Exhibit 10.3

20 February 2007

SHR PRAGUE PRAHA B.V.

(As Borrower)

AAREAL BANK AG

(As Lender)

FACILITY AGREEMENT

in respect of

a revolving loan of up to €104,000,000

(with a term-out option)

relating to financing of the

Intercontinental Hotel, Prague

Paul, Hastings, Janofsky & Walker (Europe) LLP

Solicitors and Registered Foreign Lawyers

88 Wood Street

London EC2V 7AJ

Tel: +44 20 7710 2000

Fax: +44 20 7796 2233

Ref: WJM/MJE/59104.00024

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TABLE OF CONTENTS

 

          Page 1.    INTERPRETATION    1 2.    FACILITY AND PURPOSE    29 3.   
CONDITIONS PRECEDENT AND UTILISATION    30 4.    REPAYMENT    31 5.   
PREPAYMENT AND CANCELLATION    32 6.    INTEREST    37 7.    INTEREST PERIODS   
38 8.    MARKET DISRUPTION    39 9.    TAXES    39 10.    INCREASED COSTS    42
11.    PAYMENTS    43 12.    BANK ACCOUNTS    45 13.    REPRESENTATIONS    48
14.    INFORMATION COVENANTS    54 15.    GENERAL COVENANTS    57 16.   
PROPERTY COVENANTS    63 17.    DEFAULT    68 18.    EVIDENCE AND CALCULATIONS
   72 19.    FEES AND INDEMNITIES    72 20.    EXPENSES    74 21.    AMENDMENTS
& WAIVERS    74 22.    CHANGES TO THE PARTIES    75 23.    DISCLOSURE OF
INFORMATION    76 24.    SET-OFF    77 25.    SEVERABILITY    77 26.   
COUNTERPARTS    77 27.    NOTICES    77 28.    GOVERNING LAW    78 29.   
ARBITRATION    79

SCHEDULE 1

   CONDITIONS PRECEDENT    80

SCHEDULE 2

   CALCULATION OF MANDATORY COSTS    86

SCHEDULE 3

   FORM OF REQUEST    88

SCHEDULE 4

   FORM OF TRANSFER CERTIFICATE    89

 

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TABLE OF CONTENTS

(continued)

 

          Page

SCHEDULE 5

   FORM OF TERM OUT NOTICE    92

SCHEDULE 6

   AMORTISATION SCHEDULE    93

SCHEDULE 7

   HOTEL MANAGER LETTER    94

SCHEDULE 8

   UNSUBORDINATED FINANCIAL INDEBTEDNESS    96

SCHEDULE 9

   FORM OF COMPLIANCE CERTIFICATE    97

SCHEDULE 10

   INTEREST COSTS CALCULATION    98

SCHEDULE 11

   EXISTING SUBORDINATED LOANS    99

SCHEDULE 12

   GROUP STRUCTURE CHART    100

 

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THIS AGREEMENT is dated 20 February 2007

BETWEEN:

 

(1) SHR PRAGUE PRAHA B.V., a limited liability company incorporated under the
law of the Netherlands, registered in the commercial register of the Chamber of
Commerce and Industries for Amsterdam under no. 34119161, whose registered
offices are at Strawinskylaan 3105, 1077 ZX, Amsterdam, the Netherlands (the
“Borrower”);

 

(2) AAREAL BANK AG, a joint stock company incorporated under the laws of the
Federal Republic of Germany, registered with the Commercial Register in
Wiesbaden under no. HRB 13184 whose seat is in Wiesbaden, the Federal Republic
of Germany and whose commercial offices are at Paulinenstraße 15, 65189
Wiesbaden, the Federal Republic of Germany, in its capacity as lender under the
Existing Facility (as defined below) (in this capacity, the “Existing Lender”);
and

 

(3) AAREAL BANK AG, a joint stock company incorporated under the laws of the
Federal Republic of Germany, registered with the Commercial Register in
Wiesbaden under no. HRB 13184 whose seat is in Wiesbaden, the Federal Republic
of Germany and whose commercial offices are at Paulinenstraße 15, 65189
Wiesbaden, the Federal Republic of Germany, in its capacity as lender under this
Agreement (in this capacity, the “Lender”).

IT IS AGREED as follows:

 

1. INTERPRETATION

 

1.1 Definitions

In this Agreement:

Accounts Administrator means COMMERZBANK Aktiengesellschaft, a joint stock
company incorporated under the laws of the Federal Republic of Germany, acting
through COMMERZBANK Aktiengesellschaft pobočka Praha, Identification Number 47
61 09 21, with its registered office in Prague 2, Jugoslávská 1, Postal Code 120
21, the Czech Republic, registered in the Commercial Register maintained by the
Municipal Court in Prague, Section A, Insertion 7341.

Additional Obligor means any Holding Company or Subsidiary of the Borrower that
is not referred to in paragraphs (a) or (c) of the definition of Obligor that
grants a Security Interest to the Lender under a Security Document.

Accounts Pledges means the pledges over monetary receivables of the Owner, the
Lessee, the Borrower and TRS arising from the Specified Accounts other than the
Dutch Revenue Account granted in favour of the Lender by the Owner, the Lessee,
the Borrower and TRS, respectively under agreements on pledge of receivables
arising from the Specified Accounts other than the Dutch Revenue Account between
the Lender as pledgee and the Owner, the Lessee, the Borrower and TRS, as
applicable, as pledgor dated on or around the date of this Agreement and
“Account Pledge” means any one of them.

 

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Affiliate means in relation to any person, a Subsidiary of that person or a
Holding Company of that person or any other Subsidiary of that Holding Company.

Agreement on Employees’ Safeguards means the Agreement on Employees’ Safeguards
entered into by Lessee and GPHS on May 3, 2004, as amended from time to time.

Agreement on Use of Assets and Performance of Contracts means the Agreement on
Use of Assets and Performance of Contracts entered into by Lessee and GPHS on
May 24, 2004, as amended from time to time.

Amortisation Payment Period means the fourth and fifth years falling after the
first Utilisation Date.

Amortisation Schedule means the amortisation schedule agreed between the
Borrower and the Lender based upon the principles set out at Schedule 6
(Amortisation Schedule).

Annual Budget means the annual budget for the hotel, developed in conjunction
with the Hotel Manager under the Hotel Management Agreement.

Approved Manager means either a Pre-Approved Manager or any other management
company appointed by the Borrower and acceptable to the Lender (acting
reasonably).

Asset Management Agreement means the agreement concluded on 17 August 1999
between the Lessee and Strategic Hotel Capital Europe Asset Management Limited
as amended from time to time (including as assigned by Strategic Hotel Capital
Europe Asset Management Limited as of December 31, 2002 to SHC Asset Management,
LLC and as further assigned by SHC Asset Management, LLC, to SHC DTRS).

Availability Period means if the first Utilisation Date occurs during the
Initial Availability Period, the period from and including the date of the first
Loan to and including the last Business Day which is not more than 364 days from
and including the date of the first Utilisation, provided that if no Loan is
made during the Initial Availability Period, then the Availability Period shall
terminate on the last day of the Initial Availability Period.

Authorisation means an authorisation, consent, approval, resolution, licence,
exemption or registration.

Borrower Group means the Borrower and its Subsidiaries from time to time.

Borrower Share Pledge means the pledge over the shares in the Borrower granted
by the Parent in favour of the Lender under a notarial deed of pledge of shares
in the Borrower between the Lender as pledgee and the Parent as pledgor dated on
or about the date of this Agreement.

Break Costs means the amount (if any), which the Lender is entitled to receive
under Clause 19.3 (Break Costs).

 

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Buildings means (i) building No. 43 on plot of land No. 988, cadastral area
Staré Mesto, registered on ownership folio no. 279 in the Real Estate Register
maintained for the cadastral area Staré Mesto, municipality part Staré Mesto,
municipality Praha by the Cadastral Office for the Capital City of Praha, Prague
Branch and (ii) the Golden Prague Residence.

Business means the business of a hotel carried on at the Property by the Lessee
and managed for it by the Hotel Manager under the Hotel Management Agreement.

Business Day means a day (other than a Saturday or a Sunday) on which banks are
open for general business in Frankfurt, Germany and Prague, Czech Republic and,
in respect of any payments in Euro, which is also a TARGET Day.

Call Option Agreement means the Call Option Agreement in respect of the 100%
ownership interest in GPHS entered into between the Lessee and ICH Overseas,
dated May 24, 2004 (as amended from time to time), regarding the option right of
the Lessee to buy 100% ownership interest in GPHS.

Commercial Register (“obchodní rejstrík” in Czech) means the commercial register
maintained by the courts of the Czech Republic.

Commitment means the lowest of:

 

  (i) €104,000,000; or

 

  (ii) an amount in Euro equal to 66% of the value attributed to the Property in
the Initial Valuation; or

 

  (iii) an amount which as of the date of the first Request is equal to such
amount as would, when the ICR test is applied to it, generate an ICR of 150%.

Compliance Certificate means a certificate substantially in the form of Schedule
9 (Compliance Certificate).

Conditions Subsequent means those items referred to in Part 2 of Schedule 1
(Conditions Subsequent).

Corporate Expenses means any professional adviser’s fees, including those of any
valuer, legal adviser, accountant or other professional adviser.

Counterparty means the counterparty to any Hedging Agreement.

Czech Revenue Account means the CZK, EUR and USD bank account opened and held by
the Borrower with Accounts Administrator having account number 1019330.

“Czech Securities Centre” means the Securities Centre (“Stredisko cenných
papíru” in Czech) once changes envisaged under Section § 202 of Act No. 256/2004
Coll., as amended, are implemented the Central Depository (“Centrální depozitár”
in Czech).

“CZK” and “Czech crowns” denote lawful currency of the Czech Republic.

 

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Default means:

 

  (a) an Event of Default; or

 

  (b) an event which would be (with the expiry of a grace period, the giving of
notice or the making of any determination under the Finance Documents or any
combination of the foregoing) an Event of Default.

Deposit Account means the CZK, EUR and USD bank account opened and held by the
Borrower with the Accounts Administrator having account number 1019322.

Deposit Date has the meaning given to that term in Clause 16.10 (Interest
Cover).

Dutch Banking Act means the Dutch Act on the Supervision of the Credit
System 1992 (Wet toezicht kredietwezen 1992) as amended from time to time or its
successor, being the Dutch Act on Financial Supervision (Wet op het financieel
toezicht) as amended from time to time, as the case may be.

Dutch Revenue Account means the account opened and held by the Borrower with
Deutsche Bank Netherlands.

Easements means:

 

  (i) the easement over building no. 43 on plot of land No. 988 located in the
cadastral area Staré Mesto, municipality Prague and registered on ownership
folio no. 279 in the Real Estate Register maintained for the cadastral area
Staré Mesto, municipality Prague by the Cadastral Office for the Capital City of
Prague, Prague Branch corresponding to the right of PREdistribuce, a.s.,
Identification Number 273 76 516 to install and operate the technological
facility RS 2660 in the above building and have a free access to this building
for the purpose of securing operation, maintenance and repairs of this facility;
and

 

  (ii) the easement over plots of land nos. 989/1 and 989/2, located in the
cadastral area Staré Mesto, municipality Prague and registered on ownership
folio no. 279 in the Real Estate Register maintained for the cadastral area
Staré Mesto, municipality Prague by the Cadastral Office for the Capital City of
Prague, Prague Branch corresponding to the right of PREdistribuce, a.s.,
Identification Number 273 76 516 to install and operate the 22 KV electricity
cables leading the technological facility RS 2660 on the above plots and have a
free access to these plots for the purpose of securing operation, maintenance
and repairs of these cables;

to the establishment of which the Existing Lender consented in the capacity of
the lender under the Existing Facility Agreement on December 29, 2006.

Environmental and Works Report means the report dated October 2006 and prepared
by Gleeds (London) whose registered offices are at 123 Regent Street, London W1
or by its subsidiary operating in the Czech Republic.

Euro or € means the single currency unit of the Participating Member States.

 

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EURIBOR means, in relation to any Loan:

 

  (a) the applicable Screen Rate; or

 

  (b) (if no Screen Rate is available for the Interest Period of that Loan) the
arithmetic mean of the rates (rounded upwards to four decimal places) as
supplied to the Lender at its request quoted by the Reference Banks to leading
banks in the European interbank market,

as of 11.00am on the Quotation Day for the offering of deposits in Euro for a
period comparable to the Interest Period of the relevant Loan.

Event of Default means any event or circumstance specified as such in Clause 17
(Default).

Exemption Regulation means the Exemption Regulation dated 26 June 2002 (as
amended from time to time) of the Ministry of Finance of the Netherlands
(Vrijstellingsregeling Wet toezicht kredietwezen 1992), as promulgated in
connection with the Dutch Banking Act and its successor exemption regulation
issued pursuant to the Dutch Act on Financial Supervision (Wet op het financieel
toezicht) dated 15 November 2006 (Official Gazette 23 November 2006, NZ229).

Existing Facility means the facility made available to the Borrower under the
Existing Facility Agreement.

Existing Facility Agreement means the €75,000,000 loan agreement, no. 30580633,
dated 26 June 2003 (as amended) made between the Existing Lender and the
Borrower.

Existing Facility Event of Default means an Event of Default as defined in the
Existing Facility Agreement.

Existing Subordinated Loans means the loans set out in Schedule 11 (Existing
Subordinated Loans).

Facility means the credit facility made available under this Agreement.

Facility Office means the office(s) of the Lender through which it will perform
its obligations under this Agreement.

Fee Letter means any letter or letters entered into by reference to this
Agreement between one or more Lender and the Borrower setting out the amount of
certain fees and margin referred to in this Agreement.

FF&E means all movable assets, i.e. fixtures, furniture, furnishings, equipment,
apparatus and other personal property owned by the Lessee (excluding operating
equipment, operating supplies and fixtures attached to and forming part of the
Property) used in, or held in storage for use in (or if the context so dictates,
required in connection with), and required for the operation of the Property and
carrying on the Business in accordance with applicable Management Agreement and
Agreement on Use of Assets and Performance of Contracts, including, without
limitation, (i) office furnishings and equipment, (ii) specialized hotel and spa
equipment necessary for the

 

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operation of any portion of the Property, including equipment for kitchens,
laundries, dry cleaning facilities, bars, restaurants, public rooms, commercial
and parking space, spa and recreational facilities, and (iii) all other
furnishings and equipment as Owner or the Hotel Manager deems necessary or
desirable for the operation of the Property in accordance with the applicable
Management Agreement.

FF&E Account means the CZK, EUR and USD bank account opened and held by the
Lessee with Accounts Administrator having account number 1018993.

FF&E Pledge means the non-possesory pledge, as collective item (“soubor vecí”),
of those items of FF&E owned by the Lessee that are movable assets, granted by
the Lessee in favour of the Lender under an agreement on pledge over movables
between the Lender as pledgee and Lessee as pledgor dated on or about the date
of this Agreement.

Final Maturity Date means the last Business Day which is not more than 364 days
from and including the first Utilisation Date subject to such date being
extended in accordance with Clause 4.4.1 (Term-out Option and Amortisation).

Finance Document means:

 

  (a) this Agreement;

 

  (b) a Security Document;

 

  (c) any Hedging Agreement;

 

  (d) the Subordination Agreement;

 

  (e) any SDNA;

 

  (f) a Transfer Certificate;

 

  (g) a Fee Letter;

 

  (h) the Notarial Records on Direct Enforceability;

 

  (i) the Security Release Agreement;

 

  (j) the Termination of Subordination Agreement; or

 

  (k) any other document designated as such by the Lender and the Borrower.

Financial Indebtedness means any indebtedness for or in respect of:

 

  (a) monies borrowed;

 

  (b) any amount raised by acceptance under any acceptance credit facility or
dematerialised equivalent;

 

  (c) the amount of any liability in respect of any lease or hire purchase
contract which would, in accordance with generally accepted accounting
principles in the Czech Republic, be treated as a finance or capital lease;

 

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  (d) any counter-indemnity obligation in respect of a guarantee, bond, standby
or documentary letter of credit or any other instrument issued by a bank or
financial institution;

 

  (e) any amount raised under any other transaction (including any forward sale
or purchase agreement) having the commercial effect of a borrowing; and

the amount of any liability in respect of any guarantee for any of the items
referred to in paragraphs (a) to (e) above

Fixed Rate Basis means the calculation of interest due on the Loan in accordance
with Clause 6.1.2(b) (Calculation of Interest).

Floating Rate Basis means the calculation of interest due on the Loan in
accordance with Clause 6.1.2(a) (Calculation of Interest).

General Owner Account means the CZK, EUR and USD bank account opened and held by
the Owner with Accounts Administrator having account number 1018928.

Golden Prague Residence means building No. 44 on plot of land No. 986/2,
cadastral area Staré Mesto, registered on ownership folio no. 279 in the Real
Estate Register, maintained for the cadastral area Staré Mesto, municipality
part Staré Mesto, municipality Praha by the Cadastral Office for the Capital
City of Praha, Prague Branch.

GPHS means Golden Prague Hotel Services s.r.o., a limited liability company
incorporated under the laws of the Czech Republic, Identification
Number 27 08 39 34, with its registered seat in Prague 1, nám. Curieových 43/5,
Postal Code 110 00, the Czech Republic, registered in the Commercial Register
maintained by the Municipal Court in Prague, Section C, Insertion 95038.

Group Structure Chart means the organisational chart set out at Schedule 12
(Group Structure Chart), showing the ownership of the Parent and the Obligors.

Hedging Agreement means any interest hedging agreement or agreements entered
into by the Borrower with the Lender or any other Counterparty acceptable to the
Lender (acting reasonably) in connection with interest payable under this
Agreement.

HELCONT means HELCONT spol. s r.o., a limited liability company incorporated
under the laws of the Czech Republic, Identification Number 161 92 516,
registered seat in Prague 1, nám. Curieových 43/5, Postal Code 110 00, the Czech
Republic, registered in the Commercial Register maintained by the Municipal
Court in Prague, Section C, Insertion 1723.

Holding Company means in relation to a company or corporation, any other company
or corporation in respect of which it is a Subsidiary.

Hotel Agreements means the Hotel Services Agreement, the Hotel Management
Agreement, the License Agreement, the Agreement on Use of Assets and Performance
of Contract and the Agreement on Employees Safeguards.

 

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Hotel Management Agreement means whilst it is in effect, the Initial HMA and
thereafter any Permitted Replacement HMA.

Hotel Manager means, whilst the Initial HMA is in effect, IOHC, and thereafter
any new manager with whom the Borrower and Lessee enter into a Permitted
Replacement HMA.

Hotel Manager Letter means a letter signed by the Hotel Manager and the Lender
substantially in the form set out at Schedule 7 (Hotel Manager Letter).

Hotel Services Agreement means Hotel Services Agreement entered into by and
between Lessee and GPHS on May 24, 2004, as amended from time to time.

ICH Overseas means Inter-Continental Hotels (Overseas) Limited, a limited
liability company incorporated under the laws of England and Wales, with its
registered office at 67 Alma Road, Windsor, Berks. SL4 3HD, England on May 24,
2004.

IHC means Intercontinental Hotels Corporation, a corporation incorporated under
the laws of Delaware, with its principal place of business at Three Ravinia
Drive, Atlanta, Georgia, the USA.

Increased Cost means:

 

  (a) an additional or increased cost;

 

  (b) a reduction in the rate of return from the Facility or on the Lender’s
overall capital; or

 

  (c) a reduction of an amount due and payable under any Finance Document,

which is incurred or suffered by the Lender but only to the extent attributable
to a the Lender having entered into any Finance Document or funding or
performing its obligations under any Finance Document.

Indemnity Agreement means the Indemnity Agreement entered into by and between
GPHS and Strategic Hotel Funding, LLC, dated May 24, 2004, as amended from time
to time.

Initial Availability Period means the period commencing from and including the
date of this Agreement and ending on and including the date twenty (20) Business
Days after this Agreement (or, if such day is not a Business Day, the
immediately following Business Day).

Initial HMA means the hotel management agreement entered into on 23 June 2004
between Lessee, Borrower and the Hotel Manager (as amended).

Initial Obligors means the Borrower, the Owner, the Parent, TRS and the Lessee.

Initial Valuation means the Valuation dated 31 August 2006 prepared by the
Valuer in respect of the Property.

 

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Initial Maturity Date means the last Business Day which is not more than 364
days from and including the first Utilisation Date.

Insolvency Regulation means Council Regulation (EC) No. 1346/2000 of
29 May 2000.

Insurance Security Assignments means:

 

  (i) the Terrorism Insurance Security Assignment; and

 

  (ii) the Other Insurance Security Assignment.

Interest Cover Ratio or ICR means the ratio calculated on an annual historical
rolling basis using the formula set out at Schedule 10 (ICR Calculation).

IOHC means Intercontinental Overseas Holding Corporation, a corporation
organized and existing under the laws of the State of Delaware, USA, with its
principal place of business at Three Ravinia Drive, Atlanta, GA, USA.

Interest Payment Date means:

 

  (a) prior to the earlier of the Term-out Date and the Initial Maturity Date,
the 15th day of each calendar month;

 

  (b) after the Term-out Date, during any period where interest is calculated on
a Floating Rate Basis, the last day of each Interest Period;

 

  (c) during any period where interest is calculated on a Fixed Rate Basis, the
15th day of each third calendar month starting with the third calendar month
after the Term-out Date,

provided that if any such day is not a Business Day, the Interest Payment Date
will instead be the next Business Day in that calendar month (if there is one)
or the preceding Business Day (if there is not).

Interest Period means in relation to a Loan:

 

  (a) in respect of the first Interest Period for such Loan, the period from the
Utilisation Date to the 15th day of the calendar month falling after the first
Utilisation Date;

 

  (b) prior to the earlier of the Term-out Date and the Initial Maturity Date,
each period of one month commencing on the later of the 15th day of the calendar
month falling after each Utilisation Date and the day following the end of the
preceding interest period and ending on:

 

  (i) the 14th day in each following month; and

 

  (ii) if the first to occur of the Term-out Date and the Initial Maturity Date
occurs on a day other than the day referred to in (i) above, such day;

 

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  (c) after the Term-out Date, during any period where interest is calculated on
a Floating Rate Basis, the period of one (1) or three (3) months specified in
the Term-out Notice, with the first such period commencing on the Term-out Date
and ending on the 15th day of the month in which the Term-out Date occurred or,
if the Term-out Date occurs after the 15th day of any month, the 15th day of the
next month, and each period thereafter ending on the day immediately prior to
the corresponding day in the relevant month;

 

  (d) during any period where interest is calculated on a Fixed Rate Basis, such
period as is selected in a Term-out Notice,

provided that if the last day of any such period is not a Business Day then the
period shall end on the next Business Day in that calendar month (if there is
one) or the preceding Business Day (if there is not).

Intra Group Distribution means any dividend payment or distribution of cash or
equity release by any Obligor other than the Borrower provided such payment or
distribution is made to a member of the Borrower Group.

ITM means ITM Praha (Institut pro trenink a management Praha) spol. s r.o., a
limited liability company incorporated under the laws of the Czech Republic,
Identification Number 49 68 51 12, with its registered seat in Praha 6, Koulova
15, Postal Code 160 00, registered with the Commercial Register maintained by
the Municipal Court in Prague, Section C, Insertion 23444.

LCIA Court means the London Court of International Arbitration.

Lease Agreements means any and all lease agreements and sublease agreements on
the lease or sublease of the Property or a part thereof or residential or
non-residential premises in the Property entered into by the Lessee as lessor or
sublessor and a third party as lessee or sublessee, as amended from time to
time, (other than any and all of the lease agreements and sublease agreements
concerning premises in Golden Prague Residence entered into with customers for
the purpose of their accommodation in Golden Prague Residence), including
without limitation any and all lease guarantees and any and all other
lease-related security.

Lease Document means:

 

  (a) each Lease Agreement; or

 

  (b) any other document designated as such by the Lender and the Borrower.

Lease Income means the rental income from the Property Lease Agreement.

Lease Pledge means the pledge over monetary receivables of the Lessee arising
from the Lease Agreements granted in favour of the Lender by the Lessee under an
agreement on pledge of receivables arising from the Lease Agreements between the
Lender as pledgee and the Lessee as pledgor dated as of the date of this
Agreement.

 

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Lessee means SHC Management Prague, s.r.o., a limited liability company
incorporated under the laws of the Czech Republic, Identification Number 25 19
99 01, with its registered seat in Prague 1, nám. Curieových 43/5, Postal Code
110 00, the Czech Republic, registered with the Commercial Register maintained
by the Municipal Court of Prague, Section C, Insertion 72305; upon completion of
the Merger, any reference to the Lessee in this Agreement shall construed as
reference to TRS.

Lessee Corporate Account means the CZK, EUR and USD bank account opened and held
by the Lessee with Accounts Administrator having account number 1025709.

Lessee Guarantee means the guarantee granted on or around the date of this
Agreement by the Lessee in favour of the Lender in respect of all amounts owing
by the Borrower under this Agreement.

Lessee Share Pledge means the pledge over the 100% ownership interest in the
Lessee granted by TRS in favour of the Lender under an agreement on pledge of
ownership interest in the Lessee between the Lender as pledgee and TRS as
pledgor dated as of the date of this Agreement.

License Agreement means whilst it is in effect, the Licence Agreement entered
into on June 23, 2004 among Lessee, Borrower and IHC (as amended), and
thereafter (if any) any Permitted Replacement License Agreement.

Loan means, unless otherwise stated in this Agreement, the principal amount of a
borrowing under this Agreement or the principal amount outstanding of that
borrowing.

Loan to Value Ratio has the meaning given to that term in Clause 16.9 (Loan to
Value Ratio).

Main Operating Account means the CZK, EUR and USD bank account opened and held
by the Lessee with Accounts Administrator having account number 1018936.

Maintenance Reserve Amount means, in respect of any calendar month, an amount
equal to the higher of:

 

  (i) 4% of Turnover during such month; or

 

  (ii) any amount required to be credited on a monthly basis to a maintenance
reserve account under the terms of the Hotel Management Agreement.

Management Agreement means either the Hotel Management Agreement and/or the
License Agreement.

Mandatory Costs Rate means the percentage rate per annum calculated by the
Lender in accordance with Schedule 2 (Calculation of Mandatory Costs).

Margin means the margin as set out in the Fee Letter.

Material Adverse Effect means a material adverse effect on:

 

  (a) the business or financial condition of the Obligors taken as a whole; or

 

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  (b) the ability of any Obligor to perform its obligations under the Finance
Documents which would have a material adverse effect on the Lender’s ability to
exercise those provisions of the Finance Documents expressed to be for its
benefit as against the Obligors (taken as a whole) following an Event of
Default.

Material Contract means each of the:

 

  (a) the Hotel Agreements;

 

  (b) Agreement on Use of Assets and Performance of Contracts;

 

  (c) Put Option Agreement;

 

  (d) Call Option Agreement;

 

  (e) Property Lease Agreement;

 

  (g) Indemnity Agreement;

 

  (i) the Asset Management Agreement;

 

  (j) the License Agreement.

Mortgage means a mortgage over the Property granted by Owner in favour of the
Lender under the mortgage agreement between the Lender as mortgagee and Owner as
mortgagor dated as of the date of this Agreement.

Notarial Records on Direct Enforceability means notarial records on direct
enforceability of claims against:

 

  (a) the Owner arising from the Owner Guarantee executed by the Owner and the
Lender on or about the date of this Agreement; and

 

  (b) the Lessee arising from the Lessee Guarantee executed by the Lessee and
the Lender on or about the date of this Agreement.

Obligors means:

 

  (a) the Initial Obligors;

 

  (b) each Additional Obligor; and

 

  (c) SHC Prague,

and “Obligor” means any one of them.

Open Market Value means the value of the Property as determined on the basis of
the most recent Valuation of the market value as that term is defined in the
then current Statement of Asset valuation Practice and Guidance Notes issued by
the Royal Institution of Chartered Surveyors.

 

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Other Insurance Security Assignment means the security assignment over the
proceeds of all insurance policies (other than third party liability policies,
motor vehicles insurance policies, and policies in respect of acts of terrorism)
entered into by the Lessee and the Owner, insuring the Buildings and FF&E
against all common risks and business interruption insurance policies (including
flood insurance) granted by the Lessee and the Owner in favour of the Lender
under agreements on security assignment of insurance proceeds between the Lender
as assignee and the Lessee and the Owner as assignors, dated on or around the
date of this Agreement.

Owner means SHC Property Prague, s.r.o., a limited liability company
incorporated under the laws of the Czech Republic, Identification Number 251 99
927, with its registered seat in Prague 1, nám. Curieových 43/5, Postal Code 110
00, the Czech Republic, registered with the Commercial Register maintained by
the Municipal Court of Prague, Section C, Insertion 72304.

Owner Share Pledge means the pledge over the 99% ownership interest in the Owner
granted by the Borrower in favour of the Lender under an agreement on pledge of
ownership interest in the Owner between the Lender as pledgee and Borrower as
pledgor dated on or around the date of this Agreement.

Owner Guarantee means the guarantee granted on or around the date of this
Agreement by the Owner in favour of the Lender in respect of all amounts owing
by the Borrower under this Agreement.

Parent means SHR Prague Praha, LLC., a corporation organized and existing under
the laws of the State of Delaware, U.S.A., registered offices at
2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, U.S.A., 100%
shareholder of the Borrower.

Participating Member States means any member state of the European Communities
that adopts or has adopted the Euro as its lawful currency.

Party means a party to this Agreement.

Permitted Amendment means any amendment to a Transaction Document (other than a
Finance Document) that is:

 

  (a) required as a result of or necessary in order to facilitate a Permitted
Reorganisation;

 

  (b) of a non-material nature; or

 

  (c) in case of a Lease Agreement, if it is made in order to facilitate a
Permitted Letting; or

 

  (d) required to be made to any of the Hotel Services Agreement, the Agreement
on Employees’ Safeguards or the Agreement on Use of Assets and Performance of
Contracts in order to enable the Borrower to comply with its obligations under
the Finance Documents; or

 

  (e) any other amendment to which the Lender consents (such consent not to be
unreasonably withheld or delayed).

 

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Permitted Bank Accounts means each of the following:

 

  (a) the USD Account No. 27-1840780227/0100 and the EUR Account
No. 27-1840760277/0100 each held by the Lessee with Komerční banka, a.s.;

 

  (b) Bank Account No. 5001057-028/0800 held by either the Lessee or SHC Prague
with Česká sporitelna, a.s.;

 

  (c) the CZK, EUR and USD bank account opened and held by SHC Prague with
Accounts Administrator having account number 101875300,

provided that the accounts listed at paragraphs (a) and (b) above shall only be
Permitted Bank Accounts if:

 

  (x) in the case of the account referred to at paragraph (a) above, it is
solely used for the depositing of cash or cheques denominated in various
currencies, received primarily from the hotel guests and customers or in
relation with the currency exchange operated by the Lessee; and

 

  (y) in the case of the account referred to at paragraph (b) above, it is
solely used in relation to the lease and administration of the property situated
at Prague 3, Roháčova 134/4, Postal Code 130 00 and owned by SHC Prague.

Permitted Distribution means any dividend payment or distribution of cash or
equity release by the Borrower made as part of, or utilising cash made available
as a consequence of, any Permitted Reorganisation.

Permitted Indebtedness means:

 

  (a) indebtedness entered into in accordance with or permitted by the Finance
Documents;

 

  (b) indebtedness in respect of trade or other indebtedness incurred by an
Obligor in the ordinary course of its business other than Financial
Indebtedness;

 

  (c) indebtedness subordinated on terms satisfactory to the Lender, (the Lender
acknowledges and agrees that any Subordinated Loan is satisfactorily
subordinated);

 

  (d) indebtedness in respect statutory guarantees arising by operation of law
as a result of any Permitted Reorganisation other than as a result of any breach
of law or contractual obligations;

 

  (e) Unsubordinated Financial Indebtedness; and

 

  (f) any other indebtedness to which the Lender gives its consent.

Permitted Insurer means any of:

 

  (a) Česká pojišt’ovna a.s.;

 

  (b) Allianz pojišt’ovna, a.s.;

 

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  (c) Kooperativa, pojist’ovna, a.s.;

 

  (d) AIG CZECH REPUBLIC pojis?ovna, a.s.;

 

  (e) Generali Pojist’ovna a.s.;

 

  (f) UNIQA pojist’ovna, a.s.;

 

  (g) ČSOB Pojist’ovna, a. s., člen holdingu ČSOB; and

 

  (h) Lloyds Market.

Permitted Letter of Credit means any letter of credit provided by the Borrower
in substitution for the Borrower’s obligations with regard to payment of the
Maintenance Reserve Amount under Clause 12.1.2(a) (Obligations with regard to
accounts).

Permitted Letting means:

 

  (a) any letting and/or sub-letting of the Property or a part thereof or
residential or non-residential premises in the Property entered into in
accordance with the provisions of the Hotel Management Agreement and which:

 

  (i) is entered into with a third party (excluding any Subsidiary or Holding
Company of the Obligors) on an arms’ length basis; and

 

  (ii) is at market rent and does not contain any premium; or

 

  (b) any letting and/or sub-letting of premises in the Golden Prague Residence
to customers in the ordinary course of the Business;

 

  (c) any letting and/or sub-letting on an arms length basis of:

 

  (i) residential or non-residential premises in the Property or land of the
Property in each case not greater than 100 square metres, or a in case of
commercial retail lease of an area of the Property not greater than 30 square
metres; or

 

  (ii) provided that the letting benefits the Property, part of the Property for
the purpose of placing technical or other equipment thereon or therein,

provided that in respect of each of (a) – (c) above:

 

  (i) the Hotel Management Agreement is complied with; and

 

  (ii) and each letting and/or sub-letting is for a term (assuming for these
purposes that any option to extend the term thereof is exercised) not exceeding
7 years and otherwise terminable in accordance with market standard
arrangements.

Permitted Loan means any loan made by the Borrower to any Subsidiary of the
Ultimate Parent that is not a Subsidiary of the Borrower.

 

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Permitted Merger means the merger by amalgamation (“fúze sloučením” as referred
to in section 69a (1) of the Czech Commercial Code) of the Lessee as dissolving
company into TRS as the surviving entity and in accordance with the Permitted
Merger Documents with January 1, 2007 as the merger decisive date (“rozhodný den
fúze” in Czech ).

Permitted Merger Documents means:

 

  (a) the merger agreement to be entered into between the TRS and the Lessee;

 

  (b) the resolutions of TRS in its capacity as the sole shareholder of the
Lessee to approve the Permitted Merger;

 

  (c) the resolutions of the Borrower in its capacity as the sole shareholder of
the shares in TRS to approve the Permitted Merger; and

 

  (d) any other documents which will be filed with the court which maintains the
Commercial Register,

Permitted Payment means any payment of monies (whether by dividend or otherwise)
standing to the credit of the Dutch Revenue Account at any time.

Permitted Reorganisation means:

 

  (a) any corporate reorganization of the Borrower Group permitted under the
terms of the Existing Facility Agreement but incomplete at the date of this
Agreement;

 

  (b) any acquisition or disposal of an ownership interest made in accordance
with the terms of the Put Option Agreement or the Call Option Agreement;

 

  (c) the Permitted Merger;

 

  (d) the liquidation of SHC Prague Repository B.V. and SHC Prague (Gibraltar)
Limited and SHC Prague provided that:

 

  (i) the Borrower has provided the Lender with adequate advance notice of any
such liquidation in sufficient detail to enable the Lender to comprehend the
effect of such liquidation on the Borrower Group; and

 

  (ii) the Lender has consented to any such liquidation in advance of its
commencement, such consent not to be unreasonably withheld or delayed;

 

  (e) the decrease in the registered capital of TRS to CZK 371,000,000;

 

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  (f) the increase of the Borrower’s issued share capital by conversion of its
(share premium, dividend and/or other) reserves into share capital and the
subsequent decrease of the Borrower’s issued share capital (by reduction of the
nominal value of its shares or repurchase and cancellation of its shares),
resulting in a repayment of capital to the Parent provided that:

 

  (i) following such decrease:

 

  1. any Security Interest held by the Lender in respect of the remaining shares
provides the Lender with substantially the same rights and remedies in respect
of such remaining shares as the Lender had in respect of the shares that are the
subject of the decrease;

 

  2. in the event that the decrease is wholly or in part effected through any
issue of any new shares, the Borrower must ensure the Lender is granted a
materially similar Security Interest in all of the newly issued shares
corresponding in all material respects to the Security Interest which the Lender
held in respect of the shares subject to the decrease at the time immediately
prior to that decrease; and

 

  3. for the avoidance of doubt, the Borrower must do all things necessary
(including consenting to and execution of any new Security Documents on terms
acceptable to the Lender, having regard to the materiality thresholds referred
to herein, in its discretion) to ensure that the Security Interest the Lender
has in respect of the shares to be decreased is correspondingly effected, in all
material respects, as a Security Interest in any shares remaining after that
decrease and/or any new shares issued as part of the decrease;

 

  (ii) the Borrower only uses monies drawn from the proceeds of the Loan to
effect such decrease;

 

  (g) the Permitted Transfer;

 

  (h) any disposal of, by any Obligor, of any ownership interest in HELCONT,
Stredisko and/or ITM;

 

  (i) acquisition contemplated by Clause 15.11 (Acquisitions); or

 

  (j) any other reorganisation of the Borrower Group provided that such other
reorganisation is made with the Lender’s consent, such consent not to be
unreasonably withheld or delayed,

provided in each case that such reorganisation does not have a Material Adverse
Effect in respect of those entities that are Obligors following the completion
of such reorganisation.

Permitted Replacement HMA means a hotel management agreement or agreements in
respect of the Property entered into by any of the Borrower, the Owner and the
Lessee with a new hotel manager following the termination of the Initial HMA
that satisfies the following criteria:

 

  (a) the new hotel manager under such agreement is an Approved Manager;

 

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  (b) such agreement shall both:

 

  (i) be on economic terms at least favourable to the Borrower Group as those
under the Initial HMA; and

 

  (ii) be on substantially similar terms to the Initial HMA including but not
limited to Article VIII of the Initial HMA and the provisions of the Initial HMA
concerning payment of the incentive fee.

or, if not, the new hotel manager shall have provided the Lender with a SDNA on
terms satisfactory to it (acting reasonably);

 

  (c) prior to the date of execution of such agreement the Lender has been
provided with an updated Valuation confirming the Open Market Value of the
Property and also that the Loan To Value Ratio is complied with as at the date
of such updated Valuation; and

 

  (d) promptly after the execution of such agreement the Lender has been
provided with a signed copy thereof, together with a letter from the Borrower
confirming that the conditions at (a) – (c) above are, in respect of the new
agreement, satisfied.

Permitted Replacement License Agreement means a license agreement or
arrangements in respect of the Property entered into by any of the Borrower, the
Owner and the Lessee with a new hotel brand licensor following the termination
of the License Agreement that satisfies the following criteria:

 

  (a) the new hotel brand licensor under, such agreement is an Approved Manager
or its Affiliate;

 

  (b) such agreement shall be on terms substantially similar to the License
Agreement;

 

  (c) prior to the date of execution of such agreement the Lender has been
provided with an updated Valuation confirming the Open Market Value of the
Property and also that the Loan To Value Ratio is complied with as at the date
of such updated Valuation; and

 

  (d) promptly after the execution of such agreement the Lender has been
provided with a signed copy thereof, together with a letter from the Borrower
confirming that the conditions at (a) – (c) above are, in respect of the new
agreement, satisfied.

Permitted Security means:

 

  (a) any Security Interest created under the Finance Documents or with the
consent of the Lender;

 

  (b) any Security Interest arising by operation of law other than as a result
of any action on the part of an Obligor undertaken with the express intention of
creating such a Security Interest or incurring any Financial Indebtedness (other
than Permitted Indebtedness);

 

18

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  (c) in respect of any member of the Borrower Group, any Security Interest
arising under any retention of title arrangement or arrangements having similar
effect in respect of goods supplied to an Obligor in the ordinary course of its
business and on the supplier’s standard or usual terms and not arising as a
result of any default or omission by an Obligor;

 

  (d) in respect of the Lessee and the Owner only, any Security Interest arising
under any hire purchase or conditional sale agreement or arrangements having
similar effect in respect of goods supplied to Lessee or Owner (as the case may
be) in the ordinary course of its business and on the supplier’s standard or
usual terms and not arising as a result of any default or omission by Lessee or
Owner (as the case may be);

 

  (e) any netting or set-off arrangement entered into by an Obligor in the
ordinary course of its banking arrangements for the purpose of netting debit and
credit balances or pursuant to any Hedging Agreement;

 

  (f) any Security securing any receivables of the Lender under the Existing
Facility and related security and finance documents provided that the same is
released on or prior to the first Utilisation Date under the Security Release
Agreement.

Permitted Transfer has the meaning given to that term in Clause 5.2.1(a)
(Mandatory Prepayment – other).

PMP means a “professional market party” within the meaning of the Exemption
Regulation or the Dutch Banking Act as the case may be.

Pre-Approved Manager means any member of the groups of companies respectively
trading under the names:

 

  (i) Marriot International;

 

  (ii) Four Seasons;

 

  (iii) Fairmont Hotels & Resorts;

 

  (iv) Starwood; or

 

  (v) Hilton International.

Prepayment Event means any of the following events or circumstances:

 

  (a) it is or becomes unlawful for an Obligor to perform any material payment
obligation under the Finance Documents to which it is a party; or

 

  (b) any material provision of any Finance Document is not effective in
accordance with its terms or is alleged by an Obligor to be ineffective for any
reason.

Prepayment Notice means the notice dated on or around the date hereof served by
the Borrower, and acknowledged by the Existing Lender, in respect of the
prepayment of the Existing Facility.

 

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Property means:

 

  (a) building No. (čp.) 43 on plot of land No. 988 (Inter-Continental Hotel
Prague);

 

  (b) building No. (čp.) 44 on plot of land No. 986/2 (Golden Prague Residence);

 

  (c) plot of land No. 988;

 

  (d) plot of land No. 986/2;

 

  (e) plot of land No. 987/1;

 

  (f) plot of land No. 989/1; and

 

  (g) plot of land No. 989/2,

all located in the cadastral area Staré Mesto, municipality Prague and
registered on ownership folio no. 279 in the Real Estate Register maintained for
the cadastral area Staré Mesto, municipality Prague by the Cadastral Office for
the Capital City of Prague, Prague Branch.

Property Lease Agreement means the lease agreement dated 30 November 1999
between Owner and Lessee as amended from time to time.

Property Lease Pledge means the pledge over monetary receivables of the Owner
arising from the Property Lease Agreement granted in favour of the Lender by the
Owner under an agreement on pledge of receivables arising from the Property
Lease Agreement between the Lender as pledgee and the Owner, as pledgor, dated
on or around the date of this Agreement.

Proposed Term-out Date means the date specified in any Term-out Notice as being
the date on which the term out of the loan referred to therein shall occur.

Put Option Agreement means a Put Option Agreement concerning the 100% ownership
interest in GPHS entered into by and between Strategic Hotel Funding, LLC and
ICH Overseas on May 24, 2004, as amended from time to time regarding the option
right of ICH Overseas to sell the entire issued share capital of GPHS.

Qualifying Lender means the Lender being on the date a payment of interest falls
due under this Agreement:

 

  (a) resident (as defined in the appropriate double taxation agreement) in a
country with which the Netherlands and the Czech Republic each has a double
taxation agreement giving residents of that country full exemption from both
Netherlands and Czech Republic taxation on interest; or

 

  (b) resident in the Czech Republic or the Netherlands for tax purposes of the
Czech Republic or the Netherlands (as the case may be).

Quarter Dates means 31 March, 30 June, 30 September and 31 December in each
year.

 

20

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Quotation Day means, in relation to any period for which an interest rate is to
be determined two TARGET Days preceding the first day of that period.

Real Estate Register (“katastr nemovitostí” in Czech) means a public register of
real estate in the Czech Republic maintained by the Czech Cadastral Offices in
which entries are made, as required by law, pertaining to ownership title and
other rights in rem relating to such real estate.

Receivables Pledge means:

 

  (a) the pledge over the Lessee’s monetary receivables under the Hotel Services
Agreement granted in favour of the Lender by the Lessee under an agreement on
pledge of receivables arising from the Hotel Services Agreement between the
Lender as pledgee and the Lessee as pledgor dated on or around the date of this
Agreement; and

 

  (b) the pledge over the Lessee’s and Borrower’s monetary receivables under the
Hotel Management Agreement and the License Agreement to the Lender by the
Borrower and the Lessee under an agreement on pledge of receivables arising from
the Hotel Management Agreement and the License Agreement between the Lender as
pledge and the Borrower and the Lessee as pledgors dated on or around the date
of this Agreement.

Reference Banks means Commerzbank AG, Deutsche Bank, Dresdner Bank and any other
bank or financial institution appointed as such by the Lender, and consented to
by the Borrower, under this Agreement.

Repeating Representations has the meaning given to that term in Clause 13.23
(Times for Making Representations).

Request means a request for a Loan, substantially in the form of Schedule 3
(Form of Request).

Reservations means each and all of the following reservations that:

 

  (a) the principle that equitable remedies may be granted or refused at the
discretion of a court and the limitation of enforcement by laws relating to
bankruptcy (faillissement), moratorium (surséance van betaling), insolvency,
reorganisation, fraudulent conveyance (actio pauliana) and other laws generally
affecting the rights of creditors;

 

  (b) the time barring of claims under applicable limitation laws (including the
limitation acts in force from time to time in England, the Czech Republic and
the Netherlands), the possibility that an undertaking to assume liability for or
indemnify a person against non-payment of stamp duty may be void, and defences
of set-off or counterclaim;

 

  (c) a court construing security expressed to be created by way of fixed
security as being floating security, or security purporting to be constituted as
an assignment as being a charge;

 

21

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  (d) the enforcement of rights under the Finance Document may be limited by the
application of Article 3 (3) and Article 7 of the Rome Convention;

 

  (e) in respect of any Finance Document governed by Czech or Dutch law,
mandatory provisions of applicable Czech or Dutch law (as the case may be)
prevail over any arrangement of the parties to such Finance Document to the
extent such arrangement deviates from the relevant mandatory provision of Czech
or Dutch law (as the case may be);

 

  (f) reservation which is made expressly in, or can be implied from, any other
Finance Document;

 

  (g) any other general principles, reservations or qualifications which are set
out as qualifications as to matters of law in any legal opinion delivered to the
Lender pursuant to Schedule 2 (Conditions Precedent Documents); and

 

  (h) the rights and obligations of the parties to the Finance Documents in as
far as they are governed by Dutch law, are subject to the principle of good
faith/reasonableness and fairness (redelijkheid en billijkheid) which under
Netherlands law governs the relationship between the parties to a contract and
which, in certain circumstances, may limit or preclude the reliance on, or
enforcement of, contractual terms and provisions.

Roll-over Date means the last day of each Interest Period in respect of a Loan
occurring before the Initial Maturity Date (assuming for this purpose that the
Final Maturity Date has not been amended under Clause 4.4.1 (Term Out Option and
Amortisation).

Rome Convention means Convention on the Law Applicable to Contractual
Obligations opened for signature in Rome on 19 June 1980 (80/934/EEC).

Screen Rate means in relation to EURIBOR, the percentage rate per annum
determined by the Banking Federation of the European Union for the relevant
period, displayed on the appropriate page of the Telerate/Reuters screen. If the
relevant page is replaced or the service ceases to be available, the Lender
(after consultation with the Borrower) may specify another page or service
displaying the appropriate rate.

SDNA means a subordination and non-disturbance agreement made between the
prospective manager under any Permitted Replacement HMA, the Lender and any of
the Borrower, the Owner and the Lessee.

Security means the Security Interests created under the Security Documents.

Security Document means:

 

  (a) mortgage agreement establishing the Mortgage;

 

  (b) agreement on pledge of receivables arising from the Lease Agreements
establishing the Lease Pledge;

 

  (c) agreement on pledge of receivables arising from the Property Lease
Agreements establishing the Property Lease Pledge;

 

22

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  (d) agreement on pledge over trademarks establishing the Trademark Pledge;

 

  (e) agreement on pledge of receivables arising from the Hotel Services
Agreement and agreement on pledge of receivables arising from the Hotel
Management Agreement and the License Agreement establishing the Receivables
Pledges;

 

  (f) agreements on security assignment of insurance proceeds establishing the
Insurance Security Assignments;

 

  (g) the Owner Guarantee;

 

  (h) the Lessee Guarantee;

 

  (i) agreement on pledge over movables establishing the FF&E Pledge;

 

  (j) agreements on pledge of receivables arising from bank account(s)
establishing the Accounts Pledges;

 

  (k) the Subordination Agreement;

 

  (l) deed of pledge, agreements on pledge of ownership interests and agreements
on pledge of shares establishing the Share Pledges;

 

  (m) any other document designated as such by the Lender and the Borrower.

Security Interest means any mortgage, pledge, lien, charge, security assignment,
hypothecation or security interest or any other agreement or arrangement having
a similar effect.

Security Release Agreement means an agreement between the Borrower, other
relevant parties to the Existing Facility Agreement and related security and
finance documents and the Existing Lender in respect of the release of any
Security Interest securing any receivables of the Existing Lender relating to
the Existing Facility Agreement and related security and other finance documents
in relation to the Existing Facility, entered into on or around the date hereof
and effective upon the first Utilisation Date.

Senior Liabilities means all present and future sums, liabilities and
obligations payable or owing by the Borrower to the Lender (whether current or
contingent, jointly or severally or otherwise) under or in connection with the
Finance Documents.

Share Pledges means the Borrower Share Pledge, the SHC Prague Share Pledge, the
TRS Share Pledge, the Owner Share Pledge and the Lessee Share Pledge.

SHC Asset Management LLC means SHC Asset Management L.L.C., a limited liability
company organized and existing under the laws of Delaware, U.S.A., registered
offices at 2711 Centreville Road, Suite 400, Wilmington, Delaware 19808, the
USA.

SHC DTRS means SHC DTRS, Inc., a limited liability company incorporated and
existing under the laws of Delaware, U.S.A., registered offices at 2711
Centreville Road, Suite 400, Wilmington, Delaware 19808, USA.

 

23

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SHC Europe means a limited liability company incorporated and existing under the
laws of Delaware, with its principal place of business at 77 West Wacker Drive,
Suite 4600, Chicago, Illinois.

SHC Prague means the Strategic Hotel Capital Prague, a.s., a joint stock company
incorporated under the laws of the Czech Republic, Identification
Number 452 70 724, with its registered seat in Prague 1, nám. Curieových 43/5,
Postal Code 110 00, the Czech Republic, registered in the Commercial Register
maintained by the Municipal Court in Prague, Section B, Insertion 1404.

SHC Prague (Gibraltar) Limited means a limited company incorporated under the
laws of Gibraltar, registered in the Registry of Companies of Gibraltar, whose
registered offices are at 57/63 Line Wall Road, Gibraltar.

SHC Prague Repository B.V. means a limited liability company incorporated under
the laws of the Netherlands, registered in the commercial register of the
Chamber of Commerce and Industries for Amsterdam under no. 34126293, whose
registered offices are at Strawinskylaan 3105, 1077 ZX, Amsterdam, the
Netherlands.

SHC Prague Share Pledge means the pledge over the shares owned by the Borrower
in SHC Prague granted by the Borrower in favour of the Lender under agreement on
pledge of shares in SHC Prague between the Lender as pledgee and Borrower as
pledgor dated on or around the date of this Agreement.

Specified Accounts means the General Owner Account, Dutch Revenue Account, TRS
Accounts, Main Operating Account, Lessee Corporate Account, Czech Revenue
Account, FF&E Account and the Deposit Account.

Strategic Hotel Capital Europe Asset Management Limited means the Strategic
Hotel Capital Europe Asset Management Limited, a limited liability company
organized and existing under the laws of England and Wales, registered offices
at 190 Strand, London, WC2R 1JN.

Strategic Hotel Funding, LLC means Strategic Hotel Funding, L.L.C. a limited
liability company organized and existing under the laws of Delaware, with its
principal place of business at 77 West Wacker Drive, Suite 4600, Chicago,
Illinois 60601, the USA.

Stredisko means the Stredisko praktického vyučování hotelu Inter. Continental
s.r.o., a limited liability company incorporated under the laws of the Czech
Republic, Identification Number 256 91 376, registered seat in Prague 1, nám.
Curieových 43/5, Postal Code 110 00, the Czech Republic, registered in the
Commercial Register maintained by the Municipal Court in Prague, Section C,
Insertion 61579.

Subordinated Loan means:

 

  (a) those loans subordinated at the date hereof under the terms of the
Subordination Agreement and any loan made after the date of this Agreement by
the Ultimate Parent (or any Subsidiary thereof) to an Obligor where the lender
(or lenders, as the case may be) in respect of such loan have, prior to making
such loan, acceded to the Subordination Agreement (if not an original party
thereto); or

 

24

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  (b) the amount of any debt owed to the Lessee by any member of the Borrower
Group where such debt arises as a result of the Lessee settling any obligation
owed to a third party by the relevant member of the Borrower Group on behalf of
such member of the Borrower Group.

Subordination Agreement means the agreement dated on or around the date hereof
made between the Borrower, the Lender, the Lessee and the persons defined
therein as “Subordinated Creditors”.

Subsidiary means an entity of which a person has direct or indirect control or
owns directly or indirectly more than 50 per cent. of the voting capital or
similar right of ownership and control, which for this purpose means the power
to direct the management and the policies of the entity whether through the
ownership of voting capital, by contract or otherwise.

Swap Rate means the rate per annum determined by the Lender on the Quotation Day
as the rate per annum at which a counter party selected by the Lender would
receive fixed rate payments in Euros from the Lender calculated by reference to
a series of notional principal amounts equal to the anticipated balance of the
Loan from time to time during the period from such date to the Final Maturity
Date (as calculated by the Lender) in exchange for floating rate payments in
Euros at EURIBOR on the same notional principal amounts, in each case payable on
the Interest Payment Dates falling during the Fixed Rate Period.

TARGET Day means any day on which the Trans European Automated Real Time Gross
Settlement Express Transfer payment system (TARGET) is open for the settlement
of payments in Euro.

Tax means any tax, levy, impost, duty or other charge or withholding of a
similar nature (including any related penalty or interest).

Tax Credit means a credit against any Tax or any relief or remission for Tax (or
its repayment).

Tax Deduction means a deduction or withholding for or on account of Tax from a
payment under a Finance Document.

Tax Payment means a payment made by an Obligor to the Lender in any way relating
to a Tax Deduction or under any indemnity given by such Obligor in respect of
Tax under any Finance Document.

Term-out Conditions means each of the following:

 

  (a) all Security Documents, save for any which are Conditions Subsequent and
to which any period for satisfaction (whether originally applicable or extended
in accordance with Schedule 1 Part 2 (Conditions Subsequent)) applies, being in
full force and effect;

 

  (b) the Borrower having:

 

25

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  (i) provided to the Lender an updated extract from the Real Estate Register
showing that the registration of the Mortgage is current and that no further
liens and mortgages ranking in priority to it have been registered; or

 

  (ii) if the Mortgage has not been registered, the Borrower demonstrating to
the Lender’s satisfaction that it is using reasonable efforts to procure such
registration;

 

  (c) no Event of Default being continuing;

 

  (d) a Term-out Notice (together with an Amortisation Schedule agreed between
the Borrower and the Lender) having been served under Clause 4.4.1 (Term-out
option and Amortisation);

 

  (e) if the Term-out Notice stipulates that interest is to be calculated on a
Floating Rate Basis, a Hedging Agreement in form and substance satisfactory to
ensure that the Borrower can meet the various ICR tests in this Agreement; and

 

  (f) a security assignment granted by the Borrower in favour of the Lender in
respect of the Borrower’s rights under any Hedging Agreement.

Term-out Date means the later of the Proposed Term-out Date and the date on
which the Lender confirms that the Term-out Conditions have been satisfied
pursuant to Clause 4.4.2 (Term-out option and authorisation).

Term-out Notice means the notice to term-out the revolving loans substantially
in the form in Schedule 5 (Form of Term-out Notice).

Termination of Subordination Agreement means the agreement dated on or around
the date hereof made between the Lender, SHC Europe, GPHS, the Borrower and SHC
DTRS in respect of the termination of certain subordination agreements referred
to therein.

Terrorism Insurance Security Assignment means the security assignment over the
proceeds of all insurance policies entered into by the Lessee and the Owner,
insuring the Buildings and FF&E in respect of acts of terrorism, granted by the
Lessee and the Owner in favour of the Lender under an agreement on security
assignment of insurance proceeds to be made between the Lender as assignee and
the Lessee and the Owner as assignors.

Test Date means each Quarter Date.

Trademark Pledge means a first priority pledge over trademarks owned by the
Lessee granted by the Lessee in favour of the Lender under an agreement on
pledge of trademarks between the Lender as pledgee and Lessee as pledgor dated
on or around the date of this Agreement.

Transaction Document means:

 

  (a) a Finance Document;

 

26

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  (b) any new Lease Document;

 

  (c) each Material Contract;

 

  (d) any SDNA or

 

  (e) any other document designated as such by the Lender and the Borrower.

Transfer Certificate means a certificate, substantially in the form of Schedule
4 (Form of Transfer Certificate), with such amendments as the Lender may approve
or require or any other form agreed between the Lender and the Borrower.

TRS means SHC Prague TRS, a.s., a joint stock company incorporated under the
laws of the Czech Republic, Identification Number 271 12 390, with its
registered seat in Prague 1, Platnérská 191/4, Postal Code 110 00, the Czech
Republic, registered in the Commercial Register maintained by the Municipal
Court in Prague, Section B, Insertion 9078.

TRS Accounts means the CZK, EUR and USD bank accounts opened and held by TRS
with the Accounts Administrator having account number 1027036.

TRS Share Pledge means the pledge over 100% shares in TRS granted by the
Borrower in favour of the Lender under agreement on pledge of shares in TRS
between the Lender as pledgee and Borrower as pledgor dated on or around the
date of this Agreement.

Turnover has the meaning given to that term in the Uniform System.

Ultimate Parent means Strategic Hotels & Resorts, Inc. a corporation
incorporated under the laws of the Maryland which is a real estate investment
trust with its principal place of business at 77 West Wacker, Suite 4600,
Chicago, Illinois 60601 the USA.

Uniform System means the Uniform System of Accounts for the Lodging Industry
(Tenth (10th) Edition).

Unsubordinated Financial Indebtedness means all Financial Indebtedness listed in
Schedule 8 (Unsubordinated Financial Indebtedness) and, in respect of the loan
number 3 referred to in that Schedule, any refinancing thereof.

Utilisation Date means the date on which a Loan is borrowed by the Borrower.

Valuation means at any time the then most recent Open Market Valuation by the
Valuer, prepared in accordance with the Lender’s instructions and addressed to
the Lender.

Valuer means Jones Lang LaSalle or any other surveyor or valuer appointed by the
Borrower and agreed to by the Lender (acting reasonably).

Working Capital has, whilst the Initial HMA is in effect, the meaning given to
that term in the Initial HMA, and thereafter has the meaning given to that term
in any Permitted Replacement HMA.

 

27

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1.2 Construction

 

  1.2.1. In this Agreement, unless the contrary intention appears, a reference
to:

 

  (a) an amendment includes a supplement, novation, restatement or re-enactment
and amended will be construed accordingly;

 

  (b) assets includes any present and future properties, revenues and rights of
every description;

 

  (c) disposal means a sale, transfer, grant, lease or other disposal, whether
voluntary or involuntary, and dispose will be construed accordingly;

 

  (d) indebtedness includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money including, without limitation,
under any derivative transaction or any other transaction which has the
commercial effect of a borrowing;

 

  (e) know your customer requirements are the identification checks that the
Lender requests in order to meet its obligations under any applicable law or
regulation to identify a person who is (or is to become) its customer including
(but not limited to) the requirements of the German “Gesetz über das Kredit
wesen” Section 18;

 

  (f) a person includes any individual, company, corporation, unincorporated
association or body (including a partnership, trust, joint venture or
consortium), government, state, agency, organisation or other entity whether or
not having separate legal personality;

 

  (g) a regulation includes any regulation, rule, official directive, request or
guideline (whether or not having the force of law but, if not having the force
of law, being of a type with which any person to which it applies is accustomed
to comply) of any governmental, inter-governmental or supranational body,
agency, department or regulatory, self-regulatory or other authority or
organisation which is binding upon the relevant Obligor;

 

  (h) a Default or Event of Default being outstanding means that it has not been
remedied or waived;

 

  (i) a provision of law is a reference to that provision as extended, applied,
amended or re-enacted and includes any subordinate legislation;

 

  (j) a Clause, a Subclause or a Schedule is a reference to a clause or
subclause of, or a schedule to, this Agreement;

 

  (k) a Party or any other person includes its successors in title, permitted
assigns and permitted transferees;

 

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  (l) a Finance Document or another document is a reference to that Finance
Document or other document as amended;

 

  (m) a document being in an agreed form means that the form and content of the
document have been approved by the Lender and the Borrower;

 

  (n) a report, opinion or other document being appropriately addressed means
such report, opinion or other document is addressed in the manner required by
the Lender and notified to the Borrower before the date of this Agreement;

 

  (o) a time of day is a reference to Berlin time; and

 

  (p) reference to the singular shall include the plural and vice versa.

 

  1.2.2.  Unless expressly provided to the contrary in a Finance Document, a
person who is not a party to a Finance Document may not enforce any of its terms
under the Contracts (Rights of Third Parties) Act 1999 and, notwithstanding any
term of any Finance Document, no consent of any third party is required for any
variation (including any release or compromise of any liability) or termination
of any Finance Document.

 

  1.2.3.  Unless the contrary intention appears:

 

  (a) a word or expression used in any other Finance Document or in any notice
given in connection with any Finance Document has the same meaning in that
Finance Document or notice as in this Agreement; and

 

  (b) any obligation of the Borrower under the Finance Documents which is not a
payment obligation remains in force for so long as any payment obligation of the
Borrower is or may be outstanding under the Finance Documents.

 

  1.2.4. The headings in this Agreement do not affect its interpretation.

 

  1.2.5. Where the consent, permission or approval (“Consent”) of an Obligor is
required under any Material Contract and under the terms of the relevant
agreement such Obligor is not entitled to unreasonably withhold or delay its
consent, and where the consent of the Lender is also required under the Finance
Documents before the Obligor granting its consent, then the Lender shall not
unreasonably withhold or delay its consent, provided that the Borrower has
provided the Lender with all documents and information reasonably requested by
the Lender in sufficient time to enable the Lender to reach a considered
decision.

 

2. FACILITY AND PURPOSE

Subject to the terms of this Agreement, the Lender makes available to the
Borrower a 364 day revolving loan facility in an aggregate amount equal to the
Commitment. Amounts borrowed under this Agreement may only be used:

 

29

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  2.1.1.  firstly, for repaying monies owing under the Existing Facility
Agreement;

 

  2.1.2.  secondly, for paying fees and expenses incurred in connection with
such repayment;

 

  2.1.3.  thirdly, for making a Permitted Loan; and

 

  2.1.4.  fourthly, for making distributions to shareholders.

 

3. CONDITIONS PRECEDENT AND UTILISATION

 

3.1 Documentary conditions precedent

 

  3.1.1.  The Lender shall have no obligation to make a Loan unless and until it
has notified the Borrower that it has received all of the documents and evidence
set out in Part 1 of Schedule 1 (Conditions precedent documents) in form and
substance satisfactory to it. The Lender must give this notification to the
Borrower promptly upon being so satisfied.

 

  3.1.2.  If the Loan specified in a Request has not been utilised within twenty
(20) Business Days of the date of receipt of the Request, or such longer period
as the Lender may confirm in writing, then the Request will lapse.

 

3.2 Conditions subsequent

The Borrower covenants to provide within the periods specified in Part 2 of
Schedule 1 (as the same may be extended in accordance with that Schedule) each
of the Conditions Subsequent in form and substance satisfactory to the Lender.

 

3.3 Number of Loans

The Borrower may not deliver a Request if as a result of the proposed Loan three
or more Loans would be outstanding.

 

3.4 Giving of Requests

 

  3.4.1.  The Borrower may borrow a Loan during the Availability Period by
giving to the Lender a duly completed Request. A Request is irrevocable.

 

  3.4.2.  Unless the Lender otherwise agrees, the latest time for receipt by the
Lender of a duly completed Request is 12.00 p.m. five Business Days before the
Utilisation Date.

 

3.5 Completion of Request

 

  3.5.1.  A Request will not be regarded as having been duly completed unless:

 

  (a) the Utilisation Date is a Business Day falling within the Availability
Period;

 

  (b) the amount of the Loan requested does not exceed the Commitment available
on the proposed Utilisation Date;

 

30

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  (c) the payment instructions are specified;

 

  (d) the previous Request submitted was made at least one month prior to the
date of such Request; and

 

  (e) the amount of the Loan requested is in a minimum amount of €500,000 and an
integral multiple of €100,000.

 

3.6 Further conditions precedent

The obligations of the Lender to make a Loan are subject to the further
conditions precedent that on both the date of a Request and the Utilisation
Date:

 

  3.6.1.  the Repeating Representations are correct in all material respects;
and

 

  3.6.2.  no Default (or, in the case of a Loan that is deemed to be repaid and
redrawn on a Roll-over Date in accordance with Clause 4.2 (Roll-over Notice),
Event of Default) is outstanding or would result from the making of the Loan.

 

3.7 Advance of the Loan; Prepayment of Existing Facility

 

  3.7.1.  Subject to the terms of this Agreement, the Lender shall make the Loan
available to the Borrower on each Utilisation Date.

 

  3.7.2.  The Lender, the Existing Lender and the Borrower agree that all monies
required to be repaid under the Existing Facility as a result of the service of
the Prepayment Notice (including, for the avoidance of doubt, all interest, fees
and other costs payable in respect thereof and comprehensively described in the
Prepayment Notice) shall be offset against the first Loan as of the Utilisation
Day of the first Loan.

 

  3.7.3.  The first Loan made under this Agreement shall be advanced to the
Borrower net of monies described in Subsection 3.7.2. As a result of the offset
the Borrower shall be released from all of its obligations under the Existing
Facility Agreement, which agreement the Borrower and the Existing Lender agree
shall automatically terminate at that time.

 

  3.7.4.  The Existing Lender acknowledges and agrees that the execution by the
Obligors and other parties of this Agreement and each Finance Document referred
to herein shall, notwithstanding any provision to the contrary in the Existing
Facility Agreement and any document entered into pursuant thereto or in
connection therewith, not constitute a breach thereof, an Existing Facility
Event of Default or an Event of Default.

 

4. REPAYMENT

 

4.1 Revolving Loans

Each Loan shall be repaid on the Roll-over Date relating to such Loan and then,
shall subject to the terms of this Agreement, be available for further
utilisation.

 

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4.2 Roll-over

If on a Roll-Over Date no notice of an intention to make a voluntary pre-payment
has been served in accordance with Clause 5.3.1 (Voluntary Pre-payment) subject
to compliance with the conditions set out in Clause 3.6 (Further Conditions
Precedent), the Loans shall be deemed to have been repaid and redrawn on that
Roll-over Date for an Interest Period of one month.

 

4.3 Repayment

The Borrower must repay the outstanding amount of the Loans, together with all
other amounts outstanding under the Finance Documents, in full to the Lender on
the Final Maturity Date.

 

4.4 Term-out option and amortisation

 

  4.4.1.  On or before the day falling 349 days from and including the date of
the first Utilisation Date the Borrower may, subject to Clause 4.4.2 below,
serve a Term-out Notice in respect of the whole or part of the Loans. Such
notice shall specify that the whole, or an amount of, the Loans are to be termed
out and the Proposed Term-out Date. From the Term-out Date the Final Maturity
Date in respect of the amount of the Loans termed-out shall be the date falling
five years after the first Utilisation Date and if such date is not a Business
Day, it shall be the preceding Business Day.

 

  4.4.2.  The Lender shall promptly notify the Borrower upon satisfaction of the
Term-out Conditions.

 

  4.4.3. Any Loans not termed-out under Clause 4.4.1 above, and in relation to
which the Term-out Date has not occurred by the Initial Maturity Date, shall be
repaid in full, together with all other outstanding amounts relating to such
Loans, to the Lender on the Initial Maturity Date.

 

  4.4.4.  Any Loans that are termed-out under Clauses 4.4.1 above shall
thereafter be repaid on the dates and in the amounts specified in the
Amortisation Schedule.

 

  4.4.5.  Notwithstanding anything to the contrary herein, if any amount of the
Commitment has not been drawn as at the date of the Term-out Notice, the
Borrower may specify in such notice that it wishes to draw down a Loan in an
amount equal to undrawn amount of the Commitment, which Loan shall, subject to
the provisions of Clause 3 (Conditions Precedent and Utilisation), be made by
the Lender on the Term-out Date.

 

5. PREPAYMENT AND CANCELLATION

 

5.1 Mandatory prepayment - illegality

 

  5.1.1.  The Lender must notify the Borrower promptly if it becomes aware that
it is unlawful in England, the Lender’s jurisdiction of incorporation, the Czech
Republic or any other relevant jurisdiction for the Lender to perform any of its
obligations under a Finance Document or to fund or maintain the Loan.

 

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  5.1.2. After notification under Clause 5.1.1 above:

 

  (a) the Borrower must repay or prepay the Loan on the date specified in Clause
5.1.3 below; and

 

  (b) the Commitment will be immediately cancelled.

 

  5.1.3. The date for repayment or prepayment of the Loan will be:

 

  (a) the next Interest Payment Date; or

 

  (b) if earlier, the date specified by the Lender in the notification under
Clause 5.1.1 above, which must not be earlier than the last day of any
applicable grace period allowed by law.

 

5.2 Mandatory prepayment - other

 

  5.2.1. For the purposes of this Clause a change of control occurs if any
person or persons (other than the Ultimate Parent or any of its Subsidiaries)
acting in concert acquires more than 50% of the ordinary share capital of any
Obligor other than as a result of a Permitted Reorganisation or as otherwise
agreed to by the Lender.

PROVIDED ALWAYS THAT a Permitted Transfer shall not constitute a change of
control for the purposes of this Clause 5.2;

acting in concert means acting together pursuant to an agreement or
understanding (whether formal or informal);

control means the power to direct the management and policies of an entity,
whether through the ownership of voting capital, by contract or otherwise; and

Permitted Transfer means:

 

  (a) any direct or indirect transfer, contribution, assignment or conveyance of
the entire share capital of the Parent or of any ultimate or intermediate
holding company of the Parent provided that the ultimate control of the Parent
remains vested in the Ultimate Parent or any of its direct or indirect
Subsidiaries following any such transfer, contribution, assignment or
conveyance;

 

  (b)

any direct or indirect transfer, contribution, assignment or conveyance of the
issued share capital of the Borrower to a partnership, joint venture or similar
structure (the “New Owner”) so long as the Ultimate Parent or any of its
Subsidiaries retains, directly or indirectly, (A) at least a 15% interest in the
New Owner following any such transfer, contribution, assignment or conveyance;
(B) the Parent or any of its Subsidiaries shall continue

 

33

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to provide services to such structure in respect of the management and operation
of its assets; and (C) the New Owner grants a Security Interest in favour of the
Lender on substantially the same terms as the Borrower Share Pledge over the
issued share capital of the Borrower.

Provided that prior to any such transfer as contemplated in sub-clauses 5.2.1(a)
to 5.2.1(b) above, the Borrower delivers to the Lender:

 

  (i) full details of the owners and controllers of any proposed transferee to
satisfy all reasonable “know your customer” requirements of the Lender; and

 

  (ii) evidence demonstrating to the Lender’s reasonable satisfaction that the
proposed transferee is or its owners or controllers are of good repute and
standing in English and/or international real estate market.

 

  5.2.2.  The Borrower must promptly notify the Lender if it becomes aware of
any change of control.

 

  5.2.3.  If a change of control or Prepayment Event occurs, the Lender may, by
notice to the Borrower:

 

  (i) cancel the Commitment; and

 

  (ii) in the case of a:

 

  (A) change of control or a Prepayment Event falling under paragraph (b) of the
definition of that term only, declare the Loan, together with accrued interest
and all other amounts outstanding under the Finance Documents, to be due and
payable on the day falling ten (10) Business Days after that change of control
or Prepayment Event; or

 

  (B) Prepayment Event falling under paragraph (a) of the definition of that
term only, declare the Loan, together with accrued interest and all other
amounts outstanding under the Finance Documents, to be due and payable on the
earlier of the next Interest Payment Date or on the last day of any other
applicable grace period allowed by law.

Any such notice will take effect in accordance with its terms.

 

5.3 Voluntary prepayment

 

  5.3.1.  The Borrower may, by giving not less than 5 (five) Business Days’
prior notice to the Lender, prepay the Loan in whole or in part (but, if in
part, in a minimum amount, and an integral multiple of, €5,000,000).

 

34

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  5.3.2.  Prior to the Term-out Date only;

 

  (a) the Borrower may not make more than three prepayments;

 

  (b) amounts prepaid shall not result in a corresponding cancellation of the
Commitment and may be redrawn in accordance with Clause 3.5 (Completion of a
Request).

 

  5.3.3.  After the Term-out Date:

 

  (a) no amount of the Loan prepaid may subsequently be re-borrowed; and

 

  (b) the amount prepaid shall be applied to reduce the balance of the Loan; and

 

  (c) the Commitment shall be automatically cancelled in an amount corresponding
to any amount prepaid.

 

5.4 Prepayment to maintain a ratio

If a prepayment is made upon request of the Lender in order to maintain, or
rectify any breach of the Loan to Value Ratio or the ICR, such prepayment must
be made promptly following any request from the Lender but in any event within
10 days of receipt of the request from the Lender, in any amount required to
maintain, or rectify any breach of, the applicable ratio and without any
additional notice being given to the Lender.

 

5.5 Prepayment fees

No prepayment fees shall fall due in connection with any prepayment made under
this Agreement.

 

5.6 Involuntary prepayment and cancellation

 

  5.6.1.  If any Obligor is, or will be, required to pay to the Lender:

 

  (a) a Tax Payment; or

 

  (b) an Increased Cost,

the Borrower may, while the requirement continues, give notice to the Lender
requesting prepayment of the Loan.

 

  5.6.2.  After notification under Clause 5.6.1 above:

 

  (a) the Borrower must repay or prepay the Loan on the date specified in Clause
5.6.3 below; and

 

  (b) the Commitment will be immediately cancelled.

 

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  5.6.3.  The date for repayment or prepayment of the Loan will be:

 

  (a) the next Interest Payment Date; or

 

  (b) if earlier, the date specified by the Borrower in its notification.

 

5.7 Automatic cancellation

The undrawn Commitments will be automatically cancelled at the close of business
on the last day of the Availability Period.

 

5.8 Miscellaneous provisions

 

  5.8.1.  Any notice of prepayment and/or cancellation under this Agreement is
irrevocable and shall specify the date or dates upon which the relevant
cancellation or prepayment is to be made and the amount of that cancellation or
prepayment.

 

  5.8.2.  All prepayments under this Agreement must be made with accrued
interest on the amount prepaid and, if the prepayment is made on a day which is
not an Interest Payment Date, Break Costs thereon. No premium or penalty is
payable in respect of any prepayment or cancellation under this Agreement except
for Break Costs.

 

  5.8.3.  The Borrower may not re-borrow any part of any Loan which is prepaid
save in accordance with Clause 5.3.2 (Voluntary Prepayment).

 

  5.8.4.  No prepayment or cancellation is allowed except in accordance with the
express terms of this Agreement.

 

  5.8.5.  No amount of the Commitment cancelled under this Agreement may
subsequently be reinstated.

 

5.9 Mitigation

If the Borrower is required to make a payment under Clause 5.1 (Mandatory
Prepayment-illegality) then, without in any way limiting, reducing or otherwise
qualifying the Borrower’s obligations:

 

  5.9.1.  the Lender shall, following consultation with the Borrower and at the
cost of the Borrower, endeavour to take such steps as the Lender considers
reasonable and available to it (including transfer of its rights and obligations
to an Affiliate or other Facility Office), to mitigate the effects of such
circumstances, provided that the Lender shall not be under any obligation to do
so if, in the opinion of the Lender (acting reasonably), such steps may have a
material adverse effect on its business operations or financial condition; and

 

  5.9.2.  the Borrower may (for so long as the circumstance giving rise to the
payment continues) cancel the whole of the undrawn part of the Facility provided
that on the next Interest Payment Date the Senior Liabilities are discharged in
full.

 

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6. INTEREST

 

6.1 Calculation of interest

 

  6.1.1. The rate of interest on the Loan prior to the Term-out Date is the
percentage rate per annum equal to the aggregate of the applicable:

 

  (a) Margin;

 

  (b) EURIBOR; and

 

  (c) Mandatory Cost.

 

  6.1.2. If a Term-out Notice is served, the rate of interest on the Loan after
the Term-out Date shall be:

 

  (a) where the Borrower has elected in the Term-out Notice that interest is to
be calculated on a Floating Rate Basis, calculated on the same basis as set out
in Clause 6.1.1; or

 

  (b) where the Borrower has elected in the Term-out Notice that interest is to
be calculated on a Fixed Rate Basis, the percentage rate per annum equal to the
aggregate of the applicable:

 

  (i) Margin;

 

  (ii) the Swap Rate; and

 

  (iii) Mandatory Cost.

 

  6.1.3. In respect of the first Interest Period for any Loan which is less than
one month, if no EURIBOR rate is available for the exact period from the
Utilisation Date until the next Interest Payment Date, EURIBOR for such Interest
Period shall be interpolated by reference to Screen Rates for that Interest
Period in a manner consistent with standard market practice.

 

6.2 Payment of interest

Except where it is provided to the contrary in this Agreement, the Borrower must
pay to the Lender accrued interest on the Loan on each Interest Payment Date.

 

6.3 Interest on overdue amounts

 

  6.3.1. If an Obligor fails to pay any amount payable by it under a Finance
Document on its due date, interest shall accrue on the overdue amount from the
due date up to the date of actual payment (both before and after judgment) at a
rate which, subject to Clause 6.3.2 below, is two (2) per cent higher than the
rate which would have been payable if the overdue amount had, during the period
of non-payment, constituted a Loan in the currency of the overdue amount for
successive Interest Periods, each of a duration selected by the Lender (acting
reasonably). Any Interest accruing under these Clauses 6.3.1 to 6.3.3 shall be
immediately payable by the applicable Obligor on demand by the Lender.

 

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  6.3.2. If any overdue amount consists of all or part of a Loan which became
due on a day which was not the last day of an Interest Period relating to that
Loan:

 

  (a) the first Interest Period for that overdue amount shall have a duration
equal to the unexpired portion of the current Interest Period relating to that
Loan; and

 

  (b) the rate of interest applying to the overdue amount during that first
Interest Period shall be two (2) per cent. higher than the rate which would have
applied if the overdue amount had not become due.

 

  6.3.3. Default interest (if unpaid) arising on an overdue amount will be
compounded with the overdue amount at the end of each Interest Period applicable
to that overdue amount but will remain immediately due and payable.

 

6.4 Notification of rates of interest

The Lender must promptly notify the Borrower of the determination of a rate of
interest under this Agreement.

 

7. INTEREST PERIODS

 

7.1 Length of Interest Periods

 

  7.1.1. Each Loan has successive Interest Periods.

 

  7.1.2. Each Interest Period for a Loan will start on its Utilisation Date or
on the expiry of its preceding Interest Period and end on the next Interest
Payment Date.

 

  7.1.3. An Interest Period for a Loan shall not extend beyond the Final
Maturity Date.

 

7.2 Consolidation

 

  7.2.1. Before the Term-out Date all Loans will be consolidated on each
Interest Payment Date and subsequently treated as not more than two Loans.

 

  7.2.2. All Loans termed out under Clause 4.4 (Term-out option and
amortisation) will be consolidated on the Term-out Date and subsequently treated
as one Loan.

 

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8. MARKET DISRUPTION

 

8.1 Failure of a Reference Bank to supply a rate

If EURIBOR is to be calculated by reference to the Reference Banks but a
Reference Bank does not supply a rate by 11.00 a.m. on a Quotation Day, the
applicable EURIBOR will, subject as provided below, be calculated on the basis
of the rates of the remaining Reference Banks.

 

8.2 Market disruption

 

  8.2.1. In this Agreement a market disruption event occurs if EURIBOR is to be
calculated by reference to the Reference Banks but no, or only one, Reference
Bank supplies a rate to determine EURIBOR for Euro and the relevant Interest
Period by 11.00 a.m. on the Quotation Day.

 

  8.2.2. The Lender must promptly notify the Borrower of a market disruption
event.

 

  8.2.3. After notification under Clause 8.2.2 above, the rate of interest on
the affected Loan for the relevant Interest Period will be the aggregate of the
applicable:

 

  (a) Margin;

 

  (b) rate which expresses as a percentage rate per annum the cost to the Lender
of funding the Loan from whatever source it may reasonably select; and

 

  (c) Mandatory Cost.

 

8.3 Alternative basis of interest or funding

If a market disruption event occurs and the Lender or the Borrower so requires,
the Borrower and the Lender must enter into negotiations for a period of not
more than 30 days with a view to agreeing an alternative basis for determining
the rate of interest and/or funding for the affected Loan and any future Loan.

 

9. TAXES

 

9.1 Tax gross-up

 

  9.1.1. The Borrower shall make, and shall procure that each other Obligor
makes, all payments to be made by it under the Finance Documents without any Tax
Deduction, unless a Tax Deduction is required by law.

 

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  9.1.2. If:

 

  (a) the Lender is not, or ceases to be, a Qualifying Lender; or

 

  (b) the Borrower or the Lender is aware that an Obligor must make a Tax
Deduction (or that there is a change in the rate or the basis of a Tax
Deduction),

it must promptly notify the Borrower or the Lender (as appropriate).

 

  9.1.3. Except as provided below, if a Tax Deduction is required by law to be
made by the Borrower or any other Obligor or the Lender, the Borrower shall or,
as the case may be, shall procure that the relevant Obligor will, increase the
amount of the payment due from the Borrower or any such Obligor to an amount
which (after making the Tax Deduction) leaves an amount equal to the payment
which would have been due if no Tax Deduction had been required.

 

  9.1.4. Except as provided below, an Obligor is not required to make an
increased payment under Clause 9.1.3 above for a Tax Deduction to the Lender if
the Lender is not, or has ceased to be, a Qualifying Lender in excess of the
amount that such Obligor would have had to pay had the Lender been, or not
ceased to be, a Qualifying Lender.

 

  9.1.5. Clause 9.1.4 above will not apply if the Lender has ceased to be a
Qualifying Lender by reason of any change after the date it became the Lender
under this Agreement in (or in the interpretation, administration, or
application of) any law or double taxation agreement or any published practice
or concession of any relevant taxing authority.

 

  9.1.6. An Obligor is not required to make an increased payment to the Lender
under Clause 9.1.3 above for a Tax Deduction if the Obligor is able to
demonstrate that the Tax Deduction would not have been required if the Lender
had complied with its obligations under Clause 9.1.9 below.

 

  9.1.7. If the Borrower or any other Obligor is required to make a Tax
Deduction, the Borrower must or, as the case may be, must procure that such
Obligor will, make the minimum Tax Deduction required by law and make any
payment required in connection with that Tax Deduction within the time allowed
by law.

 

  9.1.8. Within 30 days of making either a Tax Deduction or a payment required
in connection with a Tax Deduction, the Borrower must or, as the case may be,
must procure that the relevant company will, deliver to the Lender evidence
satisfactory to the Lender (acting reasonably) that the Tax Deduction has been
made or (as applicable) the appropriate payment has been paid to the relevant
taxing authority.

 

  9.1.9. The Lender must co-operate with the Borrower in completing any
procedural formalities necessary for each Obligor to obtain authorisation to
make that payment without a Tax Deduction.

 

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9.2 Tax indemnity

 

  9.2.1. Except as provided below, the Borrower must indemnify the Lender
against any loss or liability which the Lender (in its absolute discretion)
determines will be or has been suffered (directly or indirectly) by it or on
account of Tax in relation to a payment received or receivable (or any payment
deemed to be received or receivable) under a Finance Document.

 

  9.2.2. Clause 9.2.1 above does not apply to:

 

  (a) any Tax assessed on the Lender under the laws of the jurisdiction in
which:

 

  (i) the Lender is incorporated or, if different, the jurisdiction (or
jurisdictions) in which the Lender has a Facility Office and is treated as
resident for tax purposes; or

 

  (ii) the Lender’s Facility Office is located in respect of amounts received or
receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received
or receivable by the Lender. However, any payment deemed to be received or
receivable, including any amount treated as income but not actually received by
the Lender, such as a Tax Deduction, will not be treated as net income received
or receivable for this purpose;

 

  (b) the extent a loss, liability or cost is compensated for by an increased
payment under Clause 9.1.3 (Tax gross-up) or would have been compensated for by
an increased payment under Clause 9.1.3 but was not so compensated solely
because one of the exclusions in Clauses 9.1.4 or 9.1.6 applied.

 

  9.2.3 If the Lender makes, or intends to make, a claim under Clause 9.2.1
above, it must promptly notify the Borrower of the event which will give, or has
given, rise to the claim.

 

9.3 Tax Credit

If the Borrower makes a Tax Payment and the Lender (in its absolute discretion)
determines that:

 

  9.3.1. a Tax Credit is attributable to that Tax Payment; and

 

  9.3.2. it has used and retained that Tax Credit,

the Lender must pay an amount to the Borrower which the Lender determines (in
its absolute discretion) will leave it (after that payment) in the same
after-tax position as it would have been if the Tax Payment had not been
required to be made by the Borrower.

 

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9.4 Stamp taxes

The Borrower must pay and indemnify the Lender against any stamp duty, stamp
duty land tax, registration or other similar Tax payable in connection with the
entry into, performance or enforcement of any Finance Document, except for any
such Tax payable in connection with the entry into a Transfer Certificate.

 

9.5 Value added taxes

 

  9.5.1. Any amount (including costs and expenses) payable under a Finance
Document by the Borrower is exclusive of any value added tax or any other Tax of
a similar nature which might be chargeable in connection with that amount. If
any such Tax is chargeable, the Borrower must pay to the Lender (in addition to
and at the same time as paying that amount) an amount equal to the amount of
that Tax.

 

  9.5.2. Where a Finance Document requires any Party to reimburse the Lender for
any costs or expenses, that Party must also at the same time pay and indemnify
the Lender against all value added tax or any other Tax of a similar nature
incurred by the Lender in respect of those costs or expenses but only to the
extent that the Lender (acting reasonably) determines that it is not entitled to
credit or repayment from the relevant tax authority in respect of the Tax.

 

9.6 Conduct of business by the Lender

No term of this Agreement will:

 

  9.6.1. interfere with the right of the Lender to arrange its affairs (Tax or
otherwise) in whatever manner it thinks fit;

 

  9.6.2. oblige the Lender to investigate or claim any credit, relief, remission
or repayment available to it in respect of Tax or the extent, order and manner
of any claim; or

 

  9.6.3. oblige the Lender to disclose any information relating to its affairs
(Tax or otherwise) or any computation in respect of Tax.

 

10. INCREASED COSTS

 

10.1 Increased Costs

Except as provided below in this Clause, the Borrower shall within 5 Business
Days of demand pay to the Lender the amount of any Increased Cost incurred by
the Lender as a result of:

 

  10.1.1. the introduction of, or any change in, or any change in the
interpretation, administration or application of, any law or regulation; or

 

  10.1.2. compliance with any law or regulation made after the date of this
Agreement,

 

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which is incurred or suffered by the Lender to the extent that it is
attributable to the Lender having entered into its Commitment or funding or
performing its obligations under any Finance Document.

 

10.2 Exceptions

The Borrower need not make any payment for an Increased Cost to the extent that
the Increased Cost is:

 

  10.2.1. compensated for by payment of Mandatory Costs;

 

  10.2.2. compensated for under another Clause or would have been but for an
exception to that Clause;

 

  10.2.3. arises from a tax on the overall net income, profit or gain of the
Lender or the Lender and/or its Affiliate;

 

  10.2.4. attributable to the Lender wilfully failing to comply with any law or
regulation or the terms of any of the Finance Documents; or

 

  10.2.5. attributable to the implementation or application of or compliance
with the “International Convergence of Capital Measurement and Capital
Standards, a Revised Framework” published by the Basel Committee on Banking
Supervision in June 2004 in the form existing on the date of this Agreement
(“Basel II”) or any other law or regulation which implements Basel II (whether
such implementation, application or compliance is by a government regulator, the
Lender or any of its Affiliates).

 

10.3 Claims

If the Lender intends to make a claim for an Increased Cost, it must notify the
Borrower promptly of the circumstances giving rise to, and the amount of, the
claim and shall provide the Borrower with a certificate confirming the amount of
the Increased Costs and showing how such Increased Cost is calculated.

 

11. PAYMENTS

 

11.1 Place

Unless a Finance Document specifies that payments under it are to be made in
another manner, all payments by a party under the Finance Documents must be made
to the Lender to its account at such office or bank in Germany as it may notify
to the parties for this purpose by not less than ten (10) Business Days’ prior
notice.

 

11.2 Funds

Payments under the Finance Documents to the Lender must be made for value on the
due date at such times and in such funds as is customary at the time for the
settlement of transactions in that currency in the place for payment.

 

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11.3 Distribution

The Lender may apply any amount received by it for the Borrower in or towards
payment of any amount due from the Borrower under the Finance Documents.

 

11.4 Currency

Save for payments to be made in CZK in relation to establishment, registration,
perfection and/or enforcement of Security under Security Documents, all amounts
payable under the Finance Documents are payable in Euro.

 

11.5 Business Days

 

  11.5.1. If a payment under the Finance Documents is due on a day which is not
a Business Day, the due date for that payment will instead be the next Business
Day in the same calendar month (if there is one) or the preceding Business Day
(if there is not).

 

  11.5.2. During any extension of the due date for payment of any principal
under this Agreement interest is payable on that principal at the rate payable
on the original due date.

 

11.6 Partial payments

 

  11.6.1. If the Lender receives a payment insufficient to discharge all the
amounts then due and payable by the Borrower under the Finance Documents, the
Lender must apply that payment towards the obligations of the Borrower under the
Finance Documents in the following order:

 

  (a) first, in or towards payment pro rata of any unpaid fees, costs and
expenses of the Lender payable by the Borrower under the Finance Documents;

 

  (b) second, in or towards payment of any accrued interest or fee due but
unpaid under this Agreement and any amount due from the Borrower under any
Hedging Agreement;

 

  (c) third, in or towards payment of any principal amount due but unpaid under
this Agreement; and

 

  (d) fourth, in or towards payment pro rata of any other sum due but unpaid
under the Finance Documents.

 

  11.6.2. This Subclause will override any appropriation made by the Borrower.

 

11.7 Timing of payments

If a Finance Document does not provide for when a particular payment is due,
that payment will be due within five Business Days of demand by the Lender.

 

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12. BANK ACCOUNTS

 

12.1 Obligations with regard to accounts

The Borrower must ensure that:

 

  12.1.1. the Accounts Administrator regularly sends to the Lender on or before
the fifteenth day falling after each Quarter Date copies of all bank statements
of the Specified Accounts;

 

  12.1.2. the following transfers are made:

 

  (a) unless a Permitted Letter of Credit which is in form and substance
satisfactory to the Lender and the use of which the Lender has consented to
prior to its issue (neither consent to be unreasonably withheld or delayed) is
in effect, at such times and in such manner as required under the Hotel
Management Agreement, a transfer of an amount equal to the Maintenance Reserve
Amount to the FF&E Account;

 

  (b) at such times and in such manner as required under the Hotel Management
Agreement, a transfer to the Lessee Corporate Account of the amount standing to
the credit of the Main Operating Account less any amounts entitled to be
retained by the Hotel Manager for Working Capital pursuant to the Hotel
Management Agreement;

 

  (c) prior to each Interest Payment Date, a transfer of an amount equal to the
aggregate of all amounts due to be paid by the Borrower on such Interest Payment
Date to the Czech Revenue Account; and

 

  (d) promptly upon completion of any Permitted Reorganisation, a transfer to
the Czech Revenue Account of an amount equal to such amounts as are available to
be paid to the Borrower from the proceeds of such Permitted Reorganisation;

 

  12.1.3. the Obligors maintain the Specified Accounts; and

 

  12.1.4. no Obligor, without the prior consent of the Lender, maintains any
other bank account other than the Specified Accounts except for the Permitted
Bank Accounts.

 

12.2 Withdrawal from Specified Accounts

 

  12.2.1. The Borrower may only make, or permit the Hotel Manager to make, the
following withdrawals from the Specified Accounts:

 

  (a) at any time, withdrawals from the Main Operating Account to make a payment
of any amount (including any fees) due from the Borrower, or to be provided or
made available by the Borrower to the Hotel Manager, pursuant to the Hotel
Management Agreement;

 

45

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  (b) provided that the amount standing to the credit of the Lessee Corporate
Account is sufficient so that on the next Interest Payment Date following the
proposed withdrawal the Borrower could meet its payment obligations under this
Agreement, withdrawals from the Lessee Corporate Account to satisfy any
obligations of the Lessee in respect of:

 

  (i) taxes falling due in the Czech Republic;

 

  (ii) any Corporate Expenses incurred by the Lessee;

 

  (c) provided that the Interest Payment Date falling immediately after the most
recent of the transfers referred to in Clause 12.1.2(b) above has occurred, an
amount equal to any fees due to be paid by the Lessee under the Asset Management
Agreement;

 

  (d) at any time, withdrawals from the Czech Revenue Account to be credited to
the Dutch Revenue Account for the purposes of making a Permitted Distribution
provided that:

 

  (i) if the proposed withdrawal is to occur within 45 days from and including
the date of the most recent Compliance Certificate, no Event of Default is
outstanding; or

 

  (ii) if the proposed withdrawal is to occur more than 45 days after the date
of the most recent Compliance Certificate, the Borrower supplies the Lender with
a Compliance Certificate,

and that no such withdrawal may be made until the earlier of the Lender
confirming that the information in the Compliance Certificate is satisfactory or
the date falling 5 days after the date of any Compliance Certificate.

 

12.3 Miscellaneous Accounts provisions

 

  12.3.1. The Borrower must ensure that no Specified Account exceeds any
applicable overdraft limit.

 

  12.3.2. Any amount received or recovered by the Obligors otherwise than by
credit to a Specified Account must be held subject to the security created by
the Finance Documents and immediately be paid to the relevant Specified Account
or to the Lender in accordance with Finance Documents in the same funds as
received or recovered.

 

  12.3.3. On each Interest Payment Date the amount standing to the credit of the
Czech Revenue Account, shall be applied or retained in the following manner and
order:

 

  (a) first, in or towards payment of, or retention for, any fees or expenses
then due and payable to the Lender pursuant to the Finance Documents;

 

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  (b) secondly, in or towards payment of, or retention for, any interest then
due and payable under this Agreement and any amount due from the Borrower under
any Hedging Agreement;

 

  (c) thirdly, in or towards payment of, or retention for, any principal amount
then due and payable under this Agreement;

 

  (d) fourthly in payment of any prepayment then due under Clauses 16.9.2 (Loan
to Value Ratio) and/or 16.10.1 (Interest Cover);

 

  (e) fifthly transferred to the Deposit Account pursuant to Clause 16.10.3
(Interest Cover) (if applicable);

 

  (f) sixthly, in or towards payment of any other amounts then due and payable
under any Finance Document;

 

  (g) seventhly, any surplus shall be treated in accordance with Clause 12.3.4.

 

  12.3.4. Any surplus amount standing to the credit of the Czech Revenue Account
after the application of the waterfall in accordance with Clause 12.3.3 shall be
applied as follows:

 

  (a) prior to the Term-out Date, provided that no Event of Default is
outstanding and five days have elapsed since the date of the most recent
Compliance Certificate or (if earlier) the Lender has confirmed that the
information therein is satisfactory, the surplus amount shall be immediately
transferred to the Dutch Revenue Account; and

 

  (b) after the Term-out Date:

 

  (i) if:

 

  (A) the relevant Interest Payment Date occurs within 45 days from and
including the date of the most recent Compliance Certificate;

 

  (B) five days have elapsed since the date of the most recent Compliance
Certificate or (if earlier) the Lender has confirmed that the information
therein is satisfactory; and

 

  (C) no Event of Default is outstanding,

the surplus amount shall be immediately transferred to the Dutch Revenue
Account; or

 

  (ii)

if the relevant Interest Payment Date occurs more than 45 days after the date of
the most recent Compliance Certificate, then the Borrower shall provide an
Compliance Certificate on the relevant Interest Payment Date and,

 

47

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provided no Event of Default is outstanding, the surplus amount shall be
transferred to the Dutch Revenue Account on the first to occur of the date on
which the Lender confirms that the information set out in the Compliance
Certificate is satisfactory or the date falling 5 days after the date of such
Compliance Certificate.

 

  12.3.5. The Lender is not responsible nor liable to the Obligors (other than
in respect of gross negligence or wilful default) for:

 

  (a) any non-payment of any liability of the Obligors which could be paid out
of moneys standing to the credit of a Specified Account; or

 

  (b) any withdrawal wrongly made, if made in good faith.

 

  12.3.6. The Obligors must, within five Business Days of any reasonable request
by the Lender, supply the Lender with the following information in relation to
any payment received in any Specified Account:

 

  (a) the date of payment or receipt;

 

  (b) the payer; and

 

  (c) the purpose of the payment or receipt.

 

13. REPRESENTATIONS

 

13.1 Representations

The representations set out in this Clause are made by the Borrower to the
Lender.

 

13.2 Status

The Borrower is a private limited liability company, duly incorporated and
validly existing under the laws of its jurisdiction of original incorporation
has the power to own its assets and carry on its business as it is being
conducted.

 

13.3 Powers and authority

The Borrower has the power to enter into and perform, and has taken all
necessary action to authorise the entry into and performance of, the Transaction
Documents to which it is or will be a party and the transactions contemplated by
those Transaction Documents.

 

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13.4 Legal validity

Subject to the Reservations, the obligations expressed to be assumed by each
Obligor under each Finance Document to which it is a party are legally binding,
valid and enforceable obligation.

 

13.5 Non-conflict

The entry into and performance by each Obligor of, and the transactions
contemplated by, the Finance Documents do not conflict with:

 

  13.5.1. any law or regulation applicable to it;

 

  13.5.2. its constitutional documents;

 

  13.5.3. any document which is binding upon it or any of its assets (other than
the Existing Facility Agreement and security and finance documents relating to
it),

or require any Obligor to create any Security Interest over all or any of its
assets other than in favour of Aareal Bank AG.

 

13.6 No default

 

  13.6.1. No Event of Default is outstanding or will result from the execution
of, or the performance of any transaction contemplated by, any Finance Document;
and

 

  13.6.2. no other event is outstanding which constitutes a default under any
document which is binding on any Obligor or any of its assets to an extent or in
a manner which has a Material Adverse Effect.

 

13.7 Authorisations

Except for de-registrations of pledges and mortgages in respect of the Existing
Facility Agreement and registrations (and authorisations necessary for such
registrations) of the Mortgage, the Trademark Pledge, the FF&E Pledge and the
Share Pledges (until obtained in accordance with the relevant Security
Document), all material Authorisations required by it and each Obligor:

 

  (i) in connection with the entry into, performance, validity and
enforceability of, and the transactions contemplated by, the Finance Documents;
or

 

  (ii) necessary to conduct its business as it is presently conducted have been
obtained or effected (as appropriate) and are in full force and effect, and if
not in full force and effect, this could not reasonably be expected to have a
Material Adverse Effect.

 

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13.8 Financial statements

Each Obligor’s financial statements most recently delivered to the Lender:

 

  13.8.1. have been prepared in accordance with accounting principles and
practices generally accepted in its jurisdiction of incorporation, consistently
applied; and

 

  13.8.2. fairly represent its financial condition as at the date to which they
were drawn up.

 

13.9 Litigation

No litigation, arbitration or administrative proceedings are current or, to its
knowledge, pending or threatened, which (if adversely determined) have or are
reasonably likely to have a Material Adverse Effect.

 

13.10  Information

 

  13.10.1. All information supplied by any Obligor or on their behalf to the
Lender in connection with the Transaction Documents was in all material respects
true and accurate as at its date or (if appropriate) as at the date (if any) at
which it is stated to be given;

 

  13.10.2. Any financial projections contained in the information referred to in
Clause 13.10.1 above have been prepared as at their date, on the basis of recent
historical information and assumptions believed by it to be fair and reasonable;

 

  13.10.3. As at the date the information referred to in Clause 13.10.1 above
was stated to be given it had not omitted to supply any information which, if
disclosed, would make any other information referred to in Clause 13.10.1 above
untrue or misleading in any material respect; and

 

  13.10.4. As at the date of this Agreement and the first Utilisation Date,
nothing has occurred since the date information referred to in Clause 13.10.1
above was supplied which, if disclosed, would make that information untrue or
misleading in any material respect.

 

13.11  Valuation

 

  13.11.1. All information supplied by any Obligor or on their behalf to the
Valuer for the purposes of each Valuation was true and accurate as at its date
or (if appropriate) as at the date (if any) at which it is stated to be given;
and

 

  13.11.2. As at the date the information referred to in Clause 13.11.1 above
was stated to be given it had not omitted to supply any information which, if
disclosed, would materially adversely affect the Valuation.

 

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13.12 Title to Property

 

  13.12.1. The Owner is the owner of the Property, free from Security Interests
save for any Permitted Security, and:

 

  (a) all consents, licences and Authorisations required by it in connection
with its ownership of the Property have been obtained or effected (as
appropriate) and are in full force and effect;

 

  (b) no breach of any law or regulation (including in respect of any Tax) is
outstanding which materially adversely affects or might materially adversely
affect the value of the Property;

 

  (c) save for any Permitted Security (until released), there is no covenant,
agreement, stipulation, reservation, condition, interest, right or other matter
materially adversely affecting the Property;

 

  (d) nothing has arisen or has been created or is outstanding which would be an
overriding interest, or an unregistered interest which overrides first
registration or registered dispositions, over the Property;

 

  (e) no facility necessary for the enjoyment and use of the Property is enjoyed
by the Property on terms entitling any person to terminate or curtail its use;

 

  (f) it has not received any notice of any adverse claim by any person in
respect of the ownership of the Property or any interest in it, nor has any
acknowledgement been given to any person in respect of the Property;

 

  (g) the Property is held by it free from rights in rem of any third party
other than (i) the Mortgage (once established and perfected); (ii) the Permitted
Security (until released), (iii) those arising by operation of law or permitted
by Finance Documents or in writing by the Lender; and (iv) the Easements (once
established); and

 

  (h) the Property has the benefit of all rights of way and the supply of
material services necessary for the operation of the Business and no additional
rights are necessary in order to permit the Owner and the Lessee to gain access
to the Property or to comply in all material respects with fire regulations or
any statutory requirement or maintain any Building.

 

  13.12.2. The Owner is duly registered as the owner of the Property in the Real
Estate Register.

 

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13.13 No other business

 

  13.13.1. No Obligor trades or carries on any business except for in connection
with the Business and/or ownership, management, operating, (sub)letting,
maintenance and development in respect of the Property or other real estate or
ownership of Subsidiaries engaged in the foregoing.

 

  13.13.2. No Obligor is party to any material agreement other than the
Transaction Documents and documents contemplated in or permitted by the
Transaction Documents, agreements entered into the ordinary course of business
at arm’s length on normal commercial terms and/or agreements with members of the
group of companies to which the Borrower and Parent belong.

 

  13.13.3. No Obligor has any employees.

 

  13.13.4. It has not incurred any liabilities or undertaken any obligations
other than those arising from the activities referred to in Clauses 13.13.1 and
13.13.2 above or under the Transaction Documents.

 

13.14 Ownership

As at the date of this Agreement:

 

  13.14.1. the entire issued share capital of the Borrower is legally and
beneficially wholly owned and controlled by the Parent; and

 

  13.14.2. the ownership of the Obligors is as set out in the Group Structure
Chart.

 

13.15 Ranking of Security

Subject to the Reservations:

 

  (i) the Security constitutes a Security Interest of the type intended and
described in the relevant Security Document; and

 

  (ii) the payment obligations of each Obligor under the Finance Documents rank
at least pari passu with the claims of all its other unsecured unsubordinated
creditors, except for obligations mandatorily preferred by law applying to
companies generally.

 

13.16 Taxes on payments

All amounts payable by each Obligor under the Finance Documents may be made
without any Tax Deduction.

 

13.17 Stamp duties

Except for court, administrative, notarial and registration fees payable in
respect of the Security Documents and Notarial Record on Direct Enforceability
and/or enforcement of any Finance Document, no stamp or registration duty or
similar Tax or charge is payable in each Obligor’s jurisdiction of incorporation
in respect of any Finance Document.

 

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13.18 Immunity

 

  13.18.1. Each Obligor’s entry into the Finance Documents to which it is a
party constitutes, and the exercise by it of its rights and performance of such
Obligor’s obligations under each such Finance Document will constitute, private
and commercial acts performed for private and commercial purposes; and

 

  13.18.2. Subject to the Reservations, no Obligor is entitled to claim immunity
from suit, execution, attachment or other legal process in any proceedings taken
in its jurisdiction of incorporation in relation to any Finance Document.

 

13.19 Jurisdiction/governing law

The:

 

  (a) agreement that this Agreement is governed by English law; and

 

  (b) agreement not to claim any immunity to which it or its assets may be
entitled;

are legal, valid and binding under the laws of the jurisdiction of incorporation
of the Borrower.

 

13.20 Insolvency

Save for the Permitted Reorganization, no Obligor has taken any formal corporate
action nor have any other formal steps been taken or legal proceedings been
started against it for its bankruptcy, liquidation, winding-up, dissolution,
administration or reorganisation.

 

13.21 Material Contracts

 

  13.21.1. Each Material Contract is, in all material respects, in full force
and effect.

 

  13.21.2. No Obligor is in breach of any of its obligations under the Material
Contracts in a manner which has a Material Adverse Effect.

 

  13.21.3. It is not aware that any counterparty to a Material Contract is
breach of any of its obligations under that Material Contract in a manner which
has a Material Adverse Effect.

 

13.22 Personal Capacity

The Borrower and each Obligor is entering into this Agreement and the Security
Documents to which it is a party in its personal capacity and not as agent for
any person.

 

13.23 Times for making representations

 

  13.23.1. The representations set out in this Clause are made by the Borrower
on the date of this Agreement.

 

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  13.23.2. The representations at Clauses 13.2 (Status), 13.3 (Powers and
Authority), 13.5.2 and 13.5.3 (Non-conflict), 13.6.2 (No default), 13.10
(Information), 13.11 (Valuation), 13.12 (Title to Property), 13.19
(Jurisdiction/governing law) and 13.21 (Material Contracts) (the “Repeating
Representations”) are deemed to be repeated by the Borrower on the date of the
Request, on the Utilisation Date and thereafter on each Interest Payment Date.

 

  13.23.3. When a representation is repeated, it is applied to the circumstances
existing at the time of repetition.

 

  13.23.4. The Repeating Representations and those representations at
Clauses 13.17 (Stamp Duties), 13.18 (Immunity) and 13.19 (Jurisdiction/Governing
Law) are deemed to be repeated by the Borrower with respect to each Additional
Obligor on the date that it becomes an Additional Obligor.

 

14. INFORMATION COVENANTS

 

14.1 Financial statements

 

  14.1.1. The Borrower confirms that the date of its financial year end is
31 December. The Borrower must supply to the Lender:

 

  (a) audited financial statements for each of its financial years and for the
Lessee, TRS and the Owner; and

 

  (b) its unaudited financial statements for each financial quarter (but only if
prepared);

 

  (c) semi annual management accounts for the Lessee, TRS and the Owner on an
unconsolidated basis.

 

  14.1.2. Financial Statements supplied under Clause 14.1 shall be certified
(without personal liability save in respect of fraud and wilful misconduct) by a
director of the relevant Obligor as fairly representing its financial condition
as at the date as at which those financial statements were drawn up, and shall
be prepared using accounting principles and practices generally accepted in its
jurisdiction of incorporation.

 

  14.1.3. All financial statements must be supplied as soon as they are
available and:

 

  (a) in the case of the Borrower’s audited financial statements, within 180
days;

 

  (b) (if applicable) in the case of the Borrower’s quarterly unaudited
financial statements, within 45 days;

 

  (c) in the case of the semi-annual accounts, within 60 days of the third
Quarter Date in each year,

of the end of the relevant financial period.

 

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  14.1.4. The Borrower shall provide the Lender with:

 

  (a) the Annual Budget approved by the Hotel Manager and Lessee not later than
the day falling 30 days prior to the beginning of each of its financial year
provided that if the Annual Budget is not provided to the Borrower by the Hotel
Manager in sufficient time for the Borrower to approve and provide it by such
date, the Borrower may, providing the Borrower is using reasonable efforts to
promptly approve the Annual Budget, provide it to the Lender following such
later date when the Borrower finally approves it; and

 

  (b) the quarterly income statements prepared by the Hotel Manager in respect
of the Property at the end of each quarter in respect of the twelve months prior
to such quarter within 30 days from each Quarter Date; and

 

  (c) quarterly forecast updated and prospective trading for the remainder of
the then current calendar year prepared by the Hotel Manager within 30 days from
each Quarter Date,

each prepared in accordance with the Uniform System.

 

  14.1.5. The Borrower shall supply the Lender with a Compliance Certificate
with each set of financial statements delivered pursuant to Clauses 14.1.1(a)
and 14.1.1(b).

 

14.2 Valuations

 

  14.2.1. The Lender may request a Valuation at any time on reasonable notice so
as not to disturb the Business.

 

  14.2.2. The Borrower must on demand by the Lender pay the costs of:

 

  (a) any Valuation requested by the Lender at any time when an Event of Default
is outstanding or if the Valuation shows that the Loan to Value Ratio is not
met;

 

  (b) a Valuation requested by the Lender at any time when an Event of Default
is not outstanding, provided that the Borrower shall only bear such cost once
every two years; and

 

  (c) where a Valuation is reasonably requested by the Lender for compliance
purposes associated with applicable regulatory requirements.

 

  14.2.3. Any Valuation not referred to in Clause 14.2.2 above will be at the
cost of the Lender.

 

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14.3 Information - miscellaneous

The Borrower must supply to the Lender:

 

  14.3.1. promptly on request, such further information as the Lender may
reasonably request in the Borrower’s possession or control regarding:

 

  (a) the financial condition and operations of any Obligor; or

 

  (b) the Property;

 

  14.3.2. details of any non-material amendment permitted under Clause 15.12
(Amendment to material documents) made to any Transaction Document;

 

  14.3.3. on a semi-annual basis an update on the renovation works being carried
out in respect of the Property and their progress against the Environmental and
Works Report and the Initial Valuation, provided that nothing in this Clause
14.3.3 shall oblige the Borrower to carry out any renovation work referred to in
either document;

 

  14.3.4. within 45 days of submission copies of all yearly income tax returns
of the Obligors (if any) together with evidence of payment of taxes due
thereunder (if any);

 

  14.3.5. by 30 June each year a current extract from the Real Estate Register
in respect of the Property;

 

  14.3.6. within 60 days from the third Quarter Date in each year, the current
extract from the Commercial Register in respect of each of Lessee, TRS and
Owner.

 

14.4 Notification of an Event of Default

The Borrower must notify the Lender of any Event of Default (and the steps, if
any, being taken to remedy it) promptly upon becoming aware of its occurrence.

 

14.5 Know your customer requirements

The Borrower must promptly on the request of the Lender supply to the Lender any
documentation or other evidence which is reasonably requested by it to enable
the Lender to carry out and be satisfied with the results of all applicable know
your customer requirements.

 

14.6 Access

The Borrower shall, or shall procure that the relevant Obligor, upon being given
at least three Business Days prior notice:

 

  14.6.1. provide the Lender or its representatives with access to, and permit
inspection of the books and records of the Obligors, provided that:

 

  (a) prior to the occurrence of an Event of Default which is outstanding, the
costs of the Lender and/or its representatives in respect of any such inspection
shall be borne by the Lender); and

 

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  (b) the Lender shall not exercise its right under this Clause (save at such
times as an Event of Default is outstanding) more than once per year

 

  14.6.2. subject to the provisions of the Hotel Agreements and the Lease
Agreements, permit the Lender with or without surveyors, workmen or others
during business hours to enter upon the Property to inspect the dame (provided
that such right to enter the Property shall not be exercised more than twice a
year, unless a Default is continuing and/or in case of emergency).

 

15. GENERAL COVENANTS

 

15.1 General

The Borrower agrees to be bound by the covenants set out in this Clause, and to
procure that each other Obligor complies with those covenants that are specified
as being applicable to it.

 

15.2 Authorisations

Each Obligor must promptly obtain, maintain and comply with the terms of any
material Authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of, any
Transaction Document to which it is a party.

 

15.3 Compliance with laws

Each Obligor must comply in all respects with all laws to which it is subject
where failure to do so has or is reasonably likely to have a Material Adverse
Effect.

 

15.4 Pari passu ranking

Each Obligor must ensure that its payment obligations under the Finance
Documents rank at least pari passu with all its other present and future
unsecured payment obligations, except for obligations mandatorily preferred by
law applying to companies generally.

 

15.5 Negative pledge

 

  15.5.1. Except as provided below, no Obligor may create or allow to exist any
Security Interest on any of its assets.

 

  15.5.2. Clause 15.5.1 above does not apply to any Permitted Security.

 

  15.5.3. Save where permitted under any Finance Document, no Obligor, without
the Lender’s prior written consent may:

 

  (a) sell, transfer or otherwise dispose of any of its assets on terms where it
is or may be leased to or re-acquired or acquired by any of its related
entities;

 

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  (b) sell, transfer or otherwise dispose of any of its receivables on recourse
terms;

 

  (c) enter into any arrangement under which money or the benefit of a bank or
other account may be applied, set-off or made subject to a combination of
accounts; or

 

  (d) enter into any preferential arrangements having a similar effect, in
circumstances where the transaction is entered into primarily as a method of
raising indebtedness or of financing the acquisition of an asset.

 

15.6 Disposals

 

  15.6.1. No Obligor may, except where permitted in or under any Finance
Document, either in a single transaction or in a series of transactions and
whether related or not, dispose of their respective interests in the Property,
the Business or all or any part of its assets.

 

  15.6.2. Clause 15.6.1 above does not apply to any disposal:

 

  (a) made with the consent of the Lender;

 

  (b) actions made in accordance with Clause 16.2 (Lease Agreements and Lease
Documents);

 

  (c) of cash by way of a payment out of a specified Account in accordance with
this Agreement;

 

  (d) made by Lessee or Owner (provided that the Owner may not make any disposal
of the Property) in the ordinary course of trading;

 

  (e) made as part of a Permitted Reorganisation; or

 

  (f) of real estate made by the Owner (provided that the Owner may not make any
disposal of the Property).

 

15.7 Financial indebtedness

 

  15.7.1. Except as provided below, neither the Borrower nor any other Obligor
may incur any indebtedness.

 

  15.7.2. Clause 15.7.1 above does not apply to:

 

  (a) any indebtedness incurred under the Finance Documents; or

 

  (b) any Permitted Indebtedness.

 

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15.8 Lending and guarantees

 

  15.8.1. No Obligor may make any loan or provide any form of credit to any
person save:

 

  (a) in the case of the Lessee or Owner where such credit is provided in the
ordinary course of trading or as a result of payment or receipt of payment by
the Lessee or Owner for some other Obligor or an affiliate thereof; or

 

  (b) in the case of the Borrower where it makes a Permitted Loan.

 

  15.8.2. No Obligor may make or give any guarantee or indemnity to or for the
benefit of any person in respect of any obligation of any other person or enter
into any document under which the Obligor in question assumes any liability of
any other person except in the ordinary course of business.

 

  15.8.3. This Clause does not apply to Permitted Indebtedness.

 

15.9 Change of business

Save changes to business or termination of business of any Obligor resulting
from the Permitted Reorganization, no Obligor may carry on any business other
than that which it carries out at the date of this Agreement.

 

15.10 Mergers

No Obligor may enter into any amalgamation, demerger, merger or reconstruction
other than as part of a Permitted Reorganisation.

 

15.11 Acquisitions

No Obligor may make any acquisition or investment other than:

 

  15.11.1. as part of a Permitted Reorganisation; or

 

  15.11.2. of the ownership interest held by SHC Prague in the Owner, provided:

 

  (a) that the acquiring Obligor enters into an agreement on pledge of ownership
interest, in form and substance reasonably satisfactory to the Lender, over such
ownership interest in favour of the Lender within 10 Business Days of its
acquisition; and

 

  (b) if the consent of a shareholders´ meeting is required in connection with
such acquisition, the Borrower has used its best efforts to acquire such
consent.

 

15.12 Amendments to material documents

 

  15.12.1. The Borrower may not enter into any contract other than:

 

  (a) the Transaction Documents; and

 

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  (b) any other contract expressly allowed under any other term of this
Agreement.

 

  15.12.2. No Obligor may make any material amendment to, or terminate any
Transaction Document save:

 

  (a) where such an amendment is a Permitted Amendment; or

 

  (b) with the Lender’s prior written consent (not to be unreasonably withheld
or delayed).

 

  15.12.3. Each Obligor shall perform its material obligations under any
Transaction Document to which it is a party in all material respects.

 

15.13 Shares and dividends

 

  15.13.1. The Borrower must not (save for a Permitted Payment or as part of a
Permitted Reorganisation):

 

  (a) declare or pay any dividend or make any other distribution in respect of
any of its shares;

 

  (b) alter any rights attaching to its issued shares as at the date of this
Agreement; or

 

  (c) repay or redeem any of its share capital or decrease its registered
capital.

 

  15.13.2. Each Obligor other than the Borrower must not, save as part of a
Permitted Reorganisation or an Intra Group Distribution:

 

  (a) declare or pay any dividend or make any other distribution in respect of
any of its shares;

 

  (b) alter any rights attaching to its issued shares as at the date of this
Agreement; or

 

  (c) repay or redeem any of its share capital or decrease its registered
capital.

 

15.14 Accounts

The Borrower shall not, and shall procure that neither the Owner, the Lessee nor
TRS shall not, change:

 

  15.14.1. the calculation methods used in its annual accounts, or the valuation
principles applied by it to the Property in such accounts, without providing the
Lender adequate information to enable it to understand the rationale behind such
change when interpreting any accounts produced after the date of such change;
and

 

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  15.14.2.  the identity of their accountant without the prior written consent
of the Lender (such consent not to be unreasonably withheld or delayed).

 

15.15 Articles  of Association

No Obligor shall without the prior written consent of the Lender, propose or
agree to, any amendment to its constitutional documents, other than where such
amendment is:

 

  (a) of a non-material nature;

 

  (b) permitted under the Security Documents;

 

  (c) required as a result of a Permitted Reorganisation; or

 

  (d) required by law.

 

15.16 Additional  Security

 

  15.16.1.  Each Obligor shall:

 

  (a) promptly upon the written request of the Lender, execute or procure the
execution of further pledge agreements or security assignments of receivables in
favour of the Lender in respect of new contract receivables which give rise to
interests, rights and benefits in favour of the Borrower which are capable of
being assigned by way of security or pledged with such further security
assignments of receivables or pledge over receivables to be substantially in the
form of the existing relevant Security Document or other form of Security
Interest in favour of the Lender as the Lender may reasonably require;

 

  (b) if it opens any additional bank or similar account(s) (having first
received the prior written consent of the Lender), prior to or simultaneous with
such account(s) becoming operational, the Borrower will create a Security
Interest over such account(s) in favour of the Lender, substantially in the form
of the Accounts Pledges, or other form of Security in favour of the Lender as
the Lender may reasonably require; and

 

  (c) take any action and execute any document which is required by the Lender
(acting reasonably) so that a Security Document provides for an effective and
perfected Security Interest in favour of the Lender.

 

  15.16.2.  Clause 15.16.1 shall not apply to SHC Prague if the effect of SHC
Prague complying with its obligations thereunder would be to breach the
financial assistance laws of the Czech Republic.

 

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15.17  Subordination

 

  15.17.1.  Each Obligor (subject to Clause 15.17.2 below) will ensure that at
all times any and all of its obligations or liabilities to any of its respective
shareholders or any Affiliate of a shareholder under any loan agreement made
between it and such persons is either:

 

  (a) subject to the terms and conditions of the Subordination Agreement; or

 

  (b) is a Subordinated Loan;

and in either case is fully subordinated at all times and in all respects to the
obligations and liabilities of each Obligor (subject to Clause 15.17.2 below) to
the Lender at such time.

 

  15.17.2.  Clause 15.17.1 shall not apply to:

 

  (a) any Unsubordinated Financial Indebtedness; or

 

  (b) SHC Prague if the effect of SHC Prague complying with its obligations
thereunder would be to breach the financial assistance laws of the Czech
Republic.

 

15.18  Taxes

With the exception of any nominal amount of Tax, each Obligor must pay all Taxes
due and payable (or, where payments of Tax must be made by reference to
estimated amounts, such estimated Tax (calculated in good faith) as due and
payable for the relevant period) by it prior to the accrual of any fine or
penalty for late payment, unless (and only to the extent that):

 

  (a) payment of those Taxes is being contested in good faith;

 

  (b) adequate reserves are being maintained for those Taxes and the costs
required to contest them have been disclosed in the latest financial statements
delivered to the Agent;

 

  (c) failure to pay those Taxes is not reasonably likely to have a Material
Adverse Effect.

 

15.19  Litigation

The Borrower shall, promptly upon becoming aware of the same, notify the Lender
in writing of any material litigation, arbitration, administrative proceedings
or other actions, whatsoever, of or before any court, arbitral body, agency or
similar body whatsoever, involving any Obligor not previously disclosed to the
Lender pursuant to this Agreement which, if adversely determined, would
reasonably be expected to give rise to a Material Adverse Effect and will
continue to provide written updates of any material developments in respect of
any such material litigation, arbitration, administrative proceedings or other
actions to the Lender.

 

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15.20  Hotel Manager Letter

The Borrower shall deliver to the Lender the Hotel Manager Letter within six
(6) months of the date of this Agreement.

 

16. PROPERTY COVENANTS

 

16.1 General

The Borrower agrees to be bound by the covenants set out in this Clause and to
procure that each other Obligor complies with those covenants that are specified
as being applicable to it.

 

16.2 Lease Agreements and Lease Documents

Neither the Owner nor the Lessee may, without the prior consent of the Lender
(such consent not to be unreasonably withheld or delayed):

 

  16.2.1.  enter into any new Lease Agreement unless the same constitutes a
Permitted Letting:

 

  16.2.2.  agrees to any amendment (other than a Permitted Amendment), waiver or
surrender in respect of any Lease Document or exercise any break option, under a
Lease Document unless such amendment waiver or surrender constitutes the
Permitted Amendment;

 

  16.2.3.  consents to any sub-lease of any tenant’s interest under any Lease
Document (which Lease Document does not constitute or relate to Permitted
Letting), unless the Owner and the Lessee, as applicable, remains bound by the
terms of the Lease Document for the remainder of its term; or

 

  16.2.4.  agrees to any downward rent review in respect of any Lease Document
unless such Lease Document constitutes or relates to Permitted Letting.

 

16.3 Hotel Manager

 

  16.3.1.  The Lessee and Borrower must ensure that the Hotel Manager and GPHS
manage the Business to a standard consistent with that of a prudent hotelier.

 

  16.3.2.  If the Hotel Manager is in default of its obligations under the Hotel
Management Agreement and, as a result, the Lessee or Borrower is entitled to
terminate the Hotel Management Agreement, then, if the Lender so requires, the
Borrower must promptly use all reasonable endeavours to:

 

  (a) terminate the Hotel Management Agreement and the Hotel Licence Agreement
in accordance with its terms; and

 

  (b) enter into a Permitted Replacement HMA and/or Permitted Replacement
License Agreement.

 

  16.3.3.  No Obligor may agree to increase any fee payable to the Hotel Manager
or GPHS under any Hotel Agreement without the prior consent of the Lender.

 

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16.4 Insurances

 

  16.4.1.  In this Clause, insurance policy means an insurance policy or
contract required under this Subclause.

 

  16.4.2.  The Borrower must ensure that at all times from the Utilisation Date:

 

  (a) the Buildings and the Business and movable assets on or in the Buildings
(including fixtures and improvements) are insured by the Owner and/or the Lessee
on a full reinstatement basis as per the latest Valuation (and including FF&E as
insured under the terms of the insurance maintained in respect of the Property
at the date of this Agreement), such insurance to include:

 

  (i) any material damages of the Buildings and FF&E as a result of fire, water,
storm, floodwater, terrorism, liability and other usual risks; and

 

  (ii) any case of business interruption for a minimum of two (2) years;

 

  (b) such other insurances entered into by or in favour of the Owner and/or the
Lessee as a prudent company in the same business as the Owner and/or the Lessee
would effect in respect of the Building and/or the Business are in force
including third party liability insurance.

 

  16.4.3.  All insurances required under this Subclause must:

 

  (a) be in an amount and form acceptable to the Lender (acting on the
instructions of the Lender); and

 

  (b) be maintained with a Permitted Insurer or with insurance companies which
are rated or whose majority shareholder is rated is rated at least AA— by
Standard & Poor’s.

 

  16.4.4.  The Borrower must provide the Lender with a copy of any insurance
policies (other than insurance policies in respect of motor vehicles) on 30 June
of each year (or, if such policies are not available on such date, promptly
after they do become available) together with evidence of payment in accordance
with the terms thereof of all premiums and other sums due thereunder.

 

  16.4.5.  The Borrower must promptly notify the Lender of:

 

  (a) the proposed terms of any future renewal of any insurance policy (other
than insurance policies in respect of motor vehicles);

 

  (b) any extension, material variation, termination, avoidance or cancellation
of any insurance policy (other than insurance policies in respect of motor
vehicles), and provide copies of any documentation received in connection with
the same within 10 Business Days of receipt by the Borrower; and

 

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  (c) any event or circumstance which has led or may lead to a breach by the
Borrower of any term of this Subclause.

 

  16.4.6.  The Borrower must ensure that the Owner and/or the Lessee will:

 

  (a) pay all premiums and other sums due under and comply with the terms of all
insurance policies to which the Owner and/or the Lessee are parties;

 

  (b) not do or permit anything to be done which may make void or voidable any
insurance policy to which the Owner and/or the Lessee are parties; and

 

  (c) comply with all reasonable risk improvement requirements of insurers
binding on the Owner and/or the Lessee;

and if the Borrower fails to comply with any term of this Subclause, the Lender
may, at the expense of the Borrower, effect any insurance and generally do such
things and take such other action as the Lender may reasonably consider
necessary to prevent or remedy any breach of this Subclause and shall notify the
Borrower of such action.

 

  16.4.7.  To the extent required by the basis of settlement under any insurance
policy or Lease Document, the Borrower must apply moneys received under any
insurance policy in respect of the Building towards replacing, restoring or
reinstating the Building.

 

  (a) moneys received under liability policies which are required by the
Borrower to satisfy established liabilities of the Borrower to third parties
must be used to satisfy these liabilities.

 

  (b) save as set out above, the proceeds of any insurance policy other than any
third party liability insurance policy must, if the Lender so requires (acting
on the instructions of the Lender) and to the extent allowed by applicable law,
be used to prepay the Loan.

 

  16.4.8.  Notwithstanding anything to the contrary in this Agreement, nothing
in this Clause 16.4 shall require the Borrower to grant, or procure the grant,
to the Lender of any Security Interest in any insurances relating to motor
vehicles that are maintained by any Obligor, nor pay, or procure the payment of,
the proceeds of any such insurances to the Lender.

 

16.5 Environmental matters

 

  16.5.1.  In this Subclause:

Environmental Approval means any Authorisation required by an Environmental Law.

 

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Environmental Claim means any claim against the Borrower or any other Obligor by
any person in connection with:

 

  (a) a breach, or alleged breach, of an Environmental Law;

 

  (b) any accident, fire, explosion or other event of any type involving an
emission or substance which is capable of causing harm to any living organism or
the environment; or

 

  (c) any other environmental contamination.

Environmental Law means any law or regulation concerning the protection of
health and safety, the environment or any emission or substance which is capable
of causing harm to any living organism or the environment.

 

  16.5.2.  The Borrower must ensure that it and each other Obligor is, and has
been, in compliance with all applicable Environmental Law and Environmental
Approvals granted to such person or applicable to it, where failure to do so has
or is reasonably likely to have a Material Adverse Effect or result in any
liability for the Lender.

 

  16.5.3.  The Borrower must promptly upon becoming aware notify the Lender of:

 

  (a) any Environmental Claim;

 

  (b) any circumstances reasonably likely to result in an Environmental Claim;
or

 

  (c) any suspension, revocation or notification of any Environmental Approval,

which has or, if substantiated, is reasonably likely to either have a Material
Adverse Effect or result in any liability for the Lender.

 

  16.5.4.  The Borrower must indemnify the Lender against any loss or liability
which:

 

  (a) the Lender incurs as a result of any actual or alleged breach by any other
Obligor of any Environmental Law by any person; and

 

  (b) would not have arisen if the Lender had not entered into a Finance
Document,

unless it is caused by the Lender’s gross negligence or wilful misconduct.

 

16.6 Use of Property

The Borrower shall procure that neither the nature of the use or the operation
and purpose of the Property (save in connection with any Permitted Amendment or
Permitted Letting) without the prior written consent of the Lender (such consent
not to be unreasonably withheld or delayed).

 

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16.7 Activities by GPHS

The Borrower shall, or shall cause the Lessee and the Hotel Manager to, ensure
that GPHS does not perform any of the activities specified in schedule B to the
Hotel Services Agreement and/or schedule A to the Agreement on Use of Assets and
Performance of Contracts without, where such activity is expressly precluded
under the terms of this Agreement, the prior written approval of the Lender,
which approval shall be given or withheld in accordance with relevant provision
of this Agreement.

 

16.8 FF&E

The Borrower shall ensure that the FF&E are maintained in acceptable condition
commensurate with the current standard of the FF&E at the date hereof.

 

16.9 Loan to Value Ratio

 

  16.9.1.  The Borrower must ensure that at all times the aggregate of the Loans
outstanding do not exceed 70% of the Open Market Value of the Property (the
“Loan to Value Ratio”).

 

  16.9.2.  If any Valuation shows that the Loan to Value Ratio is greater than
70%, then the Lender shall have the right to require that the Borrower either
prepays a sufficient amount of the Loan, or creates additional securities in
favour of the Lender, to ensure that the Loan to Value Ratio reduces below the
70% threshold.

 

16.10  Interest Cover

 

  16.10.1.  Subject to Clause 16.10.2 below, if on any Test Date the ICR is less
than 140%, then the Lender shall have the right to require that the Borrower
either prepays a sufficient amount of the Loan, or creates additional securities
in favour of the Lender, to ensure that the ICR returns to a ratio of equal to
or greater than 140%.

 

  16.10.2.  The Lender may not exercise its rights under Clause 16.10.1 for so
long as the Borrower is entitled to the benefit of any grace period under Clause
17.11.2 (Financial Covenants).

 

  16.10.3.  If the Interest Cover Ratio is on any Test Date less than 150%, the
Borrower shall procure that from such date (the “Deposit Date”), any surplus
income remaining after the payment and repayment of all amounts of interest and
principal due hereunder is deposited in the Deposit Account.

 

  16.10.4.  If on the Business Day falling immediately after the second Quarter
Date following the Deposit Date the ICR is less than 140%, then the Lender may
apply any amounts standing to the credit of the Deposit Account in prepayment of
the Loan.

 

  16.10.5.  Amounts deposited in the Deposit Account pursuant to Clause 16.10.2
shall be released from the Deposit Account if on the two subsequent Test Dates
falling after the Deposit Date an ICR of equal to or greater than 150% is
maintained.

 

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  16.10.6.  The ICR referred to in this Clause shall be tested on each Test Date
on a rolling historical twelve month basis.

 

17. DEFAULT

 

17.1 Events of Default

Each of the events set out in this Clause is an Event of Default.

 

17.2 Non-payment

An Obligor does not pay on the due date any amount payable by it under the
Finance Documents in the manner required under the Finance Documents, unless the
non-payment:

 

  17.2.1.  is caused by technical or administrative error; and

 

  17.2.2.  is remedied within five (5) Business Days of the due date.

 

17.3 Breach of other obligations

Any Obligor does not comply with any term of the Finance Documents (other than
any term referred to in Clause 17.2 (Non-payment) above), unless the
non-compliance is:

 

  17.3.1.  capable of remedy; and

 

  17.3.2.  either:

 

  (a) in the case of a breach of Clauses 15.2 (Authorisations) (but not if such
breach is in respect of a Finance Document), 14.1.4, 15.14 (Accounts), 16.2
(Lease Agreements and Lease Documents), 16.3.1, 16.3.2, 16.4.5, 16.4.7, 16.5
(Environmental Matters), 16.7 (Activities by GPHS) and 16.8 (FF&E), the Borrower
has demonstrated to the Lender’s reasonable satisfaction that it is taking steps
to remedy such breach, provided that such breach is in any event remedied within
60 days; or

 

  (b) in the case of a breach of any other Clause or any provision of a Security
Document (other than those provisions of the Security Documents corresponding to
those Clauses referred to in (a) above), such breach is remedied within thirty
(30) days,

provided that it is hereby agreed that any breach of Clauses 15.5 (Negative
Pledge), 15.6 (Disposals), 15.7 (Financial Indebtedness), 15.8 (Lending and
guarantees), 15.10 (Mergers), 15.11 (Acquisitions) and 15.13 (Shares and
dividends) is not capable of remedy.

 

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17.4 Misrepresentation

A representation made or repeated by the Obligors in any Finance Document or in
any document delivered by or on behalf of the Obligors under any Finance
Document is incorrect in any material respect when made or deemed to be repeated
unless the matter giving rise to such misrepresentation:

 

  17.4.1.  is capable of remedy; and

 

  17.4.2.  such matter is remedied within thirty (30) days of the earlier of the
Lender giving notice and the Obligors, as appropriate, becoming aware of the
misrepresentation.

 

17.5 Cross Acceleration

Any Financial Indebtedness of any member of the Borrower Group becomes due and
payable before its stated maturity or is not paid when due nor within any
originally applicable grace period.

 

17.6 Insolvency

Any of the following occurs in respect of the Obligors:

 

  17.6.1.  it is, or is deemed for the purposes of any law to be, unable to pay
its debts as they fall due or insolvent;

 

  17.6.2.  it admits its inability to pay its debts as they fall due;

 

  17.6.3.  it suspends making payments on any of its debt or announces an
intention to do so (save in respect of debts where it has a fide dispute with a
creditor and a reasonable prospect of success, and is not involved in disputes
with the general body of its creditors);

 

  17.6.4.  by reason of actual or anticipated financial difficulties, it begins
negotiations with creditors for the rescheduling of any of its indebtedness;

 

  17.6.5.  a moratorium is declared by creditors generally in respect of any of
its indebtedness; or

 

  17.6.6.  any other analogous step or procedure is taken in any jurisdiction.

If a moratorium occurs in respect of the Obligors, the ending of the moratorium
will not remedy any Event of Default caused by the moratorium, and
notwithstanding any other term of the Finance Documents that Event of Default
will continue to be outstanding unless and until it is expressly waived by the
Lender.

 

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17.7 Insolvency proceedings

 

  17.7.1.  Except as provided below, any of the following occurs in respect of
the Obligors:

 

  (a) any step is taken with a view to a moratorium or a composition, assignment
or similar arrangement with any of its creditors;

 

  (b) a meeting of its shareholders, directors or other officers is convened for
the purpose of considering any resolution for, to petition for or to file
documents with a court or any registrar for, its winding-up, administration or
dissolution or any such resolution is passed;

 

  (c) any person presents a petition, or files documents with a court or any
registrar, for its winding-up, administration or dissolution;

 

  (d) an order for its winding-up, administration or dissolution is made;

 

  (e) any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or similar officer is
appointed in respect of it or any of its assets;

 

  (f) its shareholders, directors or other officers request the appointment of,
or give notice of their intention to appoint, a liquidator, trustee in
bankruptcy, judicial custodian, compulsory manager, receiver, administrative
receiver, administrator or similar officer; or

 

  (g) any other analogous step or procedure is taken in any jurisdiction.

 

  17.7.2.  Clause 17.7.1 above does not apply to a vexatious or frivolous
petition for winding-up presented by a creditor which is being contested in good
faith and with due diligence and is discharged or struck out within 14 days.

 

17.8 Creditors’ process

Any attachment, sequestration, distress, execution or analogous event affects
any material asset(s) of the Borrower and is not discharged within 14 days.

 

17.9 Cessation of business

Any Obligor ceases, or threatens to cease, to carry on business save as a result
of the Permitted Reorganisation.

 

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17.10  Ownership

Save for pursuant to a Permitted Reorganisation, the Obligors cease to be
legally and beneficially wholly owned Subsidiaries either directly or indirectly
of the Parent without the prior consent of the Lender.

 

17.11  Financial Covenants

Either:

 

  17.11.1.  the LTV exceeds 70%, provided that such breach shall not constitute
an Event of Default where it is cured by the making of a prepayment or provision
of additional securities to the satisfaction of the Lender (in its absolute
discretion) envisaged by Clause 16.9 (Loan to Value Ratio) within 30 days from
such breach; or

 

  17.11.2.  the ICR falls below 140%, provided that such breach shall not
constitute an Event of Default where it is remedied within six months of its
occurrence and that during such remedy period no other Event of Default which
relates to payment of money occurs.

 

17.12  Major damage

Any material part of the Property is destroyed or damaged and in the opinion of
the Lender, taking into account the amount and timing of receipt of the proceeds
of insurance effected in accordance with the terms of this Agreement, the
destruction or damage has or will have a Material Adverse Effect.

 

17.13  Compulsory Purchase

Any material part of the Property is compulsorily purchased or the applicable
local authority makes an order for the compulsory purchase of all or any part of
the Property and the Lender, taking into account the amount and timing of any
compensation payable, the compulsory purchase has likely to have a Material
Adverse Effect.

 

17.14  Material adverse change

Any event or series of events occurs which, in the reasonable determination of
the Lender has a Material Adverse Effect.

 

17.15  Repudiation and rescission of agreements

An Obligor repudiates or purports to repudiate or rescinds or purports to
rescind a Finance Document or any of the Security or evidences an intention to
rescind or repudiate a Finance Document or any Security.

 

17.16  Judgments and awards

Any final judgments or awards of any competent court or arbitral body are not
complied with by any Obligor within the time specified for an amount in excess
of €2,000,000.

 

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17.17  Acceleration

If an Event of Default is outstanding, the Lender may by notice to the Obligors:

 

  17.17.1.  cancel all or any part of the Commitment; and/or

 

  17.17.2.  declare that all or part of any amounts outstanding under the
Finance Documents are:

 

  (a) immediately due and payable; and/or

 

  (b) payable on demand.

Any notice given under this Subclause will take effect in accordance with its
terms.

 

18. EVIDENCE AND CALCULATIONS

 

18.1 Accounts

Entries in accounts maintained by the Lender in connection with this Agreement
are prima facie evidence of the matters to which they relate for the purpose of
any litigation or arbitration proceedings.

 

18.2 Certificates and determinations

Any certification or determination by the Lender of a rate or amount under the
Finance Documents will be, in the absence of manifest error, conclusive evidence
of the matters to which it relates.

 

18.3 Calculations

Any interest or fee accruing under this Agreement accrues from day to day and is
calculated on the basis of the actual number of days elapsed and a year of 360
days (where interest is calculated on a Floating Rate Basis) or on a 30/360 or
act/360 basis (where interest is calculated on a Fixed Rate Basis).

 

19. FEES AND INDEMNITIES

 

19.1 Fees

The Borrower must pay to the Lender the fees in the amount and in the manner
agreed in each Fee Letter between the Lender and the Borrower.

 

19.2 Other Indemnities

 

  19.2.1.  The Borrower must indemnify the Lender against any direct loss or
liability which the Lender incurs as a consequence of:

 

  (a) the direct occurrence of any Event of Default;

 

  (b) any failure by an Obligor to pay any amount due under a Finance Document
on its due date;

 

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  (c) (other than by reason of default or negligence by the Lender) the Loan not
being made after a Request has been delivered for the Loan;

 

  (d) the Loan (or part of the Loan) not being prepaid in accordance with this
Agreement; or

 

  (e) any amount being received by the Lender in a currency other than the
currency in which the amount is expressed to be payable under the relevant
Finance Document.

 

  19.2.2.  The Borrower must indemnify the Lender against any loss or liability
incurred by it as a result of:

 

  (a) investigating any event which the Lender believes to be an Event of
Default and which is an Event of Default; or

 

  (b) acting or relying on any notice which the Lender reasonably believes to be
genuine, correct and appropriately authorised.

 

19.3 Break Costs

 

  19.3.1.  The Borrower must pay to the Lender its Break Costs if a Loan or
overdue amount is repaid or prepaid otherwise than on an Interest Payment Date
applicable to it.

 

  19.3.2. Break Costs are:

 

  (a) prior to the Term-out Date and thereafter, if the Borrower has selected
the Floating Rate Basis, the amount (if any) determined by the Lender (using
methodology generally applied to its customers) by which (i) the interest
(excluding Margin) which the Lender would have received for the period from the
date of receipt of any part of its share in the Loan to the last day of the then
current Interest Period for the Loan exceeds (ii) the amount which the Lender
would be able to obtain by placing any amount equal to the amount received by it
on deposit with a leading bank in the appropriate interbank market for a period
starting on the Business Day following receipt and ending on the last day of the
then current Interest Period; and

 

  (b) if the Borrower has selected the Fixed Rate Basis, the amount (if any)
determined by the Lender which would indemnify the Lender against any loss or
liability that it incurs as a consequence of any part of the Loan being prepaid,
and including any costs incurred as a result of the Lender terminating all or
any part of its fixed rate, swap or other hedging arrangement (except to the
extent that such costs were caused directly by the gross negligence or wilful
misconduct of the Lender) provided that all amounts claimed as due under this
clause (b) shall, if requested, be accompanied by a calculation of such costs
certified by the Lender.

 

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20. EXPENSES

 

20.1 Initial costs

The Borrower must promptly on demand pay to the Lender the amount of all costs
and expenses (including legal fees, subject always to any pre-agreed cap)
reasonably incurred by it in connection with the negotiation, preparation,
printing, execution of the Finance Documents and registration of any Security
Document.

 

20.2 Subsequent costs

The Borrower must within five (5) Business Days of demand pay to the Lender the
amount of all costs and expenses (including legal fees) reasonably incurred by
it in connection with:

 

  20.2.1.  the negotiation, preparation, printing and execution of any Finance
Document (other than a Transfer Certificate), and registration of any Security
Document, executed after the date of this Agreement; and

 

  20.2.2.  any amendment, waiver or consent requested by or on behalf of the
Borrower.

 

20.3 Enforcement costs

The Borrower must within five (5) Business Days of demand pay to the Lender the
amount of all costs and expenses (including legal and servicer’s fees) properly
incurred by it in connection with the enforcement of, or the preservation of any
rights under, any Finance Document.

 

21. AMENDMENTS & WAIVERS

 

21.1 Change of Currency

 

21.2  If a change of any currency of a country occurs (including where there is
more than one currency or currency unit recognised at the same time as the
lawful currency of a country), the Agreement will be amended to the extent the
Lender (acting reasonably and after consultation with the Borrower) determines
is necessary to reflect the change.

 

21.3 Waivers and remedies cumulative

The rights of the Lender under the Finance Documents:

 

  21.3.1.  may be exercised as often as necessary;

 

  21.3.2.  are cumulative and not exclusive of its rights under the general law;
and

 

  21.3.3.  may be waived only in writing and specifically.

Delay in exercising or non-exercise of any right is not a waiver of that right
by any party hereto.

 

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21.4 Amendments to Facilitate Syndication

 

  21.4.1.  Subject to Clause 21.4.2, the Borrower agrees that if the Lender
notifies it that the Lender wants to syndicate its participation in the
Commitment it shall negotiate with the Lender to make such amendments as the
Lender may reasonably request are made to this Agreement in order to introduce
Loan Market Association standard agency provisions and other provisions normally
found in a syndicated loan agreement.

 

  21.4.2.  The Borrower shall not be obliged to agree any amendment pursuant to
Clause 21.4.1 if:

 

  (a) the Borrower is not fully indemnified by the Lender for all of its costs
(including any legal fees reasonably incurred) in respect of the negotiation or
execution of any amendment agreement;

 

  (b) the proposed amendment is not strictly necessary to enable this Agreement
to be adapted to follow the agency provisions of the Loan Market Association’s
then current form of single currency revolving credit syndicated loan agreement
or to give effect to any Security Document; or

 

  (c) the proposed amendment would have the effect of increasing the Borrower’s
obligations under this Agreement.

 

22. CHANGES TO THE PARTIES

 

22.1 Assignments and transfers by Obligors

No Obligor may assign or transfer any of its rights and obligations under the
Finance Documents without the prior consent of the Lender.

 

22.2 Assignments and transfers by the Lender

 

  22.2.1.  The Lender may only assign, or transfer (including by novation) the
whole of its rights and obligations under this Agreement, and not only a part
thereof. Such assignment or transfer shall be made in accordance with this
Clause 22.2.

 

  22.2.2.  If the Lender (the Existing Lender) wishes to assign or transfer all
of its rights and obligations under this Agreement to any person (the New
Lender), such assignment or transfer may be (subject always to 22.2.7 below)
effected by way of:

 

  (a) in the case of a novation:

 

  (i) the delivery to the Borrower of a duly completed Transfer Certificate in
accordance with the provisions of this Clause; or

 

  (ii)

the New Lender confirming to the Existing Lender and the Borrower in form and
substance satisfactory to the Existing

 

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Lender and the Borrower that it is bound by the terms of this Agreement as the
Lender. On the transfer becoming effective in this manner the Existing Lender
will be released from its obligations under this Agreement to the extent that
they are transferred to the New Lender.

 

  22.2.3.  For a novation, on the date specified in the Transfer Certificate:

 

  (a) the New Lender will assume the rights and obligations of the Existing
Lender expressed to the subject of the novation in the Transfer Certificate in
substitution for the Existing Lender; and

 

  (b) the Existing Lender will be released from those obligations and cease to
have those rights.

 

  22.2.4.  The Borrower irrevocably authorises the Lender to execute any duly
completed Transfer Certificate on its behalf.

 

  22.2.5.  The Existing Lender shall promptly notify the Borrower of the
execution on its behalf of any Transfer Certificate.

 

  22.2.6.  Any reference in this Agreement to the Lender includes a New Lender.

 

  22.2.7.  The Lender represents and warrants to the Borrower that it is a PMP.

 

  22.2.8.  If on the date on which a New Lender becomes the Lender, it is a
requirement of Dutch law that such New Lender is a PMP, the New Lender
represents and warrants to the Borrower on the date on which it becomes a party
to this Agreement as the Lender that it is a PMP.

 

  22.2.9.  Each such Lender and New Lender acknowledges that the Borrower has
relied upon such representation and warranty.

 

  22.2.10.  Notwithstanding anything to the contrary in this Agreement:

 

  (i) no assignment of rights or transfer of rights and obligations may be made
by the Lender without the Borrower’s prior written consent (not to be
unreasonably withheld or delayed); and

 

  (ii) no Obligor shall have any greater obligations under any Finance Document
as a result of any assignment or transfer made under this Clause 22 than it
would have had if such an assignment or transfer had not taken place based on
applicable laws in effect as at the date of the assignment or transfer.

 

23. DISCLOSURE OF INFORMATION

The Lender may not disclose any information which it has acquired under or in
connection with any Finance Documents (including, without limitation, all
information provided by or on behalf of the Borrower in respect of the Property
or the financial condition of any Obligor) apart from to:

 

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  23.1.1.  any of its Affiliates, delegates or sub-delegates or any person to,
or through whom it sub-participates or assigns or transfers (or may potentially
sub-participate or assign or transfer) any of its rights and/or obligations
under the Finance Documents;

 

  23.1.2.  any other investors or potential investors (including any investors,
sub-participant or potential New Lenders) in any of its rights and/or
obligations under the Finance Documents provided that such person has executed a
Confidentiality Agreement prior to such disclosure;

 

  23.1.3.  its professional advisers and the professional advisers of any other
person referred to in clauses 23.1.1 and 23.1.2 above;

 

  23.1.4.  a stock exchange listing authority or similar body; and

 

  23.1.5.  a governmental, banking, taxation or other regulatory authority,

without the Borrower’s prior written consent, such consent not to be
unreasonably withheld or delayed.

 

24. SET-OFF

Each Party may set off any matured obligation owed to it by any other Party
under the Agreement against any obligation (whether or not matured) owed by such
person, regardless of the place of payment, booking branch or currency of either
obligation. If the obligations are in different currencies, such Party may
convert either obligation at the Lender’s market rate of exchange for the
purpose of the set-off.

 

25. SEVERABILITY

If a term of this Agreement is or becomes illegal, invalid or unenforceable in
any jurisdiction, that will not affect:

 

  25.1.1.  the legality, validity or enforceability in that jurisdiction of any
other term of the Agreement; or

 

  25.1.2.  the legality, validity or enforceability in other jurisdictions of
that or any other term of the Agreement.

 

26. COUNTERPARTS

This Agreement may be executed in any number of counterparts. This has the same
effect as if the signatures on the counterparts were on a single copy of the
Agreement.

 

27. NOTICES

 

27.1 In writing

 

  27.1.1.  Any communication in connection with this Agreement must be in
writing and, unless otherwise stated, may be given in person, by post or fax.

 

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  27.1.2.  For the purpose of the Agreement, an electronic communication will be
treated as being in writing.

 

  27.1.3.  Unless it is agreed to the contrary, any consent or agreement
required under this Agreement must be given in writing.

 

27.2 Contact details

 

  27.2.1.  The contact details of each Party for all communications in
connection with the Agreement are those listed at Clause 27.2.4 below, or, in
the case of the Lender that becomes a Party to this Agreement after the date
hereof, those notified by that Party for this purpose to the Lender and the
Borrower on or before the date it becomes a Party.

 

  27.2.2.  Any Party may change its contact details by giving five Business
Days’ notice to the Lender or (in the case of the Lender) to the other Parties.

 

  27.2.3.  Where the Lender nominates a particular department or officer to
receive a communication, a communication will not be effective if it fails to
specify that department or officer.

 

  27.2.4.  Notices shall be sent as follows:

 

(a)    

   if to the Lender:    Name:    Aareal Bank AG    Attention:    European
Property Financing, Czech Desk    Address:    Paulinenstraße 15, 65189
Wiesbaden, Federal Republic of Germany    Fax no:    0049-611-348 3558

(b)    

   if to the Borrower :    Name:    SHR Prague Praha B.V.,    Attention:    The
Directors    Address:    Strawinskylaan 3105, 1077 ZX Amsterdam, The Netherlands
   Fax no:    00 31 20 406 4555    and with a copy to:    Name:   

SHR Prague Praha B.V.

c/o Strategic Hotel Capital, LLC

   Attention:    General Counsel    Address:   

77 West Wacker Drive, Suite 4600

Chicago, IL 60601 U.S.A.

   Fax no:    001 –312 658 5799

 

28. GOVERNING LAW

This Agreement is governed by English law.

 

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29. ARBITRATION

 

29.1 Any dispute, claim or controversy arising out of or in connection with the
Finance Documents, including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by arbitration under the
LCIA Rules (for the purposes of this Subclause, the Rules).

 

29.2 The Rules are incorporated by reference into this Subclause and capitalised
terms used in this Subclause which are not otherwise defined in this Agreement,
have the meaning given to them in the Rules.

 

29.3 The number of arbitrators shall be three. The Borrower shall nominate one
arbitrator for appointment by the LCIA Court. The Lender shall nominate one
arbitrator for appointment by the LCIA Court. The LCIA Court shall appoint the
chairman.

 

29.4 Each other Obligor:

 

  29.4.1.  expressly agrees and consents to this procedure for nominating and
appointing the Arbitral Tribunal; and

 

  29.4.2.  irrevocably and unconditionally waives any right to choose its own
arbitrator.

 

29.5 The seat, or legal place of arbitration, shall be London. The language used
in the arbitral proceedings shall be English.

THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.

 

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SCHEDULE 1

CONDITIONS PRECEDENT

PART ONE

 

1. OBLIGORS

 

(a) Constitutional documents of each Obligor, being:

 

  (i) in the case of those Obligors incorporated in the Czech Republic:

 

  (A) an extract from the Commercial Register concerning such Obligor, provided
such extract is dated after the date falling one (1) month prior to the date of
this Agreement; and

 

  (B) the most recent full wording of the memorandum of association or the
articles of association, as applicable, of such Obligor other than SHC Prague;

 

  (ii) in the case of the Parent:

 

  (A) A certificate of incorporation issued by the Secretary of State of
Delaware concerning the Parent, provided that such certificate is dated after
the date falling one (1) month prior to the date of execution of the Borrower
Share Pledge; and

 

  (B) The bylaws of the Parent or any other constitutional document of the
Parent, as applicable;

 

  (iii) in the case of the Borrower:

 

  (A) an extract from the Commercial Register concerning the Borrower, provided
such extract is dated after the date falling one (1) month prior to the date of
this Agreement; and

 

  (B) the most recent full wording of the articles of association of the
Borrower.

 

(b) A copy of the register of shareholders of each the Borrower, Owner, Lessee,
TRS.

 

(c) A copy of the binding and valid resolution(s) of the general meeting (or the
sole shareholder) or other relevant corporate body of each Obligor (other than
SHC Prague and the Parent) approving the terms and conditions of the
transactions contemplated by each of the Finance Documents to which such Obligor
is a party and the entering into by such Obligor that of each of the Finance
Documents to which such Obligor is a party and resolving that such Obligor
executes, delivers and performs each of the Finance Documents to which the
Obligor is a party.

 

(d) A certificate of an authorised signatory of each Obligor other than SHC
Prague:

 

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  (i) confirming that utilising the Commitment in full and securing the Loan by
way of the Security created over the Borrower’s assets would not breach any
borrowing, guaranteeing or similar limit binding on it; and

 

  (ii) certifying that each copy document provided under part one of this
Schedule is in all material respects correct, complete and in full force and
effect as at a date no earlier than the date of this Agreement.

 

(e) The following documents from any of the Obligors (other than SHC Prague) as
evidence for the purpose of any applicable money laundering regulations:

 

  (i) copies (for the avoidance of doubt not certified copies) of the passports
of persons executing:

 

  (A) the Finance Documents on behalf of the Obligors;

 

  (B) the Subordination Agreement on behalf of the Subordinated Creditors (as
defined therein); and

 

  (C) each power of attorney issued by the Obligors and, if they issue such a
power of attorney, the Subordinated Creditors (as defined in the Subordination
Agreement) in connection with their entry into the Finance Documents to which
they are a party; and

 

  (ii) a copy, certified as a true copy by an attorney or notary, of the
signature specimen of each person referred to at (i) above other than the
signature specimen of the persons signing the Subordination Agreement on behalf
of SHR Prague (Gibraltar) Limited.

 

(f) The Group Structure Chart.

 

2. VALUATION AND SURVEY

 

(a) A copy of the Initial Valuation appropriately addressed to the Lender.

 

(b) An appropriately addressed environmental report (including an environmental
contamination and phase I assessment) and an appropriately addressed structural
survey on the Property addressed to the Lender.

 

3. INSURANCE

 

(a) An insurance report prepared by Marsh and addressed to the Lender
summarising the insurances maintained by the Borrower Group and confirming that
the details of the insurance policies remain the same as under the Existing
Facility.

 

(b) Copies of insurance policies, which this Agreement requires to be in place
and that are in place in accordance with the terms of this Agreement.

 

4. PROPERTY

Extract from the Real Estate Register, provided such extract is not dated before
the date falling one month prior to the date of this Agreement, (i) evidencing
the Owner’s

 

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ownership title to the Property and (ii) showing that with the exception of any
Permitted Security and the Easements (if registered) there are no rights in rem
of any third party over the Property.

 

5. FINANCE DOCUMENTS

 

(a) Each Finance Document other than those referred to in Part 2 of this
Schedule, if notarisation is required, and the registrations of any Securities
thereunder in the relevant registers other than the registrations referred to in
Part Two of this Schedule.

 

(b) A copy, certified by an authorised signatory of the Obligors as being true,
complete and up-to-date of agreements (as amended) on Existing Subordinated
Loans.

 

(c) Extract from the register of pledges maintained by the Czech Notarial
Chamber evidencing that no pledge over any assets of the Owner, TRS and SHC
Prague is registered therein.

 

(d) A copy of the application for the registration of the Mortgage in the Real
Estate Register has been filed by the Owner with the relevant Cadastral Office
where the receipt of the application is confirmed by a stamp of the relevant
Cadastral Office.

 

(e) A copy of the application for the registration of the Trademark Pledge by
the Lessee with the Industrial Property Office of the Czech Republic (“Úrad
prumyslového vlastnictví České republiky” in Czech) where the receipt of the
application is confirmed by a stamp of the Industrial Property Office.

 

(f) Extract from the register of pledges maintained by the Czech Notarial
Chamber evidencing the due registration of the FF&E Pledge in the register of
pledges maintained by the Czech Notarial Chamber and showing no other pledge
except for the pledge in favour of Aareal Bank AG securing receivables under the
Existing Facility Agreement.

 

(g) Copies of all agreements (including insurance policies) that are subject to
pledge or security assignment in favour of the Lender pursuant to each Security
Document.

 

(h) Copies of notifications under the Insurance Security Assignments to be
delivered to the relevant insurance companies under the Insurance Security
Assignments.

 

6. HOTEL MANAGEMENT

A copy of the Initial HMA and each other Material Contract.

 

7. OTHER DOCUMENTS AND EVIDENCE

 

(a) A certificate of registrations of relevant Obligors with the applicable tax
office for tax purposes.

 

(b) All legally effective occupancy permits permitting use of the Property
issued after 26 June 2003.

 

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(c) Evidence that all the fees, costs and expenses (payable on to the Lender)
then due from any of the Obligors under this Agreement or any Finance Document
will be paid by the first Utilisation Date.

 

(d) A legal opinion of CMS Cameron McKenna LLP, legal advisors as to matters of
English law to the Lender, addressed to the Lender.

 

(e) A legal opinion of CMS Cameron McKenna, v.o.s., legal advisors as to matters
of Czech law to the Lender, addressed to the Lender.

 

(f) The latest available audited accounts and management accounts of each of the
Borrower, Owner and Lessee.

 

(g) Certificate by each Obligor incorporated under Czech law confirming that
there are no outstanding tax payments due from each such Obligor, towards any
financial office of the Czech Republic issued not earlier than thirty (30) days
prior to the date of the first Request.

 

(h) Confirmation from the Owner, in form and substance satisfactory to the
Lender, that there are no current or pending restitution claims in respect of
any part of the Property.

 

(i) Evidence of service of the Prepayment Notice.

 

(j) Certificate from each Obligor incorporated under Czech law confirming that
there are no overdue payments from such Obligor to any the social security and
health insurance authorities, issued not earlier than thirty (30) days prior to
the first Utilisation Date.

 

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PART TWO

Conditions Subsequent

 

(a) Registration of the Mortgage as the first ranking mortgage in the Real
Estate Cadastre, to occur within six (6) months of the first Utilisation Date,
or such longer period as the Owner requests, provided that it demonstrates, if
it requests such longer period, that it is using reasonable efforts to procure
registration.

 

(b) Deletion of the existing share pledges and registration of the Owner Share
Pledge and the Lessee Share Pledge in the Commercial Register within twenty
(20) Business Days of the receipt by the Borrower of the original of the
security release confirmation by the Lender (on which the signatures of the
Lender are notarized and authenticated) under the Security Release Agreement,
made in one filing or such longer period as the Borrower requests, provided that
it demonstrates, if it requests such longer period, that it is using reasonable
efforts to procure registration.

 

(c) Registration of the SHC Prague Share Pledge in the Czech Securities Centre
within the deadline and under the terms of Clause 2.3 of the agreement on pledge
of shares in SHC Prague establishing the SHC Prague Share Pledge.

 

(d) Perfection of the TRS Share Pledge on the first Utilisation Date on
condition that on such date the Borrower receives a copy of the security release
confirmation by the Lender (on which the signatures of the Lender are notarized
and authenticated) under the Security Release Agreement.

 

(e) Registration of the Trademark Pledge with the Intellectual Property Office
in the Czech Republic within one (1) month of the first Utilisation Date, or
such longer period as the Lessee requests, provided that it demonstrates, if it
requests such longer period, that it is using reasonable efforts to procure
registration.

 

(f) Delivery of notifications (including information on the release of pledges
established in relation to the Existing Facility Agreement) of the Lease Pledge,
the Property Lease Pledge, the Receivables Pledges and the Accounts Pledges
under the relevant Security Documents to the respective subdebtors (in Czech:
poddluzníci) within the deadlines stipulated in such Security Documents

 

(g) Delivery of a certificate from the relevant Czech financial office in
respect of each Obligor incorporated under Czech law confirming that there are
no outstanding tax payments due from each such Obligor incorporated under Czech
law, towards any financial office of the Czech Republic issued not earlier than
thirty (30) days prior to the date of the first Utilization Date.

 

(h) Conclusion of the Security Document establishing, and the perfection of, the
Borrower Share Pledge on the first Utilisation Date.

 

(i) Issue on the first Utilisation Date of:

 

  (A) a legal opinion of DLA Piper, legal advisors as to matters of Dutch law to
the Lender, addressed to the Lender; and

 

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  (B) a legal opinion of Paul Hastings Janofsky & Walker (Europe) LLP, legal
advisors as to matters of Delaware law to the Borrower, addressed to the Lender.

 

(j) Provision to the Lender on the first Utilisation Date of a copy, certified
as a true copy by an attorney or notary, of the signature specimens of the
persons signing the Subordination Agreement on behalf of SHR Prague (Gibraltar)
Limited.

 

(k) Provision to the Lender on the first Utilisation Date of an extract from the
Real Estate Register showing the relevant registration proceedings commenced
(“plomba” in Czech).

 

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SCHEDULE 2

CALCULATION OF MANDATORY COSTS

 

1. The Mandatory Costs Rate is an addition to the interest rate to compensate
the Lender for the cost of compliance with (a) the requirements of the Bank of
England and/or the Financial Services Authority (or, in either case, any other
authority which replaces all or any of its functions) or (b) the requirements of
the European Central Bank.

 

2. On the first day of each Interest Period (or as soon as possible thereafter)
the Lender shall calculate, as a percentage rate, a rate (the “Additional Cost
Rate”) for the Lender, in accordance with the paragraphs set out below. The
Mandatory Costs Rate will be expressed as a percentage rate per annum.

 

3. The Additional Cost Rate for the Lender lending from a Facility Office in a
Participating Member State will be the percentage notified to be its reasonable
determination of the cost of complying with the minimum reserve requirements of
the European Central Bank in respect of loans made from that Facility Office.

 

4. The Additional Cost Rate for the Lender lending from a Facility Office in the
United Kingdom will be calculated by the Lender as follows:

 

  4.1 in relation to a sterling Loan or Advance:

 

AB+C(B — D)+ Ex 0.01   per cent. per annum 100—(A+C)  

 

  4.2 in relation to a Loan or Advance in any currency other than sterling:

 

Ex 0.01   per cent. per annum 300  

Where:

 

  A is the percentage of Eligible Liabilities (assuming these to be in excess of
any stated minimum) which the Lender is from time to time required to maintain
as an interest free cash ratio deposit with the Bank of England to comply with
cash ratio requirements.

 

  B is the percentage rate of interest (excluding the Margin and the Mandatory
Costs Rate and, if the Loan or Advance is an Unpaid Sum, the additional rate of
interest specified in Clause 6.3 (Interest on overdue accounts) payable for the
relevant Interest Period on the Loan or Advance.

 

  C is the percentage (if any) of Eligible Liabilities which the Lender is
required from time to time to maintain as interest bearing Special Deposits with
the Bank of England.

 

  D is the percentage rate per annum payable by the Bank of England to the
Lender on interest bearing Special Deposits.

 

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  E is designed to compensate the Lender for amounts payable under the Fees
Rules and is expressed in pounds per £1,000,000.

 

5. For the purposes of this Schedule:

“Eligible Liabilities” and “Special Deposits” have the meanings given to them
from time to time under or pursuant to the Bank of England Act 1998 or (as may
be appropriate) by the Bank of England;

“Fees Rules” means the rules on periodic fees contained in the FSA Supervision
Manual or such other law or regulation as may be in force from time to time in
respect of the payment of fees for the acceptance of deposits; and

“Fee Tariffs” means the fee tariffs specified in the Fees Rules under the
activity group A.1 Deposit Acceptors (ignoring any minimum fee or zero rated fee
required pursuant to the Fees Rules but taking into account any applicable
discount rate; and

“Tariff Base” has the meaning given to it, and will be calculated in accordance
with, the Fees Rules.

 

6. In application of the above formulae, A, B, C and D will be included in the
formulae as percentages (i.e. 5 per cent. will be included in the formula as 5
and not as 0.05). A negative result obtained by subtracting D from B shall be
taken as zero. The resulting figures shall be rounded to four decimal places.

 

7. The percentages of the Lender for the purpose of A and C above shall be
determined by the Lender on the assumption that the Lender’s obligations in
relation to cash ratio deposits and Special Deposits are the same as those of a
typical bank from its jurisdiction of incorporation with a Facility Office in
the same jurisdiction as its Facility Office.

 

8. The Lender shall have no liability to any person if such determination
results in an Additional Cost Rate which over or under compensates the Lender.

 

9. Any determination by the Lender pursuant to this Schedule in relation to a
formula, the Mandatory Costs Rate, an Additional Cost Rate or any amount payable
to the Lender shall, in the absence of manifest error, be conclusive and binding
on all Parties.

 

10. The Lender may from time to time, after consultation with the Principal
Borrower, determine and notify to all Parties any amendments which are required
to be made to this Schedule in order to comply with any change in law,
regulation or any requirements from time to time imposed by the Bank of England,
the Financial Services Authority or the European Central Bank (or, in any case,
any other authority which replaces all or any of its functions) and any such
determination shall, in the absence of manifest error, be conclusive and binding
on all Parties.

 

11. The Parties hereby agree that the amount of Mandatory Costs as at the date
of this Agreement is nil.

 

87

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SCHEDULE 3

FORM OF REQUEST

 

To:

   AAREAL BANK AG as Lender

From:

   [            ]

Date:

   [            ]

[BORROWER] – €[AMOUNT] Facility Agreement

dated [            ], 2006 (the Agreement)

 

(a) We refer to the Agreement. This is a Request.

 

(b) We wish to borrow [a Loan/Loans] on the following terms:

 

  (i) Utilisation Date: [being a Business Day falling within the Availability
Period].

 

  (ii) Amount: [            ]. Interest Period (1) month.

 

  (iii) Amount: [            ]. Interest Period (3) months.

 

(c) Our payment instructions are:

[

 

(d) We confirm that each condition precedent and condition subsequent (as
appropriate) under the Agreement which must be satisfied on the date of this
Request is so satisfied to the extent not waived by the Lender.

 

(e) [We confirm that you may deduct from the Loan (although the amount of the
Loan will remain the amount requested above):

 

  (i) [[amount to refinance the existing facility - being principal, interest
and break costs, amount to be confirmed]

 

  (ii) [any applicable stamp duties;];

 

  (iii) the arrangement fee being £[ ];]

 

  (iv) the following legal fees:

 

  (1) [•].

 

(f) This Request is irrevocable.

By:

[BORROWER]

 

88

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SCHEDULE 4

FORM OF TRANSFER CERTIFICATE

This transfer certificate relates to a Facility Agreement dated [*] and made
between, among others, (1) Aareal Bank AG and (2) SHR Prague Praha B.V. in
respect of a Euro term loan facility (the Facility Agreement, which term shall
include any amendments or supplements to it). This is a Transfer Certificate.

Terms defined and references construed in the Facility Agreement shall have the
same meanings and construction in this Transfer Certificate.

 

(a) *[insert full name of Existing Lender] (the Existing Lender) transfers by
novation to *[insert full name of New Lender] (the New Lender) all of the
Existing Lender’s rights and obligations under the Facility Agreement in
accordance with Clause 22 of the Facility Agreement by signing this Transfer
Certificate.

 

(b) This executed Transfer Certificate will take effect in accordance with the
provisions of Clause 22 of the Facility Agreement on *[insert date of transfer].

 

(c) The New Lender:

 

  (i) confirms that it has received a copy of the Facility Agreement together
with such other documents and information as it has requested in connection with
this transaction;

 

  (ii) confirms that it has not relied and will not rely on the Existing Lender
to check or enquire on its behalf into the legality, validity, effectiveness,
adequacy, accuracy or completeness of any such documents or information;

 

  (iii) agrees that it has not relied and will not rely on the Existing Lender
to assess or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of the Borrower or any
other party to the Finance Documents; and

 

  (iv) [confirms that its lending office is in [the Czech Republic/Germany].

 

(d) The Existing Lender does not:

 

  (i) make any representation or warranty or assume any responsibility with
respect to the legality, validity, effectiveness, adequacy or enforceability of
the Finance Documents; or

 

  (ii) assume any responsibility for the financial condition of the Borrower or
any other party to the Finance Documents or any other document or for the
performance and observance by the Borrower or any other party to the Finance
Documents or any other document of its or their obligations and any and all
conditions and warranties, whether express or implied by law or otherwise, are
excluded.

 

(e) The New Lender confirms that its lending office and address for notices for
the purposes of the Facility Agreement are as set out in the schedule to this
Transfer Certificate.

 

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(f) The Existing Lender gives notice to the New Lender (and the New Lender
acknowledges and agrees with the Existing Lender) that nothing in any Finance
Document requires the Existing Lender to:

 

  (i) accept a re-transfer from the New Lender of any of the rights and
obligations assigned or transferred under Clause 22 (Changes to Parties) of the
Facility Agreement; or

 

  (ii) support any losses incurred by the New Lender by reason of
non-performance by the Borrower of its obligations under any Finance Document or
otherwise.

 

(g) This Transfer Certificate is governed by English law.

 

90

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THE SCHEDULE

Rights and obligations to be transferred by way of novation

All of the Existing Lender’s rights and obligations under the Finance Documents.

Administrative details of New Lender

 

*[insert full name of New Lender]

  

lending office

   Address for notices    *[address]    Attention:    Answerback:    Fax:

 

[EXISTING LENDER]

   [NEW LENDER]

By:

   By:

[•]

By:

 

91

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SCHEDULE 5

FORM OF TERM OUT NOTICE

 

To: Aareal Bank AG

 

From: [BORROWER]

 

Date: [BORROWER]

[BORROWER] – €[AMOUNT] Facility Agreement

dated [            ], 200[•] (the Agreement)

 

(a) We refer to the Agreement. Terms defined herein have the meaning given to
them in the Agreement. This is a Term-out Notice.

 

(b) We confirm that as at the date of this Notice we are in compliance of our
obligations under Clause 4.4 (Term-out option and amortisation) of the
Agreement.

 

(c) We confirm that no Event of Default is outstanding as at the date of service
of this notice.

 

(d)

We confirm that from the date that this notice becomes effective interest under
the Loan Agreement shall be calculated on a [Fixed Rate Basis/Floating Rate
Basis]. [We confirm, until we give you notice to the contrary, that each
Interest Period shall be of [one (1)] [three (3)] months duration]].1

 

(e) A copy of the agreed amortisation schedule is attached.

 

(f)

[We wish to borrow a Loan in an amount equal to the amount of the Commitment
that remains undrawn at the date hereof].2

[BORROWER]

By:

 

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

1

For use only where Fixed Rate Basis is selected.

 

2

Only needed if facility is not fully drawn at date of Term-out Notice.

 

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SCHEDULE 6

AMORTISATION SCHEDULE

To be agreed between the Lender and the Borrower prior to the exercise of the
Term-out Option using the following principles:

 

(a) that no amortisation payment shall be required apart from in the fourth and
fifth year of the term of the Facility;

 

(b) during the Amortisation Payment Period only, a repayment of 1.5% (one point
five per cent) of the outstanding balance of the Loan shall be made on the last
Interest Payment Date falling before the second and fourth Quarter Dates of each
calendar year during such period so that not less than 3% (three percent) of the
amount due over the Amortisation Period is paid in the first year of such
period, provided that Lender and Borrower shall, prior to the exercise of the
Term Out Option, agree to vary the percentage rate and time of such repayments
so that, over the course of the Amortisation Payment Period, an amount equal to
6% of the amount at the Loan as at the Term-out Date is repaid;

 

(c) that the outstanding amount of the Loan will be repaid in full on the Final
Maturity Date; and

 

(d) such Schedule shall, once attached to a validly served Term-out Notice, be
deemed to replace this Schedule for all purposes under this Agreement.

 

93

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SCHEDULE 7

HOTEL MANAGER LETTER

[Intercontinental Overseas Holding Corporation letter head]

Aareal Bank AG

Paulinstraße 15

65189 Wiesbaden

Federal Republic of Germany

Attention: Regina DiBenedetto

                    2007

Dear Sirs,

Re: Hotel Management Agreement dated May 25, 2004 (as amended from time to time)
concerning the Hotel InterContinental Praha (hereinafter referred to as the
“HMA”)

We understand that Aareal Bank AG (the “Bank”) proposes to provide SHC Prague
InterContinental BV (hereinafter referred to as the “SHC Prague
InterContinental” or the “Owner”) with a credit facility in the maximum amount
of EUR 104,000,000 (hereinafter referred as to the “Loan”).

SHC Prague InterContinental holds a 100% stake in the company SHC Prague TRS,
a.s, which is the parent company of SHC Management Prague s.r.o. (hereinafter
referred to as “SHC Management”). SHC Management and we (together with SHC
Prague InterContinental) have entered into the HMA in respect of the Hotel.
Terms defined in the HMA have the same meaning in this letter.

We hereby confirm for the benefit of the Bank that as the Loan (i) does not
exceed sixty-five percent (65%) of the value of the Hotel (valued by SHC
Management Prague s.r.o. in its reasonable judgement) and (ii) is substantially
hedged against foreign currency exchange risks and fluctuations, the Manager has
no right under the terms of the HMA to approve of the Loan (or any mortgage that
may be granted in connection with the Loan) or cause a Termination of the HMA.

We acknowledge that:

 

(a) the Bank will, following execution of a Mortgage, be a Mortgagee for the
purposes of the HMA and that the Bank shall be entitled to exercise all of the
rights of a Mortgagee under the HMA (including without limitation those arising
in Sections 8.01 and 8.02);

 

(b) for the purposes of the HMA and this letter, the phrase “substantially
hedged” shall mean a 12 month forward hedge in the amount of the annual debt
service of the Loan against a 33% decrease in the value of the Czech Crown
against the Euro; and

 

94

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(c) SHC Prague InterContinental shall pledge its rights (receivables) arising
from the HMA as well as from the License Agreement concerning the Hotel
InterContinental Praha dated 23 May 2004, as partial security for the Loan under
a receivables pledge agreement to be made in favour of the Bank.

Any and all disputes arising of this Letter and of the legal relations based on
this letter shall be decided according to the HMA—Section 11.04.

Very truly yours,

Intercontinental Overseas Holding Corporation

 

Name:                                                                      

 

Position:                                                                      

We have received your letter and hereby we accept your confirmations

Wiesbaden                     2007

Aareal Bank AG

 

Name:                                                                      

 

Position:                                                                      

 

Name:                                                                      

 

Position:                                                                      

 

95

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SCHEDULE 8

UNSUBORDINATED FINANCIAL INDEBTEDNESS

 

No.   

Current

Lender/Noteholder

  

Borrower/Payee

  

Original

Principal

Amount

  

Date of Loan

Agreement or

Loan/Promissory

Note

1.    SHC Management Prague, s.r.o    SHC Property Prague, s.r.o.    CZK
22,806,000    30 March 2001 2.    SHC Prague TRS, A.S.    SHC Management Prague,
s.r.o.    USD 8,000,000    11 August 2006 3.    SHR Prague Praha B.V.    SHC
Management Prague s.r.o.    Amount equal to the amount necessary to satisfy in
full all amounts owed by the Lessee to the Borrower under the original
EUR 60,000,000 subordinated loan facility    26 June 2003 4.    SHR Prague Praha
B.V.    SHC Property Prague, s.r.o.    CZK 34,088,400    8 March 2001

 

96

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SCHEDULE 9

FORM OF COMPLIANCE CERTIFICATE

 

To: Aareal Bank AG

  European Property Financing, Czech Desk

  Paulinenstraße 15, 65189 Wiesbaden, Federal Republic of Germany

  Fax no: 0049-611-348 3065G

  (the “Lender”)

From: SHR Prague Praha B.V. (the “Borrower”)

Dated:

Dear Sirs

Revolving loan of up to €104,000,000

dated [            ] made between the Borrower and the Lender (the “Agreement”)

 

1. We refer to the Agreement. This is a Compliance Certificate. Terms defined in
the Agreement have the same meaning in this Compliance Certificate unless given
a different meaning in this Compliance Certificate.

 

2. We confirm, without personal liability save in respect of fraud or wilful
misconduct, that:

 

  (i) the Loan to Value Ratio is [•]%;

 

 

(ii)

the ICR [at the date hereof ]3[in relation to the Test Date ending on [•]]4is
[•]%; and

 

  (iii) no Event of Default is continuing.

 

Signed:

                  Director      Director      Of      Of      [Company]     
[Company]   

 

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

3

In the case of a Compliance Certificate delivered under Clauses 12.2.1
(d) (ii) or 12.3.4 (b)(ii) only.

 

4

In the case of a Compliance Certificate delivered other then under Clauses
12.2.1 (d) (ii) or 12.3.4 (b)(ii).

 

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SCHEDULE 10

INTEREST COSTS CALCULATION

 

1. ICR calculation during Availability Period:

 

(a) Cash Sweep Testing:

ICR calculation:

 

                                               A                               
((higher of v%, w%, x%) +z%)(C)   

 

(b) Default Testing:

ICR calculation:

 

                                               A                               
(v% +z%)(C)   

 

2. ICR calculation following Term-Out:

 

(a) Cash Sweep Testing:

ICR calculation if floating rate is selected:

 

                                               A                               
(y% +z%)(C)   

ICR calculation if fixed rate is selected:

 

                                               A                               
(u%+z%)(C)   

 

(b) Default Testing:

ICR calculation:

 

                                             A                                B
  

Where:

 

TTM Net Operating Income as at Test Date:    A   Actual TTM interest paid as at
Test Date:    B   Outstanding loan amount as at Test Date:    C   The fixed
interest rate.    u % Per annum interest rate fixed and valid for applicable
Interest Rate Period as at Test Date.    v % Per annum 1-month EURIBOR as at
Test Date:    w % Per annum 5-year EURIBOR Swap as at Test Date:    x % Strike
Rate of Cap:    y % Margin:    z %

 

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SCHEDULE 11

EXISTING SUBORDINATED LOANS

 

No.   

Current

Lender/Noteholder

  

Borrower/Payee

  

Original

Principal

Amount

  

Date of Loan

Agreement or

Loan/Promissory

Note

1.    SHC Prague (Gibraltar) Limited.    SHR Prague Praha B.V.   
USD 110,000,075    14 August 2000       Payee    (Estimate)    2.    SHC Europe,
LLC    SHR Prague Praha B.V.    USD21,000,000    16 August 1999 3.    Parent   
SHR Prague Praha B.V.    USD 39,000,000    16 August 1999

 

99

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SCHEDULE 12

GROUP STRUCTURE CHART

LOGO [g30240img01.jpg]

 

100

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SIGNATORIES

Borrower

 

SHR PRAGUE PRAHA B.V. /s/ Ryan Montgomery Bowie

By: Ryan Montgomery Bowie

pursuant to a Power of Attorney

dated 15 February 2007

Lender

 

AAREAL BANK AG /s/ Ivo Keltner

By: Ivo Keltner

pursuant to a Power of Attorney

dated 16 February 2007

Existing Lender

 

AAREAL BANK AG /s/ Ivo Keltner

By: Ivo Keltner

pursuant to a Power of Attorney

dated 16 February 2007

 

101