Document:

Exhibit 10.1

Exhibit 10.1

BOLIVARIAN REPUBLIC OF VENEZUELA

MINISTRY OF THE POPULAR POWER FOR

INTERNAL AFFAIRS AND JUSTICE

Registries and Notaries Offices Autonomous Service (SAREN)

(For its acronym in the Spanish language)

Public Registry Office of

Chacao Municipality of the Bolivarian State of Miranda

DOCUMENTS GRANTED

	 
	Number:
	 
	240.13.18.1.5824 to 5833
	 

	 
	Volume:
	 
	 
	 

	 
	Protocol:
	 
	 
	 

	 
	Date:
	 
	June 02 of 2011”
	 

Interpreter’s
Note: The foregoing document bears on the upper left margin the logo
of the Ministry of the Popular Power for Internal affairs and Justice and on
the right corner the logo of the Registries and Notaries Offices Autonomous
Service. The following page is a Sole Bank Form Number: 24000032354 for
the payment of Sales Registry Fees for an amount of VEB 141,280.60. This form
has been duly signed and sealed by the appropriate authorities. Another Sole
Bank Form follows identified with Number: 24000032752 for the payment of the
Sale and Registry Fees and Taxes for an amount of VEB 535.80, also duly singed
and sealed. The document continues as follows:

1

 

	“(Illegible signature)	 	240.2011.2239
	Zaida Gonzalez A.	 	 
	Inpreabogado No 21 374 (Venezuelan Lawyer’s Association)

I, ZAIDA GONZALEZ,
Venezuelan, of legal age, domiciled in the city of Caracas, holder of Identity
Card No V- 5 605 158, acting in my condition of Agent
of the Corporation named INVERSIONES 1182450, C.A., of this domicile
and duly incorporated before the Second Mercantile Registry of the Judicial
Circumscription of the Capital District and Miranda State on April 29
of 1996, under No 47, Volume 196-A Sgdo., registered
before the Fiscal Information Registry (RIF J-30342236-5), hereinafter
and for all effects of this document referred to as THE SELLER, my
condition is evidenced in power of attorney granted before the Second Public
Notary Office of Sucre Municipality of Miranda State, on May seventeen
(17) of 2011, under No. 13, Volume 79, folios from 40
to 43, previously registered before the Real Property Registry of Chacao
Municipality of Miranda State, do hereby declare that: I unconditionally,
absolutely and irrevocably sell to MERCADOLIBRE VENEZUELA, S.A.,
corporation of this domicile, incorporated as per document registered before
the First Mercantile Registry of the Judicial Circumscription of the Capital
District and Miranda State, on March one (01) of 2000, under
No. 31, Volume 31-A Pro., Record No: 539387; registered
before the Fiscal Information Registry RIF J-30684276-5, hereinafter and
referred to as THE BUYER, represented in this act by MARTIN MIGUEL
GALLONE Y FERNANDEZ, Argentinean, of legal age, non-resident, married,
Administrator by profession, holder of Identity Card No: E- 84 487
013, registered before the Fiscal Information Registry RIF
E-84487013-5, sufficiently authorized by the Shareholders’ Special
Meeting held on March 18 of 2011, duly registered before the
corresponding Mercantile Registry Office on March 23 of 2011, under
No 15, Volume 53-A Pro., the real property consisting of TEN
(10) Offices marked with letters “A” to
“J”, preceded with the number that indicates the floor level
in which they are, located in the Plan Type 6 (8th Floor),
which are part of the Building named TORRE LA CASTELLANA, which is built
on a Plot of land marked with cadastre 209-13-15-16-01-03 and a strip of land
W/N as evidenced in Official Letter 2000 dated April 29 of 1988, issued by
the Municipal Engineering Director’s Office attached to the Municipal
Council of Sucre District and Miranda State, which authorized the incorporation
of the lot with the referred land strip, located at Avenida Eugenio Mendoza and
Jose Angel Lamas of

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Urbanización La Castellana,
Jurisdiction of the Chacao’s Autonomous Municipality of Miranda State.
The lot resulting from the land plot incorporation upon which the building is
built, has an approximate surface of: FOUR THOUSAND, THREE HUNDRED SIXTY-TWO
SQUARE METERS AND EIGHT SQUARE CENTIMETERS (4,362.08 m2), as
evidenced in the respective Lot Incorporation Document registered before the
Subaltern Office of the Third Registry Circuit of Sucre District and Miranda
State, on August 17 of 1988, under No 27, Volume 8, Protocol 1. The
aforementioned lot has the following boundaries: NORTH: a curve line
which chord is of EIGHT METERS AND THIRTY-NINE CENTIMETERS (8.39 m) at
the intersection of Avenida Eugenio Mendoza with Avenida José Angel Lamas,
and a straight line of EIGHTY METERS AND TWENTY-TWO CENTIMETERS (80.22 m)
at Avenida Jose Angel Lamas. SOUTH: a straight line of SIXTY
METERS AND TWELVE CENTIMETERS (60.12 m) with lots 2 and 3 of block A, where
currently Edificio IASA is built, and a broken line with a total length of
TWENTY-SEVEN METERS WITH EIGHT CENTIMETERS (27.08m) at lot No5 and
the land strip which is or was property of C.A. LA ELECTRICIDAD DE CARACAS;
EAST: a straight line of TWENTY-FIVE METERS WITH THREE CENTIMETERS
(25.03 m) at a lot that is or was property of Carmen Carbonell de Villegas
and a straight line of THIRTY-SEVEN METERS AND SEVEN CENTIMETERS (37.07 m)
at lots Nos. 10 and 11 land strip in the middle that is or was property of
C.A. LA ELECTRICIDAD DE CARACAS; WEST: a straight line of FIFTY-SIX
METERS AND TWENTY-SIX CENTIMETERS (56.26 m) at Avenida Eugenio Mendoza. The
plan of said lot entered in the Book of Records kept by the Subaltern Office of
the Third Registry Circuit of Chacao Autonomous Municipality of Miranda State,
on November 22 of 1994, under No. 400, Folio 1028. Our principal, THE
SELLER, has granted in favor of C.A. LA ELECTRICIDAD DE CARACAS, SACA, the
right to permanently use a part of a lot located in front of the Calle Jose
Angel Lamas of Urbanización La Castellana, in Chacao’s Municipality
Jurisdiction of Miranda State, to build electricity power transformation
cellars, which parts appear marked in Red in the attached plan to be included
in the Book of Records when the Condominium document is registered, which are
mentioned hereinafter and have the following measures 4.00 x 4.00 m2 and 4.80 x
0.90 m2 respectively, which boundaries on the four sides are lots owned by my
principal. C.A. LA ELECTRICIDAD DE CARACAS, SACA, may keep its electricity power

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transformation equipment, in the
marked parts of the lot, while said equipment is serving and said company shall
not pay anything to our principal for this purpose. It is agreed that if our
principal has the need to request to vacate the parts of lot occupied, it is
bound to assign to C.A. LA ELECTRICIDAD DE CARACAS, SACA, other parts of the
lot necessary for the relocation of the transformation equipment with no cost
for said corporation, to pay the relocation expenses and to grant or cause to
grant the easements for electrical conductors necessary for said purpose. The
building TORRE LA CASTELLANA was built with permits No 35752
dated November 27 of 1990, No 0075 dated October 10
of 1997, No 0147 dated December 11 of 1998 and No
00122 dated September 30 of 1999. The following Cadastre Numbers
correspond to the real property consisting of TEN (10) Offices
marked with letters “A” to “J”:
OFFICE 8-A: 209-13-001-0000141; OFFICE 8-B: 209-13-001-0000142;
OFFICE 8-C: 209-13-001-0000143; OFFICE 8-D: 209-13-001-0000144;
OFFICE 8-E: 209-13-001-0000145; OFFICE 8-F: 209-13-001-0000146;
OFFICE 8-G: 209-13-001-0000147; OFFICE 8-H: 209-13-001-0000148;
OFFICE 8-I: 209-13-001-0000149; OFFICE 8-J: 209-13-001-0000150;
with a total approximate surface of NINE HUNDRED, NINETY-TWO SQUARE METERS
(992.00 m2), described hereinafter: OFFICE 8-A: Has a total
approximate surface of Two hundred and three square meters (203.00 m2),
consisting of one (1) room and one (1) bathroom and its boundaries
are: NORTH: a straight line on eleven meters and sixty centimeters
(11.60 m) with the buildings north façade; SOUTH: a straight
line of fourteen meters and thirty centimeters (14.30 m) with the
building’s hallway; EAST: a straight line of twelve meters and
twenty centimeters (12.20 m) to office B: NORTHWEST: a broken
line of five parts that add twenty-two meters and forty-eight centimeters
(22.48 m) with the building’s northwest façade, emergency
staircases and air conditioning room. OFFICE 8-B: Has a total
approximate surface of One hundred and two square meters (102.00 m2),
consisting of one (1) room and one (1) bathroom and its boundaries
are: NORTH: a straight line of twelve meters and ninety centimeters
(12.90 m) with the buildings north façade; SOUTH: a straight
line of five meters and ten centimeters (5.10 m) with the
building’s hallway and a straight line of four meters and twenty-seven
centimeters (4.27m) with the elevators pit; EAST: a straight line
of three meters and sixty centimeters (3.60 m) with office C and a
straight line of eight meters and sixty centimeters (8.60 m) with the
ladies public restroom; WEST: a straight line of twelve meters and
twenty centimeters (12.20m) with Office A. OFFICE 8-C: Has
a total

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approximate surface of One
hundred and two square meters (102.00 m2), consisting of one (1) room
and one (1) bathroom and its boundaries are: NORTH: a straight line
of twelve meters and ninety centimeters (12.90 m) with the buildings
north façade; SOUTH: a straight line of four meters and
twenty-seven centimeters (4.27 m) with the elevators’ pit, and a
straight line of five meters and ten centimeters (5.10 m) with the
hallway; EAST: a straight line of twelve meters and twenty centimeters
(12.20 m) with Office D: WEST: a straight line of eight meters
and sixty centimeters (8.60 m) with the men’s public restrooms and
a straight line of three meters and sixty centimeters (3.60 m) with
office B; OFFICE 8-D: Has a total approximate surface of
Ninety-three square meters (93.00 m2), consisting of one (1) room and
one (1) bathroom and its boundaries are: NORTH: a straight line of
three meters (3.00 m) with the buildings north façade;
SOUTH: a straight line of five meters and eighty centimeters (5.80 m)
with the hallway, NORTH-EAST: a broken line of five parts that add
twenty-two meters and thirty-nine centimeters (22.39 m) with the
building’s northeast façade, emergency staircase, and air
conditioning room, WEST: a straight line of twelve meters and twenty
centimeters (12.20 m) with office C; OFFICE 8-E: has a
total approximate surface of Eighty square meters (80.00 m2), consisting
of one (1) room and one (1) bathroom and its boundaries are:
NORTH: a straight line of seven meters and eighty centimeters (7.80
m) with the hallway; SOUTH: a broken line of two parts that add
three meters and thirty centimeters (3.30 m) with the building’s
south facade, SOUTH-EAST: a broken line of three parts that add sixteen
meters and forty-two centimeters (16.42 m) with the building’s
south-east façade, emergency staircase, WEST: a straight line of
eight meters and ten centimeters (8.10 m) with office F; OFFICE
8-F: has a total approximate surface of Eighty-three square meters
(83.00 m2), consisting of one (1) room and its boundaries are:
NORTH: a straight line of eight meters and sixty-five centimeters
(8.65 m) with the hallway; SOUTH: a broken line of two parts that
add nine meters (9.00 m) with the building’s south facade,
EAST: a straight line of eight meters and ten centimeters (8.10
m) with office E, WEST: a straight line of nine meters and sixty
centimeters (9.60 m) with office G; OFFICE 8-G: has a
total approximate surface of Eighty-three square meters (83.00 m2),
consisting of one (1) room and its boundaries are: NORTH: a
straight line of eight meters and sixty-five centimeters (8.65 m) with
the hallway; SOUTH: a broken line of two parts that add nine meters
(9.00 m) with the building’s south facade, EAST: a straight
line of nine meters and sixty centimeters (9.60m) with

5

 

office F, WEST: a straight
line of eight meters and ten centimeters (8.10 m) with office H;
OFFICE 8-H: has a total approximate surface of Eighty-three
square meters (83.00 m2), consisting of one (1) room and its
boundaries are: NORTH: a straight line of eight meters and sixty-five
centimeters (8.65 m) with the hallway; SOUTH: a broken line of
two parts that add nine meters (9.00 m) with the building’s south
facade, EAST: a straight line of eight meters and ten centimeters
(8.10 m) with Office G, WEST: a straight line of nine meters and
sixty centimeters (9.60 m) with office I; OFFICE 8-I: has
a total approximate surface of Eighty-three square meters (83.00 m2),
consisting of one (1) room and its boundaries are: NORTH: a
straight line of eight meters and sixty-five centimeters (8.65 m) with
the hallway; SOUTH: a broken line of two parts that add nine meters
(9.00 m) with the building’s south facade, EAST: a straight
line of nine meters and sixty centimeters (9.60 m) with Office H,
WEST: a straight line of eight meters and ten centimeters (8.10 m)
with Office J; OFFICE 8-J: has a total approximate surface of
Eighty square meters (80.00 m2), consisting of one (1) room and one
(1) bathroom and its boundaries are: NORTH: a straight line of
seven meters and eighty centimeters (7.80 m) with the hallway;
SOUTH: a broken line of two parts that add three meters and thirty
centimeters (3.30 m) with the building’s south facade, EAST:
a straight line of eight meters and ten centimeters (8.10 m) with
Office I, SOUTH-WEST: a broken line of three parts that add sixteen
meters and forty-two centimeters (16.42 m) with the building’s
south-west façade, emergency staircase. A percentage of the condominium
corresponds to each office as follows: OFFICE 8-A: 1.494518%;
OFFICE 8-B: 0.750940%; OFFICE 8-C: 0.750940%; OFFICE 8-D:
0.684618%; OFFICE 8-E: 0.588973%; OFFICE 8-F: 0.611059%;
OFFICE 8-G: 0.611059%; OFFICE 8-H: 0.611059%; OFFICE 8-I:
0.611059%; OFFICE 8-J: 0.5889773% on the Building’s common things
and expenses, as evidenced in condominium document registered on November
twenty-six (26) 0f 1999, before the Public Registry Subaltern Office of
Chacao Municipality of Miranda State, under No 48, Volume 11, First Protocol
and its explanatory documents registered before this same Office on March 2 of
2000, March 21 of 2000 and April 28 of 2000, entered under Numbers
32, 32 and 8; Volumes:10, 14 and 6, First Protocol, respectively, which THE
BUYER declares that he knows together with its respective regulations and
undertakes the obligation to fulfill any and all of its parts. The sale prices
of each real property previously described are the following amounts: OFFICE
8-A: SEVEN MILLION, ONE

6

 

HUNDRED SIXTY-TWO THOUSAND, TWO
HUNDRED NINETY-EIGHT BOLIVARS WITH THIRTY-NINE CENTS (VEB 7,162,298.39);
OFFICE 8-B: THREE MILLION, FIVE HUNDRED AND NINETY-EIGHT THOUSAND, SEVEN
HUNDRED AND NINETY BOLIVARS WITH THIRTY-TWO CENTS (VEB 3,598,790.32);
OFFICE 8-C: THREE MILLION, FIVE HUNDRED AND NINETY-EIGHT THOUSAND, SEVEN
HUNDRED AND NINETY BOLIVARS WITH THIRTY-TWO CENTS (VEB 3,598,790.32);
OFFICE 8-D: THREE MILLION, TWO HUNDRED AND EIGHTY-ONE THOUSAND, TWO
HUNDRED AND FIFTY BOLIVARS (VEB 3,281,250.00); OFFICE 8-E: TWO
MILLION, EIGHT HUNDRED AND TWENTY-TWO THOUSAND, FIVE HUNDRED AND EIGHTY
BOLIVARS WITH SIXTY-FIVE CENTS (VEB 2,822,580.65); OFFICE 8-F:
TWO MILLION, NINE HUNDRED AND TWENTY-EIGHT THOUSAND, FOUR HUNDRED AND
TWENTY-SEVEN BOLIVARS WITH FORTY-TWO CENTS (VEB 2,928,427.42); OFFICE
8-G: TWO MILLION, NINE HUNDRED AND TWENTY-EIGHT THOUSAND, FOUR HUNDRED AND
TWENTY-SEVEN BOLIVARS WITH FORTY-TWO CENTS (VEB 2,928,427.42); OFFICE
8-H: TWO MILLION, NINE HUNDRED AND TWENTY-EIGHT THOUSAND, FOUR HUNDRED AND
TWENTY-SEVEN BOLIVARS WITH FORTY-TWO CENTS (VEB 2,928,427.42); OFFICE
8-I: TWO MILLION, NINE HUNDRED AND TWENTY-EIGHT THOUSAND, FOUR HUNDRED AND
TWENTY-SEVEN BOLIVARS WITH FORTY-TWO CENTS (VEB 2,928,427.42); OFFICE
8-J: TWO MILLION, EIGHT HUNDRED AND TWENTY-TWO THOUSAND, FIVE HUNDRED AND
EIGHTY BOLIVARS WITH SIXTY-FIVE CENTS (VEB 2,822,580.65), which is a
total of THIRTY FIVE MILLION BOLIVARS (VEB 35,000,000.00) which THE
SELLER declares to have received in this act, completely and to its entire
satisfaction in legal currency, by cashier checks No 00004192 issued on
Banco Venezuela for an amount of TWENTY-EIGHT MILLION, SIX HUNDRED AND FIFTY
THOUSAND BOLIVARS (VEB 28,650,000.00) and No11538206 issued on Banco
Provincial for an amount of SIX MILLION, THREE HUNDRED AND FIFTY BOLIVARS
(VEB 6,350,000.00) payable to Inversiones 1182450, C.A. The real
properties sold herewith are free of liens and have no debts for National,
Municipal taxes or for any other concept whatsoever, they have no liens of any
degree or nature nor is affected by any procedure and/ or measure that may
limit its domain and /or ownership. These real properties are

7

 

owned by our principal, THE
SELLER, as follows: The land plot as evidenced in document registered
before the Subaltern Office of the Third Circuit Registry of Chacao Autonomous
Municipality of Miranda State, on September 04 of 1996, under No 42,
Volume 15, First Protocol and the real property consisting of TEN
(10) Offices which were marked with letters “8-A” to
“8-J”, as evidenced in document registered before the Public
Registry Office of Chacao Municipality of Miranda State, on November 26 of
1999, under No 48, Volume 11, First Protocol. By granting this document I
perform the legal transfer of the real property sold to THE BUYER and on
behalf of my principal, THE SELLER, I bind myself to the lawful clearing
of title. And I, MARTIN MIGUEL GALLONE Y FERNANDEZ, previously
identified, in the aforementioned condition in respect to THE BUYER,
declare: That I accept on behalf of my principal MERCADOLIBRE VENEZUELA,
S.A, previously identified, the sale made by this document in the terms and
conditions herein stated. For all effects of this document the city of Caracas
has been chosen as special domicile, specifically excluding any other domicile
that may result competent. The Registrar shall certify in the registry note of
the present document that the real property sold has neither measures in force
prohibiting the disposition or encumbrance nor measures of seizure, nor any
mortgage, antichresis lien or of any other type whatsoever, that THE SELLER may
have imposed from November 26 of 1999 to the date of Registry of the
present document. Otherwise, the Registrar shall refrain from registering the
present document. 

Caracas on the date of its registry.

(Illegible signature)
(Fingerprint)

(Illegible signature)
(Fingerprint)”                                                                                                                                                                                        

Interpreter’s Note: On
the first page of the foregoing document a wet seal has been stamped on the
lower right corner that reads as follows: “Receipt: (illegible
signature) – Revision: (illegible signature) 06/02/2011
–Prohibitions: (illegible signature) 06-02-11”.

The document continues as follows:

8

 

“BOLIVARIAN REPUBLIC OF VENEZUELA

MINISTRY OF THE POPULAR POWER FOR

INTERNAL AFFAIRS AND JUSTICE

REGISTRIES AND NOTARIES OFFICES AUTONOMOUS SERVICE

PUBLIC REGISTRY OFFICE OF CHACAO MUNICIPALITY

OF MIRANDA STATE

June Two (02) Twenty of Two Thousand and Eleven (2011),

201st and 152nd (historical years)

The foregoing document was prepared
by Lawyer ZAIDA GONZALEZ A., registered in Inprebogado under No.
21374 (Venezuelan Lawyers’ Association); identified with
Number 240.2011.2.239, dated 04/08/2011 was presented for its
registry by: ZAIDA DOLORES GONZALEZ DE SILVA, holder of Identity Card
No V- 5 605 158. Was read and compared with its copies which were
signed together with the original by its grantors, before me and the witnesses:
EMILIO MARIO PARADISO DI MARCO and CRISTINA JOSEFINA GONZALEZ
SUNIAGA, holders of Identity Card No. V- 11 933 996 and
Identity Card No. V- 8 477 038. Lawyer INGRID MARGOTT VINAJA
DIAZ, holder of Identity Card No. V- 10 967 084, officer of
this Registry Office performed the Legal Revision. MARIA DEL CARMEN ALEMAN
RODRIGUEZ, holder of Identity Card No. V- 5 113 738, performed
the Revision of Prohibitions. The tax in favor of the Municipal Treasury
provided in Article 92 of the Public Registry and Notary’s Law, is
equivalent to 5 Tax Units. I CERTIFY THAT FROM THE REVISION OF THE RECORDS AND
MARGINAL NOTES KEPT IN THIS OFFICE NO ENCUMBRANCE CURRENTLY IN FORCE APPEAR ON
THE REAL PROPERTY HEREIN REFERRED TO, LIKEWISE, I CERTIFY THAT: THEY ARE NO
MEASURES PROHIBITING THE DISPOSITION OR ENCUMBRANCE, NOR SEIZURE MEASURES IN
FORCE. THIS CERTIFICATE HAS BEEN ISSUED WITH THE COLLABORATION OF INGRID VINAJA
AND MARIA ALEMAN. The identification of the grantors was performed as
follows: ZAIDA DOLORES GONZALEZ DE SILVA, Venezuelan, of marital
status MARRIED, IDENTITY CARD No V- 5 605 158 and MARTIN MIGUEL
GALLONE Y FERNANDEZ, ARGENTINEAN, of marital status MARRIED,
IDENTITY CARD No E- 84 487 013. The supporting documents PAYMENT
CERTIFICATE, INCORPORATION PAPERS, MEETING’S MINUTE, MEETING’S
MINUTE, INCORPORATION PAPERS,

9

 

IDENTITY CARD, FORM 33, MUNICIPAL
PAYMENT FORM, IDENTITY CARD, WATER SUPPLY SOLVENCY CERTIFICATE, FISCAL
INFORMATION REGISTRY, FISCAL INFORMATION REGISTRY, CADASTRAL RECORD, MUNICIPAL
SOLVENCY CERTIFICATE, IDENTITY CARD, MUNICIPAL SOLVENCY CERTIFICATE, MUNICIPAL
SOLVENCY CERTIFICATE, MUNICIPAL SOLVENCY CERTIFICATE, MUNICIPAL SOLVENCY
CERTIFICATE, MUNICIPAL SOLVENCY CERTIFICATE, MUNICIPAL SOLVENCY CERTIFICATE,
MUNICIPAL SOLVENCY CERTIFICATE, MUNICIPAL SOLVENCY CERTIFICATE, MUNICIPAL
SOLVENCY CERTIFICATE, IDENTITY CARD, IDENTITY CARD, CADASTRAL RECORD, CADASTRAL
RECORD, CADASTRAL RECORD, CADASTRAL RECORD, CADASTRAL RECORD, CADASTRAL RECORD,
CADASTRAL RECORD, CADASTRAL RECORD and CADASTRAL RECORD include in the book of
Records under numbers 8511, 8512, 8513,8514, 8515, 8516, 8517, 8518, 8519,
8520, 8521, 8522, 8523,8524,8525,8526, 8527, 8528, 8529, 8530, 8531, 8532,
8533, 8534, 8535, 8536, 8537, 8538, 8539, 8540, 8541, 8542, 8543, 8544 and 8545
and folios 21047-21047, 21048-21062, 21063-21074, 21075-21086, 21087-21110,
21111-21111, 21112-21112, 21113-21113, 21114-21114, 21115-21115, 21116-21116,
21117-21117, 21118-21119, 21120-21120, 21121-21121, 21122-21122, 21123-21123,
21124-21124, 21125-21125, 21126-21126, 21127-21127, 21128-21128, 21129-21129,
21130-21130, 21131-21131, 21132-21132, 21133-21134, 21135-21136, 21137-21138,
21139-21140, 21141-21142, 21143-21144, 21145-21146, 21147-21148 and
21149-21150, respectively. This document was registered under Number 2011.3112,
Registry Record 1 of the Real Property registered under Number
240.13.18.1.5824, corresponding to the Book of Records of the year 2011, Number
2011.3113, Registry Record 1 of the Real Property registered under Number
240.13.18.1.5825, corresponding to the Book of Records of the year 2011, Number
2011.3114, Registry Record 1 of the Real Property registered under Number
240.13.18.1.5826, corresponding to the Book of Records of the year 2011, Number
2011.3115, Registry Record 1 of the Real Property registered under Number
240.13.18.1.5827, corresponding to the Book of Records of the year 2011, Number
2011.3116, Registry Record 1 of the Real Property registered under Number
240.13.18.1.5829, corresponding to the Book of Records of the year 2011, Number
2011.3118, Registry Record 1 of the Real Property registered under Number

10

 

240.13.18.1.5830, corresponding to
the Book of Records of the year 2011, Number 2011.3119, Registry Record 1 of
the Real Property registered under Number 240.13.18.1.5831, corresponding to
the Book of Records of the year 2011, Number 2011.3120, Registry Record 1 of
the Real Property registered under Number 240.13.18.1.5832, corresponding to
the Book of Records of the year 2011, Number 2011.3121, Registry Record 1 of
the Real Property registered under Number 240.13.18.1.5833, corresponding to
the Book of Records of the year 2011. It is hereby certified that the present
document was granted by Officer: Emilio Mario Paradiso Di Marco, I.C.
No. 11 993 996, duly constituted at: Avenida Principal de la Castellana,
Torre LA CASTELLANA, Piso 09, Oficina B at 2.17 p.m.

	 	 	 
	The Grantors:	 	 
	 	 	 
	(Illegible signature)
	 
	(Illegible signature)

	 	 	 
	(Two fingerprints)
	 
	(Two fingerprints)

	 	 	 
	The Witnesses.	 	 
	 	 	 
	Emilio Paradiso (signed)	 	 
	 	 	 
	Cristina Gonzalez (signed)	 	 
	 	 	 
	Granted by Officer:	 	 
	 	 	 
	Emilio Paradiso (signed)	 	 

	 	 
	 	(Wet seal) Bolivarian Republic of Venezuela
	 	 
	 	Ministry of the Popular Power for Internal Affairs and Justice
	 	 
	 	Registries and Notaries Autonomous Service (SAREN)
	 	 
	 	Autonomous Registry Office of Chacao Municipality of Miranda State
	 	 
	 	(Illegible signature) 06-02-2011
	 	 
	 	Richard J. Silva M.
	 	 
	 	Registrar”                                                                                                                                                                                        

Interpreter’s
Note: A round wet seal that bears the Coat-of-Arms of Venezuela has
been stamped on all pages of the foregoing document, said seal reads as
follows: “Bolivarian Republic of Venezuela – Ministry of the
Popular Power for Internal Affairs and Justice- Registries and Notaries Offices
Autonomous Service (SAREN) – Public Registry Office of Chacao
Municipality of Miranda State”                                                                                                                                                                                                                               

11Exhibit 10.1

Exhibit 10.1

MORGANS NEW YORK

PURCHASE AND SALE AGREEMENT

BETWEEN

Morgans Holdings LLC,

a Delaware limited liability company,

AS SELLER

AND

Madison 237 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
	 	 	7	 
	2.3 Approval of Title
	 	 	7	 
	2.4 Conveyance of Title
	 	 	9	 
	2.5 Title Policy
	 	 	10	 
	ARTICLE III INSPECTION
	 	 	10	 
	3.1 Right of Inspection
	 	 	10	 
	3.2 Seller Due Diligence Materials
	 	 	12	 
	ARTICLE IV CLOSING
	 	 	13	 
	4.1 Time and Place; Pre-Closing
	 	 	13	 
	4.2 Seller’s Closing Obligations and Deliveries
	 	 	13	 
	4.3 Purchaser’s Closing Obligations and Deliveries
	 	 	16	 
	4.4 Prorations, Credits and Other Adjustments
	 	 	17	 
	4.5 Closing Costs
	 	 	22	 
	4.6 Conditions Precedent to Obligation of Purchaser
	 	 	22	 
	4.7 Conditions Precedent to Obligation of Seller
	 	 	23	 
	4.8 Conditions Precedent to Obligation of Seller and Purchaser
	 	 	24	 
	4.9 Failure or Waiver of Conditions Precedent
	 	 	24	 
	4.10 Alcoholic Beverage License

	 	 	25	 
	4.11 No New Management Agreement Election
	 	 	25	 
	ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	26	 
	5.1 Representations and Warranties of Seller
	 	 	26	 
	5.2 Knowledge Defined
	 	 	32	 
	5.3 Covenants of Seller
	 	 	32	 
	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
	 	 	40	 
	6.1 Default by Purchaser
	 	 	40	 
	6.2 Default by Seller
	 	 	41	 
	6.3 Seller’s Right to Cure Defaults
	 	 	41	 
	ARTICLE VII SURVIVAL, INDEMNIFICATION, AND LIMITATIONS ON LIABILITY
	 	 	42	 
	7.1 Survival
	 	 	42	 
	7.2 Seller’s Indemnification
	 	 	42	 
	7.3 Purchaser’s Indemnification
	 	 	43	 

 

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	 	 	Page	 
	 
	7.4 Notice and Resolution of Claims
	 	 	43	 
	7.5 Limitations on Liability
	 	 	44	 
	7.6 Other Matters Regarding Indemnification
	 	 	45	 
	ARTICLE VIII RISK OF LOSS
	 	 	46	 
	8.1 Minor Damage
	 	 	46	 
	8.2 Major Damage
	 	 	46	 
	8.3 Definition of “Major” Loss or Damage
	 	 	46	 
	ARTICLE IX COMMISSIONS
	 	 	47	 
	9.1 Brokerage Commissions
	 	 	47	 
	ARTICLE X DISCLAIMERS AND WAIVERS
	 	 	47	 
	10.1 No Reliance on Documents
	 	 	47	 
	10.2 DISCLAIMERS
	 	 	48	 
	10.3 Repairs, Reserves, and Capital Expenditures
	 	 	49	 
	10.4 Effect and Survival of Disclaimers
	 	 	49	 
	ARTICLE XI MISCELLANEOUS
	 	 	50	 
	11.1 Confidentiality
	 	 	50	 
	11.2 Public Disclosure
	 	 	51	 
	11.3 Assignment
	 	 	51	 
	11.4 Notices
	 	 	51	 
	11.5 Modifications
	 	 	53	 
	11.6 Calculation of Time Periods; Time is of the Essence
	 	 	53	 
	11.7 Successors and Assigns
	 	 	53	 
	11.8 Entire Agreement
	 	 	53	 
	11.9 Further Assurances
	 	 	53	 
	11.10 Counterparts; Facsimile Signatures
	 	 	53	 
	11.11 Severability
	 	 	54	 
	11.12 Applicable Law
	 	 	54	 
	11.13 No Third Party Beneficiary
	 	 	54	 
	11.14 Exhibits and Schedules
	 	 	54	 
	11.15 Captions
	 	 	55	 
	11.16 Construction
	 	 	55	 
	11.17 Termination of Agreement
	 	 	55	 
	11.18 Attorneys Fees
	 	 	55	 
	11.19 No Waiver
	 	 	55	 
	11.20 No Reservation of Property
	 	 	55	 
	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 Morgans Holdings LLC, a Delaware limited liability company
(“Seller”), and Madison 237 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 237 Madison Avenue, 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 “Morgans” (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, 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”), which shall not include Asia de Cuba for purposes of this provision) 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.

 

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(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 Lease (1)
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 or
(2) which are listed on such Schedule 1.1(e)-1 under the heading “Asia de Cuba” (the
“ADC Contracts”).

 

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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), 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; 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.

 

4

 

(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.

(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 expressly acknowledge and agree
that, while the Purchaser will take title at Closing to the Hotel, subject to the Space Lease,
Purchaser is expressly not assuming the Space Lease nor any obligations thereunder and will,
pursuant to the Master Lease (defined below), lease to Seller the portion of the Hotel that
constitutes the leased premises under the Space Lease.

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 FIFTY ONE MILLION
EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($51,800,000.00) (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 TWO MILLION FIVE HUNDRED NINETY THOUSAND AND NO/100 DOLLARS
($2,590,000.00) (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 ONE HUNDRED TEN
THOUSAND AND NO/100 DOLLARS ($1,110,000.00) 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.
3008-342365NY2) (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.

 

6

 

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 dated September 18, 1926 last
brought up to date with a visual examination by Earl B. Lovell-S.P. Belcher, Inc. on March 24, 2011
(the “Survey”).

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

 

7

 

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.

(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.

 

8

 

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.

(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.

 

9

 

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

(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.

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.

 

10

 

(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).

(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.

 

11

 

(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.

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.

 

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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.

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.

 

13

 

(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 the ADC Contracts and 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.

(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.

 

14

 

(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.

(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 Purchaser (2) original executed counterpart copies of Master Lease Agreement in
the form agreed to by the parties prior to the Effective Date (the “Master Lease”).

(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”).

 

15

 

(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 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.

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), (r), and (s) 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.

 

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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.

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.

 

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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.

(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.

 

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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.

(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.

 

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(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.

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.

 

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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 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.

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.

 

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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.

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).

 

22

 

(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.

(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.

 

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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 Royalton, LLC, as seller, and
Royalton 44 Hotel, L.L.C., a Delaware limited liability company regarding the purchase and sale of
the hotel known as the Royalton Hotel located in New York, New York (the “Royalton 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 Royalton PSA,
if the Royalton 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 Royalton PSA, Purchaser shall have the right to make the No New Management
Agreement Election described in Section 4.11.

(b) Notwithstanding anything to the contrary contained in this Agreement or the Royalton PSA,
if the Royalton 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.

 

24

 

4.10 Alcoholic Beverage License.

(a) Purchaser acknowledges that Seller is the current licensee under the existing alcoholic
beverage license for the Hotel (the “Existing Liquor License”). 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 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. In no event shall Seller 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 is permitted to transfer
such inventories pursuant to applicable law.

(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 ONE
HUNDRED TEN THOUSAND AND NO/100 DOLLARS ($1,110,000.00) 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 Royalton 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 FOUR MILLION DOLLARS ($4,000,000).

 

25

 

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.

(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.

 

26

 

(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.

(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.

 

27

 

(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”).

(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 License.

(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.

 

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(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).

(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.

 

29

 

(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

(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.

 

30

 

(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.

(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.

 

31

 

(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.

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.

 

32

 

(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.

(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.

 

33

 

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.

(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
45-1137528.

(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.

 

34

 

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”).

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.

 

35

 

(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.

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.

 

36

 

(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).

(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.

 

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(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.

(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.

 

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(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 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.

 

39

 

(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.

 

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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.

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.

 

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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.

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.

 

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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

(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.

 

43

 

(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.

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.

 

44

 

(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

(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.

 

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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.

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.

 

46

 

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.

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.

 

47

 

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 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

 

48

 

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.

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.

 

49

 

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).

(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.

 

50

 

(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.

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:

Morgans Holdings 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

 

51

 

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

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

 

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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.

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.

 

53

 

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.

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 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

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

 

54

 

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. 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.

 

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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:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MORGANS HOLDINGS 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:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MADISON 237 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 Morgans 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 Morgans 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 Primary Name, 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.

“Primary Name” shall mean Morgans.

 

 

 

(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 License

	 	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)
	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)
	Royalton PSA

	 	Section 4.8
	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)
	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, City, County and State of NEW YORK, bounded and described as follows:

BEGINNING at a point on the easterly side of MADISON AVENUE, distant 49 feet northerly from the
corner formed by the intersection of the easterly side of MADISON AVENUE and the northerly side of
37TH STREET;

thence easterly parallel with the northerly side of 37TH STREET, and part of the way through a
party wall, 100 feet;

thence northerly parallel with the easterly side of MADISON AVENUE, 49 feet 9 inches to the center
line of the block between 37TH and 38TH STREETS;

thence westerly along said center line of the block and parallel with 37TH STREET, 100 feet to the
easterly side of MADISON AVENUE;

thence southerly along the easterly side of MADISON AVENUE, 49 feet 9 inches to the point or place
of BEGINNING.

 

 

 

Schedule 1.1(c)

Excluded Personal Property

	1.	 	2 computers owned by Asia de Cuba

	2.	 	The liquor inventory at Asia de Cuba, which is the following as of March 25, 2011:

	 	 	 	 	 
	Items	 	Btls	 
	 
	 	 	 	 
	Benedictine
	 	 	1	 
	Borgo Conventi
	 	 	6	 
	Clifford Bay
	 	 	6	 
	Bacardi Superior
	 	 	1	 
	Cruzan Pineapple
	 	 	1	 
	Crusher Petit Syrah
	 	 	12	 
	Dubachet Amaretto
	 	 	5	 
	El Dorado White Rum
	 	 	3	 
	Fusional
	 	 	12	 
	Grand Marnier
	 	 	2	 
	Juve and Camps
	 	 	24	 
	Mas de Mas
	 	 	6	 
	Mesta (Fontana) Red — for Sangria
	 	 	18	 
	Paco & Lola
	 	 	6	 
	Paso Creek Merlot
	 	 	6	 
	Southern Right (Sav Blanc)
	 	 	30	 
	Tapena Garnacha (Happy Hour)
	 	 	6	 
	Villa Maria
	 	 	6	 
	Wycliff Champagne
	 	 	4	 

 

 

 

Schedule 1.1(e)-1

Service Contracts

Morgans

	 	1.	 	(Alarm Services) Inspection/Maintenance Contract, dated as of November 17, 1994,
between Morgans Hotel and AFA Protective Systems, Inc., as extended by letter agreement,
dated as of September 10, 2008, between Morgans Hotel and AFA Protective Systems, Inc.

	 	2.	 	LodgeNet Free-to-Guest License Agreement and Addendum thereto, dated as of February 11,
2010, between Morgans Holdings LLC and LodgeNet Interactive Corporation, as amended by that
certain Amendment to LodgeNet Free to Guest License Agreement, dated as of June 2, 2010,
between Morgans Holdings LLC and LodgeNet Interactive Corporation

	 	3.	 	LodgeNet Content and System Maintenance Agreement and Addendum thereto, dated as of
February 11, 2010, between Morgans Holdings LLC and LodgeNet Interactive Corporation

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

	 	5.	 	License Agreement — Hotels and Motels, dated as of January 12, 2010, between Morgans
Holdings LLC and American Society of Composers, Authors and Publishers

	 	6.	 	Boiler Water Treatment Services Proposal, dated as of October 24, 2008, between Morgans
Hotel and Chemical Specifics, Inc.

	 	7.	 	Contract for The Removal of Non-Hazardous Trade Waste (Morgans Hotel), dated as of May
7, 2009, between IESI NY Corporation and Morgans Hotel

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

	 	9.	 	Oil Burner Service Plan, dated as of September 1, 2008, between Stuyvesant Fuel Service
Corp. and Morgans Hotel Group LLC

	 	10.	 	Harvard Maintenance / Proposal for Metal Maintenance & Refinishing, dated as of
February 11, 2011, between Morgans Hotel and Harvard Maintenance, Inc.

	 	11.	 	(Long Distance Telephone) Service Agreement, dated as of August 20, 2009, between
Morgans Holdings LLC and PAETEC

	 	12.	 	Mini Bar Master Service Agreement, dated as of June 28, 2005, between Morgans Hotel and
Minibar North America, Inc.

	 	13.	 	(Parking) Agreement, dated as of January 1, 2000, between Rapid E. 38th Street Corp.
and Morgans Hotel

 

 

 

	 	14.	 	Pest Control Program Proposal, dated as of May 13, 1997, for Morgan Hotel by Abalon
Exterminating Company Inc.

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

	 	16.	 	Verizon Directory Advertising (Application), dated as of January 6, 2005, between
Morgan’s Hotel and Verizon Directories Corp.

	 	17.	 	Computer Services Agreement, dated as of October 21, 2008, between Eleven Wireless,
Inc. and SC Madison LLC dba Morgans Hotel

	 	18.	 	Elevator Full Service Preventative Maintenance Agreement (for Morgan Hotel), dated as
of April 2, 2007, between Morgans Hotel Group LLC and Transel Elevator Company

	 	19.	 	Bid Acceptance for Nomadix Support Renewal, dated as of October 15, 2010, by Morgans
for a bid submitted by Sunray Technology Integration

	 	20.	 	Customer Subscriber Agreement, dated as of October 7, 2010, between Morgans Holdings
LLC and Cogent Communication, Inc.

	 	21.	 	SDD Managed Services Agreement, dated as of September 24, 2010, between Morgans and
Systems Design & Development, Inc.

	 	22.	 	Music Performance Agreement — Hotel/Motel, dated as of April 9, 2009, between Morgans
Holdings LLC and Broadcast Music, Inc.

	 	23.	 	SESAC, Inc. Hotel, Motel & Resort Performance License, effective as of January 1, 2008,
between SESAC, Inc. and Morgans Holding LLC

	 	24.	 	Agreement for Interior Design Services, dated as of March 6, 2006, between Morgans
Holdings LLC and Andree Putman Sarl

	 	25.	 	Agreement between Owner and Executive Architect, dated as of September 27, 2006,
between Morgans Holdings LLC and R Wade Johnson Design Inc.

	 	26.	 	Asset Management Agreement, dated as of January 26, 2004, between Morgans and Moishe’s
Guaranteed Storage Centers

Asia de Cuba

	 	27.	 	Air Conditioning/Heating Inspection and Maintenance Agreement (Restaurant), dated as of
May 1, 2009, between Asia de Cuba Restaurant and Gem Air Conditioning Inc.

	 	28.	 	Contract for The Removal of Non-Hazardous Trade Waste (Asia de Cuba), dated as of May
5, 2009, between IESI NY Corporation and SC Madison LLC

	 	29.	 	ECOTEMP Lease Agreement, dated as of December 27, 2000, between Asia de Cuba/SC Madison
LLC and Ecolab Inc.

 

 

 

	 	30.	 	Price Increase Letter, dated as of August, 2005, from Food Sanitation Consultant
Service, Inc. regarding Asia de Cuba

	 	31.	 	Micros Service Maintenance Agreement, dated as of February 3, 2005, between Asia de
Cuba — NYC and MICROS Retail Systems, Inc.

	 	32.	 	OpenTable Corporate Agreement, dated as of March 31, 2001, between OpenTable, Inc. and
China Grill Management BD, Inc., as amended by Third Restaurant Addendum to the OpenTable
Corporate Agreement, dated as of March 31, 2001, between OpenTable, Inc. and SC Madison LLC
dba Asia de Cuba

	 	33.	 	Exclusive Services Agreement, dated as of February 18, 1998, between Ian Schrager
Hotels LLC and Philippe Starck (acting on his behalf and/or on behalf of Ubik Sarl), as
supplemented by General Terms and Conditions of Design Services, undated

	 	34.	 	Central Station Service Contract, dated as of May 2, 1998, between Asia de Cuba, Inc.
and AFA Protective Systems, Inc.

 

 

 

Schedule 1.1(e)-2

Equipment Leases

Morgans

	 	1.	 	Firstcorp Equipment Lease Agreement, dated as of August 15, 2008, between IFC Credit
Corporation and SC Madison LLC dba Morgans Hotel

	 	2.	 	Pitney Bowes Agreement, dated as of September 25, 2003, between Pitney Bowes Credit
Corporation and Morgans Hotel Group

	 	3.	 	Pitney Bowes Agreement, dated as of June 23, 2008, between Pitney Bowes and Morgans
Hotel

	 	4.	 	LDI Lease Agreement, dated as of November 20, 2010, between LDI Color Toolbox and
Morgans Hotel

Asia de Cuba

None

 

 

 

Schedule 1.1(f)

Intellectual Property

None.

 

 

 

Schedule 1.2(b)(vi)

Space Lease

Amended and Restated Lease Agreement between Morgans Holdings LLC and SC Madison LLC dated as of
January 1, 2000, as extended by extension letter dated January 15, 2007 (for leased restaurant)

 

 

 

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 237 Madison Avenue, Manhattan with Back-Up Report, filed as of January 3,
2007, prepared by Hugh Robotham, Architect, P.C.

	 	3.	 	Property Condition Report, dated as of January 29, 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 Morgans Hotel

	 	3.	 	Agreement, dated as of March 28, 2008, by and between the New York Hotel & Motel Trades
Council, AFL-CIO and Morgans Hotel Group on behalf of SC Madison, LLC d/b/a Asia de Cuba
Restaurant

	 	4.	 	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 #96628, issued on
July 24, 1990, for a cellar, mezzanine, and seventeen story fireproof building, hotel

	 	2.	 	The City of New York Department of Buildings Amended Certificate of Occupancy,
superseding Certificate of Occupancy #47782 — Sub-Cellar, Cellar, 1st Floor, Mezzanine, 2nd
Floor, 3rd thru 11th Floors, 12th & 13th Floors, 14th Floor, 15th Floor, 16th Floor, 17th &
Roof

	 	3.	 	The City of New York Department of Buildings Freight & Sidewalk Elevator Inspection
Certificate No. 152435, dated as of July 7, 2010

	 	4.	 	The City of New York Department of Buildings Passenger Elevator Inspection Certificate
(North), dated as of July 7, 2010

	 	5.	 	The City of New York Department of Buildings Passenger Elevator Inspection Certificate
(South), dated as of July 7, 2010

	 	6.	 	New York City Fire Department, Bureau of Fire Prevention Certificate, issued on
February 28, 2011

	 	7.	 	New York City Fire Department, Bureau of Fire Prevention, Certificate of Fitness
#61987707 for W12 Maintenance Sprinkler System, issued on January 6, 2010

	 	8.	 	The Hartford Steam Boiler Inspection and Insurance Co., Certificate of Boiler or
Pressure Vessel Inspection, dated as of March 25, 2010

	 	9.	 	The Hartford Steam Boiler Inspection and Insurance Co., Certificate of Boiler or
Pressure Vessel Inspection, dated as of April 30, 2009

	 	10.	 	New York City Fire Department, Bureau of Fire Prevention, Open Flame Permit, issued to
Asia de Cuba

	 	11.	 	The City of New York Department of Health and Mental Hygiene, Food Service
Establishment Permit, issued as of September 15, 2010 to SC Madison LLC, Asia de Cuba

	 	12.	 	Sentinel Fire Control, Inc. Certificate of Inspection for Automatic Fire Suppression
Systems, issued December, 2010 to Asia de Cuba

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

MORGANS HOLDINGS LLC

TO

MADISON 237 HOTEL, L.L.C.

Location of Property:

	 	 	 	 	 	 	 
	Street Address:
	 	237 Madison Avenue
	 	 
	County:
	 	New York
	 	 
	State:
	 	New York
	 	 
	Block:
	 	867	 	 
	Lot:
	 	0020	 	 
	 
	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 MORGANS HOLDINGS LLC, a
Delaware limited liability company (incorrectly recited as a New York limited liability company on
the vesting deeds described in the first recital below), having an address at

 _____ 
(“Grantor”), in favor of MADISON 237 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 deeds recorded on July 28, 1998
in Reel 2692, page 1167, as to an undivided 67% interest and in Reel 2692, page 1160, as to an
undivided 33% interest) 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.

	 	 	 	 	 	 	 
	 	 	MORGANS HOLDINGS 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

237 Madison Avenue, Block 867, Lot 0020

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

BEGINNING AT A POINT ON THE EASTERLY SIDE OF MADISON AVENUE DISTANT 49 FEET
NORTHERLY FROM THE CORNER FORMED BY THE INTERSECTION OF THE EASTERLY SIDE OF
MADISON AVENUE AND THE NORTHERLY SIDE OF 37TH STREET;

THENCE EASTERLY PARALLEL WITH THE NORTHERLY SIDE OF 37TH STREET AND PART OF
THE WAY THROUGH A PARTY WALL 100 FEET;

THENCE NORTHERLY PARALLEL WITH THE EASTERLY SIDE OF MADISON AVENUE 49 FEET 9
INCHES TO THE CENTER LINE OF THE BLOCK BETWEEN 37TH AND 38TH STREETS;

THENCE WESTERLY ALONG SAID CENTER LINE OF THE BLOCK AND PARALLEL WITH 37TH
STREET 100 FEET TO THE EASTERLY SIDE OF MADISON AVENUE;

THENCE SOUTHERLY ALONG THE EASTERLY SIDE OF MADISON AVENUE 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, MORGANS
HOLDINGS 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 MADISON 237 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:	 	 
	 
	 	 	 	 	 	 
	 	 	MORGANS HOLDINGS LLC,

a Delaware limited liability company	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

Exhibit B-2

Form of Bill of Sale for Alcoholic Beverages

BILL OF SALE (LIQUOR INVENTORY)

For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, MORGANS
HOLDINGS 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 MADISON 237 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:	 	 
	 
	 	 	 	 	 	 
	 	 	MORGANS HOLDINGS 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 MORGANS HOLDINGS LLC, a Delaware limited
liability company (“Seller”), in favor of MADISON 237 HOTEL, L.L.C., a Delaware limited
liability company (“Purchaser”).

RECITALS

A. Seller is the owner of certain property commonly known as the “Morgans” located at 237
Madison Avenue, 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:	 	 
	 
	 	 	 	 	 	 
	 	 	MORGANS HOLDINGS LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 
	 	 	MADISON 237 HOTEL, L.L.C.,

a Delaware limited liability company	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

Annex 1

Assumed Service Contracts

[to be completed at Closing — not to include any asia de cuba contracts]

 

 

 

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. 3111-00130

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 Arthur Felber and Elm Hotel Corp., dated June 1, 1959 (as
described in Exception 3 of Schedule B-1 to the title report dated February 24,
2011 (the “Morgans Title Report”) and as assigned and modified as described in such
Exception 3) is terminated/expired and the tenant no longer remains in possession of space
at the Real Property.

8. The unrecorded lease between 237 Hotel Corporation and Toms Associates, dated June 2,
1962 (as described in Exception 4 of Schedule B-1 to the Morgans Title Report) is
terminated/expired and the tenant no longer remains in possession of space at the Real
Property.

9. The unrecorded lease between Executive Hotel Associates and Executive Partnership, Inc.,
dated May 4, 1964 (as described in Exception 5 of Schedule B-1 to the Morgans Title Report)
is terminated/expired and the tenant no longer remains in possession of space at the Real
Property.

10. The unrecorded lease between Morgans Holdings LLC and Ian Schrager Hotel Management LLC,
dated July 28, 1998 (as described in Exception 6 of Schedule B-1 to the Morgans Title
Report) is terminated/expired and the tenant no longer remains in possession of space at the
Real Property.

11. The unrecorded lease between Morgans Holdings LLC and Madison Bar Company LLC, dated
August 13, 2004 (as described in Exception 7 of Schedule B-1 to the Morgans Title Report) is
terminated/expired and the tenant no longer remains in possession of space at the Real
Property.

12. The Environmental Control Board Violation #:034829059K in the amount of $800.00 was
filed against a party with a similar name to Morgans Holding LLC and such violation does not
affect 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
MADISON 237 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:

MORGANS HOLDINGS 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, City, County and State of NEW YORK, bounded and described as follows:

BEGINNING at a point on the easterly side of MADISON AVENUE, distant 49 feet northerly from the
corner formed by the intersection of the easterly side of MADISON AVENUE and the northerly side of
37TH STREET;

thence easterly parallel with the northerly side of 37TH STREET, and part of the way through a
party wall, 100 feet;

thence northerly parallel with the easterly side of MADISON AVENUE, 49 feet 9 inches to the center
line of the block between 37TH and 38TH STREETS;

thence westerly along said center line of the block and parallel with 37TH STREET, 100 feet to the
easterly side of MADISON AVENUE;

thence southerly along the easterly side of MADISON AVENUE, 49 feet 9 inches to the point or place
of BEGINNING.

 

 

 

Exhibit B

Leases on Real Property

	1.	 	Amended and Restated Lease, dated as of January 1, 2000, between Morgans Holdings LLC, a
Delaware limited liability company, as landlord, and SC Madison LLC, a Delaware limited liability
company, as tenant, as amended by that letter dated as of January 1, 2000 and by that letter dated
as of January 15, 2007.

 

 

 

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 Morgans Holdings LLC, a Delaware limited liability company (the
“Seller”), which owns the hotel located at 237 Madison Avenue, New York, NY commonly known
as “Morgans” (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”), Madison 237 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.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	MADISON 237 HOTEL L.L.C.	 	MORGANS HOLDINGS LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 
 

	 	 	 	Name:
	 	 
 

	 	 
	 

	 	Title:
	 	 
 

	 	 	 	Title:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	NEW YORK HOTEL AND MOTEL

TRADES COUNCIL, AFL-CIO	 	MORGANS HOTEL GROUP

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: 3111-00130

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: 3111-00130

	 	(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 staled 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

	 	 	 	CHICAGO TITLE INSURANCE COMPANY

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

Secretary

	 	 	 
	 

Authorized Signatory

	 	 

 

 

 

			
	 	 	 
	American Land Title Association
	 	Owner’s Policy

Policy No: 3111-00130

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:
	3111-00130

	 	 	 	 $51,800,000.00

	1.	 	Name of Insured:

	 
	 	 	MADISON 237 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 MORGANS HOLDINGS LLS -to- MADISON 237 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.: 3111-00130

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

BEGINNING at a point on the easterly side of MADISON AVENUE, distant 49 feet northerly
from the corner formed by the intersection of the easterly side of MADISON AVENUE and the
northerly side of 37TH STREET;

thence easterly parallel with the northerly side of 37TH STREET, and part of the way through a
party wall, 100 feet;

thence
northerly parallel with the easterly side of MADISON AVENUE, 49 feet 9 inches to the
center line of the block between 37TH and 38TH STREETS;

thence westerly along said center line of the block and parallel with 37TH STREET, 100 feet
to the easterly side of MADISON AVENUE;

thence southerly along the easterly side of MADISON AVENUE, 49 feet 9 inches to the point or
place of BEGINNING.

 

 

 

SCHEDULE B

Policy
No.: 3111 - 00130

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.	 	Rights of tenants or persons in possession, as tenants only, under that certain
Amended and Restated Lease, dated as of January 1, 2000, between Morgans Holdings LLC, a
Delaware limited liability company, as landlord, and SC Madison LLC, a Delaware limited
liability company, as tenant, as ameneded by that letter dated as of January 1, 2000 and
by that letter dated January 15, 2007 containing no purchase options, rights of first
refusal, first offer to purchase the property or similar rights with respect to the
property.

	2.	 	a. Building encroaches and projects upon Madison Avenue by 2-l/4 inches.

b. Brick at third story projects 3/4 inch onto Madison Avenue.

c. Ornamental brick, limestone pilasters, roof cornice, ornamental trim, door trim, cellar
doors, stand pipe and ledge project upon Madison Avenue.

d. Tile at roof of 14 story building projects 6 inches more or less south onto the premises
herein described.

e. 14- to 20-story brick and brownstone front building on northerly adjoining premises
encroaches 1/2 inch onto premises herein described.

f. Brick retaining wall on southerly adjoining premises encroaches 1-1/4 inches
northerly onto premises herein described.

g. Five-story building on southerly adjoining premises encroaches 1 inch northerly on
the premises herein described.

h. Chimney encroaches upon the southerly adjoining premises (survey does not specify to
which building said chimney belongs).

i. Chimney of five story building on southerly adjoining premises is fastened to the
southerly wall of building on premises herein described and carried up.

As shown on a survey made by Earl B. Lovell dated 9/15/1926 and last brought to date by
Earl B. Lovell-S.P. Belcher, Inc. on 3/24/2011.

With respect to 2a and b above, Policy insures that each building or 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.

- SCHEDULE B -

 

 

 

SCHEDULE B (Continued)

Policy
No.: 3111 - 00130

	3.	 	Terms, Covenants, and Restrictions contained in an instrument recorded in
Liber 486 cp 594 on 3/2/1847. Policy insures that a violation of the foregoing
restrictions will not result in reversion or forfeiture of title.

	4.	 	Covenants and Restrictions Liber 817 Cp. 89 and Liber 845 Cp. 318. Policy insures
that any violation of same will not result in a reversion or forfeiture of title.

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

This
policy is issued contemporaneously with Policy No. Y 3008-342365NY2 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: 3111-00130

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)
	 	 

 

 

 

			
	 	 	 
	American Land Title Association
	 	Owner’s Policy

Policy No: 3111-00130

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: 3111-00130

	 	(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

	 	 	 	CHICAGO TITLE INSURANCE COMPANY

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

Secretary

	 	 	 
	 

 

 

Authorized Signatory

	 	 

 

 

 

			
	 	 	 
	American Land Title Association
	 	Owner’s Policy

Policy No: 3111-00130

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:

	3111-00130	 	 	 	$	51,800,000.00	 

	1.	 	Name of Insured:

	 
	 	 	MADISON 237 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 MORGANS HOLDINGS LLS -to- MADISON 237 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.: 3111-00130

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

BEGINNING at a point on the easterly side of MADISON AVENUE, distant 49 feet northerly
from the corner formed by the intersection of the easterly side of MADISON AVENUE and the
northerly side of 37TH STREET;

thence easterly parallel with the northerly side of 37TH STREET, and part of the way through a
party wall, 100 feet;

thence northerly parallel with the easterly side of MADISON AVENUE, 49 feet 9 inches to the
center line of the block between 37TH and 38TH STREETS;

thence westerly along said center line of the block and parallel with 37TH STREET, 100 feet
to the easterly side of MADISON AVENUE;

thence southerly along the easterly side of MADISON AVENUE, 49 feet 9 inches to
the point or place of BEGINNING.

 

 

 

SCHEDULE B

Policy No.: 3111-00130

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.	 	Rights of tenants or persons in possession, as tenants only, under that certain
Amended and Restated Lease, dated as of January 1, 2000, between Morgans Holdings LLC, a
Delaware limited liability company, as landlord, and SC Madison LLC, a Delaware limited
liability company, as tenant, as ameneded by that letter dated as of January 1, 2000 and
by that letter dated January 15, 2007 containing no purchase options, rights of first
refusal, first offer to purchase the property or similar rights with respect to the
property.

	2.	 	a. Building encroaches and projects upon Madison Avenue by 2-l/4 inches.

b. Brick at third story projects 3/4 inch onto Madison Avenue.

c. Ornamental brick, limestone pilasters, roof cornice, ornamental trim, door trim, cellar
doors, stand pipe and ledge project upon Madison Avenue.

d. Tile at roof of 14 story building projects 6 inches more or less south onto the
premises herein described.

e. 14- to 20-story brick and brownstone front building on northerly adjoining premises
encroaches 1/2 inch onto premises herein described.

f. Brick retaining wall on southerly adjoining premises encroaches 1-1/4 inches
northerly onto premises herein described.

g. Five-story building on southerly adjoining premises encroaches 1 inch northerly on
the premises herein described.

h. Chimney encroaches upon the southerly adjoining premises (survey does not specify to
which building said chimney belongs).

i. Chimney of five story building on southerly adjoining premises is fastened to the
southerly wall of building on premises herein described and carried up.

As shown on a survey made by Earl B. Lovell dated 9/15/1926 and last brought to date by
Earl B. Lovell-S.P. Belcher, Inc. on 3/24/2011.

With respect to 2a and b above, Policy insures that each building or 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.

-
SCHEDULE B -

 

 

 

SCHEDULE B (Continued)

Policy No.: 3111-00130

	3.	 	Terms, Covenants, and Restrictions contained in an instrument recorded in
Liber 486 cp 594 on 3/2/1847. Policy insures that a violation of the foregoing
restrictions will not result in reversion or forfeiture of title.

	4.	 	Covenants and Restrictions Liber 817 Cp. 89 and Liber 845 Cp. 318. Policy insures
that any violation of same will not result in a reversion or forfeiture of title.

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

This policy is issued contemporaneously with Policy No. Y 3008 — 342365NY2 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: 3111-00130

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: 3111-00130

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: 3111-00130

CO-INSURANCE ENDORSEMENT

Attached to and made a part of Chicago Title Insurance Company (“Issuing Co-Insurer”)
Policy No. 311100130 (“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
	 	Y3008-342365NY2
	 	$~
	 	 	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: 3111-00130

	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 tender 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: 3111-00130

	 	(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 Morgans Holdings LLC, a Delaware limited liability
company (“Seller”), and Madison 237 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 Two Million Five Hundred Ninety Thousand and 00/100 Dollars
($2,590,000.00), which may be increased by an amount equal to One Million One Hundred Ten Thousand
and 00/100 ($1,110,000.00) 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 45-1137528) 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:

MORGANS HOLDINGS 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:

MADISON 237 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

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