indemnification obligations and other contingent liabilities of MHG LLC and its direct and indirect subsidiaries relating to the ownership, business or operations of the Transferred Business relating to periods ending on or prior to the effective date of the Formation and Structuring Transactions, including any Liabilities relating to the agreement with or claims by the hotel designer described in Note 5 to the Combined Financial Statements of Morgans Hotel Group Co. Predecessor included in the Registration Statement on Form S-1 filed by MHG Co. in connection with the IPO, (ii) all Liabilities for New York City or New York State transfer taxes in connection with the transactions contemplated by the Formation and Structuring Transactions or the IPO, including resulting from any subsequent transfers of common stock of MHG Co. by the MHG LLC Group that are aggregated with the transfers contemplated by the Formation and Structuring Transactions or the IPO, and (iii) all Liabilities under that certain Agreement of Lease, dated as of December    , 1997, by and between Adler Realty Company and ISH Operating Corp., a wholly-owned subsidiary of Morgans Hotel Group Management LLC; provided , however , that the amount of any Assumed Liability shall be reduced by any benefits or amounts that are received by the MHG LLC after the effective date of the Formation and Structuring Transactions, including any insurance or other recoveries that are received by MHG LLC from third parties relating to, arising out of or in connection with any Assumed Liability.

“ Formation and Structuring Transactions ” shall have the meaning assigned thereto in the Registration Statement on Form S-1 filed by MHG Co. in connection with the IPO.

“ Indemnifying Party ” has the meaning set forth in Section 2.4(a) hereof.

“ Indemnitee ” has the meaning set forth in Section 2.4(a) hereof.

“ Information ” means information, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, computer data, disks, diskettes, tapes, computer programs or other technical, financial, employee or business information or data.

“ IPO Closing Date ” shall mean the date on which shares of common stock of MHG Co. are issued pursuant to the IPO.

“ Liabilities ” means all debts, liabilities, guarantees, assurances, commitments and obligations, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or un-liquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including, without limitation, whether arising out of any contract or tort based on negligence or strict liability) and whether or not the same would be required by generally accepted accounting principles and accounting policies to be reflected in financial statements or disclosed in the notes thereto.  For purposes of any indemnification hereunder, “Liabilities” shall be deemed also to include any and all damages, claims, suits, judgments, fines, penalties, costs and expenses of any kind or character, including attorney’s reasonable fees.

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“ MHG LLC Group ” or “ MHG LLC Indemnitees ” means MHG LLC and its wholly- and partially-owned direct and indirect subsidiaries (other than members of the Morgans Group LLC Group) and its and their respective members, affiliates, managers, directors, officers and employees (in each case, other than members of the Morgans Group LLC Group) after giving effect to the transactions contemplated by the Formation and Structuring Transactions.  For purposes hereof, “MHG LLC Group” and “MHG LLC Indemnities” shall include (i) NorthStar Partnership, L.P., a Delaware limited partnership, (ii) any general or limited partner of NorthStar Partnership, L.P., including, without limitation, NorthStar Capital Investment Corp., a Maryland corporation and the general partner of NorthStar Partnership, L.P., (iii) the Board of Directors of NorthStar Capital Investment Corp., (iv) any direct or indirect member, investor or beneficial owner of any equity interest in any partner of NorthStar Partnership, L.P. that receives shares of common stock of MHG Co. initially held by NorthStar Partnership, L.P., whether by distribution, redemption, exchange or otherwise, (v) RSA Associates, L.P., a Delaware limited partnership, (vi) any general or limited partner of RSA Associates, L.P., and (vii) any direct or indirect member, investor or beneficial owner of any equity interest in any partner of RSA Associates, L.P. that receives shares of common stock of MHG Co. initially held by RSA Associates, L.P., whether by distribution, redemption, exchange or otherwise.

“ MHG Management Company ” means Morgans Hotel Group Management LLC, a Delaware limited liability company.

“ Morgans Group LLC Group ” or “ Morgans Group LLC Indemnitees ” means Morgans Group LLC and its partially and wholly-owned direct and indirect subsidiaries and their respective members, managers, officers and employees after giving effect to the Formation and Structuring Transactions.

“ Third Party Claim ” has the meaning set forth in Section 2.4(a) of this Agreement.

“ Transferred Business ” means:  the business and operations of Morgans Group LLC and its partially and wholly-owned direct and indirect subsidiaries after giving effect to the consummation of the Formation and Structuring Transactions, including, without limitation, (i) MHG LLC’s interest in the ownership, business and operations of the following hotel properties, whether conducted or occurring prior to, on or after the effective date of the Formation and Structuring Transactions:

(1)                                   Morgans;

(2)                                   Mondrian;

(3)                                   Royalton;

(4)                                   Delano;

(5)                                   Hudson;

(6)                                   Clift;

(7)                                   Sanderson;

(8)                                   St. Martins Lane; and

(9)                                   Shore Club,

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(ii) the ownership, business and operations of MHG Management Company, and (iii) MHG LLC’s interest in the ownership, business and operations of the restaurant joint ventures operating in the hotel properties named above.

ARTICLE II
MUTUAL RELEASES; INDEMNIFICATION

Section 2.1             Release of Pre-Closing Claims .

(a)           Morgans Group LLC Release .  Except as provided in Section 2.1(c), effective as of the IPO Closing Date, Morgans Group LLC does hereby, for itself and as agent for each member of the Morgans Group LLC Group, release and forever discharge the MHG LLC Indemnitees from any and all Assumed Liabilities and any and all other Liabilities whatsoever related to, arising from or in connection with the Transferred Business (whether arising at law or in equity (including any right of contribution), and whether arising under any contract or agreement, by operation of law or otherwise), existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the IPO Closing Date, including, without limitation, any such acts, events or conditions on or before the IPO Closing Date in connection with the Formation and Structuring Transactions, including the IPO, other than any Liabilities attributable to such member in its capacity as a selling stockholder in the IPO or asserted by another member of the MHG LLC Group.

(b)           No Actions as to Released Claims .  Morgans Group LLC agrees, for itself and as agent for each member of the Morgans Group LLC Group, not to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against MHG LLC or any other person released pursuant to Section 2.1(a), with respect to any Liabilities released pursuant to Section 2.1(a).

(c)           Excluded Liabilities; No Impairment .  Nothing contained herein shall release any claims under, or impair any right of any person to enforce, this Agreement or the IPO underwriting agreement.

Section 2.2             Indemnification by Morgans Group LLC .  Except as otherwise provided in this Agreement, Morgans Group LLC shall indemnify, defend and hold harmless the MHG LLC Indemnitees from and against any and all Liabilities that any third party seeks to impose upon the MHG LLC Indemnitees, or which are imposed upon the MHG LLC Indemnit