not effect a cure thereof, then, in any such event, Purchaser shall, within five (5)
days after such notice has been given (or within five (5) days after Seller’s five (5) business day
period to respond to Purchaser’s objection notice has expired), notify Seller in writing whether
Purchaser shall elect to accept the conveyance under clause (i) of the immediately preceding
sentence or to terminate this Agreement under clause (ii) of the immediately preceding sentence.
Purchaser’s failure to notify Seller of termination of this Agreement within such five (5) business
day period shall be deemed to be an irrevocable election under clause (i) above to accept
conveyance of the Property without reduction of the Purchase Price.

(c) Unless expressly agreed to by Seller, Seller have no responsibility or obligation of any
kind or nature whatsoever (express or implied) to cure any title matter objected to by Purchaser.
Notwithstanding the foregoing sentence, if any exceptions on the Title Report or any of the
objections set forth in a written notice from Purchaser consist of delinquent taxes, mortgages,
deeds of trust, security agreements, construction or mechanics’ liens, tax liens or other liens or
charges in a fixed sum (or capable of computation as a fixed sum) (collectively, “Monetary
Encumbrances”), then Seller shall be obligated to pay and discharge (or cause the Title Company
to insure over) such Monetary Encumbrances, provided that (1) Seller’s obligation to incur costs
and expenses in connection with paying and/or discharging all such Monetary Encumbrances is limited
to Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) in the aggregate and (2) the
foregoing aggregate limitation of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) shall
not apply to any liens securing loans made to Seller and any other Monetary Encumbrances that were
caused, assumed, consented to or created by Seller.

 

7

 

2.4 Conveyance of Title. Notwithstanding anything contained herein to the contrary, at
Closing, Seller shall convey and transfer to Purchaser its interest in the Real Property subject to
the following exceptions to title (the “Permitted Exceptions”):

(a) Those matters specifically set forth on Schedule 2.4(a) attached hereto and made a
part hereof.

(b) Any state of facts shown on the Survey.

(c) The lien of all ad valorem real estate taxes and assessments not yet due and payable as of
the Closing Date, subject to adjustment as herein provided.

(d) All laws, ordinances, rules and regulations of the United States, the State of California,
any city or other subdivision or any agency, department, commission, bureau or instrumentality of
any of the foregoing having jurisdiction over the Real Property or the Hotel, as the same may now
exist or may be hereafter modified, supplemented or promulgated (collectively, the “Legal
Requirements”).

(e) All presently existing and future liens of real estate taxes or assessments and water
rates, water meter charges, water frontage charges and sewer taxes, rents and charges, if any,
subject to apportionment as provided in this Agreement.

(f) Any matters over which the Title Company is willing to insure to the reasonable
satisfaction of Purchaser at no additional cost (or, if there is additional cost, if Seller will
pay the cost).

(g) Any matters against which the Title Company is willing to provide affirmative insurance to
the reasonable satisfaction of Purchaser at no additional cost (or, if there is additional cost, if
Seller will pay the cost).

(h) Any other matter affecting title to the Real Property that was not objected to by
Purchaser or was waived or deemed waived by Purchaser in accordance with Section 2.3
hereof.

(i) All violations of laws, rules, regulations, statutes, ordinances, orders or requirements
of law and/or conditions giving rise to the same;

(j) The rights of Hotel guests which occupy the Hotel or have any Booking or reservation for
rooms, food and beverages, meetings and other customary Hotel uses relating to periods subsequent
to the Closing Date; and

(k) The rights of the tenants under the Space Leases and any person claiming by, through or
under such tenants.

2.5 Title Policy. At Closing, Seller and Purchaser shall direct the Title Company to issue
an ALTA Owner’s Policy 2006 (“Title Policy”) insuring Purchaser’s interest in and to the
Real Property as of the Closing Date, subject to the Permitted Exceptions.

 

8

 

ARTICLE III

INSPECTION

3.1 Right of Inspection.

(a) Purchaser shall, subject to the rights of guests of the Hotel and the tenants under the
Space Leases, have the right to make physical inspections of the Real Property and to examine at
such place or places at the Hotel or elsewhere as the same may be located, any operating files
maintained by or for the benefit of Seller in connection with the leasing, operation, current
maintenance and/or management of the Property (“Property Information”), including, without
limitation, the Space Leases, the Service Contracts, insurance policies, bills, invoices, receipts
and other general records relating to the income and expenses of the Hotel, correspondence,
surveys, plans and specifications, warranties for services and materials provided to the Hotel,
environmental audits and similar materials, materials related to Hotel Employees (as defined
below), to the extent Seller is not prohibited by applicable contracts or law from disclosing such
materials, and any other documents relating to the Property in Seller’s or Manager’s possession or
control, but excluding materials not directly related to the maintenance and/or management of the
Property such as, without limitation, Seller’s financial projections, forecasts, budgets,
appraisals, company tax records, internal memoranda, correspondence and reports and similar
proprietary or confidential information; provided, however that it is anticipated and Purchaser and
Seller agree that Manager will provide Purchaser with Manager’s forecasts and budgets with respect
to the future operation of the Property.

(i) Subject to Section 11.2, Purchaser shall keep all Property Information strictly
confidential, provided that Purchaser may deliver copies of Property Information to its attorneys,
accountants and other advisors in connection with the acquisition of the Property and to current
and prospective lenders and partners provided that such parties agree to maintain the
confidentiality of such Property Information and that Purchaser is liable to Seller for any breach
by any such party of the confidentiality of such Property Information.

(b) Purchaser understands and agrees that any on-site inspections of the Property shall only
be conducted during business hours with not less than two (2) business days prior notice to Seller.
Seller may have its respective representatives attend any such inspections. Such physical
inspection shall not disturb Hotel guests or tenants under the Space Leases nor unreasonably
interfere with the use of the Property by Seller or Manager. Such physical inspection shall not be
invasive in any respect, and in any event shall be conducted in accordance with standards
customarily employed in the industry and in compliance with all governmental laws, rules and
regulations. Following each entry by Purchaser with respect to inspections and/or tests on the Real
Property, Purchaser shall repair any damage to the Property caused by Purchaser or any of its
agents, consultants or representatives in connection with Purchaser’s diligence activities at the
Property, and restore the Property to the original condition as existed prior to any such
inspections and/or tests, at Purchaser’s sole cost and expense.

(c) Seller shall reasonably cooperate with Purchaser in its due diligence but shall not be
obligated to incur any liability in connection therewith. Purchaser shall not disrupt Seller’s,
Manager’s or any tenant’s or guest’s activities on the Real Property and shall not contact
Manager’s on-site managers or on-site employees, or any other employees working at the Hotel, any
guests of the Property, any party to a Service Contract, any tenants under the Space Leases, any
lender providing financing secured by the Real Property or any governmental authority without in
each instance obtaining Seller’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed.

 

9

 

(d) Purchaser shall indemnify, defend, protect and hold Seller harmless from and against any
claim for liabilities, losses, costs, expenses (including reasonable attorneys’ fees actually
incurred), damages or injuries arising out of or resulting from or in connection with the
inspection of the Property by Purchaser or its agents, employees, representatives, consultants or
contractors and notwithstanding anything to the contrary in this Agreement, such obligation to
indemnify, defend, protect and hold harmless Seller shall survive Closing or any termination of
this Agreement. Purchaser agrees (i) that prior to entering the Property to conduct any
inspection, Purchaser shall obtain and maintain, and shall cause each of its consultants,
contractors and agents to maintain (and shall deliver evidence thereof in the form of a policy
certificate satisfactory to Seller thereof), at no cost or expense to Seller, commercial general
liability insurance from an insurer reasonably acceptable to Seller in the amount of Two Million
Dollars ($2,000,000) with combined single limit for personal injury or property damage per
occurrence, such policies to name Seller and Manager as additional insured parties, which insurance
shall provide coverage against any claim for personal injury or property damage caused by Purchaser
or its agents, employees, representatives or consultants in connection with any such tests and
investigations, and (ii) to keep the Property free from all liens and encumbrances on account of
any inspections and/or tests made by or for the benefit of Purchaser. Purchaser’s insurance may
not be canceled or amended prior to Closing except upon not less than thirty (30) days’ prior
written notice to Seller. Purchaser’s obligations under this Section 3.1 shall survive a
termination of this Agreement.

3.2 Seller Due Diligence Materials. PURCHASER ACKNOWLEDGES THAT INFORMATION RELATED TO THE
PROPERTY CONTAINED IN THE SECURE WEBSITE (THE “E-ROOM”) TO WHICH PURCHASER HAS PREVIOUSLY
BEEN GRANTED ACCESS HAS BEEN MADE AVAILABLE TO PURCHASER IN THE E-ROOM BY SELLER. BY EXECUTING
THIS AGREEMENT, PURCHASER ACKNOWLEDGES ITS RECEIPT THEREOF OR THE AVAILABILITY THEREOF AND THAT (1)
PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL, ENGINEERING, SOILS AND OTHER REPORTS REGARDING
THE CONDITION OF THE PROPERTY (COLLECTIVELY, THE “REPORTS”) LISTED ON SCHEDULE 3.2 ATTACHED HERETO,
AND (2) ANY REPORTS OR OTHER DOCUMENTS DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR
CONSULTANTS TO PURCHASER ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND
WITHOUT ANY REPRESENTATION OR WARRANTY OF SELLER AS TO THEIR ACCURACY OR COMPLETENESS OF FACTS OR
OPINIONS SET FORTH THEREIN EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THAT ANY RELIANCE BY
PURCHASER ON SUCH REPORTS OR OTHER DOCUMENTS IN CONNECTION WITH THE PURCHASE OF THE PROPERTY IS
UNDERTAKEN AT PURCHASER’S SOLE RISK. PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR
OBLIGATION WHATSOEVER FOR ANY UNINTENTIONAL INACCURACY IN OR OMISSION FROM THE OFFERING MATERIALS

 

10

 

PREPARED IN CONNECTION WITH THE SALE OF THE PROPERTY OR ANY REPORTS OR OTHER DOCUMENTS MADE
AVAILABLE TO PURCHASER OR ITS REPRESENTATIVES SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES
SET FORTH IN THIS AGREEMENT. PURCHASER HAS CONDUCTED ITS OWN INVESTIGATION OF THE CONDITION OF THE
PROPERTY TO THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE. For
purposes of this Agreement, the term “Seller Due Diligence Materials” shall mean the Reports, the
Property Information and all other documents and materials provided or otherwise made available by
Seller to Purchaser in the E-Room or pursuant to Section 3.1 and the other provisions of
this Agreement or otherwise, together with any copies or reproductions of such documents or
materials, or any summaries, abstracts, compilations, or other analyses made by Purchaser based on
the information in such documents or materials.

ARTICLE IV

CLOSING

4.1 Time and Place; Pre-Closing. 

(a) Subject to the provisions of Sections 4.6 and 4.7 below, the consummation
of the transaction contemplated hereby (“Closing”), as evidenced by the payment and release
of the Purchase Price to Seller and the release by Seller of the deed for recording, shall occur on
or before 4:00 p.m. (New York time) on May 3, 2011, as such date may be adjourned from time to time
in accordance with this Agreement (“Outside Closing Date”, with the actual date of Closing
being referred to herein as the “Closing Date”). The Closing shall occur through an escrow
administered by Escrow Agent and the Purchase Price and all documents (unless otherwise mutually
agreed) shall be deposited with Escrow Agent as escrowee. At Closing, Seller and Purchaser shall
perform the obligations set forth in, respectively, Section 4.2 and Section 4.3,
the performance of which obligations shall be concurrent conditions.

(b) Notwithstanding anything herein to the contrary, the parties shall “pre-close” the sale of
the Property on the last business day immediately prior to the Closing Date (the “Pre-Closing
Date”). The term “pre-close” shall mean that each of the parties shall deliver to Escrow Agent
no later than 4:00 p.m. (New York time) on the Pre-Closing Date all of the documents and other
items (other than closing proceeds and other funds) required to be delivered by such party for
Closing, including all of the closing documents required pursuant to Sections 4.2 and
4.3 hereof. With respect to the closing adjustments to be made between the parties pursuant
to Section 4.4 hereof, the adjustments shall continue to be made effective as of the
Cut-Off Time, but on the closing statement executed by the parties on the Pre-Closing Date, the
parties shall in good faith estimate those adjustments which are not capable of being finalized
prior to the Cut-Off Time, and the parties shall reconcile said estimated adjustments pursuant to
Section 4.4.14 hereof.

 

11

 

4.2 Seller’s Closing Obligations and Deliveries. At Closing, subject to Section 4.1
above, Seller shall through Escrow Agent make the following deliveries and take the following
actions:

(a) Execute and deliver to Purchaser one (1) original counterpart of a grant deed
(“Deed”), in the form attached hereto as Exhibit A and made part hereof, conveying
the Real Property subject only to the Permitted Exceptions.

(b) Execute and deliver to Purchaser two (2) original counterparts of a bill of sale in the
form attached hereto as Exhibit B and made a part hereof conveying all of Seller’s right
title and interest in and to the Personal Property, the Unopened Inventory, the Retail Inventory,
the Consumable Inventory without warranty of use and without warranty, expressed or implied, as to
merchantability and fitness for any purpose.

(c) Execute and deliver to Purchaser two (2) original counterparts of an assignment and
assumption of Seller’s interest in the Service Contracts (including the Equipment Leases), the
Bookings the Permits and the other Intangibles (in each case to the extent assignable)
(“Assignment of Contracts”) in the form attached hereto as Exhibit C and made a
part hereof.

(d) Execute and deliver to Purchaser two (2) original counterparts of an assignment and
assumption of Seller’s interest in the Space Leases (“Assignment of Space Leases”) in the
form attached hereto as Exhibit D and made a part hereof.

(e) Deliver to Purchaser a certificate, dated as of the Closing Date and executed on behalf of
Seller by a duly authorized officer thereof, stating that, to the best knowledge of such duly
authorized officer, the representations and warranties of Seller contained in this Agreement are
true and correct in all material respects as of the Closing Date (with appropriate modifications of
those representations and warranties made in Section 5.1 hereof to reflect any changes
therein including without limitation any changes resulting from actions under Section 5.3
hereof) or identifying any representation or warranty which is not, or no longer is, true and
correct. Seller shall not be liable to Purchaser for, or be deemed to be in default hereunder by
reason of, any breach of representation or warranty which results from any change that (i) occurs
between the Effective Date and the Closing Date and (ii) is permitted under the terms of this
Agreement or is beyond the reasonable control of Seller; provided, however, that if any of the
foregoing changes are not permitted under the terms of this Agreement but are materially adverse to
Purchaser, then any such changes constitute the non-fulfillment of the condition set forth in
Section 4.6(a) and Purchaser may elect to terminate this Agreement pursuant to Section
4.8.If, despite changes or other matters described in such certificate, the Closing occurs,
Seller’s representations and warranties set forth in this Agreement shall be deemed to have been
modified by all statements made in such certificate.

(f) Deliver to Purchaser and the Title Company such evidence as the Title Company may
reasonably require as to the authority of the person or persons executing documents on behalf of
Seller.

(g) Deliver to Purchaser an affidavit duly executed by Seller stating that Seller is not a
“foreign person” as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and
the 1984 Tax Reform Act, in the form attached hereto as Exhibit E.

 

12

 

(h) If not already delivered to Purchaser, deliver to Purchaser, originals, or, if
unavailable, copies of the Space Leases, the Service Contracts and the Permits, if any, in the
possession or control of Seller or Seller’s agents, together with such leasing and property files
and records which are (A) in the possession or control of Seller or Seller’s agents and (B)
material in connection with the continued operation, leasing and maintenance of the Property and
any keys to security deposit boxes. For a period of four (4) years after Closing in case of
Seller’s need in response to any legal requirement, a tax audit, tax return preparation or
litigation threatened or brought against Seller, Purchaser shall maintain the books and records for
the Property with respect to the period of Seller’s ownership (to the extent that such records were
provided to Purchaser and Seller did not retain copies thereof), at Purchaser’s expense, and allow
Seller and its agents or representatives reasonable access, upon reasonable advance notice (which
notice shall identify the nature of the information sought by Seller), at all reasonable times to
examine and make copies of any and all books and records at Seller’s cost and expense, which right
shall survive the Closing. The location of such items at the Hotel on the Closing Date shall
constitute delivery to Purchaser.

(i) Deliver to Escrow Agent an executed counterpart closing statement consistent with this
Agreement and in a customary form.

(j) Deliver a copy of the termination agreement executed by Seller and Manager, which has the
effect of terminating the Management Agreement effective as of the Closing Date.

(k) Deliver to Title Company a title affidavit generally in the form attached hereto as
Exhibit F (the “Title Affidavit”).

(l) Deliver to Purchaser the Intangibles in Seller’s possession or control. The location of
such items at the Hotel on the Closing Date shall constitute delivery to Purchaser.

(m) Deliver to Purchaser two (2) original counterpart copies of the New Management Agreement
executed by the Manager.

(n) Deliver to Purchaser a certificate or registration of title for any owned vehicle or other
Personal Property included in the Property which requires such certification or registration, duly
executed, conveying such vehicle or such other Personal Property to Purchaser.

(o) Deliver any real estate transfer tax declaration (including, without limitation, a
Preliminary Change of Ownership Report) and all other documents required under Applicable Law in
connection with the conveyance of the Real Property.

(p) Deliver to Purchaser (2) original executed counterpart copies of a Post-Closing F&B
Operations Agreement in the form agreed to by the parties prior to the Effective Date.

(q) Deliver to Escrow Agent two (2) original executed counterpart copies of an agreement
regarding post-closing capital projects in the form agreed to by the parties prior to the Effective
Date (the “Capital Repairs Escrow Agreement”).

 

13

 

(r) Deliver to Purchaser two (2) original executed counterpart copies of the Liquor Assets
Escrow Agreement executed by Liquor Seller.

(s) Deliver such additional documents as shall be reasonably required to consummate the
transaction expressly contemplated by this Agreement.

4.3 Purchaser’s Closing Obligations and Deliveries. At Closing, Purchaser shall through
Escrow Agent make the following deliveries and take the following actions:

(a) Pay the Purchase Price, as increased or decreased by prorations and adjustments as herein
provided, to Seller in immediately available wire transferred funds pursuant to Section 1.5
above, it being agreed that at Closing the Earnest Money shall be applied towards payment of the
Purchase Price.

(b) Deliver a written direction to Escrow Agent to disburse the Earnest Money to Seller in
accordance with the Escrow Agreement.

(c) Deliver the same number of original executed counterparts of the instruments described in
clauses (b), (c), (d), (i), (p), and (q) of Section 4.2 above to Seller or Escrow Agent, as
applicable.

(d) Deliver to Seller a certificate, dated as of the Closing Date and executed on behalf of
Purchaser by a duly authorized officer thereof, stating that, to the best knowledge of such duly
authorized officer, the representations and warranties of Purchaser contained in this Agreement are
true and correct in all material respects as of the Closing Date.

(e) Deliver to Seller and Title Company such evidence as Title Company may reasonably require
as to the authority of the person or persons executing documents on behalf of Purchaser.

(f) Deliver to Seller, on behalf of Manager, two (2) original executed counterpart copies of
the New Management Agreement.

(g) Deliver to Seller two (2) original executed counterpart copies of the Liquor Assets Escrow
Agreement executed by Wolverines Lessee.

(h) Deliver such additional documents as shall be reasonably required to consummate the
transaction contemplated by this Agreement.

4.4 Prorations, Credits and Other Adjustments. At Closing, Purchaser and Seller shall
prorate all items of income and expense which are customarily prorated between a purchaser and
seller for hotel properties comparable to the Hotel, including, without limitation, the prorations
and other adjustments provided below, and the net amount consequently owing to Seller or Purchaser
shall be added to or subtracted from the proceeds of the Purchase Price payable to Seller at
Closing. Beginning as close to the anticipated Closing Date as practicable, Seller shall, in
consultation with Purchaser and with Purchaser’s reasonable cooperation, cause to be prepared a
prorations and credit statement (the “Preliminary Statement”) which shall reflect all of
the prorations, credits and other adjustments to the Purchase Price at Closing required under this
Section 4.4 or under any other provision of this Agreement. As soon as Purchaser and Seller
have agreed upon the Preliminary Statement, they shall jointly deliver a mutually signed copy
thereof to Escrow Agent. To the extent Purchaser and Seller are unable to agree by Closing on any
item on the Preliminary Statement, Seller’s estimation of such item shall be used and such item
shall be finally resolved on the Final Statement (defined below) pursuant to Section 4.4.14
below.

 

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4.4.1 Proration of Taxes.

(a) All real estate ad valorem taxes, general assessments and special assessments and all
personal property ad valorem taxes assessed against the Hotel (collectively, “Taxes”) with
respect to the tax year in which Closing occurs shall be prorated between Purchaser and Seller as
of the Closing Date. If the amount of any such Taxes is not ascertainable on the Closing Date, the
proration for such Taxes shall be based on the tax rates set forth in the most recent available
bill and the latest assessed valuation of the Property; provided, however, that after the Closing,
Seller and Purchaser shall re-prorate the Taxes in accordance with Section 4.4.14 below and
pay any deficiency in the original proration to the other party promptly upon receipt of the actual
bill for the relevant taxable period. Purchaser shall give Seller written notice of the actual
amounts of any such bills within three (3) days after receipt thereof. If, at the time of the
Closing, the Hotel is subject to a special assessment or assessments which are payable by Seller
and which are or may become payable in installments, then, for the purposes of this Agreement, all
of the installments of any such special assessment or assessments which are not delinquent on the
Closing Date and which may be paid thereafter shall be equitably apportioned between Seller and
Purchaser based upon their respective periods of ownership in relation to the benefits for which
such assessments were levied.

(b) Seller retains the right to commence, continue and settle any proceeding to contest any
Taxes for any taxable period which terminates prior to the date of the Closing, and shall be
entitled to any refunds or abatements of Taxes awarded in such proceedings.

(c) Seller shall have the right to commence, continue and settle any proceeding to contest any
Taxes for any taxable period which includes the Closing Date. Notwithstanding the foregoing, if
Purchaser desires to contest any Taxes for such taxable period and Seller has not commenced any
proceeding to contest any such Taxes for such taxable period, Purchaser shall provide written
notice requesting that Seller contest such Taxes. If Seller desires to contest such Taxes, Seller
shall provide written notice to Purchaser within fifteen (15) days after receipt of Purchaser’s
request confirming that Seller will contest such Taxes, in which case Seller shall proceed to
contest such Taxes, and Purchaser shall not have the right to contest such Taxes. If Seller fails
to provide such written notice confirming that Seller will contest such Taxes within such fifteen
(15) day period, Purchaser shall have the right to contest such Taxes. Any refunds or abatements
awarded in such proceedings shall be used first to reimburse the party contesting such Taxes for
the reasonable costs and expenses incurred by such party in contesting such Taxes, and the
remainder of such refunds or abatements shall be prorated between Seller and Purchaser as of the
Cut-Off Time, and the party receiving such refunds or abatements promptly shall pay such prorated
amount due to the other party.

 

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(d) Purchaser shall have the right to commence, continue and settle any proceedings to contest
Taxes for any taxable period which commences after the Closing Date, and shall be entitled to any
refunds or abatements of Taxes awarded in such proceedings.

(e) Seller and Purchaser shall use commercially reasonable efforts to cooperate with the party
contesting the Taxes (at no cost or expense to the party not contesting the Taxes other than any de
minimis cost or expense or any cost or expense which the requesting party agrees in writing to
reimburse) and to execute and deliver any documents and instruments reasonably requested by the
party contesting the Taxes in furtherance of the contest of such Taxes.

4.4.2 General Proration of Expenses.

(a) The following items of expense with respect to any portion or aspect of the Hotel shall be
prorated between Seller and Purchaser as of the Closing Date:

(i) All charges and expenses under any Service Contracts.

(ii) All utility charges (but excluding any utility deposits). To the extent reasonably
practicable, though, in lieu of prorating the charges for any metered utility service, Purchaser
and Seller shall endeavor to have the utility read the meter as close as practicable to the Closing
Date, render a final bill to Seller based on such reading and Purchaser shall thereafter be
responsible for all subsequent bills relating to such service.

(iii) Prepaid expenses of the Hotel, excluding insurance but including without limitation, (A)
amounts incurred to pay for natural gas (if any) held in storage pending use at the Hotel and (B)
the expense of all transferable licenses and permits obtained in connection with the operation of
the Hotel.

(iv) All other Hotel operating expenses, other than employment expenses (which are covered by
Section 4.4.3 below).

4.4.3 Employment Expenses. All salaries, bonuses, other compensation and employment
benefits for unused vacation, holiday, sick leave and personal days if, and to the extent, that
amounts are accrued and vested and unused prior to the Closing Date, and contributions for
retirement and welfare benefits, together with F.I.C.A., unemployment and other payroll taxes and
benefits due with respect to the employment of the Employees shall be prorated between Seller and
Purchaser as of the Closing Date, with accrued vacation and other benefits due to Employees in
accordance with past practices. Purchaser shall pay the salaries and related benefits that are
payable to any Employees for work performed at the Hotel on the Closing Date, whether prior to or
following the time of Closing, regardless of whether such persons are employees of Seller, Manager
or Purchaser.

 

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4.4.4 Hotel Revenues.

(a) At Closing, Seller shall receive one-half (1/2) of all revenues from the Hotel guest rooms
and facilities occupied on the evening immediately preceding the Closing Date, including without
limitation any sales taxes, room taxes, occupancy taxes and other taxes charged to guests in such
rooms, all parking charges, sales from mini-bars, in-room food and beverage, telephone, facsimile
and data communications, in-room movie, laundry, and other service charges allocable to such rooms
with respect to the evening immediately preceding the Closing Date. All revenues from restaurants,
bars, lounges, vending machines and other service operations conducted at the Property shall be
allocated based on whether the same accrued before or after the Cut-Off Time, and Seller shall
cause the Manager to separately record sales occurring before and after the Cut-Off Time at the
Property. Notwithstanding the foregoing, all revenues from any bars and lounges at the Property
shall be prorated based on the actual closing time for such bar or lounge. For example, if such
bar or lounge closes at 2 a.m. on the Closing Date, Seller shall retain the revenues from such
services and operations even though such revenues were generated two (2) hours after the Cut-Off
Time.

(b) Revenues from conferences, receptions, meetings, and other functions occurring in any
conference, banquet or meeting rooms in the Hotel, or in any adjacent facilities owned or operated
by Seller, including usage charges and related taxes, food and beverage sales, valet parking
charges, equipment rentals, and telecommunications charges, shall be allocated between Seller and
Purchaser, based on when the function therein commenced, with: (i) one-day functions commencing
prior to the Cut-Off Time being allocable to Seller; (ii) functions commencing after the Cut-Off
Time being allocable to Purchaser; and (iii) multi-day functions being allocated on a pro rata
basis between Seller and Purchaser according to when the event commences and is scheduled to end in
relation to the Cut-Off Time.

(c) Any operating revenues not otherwise provided for in this Section 4.4, shall be
prorated between Purchaser and Seller as of Closing.

4.4.5 Rent.

(a) Rent and other payments payable by tenants, licensees, concessionaires, and other persons
using or occupying the Real Property or any part thereof under a Space Lease or otherwise, if any,
for or in connection with such use or occupancy, including, without limitation, fixed monthly
rentals, additional rentals, percentage rentals, escalation rentals, retroactive rentals, operating
cost pass-throughs, common area maintenance charges, HVAC charges, payments of taxes and insurance
expenses, promotional/marketing charges, construction receivables and other sums and charges
payable by the tenants under the Space Leases (collectively, “Rent”) shall be prorated as
of the Closing Date such that Seller will be entitled to Rent attributable to periods prior to the
Closing Date and Purchaser will be entitled to Rent attributable to periods from and after the
Closing Date, all as more particularly set forth below:

(b) All Rent, other than Percentage Rent, owed under any Space Lease collected during the
calendar month for the month in which the Closing occurs, but prior to the Closing Date, shall be
applied in the following order of priority (after deduction of actual out-of-pocket costs of
collection paid by Seller to third parties): (i) first, to Rent due from such tenant for the month
in which the Closing occurs prorated between Seller and Purchaser as of the Closing Date, and (ii)
second, to the extent the applicable tenant shall be in arrears for any Rent due for periods of
time prior to the calendar month during which the Closing occurs (“Rent Arrears”), then
Rent collected from such tenant during the calendar month in which the Closing occurs shall be
applied to Rent Arrears due from such tenant for the months preceding the month during which the
Closing occurs.

 

17

 

(c) All Rent, other than Percentage Rent, owed under any Space Lease collected after the
Closing Date shall be applied in the following order of priority (after deduction of actual
out-of-pocket costs of collection paid by Purchaser to third parties): (i) first, to Rent then due
from the applicable tenant to Purchaser; (ii) second, to Rent due from the applicable tenant for
the calendar month in which the Closing occurs, prorated between Seller and Purchaser as of the
Closing Date; and (iii) third, thereafter to the balance of Rent Arrears due then to Seller from
such tenant. Any sums owed to Seller or Purchaser, as the case may be, pursuant to the foregoing
shall be paid to the party entitled hereunder to receive such sum within fifteen (15) days
following receipt thereof by the other party. Purchaser shall deliver to Seller by the twentieth
(20th) day of the first full calendar month after the Closing and every month thereafter through
the twelfth (12th) month following the Closing, a statement of the collection status of each Rent
Arrear until the collection of all Rent Arrears. For one (1) year following the Closing, Seller
shall have the right, upon reasonable notice, but no more often than once in such twelve (12) month
period, to audit Purchaser’s books and records to verify the amount of Rent Arrears which has
actually been collected by Purchaser. Purchaser shall pursue all Rent Arrears in the ordinary
course of business and shall have the right to negotiate settlements with tenants who have Rent
Arrears as it may determine in good faith; provided that, at its sole cost and expense (A) Seller
shall have the unrestricted right to pursue collection from any tenant not in possession of its
space as of the Closing Date in Seller’s sole discretion including, without limitation, initiating
and prosecuting a lawsuit against the applicable tenant and (B) in the event that after Closing
Purchaser evicts or otherwise terminates the possession of any tenant with Rent Arrears, Seller
shall have the unrestricted right to pursue collection from such tenant in Seller’s sole discretion
including, without limitation, initiating and prosecuting a lawsuit against the applicable tenant.

(d) Percentage rent or overage rent (referred to herein as “Percentage Rent”) under
each Lease shall be prorated between Purchaser and Seller for the Lease Year (as defined below) in
which the Closing occurs in proportion to the relative periods of ownership of Seller and Purchaser
during such Lease Year, with an adjustment to be made post-Closing upon completion of each
applicable Lease Year to account for any Percentage Rent paid after Closing Date occurs. As used
herein, the term “Lease Year” means the twelve (12) month period (or, as to tenants for
which the Closing occurs during a partial Lease Year, such applicable shorter period) as to which
annual Percentage Rent is owed under each Lease.

4.4.6 Hotel Payables. At Closing, Purchaser shall receive a proration credit equal to
the aggregate amount of all outstanding accounts payable for the Hotel with respect to purchases of
goods and services delivered prior to the Closing Date (“Hotel Payables”) as set forth in a
schedule attached to the Preliminary Statement. Purchaser shall: (a) assume the obligation to
satisfy all Hotel Payables for which Purchaser received such credit at Closing; (b) indemnify,
defend and hold Seller harmless against any claim for such Hotel Payables; and (c) assume all
obligations of Seller to pay for any (i) consumables or other items ordered by or for the benefit
of Seller in the ordinary course of business but which are not yet received as of the Closing Date
and (ii) items or services listed on a purchase order log prepared by Manager which are not yet
received as of the Closing Date, which list shall be updated by Manager immediately prior to
Closing. There shall not be any adjustment to the Purchase Price in connection with Purchaser’s
assumption of the liabilities described in clauses (i) and (ii) above.

 

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4.4.7 Credit for Certain Inventories. At Closing, Seller shall receive a credit (based
upon the original net invoice price paid) for (x) all unopened Liquor Inventory owned by 8440 LLC
as of the Closing (which Liquor Inventory is not being purchased by Purchaser hereunder but shall
be transferred in accordance with the Liquor Assets Escrow Agreement, subject to the post-Closing
food and beverage operations agreement referred to in Section 4.2(p)) and (y) all unopened
Retail Inventories at the Hotel as of the Closing Date, and Purchaser shall purchase all such
unopened Retail Inventories. The amount of such credit shall be based on the actual costs
(including without limitation sales tax) paid by Seller (or 8440, as applicable) for the actual
inventory of such unopened Liquor Inventory and Retail Inventories by Seller’s and Purchaser’s
representatives.

4.4.8 Credit for Reservation Deposits. Purchaser shall receive a proration credit
equal to the aggregate amount of advance deposits that shall have been received by Seller prior to
the Cut-Off Time on account of reservations for use or occupancy of the Property after the Cut-Off
Time.

4.4.9 Credit for Cash Banks. Seller shall receive a credit at Closing in an amount
equal to all House Bank Funds.

4.4.10 Space Lease Deposits. Purchaser shall receive a credit at Closing in an amount
equal to the aggregate amount of security and other deposits of tenants under the Space Leases
which have not been applied to the tenants’ obligations in accordance with the terms of such Space
Leases as of the Closing Date. All obligations with respect to such security deposits shall be
assumed by Purchaser and Purchaser shall indemnify, defend and hold Seller harmless with respect
thereto.

4.4.11 Regarding Hotel Prorations Generally. Unless this Section 4.4 expressly
provides otherwise: (a) all prorations hereunder with respect to the Hotel shall be made as of
12:00:01 a.m., local time at the Hotel (“Cut-Off Time”) on the Closing Date; (b) all
prorations shall be made on an actual daily basis; and (c) for purposes of such prorations, all
items of revenue and expense with respect to the Hotel’s operations shall be classified and
determined in accordance with the Uniform System of Accounts for the Lodging Industry, as
reasonably modified by Manager for use at the Hotel consistent with past practices within the
twelve (12) months preceding the Closing, and otherwise in accordance with generally accepted
accounting principles. Except as otherwise expressly provided herein, in any case in which
Purchaser receives a credit at Closing on account of any obligation of Seller hereunder, Seller
shall have no further liability for such obligation to the extent of the credit so given, Purchaser
shall pay and discharge the same, and Purchaser shall indemnify, defend and hold Seller harmless
Seller with respect thereto.

 

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4.4.12 Vouchers. Purchaser shall: (a) honor all outstanding unexpired gift
certificates, coupons or other writings issued by Seller or its affiliates prior to the Closing
Date that entitles the holder or bearer thereof to a credit (whether in a specified dollar amount
or for a specified item, such as room night or meals) to be applied against the usual charge for
rooms, meals, or goods and services at the Hotel (collectively, “Vouchers”) and shall
assume all liability, if any, for all outstanding Vouchers as of the Closing Date; (b) receive a
credit against the Purchase Price payable at Closing in the amount set forth on the schedule
entitled “Vouchers and Barter” Agreements annexed to the Property Information Letter, with respect
to the Vouchers listed thereon, as updated as of the Closing Date; (c) be reimbursed by Manager for
any other Vouchers presented by holders thereof in accordance with the New Management Agreement;
and (d) indemnify, defend and hold Seller harmless from and against all claims, liabilities, costs
and expenses arising out of a violation of this Section 4.4.12 with respect to the Vouchers
from and after the Closing Date.

4.4.13 Utility and Other Deposits. At Closing, Seller shall receive a credit for all
refundable cash or other deposits posted with utility companies serving the Property or any
governmental agencies or authorities or posted pursuant to any Service Contract, or, at Seller’s
option, Seller shall be entitled to receive and retain such refundable cash and deposits.

4.4.14 Final Statement; Post-Closing Adjustments. Except for prorations for real
estate taxes and other assessments, which shall be adjusted within fifteen (15) business days of
receipt of the tax bill for the tax year in which the Closing occurs, and prorations of Percentage
Rent in accordance with Section 4.4.5 hereof, Purchaser and Seller shall make a one-time
post-Closing adjustment of any item of income and expense subject to adjustment as provided above
which was either incomplete or incorrect (whether as a result of an error in calculation or a lack
of complete and accurate information) as of the Closing. Purchaser will prepare and deliver to
Seller for its review and approval a statement of prorations (the “Final Statement”) within
ninety (90) days following the Closing Date, and the party in whose favor the original incorrect
adjustment or error was made (“Adjusting Party”) shall pay to the other party
(“Requesting Party”) the sum necessary to correct such prior incorrect adjustment or error
within ten (10) days after completion of the Final Statement. Notwithstanding any provision of
this Agreement to the contrary, all items required to be adjusted pursuant to this Section
4.4.14 shall be adjusted within one hundred twenty (120) days of Closing (except real estate
taxes, which shall be re-adjusted within the period set forth above), and such adjustment shall be
final and no further adjustment to the prorations or the Purchase Price shall be made.

4.4.15 Resolution of Disputes. In the case of a dispute with respect to any
post-closing adjustment, the parties shall attempt to resolve such dispute, but if for any reason
such dispute is not resolved by the date that is thirty (30) days after the delivery of the
original notice of the claimed adjustment by Purchaser or Seller, but not to exceed one hundred
fifty (150) days after Closing, then the parties shall, upon the written request of either party to
the other, submit such dispute to Ernst & Young (“Outside Accountants”), and the
determination of the Outside Accountants, which shall be made within a period of fifteen (15) days
after such submittal by the parties, shall be conclusive. The fees and expenses of the Outside
Accountants shall be paid equally by Purchaser and Seller. At such time as the amount of any
adjustment or dispute shall be determined (either by agreement or by determination of the Outside
Accountants), any amount that shall be payable by the Requesting Party to the Adjusting Party as a
result of such adjustment or determination shall be paid within ten (10) business days after the
date on which such agreement or determination shall have been made.

4.4.16 Survival. The provisions of this Section 4.4 shall survive Closing.

 

20

 

4.5 Closing Costs. 

(a) Seller Closing Costs(b) . At Closing, Seller shall pay: (a) the fees of any
counsel representing it in connection with this transaction; (b) 100% of the premium for the Title
Policy; (c) one-half of the escrow fees charged by Escrow Agent; (d) all recording and filing fees;
and (e) 100% of the city, county, and state documentary transfer tax imposed in connection with the
consummation of the transactions contemplated by this Agreement. The parties acknowledge and agree
that Seller may use the Purchase Price to pay Seller’s closing costs.

(c) Purchaser Closing Costs(d) . At Closing, Purchaser shall pay: (a) the fees of any
counsel representing Purchaser in connection with this transaction; (b) 100% of the (i) cost of any
endorsements or extended coverages to the Title Policy, and (ii) cost of any title insurance
provided to Purchaser’s lender; (c) the cost of any modifications or updates to the Survey,
including the update referred to in Section 2.2; (d) one-half of the escrow fees charged by
Escrow Agent; (e) the cost of any third party engineering and environmental reports and any updates
obtained by Purchaser to the property condition report and the Phase I environmental report; and
(f) all bulk sales taxes, sales tax on the sale of the Personal Property (or any part thereof) and
any other sales or use taxes.

(e) Other Costs(f) . All other costs and expenses incident to this transaction and the
closing thereof shall be paid in a manner consistent with custom for similar transactions in the
city where the Hotel is located. Notwithstanding the foregoing, in the event that this Agreement is
terminated as a result of a party’s default, such defaulting party shall pay all escrow and title
cancellation fees charged in connection with such cancellation.

4.6 Conditions Precedent to Obligation of Purchaser. The obligation of Purchaser to
consummate the transaction hereunder shall be subject to the fulfillment on or before the Closing
Date of all of the following conditions, any or all of which may be waived by Purchaser in its sole
discretion:

(a) All of the representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects as of the Closing Date (with appropriate modifications
permitted under this Agreement or not materially adverse to Purchaser).

(b) Seller shall have performed and observed, in all material respects, all covenants and
agreements of this Agreement to be performed and observed by Seller as of the Closing Date.

(c) Seller shall have delivered to Purchaser or deposited with Escrow Agent all of the items
required to be delivered to Purchaser or deposited with Escrow Agent pursuant to the terms of
Section 4.2.

(d) Title Company shall have issued, or be irrevocably committed to issue subject to payment
of title premiums, the Title Policy.

 

21

 

(e) Seller shall deliver an executed Tenant Estoppel for the Space Lease for Liquor Seller.

(f) The existing alcoholic beverage license for the Hotel (License No. 326147), which is owned
by 8440 LLC (the “Existing Liquor License”) shall be in full force and effect.

4.7 Conditions Precedent to Obligation of Seller. The obligation of Seller to consummate
the transaction hereunder shall be subject to the fulfillment on or before the Closing Date of all
of the following conditions, any or all of which may be waived by Seller in writing in its sole
discretion:

(a) Purchaser shall have deposited with Escrow Agent the Purchase Price as adjusted pursuant
to and payable in the manner provided for in this Agreement and Seller shall have received such
Purchase Price from Escrow Agent.

(b) All of the representations and warranties of Purchaser contained in this Agreement shall
be true and correct in all material respects as of the Closing Date (with modifications which are
not materially adverse to Seller).

(c) Purchaser shall have performed and observed, in all material respects, all covenants and
agreements of this Agreement to be performed and observed by Purchaser as of the Closing Date.

(d) Purchaser shall have deposited with Escrow Agent all of the items required to be delivered
to Seller or deposited with Escrow Agent pursuant to the terms of Section 4.3.

4.8 Failure or Waiver of Conditions Precedent. If other than as a result of a default
by either party (in which case Article VI shall apply), any of the conditions set forth in
Sections 4.6 or 4.7 are not fulfilled or waived on or before the Outside Closing Date, the sole and
exclusive remedy available to the party benefited by such conditions shall be to terminate this
Agreement by written notice to the other party, whereupon the Earnest Money shall be refunded to
Purchaser (less Purchaser’s share of any escrow charges) and all rights and obligations hereunder
of each party shall be at an end except those that expressly survive any termination of this
Agreement. Either party benefited by a condition set forth in Sections 4.6 and 4.7 above may, at
its election, at any time or times on or before the date specified for the satisfaction of the
condition, waive in writing the benefit of such condition. The parties’ consummation of the Closing
pursuant to this Agreement shall waive any remaining unfulfilled conditions and any liability on
the part of the other party for breaches of representations and warranties of which such party had
actual knowledge as of the Closing.

 

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4.9 Alcoholic Beverage License.

(a) Purchaser and Seller recognize that the Existing Liquor License and all alcoholic
beverages on hand at the Hotel or the Property as of the Effective Date, whether issued to the food
and beverage department or held in reserve storage (the “Liquor Inventory” and, together
with the Existing Liquor License, the “Liquor Assets”) are currently owned by 8440 LLC, a
California limited liability company (the “Liquor Seller”). On or prior to Closing,
Wolverines Lessee LLC, a Delaware limited liability company (“Wolverines LLC”), and Liquor
Seller (collectively, the “Liquor Designee”) shall execute a separate escrow agreement
relating to the transfer of the Liquor Assets to Liquor Designee, as co-licensees, (the “Liquor
Assets Escrow Agreement”), in the form of Exhibit I attached hereto, and any other
documents required by the California Department of Alcoholic Beverage Control (the “ABC”)
and reasonably required by the Liquor Assets Escrow Agent (as defined below) to effectuate such
transfer, and the parties shall, at or prior to Closing, deliver a fully executed Liquor Assets
Escrow Agreement to Bay Commercial Bank, 3895 East Castro Valley Boulevard—Suite A, Castro Valley,
CA 94552, Attention Chloe Flowers (the “Liquor Assets Escrow Agent”) along with the Liquor
Assets Purchase Price.

(b) Simultaneously with the Closing, Purchaser shall deposit into the Liquor Assets Escrow, in
cash or other immediately available funds, an amount equal to Seventy-Five Thousand and 00/100
Dollars ($75,000.00) (the “Liquor Assets Purchase Price”), which amount shall be allocated
as set forth in the Liquor Assets Escrow Agreement. The amount deposited as the Liquor Assets
Purchase Price shall be a credit to Purchaser against the Purchase Price at Closing.

(c) The Liquor Assets Escrow Agreement shall close as promptly as possible after the Closing,
subject to Applicable Law. Upon the closing of the Liquor Assets Escrow Agreement, the Liquor
Assets Escrow Agent shall deliver to Liquor Seller the Liquor Assets Purchase Price (less any
amounts disbursed to third parties by the Liquor Assets Escrow Agent from the Liquor Assets Escrow
pursuant to the terms of the Liquor Assets Escrow Agreement).

(d) Promptly after the Liquor Assets Escrow Agreement and Liquor Assets Purchase Price has
been deposited with the Liquor Assets Escrow Agent, Purchaser shall, at its cost and expense,
submit an application to the ABC to transfer of the Existing Liquor License to the Liquor Designee,
as co-licensees. Liquor Seller shall use commercially reasonable efforts to cooperate with
Purchaser and Liquor Designee to cause the Existing Liquor License to be transferred or issued as
provided herein, which such cooperation shall include, without limitation, maintaining and renewing
the Existing Liquor License until such time as the Liquor Designee secures approval from the ABC
for the transfer of the Existing Liquor License (or receives an unappealable order denying the
transfer.

 

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ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS

5.1 Representations and Warranties of Seller. Seller hereby makes the following
representations and warranties to Purchaser as of the Effective Date, subject to the qualifications
and exceptions set forth below:

(a) Organization and Authority. Seller has been duly organized and is validly existing
and in good standing under the laws of Delaware and is qualified to do business in the State of
California. Seller has the full right and authority to enter into this Agreement and to transfer
all of the Property to be conveyed by Seller pursuant hereto and to consummate or cause to be
consummated the transactions contemplated herein to be made by Seller. The person signing this
Agreement on behalf of Seller is authorized to do so.

(b) No Breach. The execution, delivery and performance of this Agreement by Seller and
the consummation of the transactions contemplated herein will not: (i) result in a breach or
acceleration of or constitute a default or event of termination under the provisions of any
agreement or instrument by which the Property is bound which would have a material adverse impact
on the ownership and operation of the Property by Purchaser; or (ii) constitute or result in the
violation or breach by Seller of any judgment, order, writ, injunction or decree issued against or
imposed upon Seller or result in the violation of any Applicable Law, rule or regulation of any
governmental authority which, with respect to any of the foregoing, would have a material adverse
impact on the ownership or operation of the Property by Purchaser.

(c) Litigation/Condemnation. Except as set forth on the schedule entitled “Litigation”
annexed to the Property Information Letter, neither Seller nor Manager has received written notice
and, to Seller’s knowledge, there has been no written threat, of any litigation which has been
filed against Seller that arises out of the ownership of the Property, or affecting the Property,
an adverse determination of which would reasonably be expected to materially and adversely affect
the Property or use thereof, or Seller’s ability to perform its obligations hereunder, nor has
Seller received written notice of any condemnation proceedings.

(d) Space Leases. The list of Space Leases attached hereto as Schedule 1.1(j)
lists all leases or licenses for the lease and occupancy of space at the Hotel, and Seller has made
available to Purchaser a true and correct copy of each such Space Lease. No written notice of
default has been delivered by Seller or Manager or received by Seller or Manager with respect to
any Space Leases that, to Seller’s knowledge, remains uncured, other than as set forth in
Schedule 5.1(d). Any and all brokerage, leasing and other commissions and tenant
improvement credits or contributions due under any such Space Leases have been performed in all
material respects and all amounts due from Seller under the Space Leases as of the Closing Date
have been (or will be) paid by the Closing Date.

 

24

 

(e) Service Contracts and Equipment Leases. There are no Service Contracts, including
without limitation Equipment Leases, which will affect the Property in any material respect after
the Closing Date except as set forth on Schedule 1.1(e)-1(a), Schedule 1.1(e)-1(b),
Schedule 1.1(e)-2(a), Schedule 1.1(e)-2(b), or Service Contracts entered into
after the Effective Date which Seller is permitted to enter into under the terms of this Agreement.
No Service Contracts, including without limitation Equipment Leases, have been amended except as
set forth in said Schedules or as otherwise permitted pursuant to this Agreement. As of the
Effective Date and the Closing Date, no written notice of material default has been delivered by
Seller or Manager or, to Seller’s knowledge, received by Seller or Manager with respect to any
Service Contracts or Equipment Leases that, to Seller’s knowledge, remain uncured. The copies of
Service Contracts and Equipment Leases made available to Purchaser by Seller are true and complete
in all material respects.

(f) Personal Property. Seller owns the Personal Property, other than any leased
Personal Property under the Equipment Leases, free of all liens and encumbrances.

(g) No Consents. No consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part of Seller is
required in connection with the execution, delivery and performance of Agreement or the
consummation of the transactions contemplated.

(h) No Violations. Except for violations shown in or disclosed by the Title Report or
any Title Update and any violations disclosed on the schedule entitled “Violations of Law” annexed
to the Property Information Letter, Seller has not received any written notice of, nor does Seller
have any knowledge of, any violation in any material respect of Applicable Law that remains
uncured.

(i) Liquor Licenses. Neither Seller nor Manager has received any written notice from
any Governmental Authority or other Person of any violation, suspension, revocation or non renewal
of the liquor licenses held by Seller or any of its affiliates in effect with respect to the Hotel
that has not been cured or dismissed.

(j) Hotel Operating Statements. To Seller’s knowledge, the operating statements of
the Hotel provided to Purchaser: fairly present in all material respects the financial condition of
the Hotel as of the date thereof and the results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the periods covered thereby.

(k) Patriot Act Compliance. Neither Seller nor any individual or entity having an
interest in Seller or controlled by Seller: (i) is a person or entity listed on the Specially
Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control,
Department of the Treasury (“OFAC”) pursuant to Executive Order No. 13224, 66 Fed. Reg.
49079 (September 25, 2001) (the “Order”) and/or on any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant
to any other applicable orders (such lists are collectively referred to as the “Lists”);
(ii) is a person or entity who has been determined by competent authority to be subject to the
prohibitions contained in the Order; or (iii) is owned or controlled by, or acts for or on behalf
of, any person or entity on the Lists or any other person or entity who has been determined by
competent authority to be subject to the prohibitions contained in the Order.

 

25

 

(l) Employees.

(i) There are no employees of the Hotel other than those employees who are employed by Manager
with respect to the Hotel.

(ii) Neither the Seller nor the Manager is a party to any collective bargaining agreement or
other agreement with any labor union with respect to the Property or the Hotel or any employees at
the Hotel.

(iii) Neither the Seller nor the Manager is a party to any written employment agreement with
any employee at the Hotel that contains a fixed term or provides for severance other than in
accordance with the generally applicable severance policy of Manager or Seller.

* * *

Notwithstanding the foregoing, if Purchaser has actual knowledge of a breach of any
representation or warranty made by Seller in this Agreement prior to Closing and Purchaser
nevertheless proceeds to close the purchase of the Property, such representation or warranty by
Seller shall be deemed to be qualified or modified to reflect Purchaser’s knowledge of such breach
and Seller shall have no liability whatsoever respecting the same.

5.2 Knowledge Defined. For purposes of this Agreement, “knowledge” means (a) with
respect to Seller, the actual knowledge of Richard Szymanski or Richard Russo (provided that, in no
event shall such person have any personal liability arising under this Agreement), without any duty
of inquiry or investigation (other than to make reasonable inquiries of the general manager of the
Hotel), and expressly excluding the knowledge of any other shareholder, partner, member, trustee,
beneficiary, director, officer, employee, agent or representative of Seller or any of its
affiliates, and (b) with respect to Purchaser: (i) the actual knowledge of Thomas Fisher and Jon
Bortz (provided that, in no event shall such person(s) have any personal liability arising under
this Agreement); (ii) any matter disclosed in this Agreement or in any exhibits or schedules to
this Agreement; (iii) any matter disclosed in any of the Seller Due Diligence Materials or any
other documents or other written materials delivered by Seller or its agents to Purchaser prior to
Closing; (iv) any matter disclosed by Purchaser’s inspections or investigations of the Property;
and (v) any matter disclosed by a Tenant Estoppel (defined below).

5.3 Covenants of Seller.

(a) Seller hereby covenants as follows:

(i) From the Effective Date hereof until the Closing or earlier termination of this Agreement,
Seller shall cause Manager to operate and maintain the Hotel in the ordinary course and in a manner
generally consistent with the manner in which Manager has operated and maintained the Hotel during
the twenty-four (24) month period prior to the date hereof, in good condition consistent with past
practice, reasonable wear and tear excepted and so as (i) to maintain levels of Retail Inventory
and Consumable Inventory consistent with past practice (ii)  maintain all existing insurance
coverages for the Hotel, (iii) perform maintenance and repairs for the Property and Hotel in the
ordinary course of business and consistent with past practices, and (iv) maintain all Permits and
the Existing Liquor License in full force and effect, subject in all events to force majeure and
other circumstances or events outside of control of Seller.

 

26

 

(ii) From and after the Effective Date until the Closing, Seller shall not sell, assign or
enter into any agreement to sell or transfer the Hotel or any portion thereof, except for the
provision of hotel rooms and facilities in the ordinary course.

(iii) From and after the Effective Date until the Closing, Seller shall not (i) enter into any
new, written management agreement or Service Contracts, Space Lease or other agreement or
encumbrance with respect to the Property (other than agreements with potential guests or groups
entered into in the ordinary course of business consistent with past practice), nor shall Seller
enter into any written agreements modifying the Service Contracts, Permitted Exceptions or Space
Leases unless: (A) any such agreement or modification will not bind Purchaser or the Property after
the Closing Date; (B) any such agreement or modification is subject to termination on not more than
thirty (30) days’ notice without penalty; or (C) Seller has obtained Purchaser’s prior written
consent to such agreement or modification which consent shall not unreasonably be withheld or
delayed or (ii) grant its consent to any action described in clause (i) above by Manager;
provided that Seller shall be permitted to enter into a new lease with Liquor Seller on the
same terms as the existing Space Lease with Liquor Seller except for the term thereof which shall
extend to February 28, 2019. Contracts and agreements entered into after the Effective Date in
accordance with this Section 5.3(a)(iii) shall constitute, as applicable, “Service
Contracts” or “Space Leases” and be scheduled on, and assigned pursuant to, the Assignment of
Contracts or the Assignment of Space Leases.

(b) Following the Effective Date and prior to Closing, Seller shall obtain from 8440 LLC, in
its capacity as tenant under the Space Lease for certain restaurant, bar, and similar areas in the
Hotel, an estoppel in the form required under the applicable Lease (or, if neither a form nor the
contents of any estoppel is specified, in substantially the form of Exhibit H attached
hereto) (such estoppel being referred to herein as a “Tenant Estoppel”), which Tenant
Estoppel shall be delivered to Purchaser at the Closing pursuant to Section 4.6(e).

5.4 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants
to Seller:

(a) ERISA. Purchaser is not acquiring the Property with the assets of an employee
benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (as
amended, “ERISA”).

(b) Organization and Authority. Purchaser has been duly organized and is validly
existing and in good standing under the laws of the State of Delaware. Purchaser has the full
right, power and authority to purchase the Property as provided in this Agreement and to carry out
Purchaser’s obligations hereunder, and all requisite action necessary to authorize Purchaser to
enter into this Agreement and to carry out its obligations hereunder have been, or by the Closing
will have been, taken. The person signing this Agreement on behalf of Purchaser is authorized to
do so, and this Agreement is enforceable against Purchaser in accordance with its terms, subject to
bankruptcy, insolvency and similar laws.

 

27

 

(c) No Breach. The execution, delivery and performance of this Agreement by Purchaser
and the consummation of the transaction contemplated herein will not: (i) result in a breach or
acceleration of or constitute a default under any agreement or instrument by which Purchaser is
bound or affected which would have a material adverse impact on the ability of Purchaser to timely
close the acquisition of the Property pursuant to the terms of this Agreement; or (ii) constitute
or result in the violation or breach by Purchaser of any judgment, order, writ, injunction or
decree issued against or imposed upon Purchaser or result in the violation of any Applicable Law,
rule or regulation of any governmental authority which, with respect to any of the foregoing, would
have a material adverse impact on the ability of Purchaser to timely complete the acquisition of
the Property pursuant to this Agreement.

(d) No Consents. No consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part of Purchaser is
required in connection with the execution, delivery and performance of Agreement or the
consummation of the transactions contemplated.

(e) Pending Actions. There is no action, suit, arbitration, unsatisfied order or
judgment, government investigation or proceeding pending against Purchaser which, if adversely
determined, could individually or in the aggregate materially interfere with the consummation of
the transaction contemplated by this Agreement.

(f) Patriot Act Compliance. Neither Purchaser nor any individual or entity having an
interest in Purchaser or controlled by Purchaser (i) is in violation of any applicable anti-money
laundering or anti-bribery laws and regulations, (ii) is a person or entity listed on the Lists;
(iii) is a person or entity who has been determined by competent authority to be subject to the
prohibitions contained in the Order; or (iv) is owned or controlled by, or acts for or on behalf
of, any person or entity on the Lists or any other person or entity who has been determined by
competent authority to be subject to the prohibitions contained in the Order.

(g) Tax Identification Number. Purchaser’s valid tax identification number is
45-1822358.

(h) Bankruptcy. No petition in bankruptcy (voluntary or otherwise), assignment for the
benefit of creditors, or petition seeking reorganization or arrangement or other action under
federal or state bankruptcy laws is pending against or contemplated by Purchaser or its general
partner(s) or controlling shareholders or members.

 

28

 

5.5 Covenants of Purchaser and/or of Seller.

(a) Purchaser may at its election (but subject to the limitations of Section 3.1
above), inspect the Property for the presence of Hazardous Substances, and, at Seller’s request,
shall furnish to Seller without representation or warranty copies of any reports received by
Purchaser in connection with any such inspection. Purchaser shall also furnish to Seller without
representation or warranty copies of any other reports received by Purchaser relating to any other
physical inspections of the Property conducted on Purchaser’s behalf, if any (including,
specifically, without limitation, any reports analyzing compliance of the Property with the
provisions of the Americans with Disabilities Act, 42 U.S.C. §12101, et seq., if
applicable).

(b) Purchaser hereby assumes full responsibility for its inspections of the Property regarding
Hazardous Substances and irrevocably waives any claim against Seller and releases Seller from all
liability arising from the presence of Hazardous Substances on the Property.

(c) Not later than three (3) days prior to the Closing, Seller shall send, or cause the
Manager to send, written notice to guests or other persons who have safe deposit boxes at the Hotel
advising of the sale of the Hotel and requesting verification or removal of the contents within two
(2) days. The safe deposit boxes of guests or other persons not responding to said written notice
shall be opened only in the presence of the Manager or representatives of both Seller and
Purchaser. The contents of all boxes opened as aforesaid shall be listed at the time such boxes
are opened and each such list shall be signed by or on behalf of the Manager or by or on behalf of
Seller and Purchaser, and Purchaser shall not be liable or responsible for any items claimed to
have been in said boxes unless such items are included in such list. Seller agrees to indemnify,
defend and hold Purchaser harmless from and against any liability or responsibility for any items
claimed to have been in said boxes but not included on such list and Purchaser agrees to indemnify,
defend and hold Seller harmless from and against any liability or responsibility for items claimed
to have been in said boxes and included in such list and all claims, losses and liabilities with
respect thereto arising out of the acts or omissions of Purchaser after the Closing Date.

(d) All baggage or other property of guests of the Hotel which has been checked with or left
in the care of Seller and remains in Seller’s care as of the Cut-Off Time shall be inventoried and
tagged jointly by Seller and Purchaser. Purchaser hereby agrees to defend, indemnify and hold
harmless Seller against any claims, losses or liabilities in connection with such tagged baggage
and property arising out of the acts or omissions of Purchaser from and after the Closing Date.
Seller hereby agrees to defend, indemnify and hold harmless Purchaser against all claims, losses
and liabilities with respect to such tagged baggage and property arising out of the acts or
omissions of Seller prior to the Closing Date.

(e) Purchaser shall honor (and shall cause its manager to honor) all reservations made in the
ordinary course of business at the Hotel (including honoring the rates at which such reservations
were made, including reservations made on a wholesale, reward points redemption, or other basis),
or for any related conference, banquet, or meeting space or any other facilities in connection with
the Hotel made by Seller on or prior to the Cut-Off Time for periods on or after the Closing Date.

 

29

 

The provisions of this Section 5.5 shall survive Closing or any earlier termination of
this Agreement.

5.6 Employees.

(a) For purposes of this Agreement, “Employees” means, collectively, all individuals
employed at the Hotel by Manager as of the Closing Date, irrespective of whether such individuals
are active or on leaves of absence or otherwise inactive but still employed at the Hotel.

(b) Purchaser agrees that it will cause the Manager to continue to employ, following the
Closing, the Employees so that Seller shall not be required to give any layoff, closing or other
termination notices or otherwise incur any liability pursuant to the provisions of the Federal
Worker Adjustment and Retraining Notification Act. 29 U.S.C. 2101-2109 (the “Federal WARN
Act”) and the California Worker Adjustment and Retraining Notification Act (the “California
WARN Act”). Purchaser shall be required to assume and discharge all obligations and
liabilities of Seller or Manager with respect to costs of termination of any Employee incurred
after the Closing including, without limitation, any severance claim made after the Closing or
arising from the transactions contemplated by this Agreement.

(c) From and after the Closing, Purchaser (i) shall be solely responsible for complying or
causing compliance with all applicable provisions of federal, state and municipal laws and
regulations relating to Employees, including Purchaser’s covenants set forth in this Section
5.6, including without limitation compliance with any applicable provisions of the Federal WARN
Act or the California WARN Act, and (ii) hereby agrees to indemnify, defend, protect and hold
Seller, Manager, and their respective affiliates harmless from and against any and all claims,
liabilities, debts, costs, expenses, damages, attorneys’ fees and disbursements arising out of any
violation of the Federal WARN Act or the California WARN Act in connection with the transaction
contemplated by this Agreement. Seller agrees to indemnify, defend, protect and hold Purchaser and
its affiliates harmless from and against any and all claims, liabilities, debts, costs, expenses,
damages, attorneys’ fees and disbursements arising out of any violation of the Federal WARN Act or
the California WARN Act for any period prior to the Closing (excluding any matters arising from the
transaction contemplated by this Agreement).

(d) During the period prior to Closing, the parties agree to reasonably cooperate and also to
consult on a regular basis and coordinate their activities relating to employee matters so as to
facilitate a smooth transition of Hotel operations and the continued proper performance by the
Employees of their respective duties up to Closing.

 

30

 

(e) Purchaser agrees to indemnify, defend and hold harmless Seller, Manager and their
respective officers, directors, members, owners and affiliates (together with Seller and Manager,
the “Seller-Related Parties”) from and against any claim, liability, or judgment asserted
against any of the Seller-Related Parties on account of or with respect to any of the following:
(i) any causes of action, damages, complaints, judgments, orders and/or claims, whatsoever, and all
costs and expenses (including, without limitation, reasonable attorneys’ fees and costs) incurred
in connection therewith, which may be asserted against any of the Seller-Related Parties on account
of any violation of the National Labor Relations Act, Title VII of the Civil Rights Act, the Fair
Labor Standards Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act,
the Family and Medical Leave Act, the Vocational Rehabilitation Act of 1973, the Federal WARN Act
and/or the California WARN Act, California Labor Law, California and City of West Hollywood Human
Rights Law, and/or any other applicable federal, state or city employment statutes, laws, rules and
regulations (collectively, “Employment Laws”) by Purchaser, or any designee or management
company engaged by Purchaser to employ Hotel personnel (other than Manager), except to the extent
such are based on the acts of any Seller Related Parties (other than those arising from the
transactions contemplated by this Agreement), and (ii) any claims or liabilities arising (A) under
ERISA and/or any other applicable federal or state law or regulation concerning employee benefit
plans with respect to the employment of employees by Purchaser or such designee or management
company from and after the Closing or from the transactions contemplated by the Agreement, to the
extent that any such claim or liability relates to any period of employment from and after the
Closing or arise from the transactions contemplated by this Agreement or (B) from or under any
employee benefit plan applicable to any Employee or any other employee hired by Purchaser or such
designee or management company to perform services at or for the Hotel, to the extent that any such
claim or liability relates to any period of employment from and after the Closing or arise from the
transactions contemplated by this Agreement. For the avoidance of doubt, nothing in this
Section 5.6(e) shall be deemed to require Purchaser to indemnify any Seller-Related Party
with respect to any claim, liability or judgment of the type described in clause (i) or (ii) of
Section 5.6(f).

(f) Seller agrees to indemnify, defend and hold harmless Purchaser, or any designee or
management company engaged by Purchaser to employ Hotel personnel and their respective officers,
directors, members, owners and affiliates (together with Purchaser, the “Purchaser-Related
Parties”) from and against any claim, liability, or judgment asserted against any of the
Purchaser-Related Parties other than those arising from the transactions contemplated by this
Agreement on account of or with respect to any of the following: (i) any causes of action, damages,
complaints, judgments, orders and/or claims, whatsoever, and all costs and expenses (including,
without limitation, reasonable attorneys’ fees and costs) incurred in connection therewith, which
may be asserted against any of the Purchaser-Related Parties on account of any violation of the
Employment Laws occurring up to and including the Closing by Seller-Related Parties, except to the
extent such are based on the acts of any Purchaser-Related Parties and (ii) any claims or
liabilities arising (A) under ERISA and/or any other applicable federal or state law or regulation
concerning employee benefit plans with respect to the employment of employees by Seller-Related
Parties up to and including the Closing, or (B) from or under any employee benefit plan applicable
to any Employee or any other employee hired by Purchaser or such designee or management company to
perform services at or for the Hotel, to the extent that any such claim or liability relates to any
period of employment up to and including the Closing. For the avoidance of doubt, nothing in this
Section 5.6(f) shall be deemed to require Seller to indemnify any Purchaser-Related Party
with respect to any claim, liability or judgment of the type described in clause (i) or (ii) of
Section 5.6(e).

(g) Purchaser’s and Seller’s obligations under this Section 5.6 shall survive Closing
without limitation.

 

31

 

5.7 Independent Audit. From the Effective Date until two (2) years after the Closing or
earlier termination of this Agreement, Seller shall make the books and records for the years ending
December 31, 2010, 2009, and 2008 and interim periods as required by the rules and regulations of
the Securities and Exchange Commission (“SEC”) of the Property/Seller available to Purchaser and
Purchaser’s independent accountants for inspection, copying and audit by Purchaser’s designated
accountants at the expense of Purchaser. Seller and the Manager of the Property will provide the
Purchaser’s independent accountants with a management representation letter with respect to the
audited historical financial statements of the Property/Seller for the years ending December 31,
2010, 2009, and 2008 and any unaudited interim period required by the rules and regulations of the
SEC. Seller shall provide Purchaser with copies of, or access to, such factual information,
accounting records and financial information as may be reasonably requested by Purchaser or its
auditors, and in the possession or control of Seller, to enable Purchaser or its affiliates to file
reports or registration statements in compliance with the rules and regulations of the SEC. This
Section 5.7 shall survive the Closing for two (2) years.

ARTICLE VI

DEFAULT

6.1 Default by Purchaser. If prior to Closing, Purchaser defaults under this Agreement,
Seller shall be entitled, as its sole and exclusive remedy (without limiting Seller’s rights with
respect to any indemnification obligations of Purchaser under Section 11.1, ARTICLE
III and/or Section 11.18) to terminate this Agreement and receive the Earnest Money as
liquidated damages for the breach of this Agreement, it being agreed between the parties hereto
that the actual damages to Seller in the event of such breach are impractical to ascertain and the
amount of the Earnest Money is a reasonable estimate thereof. THEREFORE, SUBJECT TO THE PRECEDING
SENTENCE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN
AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OF SELLER’S DAMAGES AND AS
SELLER’S EXCLUSIVE REMEDY AGAINST PURCHASER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER
THIS AGREEMENT ON THE PART OF PURCHASER. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH
LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLER.

INITIALS: Seller YG              Purchaser TCF

Nothing contained in this Section 6.1 shall limit or prevent Seller, after Closing has
occurred, from: (a) asserting any legal or equitable claims against Purchaser for Purchaser’s
obligation to pay attorneys’ fees and other amounts under Section 11.18; (b) enforcing any
indemnity obligation of Purchaser under this Agreement or preclude Seller from obtaining a damage
award in connection therewith; or (c) enforcing Purchaser’s other obligations and liabilities which
survive Closing.

 

32

 

6.2 Default by Seller. In the event that Seller fails to consummate this Agreement for any
reason other than Purchaser’s default (in which event Section 6.1 applies), then Purchaser
shall be entitled, as its sole and exclusive remedy, to terminate this Agreement and receive the
return of the Earnest Money, in which event Seller shall be released from any and all liability
hereunder ; provided that if the termination resulted from an intentional or willful act of Seller,
then Seller shall pay Purchaser its Termination Costs (as hereinafter defined) upon Purchaser’s
written notice to Seller that the same have become due Purchaser expressly waives its rights to
seek monetary or other damages in the event of Seller’s default hereunder other than as expressly
provided in the preceding sentence. Notwithstanding the foregoing, if Purchaser is ready, willing
and able to close and Seller is obligated to close pursuant to the terms of this Agreement, then
Purchaser shall have the right for file suit for specific performance against Seller in a court
having jurisdiction in the county and state in which the Property is located, on or before sixty
(60) days following the date upon which Closing was to have occurred. Purchaser shall be deemed to
have elected to waive such right to seek specific performance if it fails to file suit within such
period. As material consideration to Seller’s entering into this Agreement with Purchaser,
Purchaser expressly waives any right under statutory or common law or otherwise to record or file a
lis pendens or a notice of pendency of action or similar notice against all of any portion of the
Property unless all conditions precedent to Seller’s obligation to proceed to Closing have been
satisfied and Seller defaults in its obligation to proceed to Closing. “Termination Costs”
shall mean those reasonable costs actually incurred by Purchaser in connection with its
investigation and efforts to purchase the Property, including, without limitation, actual
reasonable fees and costs of counsel and consultants, all of which Termination Costs shall be
evidenced by written documentation reasonably acceptable to Seller, but in no event shall the
Termination Costs payable by Seller to Purchaser in connection with this Section 6.2 exceed
$500,000.

6.3  Seller’s Right to Cure Defaults. Notwithstanding anything to the contrary in this
Agreement, Purchaser shall not have the right to exercise its remedies under Section 6.2
for a Seller default unless Purchaser has provided written notice to Seller specifying in
reasonable detail the nature of the Seller default, and Seller has not cured the same within ten
(10) business days after Seller’s receipt of such notice (the “Seller Cure Period”), in
which case the Outside Closing Date shall be extended until the date which is five (5) business
days after the expiration of the Seller Cure Period.

6.4 Purchaser’s Right to Cure Defaults. Notwithstanding anything to the contrary
contained in this Agreement, with respect to any default under this Agreement by Purchaser other
than a default in Purchaser’s obligation to close the transaction contemplated hereunder on the
Closing Date, Seller shall not have the right to exercise its remedies under Section 6.1 for any
such Purchaser default unless Seller has provided written notice to Purchaser specifying in
reasonable detail the nature of the Purchaser default, and Purchaser has not cured the same within
10 days after Purchaser’s receipt of such notice. It is expressly understood and agreed that there
shall be no cure period afforded Purchaser and no need for Seller to provide any notice, written or
otherwise, with respect to a default by Purchaser in its obligation to close the transaction on the
Closing Date, and in the event of such a default, Seller shall have the immediate right to exercise
its remedies on account thereof provided in Section 6.1 above.

 

33

 

ARTICLE VII

SURVIVAL, INDEMNIFICATION, AND LIMITATIONS ON LIABILITY 

7.1 Survival. The representations and warranties of Seller set forth in Section 5.1
of this Agreement, as updated by the certificate of Seller to be delivered to Purchaser at Closing
in accordance with Section 4.2(e) hereof, and any other representations and warranties of
Seller contained herein or in any other instrument delivered to Purchaser in connection herewith
shall survive Closing for a period of six (6) months. The representations and warranties of
Purchaser set forth in Section 5.4, as updated by the certificate of Purchaser to be
delivered to Seller at Closing in accordance with Section 4.3(d) hereof, and any other
representations and warranties of Purchaser contained herein or in any other instrument delivered
to Seller in connection herewith shall survive the Closing for a period of nine (9) months from the
Closing Date.

7.2 Seller’s Indemnification. From and after the Closing, Seller shall, subject to the
provisions of this Section 7.2, defend, indemnify and save harmless Purchaser and its
Affiliates, and their respective employees, contractors, officers, directors, and agents
(collectively, “Purchaser Indemnitees”) from and against any and all losses, injuries,
claims, penalties, liabilities, fines, damages, costs or expenses (including, without limitation,
reasonable attorneys’ fee and costs) (collectively, “Losses”) arising out of, resulting
from or relating to:

(a) the inaccuracy of any representation or warranty of Seller;

(b) the failure by Seller to perform or fulfill any covenant or agreement of Seller
contained in this Agreement; or

(c) any injury to or death of any person or persons or damage to or destruction of any
property owned by a third-party, arising out of or in any manner directly or indirectly
connected with the Hotel and having accrued prior to the Closing Date (unless caused by a
Purchaser Indemnitee).

The provisions of this Section 7.2 shall survive the Closing without limitation.

7.3 Purchaser’s Indemnification. From and after the Closing, Purchaser shall, subject to
the provisions of this Section 7.3, defend, indemnify and save harmless Seller and its
Affiliates, and their respective employees, contractors, officers, directors, and agents
(collectively, “Seller Indemnitees”) from and against any and all Losses arising out of,
resulting from or relating to:

(a) the inaccuracy of any representation or warranty of Purchaser;

(b) the failure by Purchaser to perform or fulfill any covenant or agreement of
Purchaser contained in this Agreement; or

(c) any injury to or death of any person or persons or damage to or destruction of any
property owned by a third-party, arising out of or in any manner directly or indirectly
connected with the Hotel and having accrued after the Closing Date (unless caused by a
Seller Indemnitee).

The provisions of this Section 7.3 shall survive the Closing without limitation.

7.4 Notice and Resolution of Claims.

(a) Notice. Each Person entitled to indemnification pursuant to Section 7.2
or 7.3 (an “Indemnitee”) shall give written notice to the indemnifying party or
parties from whom indemnity is sought (the “Indemnifying Party”) promptly after obtaining
knowledge of any claim that it may have under Section 7.2 or 7.3, as applicable.
The notice shall set forth in reasonable detail the claim and the basis for indemnification.
Failure to give the notice in a timely manner shall not release the Indemnifying Party from its
obligations under Section 7.2 or 7.3, as applicable, except to the extent that the
failure materially prejudices the ability of the Indemnifying Party to contest that claim.

 

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(b) Defense of Third Party Claims. If a claim for indemnification pursuant to
Section 7.2 or 7.3 shall arise from any action made or brought by a third party
that would reasonably be expected to result in indemnifiable Losses (a “Third Party
Claim”), the Indemnifying Party may assume the defense of the Third Party Claim. If the
Indemnifying Party assumes the defense of the Third Party Claim, the defense shall be conducted by
counsel chosen by the Indemnifying Party, who shall be reasonably acceptable to Indemnitee,
provided that the Indemnitee shall retain the right to employ its own counsel and participate in
the defense of the Third Party Claim at its own expense (which shall not be recoverable from the
Indemnifying Party under this ARTICLE VII unless (i) the Indemnitee is advised by counsel
reasonably satisfactory to the Indemnifying Party that use of counsel of the Indemnifying Party’s
choice would be expected to give rise to a conflict of interest, (ii) the Indemnifying Party shall
not have employed counsel to represent the Indemnitee within a reasonable time after notice of the
assertion of any such claim or institution of any such action or proceeding, or (iii) the
Indemnifying Party shall authorize the Indemnitee in writing to employ separate counsel at the
expense of the Indemnifying Party, in each of which cases the reasonable expenses of counsel to the
Indemnitee shall be reimbursed by the Indemnifying Party). In no event shall the Indemnifying
Party be obligated to pay the fees and expenses of more than one counsel (other than local counsel)
for all Indemnitees with respect to any claim indemnified under this ARTICLE VII; provided
that an Indemnitee shall be entitled to employ separate counsel at the expense of the Indemnifying
Party if the Indemnitee is advised by counsel reasonably satisfactory to the Indemnifying Party
that use of such other counsel would give rise to a conflict of interest, in which case the
reasonable expenses of counsel to such Indemnitee shall be reimbursed by the Indemnifying Party.
Notwithstanding the foregoing provisions of this Section 7.4(b), (i) no Indemnifying Party
shall be entitled to settle any Third Party Claim for which indemnification is sought under
Section 7.2 or 7.3 without the Indemnitee’s prior written consent, which shall not
be unreasonably withheld, conditioned or delayed, unless it has assumed the defense of such Third
Party Claim and as part of the settlement the Indemnitee is released from all liability with
respect to the Third Party Claim and the settlement does not impose any equitable remedy on the
Indemnitee or require the Indemnitee to admit any fault, culpability or failure to act by or on
behalf of the Indemnitee, and (ii) no Indemnitee shall be entitled to settle any Third Party Claim
for which indemnification is sought under Section 7.2 or 7.3 without the
Indemnifying Party’s prior written consent, which shall not be unreasonably withheld, conditioned
or delayed, unless the Third Party claim is for money damages only and such settlement does not
include a statement as to, or an admission of fault, culpability or a failure to act by or on
behalf of the Indemnifying Party and as part of such settlement the Indemnifying Party is released
from all liability (for indemnification pursuant to this ARTICLE VII and otherwise) with
respect to such Third Party Claim. If the Indemnifying Party does not notify the Indemnitee within
twenty (20) Business Days after receipt of the Indemnitee’s notice of a Third Party Claim of
indemnity hereunder that it elects to assume the control of the defense of any Third Party Claim,
the Indemnitee shall have the right to contest the Third Party Claim but shall not thereby waive
any right to indemnity therefor pursuant to this Agreement and the costs of such actions by the
Indemnitee shall be paid by the Indemnifying Party.

 

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7.5 Limitations on Liability.

(a) Deductible.

(i) Seller shall not have any obligation or liability to any Purchaser Indemnitee under
Section 7.2(a) unless and until the aggregate amount of Losses incurred or suffered
by the Purchaser Indemnitees arising out of the matters referred to in
Section 7.2(a) shall have exceeded $75,000, in which case Seller shall be obligated
and liable under Section 7.2(a) only with respect to such excess.

(ii) Purchaser shall not have any obligation or liability to any Seller Indemnitee
under Section 7.3(a) unless and until the aggregate amount of Losses suffered by the
Seller Indemnitees arising out of the matters referred to in Section 7.3(a) shall
have exceeded $75,000, in which case Purchaser shall be obligated and liable under
Section 7.3(a) only with respect to such excess.

(b) Limit of Liability. The aggregate liability of Seller or Purchaser, as
applicable—

(i) under Section 7.2(a) shall not exceed $3,000,000;

(ii) under Section 7.3(a) shall not exceed $3,000,000; and

(iii) under Section 7.2(b), 7.2(c), 7.3(b), or 7.3(c)
shall not be subject to any limits.

(c) Limit on Time for Assertion of Claims. Neither Seller nor Purchaser shall have
any obligation or liability pursuant to Section 7.2 or 7.3, respectively, for any
breach of any representation or warranty unless notice of a claim asserting such breach shall have
been given in accordance with Section 7.4 prior to the termination of the survival period
applicable to such representation or warranty as set forth in Section ARTICLE VII. Neither
Seller nor Purchaser shall have any obligation or liability pursuant to Section 7.2 or
7.3, respectively, for any breach of any covenant contained in this Agreement that occurred
prior to the Closing unless notice of a claim asserting such breach shall have been given in
accordance with Section 7.4 on or before the date six (6) months following the Closing
Date.

7.6 Other Matters Regarding Indemnification.

(a) In the event either Seller or Purchaser (the “Claiming Party”) has actual
knowledge on or before the Closing that any representation or warranty of the other is incorrect
(either through independent investigation or through information and materials provided to the
Claiming Party) or that a covenant of the other has been breached and the Claiming Party proceeds
to Closing, then the Claiming Party shall not be permitted to assert a claim for such matters
following the Closing Date.

 

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(b) The right to be indemnified for Losses, on the terms and subject to the limitations set
forth in this ARTICLE VII, shall be the exclusive remedy available to the Parties and the
Indemnitees for the matters set forth in Sections 7.2 and 7.3.

ARTICLE VIII

RISK OF LOSS

8.1 Minor Damage. In the event of loss or damage to the Real Property or any portion
thereof which is not “major” (as hereinafter defined), this Agreement shall remain in full force
and effect provided Seller shall, at Seller’s option, either (a) perform any necessary repairs (to
return the Real Property to substantially the condition in which it existed immediately prior to
such loss or damage), or (b) assign to Purchaser all of Seller’s right, title and interest to any
claims and proceeds Seller may have with respect to any casualty insurance policies or condemnation
awards relating to the premises in question (other than business interruption proceeds attributable
to the period prior to Closing and proceeds in respect of amounts expended by or on behalf of
Seller prior to Closing to restore the Property). In the event that Seller elects to perform
repairs upon the Real Property, Seller shall use commercially reasonable efforts to complete such
repairs promptly and the Outside Closing Date shall be extended a reasonable time, not to exceed
thirty (30) days, in order to allow for the completion of such repairs. If Seller elects to assign
a casualty claim to Purchaser, the Purchase Price shall be reduced by an amount equal to the
deductible amount under Seller’s insurance policy with respect to such loss or damage and not paid
by Seller prior to Closing and Seller shall assign all of its rights to proceeds under the
applicable policy with respect to any claim for the applicable loss (other than business
interruption proceeds attributable to the period prior to Closing and proceeds in respect of
amounts expended by or on behalf of Seller prior to Closing to restore the Property). Upon Closing,
full risk of loss with respect to the Property shall pass to Purchaser.

8.2 Major Damage. In the event of a “major” loss or damage to the Real Property, Purchaser
may, upon notice in writing to Seller delivered within ten (10) days after Seller sends Purchaser
written notice of the occurrence of such major loss or damage, terminate this Agreement by written
notice to Seller, in which event the Earnest Money shall be returned to Purchaser and neither
Seller nor Purchaser shall have any further rights or obligations under this Agreement except any
obligations that expressly survive the termination of this Agreement. If Purchaser fails for any
reason to deliver written notice of termination to Seller within ten (10) days after Seller sends
Purchaser written notice of the occurrence of major loss or damage, then Purchaser shall be deemed
to have elected to proceed with Closing, in which event Seller shall, at Seller’s option, either
(a) perform any necessary repairs (to return the Real Property to substantially the condition in
which it existed immediately prior to such loss or damage), or (b) assign to Purchaser all of
Seller’s right, title and interest to any claims and proceeds Seller may have with respect to any
casualty insurance policies or condemnation awards relating to the premises in question (other than
business interruption proceeds attributable to the period prior to Closing and proceeds in respect
of amounts expended by or on behalf of Seller prior to Closing to restore the Property). In the
event that Seller elects to perform repairs upon the Real Property, Seller shall use commercially
reasonable efforts to complete such repairs promptly and the Outside Closing Date shall be extended
a reasonable time in order to allow for the completion of such repairs. If Seller elects to assign
a casualty claim to Purchaser, the Purchase Price shall be reduced by an amount equal to the
deductible amount under Seller’s insurance policy with respect to such loss or damage and not paid
by Seller prior to Closing and Seller shall assign all of its rights to proceeds under the
applicable policy with respect to any claim for the applicable loss (other than business
interruption proceeds attributable to the period prior to Closing and proceeds in respect of
amounts expended by or on behalf of Seller prior to Closing to restore the Property). Upon
Closing, full risk of loss with respect to the Property shall pass to Purchaser.

 

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8.3 Definition of “Major” Loss or Damage. For purposes of Sections 8.1 and
8.2, “major” loss or damage refers to the following (a) loss or damage to the Real Property
or any portion thereof such that the cost of repairing or restoring the premises in question to a
condition substantially identical to that of the premises in question prior to the event of damage
would be, in the opinion of a licensed independent architect or registered professional engineer
with a minimum of ten (10) years experience related to commercial real estate construction selected
by Seller, equal to or greater than five percent (5%) of the Purchase Price or (b) any loss due to
a condemnation which permanently and materially adversely modifies or impairs the continued
operation of the Hotel in substantially the same manner as the Hotel is operated on the Effective
Date.

ARTICLE IX

COMMISSIONS

9.1 Brokerage Commissions. In the event the transaction contemplated by this Agreement is
consummated, but not otherwise, Seller agrees to pay to Goldman Sachs (“Broker”) at Closing
a brokerage commission pursuant to a separate written agreement between Seller and Broker and
Seller shall indemnify and hold Purchaser harmless with respect to any payments due and owing to
Broker in connection with this transaction under such agreement. Each party agrees that should
any claim be made for brokerage commissions or finder’s fees by any broker or finder other than the
Broker by, through or on account of any acts of said party or its representatives, said party will
indemnify, defend, protect and hold the other party free and harmless from and against any and all
loss, liability, cost, damage and expense in connection therewith. The provisions of this
Section 9.1 shall survive Closing or earlier termination of this Agreement.

ARTICLE X

DISCLAIMERS AND WAIVERS

10.1 No Reliance on Documents. Except as expressly set forth in this Agreement, Seller
makes no representation or warranty as to the truth, accuracy or completeness of any materials,
data or information delivered by or on behalf of Seller or its brokers to Purchaser in connection
with the transaction contemplated hereby including, without limitation, the Reports, material
available in the E-Room, and other Seller Due Diligence Materials, provided, however, that Seller
shall not intentionally alter any material, data or information for the purpose of misleading
Purchaser. Purchaser acknowledges and agrees that all materials, data and information delivered by
Seller to Purchaser in connection with the transaction contemplated hereby are provided to
Purchaser as a convenience only and that any reliance on or use of such materials, data or
information by Purchaser shall be at the sole risk of Purchaser, except as

 

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otherwise expressly
stated herein. Without limiting the generality of the foregoing provisions, Purchaser acknowledges
and agrees that (a) any environmental or other report with respect to the Property which is
delivered by Seller to Purchaser shall be for general informational purposes only, (b) Purchaser
shall not have any right to rely on any such report delivered by Seller to Purchaser, but rather
will rely on its own inspections and investigations of the Property and any reports commissioned by
Purchaser with respect thereto, and (c) except for matters expressly set forth in this Agreement,
neither Seller nor any affiliate of Seller nor the person or entity which prepared any such report
delivered by Seller to Purchaser shall have any liability to Purchaser for any inaccuracy in or
omission from any such report or other materials provided to Purchaser in connection with this
Agreement.

10.2 DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT: IT IS UNDERSTOOD AND
AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF
ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, PROFITABILITY,
FITNESS FOR A PARTICULAR PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR
ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL
APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR
COMPLETENESS OF THE PROPERTY DOCUMENTS OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLER
TO PURCHASER, OR ANY OTHER MATTER OR THING REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES AND
AGREES THAT UPON CLOSING SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE
PROPERTY “AS IS, WHERE IS, WITH ALL FAULTS”, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN
THIS AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR
BOUND BY, ANY EXPRESSED OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT
LIMITATION, PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY AND ANY ACTUAL
OR PROPOSED BUDGETS FOR THE REAL PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGER OF THE
PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO
WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH
IN THIS AGREEMENT. PURCHASER REPRESENTS TO SELLER THAT PURCHASER IS A SOPHISTICATED INSTITUTIONAL
INVESTOR WITH SUBSTANTIAL EXPERIENCE AND EXPERTISE WITH INVESTMENT PROPERTIES AND HAS CONDUCTED, OR
WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO,
THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO SATISFY ITSELF
AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE
TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND
WILL RELY SOLELY

 

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UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS
AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS
OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE DOCUMENTS DELIVERED AT CLOSING.
UPON CLOSING AND SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN
THIS AGREEMENT AND THE DOCUMENTS DELIVERED AT CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE
MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL
CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S INVESTIGATIONS, AND PURCHASER, UPON CLOSING,
SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER’S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION
(INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING
ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH
PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER’S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT
CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS RELATING TO THE
CONDITION OF THE PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL
OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY EXCEPT FOR FRAUD AND
OBLIGATIONS OF SELLER UNDER THIS AGREEMENT OR ANY AGREEMENTS EXECUTED AND DELIVERED BY SELLER AT
CLOSING. PURCHASER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES
OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE CLOSING DATE, SUCH
CLEAN-UP, REMOVAL OR REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE
COST AND EXPENSE OF PURCHASER.

The waivers and releases set forth in Sections 5.5(a) and 5.5(b) and in the
immediately preceding paragraph include claims of which Purchaser is presently unaware or which
Purchaser does not presently suspect to exist which, if known by Purchaser, would materially affect
Purchaser’s waiver or release of Seller and the other parties referenced in this Section.

10.3 Repairs, Reserves, and Capital Expenditures. Purchaser acknowledges and agrees that
except as provided in Section 5.3 of this Agreement, (a) Seller shall have no obligation to
make any repairs, replacements, improvements or alterations to the Property or to expend any funds
therefor, including, without limitation, any reserves that may be held for such purpose, and (b)
Purchaser shall not be entitled to a credit to the Purchase Price at Closing in the event capital
expenditures actually made at the Hotel for any year are less than the budgeted amount as of the
date of the Closing.

 

40

 

10.4 Effect and Survival of Disclaimers. Seller and Purchaser acknowledge that the
compensation to be paid to Seller for the Property has been decreased to take into account that the
Property is being sold subject to the provisions of this Article X. Seller and Purchaser
agree that the provisions of this Article X shall survive Closing.

ARTICLE XI

MISCELLANEOUS

11.1 Confidentiality. Prior to the Closing, and subject to the provisions of Section
11.2, this Agreement, the terms hereof and the Property Information shall be treated as
“Evaluation Material” in accordance with that certain Confidentiality Agreement executed by
Purchaser in favor of Seller (the “Confidentiality Agreement”). From and after the
Closing, Seller and its affiliates shall hold in confidence, and shall not disclose to third
parties without the prior written consent of Purchaser, any non-public proprietary information
regarding the Hotel and the Property. The foregoing shall not be deemed to restrict the ability of
Seller and its affiliates to comply with their disclosure and reporting obligations under
applicable law.

11.2 Public Disclosure. Prior to the Closing, neither Purchaser nor Seller, nor any of
their respective affiliates, shall make any press release or other public statement, or file any
report with the Securities and Exchange Commission containing information, regarding the terms of
this Agreement that are not generally known to the public (the “Confidential Information”)
without affording the other party a reasonable opportunity (not to exceed two business days) to
review and comment on the content of such release, report, or statement insofar as it applies to
this Agreement and the transaction contemplated hereby. For the avoidance of doubt, Purchaser or
Seller or their respective affiliates shall be permitted to make such disclosure and shall not be
required to obtain the consent of the other party prior to making such disclosure. Notwithstanding
the foregoing, Seller and Purchaser shall be permitted to (i) disclose any Confidential Information
to the extent required by court order or under Applicable Law (subject to providing the other party
the reasonably opportunity to review and comment on any such disclosure, as provided above, to the
extent consistent with Applicable Law) and (ii) disclose any Confidential Information to any Person
on a “need-to-know” basis, such as their respective members, trustees, directors, officers,
employees, attorneys, consultants, engineers, surveyors, lenders, investors, and such other Persons
whose assistance is required to consummate the transactions contemplated in this Agreement or to
whom notice of this transaction may be required pursuant to the Service Contracts or Applicable
Law, or with whom communication may be required to accomplish the assignment of the Permits, the
Service Contracts or the Space Leases; provided, however, that Purchaser or Seller (as applicable)
shall, to the extent consistent with Applicable Law, (a) advise such person of the confidential
nature of such Confidential Information, and (b) use commercially reasonable efforts to cause such
Person to maintain the confidentiality of such information. Purchaser and Seller shall mutually
agree on the content of the initial press release regarding the consummation of the transaction
contemplated by this Agreement following the Closing. Notwithstanding anything to the contrary
contained herein, the parties understand and agree that Pebblebrook Hotel Trust, Inc. and Morgans
Hotel Group Co. each will file a report on Form 8-K with the Securities and Exchange Commission in
connection with the transaction contemplated by this agreement. The provisions of this
Section 11.2 shall survive the Closing.

 

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11.3 Assignment. Purchaser may not assign or otherwise transfer this Agreement or any of
its rights or obligations under this Agreement without first obtaining Seller’s written approval
which may be given or withheld in Seller’s sole discretion; provided that Purchaser may assign all
or any portion of this Agreement to one or more entities that are wholly-owned, directly or
indirectly, by Pebblebrook Hotel, L.P. Any assignment by Purchaser of this Agreement shall not
relieve Purchaser of its obligations under this Agreement and any permitted assignee must expressly
assume the obligations of Purchaser in writing. Without limiting the foregoing, in no event shall
Purchaser assign this Agreement to any assignee which, in the reasonable judgment of Seller, will
cause the transaction contemplated hereby or any party thereto to violate the requirements of
ERISA.

11.4 Notices. Any notice pursuant to this Agreement shall be given in writing by (a)
personal delivery, or (b) reputable overnight delivery service with proof of delivery, or (c)
United States Mail, postage prepaid, registered or certified mail, return receipt requested, or (d)
legible facsimile transmission or PDF transmission completed before 5:00 p.m. (New York time) on a
business day sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have designated by written
notice sent in accordance herewith, and shall be deemed to have been given either at the time of
personal delivery, or, in the case of expedited delivery service or mail, as of the date of first
attempted delivery at the address and in the manner provided herein, or, in the case of facsimile
transmission or PDF transmission, as of the date of the facsimile transmission or PDF transmission
provided that an original of such facsimile or PDF is also sent to the intended addressee by means
described in clauses (a), (b) or (c) above. Notices may be given by a party’s counsel on behalf of
such party as if such party had given such notice itself. Unless changed in accordance with the
preceding sentence, the addresses for notices given pursuant to this Agreement shall be as follows:

If to Seller:

Mondrian Holdings LLC

c/o Morgans Group LLC

475 Tenth Avenue

New York, NY 10018

Attention:  David Smail, Executive Vice President & General Counsel

Facsimile No.: (212) 277-4172

Email: david.smail@morganshotelgroup.com

With a copy to:

Hogan Lovells US LLP

555 13th Street NW

Washington, DC 20004

Attention: Bruce W. Gilchrist

Facsimile No.: (202) 637-5600

Email: bruce.gilchrist@hoganlovells.com

 

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If to Purchaser:

Wolverines Owner LLC

c/o Pebblebrook Hotel Trust

2 Bethesda Metro Center

Suite 1530

Bethesda, Maryland 20814

Attention: Thomas Fisher

Facsimile no. (240) 396-5763

Email: tfisher@pebblebrookhotels.com

With a copy to:

Hunton & Williams LLP

1900 K Street, NW

Washington, DC 20006

Attention: John M. Ratino, Esquire

Facsimile No.: (202) 828-3779

Email: jratino@hunton.com

11.5 Modifications. This Agreement cannot be changed orally, and no executory agreement
shall be effective to waive, change, modify or discharge it in whole or in part unless such
executory agreement is in writing and is signed by the parties against whom enforcement of any
waiver, change, modification or discharge is sought.

11.6 Calculation of Time Periods; Time is of the Essence. Unless otherwise specified, in
computing any period of time described in this Agreement, the day of the act or event after which
the designated period of time begins to run is not to be included and the last day of the period so
computed is to be included, unless such last day is a Saturday, Sunday or legal holiday under the
laws of the State in which the Real Property is located, in which event the period shall run until
the end of the next day which is neither a Saturday, Sunday or legal holiday. The final day of any
such period shall be deemed to end at 5:00 p.m., New York time. Time is of the essence with
respect to each and every term and provision of this Agreement.

11.7 Successors and Assigns. Subject to the limitations on assignment set forth in
Section 11.3 above, the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto.

11.8 Entire Agreement. This Agreement, including the Exhibits, the Schedules and the
Confidentiality Agreement contain the entire agreement between the parties pertaining to the
subject matter hereof and fully supersedes all prior written or oral agreements and understandings
between the parties pertaining to such subject matter.

 

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11.9 Further Assurances. Each party agrees that it will without further consideration
execute and deliver such other documents and take such other action, whether prior or subsequent to
Closing, as may be reasonably requested by the other party to consummate more effectively the
purposes or subject matter of this Agreement. Without limiting the generality of the foregoing,
Purchaser shall, if requested by Seller, (a) execute acknowledgments of receipt with respect to any
materials delivered by Seller to Purchaser with respect to the Property, and (b) obtain sellers’
permits for any sales activities conducted at the Property prior to Closing and/or obtain “sale for
resale certificates” for any Personal Property that may be sold after the Closing. The provisions
of this Section 11.9 shall survive Closing.

11.10 Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts,
and all such executed counterparts shall constitute the same agreement. It shall be necessary to
account for only one such counterpart in proving this Agreement. In order to expedite the
transaction contemplated herein, telecopied, facsimile or PDF signatures may be used in place of
original signatures on this Agreement. Seller and Purchaser intend to be bound by the signatures
on the telecopied, facsimile or PDF document, are aware that the other party will rely on the
telecopied, facsimile or PDF signatures, and hereby waive any defenses to the enforcement of the
terms of this Agreement based on the form of signature.

11.11 Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall
nonetheless remain in full force and effect.

11.12 Applicable Law. THIS AGREEMENT IS PERFORMABLE IN THE STATE OF NEW YORK AND SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE FEDERAL LAWS OF THE
UNITED STATES AND THE LAWS OF SUCH STATE. SELLER AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN A STATE OR FEDERAL
COURT SITTING IN THE STATE OF NEW YORK. PURCHASER AND SELLER AGREE THAT THE PROVISIONS OF THIS
SECTION 11.12 SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.

11.13 No Third Party Beneficiary. The provisions of this Agreement and of the documents to
be executed and delivered at Closing are and will be for the benefit of Seller and Purchaser only
and are not for the benefit of any third party, and accordingly, no third party shall have the
right to enforce the provisions of this Agreement or of the documents to be executed and delivered
at Closing.

 

44

 

11.14 Exhibits and Schedules. The following schedules or exhibits attached hereto shall be
deemed to be an integral part of this Agreement:

Schedule 1.1(a) -Legal Description of Land

Schedule 1.1(c) -Excluded Personal Property

Schedule 1.1(e)-1(a) -Service Contracts (assignable without consent)

Schedule 1.1(e)-1(b) -Service Contracts (consent required for assignment)

Schedule 1.1(e)-2(a) -Equipment Leases (assignable without consent)

Schedule 1.1(e)-2(b) -Equipment Leases (consent required for assignment)

Schedule 1.1(f) -Intellectual Property

Schedule 1.1(g) -Transferable Permits

Schedule 1.1(j) -List of Space Leases

Schedule 1.5(c) -Allocations of Real and Personal Property

Schedule 2.4(a) -Permitted Exceptions

Schedule 3.2 -Reports

Schedule 5.1(d) -Space Leases

Exhibit A -Deed

Exhibit B -Bill of Sale

Exhibit C -Assignment of Contracts

Exhibit D -Assignment of Space Leases

Exhibit E -FIRPTA Certificate

Exhibit F -Title Affidavit

Exhibit G -Escrow Agreement

Exhibit H -Form of Tenant Estoppel

Exhibit I -Form of Liquor Assets Escrow Agreement

11.15 Captions. The section headings appearing in this Agreement are for convenience of
reference only and are not intended, to any extent and for any purpose, to limit or define the text
of any section or any subsection hereof.

11.16 Construction. The parties acknowledge that the parties and their counsel have
reviewed and revised this Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any exhibits, schedules or amendments hereto. Singular words
shall connote the plural as well as the singular, and plural words shall connote the singular as
well as the plural, and the masculine shall include the feminine and the neuter, as the context may
require.

11.17 Termination of Agreement. It is understood and agreed that if either Purchaser or
Seller terminates this Agreement pursuant to a right of termination granted hereunder, such
termination shall operate to relieve Seller and Purchaser from all obligations under this
Agreement, except for such obligations as are specifically stated herein to survive the termination
of this Agreement.

11.18 Attorneys Fees. If any action or proceeding is commenced by either party to enforce
their rights under this Agreement or to collect damages as a result of the breach of any of the
provisions of this Agreement, the prevailing party in such action or proceeding, including any
bankruptcy, insolvency or appellate proceedings, shall be entitled to recover all reasonable costs
and expenses, including, without limitation, reasonable attorneys’ fees and court costs, in
addition to any other relief awarded by the court.

 

45

 

11.19 No Waiver. Failure of either party at any time to require performance of any
provision of this Agreement shall not limit the party’s right to enforce the provision. Waiver of
any breach of any provision shall not be a waiver of any succeeding breach of the provision or a
waiver of the provision itself or any other provision.

11.20 No Reservation of Property. The preparation and/or delivery of unsigned drafts of
this Agreement shall not create any legally binding rights in the Property and/or obligations of
the parties, and Purchaser and Seller acknowledge that this Agreement shall be of no effect until
it is duly executed by both Purchaser and Seller.

11.21 No Recordation. Purchaser shall not record this Agreement, nor any memorandum or
other notice of this Agreement, in any public records.

[SIGNATURE PAGE FOLLOWS]

 

46

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective
Date.

	 	 	 	 	 
	 	SELLER:

Mondrian Holdings LLC

 	 
	 	 	By: 	 Mondrian Senior Mezz LLC, its
 	 
	 	 	 	Managing Member 	 
	 
	 	 	By: 	                                                               Morgans Group LLC, its
 	 
	 	 	 	Managing Member 	 
	 
	 	 	By: 	                                                              Morgans Hotel Group Co., its
 	 
	 	 	 	Managing Member 	 

	 	 	 	 	 
	 	By:  	                       /s/ Yoav Gery
 	 
	 	 	Name:  	Yoav Gery 	 
	 	 	Title:  	CDO & EVP 	 
	 
	 	PURCHASER:

Wolverines Owner LLC, a Delaware

limited liability company

 	 
	 	By:  	/s/ Thomas C. Fisher
 	 
	 	 	Name:  	Thomas C. Fisher 	 
	 	 	Title:  	Vice President 	 

 

47

 

Annex I

Definitions

(a) As used in this Agreement, the following terms have the meanings ascribed thereto below:

“Applicable Law” means all statutes, laws, common law, rules, regulations, ordinances,
codes or other legal requirements of any Governmental Authority, Board of Fire Underwriters and
similar quasi-governmental agencies or entities, and any judgment, injunction, order, directive,
decree or other judicial or regulatory requirement of any court or Governmental Authority of
competent jurisdiction affecting or relating to the Person or property in question.

“Consumable Supplies” shall mean office, cleaning, engineering, laundry and valet supplies,
food service supplies, decorations, menus, guest supplies (including stationery, soap, matches,
toilet and facial tissues) and such other supplies as are customarily consumed on a daily basis in
the operation of the Hotel.

“Environmental Laws” means Applicable Laws regulating or relating to any Hazardous
Substances including, without limitation, (i) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”), (ii) the Resource Conservation
and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”), (iii) the Federal Water Pollution Control Act,
33 U.S.C. § 2601 et seq., (iv) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., (v) the
Clean Water Act, 33 U.S.C. § 1251 et seq., (vi) the Clean Air Act, 42 U.S.C. § 7401 et seq., (vii)
the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq., (viii) the Safe Drinking
Water Act, 42 U.S.C. § 803 et seq., (ix) the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.,
(x) the Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C. § 11001 et seq.,
(xi) the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. (to the extent it regulates
exposure to Hazardous Substances), and similar state and local Applicable Law, as amended from time
to time, and all regulations, rules and guidance issued pursuant thereto.

“Governmental Authority” means any federal, state or local government or other political
subdivision thereof, including, without limitation, any agency or entity exercising executive,
legislative, judicial, regulatory or administrative governmental powers or functions, in each case
to the extent the same has jurisdiction over the person or property in question.

“Guest Records” shall mean guest records, profiles, histories, contact information and
preferences gathered by Manager based on the guest’s stay or information provided by the guest
during, prior to or after such stay at the Hotel.

“Hazardous Substances” means any hazardous or toxic substances, materials or waste, whether
solid, semisolid, liquid or gaseous, including, without limitation, asbestos, polychlorinated
biphenyls, petroleum or petroleum by-products (excluding any substances of kinds and amounts
ordinarily used or stored in similar properties for purposes of cleaning or other maintenance or
operations and otherwise in compliance with all Environmental Laws), and any other material or
substance which is defined as a “hazardous substance”, “hazardous waste”, “toxic waste” or “toxic
substance” under any Environmental Laws.

 

Annex I- 1

 

“Operating Equipment” shall mean chinaware, glassware, linens, silverware, and other items
of a comparable nature, and all replacements, additions and substitutions therefor.

“Manager’s Materials” shall mean materials, files, lists, records, compilations and methods
of operation which constitute valuable proprietary information, trade secrets and Manager’s work
product, including, by way of example and not of limitation, Guest Records, marketing techniques,
customer and mailing lists and reservation systems.

“Manager’s Tradenames” shall mean the Primary Name, the marks “Morgans”, “A Morgans Hotel”,
“Mondrian”, “SkyBar”, “Asia de Cuba” and “ADCB” or any other tradenames, trademarks, service marks,
symbols, logos or designs owned or licensed by Manager or any of its affiliates including, without
limitation, the name of any restaurant, bar and/or lounge at any Morgans Hotel, and any words or
designs, marketing materials, concepts and trade dress (such as the menu and the items thereon)
related thereto.

“Primary Name” shall mean Mondrian.

“Property Information Letter” shall mean that certain letter from Seller to Purchaser dated
as of the Effective Date.

(b) The following terms are defined in the Section of this Agreement set forth after such term
below:

	 	 	 	 	 
	ABC
	 	Section 4.9(a)
	Adjusting Party
	 	Section 4.4.14
	Agreement
	 	Introduction
	Assignment of Contracts
	 	Section 4.2(c)
	Assignment of Space Leases
	 	Section 4.2(d)
	Bookings
	 	Section 1.1(d)
	Broker
	 	Section 9.1
	California WARN Act
	 	Section 5.6(b)
	Claiming Party
	 	Section 7.6(a)
	Closing
	 	Section 4.1(a)
	Closing Date
	 	Section 4.1(a)
	Confidentiality Agreement
	 	Section 11.1
	Consumable Inventory
	 	Section 1.1(i)
	Cut-Off Time
	 	Section 4.4.11
	Deed
	 	Section 4.2(a)
	Effective Date
	 	Introduction
	Employees
	 	Section 5.6(a)
	Employment Laws
	 	Section 5.6(e)

 

Annex I- 2

 

	 	 	 	 	 
	Equipment Leases
	 	Section 1.1(e)
	ERISA
	 	Section 5.4(a)
	Escrow Agreement
	 	Section 1.6(b)
	Excluded Permits
	 	Section 1.1(g)
	Excluded Personal Property
	 	Section 1.1(c)
	Existing Liquor License
	 	Section 4.6(f)
	Federal WARN Act
	 	Section 5.6(b)
	Final Statement
	 	Section 4.4.14
	Hotel
	 	Recitals
	Hotel Payables
	 	Section 4.4.6
	House Bank Funds
	 	Section 1.1(k)
	Improvements
	 	Recitals
	Initial Earnest Money
	 	Section 1.6(a)
	Intangibles
	 	Section 1.1(h)
	Land
	 	Recitals
	Lease Year
	 	Section 4.4.5(d)
	Legal Requirements
	 	Section 2.4(d)
	Liquor Assets
	 	Section 4.9(a)
	Liquor Assets Escrow Agent
	 	Section 4.9(a)
	Liquor Assets Escrow Agreement
	 	Section 4.9(a)
	Liquor Assets Purchase Price
	 	Section 4.9(b)
	Liquor Designee
	 	Section 4.9(a)
	Liquor Inventory
	 	Section 4.9(a)
	Liquor Seller
	 	Section 4.9(a)
	Lists
	 	Section 5.1(k)
	Losses
	 	Section 7.2
	Management Agreement
	 	Section 1.7
	Manager
	 	Section 1.7
	Monetary Encumbrances
	 	Section 2.3(c)
	OFAC
	 	Section 5.1(k)
	Order
	 	Section 5.1(k)
	Outside Accountants
	 	Section 4.4.15
	Outside Closing Date
	 	Section 4.1(a)
	Percentage Rent
	 	Section 4.4.5(d)
	Permits
	 	Section 1.1(g)
	Permitted Exceptions
	 	Section 2.4
	Personal Property
	 	Section 1.1(c)
	Pre-Closing Date
	 	Section 4.1(b)
	Preliminary Statement
	 	Section 4.4
	Property
	 	Section 1.2(a)
	Property Information
	 	Section 3.1(a)
	Purchase Price
	 	Section 1.4
	Purchaser
	 	Introduction
	Purchaser Indemnitees
	 	Section 7.2
	Purchaser-Related Parties
	 	Section 5.6(f)

 

Annex I- 3

 

	 	 	 	 	 
	Real Property
	 	Recitals
	Receivables

	 	Section 1.2(b)(v)
	Rent
	 	Section 4.4.5
	Rent Arrears
	 	Section 4.4.5(b)
	Requesting Party
	 	Section 4.4.14
	Retail Inventory
	 	Section 1.1(i)
	Retained IP
	 	Section 1.1(f)
	Seller
	 	Introduction
	Seller Cure Period
	 	Section 6.3
	Seller Indemnitees
	 	Section 7.3
	Seller-Related Parties
	 	Section 5.6(e)
	Service Contracts
	 	Section 1.1(e)
	Space Leases
	 	Section 1.1(j)
	Survey
	 	Section 2.2
	Taxes
	 	Section 4.4.1(a)
	Tenant Estoppel
	 	Section 5.3(b)
	Title Affidavit
	 	Section 4.2(k)
	Title Company
	 	Section 2.1
	Title Policy
	 	Section 2.5
	Title Report
	 	Section 2.1
	Title Update
	 	Section 2.1
	Unopened Inventory
	 	Section 1.1(i)
	Wolverines LLC
	 	Section 4.9(a)

 

Annex I- 4

 

Exhibit A

Deed

	 	 	 
	RECORDING REQUESTED BY:
	 	 
	 
	 	 
	MAIL TAX STATEMENTS AND
	 	 
	WHEN RECORDED MAIL TO:
	 	 
	 
	 	 
	Order No.:
	 	 
	Escrow No.:
	 	 
	 
	APN:

	 	SPACE ABOVE THIS LINE FOR RECORDER’S USE
	 
	 	 
	THE UNDERSIGNED GRANTOR(S) DECLARE(S):

	 	DOCUMENTARY TRANSFER TAX IS $                                        
	 

	 	
 _____ 
Computed on full value of property conveyed, or
	 

	 	
 _____ 
Computed on full value less liens and encumbrances remaining at time
of sale.

	 

	 	
 _____ 
Unincorporated area
 _____ 
City of                     

GRANT DEED

For valuable consideration, receipt of which is hereby acknowledged, Mondrian Holdings LLC, a
Delaware limited liability company hereby GRANTS to Wolverines Owner LLC, a Delaware limited
liability company, the real property situated in the County of Los Angeles, State of California,
more particularly described as follows:

Lot “A” of Tract No. 2527, in the city of West Hollywood, county of Los Angeles, state
of California, as per map recorded in Book 34 Page 14 of Maps, in the office of the
county recorder of said county.

EXCEPT therefrom that portion thereof lying Southerly of a line bearing North 89 degrees
54’ West from a point on the East line of said Lot, distant North 0 degrees 06’ East
thereon 320 feet from the Southeast corner of said Lot.

	 	 	 	 	 	 	 	 	 
	Dated:                                                             	 	Mondrian Holdings LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 

	 	 	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss:
	COUNTY OF LOS ANGELES

	 	 	)	 	 	 

On
                    
before me,                                          (here insert name of the officer),
Notary Public, personally appeared                                         , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.

WITNESS my hand and official seal.

 

			
	 	 	 
	Notary Public
	 	[Notary Seal]

MAIL TAX STATEMENTS AS DIRECTED ABOVE

Exhibit A

 

 

 

Exhibit B

BILL OF SALE

For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, MONDRIAN
HOLDINGS LLC, a Delaware limited liability company (“Seller”), in connection with the sale
of certain real property located in West Hollywood, California, which is more particularly
described in that certain Purchase and Sale Agreement dated as of                                         , 2011
(“Purchase Agreement”), between Seller and WOLVERINES OWNER LLC, a Delaware limited
liability company (“Purchaser”), hereby grants, assigns, transfers, conveys and delivers to
Purchaser, without recourse and without any representation or warranty (including warranty of use
and warranty, express or implied, as to merchantability and fitness for any purpose) except as
expressly set forth in the Purchase Agreement, all of Seller’s right, title and interest in and to
the “Personal Property”, the “Unopened Inventory”, the “Retail Inventory” and the “Consumable
Inventory”, as such terms are defined in the Purchase Agreement and, in each case, solely to the
extent the “Personal Property”, the “Unopened Inventory”, the “Retail Inventory” and the
“Consumable Inventory” are included in the definition of “Property” in the Purchase Agreement.
This Bill of Sale shall be governed by the laws of the State of New York.

[Signature on following page]

Exhibit B

 

 

 

IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of                     , 2011.

	 	 	 	 	 	 	 
	 	 	SELLER:

MONDRIAN HOLDINGS LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 

 

 

 

Exhibit C

Assignment of Contracts

ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS,

PERMITS, BOOKINGS AND INTANGIBLES 

THIS ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS, PERMITS, BOOKINGS AND INTANGIBLES (this
“Assignment”) is made as of                     , 2011, by MONDRIAN HOLDINGS LLC, a Delaware
limited liability company (“Seller”), in favor of WOLVERINES OWNER, LLC, a Delaware limited
liability company (“Purchaser”).

RECITALS

A. Seller is the owner of certain property commonly known as the “Mondrian” located at 8440
Sunset Boulevard, West Hollywood, California.

B. Seller and Purchaser have entered into that certain Purchase and Sale Agreement dated as of
                    , 2011 (as may be amended, the “Purchase Agreement”), pursuant to which Seller
has agreed to sell and Purchaser has agreed to purchase the real property described in Schedule
1.1(a) attached thereto and the improvements located thereon, on the terms and conditions stated in
the Purchase Agreement. All terms not otherwise defined herein shall have the meaning assigned to
them in the Purchase Agreement.

C. Pursuant to the Purchase Agreement, Seller has agreed to assign to Purchaser all of
Seller’s right, title and interest to (a) the Service Contracts set forth on Annex 1
attached hereto (the “Assumed Service Contracts”) (b) the Permits, (c) the Bookings, and
(d) the Intangibles.

NOW, THEREFORE, Seller and Purchaser agree as follows:

1. Assignment. Seller hereby sells, assigns, transfers and conveys to Purchaser,
without recourse and without representation or warranty (except to the extent expressly provided in
the Purchase Agreement, as to which all of the limitations set forth in the Purchase Agreement
shall apply), all of Seller’s right, title and interest in and to (a) the Assumed Service
Contracts, (b) the Permits, (c) the Bookings and (d) the Intangibles.

2. Assumption. Purchaser hereby assumes the benefits of Seller and assumes and agrees
to be bound by all of the covenants, obligations, liabilities, and burdens of Seller that arise or
accrue from and after the date of this Assignment under or in connection with (a) the Assumed
Service Contracts, (b) the Permits, (c) the Bookings, and (d) the Intangibles. This Assignment is
made by Seller without recourse and without any express or implied representation or warranty
whatsoever (except to the extent expressly provided in the Purchase Agreement, as to which all of
the limitations set forth in the Purchase Agreement shall apply).

3. Successors. This Assignment shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives, successors and assigns.

4. Governing Law. This Assignment shall be governed by the laws of the State of New
York.

Exhibit C

 

 

 

5. Further Assurances. Seller and Purchaser agree to execute such other documents and
perform such other acts as may be reasonably necessary or proper and usual to effect this
Assignment.

6. Counterparts. This Assignment may be executed in counterparts, each of which shall
be deemed an original, and both of which together shall constitute one and the same instrument.

[signature page follows]

 

 

 

IN WITNESS WHEREOF, Purchaser and Seller have executed this Assignment as of the date first
above written.

	 	 	 	 	 	 	 
	 	 	SELLER:

MONDRIAN HOLDINGS LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	PURCHASER:

WOLVERINES OWNER LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 

 

 

 

Annex 1

Assumed Service Contracts

[to be completed at Closing]

 

 

 

Exhibit D

Assignment of Space Leases

ASSIGNMENT AND ASSUMPTION OF SPACE LEASES

THIS ASSIGNMENT AND ASSUMPTION OF SPACE LEASES (this “Assignment”) is made as of
                    , 2011 (the “Effective Date”), by MONDRIAN HOLDINGS LLC, a Delaware limited
liability company (“Seller”) in favor of WOLVERINES OWNER LLC, a Delaware limited liability
company (“Purchaser”).

RECITALS

A. Seller is the owner of certain property commonly known as the “Mondrian” located at 8440
Sunset Boulevard, West Hollywood, California.

B. Seller and Purchaser have entered into that certain Purchase and Sale Agreement dated as of
                    , 2011 (as may be amended, the “Purchase Agreement”), pursuant to which Seller
has agreed to sell and Purchaser has agreed to purchase the real property described in Schedule
1.1(a) attached thereto and the improvements located thereon, on the terms and conditions stated in
the Purchase Agreement. All terms not otherwise defined herein shall have the meaning assigned to
them in the Purchase Agreement.

C. Pursuant to the Purchase Agreement, Seller has agreed to assign to Purchaser all of
Seller’s right, title and interest to the Space Leases.

NOW, THEREFORE, Seller and Purchaser agree as follows:

1. Assignment. Seller hereby sells, assigns, transfers and conveys to Purchaser,
without recourse and without representation or warranty, all of Seller’s right, title and interest
in and to the Space Leases.

2. Assumption. Purchaser hereby assumes the benefits of Seller and assumes and agrees
to be bound by all of the covenants, obligations, liabilities, and burdens of Seller under the
Space Leases that arise or accrue from and after the date of this Assignment.

3. Successors. This Assignment shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives, successors and assigns.

4. Governing Law. This Assignment shall be governed by the laws of the State of New
York.

5. Attorneys’ Fees. If any action or proceeding is commenced by either party to
enforce their rights under this Assignment or to collect damages as a result of the breach of any
of the provisions of this Assignment, the prevailing party in such action or proceeding, including,
without limitation, any bankruptcy, insolvency or appellate proceedings, shall be entitled to
recover all reasonable costs and expenses, including, without limitation, reasonable attorneys’
fees and court costs actually incurred, in addition to any other relief awarded by the court.

6. Counterparts. This Assignment may be executed in counterparts, each of which shall
be deemed an original, and both of which together shall constitute one and the same instrument.

[signature page follows]

Exhibit D

 

 

 

IN WITNESS WHEREOF, Purchaser and Seller have executed this Assignment as of the date first
above written.

	 	 	 	 	 	 	 
	 	 	SELLER:

MONDRIAN HOLDINGS LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	PURCHASER:

WOLVERINES OWNER LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 

 

 

 

Exhibit E

FIRPTA CERTIFICATE

CERTIFICATION OF NON-FOREIGN STATUS

A. Federal FIRPTA Certificate

Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”) provides
that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign
person. For U.S. tax purposes (including Code Section 1445), the owner of a disregarded entity
(which has legal title to a U.S. real property interest under local law) will be the transferor of
the property and not the disregarded entity. To inform the transferee that withholding of tax is
not required upon the disposition of a U.S. real property interest by                                          (the
“Transferor”) the undersigned hereby certifies the following on behalf of the Transferor:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign
estate (as those terms are defined in the Code and the Income Tax Regulations promulgated
thereunder);

2. Transferor’s U.S. tax identification number is                     ; and

3. Transferor’s office address is                     .

Transferor understands that this certification may be disclosed to the Internal Revenue
Service by Transferee and that any false statement contained herein could be punished by fine,
imprisonment, or both.

Transferor understands that Transferee is relying on this certification in determining whether
withholding is required upon said transfer.

Exhibit E

 

 

 

Under penalty of perjury the undersigned declare that they have examined this certification and to
the best of their knowledge and belief it is true, correct and complete, and they further declare
that they have authority to sign this certification on behalf of Transferor.

Dated as of ___________, 2011

	 	 	 	 	 	 	 
	 	 	TRANSFEROR:

                          

                    
                     ,

a           
                       
                              	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 

 

 

 

Exhibit F

Title Affidavit

OWNER’S AFFIDAVIT & GAP INDEMNITY

	 	 	 	 	 
	STATE OF

	 	 	)	 
	 

	 	 	) ss:	 
	COUNTY OF

	 	 	)	 

MONDRIAN HOLDINGS LLC, a Delaware limited liability company
(“Owner”) the Owner of the premises described in Title Commitment No. NCS-480122-NY,
and in consideration of First American Title Insurance Company (the “Company”) issuing its policy
of title insurance insuring an interest in the real estate described herein, and being first duly
sworn on oath, states as follows:

1. That Owner is the owner of, or has an ownership interest in, the real estate referred to
herein (“Premises”), which is described as follows: (See Schedule A annexed hereto).

2. That Owner has owned real estate described herein, continuously for the last
 _____ 
years.

3. That Owner’s possession of the real estate has been peaceable and undisturbed, and that
title to the real estate has never been disputed or questioned.

4. That no proceedings in bankruptcy or receivership have been instituted by or against the
Owner within the last ten (10) years, and that the Owner has never made an assignment for the
benefit of creditors.

5. That there is not any action or proceeding now pending in any State or Federal Court in the
United States, to which the Owner is a party; nor is there any State or Federal Court judgment,
State of Federal Tax Lien, or any other State or Federal lien of any kind or nature against the
Owner, which could constitute a lien or charge upon the real estate.

6. That the charter of said corporation is in full force and effect an no proceeding is
pending for its dissolution or annulment. That all license, state franchise, and city corporation
taxes, if applicable, due and payable by said corporation have been paid in full.

7. That Owner has not contracted for, received any notice regarding, and does not know of any
improvement, alteration or change to be made in or about the real estate.

8. That there are not any delinquent real estate taxes or unpaid current real estate taxes;
nor any pending or levied assessments on the real estate, including but not limited to those for
trees, sidewalks, streets, sewers and water lines.

9. That the improvements on the real estate were completed more than five (5) years ago, and
that there has not been any new construction or major repair work performed on the real estate for
at least one hundred twenty-five (125) days. That the Owner has not contracted for any labor to be
supplied to the premises, or for any materials to be delivered thereto, that might become the
subject of a lien upon the premises and that have not been paid for.

(Continued)

Exhibit F

 

 

 

Owner’s Affidavit

Page Two

10. That there are not any unpaid bills or claims for labor, services, or materials, nor any
recorded or unrecorded mortgages, home improvement loans, chattel mortgages, conditional bills of
sale, retention of title agreements, security agreements, agreements not to sell or encumber,
financing statements, or personal property leases, which affect the real estate or which affect any
fixtures, appliances, or equipment now installed in or on the Premises.

11. No tenant or party has any rights to the Premises other than as to tenants, nor any option
or rights of first refusal to purchase the Premises. The only tenants occupying the Premises are
as set forth on Exhibit “A” annexed hereto.

12. None of the easements referred to in Schedule B interfere with the beneficial use of the
improvements erected on the Premises.

13. That the covenants and restrictions contained in the aforesaid title commitment have not
been violated by the erection of the improvements on the Premises and affiant knows of no facts
which would cause such violation, nor has Owner received any notices of any violations thereof.

14. That the Company has been requested to issue its policy or policies of title insurance
referenced above in favor of the Insured named therein;

AND WHEREAS, the Company is unwilling to issue said policy or policies until the closing
instrument(s) under which the insured acquires an interest in said real property is/are filed for
record in the appropriate recording office(s);

AND WHEREAS, the parties in the transaction have requested the Company to provide a so-called
“New York Style Closing” which provides for the unconditional delivery of the closing instrument(s)
between the parties and the passing of consideration therefore.

NOW THEREFORE it is agreed that in consideration of the Company issuing its policy or policies
without making exception therein of matters which may arise between the most recent effective date
of the title commitment (the last date upon which the search of title is effective) and the date
the documents creating the interest being insured have been filed for record and which matters may
constitute an encumbrance on or affect said title, the undersigned agrees to promptly defend,
remove, bond or otherwise dispose of any encumbrance, lien or objectionable matter to title
(collectively, “objection(s) to title”) which may arise or be filed, as the case may be, against
the captioned premises during the period of time between the most recent effective date of title
commitment and date of recording of all closing instruments, and to hold harmless and indemnify the
Company against all expenses, costs and reasonable attorneys fees which may arise out of its
failure to so remove, bond or otherwise dispose of any said objection(s) to title.

BY:
                                        

Sworn to before me this

                  
   day of
 _____,  2011

                                                            

(Notary Public)

 

 

 

Exhibit G

Escrow Agreement

DEPOSIT ESCROW INSTRUCTIONS

_________, 2011

First American Title Insurance Company

633 Third Avenue

New York, New York 10017

Attention: Andrew Jaeger

Attention:

	 	 	 
	Re:

	 	Deposit under that certain Purchase and Sale Agreement dated April _____, 2011
(the “Agreement”), by and between Mondrian Holdings LLC, a Delaware limited liability
company (“Seller”), and Wolverines Owner LLC, a Delaware limited liability company
(“Purchaser”); Escrow No. 480122 (“Escrow”).

Gentlemen and Ladies:

Purchaser and Seller have entered into the Agreement pursuant to which Purchaser agrees to
purchase the Property (as defined in the Agreement). A copy of the Agreement has been delivered to
you concurrently herewith.

In accordance with Section 1.6 of the Agreement, within one (1) business day following the
execution of the Agreement, Purchaser will be delivering by wire transfer of immediately available
federal funds in the amount of Five Million and 00/100 Dollars ($5,000,000.00) (together with any
interest earned thereon, the “Earnest Money”), for deposit in the Escrow. You are to place the
Earnest Money in an interest bearing account (for this purpose, Purchaser’s Federal Employer I.D.
number is 45-1822358) and hold the Earnest Money in the Escrow and deliver it to Seller or
Purchaser in accordance with these instructions. An executed IRS Form W-9 for Purchaser has been
delivered to you to enable the Earnest Money to be invested.

In the event that (i) you receive written notice from Seller or Purchaser (the party that
delivers such written notice is referred to herein as the “Notice Party”), which notice shall be
delivered concurrently to the other party (the “Other Party”), stating that the Notice Party is
terminating the Agreement and is entitled to the Earnest Money under the terms of the Agreement,
and (ii) you have received written confirmation from the Other Party of its receipt of such written
notice from the Notice Party, you shall, on the tenth (10th) business day after the Other Party’s
receipt of such written notice from the Notice Party, deliver the Earnest Money (by delivering
cash, certified check or some other form of immediately available funds, to the Notice Party at the
address or pursuant to the wiring instructions provided in such written notice from the Notice
Party); provided that, if you receive written notice from the Other Party or the Other Party’s
counsel within nine (9) business days after the Other Party’s receipt of the such written notice
from the Notice Party that the Other Party disputes the Notice Party’s right to receive the Earnest
Money and directs you not to make the foregoing delivery, you shall not deliver the Earnest Money
to the Notice Party but shall instead retain it or, if appropriate, interplead the Earnest Money in
a court of competent jurisdiction in the State of New York. All notices delivered pursuant to these
instructions shall be made in accordance with the provisions of
Section 11.4 of the Agreement. Notices to Escrow Agent will be delivered to the attention of
Andrew Jaeger, Esq. and Gregory Faust, reference Title No 480122.

Exhibit G

 

 

 

You are not to disclose to any person (other than the parties hereto, their employees, agents
or independent contractors) any information about the Agreement or its existence or this letter of
instructions (except if requested by either party or as may be required by court in any litigation
or by law).

You are to maintain the Earnest Money in a federally-insured interest-bearing account at JP
Morgan Chase and all interest accruing thereon shall be paid to the party entitled to the Earnest
Money in accordance with this deposit escrow instruction letter. We understand that you shall not
be responsible for any penalties, loss of principal or interest, or the consequences of a delay in
withdrawal of the Deposit and interest accrued thereon, if any, which may be imposed as a result of
the making or the redeeming of the above investment, as the case may be. Seller and Purchaser also
agree that Escrow Agent shall not be liable for any loss or impairment of the Deposit while the
Deposit is in the course of collection or of the Escrow if such loss or impairment results from the
failure, insolvency or suspension of the financial institution in which the Deposit is deposited.
Nor shall you be required to institute legal proceedings of any kind pursuant to these
instructions, nor be required to defend any legal proceedings which may be instituted against you
with respect to the subject matter of these instructions unless you are requested to do so by
Purchaser or Seller and arrangements reasonably satisfactory to you have been made to indemnify you
against the cost and expense of such defense by the party making such request. If any dispute shall
arise with respect to these instructions, whether such dispute arises between the parties hereto or
between the parties hereto and other persons, you may interplead such disputants. You shall be
responsible only for the performance of such duties as are strictly set forth herein and in no
event shall you be liable for any act or failure to act under the provisions of this letter except
where such action or inaction is the result of your willful misconduct or gross negligence.

Seller and Purchaser each hereby agrees, jointly and severally, to indemnify you and hold you
harmless against any loss, liability or damage (including the cost of litigation and reasonable
counsel fees) incurred in connection with the performance of your duties hereunder except as a
result of your willful misconduct or gross negligence.

In the event of any dispute between Seller and Purchaser respecting these instructions, Seller
and Purchaser may elect to submit such dispute to any court of competent jurisdiction in the State
of New York in accordance with Section 11.12 of the Agreement. The prevailing party in any such
dispute shall be entitled to recover its legal fees and expenses incurred in connection with such
dispute.

Please indicate your agreement to comply with the foregoing instructions by executing at least
three (3) copies of this letter and returning, by overnight courier, one to Hogan Lovells US LLP,
as counsel for Seller, and one to Hunton & Williams LLP, as counsel for Purchaser.

 

 

 

Very truly yours,

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	SELLER:

MONDRIAN HOLDINGS LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Mondrian Senior Mezz LLC, its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Morgans Group LLC, its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	Morgans Hotel Group Co., its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	PURCHASER:

WOLVERINES OWNER LLC

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 	 	 

ACKNOWLEDGED AND AGREED:

First American Title Insurance Company

	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

Date:                     , 2011

 

 

 

Exhibit H

Form of Tenant Estoppel

TENANT ESTOPPEL CERTIFICATE

	 	 	 	 	 	 	 
	To:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 
	Property Address:

	 	8440 Sunset Boulevard
	 

	 	West Hollywood, California
	 

	 	(the “Property”)

Premises
at Property:                                                              (the “Premises”)

[Reference Guarantor if applicable]

The undersigned tenant (the “Tenant”) hereby certifies to you as follows:

(1) Tenant is a tenant at the Property under a lease (the “Lease”) dated                      for
the Premises.

(2) The Lease is in full force and effect, represents the entire agreement between the
landlord and Tenant as to Tenant’s interest in the Property and Premises, and has not been
canceled, modified, assigned, extended or amended except as follows:                                         .

(3) The Lease has been guaranteed by                      (the “Guarantor”) and such guaranty is in
full force and effect [If no guarantor, then this section to be deleted].

(4) All base rent, rent escalations, additional rent, Tenant’s proportionate share of real
estate taxes, insurance and operating expenses, and other sums or charges due and payable under the
Lease by Tenant have been paid through                     ,
20_____. There is no prepaid rent, additional
rent, or other similar sums or charges, except for the current month, and the amount of security
deposit currently being held by the landlord under the Lease is $_____.

(5) Base rent is currently payable in the amount of $                     per month, and Tenant is
currently making estimated payments for operating expenses and taxes in the amount of $                    
per month.

(6) The Lease commencement date occurred on                                          and the Lease terminates on
                    . The Tenant has the following renewal option(s)                     .

(7) To Tenant’s knowledge: (a) the Lease is free from default and free from any event which
could become a default under the Lease; (b) Tenant has no claims or counterclaims against the
landlord; and (c) Tenant has no offsets or defenses against the payment of rent or other sums, or
the performance of any of Tenant’s other obligations under the Lease.

(8) The Tenant has received no notice of prior sale, transfer or assignment, hypothecation or
pledge of the Lease or of the rents payable thereunder, except                                                             .

Exhibit H

 

 

 

(9) The Tenant has full possession of the Premises, has not assigned the Lease or sublet the
Premises or any part thereof and does not hold the Premises under an assignment or sublease, except
pursuant to subleases consented to by the landlord and                                                             .

(10) The Tenant has no rights or options to purchase the Property or any part thereof of any
interest therein by right of first refusal, rights of first offer or option or other similar right
to purchase. Tenant has no right to lease other space in the Property except as set forth in the
Lease.

(11) The Tenant is not insolvent or bankrupt and is not contemplating seeking relief under
any insolvency or bankruptcy statutes. No actions, whether voluntary or otherwise, are pending
against Tenant [or Guarantor] under the bankruptcy laws of the United States or any state and there
are no claims or actions pending against Tenant [and/or Guarantor] which if decided against Tenant
[and/or Guarantor] would materially and adversely affect Tenant’s [or Guarantor’s] financial
condition or ability to perform Tenant’s [and/or Guarantor’s] obligations under, or in respect of,
the Lease.

(12) To the best of Tenant’s knowledge, both Tenant and the landlord have performed all of
their respective obligations under the Lease and Tenant has no knowledge of any event which with
the giving of notice, the passage of time or both would constitute a default by the landlord under
the Lease.

(13) The landlord has not agreed to grant Tenant any free rent or rent rebate or to make any
contribution to Tenant’s improvements.

(14) All base building and other tenant improvement work to be performed by the landlord
under the Lease has been substantially completed in accordance with the Lease, and all payments due
to Tenant, including without limitation, under the Lease as a landlord contribution towards
Tenant’s work has been paid in full, except as follows:                                                             . [To be deleted
if there is no contractual obligation to perform work and/or make any landlord contribution].

(15) This certificate has been duly authorized, executed and delivered by Tenant.

The undersigned has executed this Estoppel Certificate with the knowledge and understanding
that you, or one of your affiliates, is acquiring the Property in reliance on this Estoppel
Certificate and that the undersigned will be bound by this Estoppel Certificate. The statements
contained herein may be relied upon by you and your affiliates, the landlord, any purchaser of the
Property or the landlord’s interest therein, any lenders to the owners of the Property, any of the
owner’s constituent entities, and any mortgagee of the Property and their successors and assigns.

Dated this _____ day of                     ,
20_____.

	 	 	 	 	 	 	 	 	 
	 	 	TENANT	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	[GUARANTOR]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

 

 

Exhibit I

Form of Liquor Assets Escrow Agreement

LIQUOR ASSETS ESCROW AGREEMENT

	 	 	 
	TO:

	 	Bay Commercial Bank
	 

	 	3895 East Castro Valley Boulevard — Suite A
	 

	 	Castro Valley, CA 94552,
	 

	 	Attn: Chloe Flowers, Senior Vice President
	 

	 	Tel: 510-300-8140

Date: May _____, 2011

Escrow Officer: C. Flowers

Escrow No. 210124

IT IS AGREED BETWEEN THE TRANSFEROR AND INTENDED TRANSFEREE THAT NONE OF THE SAID
CONSIDERATION WILL BE PAID FOR THE TRANSFER OF THE LICENSE(S) UNTIL SUCH TIME AS ESCROW AGENT HAS
BEEN ADVISED IN WRITING BY DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL (“ABC”) THAT THE
TRANSFER OF SAID LICENSE(S) HAS BEEN APPROVED.

	 	 	 	 	 
	A.

	 	THE TRANSFEROR (SELLER):
	 	8440 LLC
	 
	 	 	 	 
	 

	 	WHOSE MAILING ADDRESS IS:
	 	c/o MORGANS HOTEL GROUP
	 

	 	 	 	475
10TH
AVENUE,
11TH
FLOOR
	 

	 	 	 	NEW YORK, NY 10018
	 
	 	 	 	 
	B.

	 	AND INTENDED TRANSFEREE:
	 	8440 LLC AND WOLVERINES LESSEE
	 

	 	 	 	LLC, AS CO-LICENSEES
	 
	 	 	 	 
	 

	 	WHOSE MAILING ADDRESS IS:
	 	c/o PEBBLEBROOK HOTEL TRUST
	 

	 	 	 	2 BETHESDA METRO CENTER, STE 1530
	 

	 	 	 	BETHESDA, MD 20814

Exhibit I

 

 

 

	 	 	 	 	 
	C.	 	Will complete all Department of ABC Requirements to cause license(s) to be transferred to Intended Transferee:
	 
	 	 	 	 
	 

	 	Kind of Licenses:
	 	TYPE 47 — ON-SALE GENERAL EATING PLACE
	 
	 	 	 	 
	 

	 	 	 	TYPE 47 — ON-SALE GENERAL EATING PLACE
	 
	 	 	 	 
	 

	 	 	 	TYPE 58 — CATERER PERMIT
	 
	 	 	 	 
	 

	 	 	 	TYPE 66 — CONTROLLED ACCESS CABINET PERMIT
	 
	 	 	 	 
	 

	 	 	 	TYPE 68 — PORTABLE BAR
	 
	 	 	 	 
	 

	 	 	 	LICENSE NO. 326147
	 
	 	 	 	 
	 

	 	Now Located at
	 	8440 SUNSET BOULEVARD
	 

	 	 	 	WEST HOLLYWOOD, CA 90069 (the “Premises”)

1. Pursuant to Section 24073 of the Business and Professions Code of the State of California,
Transferor or Intended Transferee shall cause Notice of Intended Transfer to be filed for record in
the Office of the Los Angeles County Recorder upon receipt of the total purchase price for the
transfer. Transferor and the Intended Transferee shall deliver to Escrow Agent a conformed copy
of said Notice, Intended Transferee shall deliver a copy of said Notice of Intended Transfer,
certified by the County Recorder, to the ABC.

2. Prior to the release of ABC Form 226 “Applicant’s Statement That Consideration Has Been
Deposited in Escrow”, Intended Transferee shall deliver to BAY COMMERCIAL BANK, Corporate Escrow
Services (hereinafter, Escrow Agent), the full amount of the purchase price in the form of CASH in
the amount of $75,000, of which $40,000 shall be allocated to the liquor licenses and $35,000 shall
be allocated to the liquor inventory, which amounts constitute a deferral of a portion of the
purchase price paid by Intended Transferee (or its affiliate) for the Premises.

3. License Renewal Fees which may become due prior to the transfer of the liquor license will
be payable by Transferee.

INITIALS (Transferor(s)
 _____) INITIALS (Intended Transferee(s)
 _____ 

This section must be initialed by Transferor and Intended Transferee

TRANSFEROR AND INTENDED TRANSFEREE HEREBY ACKNOWLEDGE THAT IN THE EVENT ESCROW AGENT IS
NOTIFIED BY THE ABC THAT A “TAX HOLD” HAS BEEN PLACED ON THE LIQUOR LICENSE OF THE TRANSFEROR BY
THE STATE BOARD OF EQUALIZATION, EMPLOYMENT DEVELOPMENT DEPARTMENT, FRANCHISE TAX BOARD, CITY
AND/OR COUNTY DELINQUENT BUSINESS TAXES AND/OR INTERNAL REVENUE SERVICE UNDER PROVISIONS OF
BUSINESS AND PROFESSIONS CODE 24049, AND, THAT TO THE BEST OF ESCROW AGENT’S KNOWLEDGE, AFTER
APPROPRIATE INQUIRY, NOTHING AT THE TIME OF SUCH NOTIFICATION IS PREVENTING THE TRANSFER OF THE
LIQUOR LICENSE EXCEPT THE “RELEASE OF SAID TAX HOLD”,
THEN ESCROW AGENT IS HEREBY AUTHORIZED AND INSTRUCTED TO PAY, WITHOUT FURTHER INSTRUCTION FROM
THE TRANSFEROR AND INTENDED TRANSFEREE, FROM THE FUNDS DEPOSITED INTO ESCROW BY INTENDED
TRANSFEREE, TO THE TAXING AGENCY HAVING PLACED SAID “TAX HOLD”, PER THEIR WRITTEN DEMAND DELIVERED
TO ESCROW AGENT. UPON TRANSFER OF THE LIQUOR LICENSE THE AMOUNT RELEASED WILL BE DEDUCTED FROM
SELLERS PROCEEDS.

 

 

 

FURTHER, TRANSFEROR AND INTENDED TRANSFEREE ACKNOWLEDGE AND UNDERSTAND THAT THE PAYMENT OF THE
DEMAND FROM SAID TAXING AUTHORITY MAY OR MAY NOT CONSTITUTE FULL OR FINAL PAYMENT THEREOF AND DOES
NOT RELIEVE THE TRANSFEROR OF ITS LIABILITY THERETO AND THAT THE TAXING AUTHORITY MAY STILL IMPOSE
SUCCESSOR LIABILITY UPON THE INTENDED TRANSFEREE.

TRANSFEROR AND INTENDED TRANSFEREE HOLD ESCROW AGENT HARMLESS AND WITHOUT LIABILITY FOR
FOLLOWING THESE INSTRUCTIONS AND THE EARLY RELEASE OF INTENDED TRANSFEREE’S FUNDS, AND INTENDED
TRANSFEREE IS TO LOOK TO TRANSFEROR FOR RESTITUTION IN THE EVENT INTENDED TRANSFEREE SHOULD NOT
ACQUIRE THE LIQUOR LICENSE IN QUESTION.

INITIALS (Transferor(s)
 _____) INITIALS (Intended Transferee(s)
 _____)

This section must be initialed by Transferor and Intended Transferee

	D.	 	UPON APPROVAL OF THE TRANSFER OF THE LICENSE BY THE ABC ESCROW AGENT SHALL;

1. Out of said purchase price, Escrow Agent is authorized to pay the claims of such of the
bona fide creditors of Transferor who shall file their claims with Escrow Agent not later than the
date on which written notice of transfer from the ABC is received.

2. All claims approved by Transferor shall be deemed to be bona fide and Escrow Agent may pay
such approved claims. Should any claims be filed, which Transferor refuses to approve, Escrow
Agent shall notify the claimant; and the pro rata amount thereof shall be retained by Escrow Agent
for a period of 25 days; and if not attached, shall be paid to Transferor in accordance with
Section 24074 of the Business and Professions Code of the State of California.

 

 

 

3. If such purchase price shall not be sufficient to pay said claims in full, Escrow Agent is
to distribute said consideration pursuant to the provisions of Section 24074.1 of the Business and
Professions Code of the State of California; provided, however, that prior to such distribution,
Escrow Agent shall deliver written notice of each creditor setting forth the distribution to be
made in accordance with this paragraph, which notice shall provide that such creditor may dispute
such distribution if it can show reasonable proof that such distribution would violate the
provisions of Section 24074.1 of the Business and Professions Code of the State of California.

4. Escrow Agent shall pay the balance remaining of such purchase price, after payment of
creditor claims and other expenses, to Transferor or as directed by Transferor.

GENERAL PROVISIONS

TAXES: Escrow Agent is not to be concerned as to any unpaid beverage, unemployment, social
security, personal property, sales tax, or any other tax or contribution, any federal liens, or any
unpaid salaries or wages, unless otherwise specifically instructed in this escrow. SHOULD ESCROW
AGENT BE DIRECTED AND INSTRUCTED IN THESE INSTRUCTIONS TO MAKE ANY SUCH PAYMENT, SAME MAY OR MAY
NOT CONSTITUTE FULL OR FINAL PAYMENT THEREOF.

OTHER AGREEMENTS: Unless otherwise provided herein, Escrow Agent is not to be concerned with
any conditional sales contract, lease contract or security agreement that may affect the herein
referred to personal property, and is not responsible for the delivery of any papers other than
described herein. Escrow Agent is not a party to, or bound by any agreement which may be deposited
under, evidenced by, or arise out of these instructions, other than these instructions.

AGENCY RESPONSIBILITY: Escrow Agent is to make no examination of the property nor of the
title thereto; Escrow Agent acts as a depositary only and is not responsible or liable in any
manner whatever for the sufficiency, correctness, genuineness or validity of any instrument
deposited with it hereunder, or with respect to form or execution of the same, or the identity,
authority, or right of any person executing or depositing the same.

 

 

 

DEFAULTS: Escrow Agent shall not be required to take or be bound by notice of any default of
any person, or to take any action with respect to such default involving any expense or liability,
unless notice in writing is given to the Escrow Agent at the office above named, of such default by
the undersigned or any of them, and unless it is indemnified in a manner satisfactory to it against
such expense or liability. These instructions shall not be subject to revision or modification
except upon receipt by Escrow Agent at the office above named of the written instructions of all of
the parties hereto or their successors in interest.
Notwithstanding anything herein to the contrary, in the event approval of the transfer of the
License by the ABC has not occurred by the date that is 180 days after the date of these
instructions, Intended Transferee shall be deemed in default hereunder and Escrow Agent shall
immediately disburse the purchase price to Transferor as Transferor’s sole and exclusive remedy for
such default, and upon such disbursement, this escrow shall be deemed cancelled.

THE PARTIES ACKNOWLEDGE AND AGREE THAT IF INTENDED TRANSFEREE IS DEEMED IN DEFAULT AS PROVIDED
HEREIN, THE DAMAGES THAT TRANSFEROR WOULD SUSTAIN AS A RESULT OF SUCH DEFAULT WOULD BE IMPRACTICAL
AND EXTREMELY DIFFICULT TO ASCERTAIN. ACCORDINGLY, THE PARTIES AGREE THAT TRANSFEROR SHALL RETAIN
THE PURCHASE PRICE AS FULL AND COMPLETE LIQUIDATED DAMAGES (AND NOT AS A PENALTY) AS TRANSFEROR’S
SOLE AND EXCLUSIVE REMEDY FOR SUCH DEFAULT. THE PARTIES ACKNOWLEDGE THAT THE RETENTION OF THE
PURCHASE PRICE AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING
OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO
TRANSFEROR PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677.

NOTICES: Escrow Agent shall be protected in acting upon any notice, request, waiver, consent,
receipt or other paper or document believed by Escrow Agent to be signed by the proper party or
parties.

JUDGMENT: Escrow Agent shall not be liable for any error of judgment or for any act done or
step taken or omitted by it in good faith or for any mistake of fact or law, or for anything which
it may do or refrain from doing in connection herewith, except its own gross negligence or willful
misconduct, and Escrow Agent shall have no duties to anyone except those signing these
instructions.

COUNSEL: Escrow Agent may advise with legal counsel in the event of any dispute or questions
as to the construction of the foregoing instructions, or Escrow Agent’s duties thereunder, and
Escrow Agent shall incur no liability and shall be fully protected in acting in accordance with the
opinion and instructions of counsel.

 

 

 

DISAGREEMENTS: In the event of any disagreement between the undersigned or any of them,
and/or the person or persons named in the foregoing instructions, and/or any other person,
resulting in adverse claims and demands being made in connection with or for any papers, money or
property involved herein or affected hereby, Escrow Agent shall be entitled at its option to refuse
to comply with any such claim or demand, so long as such
disagreement shall continue, and in doing so doing Escrow Agent shall not be or become liable
for damages or interest to the undersigned or any of them or to any person named in the foregoing
instructions for its failure or refusal to comply with such conflicting or adverse demands, and
Escrow Agent shall be entitled to continue to refrain and refuse so to act until;

1. the rights of the adverse claimants have been finally adjudicated in a court assuming and
having jurisdiction of the parties and the money, papers, and property involved herein or affected
hereby; and/or

2. all differences shall have been adjusted by agreement and Escrow Agent shall have been
notified thereof in writing, signed by all of the persons interested.

In the event of such disagreement, Escrow Agent in its discretion, may file a suit in
interpleader for the purpose of having the respective rights of the claimants adjudicated, and
deposit with the court all documents and property held hereunder, and the undersigned agree to pay
all reasonable costs and counsel fees incurred by Escrow Agent in such action and said costs and
fees shall be included in the judgment in any such action.

FEES AND CHARGES: In the event that Escrow Agent performs any service not specifically
provided hereinabove, or that there is any assignment or attachment of any interest in the subject
matter of this escrow or modifications thereof, or that any controversy arises hereunder, or that
Escrow Agent is made a party to, or intervenes in, any litigation pertaining to this escrow or the
subject matter thereof, Escrow Agent shall be reasonably compensated therefor and reimbursed for
all costs and expenses occasioned thereby. Escrow Agent shall have a first lien on the property
and papers held by it hereunder for such compensation and expenses, and the parties hereto agree
jointly and severally to pay the same, and to indemnify Escrow Agent against any loss, liability or
expense incurred in any act or thing done hereunder.

 

 

 

For its ordinary services hereunder, the Escrow Agent shall be entitled to an initial fee of
$1,025.00 which is Non-refundable, payable concurrently with its acceptance hereof, by Intended
Transferee and to additional compensation, if applicable, paid by Transferor as follows:

Federal Express fees will be in addition to the escrow fee.

$15.00 for each claim in excess of three (3) paid through escrow

$50.00 for each disputed claim of Transferor

CANCELLATION: In the event this escrow is cancelled, Transferor or Intended Transferee will
nevertheless pay the escrow fees plus all costs and expenses of Escrow Agent. Notwithstanding
anything in these instructions to the contrary, Escrow Agent may, at his discretion, resign at any
time prior to receipt of written notice from the ABC that the license(s) has been transferred by
giving five (5) days written notice to the ABC and parties hereto, and shall be entitled to
reimbursement only for those costs and expenses incurred by Escrow Agent to the date of such
resignation. Upon cancellation by the parties or resignation of Escrow Agent, after deducting
Escrow Agent’s fees and/or costs or expenses, the balance of funds and documents shall be returned
to the parties who shall have deposited the same, except as otherwise provided in the “DEFAULTS”
section above.

SIGNATURES: These instructions may be executed in counterparts, each of which so executed
shall be deemed an original, irrespective of the date of its execution and delivery; and said
counterparts together shall constitute one and the same instrument.

Each of the undersigned states he has read the foregoing instructions, understands and agrees
to them.

DEPOSITS. All funds received in the escrow shall be deposited with other escrow funds in a
non-interest bearing general escrow account or accounts of COMMERCIAL BANK, unless otherwise
instructed verbally or in written form.

[Signatures follow]

 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TRANSFEROR:	 	INTENDED TRANSFEREE:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8440 LLC	 	8440 LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Mondrian Pledgor LLC	 	 	 	By:	 	Mondrian Pledgor LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Mondrian Senior Mezz LLC, its Managing Member	 	 	 	 	 	By:	 	Mondrian Senior Mezz LLC, its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Morgans Group LLC, its Managing Member	 	 	 	 	 	 	 	By:	 	Morgans Group LLC, its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	Morgans Hotel Group Co., its Managing Member
	 	 	 	 	 	 	 	 	 	By:
	 	Morgans Hotel Group Co., its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	 	 	 	 	By:	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	 	 	 	 	 	 	Name:	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	 	 	 	 	 	 	Title:	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	WOLVERINES LESSEE LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	By:	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	Name:	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	Title:	 	 	 	 	 	 	 	 	 	 

Signature Page to Mondrian Liquor Assets Escrow Agreement

 

 

 

Schedule 1.1(a)

Legal Description of Land

Lot “A” of Tract No. 2527, in the city of West Hollywood,
county of Los Angeles, state of California, as per map
recorded in Book 34 Page 14 of Maps, in the office of the
county recorder of said county.

EXCEPT therefrom that portion thereof lying Southerly of a
line bearing North 89 degrees 54’ West from a point on the
East line of said Lot, distant North 0 degrees 06’ East
thereon 320 feet from the Southeast corner of said Lot.

 

 

 

Schedule 1.1(c)

Excluded Personal Property

	1.	 	Asia de Cuba uniforms

	2.	 	Four (4) ping pong tables

	3.	 	Six (6) portraits,
photographs of (on file)

 

 

 

Schedule 1.1(e)-1

Service Contracts

Schedule 1.1(e)-1(a)

	 	1.	 	Maintenance Agreement, dated as of August 1, 2008, between ACCO Engineered Systems and
Morgans Hotel Group

	 	2.	 	Standard Service Agreement, dated as of May 7, 1996, between American Waste Industries
and Mondrian Hotel

	 	3.	 	Consulting Agreement, effective as of July 20, 2010, between 8440 LLC and Spin Global
Management LLC, as terminated by notice, dated March 22, 2011

	 	4.	 	Contract, dated as of March 30, 2000, between Pico Cleaners and Mondrian Holding LLC
and Ian Schrager Hotel, Ian Schrager Hotel Management LLC

	 	5.	 	Hotel Car Rental Agreement, dated as of November 11, 2009, between Midway Car Rental
and Mondrian Hotel

	 	6.	 	Agreement (Landscape Maintenance Specifications), dated as of November 1, 2005, between
Mondrian and Reliable Gardens Inc.

	 	7.	 	Limousine Agreement, dated as of May 5, 2007, between Mondrian Holdings, LLC and CLS
Los Angeles Transportation, LLC

	 	8.	 	Non-Guaranteed Monthly Interior Plant Maintenance Agreement, agreed and accepted on May
28, 2008, between Inner Gardens, Inc. and Mondrian.

	 	9.	 	Preventative Maintenance Agreement, dated as of July 21, 2009, between Advantage
Fitness Products and Mondrian Hotel

	 	10.	 	Master Preventative Maintenance Service Agreement, dated as of June 5, 2009, between
Mondrian Hotel and Fujitec America, Inc.

	 	11.	 	Routine Maintenance Agreement, dated as of March 21, 2008, between Mondrian and Western
State Design, Inc.

	 	12.	 	Service Agreement, dated as of October 10, 2007, between Ontario Refrigeration Service,
Inc. and Mondrian Hotel

	 	13.	 	Service Agreement, dated as of August 10, 2006, between, between Ontario Refrigeration
Service, Inc. and Mondrian Hotel

	 	14.	 	Technical Support Agreement, executed as of July 26, 2002, between Minibar North
America, Inc. and Mondrian Hotel

	 	15.	 	Music Service Agreement, dated as of May 1, 2002, between Mondrian Holdings and DMX
Music, Inc.

 

 

 

	 	16.	 	Fire Alarm System Monitoring Proposal/Contract, dated as of February 15, 1990, between
Mondrian Hotel and Fire Call

	 	17.	 	Music Services Agreement, dated as of December 31, 2008, between Morgans Hotel Group
LLC and Sauce Industries, LLC (d/b/a Gray V)

	 	18.	 	Master Agreement for the Supply of Equipment, Software, Maintenance Services and
Professional Services, dated as of November 16, 2000, between Mondrian Hotel and MAI
Systems Corporation

	 	19.	 	Commercial Service Agreement, dated as of March 4, 2008, between Mondrian and Isotech
Pest Management

	 	20.	 	Supplemental Law Enforcement Services Agreement at Special Events or Occurrences, dated
as of July 1, 2006, between County of Los Angeles and Mondrian Hotel

	 	21.	 	Service Agreement, dated as of October 21, 2009, between Morgans Hotel Group-The
Mondrian Hotel and Merchants Building Maintenance, LLC

	 	22.	 	Service Agreement, dated as of July 21, 2004, between PAETEC Communications, Inc. and
Mondrian Holdings LLC

	 	23.	 	Pay Phone Service Agreement , dated as of November 1, 2005, between Mondrian Holdings
and the Public Communications Division of SBC Communications Inc.

	 	24.	 	Contract, dated as of May 29, 2007, between Bevinco and Mondrian

	 	25.	 	Master Services Agreement, dated as of March 15, 2011, between Mondrian West Hollywood
and TRAVELCLICK, Inc.

	 	26.	 	LodgeNet Content and System Maintenance Agreement, dated as of November 6, 2009,
between Mondrian Holdings LLC and LodgeNet Interactive Corporation

	 	27.	 	Computer Services Agreement, effective as of [December 14, 2010], between Mondrian Los
Angeles and Eleven Wireless Inc.

	 	28.	 	Customer Care Agreement, dated as of July 9, 2009, between Sunray Technology Ventures
Inc. and Mondrian Los Angeles

	 	29.	 	Letter Agreement from SPG Security/Specialized Protective Group to Mondrian Hotel
Director of Security, dated as of September 1, 2008

	 	30.	 	Service Agreement, dated as of _____, between Mondrian Hotel and Gemini Electronic
Security Inc.

	 	31.	 	Consultant Services Agreement (Interior Design), dated as of January 17, 2007, between
Benjamin Noriega-Ortiz, LLC and Mondrian Holdings LLC

	 	32.	 	Agreement, dated as of October 25, 1999, between Sectran Security, Incorporated and
Mondrian Hotel

	 	33.	 	Invoice, dated March 12, 2011, by USA Mobility Wireless Inc. for Morgans Hotel Group

 

 

 

	 	34.	 	Consulting Agreement, dated as of March 14, 2006, between Mondrian Holdings LLC and
House & Robertson Architects, Inc.

	 	35.	 	Contract, dated as of December 15, 2007, between Bevinco and SkyBar

	 	36.	 	LP — Gas Service Order Form, dated as of August 23, 2006, with Avcogas for SkyBar

Warranties

	 	37.	 	From CDW Direct: Three (3) year warranty on six (6) laptops, Mfg# HPE-U441E, expires on
or about February 2014

	 	38.	 	From DELL: “3 Year Basic Limited Warranty and 3 Year NBD Onsite Service”, Product Code
U3OS, expires on or about September 2012

	 	39.	 	From Fujitec America, Inc.: One (1) year limited warranty against defects in material
and workmanship, expires on or about August 2011.

	 	40.	 	From Midwest Roofing Inc.:

	 	a.	 	Ten (10) year warranty on materials (excluding skylight lens, A/C
ducts, conduits, gutters, drains, or other similar equipemtn), expires on or about
August 2019

	 	b.	 	Seven (7) year warranty on labor, expires on or about August 2016

	 	41.	 	Washex Machinery of California: One (1) year warranty on flatironer, expires on January
1, 2012

Schedule 1.1(e)-1(b)

	 	1.	 	Lease/Rental Agreement, dated as of March 10, 2010, between Public Storage and Mondrian
Hotel

	 	2.	 	Lease/Rental Agreement, dated as of April 30, 2010, between Public Storage and Mondrian
Hotel

	 	3.	 	Placement Agreement, dated as of January 3, 2007, between Mondrian Los Angeles and OSA
Financial, Inc.

	 	4.	 	Hotel Parking Facility Management Agreement, dated as of April 30, 2003, between
Mondrian Holdings LLC, dba The Mondrian Hotel and Quality Parking Service, Inc., as amended
by Amendment to Hotel Parking Facility Management Agreement, dated as of December 4, 2008,
between Mondrian Holdings LLC, dba The Mondrian Hotel and Quality Parking Service, Inc.

	 	5.	 	Customer Subscriber Agreement, dated as of October 7, 2010, between Mondrian Holdings,
LLC and Cogent Communications, Inc.

 

 

 

	 	6.	 	Master Service Agreement, dated as of November 15, 2004, between Mondrian Holdings, LLC
and Shift4 Corporation

	 	7.	 	SpaSoft Support Services Agreement, dated as of January 1, 2004, between
Springer-Miller Systems, Inc. and Mondrian Holdings LLC

	 	8.	 	Letter of Agreement, dated as of December 3, 2010, between Mondrian Holdings LLC and
Virgin Mobile Canada, a Division of Bell Mobility Inc.

	 	9.	 	Equipment Maintenance Contract, dated as of February 28, 2003, between Design
Communications, Inc. and Mondrian Holdings, LLC

	 	10.	 	Lodgenet Free-to-Guest License Agreement, dated as of August 13, 2009, Mondrian
Holdings LLC and LodgeNet Interactive Corporation

	 	11.	 	Lodgenet Free-to-Guest License Agreement, dated as of November 6, 2009, Mondrian
Holdings LLC and LodgeNet Interactive Corporation

	 	12.	 	Amendment to Lodgenet Free-to-Guest License Agreement, effective as of June 4, 2010,
between Mondrian Holdings LLC and LodgeNet Interactive Corporation

 

 

 

Schedule 1.1(e)-2

Equipment Leases

Schedule 1.1(e)-2(a)

	 	1.	 	Certificate of Delivery, Installation and Training, dated as of February 20, 2008,
between Mondrian Hotel and Priority Mailing Systems, Inc.

Schedule 1.1(e)-2(b)

	 	1.	 	Order Agreement, dated as of March 21, 2007, between Mondrian Hotel and Lanier
Worldwide, Inc.

 

 

 

Schedule 1.1(f)

Intellectual Property

None.

 

 

 

Schedule 1.1(g)

List of Transferable Permits

None.

 

 

 

Schedule 1.1(j)

List of Space Leases

	1.	 	Sublease (Food and Beverage Premises) Mondrian, dated as of November 13, 1996, between
Ian Schrager Hotels, Inc. and 8440 LLC

	2.	 	License Agreement, dated as of March
 _____, 2011, between Mondrian Holdings LLC and
Artspace Marketplace, Inc.

	3.	 	Building Sign License Agreement, dated as of April 12, 2001, between Mondrian Holdings
LLC and Eller Media Company, Inc., and expiration notice, dated April 4, 2011

	4.	 	Lease, dated as of February
 _____, 2011, between Mondrian Holdings LLC and Branded Cities,
LLC (relating to signage)

 

 

 

Schedule 1.5(c)

Allocations of Real and Personal Property

	 	 	 	 	 
	Land/Building:
	 	$	130,909,000	 
	FF&E:
	 	$	6,091,000	 
	Total:
	 	$	137,000,000	 

 

 

 

Schedule 2.4(a)

Permitted Exceptions

	1.	 	The lien of supplemental taxes, if any, assessed in connection with the change of
ownership pursuant to this Agreement pursuant to Chapter 3.5 commencing with Section 75 of
the California Revenue and Taxation Code.

	2.	 	An easement for public road and incidental purposes in the document recorded November
8, 1962 as Instrument No. 5516, in Book D-1817 Page 222 of Official Records.

By Resolution No. 96-1627, the City Council of the City of West Hollywood ordering the
vacation of a portion of Sunset Boulevard and Olive Drive at 8440 Sunset Boulevard, in the
city of West Hollywood, recorded September 12, 1996 as Instrument No. 96-1504898.

	3.	 	The terms and provisions contained in the document entitled “Acceptance Affidavit”
recorded May 7, 1996 as Instrument No. 96-713245 of Official Records.

	4.	 	The terms and provisions contained in the document entitled “Acceptance Affidavit of
Resolution No. 01-2619R — A Resolution of the City Council of the City of West Hollywood
Approving the Appeal of Hillcrest Realty Services, and Approving Conditional Use Permit
2001-11 for a Tall Wall Sign at 8440 Sunset Boulevard, West Hollywood, California” recorded
January 18, 2002 as Instrument No. 02-0143019 of Official Records.

	5.	 	A notice of assessment recorded November 5, 1996 as Instrument No.
96-1796913 of Official Records, executed by City Clerk of the City of West
Hollywood.

	 

	6.	 	The terms and provisions contained in the document entitled “Acceptance Affidavit”
recorded July 18, 2006 as Instrument No. 06-1577722 of Official Records.

 

 

 

Schedule 3.2

Reports

	1.	 	Phase I Environmental Site Assessment, dated August 14, 2006, prepared by IVI Due
Diligence Services, Inc.

	2.	 	Property Condition Report for Mortgage Financing Purposes, dated August 11, 2006,
prepared by IVI Due Diligence Services, Inc.

	3.	 	Letter regarding Probable Maximum Loss at Site, dated August 11, 2006, prepared by IVI
Due Diligence Services, Inc.

 

 

 

Schedule 5.1(d)

Material Defaults under Space Leases

None.

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