Exhibit 10.19


 


24 NOVEMBER 2005


 


 


£107,456,000 FACILITY AGREEMENT


 


IAN SCHRAGER LONDON
LIMITED


(to be renamed MORGANS
HOTEL GROUP LONDON LIMITED)


as Borrower


 


and


 


CITIGROUP GLOBAL MARKETS
LIMITED


as Arranger


 


and


 


THE FINANCIAL INSTITUTIONS
LISTED IN SCHEDULE 1


as Lenders


 


and


 


CITIBANK INTERNATIONAL PLC


as Agent


 


and


 


CITIBANK INTERNATIONAL PLC


as Security Trustee


 


Herbert Smith LLP


 


 





 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  DEFINITIONS AND
  INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  THE FACILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  PURPOSE

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  CONDITIONS OF DRAWDOWN

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  SECURITY

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  DRAWDOWN

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  REPAYMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  PREPAYMENT AND CANCELLATION

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  INTEREST

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  INTEREST PERIODS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  CHANGES
  TO THE CALCULATION OF INTEREST

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  FEES

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  TAX
  GROSS UP AND INDEMNITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  INCREASED
  COSTS

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  BREAK
  COSTS AND OTHER INDEMNITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  MITIGATION
  BY THE LENDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  COSTS AND
  EXPENSES

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  REPRESENTATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  INFORMATION UNDERTAKINGS

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  BANK ACCOUNTS

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  PROPERTY
  UNDERTAKINGS

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  FINANCIAL
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  GENERAL
  UNDERTAKINGS

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  CHANGES
  TO THE LENDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  ASSIGNMENTS AND TRANSFER BY THE BORROWER

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  ROLE OF THE AGENT, THE ARRANGER AND THE SECURITY
  TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  28.

  	
  THE
  SECURITY TRUSTEE

  	
   

  



 





















 


	
  29.

  	
  CONDUCT OF BUSINESS BY THE FINANCE PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  30.

  	
  SHARING AMONG THE FINANCE PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  31.

  	
  PAYMENT MECHANICS

  	
   

  
	
   

  	
   

  	
   

  
	
  32.

  	
  SET-OFF

  	
   

  
	
   

  	
   

  	
   

  
	
  33.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  34.

  	
  CALCULATIONS AND CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  35.

  	
  REINSTATEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  36.

  	
  PARTIAL
  INVALIDITY

  	
   

  
	
   

  	
   

  	
   

  
	
  37.

  	
  REMEDIES
  AND WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  38.

  	
  AMENDMENTS
  AND WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  39.

  	
  OFFICERS, EMPLOYEES OR AGENTS OF THE FINANCE PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  40.

  	
  COUNTERPARTS

  	
   

  
	
   

  	
   

  	
   

  
	
  41.

  	
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1 THE ORIGINAL PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 2
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 3
  DRAWDOWN REQUEST

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 4
  MANDATORY COST FORMULA

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 5
  FORM OF TRANSFER CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6
  FORM OF COMPLIANCE CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 7
  FORM OF QUARTERLY REPORT

  	
   

  



 





















 


THIS AGREEMENT is dated 24 November 2005 and made between:


 


(1)           IAN
SCHRAGER LONDON LIMITED (to be renamed MORGANS
HOTEL GROUP LONDON LIMITED), a company incorporated in England and Wales with
registered number 03462675 (the “Borrower”);


 


(2)           CITIGROUP GLOBAL MARKETS LIMITED (the “Arranger”);


 


(3)           THE FINANCIAL INSTITUTIONS listed in Part I of Schedule 1 (the “Original A
Lenders”);


 


(4)           THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1
(the “Original B Lenders”);


 


(5)           CITIBANK INTERNATIONAL
plc as agent of the other Finance Parties (the “Agent”); and


 


(6)           CITIBANK
INTERNATIONAL plc as security trustee for the other Finance Parties (the “Security Trustee”).


 


IT IS AGREED as follows:


 


SECTION 1


 


INTERPRETATION


 


1.            DEFINITIONS AND INTERPRETATION


 


1.1           Definitions


 


In this Agreement:


 


“A  Commitment” means:


 


(A)          in relation to an Original A Lender, the amount set opposite its
name under the heading “A Commitment” in Part I of Schedule 1 (The Original Parties) and the amount of any other A
Commitment transferred to it under this Agreement; and


 


(B)           in relation to any other A Lender, the amount of any A Commitment
transferred to it under this Agreement,


 


to the extent not cancelled, reduced or transferred by
it under this Agreement.


 


“A  Facility” means the A term loan facility made available
under this Agreement as described in Clause
2.1.1 (The Facility).


 


“A Facility Amount”
means £82,432,000.


 


“A  Finance Costs” means, as calculated by the Agent (acting
reasonably) for any period, the aggregate of all accrued interest, fees and
other finance costs (for the avoidance of doubt, excluding all payments of
principal) which were paid or were payable by the Borrower to the A Lenders
under the Finance Documents during that period.


 


“A Lender” means:


 


1





















 


(A)            any Original A Lender; and


 


(B)             any person, bank, financial institution, trust, fund or other entity
which has become a Party as an A Lender in accordance with Clause 25 (Changes to the Lenders),


 


which in each case has not ceased to be a Party in
accordance with the terms of this Agreement.


 


“A Loan” means the loan made or to be made under the A Facility
or the principal amount outstanding for the time being of that loan.


 


“A Margin” means the amount specified as the A Margin in the A
Margin Letter.


 


“A Margin Letter” means the letter dated on or about the
date of this Agreement between the Borrower and the Agent setting out the A
Margin.


 


“Account Bank”
means National Westminster Bank plc or such other bank as may be previously
approved in writing by the Agent.


 


“Account Bank Rating
Requirements” means, at any time, a rating of not less than:


 


(A)          F1 by Fitch Ratings Ltd;


 


(B)           P-1+ by Moody’s Investor Service Limited; and


 


(C)           A-1+ by Standard & Poor’s Rating Services, a division
of The McGraw Companies, Limited.


 


“Account Charge”
means the assignment of Revenues and charge over the monies held from time to
time in the Charged Accounts, granted by the Borrower to the Security Trustee.


 


“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.


 


“Agent’s Solicitors”
means Herbert Smith LLP, Exchange House, Primrose Street, London, EC2A 2HS.


 


“Agreement for Lease”
means any agreement by the Borrower to grant an Occupational Lease of all or
any part of its interest in a Property.


 


“Allocated Loan
Amount” means:


 


(A)          with respect to the Property known as The Sanderson, £42,982,400;
and


 


(B)          with respect to the Property known as the St. Martin’s Lane Hotel, £64,473,600.


 


“Approved Accountant”
means KPMG, PricewaterhouseCoopers, Deloitte & Touche, Ernst &
Young, BDO Stoy Hayward or any other firm of chartered accountants of
internationally recognised standing that has been selected by the Borrower and
previously approved by the Agent (acting reasonably) and appointed as auditors
of the Borrower.


 


“Authorisation”
means an authorisation, consent, approval, resolution, licence, exemption,
filing, notarisation or registration.


 


2





















 


“Available Commitment”
means the Available A Commitment or the Available B Commitment.


 


“Available Facility”
means the Available A Facility or the Available B Facility.


 


“Available A Commitment”
means a Lender’s A Commitment minus:


 


(A)           its participation in the outstanding A Loan; and


 


(B)            in relation to the proposed Drawdown, its participation in the A
Loan due to be made on or before the proposed Drawdown Date.


 


“Available A Facility”
means the aggregate for the time being of each Lender’s Available A Commitment.


 


“Available B Commitment”
means a Lender’s B Commitment minus:


 


(A)           its participation in the outstanding B Loan; and


 


(B)            in relation to the proposed Drawdown, its participation in the B
Loan due to be made on or before the proposed Drawdown Date.


 


“Available B Facility”
means the aggregate for the time being of each Lender’s B Available Commitment.


 


“Availability Period”
means the period from and including the date of this Agreement to and including
31 December 2005.


 


“B  Commitment” means:


 


(A)           in relation to an Original B Lender, the amount set opposite its
name under the heading “B Commitment” in Part II of Schedule 1 (The Original Parties) and the amount of any other B Commitment
transferred to it under this Agreement; and


 


(B)            in relation to any other B Lender, the amount of any B Commitment
transferred to it under this Agreement,


 


to the extent not cancelled, reduced or transferred by
it under this Agreement.


 


“B  Facility” means the B term loan facility made available
under this Agreement as described in Clause
2.1.2 (The Facility).


 


“B Facility Amount”
means £25,024,000.


 


“B Finance Costs” means, as calculated by the Agent (acting
reasonably) for any period, the aggregate of all accrued interest, fees and
other finance costs (for the avoidance of doubt excluding all payments of
principal) which were paid or were payable by the Borrower to the B Lenders
under the Finance Documents during that period.


 


“B Lender” means:


 


(A)            any Original B Lender; and


 


(B)             any person, bank, financial institution, trust, fund or other entity
which has become a Party as a B Lender in accordance with Clause 25 (Changes to the Lenders),


 


3





















 


which in each case has not ceased to be a Party in
accordance with the terms of this Agreement.


 


“B Loan” means the loan made or to be made under the B Facility
or the principal amount outstanding for the time being of that loan.


 


“B Margin” means the amount specified as the B Margin in the B
Margin Letter.


 


“B Margin Letter”
means the letter dated on or about the date of this Agreement between the
Borrower and the Agent setting out the B Margin.


 


“Borrower’s
Solicitors” means Macfarlanes, 10 Norwich Street, London EC4A 1BD.


 


“Break Costs”
means the amount (if any) by which:


 


(A)          the interest (excluding the Margin) which a Lender should have
received for the period from the date of receipt of all or any part of its
participation in a Loan or Unpaid Sum to the last day of the current Interest
Period in respect of a Loan or Unpaid Sum, had the principal amount or Unpaid
Sum received been paid on the last day of that Interest Period;


 


exceeds:


 


(B)           the amount which that Lender would be able to obtain by placing an
amount equal to the principal amount or Unpaid Sum received by it on deposit
with a leading bank in the Relevant Interbank Market for a period starting on
the Business Day following receipt or recovery and ending on the last day of
the current Interest Period.


 


“Business Day”
means a day (other than a Saturday or Sunday) on which banks are open for
general business in London.


 


“Certificate of Title”
means a certificate of title dated on the Drawdown Date in relation to each
Property, each in a form and substance satisfactory to the Agent, addressed to
the Finance Parties and their successors in title, and prepared by the Borrower’s
Solicitors.


 


“Charged Accounts” means the General Account, FF&E Account, the Deposit
Account and the Revenue Account.


 


“Charge on Shares” means the charge over the entire share
capital of the Borrower.


 


“Commitment”
means the A Commitment and the B Commitment.


 


“Compliance Certificate”
means a certificate substantially in the form set out in Schedule 6 (Form of Compliance Certificate).


 


“Contribution Notice”
means a contribution notice issued by the Pensions Regulator under section 38
or section 47 of the Pensions Act 2004.


 


“Debenture” means the debenture granted by the
Borrower in favour of the Security Trustee.


 


“Default” means
an Event of Default or any event or circumstance specified in Clause 24 (Events of Default) which would (with the expiry of a grace
period, the giving of notice, the making of any determination under the Finance
Documents or any combination of any


 


4





















 


of the foregoing, in each case as specified in Clause 24
(Events of Default)) be an Event
of Default.


 


“Deposit Account”
means the current account so designated and referred to in Clause 20 (Bank Accounts).


 


“Drawdown” means
a drawdown of a Facility.


 


“Drawdown Date”
means the date of a Drawdown, being the date on which a Loan is made or
proposed to be made.


 


“Drawdown Request”
means a notice substantially in the form set out in Schedule 3 (Drawdown Request).


 


“Environmental
Authorisations” means all permits, licences, consents or other
authorisations or approvals required at any time under any Environmental Laws
for the operation of the business of the Borrower or the occupation of a
Property by any person.


 


“Environmental Laws”
means all applicable statutes, statutory instruments, common law, treaties,
regulations, directives, codes of conduct, circulars, guidance notes, orders,
notices, demands and other measures having the force of law or which are
customarily complied with by persons similar to the Borrower imposed by any
authority to which the Borrower or any of a Property is or has been or is
reasonably likely to be subject which relate to the pollution or protection of
the environment or the protection of the health of any living organism or the
protection of public health or welfare.


 


“Environmental
Matters” means:


 


(A)            the generation, deposit, disposal, keeping, treatment,
transportation, transmission, handling, importation, exportation, processing,
collection, sorting, presence or manufacture of any pollution, waste (as
defined in the Environmental Protection Act 1990) or substance which is toxic,
hazardous, flammable, explosive or capable of damaging the environment;


 


(B)             public or private nuisance, noise, defective premises or health and
safety at work;


 


(C)             the carrying out of any development (as defined in Section 55(1) Town
and Country Planning Act 1990); and


 


(D)             any act, default or phenomenon which is capable of causing harm to
human health or welfare or harm to any other living organism or of damaging the
environment.


 


“Event of Default”
means any event or circumstance specified as such in Clause 24 (Events of Default).


 


“Facility” means
the A Facility or the B Facility.


 


“Facility Office”
means the office or offices notified by a Lender to the Agent in writing on or
before the date it becomes a Lender (or, following that date, by not less than
five Business Days’ written notice) as the office or offices through which it
will perform its obligations under this Agreement.


 


“Facility Period”
means the period starting on the date of this Agreement and ending on the date
on which all the obligations and liabilities of the Borrower under the Finance


 


5





















 


Documents are discharged in full and the Finance
Parties have no continuing obligations in relation to any Facility.


 


“FF&E”
means the repair and/or replacement of worn out or damaged furnishings,
fixtures and equipment and other similar ordinary replacement items and related
capital improvements to the Properties as required pursuant to the relevant
Management Agreement.


 


“FF&E Account”
means the current account so designated and referred to in Clause 20 (Bank Accounts).


 


“Final Repayment
Date” means the fifth anniversary of the Drawdown Date.


 


“Finance Costs”
means, as calculated by the Agent for any period, the aggregate of all accrued
interest, fees and other finance costs (excluding for the avoidance of doubt
any payment of principal) which were paid or were payable by the Borrower to
the Finance Parties under the Finance Documents during that period.


 


“Finance Documents”
means this Agreement, the Security Documents, the A Margin Letter, the B Margin
Letter and any other documents designated as such by the Agent and the
Borrower, and “Finance Document” means any of them.


 


“Finance Parties”
means the Agent, the Arranger, the Security Trustee and the Lenders, and “Finance
Party” means any of them.


 


“Financial Indebtedness”
means any indebtedness for or in respect of (without any double counting):


 


(A)            moneys borrowed;


 


(B)             any amount raised by acceptance under any acceptance credit
facility;


 


(C)             any amount raised pursuant to any note purchase facility or the
issue of bonds, notes, debentures, loan stock or any similar instrument;


 


(D)             any amount raised in accordance with any issue of shares which are
expressed to be preferred or redeemable on or prior to the Final Repayment
Date;


 


(E)             the amount of any liability in respect of any lease or hire purchase
contract which would, in accordance with GAAP, be treated as a finance or
capital lease;


 


(F)             the amount of any liability outstanding for goods or services bought
or received if the same are capable of remaining outstanding for more than six
months in accordance with the terms of the contract under which such goods or
services were bought or received;


 


(G)             receivables sold or discounted (other than any receivables to the
extent they are sold on a non-recourse basis);


 


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


 


(I)              any derivative transaction entered into in connection with
protection against or benefit from fluctuation in any rate or price (and, when
calculating the value of


 


6





















 


any derivative transaction, only the net aggregate
marked to market value shall be taken into account);


 


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


 


(K)             the amount of any liability in respect of any guarantee or indemnity
for any of the items referred to in paragraphs (A) to (J) above, to the
extent that the same is not otherwise included in any such paragraphs.


 


“Financial Support
Direction” means a financial support direction issued by the
Pensions Regulator under section 43 of the Pensions Act 2004.


 


“Fixed Rate”
means the rate (expressed as a percentage rate per annum) calculated by the
Agent and notified to the Borrower on the Drawdown Date.


 


“GAAP” means, in
relation to the Borrower, generally accepted accounting principles in the
jurisdiction of its incorporation.


 


“General Account”
means the current account so designated and referred to in Clause 20 (Bank Accounts).


 


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


 


“Headlease”
means the lease of the Sanderson under which the Borrower holds title to that
Property.


 


“Hedging Arrangement”
means the interest rate swap, cap, floor, collar option or swaption transaction
or any other treasury transaction entered into against or to benefit from
fluctuations in any rate or price.


 


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


 


“Insurance Company Rating
Requirements” means, at any time, a rating of not less than:


 


(A)            A- by Fitch Ratings Ltd;


 


(B)             A3 by Moody’s Investor Service Limited; and


 


(C)             A- by Standard &
Poor’s Rating Services, a division of The McGraw Companies, Limited.


 


“Insurance Policies”
means insurance policies in respect of each Property in form and substance
satisfactory to the Agent (acting reasonably) which shall be obtained and
maintained by the Borrower pursuant to Clause 21.8 (Insurance).


 


“Interest Period”
means, in relation to a Loan, each period determined in accordance with Clause 10
(Interest Periods) and, in relation to an
Unpaid Sum, each period determined in accordance with Clause 9.3 (Default interest).


 


“Interest Payment Date” means the 16th day in each
calendar month in each year.


 


7





















 


“Legal Reservations”
means:


 


(A)             the principle that equitable remedies may be granted or refused at
the discretion of the court and the limitation of enforcement by laws relating
to insolvency, reorganisation and other laws generally affecting the rights of
creditors;


 


(B)              the time barring of claims under the Limitation Acts, the
possibility that an undertaking to assume liability for, or, indemnify a person
against, non-payment of UK stamp duty may be void and defences of set—off or
counterclaim;


 


(C)              any qualification or reservation as to matters of law which appears
in any legal opinions delivered under Schedule 2 (Conditions precedent).


 


“Lender” means
an A Lender or a B Lender.


 


“LIBOR” means,
in relation to a Loan:


 


(A)            the applicable Screen Rate; or


 


(B)             (if no Screen Rate is available for Sterling for the Interest Period
of the Loan) the rate quoted by leading banks in the London interbank market to
the Agent,


 


as of 11.00 a.m. on the Quotation Day for the
offering of deposits in Sterling and for a period comparable to the Interest
Period for the Loan.


 


“Loan” means the
loans made or to be made under any Facility or the principal amount outstanding
for the time being of those loans and shall include the A Loan and the B Loan.


 


“Majority Lenders”
means:


 


(A)            if a Loan is not outstanding, a Lender or Lenders whose Commitments
aggregate more than 662/3% of the Total Commitments (or,
if the Total Commitments have been reduced to zero, aggregated more than 662/3%
of the Total Commitments immediately prior to the reduction); or


 


(B)             at any other time, a Lender or Lenders whose participations in the
Loans aggregate more than 662/3%.


 


“Manager”
means Royalton UK Management Limited (to be renamed Morgans Hotel Group UK Management
Limited) (a company incorporated in England & Wales with registered
number 03520726) as manager of each Property under the terms of the Management
Agreements or any other person appointed as a manager of any Property in
accordance with this Agreement.


 


“Management
Agreement” means each management agreement dated 18 June 1998
between the Borrower and the Manager relating to the management of each
Property as a hotel or any other management agreement entered into by the
Borrower relating to the management of a Property in accordance with this
Agreement.


 


“Mandatory Cost”
means the percentage rate per annum calculated by the Agent in accordance with Schedule 4
(Mandatory Cost formula).


 


“Margin” means
the A Margin or the B Margin.


 


8





















 


“Market Value” has
the meaning given to that term in the then current Appraisal and Valuation
Standards issued by the Assets Valuation Standards Committee of the Royal
Institution of Chartered Surveyors (RICS).


 


“Material Adverse Effect” means a material adverse effect on:


 


(A)           the business, operations,
condition (financial or otherwise) or prospects of the Borrower in any
jurisdiction;


 


(B)            any Property and/or the
income derived from the Property (including, without limitation, the Revenues);


 


(C)            the ability of the
Borrower to perform any of its obligations under any of the Finance Documents;
or


 


(D)           the validity or
enforceability of any of the Finance Documents or the rights or remedies of the
parties thereunder.


 


“Material Litigation”
means any litigation, arbitration or administrative proceedings of or before
any court, arbitral body or agency which is reasonably likely to be adversely
determined and if adversely determined, might reasonably be expected in the
opinion of the Agent (acting reasonably) to have a Material Adverse Effect.


 


“Money Laundering
Regulations” means any regulations applicable to the Finance Parties
for the prevention of money laundering and financial crime, including all
Financial Services Authority requirements, guidance notes issued by the Joint
Money Laundering Steering Group, the Proceeds of Crime Act 2002 and any other
regulations in any relevant jurisdiction from time to time.


 


“Month” means a
period starting on one day in a calendar month and ending on the numerically
corresponding day in the next calendar month, except that:


 


(A)               if the numerically corresponding day is not a Business Day, that
period shall end on the next Business Day in that calendar month in which that
period is to end if there is one, or if there is not, on the immediately
preceding Business Day; and


 


(B)               if there is no numerically corresponding day in the calendar month
in which that period is to end, that period shall end on the last Business Day
in that calendar month.


 


“Net Operating
Income” means, in respect of any period, the operating profit of the
Borrower for such period (including gains or losses from the sale of rental
equipment), before taking account of:


 


(D)          corporation tax on the overall income of the Borrower payable in
respect of the period;


 


(E)           Finance Costs;


 


(F)           unless they have a cash impact, extraordinary or exceptional items;


 


(G)           amortisation of intangible assets and depreciation of tangible
assets; and


 


(H)          any amounts paid into the FF&E Account during the relevant
period,


 


9





















 


all as determined by reference to the most recent
financial statements and certificates delivered pursuant to Clause 19.1 (Financial Statements) and 19.2 (Compliance  Certificate).


 


“Occupational Lease”
means any occupational lease, underlease, sub-lease, licence, tenancy or right
to occupy (in each case howsoever described and whether on a fixed term or
periodic basis) to which all or any part of a Property may be subject from time
to time.


 


“Original Financial
Statements” means the audited financial statements of the Borrower
for the financial year ended 31 December 2004 audited by an Approved
Accountant in accordance with GAAP consistently applied.


 


“Owners”
means:


 


(A)          Burford Hotels Limited;


 


(B)          Royalton Europe Holdings LLC; or


 


(C)          any other person consented to in accordance with Clause 18.18.2 (Ownership).


 


“Participating Member State”
means any member state of the European Communities that adopts or has adopted
the euro as its lawful currency in accordance with legislation of the European
Community relating to Economic and Monetary Union.


 


“Party” means a
party to this Agreement.


 


“Pensions Regulator”
means the body corporate called the Pensions Regulator established under Part I
of the Pensions Act 2004.


 


“Property”
means:


 


(A)          the freehold property known as The St. Martin’s Lane Hotel, 45 St.
Martin’s Lane, London, WC2N 4HX registered at the Land Registry with title
number 379553; and


 


(B)           the leasehold property known as The Sanderson Hotel, 50 Berners
Street, London, W1T 3NG registered at the Land Registry with title number
NGL748048,


 


and any other freehold or leasehold property
designated as such by the Agent from time to time.


 


“Qualifying Lender”
has the meaning given to it in Clause 13 (Tax gross-up and
indemnities).


 


“Quarter Date”
means each of 31 March, 30 June, 30 September and 31 December in any
year.


 


“Quarter Period”
means any three month period ending on a Quarter Date.


 


“Quotation Day”
means, in relation to any period for which an interest rate is to be
determined, the first day of that period unless market practice differs in the
Relevant Interbank Market in which case the Quotation Day will be determined by
the Agent in accordance with market practice in the Relevant Interbank Market
(and if quotations would normally be given by leading banks in the Relevant
Interbank Market on more than one day, the Quotation Day will be the last of
those days).


 


10





















 


“Relevant Consents”
means any Authorisation of whatsoever nature necessary or appropriate to be
obtained for the purpose of:


 


(A)          acquiring and managing a Property; and


 


(B)           entering into and performing the Borrower’s obligations under the
Finance Documents and Management Agreements;


 


“Relevant Interbank Market”
means the London interbank market.


 


“Repayment Instalment”
means the instalments set out in Clause 7.1 (Repayment of
the Loans).


 


“Repeating Representations”
means each of the representations set out in Clause 18, save for those
contained in Clauses 18.5 (Validity and
admissibility in evidence), 18.7.1, 18.7.2 and 18.7.4 (Deduction of Tax), Clause 18.8 (No filing or stamp taxes), Clause 18.10.1
(No default), Clause 18.12 (Financial Statements) and 18.13.1 (Ranking).


 


“Revenue”
means, in respect of any period, the gross revenue of the Borrower arising from
its ownership of the Properties.


 


“Sanderson”
means the Property described at paragraph (B) of the definition of
Property.


 


“Screen Rate”
means the British Bankers’ Association Interest Settlement Rate for Sterling
for the relevant period, displayed on the appropriate page of the Telerate
screen.  If the agreed page is
replaced or service ceases to be available, the Agent may specify another page or
service displaying the appropriate rate after consultation with the Borrower
and the Lenders.


 


“Security” means
a mortgage, charge, pledge, lien or other security interest securing any
obligation of any person or any other agreement or arrangement having a similar
effect.


 


“Security Documents”
means the security documents referred to in Clause 5 (Security).


 


“Service Charge”
means that proportion of the Revenues which consists of any service charges,
insurance premiums, the cost of insurance valuations, any contributions to any
sinking fund paid by any Manager pursuant to any Management Agreement and any
VAT on any such sums.


 


“Shareholder”
means IS Europe Limited (to be renamed Morgans Hotel Group Europe Limited) (a
company incorporated in England & Wales with company number 03203996).


 


“St Martin’s Lane”
means the Property described at paragraph (A) of the definition of
Property.


 


“Subsidiary”
means (i) a subsidiary within the meaning of Section 736 of the
Companies Act 1985; and (ii) a subsidiary undertaking within the meaning
of Section 258 of the Companies Act 1985.


 


“Tax” means any
tax, levy, impost, duty or other charge or withholding of a similar nature
(including any penalty or interest payable in connection with any failure to
pay or any delay in paying any of the same).


 


11





















 


“Tax Report”
means a report prepared by an Approved Accountant in form and substance satisfactory
to the Agent (acting reasonably), confirming the tax status of inter alia the Borrower.


 


“Taxes Act”
means the Income and Corporation Taxes Act 1988.


 


“Test Date”
means 16 February, 16 May, 16 August and 16 November in each year.


 


“Total A Commitments”
means the aggregate of the A Commitments being £82,432,000 at the date of this
Agreement.


 


“Total B Commitments”
means the aggregate of the B Commitments being £25,024,000 at the date of this
Agreement.


 


“Total Commitments”
means the Total A Commitments or the Total B Commitments.


 


“Transfer Certificate”
means a certificate substantially in the form set out in Schedule 5 (Form of Transfer Certificate) or any other form agreed
between the Agent and the Borrower.


 


“Transfer Date”
means, in relation to a transfer, the later of:


 


(A)          the proposed Transfer Date specified in the Transfer Certificate;
and


 


(B)          the date on which the Agent executes the Transfer Certificate.


 


“Unpaid Sum”
means any sum due and payable but unpaid by the Borrower under the Finance
Documents.


 


“Valuation”
means a valuation of a Property on a Market Value basis, in form and substance
satisfactory to the Agent (acting reasonably), prepared by and issued by the
Valuer and addressed to the Finance Parties.


 


“Valuer” means
any firm of chartered surveyors approved by the Agent.


 


“VAT” means
value added tax as provided for in the Value Added Tax Act 1994 and any other
tax of a similar nature.


 


1.2           Construction


 


1.2.1           Unless a contrary indication appears, any reference in this
Agreement to:


 


(A)          the “Agent”, the “Arranger”,
the “Borrower”, the “Security Trustee”, any “Lender” any “Finance Party” or any “Party” shall be
construed so as to include its successors in title, permitted assigns and
permitted transferees;


 


(B)          “assets” includes present and
future properties, revenues and rights of every description;


 


(C)          a “Finance Document” or any other
agreement or instrument is a reference to that Finance Document or other
agreement or instrument as amended or novated from time to time;


 


12





















 


(D)          “indebtedness” includes any
obligation (whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or contingent;


 


(E)           a “person” includes any person, firm,
company, corporation, government, state or agency of a state or any
association, trust or partnership (whether or not having separate legal
personality) or two or more of the foregoing;


 


(F)           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 one with
which a person such as the relevant person would customarily comply with) of
any governmental, intergovernmental or supranational body, agency, department
or regulatory, self-regulatory or other authority or organisation;


 


(G)          “Sterling” or “£”
means the lawful currency for the time being of the United Kingdom;


 


(H)          “euro” or “€”
means the lawful currency for the time being of the European Union;


 


(I)            a provision of law is a reference to that provision as amended or
re-enacted from time to time;


 


(J)           a time of day is a reference to London time; and


 


(K)          any reference to “including” shall be construed as “including
without limitation”.


 


1.2.2           Section, Clause and Schedule headings are for ease of reference
only.


 


1.2.3           Unless a contrary indication appears, a term used in any other
Finance Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in this
Agreement.


 


1.2.4           A Default (other than an Event of Default) is “continuing”
if it has not been remedied or waived and an Event of Default is “continuing” if it has not been waived.


 


1.3           Third
party rights


 


Unless expressly provided to the contrary in this
Agreement, a person who is not a Party has no right under the Contracts (Rights
of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this
Agreement.  For the avoidance of doubt
the provisions of this Clause 1.3 will not prevent any person to whom any
Finance Party at any future time assigns or transfers any interest or right
created by or existing under this Agreement from enforcing or enjoying the
benefit of any term of this Agreement.


 


13





















 


SECTION 2


 


THE FACILITIES


 


2.            THE
FACILITIES


 


2.1           The
Facilities


 


Subject to the terms of this Agreement, the Lenders
make available to the Borrower:


 


2.1.1           a Sterling term loan
facility in an aggregate amount equal to the A Facility Amount; and


 


2.1.2           a Sterling term loan
facility in an aggregate amount equal to the B Facility Amount.


 


2.2           Finance
Parties’ rights and obligations


 


2.2.1           The obligations of each Finance Party under the Finance Documents
are several.  Failure by a Finance Party
to perform its obligations under the Finance Documents does not affect the
obligations of any other Party under the Finance Documents.  No Finance Party is responsible for the
obligations of any other Finance Party under the Finance Documents.


 


2.2.2           The rights of each Finance Party under or in connection with the
Finance Documents are separate and independent rights and any debt arising
under the Finance Documents to a Finance Party from the Borrower shall be a
separate and independent debt.


 


2.2.3           A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce its rights under the Finance Documents.


 


3.            PURPOSE


 


3.1           Purpose


 


The Borrower shall apply all amounts borrowed by it
under the Facilities towards:


 


3.1.1           the payment of any fees and expenses or other amounts due and
payable hereunder;


 


3.1.2           the refinancing of its existing indebtedness in connection with the
Properties (which shall include making loans to the Shareholder to enable the Shareholder
to repay its outstanding shareholder loans and make other distributions); and


 


3.1.3           the working capital requirements of the Borrower.


 


3.2           Monitoring


 


No Finance Party is bound to monitor or verify the
application of any amount borrowed pursuant to this Agreement.


 


14





















 


4.            CONDITIONS
OF DRAWDOWN


 


4.1           Initial
conditions precedent


 


The Lenders will only be obliged to comply with Clause
6.4 (Lenders’ participation) in
relation to any Request if the Agent has received all of the documents and
other evidence listed in Schedule 2 (Conditions precedent)
in form and substance satisfactory to the Agent.  The Agent shall notify the Borrower and the
Lenders promptly upon being so satisfied.


 


4.2           Further
conditions precedent


 


The Lenders will only be obliged to comply with Clause
6.4 (Lenders’ participation) if on the date
of the Drawdown Request and on the proposed Drawdown Date:


 


4.2.1           no Default is continuing or would result from the proposed Loan;


 


4.2.2           each of the representations set out in Clause 18 (Representations) to be made by the
Borrower are true in all material respects;


 


4.2.3           the proposed A Loan would not exceed 56% (fifty six per cent.) of the
Market Value of the Properties and/or the proposed B Loan (when aggregated with
the proposed A Loan) would not exceed 73% (seventy three per cent.) of the
Market Value of the Properties each as determined in accordance with the most
recent Valuation; and


 


4.2.4           the Drawdown Requests are for both an A Loan and a B Loan in amounts
pro rata to the proportion that the A Commitment bears to the B Commitment.


 


5.            SECURITY


 


5.1           Security
for the Loans


 


The Loans and all other amounts outstanding under this
Agreement shall be secured by the following security:


 


5.1.1           the Account Charge;


 


5.1.2           the Debenture;


 


5.1.3           Charge on Shares;


 


5.1.4           any supplemental charge executed by the Borrower after the date of
this Agreement; and


 


5.1.5           such other Security as the Agent may from time to time require in
connection with the Facility in accordance with a Finance Document.


 


15





















 


SECTION 3


 


UTILISATION DRAWDOWN


 


6.            DRAWDOWN


 


6.1           Delivery
of a Drawdown Request


 


The Borrower may draw down a Facility by delivery to
the Agent of a duly completed Drawdown Request not later than 11.00 a.m. 2
(two) Business Days before the proposed Drawdown Date.


 


6.2           Completion
of a Drawdown Request


 


6.2.1           Each Drawdown Request is irrevocable and will not be regarded as
having been duly made unless:


 


(1)           the proposed Drawdown Date is a Business Day within the Availability
Period; and


 


(2)           the currency and amount of the Drawdown comply with Clause 6.3 (Currency and amount).


 


6.2.2           Only two Drawdown Requests may be issued being one for an A Loan and
one for a B Loan which shall both specify the same Drawdown Date.


 


6.3           Currency
and amount


 


6.3.1           The currency specified in the Drawdown Request must be Sterling.


 


6.3.2           The amount of the relevant Loan must be an amount which is not more
than the relevant Facility Amount.


 


6.4           Lenders’
participation


 


6.4.1           If the conditions set out in this Agreement have been met, each
Lender shall make its participation in the relevant Loan available to the
Borrower by the Drawdown Date through its Facility Office.


 


6.4.2           The amount of each Lender’s participation in a Loan will be equal to
the proportion borne by its relevant Commitment to the relevant Facility
immediately prior to making the Loan.


 


6.4.3           The Agent shall notify each Lender of the amount of each Loan and
the amount of its participation in that Loan by 3.00 p.m. 2 (two) Business
Days before the proposed Drawdown Date.


 


16





















 


SECTION 4


 


REPAYMENT, PREPAYMENT AND
CANCELLATION


 


7.            REPAYMENT


 


7.1           Repayment
of the Loans


 


The Borrower shall repay an amount of the A Loan in
instalments:


 


(A)          on each Interest Payment Date falling on or prior to the second
anniversary of the Drawdown Date, in the amount of £125,000; and


 


(B)           on each Interest Payment Date falling after the second anniversary
of the Drawdown Date, in the amount of £183,333.33.


 


7.2           Subject to
Clause 7.1, the balance of the Loans (and all other amounts outstanding under
the Finance Documents) shall be repaid in full on the Final Repayment Date.


 


7.3           Reborrowing


 


The Borrower may not reborrow any part of a Facility
which is repaid.


 


8.            PREPAYMENT
AND CANCELLATION


 


8.1           Illegality


 


If it becomes unlawful in any applicable jurisdiction
relevant to a Facility and/or a Lender for such Lender to perform any of its
obligations as contemplated by this Agreement or to fund or maintain its
participation in any Loan:


 


8.1.1           that Lender shall promptly notify the Agent upon becoming aware of
that event;


 


8.1.2           upon the Agent notifying the Borrower, the relevant Commitment of
that Lender will be immediately cancelled; and


 


8.1.3           the Borrower shall repay that Lender’s participation in the relevant
Loan together with accrued interest and all other amounts accrued or
outstanding to that Lender under the Finance Documents on the last day of the
Interest Period ending immediately prior to the date specified by that Lender
in the notice delivered to the Agent (being no earlier than the last day of any
applicable grace period permitted by law).


 


8.2           Mandatory
Prepayment — Change of control


 


If the
Owners cease to directly or indirectly control all the shares in the Borrower:


 


8.2.1           the Borrower shall promptly notify the Agent upon becoming aware of
that event; and


 


8.2.2           if the Agent so requires and if the Agent has not consented in
advance to the change of control, the Agent may, by not less than 10 days
notice (the “Prepayment Notice”)
to the Borrower, cancel the Facilities and declare the outstanding Loans,
together with accrued interest and all other amounts accrued


 


17





















 


under
the Finance Documents, due and payable whereupon the Facilities will be
cancelled and all such outstanding amounts will become due and payable and if
that date is not the last day of the then current Interest Period the Borrower
shall pay into the Deposit Account all outstanding amounts under the Finance
Documents (including accrued interest and all other amounts accrued under the
Finance Documents) and in addition an amount equal to the aggregate amount that
will be payable under Clause 9.2 (Payment of
Interest) on the Loans at the end of such Interest Period and all
such amounts deposited shall be applied at the end of the Interest Period in
prepayment of the Loans and payment of all other amounts due under the Finance
Documents.  If no Default is outstanding
following application of the amounts deposited into the Deposit Account in
accordance with this Clause, any interest that has accrued on such amount that
remains in the Deposit Account shall be paid to the General Account.


 


8.3           Mandatory
Prepayment — Disposals


 


On a disposal of all or part of a Property in
accordance with Clause 23.5 (Disposals)
the Borrower must apply an amount equal to 115 per cent of the Allocated Loan
Amount for that Property from the proceeds of the sale of the Property (net of
any reasonable costs of the sale of such Property) firstly, as to 78.26%, in
prepayment of the A Loan and secondly, as to 21.74%, in prepayment of the B
Loan.  Any prepayment under this Clause 8.3
must be made on the last day of the Interest Period in which the relevant
disposal occurred and pending any such prepayment, the relevant disposal
proceeds shall be paid into the Deposit Account.  If no Default is outstanding following
application of the amounts deposited into the Deposit Account in accordance
with this Clause, any interest that has accrued on such amount that remains in
the Deposit Account shall be paid to the General Account.


 


8.4           Voluntary
prepayment of a Loan


 


The
Borrower may, if it gives the Agent not less than 10 (ten) Business Days’ (or
such shorter period as the Majority Lenders may agree) prior notice, prepay the
whole or any part of the Loans on any date (but, if in part, being an amount
that reduces the amount of the Loans by a minimum amount of £2,000,000). Any
such prepayment shall be made together with accrued interest on the amount
prepaid and an amount equal to the amount of interest that would have been
payable had the amount prepaid been paid on the next following Interest Payment
Date and the prepayment fee referred to in Clause 12.3 (Prepayment
fee). Any notice given by the Borrower under this Clause 8.4 shall
be irrevocable.  If no Default is
outstanding following application of the amounts deposited into the Deposit
Account in accordance with this Clause, any interest that has accrued on such
amount that remains in the Deposit Account shall be paid to the General
Account.


 


8.5           Right
of repayment and cancellation in relation to a single Lender


 


8.5.1           If:


 


(A)          any sum payable to any Lender by the Borrower is required to be
increased under Clause 13.2.3 (Tax gross-up);
or


 


(B)          any Lender claims indemnification from the Borrower under Clause 13.3
(Tax indemnity) or Clause 14.1 (Increased costs);


 


the Borrower may, whilst the circumstance
giving rise to the requirement or indemnification continues, give the Agent
notice of cancellation of the relevant


 


18





















 


Commitment of that Lender and its intention
to repay that Lender’s participation in the relevant Loan without premium or
penalty.


 


8.5.2           On receipt of a notice referred to in Clause 8.5.1 above, the
Commitment of that Lender shall immediately be reduced to zero.


 


8.5.3           On the last day of the Interest Period which ends after the Borrower
has given notice under Clause 8.5.1 above (or, if earlier, the date specified
by the Borrower in that notice), the Borrower shall repay that Lender’s
participation in the Loans together with accrued interest and all other amounts
accrued or outstanding to that Lender under the Finance Documents but no fee
shall be payable under Clause 12.3 (Prepayment
fee) on any such amount prepaid.


 


8.6           Restrictions


 


8.6.1           Any notice of cancellation or prepayment given by any Party under
this Clause 8 shall be irrevocable and, unless a contrary indication
appears in this Agreement, 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.


 


8.6.2           The Borrower may not reborrow any part of any Facility which is
prepaid.


 


8.6.3           The Borrower shall not repay or prepay all or any part of the Loans
except at the times and in the manner expressly provided for in this Agreement.


 


8.6.4           No amount of the Total Commitments cancelled under this Agreement
may be subsequently reinstated.


 


8.6.5           If the Agent receives a notice under this Clause 8 it shall promptly
forward a copy of that notice to either the Borrower or the affected Lender, as
appropriate.


 


8.6.6           Each prepayment under this Agreement shall be applied against the
Repayment Instalments pro rata and, once applied against all of the Repayment
Instalments, thereafter in prepayment pro rata of the principal of the Loans.


 


19





















 


SECTION 5


 


COSTS OF UTILISATION


 


9.            INTEREST


 


9.1           Calculation
of interest


 


9.1.1           The rate of interest on the A Loan for each Interest Period is the
percentage rate per annum which is the aggregate of the applicable:


 


(A)      A Margin;


 


(B)       Fixed Rate; and


 


(C)       Mandatory Cost, if any.


 


9.1.2           The rate of interest on the B Loan for each Interest Period is the
percentage rate per annum which is the aggregate of the applicable:


 


(A)      B Margin;


 


(B)       Fixed Rate; and


 


(C)       Mandatory Cost, if any.


 


9.2           Payment
of interest


 


The Borrower shall pay accrued interest on the Loans
on the last day of each Interest Period.


 


9.3           Default
interest


 


9.3.1           If the Borrower 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 9.3.2, is 2% (two per cent.) above
the higher of:


 


(A)          the rate determined in accordance with Clause 9.1 (Calculation of interest) which would have
been payable if the overdue amount had, during the period of non-payment,
constituted a Loan (applying (1) the rate determined in accordance with
Clause 9.1.1 (if the Agent determines that the failure to pay relates to the A
Loan) or Clause 9.1.2 (if the Agent determines that the failure to pay relates
to the B Loan) or (2) the higher of the rates determined in accordance
with Clause 9.1.1 and 9.1.2 (if the Agent determines that the failure to pay
relates to neither an A Loan or B Loan)); and


 


(B)          the Margin, LIBOR and Mandatory Costs, in the currency of the
overdue amount for successive Interest Periods, each of a duration selected by
the Agent (acting reasonably).  Any
interest accruing under this Clause 9.3 shall be immediately payable by the
Borrower on demand by the Agent.


 


20





















 


9.3.2           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 the Loan; and


 


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


 


9.3.3           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.


 


9.4           Notification
of rates of interest


 


The Agent shall promptly notify the Lenders and the
Borrower of the determination of a rate of interest under this Agreement.


 


10.          INTEREST
PERIODS


 


10.1         Interest
Periods


 


10.1.1         Each of the Interest Periods for each Loan will be of one months
duration.


 


10.1.2         Each Interest Period for a Loan will start on the Drawdown Date or
on (and including) an Interest Payment Date and end on (but excluding) the next
following Interest Payment Date.


 


10.1.3         If an Interest Period would otherwise extend beyond the Final
Repayment Date, it will be shortened and end on the Final Repayment Date.


 


10.2         Non-Business
Days


 


If an Interest Period would otherwise end on a day
which is not a Business Day, that Interest Period will instead end on the next
Business Day in that calendar month (if there is one) or the preceding Business
Day (if there is not).


 


11.          CHANGES TO THE CALCULATION OF INTEREST


 


11.1         Market
disruption


 


11.1.1         If a Market Disruption Event occurs in relation to an Unpaid Sum to
which Clause 9.3.1(B) applies for any Interest Period, then the rate of
interest on each Lender’s share of that Unpaid Sum for the Interest Period
shall be the rate per annum which is the sum of:


 


(A)          the Margin;


 


(B)          the rate notified to the Agent by that Lender as soon as practicable
and in any event before interest is due to be paid in respect of that Interest
Period, to be that which expresses as a percentage rate per annum the cost


 


21





















 


to that
Lender of funding its participation in that Unpaid Sum from whatever source it
may reasonably select; and


 


(C)          the Mandatory Cost, if any, applicable to that Lender’s participation
in that Loan.


 


11.1.2         In this Agreement “Market Disruption Event”
means:


 


(A)          at or about noon on the Quotation Day for the relevant Interest
Period the Screen Rate is not available and the Agent (acting reasonably) has
been unable to obtain satisfactory quotations from leading banks in the
Relevant Interbank Market so as to determine LIBOR for Sterling for the
relevant Interest Period; or


 


(B)          before close of business in London on the Quotation Day for the
relevant Interest Period, the Agent receives notifications from a Lender or
Lenders (whose participations in that Loan exceed 33.33% (thirty three point
three three per cent.) that the cost to it or them of obtaining matching
deposits in the Relevant Interbank Market would be in excess of LIBOR.


 


11.2         Alternative
basis of interest or funding


 


11.2.1         If Clause 11.1 applies and a Market Disruption Event occurs and the
Agent or the Borrower so requires, the Agent and the Borrower shall enter into
negotiations (for a period of not more than 30 (thirty) days) with a view to
agreeing a substitute basis for determining the rate of interest.


 


11.2.2         Any alternative basis agreed pursuant to Clause 11.2.1 above shall,
with the prior consent of all the Lenders, be binding on all Parties.


 


12.          FEES


 


12.1         Arrangement
fee


 


The Borrower shall pay to the Arranger (for its own
account) an arrangement fee of 0.65 per cent. (zero point six five per cent.)
of the Total Commitments (being £711,100) which shall be payable on the
Drawdown Date.


 


12.2         Agency
fee


 


The Borrower shall pay to the Agent (for its own
account) an agency fee of £10,000 per annum in advance and which shall be
payable on the Drawdown Date and each anniversary thereof.


 


12.3         Prepayment
fee


 


In the event that the Borrower elects to prepay the
whole or any part of a Loan in accordance with Clause 8.4 (Voluntary
prepayment of a Loan), the Borrower shall pay a prepayment fee
calculated as follows:


 


12.3.1         if the prepayment occurs on or before the first anniversary of the
Drawdown Date, a fee of 0.75 per cent. of the amount so prepaid;


 


22





















 


12.3.2         if the prepayment occurs after the first anniversary of the Drawdown
Date but on or before the second anniversary of the Drawdown Date, a fee of
0.50 per cent. of the amount so prepaid;


 


12.3.3         if the prepayment occurs after the second anniversary of the
Drawdown Date but on or before the third anniversary of the Drawdown Date, a
fee of 0.25 per cent. of the amount so prepaid; and


 


12.3.4         thereafter, no such fee shall be payable.


 


12.4         Abort Fee


 


If the Borrower does not drawdown a Loan before the
earlier of the date (the “payment date”)
which is the end of the Availability Period and the date on which the Borrower
notifies the Arranger that the Borrower does not intend to use a Facility for
any reason other than where it would be unlawful for a Lender to perform its
obligations under this Agreement, then the Borrower shall on the payment date
pay the Arranger (for its own account) an abort fee of £250,000.


 


23





















 


SECTION 6


 


ADDITIONAL PAYMENT
OBLIGATIONS


 


13.          TAX GROSS UP AND INDEMNITIES


 


13.1         Definitions


 


13.1.1         In this Agreement:


 


“Protected Party”
means a Finance Party which is or will be subject to any liability, or required
to make any payment, for or on account of Tax in relation to a sum received or
receivable (or any sum deemed for the purposes of Tax to be received or
receivable) under a Finance Document.


 


“Qualifying Lender”
means a Lender which is beneficially entitled to interest payable to that
Lender in respect of an advance under a Finance Document and is:


 


(A)      a Lender:


 


(1)           which is a bank (as defined
for the purpose of Section 349 of the Taxes Act) making an advance under a
Finance Document; or


 


(2)           in respect of an advance
made under a Finance Document by a person that was a bank (as defined for the
purpose of Section 349 of the Taxes Act) at the time that that advance was
made,


 


and which is within the charge to United
Kingdom corporation tax as respects any payments of interest made in respect of
that advance; or


 


(B)       a UK
Non-Bank Lender; or


 


(C)       a Treaty Lender.


 


“Tax Confirmation”
means a confirmation by a Lender that the person beneficially entitled to
interest payable to that Lender in respect of an advance under a Finance
Document is either:


 


(A)      a company resident in the United Kingdom, or a partnership each
member of which is a company resident in the United Kingdom, for United Kingdom
tax purposes; or


 


(B)       a company not so resident in the United Kingdom which carries on a
trade in the United Kingdom through a branch or agency and that interest
payable in respect of that advance falls to be brought into account in
computing the chargeable profits of that company for the purposes of Section 11(2) of
the Taxes Act.


 


“Tax Credit”
means a credit against, relief or remission for, or repayment of any Tax.


 


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


 


“Tax Payment”
means either the increase in a payment made by the Borrower to a Finance Party
under Clause 13.2 (Tax gross-up)
or a payment under Clause 13.3 (Tax indemnity).


 


24





















 


“Treaty Lender”
means a Lender which:


 


(A)          is treated as a resident of a Treaty State for the purposes of the
Treaty; and


 


(B)          does not carry on a business in the United Kingdom through a
permanent establishment with which that Lender’s participation in a Loan is
effectively connected.


 


“Treaty State”
means a jurisdiction having a double taxation agreement (a “Treaty”) with the United Kingdom which makes provision for
full exemption from tax imposed by the United Kingdom on interest.


 


“UK Non-Bank Lender”
means a Lender which is:


 


(A)          a company resident in the United Kingdom for United
Kingdom tax purposes;


 


(B)          a partnership each member of which is a company resident in
the United Kingdom for United Kingdom tax purposes; or


 


(C)          a company not
so resident in the United Kingdom which carries on a trade in the United
Kingdom through a permanent establishment and which brings into account
interest payable in respect of that advance in computing its chargeable profits
(within the meaning given by Section 11(2) of the Taxes Act).


 


13.1.2         Unless a contrary indication appears, in this Clause 13 a reference
to “determines” or “determined” means a determination made in the absolute
discretion of the person making the determination.


 


13.2         Tax
gross-up


 


13.2.1         The Borrower shall make all payments to be made by it without any
Tax Deduction, unless a Tax Deduction is required by law.


 


13.2.2         The Borrower shall promptly upon becoming aware that it must make a
Tax Deduction (or that there is any change in the rate or the basis of a Tax
Deduction)  notify the Agent accordingly.  Similarly, a Lender shall notify the Agent on
becoming so aware in respect of a payment payable to that Lender.  If the Agent receives such notification from
a Lender it shall notify the Borrower.


 


13.2.3         If a Tax Deduction is required by law to be made by the Borrower, the
amount of the payment due from the Borrower shall be increased to an amount
which (after making any Tax Deduction) leaves an amount equal to the payment
which would have been due if no Tax Deduction had been required.


 


13.2.4         The Borrower is not required to make an increased payment to a
Lender under Clause 13.2.3 above for a Tax Deduction in respect of tax imposed
by the United Kingdom from a payment of interest on a Loan, if on the date on
which the payment falls due:


 


(A)          the payment could have been made to the relevant Lender without a
Tax Deduction if it was a Qualifying Lender, but on that date that Lender is


 


25





















 


not or
has ceased to be a Qualifying Lender other than as a result of any change after
the date it became a Lender under this Agreement in (or in the interpretation,
administration, or application of) any law or Treaty, or any published practice
or concession of any relevant taxing authority;


 


(B)          the relevant Lender is a Treaty Lender and the Borrower is able to
demonstrate that the payment could have been made to that Lender without the
Tax Deduction had that Lender complied with its obligations under Clause 13.2.7
below; or


 


(C)


 


(1)           the relevant Lender is a Qualifying Lender solely under paragraph (B) of
the definition of Qualifying Lender;


 


(2)           the Board of Customs and Revenue has given (and not revoked) a
direction (a “Direction”) under section 349C
of the Taxes Act (on that provision has effect on the date on which the
relevant Lender became a Party) which relates to that payment and that Lender
has received from the Borrower a certified copy of that Direction; and


 


(3)           the payment could have been made to the Lender without any Tax
Deduction in the absence of that Direction.


 


13.2.5         If the Borrower is required to make a Tax Deduction, the Borrower
shall make that Tax Deduction and any payment required in connection with that
Tax Deduction within the time allowed and in the minimum amount required by
law.


 


13.2.6         Within 30 (thirty) days of making either a Tax Deduction or any
payment required in connection with that Tax Deduction, the Borrower shall
deliver to the Agent for the Finance Party entitled to the payment evidence
reasonably satisfactory to that Finance Party that the Tax Deduction has been
made or (as applicable) any appropriate payment paid to the relevant taxing
authority.


 


13.2.7         A Treaty Lender and the Borrower which makes a payment to which that
Treaty Lender is entitled shall co-operate in completing any procedural
formalities necessary for the Borrower to obtain authorisation to make that
payment without a Tax Deduction.


 


13.2.8         A UK Non-Bank Lender which becomes a Party on the day on which this
Agreement is entered into gives a Tax Confirmation to the Borrower by entering
into this Agreement.


 


13.2.9         A UK Non-Bank Lender shall promptly notify the Borrower and the
Agent if there is any change in the position from that set out in the Tax
Confirmation.


 


13.3         Tax
indemnity


 


13.3.1         The Borrower shall (within 3 (three) Business Days of demand by the
Agent) pay to a Protected Party an amount equal to the loss, liability or cost
which that Protected Party determines will be or has been (directly or
indirectly) suffered for or on account of Tax by that Protected Party in
respect of a Finance Document.


 


26





















 


13.3.2         Clause 13.3.1 above shall not apply:


 


(A)          with respect to any Tax assessed on a Finance Party:


 


(1)           under the law of the jurisdiction in which that Finance Party is
incorporated or, if different, the jurisdiction (or jurisdictions) in which
that Finance Party is treated as resident for tax purposes; or


 


(2)           under the law of the jurisdiction in which that Finance Party’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 (but not any sum deemed to
be received or receivable) by that Finance Party; or


 


(B)          to the extent a loss, liability or cost:


 


(1)           is compensated for by an increased payment under Clause 13.2 (Tax gross-up); or


 


(2)           would have been compensated for by an increased payment under Clause
13.2 (Tax gross-up) but was not so compensated
solely because one of the exclusions in Clause 13.2.4 (Tax gross-up)
applied.


 


13.3.3         A Protected Party making, or intending to make a claim under Clause 13.3.1
shall promptly notify the Agent of the event which will give, or has given,
rise to the claim, following which the Agent shall notify the Borrower.


 


13.3.4         A Protected Party shall, on receiving a payment from the Borrower
under this Clause 13.3, notify the Agent.


 


13.4         Tax
Credit


 


If the Borrower makes a Tax Payment and the relevant
Finance Party determines that:


 


13.4.1         a Tax Credit is attributable either to an increased payment of which
that Tax Payment forms part, or to that Tax Payment; and


 


13.4.2         that Finance Party has obtained, utilised and retained that Tax
Credit,


 


the Finance Party shall pay an amount to the Borrower
which that Finance Party determines will leave it (after that payment) in the
same after-Tax position as it would have been in had the Tax Payment not been
required to be made by the Borrower.


 


13.5         Stamp
taxes


 


The Borrower shall pay and, within 3 (three) Business
Days of demand, indemnify each Finance Party against any cost, loss or
liability that Finance Party incurs in relation to all stamp duty, registration
and other similar Taxes payable in respect of any Finance Document other than a
Transfer Certificate.


 


27





















 


13.6         Value
added tax


 


13.6.1         All consideration expressed to be payable under a Finance Document
by any Party to a Finance Party shall be deemed to be exclusive of any
VAT.  If VAT is chargeable on any supply
made by any Finance Party to any Party in connection with a Finance Document,
that Party shall pay to the Finance Party (in addition to and at the same time
as paying the consideration) an amount equal to the amount of the VAT.


 


13.6.2         Where a Finance Document requires any Party to reimburse a Finance
Party for any costs or expenses, that Party shall also at the same time pay and
indemnify the Finance Party against all VAT incurred by the Finance Party in
respect of the costs or expenses to the extent that the Finance Party
reasonably determines that it is not entitled to credit or repayment of the
VAT.


 


14.          INCREASED COSTS


 


14.1         Increased
costs


 


14.1.1         Subject to Clause 14.3 (Exceptions) the
Borrower shall, within 3 (three) Business Days of a demand by the Agent, pay
for the account of a Finance Party the amount of any Increased Costs incurred
by that Finance Party or any of its Affiliates as a result of (i) the
introduction of or any change in (or in the interpretation, administration or
application of) any law or regulation or (ii) compliance with any law or
regulation, in each case, made after the date of this Agreement.


 


14.1.2         In this Agreement “Increased Costs”
means:


 


(A)          a reduction in the rate of return from a Facility or on a Finance
Party’s (or its Affiliate’s) overall capital;


 


(B)          an additional or increased cost; or


 


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


 


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


 


14.2         Increased
cost claims


 


14.2.1         A Finance Party intending to make a claim pursuant to Clause 14.1 (Increased costs) shall notify the Agent of the event giving
rise to the claim, following which the Agent shall promptly notify the
Borrower.


 


14.2.2         Each Finance Party shall, as soon as practicable after a demand by
the Agent, provide a certificate confirming in reasonable detail the amount of
its Increased Costs.


 


14.3         Exceptions


 


14.3.1         Clause 14.1 (Increased costs)
does not apply to the extent any Increased Cost is:


 


28





















 


(A)          attributable to a Tax Deduction required by law to be made by the
Borrower;


 


(B)          compensated for by Clause 13.3 (Tax indemnity) (or would have been compensated for under Clause 13.3 (Tax indemnity) but was not so compensated solely because any
of the exclusions in Clause 13.3.2 (Tax indemnity)
applied);


 


(C)          compensated for by the payment of the Mandatory Cost; or


 


(D)          attributable to the wilful breach by the relevant Finance Party or
its Affiliates of any law or regulation.


 


14.3.2         In this Clause 14.3, a reference to a “Tax
Deduction” has the same meaning given to the term in Clause 13.1 (Definitions).


 


15.          BREAK COSTS AND OTHER INDEMNITIES


 


15.1         Break
Costs


 


15.1.1         The Borrower shall, within 3 (three) Business Days of demand by a
Finance Party, pay to that Finance Party its Break Costs attributable to all or
any part of a Loan or Unpaid Sum being paid by that Borrower on a day other
than the last day of an Interest Period for that Loan or Unpaid Sum.


 


15.1.2         Each Lender shall, as soon as reasonably practicable after a demand
by the Agent, provide a certificate confirming in reasonable detail the amount
of its Break Costs for any Interest Period in which they accrue.


 


15.2         Hedging
Arrangement Indemnity


 


15.2.1         The Borrower acknowledges that the Lenders may enter into Hedging
Arrangements to four decimal places for the purpose of hedging for the Fixed
Rate payable in respect of a Loan and shall promptly give details of such
Hedging Arrangements to the Borrower.


 


15.2.2         If any Hedging Arrangement entered into by a Lender is terminated
for any reason other than a breach by the Lender of the Hedging Arrangement
(not being a breach caused directly or indirectly by the Borrower):


 


(A)          the Borrower shall (without prejudice to the generality of the other
provisions of this Clause 15), on demand, pay to the Lender (i) such
amount as is legally obliged to pay to the relevant counterparty of the Hedging
Arrangement on early termination, and/or (ii) such amount as the Lender has
paid or is obliged to pay to purchase (having agreed to purchase such interest
rate swap (or other hedging)), any interest rate swap (or other hedging)
contract to replace the unexpired period of the previously terminated Hedging
Arrangement; or


 


(B)          the Lenders shall within three Business Days (without prejudice to
the generality of the other provisions of this Clause 15) use such amount as
the Lenders receive by way of breakage gain or premium from the relevant
counterparty of the Hedging Arrangement on (i) early termination or (ii) any
purchase of any interest rate swap as set out below:


 


29





















 


(1)           first, if there is a
Default outstanding, towards prepayment of the Loans;


 


(2)           second towards payment
of all sums then due to the Lenders; and


 


(3)           third, any balance
shall be paid into the Revenue Account.


 


15.2.3         Any Lender making a claim under this Clause 15.2 shall provide to
the Borrower reasonable details of any amount claimed at the time of making
such claim.


 


15.2.4         The Original A Lender and Original B Lender agree that prior to
setting the Fixed Rate they will consult with the Borrower or its
representatives on the setting of that Fixed Rate in a ‘live pricing call’.


 


15.2.5         Provided that no Default is outstanding, the Borrower and/or its
representative are available at the relevant time and it is commercially
feasible, each Lender agrees to consult with the Borrower or its representative
as to the level of any break gains or break losses payable on any partial or
whole termination of any Hedging Arrangement. 
In the absence of any consultation under this clause and provided that
no Default is outstanding each Lender agrees that any sum payable on any
partial or whole termination of any Hedging Arrangement will be calculated in
accordance with section 6(e) of the ISDA Master Agreement 2002 where
the Lender is the ‘affected party’.


 


15.3         Currency
indemnity


 


15.3.1         If any sum due from the Borrower under the Finance Documents (a “Sum”), or any order, judgment or award given or made in
relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another
currency (the “Second Currency”) for the purpose
of:


 


(A)          making or filing a claim or proof against the Borrower;


 


(B)          obtaining or enforcing an order, judgment or award in relation to
any litigation or arbitration proceedings,


 


the Borrower shall as an independent obligation,
within 3 (three) Business Days of demand, indemnify each Finance Party to whom
that Sum is due against any cost, loss or liability arising out of or as a
result of the conversion including any discrepancy between (A) the rate of
exchange used to convert that Sum from the First Currency into the Second
Currency and (B) the rate or rates of exchange available to that person at
the time of its receipt of that Sum.


 


15.3.2         The Borrower waives any right it may have in any jurisdiction to pay
any amount under the Finance Documents in a currency or currency unit other
than that in which it is expressed to be payable.


 


15.4         Other
indemnities


 


The Borrower shall within 3 (three) Business Days of
demand, indemnify each Finance Party against any cost, loss or liability
incurred by that Finance Party as a result of:


 


15.4.1         the occurrence of any Event of Default;


 


30





















 


15.4.2         a failure by the Borrower to pay any amount due under a Finance
Document on its due date, including without limitation, any cost, loss or
liability arising as a result of Clause 30 (Sharing among the Finance
Parties);


 


15.4.3         funding, or making arrangements to fund, its participation in any
Loan requested by the Borrower in a Drawdown Request but not made by reason of
the operation of any one or more of the provisions of this Agreement (other
than by reason of default or negligence by that Lender alone); or


 


15.4.4         the Loans (or part of a Loan) not being prepaid in accordance with a
notice of prepayment given by the Borrower.


 


15.5         Indemnity
to the Agent and Security Trustee


 


The Borrower shall promptly indemnify the Agent and
Security Trustee against any cost, loss or liability incurred by the Agent or
Security Trustee (acting reasonably) as a result of:


 


15.5.1         investigating any event which it reasonably believes is a Default;
or


 


15.5.2         acting or relying on any notice, request or instruction which it
reasonably believes to be genuine, correct and appropriately authorised.


 


16.          MITIGATION BY THE LENDERS


 


16.1         Mitigation


 


16.1.1         Each Finance Party shall, in consultation with the Borrower, take
all reasonable steps to mitigate any circumstances which arise and which would
result in any amount (or increased amount) becoming payable under or pursuant
to, or cancelled pursuant to, any of Clause 8.1 (Illegality),
Clause 13 (Tax gross-up and indemnities), Clause 14
(Increased costs) or paragraph 3 of Schedule 4
(Mandatory Cost formulae) including (but
not limited to) transferring its rights and obligations under the Finance
Documents to another Affiliate or Facility Office.


 


16.1.2         Clause 16.1.1 above does not in any way limit the obligations of the
Borrower under the Finance Documents.


 


16.2         Limitation
of liability


 


16.2.1         The Borrower shall indemnify each Finance Party for all costs and
expenses reasonably incurred by that Finance Party as a result of steps taken
by it under Clause 16.1 (Mitigation).


 


16.2.2         A Finance Party is not obliged to take any steps under Clause 16.1 (Mitigation) if, in the opinion of that Finance Party (acting
reasonably), to do so might be prejudicial to it.


 


31





















 


17.          COSTS AND EXPENSES


 


17.1         Transaction
expenses


 


The Borrower shall promptly on demand pay to each
Finance Party the amount of all costs and out of pocket expenses (including
legal fees) reasonably incurred by that Finance Party in connection with the
negotiation, preparation, printing and execution of:


 


17.1.1         this Agreement, the Security Documents and any other documents
referred to in this Agreement; and


 


17.1.2         any other Finance Documents executed after the date of this
Agreement.


 


17.2         Amendment
costs


 


If (a) the Borrower requests an amendment, waiver
or consent or (b) an amendment is required pursuant to Clause 31.10 (Change of currency), the Borrower shall, within 10 (ten)
Business Days of demand, reimburse the Agent for the amount of all costs and
expenses (including legal fees) reasonably incurred by the Agent in responding
to, evaluating, negotiating or complying with that request or requirement.


 


17.3         Enforcement
costs


 


The Borrower shall, within 3 (three) Business Days of
demand, pay to each Finance Party the amount of all costs and expenses
(including legal fees) incurred by that Finance Party in connection with the
enforcement of, or the preservation of any rights under, any Finance Document.


 


32


















 


SECTION 7


 


REPRESENTATIONS,
UNDERTAKINGS AND EVENTS OF DEFAULT


 


18.          REPRESENTATIONS


 


The Borrower makes the representations and warranties
set out in this Clause 18 to each Finance Party on the date of this Agreement
and on the Drawdown Date and in the case of the Repeating Representations on
the dates provided for in Clause 18.20 (Repetition).


 


18.1         Status


 


18.1.1         It is a corporation, duly incorporated and validly existing under
the law of its jurisdiction of incorporation.


 


18.1.2         It has the capacity to sue or be sued in its own name.


 


18.1.3         It has full power and all necessary governmental and other consents,
approvals, licences and authorities to own its assets and carry on its business
as it is being conducted.


 


18.2         Binding
obligations


 


Subject to the Legal Reservations, the obligations
expressed to be assumed by it in each Finance Document and each Management
Agreement are legal, valid, binding and enforceable obligations.


 


18.3         Non-conflict
with other obligations


 


The entry into and performance by it of, and the
transactions contemplated by, the Finance Documents or any Management Agreement
do not and will not conflict with:


 


18.3.1         any law or regulation applicable to it;


 


18.3.2         its constitutional documents; or


 


18.3.3         any agreement, instrument, judgment, order, licence, permit or
consent binding upon it or any of its assets.


 


18.4         Power
and authority


 


It has the power to enter into, perform and deliver,
and has taken all necessary action to authorise its entry into, performance and
delivery of, the Finance Documents to which it is a party or each Management
Agreement and the transactions contemplated by those Finance Documents and/or
each Management Agreement.


 


18.5         Validity
and admissibility in evidence


 


All Authorisations required or desirable:


 


18.5.1         to enable it lawfully to enter into, exercise its rights and comply
with its obligations in the Finance Documents to which it is a party or each
Management Agreement; and


 


33





















 


18.5.2         to make the Finance Documents to which it is a party or each
Management Agreement admissible in evidence in its jurisdiction of
incorporation,


 


have been obtained or effected or will be obtained or
effected prior to its entry into such documents and are or will then be in full
force and effect.


 


18.6         Governing
law and enforcement


 


18.6.1         The choice of English law as the governing law of the Finance
Documents will be recognised and enforced in its jurisdiction of incorporation.


 


18.6.2         Any judgment obtained in England in relation to a Finance Document
to which it is a party will be recognised and enforced in its jurisdiction of
incorporation.


 


18.7         Deduction
of Tax


 


18.7.1         As at the date of this Agreement, it is not required under the law
of its jurisdiction of incorporation to make any deduction for or on account of
Tax from any payment it may make under any Finance Document.


 


18.7.2         As at the date of this Agreement, it is entitled to receive all
Revenue free from any deduction or withholding for or on account of any Tax
(whether pursuant to section 42A of the Taxes Act or otherwise).


 


18.7.3         It is registered for VAT and is not a member of any group for VAT
purposes, other than a group made up solely of itself and the Shareholder.


 


18.7.4         It has exercised its option to charge VAT in respect of supplies
made in relation to the Properties and has received confirmation from HM
Revenue & Customs in writing that such option is acknowledged.


 


18.8         No
filing or stamp taxes


 


As at the date of this Agreement and save for the
registration of any Security Documents at the Land Registry and/or Companies
House under the law of its jurisdiction of incorporation it is not necessary
that the Finance Documents be filed, recorded or enrolled with any court or
other authority in that jurisdiction or that any stamp, registration or similar
tax be paid on or in relation to the Finance Documents or the transactions
contemplated by the Finance Documents whether for the purpose of ensuring the
enforceability of any right or otherwise.


 


18.9         Tax
Residence


 


It is resident for tax purposes in the United Kingdom
and in no other jurisdiction.


 


18.10       No default


 


18.10.1       No Default is continuing or might reasonably be expected to result
from the making of a Loan.


 


18.10.2       No Event of Default is continuing.


 


18.10.3       No other event or circumstance is outstanding which constitutes a
default under any other agreement or instrument which is binding on it or to
which its assets are subject which is reasonably likely to have a Material
Adverse Effect.


 


34





















 


18.11       No
misleading information


 


18.11.1       (A)          Any
factual information (as supplemented from time to time) that has been or will
hereafter be provided to any Finance Party, a Valuer or an Approved Accountant
by any member of the Group in connection with a Facility and any Property (or
for the purposes of any Valuation and/or the Tax Report) was true, complete and
accurate in all material respects as at the date it was provided or as at the
date (if any) at which it is stated; and


 


(B)          all information provided by, or on behalf of the Borrower to the
Borrower’s Solicitors for the purposes of preparing the Certificates of Title
is true, complete and accurate in all material respects as at the date of the
Certificate of Title.


 


18.11.2       All financial projections (if any) that have been or will be
prepared by any member of the Group and provided to any Finance Party have been
or will be prepared on the basis of recent historical information and on the
basis of assumptions believed by the Borrower to be reasonable.


 


18.11.3       At the Drawdown Date, nothing has occurred since the date the
information referred to in Clause 18.11.1 above was supplied which, if
disclosed, would make that information untrue or misleading in any material
respect.


 


18.12       Financial
statements


 


18.12.1       The Original Financial Statements were audited by an Approved
Accountant in accordance with GAAP consistently applied unless disclosed in the
Original Financial Statements.


 


18.12.2       The Original Financial Statements fairly represent the financial
condition and operations of the Borrower during the relevant financial year
unless previously disclosed to the Agent in writing by the Borrower before the
date of this Agreement.


 


18.12.3       There has been no change in the business or consolidated financial
condition of the Borrower since the date of the Original Financial Statements
which is reasonably likely to have a Material Adverse Effect.


 


18.12.4       The financial statements of the Shareholder delivered to the Agent
in accordance with Clause 4.1 (Initial
Conditions Precedent) fairly represent the financial condition and
operations of that Shareholder during the relevant year.


 


18.13       Ranking


 


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


 


18.13.2       The security conferred by each Security Document constitutes a first
priority security interest of the type described over the assets referred to in
that Security Document and these assets are not subject to any prior or pari
passu security.


 


35





















 


18.14       No
proceedings pending or threatened


 


No Material Litigation has been started or (to the
best of its knowledge and belief) threatened against it.


 


18.15       Environmental
Authorisations


 


It is in possession of all and any Environmental
Authorisations required for the conduct of its business and it has not breached
in any material respect any of the terms and conditions of such Environmental
Authorisations nor has it received any notice relating to an actual or
potential contravention of any Environmental Authorisation.


 


18.16       Environmental
Compliance


 


It has not breached any Environmental Laws and no
condition exists or event has occurred which could be reasonably likely to give
rise to any breach of, or liability on it or a Finance Party of any kind under,
any Environmental Laws.


 


18.17       Ownership
of the Properties


 


The Borrower is the legal and beneficial owner of each
Property, and will at all times during the Facility Period have a good valid
and marketable title (which was acquired with full title guarantee and the
Borrower has the right to transfer each Property with full title guarantee) to
each Property and (subject to the matters fully disclosed in each Certificate
on Title) free from any Security, restrictions, agreements, stipulations,
reservations, conditions, interests, rights, covenants, trusts or other matters
whatsoever affecting each Property, and all deeds and documents (if any)
necessary to show good and marketable title to each Property will be in the
possession of or held to the order of the Agent.


 


18.18       Ownership


 


18.18.1       Except where prior written consent has been given by the Agent to
any charge, the entire issued share capital of the Borrower is legally and
beneficially owned and controlled by the Shareholder.


 


18.18.2       The Borrower is directly or indirectly owned and controlled by the
Owners or with the Agent’s prior written consent and after having received the
confirmation of the Finance Parties that they have completed any know your
customer checks, any other person.


 


18.18.3       The shares in the capital of the Borrower are fully paid.


 


18.19       No other
business


 


18.19.1       The Borrower has not traded or carried on any business since the
date of its incorporation except for the acquisition, ownership and management
of its interests in the Properties.


 


18.19.2       The Borrower is not a party to any material agreement other than:


 


(A)          the Finance Documents;


 


(B)          each Management Agreement;


 


36





















 


(C)          contracts entered into on arms length terms with third parties in
the ordinary course of business in relation to the day to day administration of
Property (including, but not limited to, maintenance contracts and employment
contracts); and


 


(D)          contracts and arrangements expressly disclosed in any Certificates
of Title.


 


18.20       No
Subsidiaries


 


The Borrower does not have any Subsidiaries.


 


18.21       Relevant Consents


 


18.21.1       All Relevant Consents which it is necessary or appropriate for the
Borrower to hold at the relevant time of making or being deemed to repeat this
representation and warranty have been obtained and effected and are in full
force and effect.


 


18.21.2       There exists no reason known to it, having made all reasonable
enquiries, why any Relevant Consent might be withdrawn, suspended, cancelled,
varied, surrendered or revoked.


 


18.21.3       All Relevant Consents and other consents, permissions and approvals
have been or are being complied with.


 


18.22       Pensions


 


18.22.1       It is not nor
has it at any time been an Employer (as defined in Section 318 of the
Pensions Act 2004) of an ‘occupational pension scheme’ which is not a ‘money
purchase scheme’ (both terms as defined in the Pensions Schemes Act 1993); and


 


18.22.2       it has not received nor is it aware of any circumstance which might
lead to it receiving a Financial Support Directive or Contribution Notice from
the Pensions Regulator.


 


18.23       Repetition


 


The
Repeating Representations are deemed to be made by the Borrower by reference to
the facts and circumstances then existing on the date of each Drawdown Request
and each Interest Payment Date.


 


19.          INFORMATION UNDERTAKINGS


 


The undertakings in this Clause 19 remain in force
from the date of this Agreement for so long as any amount is outstanding under
the Finance Documents or any Commitment is in force.


 


19.1         Financial
statements


 


The Borrower shall supply to the Agent in sufficient
copies for all the Lenders:


 


19.1.1         as soon as the same become available, but in any event within 180
(one hundred and eighty) days after the end of each of its financial years, its
audited financial statements for that financial year; and


 


37





















 


19.1.2         as soon as the same become available, but in any event within 45
(forty five) days after the end of each quarter of each of its financial years,
its financial statements for that financial quarter year.


 


19.2         Compliance
Certificate


 


19.2.1         The Borrower shall supply to the Agent, with each set of financial
statements delivered pursuant to Clauses 19.1.1 or 19.1.2 (Financial
statements), a Compliance Certificate setting out (in reasonable
detail) computations as to compliance with Clause 21.14 (Financial
covenants) as at the date as at which those financial statements
were drawn up.


 


19.2.2         Each Compliance Certificate shall be signed by two directors of the
Borrower.


 


19.3         Requirements
as to financial statements


 


19.3.1         Each set of financial statements delivered by the Borrower pursuant
to Clause 19.1 (Financial statements)
shall be certified by a director of the Borrower as fairly representing its
financial condition as at the date as at which those financial statements were
drawn up.


 


19.3.2         The Borrower shall procure that each set of financial statements of
the Borrower delivered pursuant to Clause 19.1 (Financial
statements) is prepared using GAAP (and in the case of the financial
statements delivered under Clause 19.1.1, audited by the Approved Accountant),
accounting practices and financial reference periods consistent with those
applied in the preparation of the Original Financial Statements for the
Borrower unless, in relation to any set of financial statements, it notifies
the Agent that there has been a change in GAAP, the accounting practices or
reference periods and an Approved Accountant or such other person as approved
by the Agent acting reasonably delivers to the Agent:


 


(A)          a description of any change necessary for those financial statements
to reflect the GAAP, accounting practices and reference periods upon which the
Original Financial Statements were prepared; and


 


(B)          sufficient information, in form and substance as may be reasonably
required by the Agent, to enable the Lenders to determine whether Clause 22 (Financial covenants) has been complied with and make an
accurate comparison between the financial position indicated in those financial
statements and the Original Financial Statements.


 


Any reference in this Agreement to those
financial statements shall be construed as a reference to those financial
statements as adjusted to reflect the basis upon which the Original Financial
Statements were prepared.


 


19.3.3         If the Borrower notifies the Agent of a change in accordance with
Clause 19.3.2 above then the Borrower and Agent shall enter into negotiations
in good faith with a view to agreeing:


 


(B)          whether or not the change would result in any material alteration in
the commercial effect of any of the terms of this Agreement (including, without
limitation, Clause 22 (Financial Covenants);
and


 


38





















 


(C)          if so, any amendments to this Agreement which may be necessary to
ensure that the change does not result in any material alteration in the
commercial effect of those terms


 


and if any amendments are agreed they shall take
effect and be binding on each of the Parties in accordance with their terms.


 


19.4         Information:
miscellaneous


 


The Borrower shall supply to the Agent (in sufficient
copies for all the Lenders, if the Agent so requests):


 


19.4.1         all documents dispatched by the Borrower to its shareholders (or any
class of them) or its creditors generally at the same time as they are
dispatched;


 


19.4.2         promptly upon becoming aware of them, the details of any Material
Litigation; and


 


19.4.3         promptly, such further information regarding the financial
condition, business and operations of the Borrower as any Finance Party
(through the Agent) may reasonably request.


 


19.5         Notification
of default


 


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


 


19.5.2         Promptly upon request by the Agent, the Borrower shall supply to the
Agent a certificate signed by two of its directors or senior officers on its
behalf certifying that no Default is continuing (or if a Default is continuing,
specifying the Default and the steps, if any, being taken to remedy it).


 


19.6         Use of
websites


 


19.6.1         The Borrower may satisfy its obligation under this Agreement to
deliver any information in relation to those Lenders ( the “Website Lenders”) who accept this method of communication by
posting this information onto an electronic website designated by the Borrower
and the Agent (the “Designated Website”)
if:


 


(A)          the Agent expressly agrees (after consultation with each of the
Lenders) that it will accept communication of the information by this method;


 


(B)          both the Borrower and
the Agent are aware of the address of and any relevant password specifications
for the Designated Website; and


 


(C)          the information is in a format previously agreed between the
Borrower and the Agent.


 


If any Lender (a “Paper Form Lender”)
does not agree to the delivery of information electronically then the Agent
shall notify the Borrower accordingly and the Borrower shall supply the
information to the Agent (in sufficient copies for each Paper Form Lender)
in paper form.  In any event the Borrower
shall


 


39





















 


supply the Agent with at least one copy in
paper form of any information required to be provided by it.


 


19.6.2         The Agent shall supply each Website Lender with the address of and
any relevant password specifications for the Designated Website following
designation of that website by the Borrower and the Agent.


 


19.6.3         The Borrower shall promptly upon becoming aware of its occurrence
notify the Agent if:


 


(A)          the Designated Website cannot be accessed due to technical failure;


 


(B)          the password specifications for the Designated Website change;


 


(C)          any new information which is required to be provided under this
Agreement is posted onto the Designated Website;


 


(D)          any existing information which has been provided under this
Agreement and posted onto the Designated Website is amended; or


 


(E)           the Borrower becomes aware that the Designated Website or any
information posted onto the Designated Website is or has been infected by any
electronic virus or similar software.


 


If the Borrower notifies the Agent under Clause 19.6.3(A) or
Clause 19.6.3(E) above, all information to be provided by the Borrower
under this Agreement after the date of that notice shall be supplied in paper
form unless and until the Agent and each Website Lender is satisfied that the
circumstances giving rise to the notification are no longer continuing.


 


19.6.4         Any Website Lender may request, through the Agent, one paper copy of
any information required to be provided under this Agreement which is posted
onto the Designated Website.  The
Borrower shall comply with any such request within 10 (ten) Business Days.


 


19.7         Property
Information


 


The Borrower shall or shall procure that the Manager
shall:


 


19.7.1         promptly and in any event no later than 3 (three) Business Days
prior to each Test Date provide to the Agent (in sufficient copies for all of
the Lenders) the following information (in form and substance satisfactory to
the Agent) in respect of each Property and the immediately preceding Quarter
Period:


 


(A)          copies of any management accounts and management cash flows produced
by or for the Borrower showing amongst other things, with respect to each
Property, the occupancy rate, the average room rate, revenue per available
room, total revenue, total operating expenses, gross operating income, total
overheads, gross operating profit, total fixed expenses and net operating
income (containing at least the information set out in Schedule 7) with
supporting information;


 


(B)          details of any arrears of amounts due (if any) to the Borrower under
any Management Agreement with respect to the occupancy of hotel rooms,


 


40





















 


VAT,
and all other amounts due but unpaid under the Management Agreement and any
steps being taken to recover the same;


 


(C)          if not contained within information provided in accordance with
paragraph (A) above, details of the Manager’s fees;


 


(D)          a copy of the relevant extract of the minutes (if any) of any
significant property management meetings relating to each Property; and


 


(E)           a summary of  any proposed or
actual FF&E expenditure carried out by the Borrower or any Manager on its
behalf;


 


19.7.2         give notice to the Agent of any insolvency, bankruptcy,
receivership, administration, liquidation or any other analogous proceedings
affecting the Manager promptly upon becoming aware of any such event;


 


19.7.3         notify the Agent of any potential purchaser of a Property; and


 


19.7.4         promptly provide to the Agent such other information in its
possession or control about a Property, as the Agent may reasonably request
from time to time.


 


19.8         Money
Laundering Information


 


The Borrower shall promptly provide to the Agent all
such information and identification or other evidence as the Agent may from
time to time require to ensure compliance with Money Laundering Regulations.


 


20.          BANK ACCOUNTS


 


20.1         Designation
of Accounts


 


20.1.1         The Borrower shall forthwith at the request of the Agent open and
thereafter maintain at the Account Bank, the following bank accounts
denominated in Sterling:


 


(A)          an
account designated the Revenue Account in
the name of the Borrower;


 


(B)          a current account designated the General
Account in the name of the Borrower;


 


(C)          a current account designated the FF&E
Account in the name of the Borrower; and


 


(D)          a current account designated the Deposit
Account in the name of the Borrower.


 


The Account Bank must at all times comply with the
Account Bank Rating Requirements. If at any time the rating of the Account Bank
falls below the Account Bank Rating Requirements, then the Borrower shall move
the accounts forthwith to a replacement account bank which meets the Account
Bank Rating Requirements and which shall be previously approved in writing by
the Agent (such approval not to be unreasonably withheld or delayed).


 


41





















 


20.1.2         The Borrower may not without the prior consent of the Agent maintain
any other bank account (except for any bank account which only receives
deposits from amounts permitted under this Agreement to be withdrawn from the
General Account).


 


20.2         Control
of Accounts


 


20.2.1         The Agent and the Borrower shall have joint signing rights on the
Revenue Account provided that if a Default is
continuing only the Agent shall have sole signing rights on the Revenue
Account.


 


20.2.2         Subject to Clause 20.6 below, the Borrower shall have sole signing
rights on the General Account.


 


20.2.3         The Agent shall have sole signing rights on the FF&E Account and
the Deposit Account.


 


20.3         Payments
into the Accounts


 


The Borrower shall ensure that all Revenue and other
amounts payable to it (other than any amounts required to be paid into another
Charged Account) is paid into the Revenue Account.


 


20.4         Indirect
Receipts


 


If the Borrower or the Manager receives or recovers
any amount otherwise than by credit to the relevant Charged Account, the
Borrower shall pay (or shall procure the payment of by the Manager) the same
into the Revenue Account immediately after receipt or recovery and in like
funds as received or recovered by the Borrower, who shall in the meantime hold
the same subject to the security created by the Finance Documents.


 


20.5         Withdrawals
from the Revenue Account


 


20.5.1         The Borrower may make no withdrawals from the Revenue Account
without the Agent’s prior written consent.


 


20.5.2         On each Interest Payment Date the amounts standing to the credit of
the Revenue Account shall be applied by the Agent in the following order and in
or towards the following items:


 


(A)          first, in or
towards payment of any Unpaid Sum (not otherwise referred to in this Clause 20.5.2);


 


(B)          second, in or
towards payment of any costs, fees and expenses of the Agent or the Arranger
which are due but unpaid under the Finance Documents;


 


(C)          third, in or
towards payment of accrued interest due but unpaid to the A Lenders under the
Finance Documents;


 


(D)          fourth, in or
towards any repayment or prepayment of principal which is due but unpaid to the
A Lenders under the Finance Documents;


 


(E)           fifth, in or
towards payment of accrued interest due but unpaid to the B Lenders under the
Finance Documents;


 


42





















 


(F)           sixth, in or
towards any repayment or prepayment of principal which is due but unpaid to the
B Lenders under the Finance Documents;


 


(G)          seventh, in or
towards payment of such amounts as the Agent considers are necessary in respect
of any Service Charge shortfalls or other liabilities with respect to any
Property (including any insurance premia, rates or other monies which may from
time to time be payable by the Borrower in respect of any Property), such
amounts not being recoverable under the Management Agreement;


 


(H)          eight, if the
Borrower is not in compliance with its obligations under Clause 22 (Financial Covenants), ignoring any right
it may have under Clause 20.8 (Deposit
Account) to remedy such non compliance but only until such time as
that breach is remedied under that Clause, in payment of any essential
operating costs (which shall include VAT due to be paid by the Borrower, staff
gratuities due to be paid onto any member of staff or other amounts charged to
guests of any Property which are due to any concessionaire or tenant of the
Borrower) relating to each Property in accordance with the Borrower’s annual
budget for each Property or otherwise any expenditure which the Agent may, in
its absolute discretion approve, and, thereafter, in prepayment of the A Loan;


 


(I)            ninth, any
other amount due to the Finance Parties;


 


(J)           tenth, an
amount equal to 4 per cent. of the Net Operating Income received in the
Interest Period ending on that Interest Payment Date to the FF&E Account;


 


(K)          eleventh,
subject to Clause 20.5.3 below, payment of any surplus into the General
Account.


 


Any
surplus monies not paid into the General Account in accordance with this
provision may be applied by the Agent, at its discretion, towards a prepayment
of the Loans at any time or may be retained in the Revenue Account.


 


20.5.3         The Agent is obliged to make a withdrawal from the Revenue Account
in accordance with Clause 20.5.2 above only if:


 


(A)          no Default is continuing; and


 


(B)          the Repeating Representations are correct and will be correct
immediately after the withdrawal.


 


20.5.4         The Agent may authorise withdrawals at any time from the Revenue
Account to pay any amount due but unpaid under the Finance Documents.


 


20.5.5         The Agent may vary the order set out in Clause 20.5.2 above if a
Default (other than a Default arising solely under Clause 22.1 (Loan to Value Covenant) or Clause 22.2 (Interest Cover) is continuing or any of
the Repeating Representations are not correct at any time.


 


20.5.6         If the Borrower fails to pay any amount due under any Headlease on
the day on which it is due, the Agent may, and is irrevocably authorised by the
Borrower to


 


43





















 


withdraw
from the Revenue Account a sum necessary to meet the due amount and apply that
sum in payment of that due amount.


 


20.5.7         Notwithstanding Clause 20.5.2 above the Borrower may on any date (but
no more than once in any week) on which:


 


(A)          no Default is outstanding;


 


(B)          the Borrower is in compliance with Clause 22 (Financial Covenants);


 


(C)          the Repeating Representations are all correct and will be correct
immediately after the withdrawal;


 


(D)          the Agent reasonably believes that the Borrower will be in
compliance with each of the matters set out in paragraphs (A) to (C) when
tested on the next Interest Payment Date; and


 


(E)           and the balance standing to the credit of the Account is more than
the Agent’s estimate, acting reasonably, of the amount due under the Finance
Documents on the next Interest Payment Date,


 


request
that the Agent’s estimate of the surplus amount not required to meet amounts
due under the Finance Documents on that next Interest Payment Date be released
to the General Account.


 


20.6         General
Account


 


20.6.1         Provided no Default is continuing or would occur as a result of the
withdrawals, the Borrower may withdraw any amount from the General Account.


 


20.6.2         At any time when a Default is continuing, the Agent may, and is
irrevocably authorised by the Borrower to:


 


(A)          operate the General Account; and


 


(B)          withdraw from, and apply amounts standing to the credit of, the
General Account in or towards any purpose for which monies in any Account may
be applied under the powers contained in the Finance Documents.


 


20.7         FF&E
Account


 


20.7.1         Provided no Default is continuing or would occur as a result of the
withdrawals, the Borrower may request the Agent to withdraw any amount from the
FF&E Account in order to fund FF&E on the Properties in accordance with
the relevant Management Agreement.


 


20.7.2         At any time when a Default is continuing, the Agent may, and is
irrevocably authorised by the Borrower to withdraw from, and apply amounts
standing to the credit of, the FF&E Account in or towards any purpose for
which monies in any Account may be applied under the powers contained in the
Finance Documents.


 


20.8         Deposit
Account


 


20.8.1         The Borrower must ensure that:


 


44





















 


(F)           any amount required to be paid into the Deposit Account by this
Agreement is paid into the Deposit Account; and


 


(G)          any amount received by it under any insurance policy is paid into
the Deposit Account.


 


20.8.2         Provided no Default is continuing or would occur as a result of a
withdrawal, the Borrower may request the Agent to withdraw any amount deposited
in accordance with Clause 20.8.1(A) from the Deposit Account to meet any
liability of the Borrower for which the relevant amount was paid out by the
relevant insurer.


 


20.8.3


 


(A)           if the Agent notifies the Borrower that there is a breach of Clause 22.1
(Loan to Value Covenant) then the
Borrower may within 3 (three) months remedy that breach by:


 


(i)         depositing into the Deposit Account an amount which when applied in
prepaying the Loans will be sufficient to ensure compliance with Clause 22.1 (Loan to Value Covenant), such amount to be
applied by the Agent on the next Interest Payment Date in prepayment of the
Loans; or


 


(ii)        depositing an amount into the Deposit Account (an “LTV Remedy Amount”);


 


(B)            an LTV Remedy Amount above shall be the amount calculated by the
Agent which if it were used to prepay the Loans would be enough to ensure
compliance with Clause 22.1 (Loan to Value
Covenant);


 


(C)            if the Borrower deposits an LTV Remedy Amount in accordance with
Clause 20.8.3(A)(ii) into the 
Deposit Account the Borrower will not be regarded as being in breach of
Clause 22.1 (Loan to Value Covenant);
and


 


(D)           in relation to any LTV Remedy Amount or any part thereof, if the
test in Clause 22.1 (Loan to Value Covenant)
is satisfied (without taking into account the LTV Remedy Amount or any part
thereof) on the relevant test date and no Default is continuing the Agent
shall, upon the request of the Borrower, release any of the amount of the LTV
Remedy Amount not required to satisfy the relevant test to the General Account
and any amount so released shall cease to be part or all of any LTV Remedy
Amount.


 


20.8.4


 


(E)            if the Agent notifies the Borrower that there is a breach of Clause 22.2
(Interest Cover) then the
Borrower may within 5 (five) Business Days remedy that breach by:


 


(i)         deposit into the Deposit Account an amount which when applied in
prepaying the Loans will be sufficient to ensure compliance with Clause 22.2 (Interest Cover), such amount to be applied
by the


 


45





















 


Agent on the next Interest Payment Date in
prepayment of the Loans; or


 


(ii)        depositing an amount into the Deposit Account (an “ICR Remedy Amount”);


 


(F)            an ICR Remedy Amount shall be the amount calculated by the Agent as
being sufficient if added to Net Operating Income before the last Interest
Payment Date would have been enough to ensure compliance with Clause 22.2 (Interest Cover);


 


(G)            if the Borrower deposits an ICR Remedy Amount in accordance with
Clause 20.8.4(A)(ii) the Borrower will not be regarded as being in breach
of Clause 22.2 (Interest Cover);
and


 


(H)           in relation to any ICR Remedy Amount or any part thereof, if the
test in Clause 22.2 (Interest Cover)
is satisfied (without taking into account the ICR Remedy Amount or any part
thereof) on the relevant test date and no Default is continuing the Agent
shall, upon the request of the Borrower, release any of the ICR Remedy Amount
not required to satisfy the relevant test to the General Account and any amount
so released shall cease to be part or all of any ICR Remedy Amount.


 


(I)             and any amount so released shall cease to be part or all of any ICR
Remedy Amount.


 


20.8.5         Any LTV Remedy Amount deposited in the Deposit Account may also form
part of any ICR Remedy Amount and vice versa in order that the Borrower need
only deposit one amount in the Deposit Account as ICR Remedy Amount and LTV
Remedy Amount in an amount of the higher of the amount required under Clause 20.8.3
or 20.8.4.


 


20.8.6         Other than any amount deposited in accordance with Clauses 20.8.1(B),
20.8.3 or 20.8.4 above, provided no Default is outstanding or would occur as a
result of the withdrawals, the Agent shall withdraw any amount from the Deposit
Account on the next Interest Payment Date in prepayment of the Loans.


 


20.9         Withdrawals
generally


 


20.9.1         The Borrower hereby irrevocably authorises the Agent to effect the
withdrawals and transfers referred to in this Clause 20.


 


20.9.2         The Agent may delegate its powers to make withdrawals under this
Clause 20 to any administrator, receiver and/or manager appointed under the
powers contained in the Security Documents.


 


20.9.3         While a Default is continuing, the Agent may, and is irrevocably
authorised by the Borrower to, withdraw monies standing to the credit of each
Charged Account and apply in or towards repayment of the Loans and/or payment
of any other amount outstanding under the Finance Documents or in or towards
any purpose for which monies in any Charged Account may be applied under the
powers contained in the Finance Documents.


 


46





















 


20.10       No
Liability


 


The Agent shall not be responsible to the Borrower for
any non-payment of any liability of the Borrower which could be paid out of
monies standing to the credit of any Account unless caused by the wilful
neglect or gross negligence of the Agent. 
The Agent shall not be liable to the Borrower for any withdrawal wrongly
made if it is made in good faith.


 


21.          PROPERTY UNDERTAKINGS


 


21.1         Planning


 


The Borrower shall:


 


21.1.1         comply or procure compliance in all respects with any conditions
attached to any planning permissions relating to or affecting any Property and
not without the prior written consent of the Agent carry out any development or
make any alteration to the use of any Property (such consent not to be
unreasonably withheld or delayed in the case of any development); and


 


21.1.2         not make any application for planning permission or implement any
planning permission obtained or enter into any agreement or undertaking under Section 106
of the Town and Country Planning Act 1990 or Section 33 of the Local
Government (Miscellaneous Provisions) Act 1982 or Sections 38 or 278 of the
Highways Act 1980 or any other similar act or acts without the prior written
consent of the Agent (such consent not to be unreasonably withheld).


 


21.2         Title


 


The Borrower shall:


 


21.2.1         observe and perform all restrictive and other covenants, stipulations
and obligations now or at any time affecting any Property insofar as the same
are subsisting and are capable of being enforced; and


 


21.2.2         duly and diligently enforce all material restrictive or other
covenants, stipulations and other obligations benefiting any Property and not
waive, release or vary (or agree to do so) the obligations of any other party
thereto.


 


21.3         Management
Agreements and Leases


 


21.3.1         The Borrower shall comply with all of its obligations under each
Management Agreement and, without prejudice to Clause 21.3.2(A), ensure that it
is at all times party to a Management Agreement, under which the Manager is
obliged to operate the hotel businesses at the Properties.


 


21.3.2


 


(A)          Other than as set out in paragraph (B) below, the Borrower
shall not after the date of this Agreement, without the prior written consent
of the Agent (such consent not be unreasonably withheld or delayed):


 


(i)            enter into any Management Agreement or agree to do so;


 


47





















 


(ii)           give any consent to any matter, document or proposal requested under
or in relation to any Management Agreement provided that while no Default is
continuing the Borrower may grant such consent (other than any consent relating
to the agreeing of any budget for a Property) to the extent that the consent or
relevant matter, document or proposal would not reasonably be expected to have
a prejudicial affect on any Finance Party or a Material Adverse Effect;


 


(iii)          agree to any amendment or waiver in respect of any Management
Agreement nor agree to the termination of any Management Agreement;


 


(iv)          grant, or permit the grant of, any contractual licence, Occupational
Lease, Agreement for Lease or right to occupy any part of a Property (other
than permitting the renting of individual rooms as part of its business at the
Property) or grant any consent under the same or agree to any assignment of any
Occupational Lease, Agreement for Lease or licence; or


 


(v)           agree any budget for a Property with the Manager.


 


(B)          The consent of the Agent is not required under paragraph (A) above:


 


(i)            subject to the Agent having been notified in writing prior to the
date of this Agreement of a contractual obligation to enter into an agreement,
to the entry into by the Borrower of  the
same;


 


(ii)           having given the Agent prior written notice of the proposed terms of
such lease, for the granting of an Occupational Lease on arms length terms over
the former Lumiere Cinema space at St. Martin’s Lane to Gymbox Limited for a
term of approximately twenty years at an annual rent of approximately £150,000;


 


(iii)          if the Agent has been notified in writing of such grant prior to its
being granted, in respect of the grant of any licence, Agreement for Lease,
Occupational Lease or right to occupy any part of a Property in such case
granted to a statutory undertaker or telecommunications company in connection
with the supply of any utility or telecoms service to a Property; and


 


(iv)          subject to the Agent having been notified prior to any such grant, for
the grant of any consent under a contractual licence, Occupational Lease,
Agreement for Lease or other right to occupy part of a Property in
circumstances where the Borrower is under a contractual obligation not to
unreasonably withhold or delay the grant of such consent and where the
withholding of such consent because the consent of the Agent has not been
obtained in time would cause the Borrower to be in breach of that contractual
obligation.


 


21.3.3         The Borrower shall duly and diligently implement the provisions of
each Management Agreement.


 


48





















 


21.3.4         The Borrower shall promptly following receipt of the same supply to
the Agent a copy of any notice or document (including but not limited to the
annual budget for each property) it receives from any Manager in connection
with any Management Agreement.


 


21.3.5         No later than 6 months before the expiry of any Management Agreement
(and thereafter if required by the Agent from time to time), the Borrower shall
inform the Agent of the steps being taken to renew that Management Agreement or
to enter into a new Management Agreement.


 


21.4         Managers


 


21.4.1         The Borrower shall:


 


(A)          ensure that at all times whilst any monies are outstanding under the
Finance Documents each Property shall be managed by a Manager approved by the
Agent (acting reasonably) and shall procure that each Manager carries out its
duties in accordance with the terms of the relevant Management Agreement; or


 


(B)          not appoint a new Manager or replace a Manager without the prior
written consent of, and upon terms approved by, the Agent (acting reasonably)
including, without limitation, the entering into a new Management Agreement.


 


21.4.2         If:


 


(C)          a Manager is in breach of its duties under the terms of its
appointment by the Borrower; or


 


(D)          a Manager has ceased to exist or become insolvent;


 


the Agent may require the Borrower to
terminate the appointment of the Manager (which the Borrower agrees to do on
the date required by the Agent) and to appoint a new Manager. The Borrower
shall procure that any new Manager so appointed shall enter into a Management
Agreement.


 


21.5         Environmental
Compliance


 


The Borrower shall:


 


21.5.1         comply in all material respects with all Environmental Laws; and


 


21.5.2         obtain and do all that is necessary to maintain in full force and
effect all Environmental Authorisations; and


 


21.5.3         promptly on becoming aware of the same, notify the Agent of the
following:


 


(E)           any indication that any Property is referred to or listed or might
be referred to or listed in any register maintained or proposed under Section 143
of the Environmental Protection Act 1990;


 


(F)           any claim, notice of violation, prosecution, official warning,
abatement or other order relating to Environmental Matters or requiring
compliance with any Environmental Laws or with any licence or approval relating
to


 


49





















 


Environmental Matters which to its knowledge is
pending or threatened against the Borrower or any of its officers in their
capacity as such or against any Property or of any requirement to make any
investment or expenditure or to take or desist from taking action which might
be reasonably likely to have a Material Adverse Effect;


 


(G)          the existence or recent
existence of any Environmental Matters at any of the Properties which may give
rise to any environmental liability, and in such circumstances the Borrower
shall take or procure the taking of all necessary action to remedy or remove or
prevent the incursion of Environmental Matters in a manner that complies with
all Environmental Laws;


 


(H)          any facts or circumstances
entitling any Environmental Authorisation to be revoked, suspended, amended or
not renewed where this might be reasonably likely to have a Material Adverse
Effect and of any requirement to make any investment or expenditure or to take
or desist from taking any action where this might have a similar effect; and


 


(I)            full details of any inspections, investigations, audits, tests or
other analyses concerning Environmental Matters relating to the Borrower or to
a Property occurring after the date of this Agreement; and


 


21.5.4         on demand indemnify the Finance Parties against any loss or
liability which:


 


(A)          any Finance Party incurs as a result of any actual or alleged breach
of any Environmental Law by any person; and


 


(B)          which would not have arisen if a Finance Document had not been
entered into.


 


21.6         VAT
Election


 


The Borrower shall not carry out or permit to be
carried out any action which will or may cause any option or right of election
that the supplies made in respect of any lease or tenancy of the same by it
shall be taxable for VAT purposes at the standard or any other applicable rate
which has already been exercised, to be revoked or disapplied.


 


21.7         Valuations,
Structural Survey or Environmental Survey


 


21.7.1         The Agent may at any time but only once per annum request the Valuer
promptly to prepare and deliver to the Agent a Valuation in respect of a
Property or the Properties as the Agent may direct and the cost of any such
Valuation shall borne by the Borrower.


 


21.7.2         The Agent may request the Valuer or any agent of the Valuer promptly
to prepare and deliver to the Agent a structural survey and/or environmental
report with respect to a Property if the Agent has serious grounds to believe
that the environmental or structural condition of that Property has materially
altered since the first Drawdown Date and the cost of any such survey or report
shall be borne by the Borrower.


 


21.7.3         On or after the occurrence of a Default which is continuing, the
Agent may at any time and from time to time request a Valuation of any
Property.


 


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21.7.4         The Borrower shall ensure that the Valuer has all such assistance as
the Agent may require to carry out any such Valuation, structural survey or
environmental report including (upon reasonable notice and during normal
business hours) full access to each Property upon reasonable written notice.


 


21.8         Insurance


 


The Borrower shall at all times during the Facility
Period:


 


21.8.1         effect and maintain the Insurance Policies in full force and effect
with such insurers which comply with the Insurance Company Rating Requirements,
in such amounts and against all such risks of loss or damage as the Agent may
from time to time require (including, without limitation, subsidence,
terrorism, professional fees, site clearance, consequential loss, third party
liability, VAT and not less than, from the date of this Agreement up to the
date of the renewal of the loss of Revenue policy delivered to the Agent in
accordance with Clause 4.1 (Initial
Conditions Precedent), two years, but thereafter, three years’ loss
of Revenue and any fees payable to the Manager during any period of loss or
damage);


 


21.8.2         duly and punctually pay all premiums and other monies due and
payable under or in connection with the Insurance Policies (and promptly upon
request by the Agent, supply copies of the premium receipts or other evidence
of payment) and not do or omit to do anything which may result in any Insurance
Policy being made void or voidable;


 


21.8.3         ensure that the terms of each Insurance Policy provide that the
Security Trustee is named as co-insured and as loss payee and that the Insurance
Policy shall not be invalidated as against the Security Trustee for failure to
pay any premium without at least 10 (ten) Business Days’ prior written notice
being given to the Security Trustee and contain terms providing that the
Security Trustee shall have no duty of disclosure to the insurance company or
underwriters and have no liability to pay any unpaid premium, and whereby the
relevant insurer agrees in terms satisfactory to the Security Trustee not to
vitiate or avoid the Insurance Policy as a result of any misrepresentation, act
or omission of any party other than the Security Trustee;


 


21.8.4         procure that on each anniversary of the Drawdown Date (for as long
as there are any amounts outstanding under any Facility) there shall be
produced to the Agent a confirmation from its insurance broker to the Agent
that each Property is insured in accordance with this Clause 21.8;


 


21.8.5         promptly upon request provide to the Agent such information in its
possession in connection with the Insurance Policies as the Agent may
reasonably require and promptly notify the Agent upon becoming aware of
renewals made and variations or cancellations of policies made or, to its
knowledge, threatened or pending; and


 


21.8.6         if so required by the Agent, deposit with the Agent the Insurance
Policies and all other contracts of insurance relating to each Property or, if
this is not permitted by any lease to which that Property is subject, shall
produce a copy of the same to the Agent for inspection.


 


51





















 


21.8.7         Each of the Borrower’s insurers must at all times comply with the
Insurance Company Rating Requirements. If at any time the rating of any insurer
falls below the Insurance Company Rating Requirements, then the Borrower shall
procure that the relevant assets are insured forthwith by a replacement
insurer, which shall be previously approved in writing by the Agent acting
reasonably.


 


21.8.8         If the Borrower fails to comply with any of the provisions of this
Clause 21.8, the Agent may effect the insurances concerned, with an insurer
complying with the Insurance Company Requirements, and any cost, liability or expense
properly incurred in connection therewith shall promptly on demand be paid by
the Borrower to the Agent.


 


21.9         Repair


 


The Borrower shall:


 


21.9.1         procure that each Property is maintained in good and substantial
repair and condition, and ensure that all plant, machinery and equipment which
forms part of the Properties is replaced as necessary with items of similar quality
and value; and


 


21.9.2         make good any want of maintenance and repair in each Property
promptly upon the request of the Agent (acting reasonably) so to do, and notify
the Agent immediately upon completion of such maintenance and repair.


 


21.10       Alterations


 


The Borrower shall not without the prior written
consent of the Agent (acting reasonably):


 


21.10.1       effect, carry out or permit to be carried out any demolition,
reconstruction or rebuilding of or any material structural or other material
alteration to or change in the use of all or any part of any Property; or


 


21.10.2       sever, unfit or remove any of the fixtures, fittings, plant or
machinery on or at any Property (other than in accordance with the principles
of good hotel management and in accordance with the relevant Management
Agreement).


 


21.11       Revenue
Account


 


The Borrower shall ensure that on each Interest
Payment Date there are sufficient sums in the Revenue Account to enable the
Agent to make each of the transfers and payments listed in Clause 20 (Bank Accounts).


 


21.12       Survey
Recommendations


 


The Borrower will promptly implement (and in any event
within any time period stipulated in any such report or survey) all steps
recommended to be implemented under any environmental report or structural survey
provided to the Agent pursuant to Schedule 1 (Conditions
Precedent) which the Agent (acting on the reasonable advice of the
Valuer) requires to be implemented and notify the Agent when all such steps
have been fully implemented.


 


52





















 


21.13       Headlease


 


The
Borrower shall in relation to the Headlease under which the Borrower derives
its estate or interest in a Property:


 


(J)            observe and perform all covenants, stipulations and obligations on
the lessee under the Headlease;


 


(K)          diligently enforce all covenants on the part of the lessor under the
Headlease;


 


(L)           not, without the prior written consent of the Agent (acting
reasonably):


 


(1)           waive, release or vary any obligation under, or the terms of; or


 


(2)           exercise any option or power to break, determine or extend,


 


in each case, the Headlease;


 


(M)         not do or permit anything under the Headlease whereby the same may
be forfeited;


 


(N)          other than any rent increase fixed under the terms of the Headlease,
not agree any change to the rent payable under the Headlease without the prior
written consent of the Agent (acting reasonably); and


 


(O)          promptly notify the Agent of any matter or event under or by reason
of which the Headlease has or may become subject to determination or to the
exercise of any right of re-entry or forfeiture and, if so requested by the
Agent, to apply for relief against forfeiture.


 


21.14       FF&E
Reserve


 


Subject always to the terms of any Headlease the
Borrower shall promptly and diligently carry out all works and/or incur all
necessary expenditure in connection with the FF&E in accordance with the
terms of the relevant Management Agreement.


 


22.          FINANCIAL COVENANTS


 


22.1         Loan to
Value Covenant


 


Subject
to Clause 20.8 (Deposit Account),
the Borrower undertakes and covenants with the Agent that:


 


22.1.1         on the Drawdown Date the aggregate sum of outstandings under the A
Facility shall not exceed 56% of the aggregate Market Value of the Properties
determined in accordance with the most recent Valuation; and


 


22.1.2         after the Drawdown Date until (and including) the date on which all
the obligations and liabilities of the Borrower under the Finance Documents are
discharged in full and the Finance Parties have no continuing obligations in
relation to any Facility, the aggregate sum of outstandings under the Facility
shall not at any time exceed 73% of the aggregate Market Value of the
Properties determined in accordance with the most recent Valuation.


 


22.2         Interest
Cover


 


22.2.1         Subject to Clause 20.8 (Deposit
Account), the Borrower shall ensure that:


 


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(P)           on each Test Date falling before the second anniversary of the date
of this Agreement, the Net Operating Income for the year ending on the last
Quarter Date is not less than 200% (two hundred per cent.) of the A Finance
Costs for the year ending on (and including) that Test Date (or, in respect of
an Test Date falling before the first anniversary of the Drawdown Date, the A
Finance Costs calculated in accordance with Clause 22.2.2);


 


(Q)          on each Test Date falling on or after the second anniversary of the
date of this Agreement but before the fourth anniversary of the date of this
Agreement, the Net Operating Income for the year ending on the last Quarter Date
is not less than 205% (two hundred and five per cent.) of the A Finance Costs
for the year ending on (and including) that Test Date;


 


(R)          on each Test Date falling on or after the fourth anniversary of the
date of this Agreement, the Net Operating Income for the year ending on the
last Quarter Date is not less than 210% (two hundred and ten per cent.) of the
A Finance Costs for the year ending on (and including) that Test Date;


 


(S)           on each Test Date falling before the second anniversary of the date
of this Agreement, the Net Operating Income for the year ending on the last
Quarter Date is not less than 135% (one hundred and thirty five per cent.) of
the B Finance Costs for the year ending on (and including) that Test Date (or,
in respect of a Test Date falling before the first anniversary of the Drawdown
Date, the B Finance Costs calculated in accordance with Clause 22.2.2);


 


(T)          on each Test Date falling on or after the second anniversary of the
date of this Agreement but before the fourth anniversary of the date of this
Agreement, the Net Operating Income for the year ending on the last Quarter
Date is not less than 140% (one hundred and forty per cent.) of the B Finance
Costs for the year ending on (and including) that Test Date; and


 


(U)          on each Test Date falling on or after the fourth anniversary of the
date of this Agreement, the Net Operating Income for the year ending on the
last Quarter Date is not less than 145% (one hundred and forty five per cent.)
of the B Finance Costs for the year ending on (and including) that Test Date.


 


22.2.2         In calculating Finance Costs under this Clause on a Test Date
falling before the first anniversary of the Drawdown Date, the Finance Costs
shall be calculated by dividing the Finance Costs actually incurred to the relevant
calculation date by the number of days elapsed since the Drawdown Date
(including such date) and then multiplying the product of such sum by 365.


 


22.3         Calculations


 


22.3.1         All calculations made at any time for the purposes of this Clause 22
shall be made by reference to the following:


 


54





















 


(A)          where such calculations
relate to the date as at or to which audited financial statements of the
Borrower are prepared, the most recent such financial statements; and


 


(B)          where such calculations relate to a date on which quarterly accounts or
management accounts of the Borrower are prepared, the most recent such
accounts,


 


adjusted in each case, as
the Agent may in its discretion reasonably consider appropriate, to take
account of any changes in the financial condition or
circumstances of the Borrower which occur after the date as at or to which such
financial statements or accounts were or certificate was prepared.


 


22.3.2         If there is any dispute as to any computation under this Clause 22
the decision of the Agent shall, in the absence of manifest error, be
conclusive and binding on the Parties to this Agreement.


 


23.          GENERAL UNDERTAKINGS


 


The undertakings in this Clause 23 remain in force
from the date of this Agreement for so long as any amount is outstanding under
the Finance Documents or any Commitment is in force.


 


23.1         Authorisations


 


The Borrower shall promptly:


 


23.1.1         obtain, comply with and do all that is necessary to maintain in full
force and effect; and


 


23.1.2         supply certified copies to the Agent of,


 


any Authorisation:


 


(V)            required or desired under any law or regulation of its jurisdiction
of incorporation to enable it lawfully to enter into, exercise its rights and
comply with and perform its obligations under the Finance Documents and each
Management Agreement; and


 


(W)          to ensure the legality, validity, enforceability or admissibility in
evidence in its jurisdiction of incorporation of any Finance Document and
Management Agreement.


 


23.2         Compliance
with laws


 


The Borrower shall comply in all respects with all
laws and regulations to which it may be subject, if failure so to comply would
materially impair its ability to perform its obligations under the Finance
Documents.


 


23.3         Financial
Indebtedness


 


The Borrower shall not incur any Financial
Indebtedness to any person other than the Finance Parties other than Financial
Indebtedness not exceeding in aggregate £1,200,000.


 


55





















 


23.4         Negative
pledge


 


23.4.1         The Borrower shall not create or permit to subsist any Security over
any of its assets.


 


23.4.2         The Borrower shall not:


 


(A)          sell, transfer or otherwise dispose of any of its assets on terms
whereby they are or may be leased to or re-acquired by the Borrower;


 


(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 other preferential arrangement having a similar
effect,


 


in circumstances where the arrangement or transaction
is entered into primarily as a method of raising Financial Indebtedness or of
financing the acquisition of an asset.


 


23.4.3         Clauses 23.4.1 and 23.4.2 above do not apply to:


 


(A)          any lien arising by operation of law and in the ordinary course of
trading and securing amounts not more than 90 days overdue; and


 


(B)          any Security entered into pursuant to any Finance Document.


 


23.5         Disposals


 


23.5.1         The Borrower shall not enter into a single transaction or a series
of transactions (whether related or not) and whether voluntary or involuntary
to sell, lease, transfer or otherwise dispose of any part or parts of any
Property or its assets (or agree to accept any surrender or cancellation of any
Occupational Lease).


 


23.5.2         Clause 23.5.1 above does not apply to:


 


(A)          sales of stock in the ordinary course of business (other than of any
Property);


 


(B)          disposal on arms length and normal commercial terms of obsolete
assets (other than any Property);


 


(C)          the payment of cash as consideration for the acquisition of any
asset or provision of any services at arms length and on normal commercial
terms for the purpose of carrying on its business;


 


(D)          any sale of a Property with the prior written consent of the Agent
(acting reasonably); and


 


(E)           any sale, lease, transfer or other disposal expressly permitted by
this Agreement.


 


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23.6         Merger


 


The Borrower shall not enter into any amalgamation,
demerger, merger or corporate reconstruction.


 


23.7         Conduct
of business


 


The Borrower shall conduct and carry on its business
in a proper and efficient manner and shall procure that no substantial change
is made to the general nature of the business of the Borrower from that carried
on at the date of this Agreement.


 


23.8         Access


 


The Borrower shall permit the Agent and any person
(being an accountant, auditor, solicitor, valuer or other professional adviser
of the Agent) authorised by the Agent to have, at all reasonable times during
normal business hours and on reasonable notice, (save in an emergency) access
to its property, premises and accounting books and records.


 


23.9         Ranking
of Obligations


 


The Borrower shall ensure that its payment obligations
under the Finance Documents, to the extent that they are secured under the
Security Documents, shall at all times be payable in priority to all its other
Financial Indebtedness other than such Financial Indebtedness as would be
preferred by applicable law and to the extent that they are not so secured
ensure that they will at all times rank at least equally and rateably in all
respects with all its other unsecured Financial Indebtedness except for such
Financial Indebtedness as would be mandatorily preferred by law and not by
contract.


 


23.10       Further
Assurance


 


The Borrower shall, at the request of the Agent, take
or procure the taking of all actions and things, and shall execute or procure
the execution of all such deeds and documents as are, in the reasonable opinion
of the Agent, necessary to ensure that the Finance Parties obtain all their
rights and benefits under the Finance Documents as contemplated by the terms
thereof.


 


23.11       Centre of
Main Interests


 


23.11.1       The Borrower shall not permit its centre of main interests for the
purposes of Council Regulation (EC) No 1346/2000 to be in any jurisdiction
other than its jurisdiction of incorporation.


 


23.11.2       The Borrower shall not permit to exist an establishment for the
purpose of Council Regulation (EC) No 1346/2000 in any jurisdiction other than
its jurisdiction of incorporation.


 


23.12       Loans


 


The
Borrower will not make any loan or provide any other form of credit or
financial accommodation to any person.


 


23.13       Contracts


 


The
Borrower may not enter into any material contract other than those contracts
listed in Clause 18.19.2.


 


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23.14       Dividends,
subordination and share capital


 


The Borrower shall not:


 


23.14.1       other than with monies standing to the credit of the General
Account, pay any dividends, make any distributions or repay or redeem any of
its share capital; or


 


23.14.2       other than with the prior written consent of the Agent, issue any
further shares or alter any rights attaching to its issued shares as at the
date of this Agreement.


 


23.15       Consents


 


The Borrower must ensure that:


 


23.15.1       all Relevant Consents; and


 


23.15.2       all statutory requirements, as are necessary:


 


(X)          to enable it to perform its obligations under the Finance Documents
or Management Agreements to which it is a party; and


 


(Y)          in connection with the management, use and occupation of the
Properties,


 


are duly obtained and maintained in full force and
effect or, as the case may be, complied with.


 


23.16       Pensions


 


23.16.1       On and after the date of this Agreement the Borrower shall ensure
that it is not at any time an Employer (as defined in Section 318 of the
Pensions Act 2004) of an ‘occupational pension scheme’ which is not a ‘money
purchase scheme’ (both terms as defined in the Pension Schemes Act 1993).


 


23.16.2       The Borrower shall as soon as possible after becoming aware of it
notify the Agent of any investigation or proposed investigation by the Pensions
Regulator which is reasonably likely to lead to the issue of a Financial
Support Direction or a Contribution Notice to it.


 


23.16.3       The Borrower shall ensure that it does not receive a Financial
Support Direction or a Contribution Notice from the Pensions Regulator unless
the Agent is satisfied that that Financial Support Direction or a Contribution
Notice would not have a Material Adverse Effect.


 


23.17       Taxes


 


The Borrower shall ensure that it pays all Taxes shown
to be due and payable by it in any tax assessment or demand within the period for
payment of such Tax.


 


23.18       Asbestos


 


The Borrower shall ensure that all asbestos remediation
work is satisfactorily carried out with respect to St. Martin’s Lane and a
report that the work has been satisfactorily completed by a reputable
professional competent in providing such reports is delivered to the Agent
within the period of six months commencing on the date of this Agreement, the


 


58





















 


identity of the professional having been approved by
the Agent (acting reasonably) and such report to be in a form and substance
satisfactory to the Agent (acting reasonably).


 


24.          EVENTS OF DEFAULT


 


Each of the events or circumstances set out in Clause 24
is an Event of Default.


 


24.1         Non-payment


 


Any person (other than a Finance Party) does not pay
on the due date any amount payable by it pursuant to a Finance Document at the
place at and in the currency in which it is expressed to be payable unless:


 


24.1.1         its failure to pay is caused by administrative or technical error;
and


 


24.1.2         payment is made within 2 (two) Business Days of its due date.


 


In the event of any such administrative or
technical error, the Borrower shall notify the Agent immediately upon becoming
aware of the same.


 


24.2         Financial
covenants


 


Any requirement of Clause 22.1 (Loan to Value Covenant) or 22.2 (Interest Cover) is not satisfied on any four Test Dates.


 


24.3         Other
obligations


 


24.3.1         Any person (other than a Finance Party) does not comply with any
provision of the Finance Documents (other than those referred to in Clause 24.1
(Non-payment) and Clause 24.2 (Financial covenants)).


 


24.3.2         No Event of Default under Clause 24.3.1 above will occur if the
failure to comply is capable of remedy and is remedied within the earlier of 20
(twenty) Business Days of (A) the Agent giving notice to the Borrower or (B) the
Borrower becoming aware of the failure to comply.


 


24.4         Misrepresentation


 


24.4.1         Any representation or statement made or deemed to be made by any
person (other than a Finance Party) in the Finance Documents or any other
document delivered by or on behalf of it under or in connection with any
Finance Document is or proves to have been incorrect or misleading in any
material respect when made or deemed to be made.


 


24.4.2         No Event of Default under Clause 24.4.1 above will occur if the
misrepresentation is capable of remedy and is remedied within the earlier of 20
(twenty) Business Days of (A) the Agent giving notice to the Borrower or (B) the
Borrower becoming aware of the misrepresentation.


 


24.5         Cross
default


 


24.5.1         Any Financial Indebtedness of the Borrower is not paid when due nor
within any originally applicable grace period.


 


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24.5.2         Any Financial Indebtedness of the Borrower is declared to be or
otherwise becomes due and payable prior to its specified maturity as a result
of an event of default (however described).


 


24.5.3         Any commitment for any Financial Indebtedness of the Borrower is
cancelled or suspended by a creditor of the Borrower as a result of an event of
default (however described).


 


24.5.4         Any creditor of the Borrower becomes entitled to declare any
Financial Indebtedness of the Borrower due and payable prior to its specified
maturity as a result of an event of default (however described).


 


24.5.5         No Event of Default will occur under this Clause 24.5 if the
aggregate amount of Financial Indebtedness or commitment for Financial
Indebtedness falling within Clauses 24.5.1 to 24.5.4 above is less than
£250,000 (or its equivalent in any other currency or currencies).


 


24.6         Insolvency


 


24.6.1         The Borrower is unable or admits inability to pay its debts as they
fall due, suspends making payments on any of its debts or, by reason of actual
or anticipated financial difficulties, commences negotiations with one or more
of its creditors with a view to rescheduling any of its indebtedness.


 


24.6.2         The value of the assets of the Borrower is less than its liabilities
(taking into account contingent and prospective liabilities).


 


24.6.3         A moratorium is declared in respect of any indebtedness of the
Borrower.


 


24.7         Insolvency
proceedings


 


Any corporate action, legal proceedings or other
procedure or formal step is taken in relation to:


 


24.7.1         other than any winding up petition which the Agent is satisfied is
both (a) frivolous or vexatious and (b) which will be discharged or
dismissed within 5 Business Days (or such later date to which the Agent agrees)
of being filed or if earlier the day on which it is advertised, the suspension
of payments, a moratorium of any indebtedness, winding-up, dissolution,
administration or reorganisation (by way of voluntary arrangement, scheme of
arrangement or otherwise) of the Borrower (other than a solvent liquidation or
reorganisation to which the Agent has given its prior written consent);


 


24.7.2         a composition, assignment or arrangement with any creditor of the
Borrower;


 


24.7.3         the appointment of a liquidator, receiver, administrator,
administrative receiver, compulsory manager or other similar officer in respect
of the Borrower or any of its assets; or


 


24.7.4         enforcement of any Security over any assets of the Borrower,


 


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


 


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24.8         Creditors’
process


 


Any expropriation, attachment, sequestration, distress
or execution affects any asset or assets of the Borrower.


 


24.9         Ownership
of the Borrower


 


Without the Majority Lenders prior written consent,
the Borrower ceases to be directly owned by the Shareholder.


 


24.10       Unlawfulness


 


It is or becomes unlawful or impossible for any person
(other than a Finance Party) to perform and observe, or to procure the
performance or observance of, any of its obligations under the Finance
Documents and/or the Management Agreement.


 


24.11       Repudiation


 


Any party to a Finance Document (other than a Finance
Party) or the Management Agreement repudiates a Finance Document or the
Management Agreement or evidences an intention to repudiate a Finance Document
or the Management Agreement.


 


24.12       Compulsory
Acquisition


 


Other than where the Agent is satisfied both that the
proceeds of such compulsory acquisition will be applied by the Borrower in
prepayment of the Loans and that there will be no Material Adverse Effect in
connection with such order, an order is made for the compulsory acquisition of
all or any part of a Property.


 


24.13       Major
damage


 


All or any part of a Property is destroyed or
otherwise damaged and the Agent determines (taking into account the proceeds of
any insurance) that the destruction or damage could result in a Material
Adverse Effect.


 


24.14       Manager


 


24.14.1       The Manager fails to pay any amount payable by it under the
Management Agreement without set-off, deduction or counterclaim or breaches any
obligation expressed to be assumed by it under the Management Agreement;


 


24.14.2       the Manager ceases to be liable for the obligations expressed to be
assumed by it under the Management Agreement; or


 


24.14.3       any of the events referred to in Clauses 24.5 (Insolvency) to 24.8 (Creditors’ Process) occurs in respect of
the Manager; and


 


the Agent is satisfied that any such event may have a
Material Adverse Effect.


 


24.15       Material
adverse change


 


Any event or circumstance occurs which the Agent
reasonably believes might have a Material Adverse Effect.


 


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24.16       Headlease


 


Forfeiture proceedings are commenced against the
Borrower under the Headlease or the Headlease is forfeited.


 


24.17       Pensions


 


The Pensions Regulator issues a Financial Support
Direction or a Contribution Notice to the Borrower which has or is reasonably
likely to have a Material Adverse Effect.


 


24.18       Acceleration


 


On and at any time after the occurrence of an Event of
Default which is continuing the Agent may, and shall if so directed by the
Majority Lenders, by notice to the Borrower:


 


24.18.1       cancel the Total Commitments whereupon they shall immediately be
cancelled;


 


24.18.2       declare that all or part of the Loans, together with accrued
interest, and all other amounts accrued or outstanding under the Finance
Documents be immediately due and payable, whereupon it shall become immediately
due and payable; and/or


 


24.18.3       declare that all or part of the Loans be payable on demand,
whereupon it shall immediately become payable on demand by the Agent on the
instructions of the Majority Lenders.


 


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SECTION 8


 


CHANGES TO PARTIES


 


25.          CHANGES TO THE LENDERS


 


25.1         Assignments
and transfers by the Lenders


 


25.1.1         Subject to this Clause 25, a Lender (the “Existing
Lender”) may assign any of its rights or transfer by novation any of
its rights and obligations under this Agreement to any person, bank, financial
institution, trust, fund or other entity which is regularly engaged in or
established for the purpose of making, purchasing or investing in loans,
securities or other financial assets (the “New Lender”).


 


25.1.2         An assignment will only be effective:


 


(A)           on receipt by the Agent of written confirmation from the New Lender (in
form and substance satisfactory to the Agent) that the New Lender will assume
the same obligations to the other Finance Parties as it would have been under
if it was an Original Lender; and


 


(B)          if it is in an amount of equal to or more than £2,000,000.


 


25.1.3         A transfer will only be effective if the procedure set out in Clause
25.4 (Procedure for transfer) is complied
with.


 


25.1.4         If:


 


(A)          a Lender assigns or transfers any of its rights or obligations under
the Finance Documents or changes its Facility Office; and


 


(B)          as a result of circumstances existing at the date the assignment,
transfer or change occurs, the Borrower would be obliged to make a payment to
the New Lender or Lender acting through its new Facility Office under Clause 13
(Tax gross-up and indemnities) or Clause 14
(Increased Costs),


 


then the New Lender or Lender acting through its new
Facility Office is only entitled to receive payment under those Clauses to the
same extent as the Existing Lender or Lender acting through its previous
Facility Office would have been if the assignment, transfer or change had not
occurred.


 


25.2         Assignment
or transfer fee


 


The New Lender shall, on the date upon which an
assignment or transfer takes effect, pay to the Agent (for its own account) a
fee of £1,000.


 


25.3         Limitation
of responsibility of Existing Lenders


 


25.3.1         Unless expressly agreed to the contrary, an Existing Lender makes no
representation or warranty and assumes no responsibility to a New Lender for:


 


(A)          the legality, validity, effectiveness, adequacy or enforceability of
the Finance Documents or any other documents;


 


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(B)          the financial condition of the Borrower;


 


(C)          the performance and observance by the Borrower of its obligations
under the Finance Documents or any other documents; or


 


(D)          the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document or any other document,


 


and any representations or warranties
implied by law are excluded.


 


25.3.2         Each New Lender confirms to the Existing Lender and the other
Finance Parties that it:


 


(A)          has made (and shall continue to make) its own independent
investigation and assessment of the financial condition and affairs of the
Borrower and its related entities in connection with its participation in this
Agreement and has not relied exclusively on any information provided to it by
the Existing Lender in connection with any Finance Document; and


 


(B)          will continue to make its own independent appraisal of the
creditworthiness of the Borrower and its related entities whilst any amount is
or may be outstanding under the Finance Documents or any Commitment is in
force.


 


25.3.3         Nothing in any Finance Document obliges an Existing Lender to:


 


(A)          accept a re-transfer from a New Lender of any of the rights and
obligations assigned or transferred under this Clause 25; or


 


(B)          support any losses directly or indirectly incurred by the New Lender
by reason of the non-performance by the Borrower of its obligations under the
Finance Documents or otherwise.


 


25.4         Procedure
for transfer


 


25.4.1         A transfer is effected in accordance with Clause 25.4.2 below when
the Agent executes an otherwise duly completed Transfer Certificate delivered
to it by the Existing Lender and the New Lender.  The Agent shall, as soon as reasonably
practicable after receipt by it of a duly completed Transfer Certificate
appearing on its face to comply with the terms of this Agreement and delivered
in accordance with the terms of this Agreement, execute that Transfer
Certificate.


 


25.4.2         On the Transfer Date:


 


(A)          to the extent that in the Transfer Certificate the Existing Lender
seeks to transfer by novation its rights and obligations under the Finance
Documents the Borrower and the Existing Lender shall be released from further
obligations towards one another under the Finance Documents and their
respective rights against one another under the Finance Documents shall be
cancelled (being the “Discharged Rights and
Obligations”);


 


(B)          the Borrower and the New Lender shall assume obligations towards one
another and/or acquire rights against one another which differ from the
Discharged Rights and Obligations only insofar as the Borrower and the


 


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New Lender
have assumed and/or acquired the same in place of the Borrower and the Existing
Lender;


 


(C)          the Agent, the Arranger, the Security Trustee, the New Lender and
other Lenders shall acquire the same rights and assume the same obligations
between themselves as they would have acquired and assumed had the New Lender
been an Original Lender with the rights and/or obligations acquired or assumed
by it as a result of the transfer and to that extent the Agent, the Arranger,
the Security Trustee and the Existing Lender shall each be released from
further obligations to each other under the Finance Documents; and


 


(D)          the New Lender shall become a Party as a “Lender”.


 


25.5         Disclosure
of information


 


25.5.1         Any Lender may disclose to its professional advisers, its auditors,
any of its Affiliates and any other person:


 


(A)          to (or through) whom that Lender assigns or transfers (or may
potentially assign or transfer) all or any of its rights and obligations under
this Agreement;


 


(B)          with (or through) whom that Lender enters into (or may potentially
enter into) any sub-participation in relation to, or any other transaction
under which payments are to be made by reference to, this Agreement or the
Borrower;


 


(C)          to whom, and to the extent that, information is required to be
disclosed by any applicable law or regulation; or


 


(D)          any rating agency,


 


any information about the Borrower, the Group and the
Finance Documents as that Lender shall consider appropriate provided that, in
the case of any person to whom information is disclosed under (A) or (B) above
(except where such disclosure is made in connection with (i) any
securitisation or capital markets issue of which a participation in the Loans
is to form a part or (ii) any general syndication), such person agrees to
keep such information confidential.


 


25.5.2         The Lenders may from time to time carry out credit checks on the
Borrower.


 


25.6         Tranching


 


The Finance Parties may whether in connection with any
securitisation, syndication, or other assignment or transfer of any or all of
their rights and obligations under this Agreement or otherwise, subdivide,
split, sever or modify any Facility provided that there shall be no overall
increase in any payments by the Borrower under this Agreement following such
subdivision, split, severance or modification of any Facility.


 


25.7         Securitisation,
Syndication or Sell Down


 


The Borrower agrees to co-operate with the Finance
Parties in connection with any sale or transfer of the Finance Parties’
interest in any Loan and/or any of the Finance Documents or in connection with
any securitisation, syndication, assignment or transfer of any Loan or


 


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part of any Loan whether alone or in conjunction with
any other loan or loans and agrees to provide such information and to execute
such documents as the Agent may reasonably request (including making available
senior management and representatives of the Borrower to participate in bank
meetings and/or rating agency and investor meetings at such time and places as
the Agent may reasonably request and providing the Finance Parties with all the
information reasonably required by them to complete such sale, transfer,
securitisation or syndication of any Loan). 
Any such securitisation, syndication, assignment or other transfer of
any Loan is to be made without additional costs being incurred by the
Borrower.  All costs and expenses
(including legal fees) in connection with the negotiation, preparation,
printing, execution, syndication, assignment or transfer and securitisation of
any Loan or any part of it and/or any of the Finance Documents shall be borne
by the Finance Parties.


 


To ensure an orderly and effective syndication or
securitisation of any Facility, the Borrower agrees that until the completion
of that process (as determined by Citigroup), the Borrower will not, and will
not permit any of its Subsidiaries to, syndicate or issue, attempt to syndicate
or issue, announce or authorise the announcement of the syndication or issuance
of, or engage in discussions concerning the syndication or issuance of, any
debt facility (including the establishment of a series of bilateral
arrangements) or debt securities (including any renewals thereof) in the
commercial bank or capital markets, without the prior written consent of
Citigroup; provided that the foregoing shall not limit the Borrower’s ability
to issue commercial papers, utilise other short-term debt programmes currently
in place or issue equity securities.


 


26.          ASSIGNMENTS AND TRANSFER BY THE BORROWER


 


The Borrower may not assign any of its rights or
transfer any of its rights or obligations under the Finance Documents.


 


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SECTION 9


 


THE FINANCE PARTIES


 


27.          ROLE OF THE AGENT, THE ARRANGER AND THE
SECURITY TRUSTEE


 


27.1         Appointment
of the Agent


 


27.1.1         Each other Finance Party appoints the Agent to act as its agent
under and in connection with the Finance Documents.


 


27.1.2         Each other Finance Party authorises the Agent to exercise the
rights, powers, authorities and discretions specifically given to the Agent
under or in connection with the Finance Documents together with any other
incidental rights, powers, authorities and discretions.


 


27.2         Duties
of the Agent


 


27.2.1         The Agent shall promptly forward to a Party the original or a copy
of any document which is delivered to the Agent for that Party by any other
Party.


 


27.2.2         Except where a Finance Document specifically provides otherwise, the
Agent is not obliged to review or check the adequacy, accuracy or completeness
of any document it forwards to another Party.


 


27.2.3         If the Agent receives notice from a Party referring to this
Agreement, describing a Default and stating that the circumstance described is
a Default, it shall promptly notify the Finance Parties.


 


27.2.4         If the Agent is aware of the non-payment of any principal, interest,
commitment fee or other fee payable to a Finance Party (other than the Agent or
the Arranger) under this Agreement it shall promptly notify the other Finance
Parties.


 


27.2.5         The Agent’s duties under the Finance Documents are solely mechanical
and administrative in nature.


 


27.3         Appointment
of the Security Trustee


 


27.3.1         Each other Finance Party appoints the Security Trustee to act as
trustee on its behalf under and in connection with the Finance Documents.


 


27.3.2         Each other Finance Party
authorises the Security Trustee to exercise the rights, powers, authorities and
discretions specifically given to the Security Trustee under or in connection
with the Finance Documents together with any other incidental rights, powers,
authorities and discretions.


 


27.4         Role of
the Security Trustee


 


27.4.1         The Security Trustee declares that it shall hold the security
created or expressed to be created in favour of the Security Trustee pursuant
to the Finance Documents on trust for the benefit of the Finance Parties.  Each of the Parties to this Agreement agrees
that the Security Trustee shall have only those duties, obligations and
responsibilities expressly specified in this Agreement and in the Finance
Documents (and no others shall be implied).


 


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27.4.2         The Security Trustee shall be entitled (i) to set aside by way
of reserve amounts required to meet and (ii) to make and pay any
deductions and withholdings (on account of Taxes or otherwise) which it is or
may be required by any applicable law to make from any distribution or payment
made by it under this Agreement and to pay all Taxes which may be assessed
against it in respect of any assets or revenues that are subject to the
security created or expressed to be created in favour of the Security Trustee
pursuant to the Finance Documents or as a consequence of performing its duties,
or by virtue of its capacity as Security Trustee under any of the Finance
Documents or otherwise (other than in connection with its remuneration for
performing its duties under this Agreement).


 


27.4.3         If the Security Trustee receives notice from the Borrower or any
other person referring to a Default under this Agreement, it shall promptly
notify the Lenders.


 


27.5         Role of
the Arranger


 


Except as specifically provided in the Finance
Documents, the Arranger has no obligations of any kind to any other Party under
or in connection with any Finance Document.


 


27.6         No
fiduciary duties


 


27.6.1         Nothing in this Agreement constitutes the Agent or the Arranger as a
trustee or fiduciary of any other person.


 


27.6.2         Neither the Agent nor the Arranger shall be bound to account to any
Lender for any sum or the profit element of any sum received by it for its own
account.


 


27.7         Business
with the Group


 


The Agent, the Arranger and the Security Trustee may
accept deposits from, lend money to and generally engage in any kind of banking
or other business with any member of the Group.


 


27.8         Rights
and discretions of the Agent and Security Trustee


 


27.8.1         The Agent and/or Security Trustee, may rely on:


 


(A)          any representation, notice or document believed by it to be genuine,
correct and appropriately authorised; and


 


(B)          any statement made by a director, authorised signatory or employee
of any person regarding any matters which may reasonably be assumed to be
within his knowledge or within his power to verify.


 


27.8.2         The Agent and/or Security Trustee may assume (unless it has received
notice to the contrary in its capacity as agent or trustee for the Lenders)
that:


 


(A)          no Default has occurred (unless it has actual knowledge of a Default
arising under Clause 24.1 (Non-payment));


 


(B)          any right, power, authority or discretion vested in any Party or the
Majority Lenders has not been exercised; and


 


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(C)          any notice or request made by the Borrower (other than the Drawdown
Request) is made on behalf of and with the consent and knowledge of the
Borrower.


 


27.8.3         The Agent and/or Security Trustee may engage, pay for and rely on
the advice or services of any lawyers, accountants, surveyors or other experts.


 


27.8.4         The Agent and/or the Security Trustee may act in relation to the
Finance Documents through its personnel and agents.


 


27.8.5         The Agent and/or the Security Trustee may disclose to any other Party
any information it reasonably believes it has received as agent under this
Agreement.


 


27.8.6         Notwithstanding any other provision of any Finance Document to the
contrary, neither the Agent, Security Trustee nor the Arranger is obliged to do
or omit to do anything if it would or might in its reasonable opinion
constitute a breach of any law or regulation or a breach of a fiduciary duty or
duty of confidentiality.


 


27.9         Majority
Lenders’ instructions


 


27.9.1         Unless a contrary indication appears in a Finance Document, the
Agent shall (i) exercise any right, power, authority or discretion vested
in it as Agent in accordance with any instructions given to it by the Majority
Lenders (or, if so instructed by the Majority Lenders, refrain from exercising
any right, power, authority or discretion vested in it as Agent) and (ii) not
be liable for any act (or omission) if it acts (or refrains from taking any
action) in accordance with an instruction of the Majority Lenders.


 


27.9.2         Unless a contrary indication appears in a Finance Document, any
instructions given by the Majority Lenders will be binding on all the Finance
Parties.


 


27.9.3         The Agent may refrain from acting in accordance with the
instructions of the Majority Lenders (or, if appropriate, the Lenders) until it
has received such security as it may require for any cost, loss or liability
(together with any associated VAT) which it may incur in complying with the
instructions.


 


27.9.4         In the absence of instructions from the Majority Lenders, (or, if
appropriate, the Lenders) the Agent may act (or refrain from taking action) as
it considers to be in the best interest of the Lenders.


 


27.9.5         The Agent is not authorised to act on behalf of a Lender (without
first obtaining that Lender’s consent) in any legal or arbitration proceedings
relating to any Finance Document.


 


27.10       Responsibility
for documentation


 


Neither the Agent, the Arranger nor the Security
Trustee:


 


27.10.1       is responsible for the adequacy, accuracy and/or completeness of any
information (whether oral or written) supplied by the Agent, the Arranger, the
Security Trustee, the Borrower or any other person given in or in connection
with any Finance Document; or


 


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27.10.2       is responsible for the legality, validity, effectiveness, adequacy
or enforceability of any Finance Document or any other agreement, arrangement
or document entered into, made or executed in anticipation of or in connection
with any Finance Document.


 


27.11       Exclusion
of liability


 


27.11.1       Without limiting Clause 27.11.2 below, the Agent will not be liable
for any action taken by it under or in connection with any Finance Document,
unless directly caused by its gross negligence or wilful misconduct.


 


27.11.2       No Party (other than the Agent) may take any proceedings against any
officer, employee or agent of the Agent in respect of any claim it might have
against the Agent or in respect of any act or omission of any kind by that
officer, employee or agent in relation to any Finance Document and any officer,
employee or agent of the Agent may rely on this Clause.


 


27.11.3       The Agent will not be liable for any delay (or any related
consequences) in crediting an account with an amount required under the Finance
Documents to be paid by the Agent if the Agent has taken all necessary steps as
soon as reasonably practicable to comply with the regulations or operating
procedures of any recognised clearing or settlement system used by the Agent
for that purpose.


 


27.12       Lenders’
indemnity to the Agent and Security Trustee


 


Each Lender shall (in proportion to its share of the
Total Commitments or, if the Total Commitments are then zero, to its share of
the Total Commitments immediately prior to their reduction to zero) indemnify
the Agent and/or the Security Trustee, within 3 (three) Business Days of
demand, against any cost, loss or liability incurred by the Agent or the
Security Trustee (otherwise than by reason of the Agent’s or Security Trustee’s
(as the case may be) gross negligence or wilful misconduct) in acting as Agent
or Security Trustee under the Finance Documents (unless the Agent or Security
Trustee has been reimbursed by the Borrower pursuant to a Finance Document).


 


27.13       Resignation
of the Agent or Security Trustee


 


27.13.1       The Agent and/or Security Trustee may resign and appoint one of its
Affiliates acting through an office in the United Kingdom as successor by
giving notice to the other Finance Parties and the Borrower.


 


27.13.2       Alternatively the Agent and/or Security Trustee may resign by giving
notice to the other Finance Parties and the Borrower, in which case the
Majority Lenders (after consultation with the Borrower) may appoint a successor
Agent or Security Trustee (on the case may be).


 


27.13.3       If the Majority Lenders have not appointed a successor Agent or
Security Trustee (on the case may be) in accordance with Clause 27.13.2 above
within 30 (thirty) days after notice of resignation was given, the Agent or
Security Trustee (as the case may be) (after consultation with the Borrower) may
appoint a successor Agent or Security Trustee (acting through an office in the
United Kingdom).


 


27.13.4       The retiring Agent or Security Trustee (as the case may be) shall,
at its own cost, make available to the successor Agent or Security Trustee such
documents and


 


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records
and provide such assistance as the successor Agent or Security Trustee may
reasonably request for the purposes of performing its functions as Agent or
Security Trustee under the Finance Documents.


 


27.13.5       The Agent’s or Security Trustee’s resignation notice shall only take
effect upon the appointment of a successor.


 


27.13.6       Upon the appointment of a successor, the retiring Agent or Security
Trustee shall be discharged from any further obligation in respect of the
Finance Documents but shall remain entitled to the benefit of this Clause 27.  Its successor and each of the other Parties
shall have the same rights and obligations amongst themselves as they would
have had if such successor had been an original Party.


 


27.13.7       After consultation with the Borrower, the Majority Lenders may, by
notice to the Agent or Security Trustee, require it to resign in accordance
with Clause 27.13.2 above.  In this
event, the Agent or Security Trustee (on the case may be) shall resign in
accordance with Clause 27.13.2 above.


 


27.14       Confidentiality


 


27.14.1       In acting as agent or Trustee for the Finance Parties, the Agent
and/or Security Trustee shall be regarded as acting through its agency division
which shall be treated as a separate entity from any other of its divisions or
departments.


 


27.14.2       If information is received by another division or department of the
Agent or Security Trustee, it may be treated as confidential to that division
or department and the Agent or Security Trustee shall not be deemed to have
notice of it.


 


27.15       Relationship
with the Lenders


 


27.15.1       The Agent may treat each Lender as a Lender, entitled to payments
under this Agreement and acting through its Facility Office unless it has
received not less than 5 (five) Business Days prior notice from that Lender to
the contrary in accordance with the terms of this Agreement.


 


27.15.2       Each Lender shall supply the Agent with any information required by
the Agent in order to calculate the Mandatory Cost in accordance with Schedule 4
(Mandatory Cost formula).


 


27.16       Credit
appraisal by the Lenders


 


Without affecting the responsibility of the Borrower
for information supplied by it or on its behalf in connection with any Finance
Document, each Lender confirms to the Agent and the Arranger that it has been,
and will continue to be, solely responsible for making its own independent
appraisal and investigation of all risks arising under or in connection with
any Finance Document including but not limited to:


 


27.16.1       the financial condition, status and nature of each member of the
Group;


 


27.16.2       the legality, validity, effectiveness, adequacy or enforceability of
any Finance Document and any other agreement, arrangement or document entered
into, made or executed in anticipation of, under or in connection with any
Finance Document;


 


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27.16.3       whether that Lender has recourse, and the nature and extent of that
recourse, against any Party or any of its respective assets under or in
connection with any Finance Document, the transactions contemplated by the
Finance Documents or any other agreement, arrangement or document entered into,
made or executed in anticipation of, under or in connection with any Finance
Document; and


 


27.16.4       the adequacy, accuracy and/or completeness of any information
provided by the Agent, any Party or by any other person under or in connection
with any Finance Document, the transactions contemplated by the Finance
Documents or any other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any Finance Document.


 


27.17       Agent’s
and Security Trustee’s Management Time


 


Any amount payable to the Agent under Clause 15.5 (Indemnity to the Agent and Security Trustees), Clause 17
(Costs and expenses) and Clause 27.12 (Lenders’ indemnity to the Agent and Security Trustee) shall
include the cost of utilising the Agent’s or Security Trustee’s management time
or other resources and will be calculated on the basis of such reasonable daily
or hourly rates as the Agent or Security Trustee may notify to the Borrower and
the Lenders, and is in addition to any fee paid or payable to the Agent under
Clause 12 (Fees).


 


27.18       Deduction
from amounts payable by the Agent


 


If any Party owes an amount to the Agent under the
Finance Documents the Agent may, after giving notice to that Party, deduct an
amount not exceeding that amount from any payment to that Party which the Agent
would otherwise be obliged to make under the Finance Documents and apply the
amount deducted in or towards satisfaction of the amount owed.  For the purposes of the Finance Documents
that Party shall be regarded as having received any amount so deducted.


 


28.          THE SECURITY TRUSTEE


 


28.1         Trust


 


The Security Trustee shall hold the benefit of the
Security Documents to which it is a party in its capacity as Security Trustee
on trust for the Finance Parties.


 


28.2         Perpetuity,
powers, conflict and enforcement


 


28.2.1         The perpetuity period for the trusts established in relation to the
Security Documents by this Agreement shall be eighty years from the date of
this Agreement.


 


28.2.2         The powers conferred upon the Security Trustee by this Agreement and
the Security Documents shall be in addition to any powers which may from time
to time be vested in trustees by the general law.


 


28.2.3         If there is any conflict between the provisions of this Clause 28
and any Security Document with regard to any matters affecting the Security
Trustee, this Clause 28 will prevail.


 


28.2.4         Each Finance Party authorises and directs the Security Trustee (by
itself or by such person(s) as it may nominate) to enforce any security granted
by the


 


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Security Documents as trustee (or as otherwise
provided) on its behalf, subject always to the terms of this Agreement and the
Security Documents.


 


28.3         Additional
Trustees


 


28.3.1         The Security Trustee may, upon giving prior notice to the Borrower
appoint any person established or resident in any jurisdiction (whether a trust
corporation or not) to act either as a separate trustee or as a co-trustee
jointly with the Security Trustee if the Security Trustee considers such
appointment to be in the interests of the Finance Parties.


 


28.3.2         Each of the Finance Parties irrevocably appoints the Security
Trustee to be its attorney in its name and on its behalf to execute any such
instrument of appointment.  Any such
additional trustee shall have such trusts, powers, obligations, authorities an
discretions (not exceeding those conferred on the Security Trustee by the
Finance Documents) and remuneration as shall be conferred or imposed by the
instrument of appointment.  The Security
Trustee shall have power in like manner to remove any such person.  The Borrower shall indemnify such additional
trustee as though it were the Security Trustee in accordance with this Clause.


 


28.4         Liability


 


28.4.1         The Security Trustee shall not be liable:


 


(A)          for any failure to give notice to any third party or to register,
file or record (or any defect in such registration, filing or recording) any
security created pursuant to any Security Document, or effect, procure the
registration of or otherwise protect the floating charge or any other such security
created by or pursuant to the Security Documents under the Land Registration
Act 1925 or nay other registration laws in England or any other jurisdiction;


 


(B)          for any failure to obtain any licence, consent or other authority
for the creation of any such security;


 


(C)          for any failure, omission, or defect in perfecting or protecting the
security constituted by the Security Documents; or


 


(D)          for any other omission or act taken by it in connection with any
Security Document unless directly caused by its gross negligence or wilful
misconduct.


 


28.4.2         The Security Trustee shall have no responsibility whatsoever to any
Finance Party as regards any deficiency which might arise because the Security
Trustee is subject to any tax or withholding from any payment made by it under
any Security Document.


 


28.4.3         Section 1 of the Trustee Act 2000 shall not apply to the duties
of the Security Trustee in relation to the trusts constituted by any Finance
Document.  Where there are any
inconsistencies between that Act and the provisions of that Finance Document,
the provisions of that Finance Document shall, to the extent allowed by law,
prevail and, in the case of any inconsistency with that Act, the provisions


 


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of that Finance Document shall constitute a
restriction or exclusion for the purposes of that Act.


 


28.5         Security Trustee as trustee


 


28.5.1         The Security Trustee has no duty (in the absence of a specific
provision in this Agreement or any Security Document):


 


(E)           to provide any Party with any credit or other information relating
to the business, assets or financial condition of the Borrower whenever coming
into its possession; or


 


(1)           unless specifically requested to do so by the Majority Lenders, to
request any certificates or other documents from the Borrower or any other
person.


 


No person shall be entitled to take any action to
obtain from the Security Trustee any such credit or other information or any
such certificates or documents.


 


28.5.2         The Security Trustee need not (unless and to the extent ordered so
to do by a court of competent jurisdiction) disclose any information
(including, without limitation, information of a confidential, financial or
price-sensitive nature) if such disclosure would or might in the reasonable
opinion of the Security Trustee constitute a breach of any law or regulation or
be otherwise actionable at the suit of any person.


 


28.5.3         The Security Trustee may accept without enquiry such title as the
Borrower may have to the property over which security is intended to be created
by any Security Document or over which a negative pledge is given.


 


28.5.4         Save as otherwise provided in the Finance Documents, all moneys
which under the trusts herein or therein contained are received by the Security
Trustee in its capacity as trustee or otherwise may be invested in the name of
or under the control of the Security Trustee in any investment for the time
being authorised by English law for the investment by trustees of trust money
or in any other investments which may be selected by the Security Trustee with
the consent of the Majority Lenders. 
Additionally, the same may be placed on deposit in the name of or under
the control of the Security Trustee at such bank or institution (including the
Security Trustee) and upon such terms as the Security Trustee may think fit.


 


28.5.5         In no circumstances shall the Security Trustee itself be obliged to
give an indemnity to any receiver who requires an indemnity as a condition of
appointment.


 


28.6         Supplemental Powers


 


28.6.1         The Security Trustee shall have all the powers conferred upon
trustees by the Trustee Act 1925 of England and Wales.


 


28.6.2         The provisions of this Clause 28.6.2 shall supplemental the Trustee
Act 1925.


 


28.6.3         The Security Trustee shall:


 


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(F)           not be under any obligation to hold any title deeds, Security
Documents or any other documents in connection with the assets charged by any
Security Document or any other such security in its own possession or to take
any steps to protect or preserve the same;


 


(G)          without prejudice to paragraph (A) above, be at liberty to hold
the Finance Documents and any other documents relating thereto or to deposit
them in any part of the world with any bank or company whose business includes
undertaking the safe custody of documents or firm of lawyers considered by the Security
Trustee shall not be responsible for or required to insure against any
liability incurred in connection with any such holding or deposit and may pay
all sums required to be paid on account of or in respect of any such deposit;
and


 


(H)          save as expressly otherwise provided in any Finance Document, have
absolute and uncontrolled discretion as to the exercise or non-exercise of its
trusts, powers, authorities and discretions under the Security Documents and
shall not be responsible for any loss or liability which may result from their
exercise or non-exercise and in particular the Security Trustee shall not be
bound to take any action under any provision of any Finance Document unless it
shall first be indemnified to its satisfaction against all costs, expenses,
losses or liabilities to which it may render itself liable or which it may
incur by so doing.


 


28.6.4         The Security Trustee may whenever it thinks fit delegate by power of
attorney or otherwise to any person or persons or fluctuating body of persons
all or any of its trusts, powers, authorities and discretions under any
Security Documents.  Such delegation may
be made upon such terms (including power to sub-delegate) and subject to such
conditions and regulations as the Security Trustee may in the interests of the
Finance Parties think fit.  The Security
Trustee shall not be under any obligation to supervise the proceedings or acts
of any such delegate or any misconduct or default on the part of any such
delegate or sub-delegate unless the Security Trustee wilfully defaulted in such
delegation.


 


28.6.5         The Security Trustee may in the conduct of the trusts instead of
acting personally employ and pay an agent (whether being a lawyer or other
professional person) to transact or conduct, or concur in transacting or
conducting, any business and to do, or concur in doing, all acts required to be
done in connection with the Security Documents. 
The Security Trustee shall not be in any way responsible for any
liability incurred by reason of any misconduct or default on the part of any
such agent or be bound to supervise the proceedings or acts of any such agent
unless the Security Trustee wilfully defaulted in such delegation.


 


28.7         Enforcement


 


No Finance Party (excluding for this purpose the
Security Trustee) shall have any independent power to enforce any of the
Security Documents or to exercise any rights, discretions or powers to grant
any consents or releases under or pursuant to the Security Documents or
otherwise have direct recourse to the security constituted by any of the
Security Documents except through the Security Trustee.


 


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28.8         Release of security


 


The Security Trustee may release any security over any
asset the subject of the Security Documents if:


 


28.8.1         the Majority Lenders consent to such release; or


 


28.8.2         the asset is disposed of in accordance with any express permission
granted in the Finance Documents; or


 


28.8.3         the asset is disposed of by any receiver or other person in
accordance with the powers granted under the Security Documents,


 


29.          CONDUCT OF BUSINESS BY THE FINANCE
PARTIES


 


29.1         No
provision of this Agreement will:


 


29.1.1         interfere with the right of any Finance Party to arrange its affairs
(tax or otherwise) in whatever manner it thinks fit;


 


29.1.2         oblige any Finance Party to investigate or claim any credit, relief,
remission or repayment available to it or the extent, order and manner of any
claim; or


 


29.1.3         oblige any Finance Party to disclose any information relating to its
affairs (tax or otherwise) or any computations in respect of Tax.


 


30.          SHARING AMONG THE FINANCE PARTIES


 


30.1         Payments
to Finance Parties


 


If a Finance Party (a “Recovering
Finance Party”) receives or recovers any amount from the Borrower
other than in accordance with Clause 31 (Payment mechanics)
and applies that amount to a payment due under the Finance Documents then:


 


30.1.1         the Recovering Finance Party shall, within 3 (three) Business Days,
notify details of the receipt or recovery to the Agent;


 


30.1.2         the Agent shall determine whether the receipt or recovery is in
excess of the amount the Recovering Finance Party would have been paid had the
receipt or recovery been received or made by the Agent and distributed in
accordance with Clause 31 (Payment mechanics),
without taking account of any Tax which would be imposed on the Agent in
relation to the receipt, recovery or distribution; and


 


30.1.3         the Recovering Finance Party shall, within 3 (three) Business Days
of demand by the Agent, pay to the Agent an amount (the “Sharing
Payment”) equal to such receipt or recovery less any amount which
the Agent determines may be retained by the Recovering Finance Party as its
share of any payment to be made, in accordance with Clause 31.6 (Partial payments).


 


30.2         Redistribution
of payments


 


The Agent shall treat the Sharing Payment as if it had
been paid by the Borrower and distribute it between the Finance Parties (other
than the Recovering Finance Party) in accordance with Clause 31.6 (Partial payments).


 


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30.3         Recovering
Finance Party’s rights


 


30.3.1         On a distribution by the Agent under Clause 30.2 (Redistribution of payments), the Recovering Finance Party
will be subrogated to the rights of the Finance Parties which have shared in
the redistribution.


 


30.3.2         If and to the extent that the Recovering Finance Party is not able
to rely on its rights under Clause 30.3.1 above, the Borrower shall be liable
to the Recovering Finance Party for a debt equal to the Sharing Payment which
is immediately due and payable.


 


30.4         Reversal
of redistribution


 


If any part of the Sharing Payment received or
recovered by a Recovering Finance Party becomes repayable and is repaid by that
Recovering Finance Party, then:


 


30.4.1         each
Finance Party which has received a share of the relevant Sharing Payment
pursuant to Clause 30.2 (Redistribution of payments)
shall, upon request of the Agent, pay to the Agent for account of that
Recovering Finance Party an amount equal to the appropriate part of its share
of the  Sharing Payment (together with an
amount as is necessary to reimburse that Recovering Finance Party for its
proportion of any interest on the Sharing Payment which that Recovering Finance
Party is required to pay); and


 


30.4.2         that
Recovering Finance Party’s rights of subrogation in respect of any
reimbursement shall be cancelled and the Borrower will be liable to the reimbursing
Finance Party for the amount so reimbursed.


 


30.5         Exceptions


 


30.5.1         This Clause 30 shall not apply to the extent that the Recovering
Finance Party would not, after making any payment pursuant to this Clause, have
a valid and enforceable claim against the Borrower.


 


30.5.2         A Recovering Finance Party is not obliged to share with any other
Finance Party any amount which the Recovering Finance Party has received or
recovered as a result of taking legal or arbitration proceedings, if:


 


(A)          it notified that other Finance Party of the legal or arbitration
proceedings; and


 


(B)          that other Finance Party had an opportunity to participate in those
legal or arbitration proceedings but did not do so as soon as reasonably
practicable having received notice and did not take separate legal or
arbitration proceedings.


 


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SECTION 10


 


ADMINISTRATION


 


31.          PAYMENT MECHANICS


 


31.1         Payments
to the Borrower


 


Each payment to be made to the Borrower under this
Agreement shall be made available by the Lenders to the General Account (with
the exception of the first drawdown hereunder which shall be paid into the bank
account of the Borrower’s Solicitors).


 


31.2         Payments
to the Agent


 


31.2.1         On each date on which the Borrower or a Lender is required to make a
payment under a Finance Document, the Borrower or Lender shall make the same
available to the Agent (unless a contrary indication appears in a Finance
Document) for value on the due date at the time and in such funds specified by
the Agent as being customary at the time for settlement of transactions in the
relevant currency in the place of payment.


 


31.2.2         Payment shall be made to such account in London with such bank as
the Agent specifies.


 


31.3         Distributions
by the Agent


 


Each payment received by the Agent under the Finance
Documents for another Party shall, subject to Clause 31.4 (Distributions
to the Borrower) and Clause 31.5 (Clawback)
be made available by the Agent as soon as practicable after receipt to the
Party entitled to receive payment in accordance with this Agreement (in the
case of a Lender, for the account of its Facility Office), to such account as
that Party may notify to the Agent by not less than 5 (five) Business Days’
notice with a bank in London.


 


31.4         Distributions
to the Borrower


 


The Agent may (with the consent of the Borrower or in
accordance with Clause 32 (Set-off)) apply
any amount received by it for the Borrower in or towards payment (on the date
and in the currency and funds of receipt) of any amount due from the Borrower
under the Finance Documents or in or towards purchase of any amount of any
currency to be so applied.


 


31.5         Clawback


 


31.5.1         Where a sum is to be paid to the Agent under the Finance Documents
for another Party, the Agent is not obliged to pay that sum to that other Party
(or to enter into or perform any related exchange contract) until it has been
able to establish to its satisfaction that it has actually received that sum.


 


31.5.2         If the Agent pays an amount to another Party and it proves to be the
case that the Agent had not actually received that amount, then the Party to
whom that amount (or the proceeds of any related exchange contract) was paid by
the Agent shall on demand refund the same to the Agent together with interest on
that amount from


 


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the
date of payment to the date of receipt by the Agent, calculated by the Agent to
reflect its cost of funds.


 


31.6         Partial
payments


 


31.6.1         If the Agent receives a payment that is insufficient to discharge
all the amounts then due and payable by the Borrower under the Finance
Documents, the Agent shall 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 Finance Parties
under the Finance Documents;


 


(B)          secondly, in or
towards payment pro rata of any accrued interest, fee or commission due to the
A Lenders but unpaid under this Agreement;


 


(C)          thirdly, in or towards
payment pro rata of any principal due to the A Lenders but unpaid under this
Agreement;


 


(D)          fourthly, in or
towards payment pro rata of any amount due (but unpaid) to an A Lender under
Clause 15.2 (Hedging Arrangement Indemnity)
with respect to any Hedging Arrangement entered into in relation to an A Loan;


 


(E)           fifthly, in or
towards payment pro rata of any accrued interest, fee or commission due to the
B Lenders but unpaid under this Agreement


 


(F)           sixthly, in or
towards payment pro rata of any principal due to the B Lenders but unpaid under
this Agreement;


 


(G)          seventhly, in
or towards payment pro rata of any amount due but unpaid to a B Lender under
Clause 15.2 (Hedging Arrangement Indemnity)
with respect to any Hedging Arrangement entered into in relation to an B Loan;
and


 


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


 


31.6.2         The Agent may at its discretion and shall, if so directed by the
Majority Lenders, vary the order set out in Clauses 31.6.1(B) to (D) above.


 


31.6.3         Clauses 31.6.1 and 31.6.2 above will override any appropriation made
by the Borrower.


 


31.7         No
set-off by the Borrower


 


All payments to be made by the Borrower under the
Finance Documents shall be calculated and be made without (and free and clear
of any deduction for) set-off or counterclaim.


 


31.8         Business
Days


 


31.8.1         Any payment which is due to be made on a day that is not a Business
Day shall be made on the next Business Day in the same calendar month (if there
is one) or the preceding Business Day (if there is not).


 


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31.8.2         During any extension of the due date for payment of any principal or
Unpaid Sum under this Agreement interest is payable on the principal or Unpaid
Sum at the rate payable on the original due date.


 


31.9         Currency
of account


 


31.9.1         Subject to Clauses 31.9.2 and 31.9.3 below, Sterling is the currency
of account and payment for any sum due from the Borrower under any Finance
Document.


 


31.9.2         Each payment in respect of costs, expenses or Taxes shall be made in
the currency in which the costs, expenses or Taxes are incurred.


 


31.9.3         Any amount expressed to be payable in a currency other than Sterling
shall be paid in that other currency.


 


31.10       Change of
currency


 


31.10.1       Unless otherwise prohibited by law, if more than one currency or
currency unit are at the same time recognised by the central bank of any
country as the lawful currency of that country, then:


 


(A)          any reference in the Finance Documents to, and any obligations
arising under the Finance Documents in, the currency of that country shall be
translated into, or paid in, the currency or currency unit of that country
designated by the Agent (after consultation with the Borrower); and


 


(B)          any translation from one currency or currency unit to another shall
be at the official rate of exchange recognised by the central bank for the
conversion of that currency or currency unit into the other, rounded up or down
by the Agent (acting reasonably).


 


31.10.2       If a change in any currency of a country occurs, this Agreement
will, to the extent the Agent (acting reasonably and after consultation with
the Borrower) specifies to be necessary, be amended to comply with any
generally accepted conventions and market practice in the Relevant Interbank
Market and otherwise to reflect the change in currency.


 


32.          SET-OFF


 


A Finance Party may set off any matured obligation due
from the Borrower under the Finance Documents (to the extent beneficially owned
by that Finance Party) against any matured obligation owed by that Finance
Party to the Borrower, regardless of the place of payment, booking branch or
currency of either obligation.  If the
obligations are in different currencies, the Finance Party may convert either
obligation at a market rate of exchange in its usual course of business for the
purpose of the set-off.


 


33.          NOTICES


 


33.1         Communications
in writing


 


Any communication to be made under or in connection
with the Finance Documents shall be made in writing and, unless otherwise
stated, may be made by fax or letter.


 


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33.2         Addresses


 


The address and fax number (and the department or
officer, if any, for whose attention the communication is to be made) of each
Party for any communication or document to be made or delivered under or in
connection with the Finance Documents is:


 


33.2.1         in the case of the Borrower, that identified with its signature
below;


 


33.2.2         in the case of each Lender, that notified in writing to the Agent on
or prior to the date on which it becomes a Party; and


 


33.2.3         in the case of the Agent, that identified with its signature below,


 


or any substitute address, fax number or department or
officer as the Party may notify to the Agent (or the Agent may notify to the
other Parties, if a change is made by the Agent) by not less than 5 (five)
Business Days’ notice.


 


33.3         Delivery


 


33.3.1         Any communication or document made or delivered by one person to
another under or in connection with the Finance Documents will only be
effective:


 


(A)          if by way of fax, when received in legible form; or


 


(B)          if by way of letter, when it has been left at the relevant address
or 5 (five) Business Days after being deposited in the post postage prepaid in
an envelope addressed to it at that address,


 


and, if a particular department or officer is
specified as part of its address details provided under Clause 33.2 (Addresses), if addressed to that department or officer.


 


33.3.2         Any communication or document to be made or delivered to the Agent
will be effective only when actually received by the Agent and then only if it
is expressly marked for the attention of the department or officer identified
with the Agent’s signature below (or any substitute department or officer as
the Agent shall specify for this purpose).


 


33.3.3         All notices from or to the Borrower shall be sent through the Agent.


 


33.4         Notification
of address and fax number


 


Promptly upon receipt of notification of an address
and fax number or change of address or fax number pursuant to Clause 33.2 (Addresses) or changing its own address or fax number, the
Agent shall notify the other Parties.


 


33.5         Electronic
communication


 


33.5.1         Any communication to be made between the Agent and a Lender under or
in connection with the Finance Documents may be made by electronic mail or
other electronic means, if the Agent and the relevant Lender:


 


(A)          agree that, unless and until notified to the contrary, this is to be
an accepted form of communication;


 


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(B)          notify each other in writing of their electronic mail address and/or
any other information required to enable the sending and receipt of information
by that means; and


 


(C)          notify each other of any change to their address or any other such
information supplied by them.


 


33.5.2         Any electronic communication made between the Agent and a Lender
will be effective only when actually received in readable form and in the case
of any electronic communication made by a Lender to the Agent only if it is
addressed in such a manner as the Agent shall specify for this purpose.


 


33.6         English
language


 


33.6.1         Any notice given under or in connection with any Finance Document
must be in English.


 


33.6.2         All other documents provided under or in connection with any Finance
Document must be:


 


(A)          in English; or


 


(B)          if not in English, and if so required by the Agent, accompanied by a
certified English translation and, in this case, the English translation will
prevail unless the document is a constitutional, statutory or other official
document.


 


34.          CALCULATIONS AND CERTIFICATES


 


34.1         Accounts


 


In any litigation or arbitration proceedings arising
out of or in connection with a Finance Document, the entries made in the
accounts maintained by a Finance Party are prima facie
evidence of the matters to which they relate.


 


34.2         Certificates
and Determinations


 


Any certification or determination by a Finance Party
of a rate or amount under any Finance Document is, in the absence of manifest
error, conclusive evidence of the matters to which it relates.


 


34.3         Day
count convention


 


Any interest, commission or fee accruing under a
Finance Document will accrue from day to day and is calculated on the basis of
the actual number of days elapsed and a year of 365 days or, in any case where
the practice in the Relevant Interbank Market differs, in accordance with that
market practice.


 


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35.          REINSTATEMENT


 


35.1         If any payment
by the Borrower or any discharge given by
a Finance Party (whether in respect of the obligations of the Borrower or any security for those obligations or otherwise) is avoided or reduced
as a result of insolvency or any similar event:


 


35.1.1         the liability of the Borrower shall continue as if the payment,
discharge, avoidance or reduction had not occurred; and


 


35.1.2         each Finance Party shall be entitled to recover the value or amount
of that security or payment from the Borrower, as if the payment, discharge,
avoidance or reduction had not occurred.


 


36.          PARTIAL INVALIDITY


 


If, at any time, any provision of the Finance
Documents is or becomes illegal, invalid or unenforceable in any respect under
any law of any jurisdiction, neither the legality, validity or enforceability
of the remaining provisions nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction will in any way be
affected or impaired.


 


37.          REMEDIES AND WAIVERS


 


No failure to exercise, nor any delay in exercising,
on the part of any Finance Party, any right or remedy under the Finance
Documents shall operate as a waiver, nor shall any single or partial exercise
of any right or remedy prevent any further or other exercise or the exercise of
any other right or remedy.  The rights
and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.


 


38.          AMENDMENTS AND WAIVERS


 


38.1         Required
consents


 


38.1.1         Subject to Clause 38.2 (Exceptions) any
term of the Finance Documents may be amended or waived only with the consent of
the Majority Lenders and any such amendment or waiver will be binding on all
Parties.


 


38.1.2         The Agent may effect, on behalf of any Finance Party, any amendment
or waiver permitted by this Clause.


 


38.2         Exceptions


 


38.2.1         An amendment or waiver that has the effect of changing or which
relates to:


 


(A)          the definition of “Majority Lenders” in Clause 1.1 (Definitions);


 


(B)          an extension to the date of payment of any principal amount under
the Finance Documents;


 


(C)          a reduction in the Margin or a reduction in the amount of any
payment of principal, interest, fees or commission payable;


 


(D)          an increase in or an extension of any Commitment;


 


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(E)           any provision which expressly requires the consent of all the
Lenders; or


 


(F)           Clause 2.2 (Finance Parties’ rights
and obligations), Clause 25 (Changes to the Lenders)
or this Clause 38,


 


shall not be
made without the prior consent of all the Lenders.


 


38.2.2         An amendment or waiver which relates to the rights or obligations of
the Agent or the Arranger may not be effected without the consent of the Agent
or the Arranger.


 


39.          OFFICERS, EMPLOYEES OR AGENTS OF THE
FINANCE PARTIES


 


The Borrower may not take any proceedings against any
officer, employee or agent of a Finance Party in respect of any claim it might
have against a Finance Party (as the case may be) or in respect of any act or
omission of any kind by that officer, employee or agent in connection with any
Finance Document.  Any officer, employee
or agent of a Finance Party may rely on this clause and enforce its terms under
the Contracts (Rights of Third Parties) Act 1999.


 


40.          COUNTERPARTS


 


Each Finance Document may be executed in any number of
counterparts, and this has the same effect as if the signatures on the
counterparts were on a single copy of the Finance Document.


 


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SECTION 11


 


GOVERNING LAW


 


41.          GOVERNING LAW


 


This Agreement is governed by English law.


 


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SCHEDULE 1


 


THE ORIGINAL PARTIES


 


Part I

The Original A Lenders - other than UK Non-Bank Lenders


 


	
  Name of Original Lender

  	
   

  	
  A Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Citibank
  NA London

  	
   

  	
  £

  	
  82,432,000

  	
   

  
					



 


Part II

The Original B Lenders


 


	
  Name of Original Lender

  	
   

  	
  B Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Citibank
  NA London

  	
   

  	
  £

  	
  25,024,000

  	
   

  
					



 


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Part III

The Original Lenders - UK Non-Bank Lenders


 


	
  Name of Original Lender

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


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SCHEDULE 2


 


CONDITIONS
PRECEDENT


 


Conditions
Precedent to Initial Drawdown


 


1.1           Original Borrower


 


1.1.1           A copy of the
constitutional documents of the Borrower and the Shareholder.


 


1.1.2           A copy of a resolution of
the board of directors of the Borrower and the Shareholder:


 


(A)          approving the terms of, and
the transactions contemplated by, the Finance Documents to which it is a party
and resolving that it execute the Finance Documents to which it is a party;


 


(B)           authorising a specified
person or persons to execute the Finance Documents to which it is a party on
its behalf; and


 


(C)           authorising a specified
person or persons, on its behalf, to sign and/or despatch all documents and
notices (including, in respect of the Borrower, the Drawdown Request) to be
signed and/or despatched by it under or in connection with the Finance
Documents to which it is a party.


 


1.1.3           A specimen of the signature
of each person authorised by the resolution referred to in Clause 1.1.2 above.


 


1.1.4           A certificate of the
Borrower (signed by a director) confirming that borrowing or guaranteeing, as
appropriate, the Total Commitments would not cause any borrowing, guaranteeing
or similar limit binding on it to be exceeded.


 


1.1.5           A list of all the directors
of the Borrower, together with, for each director:


 


(A)          original or certified copy
passport or driving licence; and


 


(B)           original or certified copy
utility bill addressed to such director.


 


1.1.6           A certificate of an
authorised signatory of the Borrower and the Shareholder certifying that each
copy document relating to it specified in this Part I of Schedule 2
is correct, complete and in full force and effect as at a date no earlier than
the date of this Agreement.


 


1.1.7           A written resolution of the
Shareholder amending the articles of the Borrower.


 


1.2           Legal opinions


 


1.2.1           A legal opinion of Herbert
Smith LLP, legal advisers to the Arranger and the Agent in England.


 


1.2.2           If the Shareholder or a
Subordinated Creditor is incorporated in a jurisdiction other than England and
Wales, a legal opinion of the legal advisers to the


 


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Arranger and the Agent in the relevant
jurisdiction, substantially in the form distributed to the Original Lenders
prior to signing this Agreement.


 


1.3           Other documents and evidence


 


1.3.1           The Original Financial
Statements of the Borrower together with a sources and applications statement
of the Borrower and the latest audited financial statements for each
Shareholder.


 


1.3.2           A certified copy of the
bank statements for the Borrower for the previous 12 months.


 


1.3.3           Evidence that the fees,
costs and expenses then due from the Borrower pursuant to Clause 12 (Fees) and Clause 17 (Costs and expenses)
have been paid or will be paid on or by the first Drawdown Date.


 


1.3.4           Each of the Finance
Documents duly executed by the parties thereto.


 


1.3.5           Duly completed Forms 395 in
respect of each Security Document which is capable of registration at the
Companies Registry.


 


1.3.6           Evidence that the Agent
will receive release documentation in respect of any Security which is held by
any person other than the Security Trustee over the assets charged by the
Security Documents.


 


1.3.7           Evidence of the approval of
the transactions contemplated by the Finance Documents by the credit committee
of the Lenders.


 


1.3.8           Details of any Material
Litigation which is pending or threatened against the Borrower or, if there is
none, a certificate signed by a director confirming that this is the case.


 


1.3.9           Details of any Material
Adverse Effect or, if there is none, a certificate signed by a director
confirming that this is the case.


 


1.3.10         A copy of any other
Authorisation or other document, opinion or assurance which the Agent considers
to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and
performance of the transactions contemplated by any Finance Document or for the
validity and enforceability of any Finance Document.


 


1.3.11         A certified copy of each Management
Agreement.


 


1.4           Valuation and Survey


 


1.4.1           Valuation(s) (including a
copy of the insurance valuation of each Property) confirming that the aggregate
value of the Properties as at the proposed Drawdown Date is not less than
£145,000,000.


 


1.4.2           An environmental report
relating to each Property which shall be addressed to the Agent and shall be in
form and substance satisfactory to the Agent.


 


89





















 


1.5           Insurance


 


1.5.1           A copy of the Insurance
Policies and a letter addressed to the Agent from its insurance broker
confirming that the Insurance Policies comply with the requirements of this
Agreement.


 


1.5.2           Evidence that all premiums
which have fallen due on or before the proposed Drawdown Date in respect of the
Insurance Policies have been paid in full.


 


1.6           Property Documentation


 


1.6.1           All title documents
relating to the interests of the Borrower in each Property (or an undertaking
from the Borrower’s Solicitors confirming that they are holding the same and
will forward the same to the Agent’s Solicitors).


 


1.6.2           The results of Land
Registry Searches in favour of the Agent on the appropriate forms against all
of the registered titles comprising each Property giving not less than 10 (ten)
Business Days’ priority beyond the date of the Security Documents and showing
no adverse entries.


 


1.6.3           The Certificates of Title.


 


1.6.4           The original of each
Occupational Lease or an undertaking from the Borrower’s solicitors confirming
that they are holding the same and will forward the same to the Agent’s
solicitors.


 


1.6.5           Appropriate Land Registry
application forms duly completed (including a direction to issue the title
documents to the Agent’s Solicitors) accompanied by all necessary Land Registry
fees.


 


1.6.6           Each notice of assignment
and confirmation from the Account Bank that it will return a duly completed
acknowledgement relating thereto which is required to be served on, and
acknowledged by, the Account Bank pursuant to Clause 4 of the Account Charge.


 


1.6.7           A notice of assignment and
a duly completed acknowledgement relating thereto which is required to be
served on, and acknowledged by, the Manager pursuant to the Account Charge.


 


1.6.8           All Authorisations
necessary for the charging of each Property to the Security Trustee (if any).


 


1.6.9           An undertaking from the
Borrower’s Solicitors to use reasonable endeavours forthwith to satisfy any
requisitions raised by HM Land Registry in connection with the application to
register the Security created in respect of each Property under the Security
Documents.


 


1.6.10         Confirmation from the
Borrower that the occupancy of each Property is in accordance with the
Certificates of Title.


 


1.6.11         A schedule of all title
deeds and documents to be handed over pursuant to Clause 1.6.1 above stating
whether original, certified copy or copy.


 


90





















 


1.6.12         Evidence of the Borrower’s
compliance with the obligations under Clause 21.5 (VAT Election).


 


1.6.13         Evidence in a form
satisfactory to the Agent that the making of the Loans will not cause the
Borrower to be in breach of Clause 22.1 (Loan to Value Covenant).


 


1.6.14         Evidence that all consents,
permission and approvals (including any consent, notice or registration fee
required under any Headlease) required in respect of any Security Document have
been duly obtained and are in full force and effect.


 


1.6.15         Notice to the landlord of the
Sanderson of the security created by the security documents.


 


1.7           Tax Documentation


 


1.7.1           The Tax Report.


 


1.8           Bank Accounts


 


1.8.1           Evidence satisfactory to
the Agent of the establishment of such bank accounts as the Agent requires
pursuant to Clause 20 (Bank Accounts).


 


1.8.2           Duly signed bank mandates
for each bank account referred to in Clause 1.8.1 above.


 


91





















 


SCHEDULE 3


 


DRAWDOWN REQUEST


 


From:      [IAN
SCHRAGER LONDON] LIMITED


 


To:          [Agent]


 


Dated:


 


Dear Sirs


 


IAN SCHRAGER LONDON
LIMITED — £109,400,000 Facility Agreement


 


dated
[         ] 2005 (the “Agreement”)


 


1              We refer to the
Agreement.  This is a Drawdown
Request.  Terms defined in the Agreement
have the same meaning in this Drawdown Request unless given a different meaning
in this Drawdown Request.


 


2.             We wish to borrow a [A/B]
Loan on the following terms:


 


	
  Proposed Drawdown Date:

  	
   

  	
  [       ] (or, if
  that is not a Business Day, the

  next Business Day)

  
	
  Amount:

  	
   

  	
  [       ] or, if
  less, the Available [A/B] Facility

  



 


 


3.             We confirm that each
condition specified in Clause 4.2 (Further conditions
precedent) is satisfied on the date of this Drawdown Request.


 


4.             The
proceeds of this Loan should be credited to [account].


 


5.             This
Drawdown Request is irrevocable.


 


	
   

  	
  Yours faithfully

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  authorised signatory for

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [IAN SCHRAGER LONDON] LIMITED

  	
   

  



 


92





















 


SCHEDULE 4


 


MANDATORY COST FORMULA


 


1.             The Mandatory Cost is an addition to the interest rate to compensate
Lenders 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 Agent shall calculate, as a percentage rate, a rate (the “Additional
Cost Rate”) for each Lender, in accordance with the paragraphs set out
below.  The Mandatory Cost will be
calculated by the Agent as a weighted average of the Lenders’ Additional Cost
Rates (weighted in proportion to the percentage participation of each Lender in
the relevant Loan) and will be expressed as a percentage rate per annum.


 


3.             The Additional Cost Rate for any Lender lending from a Facility Office in
a Participating Member State will be the percentage notified by that Lender to
the Agent.  This percentage will be
certified by that Lender in its notice to the Agent to be its reasonable
determination of the cost (expressed as a percentage of that Lender’s
participation in the Loan made from that Facility Office) of complying with the
minimum reserve requirements of the European Central Bank in respect of the
loan made from that Facility Office.


 


4.             The Additional Cost Rate for any Lender lending from a Facility Office in
the United Kingdom will be calculated by the Agent as follows:


 


	
   

  	
  AB+C (B – D) + E x 0.01

  	
   

  
	
   

  	
  100 – (A + C)

  	
  per cent. per annum

  



 


Where:


 


A             is the percentage of Eligible Liabilities (assuming these to be in
excess of any stated minimum) which that 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 Cost and, if the Loan is an Unpaid Sum, the additional rate of
interest specified in Clause 9.3 (Default interest))
payable for the relevant Interest Period on the Loan.


 


C             is the percentage (if any) of Eligible Liabilities which that 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 Agent on interest bearing Special Deposits.


 


E              is designed to compensate Lenders for amounts payable under the Fees
Rules and is calculated by the Agent as being the average of the most
recent rates of charge supplied by the Reference Banks to the Agent pursuant to
paragraph 7 below and expressed in pounds per £1,000,000.


 


93





















 


5.             For the purposes of this Schedule:


 


5.1           “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;


 


5.2           “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;


 


5.3           “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


 


5.4           “Tariff Base” has the meaning given to it in, 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.             If
requested by the Agent, each Reference Bank shall, as soon as practicable after
publication by the Financial Services Authority, supply to the Agent, the rate
of charge payable by that Reference Bank to the Financial Services Authority
pursuant to the Fees Rules in respect of the relevant financial year of
the Financial Services Authority (calculated for this purpose by that Reference
Bank as being the average of the Fee Tariffs applicable to that Reference Bank
for that financial year) and expressed in pounds per £1,000,000 of the Tariff
Base of that Reference Bank.


 


8.             Each Lender shall supply any
information required by the Agent for the purpose of calculating its Additional
Cost Rate.  In particular, but without
limitation, each Lender shall supply the following information on or prior to
the date on which it becomes a Lender:


 


8.1           the
jurisdiction of its Facility Office; and


 


8.2           any other
information that the Agent may reasonably require for such purpose.


 


Each Lender shall promptly notify the Agent of any
change to the information provided by it pursuant to this paragraph.


 


9.             The percentages of each Lender
for the purpose of A and C above and the rates of charge of each Reference Bank
for the purpose of E above shall be determined by the Agent based upon the
information supplied to it pursuant to paragraphs 7 and 8 above and on the
assumption that, unless a Lender notifies the Agent to the contrary, each
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.


 


10.           The Agent shall have no
liability to any person if such determination results in an Additional Cost
Rate which over or under compensates any Lender and shall be entitled to assume
that the information provided by any Lender or Reference Bank pursuant to
paragraphs 7 and 8 above is true and correct in all respects.


 


94





















 


11.           The Agent shall distribute the
additional amounts received as a result of the Mandatory Cost to the Lenders on
the basis of the Additional Cost Rate for each Lender based on the information
provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and
8 above.


 


12.           Any determination by the Agent
pursuant to this Schedule in relation to a formula, the Mandatory Cost, an
Additional Cost Rate or any amount payable to a Lender shall, in the absence of
manifest error, be conclusive and binding on all Parties.


 


13.           The Agent may from time to time,
after consultation with the Borrower and the Lenders, 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.


 


95





















 


SCHEDULE 5


 


FORM OF TRANSFER


 


To:          [          ]
as Agent


 


From:      [The Existing Lender] (the “Existing
Lender”) and [The New Lender] (the “New
Lender”)


 


Dated:


 


[IAN SCHRAGER LONDON] LIMITED — £109,400,000 Facility Agreement


 


dated [       ] 2005 (the “Agreement”)


 


1.             We refer to the
Agreement.  This is a Transfer
Certificate.  Terms defined in the
Agreement have the same meaning in this Transfer Certificate unless given a
different meaning in this Transfer Certificate.


 


2.             We
refer to Clause 25.4 (Procedure for transfer):


 


(a)           (The Existing Lender and the New Lender agree to the Existing Lender
transferring to the New Lender by novation all or part of the Existing Lender’s
Commitment, rights and obligations referred to in the Schedule in
accordance with Clause 25.4 (Procedure for transfer).


 


(b)           The proposed Transfer Date is
[         ].


 


(c)           The Facility Office and address, fax number and attention details
for notices of the New Lender for the purposes of Clause 33.2 (Addresses) are set out in the Schedule.


 


3.             The New Lender expressly
acknowledges the limitations on the Existing Lender’s obligations set out in
Clause 25.3.3 (Limitation of responsibility of Existing
Lenders).


 


4.             [The New Lender confirms
that the person beneficially entitled to interest payable to that Lender in
respect of an advance under a Finance Document is either:


 


(a)           a company resident in the United Kingdom, or a partnership each
member of which is a company resident in the United Kingdom, for United Kingdom
tax purposes; or


 


(b)           a company not so resident in the United Kingdom which carries on a
trade in the United Kingdom through a branch or agency and interest payable in
respect of an advance under a Finance Document falls to be brought into account
in computing the chargeable profits of that company for the purposes of Section 11(2) of
the Taxes Act.]


 


[4/5].       This
Transfer Certificate may be executed in any number of counterparts and this has
the same effect as if the signatures on the counterparts were on a single copy
of this Transfer Certificate.


 


[5/6].       This Transfer Certificate is
governed by English law.


 


96





















 


THE SCHEDULE


 


Commitment/rights and
obligations to be transferred


 


[insert relevant details
including loan type (A/B)]

[Facility Office address, fax number and attention details for notices and
account details for payments,]


 


	
  [Existing Lender]

  	
  [New Lender]

  
	
   

  	
   

  
	
  By:

  	
  By:

  



 


This Transfer Certificate is accepted by the Agent and the Transfer
Date is confirmed as
[           ].


 


[Agent]


 


97





















 


SCHEDULE 6


 


FORM OF COMPLIANCE
CERTIFICATE


 


To:          [      ]
as Agent


 


From:      IAN
SCHRAGER LONDON LIMITED


 


Dated:


 


Dear Sirs


 


[IAN SCHRAGER LONDON]
LIMITED — £109,400,000 Facility Agreement

dated [           ] 2005
(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 that:  [Insert details of covenants to be certified]


 


3.             We
confirm that no Default is continuing.


 


	
  Signed:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Director

  	
  Director

  
	
   

  	
  Of

  	
  Of

  
	
   

  	
  [Borrower]

  	
  [Borrower]

  



 


[insert applicable certification
language]**


 


 


	
   

  	
   

  
	
   

  
	
  for and on behalf of

  
	
   

  
	
  [name of auditors
  of the Borrower]***

  



 


98





















 


SCHEDULE 7


 


FORM OF QUARTERLY REPORT


 


 


	
  Room Statistics

  	
   

  	
  Underwritten SAN

  %

  	
   

  	
  Underwritten SML

  %

  	
   

  	
  Combined

  Underwriting%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Occupancy%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Available
  Rooms

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Occupied
  Rooms

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average
  Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REVENUE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rooms

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Minibar

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Telephone

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Minor
  Operating

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Rents
  and other income

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  TOTAL REVENUE

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPERATING EXPENSES

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rooms

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Minibar

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Telephone

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Minor
  Operating

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Rents
  and other income

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  TOTAL OPERATING EXPENSES

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GROSS OPERATING INCOME

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rooms

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Minibar

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Telephone

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Minor
  Operating

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Rents
  and other income

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  GROSS OPERATING INCOME (GOI)

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OVERHEAD EXPENSES

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Administration
  and General

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Sales
  and Marketing

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  Repairs
  and Maintenance Utilities

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
  TOTAL OVERHEAD EXPENSES

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GROSS OPERATING PROFIT (GOP)

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL FIXED EXPENSES

  	
   

  	
  £

  	
   

  	
   

  	
   

  	
  £

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET OPERATING INCOME (NOI)

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FF&E RESERVE (4%)

  	
   

  	
  £

  	
   

  	
  £

  	
   

  	
  £

  	
   

  



 


99





















 


SIGNATURE PAGE


 


	
  Signed by IAN
  SCHRAGER LONDON

  	
  Borrower’s Address for Notices:

  
	
  LIMITED

  	
   

  
	
   

  	
  20 Thayer Street

  
	
  as Borrower

  	
  London W1M 5LT

  
	
   

  	
   

  
	
   

  	
  Fax Number: 020 7224 1710

  
	
  Signature:

  	
  /s/ Julian Gleek

  	
   

  	
   

  
	
   

  	
  Attention: Julian Gleek

  
	
  Name:

  	
  Julian Gleek

  	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
  Position:

  	
  Director

  	
   

  	
   

  
	
   

  	
  475 Tenth Avenue

  
	
   

  	
  New York

  
	
   

  	
  New York 10018

  
	
   

  	
  United States of America

  
	
   

  	
   

  
	
   

  	
  Fax Number: 001 212 277 4280

  
	
   

  	
   

  
	
   

  	
  Attention: Ed Scheetz

  
	
   

  	
   

  
	
  Signed by CITIGROUP GLOBAL

  	
  Arranger’s Address for Notices:

  
	
  MARKETS LIMITED

  	
   

  
	
   

  	
  Citigroup Real Estates Finance

  
	
  as Arranger

  	
  Citigroup Centre

  
	
   

  	
  Canada Square

  
	
   

  	
  Canary Wharf

  
	
  Signature:

  	
  /s/ David Basra

  	
   

  	
  London E14 5LB

  
	
   

  	
   

  
	
  Name:

  	
  David Basra

  	
   

  	
  Fax Number: 020 7892 0657

  
	
   

  	
   

  
	
  Position:

  	
  Managing Director

  	
   

  	
  Attention: Chris Hunter/Kathleen Dearsley

  
	
   

  	
   

  
	
  Signed by CITIBANK NA LONDON

  	
  A Lender’s Address for Notices:

  
	
   

  	
   

  
	
  as Lender

  	
  Citigroup Real Estates Finance

  
	
   

  	
  Citigroup Centre

  
	
   

  	
  Canada Square

  
	
   

  	
  Canary Wharf

  
	
  Signature:

  	
  /s/ Mark Lightbown

  	
   

  	
  London E14 5LB

  
	
   

  	
   

  
	
  Name:

  	
  Mark Lightbown

  	
   

  	
  Fax Number: 020 7892 0657

  
	
   

  	
   

  
	
  Position:

  	
  Credit Manager

  	
   

  	
  Attention: Chris Hunter/Kathleen Dearsley

  
					



 


1





















 


	
  Signed by CITIBANK NA LONDON

  	
  B Lender’s Address for Notices:

  
	
   

  	
   

  
	
  as Lender

  	
  Citigroup Real Estates Finance

  
	
   

  	
  Citigroup Centre

  
	
   

  	
  Canada Square

  
	
   

  	
  Canary Wharf

  
	
   

  	
  London E14 5LB

  
	
  Signature:

  	
  /s/ Mark Lightbown

  	
   

  	
   

  
	
   

  	
  Fax Number: 020 7892 0657

  
	
  Name:

  	
  Mark Lightbown

  	
   

  	
   

  
	
   

  	
  Attention: Chris Hunter/Kathleen Dearsley

  
	
  Position:

  	
  Credit Manager

  	
   

  	
   

  
	
   

  	
   

  
	
  Signed by CITIBANK INTERNATIONAL

  	
  Agent’s Address for Notices:

  
	
  PLC

  	
   

  
	
   

  	
  Citigroup Real Estates Finance

  
	
  as Agent

  	
  Citigroup Centre

  
	
   

  	
  Canada Square

  
	
   

  	
  Canary Wharf

  
	
   

  	
  London E14 5LB

  
	
   

  	
   

  
	
  Signature:

  	
  /s/ Mark Lightbown

  	
   

  	
  Fax Number: 020 7892 0657

  
	
   

  	
   

  
	
  Name:

  	
  Mark Lightbown

  	
   

  	
  Attention: Chris Hunter/Kathleen Dearsley

  
	
   

  	
   

  
	
  Position:

  	
  Credit Manager

  	
   

  	
   

  
	
   

  	
   

  
	
  Signed by CITIBANK INTERNATIONAL

  	
  Security Trustee’s Address for Notices:

  
	
  PLC

  	
   

  
	
   

  	
  Citigroup Real Estates Finance

  
	
  as Security Trustee

  	
  Citigroup Centre

  
	
   

  	
  Canada Square

  
	
   

  	
  Canary Wharf

  
	
   

  	
  London E14 5LB

  
	
  Signature:

  	
  /s/ Mark Lightbown

  	
   

  	
   

  
	
   

  	
  Fax Number: 020 7892 0657

  
	
  Name:

  	
  Mark Lightbown

  	
   

  	
   

  
	
   

  	
  Attention: Chris Hunter/Kathleen Dearsley

  
	
  Position:

  	
  Credit Manager

  	
   

  	
   

  



 


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