Exhibit 1.1

OEH Italian Facility Agreement

Execution Version

DATED 28 OCTOBER 2010

ORIENT-EXPRESS HOTELS ITALIA S.R.L.

JOINTLY ARRANGED BY

BARCLAYS CORPORATE

AND

CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK

SECURED FACILITY AGREEMENT

EUR 150,000,000 TERM FACILITY AGREEMENT
RELATING TO A PORTFOLIO OF ORIENT-EXPRESS
HOTELS IN ITALY

THE MEDIUM TERM FACILITY REFERRED TO HEREIN

IS SUBJECT TO IMPOSTA SOSTITUTIVA PURSUANT

TO ART. 15 OF PRESIDENTIAL DECREE N0. 601 of 29 SEPTEMBER 1973

CONTENTS

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THIS AGREEMENT is dated 28October 2010 and made in Milan

BETWEEN:

(1)           ORIENT-EXPRESS HOTELS LTD., an exempted limited liability company incorporated in Bermuda with registered number EC13215 (the “Company”);

(2)           THE PERSONS listed in Part 2 of Schedule 1 (The Original Parties) as borrowers (the “Borrowers”);

(3)           THE PERSONS listed in Part 3 of Schedule 1 (The Original Parties) as guarantors (together with the Company, the “Guarantors”);

(4)           THE PERSONS listed in Part 1 of Schedule 1 (The Original Parties) (the “Original Lenders”);

(5)           BARCLAYS CORPORATE and CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK as joint arrangers of the Facility (the “Joint Mandated Lead Arrangers”); and

(6)           CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK as agent and security trustee for the Finance Parties (the “Agent”).

IT IS AGREED as follows:

SECTION 1

INTERPRETATION

1.             DEFINITIONS AND INTERPRETATION

1.1           Definitions

In this Agreement:

“Additional Cost Rate” has the meaning given to it in Schedule 4 (Mandatory Cost Formula).

“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.

“Allocated Debt Amount” means in respect of a Hotel, the amount in euro set out opposite that Hotel in the column headed “Allocated Debt Amount” in Schedule 9 (Allocated Debt Amount).

“Approved Account Bank” means Crédit-Agricole and Corporate Investment Bank, Milan Branch for the FF&E Accounts, the Deposit Account and the Debt Service Accounts or such other bank appointed as such in accordance with Clause 20.2 (Approved Account Banks and Local Account Banks).

“Approved Insurance Broker” means Marsh or any reputable insurance broker approved by the Agent acting reasonably.

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“Assignment Agreement” means an agreement substantially in the form set out in Schedule 6 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.

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

“Availability Period” means the period from and including the date of this Agreement to and including the date falling 30 days after the date of this Agreement, or, if earlier, the date on which the first Utilisation of the Facility is made.

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

(a)           the amount of any outstanding Loans; and

(b)           in relation to any proposed Utilisation, the amount of any Loans that are due to be made on or before the proposed Utilisation Date.

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

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

(a)           the interest (excluding 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 that 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 a 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 European 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 and any TARGET Day and, other than for the purpose of determining the rate of EURIBOR in accordance with paragraph (a) of the definition of the same, Milan.

“Business Plan” means the business plan provided by the Company under Clause 4.1 (Initial conditions precedent) as a condition precedent and any subsequent business plan prepared by the Company in accordance with Clause 19.4 (Business Plan).

“Charged Property” means all the assets and undertakings of the Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security.

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“Commitment” means:

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

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

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

“Compliance Certificate” means a compliance certificate substantially in the form set out in Schedule 7 (Form of Compliance Certificate).

“Condominio Lavatori” means the apartments owned by Hotel Cipriani S.r.l. within the buildings known as “Condominio Lavatori” located at Giudecca 10, 30133 Venice, Italy.

“Confidential Information” means all information relating to the Group or any member of the Group, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from any member of the Group or any of its advisers, in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

(a)           is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 40 (Confidentiality); or

(b)           is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or

(c)           is known by that Finance Party before the date the information is disclosed to it as described above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with any Obligor or the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

“Confidentiality Undertaking” means a confidentiality undertaking substantially in one of the forms recommended by the LMA, as selected by the relevant Finance Party or in any other form agreed between the Company and the Agent.

“Control Account” means each Debt Service Account, the Deposit Account, each FF&E Account, each Operating Account and any other account which may or is required to be opened pursuant to this Agreement.

“Debt Service Accounts” means the accounts maintained by a Borrower in accordance with paragraph (a)(ii) of Clause 20.1 (Designation of Control Accounts)

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and includes its interest in any replacement account or sub-division or sub-account of those accounts.

“Debt Service Deposit Amount” has the meaning given to that term in paragraph (c) of Clause 20.3 (Payments into Control Accounts).

“Deed of Extension and Confirmation” means any deed confirming the existence of a Security and extending that Security in favour of a Hedging Counterparty to secure liabilities under a Hedge Document.

“Default” means an Event of Default or any event or circumstance specified in Clause 25 (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 of the foregoing) be an Event of Default.

“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Agent.

“Deposit Account” means the account maintained by OEH Italia in accordance with paragraph (a)(i) of Clause 20.1 (Designation of Control Accounts) and includes its interest in any replacement account or sub-division or sub-account of that account.

“Disposal Costs” means in relation to a Hotel Disposal, any direct third party costs and expenses (including any amount which represents applicable VAT payable), reasonably and properly incurred by an Obligor in connection with that Hotel Disposal.

“Disruption Event” means:

(a)           a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; and/or

(b)           the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party from:

(i)            performing its payment obligations under the Finance Documents; or

(ii)           communicating with other Parties in accordance with the terms of the Finance Documents,

(and which (in either such case)) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

“Due Diligence Report” means the Legal Due Diligence Report, the Tax Due Diligence Report and the respective reliance letters in favour of the Finance Parties.

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“Endorsement” means each letter of endorsement, a pro-forma of which is at Schedule I to each of the Security Documents containing the assignments of insurance receivables, provided to the Finance Parties in respect of the Insurance Policies.

“Environmental Claim” means any claim, proceeding or investigation by any person in respect of any Environmental Law.

“Environmental Law” means any applicable law or regulation in any jurisdiction in which any Italian Obligor conducts business that relates to the pollution or protection of the environment or harm to or the protection of human health or the health of animals or plants or the generation, handling, storage, use, release or spillage of any emission or substance capable of causing harm to an living organism or the environment.

“Environmental Permits” means any Authorisation and the filing of any notification, report or assessment required under any Environmental Law for the operation of the business of any Italian Obligor conducted on or from the properties owned or used by the relevant Italian Obligor.

“EURIBOR” means, in relation to any Loan or Unpaid Sum on which interest for a given period is to accrue:

(a)           the applicable Screen Rate; or

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

as of the Specified Time on the Quotation Day for the offering of deposits in euro for a period comparable to the Interest Period of the relevant Loan or Unpaid Sum.

“Event of Default” means any event or circumstance specified as such in Clause 25 (Events of Default).

“Excluded Subsidiaries” means each of:

(a)           Luxury Trains Servizi S.r.l.;

(b)           OE Trains S.r.l.; and

(c)           Société de la Cité S.A.,

and their respective Subsidiaries from time to time.

“Existing Facilities” means the facilities made available under (i) a facility agreement dated 20 July 2006 between, among others, Orient-Express Hotels Ltd. and Banca Nazionale del Lavoro S.p.A. described therein as “Lender” and (ii) a facility agreement dated 20 July 2006 between, among others, Orient-Express Hotels Ltd. and Barclays Bank plc described therein as “Facility Agent”.

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“Facility” means the term loan facility in an aggregate amount of EUR 150,000,000 made available under this Agreement as described in Clause 2 (The Facility) to the extent not cancelled or reduced under this Agreement.

“Facility Office” means the office or offices in Italy, notified by a Lender to the Agent in writing on or before the date of this Agreement (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.

“Fee Letter” means any letter or letters dated shortly after the date of this Agreement between, amongst others, the Agent and the Company setting out any of the fees referred to in Clause 11 (Fees).

“FF&E” means furniture, fixtures, equipment, interior and exterior signs as well as other improvements and personal property used in the operation of the Hotels.

“FF&E Account” means the accounts maintained by each Italian Obligor (other than OEH Italia) in accordance with paragraph (a)(iii) of Clause 20.1 (Designation of Control Accounts) and includes its interest in any replacement account or sub-division or sub-account of that account.

“Final Maturity Date” means the date falling on the fifth anniversary of the date of this Agreement or, if such date is not a Business Day, the immediately preceding Business Day.

“Finance Document” means:

(a)           this Agreement;

(b)           the Security Documents including any Deed of Extension and Confirmation;

(c)           the Intercreditor Agreement;

(d)           each Transfer Certificate;

(e)           each Assignment Agreement;

(f)            each Fee Letter;

(g)           each Hedge Document;

(h)           each Utilisation Request; and

(i)            any document designated as such by the Agent and the Company.

“Finance Party” means the Agent, the Joint Mandated Lead Arrangers, each Hedge Counterparty or a Lender.

“Financial Indebtedness” means any indebtedness for or in respect of:

(a)           moneys borrowed;

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

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

(d)           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;

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

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

(g)           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 any derivative transaction, only the mark to market value (or, if any actual amount is due as a result of the termination or close-out of that derivative transaction, that amount) shall be taken into account);

(h)           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;

(i)            any amount raised by the issue of redeemable shares or quotas;

(j)            any amount of any liability under an advance or deferred purchase agreement if one of the primary reasons behind the entry into this agreement is to raise finance; and

(k)           (without double counting) 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.

“GAAP” means generally accepted accounting principles in the jurisdiction of incorporation of the relevant entity, except in respect of the Company, where it is the generally accepted accounting principles in the United States of America.

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

“Group Structure Chart” means the group structure chart showing:

(a)           all members of the Italian Group, including current name and company registration number, its jurisdiction of incorporation and/or establishment and a list of shareholders and quotaholders;

(b)           any person in which any member of the Italian Group holds shares in its issued share capital or equivalent ownership interest of such person; and

(c)           all members of the Group,

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as at the date of this Agreement.

“Hedge Counterparty” means each counterparty to a Hedge Document with a Borrower and any bank or financial institution appointed as a Hedge Counterparty in accordance with terms of the Intercreditor Agreement.

“Hedge Document” means any master agreement, confirmation, schedule or other agreement entered into or to be entered into by a Borrower and a Hedge Counterparty for the purpose of hedging interest rate liabilities in relation to the Facility Agreement.

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

“Hotel” means each of:

(a)           the Hotel Cipriani;

(b)           the Villa San Michele;

(c)           the Hotel Splendido; and

(d)           the Hotel Caruso,

but a hotel shall cease to be a Hotel if the Hotel or the Obligor that owns the Hotel (directly or indirectly) has been sold by way of a Hotel Disposal and the Hotel has ceased to be subject to any Transaction Security.

“Hotel Caruso” means the hotel known as “Hotel Caruso” (and previously known as “Palazzo D’Afflitto”) located at Piazza San Giovanni del Toro 2, Ravello, 84010, Italy and owned by OEH Italia.

“Hotel Cipriani” means:

(a)           the hotel known as “Hotel Cipriani” located at Giudecca 10, 30133, Venice, Italy and owned by Hotel Cipriani S.r.l.;

(b)           the buildings known as “Antichi Granai della Repubblica” located at 6-7-8 Giudecca, 30133 Venice, Italy and owned by Hotel Cipriani S.r.l.;

(c)           the building known as Palazetto Nani Barbaro located at Giudecca 10, 30133 Venice, Italy and owned by Hotel Cipriani S.r.l.;

(d)           Condominio Lavatori; and

(e)           that part of Palazzo Vendramin which is the subject of the Permitted Lease referred to in paragraph (a)(ii) of that definition.

“Hotel de la Cité” means the hotel known as “Hotel de la Cité” located at Hôtel de La Cité, Place Auguste-Pierre Pont, 11000 Carcassonne, France and owned by Société de la Cité S.A.

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“Hotel Disposal” means the sale of a Hotel or part thereof (other than a sale of Condominio Lavatori which is in accordance with Clause 23.4(c)(ix) (Disposals)), the direct or indirect sale of the person or legal entity that owns a Hotel in each case in accordance with this Agreement, or the disposal of a Hotel or part thereof (other than a disposal of Condominion Lavatori which is in accordance with Clause 23.4(c)(ix) (Disposals)), or of the person or legal entity that owns a Hotel pursuant to a compulsory purchase order.

“Hotel Splendido” means:

(a)           the hotel known as “Hotel Splendido” located at Viale Baratta 16, Portofino 16034 Genoa, Italy and owned by Hotel Splendido S.r.l.;

(b)           the hotel known as “Hotel Splendido Mare” and located at Via Roma 2, Portofino 16034 Genoa, Italy and owned by Hotel Splendido S.r.l.; and

(c)           Hotel Vittoria.

“Hotel Vittoria” means the building known as “ex Albergo Vittoria”, located at Via S. Filippo Neri 9, Rapallo, 16035 Genoa, Italy and owned by OEH Italia;

“Initial Debt Service Deposit Amount” has the meaning given to that term in paragraph (i) of Clause 20.4(d) (Debt Service Accounts).

“Initial Valuation” means the initial valuation of each Hotel and reports prepared by the Valuer which can be relied upon by the Finance Parties and delivered pursuant to Clause 4.1 (Initial Conditions Precedent).

“Insurance Policy” means any policy of insurance or assurance in which the Obligors may at any time have an interest entered into in accordance with Clause 24.4 (Insurance).

“Insurance Proceeds” means any proceeds of claim under an Insurance Policy (other than in respect of business interruption, third party, employer’s liability or public liability risks or any such proceeds paid directly to the Agent).

“Insurance Undertaking Default” means a breach by an Obligor of its undertaking to effect or maintain insurances in accordance with Clause 24.4 (Insurance) which is not cured within 30 days (or such shorter period as the Lenders and Agent may agree under the terms of any Endorsement as being permissible for the Agent to terminate, cancel or suspend an Insurance Policy) of the Agent being notified by the relevant insurer of the insurer’s intention to terminate, cancel or suspend the relevant Insurance Policy as a result of such breach provided that in the case of insurance against acts of terrorism, such breach shall be deemed to have occurred only where such insurance cover is not subscribed from the date that insurance becomes available at a price which is in accordance with sound commercial practice.

“Intellectual Property” means any patents, trademarks, service marks, designs, business names, copyrights, design rights, moral rights, inventions, confidential information, knowhow and other intellectual property rights and interests, whether registered or unregistered, and the benefit of all applications and rights to use a Hotel and such other assets of each Obligor.

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“Intercreditor Agreement” means the intercreditor agreement dated shortly after the date of this Agreement, and entered into by the Obligors, each Finance Party and each entity which is listed therein as a “Junior Creditor”.

“Interest Payment Date” means:

(a)           in relation to any Loan, 31 December, 31 March, 30 June and 30 September in each year (or, if not a Business Day, on the Business Day falling immediately thereafter in the same Month or, if none, it shall end on the immediately preceding Business Day); and

(b)           in relation to any Unpaid Sum, the last day of an Interest Period relevant to that Unpaid Sum.

“Interest Period” means, in relation to a Loan, each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).

“Italian Bankruptcy Law” means the Italian bankruptcy law set out in Royal Decree No. 267 of 16 March 1942, as amended by Legislative Decree No. 5 dated 9 January 2006 and by Legislative Decree No. 169 dated 7 September 2007 and as from time to time amended and/or integrated.

“Italian Civil Code” means the Italian Royal Decree No. 262 of 16 March 1942, as amended from time to time.

“Italian GAAP” means generally accepted accounting principles in Italy and the overall conventions, rules, and procedures that define accepted accounting practice in Italy.

“Italian Group” means OEH Italia and each of its Subsidiaries from time to time other than its Excluded Subsidiaries.

“Italian Obligor” means any Obligor incorporated in Italy.

“Italian Qualifying Lender” means a Lender that is a bank resident in Italy for tax purposes or which carries on a business in Italy through a permanent establishment which is the Facility Office and to which any Loan is effectively connected.

“Land Registry” means the competent land registry in Italy.

“Lease” means any present or future lease, underlease, sub-lease, licence, tenancy or right to occupy all or any part of a Hotel and any agreement for the grant of any of the foregoing.

“Legal Due Diligence Report” means the report prepared by the Company’s Italian legal counsel concerning the Italian Group and the business of the Italian Group dated on or about the date hereof.

“Legal Opinions” means the legal opinions delivered to the Agent pursuant to Clause 4.1 (Initial Conditions Precedent).

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“Lender” means:

(a)           any Original Lender; and

(b)           any person, bank, financial institution, trust, fund or other entity which has become a Party as a Lender in accordance with Clause 26 (Changes to Finance Parties),

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

“LMA” means the Loan Market Association.

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

“Local Account Banks” means the existing account banks as listed in Schedule 12 (Operating Accounts).

“Luxembourg Holdco” means Orient-Express Luxembourg Holdings Sàrl, a company registered in Luxembourg as a SARL (“société à responsibilité limitée”) with the company registration number B.95.988 having its registered office at 6C Parc d’Activites, L-5365, Munsbach, Luxembourg, and a share capital of EUR 81,452,500 as at the date of this Agreement.

“Lux GAAP” means generally accepted accounting principles in Luxembourg and the overall conventions, rules, and procedures that define accepted accounting practice in Luxembourg.

“Majority Lenders” means:

(a)           if there are no Loans then outstanding, a Lender or Lenders whose Commitments aggregate more than 662/3 per cent. of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 662/3 per cent. of the Total Commitments immediately prior to the reduction); or

(b)           at any other time, a Lender or Lenders whose participations in the Loans then outstanding aggregate more than 662/3 per cent. of all the Loans then outstanding.

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

“Margin” means 2.50 per cent. per annum.

“Material Adverse Effect” means any present or future event or circumstance which could, in the reasonable opinion of the Agent, have a material adverse effect on:

(a)           the business operations, property, condition (financial or otherwise) or prospects of the Group taken as a whole;

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(b)           the business operations, property, condition (financial or otherwise) or prospects of the Italian Group taken as a whole;

(c)           the ability of an Obligor to perform its obligations under the Finance Documents; or

(d)           the validity or enforceability of the Finance Documents or the rights or remedies of any Lender or Finance Party under the Finance Documents.

“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)           (subject to paragraph (c) below) 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;

(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; and

(c)           if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.

The above rules will only apply to the last Month of any period.

“Net Disposal Proceeds” means, upon a Hotel Disposal, the disposal proceeds derived from that Hotel Disposal after deducting any Disposal Costs incurred in connection with that Hotel Disposal.

“Obligors” means each of the Borrowers and each of the Guarantors.

“OE Finanziamenti” means Orient-Express Finanziamenti S.r.l., being a company wholly owned by Luxembourg Holdco and established for the purpose of providing working capital facilities to the Italian Group.

“OEH Italia” means Orient-Express Hotels Italia S.r.l.

“Operating Account” means each account listed in Schedule 12 (Operating Accounts) maintained by an Italian Obligor in accordance with paragraph (b) of Clause 20.1 (Designation of Control Accounts) and includes its interest in any replacement account or sub-division or sub-account of that account.

“Operating Expenses” means in respect of each Hotel all ordinary and necessary expenses incurred in the operation of that Hotel as a leading international standard five star hotel, including all:

(a)           personnel and labour costs, including salaries, bonuses and pension contributions;

(b)           costs for utilities;

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(c)           administrative expenses;

(d)           insurance costs;

(e)           costs and expenses for marketing, advertising and promotion of the Hotel;

(f)            rental and leasing costs to the extent permitted by this Agreement;

(g)           fees for professional and other third party services; and

(h)           costs for the consumption of food, beverage and other inventories.

“Operating Income” means with respect to any period of time, all income derived from the operation of the Hotels and properly attributable to such period, including rentals or other payments from licensees, lessees or concessionaries of retail space in the Hotels.

“Original Financial Statements” means:

(a)           the audited consolidated financial statements of the Company for the financial year ending 31 December 2009;

(b)           the unaudited financial statements of Luxembourg Holdco for the financial year ending 31 December 2008 and the financial year ending 31 December 2009 prepared in accordance with Lux GAAP;

(c)           in relation to each Italian Obligor, its 2009 statutory accounts including balance sheet, profit and loss account and related annual report (nota integrativa and relazione sulla gestione); and

(d)           in relation to each Obligor other than the Company, its financial statements (comprising a balance sheet and profit and loss account) for its financial year ended December 2009 prepared in accordance with US GAAP together with the existing confirmation from Deloitte, following completion of an agreed procedure, that each of these financial statements are accurately extracted from the audited consolidated financial statements of the Company for the financial year ended 31 December 2009,

which are required to be delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent).

“Palazzo Vendramin” means the building known as “Palazzo Vendramin” located at Guidecca 13, 30133 Venice, Italy and owned, as at the date of this Agreement, by Establissement Vanderelst of Vaduz, Liechtenstein.

“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.

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“Permitted Lease” means the following Leases under which an Obligor is tenant (and includes any replacement or renewal of these leases, where such replacement or renewal is in accordance with Clause 24.15(d)(iii) (Leases)):

(a)           with respect to Hotel Cipriani:

(i)            the gardens which are leased from the Istituzioni di Ricovero e di Educazione pursuant to a lease agreement dated 9 July 2002;

(ii)           a portion of Palazzo Vendramin which is leased from Etablissment Vanderelst of Vaduz, Liechtenstein pursuant to a lease agreement dated 1 December 1989 and last renewed on 11 October 2010;

(iii)          a suite inside Palazzo Vendramin which is leased from Etablissment Vanderelst of Vaduz, Liechtenstein pursuant to a lease agreement dated 1 January 2005 (“Dogaressa Suite”);

(iv)          an apartment which is leased from J.B. Sherwood pursuant to a lease agreement originally dated 18 February 1982 and since renewed on an annual basis;

(v)           a concession granted by the Venice Port Authority for the use of a mooring space consisting of the water space of 294 square meters (24.5x12) along the foundation of S. Giovanni in front of the Hotel Cipriani, extended to further water space of 748.25 (20.5x36.5), and water space of 58.5 square meters placed in the basin of San Marco, in front of the Zecca, for the shuttle boat between Hotel Cipriani and Piazza San Marco and for the pontoon used for the restaurant “The Cip” for the period from 1 January 2010 to 31 December 2010; and

(vi)          storage facilities at Marghera which are leased from S. C. Immobiliare SAS di Campesan Filippo & C pursuant to a lease dated 1 December 2009,

(b)           with respect to Hotel Splendido:

(i)            a building located in Portofino, Piazza Martiri dell’Olivetta No. 64, which is used as an ice cream shop pursuant to a lease agreement dated 1 February 2005;

(ii)           the property known as Hotel Vittoria which is used as staff lodgings pursuant to a lease agreement dated 1 November 2003 and which is leased from OEH Italia as landlord;

(iii)          ten parking spaces in the building located at Piazza della Libertà 13 A, Portofino pursuant to a lease agreement dated 7 December 2001 and ending on 31 December 2007 (now, 31 December 2013) and which is leased from OEH Italia as landlord;

(iv)          an apartment in Viale Barrata 8 used as office space for administration staff leased from Carla Adissoner pursuant to a lease dated 1 March 2006; and

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(v)           an apartment in Via Roma 22 used as staff lodgings leased from Rosselli Clotilde e Annacarla pursuant to a lease dated 1 December 2001 and subsequently renewed,

(c)           with respect to Hotel Caruso:

(i)            the Hotel Caruso building used exclusively as a deluxe hotel pursuant to a lease agreement dated 31 December 2007 and which is leased from OEH Italia as landlord;

(ii)           a staff house at Ravello, Via Monte Brusara 17 leased from Ruocco Armando e Corritore Lidia pursuant to a lease dated 1 January 2009; and

(iii)          a building at Santa Margherita 7, Ravello leased from Eva Maria Deinhammer and Anna Maria Caruso pursuant to a lease dated 1 March 2010,

(d)           with respect to OEH Italia:

(i)            a sales and marketing office at Corso Vercelli 2, Milan leased from Castoldi Irma pursuant to a lease dated 1 May 2009; and

(ii)           a building used as a regional accounting office at Via Gramsci 19 Fiesole leased from Paolo Lopreiato and Chiara Lopreiato pursuant to a lease dated 1 February 2009, and

(e)           with respect to Villa San Michele:

(i)            a storage space in Florence leased from Magazzini Generale e Silos SpA; and

(ii)           an apartment in Viale Barrata 8 used as staff lodgings leased from Carla Adissoner.

“Planning Legislation” means any present or future legislation or regulations, edicts, decrees or other form of secondary legislation relating to civic and other planning rights and conditions and to protected buildings and environmental zones and any other legislation of a similar nature or in any way relating to town and country planning matters applicable to a Hotel.

“Quarter Date” means the end of each financial quarter of the Company, being 30 September, 31 December, 31 March and 30 June.

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

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“Real Property” means:

(a)           each Hotel;

(b)           any real property in which an Obligor holds ownership (diritto di proprietà), or has an interest in it (including any property specified in the Security Documents); and

(c)           any buildings, fixtures, fittings, equipment, fixed plant or machinery from time to time situated on or forming part of the real property referred to in paragraphs (a) or (b) above.

“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

“Recovery Claim” means any claim against any professional or other adviser (including any person who has produced any Due Diligence Report or any Valuation or any other form of report for the acquisition or refinancing or development of any Hotel).

“Reference Banks” means, in relation to EURIBOR and Mandatory Costs the principal London offices of Barclays Bank PLC, Crédit Agricole Corporate and Investment Bank and BNP Paribas.

“Relevant Jurisdiction” means:

(a)           the jurisdiction of incorporation of each Obligor and each member of the Italian Group;

(b)           the jurisdiction where any asset subject to or intended to be subject to the Transaction Security is situated;

(c)           the jurisdiction whose laws govern the perfection of any of the Security Documents; and

(d)           the jurisdiction where any Obligor or member of the Italian Group is conducting its business.

“Repeating Representations” means, except as provided in Clause 18.27 (Repetition), each of the representations set out in Clauses 18.1 (Status) to 18.26 (Ownership of the Obligors).

“Report on Title” means each report on title or supplementary report on title (including a twenty year notarial report on title) or equivalent documents in the jurisdiction concerned prepared by the Company’s legal counsel addressed to the Finance Parties and relating to a Hotel, delivered pursuant to Clause 4.1 (Initial Conditions precedent).

“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

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“Requisite Rating” means the rating of long term unsecured debt instruments in issue by any insurance company which meet at least one of B by Fitch, B2 by Moody’s or B by S & P.

“Screen Rate” means the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period, displayed on the appropriate page of the Reuters 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 Company and the Lenders.

“Secured Obligations” means all present and future obligations and liabilities (whether actual or contingent, whether owed jointly, severally or in any other capacity whatsoever and whether originally incurred by an Obligor or by some other person) of each Obligor to the Finance Parties (or any of them) under each of the Finance Documents.

“Securitisation” means any securitisation or transaction of broadly equivalent economic effect relating to, or using as a reference, the whole or part of the Loans (whether alone or in conjunction with other loans) through the issue of notes on the capital markets.

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

“Security Documents” means each of the documents listed as being a Security Document in Schedule 10 (Security Documents) and each other document purporting to create Security in respect of some or all of the Secured Obligations.

“Servicer” means any servicer or special servicer appointed by the Agent in connection with any Securitisation.

“Specified Time” means a time determined in accordance with Schedule 8 (Timetables).

“Subsidiary” means in relation to any company or corporation, a company or corporation:

(a)           which is controlled, directly or indirectly, by the first mentioned company or corporation;

(b)           more than half the issued share capital or quotas of which is beneficially owned, directly or indirectly by the first mentioned company or corporation;

(c)           which is a Subsidiary of another Subsidiary of the first mentioned company or corporation; and

(d)           in relation to the Borrowers, and to the extent not covered under paragraphs (a) to (c) above, controlled pursuant to Article 2359 of the Italian Civil Code.

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and for this purpose, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body.

“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007.

“TARGET Day” means any day on which TARGET2 is open for the settlement of payments in euro.

“Tax” means any tax, levy, impost, duty, social tax contributions 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).

“Tax Authority” means any government, state or municipality or any local, state, federal or other authority, body or official anywhere in the world exercising a fiscal, revenue, customs or excise function.

“Tax Due Diligence Report” means the report prepared by MGP Studio Tributario concerning the Italian Group and the business of the Italian Group dated on or about the date hereof.

“Total Commitments” means the aggregate of the Commitments being EUR 150,000,000 at the date of this Agreement.

“Transaction Security” means the Security created or expressed to be created in favour of the Agent pursuant to the Security Documents.

“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 Company.

“Transfer Date” means, in relation to a transfer, or as the case may be, an assignment, the later of:

(a)           the proposed Transfer Date specified in the relevant Transfer Certificate or Assignment Agreement; and

(b)           the date on which the Agent executes the relevant Transfer Certificate or Assignment Agreement.

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

“US GAAP” means generally accepted accounting principles in the United States of America and the overall conventions, rules, and procedures that define accepted accounting practice in the United States of America.

“Utilisation” means a utilisation of the Facility.

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“Utilisation Date” means the date of a Utilisation, being the date on which the relevant Loan is to be made.

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

“Valuation” means the Initial Valuation or any valuation prepared by the Valuer in accordance with this Agreement.

“Valuer” means CB Richard Ellis or such other valuer appointed by the Agent.

“VAT” means value added tax as provided for in the Italian Value Added Tax Act 1972 No. 633 and any other Tax of a similar nature.

“Villa San Michele” means the hotel known as “Villa San Michele” located at Via Doccia 4, 50014, Fiesole, Italy and owned by Villa San Michele S.r.l..

1.2           Construction

(a)           Unless a contrary indication appears any reference in a Finance Document to:

(i)            any “Joint Mandated Lead Arranger”, any “Finance Party”, any “Lender”, any “Hedge Counterparty”, any “Obligor”, any “Party” or the “Agent” shall be construed so as to include its successors in title, permitted assigns and permitted transferees;

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

(iii)          “Barclays Corporate” means the corporate banking division of Barclays Bank PLC.;

(iv)          a “disposal” includes any transfer, grant, lease, assignment, sale, participation or other transfer of economic ownership, compulsory acquisition, compulsory sale or other disposal or agreement for the disposal of, or the grant or creation of any interest derived from, any asset;

(v)           a “Finance Document” or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended (however fundamentally), novated, supplemented, extended or restated, including an increase in the Facility from the amount of the Facility as at the date of this Agreement;

(vi)          “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;

(vii)         “land registry” means in respect of any real property, the competent land registry in Italy or any other registry anywhere in the world exercising a similar registration function in respect of that real property;

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(viii)        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) of two or more of the foregoing;

(ix)           a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

(x)            a provision of law is a reference to that provision as amended or re-enacted; and

(xi)           a time of day is a reference to London time.

(b)           Section, Clause and Schedule headings are for ease of reference only.

(c)           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.

(d)           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           Currency Symbols and Definitions

“$” denotes the lawful currency of the United States of America, “£” and “sterling” denotes lawful currency of the United Kingdom and “EUR” and “euro” means the single currency unit of the Participating Member States.

1.4           Third party rights

(a)           Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of any Finance Document.

(b)           Notwithstanding any term of any Finance Document the consent of any person who is not a Party is not required to rescind or vary any Finance Document at any time.

1.5           Italian Construction

In this agreement and, in relation to a member of the Group incorporated in Italy, a reference to:

(a)           a winding-up, administration or dissolution includes, without limitation, any liquidazione, procedura concorsuale (fallimento, concordato preventivo, concordato fallimentare, liquidazione coatta amministrativa, amministrazione

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straordinaria delle grandi imprese insolventi, accordi di restrutturazione dei debiti pursuant to Article 182-bis of the Italian Bankruptcy Law, piani di risanamento pursuant to Article 67, paragraph 3(d) of the Italian Bankruptcy Law) cessione dei beni ai creditori, or any other similar proceedings;

(b)           a receiver, administrative receiver, administrator or the like includes, without limitation, a curatore, commissario giudiziale, liquidatore, or any other person performing the same function of each of the foregoing;

(c)           a lease includes, without limitation, a contratto di locazione;

(d)           a matured obligation includes, without limitation, any credito liquido ed esigibile;

(e)           an encumbrance includes, without limitation, any pegno, ipoteca, privilegio speciale (including the privilegio speciale created pursuant to Article 46 of the Italian Legislative Decree No. 385 of 1 September 1993 as amended from time to time), cessione del credito in garanzia, diritto reale di garanzia and any other garanzia reale or other transactions having the same effect as each of the foregoing; and

(f)            the right of withdrawal of any minority shareholders or quotaholders at any merger, includes a diritto di recesso.

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SECTION 2

THE FACILITY

2.             THE FACILITY

2.1           The Facility

Subject to the terms of this Agreement, the Lenders agree to make available to the Borrowers a term loan facility in an aggregate amount equal to the Total Commitments, which is made available to the Borrowers in the following amounts:

(a)           to OEH Italia a maximum amount of EUR 18,858,000;

(b)           to Villa San Michele S.r.l. a maximum amount of EUR 15,772,000;

(c)           to Hotel Splendido S.r.l. a maximum amount of EUR 54,899,000; and

(d)           Hotel Cipriani S.r.l. a maximum amount of EUR 60,471,000.

2.2           Finance Parties’ rights and obligations

(a)           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.

(b)           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 an Obligor shall be a separate and independent debt.

(c)           A Finance Party may not, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

3.             PURPOSE

3.1           Purpose

Each Borrower shall apply all amounts borrowed by it towards general corporate purposes.

3.2           Monitoring

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

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4.             CONDITIONS OF UTILISATION

4.1           Initial conditions precedent

No Borrower may deliver a Utilisation Request unless 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 on such terms as the Lenders consider fit.  The Agent shall notify the Company and the Lenders promptly upon being so satisfied.

4.2           Further conditions precedent

(a)           The Lenders will only be obliged to make a Loan available to a Borrower if on the date of the Utilisation Request and on the proposed Utilisation Date:

(i)            no Default is continuing or would result from the proposed Loan;

(ii)           the amount specified in the Utilisation Request does not exceed the amount set out opposite the relevant Borrower’s name in Clause 2 (The Facility) above; and

(iii)          the Repeating Representations to be made by each Obligor are true in all material respects.

4.3           Maximum number of Loans

(a)           Only one Utilisation Request per Borrower may be delivered.

(b)           A Borrower may not request that a Loan be divided.

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SECTION 3

UTILISATION

5.             UTILISATION

5.1           Delivery of a Utilisation Request

(a)           A Borrower may utilise its proportion of the Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.

(b)           All Loans under the Facility must be utilised by the Borrowers simultaneously.

5.2           Completion of a Utilisation Request

(a)           Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

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

(ii)           the amount of the Utilisation complies with Clause 5.3 (Currency and Amount); and

(iii)          the proposed Interest Period complies with Clause 9 (Interest Periods).

(b)           Only one Loan may be requested by each Borrower.

5.3           Currency and Amount

(a)           The currency specified in a Utilisation Request must be euro.

(b)           The amount of the proposed Loan must be an amount which is not more than the Available Facility in respect of the portion of the Total Commitments allocated to the relevant Borrower as set out in Clause 2.1 (The Facility).

5.4           Lenders’ participation

(a)           If the conditions to utilisation set out in Clauses 4 (Conditions of Utilisation) and 5 (Utilisation) of this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.

(b)           The amount of each Lender’s participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the Loan.

(c)           The Agent shall notify each Lender of its participation in each Loan in each case by the Specified Time.

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5.5           Cancellation of Commitment

The Commitment which, at that time, is unutilised shall be immediately cancelled at the end of the Availability Period.

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SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION

6.             REPAYMENT

6.1           Repayment of Instalments

Each Borrower shall repay its Loan in instalments by repaying or ensuring the repayment on each Interest Payment Date of an amount which reduces the aggregate amount of all the outstanding Loans by EUR 937,500.

6.2           Repayment of Loans

On the Final Maturity Date, each Borrower shall repay its Loan in full and pay and discharge all Secured Obligations in full.

6.3           Reborrowing

A Borrower may not reborrow any part of the Facility which is repaid.

7.             PREPAYMENT AND CANCELLATION

7.1           Illegality

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

(a)           that Lender shall promptly notify the Agent upon becoming aware of that event; and

(b)           upon the Agent notifying the Company, the Commitment of that Lender will be immediately cancelled; and

(c)           each Borrower shall repay that Lender’s participation in the Loans made to that Borrower on the last day of the Interest Period for each Loan occurring after the Agent has notified the Company or, if earlier, the date specified by the Lender in the notice delivered to the Agent.

7.2           Change of control

(a)           If there is a change of control of the Company after the date of this Agreement:

(i)            the Company shall promptly notify the Agent upon becoming aware of that event;

(ii)           unless all Lenders agree otherwise, no Lender shall be obliged to fund a Utilisation; and

(iii)          if the Majority Lenders so require, and only if all the Lenders have entered into a period of at least 30 days’ negotiation with the Company

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to determine if the Facility shall continue and on what terms and the Lenders and the Company have failed to reach an agreement, the Agent shall, by not less than ten Business Days’ notice to the Company, cancel the Facility and declare all outstanding Loans, together with accrued interest and all other amounts accrued under the Finance Documents (including Break Costs and any amounts due under the Hedge Documents) immediately due and payable, whereupon the Facility will be cancelled and all such outstanding amounts will become immediately due and payable.

(b)           For the purpose of paragraph (a) above “control” means:

(i)            the power (whether by way of ownership of shares, quotas, proxy, contract, agency or otherwise) to:

(A)          cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the Company; or

(B)           appoint or remove all, or the majority, of the directors or other equivalent officers of the Company; or

(C)           give directions with respect to the operating and financial policies of the Company which the directors or other equivalent officers of the Company are obliged to comply with; or

(ii)           the holding of more than half of the issued share capital or quotas of the Company (excluding any part of that issued share capital or quotas that carries no right to participate beyond a specified amount in a distribution of either profits or capital).

7.3           Voluntary cancellation

The Company may if it gives the Agent not less than five Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (but, if in part, being an amount that reduces the Loan by a minimum amount of EUR5,000,000) of the Available Facility.  Any cancellation under this Clause 7.3 (Voluntary Cancellation) shall reduce the Commitments of the Lenders rateably under the Facility, and shall be reduced rateably against each Loan made available to the Borrowers.

7.4           Mandatory cancellation

(a)           The Facility shall, to the extent that it has not been utilised, be automatically cancelled on the expiry of the Availability Period.

(b)           Commitments shall also be cancelled, if applicable, in accordance with Clause 7.12 (Application of Prepayments).

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7.5           Voluntary prepayment of Loans

(a)           A Borrower may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of any Loan (but, if in part, being an amount that reduces the amount of that Loan by a minimum amount of EUR 5,000,000).

(b)           A Loan may only be prepaid after the last day of the Availability Period (or, if earlier, the day on which the Available Facility is zero).

7.6           Mandatory Prepayment on a Hotel Disposal

(a)           On completion of a Hotel Disposal, the relevant Borrower or OEH Italia on its behalf, or Luxembourg Holdco, in each case as applicable, shall prepay and cancel the Loans in the amount of 120 per cent. of the Allocated Debt Amount of the Hotel which is the subject of the Hotel Disposal (subject to and in accordance with Clause 7.12 (Application of Prepayment)).

(b)           Where a Hotel Disposal takes the form of the direct or indirect sale of an Obligor that owns a Hotel, the Hotel owned by that Obligor shall for the purposes of paragraph (a) above be deemed the subject of the Hotel Disposal.

(c)           If both Hotel Cipriani and Hotel Splendido are the subject of Hotel Disposals, such Hotel Disposals being either simultaneous or occurring at different times, then, on the date of completion of the second of these two Hotel Disposals to occur, the Facility shall be immediately repaid and cancelled in full together with all outstanding Secured Obligations.

(d)           If completion of a Hotel Disposal does not take place on the last day of an Interest Period, the Net Disposal Proceeds of that Hotel Disposal shall be paid to the Deposit Account and all amounts credited to that account shall be applied by the Agent to prepay the Loans on the last day of the Interest Period in which that Hotel Disposal was made in the order set out in paragraph (a) above.

7.7           Mandatory Prepayment — Operational Failure

If Hotel Caruso S.r.l. is unable to continue to operate the business of Hotel Caruso in an effective manner and the Company has failed to find a satisfactory replacement company to take over the operation of the business of Hotel Caruso (in each case in the reasonable opinion of the Agent), then within five Business Days of request from the Agent, OEH Italia shall prepay and cancel the Loans in the amount of 120 per cent. of the Allocated Debt Amount of Hotel Caruso (subject to and in accordance with Clause 7.12 (Application of Prepayment)).

7.8           Mandatory Prepayment — Insurance Proceeds

On the Interest Payment Date following payment into the Deposit Account of any Insurance Proceeds received by any Obligor in accordance with paragraph (b)(iii) of Clause 20.3 (Payments into Control Accounts) after deducting any expenses in relation to that claim which are incurred by any Obligor and which have been approved in writing by the Agent acting reasonably, the Borrowers shall prepay the

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Loans (subject to and in accordance with Clause 7.12 (Application of Prepayment) in an amount equal to the amount of such Insurance Proceeds, except to the extent that:

(a)           the Insurance Proceeds are scheduled to be applied towards reinvestment or reinstatement in a manner consented to by the Lenders within six Months of receipt of those proceeds and any proceeds which are not used within those six Months shall be applied on the then next Interest Payment Date in prepayment of the Loans;

(b)           the Insurance Proceeds are required to be applied to meet a third party claim; or

(c)           the Insurance Proceeds received are below:

(i)            in the case of any single receipt of Insurance Proceeds, EUR 1,000,000; and

(ii)           EUR 5,000,000 in aggregate over the life of the Facility.

7.9           Mandatory prepayment from Recovery Claims

On the Interest Payment Date following payment into the Deposit Account of the proceeds of any Recovery Claim in accordance with paragraph (b)(iv) of Clause 20.3 (Payments into Control Accounts), the Borrowers shall prepay the Loans in an amount equal to the proceeds received after deducting any expenses, approved in writing by the Agent, which are reasonably and properly incurred by any Obligor, or any amounts that are to be applied:

(a)           to satisfy or reimburse any liability, charge or claim upon any Obligor made by a third party; or

(b)           in the replacement, reinstatement and/or repair of assets which have been lost, destroyed or damaged,

in each case as a result of the events or circumstances giving rise to that Recovery Claim, provided those proceeds are so applied as soon as possible (but in any event within thirty days, or such longer period as the Majority Lenders may agree) after receipt.

7.10         Mandatory prepayment of cure amounts

On the Interest Payment Date following payment of any amounts into a deposit account in accordance with paragraph (a) of Clause 22.4 (Cure right), the Borrowers shall (and the Agent as sole signatory of that deposit account is authorised to) apply those amounts in full in prepayment of the Loans pro rata.

7.11         Right of replacement or repayment and cancellation in relation to a single Lender

(a)           If:

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(i)            any sum payable to any Lender by an Obligor is required to be increased under paragraph (c) of Clause 12.2 (Tax gross-up); or

(ii)           any Lender claims indemnification from the Company under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs); or

(iii)          any Lender notifies the Agent of its Additional Cost Rate under paragraph 3 of Schedule 4 (Mandatory Cost Formula),

the Company may, whilst (in the case of paragraphs (i) and (ii) above) the circumstance giving rise to the requirement or indemnification continues or (in the case of paragraph (iii) above) that Additional Cost Rate is greater than zero, give the Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Loans.

(b)           On receipt of a notice referred to in paragraph (a) above, the Commitment of that Lender shall immediately be reduced to zero.

(c)           On the last day of each Interest Period which ends after the Company has given notice under paragraph (a) above (or, if earlier, the date specified by the Company in that notice), each Borrower to which a Loan is outstanding shall repay that Lender’s participation in that Loan, together with all interest and other amounts accrued under the Finance Documents and owed to that Lender.

7.12         Application of Prepayments

(a)           Amounts to be prepaid pursuant to Clause 7.6 (Mandatory Prepayment on a Hotel Disposal), Clause 7.7 (Mandatory Prepayment — Operational Failure), Clause 7.8 (Mandatory Prepayment — Insurance Proceeds) or Clause 7.9 (Mandatory Prepayment from Recovery Claims) shall be applied as follows:

(i)            where the subject of the relevant Hotel Disposal, operational failure, Recovery Claim or Insurance Proceeds is Hotel Vittoria (and no other part of Hotel Splendido):

(A)          first, in prepayment of any Loans owed by Hotel Splendido S.r.l.;

(B)           second, in prepayment of any Loans owed by OEH Italia; and

(C)           third, in prepayment, pro rata, of the remaining Loans, and

(ii)           in any other case,

(A)          first, in prepayment of any Loans owed by a Borrower that is the owner of the Hotel, or the Hotel owning company, that is the subject of the relevant Hotel Disposal, operational failure or in relation to which the proceeds of Recovery Claims or relevant Insurance Proceeds have been paid; and

(B)           second, in prepayment, pro rata, of the remaining Loans.

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(b)           The Commitments shall be cancelled by the aggregate amount by which any Loan is prepaid pursuant to paragraph (a) above.

7.13         Restrictions

(a)           Any notice of cancellation or prepayment given by any Party under this Clause 7 (Prepayment and Cancellation) 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.

(b)           Any prepayment or cancellation under this Agreement shall be made together with:

(i)            accrued interest (including Margin and Mandatory Cost, if any) on the amount prepaid (which shall, if the Facility has, on or before that date, been the subject of a Securitisation, be calculated up to the next Interest Payment Date);

(ii)           any Break Costs;

(iii)          any amounts payable to a Hedge Counterparty as a result of the termination or closing out of all or any part of any Hedge Document on account of that prepayment;

(iv)          any fee due pursuant to Clause 11.3 (Prepayment and Cancellation Fee); and

(v)           any other Secured Obligations which become due and payable as a result of the prepayment,

but otherwise shall be made without premium or penalty.

(c)           Any prepayment under Clauses 7.5 to 7.10 (Mandatory prepayment of cure amounts) shall satisfy the obligations under Clause 6.1 (Repayment of Instalments) in inverse order of maturity.

(d)           No Borrower may reborrow any part of the Facility which is prepaid.

(e)           The Borrowers shall not repay or prepay all or any part of the Loans or cancel all or any part of the Commitment except at the times and in the manner expressly provided for in this Agreement.

(f)            No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

(g)           If the Agent receives a notice under this Clause 7 (Prepayment and Cancellation) it shall promptly forward a copy of that notice to either the Company or the affected Lender, as appropriate.

(h)          If all or part of a Loan under the Facility is repaid or prepaid, an amount of the Commitments (equal to the amount of the Loan which is repaid or prepaid) in

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respect of the Facility will be deemed to be cancelled on the date of repayment or prepayment.  Any cancellation under this paragraph (h) shall reduce the Commitments of the Lenders rateably under the Facility.

SECTION 5

COSTS OF UTILISATION

8.             INTEREST

8.1           Calculation of interest

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

(a)           Margin;

(b)           EURIBOR; and

(c)           Mandatory Cost, if any.

8.2           Payment of interest

On the last day of each Interest Period, each Borrower shall pay or ensure the payment of accrued interest on the Loan to which that Interest Period relates.

8.3           Default interest

(a)           If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is two per cent higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted a Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Agent (acting reasonably).  Any interest accruing under this Clause 8.3 shall be immediately payable by the Obligor on demand by the Agent.

(b)           If any Unpaid Sum 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:

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

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

(c)           The amount of interest on overdue amounts payable by the Borrowers under this Agreement shall be compounded to the extent permitted by article 1283 of

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the Italian Civil Code as amended, supplemented or implemented from time to time.

8.4           Notification of rates of interest

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

8.5           Italian Usury Law

(a)           The rate of interest applicable to Loans to any Italian Obligor under this Agreement (including the relevant component of any applicable fee and expense) determined as of the date of execution of this Agreement is considered in good faith by each Borrower incorporated in Italy to be in compliance with Law No. 108 of 7 March 1996 as amended (the “Italian Usury Law”).

(b)           In any event, if, pursuant to a change in law or in the official interpretation of Italian Usury Law, the rate of interest applicable to a Loan to any Italian Obligor or the default rate of interest (if due at such time from any Italian Obligor) at any time is deemed to exceed the maximum rate permitted by Italian Usury Law, then the relevant interest rate or default rate applicable to such Italian Obligor shall immediately be reduced to the maximum admissible interest rate pursuant to such legislation, for the period during which it is not.

8.6           Insurance Undertaking Default

(a)           If an Insurance Undertaking Default occurs, the Agent shall impose a default interest (the “Insurance Default Interest”) in respect of all Loans then outstanding which shall be 0.85 per cent. higher than the interest rate which would have applied if no Insurance Undertaking Default had occurred.

(b)           The Insurance Default Interest shall be calculated by the Agent based on the outstanding principal amount of the Loans and shall accrue on the day following the occurrence of the Insurance Undertaking Default and ending on the day on which the Agent confirms to the Company that the Insurance Undertaking Default ceases to exist.

(c)           The Insurance Default Interest shall be payable in arrear on each Interest Payment Date for the preceding interest period.

(d)           The Insurance Default Interest shall accrue and be payable irrespective of whether any Default Interest is or has accrued or become payable.

9.             INTEREST PERIODS

9.1           Interest Periods

(a)           The period for which each Loan is outstanding shall be divided into successive Interest Periods.

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(b)          The duration of the first Interest Period for each Loan shall start on the Utilisation Date for that Loan and end on the first Interest Payment Date to occur after that Utilisation Date.

(c)           The duration of each subsequent Interest Period shall, save as otherwise provided in this Agreement, start on each Interest Payment Date (commencing on the first Interest Payment Date) and end on the day immediately preceding the next Interest Payment Date except that, where an Interest Period would overrun the Final Maturity Date, that Interest Period shall be shortened so that it ends on the Final Maturity Date.

10.           CHANGES TO THE CALCULATION OF INTEREST

10.1         Absence of quotations

Subject to Clause 10.2 (Market disruption), if EURIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable EURIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

10.2         Market disruption

(a)           If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender’s share of that Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

(i)            the Margin;

(ii)           the rate notified to the Borrowers by the Agent 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 to that Lender of funding its participation in that Loan from whatever source it may reasonably select; and

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

(b)           In this Agreement “Market Disruption Event” means:

(i)            at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to determine EURIBOR for euro for the relevant Interest Period; or

(ii)           before close of business in Milan on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders that the cost to it or them of obtaining matching deposits in the European Interbank Market would be in excess of EURIBOR.

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10.3         Alternative basis of interest or funding

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

(b)           Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Company, be binding on all Parties.

10.4         Break Costs

Each Borrower shall, within five 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, such Break Costs being payable upon the day upon which the relevant Loan or Unpaid Sum is paid.

11.           FEES

11.1         Lender fee

The Borrowers shall pay to the Original Lenders a fee in the amount and at the times agreed in a Fee Letter.

11.2         Security and Agency fee

The Borrowers shall pay to the Agent an agency fee in the amounts and at the times agreed in a Fee Letter.

11.3         Prepayment and Cancellation Fee

(a)           The Borrowers shall, subject to paragraph (b) below, pay a prepayment fee on the date of any prepayment or cancellation (for any reason, including any mandatory prepayment required pursuant to Clause 7 (Prepayment and Cancellation) and upon enforcement) of all or any part of any Loan in the following amounts and to the following persons:

(i)            if the prepayment is made on or before the first anniversary of this Agreement, 1.5 per cent. of the amount prepaid, to the Agent for the account of each Lender;

(ii)           if the prepayment is made after the first anniversary of this Agreement but on or before the second anniversary of this Agreement, 1.25 per cent. of the amount prepaid, to the Agent for the account of each Lender;

(iii)          if the prepayment is made after the second anniversary of this Agreement but on or before the third anniversary of this Agreement, 1 per cent. of the amount prepaid, to the Agent for the account of each Lender which is not (or is not proposed to be) also a lender under any partial or whole refinancing of this Facility; and

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(iv)          thereafter, no prepayment fee will be payable.

(b)           No prepayment fee or cancellation fee shall be payable where the prepayment or cancellation is made under Clauses 7.1 (Illegality) or 7.11 (Right of repayment or cancellation in relation to a single Lender).

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SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS

12.           TAX GROSS-UP AND INDEMNITIES

12.1         Definitions

(a)           In this Agreement:

“Protected Party” means a Finance Party (other than the Hedge Counterparties) 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.

“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 an Obligor to a Lender under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).

(b)           Unless a contrary indication appears, in this Clause 12 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.

(c)           This Clause 12 (Tax gross-up and indemnities) shall not apply with respect to payments under any Hedge Document.

12.2         Tax gross-up

(a)           Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law, in which case the sum payable by such Obligor (in respect of which such deduction or withholding is required to be made) shall be increased to the extent necessary to ensure that each Finance Party receives a sum net of any withholding or deduction equal to the sum which it would have received had no such deduction or withholding been made or required to be made provided that an Obligor is not required to make an increased payment to a Finance Party under this Clause 12.2 for a Tax Deduction in respect of Tax imposed by Italy from any payment to be made, if on the date on which the payment falls due, the payment could have been made to the Lender without a Tax Deduction if the Lender was an Italian Qualifying Lender, but on that date the Lender is not or has ceased to be an Italian Qualifying Lender other than as a result of any change after the date it became the Lender under this Agreement in (or in the interpretation, administration, or application of) any law, or any published practice or concession of any relevant taxing authority.

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(b)           The Company shall promptly upon becoming aware that an Obligor 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.

(c)           If an Obligor is required to make a Tax Deduction, that Obligor 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.

(d)           Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent 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.

12.3         Tax indemnity

(a)           Each Obligor shall (within seven 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.

(b)           Paragraph (a) above shall not apply:

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

(A)          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

(B)           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

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

(A)          is compensated for by an increased payment under Clause 12.2 (Tax gross-up); or

(B)           would have been compensated for by an increased payment under Clause 12.2 (Tax gross-up) but was not so compensated solely because the exclusion in the proviso to paragraph (a) or (b) of Clause 12.2 (Tax gross-up) applied.

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12.4         Tax Credit

If an Obligor makes a Tax Payment and the relevant Finance Party determines in its sole discretion (but acting in good faith) that:

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

(b)           that Finance Party has obtained, utilised and retained according to the applicable legislation that Tax Credit,

the Finance Party shall provide to the Obligor a certificate as evidence of the increased payment of tax and pay an amount to the Obligor which that Finance Party determines, in its sole discretion (but acting in good faith), 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 Obligor, provided always that nothing herein shall require that Finance Party to disclose any confidential information relating to its affairs.

12.5         Stamp Taxes

Each Obligor shall pay and, within seven Business Days of demand, indemnify each Finance Party against:

(a)           (subject always to Clause 23.19(d) (Pfandbrief and Securitisation) any cost, loss or liability each Finance Party may incur in relation to any stamp duty land tax, stamp duty, registration and other indirect Taxes payable in respect of, or in order to register or enforce, any Finance Document or any other document referred to in the Finance Documents (including any imposta sostitutiva or other tax payable upon registration of any security document which is expressed to be governed by Italian law); and

(b)          its reasonable costs incurred in connection with making any disclosure required of any Finance Party under Part 7 of the Finance Act 2004 in relation to any arrangements contemplated by the Finance Documents.

12.6         Value added tax

(a)           All amounts set out, or expressed in a Finance Document to be payable by any Party to a Finance Party which (in whole or in part) constitute the consideration for VAT purposes shall be deemed to be exclusive of any VAT which is chargeable on such supply, and accordingly, subject to paragraph (b) below, if VAT is chargeable on any supply made by any Lender (each a “Supplier”) to any Party under a Finance Document, that Party shall pay to that Supplier (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and Lender shall procure that the Supplier shall promptly provide an appropriate VAT invoice to such Party).

(b)           Where a Finance Document requires any Party to reimburse a Supplier for any costs or expenses, that Party shall also at the same time pay and indemnify that Supplier against all VAT incurred by that Supplier in respect of the costs or expenses to the extent that that Supplier reasonably determines that neither it

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nor any other member of any group of which it is a member for VAT purposes is entitled to credit or repayment from the relevant Tax authority in respect of the VAT.

13.           INCREASED COSTS

13.1         Increased costs

(a)           Subject to Clause 13.3 (Exceptions) each Obligor shall, within seven Business Days of a demand by the Agent, pay for the account of a Finance Party (other than for the account of a Hedge Counterparty) 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 made after the date of this Agreement.

(b)           In this Agreement “Increased Costs” means:

(i)            a reduction in the rate of return from the Facility (other than under a Hedge Document) or on a Finance Party’s (or its Affiliate’s) overall capital;

(ii)           an additional or increased cost; or

(iii)          a reduction of any amount due and payable under any Finance Document (other than a Hedge Document),

which is incurred or suffered by a Finance Party (other than a Hedge Counterparty) 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 (other than a Hedge Document).

13.2         Increased cost claims

(a)           A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased Costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Company as agent for the Obligors.

(b)           Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.

13.3         Exceptions

(a)           Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:

(i)            attributable to a Tax Deduction required by law to be made by an Obligor;

(ii)           compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so

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compensated solely because any of the exclusions in paragraph (b) of Clause 12.3 (Tax indemnity) applied);

(iii)          compensated for by the payment of the Mandatory Cost;

(iv)          attributable to the wilful breach by the relevant Finance Party of any law or regulation or of the Finance Documents; or

(v)           is incurred by a Hedge Counterparty under any Hedge Document.

(b)           In this Clause 13.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 12.1 (Definitions).

14.           OTHER INDEMNITIES

14.1         Currency indemnity

(a)           If any sum due from an Obligor 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:

(i)            making or filing a claim or proof against that Obligor;

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

that Obligor shall as an independent obligation, within seven 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.

(b)           Each Obligor 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.

14.2         Other indemnities

Each Obligor shall (and the Company shall procure that the Obligors will), within seven Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party as a result of:

(a)           investigating any event which it reasonably believes is a Default;

(b)           the occurrence of any Event of Default;

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

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

(e)           a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by a Borrower or the Company;

(f)            any liability under Environmental Law relating (directly or indirectly) to any Hotel or any other asset owned by an Italian Obligor;

(g)           any litigation commenced by any person against a Finance Party or any Obligor in connection with any transaction contemplated by the Finance Documents except where that litigation is attributable to the wilful breach by a Finance Party or its Affiliates of a Finance Document or any law or regulation; or

(h)           acting or relying on any notice, request or instruction relating to the Finance Documents which it reasonably believes to be genuine, correct and appropriately authorised.

14.3         Indemnity regarding Security

(a)           Each Obligor shall promptly indemnify the Agent, the Lenders and every Receiver and Delegate against any cost, loss or liability incurred by one or more of them as a result of:

(i)            the taking, holding, protection or enforcement of the Transaction Security;

(ii)           the exercise of any of the rights, powers, discretions and remedies vested in it by the Transaction Security;

(iii)          investigating any event which it reasonably believes is a Default;

(iv)          any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in any of the Finance Documents; or

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

(b)           The Agent may, in priority to any payment to the Finance Parties, indemnify itself out of the Charged Property in respect of, and pay and retain all sums necessary to give effect to the indemnity in this Clause 14.3 and shall, to the extent possible, have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all moneys payable to it.

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15.           MITIGATION BY THE LENDERS

15.1         Mitigation

(a)           Each Finance Party (other than the Hedge Counterparty) shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax gross-up and indemnities), Clause 13 (Increased costs) or paragraph 3 of Schedule 4 (Mandatory Cost Formula) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

(b)           Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.

15.2         Limitation of liability

(a)           Each Obligor 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 15.1 (Mitigation).

(b)           A Finance Party is not obliged to take any steps under Clause 15.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.

16.           COSTS AND EXPENSES

16.1         Transaction expenses

Each Obligor shall promptly on demand pay the Agent and the Joint Mandated Lead Arrangers the amount of all costs and expenses (including, but not limited to legal fees, land registry fees, mortgage registration fees and notarial fees) reasonably incurred by it or by anyone acting under powers of attorney granted by any of the Agent or the Joint Mandated Lead Arrangers in connection with the negotiation, preparation, printing, execution, syndication and perfection of:

(a)           this Agreement and any other documents referred to in this Agreement and the Transaction Security; and

(b)           any other Finance Documents executed after the date of this Agreement.

16.2         Amendment costs

If an Obligor requests an amendment, waiver or consent, the Borrowers shall, within seven Business Days of demand, reimburse the Agent for the amount of all costs and expenses (including but not limited to legal fees) reasonably incurred by the Agent or the Finance Parties (and in the case of the Agent any Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.

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16.3         Agent’s ongoing costs

(a)           In the event of:

(i)            the occurrence of a Default;

(ii)           the Agent considering it necessary or expedient in its reasonable opinion; or

(iii)          being requested by an Obligor or the Majority Lenders (acting reasonably) to undertake duties which the Agent and the Company agree to be of an exceptional nature and/or outside the scope of the normal duties of the Agent under the Finance Documents,

the Company shall pay to the Agent any additional remuneration as shall be reasonably determined by the Agent (and, in the cases of sub-paragraphs (a)(ii) and (a)(iii) above, by the Company) as being a fair reflection of those additional duties.

(b)           If the Agent and the Company fail to agree upon the nature of the duties and/or upon any additional remuneration payable under paragraphs (a)(ii) or (a)(iii) of Clause 16.3 (Agent’s ongoing costs), that dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator) selected by the Agent and approved by the Company, or failing approval, nominated (on the application of the Agent) by the President for the time being of the Law Society of England and Wales (the costs of the nomination and of the investment bank being payable by the Company) and the determination of any investment bank shall be final and binding upon the parties to this Agreement.

16.4         Enforcement and preservation costs

The Borrowers shall, within seven Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including, but not limited to, legal and notarial fees), incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document, the Transaction Security or under any document referred to in any Finance Document and any proceedings instituted by or against the Agent as a consequence of taking or holding the Transaction Security or enforcing these rights.

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SECTION 7

GUARANTEE

17.           GUARANTEE AND INDEMNITY

17.1         Guarantee and indemnity

Each Guarantor irrevocably and unconditionally, jointly and severally:

(a)           guarantees to each Finance Party punctual performance by each Borrower of all that Borrower’s obligations under the Finance Documents including without limitation any obligation arising from any claw-back (Azione Revocatoria) under the Italian Bankruptcy Law, or any analogous action under the relevant jurisdiction in connection with the insolvency of, or any insolvency proceedings involving, such Borrower;

(b)           undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on demand by the Agent pay that amount as if it was the principal obligor; and

(c)           agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of any Borrower not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due.  The amount payable by the Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 17 (Guarantee and Indemnity) if the amount claimed had been recoverable on the basis of a guarantee.

17.2         Continuing guarantee

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

17.3         Reinstatement

If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency liquidation, administration or otherwise, without limitation, then the liability of each Obligor under this Clause 17 (Guarantee and Indemnity) will continue or be reinstated as if the discharge, release or arrangement had not occurred.

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17.4         Waiver of defences

The obligations of each Guarantor under this Clause 17 (Guarantee and Indemnity) will not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 17 (without limitation and whether or not known to it or any Finance Party) including:

(a)           any time, waiver or consent granted to, or composition with, any Obligor or other person;

(b)           the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Italian Group;

(c)           the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(d)           any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;

(e)           any amendment, novation, supplement, extension (whether of maturity or otherwise) or restatement (in each case however fundamental and of whatsoever nature and whether or not more onerous) or replacement of a Finance Document or any other document or security (including, without limitation, any change in the purpose of, any extension of, or any variation or increase in any facility or amount made available under any facility or the addition of any new facility under any Finance Document or other documents);

(f)            any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

(g)           any insolvency or similar proceedings.

17.5         Guarantor Intent

Without prejudice to the generality of Clause 17.4 (Waiver of defences), each Guarantor expressly confirms that it intends that this guarantee and indemnity shall extend from time to time to any (however fundamental and of whatsoever nature and whether or not more onerous) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following:  carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities available to new Borrowers; any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and any fees, costs and/or expenses associated with any of the foregoing.

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17.6         Immediate recourse

Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 17 (Guarantee and Indemnity).  This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

17.7         Appropriations

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:

(a)           refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and

(b)           hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor’s liability under this Clause 17 (Guarantee and Indemnity).

17.8         Deferral of Guarantors’ rights

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable or liability arising under this Clause 17 (Guarantee and Indemnity):

(a)           to be indemnified by an Obligor;

(b)           to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents;

(c)           to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;

(d)           to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Obligor has given a guarantee, undertaking or indemnity under this Clause 17 (Guarantee and indemnity);

(e)           to exercise any right of set-off against any Obligor; or

(f)            to claim or prove as a creditor of any Obligor in competition with any Finance Party.

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If any Obligor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all the Secured Obligations to be repaid or discharged in full, on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 31 (Payment Mechanics).

17.9         Additional security

This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.

17.10       Cap on Guarantor’s Obligations

The obligations of each of the Guarantors incorporated under the laws of Italy under this Clause 17 (Guarantee and Indemnity) shall not exceed EUR300,000,000.

17.11       Further assurance

Each Obligor agrees that it shall promptly at the direction of the Agent (acting reasonably) execute and deliver at its own expense any document (executed as a deed or under hand as the Agent may direct in writing) and do any act or thing in order to confirm or establish the validity and enforceability of the guarantee and indemnity intended to be created under this Clause 17 (Guarantee and Indemnity).

17.12       Garanzia autonoma

To the extent the application of provisions of Italian law cannot be derogated from by agreement with respect to any of the Guarantors incorporated under Italian law irrespective of the English law otherwise applicable to this Agreement, the guarantee and indemnity granted under this Clause 17 (Guarantee and Indemnity) shall be construed under Italian law as a garanzia autonoma and, for this purpose, each Guarantor hereby expressly waives the benefit of Articles 1939, 1945, 1954 and 1957 of the Italian Civil Code, as well as any rights, powers and exceptions it may have vis-à-vis any of the Borrower under Article 1955 of the Italian Civil Code.

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SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

18.           REPRESENTATIONS

Each Obligor makes the representations and warranties set out in this Clause 18 (Representations) to each Finance Party.

18.1         Status

(a)           It is a limited liability corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation.

(b)           It, each of the Italian Obligors’ subsidiaries including the Excluded Subsidiaries and OE Finanziamenti each has the power to own its assets and carry on its business as it is being conducted.

18.2         Centre of main interests and establishments

(a)                                  It has its “centre of main interests” (as that term is used in Article 3(1) of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings (the “Regulation”)) in its jurisdiction of incorporation and it has no “establishment” (as that term is used in Article 2(h) of the Regulation) in any jurisdiction.

(b)                               No Obligor has registered one or more “establishments” (as that term is defined in Part 1 of The Overseas Companies Regulations 2009) with the Registrar of Companies or, if it has so registered, it has provided to the Agent sufficient details to enable an accurate search against it to be undertaken by the Agent at the Companies Registry.

18.3         Binding obligations

The obligations expressed to be assumed by it:

(a)                                  in each Finance Document to which it is a party, are, subject to any general principles of law as at the date of this Agreement limiting its obligations which are specifically referred to in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation), legal, valid, binding and enforceable obligations; and

(b)                                 (without limiting the generality of paragraph (a) above,) in each Security Document, validly create a first ranking Security of the type which that Security Documents purports to create, and over the assets to which that Security is expressed to apply and the security interests therein are valid and effective.

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18.4         Non-conflict with other obligations

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

(a)           any law or regulation applicable to it;

(b)           its or any of its Subsidiaries’ constitutional documents; or

(c)           any agreement or instrument binding upon it or any of its Subsidiaries or any of its or any of its Subsidiaries assets.

18.5         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 and the transactions contemplated by the Finance Documents.

18.6         Validity and admissibility in evidence

All Authorisations required or desirable:

(a)           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; and

(b)           to make the Finance Documents to which it is a party admissible in evidence in each Relevant Jurisdiction,

have been obtained or effected and are in full force and effect.

18.7         Governing law and enforcement

(a)           The choice of governing law of each of the Finance Documents to which it is a party, will be recognised and enforced in each Relevant Jurisdiction.

(b)           Any judgment obtained in England in relation to a Finance Document to which it is a party, will be recognised and enforced in each Relevant Jurisdiction.

18.8         Deduction of Tax

It is not required to make any deduction for or on account of Tax from any payment it may make under any Finance Document to an Italian Qualifying Lender.

18.9         No filing or stamp taxes

Under the law of each Relevant Jurisdiction (other than under any rules of the U.S. Securities and Exchange Commission in respect of the Company) 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, other than:

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(a)           registration under s.860 of the Companies Act 2006;

(b)           registration under s.55 of Bermuda’s Companies Act 1981, as amended; and

(c)           payment of Imposta Sostitutiva on this Agreement and as regulated by Article 15 and following of Presidential Decree No. 601 of 29 September 1973, as amended from time to time.

18.10       No default

(a)           No Event of Default is continuing or could reasonably be expected to result from the making of any Utilisation or entry into or performance of, or any transaction contemplated by, any Finance Document.

(b)           No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it, or on any of its Subsidiaries whose Financial Indebtedness is guaranteed by one or more of the Guarantors, or to which its or its Subsidiaries’ assets are subject, and in each case which could have a Material Adverse Effect.

18.11       No misleading information

(a)           Any factual information provided by or on behalf of an Obligor:

(i)            to the Finance Parties in relation to the Finance Documents;

(ii)           to the Valuer for the purposes of the most recent Valuation; and

(iii)          to any report provider in connection with the preparation of any report listed in Schedule 2 (Conditions precedent),

is, in each case, true, complete and accurate in all material respects as at the date it was given and is not misleading in any material respect.

(b)           Any opinions, forecasts and projections made by or on behalf of the Obligors and provided to the Finance Parties have been prepared as at their date, on the basis of recent historical information, and on assumptions believed by the relevant Obligor to be fair and reasonable.

(c)           No Obligor has knowingly withheld any information which if disclosed may reasonably be expected materially and adversely to affect:

(i)            the decision of any Lender considering whether or not to provide finance to the Borrowers;

(ii)           the value of any Hotel given in the most recent Valuation; or

(iii)          anything contained in the Due Diligence Reports.

(d)           Nothing has occurred since the date any information referred to in paragraph (a) was provided which renders that information untrue or misleading in any material respect.

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18.12       Financial statements

(a)           The Company’s Original Financial Statements were prepared in accordance with US GAAP and Luxembourg Holdco’s unaudited financial statements were prepared in accordance with Lux GAAP, consistently applied.

(b)           The Company’s Original Financial Statements prepared under US GAAP represent fairly in all material respects its financial condition and where applicable, the financial condition of its subsidiaries.

(c)           Luxembourg Holdco’s Original Financial Statements prepared under Lux GAAP represent fairly in all material respects its financial condition.

(d)           The 2009 Italian statutory accounts supplied under Schedule 2 (Conditions Precedent) have been prepared in accordance with Italian regulations and present fairly in all material respects the financial condition of the Italian Group.

(e)           There has been no material adverse change in its business or financial condition (or the business or consolidated financial condition of the Group, in the case of the Company) since the date at which the Original Financial Statements were prepared.

18.13       Pari passu ranking

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.

18.14       No proceedings pending or threatened

No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency has (to the best of its knowledge and belief) been started or threatened against it or any of its Subsidiaries which:

(a)           may restrain its entry into, the exercise of its rights under, or the performance, enforcement of or compliance with any of its obligations under, the Finance Documents; or

(b)           if adversely determined, could reasonably be expected to have a Material Adverse Effect.

18.15       No insolvency proceedings

(a)           No:

(i)            corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 25.7 (Insolvency proceedings); or

(ii)           creditors’ process described in Clause 25.8 (Creditors’ process),

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has been taken by or threatened against the Company, the Luxembourg Holdco or any member of the Italian Group and none of the circumstances described in Clause 25.6 (Insolvency) applies to the Company, the Luxembourg Holdco or any member of the Italian Group.

(b)           None of the circumstances set out in Articles 2482-bis and 2482-ter of the Italian Civil Code have arisen in respect to any Italian Obligor.

18.16       Control Accounts

Each Italian Obligor has opened each Control Account which it is required to open under Clause 20 (Control Accounts) and each such account is open, valid and operating.

18.17       Environmental compliance

Each member of the Italian Group has performed and complied with all Environmental Law, Environmental Permits and all other material covenants, conditions, restrictions or agreements directly or indirectly concerned with any contamination, pollution or waste or the release or discharge of any emission or substance capable of causing harm to any living organism or the environment in connection with any Real Property which is or was at any time owned, leased or occupied by any member of the Italian Group or on which any member of the Italian Group has conducted any activity where failure to do so might reasonably be expected to have a Material Adverse Effect and no action has been taken by any Obligor so as to cause non-compliance with any of the foregoing.  To the best of each Obligor’s knowledge, no materials generally known to be hazardous to health or safety have been used in connection with any Hotel.

18.18       Environmental Claims

No Environmental Claim has been commenced or (to the best of its knowledge and belief) is threatened against any member of the Italian Group where that claim would be reasonably likely, if determined against that member of the Italian Group to have a Material Adverse Effect.

18.19       Taxation

(a)           It has duly and punctually paid and discharged all Taxes imposed upon it or its assets within the time period allowed without incurring penalties (save to the extent that (i) payment is being contested in good faith, (ii) it has maintained adequate cash reserves for those Taxes and (iii) payment can be lawfully withheld).

(b)           It is not materially overdue in the filing of any Tax returns.

(c)           Other than as disclosed in the Due Diligence Report, it is not subject to material claims being or reasonably likely to be asserted against it with respect to Taxes.

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18.20       Title to assets

Other than as disclosed in the Reports on Title in respect of paragraphs (b) to (j) below, on and from the Utilisation Date:

(a)                                each Obligor is the legal and beneficial owner of, and has good and marketable title (which was acquired and is held with full title guarantee) to, each of its assets which are expressed to be the subject of the Transaction Security, in each case free from any Security (other than under the Finance Documents and, in respect of the representation made under this Clause 18.20(a) on the date of this Agreement and on the Utilisation Date, other than any Security granted pursuant to the Existing Facilities);

(b)                               each Italian Obligor has the benefit of all material licences, consents and authorisations required under all applicable law in connection with its ownership and operation of the Hotels, and they are in full force and effect and are not subject to any challenge;

(c)                                all deeds and documents necessary to show good and marketable title to the Hotels (including lease agreements) will be delivered to the Agent or held at the appropriate Land Registry to the order of the Agent;

(d)                               no breach of any law or regulation is subsisting which would be reasonably likely to adversely affect the value of any Hotels or the value of any Operating Income;

(e)                                there is no covenant, easement, agreement, reservation, restriction, condition or other matter which adversely affects any Hotel to a material extent;

(f)                                  no Hotel is subject to any overriding interest or an unregistered interest which overrides first registration or registered dispositions;

(g)                               each Hotel is free and clear of material damage and structural defects which could reasonably be expected to have a material adverse effect on the value of that Hotel;

(h)                               all material obligations deriving from convenzioni urbanistiche and/or atti d’obligo have been duly performed;

(i)                                   there are no material matters adversely affecting the Hotels; and

(j)                                   each Hotel is insured against all risks which a prudent owner of the Hotels would insure against.

18.21       Security

(a)           No Security or other encumbrance exists over all or any of the present or future assets of any member of the Italian Group other than:

(i)            any Security permitted under Clause 23.3 (Negative Pledge);

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(ii)           the pre-emption right provided for by Decreto Legislativo 22 gennaio 2004, n.42 in favour of the Italian State on Villa San Michele;

(iii)          the pre-emption right provided for by Decreto Legislativo 22 gennaio 2004, n.42 in favour of the Italian State on the Hotel Caruso;

(iv)          the landscape protection rights provided under regional law n. 29/2001 of Regione Liguria for the protection of the Portofino area; and

(v)           the limitations under regional law n.171/1973 of Regione Veneto on Hotel Cipriani.

(b)           No Security exists over all or any of the Company’s or Luxembourg Holdco’s assets expressed to be the subject of any Security under a Finance Document.

(c)           Subject to the reservations contained in the Legal Opinions, the Transaction Security has or will have first ranking priority and it is not subject to any prior ranking or pari passu ranking Security.

18.22       Transaction Security

Each Security Document to which it is a party validly creates the Security which is expressed to be created by that Security Document and evidences the Security it is expressed to evidence.

18.23       Shares

(a)           The shares and quotas which are subject to the Transaction Security are fully paid and not subject to any option to purchase or similar rights other than those purchase rights in favour of James B. Sherwood in respect of Hotel Cipriani S.r.l., as provided for in the amended and restated agreement regarding Hotel Cipriani interests dated 8 February 2005 and in the amended and restated right of first refusal and option agreement regarding Hotel Cipriani interests dated 8 February 2005.

(b)           The constitutional documents of companies whose shares or quotas are subject to the Transaction Security do not and could not restrict or inhibit any transfer of those shares or quotas on creation or on enforcement of the Transaction Security.

18.24       Intellectual Property

No member of the Italian Group is aware of any circumstance relating to validity, subsistence or use of any of its Intellectual Property which might have an adverse effect on the value of the properties or on the ability of an Obligor to perform its obligations under the Finance Documents or on the validity or enforceability of the Finance Documents or the rights or remedies of any Lender or Finance Party under the Finance Documents.

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18.25       Group Structure

The Group Structure Chart delivered to the Agent pursuant to Schedule 2 (Conditions Precedent) is true, complete and accurate as at the first Utilisation Date.

18.26       Ownership of the Obligors

Each Obligor (other than the Company) is directly or indirectly, a wholly-owned Subsidiary of the Company.

18.27       Repetition

(a)           The representations set out in Clauses 18.1 (Status) to 18.26 (Ownership of the Obligors) are made by the Obligors on the date of this Agreement.

(b)           The representations set out in Clauses 18.1 (Status) to 18.26 (Ownership of the Obligors) (excluding Clauses 18.8 (Deduction of Tax) and 18.9 (No filing or stamp taxes)) are made and shall thereafter be deemed to be repeated by each Obligor by reference to the facts and circumstances then existing on:

(i)            save in the case of paragraphs (a)(iii) and (c)(iii) of Clause 18.11 (No misleading information), (a) to (d) of Clause 18.12 (Financial statements) and Clause 18.25 (Group Structure), the date of each Utilisation Request and the first day of each Interest Period;

(ii)           in the case of paragraphs (a)(iii) and (c)(iii) of Clause 18.11 (No misleading information) and Clause 18.25 (Group Structure), on the date of each Utilisation Request; and

(iii)          in the case of paragraphs (a) to (d) of Clause 18.12 (Financial statements), each date on which it delivers, or, if earlier, is obliged to deliver, the relevant financial statements in accordance with Clause 18.12 (Financial statements).

19.           INFORMATION UNDERTAKINGS

The undertakings in this Clause 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 Company shall supply to the Agent in sufficient copies for all the Lenders:

(a)           as soon as the same become available, but in any event within 180 days after the end of each financial year, the Italian statutory financial accounts of each Italian Obligor and each of the Excluded Subsidiaries (but not including Société de la Cité);

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(b)           as soon as the same become available, but in any event within 120 days after the end of each of its financial years:

(i)            its audited consolidated financial statements for that financial year prepared in accordance with US GAAP;

(ii)           the financial statements of Luxembourg Holdco for that financial year; and

(iii)          the financial statements of each Obligor (other than the Company) for that financial year prepared in accordance with US GAAP and the aggregated financial statements (unconsolidated) of the Italian Group, in each case together with confirmation from Deloitte, following completion of an agreed procedure, that each of these financial statements are accurately extracted from the audited consolidated financial statements of the Company for the corresponding financial year;

(c)           as soon as the same become available, but in any event within 60 days after the end of each Quarter Date, the consolidated financial statements of the Company and the aggregated financial statements (unconsolidated) of the Italian Group for that financial quarter; and

(d)           as soon as the same become available, but in any event within 60 days of each Quarter Date (as defined in Clause 22.1 (Financial Definitions)), management accounts of each Italian Obligor for that period in such a form as to disclose with accuracy the financial position of the relevant Obligor which shall include the following information in respect of each such period:

(i)            a profit and loss statement and balance sheet;

(ii)           details of income, occupancy levels, average room rates and Revpar (the revenue per available room) achieved for each Hotel;

(iii)          details of capital expenditure and FF&E expenses at each Hotel for the calendar year to date and how it was applied;

(iv)          for the quarter ending in December, details of the proposed capital expenditure at each Hotel for the then next twelve Months and how it will be applied;

(v)           details of the proposed capital expenditure and FF&E expenses at each Hotel for the remainder of that calendar year and how it will be applied;

(vi)          a cashflow statement;

(vii)         a comparison, where appropriate, of all such information with the estimates, forecasts and projections in the then current Business Plan; and

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(viii)        such other information as the Agent may, upon giving reasonable prior notice, reasonably require.

19.2        Compliance Certificate

(a)           The Company shall supply to the Agent within 60 days of each Quarter Date, or, in respect of a Quarter Date that is also its financial year end, within 75 days, and, with each set of financial statements delivered pursuant to paragraphs (b)(i), (b)(ii) and (c) of Clause 19.1 (Financial Statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 22 (Financial Covenants) as at the date as at which those financial statements were drawn up.

(b)           Each Compliance Certificate shall be signed by one director or senior officer of the Company.

19.3        Requirements as to financial statements

(a)           Each set of financial statements delivered by the Company pursuant to Clause 19.1 (Financial statements) shall be certified by a director/officer of the relevant company as fairly representing its financial condition in all material respects as at the date to which those financial statements were drawn up.

(b)           The Company shall procure that each set of financial statements of an Obligor delivered pursuant to Clause 19.1 (Financial statements) is prepared using US GAAP, Italian GAAP or Luxembourg GAAP (as the case may be) and accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in the applicable GAAP or the accounting practices or reference periods and its auditors (or, if appropriate, the auditors of the Obligor) deliver to the Agent:

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

(ii)           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 that Obligor’s Original Financial Statements.

(c)           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.

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19.4        Business Plan

The Company shall supply to the Agent at least 30 days prior to the start of each operating year, a Business Plan in a form approved by the Agent and which shall include the following information:

(a)           a projected profit and loss statement and balance sheet for each Italian Obligor;

(b)           annual budgets including details of projected income, occupancy levels, trading forecast, average room rates and Revpar to be achieved for each Hotel and details of projected capital expenditure for each Hotel;

(c)           a projected cashflow statement for each Italian Obligor;

(d)           projected calculations in relation to the financial conditions set out in Clause 22.2 (Financial condition) for the next year; and

(e)           such other information as the Agent may reasonably require.

19.5        Insurance

The Italian Obligors shall, within 60 days of the renewal of the Insurance Policies in July of each year, supply to the Agent evidence as provided to it by the Approved Insurance Broker that all relevant insurance premia have been paid as and when due and confirmation that the Insurance Policies (other than any Insurance Policies referred to in paragraph 4 of Schedule 11 (Minimum Insurance Requirements) which have not been arranged by the Approved Insurance Broker) comply with the provisions of Clause 24.4 (Insurance).

19.6        Information:  miscellaneous

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

(a)           all documents of a non-routine nature dispatched by an Obligor (other than the Company) to its shareholders or quotaholders (or any class of them) or its creditors generally at the same time as they are dispatched;

(b)           promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any member of the Group, and which might, if adversely determined, have a Material Adverse Effect;

(c)           within ten days of the end of each Quarter Date:

(i)            a copy of the bank statements in respect of each Control Account other than each Operating Account in respect of that Quarter Date; and

(ii)           confirmation in written or electronic form of the balance standing to the credit of each Operating Account as at that Quarter Date; and

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(d)           promptly, such further information regarding the financial condition, business and operations of any member of the Group including any information required to be provided under paragraph (g) of Clause 24.4 (Insurance) as the Agent may reasonably require.

19.7        Notification of default

(a)           Each Obligor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).

(b)           Promptly upon a request by the Agent, the Company 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).

19.8        “Know your customer” checks

(a)           If:

(i)            the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

(ii)           any change in the status or shareholders or quotaholders of an Obligor after the date of this Agreement; or

(iii)          a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of paragraph (iii) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (iii) above, on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in paragraph (iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

(b)           Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other

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similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

20.          CONTROL ACCOUNTS

The undertakings in this Clause 20 (Control Accounts) 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.

20.1        Designation of Control Accounts

(a)           The following accounts shall be opened and maintained with the designated branch of the Approved Account Bank:

(i)            in the name of OEH Italia a deposit account designated the “Deposit Account” with IBAN number IT82R0343201600002212092427;

(ii)           a current account designated the “Debt Service Account” with IBAN number                                                in the name of OEH Italia, IBAN number                                                       in the name of Hotel Cipriani S.r.l., IBAN number                                                       in the name of Hotel Splendido S.r.l. and IBAN number                                                       in the name of Villa San Michele S.r.l.; and

(iii)          a current account designated the “FF&E Account” with IBAN number                                                              in the name of Hotel Cipriani S.r.l., IBAN number                                                              in the name of Hotel Splendido S.r.l., IBAN number                                                              in the name of Villa San Michele S.r.l. and IBAN number                                                              in the name of Hotel Caruso S.r.l.

(b)                               Each Operating Account shall be maintained with the Local Account Bank with which each account is respectively held at the date of this Agreement.

(c)                                No Italian Obligor may, without the prior written consent of the Agent, maintain any other account with any bank or financial institution.

20.2        Approved Account Banks and Local Account Banks

(a)                               The Approved Account Bank shall initially operate out of its designated branch in Milan situated at Milan, Via Brera 21 — Italy (sort code / swift code                        ;                               /                                     ).

(b)                               The Local Account Banks shall each operate out of their respective designated branches.

(c)                                If the Agent so requires or the Company so requests and the Agent consents (such consent not to be unreasonably withheld or delayed), the Obligors shall ensure that the Approved Account Bank shall (as soon as practicable after the requirement or request):

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(i)            be changed to such other Finance Party or Affiliate of a Finance Party which is approved in writing by the Majority Lenders which agrees to that appointment and has its designated branch in Milan; or

(ii)           change its designated branch to another branch of the Approved Account Bank in Milan.

(d)          Each Obligor shall do all such things as the Agent reasonably requests in order to facilitate any such change of Approved Account Bank (including, without limitation, the execution of bank mandate forms and transfer of balances).

20.3        Payments into Control Accounts

(a)          Each Italian Obligor will ensure that:

(i)            all Operating Income;

(ii)           all proceeds of any Insurance Policy in respect of business interruption;

(iii)          all amounts payable to it (not otherwise paid directly into the Deposit Account or to the Agent) under any Hedge Document; and

(iv)          all moneys received by an Italian Obligor which are not required to be credited to the other Control Accounts pursuant to this Agreement

are promptly paid directly into its nominated Operating Account.

(b)           Each Italian Obligor will ensure that:

(i)            all its Net Disposal Proceeds;

(ii)           all sums payable to the Borrowers under the Hedge Documents in respect of any break gain;

(iii)          all Insurance Proceeds of or exceeding EUR 1,000,000 or of an amount less than EUR 1,000,000 but when aggregated with other Insurance Proceeds received or scheduled to be received in respect of the same or related claim exceeding EUR 5,000,000 (other than in respect of business interruption, third party or public liability risks or any such proceeds paid directly to the Agent); and

(iv)          any proceeds of a Recovery Claim (after deducting any expenses approved by the Agent in accordance with Clause 7.9 (Mandatory Prepayment from Recovery Claims),

are promptly paid directly into the Deposit Account.

(c)           One Month before each Interest Payment Date (and without taking into account any monies which may at that time already be standing to the credit of the Debt Service Accounts) the Obligors will ensure the transfer to the Debt Service Account of each Borrower an amount no less than the aggregate of (i) the interest and principal payable by that Borrower on the then next Interest

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Payment Date (after taking account of any receipts received or receivable under any Hedge Document on or before that date), (ii) any amounts payable by each Borrower under the Hedge Documents, and (iii) any fees, costs or expenses (including in relation to amounts that any Finance Party might have incurred in relation to Insurance Policies in respect of the Hotels) then due to any Finance Party or which will be due on that Interest Payment Date (save to the extent that any such payment has already been made in respect of such amount to the Debt Service Accounts), so that on the then next Interest Payment Date the amount transferred to each Borrower’s Debt Service Account would be sufficient to pay all amounts due (including interest and principal) and payable by each Borrower on that date (the “Debt Service Deposit Amount”).

(d)                                 Each Obligor will ensure that the amounts required to be contributed towards FF&E in accordance with paragraph (b) of Clause 24.12 (Maintenance of Hotels) are duly transferred to the FF&E Account.

20.4        Debt Service Accounts

(a)          The Agent shall have sole signing rights on the Debt Service Accounts.

(b)                               On the Utilisation Date, the Agent is authorised by the Lenders and the Obligors to transfer from the Debt Service Accounts into whichever accounts are agreed between the Lenders and Obligors such amounts as requested by the Obligors, provided that an amount equal to or greater than the Initial Debt Service Deposit Amount remains standing to the aggregated credit of the Debt Service Accounts.

(c)                                On each Interest Payment Date and on the Final Maturity Date, the Agent shall (and is irrevocably authorised by the Italian Obligors to) withdraw, pro rata, from each Debt Service Account such amount as it may determine for application in or towards payment of the obligations of the Obligors under the Finance Documents in the following order (and, if the credit balance in those Debt Service Accounts is insufficient to pay all those items, in the following order):

(i)            first, any unpaid costs, fees and expenses due to the Agent, (including any due to any Receiver or Delegate), and the Joint Mandated Lead Arrangers under the Finance Documents;

(ii)           second, in or towards payment pro rata of:

(A)          all accrued interest, costs, fees and expenses due and payable to the Lenders under the Finance Documents; and

(B)          all amounts (not being any amount payable as a result of termination or closing out of all or any part of any Hedge Document) due and payable to the Hedge Counterparties under the Finance Documents;

(iii)          third, payment pro rata of:

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(A)          the Loans to the extent due and payable to the Lenders; and

(B)          all amounts payable to the Hedge Counterparties as a result of the termination or closing out of all or any part of any Hedge Documents;

(iv)          fourth, if a Default is continuing, all other Secured Obligations; and

(v)           fifth, if the Agent determines that a Default is not continuing, any surplus in excess of an amount equal to the Minimum Debt Service Deposit Amount (as defined in paragraph (c) below) and not otherwise required to be applied in accordance with the Finance Documents to be transferred to the nominated Operating Account held in the name of OEH Italia within five days of the relevant Interest Payment Date or Final Maturity Date as applicable.

(d)           The Obligors shall ensure that on the following dates, the following amounts are standing to the aggregated credit of the Debt Service Accounts (such amount being the “Minimum Debt Service Deposit Amount”):

(i)            on or before the first Utilisation Date and at all times thereafter the amount specified in section 12 (Transfer to the Debt Service Accounts) of Schedule 2 (Conditions Precedent) (the “Initial Debt Service Deposit Amount”), such amount to remain credited, at all times, to the balance of the Debt Service Accounts until all Secured Obligations are unconditionally and irrevocably discharged in full;

(ii)           immediately after the application of paragraph (b) of Clause 20.4 (Debt Service Accounts) in respect of each Interest Payment Date, an amount equal to the higher of the Initial Debt Service Deposit Amount and the Debt Service Deposit Amount for that Interest Payment Date (the “Carryover Debt Service Deposit Amount”); and

(iii)          one Month prior to each Interest Payment Date (other than the first Interest Payment Date) an amount equal to that Interest Payment Date’s Debt Service Deposit Amount PLUS the Carryover Debt Service Deposit Amount in respect of the then preceding Interest Payment Date.

20.5        Operating Accounts

(a)                               Each Italian Obligor shall have signing rights on its Operating Accounts provided that the Agent shall have sole signing rights if a Default is continuing or the Agent gives notice in accordance with paragraph (c) below.

(b)                               Unless a Default is continuing and provided the relevant Obligor has already complied with that Interest Period’s transfer obligations to the Debt Service Accounts as set out in paragraph (c) of Clause 20.3 (Payments into Control Accounts), the relevant Italian Obligor may make withdrawals from its Operating Accounts to be applied in or towards any Operating Expenses and for any other payments required and/or under the Finance Documents

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provided always that such withdrawal is not permitted for the purpose of making a distribution that would be in breach of Clause 23.12 (Distributions).

(c)           If a Default is continuing, the Agent may give notice to the Local Account Banks that no amount may be withdrawn from any Operating Account without its prior written consent.

20.6        FF&E Account

(a)           Each Italian Obligor (other than OEH Italia) shall have signing rights on its FF&E Account provided that the Agent shall have the right to exercise sole signing rights if an Event of Default is continuing.

(b)           Provided that no Event of Default is continuing or where an Event of Default is continuing but the Agent does not have signing rights on the FF&E Account, each Italian Obligor (other than OEH Italia) may withdraw monies from its FF&E Account in order to fund FF&E in accordance with this Agreement.

(c)           Following an Event of Default which is continuing and where the Agent has obtained signing rights on the FF&E Account, each Italian Obligor will continue to be obliged to fund FF&E as required in this Agreement but will do so in consultation with the Agent.

(d)           No withdrawal may be made from the FF&E Accounts except in connection with funding FF&E.

20.7        Deposit Account

(a)           The Agent shall have sole signing rights on the Deposit Account.

(b)           On each Interest Payment Date and on the Final Maturity Date, the Agent shall (and is irrevocably authorised by the Obligors to) withdraw from the Deposit Account such amounts as it may reasonably determine are required for application in or towards (and in the order set out in Clause 7.12 (Application of Prepayments)):

(i)            the mandatory prepayment of the Loans in accordance with Clause 7.6 (Mandatory Prepayment on a Hotel Disposal), Clause 7.7 (Mandatory Prepayment — Operational Failure), Clause 7.8 (Mandatory Prepayment — Insurance Proceeds) and Clause 7.9 (Mandatory Prepayment from Recovery Claims); and

(ii)           all amounts due and payable under Clause 7.13 (Restrictions).

(c)           The Agent shall transfer from the Deposit Account to the nominated Operating Account of the relevant Borrower or Hotel Caruso S.r.l. any Insurance Proceeds which under the terms of this Agreement that Borrower or Hotel Caruso S.r.l. is entitled to control, or which the Agent agrees may be used by that Obligor in accordance with the other terms of this Agreement.

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(d)           Any surplus remaining after the amounts referred to in paragraph (b) above have been applied in accordance with this Agreement shall be paid to the Debt Service Accounts and shall be applied on that Interest Payment Date or the Final Maturity Date, as the case may be, in accordance with Clause 20.4 (Debt Service Accounts).

20.8        Determination of Default

(a)          The Agent shall, acting reasonably, make a determination as to whether or not a Default is continuing for the purposes of any Finance Document as soon as reasonably practicable after being requested by the Company to make such a determination.

(b)          In determining whether a Default is continuing, the Agent may request and rely on a certificate issued by the Company as determinative, in the absence of express knowledge to the contrary, of the absence of any Default.

20.9        Control Accounts generally

(a)          Each Control Account shall be denominated in euro.

(b)          Each Control Account shall be pledged in favour of the Agent on behalf of the Finance Parties.

(c)           The Obligors may pay to the Approved Account Bank and Local Account Banks such reasonable transaction charges and other fees (in each case, consistent with the Approved Account Bank’s and Local Account Bank’s usual practice in relation to similar accounts) as the Company may from time to time agree with the Approved Account Bank and Local Account Banks.  No other charges or fees shall be payable to the Approved Account Bank or Local Account Banks (in their capacity as such) in respect of the Control Accounts.

(d)          If an Obligor makes any payment into a Control Account which is not held in its name or for its benefit, an intercompany loan shall arise owed by the Borrower which is the holder of that Account to the Obligor making the payment.

(e)           To the extent that any payment (save in respect of (i) a payment relating to rent, (ii) tax payments in connection with Italian VAT or income tax consolidation or (iii) dividends paid in accordance with the terms of this Agreement) is made from a Control Account by or on behalf of any Obligor to or for the benefit of another Obligor, an intercompany loan shall arise owed by that Obligor to the relevant Obligor.

20.10      Withdrawals

(a)          Despite any other provision of this Clause 20 (Control Accounts), no withdrawal may be made by any Borrower from a Control Account if a Default is continuing or would occur as a result of that withdrawal, except with the prior written consent of the Agent or to pay the Secured Obligations in accordance with this Agreement.

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(b)                               On the Final Maturity Date or upon any part of the Loans becoming immediately due and payable under this Agreement, the monies standing to the credit of each Control Account may be applied by the Agent in or towards payment of the Secured Obligations.

(c)                                This Clause 20 (Control Accounts) does not limit or affect any Obligor’s obligations to pay the Secured Obligations or to make voluntary or mandatory payments under the Finance Documents.

(d)                               The Finance Parties shall not be responsible to the Obligors for the non-payment of any of the Secured Obligations which could be paid out of moneys standing to the credit of any Control Account nor shall the Finance Parties be liable for any withdrawal from a Control Account wrongly made (except for gross negligence, fraud or wilful misconduct by the Agent).

21.          HEDGING ARRANGEMENTS

The Borrowers shall, within five Business Days after the Utilisation Date, enter into, and maintain, Hedge Documents which, together with all related documentation and the hedging arrangements entered into pursuant to them, shall:

(a)           provide interest rate derivative facilities and no other sort of facilities;

(b)           be with a Lender or an Affiliate of a Lender;

(c)           have a term expiring on the Final Maturity Date;

(d)           have a notional principal amount equal to 100 per cent. of the outstanding Loans modelled to take account of amounts required to be repaid under Clause 6.1 (Repayment of Instalments);

(e)           have settlement dates that coincide with the Interest Payment Dates;

(f)            be based substantially on the form of ISDA document or such other form as is satisfactory to the Agent acting reasonably;

(g)           be secured in favour of the Finance Parties in a manner acceptable to the Agent; and

(h)           otherwise, be in form and substance satisfactory to the Agent (acting reasonably).

22.          FINANCIAL COVENANTS

22.1        Financial definitions

In this Clause 22:

“Consolidated Principal Charges” means, in respect of any Relevant Period, the aggregate amount of principal payable by any member of the Italian Group.

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“Consolidated Net Worth” means at any time the aggregate of the amounts paid up or credited as paid upon the issued ordinary share capital or quotas of the Company and the aggregate amount of the reserves of the Group,

including:

(a)           any amount credited to the share or quota premium account, including any amount of additional paid in capital;

(b)           any capital redemption reserve fund;

(c)           any balance standing to the credit of the consolidated profit and loss account of the Group; and

(d)           any balance standing to the credit of the accumulated other comprehensive income reserve,

but deducting:

(a)           any debit balance on the consolidated profit and loss account of the Group;

(b)           any debit balance on the accumulated other comprehensive income reserve;

(c)           (to the extent included) any amounts arising from an upward revaluation of assets made at any time after the date of the Original Financial Statements; and

(d)           any amount in respect of any dividend or distribution declared, recommended or made by any member of the Group to the extent payable to a person who is not a member of the Group and to the extent such distribution is not provided for in the most recent financial statements,

and so that no amount shall be included or excluded more than once.

“Debt” means all amounts of principal drawn and not repaid under the Facility less:

(a)           an amount equal to the Debt Service Deposit Amount or Initial Debt Service Deposit Amount, as applicable, in respect of the then succeeding Interest Payment Date provided it is then standing to the credit of the Debt Service Accounts; and

(b)           any amounts standing to the credit of the Deposit Account that are required under this Agreement to be applied on the then next Interest Payment Date in prepayment of principal under the Facility and excluding any mark to market amounts then accruing under the Hedge Documents.

“Group Consolidated EBITDA” means, for any Relevant Period, consolidated Net Earnings of the Group for such period PLUS without double counting and to the extent deducted in determining Net Earnings for such period, the sum of (i) Group Consolidated Net Finance Costs for such period and foreign currency gains or losses, (ii) income tax expense for such period (including tax on unconsolidated subsidiaries), (iii) all amounts attributable to depreciation and amortisation expenses for such

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period, (iv) all amounts attributable to impairment for such period, (v) any items treated as exceptional or extraordinary for such period, and (vi) any other non-cash items for such period, all calculated for the Company and its Subsidiaries on a consolidated basis in accordance with US GAAP.

“Group Consolidated Net Finance Costs” means, in respect of any Relevant Period, the aggregate amount of the interest (including the interest element of leasing and hire purchase payments and capitalised interest), commission, fees, discounts and other finance payments payable or receivable by any member of the Group (as applicable) and after taking into account all amounts payable or receivable on account of interest alone by the Group in relation to the Relevant Period under any hedge document but excluding to the extent net finance cost the mark to market valuation of derivative transactions, any amounts paid under arrangements or related facility fees and the write-off of any deferred finance costs.

“Italian Group Consolidated EBITDA” means, for the Italian Obligors in aggregate, for a Relevant Period, Italian Group Profits before Interest and Tax before non-cash items including without limitation, any amount attributable to the amortisation of intangible assets and impairment and depreciation of assets and excluding management fees, but after deducting any actual expenditure on FF&E costs as required or permitted under this Agreement. If the Group decides to introduce a sales and marketing fee this cost will be deducted from the Italian Group Profits before Interest and Tax in calculating the Italian Group Consolidated EBITDA.

“Italian Group Consolidated Net Finance Costs” means, in respect of any Relevant Period, the aggregate amount of the interest (including the interest element of leasing and hire purchase payments and capitalised interest), commission, fees, discounts and other finance payments payable or receivable by any member of the Italian Group (as applicable), and after taking into account all amounts payable or receivable on account of interest alone by the Borrowers in relation to the Relevant Period under any Hedge Document entered into in accordance with Clause 21 (Hedging Arrangements), and excluding for the avoidance of doubt, (i) any amount accounted for in the definition of “Consolidated Principal Charge”, (ii) any amount which is payable by any member of the Italian Group as a financing arrangement or structuring fee or upfront premium in connection with the purchase of interest rate protection, (iii) to the extent included the mark to market valuation of derivative transactions and (iv) the write-off of any deferred finance costs.

“Italian Group Profits before Interest and Tax” means, in respect of any Relevant Period, the Net Earnings in aggregate of the Italian Obligors from continuing operations before: