20-F

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

(Mark One)
o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
or
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2004
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-10409

InterContinental Hotels Group PLC

(Exact name of registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organization)

67 Alma Road,

Windsor, Berkshire SL4 3HD

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
American Depositary Shares	New York Stock Exchange
Ordinary Shares of 112 pence each	New York Stock Exchange*

*  Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

      Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Ordinary Shares of 112 pence each                              622,068,047

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:     Yes þ          No o

      Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 o          Item 18 þ

TABLE OF CONTENTS

		Page
Introduction			4
Cautionary Note Regarding Forward-Looking Statements			5
PART I
Item 1.	Identity of Directors, Senior Management and Advisors		7
Item 2.	Offer Statistics and Expected Timetable		7
Item 3.	Key Information		7
	Selected Consolidated Financial Information		7
	Risk Factors		13
Item 4.	Information on the Company		17
	Summary		17
	Segmental Information		19
	Hotels		23
	Soft Drinks		39
	Trademarks		41
	Organizational Structure		41
	Property, Plants and Equipment		42
	Environment		42
Item 5.	Operating and Financial Review and Prospects		43
	Introduction		43
	Critical Accounting Policies Under UK GAAP and US GAAP		44
	Operating Results		46
	Liquidity and Capital Resources		59
	International Financial Reporting Information		61
Item 6.	Directors, Senior Management and Employees		70
	Directors and Senior Management		70
	Compensation		72
	Board Practices		74
	Employees		76
	Share Ownership		77
Item 7.	Major Shareholders and Related Party Transactions		78
	Major Shareholders		78
	Related Party Transactions		78
Item 8.	Financial Information		80
	Consolidated Statements and Other Financial Information		80
	Significant Changes		80
Item 9.	The Offer and Listing		80
	Plan of Distribution		81
	Selling Shareholders		81
	Dilution		81
	Expenses of the Issue		81

2

		Page
Item 10.	Additional Information		82
	Memorandum and Articles of Association		82
	Material Contracts		84
	Exchange Controls		87
	Taxation		87
	Documents on Display		90
Item 11.	Quantitative and Qualitative Disclosures About Market Risk		90
Item 12.	Description of Securities Other Than Equity Securities		93
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies		93
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds		93
Item 15.	Controls and Procedures		93
Item 16.	[Reserved]		93
Item 16A.	Audit Committee Financial Expert		93
Item 16B.	Code of Ethics		93
Item 16C.	Principal Accountant Fees and Services		94
Item 16D.	Exemptions from the Listing Standards for Audit Committees		94
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers		95
PART III
Item 17.	Financial Statements		95
Item 18.	Financial Statements		96
Item 19.	Exhibits		96
Exhibit 4(a)(ii)
Exhibit 4(b)(i)
Exhibit 4(b)(ii)
Exhibit 4(b)(iii)
Exhibit 4(b)(iv)
Exhibit 4(b)(v)
Exhibit 4(c)(v)
Exhibit 8
Exhibit 12.1
Exhibit 12.2
Exhibit 13.1

3

INTRODUCTION

      As used in this document, except as the context otherwise requires, the terms:

•  “board” refers to the board of directors of InterContinental Hotels Group PLC or, where appropriate, the board of Six Continents PLC;

•  “Britvic” refers to Britannia Soft Drinks Limited;

•  “Company” refers to InterContinental Hotels Group PLC or Six Continents PLC or their respective board of directors as the context requires;

•  “Group” refers to InterContinental Hotels Group PLC and its subsidiaries or Six Continents PLC and its subsidiaries as the context requires;

•  “Hotels” or “IHG Hotels” refers to the hotels business of Six Continents or InterContinental Hotels Group PLC as the context requires;

•  “IHG” refers to InterContinental Hotels Group PLC or, where appropriate, its board of directors;

•  “MAB” or “Mitchells and Butlers” refers to Mitchells & Butlers plc;

•  “ordinary share” or “share” refers to the ordinary shares of 28 pence each of Six Continents PLC or the ordinary shares of £1 and after December 10, 2004, 112 pence each of InterContinental Hotels Group PLC;

•  “Separation transaction” or “Separation” refers to the transaction that separated Six Continents PLC’s hotels and soft drinks businesses from its retail business, completed on April 15, 2003. The Separation resulted in two separately listed holding companies: (i) Mitchells & Butlers plc, which is the holding company of the retail business and Standard Commercial Property Developments Limited; and (ii) InterContinental Hotels Group PLC, which is the holding company for the hotels and soft drinks businesses;

•  “Six Continents” refers to Six Continents PLC;

•  “Soft Drinks” and “Britvic business” refer to the soft drinks business of InterContinental Hotels Group PLC, which the Company has through its controlling interest in Britvic; and

•  “VAT” refers to UK value added tax levied by HM Customs & Excise on certain goods and services.

      References in this document to the “Companies Act” mean the Companies Act 1985, as amended, of Great Britain; references to the “EU” mean the European Union; references in this document to “UK” refer to the United Kingdom of Great Britain and Northern Ireland.

      The Company publishes its Consolidated Financial Statements expressed in UK pounds sterling. In this document, references to “US dollars”, “US$”, “$” or “¢” are to United States (“US”) currency, references to “euro” or “€” are to the euro, the currency of the European Economic and Monetary Union and references to “pounds sterling”, “sterling”, “£”, “pence” or “p” are to UK currency. Solely for convenience, this Annual Report on Form 20-F contains translations of certain pound sterling amounts into US dollars at specified rates. These translations should not be construed as representations that the pound sterling amounts actually represent such US dollar amounts or could be converted into US dollars at the rates indicated. Unless otherwise indicated, the translations of pounds sterling into US dollars have been made at the rate of £1.00 = $1.93, the noon buying rate in The City of New York for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of New York (the “Noon Buying Rate”) on December 31, 2004. On April 25, 2005 the Noon Buying Rate was £1.00 = $1.91. For information regarding rates of exchange between pounds sterling and US dollars from fiscal 2000 to the present, see “Item 3. Key Information — Exchange Rates”.

      The Company’s fiscal year ends on December 31. This reflects a change from September 30, implemented following Separation. The December 31 fiscal year end is in line with the calendar accounting year ends of the majority of comparable US and European hotel companies. IHG will continue to report on a

4

December 31 fiscal year end basis, as the Group believes this facilitates more meaningful comparisons with other key participants in the industry. References in this document to a particular year are to the fiscal year unless otherwise indicated. For example, references to the year ended December 31, 2004 are shown as 2004 and references to the fiscal period ended December 31, 2003 are shown as 2003 and represent the 15 months from October 1, 2002 to December 31, 2003, unless otherwise specified, references to the fiscal year ended September 30, 2002 are shown as 2002 and references to other fiscal years are shown in a similar manner.

      The Company’s Consolidated Financial Statements are prepared on the basis of accounting principles generally accepted in the United Kingdom (“UK GAAP”) which differ from those generally accepted in the United States (“US GAAP”). The significant differences applicable to the Group are explained in Note 35 of Notes to the Financial Statements.

      During 2003, the Company changed its fiscal year end to December 31 and thus its financial statements for the 2003 fiscal period are presented for the 15 months ended December 31, 2003 as permitted by the Companies Act 1985. In accordance with the transition period reporting requirements of the US Securities and Exchange Commission (“SEC”), an unaudited analysis of the financial statements and notes thereto for the 15 month period showing the three month period ended December 31, 2002 and the 12 month period ended December 31, 2003 is presented in Note 34 of Notes to the Financial Statements.

      IHG believes that the reporting of profit and earnings measures before exceptional items provides additional meaningful information on underlying returns and trends to shareholders. The Group’s key performance indicators used in budgets, monthly reporting, forecasts, long-term planning and incentive plans for internal financial reporting focus primarily on profit and earnings measures before exceptional items. For this purpose, exceptional items comprises operating exceptional items, exceptional tax and exceptional interest credits and charges, in addition to those non-operating exceptional items disclosed below operating profit as required by UK GAAP. Throughout this document earnings per share is also calculated excluding the effect of all exceptional items and the related tax effect and is referred to as adjusted earnings per share.

      The Company furnishes The Bank of New York, as Depositary, with annual reports containing Consolidated Financial Statements and an independent auditor’s opinion thereon. These Financial Statements are prepared on the basis of UK GAAP. The annual reports contain reconciliations to US GAAP of net income and shareholders’ equity. The Company also furnishes the Depositary with semi-annual reports prepared in conformity with UK GAAP, which contain unaudited interim consolidated financial information. Upon receipt thereof, the Depositary mails all such reports to recorded holders of American Depositary Receipts (“ADRs”) evidencing American Depositary Shares (“ADSs”). The Company also furnishes to the Depositary all notices of shareholders’ meetings and other reports and communications that are made generally available to shareholders of the Company. The Depositary makes such notices, reports and communications available for inspection by recorded holders of ADRs and mails to all recorded holders of ADRs notices of shareholders’ meetings received by the Depositary. The Company is not required to report quarterly financial information. However, during 2004, the Company reported interim financial information at June 30, 2004 in accordance with the Listing Rules of the UK Listing Authority. In addition, it provided a trading update at March 31, 2004 and at September 30, 2004 and intends to continue to provide quarterly financial information during fiscal 2005, although it has not made any decision with respect to reporting quarterly financial information after 2005.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

      This Form 20-F contains certain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 with respect to the financial condition, results of operations and business of the Group and certain of the plans and objectives of the board of directors of InterContinental Hotels Group PLC with respect thereto. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use such words as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe” or other words of similar meanings. Such statements in the Form 20-F include, but are not limited to, statements under the following headings: (i) “Item 4. Information on the Company”; (ii) “Item 5. Operating and Financial Review and Prospects”;

5

(iii) “Item 8. Financial Information”; and (iv) “Item 11. Quantitative and Qualitative Disclosures About Market Risk”. Specific risks faced by the Company are described under “Item 3. Key Information — Risk Factors” commencing on page 13. By their nature, forward-looking statements involve risk and uncertainty, and the factors described in the context of such forward-looking statements in this Form 20-F could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. These factors include, among others, the effect of political and economic developments, the risks involved with the Group’s reliance on brands and protection of intellectual property rights and the reliance on consumer perception of its brands, the ability to recruit and retain key personnel, the risks involved with developing and employing new technologies and systems, the Group’s ability to purchase adequate insurance, risks associated with funding the defined benefits under its pension schemes, the future balance between supply and demand for the Group’s hotels, the risks relating to identifying, securing and retaining management and franchise agreements, events that adversely impact domestic or international travel, including terrorist incidents and epidemics such as Severe Acute Respiratory Syndrome (“SARS”), increased use of intermediary reservation channels, the lack of selected acquisition opportunities or the effects of being unable to make disposals of hotel assets, the risks of litigation, the risks of possible product contamination, reliance on suppliers in the soft drinks business, competition, and the effect of adverse weather conditions on the demand in the soft drinks business.

6

PART I

ITEM 1.      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

      Not applicable.

ITEM 2.      OFFER STATISTICS AND EXPECTED TIMETABLE

      Not applicable.

ITEM 3.      KEY INFORMATION

SELECTED CONSOLIDATED FINANCIAL INFORMATION

     Summary

      The selected consolidated financial data set forth below for the year ended December 31, 2004, the 15 months ended December 31, 2003 including unaudited information for the three months ended December 31, 2002 and 12 months ended December 31, 2003, and the years ended September 30, 2002, 2001 and 2000 are derived from Consolidated Financial Statements of the Group, which have been audited by its independent registered public accounting firm, Ernst & Young LLP, restated where appropriate to accord with the Group’s current accounting policies and presentation. The selected consolidated financial data set forth below should be read in conjunction with, and are qualified in their entirety by reference to, the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report.

7

Consolidated Profit and Loss Account Data

								Three months			12 months			15 months
		Year ended						ended			ended			ended			Year ended
		December 31,						December 31,			December 31,			December 31,			September 30,
		2004(1)(2)			2004(1)			2002			2003			2003(1)			2002(1)			2001(1)			2000(1)
		$			£			£			£			£			£			£			£
		(in millions, except per share and ADS amounts)
Amounts in accordance with UK GAAP
Turnover:
	Continuing operations		4,011			2,204			529			2,161			2,690			2,134			2,473			2,092
	Discontinued operations		—			—			342			451			793			1,481			1,560			3,066
			4,011			2,204			871			2,612			3,483			3,615			4,033			5,158
Total operating profit before operating exceptional items:
	Continuing operations		603			331			60			286			346			329			486			428
	Discontinued operations		—			—			52			85			137			289			306			477
			603			331			112			371			483			618			792			905
Operating exceptional items:
	Continuing operations		(35	)		(19	)		—			(51	)		(51	)		(77	)		(43	)		—
			(35	)		(19	)		—			(51	)		(51	)		(77	)		(43	)		—
Total operating profit:
	Continuing operations		568			312			60			235			295			252			443			428
	Discontinued operations		—			—			52			85			137			289			306			477
			568			312			112			320			432			541			749			905
Non-operating exceptional items:
	Continuing operations		(126	)		(69	)		(3	)		(167	)		(170	)		(2	)		(2	)		2
	Discontinued operations		—			—			—			(43	)		(43	)		55			2			1,294
			(126	)		(69	)		(3	)		(210	)		(213	)		53			—			1,296
Profit on ordinary activities before interest			442			243			109			110			219			594			749			2,201
Interest receivable			128			70			27			77			104			116			165			57
Interest payable and similar charges			(157	)		(86	)		(39	)		(112	)		(151	)		(176	)		(224	)		(209	)
Premium on early settlement of debt			(31	)		(17	)		—			(136	)		(136	)		—			—			—
Profit before taxation			382			210			97			(61	)		36			534			690			2,049
Taxation			213			117			(29	)		46			17			(52	)		(223	)		(342	)
Minority equity interests			(51	)		(28	)		(4	)		(30	)		(34	)		(25	)		(24	)		(16	)
Earnings			544			299			64			(45	)		19			457			443			1,691
Per ordinary share:
	Basic		76.6	p		42.1	p		8.7	p		(6.1	)p		2.6	p		62.5	p		60.6	p		228.5	p
	Diluted		75.7	p		41.6	p		8.7	p		(6.1	)p		2.6	p		62.3	p		60.2	p		227.0	p
	Adjusted(3)		59.2	p		32.5	p		9.1	p		30.0	p		39.1	p		49.5	p		66.6	p		68.8	p
	Dividends		157.1	p		86.3	p		—			21.2	p		21.2	p		41.7	p		40.5	p		39.3	p

Footnotes on page 10.

8

									Three months			12 months			15 months
			Year ended						ended			ended			ended			Year ended
			December 31,						December 31,			December 31,			December 31,			September 30,
			2004(1)(2)(4)			2004(1)(4)			2002(4)			2003(4)			2003(1)(4)			2002(1)			2001(1)			2000(1)
			$			£			£			£			£			£			£			£
			(in millions, except per share and ADS amounts)
Amounts in accordance with US GAAP
Income/(loss) before cumulative effect on prior years of change in accounting principle:
	Continuing operations			580			318			29			(5	)		24			163			185			135
	Discontinued operations:
		Income from discontinued operations		2			1			31			34			65			165			466			462
		Surplus on disposal		38			21			—			—			—			171			25			1,242
	Total discontinued operations			40			22			31			34			65			336			491			1,704
Cumulative effect on prior years of adoption of FAS 142				—			—			(712	)		—			(712	)		—			—			—
	Net income/(loss)			620			340			(652	)		29			(623	)		499			676			1,839
Per ordinary share and American Depositary Share(5)
Basic
Income/(loss) before cumulative effect on prior years of change in accounting principle:
	Continuing operations			81.8	¢		44.8	p		4.0	p		(0.6	)p		3.3	p		22.3	p		25.3	p		18.2	p
	Discontinued operations			5.6	¢		3.1	p		4.2	p		4.6	p		8.9	p		46.0	p		67.1	p		230.3	p
Cumulative effect on prior years of adoption of FAS 142				—			—			(97.1	)p		—			(97.1	)p		—
Net income/(loss)				87.4	¢		47.9	p		(88.9	)p		4.0	p		(84.9	)p		68.3	p		92.4	p		248.5	p
Diluted
Income/(loss) before cumulative effect on prior years of change in accounting principle:
	Continuing operations			77.8	¢		42.6	p		4.0	p		(0.6	)p		3.3	p		22.2	p		25.2	p		18.1	p
	Discontinued operations			5.5	¢		3.1	p		4.2	p		4.6	p		8.9	p		45.8	p		66.7	p		228.8	p
Cumulative effect on prior years of adoption of FAS 142				—			—			(97.1	)p		—			(97.1	)p		—			—			—
Net income/(loss)				83.3	¢		45.7	p		(88.9	)p		4.0	p		(84.9	)p		68.0	p		91.9	p		246.9	p

Footnotes on page 10.

9

Consolidated Balance Sheet Data

	December 31,						September 30,
	2004(2)		2004		2003		2002		2001		2000
	$		£		£		£		£		£
	(in millions)
Amounts in accordance with UK GAAP
Intangible assets		274		142		158		173		174		189
Tangible assets		7,288		3,776		3,951		7,641		7,558		6,683
Investments		191		99		172		218		234		217
Current assets		1,461		757		999		1,022		1,107		1,684
Total assets		9,214		4,774		5,280		9,054		9,073		8,773
Current liabilities(6)		1,955		1,013		1,085		2,273		2,009		1,604
Long-term debt(6)		2,231		1,156		988		631		1,019		1,213
Share capital		1,345		697		739		734		734		745
Shareholders’ funds		3,816		1,977		2,554		5,335		5,153		5,099
Amounts in accordance with US GAAP
Intangible assets		2,644		1,370		1,587		2,702		2,902		2,960
Tangible assets		6,666		3,454		3,916		6,552		6,343		5,130
Investments		197		102		174		189		205		254
Current assets		2,017		1,045		978		983		1,209		1,796
Total assets		11,524		5,971		6,655		10,426		10,659		10,140
Current liabilities(6)		3,926		2,034		1,496		2,109		2,033		1,461
Long-term debt(6)		100		52		523		622		779		1,152
Share capital		1,345		697		739		243		242		246
Shareholders’ equity		5,398		2,797		3,380		6,221		6,381		6,147

(1)	The results for 2002, 2001 and 2000 include 52 weeks (Hotels 12 months). Fiscal 2003 reflects 15 months trading for Hotels, Soft Drinks 64 weeks ended December 20, 2003 and Mitchells and Butlers plc which reflects 28 weeks ended April 12, 2003. For the year 2004, Hotels include 12 months and Soft drinks 53 weeks ended December 25, 2004.
(2)	US dollar amounts have been translated at the Noon Buying Rate on December 31, 2004 of £1.00 = $1.93 solely for convenience.
(3)	Adjusted earnings per share are disclosed in order to show performance undistorted by exceptional items.
(4)	Subsequent to the publication of the Group’s UK Annual Report and Financial Statements, the net income in accordance with US GAAP for the year ended December 31, 2004, reported therein, was determined to be understated in that document by £8 million. Also, the split of net income between continuing operations and discontinued operations as reported therein, has been revised. There was no impact on the UK GAAP results.
(5)	Each American Depositary Share represents one ordinary share.
(6)	Long-term debt under UK GAAP includes amounts supported by long-term credit facilities, which are classified as current liabilities under US GAAP.

     Dividends

      InterContinental Hotels Group PLC paid an interim dividend of 4.3p per share on October 18, 2004 and a special interim dividend of 72.0p per ordinary share on December 17, 2004. The IHG board has proposed a final dividend of 10.0p per share, payable on June 3, 2005, if approved by shareholders at the Annual General

10

Meeting to be held on June 1, 2005, bringing the total IHG dividend for the year ended December 31, 2004 to 14.3p per share excluding the special interim dividend.

      IHG intends to pursue a progressive dividend policy that is appropriate to the strategies of the Group.

      On May 3, 2005, the Board of IHG announced details of the proposed return of approximately £1 billion to shareholders. In order to implement the proposals, the board is seeking shareholder approval at an Extraordinary General Meeting convened for June 1, 2005 and the sanction of the High Court of England and Wales to introduce a new listed parent company of the Group, New InterContinental Hotels Group PLC (“New IHG”) and to return funds to shareholders by way of a scheme of arrangement (the “Scheme”). Shortly after the Scheme becomes effective, it is proposed to seek a further sanction of the Court to reduce the capital of New IHG. It is intended that, subject to the Scheme becoming effective, New IHG will, with effect from the date of admission to the Official List of the UK Listing Authority, adopt the name ‘InterContinental Hotels Group PLC’.

      If the Scheme is implemented, Shareholders will receive 11 New Ordinary Shares and £1.65 in cash in exchange for every 15 Existing Ordinary Share they currently hold.

      After the reduction of capital, the share capital of New IHG will be reduced, in order to create new distributable reserves of approximately £2.7 billion, by decreasing the nominal amount of each New Ordinary Share issued pursuant to the Scheme from 625 pence to 10 pence.

      Shareholders will still own the same proportion of New IHG, subject to fractional entitlements, after the implementation of the proposals as they held in IHG before the implementation of the proposals. As all ordinary shareholdings in the Company will be consolidated, shareholders’ percentage holdings in the issued share capital of the Company will (save in respect of fractional entitlements) remain unchanged.

      The table below sets forth the amounts of interim, final and total dividends on each ordinary share in respect of each fiscal year indicated. Comparative dividends per share have been restated using the aggregate of the weighted average number of shares of InterContinental Hotels Group PLC and Six Continents PLC, adjusted to equivalent shares of InterContinental Hotels Group PLC. For the purposes of showing the dollar amounts per ADS, such amounts are before deduction of UK withholding tax (as described under “Item 10. Additional Information — Taxation”) and are translated into US dollars per ADS at the Noon Buying Rate on each of the respective UK payment dates. However, dividends paid in US dollars by the Depositary may be based on a market exchange rate other than the Noon Buying Rate.

     Ordinary dividend

	Pence per ordinary share						$ per ADS
	Interim		Final		Total		Interim		Final			Total
Year ended September 30
2000(1)		11.92		27.37		39.29		0.178		0.402			0.580
2001(1)		12.27		28.20		40.47		0.177		0.406			0.583
2002(1)		12.58		29.14		41.72		0.205		0.474			0.679
Period ended December 31, 2003
Six Continents(1)		7.65		—		7.65		0.119		—			0.119
IHG		4.05		9.45		13.50		0.068		0.174			0.242
Year ended December 31, 2004
IHG		4.30		10.00		14.30		0.077		0.191	(2)		0.268

(1)	Restated to reflect an equivalent number of shares in InterContinental Hotels Group PLC.
(2)	The 2004 final dividend has been translated at the Noon Buying Rate on April 25, 2005 of £1.00 = $1.91.

11

     Special Dividend

	Pence per
	ordinary share		$ per ADS
December 2004		72.00		1.39

      Dividends will be paid in pounds sterling and exchange rate fluctuations will affect the US dollar amount received by holders of ADRs on conversion of such dividends. Moreover, fluctuations in the exchange rates between pounds sterling and the US dollar will affect the dollar equivalent of the pounds sterling price of the ordinary shares on the London Stock Exchange and, as a result, are likely to affect the market price of ADSs which are evidenced by ADRs in the United States.

Exchange Rates

      The following tables show, for the periods and dates indicated, certain information regarding the exchange rate for pounds sterling, based on the Noon Buying Rate for pounds sterling expressed in US dollars per £1.00. The exchange rate on April 25, 2005 was £1.00 = $1.91.

	Month’s		Month’s
	highest		lowest
Month	exchange rate		exchange rate
October 2004		1.84		1.78
November 2004		1.91		1.83
December 2004		1.95		1.91
January 2005		1.91		1.86
February 2005		1.93		1.86
March 2005		1.93		1.87
April 2005 (through April 25, 2005)		1.92		1.87

	Period		Average
	end		rate(1)		High		Low
Year ended September 30
2000		1.48		1.55		1.68		1.40
2001		1.47		1.44		1.50		1.37
2002		1.56		1.48		1.58		1.41
Period ended December 31
2003		1.78		1.63		1.78		1.54
Year ended December 31
2004		1.93		1.84		1.95		1.75

(1)  The average of the Noon Buying Rate on the last day of each full month during the period.

      A significant portion of the Group’s assets, liabilities and revenues are denominated in currencies other than pounds sterling, principally the US dollar and the euro. For a discussion of the impact of exchange rate movements, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

12

RISK FACTORS

      This section describes some of the risks that could materially affect the Group’s businesses. The factors below should be considered in connection with any financial and forward-looking information in this Form 20-F and the cautionary statements contained on pages 5 and 6.

      The risks below are not the only ones that the Group faces. Some risks are not yet known to IHG and some that IHG does not currently believe to be material could later turn out to be material. All of these risks could materially affect the Group’s businesses, turnover, operating profit, earnings, net assets and liquidity and/or capital resources.

General Risks

The Group is exposed to the risks of political and economic developments

      The Group is exposed to the risks of global and regional adverse political, economic and financial market developments, including recession, inflation and currency fluctuation, that could lower revenues and reduce income. A recession would adversely affect room rates and/or occupancy levels and other income generating activities resulting in deterioration of results of operations and potentially affecting the value of properties in affected economies.

      Further, political or economic factors or regulatory action could effectively prevent the Group from receiving profits from, or from selling its investments in, certain countries, or otherwise adversely affect operations. In addition, fluctuations in currency exchange rates between the UK pound sterling, the currency in which the Group reports its financial statements, and the US dollar and other currencies in which the Group’s international operations or investments do business, could adversely affect the Group’s reported earnings and the value of its business. Fluctuations of this type have been experienced over the last two years with the significant strengthening of the pound against the dollar.

The Group is reliant on the reputation of its brands, the steps it takes to define and enforce brand standards and the protection of its intellectual property rights

      An event that was to materially damage the reputation of one or more of the Group’s brands and/or failure to sustain the appeal of the Group’s brands to its customers could have an adverse impact on the value of that brand and subsequent revenues from that brand or business.

      In addition, the value of the Group’s brands is influenced by a number of other factors including consumer preference and perception, commoditisation (whereby the price/ quality becomes relatively more important than brand identifications), failure by the Hotels business or its franchisees to ensure compliance with the significant regulations applicable to hotel operations, or other factors affecting consumers’ willingness to purchase goods and services, including any factor which adversely affects the reputation of those brands.

      In particular, the extent to which the Hotels business is able to adequately define and enforce adherence to its operating, quality and fire life safety standards, or the significant regulations applicable to hotel operations, pursuant to its management and franchise contracts, may further impact brand reputation or customer perception, and therefore the value of the hotel brands.

      Given the importance of brand recognition to the Group’s businesses, the Group has invested considerable effort in protecting its intellectual property, including by registration of trademarks and domain names. If the Group is unable to protect its intellectual property, any infringement or misappropriation could materially harm its future financial results and ability to develop its businesses.

The Group is dependent upon recruiting and retaining key personnel and developing their skills

      In order to develop, support and market its products, the Group must hire and retain highly skilled employees with particular expertise. The implementation of the Group’s strategic business plans could be undermined by a failure to recruit or retain key personnel, the unexpected loss of key senior employees, failures in the Group’s succession planning and incentive plans, or a failure to invest in the development of key

13

skills. Additionally, unless skills are supported by a sufficient infrastructure to enable knowledge and skills to be passed on, the Group risks losing accumulated knowledge if key employees leave the Group.

The Group is exposed to certain risks in relation to technology and systems

      The Group is exposed to certain risks in relation to technology and systems. To varying degrees the Group is reliant upon certain technologies and systems (including Information Technology systems) for the running of its business, particularly those which are highly integrated with business processes, and disruption to those technologies or systems could adversely effect the efficiency of the business, notwithstanding business continuity or disaster recovery processes.

      The Group may have to make substantial additional investments in new technologies or systems in order to remain competitive.

      Failing to keep pace with developments in technologies or systems may put the Group at a competitive disadvantage. The technologies or systems that the Group chooses may not be commercially successful, or the technology or system strategy may not be sufficiently aligned to the needs of the business or responsive to changes in business strategy. As a result, the Group could lose customers, fail to attract new customers, incur substantial costs or face other losses.

      Additionally, failure to develop an appropriate e-commerce strategy and select the right partners could erode the Group’s market share.

      Further details in relation to the Hotels business are set out below.

The Group may face difficulties insuring its businesses

      Historically, the Group has maintained insurance at levels determined by it to be appropriate in light of the cost of cover and the risk profiles of the businesses in which it operates. Following the effects of the September 11, 2001 terrorist attacks and subsequent events, many companies faced increased premiums for reduced cover as the insurance market hardened. A repeat of incidents of this nature may result in the Group experiencing significant increases in the cost of insuring its business at an acceptable level, or in the Group being unable to obtain cover for certain risks at a realistic price.

The Group is exposed to funding risks in relation to the defined benefits under its pension plans

      The Group is required by law to maintain a minimum funding level in relation to its ongoing obligation to provide current and future pensions for the members of its pension plans who are entitled to defined benefits. In addition, if any plan of the Group is wound up, the Group could become statutorily liable to make an immediate payment to the trustees to bring the funding of these defined benefits to a level which is higher than this minimum. The contributions payable by the Group must be set with a view to making prudent provision for the benefits accruing under the plans of the Group.

      Some of the issues which could adversely affect the funding of these defined benefits (and materially affect the Group’s funding obligations) include: (i) poor investment performance of pension fund investments; (ii) long life expectancy (which will make pensions payable for longer and therefore more expensive to provide); (iii) adverse annuity rates (which tend in particular to depend on prevailing interest rates and life expectancy) as these will make it more expensive to secure pensions with an insurance company; and (iv) other events occurring which make past service benefits more expensive than predicted in the actuarial assumptions by reference to which the Group’s past contributions were assessed.

      The trustees of the UK defined benefit plans can demand increases to the contribution rates relating to the funding of those pension plans, which would oblige the relevant members of the Group to contribute extra amounts to such pension funds. The trustees must consult the plans’ actuary and principal employer before exercising this power. In practice, contribution rates are agreed between the Group and the trustees on actuarial advice, and are set for three year terms. The last such review was as at March 31, 2004. As at April 25, 2005 (being the latest practicable date prior to the publication of this document), the Directors are

14

not aware of any circumstances that would cause the trustees to deem it necessary to unilaterally increase the contribution rates.

Risks relating to the Hotels business

The Hotels business is exposed to the risks of the hotel industry supply and demand cycle

      The future operating results of the Hotels business could be adversely affected by industry overcapacity (by number of rooms) and weak demand or other differences between planning assumptions and actual operating conditions. Reductions in room rates and occupancy levels would adversely impact the results of operations of the Hotels business.

The Hotels business is exposed to a variety of risks related to identifying, securing and retaining management and franchise agreements

      The Hotels business competes with other hotel companies for management and franchise agreements. Competition may generally reduce the number of suitable management, franchise and investment opportunities offered to the Hotels business, and increase the bargaining power of property owners seeking to engage a manager or become a franchisee. There can be no assurance that the Hotels business will be able to identify, retain or add franchisees to the Hotels business system or to secure management contracts. For example, the availability of suitable sites, planning and other local regulations or the availability of finance may all restrict the supply of suitable hotel development opportunities under franchise or management agreements. There are also risks that significant franchisees or groups of franchisees may have interests that conflict, or are not aligned, with those of the Hotels business. In connection with entering into management or franchise agreements, the Group may be required to make investments in or guarantee the obligations of third parties or guarantee minimum income to third parties. Changes in legislation or regulatory changes may be implemented that have the effect of favouring franchisees relative to brand owners.

The Hotels business is exposed to the risk of events that adversely impact domestic or international travel

      The room rates and occupancy levels of the Hotels business could be adversely impacted by events that reduce domestic or international travel, such as actual or threatened acts of terrorism or war, epidemics (such as SARS), travel-related accidents, travel-related industrial action, increased transportation and fuel costs and natural disasters resulting in reduced worldwide travel or other local factors impacting individual hotels.

      Terrorist incidents such as the events of September 11, 2001 and the war in Iraq in 2003 significantly affected international travel and consequently global demand for hotel rooms. Further incidents or uncertainties of this type may have an adverse impact on the Group’s operations and financial results. In addition, inadequate preparedness, contingency planning or recovery capability in relation to a major incident or crisis may prevent operational continuity and consequently impact the value of the brand or the reputation of the Hotels business.

The Hotels business is reliant upon its proprietary reservation system and is exposed to the risk of failures in the system and increased competition in reservation infrastructure

      The value of the brands of the Hotels business is partly derived from the ability to drive reservations through its proprietary HolidexPlus reservation system, an electronic booking and delivery channel directly linked to travel agents, hotels and internet networks. Inadequate disaster recovery arrangements, or inadequate continued investment in this technology, leading to loss of key communications linkages, particularly in relation to HolidexPlus, internet reservation channels and other key parts of the IT infrastructure for a prolonged period, or permanently, may result in significant business interruption and subsequent impact on revenues.

      The Hotels business is also exposed to the risk of competition from third party intermediaries who provide reservation infrastructure. In particular, any significant increase in the use of these reservation channels in

15

preference to proprietary channels may impact the Hotels business’ ability to control the supply, presentation and price of its room inventory.

The Hotels business may experience a lack of selected acquisition opportunities

      While the strategy of the Hotels business is to extend the hotel network through activities that do not involve significant capital, in some cases the Hotels business may consider it appropriate to acquire new land or locations for the development of new hotels. If the availability of suitable sites becomes limited, this could adversely affect its results of operations.

The Hotels business may be unable to make disposals of hotel assets

      The Hotels business has embarked upon a strategy of asset disposals and, although it has made significant progress, there can be no assurance that the Hotels business will be able to complete any such further selected disposals on commercially reasonable terms, within optimal timescales, or at all.

The Hotels business is exposed to the risk of litigation

      The Hotels business could be at risk of litigation from its guests, customers, joint venture partners, suppliers, employees, regulatory authorities, franchisees and/or the owners of hotels managed by it for breach of its contractual or other duties. Claims filed in the United States may include requests for punitive damages as well as compensatory damages.

      Exposure to litigation may affect the reputation of the Hotels business even though the monetary consequences are not significant.

Risks relating to the Britvic business

The Britvic business is exposed to risks related to possible product contamination

      The Britvic business, like all beverage producers, has been and will continue to be vulnerable to accidental or malicious contamination of its products or base raw materials. Any such contamination could result in recall of the products of the Britvic business, the Britvic business being unable to sell its products, damage to brand image and/or civil or criminal liability, which could have a material adverse effect on the operations and financial performance of the Britvic business.

The Britvic business is reliant upon certain suppliers

      Britvic is reliant upon fruit juice concentrates, sugar and other fruit juice raw materials as necessary ingredients for many of its products, as well as packaging and containers such as cans and Polyethylene Terephthalate (PET) bottles. In the event that the Britvic business is unable to obtain an adequate supply of appropriate raw materials or packaging or fails to negotiate the purchase of these materials on a reasonable commercial basis, this could have a significant adverse impact on the financial operations of the Britvic business.

The Britvic business is exposed to significant competition

      The Britvic business operates in a highly competitive market sector in which large competitors are active.

      A change in the level of marketing undertaken by competitors or in their pricing policies, the growth or strengthening of existing retailers of beverage products, the introduction of new competing brands or products or increased purchasing power pressure from customers could have a material adverse effect on the operations and financial performance of the Britvic business. Conversely, competition law may regulate the ability of the Britvic business to participate in industry consolidation at a strategic level.

16

Adverse weather conditions could reduce demand for Britvic’s products

      Demand for the Britvic business’ products may be affected by weather conditions, especially in the summer months, when unseasonably cool or wet weather can affect sales volumes and therefore the results of the Britvic business’ operations for the year.

ITEM 4.      INFORMATION ON THE COMPANY

SUMMARY

     Group Overview

      The principal activities of the Group are in hotels and resorts, with worldwide interests through franchising, management, ownership and leasing, and in the manufacture and distribution of soft drinks in the United Kingdom.

      On April 25, 2005, InterContinental Hotels Group PLC had a market capitalization of £3.9 billion, and was included in the list of FTSE 100 companies, a list of the 100 largest companies by market capitalization on the London Stock exchange. Following the Separation in April 2003, InterContinental Hotels Group PLC became the holding company for the Group of which Six Continents PLC is the principal subsidiary company. Six Continents PLC was formed in 1967.

      The Company’s corporate headquarters are in the United Kingdom, and the registered address is:

      InterContinental Hotels Group PLC

      67 Alma Road

      Windsor

      Berkshire SL4 3HD

      Tel: +44 (0) 1753 410100

      Internet address: www.ihgplc.com

      InterContinental Hotels Group PLC was incorporated in Great Britain on October 2, 2002 and registered in, and operates under, the laws of England and Wales. Operations undertaken in countries other than England and Wales are under the laws of those countries in which they reside.

Group History and Recent Developments

      The Group, formerly known as Bass and, more recently, Six Continents, was historically a conglomerate operating as, among other things, a brewer, soft drinks manufacturer, hotelier, leisure operator, and restaurant, pub and bar owner. In the last several years, the Group underwent a major transformation in its operations and organization, as a result of the Separation and a number of significant disposals during this period, narrowing the scope of its business.

      On April 15, 2003, following shareholder and regulatory approval, Six Continents PLC separated into two new listed groups, InterContinental Hotels Group PLC comprising the Hotels and Soft Drinks businesses and Mitchells & Butlers plc comprising the Retail and Standard Commercial Property Developments businesses.

Acquisitions and Dispositions

      Since the Separation, the Group has sold or announced the sale of 121 hotels with proceeds of approximately £1.75 billion and as of April 25, 2004 the Group had on the market a further 25 hotels including 10 hotels in Australia, New Zealand and Fiji announced on April 4, 2005. The following are the more significant portfolio transactions:

      On July 1, 2003, the Group completed the sale of a 16 property Staybridge Suites portfolio to Hospitality Properties Trust (“HPT”) for $185 million. The Group entered into a contract with HPT for the ongoing management of these hotels. In September 2003, HPT converted 14 other suite hotels to the Staybridge Suites brand under IHG management.

17

      In October 2003, the Group announced the acquisition of the Candlewood Suites brand in the United States from Candlewood Hotel Corporation for a consideration of $15 million and an agreement to enter into a management contract with HPT to manage 76 Candlewood Suites properties. The transaction completed on December 31, 2003.

      On December 17, 2004, the Group announced the sale of 13 hotels, in the United States, Puerto Rico and Canada, to HPT. The total consideration payable by HPT for the sales amounted to $425 million, before transaction costs, equivalent to net book value, of which $395 million was received upon the main completion of the sale on February 16, 2005, with the remaining $30 million to be received upon the completion of the sale of the InterContinental hotel in Austin, expected to be on or around June 1, 2005. The Group will continue to manage the hotels (other than the InterContinental in Puerto Rico) under a 25 year management contract with HPT. The Group has two consecutive options to extend the contracts for 15 years each, giving a total potential contract length of up to 55 years. The InterContinental in Puerto Rico has been leased back to the Group under a 25 year lease with two consecutive options to extend the lease for 15 years each, giving a total potential lease length of up to 55 years.

      On February 28, 2005, the Group announced the acquisition by Strategic Hotel Capital, Inc. (“SHC”) of 85% interests in two hotels in the United States. IHG received approximately $287 million in cash before transaction costs, based upon a total value for both hotels of $303.5 million, $12 million in excess of net book value. This transaction completed on April 1, 2005. IHG will continue to manage these hotels under a 20 year management contract with three options to extend for a further 10 years each.

      On March 10, 2005, the Group announced the sale of 73 hotels in the United Kingdom to LGR Acquisition, a consortium comprising Lehman Brothers Real Estate Partners, GIC Real Estate and Realstar Asset Management. The agreed sale price was £1 billion, £22 million below net book value, and a provision for loss on disposal of operations has been included in the financial statements. Receipt of £40 million of the total proceeds will be deferred, contingent upon certain pre-agreed performance targets being reached. This transaction is expected to complete in the second quarter of 2005 and is conditional upon obtaining European Commission clearance. The Group will continue to manage 63 of these hotels under a 20 year management contract with two consecutive options to extend the contract for a further five years each. The remaining ten hotels will be under a temporary management agreement with the Group.

Return of Funds

      In March 2004 IHG announced an on-market share repurchase program for £250 million. By December 20, 2004 the program was completed with, in total, 45.6 million shares repurchased at an average price of 548 pence per share.

      In September 2004 IHG announced a further £750 million return of funds to shareholders. This comprised a proposed special dividend of approximately £500 million and a further £250 million share repurchase program. On December 17, 2004 £501 million was returned to shareholders by way of a special dividend of 72.0 pence per share. This special dividend was accompanied by a consolidation of the Company’s ordinary share capital on the basis of 25 new ordinary shares for every 28 existing ordinary shares effective from December 13, 2004. The further £250 million share repurchase program commenced on December 20, 2004 and by December 31, 2004 a further 0.8 million shares had been repurchased at an average price per share of 651 pence (total £5 million). By April 25, 2005, a total of 20,259,275 shares had been repurchased under the second repurchase program at an average price per share of 632 pence per share (approximately £128 million). This program is planned for completion in 2005.

      Information relating to the purchases of equity securities can be found in Item 16E.

      Following the announcement in March 2005 of the sale of 73 hotels in the United Kingdom, and subject (among other things) to the completion of the sale of the 73 hotels, IHG intends to return a further £1 billion to shareholders. This will require a capital restructuring to enable the release of funds arising from the receipt of disposal proceeds. Subject to receipt of shareholder approval, completion of disposal transactions and there

18

being no material adverse change in market conditions, it is planned to complete the restructuring by the end of June 2005 and to return funds to shareholders as soon as practicable thereafter.

Hotels

      Hotels owns a number of hotel brands including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express (or Express by Holiday Inn outside of the Americas) (“Express”), Staybridge Suites and Candlewood Suites, which at December 31, 2004 comprised 3,540 franchised, managed, owned or leased hotels with approximately 534,000 guest rooms in nearly 100 countries and territories.

Soft Drinks

      IHG retains an interest in, manages and controls Britvic, one of the two leading manufacturers of soft drinks by value and volume in Great Britain. Britvic owns an extensive portfolio of soft drinks brands that include Tango and Robinsons. It also has the exclusive right to bottle and distribute the Pepsi and 7 UP brands in Great Britain until 2018. The Group, and other shareholders in the Britvic business (Allied Domecq, Whitbread and PepsiCo) have agreed, subject to market and other conditions being satisfied, to consider an initial public offering of Britvic between January 1, 2005 and December 31, 2008.

SEGMENTAL INFORMATION

     Geographic Segmentation

      The following table shows turnover and operating profit in pounds sterling by geographical area and the percentage of each geographical area, for the following periods: year ended December 31, 2004, 15 months ended December 31, 2003 including unaudited information for the three months ended December 31, 2002 and 12 months ended December 31, 2003, and the year ended September 30, 2002.

			Three months		12 months		15 months
	Year ended		ended		ended		ended		Year ended
	December 31,		December 31,		December 31,		December 31,		September 30,
	2004		2002		2003		2003		2002
					(£ million)
Turnover(1)(3)
United Kingdom		1,126		598		1,533		2,131		2,491
Rest of Europe, the Middle East and Africa		419		95		411		506		411
United States		423		117		454		571		476
Rest of Americas		102		27		100		127		108
Asia Pacific		134		34		114		148		129
Total		2,204		871		2,612		3,483		3,615
Operating profit before exceptional items(1)(2)
United Kingdom		118		70		197		267		397
Rest of Europe, the Middle East and Africa		57		8		30		38		60
United States		105		17		107		124		114
Rest of Americas		30		7		26		33		26
Asia Pacific		21		10		11		21		21
Total		331		112		371		483		618

Footnotes on page 20.

19

			Three months		12 months		15 months		Year
	Year ended		ended		ended		ended		ended
	December 31,		December 31,		December 31,		December 31,		September 30,
	2004		2002		2003		2003		2002
	%
Turnover
United Kingdom		51.1		68.7		58.7		61.2		68.9
Rest of Europe, the Middle East and Africa		19.0		10.9		15.7		14.6		11.4
United States		19.2		13.4		17.4		16.4		13.2
Rest of Americas		4.6		3.1		3.8		3.6		3.0
Asia Pacific		6.1		3.9		4.4		4.2		3.5
Total		100.0		100.0		100.0		100.0		100.0
Operating profit before exceptional items
United Kingdom		35.7		62.5		53.1		55.3		64.2
Rest of Europe, the Middle East and Africa		17.2		7.1		8.1		7.9		9.7
United States		31.7		15.2		28.8		25.7		18.5
Rest of Americas		9.1		6.3		7.0		6.8		4.2
Asia Pacific		6.3		8.9		3.0		4.3		3.4
Total		100.0		100.0		100.0		100.0		100.0

(1)	The results of overseas operations have been translated into sterling at weighted average rates of exchange for the period. In the case of the US dollar, the translation rates are 2004: £1 = $1.82; (2003: £1 = $1.62 and 2002: £1 = $1.48).
(2)	Operating profit before exceptional items does not include operating and non-operating exceptional items for all periods presented. Operating exceptional items (charge unless otherwise noted) by region are United Kingdom (2004: £10 million; 2003: 15 months £17 million, 12 months £17 million, three months £nil million; 2002: £24 million), Rest of Europe, the Middle East and Africa (2004: £11 million; 2003 15 months £24 million, 12 months £24 million, three months £nil million; 2002: £nil million), the United States (2004: credit of £6 million; 2003 15 months £9 million, 12 months £9 million, three months £nil million; 2002: £39 million) and Asia Pacific (2004: £4 million; 2003: 15 months £1 million, 12 months £1 million, three months £nil million; 2002: £14 million).
(3)	Amounts are reported by origin. See Note 2 of Notes to the Financial Statements for details by destination, for which the amounts are not significantly different.

20

Activity Segmentation

      The following table shows turnover and operating profit by activity and the percentage contribution of each activity for the following periods: year ended December 31, 2004, 15 months ended December 31, 2003 including unaudited information for the three months ended December 31, 2002 and 12 months ended December 31, 2003, and the year ended September 30, 2002.

				Three months			12 months			15 months
	Year ended			ended			ended			ended			Year ended
	December 31,			December 31,			December 31,			December 31,			September 30,
	2004			2002			2003			2003			2002
	(£ million)
Turnover(1)
Americas		495			136			525			661			570
EMEA		829			203			807			1,010			794
Asia Pacific		134			34			114			148			128
Central(3)		40			10			41			51			40
Hotels		1,498			383			1,487			1,870			1,532
Soft Drinks		706			146			674			820			602
Continuing operations		2,204			529			2,161			2,690			2,134
Discontinued operations		—			342			451			793			1,481
Total		2,204			871			2,612			3,483			3,615
Operating profit before exceptional items(1)(2)
Americas		163			34			161			195			173
EMEA		119			22			92			114			125
Asia Pacific		21			10			12			22			23
Central (3)		(52	)		(18	)		(62	)		(80	)		(55	)
Hotels		251			48			203			251			266
Soft Drinks		80			12			83			95			63
Continuing operations		331			60			286			346			329
Discontinued operations		—			52			85			137			289
Total		331			112			371			483			618

Footnotes on page 22.

21

				Three months			12 months			15 months
	Year ended			ended			ended			ended			Year ended
	December 31,			December 31,			December 31,			December 31,			September 30,
	2004			2002			2003			2003			2002
	(%)
Turnover
Americas		22.5			25.7			24.3			24.6			26.7
EMEA		37.6			38.4			37.3			37.5			37.2
Asia Pacific		6.1			6.4			5.3			5.5			6.0
Central (3)		1.8			1.9			1.9			1.9			1.9
Hotels		68.0			72.4			68.8			69.5			71.8
Soft Drinks		32.0			27.6			31.2			30.5			28.2
Continuing operations		100.0			100.0			100.0			100.0			100.0
Operating profit before exceptional items
Hotels
Americas		49.2			56.6			56.3			56.3			52.6
EMEA		36.0			36.7			32.2			32.9			38.0
Asia Pacific		6.3			16.7			4.2			6.4			7.0
Central (3)		(15.7	)		(30.0	)		(21.7	)		(23.1	)		(16.7	)
Hotels		75.8			80.0			71.0			72.5			80.9
Soft Drinks		24.2			20.0			29.0			27.5			19.1
Continuing operations		100.0			100.0			100.0			100.0			100.0

(1)	The results of overseas operations have been translated into sterling at weighted average rates of exchange for the period. In the case of the US dollar, the translation rates are 2004: £1 = $1.82; (2003: £1 = $1.62 and 2002: £1 = $1.48).
(2)	Operating profit before exceptional items does not include operating and non-operating exceptional items for all periods presented. Operating exceptional items by business segment are the Americas (2004: £14 million; 2003: 15 months £9 million, 12 months £9 million, three months £nil million; 2002: £39 million), EMEA (2004: £19 million; 2003: 15 months £41 million, 12 months £41 million, three months £nil million; 2002: £24 million), and Asia Pacific (2004: £4 million; 2003: 15 months £1 million, 12 months £1 million, three months £nil million; 2002: £14 million).
(3)	Central relates to global functions. Turnover relates to Holidex fee income.

22

HOTELS

Overview

      InterContinental Hotels Group is an international hotel business which owns a portfolio of well-recognized and respected hotel brands, including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express (Express by Holiday Inn outside the Americas), Staybridge Suites and Candlewood Suites, with 3,540 franchised, managed, owned and leased hotels and approximately 534,000 guest rooms across nearly 100 countries and territories as at December 31, 2004. Approximately 93% of the Group’s rooms are operated under managed and franchised models.

     Strategy

      The Group’s objective under its strategy is to become the world’s leading hotel brand owner, using its proven track record in hotel management and franchising to grow its portfolio of hospitality brands predominantly under a managed and franchised model. This has involved the disposal to date of a large part of the owned and leased estate (by net book value), a process which is currently ongoing. Key to the implementation of this strategy are the following priorities:

•  to strengthen the core business through focus on brand differentiation and system delivery;

•  to grow the managed and franchised fee income business in key markets;

•  to develop the organisation and its people;

•  to continue the asset disposal program; and

•  to return funds to shareholders.

23

     Segmental Results

      The following table shows turnover and operating profit in pounds sterling of IHG Hotels business by activity and the percentage contribution of each activity for the following periods: year ended December 31, 2004, 15 months ended December 31, 2003 including unaudited information for the three months ended December 31, 2002 and 12 months ended December 31, 2003, and the year ended September 30, 2002. The proportions of turnover and operating profit attributable to owned and leased, managed and franchised hotels will change in 2005 to reflect the pending completion of hotel sales.

						Three months			12 months			15 months
			Year ended			ended			ended			ended			Year ended
			December 31,			December 31,			December 31,			December 31,			September 30,
			2004			2002			2003			2003			2002
			(£ million)
Turnover by activity(1)(2)
	Americas
		Owned and leased		269			80			296			376			314
		Managed		30			8			28			36			38
		Franchised		196			48			201			249			218
				495			136			525			661			570
	EMEA
		Owned and leased		759			187			746			933			736
		Managed		43			10			38			48			36
		Franchised		27			6			23			29			22
				829			203			807			1,010			794
	Asia
		Owned and leased		110			28			95			123			103
		Managed		21			5			15			20			20
		Franchised		3			1			4			5			5
				134			34			114			148			128
	Central(4)			40			10			41			51			40
Total				1,498			383			1,487			1,870			1,532
Operating profit before exceptional items by activity(1)(3)
	Americas
		Owned and leased		22			3			20			23			24
		Managed		6			1			4			5			10
		Franchised		167			41			172			213			177
		Regional overheads		(32	)		(11	)		(35	)		(46	)		(38	)
				163			34			161			195			173
	EMEA
		Owned and leased		97			20			77			97			124
		Managed		24			5			19			24			20
		Franchised		21			5			18			23			11
		Regional overheads		(23	)		(8	)		(22	)		(30	)		(30	)
				119			22			92			114			125
	Asia Pacific
		Owned and leased		16			7			11			18			15
		Managed		14			6			8			14			14
		Franchised		2			—			4			4			5
		Regional overheads		(11	)		(3	)		(11	)		(14	)		(11	)
				21			10			12			22			23
	Central(4)			(52	)		(18	)		(62	)		(80	)		(55	)
Total				251			48			203			251			266

Footnotes on page 25.

24

						Three months			12 months			15 months
			Year ended			ended			ended			ended			Year ended
			December 31,			December 31,			December 31,			December 31,			September 30,
			2004			2002			2003			2003			2002
			(%)
Turnover
	Americas
		Owned and leased		18.0			20.9			19.9			20.1			20.5
		Managed		2.0			2.1			1.9			1.9			2.5
		Franchised		13.1			12.5			13.5			13.3			14.2
				33.1			35.5			35.3			35.3			37.2
	EMEA
		Owned and leased		50.7			48.8			50.1			49.8			48.2
		Managed		2.9			2.6			2.6			2.6			2.3
		Franchised		1.8			1.6			1.5			1.6			1.4
				55.4			53.0			54.2			54.0			51.9
	Asia Pacific
		Owned and leased		7.3			7.3			6.4			6.6			6.7
		Managed		1.4			1.3			1.0			1.1			1.3
		Franchised		0.2			0.3			0.3			0.3			0.3
				8.9			8.9			7.7			8.0			8.3
	Central (4)			2.6			2.6			2.8			2.7			2.6
Total				100.0			100.0			100.0			100.0			100.0
Operating profit before exceptional items
	Americas
		Owned and leased		8.8			6.3			9.9			9.2			9.0
		Managed		2.4			2.1			2.0			2.0			3.8
		Franchised		66.5			85.4			84.5			84.8			66.6
		Regional overheads		(12.7	)		(22.9	)		(17.2	)		(18.3	)		(14.3	)
				65.0			70.9			79.2			77.7			65.1
	EMEA
		Owned and leased		38.6			41.7			37.9			38.6			46.6
		Managed		9.6			10.4			9.4			9.6			7.5
		Franchised		8.4			10.4			8.9			9.2			4.1
		Regional overheads		(9.2	)		(16.7	)		(10.8	)		(12.0	)		(11.3	)
				47.4			45.8			45.4			45.4			46.9
	Asia Pacific
		Owned and leased		6.4			14.6			5.4			7.2			5.6
		Managed		5.6			12.5			3.9			5.6			5.3
		Franchised		0.8			—			2.0			1.6			1.9
		Regional overheads		(4.4	)		(6.3	)		(5.4	)		(5.6	)		(4.1	)
				8.4			20.8			5.9			8.8			8.7
	Central (4)			(20.8	)		(37.5	)		(30.5	)		(31.9	)		(20.7	)
Total				100.0			100.0			100.0			100.0			100.0

(1)	The results of overseas operations have been translated into sterling at weighted average rates of exchange for the period. In the case of the US dollar, the translation rates are 2004: £1 = $1.82; (2003: £1 = $1.62 and 2002: £1 = $1.48).
(2)	Amounts are reported by origin.
(3)	Operating profit before exceptional items excludes profits/(losses) on sale of fixed assets and operations and other exceptional items.
(4)	Central relates to global functions. Turnover relates to Holidex fee income.

25

     The following table shows turnover and operating profit in US dollars of the IHG Hotels business by activity and the percentage contribution of each activity for the following periods: year ended December 31, 2004, 15 months ended December 31, 2003 including unaudited information for the three months ended December 31, 2002 and 12 months ended December 31, 2003, and the year ended September 30, 2002.

						Three months			12 months			15 months
			Year ended			ended			ended			ended			Year ended
			December 31,			December 31,			December 31,			December 31,			September 30,
			2004			2002			2003			2003			2002
			($ million)
Turnover(1)
	Americas
		Owned and leased		490			127			481			608			463
		Managed		55			12			46			58			57
		Franchised		357			75			327			402			322
				902			214			854			1,068			842
	EMEA
		Owned and leased		1,383			290			1,213			1,503			1,088
		Managed		78			15			62			77			53
		Franchised		50			9			37			46			36
				1,511			314			1,312			1,626			1,177
	Asia Pacific
		Owned and leased		201			44			154			198			152
		Managed		38			8			26			34			29
		Franchised		5			2			5			7			5
				244			54			185			239			186
	Central(3)			74			16			66			82			57
Total				2,731			598			2,417			3,015			2,262
Operating profit before exceptional items(2)
	Americas
		Owned and leased		39			6			32			38			36
		Managed		12			2			7			9			15
		Franchised		304			63			279			342			262
		Regional overheads		(59	)		(18	)		(56	)		(74	)		(56	)
				296			53			262			315			257
	EMEA
		Owned and leased		177			31			125			156			184
		Managed		43			8			31			39			29
		Franchised		38			7			29			36			17
		Regional overheads		(42	)		(12	)		(36	)		(48	)		(43	)
				216			34			149			183			187
	Asia Pacific
		Owned and leased		31			9			18			27			24
		Managed		25			10			15			25			19
		Franchised		3			1			4			5			5
		Regional overheads		(20	)		(4	)		(18	)		(22	)		(16	)
				39			16			19			35			32
	Central(3)			(93	)		(28	)		(100	)		(128	)		(82	)
Total				458			75			330			405			394

Footnotes on page 27.

26

						Three months			12 months			15 months
			Year ended			ended			ended			ended			Year ended
			December 31,			December 31,			December 31,			December 31,			September 30,
			2004			2002			2003			2003			2002
			(%)
Turnover
	Americas
		Owned and leased		17.9			21.2			19.9			20.2			20.5
		Managed		2.0			2.0			1.9			1.9			2.5
		Franchised		13.1			12.5			13.5			13.3			14.2
				33.0			35.7			35.3			35.4			37.2
	EMEA
		Owned and leased		50.6			48.6			50.2			49.9			48.1
		Managed		2.9			2.5			2.6			2.6			2.3
		Franchised		1.8			1.5			1.5			1.5			1.6
				55.3			52.6			54.3			54.0			52.0
	Asia Pacific
		Owned and leased		7.4			7.4			6.4			6.6			6.7
		Managed		1.4			1.3			1.1			1.1			1.3
		Franchised		0.2			0.3			0.2			0.2			0.2
				9.0			9.0			7.7			7.9			8.2
	Central (3)			2.7			2.7			2.7			2.7			2.6
Total				100.0			100.0			100.0			100.0			100.0
Operating profit before exceptional items
	Americas
		Owned and leased		8.5			8.0			9.7			9.4			9.1
		Managed		2.6			2.7			2.1			2.2			3.8
		Franchised		66.4			84.0			84.5			84.4			66.5
		Regional overheads		(12.9	)		(24.0	)		(17.0	)		(18.3	)		(14.2	)
				64.6			70.7			79.3			77.7			65.2
	EMEA
		Owned and leased		38.6			41.3			37.9			38.5			46.7
		Managed		9.4			10.7			9.4			9.6			7.4
		Franchised		8.3			9.3			8.8			8.9			4.3
		Regional overheads		(9.2	)		(16.0	)		(10.9	)		(11.9	)		(10.9	)
				47.1			45.3			45.2			45.1			47.5
	Asia
		Owned and leased		6.7			12.0			5.5			6.7			6.1
		Managed		5.5			13.3			4.6			6.2			4.8
		Franchised		0.7			1.3			1.2			1.2			1.3
		Regional overheads		(4.4	)		(5.3	)		(5.5	)		(5.4	)		(4.1	)
				8.5			21.3			5.8			8.7			8.1
	Central (3)			(20.2	)		(37.3	)		(30.3	)		(31.5	)		(20.8	)
Total				100.0			100.0			100.0			100.0			100.0

(1)	Amounts are reported by origin.
(2)	Operating profit before exceptional items excludes profits/ (losses) on sale of fixed assets and operations and other exceptional items.
(3)	Central relates to global functions. Turnover relates to Holidex fee income.

27

     Operations

Ownership/ Management Model

      The Group currently operates its hotels business through three distinct business models which offer different growth, return, risk and reward opportunities. The models are summarized as follows:

franchised, where Group companies neither own nor manage the hotel, but license the use of a Group brand and provide access to reservation systems, loyalty schemes, and know-how. The Group derives revenues from a brand royalty or licensing fee, based on a percentage of room revenue. At the end of 2004, 396,829 (74%) of the Group’s rooms were franchised, with 86% of rooms in the Americas operating under this model.

managed, where in addition to licensing the use of a Group brand, a Group company manages the hotel for third party owners. The Group derives revenues from base and incentive management fees, and provides the system infrastructure necessary for the hotel to operate. Management contract fees are linked to total hotel revenue and may have an additional incentive fee linked to profitability and/or cash flow. The terms of these agreements vary, but are often long term (for example, 10 years or more). The Group company’s responsibilities under the management agreement typically include hiring, training and supervising the managers and employees that operate the hotels under the relevant brand standards. The Group company prepares annual budgets for the hotels that it manages, and the property owners are responsible for funding periodic maintenance and repair on a basis to be allocated by the Group company. In order to gain access to central reservation systems, global and regional brand marketing and brand standards and procedures the owners are typically required to make a further contribution. In certain cases, property owners may require performance targets, with consequences for management fees and sometimes the contract itself (including on occasion, the right of termination) if those targets are not met. At the end of 2004, 98,953 (19%) of the Group’s rooms were operated under management contracts.

owned and leased, where a Group company both owns (or leases) and operates the hotel and, in the case of ownership, takes all the benefits and risks associated with ownership. The Group has been selling a significant proportion of its owned and leased portfolio and in future expects to only own hotels where it is considered strategically important to do so. Rooms owned or leased by the Group at the end of 2004 totaled 38,420, representing 7% of the Group’s rooms.

      In addition, the Group also makes equity investments in hotel ownership entities, where its equity investment is less than 100% and it participates in a share of the benefits and risks of ownership. A management contract is generally entered into as well as the equity investment.

      The following table shows the number of hotels and rooms owned, managed or franchised by IHG at December 31, 2004, December 31, 2003 and September 30, 2002.

					Management
					contracts and joint
	Owned or leased				ventures				Franchised				Total
	No. of		No. of		No. of		No. of		No. of		No. of		No. of		No. of
	hotels		rooms		hotels		rooms		hotels		rooms		hotels		rooms
2004		166		38,420		403		98,953		2,971		396,829		3,540		534,202
2003		171		39,459		423		103,440		2,926		393,419		3,520		536,318
2002		190		42,642		314		86,761		2,821		386,122		3,325		515,525

      The Group sets quality and service standards for all of its hotel brands (including those operated under management contract or franchise arrangements) and operates a customer satisfaction and hotel quality measurement system to ensure those standards are met or exceeded. The quality measurement system includes an assessment of both physical property and customer service standards.

28

Global System

      The Group uses a global revenue delivery system for reservations, e-commerce, IT, internet and its loyalty scheme (Priority Club Rewards) which is paid for by assessments from each hotel in the Group. The elements of the global system include:

      Priority Club Rewards: The Group operates the largest loyalty program in the hotel industry, with 23.7 million members at December 31, 2004, a growth of about 23% over the previous year. It has alliances with 35 airlines which enable members to collect frequent flyer miles. IHG also has alliances with external partners such as car hire companies and credit card companies, which provide exposure and access to IHG’s system. In 2004, Priority Club Rewards launched a Japanese language website adding to the already available English, Chinese, French, German and Spanish website versions. Revenue generated from Priority Club Rewards members was 18% higher than in 2003 and represented 30% of total IHG system room revenue.

      Central Reservation System Technology: The Group operates the HolidexPlus and Holidex central reservation systems. The HolidexPlus and Holidex systems receive reservation requests entered on terminals located at most of its reservation centers, as well as from global distribution systems operated by a number of major corporations and travel agents. Where local hotel systems allow, the HolidexPlus and the Holidex systems immediately confirm reservations or indicate alternative accommodation available within IHG’s network. Confirmations are transmitted electronically to the hotel for which the reservation is made.

      Reservation Call Centers: The Group operates 13 reservation centers around the world which enable it to sell in local languages in many countries and offer a high quality service to customers.

      Internet: The Group introduced electronic hotel reservations in 1995. The Internet continues to be an important communications, branding and distribution channel for the Group’s sales. During fiscal 2004, internet channel bookings represented $1.4 billion of IHG system room revenue, an increased revenue growth of 44% over 2003. Approximately 13% of total IHG system room revenue is sold via the internet through various branded websites, such as www.intercontinental.com and www.holiday-inn.com, as well as certified third parties. IHG made progress in 2004 in establishing standards for working with third-party intermediaries — on-line travel distributors — who sell or re-sell IHG hotel rooms via their internet sites. Under the standards, certified distributors are required to respect IHG’s trademarks, ensure reservations are guaranteed through an automated and common confirmation process, and clearly present fees to customers. By the end of 2004, IHG had certified over 200 third party distributors including Travelocity, Travelocity Business, and Priceline. About 80% of IHG system room revenue booked on the web is now booked directly through the Group’s own brand sites.

      The Group estimates that, during 2004, these reservation systems (which include company reservation centers, global distribution systems and internet reservations) delivered around 38% of IHG system room revenue.

Sales and Marketing

      IHG targets its sales and marketing expenditure in each region on driving revenue and brand awareness or, in the case of sales investments, targeting segments such as corporate accounts, travel agencies and meeting organizers. The majority of IHG’s sales and marketing expenditure is funded by contractual fees paid by most hotels in the system and totaled over $400 million in 2004.

      The strategic goals for the global system as a whole include:

•  adding further locations and improving guest satisfaction for its brands;

•  continuing the focus on enrolments in Priority Club Rewards and increasing share of the total hotel spend to establish Priority Club Rewards as the number one program in the industry;

•  making the direct channels the best available; and

•  improving pricing structure.

29

Global Brands

Brands Overview

      The Group’s portfolio includes six established and diverse brands and one new brand (Hotel Indigo). These brands cover several market segments and in the case of InterContinental, Crowne Plaza, Holiday Inn and Express, operate internationally. Staybridge Suites operates in the Americas and has recently been launched in the United Kingdom. Candlewood Suites operates exclusively in the United States.

	December 31, 2004
Brands	Room numbers		Hotels
InterContinental		44,516		132
Crowne Plaza		61,627		215
Holiday Inn		278,787		1,484
Express		126,035		1,512
Staybridge Suites		9,189		79
Candlewood Suites		12,407		109
Other(1)		1,641		9
Total		534,202		3,540

(1)  Other comprises one Hotel Indigo, seven other branded hotels under management and one under franchise.

InterContinental

	Americas		Americas		EMEA		EMEA
	total		O & L		total		O & L		Asia Pacific
Average room rate $(1)		129.83		168.66		154.12		211.21		137.63
Room numbers(2)		15,088		4,489		20,292		4,483		9,136

(1)	For the year ended December 31, 2004; quoted at constant US$ exchange rate. Owned and leased average room rate is for comparable hotels.
(2)	As at December 31, 2004.

      InterContinental is IHG’s global premium hotel brand. The brand is targeted at both business and leisure guests. InterContinental hotels are generally situated in prime locations in major cities and key resorts around the world. There were 132 InterContinental hotels in more than 60 countries and territories which represented 8% of all of IHG hotel rooms as at December 31, 2004.

      InterContinental hotels are principally owned, leased or managed by the Group. The brand is one of the top international premium hotel brands based on room numbers and has more than 50 years of heritage in the segment. IHG’s competition includes international luxury chains (for example Four Seasons and Ritz Carlton) and upper upscale chains (for example, Marriott, Hilton, Hyatt and Westin).

      During 2004, four new InterContinental hotels were added to the portfolio, Buckhead, Atlanta (United States), Cairo (Egypt), Makkah (Saudi Arabia) and Kigali (Rwanda). After dispositions there was a net loss of three in the total number of InterContinental hotels. The Group expects to open an InterContinental hotel in Boston in 2006, along with other properties in Beijing and Seattle.

Crowne Plaza

	Americas		Americas		EMEA		EMEA
	total		O & L		total		O & L		Asia Pacific
Average room rate $(1)		96.24		107.73		118.48		122.29		81.07
Room numbers(2)		33,645		2,284		15,747		3,879		12,235

30

(1)	For the year ended December 31, 2004; quoted at constant US$ exchange rate. Owned and leased average room rate is for comparable hotels.
(2)	As at December 31, 2004.

      Crowne Plaza is IHG’s global upscale hotel brand which had grown to 215 hotels worldwide by December 31, 2004. The brand is targeted at the business guest, with a particular focus on meetings and related services. The upscale Crowne Plaza hotels provide the high level of comfort, amenities, services, facilities and meeting space expected of a full service hotel. Crowne Plaza represented 12% of IHG Hotels’ hotel rooms as at December 31, 2004.

      Nearly 60% of the upscale Crowne Plaza hotels and resorts are franchised hotels. As at December 31, 2004, 54% of Crowne Plaza brand properties were in the Americas. The key competitors in this segment include Sheraton, Marriott, Hilton, Double-Tree, Wyndham and Radisson.

      During 2004, 15 Crowne Plaza hotels were added to the portfolio while two left the portfolio, resulting in a net increase of 13 hotels.

Holiday Inn

	Americas		Americas		EMEA		EMEA
	total		O&L		total		O&L		Asia Pacific
Average room rate $(1)		79.85		78.56		95.49		111.89		63.22
Room numbers(2)		205,500		2,577		53,568		15,735		19,719

(1)	For the year ended December 31, 2004; quoted at constant US$ exchange rate. Owned and leased average room rate is for comparable hotels.
(2)	As at December 31, 2004.

      Holiday Inn is IHG’s midscale full service brand. Holiday Inn International was acquired in 1988 with the remaining North American business of Holiday Inn being acquired in 1990. The Holiday Inn brand is targeted at the mid-market guest and is the Group’s largest global hotel brand based on room numbers. IHG seeks to offer, through its Holiday Inn brand, good value for money with appropriate standards of products and services.

      There were 1,484 Holiday Inn hotels located in more than 70 countries and territories which represented 52% of all IHG’s hotel rooms as at December 31, 2004. The brand is predominantly franchised. As at December 31, 2004, 72% of the Holiday Inn branded hotels were located in the Americas.

      During 2004, the Group sold the following hotels in individual transactions: in the United States, the Holiday Inn South Bend Indiana, in the United Kingdom, the Holiday Inn Sheffield West, the Holiday Inn Teesside, Holiday Inn Crawley and the Holiday Inn Preston and in Australia, the Holiday Inn Newcastle and the Holiday Inn Adelaide. These sales were part of the 86 hotels that left the portfolio, which also included a number of removals due to IHG initiated action against non-performing owners or poor quality hotels. With 41 hotels added to the portfolio, the net movement during 2004 was a decrease of 45 hotels.

Express

	Americas		EMEA		EMEA
	total		total		O&L		Asia Pacific
Average room rate $(1)		75.53		89.83		75.15		61.72
Room numbers(2)		109,882		15,921		1,473		232

(1)	For the year ended December 31, 2004; quoted at constant US$ conversion rate. Owned and leased average room rate is for comparable hotels.
(2)	As at December 31, 2004.

      Express is the Group’s midscale limited service hotel brand. IHG recognized the need for a brand in this category in the early 1990s and subsequently developed Express to extend the reach of the Holiday Inn brand

31

and enter the midscale limited service market. The brand has grown rapidly and aims to provide the room quality of midscale hotels without the associated full range of facilities. The brand is targeted at the value-conscious guest.

      There were 1,512 Express hotels worldwide, which represented 24% of IHG’s hotel rooms as at December 31, 2004. Express is one of the largest brands in the US midscale limited service sector based on room numbers, and approximately 90% of the Express branded rooms are located in the Americas. Express hotels are almost entirely franchised. Express also has a solid and growing brand presence in the UK market where it faces competition from a variety of local market brands and independent hotels.

      During 2004, 114 new Holiday Inn Express hotels were added to the portfolio, while 57 hotels were removed from the portfolio, resulting in a net gain of 57 hotels. A further 200 franchise agreements were signed adding to the system pipeline.

Staybridge Suites

	Americas
	total
Average room rate $(1)		87.20
Room numbers(2)		9,189

(1)	For the year ended December 31, 2004; quoted at constant US$ exchange rate.
(2)	As at December 31, 2004.

      Staybridge Suites is IHG’s organically developed extended stay brand and offers self-catering services and amenities designed specifically for those on extended travel. The rooms offer more space than the typical hotel room, offering studios and one and two bedroom suites, with cooking facilities available in each suite. As at December 31, 2004, there were 79 Staybridge Suites hotels, all of which are presently located in the Americas, which represented 2% of all IHG’s hotel rooms. The first Staybridge Suites hotel was opened in 1998, with the seventy fifth Staybridge Suites hotel following in June 2004, demonstrating the fastest roll out of 75 properties in the extended stay segment, and making Staybridge Suites one of the fastest growing brands in its segment. Staybridge Suites operations are divided approximately equally between franchised and managed models. The primary competitors include Residence Inn, Homewood, Summerfield and Hawthorne.

      During 2004, eight hotels were added to the portfolio with no removals.

      On April 6, 2005 the Group announced the launch of Staybridge Suites in the United Kingdom. The first two hotels are expected to open in late 2006.

Candlewood Suites

	Total
Average room rate $(1)		58.06
Room numbers(2)		12,407

(1)	For the year ended December 31, 2004; quoted at constant US$ exchange rate.
(2)	As at December 31, 2004.

      The Candlewood Suites brand was acquired on December 31, 2003. Candlewood Suites is an extended stay brand which complements Staybridge Suites’ positioning. Candlewood Suites is an established brand of purpose built hotels with 109 properties on average approximately five years old. The major owner of Candlewood Suites properties is HPT and the Group manages all 76 of HPT’s Candlewood properties under a 20 year agreement. At the end of 2004, Candlewood Suites represented 2% of all of the Group’s rooms.

Hotel Indigo

      In April 2004, the Group launched its seventh brand, Hotel Indigo, which is designed to appeal to aspirational midscale hotel guests who are wishing to trade up. The first Hotel Indigo opened in Atlanta, Georgia in the United States in October 2004.

32

Geographical Analysis

      Although it has worldwide hotel operations, the Group is most dependent on the Americas for operating profit, reflecting the structure of the branded global hotel market. In terms of its overall hotel level operating profit before central overheads and exceptional items, the Americas represented 54%, EMEA represented 39% and the Asia Pacific region represented 7% in the 12 months ended December 2004.

      The geographical analysis, split by number of rooms and operating profit, is set out in the table below.

	Americas		EMEA		Asia Pacific
	(% of Total)
Room numbers(1)		72		20		8
Hotel level operating profit (before central overheads and exceptional items(2)		54		39		7

(1)	As at December 31, 2004.
(2)	For the year ended December 31, 2004.

      The following table shows information concerning the geographical locations of IHG’s hotels as at December 31, 2004.

						Management
						contract and joint
		Owned or leased				ventures				Franchised				Total
		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
United States
	InterContinental		7		3,523		5		1,819		1		150		13		5,492
	Crowne Plaza		5		1,991		16		5,942		73		20,643		94		28,576
	Holiday Inn		6		1,453		50		15,446		882		165,860		938		182,759
	Express		—		—		2		362		1,296		103,029		1,298		103,391
	Staybridge		3		372		35		4,227		39		4,255		77		8,854
	Candlewood		—		—		76		9,189		33		3,218		109		12,407
	Other		—		—		4		616		—		—		4		616
Total			21		7,339		188		37,601		2,324		297,155		2,533		342,095
Rest of Americas
	InterContinental		3		966		11		3,556		17		5,074		31		9,596
	Crowne Plaza		1		293		2		357		19		4,419		22		5,069
	Holiday Inn		2		1,124		3		1,599		131		20,018		136		22,741
	Express		—		—		—		—		59		6,491		59		6,491
	Staybridge		1		120		1		215		—		—		2		335
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		—		—		—		—		—		—
Total			7		2,503		17		5,727		226		36,002		250		44,232

33

						Management
						contract and joint
		Owned or leased				ventures				Franchised				Total
		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
Total Americas
	InterContinental		10		4,489		16		5,375		18		5,224		44		15,088
	Crowne Plaza		6		2,284		18		6,299		92		25,062		116		33,645
	Holiday Inn		8		2,577		53		17,045		1,013		185,878		1,074		205,500
	Express		—		—		2		362		1,355		109,520		1,357		109,882
	Staybridge		4		492		36		4,442		39		4,255		79		9,189
	Candlewood		—		—		76		9,189		33		3,218		109		12,407
	Other		—		—		4		616		—		—		4		616
Total			28		9,842		205		43,328		2,550		333,157		2,783		386,327
United Kingdom
	InterContinental		2		646		—		—		—		—		2		646
	Crowne Plaza		5		1,413		2		399		4		879		11		2,691
	Holiday Inn		72		12,109		3		431		22		2,881		97		15,421
	Express		1		120		—		—		98		9,987		99		10,107
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		—		—		—		—		—		—
Total			80		14,288		5		830		124		13,747		209		28,865
Europe
	InterContinental		10		3,837		13		4,488		7		2,149		30		10,474
	Crowne Plaza		10		2,466		6		1,665		21		4,669		37		8,800
	Holiday Inn		16		3,626		8		1,595		186		28,941		210		34,162
	Express		10		1,353		8		821		35		3,428		53		5,602
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		—		—		1		222		1		222
Total			46		11,282		35		8,569		250		39,409		331		59,260
The Middle East and Africa
	InterContinental		—		—		30		9,172		—		—		30		9,172
	Crowne Plaza		—		—		11		3,045		4		1,211		15		4,256
	Holiday Inn		—		—		18		3,305		4		680		22		3,985
	Express		—		—		—		—		1		212		1		212
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		—		—		—		—		—		—
Total			—		—		59		15,522		9		2,103		68		17,625

34

						Management
						contract and joint
		Owned or leased				ventures				Franchised				Total
		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
Total EMEA
	InterContinental		12		4,483		43		13,660		7		2,149		62		20,292
	Crowne Plaza		15		3,879		19		5,109		29		6,759		63		15,747
	Holiday Inn		88		15,735		29		5,331		212		32,502		329		53,568
	Express		11		1,473		8		821		134		13,627		153		15,921
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		—		—		1		222		1		222
Total EMEA			126		25,570		99		24,921		383		55,259		608		105,750
Far East and Australasia (Asia Pacific)
	InterContinental		2		729		17		6,090		7		2,317		26		9,136
	Crowne Plaza		3		698		27		9,706		6		1,831		36		12,235
	Holiday Inn		7		1,581		50		14,010		24		4,128		81		19,719
	Express		—		—		1		95		1		137		2		232
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		4		803		—		—		4		803
Total			12		3,008		99		30,704		38		8,413		149		42,125
Total
	InterContinental		24		9,701		76		25,125		32		9,690		132		44,516
	Crowne Plaza		24		6,861		64		21,114		127		33,652		215		61,627
	Holiday Inn		103		19,893		132		36,386		1,249		222,508		1,484		278,787
	Express		11		1,473		11		1,278		1,490		123,284		1,512		126,035
	Staybridge		4		492		36		4,442		39		4,255		79		9,189
	Candlewood		—		—		76		9,189		33		3,218		109		12,407
	Other		—		—		8		1,419		1		222		9		1,641
Total			166		38,420		403		98,953		2,971		396,829		3,540		534,202

35

Americas

      In the Americas, the largest proportion of rooms is operated under the franchise business model primarily in the midscale segment (Holiday Inn and Express). Similarly, in the upscale segment, Crowne Plaza is predominantly franchised, whereas the InterContinental brand currently has a bias toward ownership and management. With 2,783 hotels, the Americas represented the bulk of hotels and approximately 54% of Hotels operating profit before central costs and exceptional items during the year ended December 31, 2004. The key profit producing region is the United States, although IHG is also represented in each of Latin America, Canada, Mexico and the Caribbean.

EMEA

      Comprising 608 hotels at the end of 2004, EMEA represented approximately 39% of Hotels operating profit before central costs and exceptional items during the year ended December 31, 2004. The key profit producing regions are the United Kingdom and the main continental European gateway cities such as Paris and Frankfurt.

Asia Pacific

      Asia Pacific represented 8% of Hotels rooms and 7% of Hotels operating profit before central costs and exceptional items during the year ended December 31, 2004. IHG has a strong and growing presence in Asia Pacific, comprising 149 hotels in total. Currently Greater China is expected to generate significant growth in the hotel and tourism industry over the next decade. The Group believes that the region represents a good source of growth due to the current low penetration of brands offering the opportunity for IHG’s brands to build strong positions in key markets.

System Pipeline

      At December 31, 2004, IHG had formally approved franchise applications for 587 hotels with 59,809 rooms, though the hotels had yet to enter the system. In addition, IHG had signed management contracts on a further 84 hotels (22,418 rooms), and these are expected to enter the system over the next two years. In addition, two owned and leased hotels, with 670 rooms, are also due to enter the system. Approximately 20% of the rooms at December 31, 2004 in the pipeline were in the InterContinental and Crowne Plaza brands.

      There are no assurances that all of these hotels will open or enter the system. The construction, conversion and development of hotels is dependent upon a number of factors, including meeting brand standards, obtaining the necessary permits relating to construction and operation, the cost of constructing, converting and equipping such hotels and the ability to obtain suitable financing at acceptable interest rates. The supply of capital for hotel development in the United States and major economies may not continue at previous levels and consequently the system pipeline could decrease.

Seasonality

      Although the performance of individual hotels and geographic markets might be highly seasonal due to a variety of factors such as the tourist trade and local economic conditions, the geographical spread of IHG’s hotels in almost 100 countries and territories and the relative stability of the income stream from management and franchising activities diminish the effect of seasonality on the results of the Group.

Competition

      The Group’s hotels compete with a wide range of facilities offering various types of lodging options and related services to the public. The competition includes several large and moderate sized hotel chains offering upper, mid and lower priced accommodation and also includes independent hotels in each of these market segments, particularly outside of North America where the lodging industry is much more fragmented. Major hotel chains which compete with the Group include Marriott International, Inc., Starwood Hotels & Resorts

36

Worldwide, Inc., Choice Hotel International, Best Western International, Hilton Hotels Corporation, Hilton Group plc, Cendant Corporation, Four Seasons Hotels Inc. and Accor SA.

      The Group considers Revenue per Available Room (“RevPAR”) to be a meaningful indicator of performance because it measures the period-over-period change in room revenues for comparable properties. RevPAR is calculated by dividing room revenue by total room nights available for a given period. RevPAR may not be comparable to similarly titled measures, such as revenues.

			Owned & leased
			comparable						Managed						Franchised
						Change vs						Change vs						Change vs
			2004			2003			2004			2003			2004			2003
Americas
	InterContinental
		Occupancy		69.5	%		2.0	%		56.3	%		7.8	%		58.0	%		5.7	%
		Average daily rate	$	168.66			5.1	%	$	119.77			3.2	%	$	101.97			–5.1	%
		RevPAR	$	117.15			8.1	%	$	67.40			19.7	%	$	59.15			5.3	%
	Crowne Plaza
		Occupancy		74.4	%		1.1	%		67.4	%		7.5	%		62.3	%		1.8	%
		Average daily rate	$	107.73			5.3	%	$	107.77			5.3	%	$	91.28			1.5	%
		RevPAR	$	80.19			6.9	%	$	72.63			18.6	%	$	56.90			4.5	%
	Holiday Inn
		Occupancy		67.6	%		(0.3	%)		63.3	%		0.6	%		60.2	%		1.5	%
		Average daily rate	$	78.56			6.0	%	$	76.57			0.9	%	$	80.21			2.4	%
		RevPAR	$	53.12			5.6	%	$	48.43			1.8	%	$	48.25			5.0	%
	Express
		Occupancy		–			–			63.9	%		7.0	%		64.5	%		2.0	%
		Average daily rate		–			–		$	87.95			4.8	%	$	75.48			3.8	%
		RevPAR		–			–		$	56.22			17.7	%	$	48.67			7.1	%
	Staybridge Suites
		Occupancy		72.0	%		1.1	%		73.4	%		6.7	%		70.6	%		4.6	%
		Average daily rate	$	89.73			4.6	%	$	87.17			2.7	%	$	86.90			4.1	%
		RevPAR	$	64.64			6.3	%	$	63.95			13.0	%	$	61.36			11.3	%
	Candlewood
		Occupancy		–			–			71.4	%		–			68.5	%		–
		Average daily rate		–			–		$	55.87			–		$	63.92			–
		RevPAR		–			–		$	39.86			–		$	43.80			–
	Indigo
		Occupancy		–			–			16.7	%		–			–			–
		Average daily rate		–			–		$	103.81			–			–			–
		RevPAR		–			–		$	17.38			–			–			–

      Owned and leased statistics are for comparable hotels, and include only those hotels in our system as of December 31, 2004 and owned and leased by the Group since January 1, 2003.

      The comparison with 2003 is at constant US$ exchange rates.

37

			Owned & leased
			comparable						Managed						Franchised
						Change vs						Change vs						Change vs
			2004			2003			2004			2003			2004			2003
EMEA
	InterContinental
		Occupancy		66.8	%		2.3	%		60.5	%		3.9	%		58.2	%		(2.8	%)
		Average daily rate	$	211.21			(2.4	%)	$	128.00			(2.7	%)	$	127.92			8.7	%
		RevPAR	$	141.14			1.0	%	$	77.41			4.0	%	$	74.50			3.8	%
	Crown Plaza
		Occupancy		73.1	%		2.9	%		70.9	%		3.9	%		61.5	%		2.2	%
		Average daily rate	$	122.29			0.6	%	$	111.18			4.3	%	$	121.40			(0.1	%)
		RevPAR	$	89.41			4.9	%	$	78.88			10.4	%	$	74.62			3.6	%
	Holiday Inn
		Occupancy		70.3	%		1.4	%		60.9	%		5.2	%		64.3	%		1.2	%
		Average daily rate	$	111.89			4.1	%	$	66.31			(1.2	%)	$	92.23			3.6	%
		RevPAR	$	78.68			6.2	%	$	40.42			7.9	%	$	59.30			5.6	%
	Express
		Occupancy		63.2	%		2.3	%		42.7	%		(1.0	%)		68.1	%		5.3	%
		Average daily rate	$	75.15			2.4	%	$	74.01			0.8	%	$	91.54			0.8	%
		RevPAR	$	47.47			6.3	%	$	31.62			(1.6	%)	$	62.31			9.3	%

      Owned and leased statistics are for comparable hotels, and include only those hotels in our system as of December 31, 2004 and owned and leased by the Group since January 1, 2003.

      The comparison with 2003 is at constant US$ exchange rates.

38

			Owned & leased
			comparable						Managed						Franchised
						Change vs						Change vs						Change vs
			2004			2003			2004			2003			2004			2003
Asia Pacific
	InterContinental
		Occupancy		73.8	%		19.2	%		71.2	%		11.6%			62.1	%		(5.8%	)
		Average daily rate	$	198.49			8.6	%	$	134.39			(1.3%	)	$	123.65			(5.2%	)
		RevPAR	$	146.57			46.7	%	$	95.64			18.0%		$	76.77			(13.2%	)
	Crowne Plaza
		Occupancy		85.1	%		5.0	%		70.5	%		10.2%			73.9	%		1.4%
		Average daily rate	$	112.75			2.4	%	$	74.88			5.5%		$	92.67			(1.0%	)
		RevPAR	$	95.91			8.9	%	$	52.82			23.3%		$	68.46			0.9%
	Holiday Inn
		Occupancy		81.1	%		1.8	%		75.0	%		10.0%			69.7	%		4.8%
		Average daily rate	$	86.87			0.9	%	$	61.22			7.7%		$	59.99			1.0%
		RevPAR	$	70.48			3.2	%	$	45.89			24.3%		$	41.81			8.5%
	Express
		Occupancy		–			–			57.5	%		(1.9%	)		65.7	%		2.5%
		Average daily rate		–			–		$	69.72			0.6%		$	56.87			(0.2%	)
		RevPAR		–			–		$	40.10			(2.6%	)	$	37.39			3.7%
	Other
		Occupancy		–			–			70.3	%		5.8%			78.8	%		3.8%
		Average daily rate		–			–		$	69.71			2.4%		$	58.46			3.5%
		RevPAR		–			–		$	49.03			11.6%		$	46.07			8.7%

      Owned and leased statistics are for comparable hotels, and include only those hotels in our system as of December 31, 2004 and owned and leased by the Group since January 1, 2003.

      The comparison with 2003 is at constant US$ exchange rates.

Regulation

      Both in the United Kingdom and internationally, the Group’s hotel operations are subject to regulation, including zoning and similar land use laws as well as regulations that influence or determine wages, prices, interest rates, construction procedures and costs.

SOFT DRINKS

Overview

      The Group holds an interest in, manages and controls Britvic, which is one of the two leading manufacturers of soft drinks, by value and volume, in Great Britain. Following the signing of the Exclusive Bottling Agreement (“EBA”) on March 10, 2004 on broadly similar terms as the original agreement, the ownership of Britvic is now split between the Group (47.5%), Allied Domecq PLC and Whitbread PLC (each with 23.75%) and PepsiCo Inc. (5%). The Group continues to consolidate the results of Britvic as it continues to exercise dominant influence on the management of the company. Under the EBA, Britvic holds the exclusive right to distribute the Pepsi and 7UP brands in Great Britain until 2018 with a five year extension if Britvic becomes a listed company.

      IHG and Britvic’s other shareholders have agreed, subject to market and other conditions being satisfied, to consider an initial public offering of Britvic, between 2005 and 2008.

39

Britvic’s Business and Brands

      Britvic operates primarily in the United Kingdom (approximately 3.3% of revenues are from exports). Britvic distributes its products via a variety of outlets in the United Kingdom, including grocery stores and gas stations, (together the “Take-Home” Channel) and restaurants, pubs, clubs and other licensed premises (known as the “On-Premise” Channel). Britvic has an extensive and balanced portfolio of soft drink brands including Robinsons, Tango, Fruit Shoot, Pepsi, 7 UP, Britvic juices, R Whites, Amé, J₂O, Purdey’s and Aqua Libra.

      Soft Drinks continued to invest in its key brands and in new product innovation. During 2004, Britvic acquired the Ben Shaw’s water business, further increasing Britvic’s presence in the UK’s expanding water market and providing additional capacity.

      Britvic generated operating profits before exceptional items of £80 million on revenues of £706 million in the year ended December 2004. This compares to operating profits before exceptional items of £83 million on revenues of £674 million in the 12 months ended December 2003.

Strategy

      Britvic’s objective is to deliver continued revenue and profit growth by increasing its market share in both the stills and carbonated categories of the soft drinks market through developing both existing and new product and packaging formats, whilst continuing to drive further efficiencies and enhance employee performance.

Competition

      Britvic’s brands compete with many multi-national, national and regional producers and private label suppliers. Britvic’s main competitor in the United Kingdom is Coca-Cola Enterprises (whose brands include Coca-Cola, Fanta, Sprite, Dr Pepper, Schweppes and Lilt), which is the overall soft drinks market leader (in terms of market share). Britvic also faces significant competition from GlaxoSmithKline (Lucozade and Ribena), AG Barr (Irn-Bru and Orangina), Proctor & Gamble (Sunny Delight) and Tropicana UK Limited (fruit juices), which are each strong within specific sectors of the market. A number of smaller manufacturers dominate their individual sector and their combined influence is becoming more important. A significant example of this would be Red Bull (a leading energy drink).

Production and Distribution

      At December 31, 2004, Britvic had six production plants which produced over 1.4 billion liters of soft drinks during fiscal 2004 and operated 12 retail distribution depots as well as a national distribution center for supplying the Take-Home and On-Premise channels.

Marketing

      The success of Britvic’s brands depends upon their quality and value for money and on brand marketing. Over the past three fiscal periods, Britvic spent an average of approximately 20% of gross revenues on brand advertising, promotional and other related expenditure.

      Britvic’s products are available in a wide variety of outlets in the United Kingdom, including grocery stores, supermarkets, gas stations, other non-licensed premises, off-licenses and restaurants, pubs, clubs and other licensed premises.

      Britvic has approximately 47,000 dispense units installed in pubs and other trade outlets, including catering establishments. These installations produce mainly carbonated soft drinks from concentrates supplied by Britvic. It also supplies over 20,000 vending machines which dispense a range of soft drinks in both cans and plastic bottles. Britvic also has approximately 33,000 chiller cabinets installed in retail outlets.

40

Reliance on Suppliers

      Fruit juice concentrates and other fruit raw materials, which are important ingredients for many of Britvic’s products, are obtained from various sources worldwide. One of the principal raw materials used by Britvic is sugar. Adequate supplies of bulk sugar are available for the foreseeable future, although Britvic is obliged to purchase its sugar requirements in the EU market, where prices are considerably higher than in other markets.

Reliance on Customers

      Due to the nature of the markets in which Britvic operates, a high proportion of sales are accounted for by major customers in both the Take-Home and Licensed On-Premise sectors. Consumer demand for Britvic’s brands supports trading relationships with the Take-Home sector, while major On-Premise customers usually contract for soft drinks on an exclusive basis for periods of between two and five years. Britvic is well represented within both sectors, without over-reliance of any one, or group of, customers.

Seasonality

      The volume of sales in the soft drinks business may be affected by weather and is seasonal, peaking in the summer months and at the time of holiday occasions, such as Christmas.

Regulation

      The Food Safety Act 1990 effectively raised the quality standards demanded in the soft drinks industry. The Britvic Group has actively participated in the industry discussion processes which, it is believed, will ultimately result in legislation governing soft drinks products sold in the EU market.

TRADEMARKS

      Group companies own a substantial number of service brands and product brands and the Group believes that its significant trademarks are protected in all material respects in the markets in which it currently operates.

ORGANIZATIONAL STRUCTURE

Principal operating subsidiary undertakings

      As of December 31, 2004 InterContinental Hotels Group PLC was the beneficial owner of all (unless specified) of the equity share capital, either itself or through subsidiary undertakings, of the following companies. Unless stated otherwise, companies are incorporated in Great Britain, registered in England and Wales and operate principally within the United Kingdom.

Corporate activities

      Six Continents PLC (note a)

Hotels

      InterContinental Hotels Limited

      InterContinental Hotels Group Operating Corporation (incorporated and operates principally in the United States)

      InterContinental Hotels Group Services Company

      InterContinental Hotels Group (UK) Limited

      Holiday Inn Limited

41

Soft Drinks

Britannia Soft Drinks Limited (47.5% Six Continents Investments Limited, 23.75% Whitbread PLC, 23.75% Allied Domecq PLC, 5% PepsiCo Inc.) (note b)

      Britvic Soft Drinks Limited (100% Britannia Soft Drinks Limited)

      Robinsons Soft Drinks Limited (100% Britannia Soft Drinks Limited)

a	Shares held directly by InterContinental Hotels Group PLC.
b	Under UK GAAP and US GAAP the Group exercises control over Britannia Soft Drinks Limited, which is, accordingly, treated as a subsidiary undertaking.
c	A list of subsidiary companies as of December 31, 2004 is filed as Exhibit 8 to this Annual Report.

PROPERTY, PLANTS AND EQUIPMENT

      Group companies own and lease properties throughout the world. The table below analyzes the net book value of land and buildings at December 31, 2004 by division and geographic segment. Approximately 71% of the properties by value were directly owned, with 22% held under leases having a term of 50 years or longer. These numbers will significantly change in 2005 to reflect upcoming hotel sales as well as those currently in progress.

			Rest of Europe,
Net book value of land and buildings	United		the Middle East
as at December 31, 2004	Kingdom		and Africa		United States		Rest of World		Total
	(£ million)
Hotels		945		901		529		257		2,632
Soft Drinks		67		—		—		—		67
Total		1,012		901		529		257		2,699

      Group properties include hotels and soft drinks production facilities. Approximately 69% of Hotels property values relate to the top 20 owned and leased hotels (in terms of value) of a total of 168 hotels, with an individual net book value range of £39 million to £204 million.

      Property has been written down in the year ended December 31, 2004 by £48 million following an impairment review of the hotel estate. The impairment has been measured by reference to the value of income-generating units, using either the higher of value in use or estimated recoverable amount. The discount rate used for value in use calculations was 8.0% to 10.5%.

ENVIRONMENT

      IHG is committed to all its operating companies having a responsibility to act in a way that respects the environment in which they operate. The Group’s hotels operate in nearly 100 countries and territories and its strong presence in the US and EU markets mean that it is affected by and is familiar with highly developed environmental laws and controls. IHG regularly considers environmental matters and seeks to embed good practice into its business strategies and operations. IHG was awarded membership of both the FTSE4Good Index Series and the Dow Jones Sustainability Indices in 2004.

      Group companies incur expenditure on technical advice, services and equipment in addressing the environmental laws and regulations enacted in the countries in which they operate. In 2004, such expenditure was not material in the context of their financial results.

      It is not possible to forecast the overall Group expenditure to comply with environmental laws and regulations; this reflects the difficulty in assessing the risk of environmental accidents and the changing nature of laws and regulations. IHG expects, however, that it should be in a position to control such expenditure so that, although it may be considerable, it will be unlikely to have a material adverse effect on the Group’s financial position or results of operations.

42

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

INTRODUCTION

Business and Overview

      As at December 31, 2004 the Group operated hotels in nearly 100 countries and territories and operated, managed and franchised seven separate brand names and had 3,540 hotels with approximately 534,000 rooms. The Group owns a significant interest in Britvic, one of the two leading manufacturers of soft drinks in Great Britain (measured by value and volume) which over the past five years has built a portfolio of brands addressing all sectors of the soft drinks market. The Group continued to follow the clear strategy established on Separation. The key priorities of this strategy are: 1) to strengthen the core business through focus on brand differentiation and system delivery; 2) to grow the managed and franchised fee-income business in key markets; 3) to develop the organization and its people; 4) to continue the asset disposal program; and 5) to return funds to shareholders.

Asset Disposals and Capital Return

      During 2004, IHG continued the asset disposal program commenced in 2003. Including transactions that have been announced post year end, IHG has sold or announced the sale of 121 hotels with proceeds of approximately £1.75 billion and has on the market a further 25 hotels.

      IHG engaged in a program to return funds to shareholders. During 2004 IHG completed an on-market share repurchase program for £250 million and announced a further £250 million repurchase program commencing in December 2004. On December 17, 2004 a special dividend of £501 million was paid to shareholders. Following the announcement in March 2005 of the sale of 73 hotels in the United Kingdom, and subject (among other things) to completion of the sale of the 73 hotels, IHG intends to return a further £1 billion to shareholders.

Operational Performance

      In the Hotels business all regions reported revenue and profit growth in US dollar terms as the hotel industry showed some recovery from the impact of global insecurity, SARS and depressed travel experienced in 2003 and, with respect to operations in the United Kingdom and Europe, as the US dollar continued to depreciate significantly in relation to the sterling and the euro. The relative strength of sterling against the US dollar (weighted average US dollar exchange rate to sterling for the year was $1.82 against $1.62 for 2003) converted a 13.0% growth in Hotels turnover expressed in US dollars to a 0.7% growth when expressed in sterling. Soft Drinks turnover increased by 4.7% despite the summer of 2004 experiencing poorer weather than the very favorable summer conditions of 2003. This growth was boosted by 2004 including an extra week’s trading.

      The performance of the Hotels business is evaluated primarily on a regional basis. The regional operations are split by similar projects or services: franchise agreement, management contract, and owned and leased operations. All three income types are affected by occupancy and room rates achieved by hotels, our ability to manage costs and the change in the number of available rooms through acquisition, development and disposition. Results are also impacted by economic conditions and capacity. The Group’s segmental results are shown before allocation of central costs, interest expense, interest income and income taxes.

      The Group believes the period-over-period movement in revenue per available room (“RevPAR”) to be a meaningful indicator for the performance of the Hotels business. In the Soft Drinks business, the Group believes a meaningful indicator for performance to be the movement in on-premise and take-home volumes.

      There has been no material change in the broad trend of current trading since March 10, 2005 and the outlook for the full financial year remains in line with management’s expectation.

      The Group has seen encouraging performance in the US. The key midscale brands, Express and Holiday Inn, are showing rate growth. Crowne Plaza RevPAR is growing strongly, driven by strong performance in the meeting segment and the InterContinental brand is delivering strong results in key cities (e.g. New York).

43

The UK, and particularly London, is showing strong RevPAR growth, driven by the corporate segment. The Group is seeing continued weakness in some Continental European markets (e.g. France and Benelux) but Germany is showing some positive signs. The Group’s business in the Middle East continues to deliver positive results, while the InterContinental Hong Kong had a good start to the year with double-digit RevPAR growth and mainland China also performed strongly. The Soft Drinks business started positively with volume increases over the previous year, and several initiatives planned with the intention of increasing profit and tightly controlling costs.

CRITICAL ACCOUNTING POLICIES UNDER UK GAAP AND US GAAP

      The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and costs and expense during the reporting periods. On an ongoing basis, management evaluates its estimates and judgments, including those relating to revenue recognition, bad debts, inventories, investments, property, plant and equipment, goodwill and intangible assets, income taxes, financing operations, frequent guest program liability, self-insurance claims payable, restructuring costs, retirement benefits and contingencies and litigation.

      Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions and conditions.

      The Group’s critical accounting policies are set out below.

Tangible and Intangible Assets

     (i)  Goodwill and other Intangible assets

      Purchased goodwill and intangible assets are capitalized as intangible assets and amortized over their anticipated life.

      Under UK GAAP, prior to October 1, 1998, goodwill arising on acquisitions was written off directly to reserves. Since October 1, 1998, acquired goodwill has been capitalized and amortized over a period not exceeding 20 years. On disposal of a business, the profit or loss on disposal is determined after incorporating the attributable amount of any purchased goodwill, including any previously written off to reserves. Under US GAAP, goodwill arising on acquisitions prior to July 1, 2001 was capitalized and amortized over its estimated useful life, not exceeding 40 years. For the purposes of US GAAP, the Group adopted Financial Accounting Standard (“FAS”) 142 “Goodwill and Other Intangible Assets” on October 1, 2002 and from that date, goodwill including that which arose in the period from July 1, 2001 to October 1, 2002 is not amortized but reviewed annually for impairment.

      Under US GAAP, separately identified intangible assets arising on acquisitions are capitalized and amortized over their useful lives. Under UK GAAP, these assets are included within goodwill.

      The Company uses a discounted cash flow model to test indefinite life intangibles for impairment on an annual basis. The discounted cash flow model requires assumptions about the timing and amount of net cash inflows, economic projections, cost of capital and terminal values. Each of these can significantly affect the value of indefinite life intangibles.

      The Company tests identified intangible assets with defined useful lives by comparing the carrying value to the sum of undiscounted cash flows expected to be generated by the asset.

     (ii)  Impairment of fixed assets

      Under UK GAAP and US GAAP the carrying value of both tangible and finite lived intangible fixed assets are assessed for indicators of impairment. The Company evaluates the carrying value of its long-lived

44

assets based on its plans, at the time, for such assets and such qualitative factors as future development in the surrounding area, status of expected local competition and projected capital expenditure plans. Changes to the Company’s plans, including decisions to dispose of or change the intended use of an asset, can have a material impact on the carrying value of the asset.

      In circumstances where indicators of impairment exist, under UK GAAP, the carrying value of an income-generating unit (“IGU”) is assessed by reference to the greater of value in use, which is defined as the present value of discounted cashflows, and net realizable value. The outcome of such an assessment is subjective, and the result sensitive to the assumed future cashflows to be generated by the assets and discount rates applied in calculating the value in use, both of which will be dependent on the type of asset and its location. Any impairment arising on an income-generating unit, other than an impairment which represents a consumption of economic benefits, is eliminated against any specific revaluation reserve relating to the impaired assets in that income-generating unit with any excess being charged to the profit and loss account. Under US GAAP, the assessment of an IGU’s carrying value is by reference in the first instance to undiscounted cashflows. To the extent that undiscounted cashflows do not support carrying value, the fair value of assets must be calculated and the difference to the current carrying value charged to the profit and loss account.

      During 2004, under UK GAAP, the Company recorded an impairment of its tangible fixed assets of £48 million, all of which relates to Hotels and represents 1% of the total carrying value of tangible fixed assets. This was recorded as a £28 million charge against operating profit and £20 million reversing previous revaluation gains. For the purposes of US GAAP, the Company recorded an impairment of its tangible fixed assets of £18 million.

      Under UK GAAP and US GAAP the Group reviews its fixed asset investments on an annual basis by comparing the carrying value to current market value in cases where the investment is traded on a public exchange. During 2004, the Group recorded provisions against fixed asset investments reflecting the directors’ view that the value of the investment is equivalent to market value at December 31, 2004.

Sale of Real Estate

      Under UK GAAP, the Group recognizes a profit on disposal of fixed assets provided substantially all the risks and rewards of ownership have been transferred. For US GAAP, the Group accounts for sales of real estate in accordance with FAS 66 “Accounting for Sales of Real Estate”. If there is significant continuing involvement with the property, any gain on sale is deferred and is recognized over the life of the long-term management contract retained on the property. The deferral of pre-tax gains on such sales totaled £nil in 2004, £12 million in 2003 and £nil in 2002.

Income Taxes

      Under UK GAAP, the Group provides for deferred taxation in respect of timing differences, subject to certain exceptions, between the recognition of gains and losses in the financial statements and for tax purposes. Under US GAAP, the Group provides for deferred taxation in accordance with FAS No. 109, “Accounting for Income Taxes”. For both UK and US GAAP the Group estimates deferred tax assets and liabilities based on current tax laws and rates, and in certain cases, business plans. Changes in these estimates may affect the amount of deferred tax liabilities or the valuation of deferred tax assets. Accruals for tax contingencies require judgements on the expected outcome of tax exposures. Deferred tax assets are not recognized unless their realization is considered more likely than not.

Loyalty program

      Priority Club Rewards enables members to earn points, funded through hotel assessments, during each stay at an InterContinental Hotels Group hotel and redeem the points at a later date for free accommodation or other benefits. The future redemption liability is included in creditors less than, and greater than, one year in the consolidated balance sheets in the Consolidated Financial Statements and is estimated using actuarial

45

methods based on statistical formulas that project timing of future point redemption based on historical levels to give eventual redemption rates and points values.

Legal Contingencies

      The Group is subject to various legal proceedings and claims, the outcomes of which are subject to significant uncertainty. Under both UK and US GAAP accruals are recorded for loss contingencies when a loss is probable and the amount can be reasonably estimated.

OPERATING RESULTS

Accounting Principles

      The following discussion and analysis is based on the Consolidated Financial Statements of the Group, which are prepared in accordance with UK GAAP. The principal differences between UK GAAP and US GAAP as they relate to the Group are discussed in Note 35 of Notes to the Financial Statements.

      The financial statements have been prepared using accounting policies unchanged from the previous year.

      The Group will be required to produce its first set of audited financial statements in line with International Financial Reporting Standards (“IFRS”) for the year ending December 31, 2005. This will require an opening balance sheet to be prepared under IFRS as at January 1, 2004, and a full profit and loss account, balance sheet and cash flow statement for the year ended December 31, 2004 for comparative purposes. The transition to IFRS reporting will result in a number of changes in presentation of reported financial statements, notes thereto and accounting principles. See “International Financial Reporting Information” below.

      For the year ended December 31, 2004 the results include exceptional items totaling a net charge of £99 million — see “year ended December 31, 2004 compared to 15 months ended December 31, 2003 — Exceptional Items”. For the 15 months ended December 31, 2003 the results include exceptional items totaling a net charge of £400 million — see “15 months ended December 31, 2003 Compared to fiscal 2002 — Exceptional Items” below. Fiscal 2002 results include exceptional items totaling a net charge of £24 million. For the comparability for the periods presented, some performance indicators in this Operating and Financial Review and Prospects discussion have been calculated after eliminating these exceptional items. Such indicators are prefixed with “adjusted”. A reconciliation to the amounts under UK GAAP including such exceptional items is included in Note 9 of Notes to the Financial Statements.

46

Year ended December 2004 compared with 15 months ended December 2003

Group

					Three months			12 months			15 months
		Year ended			ended			ended			ended
		December 31,			December 31,			December 31,			December 31,
		2004			2002			2003			2003
		(£ million)
GROUP RESULTS
Turnover:
	Hotels		1,498			383			1,487			1,870
	Soft Drinks		706			146			674			820
Turnover from continuing operations			2,204			529			2,161			2,690
Discontinued operations			—			342			451			793
Total turnover			2,204			871			2,612			3,483
Operating profit before operating exceptional items from continuing operations:
	Hotels		251			48			203			251
	Soft Drinks		80			12			83			95
Total operating profit before operating exceptional items from continuing operations			331			60			286			346
	Operating exceptional item		(19	)		—			(51	)		(51	)
Operating profit after operating exceptional items from continuing operations			312			60			235			295
Discontinued operations			—			52			85			137
Total operating profit after operating exceptional items			312			112			320			432
Exceptional items:
Continuing operations:
	Cost of fundamental reorganization		—			—			(67	)		(67	)
	Separation costs		—			(3	)		(48	)		(51	)
	Provision for loss on disposal of operations		(74	)		—			—			—
	Profit on disposal of tangible fixed assets		15			—			4			4
	Provision against fixed asset investments		(10	)		—			(56	)		(56	)
Discontinued operations:
	Separation costs		—			—			(41	)		(41	)
	Loss on disposal of tangible fixed assets		—			—			(2	)		(2	)
Profit on ordinary activities before interest			243			109			110			219

      IHG turnover from continuing operations for the year ended December 31, 2004 was £2,204 million (£2,690 million for the 15 months ended December 31, 2003). Excluding the effect of the longer period ended December 31, 2003, the results reflected the strengthening in economic conditions within the Hotels division offset by the strength of the sterling against the US dollar.

      Profit on ordinary activities before interest and exceptional items from continuing operations for the year ended December 31, 2004 was £331 million (£346 million for the 15 months ended December 31, 2003). Excluding the effect of the longer period ended December 31, 2003, the results reflect the hotel industry recovery from the impact of global insecurity, SARS and depressed travel experienced in 2003.

47

      Exceptional items for the year ended December 31, 2004 after tax totaled a net profit of £68 million and included an operating exceptional charge of £19 million and non-operating exceptional credits totaling £87 million. Details of the exceptional items are outlined under the heading “Exceptional Items” below.

      Group net cash flow for the year ended December 31, 2004 was an outflow of £338 million (outflow of £22 million for the 15 months ended December 31, 2003) mainly driven by the payment of £600 million in dividends. Cash inflow from operations for the year ended December 31, 2004 was £515 million, compared with £795 million for the 15 months ended December 31, 2003. Non-operating outflows during the year ended December 31, 2004 included a £17 million premium on the early settlement of debt. These items were offset by a £230 million decrease in expenditure on tangible fixed assets.

      Basic earnings per share for the year ended December 31, 2004 was 42.1p (2.6p for the 15 months ended December 31, 2003). Adjusted earnings per share, after eliminating the effect of exceptional items, was 32.5p for the year ended December 31, 2004 (39.1p for the 15 months ended December 31, 2003). Dividends for the year ended December 31, 2004 were 86.3p per share including a 72.0p per share special dividend paid in December 2004. A reconciliation of actual to adjusted earnings per share is set out in Note 9 of Notes to the Financial Statements.

      The Group reorganized its debt financing in the last quarter of 2004. As a result, the Group’s public debt was repaid and new bank facilities put in place.

      In December 2004, the Group commenced a second £250 million on-market share repurchase program. See “Liquidity and Capital Resources — Sources of Liquidity” below.

Exceptional Items

      Following a review of the hotel estate, tangible fixed assets have been written down by £48 million; £28 million has been charged as an operating exceptional item and £20 million reverses previous revaluation gains.

      Other operating exceptional items included a charge of £11 million related to the delivery of the further restructuring of the Hotels business in conjunction with the asset disposal program, and other operating income of £20 million relating to the adjustment to market valuation of the Group’s investment in FelCor Lodging Trust Inc.

      Non-operating exceptional items included a profit of £15 million realized on the sale of hotels, a £74 million provision for loss on disposal of assets in the Americas and the United Kingdom and a £10 million provision against the value of certain fixed asset investments.

      Non-operating exceptional items also included a net exceptional interest charge of £11 million. This related mainly to refinancing costs, including the premium of £17 million paid on the repurchase of the Group’s 2010 €600 million Eurobonds, net of exceptional interest income which included £14 million received on tax refunds.

      The release of provisions relating to tax matters which were settled during the year or in respect of which the relevant statutory limitation period has expired, principally relating to acquisitions (including provisions relating to pre-acquisition periods) and disposals, intra-group financing, and, in 2004, the recognition of a deferred tax asset of £83 million in respect of capital losses and the current year exceptional items has resulted in an exceptional tax credit of £167 million.

      Operating and non-operating exceptional items, together with their related tax credits, have been excluded in the calculation of adjusted earnings per share.

      Prior year exceptional items have been restated on a basis consistent with 2004. This comprises prior year adjustments which are exceptional by reason of size or incidence.

48

Net Interest

      In November 2004 the Group refinanced its existing bank facility with a new £1.6 billion facility. The new facility comprises a £1.1 billion five year tranche and a £0.5 billion 364 day tranche with an option to extend for one year. As part of this refinancing exercise the Group repurchased its euro and sterling denominated bonds.

      The net interest charge for the year (pre-exceptionals) was £22 million compared to £47 million for the 15 months ended December 31, 2003. The reduction was principally due to lower average debt levels and the weaker US dollar.

Taxation

      The tax charge on ordinary activities excluding exceptional items was 16% for 2004. The equivalent effective rate for the IHG Group excluding MAB was 24% for the 15 months ended December 31, 2003, following restatement in respect of exceptional tax credits on a basis consistent with 2004. Net tax paid in the year ended December 31, 2004 reflected tax repayments received during the period and the impact of exceptional costs.

      Excluding the effect of exceptional items and prior year items, the Group’s tax rate for the year ended December 31, 2004 was 36%. The equivalent for the Group was 37% for the 15 months ended December 31, 2003. The difference from the UK statutory rate of 30% arose primarily due to overseas profits being taxed at rates higher than the UK statutory rate.

      The tax rate for 2005 is expected to be materially higher (around 30%) as the disposal program continues and a higher proportion of profits are earned in the United States.

Earnings and Dividends

      Basic earnings per share for the year was 42.1p. Adjusted earnings per share, removing the distorting effect of exceptional items, was 32.5p compared with 39.1p for the 15 months ended December 31, 2003.

      The board has proposed a final dividend per share of 10.0p; with the interim dividend of 4.3p, the normal dividend for the year totaled 14.3p. A special dividend of 72.0p was paid in December 2004.

Cash flow and Capital Expenditure

      IHG’s operating cash flow for 2004 was £364 million compared with £547 million for the 15 months ended December 31, 2003. Net capital expenditure was £151 million, comprising £257 million capital additions and £106 million disposal proceeds, principally from the sale of hotels. Major items of expenditure in 2004 included the InterContinental Buckhead, Atlanta, refurbishment expenditure on the Holiday Inn UK estate and refurbishment expenditure on the InterContinental hotels in London, Cannes and Frankfurt.

      Net interest paid was £41 million, and tax payments totaled £35 million. Dividend payments totaled £626 million including the special dividend paid in December 2004. The repurchase of shares totaled £257 million.

Highlights for the year ended December 31, 2004

      The following is a discussion of the year ended December 31, 2004 compared with the unaudited financial information for the period of 12 months ended December 2003.

      The results for the 15 months ended December 31, 2003 include discontinued operations of MAB for the period up until Separation. Given the scale of the events surrounding the Separation, the audited consolidated financial statements do not readily facilitate an understanding of the continuing operations of IHG on a stand alone basis. The Company has, therefore, prepared unaudited financial information which shows the results for the Group as if IHG had been independent and operating under the financing and taxation structure put in place at the time of the Separation for the 12 months ended December 31, 2003. This financial information

49

comprises the results of those businesses that form IHG following the Separation. Because of the nature of this financial information, it cannot give a complete picture of the financial position of the Group. The information is provided as guidance only and should not be viewed as a substitute for the audited consolidated financial statements; it is not audited. Significant changes were also made to the financing structure of the Group as part of the Separation, making the Group results difficult to compare year-on-year. The financial information therefore represents the Group results as reported but after excluding the results of MAB and after having been adjusted to reflect the changes made to the financing and taxation structure as part of the Separation, on the assumption that this structure had been in place since October 1, 2001. The financial information has been prepared using accounting policies consistent with those used in the Group financial statements.

Hotels Results

					12 months
		Year ended			ended
		December 31,			December 31,
		2004			2003*			Change
								%
		(£ million)
Turnover:
	Americas		495			525			(5.7	)
	EMEA		829			807			2.7
	Asia Pacific		134			114			17.5
	Central		40			41			(2.4	)
			1,498			1,487			0.7
Operating profit before exceptional items:
	Americas		163			161			1.2
	EMEA		119			92			29.3
	Asia Pacific		21			12			75.0
	Central		(52	)		(65	)		(20.0	)
			251			200			25.5

*  Unaudited pro forma results.

      Turnover. Hotels turnover increased £11 million (0.7%) from £1,487 million for the 12 months ended December 31, 2003, to £1,498 million for the year ended December 31, 2004. Hotels turnover increased by 0.7% in sterling terms but this was impacted by the strength of sterling against the US dollar. Expressed in US dollars, turnover grew by over 13.0% with particularly strong growth in the United Kingdom (where the appreciation of sterling relative to the dollar benefitted results in US dollars), the Middle East and Asia Pacific.

      Operating profit. Hotels operating profit before exceptional items for the year ended December 31, 2004 was £251 million, up 25.5% (12 months ended December 31, 2003 £200 million). Again, there was significant overall growth in US dollar terms in Europe, Middle East and Africa (EMEA) (up by 45%, assisted by the strength of sterling and the euro) and Asia Pacific (up by 105%).

50

Americas

Americas Results

					12 months
		Year ended			ended
		December 31,			December 31,
		2004			2003			Change
								%
		($ million)
Turnover:
	Owned and leased		490			481			1.9
	Managed		55			46			19.6
	Franchised		357			327			9.2
			902			854			5.6
Operating profit before exceptional items:
	Owned and leased		39			32			21.9
	Managed		12			7			71.4
	Franchised		304			279			9.0
			355			318			11.6
Regional overheads			(59	)		(56	)		5.4
Total $ million			296			262			13.0
Sterling equivalent £ million(i)			163			161			1.2

(i)  The results have been translated into pounds sterling at weighted average rates of exchange for the year. The translation rates are fiscal 2004: £1 = $1.82 (2003: £1 = $1.62).

      Total Americas operating profit was $296 million, a 13.0% increase on the pro forma operating profit for the 12 months ended December 31, 2003 of $262 million. The weakness of the US dollar to sterling meant that in sterling terms, Americas operating profit was £163 million, 1.2% up on 2003.

      The largest profit generating stream in the Americas is the franchised business, with 2,550 hotels and 333,157 rooms. Operating profit increased from $279 million in 2003 to $304 million in 2004, a 9.0% increase. All brands posted strong revenue per available room (RevPAR) growth over 2003, with Holiday Inn 5.0% up, Holiday Inn Express 7.1% up, Crowne Plaza 4.5% up and Staybridge Suites 11.3% up.

      In the owned and leased estate, strong growth in trading particularly at the InterContinental hotels in New York and Chicago, resulted in operating profit growth of $7 million to $39 million in 2004. Comparable owned and leased RevPAR saw strong growth on 2003; InterContinental was up by 8.1%, Crowne Plaza by 6.9% and Holiday Inn by 5.6%. In April 2004 the InterContinental Central Park (New York) was sold, and in November 2004 the InterContinental Buckhead, Atlanta, a newly built hotel, was opened.

      Managed operating profit increased from $7 million in 2003 to $12 million in 2004 with all brands experiencing strong RevPAR growth on 2003. The manager-owner relationship with HPT strengthened during the year as agreement was reached for HPT to purchase a further 13 hotels from IHG with long-term contracts for IHG to manage the hotels under IHG brands. Following completion of this transaction, 119 hotels owned by HPT are managed by IHG.

      Americas regional overheads increased marginally, principally as a result of specific strategic initiatives and bonus payments.

51

Europe, Middle East and Africa

EMEA Results

		Year			12 months
		ended			ended
		December 31,			December 31,
		2004			2003			Change
								%
		(£ million)
Turnover:
	Owned and leased		759			746			1.7
	Managed		43			38			13.2
	Franchised		27			23			17.4
			829			807			2.7
Operating profit before exceptional items:
	Owned and leased		97			77			26.0
	Managed		24			19			26.3
	Franchised		21			18			16.7
			142			114			24.6
Regional overheads			(23	)		(22	)		4.5
Total £ million			119			92			29.3
Dollar equivalent $ million(i)			216			149			45.0

(i)  The results have been translated into US dollars at weighted average rates of exchange for the year. The translation rates are fiscal 2004: $1 = £0.55 (2003: $1 = £0.62).

      Turnover for EMEA for 2004 was £829 million, £22 million higher than for the 12 months ended December 31, 2003. Owned and leased turnover grew by £13 million despite the loss of £42 million turnover compared to 2003 as a result of hotels being sold.

      Trading conditions across the region varied; UK hotels experienced strong growth in RevPAR throughout the year and the performance in the Middle East and Africa business was strong. Continental Europe was more mixed with Paris in particular slower to recover from the adverse conditions in 2003.

      In the owned and leased estate, RevPAR in the United Kingdom Holiday Inn estate continued to grow over previous periods. For the year Holiday Inn UK RevPAR was up by 8.0% over 2003. London hotels in particular experienced strong growth in RevPAR over 2003 (up by 16.0%) as they were slower to recover than the UK regional hotels which had seen some recovery from mid-2003. Holiday Inn UK regional hotel RevPAR was up by 4.7%.

      InterContinental owned and leased RevPAR on a comparable basis was 1.0% up on 2003. InterContinental owned and leased turnover and operating profit was boosted by a full year’s trading from the InterContinental Le Grand Paris, which was closed for refurbishment for part of 2003. Owned and leased operating profit finished £20 million ahead of 2003 with the InterContinental Le Grand Paris contributing £12 million of the increase.

      Managed operating profit in EMEA rose by £5 million to £24 million. This was driven by hotels in the Middle East where over half of EMEA’s managed hotels are located. Overall, Middle East managed RevPAR increased by 8.8% for InterContinental, 8.8% for Crowne Plaza and 6.4% for Holiday Inn. Liquidated damages of approximately £4 million were received from the early termination of the management contract for the InterContinental Barcelona.

      Overall EMEA franchise RevPAR was 6.1% up on 2003 and there was a net increase in system size of 13 hotels. As a result, EMEA franchise operating profit was £3 million ahead of 2003 at £21 million.

52

      Total EMEA regional overheads increased by £1 million, reflecting the benefits of the reorganisation partly offset by bonus awards for 2004.

      During the year, a number of UK hotels were sold, including the Crowne Plaza Manchester Midland, Holiday Inn Teeside, Holiday Inn Sheffield West, Holiday Inn Crawley and the Holiday Inn Preston.

Asia Pacific

Asia Pacific Results

		Year			12 months
		ended			ended
		December 31,			December 31,
		2004			2003			Change
								%
		($ million)
Turnover:
	Owned and leased		201			154			30.5
	Managed		38			26			46.2
	Franchised		5			5			—
			244			185			31.9
Operating profit before exceptional items:
	Owned and leased		31			18			72.2
	Managed		25			15			66.7
	Franchised		3			4			(25.0	)
			59			37			59.5
Regional overheads			(20	)		(18	)		11.1
Total $ million			39			19			105.3
Sterling equivalent £ million(i)			21			12			75.0

(i)  The results have been translated into pounds sterling at weighted average rates of exchange for the year. The translation rates are fiscal 2004: £1 = $1.82 (2003: £1 = $1.62).

      Asia Pacific’s results improved significantly in 2004 as the region made a recovery from the negative impacts in 2003 of the war in Iraq, SARS and the terrorist bombing in Bali.

      Turnover grew by 32% to $244 million with a significant increase in both owned and leased turnover (up by $47 million) and managed turnover (up by $12 million).

      The owned and leased estate operating profit grew by $13 million to $31 million with a significant contribution from the InterContinental Hong Kong. RevPAR at the InterContinental Hong Kong increased by over 50% on 2003 and, with high operational gearing, this led to a substantially improved profit. In the last quarter of the year the hotel was running at an occupancy of over 85% and RevPAR was up by 29% over 2003. In total, owned and leased RevPAR across the region was up by 47%.

      Asia Pacific managed hotel RevPAR also increased in comparison with 2003; InterContinental increased by 18%, Crowne Plaza by 23% and Holiday Inn by 24%. Operating profit increased by $10 million to $25 million.

      Asia Pacific regional overheads were $2 million higher than 2003, principally as a result of infrastructure costs to support further planned expansion in Greater China. In addition to the 44 IHG hotels already open and operating in Greater China, there are another 53 management agreements signed and under negotiation which will increase IHG’s presence and leadership in the China hotel market.

53

      In the year, the Holiday Inn Newcastle and the Holiday Inn Adelaide were sold with proceeds being broadly in line with net book value.

Central

Central

	Year			12 months
	ended			ended
	December 31,			December 31,
	2004			2003			Change
							%
	(£ million)
Turnover		40			41			(2.4	)
Gross central costs		(92	)		(106	)		(13.2	)
Net central costs £ million		(52	)		(65	)		(20.0	)
Dollar equivalent $ million(i)		(93	)		(105	)		(11.4	)

(i)  The results have been translated into US dollars at weighted average rates of exchange for the year. The translation rates are fiscal 2004: $1 = £0.55 (2003: $1 = £0.62).

      Central support function costs totaled £52 million in 2004, £13 million down on 2003. The reduction primarily reflects the continued drive to reduce overhead costs. US dollar denominated costs also benefited from being converted at a weaker US dollar to sterling exchange rate.

      Regional and central overheads were flat year on year reflecting significant savings achieved given inflationary pressures, new initiatives and the payment of bonuses in 2004. EMEA overheads expressed in US dollars were 16.7% higher than 2003 primarily due to the impact of exchange rates; in sterling, the increase was 4.5%. Including regional costs charged directly to income streams, total gross overheads were 2.0% below 2003 levels when compared at constant exchange rates.

Cash flow and Investment

      Operating cash flow for Hotels was £291 million compared with £308 million for the 12 months ended December 31, 2003. Net capital expenditure, net of disposal proceeds, was £81 million against £45 million in 2003.

Soft Drinks

	Year		12 months
	ended		ended
	December 31,		December 31,
	2004(i)		2003(i)		Change
					%
	(£ million)
Turnover		706		674		4.7
Operating profit before exceptional items		80		83		(3.6	)

(i)  2004 53 weeks 2003 52 weeks

Strategy

      Soft Drinks continued to invest in its key brands and in new product innovation. During 2004, Britvic acquired the Ben Shaw’s water business, for £4 million, further increasing Britvic’s presence in the UK’s expanding water market and providing additional capacity.

54

Performance

      Soft Drinks turnover increased by 4.7% to £706 million, a strong performance against a 2003 result that benefited from a particularly favorable summer. Volume growth was 1.5% with strong growth in on-premise volume up 7.3%, driven by carbonates, adult and fruit drinks, with J₂O and Fruit Shoot performing particularly well. Soft Drinks increased its share of the take-home market although volumes were lower as the market volume fell below 2003. Pepsi achieved a take-home cola market share of 20%. Turnover growth benefited from an extra week’s trading; 2004 included 53 weeks’ trading compared with 52 weeks in 2003.

      Operating profit for Soft Drinks was £80 million, £3 million down on 2003. Operating profit in 2003, however, was boosted by an estimated £5 million from the exceptionally good summer weather. Although 2004 operating profit benefited from an extra week’s trading, incremental costs associated with a move to a more stand-alone basis, additional depreciation, increased pension costs and continued investment both in brand support and infrastructure costs, left profit £3 million down on last year.

Cash flow and Investment

      Operating cash flow for Soft Drinks was £73 million compared with £71 million for the 12 months ended December 31, 2003. Net capital expenditure was £70 million against £55 million in 2003 in line with forecast, including the acquisition of Ben Shaw’s water business and significant investment in systems and business processes. Capital expenditure is expected to reduce to approximately £50 million in 2005.

Highlights for the 12 months ended December 31, 2003

      Turnover. Hotels turnover decreased £51 million (3.3%) from £1,538 million for the year ended December 31, 2002, to £1,487 million for the 12 months ended December 31, 2003. While revenue rose £7 million (0.9%) in EMEA, the Americas and Asia Pacific were negatively impacted by exchange rate movements. The decline of the US dollar against sterling by 9.7% from the first to fourth quarters resulted in sterling reported turnover in the Americas finishing the 12 months down 7.7% and Asia Pacific down 10.9%.

      Operating profit. Hotels operating profit before exceptional items for the year ended December 31, 2003 was £200 million, down 16.3% (12 months ended December 31, 2002 £239 million). Trading was depressed in the first and second quarters by the threat and then outbreak of the war in Iraq and the outbreak of SARS in Asia and Canada. The weakening of the US dollar against sterling had a negative impact in the second half of the year in the Americas. In EMEA the owned and leased estate was negatively impacted by the combined effects of pre-opening costs, hotels opening towards the end of the period, and increased depreciation charges associated with prior year refurbishments. A reduction in overheads primarily driven from the reorganization review helped to offset some of the profit declines.

Americas

      Operating profit before exceptional items for the Americas region for the year ended December 31, 2003 of $262 million, marginally ahead of 2002 ($260 million 12 months ended December 31, 2002). The weakening of the US dollar against sterling had a negative impact in the second half of the year on sterling reported results and the Americas finished the 12 months ended December 31, 2003 with operating profit before exceptional items in sterling of £161 million, down 7% from the 12 months ended December 31, 2002. Total Americas overheads including direct costs, were down 10%, with the separately disclosed regional overheads down 3% reflecting implementation of initiatives arising from the reorganization review.

      RevPAR performance in the franchised estate finished the year ended December 31, 2003 0.3% down from the prior year at $46.61. The war in Iraq in the first half of the year contributed to the decline. In the third and fourth quarters, as a result of an improvement in domestic travel, the franchised estate recorded 1.5% and 2.7% RevPAR growth respectively. All brands recorded a stronger second half to the year, with InterContinental, Express and Staybridge Suite franchises all recording over 3.5% year-on-year growth for the second six months.

55

      RevPAR growth in the owned and managed estates followed a similar trend with the second half of the year significantly up on the first. The InterContinental owned estate, with its major gateway city exposure, grew year-on-year in each quarter as stability returned to the travel market. The InterContinental hotels in Chicago, New York, San Francisco and Miami all recorded strong growth in the second half of the year. In July 2003, IHG sold 16 Staybridge Suites to HPT for $185 million, retaining management and branding.

      Managed results include the full profit and loss account for certain properties where IHG is responsible for the underlying operations. Operating profit before exceptional items in the managed estate fell due to RevPAR declines in the managed InterContinental and Crowne Plaza estates in North and Latin America, and the agreed payments made to HPT under our management contract. In September, HPT converted 14 additional suite hotels to IHG’s Staybridge Suite brand and management.

Europe, Middle East and Africa

      The managed and franchised estate in EMEA opened 40 hotels with over 6,500 rooms. Of these hotels, 78% were new build. As at December 31, 2003, there were a further 96 hotels with over 18,000 rooms signed and under development.

      Turnover in EMEA totaled £807 million for the 12 months ended December 31, 2003, an increase of £7 million on 2002. Owned and leased turnover grew by £7 million with the reopening during the year of the refurbished InterContinental Le Grand Paris, and the opening of the newly built Crowne Plaza Brussels Airport, Holiday Inn Paris Disney, and three Express hotels in Germany. EMEA operating profit before exceptional items totaled £92 million for the 12 months ended December 31, 2003. The conversion of revenue to operating profit was depressed by the owned and leased estate, where the combined effects of pre-opening costs, hotels opening towards the end of the period, and increased depreciation charges associated with prior year refurbishment, all negatively impacted costs. Regional overheads fell £8 million to £22 million for the 12 months ended December 31, 2003 (£30 million for the 12 months ended December 31, 2002) as a result of the reorganization initiatives.

      RevPAR in the region for the 12 months ended December 31, 2003 was 0.7% lower than the prior 12 months at $56.36. The trend in the first half of the year was similar to that experienced in the Americas, with trading primarily depressed by the threat and then outbreak of the war in Iraq. In the second half of the year the UK market showed signs of recovery, although the picture was less clear in Europe, with both the German and French markets experiencing mixed trading conditions.

      The Holiday Inn UK estate recorded five consecutive months of RevPAR growth to finish the year up 2.3%, primarily driven by increased occupancy. The UK regions, with their domestic focus, recovered earlier than London and recorded seven consecutive months of growth. In London, December 2003 trading was particularly strong with the majority of the owned estate recording double digit RevPAR growth to end the month up 12.3%.

      Across EMEA the InterContinental estate finished the year with an overall RevPAR decline of 5.7%. While the owned InterContinental estate finished down 8.0% due to its exposure to the main European gateways, the managed Middle East estate traded more positively with the comparable Middle East estate recording RevPAR growth of 2.7%.

      Crowne Plaza finished the 12 months with RevPAR growth of 3.3% due to growth in the managed and franchised estates of 11.1% and 3.2% respectively. This performance was helped by the Middle East estate which finished the 12 months ended December 31, 2003 up 29.5%.

      Franchise turnover fell due to a fall in RevPAR and exchange rate movements, offset by growth in system size. Franchise profits grew primarily due to savings in franchise overheads realized as part of the organizational review.

      During the year the InterContinental Le Grand Paris reopened after a full refurbishment to position the property at the top of the Paris market. The Holiday Inn Paris Disney opened, giving representation at one of

56

Europe’s leading family leisure destinations and the Crowne Plaza Brussels Airport opened at the end of the year, giving the brand another defining asset at a major European airport.

Asia Pacific

      System growth continued in the region with a net increase of over 3,000 rooms operated under management agreements. Highlights of the new openings were five new InterContinental hotels in Thailand, Australia and India, and four Holiday Inns in Greater China. The new Holiday Inns in China brought the system size to 44 hotels. There are also 18 management agreements signed, but under development, which will extend IHG’s leadership in the key Greater China market.

      Turnover in Asia Pacific for the 12 months ended December 31, 2003 was $185 million, down $7 million (4%) from the 12 months ended December 31, 2002. In addition to the impact of the war in Iraq, trading in Asia Pacific was depressed by the Bali bombing and the SARS outbreak.

      Trading at the InterContinental Hong Kong fell sharply in March 2003 in connection with the outbreak of SARS, but recovery commenced in the third and fourth quarters. The opening of the award-winning Spoon restaurant in the InterContinental Hong Kong in October lifted non-rooms revenue. In Australia, the Rugby World Cup gave trading a boost in the second half of the year.

      Initiatives to increase revenue within the region included the roll-out of local websites for China, Australia and New Zealand, and the opening of a Central Reservations Office based in Guangzhou, The People’s Republic Of China, supporting calls in Cantonese and Mandarin. The addition during the year of Air China as a Priority Club Rewards partner further strengthened our travel alliances in the region.

Central

      Central overheads principally comprise the costs of global functions that were centralized following the reorganization review, reduced by Holidex fee income. The reduction in gross central costs from £121 million for the year ended December 31, 2002 to £106 million for 2003, primarily reflects savings driven from the reorganization review.

Cash flow and Investment

      Following the Separation, the Group undertook a detailed review of its owned and leased portfolio to identify opportunities to lower capital intensity. The Group’s strategy is that it will, in general, only own assets if they have strategic value or generate superior returns. The Group has now developed plans for each owned asset taking into account a wide range of different criteria, including where relevant the state of the local market and readiness of the asset to be sold. It is currently estimated that the disposal program will involve the further sale of assets with a net book value of between £800 million and £1 billion. The scale and complexity of the program means that it will take some considerable time to complete and is subject to there being no significant adverse changes in market conditions.

      In the 12 months ended December 31, 2003 the Group completed sales of fixed assets with proceeds of £254 million with an overall gain on sale of £4 million. The Group is in active negotiations on further sales and has a pipeline of disposals.

      In July 2003, the Group completed the sale of a 16 property Staybridge Suites portfolio to HPT, one of the largest US hotel real estate investment trusts, for $185 million. Investment had been made into the Staybridge Suites portfolio by the Group to enable rapid entry to the important US extended stay market. The disposal to HPT achieved a reduction in capital employed within the business while retaining management and branding of the hotels.

      The Group’s strategic relationship with HPT expanded further with the conversion in September 2003 of 14 further HPT owned hotels to the Staybridge Suites brand.

57

      The sale of the InterContinental London May Fair for £115 million was completed in September 2003. With an alternative property in London, and with this property in need of refurbishment, IHG took the opportunity to reduce capital intensity in the business at a favorable price in excess of £400,000 per room.

      In October 2003, IHG announced the acquisition of the Candlewood Suites brand in the US for $15 million from Candlewood Hotel Corporation. This brand’s positioning in the midscale extended stay segment will complement Staybridge’s upscale positioning. Candlewood Suites is an established brand of purpose built hotels with 109 properties on average less than five years old. The major owner of Candlewood properties is HPT, which owned 64 properties at the time of announcement and which, in a related transaction, purchased an additional 12 properties. IHG will manage all 76 of HPT’s properties under 20-year agreements, with options to extend. The transaction concluded on December 31, 2003.

Soft Drinks

      Soft Drinks grew its market share in a number of key segments in which it operates. In addition to a strong investment program in its key brands, Soft Drinks is also committed to an active new product development program, which has recently brought additional success to the business through its J₂O and Fruit Shoot brands. While this investment is driving top line revenue growth, Soft Drinks is also focused on effective cost and asset management to deliver an even higher level of earnings and return on capital employed growth.

      Turnover. As a result of favorable summer trading conditions the overall UK soft drinks market grew 8%. Soft Drinks turnover of £674 million was up 10% on the previous year. In the 12 months ended December 31, 2003, Soft Drinks grew its share of the carbonates market with Tango having an outstanding year, with volumes up 14%. Both Pepsi and 7UP performed well with volumes up 3% and 6%, respectively. Following good performance in 2002, Robinsons continued to grow with sales excluding Fruit Shoot up a further 4% in 2003. Investment was made in further capacity to support the success of Fruit Shoot and J₂O, with both brands leading their respective market segments with volume growth in 2003 of 54% and 95%, respectively.

      Operating profit. The business continued its focus on effective cost control, which along with the increase in turnover, contributed to an overall operating profit before exceptional items increase of 22% to £83 million for the 12 months ended December 31, 2003.

Cash flow and Investment

      Operating cash flow for the 12 months ended December 31, 2003 was £71 million. Capital expenditure of £55 million for the 12 months ended December 31, 2003 was driven by expansionary investment in additional Fruit Shoot and J2O production capacity, together with significant investment in a business transformation program. This, in addition to implementing new IT infrastructure, will significantly enhance operating efficiency.

Discontinued Operations — Mitchells and Butlers

      The audited Group results for the 15 months ended December 31, 2003 includes MAB operations for the 28 weeks from October 1, 2002 until the Separation on April 15, 2003. For the year ended September 30, 2002 MAB results are included for the full fiscal year.

      For the 28 weeks until Separation, turnover from MAB operations was £793 million, up 0.9% from the comparable period in the prior year (£786 million in the 28 weeks ended April 13, 2002). Underlying the 0.9% rise in turnover was a 1.0% fall in drink sales and a 2.7% rise in food sales. These comparisons were adversely affected by the timing of the important Easter trading period, which fell after the 28 week period in 2003 but within the 2002 trading period. MAB turnover for the year ended September 30, 2002 was £1,481 million.

      MAB operating profit before exceptional items for the 28 weeks prior to the Separation was £137 million (£146 million in the 28 weeks ended April 13, 2002). Gross operating margins were maintained despite the different Easter period, higher employment and property costs arising from regulatory changes, and an

58

increase in the pension charge. The reduction in operating profit was largely due to higher depreciation costs. MAB operating profit for the year ended September 30, 2002 was £289 million.

      Operating cash flow generated by MAB was £152 million for the 28 weeks prior to the Separation (£72 million in the 28 weeks ended April 13, 2002). The improvement over the 28 weeks ended April 13, 2002 was attributable to a £64 million reduction in net capital expenditure and a favourable movement in working capital of £17 million. MAB operating cash flow for the year ended September 30, 2002 was £145 million.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

      IHG’s policy is to maintain sufficient financial resources to meet its medium term funding requirements. In 2004 the Group refinanced its syndicated bank facility with a new £1.6 billion facility which gave the Group greater financial flexibility at a lower cost. As a result of the cost effective funding obtained from the bank market the Group repurchased the outstanding £18 million of its 2007 Notes, and made a tender offer to repurchase its €600 million 4.75% 2010 Notes. The repurchase of the Group’s public debt was completed in January 2005.

      At December 31, 2004 gross debt (including currency swaps) amounted to £1,538 million comprising £799 million euro borrowings, £335 million of US dollar borrowings, £247 million of sterling borrowings, £69 million of Hong Kong dollar borrowings and the remainder denominated in a variety of other currencies.

      At December 31, 2004 committed bank facilities amounted to £1,697 million and uncommitted facilities of £64 million, and of these committed facilities £542 million were unutilized.

      The Group also held short term deposits and investments (including currency swaps) at December 31, 2004 amounting to £422 million. Credit risk on treasury transactions is minimised by operating a policy on investment of surplus funds that generally restricts counterparties to those with an A credit rating or better or those providing adequate security. Limits are also set on the amounts invested with individual counterparties. Most of the Group’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations.

      The Group is in compliance with its financial covenants in its loan documentation none of which represent a material restriction on funding or investment policy in the foreseeable future.

      Details of exchange and interest rate risk and financial instruments are disclosed in “Item 11. Quantitative and Qualitative Disclosures about Market Risk”.

Cash From Operating Activities

      Cash flow from operating activities is the principal source of cash used to fund the ongoing operating expenses, interest payments, maintenance capital expenditure and dividend payments of the Group. The Group believes that the requirements of its existing business and future investment can be met from cash generated internally, disposition of assets and businesses and external finance expected to be available to it.

Cash Used for Investing Activities

      In March 2004 IHG announced an on-market share repurchase program for £250 million. By December 20, 2004 the program was completed with, in total, 45.6 million shares repurchased at an average price of 548p per share.

      In September 2004 IHG announced a further £750 million return of funds to shareholders. A special dividend of £501 million was paid to shareholders on December 17, 2004, followed by an associated share consolidation. A further £250 million share repurchase program commenced in December 2004, and by December 31, 2004 a further 0.8 million shares had been repurchased at an average price per share of 651 pence (total £5 million). By April 25, 2005, a total of 20,259,275 shares had been repurchased under the

59

second repurchase program at an average price per share of 632 pence per share (approximately £128 million).

      Following the announcement of the sale of 73 hotels in the United Kingdom, IHG intends to return a further £1 billion to shareholders. This will require a capital restructuring to enable the release of funds arising from the receipt of disposal proceeds. Subject to receipt of shareholder approval, completion of disposal transactions and there being no material adverse change in market conditions, it is planned to complete the restructuring by the end of June 2005 and to return funds to shareholders as soon as practicable thereafter.

      As of December 31, 2004, the Group had committed contractual capital expenditure of £53 million. Contracts for expenditure on fixed assets are not authorized by the directors on an annual basis, as divisional capital expenditure is controlled by cash flow budgets. Authorization of major projects occurs shortly before contracts are placed.

      The Group intends to invest approximately £300 million in capital expenditure in 2005. This level of capital expenditure is reviewed regularly during the year and may be increased or decreased in the light of prevailing economic and market conditions and other financial considerations.

Contractual Obligations

      The Company had the following contractual obligations outstanding as of December 31, 2004:

	Total amounts		Less than						After
	committed		1 year		1-3 years		3-5 years		5 years
	(£ million)
Long-term debt		1,199		43		41		1,111		4
Operating lease obligations		1,106		55		98		69		884
Other long-term obligations(i)		62		30		32		—		—
Capital contracts placed		53		53		—		—		—
		2,420		186		171		1,180		888

(i)  Other long-term obligations includes credit balances on currency swaps, interest rate swaps, forward contracts and pension obligations.

      The Company may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees is £115 million. It is the view of the directors that, other than to the extent that liabilities have been provided for in the Consolidated Financial Statements, such guarantees are not expected to result in financial loss to the Group.

      As of December 31, 2004, the Group had outstanding letters of credit of £33 million mainly relating to self-insurance programs.

      The Group may guarantee loans made to facilitate third-party ownership of hotels in which the Group has an equity interest and also a management contract. As of December 31, 2004, the Group was a guarantor of loans which could amount to a maximum of £15 million.

      The Group has given warranties in respect of the disposal of certain of its former subsidiaries. The Company believes that, other than to the extent that liabilities have been provided for in the Consolidated Financial Statements, such warranties are not expected to result in financial loss to the Group.

Pension Plan Commitments

      IHG operates three main schemes; the InterContinental Hotels UK Pension Plan, the Britvic Pension Plan, and the US based InterContinental Hotels Pension Plan.

      The InterContinental Hotels UK Pension Plan and the Britvic Pension Plan were both established with effect from April 1, 2003. On a Financial Report Standard (FRS) 17 ‘Retirement Benefits’ basis, at

60

December 31, 2004 the Plans had a deficit of £20 million and £108 million, respectively. In October 2004, £51 million was paid into the InterContinental Hotels UK Pension Plan, while £1 million was paid into the Britvic Pension Plan in January 2004. The defined benefits sections of both these Plans are generally closed to new members. In 2005, the Group expects to make projected regular contributions to the two UK principal plans of £17 million and additional contributions of £40 million to the Britvic Pension Plan.

      The US based InterContinental Hotels Plan is closed to new members and pensionable service no longer accrues for current employee members. On an FRS 17 basis, at December 31, 2004 the Plan had a deficit of $19 million.

      The InterContinental Hotels Group will be exposed to the funding risks in relation to the defined benefit sections of the InterContinental Hotels and Britvic Plans and the InterContinental Hotels Pension Plan, as explained in “Item 3. Key Information — Risk Factors”.

      Details of exchange and interest rate risk and financial instruments are disclosed in “Item 11. Quantitative and Qualitative Disclosures about Market Risk”.

INTERNATIONAL FINANCIAL REPORTING INFORMATION

      The Group will be required to produce its first set of audited financial statements in line with International Financial Reporting Standards for the year ending December 31, 2005. Historically, the Group financial statements have been prepared in accordance with UK GAAP. The following explanatory notes and reconciliations describe the differences between IFRS and UK GAAP reporting for the financial year 2004 as well as for the IFRS opening balance sheet at January 1, 2004.

      The effects of the transition are explained on the following pages which include balance sheet reconciliations at the date of transition, January 1, 2004, and at December 31, 2004 and a reconciliation of the profit and loss account for the year ended December 31, 2004.

IFRS accounting policies

Basis of Accounting

      The financial information is prepared in accordance with International Financial Reporting Standards (“IFRS”).

      The financial information is prepared on a historical cost basis, except for certain items of property, plant and equipment held at deemed cost under the transitional rules of IFRS.

      The principle IFRS accounting policies of the Group are set out below.

First Time Adoption of IFRS

      The Group has adopted IFRS from January 1, 2004 (“date of transition”) with the exception of IAS 32 “Financial Instruments: Disclosure and Presentation” and IAS 39 “Financial Instruments: Recognition and Measurement”, which are adopted with effect from January 1, 2005 in accordance with the requirements of IFRS 1 “First-time Adoption of International Financial Reporting Standards”.

      In accordance with IFRS 1, the Group is entitled to a number of voluntary and mandatory exemptions from full restatement, which have been adopted as follows:

      Business combinations The basis of accounting for pre-transition combinations under UK GAAP has not been revisited. The initial carrying amount of assets and liabilities acquired in such business combinations is deemed to be equivalent to cost.

      Property, plant and equipment The Group has elected to retain UK GAAP carrying values of freehold and leasehold hotels including revaluations as deemed cost at transition.

      Employee benefits The cumulative actuarial gains and losses on defined benefit pension schemes and similar post retirement benefits at transition date have been recognised in full in equity.

61

      Foreign currencies The Group has elected not to recognize separately cumulative foreign exchange movements up to the transition date, and from January 1, 2004 onwards, to recognize foreign exchange differences on the retranslation of foreign subsidiaries in a separate reserve within equity.

      Share-based payments IFRS 2 “Share-based Payment” has been applied to all grants of equity instruments after November 7, 2002 that had not vested at January 1, 2005.

IFRS Accounting Policies

      The Group has adopted the transitional requirements of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” and IFRS 2 “Share-based Payment” from January 1, 2004.

Basis of Consolidation

      The Group financial statements comprise the financial statements of the Company and entities controlled by the Company.

      The results of those businesses acquired or disposed of are consolidated for the period during which they were under the Group’s control.

Investment In Associates

      An associate is an entity over which the Group has the ability to exercise significant influence, but not control, through participation in the financial and operating policy decisions of the entity.

      Associates are accounted for using the equity method, unless the investment is held for sale (see below). Using the equity method, the Group’s investment is recorded at cost adjusted by the Group’s share of post acquisition profits and losses.

Assets Held for Sale

      Assets and liabilities are classified as held for sale when their carrying amount will be recovered principally through a sale transaction, rather than continuing use, and a sale is highly probable.

      Assets designated as held for sale are held at the lower of carrying amount at designation and fair value less costs to sell.

      Depreciation is not charged against tangible assets classified as held for sale.

Foreign Currencies

      Transactions in foreign currencies are recorded at the exchange rates ruling on the dates of the transactions. Assets and liabilities denominated in foreign currencies are translated into sterling at the relevant rates of exchange ruling at the balance sheet date.

      The results of foreign operations are translated into sterling at weighted average rates of exchange for the period.

      Exchange differences arising from the retranslation of opening net assets and the net result for the year denominated in foreign currencies are transferred to the Group’s translation reserve within equity. Other exchange differences are taken to the profit and loss account.

      Goodwill arising on the acquisition of a foreign entity is treated as an asset of that foreign operation and is translated into sterling at the relevant closing rate.

Financial Instruments

      The Group has adopted both IAS 32 “Financial Instruments: Disclosure and Presentation” and IAS 39 “Financial Instruments: Recognition and Measurement” from January 1, 2005.

62

      Under the transition rules of IFRS 1, IAS 32 and IAS 39 are not applied to comparative balances; in 2005, comparative balances will be presented on the existing UK GAAP basis.

      Trade debtors Trade debtors are recorded at their original amount less an allowance for any doubtful accounts.

      An allowance for doubtful accounts is made when collection of the full amount is no longer considered probable.

      Investments On adoption of IAS 39 non current investments are classified as available for sale and held at fair value. Gains and losses from fair value changes are recognized within equity. Impairment losses are recognized within the profit and loss account.

      Until January 1, 2005, such investments were recorded in accordance with UK GAAP at cost less any provision for impairment.

      Trade creditors Under both IAS 39 and UK GAAP, trade creditors are non interest bearing and are stated at their nominal value.

      Bank and other borrowings Under both IAS 39 (subject to the hedging policies outlined below) and UK GAAP, borrowings are stated at proceeds received plus any unamortized issue costs.

      Under IAS 39 and UK GAAP, finance charges including issue costs are charged to the profit and loss account using an effective interest rate method. Finance costs not settled in the period are included within the outstanding loan balance.

      Derivative financial instruments and hedging Under IFRS, non hedging derivatives and other treasury instruments are carried on the balance sheet at fair value. Movements in fair value are recognized in the profit and loss account.

      Derivatives designated as hedging instruments are accounted for in line with the nature of the hedging arrangement. Documentation outlining the measurement and effectiveness of a hedging arrangement is maintained throughout the life of the hedge relationship. Any ineffective element of a hedge arrangement is recognized in the profit and loss account.

Goodwill

      Goodwill arises on consolidation as the excess of the cost of acquisition over the fair value at the date of acquisition of assets acquired of a subsidiary, associate or jointly controlled entity.

      Goodwill is recognized as an asset and tested annually for impairment. Goodwill is not amortized.

      Negative goodwill is recognized immediately in the profit and loss account.

      Goodwill arising on acquisitions prior to September 30, 1998 was eliminated against shareholders’ funds under UK GAAP; it has not been reinstated. On disposal of a business, any such goodwill relating to the business will not be taken into account in determining the profit or loss on disposal.

Intangible Assets

      Acquired through a business combination On acquisition of an entity, intangible assets which are separately identifiable and arise from a legal or contractual right are recognized at fair value and amortized on a straight line basis over a period appropriate to the type of asset.

      Other intangible assets Amounts paid to hotel owners to secure management contracts and franchise agreements are capitalized and amortized over the shorter of the contracted period and 10 years.

      Internally generated development costs are capitalized when forecast related revenues exceed attributable forecast development costs.

63

      In the circumstance of a hotel or other asset being sold to a purchaser who then enters into a management or franchise contract with the Group, this is accounted for as an exchange of assets and the profit or loss on disposal is determined by comparing the net book value of the asset sold to the total consideration received, which includes an estimate of the fair value of the contract.

Property, Plant and Equipment

      Freehold and leasehold land and buildings are stated at cost, except as allowed under the IFRS 1 transition rules, less depreciation and any impairment.

      All other fixed assets are stated at cost less depreciation and impairment. Borrowing costs are not capitalized. Repairs and maintenance costs are expensed as incurred.

      Under the transition rules of IFRS 1, the Group has elected to use previous UK GAAP carrying values, including revaluations, as deemed cost at transition.

      Freehold land is not depreciated. All other tangible fixed assets are depreciated to a residual value over their estimated useful lives, namely:

Freehold buildings	50 years
Leasehold buildings	lesser of unexpired term of lease and 50 years
Fixtures, fittings and equipment	3-25 years
Plant and machinery	4-20 years

      All depreciation and amortization is charged on a straight line basis.

Impairment

      At each balance sheet date the Group reviews all assets to determine if there are any indicators of impairment. If indicators of impairment exist then the recoverable amount of an asset or cash generating unit (“CGU”) is estimated.

      Where individual assets do not generate cash flows independent from other assets, the Group reviews the carrying value and recoverable amount of a CGU. This is the smallest group of assets where independent cash flows are produced.

      Intangible assets with an indefinite life and goodwill are tested for impairment at least annually by comparing carrying values with recoverable amounts.

      If the recoverable amount of an asset or CGU is less than its carrying amount, the difference is recognized in the profit and loss account as an impairment loss.

Deferred Taxation

      Deferred tax assets and liabilities are recognized in respect of all temporary differences between the tax base and carrying value of assets and liabilities. Those temporary differences recognized include accelerated capital allowances, unrelieved tax losses, unremitted profits from overseas where the Group does not control remittance, gains rolled over into replacement assets, gains on previously revalued properties and other short-term temporary differences.

      Deferred tax assets are recognized to the extent that it is regarded as probable that the deductible temporary differences can be utilized. The recoverability of all deferred tax assets is reassessed at each balance sheet date.

      Deferred tax is calculated at the tax rates that are expected to apply in the periods in which the asset or liability will be settled.

64

Leases

      Operating lease rentals are charged to the profit and loss account on a straight line basis over the term of the lease.

Pensions

      Defined contribution plans Payments to defined contribution schemes are charged to the profit and loss account as they fall due.

      Defined benefit plans Any excess or shortfall of scheme assets, measured at fair value, over scheme liabilities, measured using the projected unit credit method, is recognized in the balance sheet.

      Actuarial gains and losses are recognized in reserves in the year in which they arise.

      Past service cost is recognized immediately when the related benefits have vested. When benefits are not fully vested, these costs are recognized on a straight line basis over the remaining vesting period.

      Actuarial valuations are normally carried out every three years.

Self Insurance

      The Group is self insured for various levels of general liability, workers’ compensation and employee medical and dental coverage. Insurance reserves include projected settlements for known and incurred but not reported claims. Projected settlements are estimated based on historical trends and actuarial data.

Stocks

      Stocks are stated at the lower of cost and net realizable value. Cost includes direct purchase costs and other overheads incurred in bringing these stocks to their present location and condition. Cost is determined by a first-in, first-out method.

      Net realizable value represents estimated selling price less marketing and selling costs.

Revenue Recognition

      Revenue is derived from the following sources: owned and leased properties; management fees; franchise fees; sale of soft drinks and other revenues which are ancillary to the Group’s operations.

      Generally, revenue represents sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business and recognized when services have been rendered. The following is a description of the composition of revenues of the Group.

      Owned and leased revenue — derived from hotel operations, including the rental of rooms and food and beverage sales from a worldwide network of owned and leased hotels operated under the Group’s brand names. Revenue is recognized when rooms are occupied and food and beverage is sold.

      Management fees — earned from hotels managed by the Group, usually under long-term contracts with the hotel owner. Management fees include a base fee, which is generally a percentage of hotel revenue, and an incentive fee, which is generally based on the hotel’s profitability. Revenue is recognized in accordance with the contract.

      Franchise fees — received in connection with the franchise of the Group’s brand names, usually under long-term contracts with the hotel owner. The Group charges franchise royalty fees as a percentage of room revenue. Revenue is recognized when earned.

      Soft Drinks — sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business. Revenue is recognized when sales are made.

65

Loyalty Program

      The hotel loyalty program, Priority Club Rewards, enables members to earn points, funded through hotel assessments, during each stay at an InterContinental Hotels Group hotel and redeem points at a later date for free accommodation or other benefits. The future redemption liability is included in creditors less than, and greater than, one year and is estimated using actuarial methods which estimate eventual redemption rates and points values.

Use of Estimates

      The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

      Cash comprises cash in hand and demand deposits.

      Cash equivalents are short-term highly liquid investments with a maturity of less than 90 days that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

      Bank overdrafts repayable on demand are a component of cash equivalents.

Share-Based Payments

      In accordance with the transitional provisions of IFRS 2 “Share-based Payment” the Group has elected to apply IFRS 2 to grants, options and other equity instruments granted after November 7, 2002 not vested at January 1, 2004.

      The Group issues equity settled share-based payments to certain employees through incentive schemes and a Save As You Earn scheme. The fair value of these share-based payments is expensed on a straight line basis over the vesting period of the equity instrument, based on the Group’s best estimate of the number of shares that will vest.

      Fair value is based on option pricing models and the terms and conditions of the option schemes.

Proposed Dividend

      Dividends of £81 million (2003 £86 million) were proposed before the balance sheet date.

Accounting policy differences between UK GAAP and IFRS

      The Group financial statements are prepared in accordance with accounting principles generally accepted in the United Kingdom (UK GAAP) which differ from IFRS. The significant differences, as they apply to the Group, are summarized below.

      Assets held for sale Under UK GAAP there is no held for sale definition and no reclassification is required.

      Under IFRS, assets are classified as held for sale when their value will be recovered through a sale transaction rather than continuing use, and management consider a sale to be highly probable.

      Assets classified as held for sale are held at the lower of their carrying value and fair value less costs to sell. No depreciation or amortization is charged on assets held for sale.

      Discontinued operations Under UK GAAP, operations are classified as discontinued when the sale or termination of operations is completed before the earlier of three months after year end or approval of the financial statements. In addition, the operations concerned must have a material effect on the nature and focus

66

of operations resulting in either a withdrawal from a particular class of business or geographical market or a material reduction in turnover in a continuing market.

      Under IFRS, the results of operations arising from assets classified as held for sale are classified as discontinued operations when the results relate to a separate line of business, or geographical area of operations, or where there is a coordinated plan to dispose of a separate line of business or geographical area of operations.

      Discontinued operations are shown as a separate figure, net of tax, on the face of the profit and loss account.

      Goodwill Under UK GAAP, goodwill is amortized over 20 years and tested for impairment annually.

      Under IFRS, goodwill is subject to annual impairment testing and is not amortized.

      Impairment Under UK GAAP, impairment is measured for an income-generating unit when indicators of impairment exist. All assets are reviewed for indicators of impairment at the balance sheet date.

      Under IFRS, all assets are reviewed for evidence of the existence of impairment indicators at each reporting date. Assets with an indefinite life (such as goodwill) are subject to impairment testing at least annually.

      Pension costs Under UK GAAP, the Group provides for the cost of retirement benefits based upon a consistent percentage of employees’ pensionable pay as recommended by independent qualified actuaries. Variations in regular pension costs are amortized over the average expected service life of current employees on a straight line basis. Scheme assets and liabilities are not recognized on the Group’s balance sheet.

      Under IFRS, the cost of providing defined benefit retirement benefits is recognized over the service life of scheme members. This cost is calculated by an independent qualified actuary, based on estimates of long-term rates of return on scheme assets and discount rates on scheme liabilities.

      Any excess or deficit of scheme assets over scheme liabilities is recorded as an asset or liability, respectively, in the Group’s balance sheet to the extent that it does not relate to unrecognized actuarial gains and losses.

      Each year the scheme net assets or liabilities are adjusted for actuarial gains and losses which are recognized directly in reserves.

      Share-based payment Under IFRS, the fair value of all share-based payments is expensed over the vesting period of the related equity instruments, based on the Group’s best estimate of the number of shares that will vest.

      Fair value is determined by an option pricing model applied to all share-based payments granted after November 7, 2002.

      Deferred taxation Under UK GAAP, deferred tax is provided on all timing differences, subject to certain exceptions. Accordingly, deferred tax is not provided on revaluation gains and gains rolled over into replacement assets unless there exists a binding agreement for sale, nor on unremitted earnings of investments except to the extent of accrued dividends or where there exists a binding agreement to distribute earnings.

      Under IFRS, deferred tax is recognized on all temporary differences between the tax base and carrying value of assets and liabilities, including those arising from revaluation of assets, on gains rolled over into replacement assets and on unremitted earnings of investments where the Group does not control the timing of distributions.

      In addition, IFRS requires the tax base of assets and liabilities to be determined by management’s current intended use and the intended manner of realization of the asset or liability.

      Cash and cash equivalents Under UK GAAP, there is no equivalent definition.

67

      Under IFRS, cash equivalents are defined as short-term highly liquid investments with a maturity of less than 90 days that are readily convertible into a known amount of cash.

      Dividends Under UK GAAP, dividends are recognized in the period in which they are declared.

      Under IFRS, dividends are recognized as an appropriation of reserves in the period in which they are approved.

Reconciliation of earnings under UK GAAP to IFRS for the year ended December 31, 2004

			Operating
			profit
			before																		Earnings
			exceptional									Exceptional			Profit			Minority			available for
	Turnover		items			Interest			Tax			items			after tax			interest			shareholders
	(£ million)
As reported under UK GAAP		2,204		331			(22	)		(50	)		68			327			(28	)		299
Remove goodwill amortization		—		10			—			(1	)		—			9			(1	)		8
Pension accounting adjustments		—		(6	)		—			2			—			(4	)		2			(2	)
Share-based payment adjustments		—		(4	)		—			3			—			(1	)		—			(1	)
Impairment of previously revalued assets		—		—			—			—			(6	)		(6	)		—			(6	)
Depreciation adjustment of held for sale assets		—		15			—			(5	)		—			10			—			10
Adjustment to provision for loss on disposal of operations		—		—			—			—			74			74			—			74
Tax adjustments		—		—			—			(5	)		6			1			—			1
Under IFRS		2,204		346			(22	)		(56	)		142			410			(27	)		383
Continuing operations		1,602		228			(22	)		(18	)		118			306			(27	)		279
Discontinued operations		602		118			—			(38	)		24			104			—			104

Key indicators

	UK GAAP			IFRS
	(£ million except per
	ordinary share
	amounts)
Net debt		(1,116	)		(1,116	)
Basic earnings per ordinary share		42.1	p		53.9	p

68

Reconciliation of basic EPS to adjusted EPS

					Pence per
					ordinary
		£ million			share
Basic EPS under IFRS			383			53.9p
Exceptional items:
	Impairment of tangible fixed assets		48			6.7p
	Administrative expense		11			1.5p
	Other operating income		(20	)		(2.8p	)
	Profit on disposal of fixed assets		(15	)		(2.1p	)
	Provision against fixed asset investments		10			1.4p
	Interest receivable		(22	)		(3.1p	)
	Interest payable		16			2.3p
	Premium on early settlement of debt		17			2.4p
	Tax credit on above items		(20	)		(2.8p	)
	Exceptional tax credit		(167	)		(23.5p	)
			(142	)		(20.0p	)
Adjusted EPS under IFRS			241			33.9p

Reconciliation of UK GAAP balance sheet to IFRS balance sheet at January 1, 2004

	Non current		Current			Current			Non current			Minority
	assets		assets			liabilities			liabilities			interests			Net assets			Equity
	(£ million)
As reported under UK GAAP		4,281		999			(1,085	)		(1,478	)		(163	)		2,554			(2,554	)
Reclassify proposed dividends		—		—			86			—			—			86			(86	)
Pension accounting adjustments		—		(47	)		—			(131	)		57			(121	)		121
Deferred tax adjustments		—		—			—			(163	)		(17	)		(180	)		180
Reclassifications		30		(30	)		—			—			—			—			—
Under IFRS at January 1, 2004		4,311		922			(999	)		(1,772	)		(123	)		2,339			(2,339	)

Reconciliation of UK GAAP balance sheet to IFRS balance sheet at December 31, 2004

	Non current		Current			Current			Non current			Minority
	assets		assets			liabilities			liabilities			interests			Net assets			Equity
	(£ million)
As reported under UK GAAP		4,017		757			(1,013	)		(1,634	)		(150	)		1,977			(1,977	)
Reclassify proposed dividends		—		—			81			—			—			81			(81	)
Remove goodwill amortisation		10		—			—			—			(1	)		9			(9	)
Pension accounting adjustments		—		(110	)		—			(125	)		75			(160	)		160
Deferred tax adjustments		—		—			—			(134	)		(22	)		(156	)		156
Reclassify assets as held for sale		15		—			—			74			—			89			(89	)
Reclassifications		31		(31	)		—			—			—			—			—
Under IFRS at December 31, 2004		4,073		616			(932	)		(1,819	)		(98	)		1,840			(1,840	)

69

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

      Overall strategic direction of the Group is provided by the board of directors, comprising executive and non-executive directors, and by members of the executive committee.

      The directors and officers of InterContinental Hotels Group PLC as at April 25, 2005 are:

		Initially		Date of next
		appointed to		reappointment
Name	Title	the board		by shareholders
Andrew Cosslett	Director and Chief Executive		2005		2005
Richard Hartman	Director and Managing Director, EMEA		2003		2005
David Kappler(1)	Director and Senior Independent Director		2004		2005
Ralph Kugler(1)	Director		2003		2005
Robert C. Larson(1)	Director		2003		2005
Stevan Porter	Director and President, the Americas		2003		2006*
David Prosser(1)	Director		2003		2006*
Richard Solomons	Director and Finance Director Chairman of Britvic		2003		2005
Sir Howard Stringer(1)	Director		2003		2006*
David Webster(1)	Chairman		2003		2006*

*  One third of the directors are required to retire by rotation at each Annual General Meeting. Three of the four directors asterisked will be required to retire and/or stand for re-election at the Annual General Meeting to be held in 2006.

(1)  Non-executive director.

Officers

Name	Title	Initially appointed
Peter Gowers	Executive Vice President, Global Brand Services		2003
A. Patrick Imbardelli	Managing Director, Asia Pacific		2003
Jim Larson	Executive Vice President, Human Resources		2003
Richard Winter	Executive Vice President, Corporate Services, Group Company Secretary and General Counsel		2003

Former Directors and Officers

      Richard North served as director and Chief Executive of the Company from Separation in April 2003 until September 30, 2004.

Directors and Officers

Andrew Cosslett

      Andrew Cosslett was appointed Chief Executive in February 2005. He joined the Group from Cadbury Schweppes plc where he was most recently President, Europe, Middle East and Africa. During his career at Cadbury Schweppes he held a variety of senior regional management and marketing roles in the UK and Asia Pacific. He has over 11 years previous experience in brand marketing with Unilever. He is also non-executive Chairman of Duchy Originals Limited. Aged 50.

70

Peter Gowers

      Peter Gowers has previous international experience in management consultancy based in London and Singapore. He joined the Group in 1999 and was appointed Executive Vice President, Global Brand Services in January 2003. He is responsible for Group strategy, worldwide marketing and distribution, reservations and loyalty programs. Aged 32.

Richard Hartman

      Richard Hartman has over 38 years’ experience in the hotel industry including 30 years with Sheraton. He joined the Group in 1999 as Managing Director, Asia Pacific. Subsequently, as Managing Director, Europe, Middle East & Africa, he was appointed an executive director in April 2003. He is responsible for the business of all the Hotel brands and properties in the EMEA region. Aged 59.

A. Patrick Imbardelli

      A. Patrick Imbardelli has over 23 years’ experience in the hotel industry including 12 years with Southern Pacific Hotels Corporation. He joined the Group in 2000 and was appointed Managing Director, Asia Pacific in January 2003. He is responsible for the business of all the Hotel brands and properties in the Asia Pacific region. Aged 44.

David Kappler

      David Kappler was appointed a director and Senior Independent Director in June 2004. He is non-executive Chairman of Premier Foods plc and a non-executive director of Shire Pharmaceuticals Group plc and HMV Group plc. A qualified accountant and formerly Chief Financial Officer of Cadbury Schweppes plc until April 2004, he also served as a non-executive director of Camelot Group plc. He is Chairman of the Audit Committee. Aged 58.

Ralph Kugler

      Ralph Kugler was appointed a director in April 2003. He is President, Unilever Home and Personal Care, and has been nominated to join the Board of Unilever in May 2005. He has held a variety of senior positions globally for Unilever and has experience of regional management in Asia, Latin America and Europe (including as President of Unilever Latin America and, more recently, President of Unilever Europe, Home and Personal Care) with over 25 years’ involvement in brand marketing. Aged 49.

Jim Larson

      Jim Larson has over 25 years’ experience in human resources, most recently with the Kellogg Company. He joined the Group in 2002 as Executive Vice President, Human Resources. He is responsible for global reward strategy and implementation, talent management and leadership development. Aged 52.

Robert C. Larson

      Robert C. Larson was appointed a director in April 2003. He is Managing Director of Lazard Frères & Co LLC, Chairman of Lazard Frères Real Estate Investors, LLC and non-executive Chairman of United Dominion Realty Trust Inc. He served as a non-executive director of Six Continents PLC (formerly Bass PLC) from 1996 until April 2003. Aged 70.

Stevan Porter

      Stevan Porter spent 13 years with Hilton Corporation in a variety of senior management positions. He joined the Group in 2001 as Chief Operating Officer, the Americas. Subsequently, as President, the Americas, he was appointed an executive director in April 2003. He is responsible for the business of all the Hotel brands and properties in the Americas region. Aged 50.

71

David Prosser

      David Prosser is a qualified actuary with 40 years’ experience in financial services. Appointed a director in April 2003, he is Group Chief Executive of Legal & General Group Plc. He is Chairman of the Financial Services Skills Council and a director of the Royal Automobile Club Limited and of Epsom Downs Racecourse Limited. He served as Senior Independent Director from January to June 2004. He is Chairman of the Remuneration Committee. Aged 61.

Richard Solomons

      Richard Solomons qualified as a chartered accountant in 1985, followed by seven years in investment banking, based in London and New York. He joined the Group in 1992 and held a variety of senior finance and operational roles. He was appointed Finance Director of the Hotels business in October 2002 in anticipation of the Company’s listing in April 2003. He is responsible for finance and asset management, tax, treasury and central shared services. He is also Chairman of Britvic. Aged 43.

Sir Howard Stringer

      Sir Howard Stringer has over 35 years’ experience in the media and entertainment industries. He was appointed a director in April 2003. He is a director of Sony Corporation and Chairman and Chief Executive Officer of Sony Corporation of America and has been nominated to be Group Chairman and Chief Executive Officer of Sony Corporation. He served as a non-executive director of Six Continents PLC from 2002 until April 2003. Aged 63.

David Webster

      David Webster was appointed Deputy Chairman and Senior Independent Director of InterContinental Hotels Group on the Separation of Six Continents PLC in April 2003. He was appointed non-executive Chairman on 1 January 2004. He is also non-executive Chairman of Makinson Cowell Limited, a capital markets advisory firm. He was formerly Chairman of Safeway plc and a non-executive director of Reed Elsevier PLC. He is chairman of the Nomination Committee. Aged 60.

Richard Winter

      Richard Winter, a solicitor, qualified in 1973 and has 20 years’ commercial law experience in private practice. He joined the Group in 1994 as Director of Group Legal. He is now responsible for corporate governance, risk management, internal audit, data privacy, company secretariat, Group legal services and corporate social responsibility. Aged 56.

COMPENSATION

      In fiscal 2004, the aggregate compensation (including pension contributions, bonus and awards under the long term incentive plans) of the directors and officers of the Company was £5,191,000. The aggregate amount set aside or accrued by the Company in fiscal 2004 to provide pension retirement or similar benefits for those individuals was £243,000. An amount of nil was charged in fiscal 2004 in respect of bonuses payable to them under performance related cash bonus schemes and long term incentive plans.

      Note 4 of Notes to the Financial Statements sets out the individual compensation of the directors. The following are details of the Company’s principal share schemes, in which the directors of the Company participated during the period.

Former Six Continents Share Schemes

      Under the terms of the Separation of Six Continents PLC in 2003, holders of options under the Six Continents Executive Share Option Schemes were given the opportunity to exchange their Six Continents options for equivalent value new options over IHG shares. During fiscal 2004, 7,429,736 such options were exercised, leaving a total of 12,568,562 such options outstanding at prices ranging from 308.48p to 593.29p.

72

      Under the terms of the Six Continents Special Deferred Incentive Plan 59,217 IHG shares were transferred to employees in 2004, reflecting entitlements existing prior to the Separation.

Share Plans established on Separation

Executive Share Option Plan

      The Remuneration Committee, consisting solely of non-executive directors, may select employees, including executive directors, of the Group, for the grant of options to acquire ordinary shares in the Company. The option price will not be less than the market value of an ordinary share, or the nominal value if higher. The market value will be the quoted price on the business day preceding the date of grant, or the average of the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. The International Schedule to the Scheme extends it to executives outside the United Kingdom. Grants of options under the Executive Share Option Plan are normally made annually and except in exceptional circumstances, will not, in any year, exceed three times annual salary for executive directors. A performance condition has to be met before options can be exercised. The performance condition is set by the Remuneration Committee.

      In April 2004, options were granted to 180 employees over 6,951,420 IHG shares at 494.17p per share. In April 2005, options were granted to 58 employees over 2,104,570 IHG shares at 619.83p per share. For options granted in 2004 and 2005, the Company’s adjusted earnings per share over the three-year performance periods ending December 31, 2006 and December 31, 2007 must increase by at least nine percentage points over the increase in the UK Retail Prices Index for the same period for any of the award to vest. Options granted in 2004 are exercisable between 2007 and 2014 and options granted in 2005 are exercisable between 2008 and 2015, subject to the achievement of the performance condition.

      As of April 25, 2005, 27,633,433 IHG shares were subject to options under the Executive Share Option Plan.

Short Term Deferred Incentive Plan

      The IHG Short Term Deferred Incentive Plan (the “STDIP”) enables eligible employees, including executive directors, to receive all or part of their bonus in the form of IHG shares together with, in certain cases, a matching grant of free shares. The bonus and matching shares are deferred and released in equal amounts at the end of each of the three years following deferral. Participation in the STDIP is at the discretion of the IHG directors. The number of shares is calculated by dividing a specific percentage of the participant’s salary by the average share price for a period of days prior to the date on which the shares are granted. As of April 25 2005, conditional rights over 804,165 IHG Shares had been awarded to participants under the Plan.

Performance Restricted Share Plan

      The Performance Restricted Share Plan allows executive directors and eligible employees to receive share awards, subject to the satisfaction of a performance condition, set by the Remuneration Committee, which is normally measured over a three year period. Awards are normally made annually and, except in exceptional circumstances, will not exceed three times annual salary for executive directors. In determining the level of awards within this maximum limit, the Committee takes into account the level of Executive Share Options already granted to the same person. As of April 25, 2005 conditional rights over 5,914,246 IHG shares had been awarded to employees under the plan. The plan provides for the grant of “nil cost options” to participants as an alternative to share awards. As of April 25, 2005, no such nil cost options had been granted.

Sharesave Plan

      The Sharesave Plan is a savings plan whereby employees contract to save a fixed amount each month with a Savings Institution for 3 or 5 years. At the end of the savings term, employees are given the option to purchase shares at a price set before savings began. The Sharesave Plan is available to all UK employees (including executive directors) employed by participating Group companies provided they have been

73

employed for at least one year. The Plan provides for the grant of options to subscribe for ordinary shares at the higher of nominal value and not less than 80% of the middle market quotations of the ordinary shares on the three dealing days immediately following an announcement of results. As of April 25, 2005, 1,209,633 IHG shares were subject to options under the Sharesave Plan at a subscription price of 420.5p, exercisable up to the year 2009.

Options and Ordinary Shares held by Directors

      Details of the directors’ interests in the Company’s shares are set out below and in Note 4 of Notes to the Financial Statements.

BOARD PRACTICES

Contracts of Service

      The executive directors have service agreements with the Company.

      Prior to the Separation of Six Continents PLC Richard Hartman, Richard North, Stevan Porter and Richard Solomons entered into service agreements with a notice period of 12 months. Following the year end, Andrew Cosslett entered into a service agreement with an initial notice period of 24 months, reducing month-by-month to 12 months after the initial 12 month period. All new appointments are intended to have 12 month notice periods. However, on occasion, to complete an external recruitment successfully, a longer initial period reducing to 12 months may be used, following guidance in the Combined Code.

      David Webster took over as interim Chief Executive on September 15, 2004 following announcement that Richard North would resign as a director of the Company on September 30, 2004. David Webster’s remuneration in his capacity as interim Chief Executive was exclusive of his remuneration in his capacity as non-executive Chairman of the Company, which is the subject to six months’ notice.

      Non-executive directors, Ralph Kugler, Robert C. Larson, David Prosser and Sir Howard Stringer signed letters of appointment effective from the listing of IHG. David Kappler signed a letter of appointment effective from June 21, 2004. All non-executive directors’ appointments are subject to re-election at the Annual General Meeting at which they may retire by rotation.

      See Note 4 of the Notes to the Financial Statements for details of directors’ service contracts.

Payments on Termination

      No provisions for compensation for termination following change of control, or for liquidated damages of any kind, are included in the current directors’ contracts. In the event of any early termination of an executive director’s contract the policy is to seek to minimize any liability.

      Upon retirement, and under certain other specified circumstances on termination of his employment, a director will become eligible to receive benefit from his participation in a Company pension plan. See Note 4 of Notes to the Financial Statements for details of directors’ pension entitlements at December 31, 2004.

Executive Committee

      This Committee is chaired by the Chief Executive, Andrew Cosslett. It consists of the executive directors and senior executives from the Group and the regions and usually meets monthly. Its role is to consider and manage a range of important strategic and business issues facing the Group. It is responsible for monitoring the performance of the regional Hotels business and the Britvic business and is authorised to approve capital and revenue investment within levels agreed by the board.

Audit Committee

      The Audit Committee is chaired by David Kappler, who has significant recent and relevant financial experience and is the committee’s financial expert. He took over the role of Chairman of the Committee from

74

David Webster following his appointment to the board as Senior Independent Director on June 21, 2004. During 2004, the Audit Committee consisted of all the non-executive directors, excluding the Chairman of the Company. Since January 1, 2005, the membership of the Audit Committee has consisted of David Kappler, Ralph Kugler and David Prosser and is scheduled to meet at least four times a year.

      The Audit Committee assists the board in observing its responsibilities in relation to the integrity of the Group’s financial statements and associated announcements, the adequacy of internal control and risk management systems and the appointment and work of the internal and external auditors. The role of the Audit Committee, including the powers and responsibilities delegated by the board, is summarised below and in full in its terms of reference, a copy of which is available on the Company’s website or in writing on request.

      The Committee’s Chairman and financial expert, David Kappler, is a chartered management accountant and until April 2004 was Chief Financial Officer of Cadbury Schweppes plc. He also chairs the Audit Committees of two other UK public limited companies.

      The Committee’s principal responsibilities are to:

•  review the Company’s public statements on internal control and corporate governance compliance prior to their consideration by the board;

•  review the Company’s processes for detecting and addressing fraud, misconduct and control weaknesses and to consider the Company’s response to any such occurrence, including overseeing the process enabling the anonymous submission of concerns;

•  review reports from management, internal audit and external audit concerning the effectiveness of internal control, financial reporting and risk management processes;

•  review with management and the external auditor any financial statements required under UK or US legislation before submission to the board;

•  establish, review and maintain the role and effectiveness of the Internal Audit function, including overseeing the appointment of the Head of Internal Audit;

•  assume responsibility for the appointment, compensation, resignation, dismissal and the overseeing of the external auditor, including review of the external audit, its cost and effectiveness;

•  pre-approve non-audit work to be carried out by the external auditor and the fees to be paid for that work along with the monitoring of the external auditor’s independence; and

•  adopt and oversee a specific Code of Ethics for the senior financial officers, which is consistent with the Company’s overall Guidelines for Proper Business Conduct.

      To ensure that the independence and objectivity of the external auditor is not compromised, the Audit Committee has introduced a policy whereby all proposals for the provision of non-audit services by the external auditor must be pre-approved by the Audit Committee or its delegated member. At all times, the overriding consideration is to ensure that the provision of non-audit services does not impact the external auditor’s independence and objectivity.

     Disclosure Committee

      The Disclosure Committee, chaired by the Group’s Financial Controller, and comprising the Company Secretary and other senior executives, reports to the Chief Executive and the Finance Director, and to the Audit Committee. Its duties include ensuring that information required to be disclosed in reports pursuant to UK and US accounting, statutory or listing requirements, fairly represent the Group’s position in all material respects.

     Remuneration Committee

      The Remuneration Committee, chaired by David Prosser, consists of all the non-executive directors, excluding the Chairman of the Company (Ralph Kugler, Robert C. Larson, David Prosser and Sir Howard

75

Stringer), and meets at least three times a year. The Committee advises the board on overall remuneration policy. The Committee also determines, on behalf of the board, and with the benefit of advice from external consultants and members of the Human Resources department, the remuneration packages of the executive directors and other members of the Executive Committee. No member of the Committee has any personal financial interest, other than as a shareholder, in the matters to be decided by the Committee.

     Nomination Committee

      The Nomination Committee’s quorum comprises any three non-executive directors although, where possible, all non-executive directors are present. It is chaired by the Chairman of the Company and is responsible for nominating, for the approval of the board, candidates for appointment to the board and, also for succession planning. The Committee generally engages external consultants to advise on candidates for board appointments and did so in connection with the appointments of Messrs Kappler and Cosslett. The Committee also assists the board in identifying and developing the role of the Senior Independent Director.

      A description of the significant ways in which the Company’s actual corporate governance practices differ from the New York Stock Exchange corporate governance requirements followed by U.S. companies can be found on the Company’s website at www.ihgplc.com.

EMPLOYEES

      The Group employed an average of 29,659 people worldwide in the year ended December 31, 2004. Of these, approximately 94% were employed on a full-time basis and 6% were employed on a part-time basis.

      The table below analyzes the distribution of the average number of employees for the last three fiscal periods by division and by geographic region.

			Rest of Europe,
			the Middle East
	United Kingdom		and Africa		United States		Rest of World		Total
2004:
Hotels		9,676		6,601		8,241		2,317		26,835
Soft drinks		2,824		—		—		—		2,824
InterContinental Hotels Group		12,500		6,601		8,241		2,317		29,659
2003:
Hotels		11,174		5,585		5,704		4,648		27,111
Soft drinks		2,698		—		—		—		2,698
InterContinental Hotels Group		13,872		5,585		5,704		4,684		29,809
Discontinued operations		15,014		—		—		—		15,014
		28,886		5,585		5,704		4,648		44,823
2002:
Hotels		11,872		5,622		5,944		4,947		28,385
Soft drinks		2,637		—		—		—		2,637
InterContinental Hotels Group		14,509		5,622		5,944		4,947		31,022
Discontinued operations		36,710		2,037		—		—		38,747
		51,219		7,659		5,944		4,947		69,769

      Under EU law, many employees of Group companies are now covered by the Working Time Regulations which came into force in the United Kingdom on October 1, 1998. These regulations implemented the European Working Time Directive and parts of the Young Workers Directive, and lay down rights and

76

protections for employees in areas such as maximum working hours, minimum rest time, minimum days off and paid leave.

      In the United Kingdom there is in place a national minimum wage under the National Minimum Wage Act. At December 31, 2004, the minimum wage for individuals between 18 and under the age of 22 was £4.10 per hour and £4.85 per hour for individuals age 22 and above. This particularly impacts businesses in the hospitality and retailing sectors. Compliance with the National Minimum Wage Act is being monitored by the Low Pay Commission, an independent statutory body established by the UK Government.

      Less than 5% of the Group’s UK employees are covered by collective bargaining agreements with trade unions.

      Continual attention is paid to the external market in order to ensure that terms of employment are appropriate. The Group believes the Group companies will be able to conduct their relationships with trade unions and employees in a satisfactory manner.

SHARE OWNERSHIP

      The interests of the directors and officers in the shares of the Company at April 25, 2005 were as follows:

	Ordinary
	shares of
	112p
Directors
Andrew Cosslett		10,000
Richard Hartman		95,615
David Kappler		2,602
Ralph Kugler		892
Robert C. Larson		10,714
Stevan Porter		88,077
David Prosser		4,464
Richard Solomons		55,009
Sir Howard Stringer		7,566
David Webster		13,395
Officers
Peter Gowers		(Nil)
A. Patrick Imbardelli		52,202
Jim Larson		38,877
Richard Winter		8,159

      The above shareholdings are all beneficial interests. The percentage of ordinary share capital owned by each of the directors is negligible.

      On April 25, 2005, the executive directors’ technical interest in unallocated InterContinental Hotels Group PLC ordinary shares held by the Trustees of the ESOP was 2,831,979 shares.

      The directors’ interests in options to subscribe for shares as at the year end in InterContinental Hotels Group PLC as at December 31, 2005 are set out in Note 4 of Notes to the Financial Statements.

      The directors do not have different voting rights from other shareholders of the Company.

77

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

      As far as is known to management, InterContinental Hotels Group PLC is not directly or indirectly owned or controlled by another corporation or by any government. Under the provisions of Section 198 of the Companies Act, InterContinental Hotels has been advised of the following interests in its shares, being greater than 3% of its issued share capital as at April 25, 2005.

	April 2005					April 2004				December 2002
	Number of			Percent		Number of		Percent		Number of		Percent
Identity of person or group	shares/ADSs			of class		shares/ADSs		of class		shares/ADSs		of class
Lloyds TSB Group Plc		26,773,575			4.44%		(1)		(1)		(1)		(1)
Legal & General Group Plc		24,233,225	(2)		4.02%		29,924,045		4.10%		24,176,81		3.10%
Barclays PLC		20,246,584			3.36%		(1)		(1)		(1)		(1)
AXA SA		18,121,201			3.00%		(1)		(1)		(1)		(1)
Dodge & Cox Funds		(1)			(1)		25,106,594		3.40%		(1)		(1)

(1)	No notification of an above 3% shareholding received.
(2)	The number of shares stated to be beneficially held by Legal & General Group Plc (and its subsidiaries) is derived from the number of shares notified to the Company by Legal & General Group Plc, as adjusted to take account of a subsequent 25 for 28 share consolidation.

     The Company’s major shareholders do not have different voting rights from other shareholders of the Company. The Company does not know of any arrangements the operation of which may result in a change in its control.

      As of April 25, 2005, 29,548,420 ADSs equivalent to 29,548,420 ordinary shares, or approximately 5% of the total ordinary shares in issue, were outstanding and were held by 1,425 holders. Since certain ordinary shares are registered in the names of nominees, the number of shareholders of record may not be representative of the number of beneficial owners.

      As of April 25, 2005, there were a total of 81,566 record holders of ordinary shares, of whom 216 had registered addresses in the United States and held a total of 256,987 ordinary shares (0.04% of the total issued).

RELATED PARTY TRANSACTIONS

      Other than as herein described, the Company has entered into no related party transactions or loans.

      Pursuant to an agreement dated February 12, 2003, Thomas R Oliver, a former director of Six Continents, was contracted to provide consultancy services to the Group. This agreement ended in March 2005. (See Note 4 of Notes to the Financial Statements).

      During part of fiscal 2003, MAB was part of the Six Continents Group, and as a result the agreements entered into in connection with the Separation were with a related party at that time.

Summary of Main Agreements Relating to the Separation

Share Purchase Agreement to effect the MAB Transfer (the “MAB Transfer SPA”)

      Under the MAB Transfer SPA, which was entered into between MAB and Six Continents PLC after MAB became the holding company of the Six Continents Group, Six Continents PLC transferred at book value the whole of the issued share capital of various Retail companies, namely Six Continents Retail Limited and Six Continents Retail Germany GmbH and their respective subsidiaries and subsidiary undertakings, and Six Continents Property Developments Limited to MAB (the “MAB Transfer”).

      Under the MAB Transfer SPA, Six Continents PLC gave no warranties (other than as to ownership of the shares in the companies being transferred) and agreed to give certain limited indemnities to MAB. These indemnities were given to protect MAB against liabilities which it may incur and which relate exclusively or

78

predominantly to InterContinental Hotels Group entities. In addition, Six Continents PLC indemnified MAB in respect of 50% of certain contingent liabilities which do not relate exclusively or predominantly to either MAB or InterContinental Hotels Group entities. These shared liabilities relate primarily to businesses which have been disposed of by the Six Continents Group or its subsidiaries in the past and where warranties or indemnities were given to third parties.

      The MAB Transfer SPA also contained provisions relating to the allocation of tax liabilities and the conduct of the tax affairs of MAB and InterContinental Hotels Group relating to periods beginning before the reorganization was effected.

Separation Agreement

      Following the MAB Transfer, an agreement was entered into between MAB and IHG PLC under which MAB agreed to transfer on the Separation date the whole of the issued share capital of Six Continents PLC (which at that point only owned the hotels business and soft drinks business) to IHG in consideration for which IHG allotted and issued IHG shares to the holders of MAB shares (the “Separation Agreement”). Each shareholder on the register of members of MAB, immediately before the transfer of the Six Continents PLC shares, received one IHG share for every MAB share held at that time. The holders of MAB ADSs on the ADR register maintained by the Depositary received one IHG ADS for every MAB ADS. A shareholder or ADR holder of MAB was not required to make any payment for the IHG shares or ADSs. The Separation did not affect the number of issued MAB shares or MAB ADSs.

      All IHG shares received by MAB shareholders (including the Depositary) in connection with the Separation were credited as fully paid.

      Under the Separation Agreement, MAB agreed to give certain limited indemnities to IHG. These indemnities were given to protect IHG against liabilities which it may incur but which relate exclusively or predominantly to Retail or SCPD. In addition, MAB indemnified IHG in respect of 50% of certain contingent liabilities which do not relate exclusively or predominantly to the Retail business and SCPD or to the hotels business and soft drinks business. These shared contingent liabilities relate primarily to businesses which have been disposed of by the Six Continents Group or its subsidiaries in the past and where warranties and indemnities were given.

Relationship with Mitchells & Butlers plc

      Following the Separation, MAB and IHG each operate as separate listed companies. There are no cross-directorships between MAB and IHG. The Transitional Services Agreement put in place on Separation contains certain obligations, which expired as of December 31, 2003. Certain other obligations are continuing. Neither the expired, nor the residual continuing obligations, are believed to be material.

Franchise Agreement for Express by Holiday Inn

      Prior to Separation, a franchise agreement on arm’s length terms was entered into between a Group company (the “Licensor”) and an MAB Group company (the “Licensee”), pursuant to which the Licensor granted the Licensee the right to operate Express by Holiday Inn hotels operated by the Licensee. This license includes the rights to use the reservations and other systems of the Licensor, the trademarks and service marks and such other elements as designated from time to time by the Licensor, designed to identify “Express by Holiday Inn” hotels. In return, the Licensee pays a royalty to the Licensor, which is a pre-determined percentage of room revenues together with certain other fees as specified in the agreement. Each hotel has its own license agreement, which is typically for a ten-year period from the date of opening.

Britvic Supply Agreement

      On February 7, 2003, Britvic Soft Drinks Limited and the MAB Group extended the terms of an existing Britvic Soft Drinks Limited supply agreement for five years from that date. Under the agreement, the MAB

79

Group has a minimum purchase obligation for Britvic soft drinks across its estate which is well within the MAB Group’s actual usage levels.

ITEM 8. FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Financial Statements

      See “Item 18. Financial Statements”.

Legal Proceedings

      Group companies have extensive operations in the United Kingdom, as well as internationally, and are involved in a number of legal proceedings incidental to those operations. It is the Company’s view that the outcome of such proceedings, either individually or in the aggregate, is not likely to have a material effect on the results of the Group’s operations or its financial position.

Dividends

      See “Item 3. Key Information — Dividends”.

SIGNIFICANT CHANGES

      None.

ITEM 9. THE OFFER AND LISTING

      The principal trading market for the Company’s ordinary shares is the London Stock Exchange on which Six Continents shares were traded since its incorporation in 1967 until Separation in 2003 and on which InterContinental Hotels Group shares have been traded since Separation. The ordinary shares are also listed on the New York Stock Exchange trading in the form of ADSs evidenced by ADRs. Each ADS represents one ordinary share. InterContinental Hotels Group has a sponsored ADR facility with The Bank of New York as Depositary.

      The following tables show, for the fiscal periods indicated, the reported high and low middle market quotations (which represent an average of closing bid and ask prices) for the ordinary shares on the London Stock Exchange, as derived from the Daily Official List of the UK Listing Authority, and the highest and lowest sales prices of the ADSs as reported on the New York Stock Exchange composite tape.

	£ per
	Ordinary share				$ per ADS
Year ended September 30	High		Low		High		Low
2000		8.42		5.80		13.75		8.50
2001		8.02		5.49		12.00		7.75
2002		7.83		5.41		11.73		7.49

	£ per
	Ordinary share				$ per ADS
15 months ended December 31	High		Low		High		Low
2003 — October 1 to April 11 Six Continents		6.35		4.61		10.08		7.49
2003 — April 15 to December 31 IHG		5.55		3.38		9.82		5.26
Year ended December 31
2004		6.91		4.79		13.09		8.70

80

	£ per
	ordinary share				$ per ADS
15 months ended December 31	High		Low		High		Low
2003
First quarter		5.90		4.61		9.23		7.49
Second quarter		6.35		4.62		10.08		7.73
Third quarter — April 1 to April 11 Six Continents		6.18		5.92		9.74		9.33
Third quarter — April 15 to June 30		4.52		3.38		7.80		5.26
Fourth quarter		5.24		4.39		8.52		7.13
Final quarter		5.55		4.85		9.82		8.22

	£ per
	Ordinary share				$ per ADS
Year ended December 31	High		Low		High		Low
2004
First quarter		5.75		4.79		10.80		8.90
Second quarter		5.82		4.87		10.78		8.70
Third quarter		6.49		5.37		11.82		9.88
Fourth quarter		6.91		6.45		13.09		11.80
2005
First quarter		6.97		6.17		13.06		11.65
Second quarter (through April 25, 2005)		6.33		6.23		12.00		11.71

	£ per
	ordinary share				$ per ADS
Month ended	High		Low		High		Low
October 2004		6.75		6.45		12.59		11.80
November 2004		6.91		6.56		12.98		12.35
December 2004		6.72		6.47		13.09		12.61
January 2005		6.79		6.43		12.98		12.25
February 2005		6.97		6.63		13.06		12.66
March 2005		6.77		6.17		13.06		11.65
April 2005 (through to April 25, 2005)		6.42		6.12		12.61		12.31

PLAN OF DISTRIBUTION

      Not applicable.

SELLING SHAREHOLDERS

      Not applicable.

DILUTION

      Not applicable.

EXPENSES OF THE ISSUE

      Not applicable.

81

ITEM 10. ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF ASSOCIATION

      The following summarizes material rights of holders of the Company’s ordinary shares under the material provisions of the Company’s memorandum and articles of association and English law. This summary is qualified in its entirety by reference to the Companies Act and the Company’s memorandum and articles of association. The Company’s memorandum and articles of association were filed as an exhibit to the Company’s Registration Statement on Form S-8 (File No. 1-10409) filed with the SEC on April 23, 2003.

      The Company’s shares may be held in certificated or uncertificated form. No holder of the Company’s shares will be required to make additional contributions of capital in respect of the Company’s shares in the future.

      In the following description, a “shareholder” is the person registered in the Company’s register of members as the holder of the relevant share.

     Principal Objects

      The Company is incorporated under the name InterContinental Hotels Group PLC and is registered in England and Wales with registered number 4551528. The Company’s memorandum of association provides that its objects include to acquire certain predecessor companies and carry on business as an investment holding company, to carry on business of brewers and distillers, licensed victuallers, to deal in commodities, to acquire and operate breweries, hotels and restaurants, as well as to carry on any other business which the Company may judge capable of enhancing the value of the Company’s property or rights. The memorandum grants to the Company a range of corporate capabilities to effect these objects.

     Directors

      Under the Company’s articles of association, a director may not vote in respect of any proposal in which he, or any person connected with him, has any material interest other than by virtue of his interests in securities of, or otherwise in or through, the Company. This is subject to certain exceptions relating to proposals (a) indemnifying him in respect of obligations incurred on behalf of the Company, (b) indemnifying a third party in respect of obligations of the Company for which the director has assumed responsibility under an indemnity or guarantee, (c) relating to an offer of securities in which he will be interested as an underwriter, (d) concerning another body corporate in which the director is beneficially interested in less than one percent of the issued shares of any class of shares of such a body corporate, (e) relating to an employee benefit in which the director will share equally with other employees and (f) relating to liability insurance that the Company is empowered to purchase for the benefit of directors of the Company in respect of actions undertaken as directors (or officers) of the Company.

      The directors are empowered to exercise all the powers of the Company to borrow money, subject to the limitation that the aggregate amount of all moneys borrowed by the Company and its subsidiaries shall not exceed an amount equal to three times the Company’s share capital and aggregate reserves, unless sanctioned by an ordinary resolution of the Company.

      Any director attaining 70 years of age shall retire at the next Annual General Meeting. Such a director may be reappointed but shall retire (and be eligible for reappointment) at the next Annual General Meeting.

      Directors are not required to hold any shares of the Company by way of qualification.

     Rights Attaching to Shares

      Under English law, dividends are payable on the Company’s ordinary shares only out of profits available for distribution, as determined in accordance with accounting principles generally accepted in the United Kingdom and by the Companies Act. Holders of the Company’s ordinary shares are entitled to receive such dividends as may be declared by the shareholders in general meeting, rateably according to the amounts paid up on such shares, provided that the dividend cannot exceed the amount recommended by the directors.

82

      The Company’s board of directors may pay shareholders such interim dividends as appear to them to be justified by the Company’s financial position. If authorized by an ordinary resolution of the shareholders, the board of directors may also direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid up shares or debentures of any other company).

      Any dividend unclaimed after six years from the date the dividend was declared, or became due for payment, will be forfeited and will revert to the Company.

     Voting Rights

      Voting at any general meeting of shareholders is by a show of hands unless a poll, which is a written vote, is duly demanded. On a show of hands, every shareholder who is present in person or by proxy at a general meeting has one vote regardless of the number of shares held. On a poll, every shareholder who is present in person or by proxy has one vote for every 112 pence in nominal amount of the shares held by that shareholder. A poll may be demanded by any of the following:

•  the chairman of the meeting;

•  at least five shareholders entitled to vote at the meeting;

•  any shareholder or shareholders representing in the aggregate not less than one-tenth of the total voting rights of all shareholders entitled to vote at the meeting; or

•  any shareholder or shareholders holding shares conferring a right to vote at the meeting on which there have been paid-up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

      A proxy form will be treated as giving the proxy the authority to demand a poll, or to join others in demanding one.

      The necessary quorum for a general meeting is three persons carrying a right to vote upon the business to be transacted, whether present in person or by proxy.

      Matters are transacted at general meetings of the Company by the proposing and passing of resolutions, of which there are three kinds:

•  an ordinary resolution, which includes resolutions for the election of directors, the approval of financial statements, the cumulative annual payment of dividends, the appointment of auditors, the increase of authorized share capital or the grant of authority to allot shares;

•  a special resolution, which includes resolutions amending the Company’s memorandum and articles of association, disapplying statutory pre-emption rights or changing the Company’s name; and

•  an extraordinary resolution, which includes resolutions modifying the rights of any class of the Company’s shares at a meeting of the holders of such class or relating to certain matters concerning the Company’s winding up.

      An ordinary resolution requires the affirmative vote of a majority of the votes of those persons voting at a meeting at which there is a quorum.

      Special and extraordinary resolutions require the affirmative vote of not less than three-fourths of the persons voting at a meeting at which there is a quorum.

      In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting is entitled to cast the deciding vote in addition to any other vote he may have.

      Annual General Meetings must be convened upon advance written notice of 21 days. Other meetings must be convened upon advance written notice of 21 days for the passing of a special resolution and 14 days for any other resolution, depending on the nature of the business to be transacted. The days of delivery or receipt of the notice are not included. The notice must specify the nature of the business to be transacted. The

83

board of directors may if they choose make arrangements for shareholders who are unable to attend the place of the meeting to participate at other places.

     Variation of Rights

      If, at any time, the Company’s share capital is divided into different classes of shares, the rights attached to any class may be varied, subject to the provisions of the Companies Act, with the consent in writing of holders of three-fourths in value of the shares of that class or upon the adoption of an extraordinary resolution passed at a separate meeting of the holders of the shares of that class. At every such separate meeting, all of the provisions of the articles of association relating to proceedings at a general meeting apply, except that the quorum is to be the number of persons (which must be two or more) who hold or represent by proxy not less than one-third in nominal value of the issued shares of the class.

     Rights in a Winding-up

      Except as the Company’s shareholders have agreed or may otherwise agree, upon the Company’s winding up, the balance of assets available for distribution:

•  after the payment of all creditors including certain preferential creditors, whether statutorily preferred creditors or normal creditors; and

•  subject to any special rights attaching to any class of shares;

is to be distributed among the holders of ordinary shares according to the amounts paid-up on the shares held by them. This distribution is generally to be made in cash. A liquidator may, however, upon the adoption of an extraordinary resolution of the shareholders, divide among the shareholders the whole or any part of the Company’s assets in kind.

     Limitations on Voting and Shareholding

      There are no limitations imposed by English law or the Company’s memorandum or articles of association on the right of non-residents or foreign persons to hold or vote the Company’s ordinary shares or ADSs, other than the limitations that would generally apply to all of the Company’s shareholders.

MATERIAL CONTRACTS

      The Separation agreements summarized in “Item 7. Major Shareholders and Related Party Transactions — Related Party Transactions — Summary of Main Agreements Relating to the Separation” are material contracts of the Group. In addition, the following contracts have been entered into otherwise than in the course of ordinary business by members of the Group either (i) in the two years immediately preceding the date of this document in the case of contracts which are or may be material or (ii) which contain provisions under which any Group member has any obligation or entitlement which is material to the Group as at the date of this document. To the extent that these agreements include representations, warranties and indemnities, such provisions are considered standard in an agreement of that nature, save to the extent identified below.

     Disposal of Bass Brewers

      The disposal agreement for Bass Brewers, including the business and assets of Bass Beers Worldwide, and Six Continents’ 80% shareholding in Praszke Pivovary, was entered into on June 14, 2000 between Six Continents and certain of its subsidiaries and Interbrew and certain of its subsidiaries. The transaction completed on August 22, 2000. Pursuant to the disposal agreement, certain subsidiaries of Interbrew acquired Bass Brewers from Six Continents’ subsidiaries. Both Six Continents and Interbrew guaranteed certain of their respective subsidiaries’ obligations under the disposal agreement.

      The consideration for the sale of Bass Brewers was £2,300 million, comprising £1,426 million for the shares and assets and £874 million by way of repayment by Bass Brewers of net intra group debt owed to the

84

Company (or members of the Group). An adjustment in respect of net assets was agreed on November 3, 2000. This involved a payment of £24 million from Interbrew to Six Continents. In fiscal 2002 a further payment of £9 million was received in respect of the finalization of completion account adjustments.

      Under the disposal agreement, subsidiaries of Six Continents gave to Interbrew subsidiaries certain warranties and indemnities in relation to the shares and assets that were the subject of the disposal. In addition, Six Continents provided an indemnity in relation to the liabilities of Bass Holdings Limited (the holding company of Bass Brewers) arising out of that company having carried on the business of operation and management of licensed and unlicensed outlets as carried on by Six Continents Retail Limited, and other non-brewing businesses. MAB has indemnified the Group against claims relating to certain of these indemnities.

      In connection with the disposal agreement, the parties entered into certain ancillary agreements on completion of the disposal which included: a soft drink supply agreement under which Six Continents PLC agreed to sell, or to procure the sale of, soft drinks to Bass Brewers for a term of five years; and ancillary intellectual property agreements governing the use of the Bass name and certain trademarks following the completion of the disposal.

Britvic Joint Venture Agreements

      Britvic, Bass Public Limited Company (now Six Continents PLC), Whitbread and Company PLC, Allied-Lyons PLC and Allied Breweries Limited entered into a joint venture agreement dated February 10, 1986 under which Allied’s soft drinks business was acquired by Britvic (which at that time comprised the former soft drinks business of Six Continents and Whitbread and Company PLC in an existing joint venture) in exchange for which Allied received shares in Britvic. This agreement governs the relations of Six Continents, Whitbread and Allied as shareholders of Britvic. InterContinental Hotels Group PLC became a party to this agreement (and Six Continents was released from its obligations) on March 10, 2004.

IHG Facility Agreement

      On November 9, 2004, InterContinental Hotels Group PLC signed a new £1,600 million bank facility agreement with The Bank of Tokyo-Mitsubishi, Ltd., Barclays Capital, Citigroup Global Markets Limited, HSBC Bank plc, J.P. Morgan plc, Lloyds TSB Bank plc, The Royal Bank of Scotland plc, SG Corporate & Investment Banking (the corporate and investment banking division of Société Generale) and WestLB AG, London Branch, all acting as mandated lead arrangers and underwriters and HSBC Bank plc as agent bank.

      The facilities are split into a £1.1 billion 5 year revolving credit facility and a £500 million 364 day revolving credit facility, the latter having a one year term-out option.

      The interest margin payable on borrowings under the IHG Facility Agreement is linked to IHG’s consolidated net debt to consolidated EBITDA ratio; initially the margin was set at LIBOR + 0.375% p.a. The margin can vary between LIBOR + 0.325% and LIBOR + 0.60% depending on the level of the ratio.

      As part of this refinancing the Group repurchased its euro and sterling denominated bonds.

Britvic IPO Agreement

      Britvic and InterContinental Hotels Group PLC, Allied Domecq PLC, Whitbread Group PLC (the “Britvic Original Shareholders”) and PepsiCo Inc. (together with the Britvic Original Shareholders “the Britvic Shareholders”) entered into the Britvic IPO Agreement dated April 22, 2005 providing for PepsiCo’s rights as a minority shareholder of Britvic and the terms on which the parties would agree to proceed with an initial public offering of Britvic. The parties have agreed, subject, amongst other things, to market conditions, to consider an initial public offering of Britvic prior to December 31, 2008.

      The Britvic IPO Agreement also sets out the Britvic Shareholders’ rights to acquire and dispose of Britvic ordinary shares on and following any initial public offering.

85

      If a Britvic initial public offering has occurred, the Britvic IPO Agreement terminates upon the earlier of (a) the date on which each of the Britvic Original Shareholders has decreased its shareholding in Britvic to 3 per cent or (b) the third anniversary of the date of the listing of Britvic (or, if later, December 31, 2008). If no Britvic initial public offering has occurred, the Britvic IPO Agreement shall terminate upon the earlier of December 31, 2008 or the date upon which the Britvic board of directors decides not to proceed with an initial public offering.

Disposal to Hospitality Properties Trust (2003)

      On July 1, 2003, IHG Resources entered into a Purchase and Sale Agreement with HPT IHG Properties Trust (“HPT IHG”), pursuant to which HPT IHG purchased from InterContinental Hotels Group Resources, Inc (“IHG Resources”), 16 Staybridge Suites hotels situated in the United States for US$185 million. The Group continues to manage those hotels.

      Under the Purchase and Sale Agreement, IHG Resources has given certain customary warranties to HPT IHG.

Disposal to Hospitality Properties Trust (2004)

      On December 17, 2004, BHR Texas L.P., InterContinental Hotels Group Resources, Inc., Crowne Plaza LAX, LLC, Crowne Plaza Hilton Head Holding Company, Holiday Pacific Partners Limited Partnership, 220 Bloor Street Hotel Inc. and Staybridge Markham, Inc. (together, the “Vendors”) entered into a Purchase and Sale Agreement (as amended and restated on February 9, 2005) with HPT IHG — 2 Properties Trust (“HPT IHG-2”), pursuant to which HPT IHG-2 purchased from the Vendors 12 hotels situated in the United States and Canada. On the same date, Six Continents International Holdings B.V. (“SIH”), entered into a Stock Purchase Agreement (as amended and restated on February 9, 2005) with HPT IHG-2, pursuant to which HPT IHG-2 purchased from SIH all of the shares in Crowne Plaza (Puerto Rico) Inc., which is the owner of a hotel in Puerto Rico. The total consideration payable by HPT IHG-2 for the sales amounted to US$425 million, before transaction costs, equivalent to net book value (of which US$395 million was received upon the main completion of the sale on February 16, 2005, with the remaining US$30 million to be received upon the completion of the sale of the InterContinental hotel in Austin, expected to be on or around June 1, 2005). The Group will continue to manage the hotels.

      Under the Purchase and Sale Agreement and Stock Purchase Agreement, the Vendors have given certain customary warranties and indemnities to HPT IHG-2.

      In connection with the disposals referred to above, IHG has agreed to guarantee certain amounts payable to HPT IHG and HPT IHG-2 in relation to the managed hotels sold by the Group to HPT IHG and HPT IHG-2. The guarantee is for a maximum amount of US$125 million and requires amounts to be paid by IHG to HPT IHG and/or HPT IHG-2 (and/or their designated affiliate) irrespective of the revenue generated by the relevant hotels. The guarantee may be terminated if certain financial tests are met.

UK Hotels Disposal

      A Share Purchase Agreement (the “SPA”) was entered into on March 10, 2005 between Six Continents, IHC London (Holdings) Limited (“IHC Holdings”) and LGR Acquisition and LGR Holdings Limited (“LGR”). Pursuant to the SPA, Six Continents and IHC Holdings (the “Sellers”) have agreed to sell all of the issued ordinary share capital of Six Continents Hotels & Holidays Limited, Holiday Inn Limited, NAS Cobalt No. 2 Limited and London Forum Hotel Limited respectively (together, the “LGR Shares”) to LGR and to transfer to LGR certain contractual rights to the extent they relate to the hotels LGR will indirectly acquire under the SPA (the “LGR Hotels”) and which remain to be completed or performed, or remain in force, after completion of the sale of the Shares to LGR under the SPA.

      The agreed sale price for the LGR Shares was £1 billion. Receipt of £40 million of the total proceeds has been deferred, contingent upon certain pre-agreed performance targets being reached. Completion of the SPA

86

is conditional upon the receipt of European Commission clearance. Following completion, the Group will continue to manage the LGR Hotels.

      Under the SPA, the Sellers gave certain warranties in relation to the assets disposed of and LGR gave certain warranties in relation to its authority to enter into the SPA and its capacity to perform its obligations under the SPA. Certain indemnities were also given by the Sellers.

EXCHANGE CONTROLS

      There are no restrictions on dividend payments to US citizens.

      Although there are currently no UK foreign exchange control restrictions on the export or import of the capital or the payment of dividends on the ordinary shares or the ADSs, from time to time English law imposes restrictions on the payment of dividends to persons resident (or treated as so resident) in or governments of (or persons exercising public functions in) certain countries (each of the foregoing, a “Prohibited Person”).

      There are no restrictions under the articles of association or under English law that limit the right of non-resident or foreign owners to hold or vote the ordinary shares. However, under current English law, ordinary shares or ADSs may not be owned by a Prohibited Person. In addition, the Company’s articles of association contain certain limitations on the voting and other rights of any holder of ordinary shares, whose holding may, in the opinion of the directors, result in the loss or failure to secure the reinstatement of any license or franchise from any US governmental agency held by Six Continents Hotels Inc or any subsidiary thereof.

TAXATION

      This section provides a summary of the material US federal income tax and UK tax consequences to US holders, as defined below, of owning and disposing of ordinary shares or ADSs of the Company. This section addresses only the tax position of a US holder who holds ordinary shares or ADSs as capital assets. This section does not, however, discuss the tax consequences of members of special classes of holders subject to special rules and holders that, directly or indirectly, hold 10% or more of the Company’s voting stock. This section does not generally deal with the position of a US holder who is resident or ordinarily resident in the United Kingdom for UK tax purposes or who is subject to UK taxation on capital gains or income by virtue of carrying on a trade, profession or vocation in the United Kingdom.

      A US holder is a beneficial owner of shares or ADSs that is for US federal income tax purposes (i) a citizen or resident of the US, (ii) a US domestic corporation, (iii) an estate whose income is subject to US federal income tax regardless of its source, or (iv) a trust if a US court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.

      This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, and on UK tax laws and published practice of the UK Inland Revenue, all as currently in effect, and on the Double Taxation Convention between the United States and the United Kingdom that was ratified in March 2003 (the “Treaty”). These laws are subject to change, possibly on a retroactive basis.

      This section is further based in part upon the representations of the Depositary and assumes that each obligation in the Company ADR Deposit Agreement and any related agreement will be performed in accordance with its terms. For US federal income tax purposes, a holder of ADRs evidencing ADSs will be treated as the owner of the shares represented by those ADRs. Generally, exchanges of ordinary shares for ADRs, and ADRs for ordinary shares, will not be subject to US federal income tax or UK taxation on capital gains.

      The US Treasury has previously expressed concerns that parties to whom ADRs are released may be taking actions that are inconsistent with the claiming of foreign tax credits for US holders of ADRs. Such actions would also be inconsistent with the claiming of the reduced rate of tax, described below, for qualified

87

dividend income. Accordingly, the analysis of the availability of the reduced rate of tax for qualified dividend income described below could be affected by actions taken by parties to whom the ADRs are pre-released.

      Investors should consult their own tax advisor regarding the US federal, state and local, the UK and other tax consequences of owning and disposing of shares and ADSs in their particular circumstances, and in particular whether they are eligible for the benefits of the Treaty.

Taxation of Dividends

United Kingdom Taxation

      Under current UK tax law, the Company will not be required to withhold tax at source from dividend payments it makes.

United States Federal Income Taxation

      Subject to the passive foreign investment company (“PFIC”) rules discussed below, a US holder is subject to US federal income taxation on the gross amount of any dividend paid by the Company out of its current or accumulated earnings and profits (as determined for US federal income tax purposes). Subject to applicable limitations and the discussion above regarding concerns expressed by the US Treasury, dividends paid to a non-corporate US holder in taxable years beginning before January 1, 2009 that constitute qualified dividend income will be taxable to the holder at a maximum tax rate of 15%. The Company expects that dividends paid by the Company with respect to the shares or ADSs will constitute qualified dividend income.

      Dividends must be included in income when the US holder, in the case of shares, or the Depositary, in the case of ADSs, actually or constructively receives the dividend, and will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. For foreign tax credit limitation purposes, dividends will be income from sources outside the United States.

      The amount of the dividend distribution will be the US dollar value of the pound sterling payments made, determined at the spot pound sterling/ US dollar rate on the date the dividend distribution is includible in income, regardless of whether the payment is in fact converted into US dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includible in income to the date the payment is converted into US dollars will be treated as ordinary income or loss and, for foreign tax credit limitation purposes, from sources within the United States.

      Distributions in excess of the Company’s current or accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a return of capital to the extent of the US holder’s basis in the shares or ADSs and thereafter as capital gain. Because the Company has not historically maintained, and does not currently maintain, the worldwide Group’s books in accordance with US tax principles, the Company does not expect to be in a position to determine whether any distribution will be in excess of the Company’s current or accumulated earnings and profits as computed for US federal income tax purposes. As a result, the Company expects that amounts distributed will be reported to the Internal Revenue Service as a dividend.

Taxation of Capital Gains

United Kingdom Taxation

      A US holder who is not resident or ordinarily resident for United Kingdom tax purposes in the United Kingdom will not be liable for UK taxation on capital gains realised or accrued on the sale or other disposal of ADSs or ordinary shares unless, at the time of the sale or other disposal, the US holder carries on a trade, profession or vocation in the United Kingdom through a branch, agency or permanent establishment and such ADSs or ordinary shares are or have been used, held or acquired for the purposes of such trade, profession or vocation.

      A US holder of ADSs or ordinary shares who is an individual and who, broadly, has temporarily ceased to be resident or ordinarily resident in the UK for UK tax purposes for a period of less than five years of

88

assessment and who disposes of ordinary shares or ADSs during that period may also be liable to UK tax on capital gains (subject to any available exemption or relief), notwithstanding the fact that such US holder was not resident or ordinarily resident in the United Kingdom at the time of the sale or other disposal. As described below, a US holder will be liable to US federal income tax on such gains.

United States Federal Income Taxation

      Subject to the PFIC rules discussed below, a US holder that sells or otherwise disposes of shares or ADSs will recognize a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount realized and its tax basis, determined in US dollars, in the shares or ADSs. Generally, capital gain of a non-corporate US holder that is recognized before January 1, 2009 is taxed at a maximum rate of 15% where the holder has a holding period greater than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. The deductibility of losses is subject to limitations.

PFIC Rules

      The Company believes that the Company shares and ADSs will not be treated as stock of a PFIC for US federal income tax purposes for its 2004 taxable year. However this conclusion is an annual factual determination and thus may be subject to change. If the Company were to be treated as a PFIC, unless a US holder elects to be taxed annually on a mark-to-market basis with respect to the Company shares or ADSs, gain realized on the sale or other disposition of Company shares or ADSs would in general not be treated as capital gain. Instead, gain would be treated as if the US holder had realized such gain ratably over the holding period for the Company shares or ADSs and, to the extent allocated to the taxable year of the sale or other exchange and to any year before the Company became a PFIC, would be taxed as ordinary income. The amount allocated to each other taxable year would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, similar rules would apply to any “excess distribution” received on the Company shares or ADSs (generally, the excess of any distribution received on the Company shares or ADSs during the taxable year over 125% of the average amount of distributions received during a specified prior period), and the preferential rate for “qualified dividend income” would not apply.

Additional Tax Considerations

United Kingdom Inheritance Tax

      An individual who is domiciled in the United States (for the purposes of the Estate and Gift Tax Convention) and is not a UK national as defined in the Convention will not be subject to UK inheritance tax in respect of ADSs on the individual’s death or on a transfer of the ADSs during their lifetime, provided that any applicable US federal gift or estate tax is paid, unless the ADSs are part of the business property of a UK permanent establishment or pertain to a UK fixed base of an individual used for the performance of independent personal services. Where the ADSs have been placed in trust by a settlor, they may be subject to UK inheritance tax unless, when the trust was created, the settlor was domiciled in the United States and was not a UK national. Where ADSs are subject to both UK inheritance tax and to US federal gift or estate tax, the Estate and Gift Tax Convention generally provides for either a credit against US federal tax liabilities for UK inheritance tax paid or for a credit against UK inheritance tax liabilities for US federal tax paid as the case may be.

United Kingdom Stamp Duty and Stamp Duty Reserve Tax (“SDRT”)

      The transfer of ordinary shares will generally be liable to stamp duty at the rate of 0.5% of the amount or value of the consideration given (rounded up to the nearest £5). An unconditional agreement to transfer ordinary shares will generally be subject to SDRT at 0.5% of the agreed consideration. However, if within the period of six years of the date of such agreement becoming unconditional an instrument of transfer is executed

89

pursuant to the agreement and duly stamped, any liability to SDRT will usually be repaid, if already paid, or cancelled. The liability to pay stamp duty or SDRT is generally satisfied by the purchaser or transferee.

      No stamp duty or SDRT will generally arise on a transfer of ordinary shares into CREST, unless such transfer is made for a consideration in money or money’s worth, in which case a liability to SDRT will arise, usually at the rate of 0.5% of the value of the consideration.

      A transfer of ordinary shares effected on a paperless basis within CREST will generally be subject to SDRT at the rate of 0.5% of the value of the consideration.

      Stamp duty, or SDRT, is generally payable upon the transfer or issue of ordinary shares to, or to a nominee or, in some cases, agent of, a person whose business is or includes issuing depositary receipts or the provision of clearance services. For these purposes, the current rate of stamp duty and SDRT is usually 1.5% (rounded up, in the case of stamp duty, to the nearest £5). The rate is applied, in each case, to the amount or value of the consideration or, in some circumstances, to the value or the issue price of the ordinary shares. In accordance with the terms of the deposit agreement, any tax or duty payable on deposits of ordinary shares by the depositary or by the custodian of the depositary will be charged to the party to whom ADSs are delivered against such deposits.

      Provided that the instrument of transfer is not executed in the United Kingdom and remains at all subsequent times outside the United Kingdom, no stamp duty should be payable on the transfer of ADSs. An agreement to transfer ADSs in the form of depositary receipts will not give rise to a liability to SDRT.

DOCUMENTS ON DISPLAY

      It is possible to read and copy documents referred to in this annual report on Form 20-F that have been filed with the SEC at the SEC’s public reference room located at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. The Company’s SEC filings since May 22, 2002 are also publicly available through the SEC’s website located at http://www.sec.gov.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Exchange and Interest Rate Risk, and Financial Instruments

      The Group’s treasury policy is to manage financial risks that arise in relation to underlying business needs. The activities of the treasury function are carried out in accordance with board approved policies and are subject to regular internal audit. The treasury function does not operate as a profit center. Treasury activities include money market investments, spot and forward foreign exchange instruments, currency options, currency swaps, interest rate swaps and options, and forward rate agreements.

      One of the primary objectives of the Group’s treasury risk management policy is to protect the financial covenant ratios in the loan documentation against the adverse impact of movements in interest rates and foreign exchange rates.

      Movements in foreign exchange rates, particularly in the US dollar and the euro, can affect the Group’s reported net income, net assets and interest cover. To hedge this translation exposure as far as is reasonably practical, borrowings are taken out in foreign currencies (either directly or via currency swaps) which broadly match those in which the Group’s major net assets are denominated.

      Foreign exchange transaction exposure is managed by the forward purchase or sale of foreign currencies or the use of currency options. Most significant exposures of the Group are in currencies that are freely convertible.

      Interest rate exposure is managed within parameters that stipulate that fixed rate borrowings should normally account for no less than 25%, and no more than 75%, of net borrowings for each major currency. This is achieved through the use of interest rate swaps and options, and forward rate agreements.

90

      At December 31, 2004 27% of borrowings in major currencies were at fixed rates and 73% were at variable rates. Based on the period end net debt position, and given the underlying maturity profile of investments, borrowings and hedging instruments at that date, a one percentage point rise in US dollar interest rates or a similar rise in euro rates would increase the net interest charge by approximately £2 million and £6 million respectively.

      At December 31, 2003, 59% of borrowings in major currencies were at fixed rates and 41% were at variable rates. Based on the December 31, 2003 net debt position and given the underlying maturity profile of investments, borrowings and hedging instruments at that date, a one percentage point rise in US dollar interest rates or a similar rise in euro interest rates, would increase the net interest charge by approximately £4 million in each case.

Quantitative Information about Market Risk

Interest Rate Sensitivity

      The tables below provide information about the Group’s derivative and other financial instruments that are sensitive to changes in interest rates, including interest rate swaps and debt obligations. For long-term debt obligations (excluding debt due entirely within one year), the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate swaps and forward rate agreements, the table presents notional amounts and weighted average interest rates by expected maturity dates. Weighted average variable rates are based on rates set at the balance sheet date. The actual currencies of the instruments are indicated in parentheses.

At December 31, 2004

	Expected to mature before December 31
	2005			2006			2007			2008			2009			Thereafter			Total			Fair value(i)
	(£ million, except percentages)
Long-Term Debt:
Fixed Rate (US dollar)		—			—			—			—			—			0.5			0.5			0.8
Average dollar interest rate		—			—			—			—			—			11.0	%		11.0	%		—
Fixed Rate (£)		—			—			—			—			—			2.8			2.8			2.2
Average interest rate		—			—			—			—			—			—			—			—
Fixed Rate (euro)		0.5			0.6			31.3			0.2			—			—			32.6			33.3
Average interest rate		7.0	%		6.9	%		6.3	%		7.8	%		—			—			6.4	%		—
Variable Rate (various currencies)		10.1			1.8			1.8			10.9			1,099.6			1.2			1,125.4			1,125.4
Average interest rate		2.7	%		3.9	%		3.9	%		6.4	%		3.1	%		3.0	%		3.2	%		—

91

	Expected to mature before December 31
	2005			2006			2007		2008		2009		Thereafter		Total			Fair value(i)
	(local currency million, except percentages)
Interest Rate Swaps and Forward rate agreements:
Principal (US dollar)		—			200			—		—		—		—		200			(4	)
Fixed rate payable		—			4.5	%		—		—		—		—		4.5	%		—
Variable rate receivable		—			2.2	%		—		—		—		—		2.2	%		—
Principal (euro)		215			—			—		—		—		—		215			(1	)
Fixed rate payable		2.9	%		—			—		—		—		—		2.9	%		—
Variable rate receivable		2.2	%		—			—		—		—		—		2.2	%		—
Principal (Australian dollar)		60			—			—		—		—		—		60			—
Fixed rate payable		5.4	%		—			—		—		—		—		5.4	%		—
Variable rate receivable		5.4	%		—			—		—		—		—		5.4	%		—
Principal (Hong Kong dollar)		300			—			—		—		—		—		300			(1	)
Fixed rate payable		1.5	%		—			—		—		—		—		1.5	%		—
Variable rate receivable		1.0	%		—			—		—		—		—		1.0	%		—

(i)  Represents the net present value of the expected cash flows discounted at current market rates of interest.

Exchange Risk Sensitivity

      The following information provides details of the Group’s derivative and other financial instruments by currency presented in sterling equivalents. The tables above provide details of non-sterling denominated long-term debt obligations which are subject to foreign currency exchange rates movements while the table below presents amounts and weighted average rates of foreign currency forward exchange contracts held at December 31, 2004. All forward exchange agreements mature within one year.

At December 31, 2004

	Receive for $				Receive for £
			Average				Average
	Contract		contractual		Contract		contractual
	amount		exchange rate		amount		exchange rate
	(£ million)				(£ million)
Sterling		177.8		1.83		—
US dollar		—				4.2		1.88
Euro		—				21.7		1.38
Total		177.8				25.9
Fair value of forward contracts		8.4				1.0

      As part of the strategy to provide a currency hedge against currency net assets, the Group enters into currency swap agreements. A swap agreement has the effect of depositing cash surplus to immediate requirements and borrowing currencies which are required.

      The Group had the following currency swap agreements at December 31, 2004:

	Deposited		Borrowed
	2004		2004
	(million)
Sterling to US dollar	£	52	$	100
Sterling to euro	£	239		€350
Sterling to Australian dollar	£	48	A$	120

92

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

      Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

      None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

      None.

ITEM 15. CONTROLS AND PROCEDURES

      As at the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Chief Executive and Finance Director, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)). These are defined as those controls and procedures designed to ensure that information required to be disclosed in report filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the specified periods. Based on that evaluation, the Chief Executive and Finance Director concluded that the Company’s controls and procedures were effective.

      There have been no significant changes in the Company’s internal controls over financial reporting that occurred during the period covered by this Form 20-F that have materially affected, or are reasonably likely to materially affect, the Group’s internal control over financial reporting.

ITEM 16. [RESERVED]

ITEM 16A.     AUDIT COMMITTEE FINANCIAL EXPERT

      The Senior Independent Director David Kappler, who has significant recent and relevant financial experience is the “Audit Committee Financial Expert” as defined under the regulations of the US Securities and Exchange Commission.

ITEM 16B.     CODE OF ETHICS

      The board has agreed the adoption of a specific Code of Ethics for Senior Financial Officers, consistent with the Company’s existing Guidelines for Proper Business Conduct. This Code of Ethics has been signed by the Chief Executive and the Finance Director of the Company and by the Group Financial Controller and regional financial heads. The Company has published its Code of Ethics for Senior Financial Officers on its website.

93

ITEM 16C.     PRINCIPAL ACCOUNTANT FEES AND SERVICES

      Fees for professional services provided by Ernst & Young LLP, the Group’s independent auditors in each of the last two fiscal periods in each of the following categories are:

			15 months
	Year ended		ended
	December 31,		December 31,
	2004		2003
	(£ million)
Audit fees		3.8		2.8
Audit related fees		1.6		7.2
Tax fees		0.5		1.2
Total		5.9		11.2

      Audit related fees include £nil (2003 £6.3 million) in relation to the Separation and bid defense. These costs have been charged to exceptional items (see Note 5 of Notes to the Financial Statements). Other audit related fees principally comprise accounting consultations, completion accounts and non-statutory reporting. Tax fees principally relate to tax compliance and tax advice services.

      The Audit Committee has a process to ensure that any non-audit services do not compromise the independence and objectivity of the external auditors, and that relevant UK and US professional and regulatory requirements are met. A number of criteria are applied when deciding whether pre-approval for such services should be given. These include the nature of the service, the level of fees, and the practicality of appointing an alternative provider, having regard to the skills and experience required to supply the service effectively. Cumulative fees for audit and non-audit services are presented to the Audit Committee on a quarterly basis for review. The Audit Committee is responsible for monitoring adherence to the pre-approval policy.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

      Not applicable.

94

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

					Total number of
					shares purchased		Maximum number
	Total				as part		of shares that may
	number of		Average		of publicly		yet be purchased
	shares		price paid		announced plans or		under the plans or
Period of fiscal year	purchased		per share		programs		programs
			(£)
Month 1		—
Month 2		—
Month 3 (03.11.04 - 03.31.04)		10,490,000		4.97		10,490,000		99,605,835
Month 4 (04.01.04 - 04.26.04)		9,760,000		5.11		9,760,000		89,845,835
Month 5		—				—
Month 6 (06.02.04 - 06.25.04)		6,620,000		5.36		6,620,000		99,297,695
Month 7 (07.13.04 – 07.30.04)		6,236,000		5.76		6,236,000		93,061,695
Month 8 (08.02.04 – 08.06.04)		6,730,000		5.81		6,730,000		86,331,695
Month 9 (09.13.04 – 09.30.04)		2,250,000		6.29		2,250,000		84,081,695
Month 10 (10.01.04 – 10.22.04)		1,800,000		6.61		1,800,000		82,281,695
Month 11 (11.30.04 only)		150,000		6.68		150,000		82,131,695
Month 12 (12.01.04 – 12.03.04)		599,981		6.71		599,981		81,531,714
Month 12 (12.17.04 – 12.23.04)		1,750,000		6.50		1,750,000		91,439,655
Total		46,385,981				46,385,981

      On March 11, 2004 the Company announced an on-market share repurchase program for £250 million. By December 20, 2004 the program was completed with, in total, 45.6 million shares repurchased at an average price of 548 pence per share.

      On September 9, 2004, the Company announced a further £250 million share repurchase program. By December 31, 2004 a further 0.8 million shares had been repurchased at an average price per share of 651 pence (total £5 million). By April 25, 2005, a total of 20,259,275 million shares had been repurchased under the second repurchase program at an average price per share of 632 pence per share (approximately £128 million).

      During fiscal 2004, 5,062,409 ordinary shares were purchased by the Company’s Employee Share Ownership Trust at prices ranging from £4.94 per share to £6.57 per share, for the purpose of satisfying future share awards to employees.

PART III

ITEM 17. FINANCIAL STATEMENTS

      Not applicable.

95

ITEM 18. FINANCIAL STATEMENTS

      The following consolidated financial statements and related schedule, together with the report thereon of Ernst & Young LLP, are filed as part of this Annual Report:

	Page
Report and Consent of Independent Registered Public Accounting Firm		F-1
Financial Statements
Consolidated Profit and Loss Account for the year ended December 31, 2004, the 15 months ended December 31, 2003 and the year ended September 30, 2002		F-3
Consolidated Statement of Total Recognized Gains and Losses for the year ended December 31, 2004, the 15 months ended December 31, 2003 and the year ended September 30, 2002		F-4
Consolidated Balance Sheet at December 31, 2004 and 2003		F-5
Consolidated Statement of Changes in Shareholders’ Funds for the year ended December 31, 2004, the 15 months ended December 31, 2003 and the year ended September 30, 2002		F-6
Consolidated Statement of Cash Flows for the year ended December 31, 2004, the 15 months ended December 31, 2003 and the year ended September 30, 2002		F-8
Notes to the Financial Statements		F-9
Schedule for the year ended December 31, 2004, the 15 months ended December 31, 2003 and the year ended September 30, 2002
Schedule II — Valuation and Qualifying Accounts		S-1

ITEM 19. EXHIBITS

      The following exhibits, other than Exhibits 13.1 and 13.2, are filed as part of this Annual Report:

Exhibit 1	Memorandum and Articles of Association of IHG (incorporated by reference to Exhibit 4 of InterContinental Hotels Group’s Registration Statement on S-8 (File No. 1-10409) filed with the SEC on April 23, 2003)
Exhibit 2(b)(i)	Instruments defining the Rights of Holders of Long-Term Debt: The total amount of long-term debt securities of the Group authorized under any individual instrument, other than the “Amended and Restated Trust Deed” dated September 21, 2000 relating to the Company’s €2000 million Debt Issuance Program originally constituted on October 9, 1998 (incorporated by reference to Exhibit 2 of Six Continents PLC’s Annual Report on Form 20-F (File No. 1-10409), dated December 20, 2001), and the “Trust Deed” dated September 24, 2003 relating to the Company’s €1,000 million Debt Issuance Program and filed as Exhibit 2(b)(i) hereto does not exceed 10% of the total assets of the Group on a consolidated basis. The Company agrees to furnish copies of any or all such instruments to the Securities and Exchange Commission upon request
Exhibit 4(a)(i)	Agreement dated June 14, 2000 between the Company and the others and Interbrew SA and others relating to the disposal of Bass Brewers (incorporated by reference to Exhibit 4 of Six Continents PLC’s Annual Report on Form 20-F (File No. 1-10409), dated December 21, 2000)
Exhibit 4(a)(ii)	£1,600 million Facility Agreement dated November 9, 2004 among Bank of Tokyo-Mitsubishi, Ltd., Barclays Capital, Citigroup Global Markets Limited, HSBC Bank plc, JP Morgan plc, Lloyds Bank plc, The Royal Bank of Scotland plc, SG Corporate & Investment Banking and West LB AG
Exhibit 4(a)(iii)	Joint Venture Agreement, dated February 10, 1986, amongst Britannia Soft Drinks Limited, InterContinental Hotels Group PLC, Whitbread PLC, Allied Domecq PLC, Six Continents Investments Limited, Whitbread Group PLC and Allied

96

	Domecq Overseas (Canada) Limited (incorporated by reference to Exhibit 4(a)(iii) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409), dated April 8, 2004)
Exhibit 4(a)(iv)	Mitchells and Butlers Group Transfer Share Purchase Agreement, dated April 15, 2003 (incorporated by reference to Exhibit 4(a)(ii) of Mitchells and Butlers plc’s Registration Statement on Form 20-F (File No. 1-31653), dated March 28, 2003)
Exhibit 4(a)(v)	Separation Agreement dated April 15, 2003 between IHG and the Six Continents Group (incorporated by reference to Exhibit 4(a)(i) of Mitchells & Butlers plc’s Registration Statement on Form 20-F (File No. 1-31653), dated March 28, 2003)
Exhibit 4(b)(i)	Purchase and Sale Agreement dated July 1, 2003 between InterContinental Hotels Group Resources Inc and HPT
Exhibit 4(b)(ii)	Amended and Restated Purchase and Sale Agreement dated February 9, 2005 among BHR Texas L.P., InterContinental Hotels Group Resources Inc, Crowne Plaza LAX, LLC, Crowne Plaza Hilton Head Holding Company, Holiday Pacific Partners Limited Partnership, Staybridge Markham and HPT
Exhibit 4(b)(iii)	Britvic IPO Agreement dated April 22, 2005 among Britannia Soft Drinks Limited, InterContinental Hotels Group PLC, Allied Domecq PLC, Whitbread Group PLC and Pepsico Inc
Exhibit 4(b)(iv)	Share Purchase Agreement dated March 10, 2005 between IHC London (Holdings) Limited, and LGR Acquisition and LGR Holdings Limited
Exhibit 4(b)(v)	Amended and Restated Stock Purchase Agreement dated February 9, 2005 between Six Continents International Holdings, B.V. and HPT IHG-2
Exhibit 4(c)(i)	Richard Hartman’s service contract dated February 12, 2003 (incorporated by reference to Exhibit 4(c)(i) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated April 8, 2004
Exhibit 4(c)(ii)	Richard North’s service contract dated February 12, 2003 (incorporated by reference to Exhibit 4(c)(ii) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated April 8, 2004
Exhibit 4(c)(iii)	Stevan Porter’s service contract dated February 12, 2003 (incorporated by reference to Exhibit 4(c)(iii) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated April 8, 2004
Exhibit 4(c)(iv)	Richard Solomons’ service contract dated February 12, 2003 (incorporated by reference to Exhibit 4(c)(iv) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated April 8, 2004
Exhibit 4(c)(v)	Andrew Cosslett’s service contract dated December 13, 2004
Exhibit 4(c)(vi)	Agreement, dated February 12, 2003, between Thomas R Oliver and Six Continents Hotels Limited (incorporated by reference to Exhibit 4(c)(iv) of Six Continents PLC Annual Report of Form 20-F (File No. 1-10409) dated February 17, 2003)
Exhibit 4(c)(vii)	Consultancy Agreement, dated February 12, 2003, between Thomas R Oliver and Six Continents Hotels Limited (incorporated by reference to Exhibit 4(c)(v) of Six Continents PLC Annual Report of Form 20-F (File No. 1-10409) dated February 17, 2003)
Exhibit 8	List of Subsidiaries
Exhibit 12(a)	Certification of Andrew Cosslett filed pursuant to 17 CFR 240.13a-14(a)

97

Exhibit 12(b)	Certification of Richard Solomons filed pursuant to 17 CFR 240.13a-14(a)
Exhibit 13(a)	Certification of Andrew Cosslett and Richard Solomons furnished pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C.1350
Exhibit 14(a)	Consent of Ernst of Young LLP (included on page F-1)

98

INTERCONTINENTAL HOTELS GROUP PLC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

INTERCONTINENTAL HOTELS GROUP PLC

      We have audited the accompanying consolidated balance sheets of InterContinental Hotels Group PLC at December 31, 2004 and 2003, and the related consolidated profit and loss accounts and consolidated statements of total recognized gains and losses, changes in shareholders’ funds and cash flows for the year ended December 31, 2004, the 15 months ended December 31, 2003 and year ended September 30, 2002. Our audits also included the financial statement schedule listed in the Index at Item 18. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

      We conducted our audits in accordance with United Kingdom auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of InterContinental Hotels Group PLC at December 31, 2004 and 2003, and the consolidated results of its operations and its consolidated cash flows for the year ended December 31, 2004, the 15 months ended December 31, 2003 and the year ended September 30, 2002 in conformity with accounting principles generally accepted in the United Kingdom which differ in certain respects from those generally accepted in the United States (see Note 35 of Notes to the Financial Statements). Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

Ernst & Young LLP

London, England

March 9, 2005, except for
Note 33 — Post balance sheet events, and
Note 35 — Differences between United Kingdom
and United States Generally Accepted Accounting Principles
as to which the date is

May 3, 2005.

F-1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

      We consent to the incorporation by reference in the Registration Statements (Form F-3 No. 333-108084 and Form S-8 Nos. 333-01572, 333-08336, 333-89508, 333-99785 and 333-104691) of InterContinental Hotels Group PLC of the reference to our name in “Item 3. Key Information” and our report dated March 9, 2005, except for Note 33 — Post balance sheet events and Note 35 — Differences between United Kingdom and United States Generally Accepted Accounting Principles, as to which the date is May 3, 2005, on the consolidated financial statements and schedule both included in the Annual Report (Form 20-F) of InterContinental Hotels Group PLC for the year ended December 31, 2004.

Ernst & Young LLP

London, England

May 3, 2005

F-2

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED PROFIT AND LOSS ACCOUNT

			Year ended December 31,									15 months ended December 31,									Year ended September 30,
			2004									2003									2002
												Before									Before
			Before									exceptional			Exceptional						exceptional			Exceptional
			exceptional			Exceptional						items			items						items			items
			items			items			Total			restated(i)			restated(i)			Total			restated(i)			restated(i)			Total
			(£ million, except per ordinary share amounts)
Turnover — (Note 2)				2,204			—			2,204			3,483			—			3,483			3,615			—			3,615
Analyzed as:
	Continuing operations			2,204			—			2,204			2,690			—			2,690			2,134			—			2,134
	Discontinued operations			—			—			—			793			—			793			1,481			—			1,481
Cost of sales				(1,652	)		(28	)		(1,680	)		(2,717	)		(51	)		(2,768	)		(2,791	)		(77	)		(2,868	)
Gross operating profit				552			(28	)		524			766			(51	)		715			824			(77	)		747
Administrative expenses				(221	)		(11	)		(232	)		(283	)		—			(283	)		(206	)		—			(206	)
Other operating income				—			20			20			—			—			—			—			—			—
Operating profit — (Note 2)				331			(19	)		312			483			(51	)		432			618			(77	)		541
Analyzed as:
	Continuing operations			331			(19	)		312			346			(51	)		295			329			(77	)		252
	Discontinued operations			—			—			—			137			—			137			289			—			289
Non-operating exceptional items — (Note 5)				—			(69	)		(69	)		—			(213	)		(213	)		—			53			53
Analyzed as:
	Continuing operations:
		Cost of fundamental reorganization		—			—			—			—			(67	)		(67	)		—			—			—
		Separation costs		—			—			—			—			(51	)		(51	)		—			(4	)		(4	)
		Profit on disposal of fixed assets		—			15			15			—			4			4			—			2			2
		Provision for loss on disposal of operations		—			(74	)		(74	)		—			—			—			—			—			—
		Provision against fixed asset investments		—			(10	)		(10	)		—			(56	)		(56	)		—			—			—
	Discontinued operations:
		Separation costs		—			—			—			—			(41	)		(41	)		—			—			—
		Loss on disposal of fixed assets		—			—			—			—			(2	)		(2	)		—			(2	)		(2	)
		Profit on disposal of operations		—			—			—			—			—			—			—			57			57
Profit on ordinary activities before interest — (Note 2)				331			(88	)		243			483			(264	)		219			618			(24	)		594
Interest receivable				48			22			70			104			—			104			116			—			116
Interest payable and similar charges — (Note 6)				(70	)		(16	)		(86	)		(151	)		—			(151	)		(176	)		—			(176	)
Premium on early settlement of debt — (Note 5)				—			(17	)		(17	)		—			(136	)		(136	)		—			—			—
Profit on ordinary activities before taxation				309			(99	)		210			436			(400	)		36			558			(24	)		534
Tax on profit on ordinary activities — (Note 7)				(50	)		167			117			(115	)		132			17			(171	)		119			(52	)
Profit on ordinary activities after taxation				259			68			327			321			(268	)		53			387			95			482
Minority equity interests				(28	)		—			(28	)		(34	)		—			(34	)		(25	)		—			(25	)
Earnings available for shareholders(ii)				231			68			299			287			(268	)		19			362			95			457
Dividends on equity shares — (Note 8)				(592	)		—			(592	)		(156	)		—			(156	)		(305	)		—			(305	)
Retained for reinvestment in the business				(361	)		68			(293	)		131			(268	)		(137	)		57			95			152
Earnings per ordinary share — (Note 9)
Basic				32.5	p		9.6	p		42.1	p		39.1	p		(36.5	)p		2.6	p		49.5	p		13.0	p		62.5	p
Diluted				—			—			41.6	p		—			—			2.6	p		—			—			62.3	p

(i) Restated to show exceptional tax credits on a basis consistent with 2004, comprising prior year adjustments which are exceptional by reason of their size or incidence. Also restated to present the period ended December 31, 2003 and year ended September 30, 2002 on a consistent basis with the year ended December 31, 2004 (see Note 1 of the Notes to the Financial Statements).

(ii) A summary of the significant adjustments to earnings available for shareholders (net income) that would be required had United States generally accepted accounting principles been applied instead of those generally accepted in the United Kingdom is set out in Note 35 of Notes to the Financial Statements.

The Notes to the Financial Statements are an integral part of these Financial Statements.

F-3

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES

					15 months
		Year ended			ended			Year ended
		December 31,			December 31,			September 30,
		2004			2003			2002
		(£ million)
Earnings available for shareholders			299			19			457
Reversal of previous revaluation gains due to impairment			(20	)		(22	)		(36	)
Exchange differences(i)
	Goodwill eliminated — (Note 26)		(110	)		(139	)		(98	)
	Other assets and liabilities		(21	)		79			62
Other recognized gains and losses			(151	)		(82	)		(72	)
Total recognized gains and losses for the period			148			(63	)		385
Prior year adjustment on adoption of FRS 19			—			—			(264	)
Total recognized gains since previous year end			148			(63	)		121

(i)	Foreign currency denominated net assets, including goodwill purchased prior to September 30, 1998 and eliminated against Group reserves, and related foreign currency borrowings and currency swaps, are translated at each balance sheet date giving rise to exchange differences which are taken to Group reserves as recognized gains and losses during the period.
(ii)	The statement of comprehensive income required under United States generally accepted accounting principles is set out in Note 35 of Notes to the Financial Statements.

Note of historical cost Group profits and losses

				15 months
	Year ended			ended			Year ended
	December 31,			December 31,			September 30,
	2004			2003			2002
	(£ million)
Reported profit on ordinary activities before taxation		210			36			534
Realization of revaluation gains of previous periods		3			16			3
Adjustment for previously recognized revaluation losses		—			—			(37	)
Historical cost profit on ordinary activities before taxation		213			52			500
Historical cost (loss)/profit retained after taxation, minority equity interests and dividends		(290	)		(121	)		118

The Notes to the Financial Statements are an integral part of these Financial Statements.

F-4

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED BALANCE SHEET

		December 31,			December 31,
		2004			2003
		(£ million)
Fixed assets
Intangible assets — (Note 15)			142			158
Tangible assets — (Note 16)			3,776			3,951
Investments — (Note 17)			99			172
			4,017			4,281
Current assets
Stocks — (Note 18)			42			44
Debtors — (Note 19)			556			523
Analyzed as:
	Amounts falling due within one year		419			447
	Amounts falling due after one year		137			76
Investments — (Note 20)			116			377
Cash at bank and in hand			43			55
			757			999
Creditors: amounts falling due within one year — (Note 21)			(1,013	)		(1,085	)
Net current liabilities			(256	)		(86	)
Total assets less current liabilities			3,761			4,195
Creditors: amounts falling due after one year — (Note 22)			(1,252	)		(1,085	)
Provisions for liabilities and charges — (Note 23)			(382	)		(393	)
Analyzed as:
	Deferred taxation		(248	)		(314	)
	Other provisions		(134	)		(79	)
Minority equity interests			(150	)		(163	)
Net assets — (Note 2)			1,977			2,554
Capital and reserves
Equity share capital			697			739
Share premium account			26			14
Revaluation reserve			233			258
Capital redemption reserve			46			—
Merger reserve			1,164			1,164
Other reserves			(22	)		(11	)
Profit and loss account			(167	)		390
Equity shareholders’ funds(i)			1,977			2,554

(i)  A summary of the significant adjustments to shareholders’ funds that would be required had United States generally accepted accounting principles been applied instead of those generally accepted in the United Kingdom is set out in Note 35 of Notes to the Financial Statements.

The Notes to the Financial Statements are an integral part of these Financial Statements.

F-5

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ FUNDS

		Share capital						Retained earnings and other reserves
		Number of						Share						Capital
		ordinary			Ordinary			premium			Revaluation			redemption			Merger		Other			Profit			Total
		shares			shares			account			reserve			reserve			reserve		reserve			and loss			shareholders’
		(i)			(i)			(ii)			(ii)			(ii)			(ii)		(iii)			account			funds
		(£ million)
At October 1, 2001(iv)			866			242			799			1,025			853			—		(32	)		2,266			5,153
Goodwill (Note 26)			—			—			—			—			—			—		—			98			98
Exchange adjustments on: assets			—			—			—			(3	)		—			—		—			(161	)		(164	)
	borrowings and currency swaps		—			—			—			—			—			—		—			128			128
Allotment of ordinary shares:
	Option schemes(v)		1			1			3			—			—			—		—			(1	)		3
Revaluation surplus realized on disposals			—			—			—			(3	)		—			—		—			3			—
Transfer of previously recognized revaluation losses			—			—			—			37			—			—		—			(37	)		—
Reversal of previous revaluation gains due to impairment			—			—			—			(36	)		—			—		—			—			(36	)
Allocation of shares in employee share trusts			—			—			—			—			—			—		1			—			1
Retained income			—			—			—			—			—			—		—			152			152
At September 30, 2002(iv)			867			243			802			1,020			853			—		(31	)		2,448			5,335
Separation of MAB:
	Net Assets of MAB eliminated		—			—			—			(743	)		—			—		—			(2,034	)		(2,777	)
	Transfer to merger reserve		(133	)		491			(802	)		—			(853	)		1,164		—			—			—
MAB goodwill eliminated			—			—			—			—			—			—		—			50			50
Minority interest on transfer of pension prepayment			—			—			—			—			—			—		—			(7	)		(7	)
Reduction of shares in employee share trusts			—			—			—			—			—			—		13			(5	)		8
Allotment of ordinary shares:
	Option schemes(v)		5			5			14			—			—			—		—			(1	)		18
	Allocation of shares in employee share trusts		—			—			—			—			—			—		7			—			7
Goodwill — (Note 26)			—			—			—			—			—			—		—			139			139
Revaluation surplus realized on disposals			—			—			—			(16	)		—			—		—			16			—
Reversal of previous revaluation gains due to impairment			—			—			—			(22	)		—			—		—			—			(22	)
Exchange adjustments on: assets			—			—			—			19			—			—		—			(142	)		(123	)
	borrowings and currency swaps		—			—			—			—			—			—		—			63			63
Retained loss			—			—			—			—			—			—		—			(137	)		(137	)
At December 31, 2003(iv)			739			739			14			258			—			1,164		(11	)		390			2,554
Goodwill — (Note 26)			—			—			—			—			—			—		—			110			110
Premium on allotment of ordinary shares:
	Option schemes(v)		4			4			12			—			—			—		—			—			16
	Share capital consolidation		(75	)		—			—			—			—			—		—			—			—
	Repurchase of ordinary shares		(46	)		(46	)		—			—			—			—		—			(211	)		(257	)
Transfer to capital redemption reserve			—			—			—			—			46			—		—			(46	)		—
Purchase of own shares by employee share trusts			—			—			—			—			—			—		(33	)		—			(33	)
Release of own shares by employee share trusts			—			—			—			—			—			—		22			(6	)		16
Credit in respect of employee share schemes			—			—			—			—			—			—		—			15			15
Revaluation surplus realized on disposals			—			—			—			(3	)		—			—		—			3			—
Reversal of previous revaluation gains due to impairment			—			—			—			(20	)		—			—		—			—			(20	)
Exchange adjustments on: assets			—			—			—			(2	)		—			—		—			(73	)		(75	)
	borrowings and currency swaps		—			—			—			—			—			—		—			(56	)		(56	)
Retained loss			—			—			—			—			—			—		—			(293	)		(293	)
At December 31, 2004(iv)			622			697			26			233			46			1,164		(22	)		(167	)		1,977

(i) At September 30, 2002 the authorized share capital of Six Continents PLC was £1,149 million, comprising 1,073 million ordinary shares of 28p each and 889 million cumulative preference shares of 95.5p each.

F-6

InterContinental Hotels Group PLC (“IHG”) was incorporated in Great Britain and registered in England and Wales with registered number 4551528 on October 2, 2002 as a public limited company under the Companies Act 1985 with the name Hackplimco (No. 112) plc, and changed its name to InterContinental Hotels Group PLC on January 17, 2003.

On incorporation, the Company had an authorized share capital of £50,000, divided into 50,000 ordinary shares of £1 each, of which two ordinary shares were allotted, called up and fully paid. On February 6, 2003, the authorized share capital was increased to £10,000,050,000 by the creation of 9,999,950,000 additional ordinary shares of £1 each and one redeemable preference share of £50,000. The redeemable preference share so created was allotted and treated as paid up in full on this date.

On April 15, 2003, the Separation of Six Continents PLC was completed and the entire issued share capital of Six Continents PLC was transferred to InterContinental Hotels Group PLC at fair market value, in exchange for the issue of 734 million fully paid ordinary shares of £1 each, which were admitted to the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange on that date. In accordance with the merger relief provisions of Sections 131 and 133 of the Companies Act 1985, the 734 million shares are recorded only at nominal value.

The redeemable preference share which was redeemed at par value and cancelled on June 5, 2003, did not carry any right to receive dividends nor to participate in the profits of IHG, was replaced in accordance with the Company’s Articles of Association by £50,000 ordinary shares of £1 each.

During 2004, the Company undertook to return funds of up to £500 million to shareholders by way of two consecutive £250 million share repurchase programs, the second of which commenced in December 2004. During the year, 46,385,981 ordinary shares were repurchased and canceled under the authorities granted by shareholders at general meetings held during 2003 and 2004.

The aggregate consideration in respect of ordinary shares issued in respect of option schemes during the period was £16 million (2003 £18 million, 2002 £3 million).

At an Extraordinary General Meeting on December 10, 2004, shareholders approved a share capital consolidation on the basis of 25 new ordinary shares for every 28 existing ordinary shares except for the 50,000 £1 ordinary shares created on June 5, 2003.

At the Extraordinary General Meeting held on December 10, 2004 authority was given to the Company to purchase up to 14.99% of its own shares until the next Annual General Meeting, which will be held on June 1, 2005.

At December 31, 2004, the authorized share capital was £10,000,049,999, comprising 8,928,571,428 ordinary shares of 112 pence each and 50,000 ordinary shares of £1.

(ii)	The share premium account, capital redemption reserve, revaluation reserve and merger reserve are not distributable.
(iii)	The other reserve comprises £21.8 million (2003 £10.5 million) in respect of 3.1 million (2003 2.2 million) InterContinental Hotels Group PLC ordinary shares held by employee share trusts, with a market value at December 31, 2004 of £20 million (2003 £12 million).
(iv)	Retained earnings and other reserves at December 31, 2004 were decreased by cumulative exchange adjustments of £84 million (2003 £63 million, 2002 £142 million and £200 million at October 1, 2001).
(v)	Includes transfer of £ nil million (2003 £1 million, 2002 £1 million) from the profit and loss account in respect of shares issued to the qualifying employee share ownership trust.

The Notes to the Financial Statements are an integral part of these Financial Statements.

F-7

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

					15 months
		Year ended			ended			Year ended
		December 31,			December 31,			September 30,
		2004			2003			2002
		(£ million)
Operating activities — (Note 10)			515			795			720
Interest paid			(91	)		(141	)		(186	)
Costs associated with new facilities			(5	)		(20	)		—
Premium on early settlement of debt			(17	)		(136	)		—
Dividends paid to minority shareholders			(26	)		(22	)		(13	)
Interest received			72			111			124
Returns on investments and servicing of finance			(67	)		(208	)		(75	)
UK corporation tax (paid)/received			(4	)		25			(96	)
Overseas corporate tax paid			(31	)		(21	)		(27	)
Taxation			(35	)		4			(123	)
Paid:
	Intangible fixed assets		—			(10	)		—
	Tangible fixed assets		(245	)		(475	)		(648	)
	Fixed asset investments		(12	)		(37	)		(14	)
Received:
	Tangible fixed assets		101			265			134
	Fixed asset investments		5			9			15
Capital expenditure and financial investment			(151	)		(248	)		(513	)
Acquisitions			—			—			(24	)
Disposals			—			—			9
Separation costs			—			(66	)		—
Acquisitions and disposals			—			(66	)		(15	)
Equity dividends			(600	)		(299	)		(299	)
Net cash flow			(338	)		(22	)		(305	)
Management of liquid resources — (Note 14)			320			(129	)		232
Financing — (Note 14)			—			206			63
Movement in cash and overdrafts			(18	)		55			(10	)

      The significant differences between the cash flow statement presented above and that required under United States generally accepted accounting principles are described in Note 35 of Notes to the Financial Statements.

The Notes to the Financial Statements are an integral part of these Financial Statements.

F-8

Note 1 — Accounting Policies

Basis of preparation

      The consolidated Group profit and loss account has been prepared by reference to Format 1 as set out in Schedule 4 to the Companies Act 1985. This is considered more appropriate to the Group post Separation than the format used in previous years. Prior year amounts have been restated on a consistent basis.

Basis of accounting

      The financial statements of InterContinental Hotels Group are prepared under the historical cost convention as modified by the revaluation of certain tangible fixed assets. They have been drawn up to comply with applicable United Kingdom accounting standards.

Basis of consolidation

      The financial statements comprise the financial statements of the parent company and its subsidiary undertakings (together, the “Group”). The results of those businesses acquired or disposed of are consolidated for the period during which they were under the Group’s dominant influence.

      During 2003, the Company changed its fiscal year end to December 31 and thus its financial statements for the prior fiscal period are presented for the 15 months ended December 31, 2003 as permitted by the Companies Act 1985. In accordance with the transition period reporting requirements of the US Securities and Exchange Commission, an unaudited analysis of the financial statements and notes thereto for this 15 month period showing the three month period ended December 31, 2002 and the 12 month period ended December 31, 2003 is presented in Note 34 of Notes to the Financial Statements.

Foreign currencies

      Transactions in foreign currencies are recorded at the exchange rates ruling on the dates of the transactions, adjusted for the effects of any hedging arrangements. Assets and liabilities denominated in foreign currencies are translated into sterling at the relevant rates of exchange ruling at the balance sheet date.

      The results of overseas operations are translated into sterling at weighted average rates of exchange for the period. Exchange differences arising from the retranslation of opening net assets (including any goodwill previously eliminated against shareholders’ funds) denominated in foreign currencies and foreign currency borrowings and currency swap agreements used to hedge those assets are taken directly to shareholders’ funds. All other exchange differences are taken to the profit and loss account.

Treasury instruments

      Net interest arising on interest rate swap agreements is taken to the profit and loss account.

      Premiums payable on interest rate agreements are charged to the profit and loss account over the term of the relevant agreements.

      Currency swap agreements are retranslated at exchange rates ruling at the balance sheet date with the net amount being included in either current asset investments or borrowings. Interest payable or receivable arising from currency swap agreements is taken to the profit and loss account on a gross basis over the term of the relevant agreements.

      Gains or losses arising on forward exchange contracts are taken to the profit and loss account in line with the transactions they are hedging.

F-9

Fixed assets and depreciation

     Goodwill

      Any excess of purchase consideration for an acquired business over the fair value attributed to its separately identifiable assets and liabilities represents goodwill. Goodwill is capitalized as an intangible asset. Goodwill arising on acquisitions prior to September 30, 1998 was eliminated against shareholders’ funds. To the extent that goodwill denominated in foreign currencies continues to have value, it is translated into sterling at each balance sheet date and any movements are accounted for as set out under ‘foreign currencies’ above. On disposal of a business, any goodwill relating to the business and previously eliminated against shareholders’ funds, is taken into account in determining the gain or loss on disposal.

     Other intangible assets

      On acquisition of a business, no value is attributed to other intangible assets which cannot be separately identified and reliably measured. No value is attributed to internally generated intangible assets.

     Tangible assets

      Freehold and leasehold land and buildings are stated at cost, or valuation, less depreciation. All other fixed assets are stated at cost less depreciation. Repairs and maintenance costs are expensed as incurred.

      When implementing FRS 15 ‘Tangible Fixed Assets’ in the year ended September 30, 2000, the Group did not adopt a policy of revaluing properties. The transitional rules of FRS 15 were applied so that the carrying values of properties include an element resulting from previous valuations.

     Revaluation

      Surpluses or deficits arising from previous professional valuations of properties, realized on the disposal of an asset, are transferred from the revaluation reserve to the profit and loss account reserve.

     Impairment

      Any impairment arising on an income-generating unit, other than an impairment which represents a consumption of economic benefits, is eliminated against any specific revaluation reserve relating to the impaired assets in that income-generating unit with any excess being charged to the profit and loss account.

     Depreciation and amortization

      Goodwill and other intangible assets are amortized over their estimated useful lives, generally 20 years.

      Freehold land is not depreciated. All other tangible fixed assets are depreciated to a residual value over their estimated useful lives, namely:

Freehold buildings	50 years
Leasehold buildings	Lesser of unexpired term of lease and 50 years
Fixtures, fittings and equipment	3-25 years
Plant and machinery	4-20 years

      All depreciation and amortization is charged on a straight-line basis.

     Investments

      Fixed asset investments are stated at cost less any provision for diminution in value.

Deferred taxation

      Deferred tax assets and liabilities are recognized, subject to certain exceptions, in respect of all material timing differences between the recognition of gains and losses in the financial statements and for tax purposes.

F-10

      Those timing differences recognized include accelerated capital allowances, unrelieved tax losses and short-term timing differences. Timing differences not recognized include those relating to the revaluation of fixed assets in the absence of a commitment to sell the assets, the gain on sale of assets rolled into replacement assets and the distribution of profits from overseas subsidiaries in the absence of any commitment by the subsidiary to make the distribution.

      Deferred tax assets are recognized to the extent that it is regarded as more likely than not that they will be recovered.

      Deferred tax is calculated on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Leases

      Operating lease rentals are charged to the profit and loss account on a straight line basis over the term of the lease.

Pensions

      The Group continues to account for pensions in accordance with SSAP 24 ‘Accounting for pension costs’. The regular cost of providing pensions to current employees is charged to the profit and loss account over the average expected service life of those employees. Variations in regular pension cost are amortized over the average expected service life of current employees on a straight line basis.

      Accumulated differences between the amount charged to the profit and loss account and the payments made to the pension plans are treated as either prepayments or other provisions for liabilities and charges in the balance sheet.

      The additional disclosures required by the transitional arrangements of FRS 17 ‘Retirement Benefits’ are given in Note 4 to the financial statements.

Self insurance

      The Group is self insured for various levels of general liability, workers’ compensation and employee medical and dental insurance coverage. Insurance liabilities include projected settlements for known and incurred, but not reported claims. Projected settlements are estimated based on historical trends and actuarial data.

Stocks

      Stocks are stated at the lower of cost and net realizable value.

Trade debtors

      Trade debtors are recognized and carried at the original amount, less an allowance for any doubtful accounts. An allowance for doubtful accounts is made when collection of the full amount is no longer probable.

Revenue recognition

      Revenue is derived from the following sources: owned and leased properties; management fees; franchise fees; sale of soft drinks, and other revenues which are ancillary to the Group’s operations. Generally, revenue represents sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business and is recognized when services have been rendered. The following is a description of the composition of revenues of the Group.

F-11

      Owned and leased — derived from hotel operations, including the rental of rooms and food and beverage sales from a worldwide network of owned and leased hotels operated under the Group’s brand names. Revenue is recognized when rooms are occupied and food and beverage is sold.

      Management fees — earned from hotels managed by the Group, usually under long-term contracts with the hotel owner. Management fees include a base fee, which is generally a percentage of hotel revenue, and an incentive fee, which is generally based on the hotel’s profitability. Revenue is recognized in accordance with the contract.

      Franchise fees — received in connection with the franchise of the Group’s brand names, usually under long-term contracts with the hotel owner. The Group charges franchise royalty fees as a percentage of room revenue. Revenue is recognized when earned.

      Soft Drinks — sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business. Revenue is recognized when sales are made.

Loyalty program

      The hotel loyalty program, Priority Club Rewards, enables members to earn points, funded through hotel assessments, during each stay at an InterContinental Hotels Group hotel and redeem points at a later date for free accommodation or other benefits. The future redemption liability is included in creditors less than, and greater than, one year and is estimated using actuarial methods which estimate eventual redemption rates and points values.

Use of estimates

      The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 2 — Segmental Analysis

      The results of overseas operations have been translated into sterling at weighted average rates of exchange for the period. In the case of the US dollar, the translation rate is £1 = $1.82 (2003 £1 = $1.62, 2002 £1 = $1.48). In the case of the euro, the translation rate is £1 = €1.47 (2003 £1 = €1.47, 2002 £1 = €1.60).

      Foreign currency denominated assets and liabilities have been translated into sterling at the rates of exchange on the last day of the period. In the case of the US dollar, the translation rate is £1 = $1.93 (2003 £1 = $1.78, 2002 £1 = $1.56). In the case of the euro, the translation rate is £1 = €1.41 (2003 £1 = €1.41, 2002 £1 = €1.59).

		Year ended December 31, 2004(i)
								Asia						Total			Soft		Total
		Americas			EMEA			Pacific			Central			Hotels			Drinks		Group
		(£ million)
Turnover			495			829			134			40			1,498			706		2,204
Operating profit before exceptional items			163			119			21			(52	)		251			80		331
Operating exceptional items			(14	)		(19	)		(4	)		18			(19	)		—		(19	)
Operating profit			149			100			17			(34	)		232			80		312
Non-operating exceptional items:
	Provision for loss on disposal of operations		(9	)		(65	)		—			—			(74	)		—		(74	)
	(Loss)/ profit on disposal of fixed assets		(1	)		14			2			—			15			—		15
	Provision against fixed asset investments		8			(16	)		(2	)		—			(10	)		—		(10	)
Profit on ordinary activities before interest			147			33			17			(34	)		163			80		243

Footnotes on page F-14.

F-12

		15 months ended December 31, 2003(i)
								Asia						Total			Soft								Total
		Americas			EMEA			Pacific			Central			Hotels			Drinks		Total			Discontinued(ii)			Group
		(£ million)
Turnover			661			1,010			148			51			1,870			820		2,690			793			3,483
Operating profit before exceptional items			195			114			22			(80	)		251			95		346			137			483
Operating exceptional items			(9	)		(41	)		(1	)		—			(51	)		—		(51	)		—			(51	)
Operating profit			186			73			21			(80	)		200			95		295			137			432
Non-operating exceptional items:
	Cost of fundamental reorganization		(11	)		(17	)		(2	)		(37	)		(67	)		—		(67	)		—			(67	)
	Separation costs		—			—			—			(51	)		(51	)		—		(51	)		(41	)		(92	)
	Profit/(loss) on disposal of fixed assets		10			(6	)		—			—			4			—		4			(2	)		2
	Provision against fixed asset investments		(9	)		—			—			(47	)		(56	)		—		(56	)		—			(56	)
Profit on ordinary activities before interest			176			50			19			(215	)		30			95		125			94			219

		Year ended September 30, 2002(i)
								Asia						Total			Soft								Total
		Americas			EMEA			Pacific			Central			Hotels			Drinks		Total			Discontinued(ii)			Group
		(£ million)
Turnover			570			794			128			40			1,532			602		2,134			1,481			3,615
Operating profit before exceptional items			173			125			23			(55	)		266			63		329			289			618
Operating exceptional items			(39	)		(24	)		(14	)		—			(77	)		—		(77	)		—			(77	)
Operating profit			134			101			9			(55	)		189			63		252			289			541
Non-operating exceptional items:
	Separation costs		—			—			—			(4	)		(4	)		—		(4	)		—			(4	)
	(Loss)/profit on disposal of fixed assets		(7	)		9			—			—			2			—		2			(2	)		—
	Profit on disposal of operations		—			—			—			—			—			—		—			57			57
Profit on ordinary activities before interest			127			110			9			(59	)		187			63		250			344			594

Turnover

	Year ended				15 months				Year ended
	December 31,				ended December 31,				September 30,
	2004(i)				2003(i)				2002(i)
	By origin		By destination		By origin		By destination		By origin		By destination
	(£ million)
United Kingdom		1,126		1,103		2,131		2,124		2,491		2,485
Rest of Europe, the Middle East and Africa		419		442		506		513		411		416
United States of America		423		423		571		571		476		476
Rest of Americas		102		102		127		127		108		108
Asia Pacific		134		134		148		148		129		130
		2,204		2,204		3,483		3,483		3,615		3,615

Footnotes on page F-14.

F-13

     Profit on ordinary activities before interest

	Year ended		15 months ended			Year ended
	December 31,		December 31,			September 30,
	2004(i)		2003(i)			2002(i)
	(£ million)
United Kingdom		60		117			436
Rest of Europe, the Middle East and Africa		26		(7	)		57
United States of America		110		63			78
Rest of Americas		30		28			16
Asia Pacific		17		18			7
		243		219			594

(i)	Other than for Soft Drinks which reflects the 53 weeks ended December 25, 2004 (64 weeks ended December 20, 2003, 52 weeks ended September 30, 2002) and Mitchells & Butlers plc which reflects the 28 weeks ended April 12, 2003 (2002 52 weeks).
(ii)	Discontinued operations relate to Mitchell & Butlers plc for all periods presented and in 2002 also included a profit on disposal of Bass Brewers of £57 million relating to the finalization of completion accounts.

     Depreciation and Amortization

		Year ended		15 months ended		Year ended
		December 31,		December 31,		September 30,
		2004		2003		2002
		(£ million)
Hotels
	Americas		36		54		46
	Asia Pacific		15		16		11
	EMEA		77		95		66
	Central		22		30		16
			150		195		139
Soft Drinks			48		54		46
Continuing operations			198		249		185
Discontinued operations			—		54		86
			198		303		271

F-14

     Assets

		December 31, 2004					December 31, 2003					September 30, 2002
				Net					Net					Net
		Total		operating			Total		operating			Total		operating
		(£ million)
Hotels
	Americas		1,073		765			1,146		859			1,458		1,134
	EMEA		2,755		2,334			3,183		2,422			3,036		2,502
	Asia Pacific		444		414			481		457			467		448
			4,272		3,513			4,810		3,738			4,961		4,084
Soft Drinks			502		306			470		300			405		246
InterContinental Hotels Group PLC(i)			4,774		3,819			5,280		4,038			5,366		4,330
Discontinued operations(i)			—		—			—		—			3,682		3,493
			4,774		3,819			5,280		4,038			9,048		7,823
Non-operating assets:
	Current asset investments				40					377					218
	Cash at bank and in hand				43					55					84
	Corporate taxation				14					37					1
Non-operating liabilities:
	Borrowings				(1,199	)				(1,001	)				(1,479	)
	Proposed dividend of parent company				(62	)				(70	)				(213	)
	Proposed dividend for minority shareholders				(19	)				(16	)				—
	Corporate taxation				(261	)				(389	)				(455	)
	Deferred taxation				(248	)				(314	)				(495	)
	Minority equity interests				(150	)				(163	)				(149	)
Net assets			4,774		1,977			5,280		2,554			9,048		5,335
United Kingdom			1,972		1,512			2,329		1,586			5,963		5,202
Rest of Europe, the Middle East and Africa			1,285		1,128			1,324		1,136			1,160		1,039
United States of America			958		667			1,020		751			1,328		1,013
Rest of Americas			115		98			126		108			130		121
Asia Pacific			444		414			481		457			467		448
			4,774		3,819			5,280		4,038			9,048		7,823
Net non-operating liabilities					(1,842	)				(1,484	)				(2,488	)
Net assets					1,977					2,554					5,335

(i)  InterContinental Hotels Group PLC comprises continuing operations. Discontinued operations relate to Mitchells & Butlers plc.

F-15

Note 3 — Operating Profit

	Year ended
	December 31,
	2004			15 months ended December 31, 2003
	Total			Continuing(i)			Discontinued(i)		Total
	(£ million)
Operating profit is stated after charging:
Staff costs (Note 4)		659			815			198		1,013
Depreciation of tangible fixed assets		188			236			54		290
Impairment of tangible fixed assets		28			51			—		51
Amortization of goodwill		10			13			—		13
Hire of plant and machinery		14			18			17		35
Property rentals		53			65			24		89
Income from fixed asset investments		(1	)		(3	)		—		(3	)
Operating exceptionals included above		28			51			—		51

	Year ended September 30, 2002
	Continuing(i)			Discontinued(i)		Total
	(£ million)
Operating profit is stated after charging:
Staff costs — (Note 4)		659			378		1,037
Depreciation of tangible fixed assets		175			86		261
Impairment of tangible fixed assets		77			—		77
Amortization of goodwill		9			1		10
Hire of plant and machinery		19			30		49
Property rentals		58			42		100
Income from fixed asset investments		(8	)		—		(8	)
Operating exceptionals included above		77			—		77

(i)  Continuing operations comprises InterContinental Hotels Group PLC. Discontinued operations relate to Mitchells & Butlers plc for 2003 and 2002, and in 2002 also included a profit on disposal of Bass Brewers of £57 million.

Auditors’ remuneration paid to Ernst & Young LLP

			15 months
	Year ended		ended		Year ended
	December 31,		December 31,		September 30,
	2004		2003		2002
	(£ million)
Audit fees		3.8		2.8		1.9
Audit related fees		1.6		7.2		3.2
Tax fees		0.5		1.2		1.2
Other fees		—		—		0.4
		5.9		11.2		6.7

      Audit related fees include £nil million (2003 £6.3 million, 2002 £1.7 million) in relation to the Separation and bid defense. These costs have been charged to exceptional items (see Note 5). Non-audit fees payable for UK services were £1.1 million (2003 £6.6 million, 2002 £4.1 million).

F-16

      The Audit Committee has a process to ensure that any non-audit services do not compromise the independence and objectivity of the external auditors, and that relevant UK and US professional and regulatory requirements are met. A number of criteria are applied when deciding whether pre-approval for such services should be given. These include the nature of the service, the level of fees, and the practicality of appointing an alternative provider, having regard to the skills and experience required to supply the service effectively. Cumulative fees for audit and non-audit services are presented to the Audit Committee on a quarterly basis for review. The Audit Committee is responsible for monitoring adherence to the pre-approval policy.

Note 4 — Staff

     Costs

			15 months
	Year ended		ended		Year ended
	December 31,		December 31,		September 30,
	2004		2003		2002
	(£ million)
Wages and salaries		570		884		942
Social security costs		66		96		84
Pensions		23		33		11
		659		1,013		1,037

     Employee numbers

      Average number of persons employed, including part-time employees:

			15 months
	Year ended		ended		Year ended
	December 31,		December 31,		September 30,
	2004		2003		2002
	(Number)
Hotels		26,835		27,111		28,385
Soft Drinks		2,824		2,698		2,637
InterContinental Hotels Group PLC(i)		29,659		29,809		31,022
Discontinued operations(i)		—		15,014		38,747
		29,659		44,823		69,769

(i)  InterContinental Hotels Group PLC relates to continuing operations. Discontinued operations relate to Mitchells & Butlers plc.

     Pensions

				15 months
	Year ended			ended			Year ended
	December 31,			December 31,			September 30,
	2004			2003			2002
	(£ million)
Regular cost		16			33			35
Variations from regular cost		(2	)		(7	)		(28	)
Notional interest on prepayment		(3	)		(4	)		(3	)
Pension cost in respect of the principal plans		11			22			4
Other plans		12			11			7
		23			33			11

F-17

      Retirement and death benefits are provided for eligible Group employees in the United Kingdom principally by the InterContinental Hotels UK Pension Plan which covers approximately 1,700 employees and the Britvic Pension Plan which covers approximately 2,400 employees. The plans are predominantly defined benefit schemes for current members. For new entrants, the plans provide defined contribution benefits. The assets of the plans are held in self-administered trust funds separate from the Group’s assets. The Group also maintains a US-based InterContinental Hotels Pension Plan. This plan is now closed to new members and pensionable service no longer accrues for current employee members. In addition, the Group operates a number of minor pension schemes outside the United Kingdom, the most significant of which is a defined contribution scheme in the United States; there is no material difference between the pension costs of, and contributions to, these schemes.

      On April 1, 2003, two new pension schemes were created for InterContinental Hotels Group PLC in the UK when Mitchells & Butlers Retail Limited became the sponsoring employer for the Six Continents Pension Plan and the Six Continents Executive Pension Plan. Approximately 30% of the assets and liabilities of these plans was transferred to the new InterContinental Hotels UK Pension Plan and the Britvic Pension Plan, which were established with effect from April 1, 2003.

      The Group continues to account for its defined benefit obligations in accordance with SSAP 24. The pension costs related to the two UK principal plans are assessed in accordance with the advice of independent qualified actuaries using the projected unit method. They reflect the March 31, 2004 actuarial valuations of the InterContinental Hotels UK Pension Plan and the Britvic Pension Plan. The significant assumptions in these valuations were that wages and salaries increase on average by 4.3% per annum, the long-term return on assets is 6.5% per annum, and pensions increase by 2.8% per annum. The average expected remaining service life of current employees is 12 years.

      At March 31, 2004, the market value of the combined assets of the InterContinental Hotels UK Pension Plan was £148 million and the Britvic Pension Plan was £240 million and the value of the assets was sufficient to cover 80% and 75%, respectively, of the benefits that had accrued to members after allowing for expected increases in earnings.

      In the period to December 31, 2004, the Group made regular contributions to the two UK principal plans of £12 million (2003 £26 million, 2002 £18 million) and additional contributions of £60 million (2003 £13 million, 2002 £15 million). The agreed employer contribution rates to the defined benefit arrangements for the year to December 31, 2005 are 15.6% for the staff section of the InterContinental Hotels UK Pension Plan, 31.4% for the executive section, 16.9% for the staff section of the Britvic Pension Plan and 32.3% for the executive section.

      Certain pension benefits and post retirement insurance obligations are provided on an unfunded basis. Where assets are not held with the specific purpose of matching the liabilities of unfunded schemes, a provision is included within other provisions for liabilities and charges. Liabilities are generally assessed annually in accordance with the advice of independent actuaries.

     FRS 17 disclosures

      The valuations used for FRS 17 disclosures are based on the results of the actuarial valuations at March 31, 2004 updated by independent qualified actuaries to December 31, 2004. Scheme assets are stated at market value at December 31, 2004 and the liabilities of the schemes have been assessed as at the same date using the projected unit method. As the principal plans are now closed as defined benefit schemes, the current service cost as calculated under the projected unit method will increase as members approach retirement.

F-18

      The principal assumptions used by the actuaries to determine the liabilities on a FRS 17 basis were:

	December 31,				December 31,				September 30,
	2004				2003				2002
	UK		US		UK		US		UK		US
	(%)
Wages and salaries increases		4.3		—		4.3		—		3.8		—
Pension increases		2.8		—		2.8		—		2.3		—
Discount rate		5.3		5.8		5.4		6.3		5.5		6.8
Inflation rate		2.8		—		2.8		—		2.3		—

      The combined assets of the two principal schemes and expected rate of return were:

	Long-term rate				Long-term				Long-term
	of return				rate of return				rate of return
	expected at		Value at		expected at		Value at		expected at		Value at
	December 31,		December 31,		December 31,		December 31,		September 30,		September 30,
	2004		2004		2003		2003		2002		2002
	(%)		(£ million)		(%)		(£ million)		(%)		(£ million)
UK Schemes
Equities		8.0		272		8.0		238		8.0		507
Bonds		4.9		173		5.4		117		4.7		397
Other		8.0		27		—		—		8.0		92
Total market value of assets				472				355				996

	Long-term				Long-term				Long-term
	rate of return				rate of return				rate of return
	expected at		Value at		expected at		Value at		expected at		Value at
	December 31,		December 31,		December 31,		December 31,		September 30,		September 30,
	2004		2004		2003		2003		2002		2002
	(%)		(£ million)		(%)		(£ million)		(%)		(£ million)
US Schemes
Equities		9.6		34		9.2		29		11.2		27
Bonds		5.5		22		6.0		19		6.2		22
Total market value of assets				56				48				49

																			September 30,
	December 31, 2004									December 31, 2003									2002
	UK			US			Total			UK			US			Total			Total
	(£ million)
Total market value of assets		472			56			528			355			48			403			1,045
Present value of scheme liabilities		(600	)		(100	)		(700	)		(477	)		(102	)		(579	)		(1,415	)
Deficit in the scheme		(128	)		(44	)		(172	)		(122	)		(54	)		(176	)		(370	)
Related deferred tax asset		40			17			57			37			21			58			116
Net pension liability		(88	)		(27	)		(115	)		(85	)		(33	)		(118	)		(254	)

F-19

      If FRS 17 had been recognized in the financial statements, the effects would have been as follows:

	Year ended									15 months									Year ended
	December 31,									ended December 31,									September 30,
	2004									2003									2002
	UK			US			Total			UK			US			Total			Total
	(£ million)
Operating profit charge
Current service cost		18			—			18			32			—			32			31
Past service cost		1			—			1			2			—			2			—
Total operating profit charge		19			—			19			34			—			34			31
Finance income
Expected return on pension scheme assets		27			4			31			49			5			54			80
Interest on pension scheme liabilities		(27	)		(6	)		(33	)		(53	)		(8	)		(61	)		(76	)
Net (expense)/return		—			(2	)		(2	)		(4	)		(3	)		(7	)		4
Items recognized in the Statement of Total Recognized Gains and Losses (“STRGL”)
Actuarial loss:
Actual return less expected return on pension scheme assets		11			1			12			32			5			37			(182	)
Experience gains and losses arising on the scheme liabilities		13			—			13			(17	)		(1	)		(18	)		(23	)
Changes in assumptions underlying the present value of the scheme liabilities		(70	)		(6	)		(76	)		(111	)		(10	)		(121	)		(126	)
Actuarial loss recognized in the STRGL		(46	)		(5	)		(51	)		(96	)		(6	)		(102	)		(331	)
Other:
Deficit transferred in respect of previous acquisitions		6			—			6			—			—			—			—
Exchange adjustments		—			(4	)		(4	)		(8	)		—			(8	)		(3	)
Movement in deficit during the period
At start of period		(122	)		(54	)		(176	)		(315	)		(55	)		(370	)		(55	)
Current service cost		(18	)		—			(18	)		(32	)		—			(32	)		(31	)
Past service cost		(1	)		—			(1	)		(2	)		—			(2	)		—
Contributions		72			13			85			39			2			41			40
Finance income		—			(2	)		(2	)		(4	)		(3	)		(7	)		4
Actuarial loss		(46	)		(5	)		(51	)		(96	)		(6	)		(102	)		(331	)
Deficit transferred in respect of previous acquisitions(i)		(13	)		—			(13	)		—			—			—			—
Separation of MAB		—			—			—			288			—			288			—
Exchange adjustments		—			4			4			—			8			8			3
At end of period		(128	)		(44	)		(172	)		(122	)		(54	)		(176	)		(370	)

(i)  Relates to the acquisition of Posthouse hotels in 2001.

F-20

		Year ended									15 months
		December 31,									ended December 31,									September 30,
		2004									2003									2002
		UK			US			Total			UK			US			Total			Total
		(£ million)
History of experience gains and losses
Difference between the expected and actual return on scheme assets:
	Amount (£ million)		11			1			12			32			5			37			(182	)
	Percentage of scheme assets		2	%		2	%		2	%		9	%		10	%		9	%		(17	%)
Experience gains and losses on scheme liabilities:
	Amount (£ million)		13			—			13			(17	)		(1	)		(18	)		(23	)
	Percentage of the present value of the scheme liabilities		2	%		—			2	%		(4	%)		(1	%)		(3	%)		(2%	)
Total amount recognized in the STRGL:
	Amount (£ million)		(46	)		(5	)		(51	)		(96	)		(6	)		(102	)		(331	)
	Percentage of the present value of the scheme liabilities		(8	%)		(5	%)		(7	%)		(20	%)		(6	%)		(18	%)		(23	%)

	December 31, 2004						December 31, 2003						September 30, 2002
				Profit and						Profit and						Profit and
				loss account						loss account						loss account
	Net assets			reserve			Net assets			reserve			Net assets			reserve
	(£ million)
Group net assets and reserves reconciliation
As reported		1,977			(167	)		2,554			390			5,335			2,448
Less: SSAP 24 pension prepayment (net of tax of £23 million (2003 £14 million, 2002 £26 million))		(87	)		(87	)		(33	)		(33	)		(62	)		(62	)
SSAP 24 pension provision (net of tax of £18 million (2003 £16 million, 2002 £14 million))		31			31			30			30			25			25
FRS 17 net pension liability		(115	)		(115	)		(118	)		(118	)		(254	)		(254	)
Restated for FRS 17		1,806			(338	)		2,433			269			5,044			2,157

Policy on remuneration of executive directors and senior executives

      The following policy has applied since Separation and will apply in future years, subject to ongoing review.

Total level of remuneration

      The Committee aims to ensure that remuneration packages are offered which:

•  attract high quality executives in an environment where compensation levels are based on global market practice;

•  provide appropriate retention strength against loss of key executives;

•  drive aligned focus and attention to key business initiatives and appropriately reward their achievement;

F-21

•  support equitable treatment between members of the same executive team; and

•  facilitate global assignments and relocation.

      The Committee is aware that, as a UK listed company, IHG’s incentive arrangements may be expected to recognize UK investor guidelines. However, given the global nature of the Hotels business, an appropriate balance needs to be drawn in the design of relevant remuneration packages between domestic and international expectations.

The main components

      The Group has performance-related reward policies. These are designed to provide the appropriate balance between fixed remuneration and variable “risk” reward, which is linked to the performance of both the Group and the individual. Group performance-related measures are chosen carefully to ensure a strong link between reward and true underlying financial performance, and emphasis is placed on particular areas requiring executive focus.

      Individual performance is measured through an assessment of comprehensive business unit deliverables, demonstrated leadership behaviors, modeling the Group values and the achievement of specific key performance objectives. At the executive level, key performance objectives are linked directly to the Group’s strategic priorities. At a minimum, the individual performance of the executive directors is assessed on an annual basis.

      The normal policy for executive directors is that, using ‘target’ or ‘expected value’ calculations, their performance-related incentives will equate to approximately 70% of total annual remuneration (excluding benefits).

      The main components of remuneration are:

          Basic salary

      The salary for each executive director is based on individual performance and on information from independent professional sources on the salary levels for similar jobs in groups of comparable companies. Internal relativities and salary levels in the wider employment market are also taken into account.

      In addition, benefits are provided to executive directors in accordance with the policy applying to other executives in their geographic location.

          Annual performance bonus

      Within the Short Term Deferred Incentive Plan, challenging performance goals are set and these must be achieved before the maximum bonus becomes payable. These goals include both personal objectives and targets linked to the Group’s financial performance. For executive directors, the maximum bonus opportunity is 100% of salary, with 30% linked to personal objectives, 35% to adjusted earnings per share and 35% to earnings before exceptional items, interest and taxation. The bonus will normally be paid in IHG PLC shares and deferred. Matching shares may also be awarded up to 0.5 times the deferred amount. Such awards are conditional on the directors’ continued employment with the Group until the release date. The shares will normally be released in equal amounts at the end of each of the three years following deferral.

      The executive directors will be expected to hold all shares earned from the Group’s remuneration plans while the value of their holding is less than twice their basic salary or three times in the case of the Chief Executive.

      Bonuses are not pensionable.

          Executive share options

      The Committee believes that share ownership by executive directors and senior executives strengthens the link between the individual’s personal interest and that of the shareholders. Grants of options are normally

F-22

made annually and, except in exceptional circumstances, will not, in any year, exceed three times annual salary for executive directors.

      A performance condition has to be met before options can be exercised. The performance condition is set by the Committee. For options granted in 2004, the Company’s adjusted earnings per share over the three-year period ending December 31, 2006 must increase by at least nine percentage points over the increase in the UK Retail Prices Index (‘RPI’) for the same period for one-third of the options granted to vest; 12 percentage points over the increase in RPI for the same period for two-thirds of the options granted to vest; and 15 percentage points over the increase in RPI for the same period for the full award to vest. The options lapse if the performance condition is not met. This remains a realistic but challenging condition in the current economic climate. The achievement or otherwise of the performance condition is assessed, based on the Group’s published results; such assessment is then reviewed by the external auditor.

      Executive directors were granted options on April 1, 2004 as shown in the table on pages F-28 and F-29.

      Similar performance conditions have been applied to options granted on April 1, 2005. It is intended that similar conditions will apply in later years.

      Executive share options are not pensionable.

      Sharesave plan Executive directors are entitled to participate in all-employee share schemes. Options granted under the IHG Sharesave Plan are not subject to performance conditions and are not pensionable.

      Performance restricted shares The Performance Restricted Share Plan allows executive directors and eligible employees to receive share awards, subject to the satisfaction of a performance condition, set by the Committee, which is normally measured over a three-year period. Awards are normally made annually and, except in exceptional circumstances, will not exceed three times annual salary for executive directors. In determining the level of awards within this maximum limit, the Committee takes into account the level of executive share options granted to the same person. The grant of awards is restricted so that in each year the aggregate of (i) 20% of the market value of the executive share options and (ii) 33% of the market value of performance restricted shares, will not exceed 130% of annual salary, taking the market value in each case as at the date of grant.

      For the 2004/06 cycle, performance will be measured by reference to:

•  the increase in IHG PLC Total Shareholder Return (‘TSR’) over the performance period relative to 10 identified comparator companies; Accor, De Vere, Hilton Group, Hilton Hotels Corp., Host Marriott, Marriott Hotels, Millennium & Copthorne, NH Hotels, Sol Melia and Starwood Hotels; and

•  the increase in IHG Return On Capital Employed (‘ROCE’) over the performance period.

      In respect of TSR performance, 10% of the award will be released for the achievement of 6th place within the TSR group and 50% of the award will be released for the achievement of 1st or 2nd place. In respect of ROCE performance, 10% of the award will be released for the achievement of 70% growth and 50% of the award will be released for the achievement of 141.6% growth. Vesting between all stated points will be on a straight line basis.

      The awards lapse if the performance conditions are not met.

      Implementation of the elements of the IHG strategy that can significantly impact ROCE will be complete during the life of existing Performance Restricted Share Plan cycles. The Committee considers that it is now time to review this performance measure. Benefits under the Performance Restricted Share Plan are not pensionable.

F-23

Companies used for comparison

      In assessing levels of pay and benefits, IHG compares the packages offered by different groups of comparator companies. These groups are chosen having regard to participants’:

•  size — turnover, profits and the number of people employed;

•  diversity and complexity of businesses;

•  geographical spread of businesses;

•  industry type; and

•  relevance as:

      a) a potential recruitment target

      b) a potential threat in respect of attracting IHG talent.

      External consultants are used to advise the Committee on the structure and level of pay and benefits in IHG’s markets.

Policy on external appointments

      The Company recognises that its directors may be invited to become non-executive directors of other companies and that such duties can broaden experience and knowledge, and benefit the business. Executive directors are, therefore, allowed to accept one non-executive appointment (excluding positions where the director is appointed as the Company’s representative), subject to Board approval, as long as this is not likely to lead to a conflict of interest, and to retain the fees received. Richard North received £25,091 during the year for his services as a non-executive director. David Webster received £20,000 during the year for his services as a non-executive director.

Contracts of service

a) Policy

      The Remuneration Committee’s policy is for executive directors to have rolling contracts with a notice period of 12 months.

      Prior to the Separation of Six Continents PLC Richard Hartman, Richard North, Stevan Porter and Richard Solomons entered into service agreements with a notice period of 12 months. Following the year end, Andrew Cosslett entered into a service agreement with an initial notice period of 24 months, reducing month-by-month to 12 months after the initial 12 month period. All new appointments are intended to have 12 month notice periods. However, on occasion, to complete an external recruitment successfully, a longer initial period reducing to 12 months may be used, following guidance in the Combined Code.

      No provisions for compensation for termination following change of control, or for liquidated damages of any kind, are included in the current directors’ contracts. In the event of any early termination of an executive director’s contract the policy is to seek to minimise any liability.

      David Webster took over as interim Chief Executive on September 15, 2004 following announcement that Richard North would resign as a director of the Company on September 30, 2004. David Webster’s remuneration in his capacity as interim Chief Executive was exclusive of his remuneration in his capacity as non-executive Chairman of the Company, which is the subject of a letter of appointment, with effect from January 1, 2004. David Webster’s appointment as Chairman is subject to six months’ notice.

      Non-executive directors, Ralph Kugler, Robert C Larson, David Prosser and Sir Howard Stringer signed letters of appointment effective from the listing of IHG PLC. David Kappler signed a letter of appointment effective from June 21, 2004. All non-executive directors’ appointments are subject to re-election at the Annual General Meeting at which they retire by rotation.

F-24

b) Directors’ contracts

	Contract		Unexpired term/
Directors	effective date		notice period
Andrew Cosslett		2.3.05		21 months
Richard Hartman		4.15.03		12 months
Stevan Porter		4.15.03		12 months
Richard Solomons		4.15.03		12 months
Richard North		4.15.03		Terminated

      Richard North’s service contract provided for a notice period of 12 months. The severance arrangements which were entered into following his resignation on September 30, 2004 provided for him to receive a payment of one month’s basic salary in each month up to September 2005, subject to mitigation in the event of his taking up an alternative appointment. Details of his entitlements in respect of the Executive Share Option Plan, the Short Term Deferred Incentive Plan, the Performance Restricted Share Plan, and pension, are contained in the appropriate tables in the audited part of this report.

     Policy regarding pensions

      UK-based executive directors and senior employees participate on the same basis in the executive section of the InterContinental Hotels UK Pension Plan and, if appropriate, the InterContinental Executive Top-Up Scheme. Stevan Porter and senior US-based executives participate in US retirement benefits plans. Executives in other countries, who do not participate in these plans, will participate in local plans, or the InterContinental Hotels Group International Savings & Retirement Plan.

     Directors’ Emoluments

							Total emoluments excluding pensions
	Basic								15 months
	salaries		Performance				Year ended		ended		Year ended
	and fees		payments		Benefits		Dec 31, 2004		Dec 31, 2003		Sep 30, 2002
	(£ thousand)
Executive directors
Richard North(1)		638		553		57		1,248		1,183		629
Richard Hartman		476		—		299		775		663		—
Stevan Porter(2)		360		—		8		368		510		—
Richard Solomons		372		—		28		400		497		—
David Webster(3)		148		—		—		148		—		—
Non-executive directors
David Kappler(4)		35		—		—		35		—		—
Ralph Kugler(5)		42		—		—		42		30		—
Robert C. Larson(6)		42		—		—		42		53		36
David Prosser(7)		50		—		—		50		35		—
Sir Howard Stringer(6)		42		—		—		42		53		13
David Webster(8)		275		—		1		276		57		—
Former directors(9)		—		—		—		—		2,987		2,739
Total		2,480		553		393		3,426		6,068		3,417

(1)  Resigned as a director and as Chief Executive on September 30, 2004 and ceased employment with the Group on December 31, 2004. The emoluments shown are for the full year. Richard North’s performance payment relates to his participation in the Short Term Deferred Incentive Plan which, in accordance with plan rules, must be paid in cash due to his employment ending. He remains eligible to participate in the

F-25

	Short Term Deferred Incentive Plan for the 2005 performance year. Any award will be made in cash and pro-rated to September 30, 2005.
(2)	Emoluments for Stevan Porter include £10,731 that were chargeable to UK income tax.
(3)	Fees paid to David Webster represent £41,667 per month paid to him in his capacity as interim Chief Executive with effect from September 15, 2004.
(4)	Became Senior Independent Director and Chairman of the Audit Committee on June 21, 2004 for which a fixed fee of £65,000 pa was paid. With effect from January 1, 2005, David Kappler receives a total annual fee of £80,000.
(5)	All fees due to Ralph Kugler are paid to Unilever. With effect from January 1, 2005, Ralph Kugler’s fee as a non-executive director is £50,000 pa.
(6)	Both Robert C. Larson and Sir Howard Stringer served as non-executive directors of Six Continents PLC during the period up to April 15, 2003 for which they each received a fee of £23,000. With effect from January 1, 2005, Robert C Larson and Sir Howard Stringer each receive an annual fee of £50,000.
(7)	Fees paid to David Prosser included a £7,500 pa fee payable to the Chairman of the Remuneration Committee in recognition of the additional responsibilities of this role. With effect from January 1, 2005, David Prosser receives a total annual fee of £65,000.
(8)	Became non-executive Chairman on January 1, 2004 for which a fixed fee of £275,000 pa was paid. With effect from January 1, 2005, David Webster’s fee as non-executive Chairman is £350,000 pa.
(9)	The total emoluments earned by former directors of both Six Continents PLC and IHG PLC during the period October 1, 2002 to December 31, 2003 and the year October 1, 2001 to September 30, 2002 are shown.

      Figures for 2003 and 2002 represent emoluments earned during the 15 month period ended December 31, 2003 and the year ended September 30, 2002 and include emoluments for those directors who also served as directors of Six Continents PLC. ‘Performance payments’ include bonus awards in cash in respect of participation in the Short Term Deferred Incentive Plan (STDIP) but exclude bonus awards in deferred shares and any matching shares (further details of which are set out below under Long Term Reward).

      ‘Benefits’ incorporate all tax assessable benefits arising from the individual’s employment. For Messrs Hartman, North and Solomons, this relates in the main to the provision of a fully expensed company car and private healthcare cover. In addition, Mr Hartman received housing, child education and other expatriate benefits. For Stevan Porter, benefits relate in the main to private healthcare cover and financial counseling.

      Thomas Oliver retired from Six Continents PLC on March 31, 2003 and has not served as a director of IHG PLC. However, he had an ongoing consultancy agreement in respect of which he received fees of £136,677 during the year. In addition, he had an ongoing healthcare benefit of £9,919 during the year. These arrangements ended in March 2005. Sir Ian Prosser retired on December 31, 2003. However, he had an ongoing healthcare benefit of £1,191 during the year.

     Directors’ pensions

      The following information relates to the pension arrangements provided for Richard Hartman, Richard North and Richard Solomons under the executive section of the InterContinental Hotels UK Pension Plan (‘the IC Plan’) and the unfunded InterContinental Executive Top-Up Scheme (‘ICETUS’).

      The executive section of the IC Plan is a funded, Inland Revenue approved, final salary, occupational pension scheme. The main features applicable to the executive directors are: a normal pension age of 60; pension accrual of 1/30th of final pensionable salary for each year of pensionable service; life assurance cover of four times pensionable salary; pensions payable in the event of ill health; and spouses’ and dependants’ pensions on death.

      All plan benefits are subject to Inland Revenue limits. Where such limitation is due to the earnings ‘cap’, ICETUS is used to increase pension and death benefits to the level that would otherwise have applied.

F-26

      Stevan Porter has retirement benefits provided via the 401(k) Retirement Plan for employees of Six Continents Hotels Inc. (‘401(k)’) and the Six Continents Hotels Inc. Deferred Compensation Plan (‘DCP’).

      The 401(k) is a tax qualified plan providing benefits on a defined contribution basis, with the member and the relevant company both contributing. The DCP is a non-tax qualified plan, providing benefits on a defined contribution basis, with the member and the relevant company both contributing.

									Increase in
					Transfer value of				transfer value		Increase in		Increase in		Accrued
			Directors’		accrued benefits				over the year		accrued		accrued		pension at
	Age at		contributions						less directors’		pension		pension		Dec 31, 04
Directors’ pension benefits	Dec 31, 04		(1)		Jan 1, 04		Dec 31, 04		contributions		(2)		(3)		(4)(5)
			£		£		£		£		£pa		£pa		£pa
Richard Hartman		58		15,200		652,200		1,189,800		522,400		24,800		23,700		63,200
Richard North		54		15,200		2,423,800		3,581,400		1,142,400		60,300		55,200		240,300
Richard Solomons		43		15,100		569,400		834,100		249,600		21,300		19,200		96,800

(1) Contributions paid in the year by the directors under the terms of the plans. Richard Hartman’s contributions exclude £3,700 paid in 2004, but relating to 2003.

(2) The absolute increase in accrued pension during the period.

(3) The increase in accrued pension during the period excluding any increase for inflation, on the basis that increases to accrued pensions are applied at October 1.

(4) Accrued pension is that which would be paid annually on retirement at 60, based on service to December 31, 2004.

(5) Richard North ceased pensionable service with the Group on December 31, 2004 and his deferred pension at that date is £240,300 pa, payable from his 60th birthday (inclusive of an augmentation agreed as part of his severance arrangements).

      The figures shown in the above tables relate to the final salary plans only. For defined contribution plans, the contributions made by and in respect of Stevan Porter during the year are:

	Director’s				Company
	contribution to				contribution to
	DCP		401(k)		DCP		401(k)
	£		£		£		£
Stevan Porter		19,000		7,100		56,800		5,700

     Directors’ emoluments

      Totals relating to employers’ pension contributions for fiscal 2004, 2003 and 2002.

	Employers’ pension
	contributions
	(£ thousand)
Total 2004		141
Total 2003		430
Total 2002		374

      The following additional information relates to directors’ pensions under the UK plans.

     Dependants’ Pensions

      On the death of a director before his normal retirement age, a widow’s pension equal to one-third of his own pension is payable; a child’s pension of one-sixth of his pension is payable for each of a maximum of two eligible children. On the death of a director after payment of his pension commences, a widow’s pension of two-thirds of the director’s full pension entitlement is payable; in addition, a child’s pension of one-sixth of his full pension entitlement is payable for each of a maximum of two eligible children.

F-27

     Early Retirement Rights

      After leaving the service of the relevant company, the director has the right to draw his accrued pension at any time after his 50th birthday, subject to a discount for early payment.

     Pension Increases

      All pensions (in excess of Guaranteed Minimum Pensions) are subject to contractual annual increases in line with the annual rise in RPI, subject to a maximum of 5% per annum. In addition, it is current policy to pay additional increases based on two-thirds of any rise in RPI above 5% per annum.

     Other Discretionary Benefits

      Other than the discretionary pension increases mentioned above, there are no discretionary practices which are taken into account in calculating transfer values on leaving service.

Long Term Reward

     Performance Restricted Share Plan (“PRSP”)

      In 2004 there were three cycles in operation.

      The awards made in respect of the PRSP cycles ending on December 31, 2004, December 31, 2005 and December 31, 2006 and the maximum pre-tax number of ordinary shares due if performance targets are achieved in full are:

				PRSP shares					Market								Value based
	PRSP			awarded during					price per			PRSP shares			Planned		on share price
	shares held			the year ended			Award		share at			held at			vesting		of 647.50p at
	at Jan 1, 04			Dec 31, 04			date		award			Dec 31, 04(1)			date		Dec 31, 04
																	£
Richard Hartman		111,930	(2)					6.18.03		445	p		111,930			3.11.05		724,747
		167,900	(3)					6.18.03		445	p		167,900			3.3.06		1,087,153
					165,130	(4)		6.24.04		549.5	p		165,130			3.9.07		1,069,217
Total													444,960					2,881,117
Richard North		188,760	(2)					6.18.03		445	p		188,760			3.11.05		1,222,221
		283,140	(3)					6.18.03		445	p		259,545	(5)		3.3.06		1,680,554
					248,560	(4)		6.24.04		549.5	p		144,993	(5)		3.9.07		938,830
Total													593,298					3,841,605
Stevan Porter		113,810	(2)					6.18.03		445	p		113,810			3.11.05		736,920
		170,710	(3)					6.18.03		445	p		170,710			3.3.06		1,105,347
					142,290	(4)		6.24.04		549.5	p		142,290			3.9.07		921,328
Total													426,810					2,763,595
Sir Ian Prosser		65,410	(2)(6)					6.18.03		445	p		65,410			3.11.05		423,530
		65,410	(3)(6)					6.18.03		445	p		65,410			3.3.06		423,530
Total													130,820					847,060
Richard Solomons		110,110	(2)					6.18.03		445	p		110,110			3.11.05		712,962
		165,160	(3)					6.18.03		445	p		165,160			3.3.06		1,069,411
					144,990	(4)		6.24.04		549.5	p		144,990			3.9.07		938,810
Total													420,260					2,721,183
Total																		13,054,560

F-28

(1)	In the case of Richard North, who resigned as a director of the Company on September 30, 2004, the figures shown are as at cessation of employment.
(2)	This ‘transitional’ award is based on performance to December 31, 2004 where the performance measure relates to the Company’s total shareholder return against a group of 11 other comparator companies. The number of shares released is graded, according to where the Company finishes in the comparator group, with 100% of the award being released for first or second position and 20% of the award being released for sixth place. The Company finished in fourth place and accordingly 60% of the award vested on March 11, 2005, with 67,158; 113,256; 68,286; 39,246 and 66,066 shares released to Messrs. Hartman, North, Porter, Prosser and Solomons respectively.
(3)	This award is based on performance to December 31, 2005 where the performance measure relates to both the Company’s total shareholder return against a group of 11 other comparator companies and growth in return on capital employed.
(4)	This award is based on performance to December 31, 2006 where the performance measure relates to both the Company’s total shareholder return against a group of 10 other comparator companies and growth in return on capital employed.
(5)	Richard North’s awards were pro-rated to reflect his contractual service during the applicable performance periods.
(6)	Sir Ian Prosser was a director of the Company until his retirement on December 31, 2004. His awards were pro-rated to reflect his actual service during the applicable performance periods.

F-29

     Short Term Deferred Incentive Plan (“STDIP”)

      Messrs Hartman, Porter and Solomons participated in the STDIP during the year ended December 31, 2004, and received an award on March 16, 2005. The awards, inclusive of matching shares, are as follows:

					Market price per
	Award date		No of shares		share at award		Value on award
					(p)		(£)
Richard Hartman		03.16.05		88,341		653.67		577,459
Stevan Porter		03.16.05		80,934		653.67		529,041
Richard Solomons		03.16.05		87,061		653.67		569,092

      The shares comprised in the awards will be released in equal amounts on the first, second and third anniversary of the award date and are conditional on the directors’ continued employment within the Group until each release date.

      Directors’ pre-tax interests during the year were:

STDIP

Value based

STDIP

STDIP shares

Market

shares vested

Market

STDIP

on share

shares held

awarded during

price per

during the

price per

shares held

Planned

price of

at

the year ended

Award

share at

year ended

Vesting

share at

Value at

at

vesting

647.50p at

Jan 1, 04(1)

Dec 31, 04

date

award

Dec 31, 04

date

vesting(2)

vesting

Dec 31, 04

date

Dec 31, 04

£

£

Directors

Richard North

3,789

4.15.03

372

p

3,789

6.2.04

529.5

p

20,063

—

—

—

Stevan Porter

55,428

12.18.01

434.3

p

55,428

12.20.04

654.5

p

362,776

—

—

—

(1)	IHG PLC shares provided at 372p per share in equal value exchange for Six Continents PLC shares outstanding at 4.14.03 under the Six Continents Special Deferred Incentive Plan.
(2)	Award originally made in Six Continents PLC shares. The share prices shown are the equivalent IHG PLC share prices, based on a five day average immediately preceding the award date.

     Share Options

											Weighted
	Options		Granted		Lapsed		Exercised		Options		average
	held at		during		during		during		held at		option		Option
	Jan 1, 04		the year		the year		the year		Dec 31, 04(1)		price		price
											(p)		(p)
Richard Hartman		615,072										414.88
				218,950										494.17
A										364,388		398.98
B										469,634		464.19
Total		615,072		218,950		—		—		834,022		435.70
Richard North		1,125,168										412.69
				394,840										494.17
A										712,017		398.05
B										807,991		465.40
Total		1,125,168		394,840		—		—		1,520,008		433.85
Stevan Porter		433,059										426.22
				225,260										494.17
A										178,176		409.36
B										480,143		464.35
Total		433,059		225,260		—		—		658,319		449.47

F-30

Weighted

Options

Granted

Lapsed

Exercised

Options

average

held at

during

during

during

held at

option

Option

Jan 1, 04

the year

the year

the year

Dec 31, 04(1)

price

price

(p)

(p)

Richard Solomons

601,040

400.55

230,320

494.17

A

357,545

375.24

B

473,815

465.16

Total

601,040

230,320

—

—

831,360

426.49

(1)  In the case of Richard North, who resigned as a director of the Company on September 30, 2004, the figures shown are as at cessation of employment. In accordance with plan rules, Richard North’s unvested options will lapse three and a half years from the date of cessation of employment.

(A)  Where options are exercisable and the market price per share at December 31, 2004 was above the option price; and

(B)  Where options are not yet exercisable. A performance condition has to be met before options can be exercised, in accordance with the policy set out earlier.

     Rolled over options, all of which are shown in ‘A’ above, became exercisable on the Separation of Six Continents PLC in April 2003 and will lapse on various dates up to October 2012. Rolled over options ceased to be subject to performance conditions on Separation.

      Share options under the IHG Executive Share Option Plan granted in 2003 are exercisable between May 2006 and May 2013, subject to the achievement of the performance condition. Share options under the IHG Sharesave Plan granted in 2003 are exercisable between March 2007 and March 2009.

      Share options under the IHG Executive Share Option Plan were granted on April 1, 2004 at an option price of 494.17p. These options are exercisable between April 2007 and April 2014, subject to the achievement of the performance condition.

      Option prices range from 308.48p to 593.29p per IHG PLC share. The closing market value share price on December 31, 2004 was 647.50p and the range during the year was 479.17p to 690.81p per share.

      The gain on exercise by directors in aggregate was £nil in the year ended December 31, 2004 (£69,491 in the period ended December 31, 2003, £nil in the year ended September 30, 2002).

     Directors’ Shareholdings

	December 31, 2004		January 1, 2004
	InterContinental Hotels Group PLC		InterContinental Hotels Group PLC
	ordinary shares of 112p		ordinary shares of £1(1)(2)
Executive directors
Richard Hartman		45,247		30,345
Stevan Porter		88,077		56,754
Richard Solomons		16,031		17,956
David Webster		13,395		824
Non-executive directors
David Kappler		2,602		2,915
Ralph Kugler		892		1,000
Robert C Larson(3)		10,714		9,805
David Prosser		4,464		5,000
Sir Howard Stringer		7,566		8,474

(1)  Or date of appointment, if later.

F-31

(2)	These share interests were in InterContinental Hotels Group PLC £1 ordinary shares prior to the share consolidation effective from December 13, 2004. For every 28 existing InterContinental Hotels Group PLC shares held on December 10, 2004, shareholders received 25 new ordinary shares of 112p each.
(3)	Held in the form of American Depositary Receipts.

      The above shareholdings are all beneficial interests and include shares held by directors’ spouses and other connected persons, and shares held on behalf of certain directors by the Trustees of the Company’s ESOP. None of the directors has a beneficial interest in the shares of any subsidiary.

      At December 31, 2004, the executive directors, as potential beneficiaries under the Company’s ESOP, were each technically deemed to be interested in 3,057,649 unallocated IHG PLC shares held by the Trustees of the ESOP.

      The Company’s Register of Directors’ Interests, which is open to inspection at the Registered Office, contains full details of directors’ shareholdings and share options.

Note 5 — Exceptional Items

											15 months ended December 31, 2003
			Year ended December 31, 2004																	Year ended September 30, 2002
											Continuing
			Continuing			Discontinued					operations(i)			Discontinued			Total			Continuing			Discontinued
			operations(i)			operations(i)		Total			restated(ii)			operations(i)			restated(ii)			operations(i)			operations(i)			Total
			(£ million)
Operating exceptional items:
	Cost of sales(iii)			(28	)		—		(28	)		(51	)		—			(51	)		(77	)		—			(77	)
	Administrative expenses(iv)			(11	)		—		(11	)		—			—			—			—			—			—
	Other operating income(v)			20			—		20			—			—			—			—			—			—
Total operating exceptional items				(19	)		—		(19	)		(51	)		—			(51	)		(77	)		—			(77	)
Non-operating exceptional items:
	Cost of fundamental reorganization(vi)			—			—		—			(67	)		—			(67	)		—			—			—
	Separation costs(vii)			—			—		—			(51	)		(41	)		(92	)		(4	)		—			(4	)
	Profit/(loss) on disposal of fixed assets			15			—		15			4			(2	)		2			2			(2	)		—
	(Loss)/profit on disposal of operations
		Hotels(viii)		(74	)		—		(74	)		—			—			—			—			—			—
		Bass Brewers(ix)		—			—		—			—			—			—			—			57			57
	Provision against fixed asset investments(x)			(10	)		—		(10	)		(56	)		—			(56	)		—			—			—
				(69	)		—		(69	)		(170	)		(43	)		(213	)		(2	)		55			53
Total exceptional items before interest and taxation				(88	)		—		(88	)		(221	)		(43	)		(264	)		(79	)		55			(24	)
Interest receivable(xi)				22			—		22			—			—			—			—			—			—
Interest payable(xii)				(16	)		—		(16	)		—			—			—			—			—			—
Premium on early settlement of debt(xiii)				(17	)		—		(17	)		(136	)		—			(136	)		—			—			—
Tax credit/(charge) on above items				6			—		6			36			28			64			(10	)		1			(9	)
Exceptional tax credit(xiv)				161			—		161			68			—			68			14			114			128
Total exceptional items after interest and taxation				68			—		68			(253	)		(15	)		(268	)		(75	)		170			95

F-32

(i)	Continuing operations comprise InterContinental Hotels Group PLC. Discontinued operations relate to Mitchells & Butlers plc for 2003 and 2002 and in 2002 also included profits on disposal of Bass Brewers of £57 million, relating to the finalization of completion accounts and an exceptional tax credit representing the release of over provisions of tax in relation to Bass Brewers and other businesses.
(ii)	Restated to show exceptional tax credits on a basis consistent with 2004, comprising prior year adjustments which are exceptional by reason of their size or incidence.
(iii)	Tangible fixed assets were written down by £48 million (2003 £73 million, 2002 £113 million) following an impairment review of the hotel estate. £28 million (2003 £51 million, 2002 £77 million) was charged above as an operating exceptional item and £20 million (2003 £22 million, 2002 £36 million) reversed previous revaluation gains.
(iv)	Administrative expenses include a charge of £11 million related to the delivery of the further restructuring of the Hotels business in conjunction with the asset disposal program.
(v)	Adjustment to market valuation of the Group’s investment in FelCor Lodging Trust Inc.
(vi)	Relates to a fundamental reorganization of the Hotels business. The cost includes redundancy entitlements, property exit costs and other implementation costs.
(vii)	Relates to costs incurred for the bid defense and Separation of Six Continents PLC.
(viii)	Provision for the loss on disposal of 13 hotels in the Americas and 73 hotels in the United Kingdom.
(ix)	Bass Brewers was disposed of in August 2000. The profit in 2002 comprises £9 million received in respect of the finalization of completion account adjustments, together with the release of disposal provisions no longer required of £48 million.
(x)	Relates to a provision for the diminution in value of certain fixed asset investments and reflects the directors’ view of the fair value of the holdings.
(xi)	Mainly relates to interest received on exceptional tax refunds.
(xii)	Relates to costs of closing out swaps and costs related to refinancing the Group’s debt.
(xiii)	Relates to the premiums paid on the repurchase of the Group’s public debt.
(xiv)	Represents the release of provisions relating to tax matters which have been settled or in respect of which the relevant statutory limitation period has expired, principally relating to acquisitions (including provisions relating to pre-acquisition periods) and disposals, intra-group financing and, in 2004, the recognition of a deferred tax asset of £83 million in respect of capital losses.

Note 6 — Interest Payable and Similar Charges

			15 months
	Year ended		ended		Year ended
	December 31,		December 31,		September 30,
	2004		2003		2002
	(£ million)
Bank loans and overdrafts		16		38		21
Other		70		113		155
		86		151		176

F-33

Note 7 — Tax on Profit on Ordinary Activities

										15 months ended						Year ended
				Year ended						December 31, 2003						September 30, 2002
				December 31, 2004						restated(i)						restated(i)
				Before						Before						Before
				exceptional						exceptional						exceptional
				items			Total			items			Total			items			Total
				(£ million)
Tax charge
UK corporation tax at 30% (2003 30%, 2002 30%):
	Current year				32			23			42			4			94			106
	Prior years				(22	)		(48	)		(12	)		(80	)		(1	)		(129	)
					10			(25	)		30			(76	)		93			(23	)
Foreign tax:
	Current year				50			51			72			69			65			65
	Prior years				(29	)		(81	)		(20	)		(20	)		(1	)		(1	)
					21			(30	)		52			49			64			64
Total current tax					31			(55	)		82			(27	)		157			41
Deferred tax:
	Origination and reversal of timing differences				31			33			53			30			20			17
	Adjustments to estimated recoverable deferred tax assets				—			—			(11	)		(11	)		11			11
	Prior years				(12	)		(95	)		(9	)		(9	)		(17	)		(17	)
Total deferred tax					19			(62	)		33			10			14			11
Tax on profit on ordinary activities					50			(117	)		115			(17	)		171			52
Further analyzed as tax relating to:
	Profit before exceptional items				50			50			115			115			171			171
	Operating exceptional items:
		Administrative expenses			—			(3	)		—			—			—			—
	Non-operating exceptional items — (Note 5):
		Continuing operations:
			Cost of fundamental reorganization		—			(5	)		—			(8	)		—			—
			Profit on disposal of fixed assets		—			5			—			—			—			11
			Separation costs		—			—			—			(6	)		—			(1	)
			Provision against fixed asset investments		—			—			—			(5	)		—			—
					—			—			—			(19	)		—			10
		Discontinued operations:
			Separation costs		—			—			—			(4	)		—			—
			Other		—			—			—			—			—			(1	)
		Total non-operating exceptional items			—			—			—			(23	)		—			9
	Interest				—			2			—			—			—			—
	Premium on early settlement of debt				—			(5	)		—			(41	)		—			—
	Total exceptional items				—			(6	)		—			(64	)		—			9
	Exceptional tax credit — (Note 5)				—			(161	)		—			(68	)		—			(128	)
Tax charge/ (credit)					50			(117	)		115			(17	)		171			52

(i)  Restated to show exceptional tax credits on a basis consistent with 2004. This comprises prior year adjustments which are exceptional by reason of their size or incidence.

F-34

Tax reconciliations

Reconciliation of current tax rate

				15 months
				ended			Year ended
	Year ended			December 31,			September 30,
	December 31,			2003			2002
	2004			restated(i)			restated(i)
	(%)
UK corporation tax standard rate		30.0			30.0			30.0
Permanent differences		(0.3	)		20.7			1.3
Capital allowances in excess of depreciation		(6.9	)		(12.6	)		(3.7	)
Other timing differences		(7.4	)		(104.2	)		(1.3	)
Net effect of different rates of tax in overseas businesses		9.2			46.1			3.1
Adjustment to tax charge in respect of prior years		(24.1	)		(88.9	)		(0.2	)
Other		0.2			2.0			—
Exceptional items		(26.2	)		32.2			(21.5	)
Effective current tax rate		(25.5	)		(74.7	)		7.7
Effective current tax rate before exceptional items		10.1			18.8			28.8

(i)  Restated to show exceptional tax credits on a basis consistent with 2004, comprising prior year adjustments which are exceptional by reason of their size or incidence.

Reconciliation of overall tax rate

				15 months
				ended			Year ended
	Year ended			December 31,			September 30,
	December 31,			2003			2002
	2004			restated(i)			restated(i)
	(%)
UK corporation tax standard rate		30.0			30.0			30.0
Permanent differences		(0.4	)		20.7			1.3
Net effect of different rates of tax in overseas businesses		9.2			46.1			4.0
Adjustment to tax charge in respect of prior years		(29.5	)		(115.0	)		(3.3	)
Capital gains		—			—			—
Other		0.2			4.6			(0.6	)
Exceptional items		(65.0	)		(33.4	)		(21.7	)
Effective tax rate		(55.5	)		(47.0	)		9.7

(i)  Restated to show exceptional tax credits on a basis consistent with 2004, comprising prior year adjustments which are exceptional by reason of their size or incidence.

      Factors which may affect future tax charges The key factors which may affect future tax charges are disposals of assets, the availability of accelerated tax depreciation, utilization of unrecognized losses, changes in tax legislation, settlements with tax authorities and the proportion of profits subjected to higher overseas tax rates.

F-35

Note 8 — Dividends

			15 months						15 months
	Year ended		ended		Year ended		Year ended		ended		Year ended
	December 31,		December 31,		September 30,		December 31,		December 31,		September 30,
	2004		2003		2002		2004		2003		2002
	(pence per share)						(£ million)
Dividends on ordinary shares:
Interim Six Continents PLC		—		7.65		12.58		—		56		92
Proposed final Six Continents PLC		—		—		29.14		—		—		213
Interim InterContinental Hotels Group PLC		4.30		4.05		—		29		30		—
Special Interim Dividend Intercontinental Hotels Group PLC		72.00		—		—		501		—		—
Proposed final InterContinental Hotels Group PLC		10.00		9.45		—		62		70		—
		86.30		21.15		41.72		592		156		305

      The proposed final IHG dividend is payable on the shares in issue at April 1, 2005.

Note 9 — Earnings per ordinary share

      Basic earnings per ordinary share is calculated by dividing the earnings available for shareholders of £299 million (2003 £19 million, 2002 £457 million) by 710 million (2003 733 million, 2002 731 million), being the weighted average number of ordinary shares, excluding investment in own shares, in issue during the period. The weighted average number of shares in issue has been based on the aggregate of the weighted average number of shares of InterContinental Hotels Group PLC and Six Continents PLC adjusted to equivalent shares of InterContinental Hotels Group PLC. The comparatives have been restated accordingly.

      Diluted earnings per ordinary share is calculated by adjusting basic earnings per ordinary share to reflect the notional exercise of the weighted average number of dilutive ordinary share options outstanding during the period. The resulting weighted average number of ordinary shares is 718 million (2003 733 million, 2002 734 million).

      On December 10, 2004, shareholders approved a share capital consolidation on the basis of 25 new ordinary shares for every 28 existing ordinary shares, together with a special dividend of 72 pence per existing share. The overall effect of the transaction was that of a share repurchase at fair value. Therefore no adjustment has been made to comparative data.

      Adjusted earnings per ordinary share is calculated as follows:

				15 months
				ended			Year ended
	Year ended			December 31,			September 30,
	December 31,			2003			2002
	2004			restated(i)			restated(i)
	(pence per ordinary share)
Basic earnings		42.1			2.6			62.5
Exceptional items, less tax thereon		13.1			45.8			4.5
Exceptional tax credit		(22.7	)		(9.3	)		(17.5	)
Adjusted earnings		32.5			39.1			49.5

(i)  Restated to show exceptional tax credits on a basis consistent with 2004, comprising prior year adjustments which are exceptional by reason of their size or incidence.

F-36

      Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by exceptional items.

Note 10 — Cash flow from operating activities

				15 months
	Year ended			ended			Year ended
	December 31,			December 31,			September 30,
	2004			2003			2002
	(£ million)
Operating profit before exceptional items		331			483			618
Depreciation and amortization		198			303			271
Earnings before interest, taxation, depreciation and amortization and exceptional items		529			786			889
Other non-cash items		12			(2	)		(4	)
Decrease/(increase) in stocks		1			(1	)		(1	)
Increase in debtors		(11	)		(10	)		(92	)
Increase/(decrease) in creditors		75			69			(37	)
Special pension contributions		(71	)		—			—
Provisions expended — (Note 23)		(3	)		(10	)		(18	)
Operating activities before expenditure relating to exceptional items		532			832			737
Cost of fundamental reorganization — (Note 23)		(17	)		(37	)		—
Operating exceptional expenditure		—			—			(17	)
Operating activities		515			795			720
Net capital expenditure — (Note 12)		(151	)		(248	)		(513	)
Operating cash flow — (Note 13)		364			547			207

Note 11 — Net debt

										Liquid
	Cash and overdrafts									resources			Financing
													Other			Other
	Cash at									Current			borrowings			borrowings
	bank and									asset			due within			due after
	in hand			Overdrafts			Total			investments			one year			one year			Total
	(£ million)
At October 1, 2001		67			(37	)		30			366			(378	)		(1,019	)		(1,001	)
Net cash flow		(276	)		(29	)		(305	)(i)		—			—			—			(305	)
Management of liquid resources and financing		295			—			295	(i)		(232	)		(414	)		354			3
Exchange adjustments		(2	)		—			(2	)		84			10			34			126
At September 30, 2002		84			(66	)		18			218			(782	)		(631	)		(1,177	)
Net cash flow		(86	)		64			(22	)(i)		—			—			—			(22	)
Management of liquid resources and financing		77			—			77	(i)		129			758			(369	)		595
Separation of MAB		(7	)		—			(7	)		(7	)		4			—			(10	)
Exchange and other adjustments		(13	)		(3	)		(16	)		37			12			12			45
At December 31, 2003		55			(5	)		50			377			(8	)		(988	)		(569	)
Net cash flow		(332	)		(6	)		(338	)(i)		—			—			—			(338	)
Management of liquid resources and financing		320			—			320	(i)		(320	)		(22	)		(236	)		(258	)
Exchange and other adjustments		—			—			—			(17	)		(2	)		68			49
At December 31, 2004		43			(11	)		32			40			(32	)		(1,156	)		(1,116	)

(i)  Represents a movement in cash and overdrafts of £18 million outflow (2003 £55 million inflow, 2002 £10 million outflow) (see Consolidated Statement of Cash Flows).

Currency swaps are included within current asset investments in 2003 and within other borrowings in 2004.

F-37

Note 12 — Net capital expenditure

					15 months
		Year ended			ended			Year ended
		December 31,			December 31,			September 30,
		2004			2003			2002
		(£ million)
Hotels
	Americas		60			73			113
	EMEA		95			237			209
	Asia Pacific		20			43			12
	Central		12			24			35
			187			377			369
Hotels disposal proceeds			(106	)		(255	)		(113	)
Hotels net capital expenditure			81			122			256
Soft Drinks			70			65			31
InterContinental Hotels Group PLC(i)			151			187			287
Discontinued operations(i)			—			61			226
			151			248			513

(i)  InterContinental Hotels Group PLC relates to continuing operations. Discontinued operations relate to Mitchells & Butlers plc.

Note 13 — Operating cash flow

			15 months
	Year ended		ended		Year ended
	December 31,		December 31,		September 30,
	2004		2003		2002
	(£ million)
Hotels		291		336		(15	)
Soft Drinks		73		59		77
InterContinental Hotels Group PLC(i)		364		395		62
Discontinued operations(i)		—		152		145
		364		547		207

(i)  InterContinental Hotels Group PLC relates to continuing operations. Discontinued operations relate to Mitchells & Butlers plc.

F-38

Note 14 — Management of liquid resources and financing

				15 months
	Year ended			ended			Year ended
	December 31,			December 31,			September 30,
	2004			2003			2002
	(£ million)
New borrowings(i)		9,666			18,672			8,260
Other borrowings repaid(i)		(9,408	)		(19,061	)		(8,200	)
		258			(389	)		60
Debt assumed by MAB		—			577			—
Ordinary shares issued		16			18			3
Purchase of own shares		(257	)		—			—
Purchase of own shares by employee share trusts		(33	)		—			—
Proceeds on release of shares by employee share trusts		16			—			—
Financing		—			206			63
Movement in liquid resources(ii)		320			(129	)		232
		320			77			295

(i)	Includes amounts rolled over under bank loan facilities.
(ii)	Liquid resources primarily comprise short-term deposits of less than one year, short-term investments and, in 2003, currency swaps.

Note 15 — Intangible fixed assets

		Goodwill
		(£ million)
15 months ended December 31, 2003
Cost:
At October 1, 2002			197
	Acquisitions		10
	Separation of MAB		(15	)
At December 31, 2003			192
Amortization:
At October 1, 2002			24
	Provided		13
	Separation of MAB		(3	)
At December 31, 2003			34
	Net book value at December 31, 2003		158
Year ended December 31, 2004
Cost:
At January 1, 2004			192
	Exchange and other adjustments		(8	)
At December 31, 2004			184
Amortization:
At January 1, 2004			34
	Provided		10
	Exchange adjustments		(2	)
At December 31, 2004			42
	Net book value at December 31, 2004		142

F-39

Note 16 — Tangible fixed assets

By activity

					Soft
		Hotels			Drinks			Total			Discontinued(i)			Total Group
		(£ million)
15 months ended December 31, 2003
Cost or valuation:
At October 1, 2002			4,362			408			4,770			3,722			8,492
	Exchange and other adjustments		2			4			6			1			7
	Additions		314			66			380			81			461
	Disposals		(281	)		(27	)		(308	)		(64	)		(372	)
	Separation of MAB		—			—			—			(3,740	)		(3,740	)
	Impairment		(22	)		—			(22	)		—			(22	)
At December 31, 2003			4,375			451			4,826			—			4,826
Depreciation:
At October 1, 2002			467			188			655			196			851
	Exchange and other adjustments		(7	)		1			(6	)		—			(6	)
	Provided		186			50			236			54			290
	On disposals		(37	)		(24	)		(61	)		(40	)		(101	)
	Separation of MAB		—			—			—			(210	)		(210	)
	Impairment		51			—			51			—			51
At December 31, 2003			660			215			875			—			875
Net book value at December 31, 2003			3,715			236			3,951			—			3,951
Year ended December 31, 2004
Cost or valuation:
At January 1, 2004			4,375			451			4,826			—			4,826
	Exchange and other adjustments		(95	)		—			(95	)		—			(95	)
	Additions		177			72			249			—			249
	Disposals		(142	)		(40	)		(182	)		—			(182	)
	Impairment		(20	)		—			(20	)		—			(20	)
At December 31, 2004			4,295			483			4,778			—			4,778
Depreciation:
At January 1, 2004			660			215			875			—			875
	Exchange and other adjustments		(16	)		—			(16	)		—			(16	)
	Provided		144			44			188			—			188
	On disposals		(35	)		(38	)		(73	)		—			(73	)
	Impairment		28			—			28			—			28
At December 31, 2004			781			221			1,002			—			1,002
Net book value at December 31, 2004			3,514			262			3,776			—			3,776

(i)  Discontinued operations relate to Mitchells & Butlers plc.

      Tangible fixed assets have been written down in total by £48 million (2003 £73 million, 2002 £113 million) following an impairment review of the hotel estate. The impairment has been measured by reference to the value of income-generating units, using either the higher of value in use or estimated recoverable amount. The discount rate used for value in use calculations ranged from 8.0% to 10.5%.

F-40

By category

					Fixtures,
		Land			fittings
		and			and			Plant and
		buildings			equipment			machinery			Total
		(£ million)
15 months ended December 31, 2003
Cost or valuation:
At October 1, 2002			5,906			2,450			136			8,492
	Exchange and other adjustments		11			(8	)		4			7
	Additions		139			291			31			461
	Disposals		(221	)		(146	)		(5	)		(372	)
	Separation of MAB		(2,809	)		(930	)		(1	)		(3,740	)
	Impairment		(22	)		—			—			(22	)
At December 31, 2003			3,004			1,657			165			4,826
Depreciation:
At October 1, 2002			147			622			82			851
	Exchange and other adjustments		3			(10	)		1			(6	)
	Provided		28			243			19			290
	On disposals		(13	)		(83	)		(5	)		(101	)
	Separation of MAB		(48	)		(162	)		—			(210	)
	Impairment		51			—			—			51
At December 31, 2003			168			610			97			875
Net book value at December 31, 2003			2,836			1,047			68			3,951
Year ended December 31, 2004
Cost or valuation:
At January 1, 2004			3,004			1,657			165			4,826
	Exchange and other adjustments		(59	)		(36	)		—			(95	)
	Additions		50			172			27			249
	Disposals		(83	)		(89	)		(10	)		(182	)
	Impairment		(20	)		—			—			(20	)
At December 31, 2004			2,892			1,704			182			4,778
Depreciation:
At January 1, 2004			168			610			97			875
	Exchange and other adjustments		(6	)		(10	)		—			(16	)
	Provided		14			156			18			188
	On disposals		(11	)		(52	)		(10	)		(73	)
	Impairment		28			—			—			28
At December 31, 2004			193			704			105			1,002
Net book value at December 31, 2004			2,699			1,000			77			3,776

F-41

Land and buildings

		December 31, 2004							December 31, 2003
		Cost or					Net book		Cost or					Net book
		valuation		Depreciation			value		valuation		Depreciation			value
		(£ million)
Freehold			2,036		(130	)		1,906		2,109		(107	)		2,002
Leasehold: unexpired term of more than 50 years			636		(32	)		604		825		(25	)		800
	unexpired term of 50 years or less		220		(31	)		189		70		(36	)		34
			2,892		(193	)		2,699		3,004		(168	)		2,836

      Cost or valuation of properties comprises:

	December 31,		December 31,
	2004		2003
	(£ million)
1999 valuation		1,517		1,567
1992 valuation		22		17
Cost		1,353		1,420
		2,892		3,004

      Properties, comprising land, buildings and certain fixtures, fittings and equipment, are included above at cost or valuation, less depreciation as required. The transitional rules of FRS 15 have been followed, permitting the carrying values of properties as at October 1, 1999 to be retained.

      The most recent valuation of properties was undertaken in 1999 and covered all properties then owned by the Group other than hotels acquired or constructed in that year and leasehold properties having an unexpired term of 50 years or less. This valuation was undertaken by external Chartered Surveyors and internationally recognized valuers (Jones Lang LaSalle Hotels) in accordance with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors. The basis of valuation was predominantly existing use value and had regard to trading potential.

Historical cost

      The comparable amounts under the historical cost convention for properties would be:

	December 31,			December 31,
	2004			2003
	(£ million)
Cost		2,667			2,771
Depreciation		(205	)		(177	)
Net book value		2,462			2,594

F-42

Note 17 — Fixed asset investments

		Investments
		and
		advances
		(£ million)
15 months ended December 31, 2003
Cost:
At October 1, 2002			339
	Exchange adjustments		(34	)
	Reclassifications		6
	Additions		42
	Disposals and repayments		(12	)
At December 31, 2003			341
Provision for diminution in value:
At October 1, 2002			121
	Exchange adjustments		(20	)
	Reclassifications		3
	Provisions made(i)		65
At December 31, 2003			169
Net book value at December 31, 2003			172
Year ended December 31, 2004
Cost:
At January 1, 2004			341
	Exchange and other adjustments		(13	)
	Reclassification to current asset investments(ii)		(195	)
	Additions		11
	Disposals and repayments		(7	)
At December 31, 2004			137
Provision for diminution in value:
At January 1, 2004			169
	Exchange adjustments		(5	)
	Reclassification to current asset investments(ii)		(133	)
	Provisions made		13
	Provisions written back		(6	)
At December 31, 2004			38
Net book value at December 31, 2004			99

(i)	Relates to a provision for diminution in value of the Group’s investment in FelCor Lodging Trust Inc. and other fixed asset investments.
(ii)	Relates to the Group’s investment in FelCor Lodging Trust Inc.

F-43

Analysis of investments

	December 31, 2004				December 31, 2003
	Cost less				Cost less
	amount		Market		amount		Market
	written off		value		written off		value
	(£ million)
Listed investments(i)		1		4		64		66
Unlisted investments		98				108
		99				172

      (i) All listed investments are listed on a recognized investment exchange.

Note 18 — Stocks

	December 31,		December 31,
	2004		2003
	(£ million)
Raw materials		9		9
Finished goods		23		21
Consumable stores		10		14
		42		44

Note 19 — Debtors

	December 31, 2004					December 31, 2003
				After					After
	Total			one year		Total			one year
	(£ million)
Trade debtors		322			—		316			—
Less: Provision for bad and doubtful debts		(37	)		—		(39	)		—
		285			—		277			—
Other debtors (net of provisions for bad and doubtful debts £5 million (2003 £6 million))		100			25		104			17
Corporate taxation		14			—		37			7
Pension prepayment		110			110		47			47
Other prepayments		47			2		58			5
		556			137		523			76

Note 20 — Current asset investments

	December 31,		December 31,
	2004		2003
	(£ million)
Equity investments		76		—
Other		40		377
		116		377

F-44

Note 21 — Creditors: amounts falling due within one year

	December 31,		December 31,
	2004		2003
	(£ million)
Borrowings — (Note 24)		43		13
Trade creditors		159		133
Corporate taxation		261		389
Other taxation and social security		50		46
Accrued charges		232		235
Proposed dividend of parent company		62		70
Proposed dividend for minority shareholders		19		16
Other creditors		187		183
		1,013		1,085

Note 22 — Creditors: amounts falling due after one year

	December 31,		December 31,
	2004		2003
	(£ million)
Borrowings — (Note 24)		1,156		988
Other creditors and deferred income		96		97
		1,252		1,085

Note 23 — Deferred taxation and other provisions for liabilities and charges

				Other provisions for liabilities and charges
	Deferred					Hotels			MAB			Onerous
	taxation			Disposals(i)		reorganization(ii)			reorganization			contracts(iii)			Pensions(iv)			Other(v)			Total
	(£ million)
At October 1, 2002		495			—		—			11			12			39			9			71
Profit and loss account		10			—		67			—			(6	)		6			(1	)		66
Expenditure		—			—		(37	)		(2	)		(4	)		—			(4	)		(47	)
Exchange and other adjustments		(2	)		—		(3	)		(6	)		3			1			—			(5	)
Separation of MAB		(189	)		—		—			(3	)		—			—			(3	)		(6	)
At December 31, 2003		314			—		27			—			5			46			1			79
Profit and loss account		(62	)		74		—			—			(1	)		8			(1	)		80
Expenditure		—			—		(17	)		—			(1	)		(2	)		—			(20	)
Exchange and other adjustments		(4	)		—		(2	)		—			—			(3	)		—			(5	)
At December 31, 2004		248			74		8			—			3			49			—			134

(i)	Relates to the disposal of 13 hotels in the Americas and 73 hotels in the United Kingdom.
(ii)	Relates to the Hotels reorganization charged as a non-operating exceptional item in 2003 and is expected to be largely utilized in the year to December 31, 2005.
(iii)	Primarily relates to onerous fixed lease contracts acquired with the InterContinental hotels business and having expiry dates to 2008.
(iv)	Relates to unfunded postretirement benefit plans (see Note 4).
(v)	Represents liabilities with varying expected utilization dates.

F-45

Deferred taxation

	December 31,			December 31,
	2004			2003
	(£ million)
Analyzed as tax on timing differences related to:
Fixed assets		252			252
Deferred gains on loan notes		122			123
Losses		(113	)		(37	)
Pension prepayment		23			14
Other		(36	)		(38	)
		248			314

      The deferred tax asset of £113 million (2003 £37 million) recognized in respect of losses includes £89 million (2003 £6 million) of capital losses available to be utilized against the realization of capital gains which are recognized as a deferred tax liability and £24 million (2003 £31 million) in respect of revenue tax losses. Tax losses with a value of £305 million (2003 £317 million), including capital losses with a value of £98 million (2003 £112 million), have not been recognized as their use is uncertain or not currently anticipated.

      No provision has been made for deferred tax on the sale of properties at their revalued amounts. The total amount unprovided is estimated at £177 million (2003 £215 million).

      No provision has been made for deferred tax on the sale of properties where gains have been, or are expected to be, deferred against expenditure on replacement assets for an indefinite period until the sale of the replacement assets. The total amount unprovided is estimated at £58 million (2003 £52 million), of which £14 million is expected to be rolled over into capital expenditure in periods up to December 31, 2004. It is not anticipated that any such tax will be payable in the foreseeable future.

Note 24 — Borrowings

Analysis of borrowings

		December 31, 2004						December 31, 2003
		Within		After one				Within		After one
		one year		year		Total		one year		year		Total
		(£ million)
Secured bank loans and overdrafts:
	Bank loans(i)		2		49		51		3		57		60
Unsecured bank loans and overdrafts:
	Bank loans		12		1,104		1,116		5		489		494
	Overdrafts		11		—		11		5		—		5
Total bank loans and overdrafts			25		1,153		1,178		13		546		559
Secured — other borrowings:
	Other loan stock (ii)		—		—		—		—		1		1
Unsecured — other borrowings:
	2007 Guaranteed Notes 5.75% (£250 million)		—		—		—		—		18		18
	2010 Guaranteed Notes 4.75% (€600 million)		18		—		18		—		420		420
	Other loan stock		—		3		3		—		3		3
Total other borrowings			18		3		21		—		442		442
Total borrowings			43		1,156		1,199		13		988		1,001

(i)	Secured by way of mortgage over individual hotel properties. The terms, rates of interest and currencies of these bank loans vary.
(ii)	Secured on the individual assets purchased by using such borrowings. The terms, rates of interest and currencies of these borrowings vary.

F-46

     The weighted average interest rate on overdrafts outstanding at December 31, 2004 is 5.75% (December 31, 2003 4.75%). Interest on all other borrowings is at variable rates unless otherwise stated. Interest on the unsecured bank loans drawn at December 31, 2004 is at a weighted average rate of 3.14% (December 31, 2003 2.2%). All borrowings are redeemable at par.

Analysis by year of repayment

		December 31, 2004						December 31, 2003
		Bank						Bank
		loans and		Other				loans and		Other
		overdrafts		borrowings		Total		overdrafts		borrowings		Total
		(£ million)
Due:
Within one year — (Note 21)			25		18		43		13		—		13
Between one and two years			2		—		2		42		—		42
Between two and three years			39		—		39		452		—		452
Between three and four years			11		—		11		33		18		51
Between four and five years			1,100		—		1,100		11		—		11
Thereafter
	By installment		—		—		—		3		—		3
	Other than by installment		1		3		4		5		424		429
Due after more than one year — (Note 22)			1,153		3		1,156		546		442		988
Total borrowings			1,178		21		1,199		559		442		1,001
Amounts repayable by installments, some of which fall due after five years			19		—		19		22		—		22

Facilities committed by banks

	December 31,		December 31,
	2004		2003
	(£ million)
Utilized		1,155		554
Unutilized		542		408
		1,697		962
Unutilized facilities expire:
Within one year		40		—
After one year but before two years		500		36
After two years		2		372
		542		408

F-47

Note 25 — Financial Instruments

      The following disclosures provide information regarding the effect of financial instruments on the financial assets and liabilities of the Group, other than short-term debtors and creditors.

Interest rate risk

      In order to manage interest rate risk, the Group enters into interest rate swap, interest rate option and forward rate agreements. At December 31, 2004 and December 31, 2003 notional principal balances and related interest rates under interest rate swaps and forward rate agreements were:

Interest rate swaps and forward rate agreements

		Expected to mature before December 31,
		2005			2006			2007		2008		2009		Thereafter		Total			Fair value(i)
At December 31, 2004
Principal			—			$200m			—		—		—		—		$200m			$(4)m
	Fixed rate payable		—			4.5	%		—		—		—		—		4.5	%
	Variable rate receivable		—			2.2	%		—		—		—		—		2.2	%
Principal			€215m			—			—		—		—		—		€215m			€(1)m
	Fixed rate payable		2.9	%		—			—		—		—		—		2.9	%
	Variable rate receivable		2.2	%		—			—		—		—		—		2.2	%
Principal			A$60m			—			—		—		—		—		A$60m			—
	Fixed rate payable		5.4	%		—			—		—		—		—		5.4	%
	Variable rate receivable		5.4	%		—			—		—		—		—		5.4	%
Principal			HK$300m			—			—		—		—		—		HK$300m			HK$(1)m
	Fixed rate payable		1.5	%		—			—		—		—		—		1.5	%
	Variable rate receivable		1.0	%		—			—		—		—		—		1.0	%

(i)  Represents the net present value of the expected cash flows discounted at current market rates of interest.

     The principal indicates the extent of the use of the instrument, but exposure is limited to the interest rate differential on the principal. At December 31, 2004 the risk was approximately equal to the fair value shown. The variable rates shown are those prevailing on December 31, 2004.

		Expected to mature before December 31,
		2004			2005			2006			2007		2008		Thereafter			Total			Fair value(i)
At December 31, 2003
Principal			$250m			$600m			$300m			—		—		—			$1,150m			$(44)m
	Fixed rate payable		5.7	%		4.4	%		4.4	%		—		—		—			4.7	%
	Variable rate receivable		1.2	%		1.2	%		1.2	%		—		—		—			1.2	%
Principal			€100m			€65m			—			—		—		—			€165m			€(4)m
	Fixed rate payable		4.0	%		4.2	%		—			—		—		—			4.1	%
	Variable rate receivable		2.2	%		2.2	%		—			—		—		—			2.2	%
Principal			—			—			—			—		—		€300m			€300m			—
	Variable rate payable		—			—			—			—		—		3.0	%		3.0	%
	Fixed rate receivable		—			—			—			—		—		4.8	%		4.8	%
Principal			A$50			—			—			—		—		—			A$50m			—
	Fixed rate payable		4.7	%		—			—			—		—		—			4.7	%
	Variable rate receivable		5.5	%		—			—			—		—		—			5.5	%
Principal			HK$370m			—			—			—		—		—			HK$370m			HK$(17)m
	Fixed rate payable		5.2	%		—			—			—		—		—			5.2	%
	Variable rate receivable		0.4	%		—			—			—		—		—			0.4	%

(i)  Represents the net present value of the expected cash flows discounted at current market rates of interest.

F-48

     The principal indicates the extent of the use of the instrument, but exposure is limited to the interest rate differential on the principal. At December 31, 2003 the risk was approximately equal to the fair value shown. The variable rates shown are those prevailing on December 31, 2003.

Interest rate option agreements

      At December 31, 2004 and December 31, 2003, the Group had not entered into any interest rate option agreements.

      At December 31, 2004 and December 31, 2003, the interest rate profile of the Group’s material financial assets and liabilities, after taking account of the interest rate swap agreements and currency swap agreements detailed above, was:

																	Interest at fixed rate
																			Weighted
		Currency									Principal								average
																	Weighted		period for
					Swap						At variable			At fixed			average		which rate
		Net debt			agreements			Total			rate(i)			rate			rate		is fixed
		(£ million)															(%)		(years)
At December 31, 2004
Current asset investments and cash at bank and in hand:
	Sterling		26			339			365			365			—			—		—
	US dollar		29			—			29			29			—			—		—
	Other		28			—			28			28			—			—		—
Borrowings:
	Sterling		(247	)		—			(247	)		(244	)		(3	)		—		5.0
	US dollar		(283	)		(52	)		(335	)		(231	)		(104	)		4.6		1.7
	Euro		(560	)		(239	)		(799	)		(596	)		(203	)		3.6		1.0
	Hong Kong dollar		(69	)		—			(69	)		(49	)		(20	)		1.5		0.8
	Other		(40	)		(48	)		(88	)		(64	)		(24	)		5.4		0.7
			(1,116	)		—			(1,116	)		(762	)		(354	)		3.9		1.2
At December 31, 2003
Current asset investments and cash at bank and in hand:
	Sterling		377			934			1,311			1,311			—			—		—
	US dollar		9			—			9			9			—			—		—
	Other		46			—			46			46			—			—		—
Borrowings:
	Sterling		(24	)		—			(24	)		(3	)		(21	)		5.0		4.1
	US dollar		(337	)		(615	)		(952	)		(301	)		(651	)		4.7		1.5
	Euro		(514	)		(258	)		(772	)		(403	)		(369	)		4.8		4.7
	Hong Kong dollar		(84	)		—			(84	)		(57	)		(27	)		5.2		0.8
	Other		(42	)		(61	)		(103	)		(82	)		(21	)		4.7		0.7
			(569	)		—			(569	)		520			(1,089	)		4.8		2.6

(i)  Primarily based on the relevant inter-bank rate.

      At December 31, 2004, the Group had investments totaling £175 million (2003 £172 million) on which no interest is receivable and which do not have a maturity date. These interests are denominated primarily in US dollars.

F-49

      The Group had other creditors and deferred income, denominated primarily in US dollars, due after one year of £96 million at December 31, 2004 (2003 £97 million) on which no interest is payable.

Currency risk

      In order to manage currency risk, the Group enters into agreements for the forward purchase or sale of foreign currencies as well as currency options. Foreign currency inflows and outflows are also netted where practical. As virtually all foreign exchange gains and losses are charged to the Statement of total recognized Group gains and losses under the hedging provisions of SSAP 20, no disclosure of the remaining currency risks has been provided on the grounds of materiality.

      At December 31, 2004, the Group had contracted to exchange within one year the equivalent of £204 million (2003 £49 million) of various currencies.

Currency swap agreements

      The Group had entered into the following currency swap agreements at December 31, 2004 and December 31, 2003:

	Deposited				Borrowed
	2004		2003		2004		2003
Sterling to US dollar		£52m		£639m		$100m		$1,097m
Sterling to euro		£239m		£250m		€350m		€364m
Sterling to Australian dollar		£48m		£42m		A$120m		A$100m
Sterling to New Zealand dollar		—		£19m		—		NZ$51m

Liquidity risk

      A liquidity analysis of the Group’s borrowings is provided in Note 24, along with details of the Group’s material unutilized committed borrowing facilities.

      The liquidity analysis of the Group’s other financial liabilities is set out below.

				December 31,
		December 31,		2003
		2004		restated(i)
		(£ million)
Other financial liabilities
Due:
	between one and two years		26		36
	between two and five years		33		40
	after five years		89		72
			148		148

(i)  Restated to include certain provisions for liabilities and charges on a basis consistent with 2004.

F-50

Fair values

      The net book values and related fair values of the Group’s financial assets and liabilities are:

								December 31, 2003
		December 31, 2004						restated(i)
		Net book			Fair			Net book			Fair
		value			value			value			value
		(£ million)
Fixed asset investments			99			102			172			174
Current asset equity investments			76			76			—			—
Net debt:
	Cash and overdrafts		32			32			50			50
	Current asset investments		40			40			361			361
	Currency swap agreements		(9	)		(9	)		16			20
	Other borrowings		(1,179	)		(1,179	)		(996	)		(1,000	)
Net debt			(1,116	)		(1,116	)		(569	)		(569	)
Other financial liabilities			(148	)		(148	)		(148	)		(148	)
Interest rate swap agreements			—			(3	)		—			(29	)
Forward exchange contracts			—			9			—			(1	)
			(1,089	)		(1,080	)		(545	)		(573	)

(i)  Restated to include certain provisions for liabilities and charges on a basis consistent with 2004.

      The fair values of listed fixed asset investments and borrowings are based on market prices at the year end. Other assets and liabilities have been fair valued by discounting expected future cash flows to present value.

Hedges

      The Group’s unrecognized gains and losses for the period on derivative financial instruments are:

	Gains			Losses			Total
	(£ million)
Unrecognized at October 1, 2002		24			(45	)		(21	)
Recognized in the period		(2	)		31			29
Arising in the period but not recognized		(18	)		(16	)		(34	)
Unrecognized at December 31, 2003		4			(30	)		(26	)
Recognized in the year		(1	)		21			20
Arising in the year but not recognized		6			6			12
Unrecognized at December 31, 2004		9			(3	)		6
Expected to be recognized in the year ending December 31, 2005		9			(1	)		8
Expected to be recognized thereafter		—			(2	)		(2	)

Counterparty risk

      The Group is exposed to loss in the event of non-performance by the counterparties to the above agreements but such non-performance is not expected to occur.

F-51

Note 26 — Goodwill eliminated

      Goodwill purchased prior to September 30, 1998 and eliminated against Group reserves is as follows:

		Cost of
		goodwill			Exchange
		eliminated			adjustments			Total
		(£ million)
Eliminated to October 1, 2002			2,403			122			2,525
	Separation of MAB		(50	)		—			(50	)
	Exchange adjustments		—			(139	)		(139	)
Eliminated to December 31, 2003			2,353			(17	)		2,336
	Exchange adjustments		—			(110	)		(110	)
Eliminated to December 31, 2004			2,353			(127	)		2,226

Note 27 — Major Acquisitions and Disposals

Year ended September 30, 2002

      There were no major acquisitions or disposals in the year ended September 30, 2002.

15 months ended December 31, 2003

Separation of MAB

	£ million
Net assets disposed
Intangible assets		12
Tangible assets		3,530
Stocks		47
Debtors		140
Current asset investments		7
Cash at bank and in hand		7
Creditors: amounts falling due within one year		(244	)
Provisions for liabilities and charges		(195	)
Debt assumed by MAB		(577	)
		2,727
Goodwill previously eliminated against reserves		50
		2,777

      There were no major acquisitions in the 15 months ended December 31, 2003.

Year ended December 31, 2004

      There were no major acquisitions or disposals in the year ended December 31, 2004.

Note 28 — Share Options

Former Six Continents Share Schemes

      Under the terms of the Separation in 2003, holders of options under the Six Continents Executive Share Option Schemes were given the opportunity to exchange their Six Continents PLC options for equivalent value new options over IHG PLC shares. As a result of this exchange, 23,195,482 IHG PLC shares were put under option at prices ranging from 295.33p to 593.29p. The exchanged options were immediately exercisable

F-52

and are not subject to performance conditions. During 2004, 7,429,736 such options were exercised, leaving a total of 12,568,562 (2003, 19,998,299) such options outstanding at prices ranging from 308.5p to 593.3p. The latest date that any rolled over options may be exercised is October 2012.

      Under the terms of the Six Continents Special Deferred Incentive Plan 59,217 IHG shares were transferred to employees in 2004, reflecting entitlements existing prior to Separation.

      Options held under the Six Continents Savings Related Share Option Schemes by eligible UK employees became exercisable for a period of six months from April 11, 2003. Options exercised during this period resulted in the issue of 1,659,515 IHG PLC shares. The remainder of these options lapsed on October 11, 2003.

New Share Plans established on Separation

Short Term Deferred Incentive Plan

      The IHG Short Term Deferred Incentive Plan (the “STDIP”) enables eligible employees, including executive directors, to receive all or part of their bonus in the form of IHG PLC shares together with, in certain cases, a matching grant of free shares. The bonus and matching shares are deferred and released in equal amounts at the end of each of the three years following deferral. Participation in the STDIP is at the discretion of the IHG directors. The number of shares is calculated by dividing a specific percentage of the participant’s salary by the average share price for a period of days prior to the date on which the shares are granted. A number of executives participated in the plan during the period and conditional rights over 232,700 IHG Shares were awarded to participants.

Performance Restricted Share Plan

      The Performance Restricted Share Plan allows executive directors and eligible employees to receive share awards, subject to the satisfaction of a performance condition, set by the Remuneration Committee, normally measured over a three-year period. Awards are normally made annually and, except in exceptional circumstances, will not exceed three times salary for executive directors. In determining the level of awards within this maximum limit, the Remuneration Committee takes into account the level of Executive Share Options already granted to the same person. As of December 31, 2004 conditional rights over 2,665,390 IHG PLC shares had been awarded to employees under the plan. The plan provides for the grant of ‘nil cost options’ to participants as an alternative to conditional share awards.

Executive Share Option Plan

      The Remuneration Committee, consisting solely of non-executive directors, may select employees, including executive directors, of the Group, for the grant of options to acquire ordinary shares in the Company. The option price will not be less than the market value of an ordinary share, or the nominal value if higher. The market value will be the quoted price on the business day preceding the date of grant, or the average of the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. The International Schedule to the Scheme extends it to executives outside the United Kingdom. Grants of options under the Executive Share Option Plan are normally made annually and except in exceptional circumstances, will not, in any year, exceed three times annual salary for executive directors. A performance condition has to be met before options can be exercised. The performance condition is set by the Remuneration Committee.

      In April 2004, options were granted to 180 employees over 6,951,420 IHG PLC shares at 494.17p per share, respectively. For options granted in 2004 the Company’s adjusted earnings per share over the three-year performance period ending December 31, 2006 must increase by at least nine percentage points over the increase in the UK Retail Prices Index for the same period for any of the award to vest. Options granted in 2004 are exercisable between 2007 and 2014, subject to achievement of the performance condition.

F-53

Sharesave Plan

      The Sharesave Plan is a savings plan whereby employees contract to save a fixed amount each month with a Savings Institution for three or five years. At the end of the savings term, employees are given the option to purchase shares at a price set before savings began. The Sharesave Plan is available to all UK employees (including executive directors) employed by participating Group companies provided they have been employed for at least one year. The plan provides for the grant of options to subscribe for ordinary shares at the higher of nominal value and not less than 80% of the middle market quotations of the ordinary shares on the three dealing days immediately following an announcement of results.

US Employee Stock Purchase Plan

      The US Employee Stock Purchase Plan will allow eligible employees resident in the United States an opportunity to acquire Company ADSs on advantageous terms. The plan, when operational, will comply with Section 423 of the US Internal Revenue Code of 1986. The option to purchase ADSs may be offered only to employees of designated subsidiary companies. The option price may not be less than the lesser of either 85% of the fair market value of an ADS on the date of grant or 85% of the fair market value of an ADS on the date of exercise. Options granted under the plan must generally be exercised within 27 months from the date of grant. The plan was not operated during fiscal 2004 and at December 31, 2004 no options had been granted under the plan.

      In any ten-year period, not more than 10% of the issued ordinary share capital of the Company may be allocated under all the employee share plans operated by the Company. In addition, in any ten-year period, not more than 5% of the issued ordinary share capital may be allocated under the discretionary share plans operated by the Company. These limits include rights to ordinary shares issued in respect of options granted under the former Six Continents Share Schemes referred to above. During the year, IHG remained within its headroom limits for the issue of new shares under share incentive schemes. As at December 31, 2004, shares equivalent to 3.74% of ordinary share capital had been allocated under discretionary schemes.

      The following table sets forth awards and options granted during 2004.

	Short Term
	Deferred		Performance
	Incentive		Restricted Share		Executive Share
	Plan		Plan		Option Plan		Sharesave Plan
Number of shares awarded		227,150		2,683,260		6,951,420		N/A

F-54

      In 2004, the Company used separate option pricing models and assumptions for each plan. The following table sets forth information about how the fair value of each option grant is calculated:

	Short Term
	Deferred			Performance
	Incentive			Restricted Share			Executive Share
	Plan			Plan			Option Plan
	2004			2004			2004
Valuation model		Binomial		Monte Carlo Simulation and Binomial				Binomial
Weighted average share price		498.0	p		550.0	p		494.0	p
Exercise price		—			—			494.0	p
Expected dividend yield		3.74	%		3.49	%		3.81	%
Risk free rate		—			—			4.73	%
Volatility		—			—			31.33	%
Term (years)(a)		2.8			3			6.5
Fair value per share		448.3	p		125.1	p		136.0	p

(a)  The expected term of the options is taken to the mid point between vesting and lapse.

      Movements in the options outstanding under these schemes for the year ended December 31, 2004 and the 15 months ended December 31, 2003 and the year ended September 30, 2002 are as follows:

	Short Term Deferred			Performance Restricted
	Incentive Plan			Share Plan
	Number of Shares			Number of Shares
Outstanding at October 1, 2002		—			—
Awarded		107,222			5,445,310
Vested		—			—
Lapsed or canceled		—			—
Outstanding at December 31, 2003		107,222			5,445,310
Granted		230,700			2,665,390
Vested		(46,816	)		—
Lapsed or canceled		(50,000	)		375,252
Outstanding at December 31, 2004		241,106			7,735,448

F-55

	InterContinental Hotels
	Group employee savings					InterContinental Hotels Group
	share schemes					executive share option schemes
	No. of			Range of		No. of			Range of
	shares			option prices		shares			option prices
	(thousand)			(p)		(thousand)			(p)
Options outstanding at October 1, 2001		4,073			400.0-886.0		20,646			469.4-1,014.5
Granted		1,883			600.0-600.0		5,308			700.0-700.4
Exercised		(285	)		400.0-734.0		(198	)		505.0-746.0
Lapsed or canceled		(876	)		400.0-886.0		(3,109	)		469.4-1,014.5
Options outstanding at September 30, 2002		4,795			470.0-886.0		22,647			505.0-1,014.5
Granted		—					658			527.5
Exercised		(31	)		470.0-654.0		(24	)		505.0-527.5
Lapsed or canceled		(969	)		470.0-886.0		(163	)		584.0-1,014.5
Transferred to MAB		—			—		(9,523	)		505.0-1,014.5
Closing Six Continents PLC share options		3,795			470.0-886.0		13,595			505.0-1,014.5
Rolled over share options		2,694					9,651
Opening InterContinental Hotels Group PLC share options		6,489			374.5-518.1		23,246			295.3-593.3
Granted		1,375			420.5		7,375			438.0-491.7
Exercised		(1,661	)		374.5-518.1		(3,242	)		295.3-466.7
Lapsed or canceled		(4,830	)		374.5-518.1		(159	)		438.0
Options outstanding at December 31, 2003		1,373			420.5		27,220			295.3-593.3
Granted		—			—		6,951			494.2
Exercised		—			—		(7,430	)		295.3-593.3
Lapsed or canceled		(111	)		420.5		—			—
Options outstanding at December 31, 2004		1,262			420.5		26,741			308.5-593.3
Options exercisable:
At December 31, 2004		—			—		12,569			308.5-593.3
At December 31, 2003		—			—		19,998			295.3-593.3
At September 30, 2002		384			470.0-734.0		4,052			505.0-1,014.5
Fair value of options granted during the period ended:
December 31, 2003					176.2					99.3
September 30, 2002					122.6					160.7

      The weighted average fair values of options granted were estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield of 2003 3%, (2002 5%), expected volatility of 2003 30%, (2002 26%), risk free interest rate of 2003 5%, (2002 5%) and expected life of 3 to 5 years (2002 3 to 5 years).

F-56

      Movements in the options outstanding under the option schemes for the year ended December 31, 2004, 15 month period ended December 31, 2003 and the year ended September 30, 2002, and the related weighted average option prices are as follows:

	InterContinental Hotels					InterContinental Hotels
	Group employee savings					Group executive share
	share schemes					option schemes
				Weighted					Weighted
	No. of			average		No. of			average
	shares			option price		shares			option price
	(000)			(Pence)		(000)			(Pence)
Options outstanding at October 1, 2001		4,073			641.9		20,646			715.4
Granted		1,883			600.0		5,308			700.4
Exercised		(285	)		474.7		(198	)		600.3
Lapsed or canceled		(876	)		673.9		(3,109	)		720.5
Options outstanding at September 30, 2002		4,795			629.5		22,647			707.7
Granted		—					658			527.5
Exercised		(31	)		493.7		(24	)		519.0
Lapsed or canceled		(969	)		641.0		(163	)		695.5
Transferred to MAB		—			—		(9,523	)		712.9
Closing Six Continents PLC		3,795			627.7		13,595			695.8
Conversion into InterContinental Hotels Group PLC share options		2,694			—		9,651			—
Rolled over InterContinental Hotels Group PLC share options		6,489			367.2		23,246			413.5
Granted		1,375			420.5		7,375			439.6
Exercised		(1,661	)		364.8		(3,242	)		375.7
Lapsed or canceled		(4,830	)		368.0		(159	)		433.5
Options outstanding at December 31, 2003		1,373			420.5		27,220			424.9
Granted		—			—		6,951			494.2
Exercised		—			—		(7,430	)		408.2
Lapsed or canceled		(111	)		420.5		—			—
Options outstanding at December 31, 2004		1,262			420.5		26,741			447.6
Options exercisable:
At December 31, 2004		—			—		12,569			426.4
At December 31, 2003		—			—		19,998			419.6
At September 30, 2002		384			665.9		4,052			848.7

F-57

      Summarized information about options outstanding at December 31, 2004 under the share option schemes is as follows:

	Options outstanding
							Options exercisable
			Weighted
			average		Weighted				Weighted
	Number		remaining		average		Number		average
Range of exercise prices (pence)	outstanding		contract life		option price		exercisable		option price
	(000)		(Years)		(Pence)		(000)		(Pence)
InterContinental Hotels Group employee savings share schemes
420.5		1,262		2.8		420.5		—		—
InterContinental Hotels Group executive share option schemes
308.5 to 353.8		2,801		5.3		343.3		2,801		343.3
353.9 to 498.0		23,333		9.8		440.3		9,161		440.9
498.1 to 593.3		607		3.3		593.3		607		593.3
		26,741		7.3		319.1		12,569		426.4

Note 29 — Financial commitments

      The Group has annual commitments under non cancelable operating leases which expire as follows:

	December 31, 2004				December 31, 2003
	Properties		Other		Properties		Other
	(£ million)
Within one year		1		2		1		2
Between one and five years		11		5		10		5
After five years		35		1		32		—
		47		8		43		7

      Total commitments under non cancelable operating leases at December 31, 2004 are as follows:

	December 31, 2004
	(£ million)
Due within one year		55
One to two years		51
Two to three years		47
Three to four years		38
Four to five years		31
Thereafter		884
		1,106

      There are a number of property and equipment leases used in the Group’s operations where, in addition to a specified minimum rental, the leases provide for contingent rentals based on percentages of revenue. The average remaining term of these leases, which generally contain renewal options, is approximately 12 years. No material restrictions or guarantees exist in the Group’s lease obligations.

F-58

Note 30 — Contracts for expenditure on fixed assets

	December 31,		December 31,
	2004		2003
	(£ million)
Contracts placed for expenditure on fixed assets not provided for in the financial statements		53		63

Note 31 — Contingencies

      Contingent liabilities not provided for in the financial statements relate to:

	December 31,		December 31,
	2004		2003
	(£ million)
Guarantees		9		11

      In limited cases, the Group may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees is £115 million. It is the view of the directors that, other than to the extent that liabilities have been provided for in these financial statements, such guarantees are not expected to result in financial loss to the Group.

      As of December 31, 2004 the Group had outstanding letters of credit of approximately £33 million mainly relating to self-insurance programs.

      The Group may guarantee loans made to facilitate third-party ownership of hotels that the Group has an equity interest in and manages. As of December 31, 2004 the Group was a guarantor of loans which could reach a maximum of £15 million.

      The Group has given warranties in respect of the disposal of certain of its former subsidiaries. It is the view of the directors that, other than to the extent that liabilities have been provided for in these financial statements, such warranties are not expected to result in financial loss to the Group.

Note 32 — Companies Act 1985

      These financial statements do not comprise the Company’s “statutory accounts” within the meaning of Section 240 of the Companies Act 1985 of Great Britain. Statutory accounts for the year ended December 31, 2004, 15 month period December 31, 2003 and the year ended September 30, 2002 have been delivered to the Registrar of Companies for England and Wales. The auditors’ reports on such accounts were unqualified.

Note 33 — Post balance sheet events

      On  December 17, 2004, the Group announced the sale of 13 hotels, in the United States, Puerto Rico and Canada, to HPT. The total consideration payable by HPT for the sales amounted to $425 million, before transaction costs, equivalent to net book value, of which $395 million was received upon the main completion of the sale on  February 16, 2005, with the remaining $30 million to be received upon the completion of the sale of the InterContinental hotel in Austin, expected to be on or around June 1, 2005. The Group will continue to manage the hotels (other than the InterContinental in Puerto Rico) under a 25 year management contract with HPT. The Group has two consecutive options to extend the contracts for 15 years each, giving a total potential contract length of up to 55 years. The InterContinental in Puerto Rico has been leased back to the Group under a 25 year lease with two consecutive options to extend the lease for 15 years each, giving a total potential lease length of up to 55 years.

      On February 28, 2005, IHG announced the acquisition by Strategic Hotel Capital, Inc. of 85% interests in two hotels in the United States. IHG will receive approximately $287 million in cash before transaction costs, based upon a total value for both hotels of $303.5 million, $12 million in excess of net book value. This transaction completed on April 1, 2005. IHG will continue to manage these hotels under a 20 year management contract with three options to extend for a further ten years each.

F-59

      On March 10, 2005, IHG announced the sale of 73 hotels in the United Kingdom. Proceeds totaled £1.0 billion before transaction costs, £22 million below net book value. This transaction is expected to complete in the second quarter of 2005. IHG will continue to manage 63 of these hotels under a 20 year management contract with two consecutive options to extend the contract for a further five years each. The remaining ten hotels will be under a temporary management agreement with IHG.

Note 34 — Fifteen months ended December 31, 2003

      As discussed in Note 1, during 2003 the Company changed its fiscal year end to December 31 and thus its financial statements for the prior fiscal period are presented for the 15 months ended December 31, 2003 as permitted by the Companies Act 1985. In accordance with the transition period reporting requirements of the US Securities and Exchange Commission, an unaudited analysis of the financial statements and notes thereto for this 15 month period showing the three month period ended December 31, 2002 and the 12 month period ended December 31, 2003 is presented below.

F-60

  (a)  Consolidated profit and loss account

		Unaudited three months ended									Unaudited 12 months ended									15 months ended
		December 31, 2002(i)									December 31, 2003(i)									December 31, 2003(i)
		Before									Before									Before
		exceptional			Exceptional						exceptional			Exceptional						exceptional			Exceptional
		items			items			Total			items			items			Total			items			items			Total
		(£ million, except per ordinary share amounts)
Turnover			871			—			871			2,612			—			2,612			3,483			—			3,483
Analyzed as:
Continuing operations			529			—			529			2,161			—			2,161			2,690			—			2,690
Discontinued operations			342			—			342			451			—			451			793			—			793
Cost of sales			(692	)		—			(692	)		(2,025	)		(51	)		(2,076	)		(2,717	)		(51	)		(2,768	)
Gross operating profit			179			—			179			587			(51	)		536			766			(51	)		715
Administrative expenses			(67	)		—			(67	)		(216	)		—			(216	)		(283	)		—			(283	)
Operating profit			112			—			112			371			(51	)		320			483			(51	)		432
Analyzed as:
Continuing operations			60			—			60			286			(51	)		235			346			(51	)		295
Discontinued operations			52			—			52			85			—			85			137			—			137
Non-operating exceptional items			—			(3	)		(3	)		—			(210	)		(210	)		—			(213	)		(213	)
Analyzed as:
Continuing operations:
	Cost of fundamental reorganization		—			—			—			—			(67	)		(67	)		—			(67	)		(67	)
	Separation costs		—			(3	)		(3	)		—			(48	)		(48	)		—			(51	)		(51	)
	Profit on disposal of fixed assets		—			—			—			—			4			4			—			4			4
	Provision against fixed asset investments		—			—			—			—			(56	)		(56	)		—			(56	)		(56	)
			—			(3	)		(3	)		—			(167	)		(167	)		—			(170	)		(170	)
Discontinued operations:
	Separation costs		—			—			—			—			(41	)		(41	)		—			(41	)		(41	)
	Loss on disposal of fixed assets		—			—			—			—			(2	)		(2	)		—			(2	)		(2	)
			—			—			—			—			(43	)		(43	)		—			(43	)		(43	)
Profit on ordinary activities before interest			112			(3	)		109			371			(261	)		110			483			(264	)		219
Interest receivable			27			—			27			77			—			77			104			—			104
Interest payable and similar charges			(39	)		—			(39	)		(112	)		—			(112	)		(151	)		—			(151	)
Premium on early settlement of debt			—			—			—			—			(136	)		(136	)		—			(136	)		(136	)
Profit/ (loss) on ordinary activities before taxation			100			(3	)		97			336			(397	)		(61	)		436			(400	)		36
Tax on profit/ (loss) on ordinary activities			(29	)		—			(29	)		(86	)		132			46			(115	)		132			17
Profit/ (loss) on ordinary activities after taxation			71			(3	)		68			250			(265	)		(15	)		321			(268	)		53
Minority equity interests			(4	)		—			(4	)		(30	)		—			(30	)		(34	)		—			(34	)
Earnings available for shareholders			67			(3	)		64			220			(265	)		(45	)		287			(268	)		19
Dividends on equity shares			—			—			—			(156	)		—			(156	)		(156	)		—			(156	)
Retained for reinvestment in the business			67			(3	)		64			64			(265	)		(201	)		131			(268	)		(137	)
Earnings per ordinary share
	Basic		9.1	p		(0.4	)p		8.7	p		30.0	p		(36.1	)p		(6.1	)p		39.1	p		(36.5	)p		2.6	p
	Diluted		—			—			8.7	p		—			—			(6.1	)p		—			—			2.6	p

(i) Restated to show exceptional tax credits on a basis consistent with 2004. This comprises prior year items which are exceptional by their size or incidence. Also restated to present the period ended December 31, 2003 on a consistent basis to the year ended December 31, 2004.

F-61

     (b)  Consolidated statement of total recognized gains and losses

		Unaudited		Unaudited
		three months		12 months			15 months
		ended		ended			ended
		December 31,		December 31,			December 31,
		2002		2003			2003
		(£ million)
Earnings available for shareholders			64		(45	)		19
Reversal of previous revaluation gains due to impairment			—		(22	)		(22	)
Exchange differences
	Goodwill eliminated		—		(139	)		(139	)
	Other assets and liabilities		9		70			79
Other recognized gains and losses			9		(91	)		(82	)
Total recognized gains and losses for the period			73		(136	)		(63	)

(c) Note of historical cost Group profits and losses

	Unaudited		Unaudited
	three months		12 months			15 months
	ended		ended			ended
	December 31,		December 31,			December 31,
	2002		2003			2003
	(£ million)
Reported profit/ (loss) on ordinary activities before taxation		97		(61	)		36
Realization of revaluation gains of previous periods		2		14			16
Historical cost profit/ (loss) on ordinary activities before taxation		99		(47	)		52
Historical cost profit/ (loss) retained after taxation, minority equity interests and dividends		66		(187	)		(121	)

F-62

     (d)  Consolidated statement of cash flows

		Unaudited			Unaudited
		three months			12 months			15 months
		ended			ended			ended
		December 31,			December 31,			December 31,
		2002			2003			2003
		(£ million)
Operating activities			164			631			795
Interest paid			(39	)		(102	)		(141	)
Costs associated with new facilities			—			(20	)		(20	)
Premium on early settlement of debt			—			(136	)		(136	)
Dividends paid to minority shareholders			—			(22	)		(22	)
Interest received			35			76			111
Returns on investments and servicing of finance			(4	)		(204	)		(208	)
UK corporation tax (paid)/ received			(14	)		39			25
Overseas corporate tax paid			(14	)		(7	)		(21	)
Taxation			(28	)		32			4
Paid:
	Intangible fixed assets		—			(10	)		(10	)
	Tangible fixed assets		(127	)		(348	)		(475	)
	Fixed asset investments		(1	)		(36	)		(37	)
Received:
	Tangible fixed assets		6			259			265
	Fixed asset investments		2			7			9
Capital expenditure and financial investment			(120	)		(128	)		(248	)
Separation costs			(7	)		(59	)		(66	)
Acquisitions and disposals			(7	)		(59	)		(66	)
Equity dividends			—			(299	)		(299	)
Net cash flow			5			(27	)		(22	)
Management of liquid resources			43			(172	)		(129	)
Financing			15			191			206
Movement in cash and overdrafts			63			(8	)		55

     (e)  Segmental Analysis

		Three months ended December 31, 2002 (unaudited)
											Total										Total
		Americas		EMEA		Asia Pacific		Central			Hotels			Soft Drinks		Total			Discontinued		Group
		(£ million)
Turnover			136		203		34		10			383			146		529			342		871
Operating profit after operating exceptional items			34		22		10		(18	)		48			12		60			52		112
Non-operating exceptional items:
	Separation costs		—		—		—		(3	)		(3	)		—		(3	)		—		(3	)
Profit on ordinary activities before interest			34		22		10		(21	)		45			12		57			52		109

F-63

		12 months ended December 31, 2003 (unaudited)
														Total											Total
		Americas			EMEA			Asia Pacific			Central			Hotels			Soft Drinks		Total			Discontinued			Group
		(£ million)
Turnover			525			807			114			41			1,487			674		2,161			451			2,612
Operating profit before exceptional items			161			92			12			(62	)		203			83		286			85			371
Operating exceptional items			(9	)		(41	)		(1	)		—			(51	)		—		(51	)		—			(51	)
Operating profit after operating exceptional items			152			51			11			(62	)		152			83		235			85			320
Non-operating exceptional items:
	Cost of fundamental reorganization		(11	)		(17	)		(2	)		(37	)		(67	)		—		(67	)		—			(67	)
	Separation costs		—			—			—			(48	)		(48	)		—		(48	)		(41	)		(89	)
	Profit/(loss) on disposal of fixed assets		10			(6	)		—			—			4			—		4			(2	)		2
	Provision against fixed asset investment		(9	)		—			—			(47	)		(56	)		—		(56	)		—			(56	)
Profit/ (loss) on ordinary activities before interest			142			28			9			(194	)		(15	)		83		68			42			110

		15 months ended December 31, 2003
														Total											Total
		Americas			EMEA			Asia Pacific			Central			Hotels			Soft Drinks		Total			Discontinued			Group
		(£ million)
Turnover			661			1,010			148			51			1,870			820		2,690			793			3,483
Operating profit before exceptional items			195			114			22			(80	)		251			95		346			137			483
Operating exceptional items			(9	)		(41	)		(1	)		—			(51	)		—		(51	)		—			(51	)
Operating profit after operating exceptional items			186			73			21			(80	)		200			95		295			137			432
Non-operating exceptional items:
	Cost of fundamental reorganization		(11	)		(17	)		(2	)		(37	)		(67	)		—		(67	)		—			(67	)
	Separation costs		—			—			—			(51	)		(51	)		—		(51	)		(41	)		(92	)
	Profit/(loss) on disposal of fixed assets		10			(6	)		—			—			4			—		4			(2	)		2
	Provision against fixed asset investments		(9	)		—			—			(47	)		(56	)		—		(56	)		—			(56	)
Profit/(loss) on ordinary activities before interest			176			50			19			(215	)		30			95		125			94			219

Turnover by geographic region

	Unaudited				Unaudited
	three months ended				12 months ended				15 months ended
	December 31, 2002				December 31, 2003				December 31, 2003
	By		By		By		By		By		By
	origin		destination		origin		destination		origin		destination
	(£ million)
United Kingdom		598		598		1,533		1,526		2,131		2,124
Rest of Europe, the Middle East and Africa		95		95		411		418		506		513
United States of America		117		117		454		454		571		571
Rest of Americas		27		27		100		100		127		127
Asia Pacific		34		34		114		114		148		148
		871		871		2,612		2,612		3,483		3,483

F-64

Profit on ordinary activities before interest by geographic region

	Unaudited		Unaudited
	three months		12 months			15 months
	ended		ended			ended
	December 31,		December 31,			December 31,
	2002		2003			2003
	(£ million)
United Kingdom		67		50			117
Rest of Europe, the Middle East and Africa		8		(15	)		(7	)
United States of America		17		46			63
Rest of Americas		7		21			28
Asia Pacific		10		8			18
		109		110			219

     (f) Operating profit

	Unaudited					Unaudited
	three months ended					12 months ended						15 months ended
	December 31, 2002					December 31, 2003						December 31, 2003
	Continuing			Discontinued		Continuing			Discontinued			Continuing			Discontinued
	(£ million)
Operating profit is stated after charging:
Staff costs (see note (g))		173			89		642			109			815			198
Depreciation of tangible fixed assets		49			22		187			32			236			54
Impairment of tangible fixed assets		—			—		51			—			51			—
Amortization of goodwill		2			1		11			(1	)		13			—
Hire of plant and machinery		4			8		14			9			18			17
Property rentals		14			10		51			14			65			24
Income from fixed asset investments		(1	)		—		(2	)		—			(3	)		—

Auditors’ remuneration paid to Ernst & Young LLP

	Unaudited		Unaudited
	three months		12 months		15 months
	ended		ended		ended
	December 31,		December 31,		December 31,
	2002		2003		2003
	(£ million)
Audit fees		0.5		2.3		2.8
Audit related fees		3.4		3.8		7.2
Tax fees		0.3		0.9		1.2
		4.2		7.0		11.2

F-65

     (g)  Staff

Costs

	Unaudited		Unaudited
	three months		12 months		15 months
	ended		ended		ended
	December 31,		December 31,		December 31,
	2002		2003		2003
	(£ million)
Wages and salaries		231		653		884
Social security costs		22		74		96
Pensions		9		24		33
		262		751		1,013

Pensions

	Unaudited			Unaudited
	three months			12 months			15 months
	ended			ended			ended
	December 31,			December 31,			December 31,
	2002			2003			2003
	(£ million)
Regular cost		9			24			33
Variations from regular cost		(2	)		(5	)		(7	)
Notional interest on prepayment		(1	)		(3	)		(4	)
Pension cost in respect of the principal plans		6			16			22
Other plans		3			8			11
		9			24			33

F-66

     (h) Exceptional items

		Unaudited three months ended								Unaudited 12 months ended									15 months ended
		December 31, 2002								December 31, 2003									December 31, 2003
		Continuing			Discontinued					Continuing			Discontinued						Continuing			Discontinued
		operations			operations		Total			operations			operations			Total			operations			operations			Total
		(£ million)
Operating exceptional items:
Hotels impairment charge			—			—		—			(51	)		—			(51	)		(51	)		—			(51	)
Total operating exceptional items			—			—		—			(51	)		—			(51	)		(51	)		—			(51	)
Non-operating exceptional items:
	Cost of fundamental reorganization		—			—		—			(67	)		—			(67	)		(67	)		—			(67	)
	Separation costs		(3	)		—		(3	)		(48	)		(41	)		(89	)		(51	)		(41	)		(92	)
	Profit/(loss) on disposal of fixed assets		—			—		—			4			(2	)		2			4			(2	)		2
	Provision against fixed asset investments		—			—		—			(56	)		—			(56	)		(56	)		—			(56	)
			(3	)		—		(3	)		(167	)		(43	)		(210	)		(170	)		(43	)		(213	)
Total exceptional items before interest and taxation			(3	)		—		(3	)		(218	)		(43	)		(261	)		(221	)		(43	)		(264	)
Premium on early settlement of debt			—			—		—			(136	)		—			(136	)		(136	)		—			(136	)
Tax credit on above items			—			—		—			36			28			64			36			28			64
Exceptional tax credit											68			—			68			68			—			68
Total exceptional items after interest and taxation			(3	)		—		(3	)		(250	)		(15	)		(265	)		(253	)		(15	)		(268	)

(i) Interest

		Unaudited		Unaudited
		three months		12 months		15 months
		ended		ended		ended
		December 31,		December 31,		December 31,
		2002		2003		2003
		(£ million)
Interest payable and similar charges:
	Bank loans and overdrafts		9		29		38
	Other		30		83		113
			39		112		151
Interest receivable			27		77		104

F-67

     (j) Tax on profit on ordinary activities

			Unaudited			Unaudited
			three months			12 months			15 months
			ended			ended			ended
			December 31,			December 31,			December 31,
Tax charge			2002(i)			2003(i)			2003(i)
			(£ million)
UK corporation tax at 30%:
	Current year			18			(14	)		4
	Prior years			(4	)		(76	)		(80	)
				14			(90	)		(76	)
Foreign tax:
	Current year			9			60			69
	Prior years			(5	)		(15	)		(20	)
				4			45			49
Total current tax				18			(45	)		(27	)
Deferred tax:
	Origination and reversal of timing differences			11			19			30
	Adjustments to estimated recoverable deferred tax assets			—			(11	)		(11	)
	Prior years			—			(9	)		(9	)
Total deferred tax				11			(1	)		10
Tax on profit on ordinary activities				29			(46	)		(17	)
Further analyzed as tax relating to:
	Profit before exceptional items			29			86			115
	Exceptional items (see note (h)):
		Non-operating		—			(64	)		(64	)
		Exceptional tax credit		—			(68	)		(68	)
				29			(46	)		(17	)

Footnotes on page F-69.

F-68

     Tax reconciliations

	Unaudited			Unaudited
	three months			12 months			15 months
	ended			ended			ended
	December 31,			December 31,			December 31,
	2002(i)			2003(i)			2003(i)
	(%)
Reconciliation of current tax rate
UK corporation tax standard rate		30.0			30.0			30.0
Permanent differences		1.8			(9.5	)		20.7
Capital allowances in excess of depreciation		(3.5	)		1.9			(12.6	)
Other timing differences		(4.2	)		55.3			(104.2	)
Net effect of different rates of tax in overseas businesses		2.6			(23.4	)		46.1
Adjustment to tax charge in respect of prior years		(9.8	)		37.3			(88.9	)
Other		0.8			—			2.0
Exceptional items		1.0			(17.3	)		32.2
Effective current tax rate		18.7			74.3			(74.7	)
Reconciliation of overall tax rate
UK corporation tax standard rate		30.0			30.0			30.0
Permanent differences		1.8			(9.5	)		20.7
Net effect of different rates of tax in overseas businesses		2.6			(23.4	)		46.1
Adjustment to tax charge in respect of prior years		(6.1	)		58.7			(115.0	)
Other		0.8			(1.3	)		4.6
Exceptional items		1.0			21.6			(33.4	)
Effective tax rate		30.1			76.1			(47.0	)

(i) Restated to show exceptional tax credits on a basis consistent with 2004. This comprises prior year items which are exceptional by their size or incidence.

     Analysis of tax charge/(credit) on continuing operations in accordance with US GAAP

	Unaudited		Unaudited
	three months		12 months			15 months
	ended		ended			ended
	December 31,		December 31,			December 31,
	2002		2003			2003
	(£ million)
Current taxes		6		(54	)		(48	)
Deferred taxes		8		(6	)		2
		14		(60	)		(46	)

F-69

     Reconciliation of UK statutory tax rate to US GAAP tax charge on income from continuing operations

	Unaudited			Unaudited
	three months			12 months			15 months
	ended			ended			ended
	December 31,			December 31,			December 31,
	2002			2003			2003
	(%)
UK corporate tax standard rate		30.0			30.0			30.0
Permanent differences		3.0			8.0			(17.8	)
Net effect of different rates of tax in overseas businesses		5.2			(37.1	)		178.5
Adjustment to tax charge in respect of prior periods		(12.5	)		124.6			(574.2	)
Other		2.0			(1.5	)		0.6
Exceptional items		2.1			33.9			(128.2	)
Effective current tax rate on continuing operations		29.8			157.9			(511.1	)

(k) Cash flow from operating activities

	Unaudited			Unaudited
	three months			12 months			15 months
	ended			ended			ended
	December 31,			December 31,			December 31,
	2002			2003			2003
	(£ million)
Operating profit before exceptional items		112			371			483
Depreciation and amortization		74			229			303
Earnings before interest, taxation, depreciation and amortization and exceptional items		186			600			786
Other non-cash items		1			(3	)		(2	)
(Increase)/decrease in stocks		(13	)		12			(1	)
(Increase)/decrease in debtors		(18	)		8			(10	)
Increase in creditors		10			59			69
Provisions expended		(2	)		(8	)		(10	)
Operating activities before expenditure relating to exceptional items		164			668			832
Cost of fundamental reorganization		—			(37	)		(37	)
Operating activities		164			631			795
Net capital expenditure		(120	)		(128	)		(248	)
Operating cash flow		44			503			547

F-70

(l) Net debt

	Unaudited
				Current
	Cash and			asset
	overdrafts			investments			Borrowings			Total
	(£ million)
At October 1, 2002		18			218			(1,413	)		(1,177	)
Net cash flow		5			—			—			5
Management of liquid resources and financing		58			(43	)		(15	)		—
Exchange and other adjustments		—			20			10			30
At December 31, 2002		81			195			(1,418	)		(1,142	)
Net cash flow		(27	)		—			—			(27	)
Management of liquid resources and financing		19			172			404			595
Separation of MAB		(7	)		(7	)		4			(10	)
Exchange and other adjustments		(16	)		17			14			15
At December 31, 2003		50			377			(996	)		(569	)

     (m) Management of liquid resources and financing

	Unaudited			Unaudited
	three months			12 months			15 months
	ended			ended			ended
	December 31,			December 31,			December 31,
	2002			2003			2003
	(£ million)
New borrowings		1,598			17,074			18,672
Other borrowings repaid		(1,583	)		(17,478	)		(19,061	)
		15			(404	)		(389	)
Debt assumed by MAB		—			577			577
Ordinary shares issued by InterContinental Hotels Group PLC		—			18			18
Financing		15			191			206
Movement in liquid resources		43			(172	)		(129	)
		58			19			77

F-71

(n) Net capital expenditure

		Unaudited			Unaudited
		three months			12 months			15 months
		ended			ended			ended
		December 31,			December 31,			December 31,
		2002			2003			2003
		(£ million)
Hotels
	Americas		14			59			73
	EMEA		54			183			237
	Asia Pacific		4			39			43
	Central		7			17			24
			79			298			377
Hotels disposal proceeds			(2	)		(253	)		(255	)
Hotels net capital expenditure			77			45			122
Soft Drinks			10			55			65
InterContinental Hotels Group PLC			87			100			187
Discontinued operations			33			28			61
			120			128			248

(o) Operating cash flow

	Unaudited			Unaudited
	three months			12 months		15 months
	ended			ended		ended
	December 31,			December 31,		December 31,
	2002			2003		2003
	(£ million)
Hotels		28			308		336
Soft Drinks		(12	)		71		59
InterContinental Hotels Group PLC		16			379		395
Discontinued operations		28			124		152
		44			503		547

(p) Earnings per share

      Basic earnings per ordinary share is calculated by dividing the earnings available to shareholders of £64 million for the three months ended December 31, 2002, £45 million loss for the 12 months ended December 31, 2003 and £19 million for the 15 months ended December 31, 2003, by 731 million, 733 million and 733 million respectively, being the weighted average number of shares, excluding investment in own shares, in issue during the period.

      Diluted earnings per ordinary share is calculated by adjusting basic earnings per ordinary share to reflect the notional exercise of the weighted average number of dilutive ordinary share options outstanding during the period. The resultant number of shares is 731 million for the three months ended December 31, 2002, 733 million for the 12 months ended December 31, 2003 and 733 million for the 15 months ended December 31, 2003.

F-72

(q) Pensions

	UK pension benefits
	Unaudited			Unaudited
	three months			12 months			15 months
	ended			ended			ended
	December 31,			December 31,			December 31,
	2002			2003			2003
	(£ million)
Service cost		8			24			32
Interest cost		18			35			53
Expected return on plan assets		(17	)		(32	)		(49	)
Net amortization and deferral		5			9			14
Cost of contractual benefits recognized		—			2			2
Net periodic pension cost		14			38			52

	US pension benefits
	Unaudited			Unaudited
	three months			12 months			15 months
	ended			ended			ended
	December 31,			December 31,			December 31,
	2002			2003			2003
	(£ million)
Interest cost		2			5			7
Expected return on plan assets		(1	)		(4	)		(5	)
Recognized net actuarial gain		—			2			2
Net periodic pension cost		1			3			4

	US pension benefits
	Unaudited		Unaudited
	three months		12 months		15 months
	ended		ended		ended
	December 31,		December 31,		December 31,
	2002		2003		2003
	(£ million)
Interest cost		—		1		1
Net periodic pension cost		—		1		1

Note 35 — Differences between United Kingdom and United States Generally Accepted Accounting Principles

      The Group financial statements are prepared in accordance with accounting principles generally accepted in the United Kingdom (“UK GAAP”) which differ from those generally accepted in the United States (“US GAAP”). The significant differences, as they apply to the Group, are summarized below.

      This US GAAP information provides a reconciliation between earnings available for shareholders under UK GAAP and net income under US GAAP and between shareholders’ funds under UK GAAP and shareholders’ equity under US GAAP, respectively.

      During 2003, the Company changed its fiscal year to December 31 and thus its financial statements are presented for the 15 months ended December 31, 2003 as permitted by the Companies Act 1985. In accordance with the transition reporting period reporting requirements of the US Securities and Exchange Commission, an unaudited analysis of the financial statements and notes thereto for this 15 month period showing the three-month period ended December 31, 2002 and the 12 month period ended December 31, 2003 is presented in Note 34. The unaudited analysis of the significant adjustments for the purposes of US GAAP for the 15 month period is set out below.

F-73

Intangible assets

      Under UK GAAP, prior to October 1, 1998, goodwill arising on acquisitions was eliminated against reserves. Since October 1, 1998, acquired goodwill has been capitalized and amortized over a period not exceeding 20 years. On disposal of a business, the profit or loss on disposal is determined after incorporating the attributable amount of any purchased goodwill, including any previously written off to reserves. Under US GAAP, goodwill arising on acquisitions prior to July 1, 2001 would be capitalized and amortized over its estimated useful life, not exceeding 40 years.

      For the purposes of US GAAP, the Group adopted Statement of Financial Accounting Standards (“FAS”) 142 ‘Goodwill and Other Intangible Assets’ on October 1, 2002 and from that date goodwill and indefinite life intangible assets, including that which arose in the period from July 1, 2001 would not be amortized but would be reviewed annually for impairment.

      Under US GAAP, separately identified definite life intangible assets arising on acquisitions would be capitalized and amortized over their useful lives. Under UK GAAP, these assets are included within goodwill.

      Under UK GAAP, where purchase consideration is contingent on a future event, the cost of acquisition includes a reasonable estimate of the amount expected to be payable in the future. Under US GAAP, contingent consideration is not recognized until the related contingencies are resolved.

Impairment of goodwill

      Under UK GAAP, goodwill is reviewed for potential impairment where there is an indicator that impairment may have occurred. The impairment is measured by comparing the carrying value of goodwill for each income-generating unit (“IGU”) with the higher of net realizable value and value in use. Under US GAAP, goodwill impairment reviews are also conducted when an indicator of impairment exists, in addition to an annual goodwill impairment test required by FAS 142. Any impairment is measured by comparing the carrying value of each reporting unit with its fair value. Where the carrying value, including any separately identified intangible assets, is greater than the fair value, the impairment loss is based on the excess of the carrying value of goodwill over the implied fair value of the goodwill. Where reporting units identified under US GAAP differ from IGUs identified under UK GAAP, a reconciling item may arise.

Tangible fixed assets

      Prior to October 1, 1999, the Group’s properties were valued from time to time by professionally qualified external valuers. Book values were adjusted to accord with the valuations, except where a directors’ valuation was deemed more appropriate. Under US GAAP, revaluations would not have been permitted.

      Depreciation is based on the book value of assets, including revaluation where appropriate. Prior to October 1, 1999, freehold pubs and hotels were not depreciated under UK GAAP, as any charge would have been immaterial given that such properties were maintained, as a matter of policy, by a program of repair and maintenance such that their residual values were at least equal to their book values. Following the introduction of FRS 15, which was implemented by the Group with effect from October 1, 1999, all properties are depreciated under UK GAAP. There is now no difference between UK GAAP and US GAAP with regard to depreciation policies.

      Under UK GAAP, the impairment of tangible fixed assets is measured by reference to discounted cash flows. Under US GAAP, if the carrying value of assets is supported by undiscounted cash flows, there is no impairment.

      The Group recognizes a profit on disposal of fixed assets provided substantially all the risks and rewards of ownership have transferred. For the purposes of US GAAP, the Group would account for sales of real estate in accordance with FAS 66 ‘Accounting for Sales of Real Estate’. If there is a significant continuing involvement with the property, any gain on sale is deferred and is recognised over the life of the long-term management contract retained on the property. In circumstances where a return of the buyer’s investment is guaranteed, a sale is not recognized and the transaction would be accounted for as a leasing arrangement.

F-74

Assets held for sale

      Under UK GAAP there is no held for sale definition. Under US GAAP, assets are classified as held for sale when the criteria under FAS 144 ‘Accounting for the impairment or disposal of long-lived assets’ are met. Assets classified as held for sale are recorded at the lower of carrying value or estimated fair value, less estimated costs to sell. Depreciation is no longer charged.

Fixed asset investments

      Fixed asset investments are stated at cost less any provision for diminution in value. Under US GAAP, these investments are recorded at market value and unrealized gains and losses are reported in other comprehensive income except for other than temporary losses which are recognized in the profit and loss account.

Pension costs

      The Group provides for the cost of retirement benefits based upon consistent percentages of employees’ pensionable pay as recommended by independent qualified actuaries. Under US GAAP, the projected benefit obligation (pension liability) in respect of the Group’s principal pension plans would be matched against the fair value of the plans’ assets and would be adjusted to reflect any unrecognized obligations or assets in determining the pension cost or credit for the year.

      At December 31, 2004, the accumulated benefit obligations exceeded the fair value of the plans’ assets. In these circumstances, US GAAP would require the recognition of the difference as a balance sheet liability and the elimination of any amounts previously recognized as a prepaid pension cost. An equal amount, but not exceeding the amount of unrecognized past service cost, would be recognized as an intangible asset with the balance reported in other comprehensive income.

Staff costs

      The Group charges against earnings the cost of shares acquired to settle awards under certain incentive schemes. The charge is based on an apportionment of the cost of shares over the period of the scheme. Prior to Separation, for the purposes of US GAAP, the Group accounted for those plans under the recognition and measurement provisions of Accounting Principles Board (“APB”) Opinion 25 ‘Accounting for Stock Issued to Employees’ and related interpretations. Under APB 25 these awards would be accounted for as variable plans and the charge would be based on the intrinsic value of the shares using the share price at the balance sheet date. Effective from the date of Separation, the Group adopted the preferable fair value recognition provisions of FAS 123 ‘Accounting for Stock-Based Compensation’. The Group selected the modified prospective method of adoption described in FAS 148 ‘Accounting for Stock-Based Compensation — Transition and Disclosure’. Compensation costs recognized since Separation are the same as those which would have been recognized had the fair value method of FAS 123 been applied from its original effective date. In accordance with the modified prospective method of adoption, results for years prior to 2002 have not been restated.

      The Group provides certain compensation arrangements in the United States through a rabbi trust. Under UK GAAP, the net deficit is recorded as a provision in the accounts and the net change in the underlying value of the assets and liabilities is recorded as a charge (or credit) to the profit and loss account. Under US GAAP, the marketable securities held by the rabbi trust would be accounted for in accordance with FAS 115 ‘Accounting for certain investments in Debt and Equity Securities’. The trust is shown gross in the balance sheet. The marketable securities held by the trust are recorded at market value and unrealised gains and losses are reported in other comprehensive income except for other than temporary which are recognised in the profit and loss account.

F-75

Derivative instruments and hedging

      The Group enters into derivative instruments to limit its exposure to interest rate and foreign exchange risk. Under UK GAAP, these instruments are measured at cost and accounted for as hedges, whereby gains and losses are deferred until the underlying transaction occurs. Under US GAAP, all derivative instruments (including those embedded in other contracts) are recognized on the balance sheet at their fair values. Changes in fair value would be recognized in net income unless specific hedge criteria are met. If a derivative qualifies for hedge accounting as defined under US GAAP, changes in fair value are recognized periodically in net income or in shareholders’ equity as a component of other comprehensive income depending on whether the derivative qualifies as a fair value or cash flow hedge. Substantially all derivatives held by the Group during the year did not qualify for hedge accounting under US GAAP.

Provisions

      Under UK GAAP, a provision for loss on disposal is recorded for the difference between the net asset value to be sold and the expected proceeds. Under US GAAP, the provision would be adjusted to remove the impact of revaluation adjustments and to include the effect of fully providing for the difference between the book and tax basis of assets and liabilities.

Deferred taxation

      The Group provides for deferred taxation in respect of timing differences, subject to certain exceptions, between the recognition of gains and losses in the financial statements and for tax purposes. Timing differences recognized, include accelerated capital allowances, unrelieved tax losses and short-term timing differences. Under US GAAP, deferred taxation would be computed on all temporary differences between the tax bases and book values of assets and liabilities which will result in taxable or tax deductible amounts arising in future years. Deferred taxation assets under UK GAAP and US GAAP are recognized only to the extent that it is more likely than not that they will be realized.

Guarantees

      The Group gives guarantees in connection with obtaining long-term management contracts. Under UK GAAP, a contingent liability under such guarantees is not recognized unless it is probable that it will result in a future loss to the Group. For the purposes of US GAAP, under FASB Interpretation (“FIN”) 45 ‘Guarantors Accounting and Disclosure Requirements for Guarantees, Including Direct Guarantees of Indebtedness of Others in the Year’, at the inception of guarantees issued after December 31, 2002, the Group would record the fair value of the guarantee as an asset and a liability, which are amortized over the life of the contract.

Discontinued operations

      Under UK GAAP, operations are classified as discontinued when the sale or termination of operations is completed by the balance sheet date, or before approval of the financial statements. In addition, the operations concerned must have a material effect on the nature and focus of operations resulting in either a withdrawal from a particular class of business or geographic market or a material reduction in turnover in a continuing market. Under US GAAP, operations are classified as discontinued when they are classified as held for sale and when the Group no longer believes it will have a significant continuing involvement.

Classification of borrowings

      Under US GAAP the amounts shown as repayable after one year for unsecured bank loans and overdrafts drawn under or supported by bank facilities with maturities of up to five years and amounting to £1,014 million (2003 £489 million) would be classified as current liabilities.

F-76

Proposed dividends

      Final ordinary dividends are provided for in the year in respect of which they are proposed by the Board for approval by the shareholders. Under US GAAP, dividends would not be provided for until the year in which they are declared.

     Reimbursements

      Under UK GAAP, reimbursements of costs incurred on managed hotel properties are not reflected in the profit and loss accounts. These costs primarily relate to payroll costs where the Group is the employer. Reimbursements are made based upon costs incurred with no added margin. For purposes of US GAAP, such reimbursements would be included in net sales and operating expenses.

Exceptional items

      Certain exceptional items are shown on the face of the profit and loss account statement after operating profit. Under US GAAP, these items would be classified as operating profit or expenses.

      Exceptional items for the year ended December 31, 2004 and the 15 and 12 months ended December 31, 2003 include restructuring charges associated with the fundamental reorganization within the Hotels business which is an expressly permitted exceptional item in accordance with FRS 3 under UK GAAP.

F-77

Net income/(loss) in accordance with US GAAP

      The significant adjustments required to convert earnings available for shareholders in accordance with UK GAAP to net income/ (loss) in accordance with US GAAP are:

						Unaudited			Unaudited
						three months			12 months			15 months
			Year ended			ended			ended			ended			Year ended
			December 31,			December 31,			December 31,			December 31,			September 30,
			2004			2002			2003			2003			2002
			(£ million, except per ADS amounts)
Earnings available for shareholders in accordance with UK GAAP				299			64			(45	)		19			457
Adjustments:
	Amortization of intangible fixed assets			7			(4	)		(5	)		(9	)		(105	)
	Impairment of intangible fixed assets on adoption of FAS 142			—			(712	)		—			(712	)		—
	Impairment of tangible fixed assets			10			—			45			45			77
	Disposal of tangible fixed assets			5			3			5			8			6
	Depreciation of tangible fixed assets			(4	)		—			(4	)		(4	)		—
	Deferred revenue			5			—			3			3			—
	Gain on held for sale equity investment			(28	)		—			—			—			—
	Pension costs			(15	)		(9	)		(14	)		(23	)		(21	)
	Staff costs			(2	)		—			(6	)		(6	)		—
	Change in fair value of derivatives(i)			52			7			26			33			79
	Provisions			69			(1	)		3			2			—
	Deferred taxation:
		on above adjustments		(3	)		2			4			6			(4	)
		methodology		(59	)		(2	)		14			12			7
				37			(716	)		71			(645	)		39
	Minority share of above adjustments			4			—			3			3			3
				41			(716	)		74			(642	)		42
Net income/(loss) in accordance with US GAAP				340			(652	)		29			(623	)		499

See page F-79 for footnotes.

F-78

      The condensed consolidated income statement presented below reflects the adjustments to attributable profit for the year.

				Unaudited			Unaudited
				three months			12 months			15 months
	Year ended			ended			ended			ended			Year ended
	December 31,			December 31,			December 31,			December 31,			September 30,
	2004			2002			2003			2003			2002
	(£ million, except per ADS amounts)
Net sales		2,377			532			2,224			2,756			2,189
Operating and administrative expense		(2,055	)		(483	)		(2,104	)		(2,587	)		(1,900	)
Interest expense, net		(33	)		(2	)		(158	)		(160	)		(17	)
Income/(loss) before income tax expense and minority interest		289			47			(38	)		9			272
Income tax credit/(expense)		53			(14	)		60			46			(87	)
Minority interest		(24	)		(4	)		(27	)		(31	)		(22	)
Income from continuing operations before cumulative effect on prior years of change in accounting principle		318			29			(5	)		24			163
Discontinued operations:
Result for period, net of tax(iv)(vi)		1			31			34			65			165
Surplus on disposal, net of tax(v)(vii)		21			—			—			—			171
		22			31			34			65			336
Cumulative effect on prior years of adoption of FAS 142		—			(712	)		—			(712	)		—
Net income/(loss)		340			(652	)		29			(623	)		499
Per ordinary share and American Depositary Share(ii) basic
Income/(loss) before cumulative effect on prior years of change in accounting principle:
Total continuing operations		44.8p			4.0p			(0.6	)p		3.3p			22.3p
Total discontinued operations		3.1p			4.2p			4.6p			8.9p			46.0p
Cumulative effect on prior years of adoption of FAS 142		—			(97.1	)p		—			(97.1	)p		—
Net income/(loss)		47.9p			(88.9	)p		4.0p			(84.9	)p		68.3p
Diluted(iii)
Income/(loss) Before cumulative effect on prior years of change in accounting principle:
Total continuing operations		42.6p			4.0p			(0.6	)p		3.3p			22.2p
Total discontinued operations		3.1p			4.2p			4.6p			8.9p			45.8p
Cumulative effect on prior years of adoption of FAS 142		—			(97.1	)p		—			(97.1	)p		—
Net income/(loss)		45.7p			(88.9	)p		4.0p			(84.9	)p		68.0p

(i)	Comprises net gains in the fair value of derivatives that do not qualify for hedge accounting of £50 million (2003 £28 million, 2002 £75 million) and net gains reclassified from other comprehensive income of £2 million (2003 £5 million, 2002 £4 million).
(ii)	Calculated by dividing net income/(loss) in accordance with US GAAP of £340 million income (2003 £623 million loss, 2002 £499 million income), by 710 million (2002 733 million, 2002 731 million) shares, being the weighted average number of ordinary shares in issue during the period. Each American Depositary Share represents one ordinary share.
(iii)	Calculated by adjusting basic net income/(loss) in accordance with US GAAP of £329 million income to reflect both the future compensation on share-based payments and the notional exercise of the

F-79

	weighted average number of dilutive ordinary share options outstanding during the period. The resulting weighted average number of ordinary shares is 720 million (2003 733 million, 2002 734 million).
(iv)	Discontinued operations relate to 11 hotels in 2004, 2003 and 2002, Mitchells & Butlers plc for 2003 and 2002 and Bass Brewers in fiscal 2002.
(v)	Relates to profit on disposal of Bass Brewers relating to the finalization of completion accounts and the release of prior over provisions for tax.
(vi)	Tax for the year ended December 31, 2004 of £1 million (15 months ended December 31, 2003 of £11 million charge, 12 months ended December 31, 2003 (unaudited) of £4 million credit, three months ended December 31, 2002 (unaudited) of £15 million charge, year ended September 30, 2002 of £76 million charge).
(vii)	Tax for the year ended December 31, 2004 of £3 million credit (15 months ended December 31, 2003 of £nil million, 12 months ended December 31, 2003 (unaudited) of £nil million, three months ended December 31, 2002 (unaudited) of £nil million, year ended September 30, 2002 of £114 million credit).

Comprehensive income/(loss)

      Comprehensive income under US GAAP is as follows:

				Unaudited			Unaudited
				three months			12 months			15 months
	Year ended			ended			ended			ended			Year ended
	December 31,			December 31,			December 31,			December 31,			September 30,
	2004			2002			2003			2003			2002
	(£ million)
Net income/(loss) in accordance with US GAAP		340			(652	)		29			(623	)		499
Other comprehensive income:
Transfer to MAB of minimum pension liability on April 1, 2003, net of tax of £108 million		—			—			253			253			—
Minimum pension liability, net of tax of £1 million (2003 £22 million, 2002 £108 million)		8			(37	)		(14	)		(51	)		(253	)
Change in valuation of marketable securities, net of tax of £3 million (2003 and 2002 £nil million)		29			(9	)		40			31			(1	)
Change in fair value of derivatives, net of tax of £nil million (2003 £1 million, 2002 £1 million)		(2	)		(1	)		(3	)		(4	)		(3	)
Currency translation differences		74			(21	)		(99	)		(120	)		(107	)
		109			(68	)		177			109			(364	)
Comprehensive income/(loss) in accordance with US GAAP		449			(720	)		206			(514	)		135

F-80

      Movements in other comprehensive income amounts (net of related tax) are as follows:

	Minimum			Change in			Derivative
	pension			valuation of			financial			Currency
	liability			marketable			instruments			translation
	adjustment			securities			gains/(losses)			differences			Total
	(£ million)
At October 1, 2001		—			(28	)		11			237			220
Movement in the year		(253	)		(1	)		(3	)		(107	)		(364	)
At September 30, 2002		(253	)		(29	)		8			130			(144	)
Movement in the three months to December 31, 2002 (unaudited)		(37	)		(9	)		(1	)		(21	)		(68	)
Movement in the 12 months to December 31, 2003 (unaudited)		239			40			(3	)		(99	)		177
At December 31, 2003		(51	)		2			4			10			(35	)
Movement in the year		8			29			(2	)		74			109
At December 31, 2004		(43	)		31			2			84			74

F-81

Shareholders’ equity in accordance with US GAAP

      The significant adjustments required to convert shareholders’ funds in accordance with UK GAAP to shareholders’ equity in accordance with US GAAP are:

				December 31,			December 31,
				2004			2003
				(£ million)
Shareholders’ funds in accordance with UK GAAP					1,977			2,554
Adjustments:
	Intangible fixed assets:
		Cost: goodwill			781			837
		other			689			843
		Accumulated amortization			(245	)		(257	)
					1,225			1,423
	Intangible asset — minimum pension liability				3			6
					1,228			1,429
	Tangible fixed assets:
		Cost			(82	)		(68	)
		Assets held for sale			(300	)		—
		Accumulated depreciation			60			33
					(322	)		(35	)
	Fixed asset investments:
		Investments and advances			3			2
		Assets held for sale			300			—
	Current assets:
		Pension prepayment			(52	)		(47	)
		Other debtors			22			22
		Derivatives			9			4
	Creditors: amounts falling due within one year:
		Other creditors			5			(2	)
		Proposed dividend of parent company			62			70
		Proposed dividend for minority shareholders			19			16
		Derivatives			(1	)		(6	)
	Creditors: amounts falling due after one year:
		Other creditors			(99	)		(114	)
		Derivatives			(2	)		(24	)
	Provisions for liabilities and charges:
		Provisions			98			25
		Accrued pension cost			(64	)		(54	)
		Deferred taxation:
			on above adjustments		(187	)		(238	)
			methodology		(155	)		(169	)
					864			879
	Minority share of above adjustments				(45	)		(53	)
					819			826
Shareholders’ equity in accordance with US GAAP					2,796			3,380

F-82

Additional information required by US GAAP in respect of earnings per share

      The following table sets forth the computation of basic and diluted earnings per share from continuing operations under US GAAP:

					Unaudited			Unaudited
					three months			12 months			15 months
		Year ended			ended			ended			ended			Year ended
		December 31,			December 31,			December 31,			December 31,			September 30,
		2004			2002			2003			2003			2002
		(£ million, except per ADS amounts)
Numerator:
	Numerator for basic earnings per ordinary share and ADS		318			29			(5	)		24			163
	Deduct: FAS No. 123 compensation cost		(15	)		—			—			—			—
	Tax effect		4			—			—			—			—
	Numerator for diluted earnings per ordinary share and ADS		307			29			(5	)		24			163
Denominator:
	Denominator for basic earnings per ordinary share and ADS		710			733			733			733			731
	Effect of dilutive securities:
	Employee options and restricted stock awards		10			—			—			—			3
	Denominator for diluted earnings per ordinary share and ADS		720			733			733			733			734
Basic earnings per ordinary share and ADS from continuing operations			44.8p			4.0	p		(0.6	)p		3.3	p		22.3p
Diluted earnings per ordinary share and ADS from continuing operations			42.6p			4.0	p		(0.6	)p		3.3	p		22.2p

Consolidated statement of cash flows

      The consolidated statement of cash flows prepared under UK GAAP presents substantially the same information as that required under US GAAP but may differ with regard to classification of items within the statements and as regards the definition of cash under UK GAAP and cash and cash equivalents under US GAAP.

      US GAAP requires that cash and cash equivalents include short-term highly liquid investments but do not include bank overdrafts. Under UK GAAP, cash flows are presented separately for operating activities, dividends received from associates, returns on investments and servicing of finance, taxation, capital expenditure and financial investment, acquisitions, equity dividends and management of liquid resources and financing. US GAAP, however, require only three categories of cash flow activity to be reported: operating, investing and financing. Cash flows from taxation and returns on investments and servicing of finance shown under UK GAAP would, with the exception of dividends paid to minority shareholders, be included as operating activities under US GAAP. The payment of dividends would be included as a financing activity under US GAAP. Under US GAAP, capitalized interest is treated as part of the cost of the asset to which it relates and is thus included as part of investing cash flows. Under UK GAAP all interest is treated as part of returns on investments and servicing of finance. Under US GAAP capital expenditure and financial investment and acquisitions are reported within investing activities.

F-83

      The categories of cash flow activity under US GAAP can be summarized as follows:

					Unaudited			Unaudited
					three months			12 months			15 months
		Year ended			ended			ended			ended			Year ended
		December 31,			December 31,			December 31,			December 31,			September 30,
		2004			2002			2003			2003			2002
		(£ million)
Cash inflow from operating activities			439			132			481			613			535
Cash outflow on investing activities			(148	)		(127	)		(200	)		(327	)		(320	)
Cash outflow from financing activities			(620	)		(32	)		(147	)		(179	)		(220	)
(Decrease)/increase in cash and cash equivalents			(329	)		(27	)		134			107			(5	)
Effect of foreign exchange rate changes			(17	)		20			1			21			82
Cash and cash equivalents
	At start of the fiscal year		429			301			294			301			224
	At end of the fiscal year		83			294			429			429			301

Additional information required by US GAAP in respect of the Group’s principal pension plans

      The pension cost for these plans computed in accordance with the requirements of US GAAP comprises:

	UK pension benefits									US pension benefits									US postretirement benefits
				15 months									15 months								15 months
	Year ended			ended			Year ended			Year ended			ended			Year ended			Year ended		ended		Year ended
	December 31,			December 31,			September 30,			December 31,			December 31,			September 30,			December 31,		December 31,		September 30,
	2004			2003			2002			2004			2003			2002			2004		2003		2002
	(£ million)
Service cost		17			34			31			—			—			—			—		—		—
Interest cost		26			53			66			5			7			9			1		1		1
Expected return on plan assets		(25	)		(49	)		(76	)		(4	)		(5	)		(4	)		—		—		—
Net amortization and deferral		7			14			2			—			—			—			—		—		—
Recognized net actuarial gain		—			—			—			2			2			—			—		—		—
Net periodic pension cost		25			52			23			3			4			5			1		1		1

      The major assumptions used in computing the pension expense were:

	UK pension benefits						US pension benefits						US postretirement benefits
			15 months				Year months		15 months				Year months		15 months
	Year ended		ended		Year ended		ended		ended		Year ended		ended		ended		Year ended
	December 31,		December 31,		September 31,		December 31,		December 31,		September 31,		December 31,		December 31,		September 31,
	2004		2003		2002		2004		2003		2002		2004		2003		2002
Expected long-term rate of return on plan assets		6.90%		6.90%		7.00%		8.00%		8.00%		9.00%		—		—		—
Discount rate		5.30%		5.40%		5.50%		5.75%		6.30%		6.80%		5.75%		6.30%		6.80%
Expected long-term rate of earnings increases		4.30%		4.30%		3.80%		3.50%		3.50%		3.50%		—		—		—

      The plans’ expected return on assets, as shown above, is based on the Company’s expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, as well as current economic and capital market conditions.

F-84

      The assumed health care cost trends rates for medical and dental plans at December 31, 2004 and 2003 and September 30, 2002 are as follows:

	2004			2003			2002
Health care cost trend rate assumed for next year		9.5	%		10.0	%		7.5	%
Rate that the cost trend rate gradually declines to		4.5	%		4.5	%		5.0	%
Year that rate reaches the assumed ultimate rate		2014			2014			2007

      A one-percentage point increase/ (decrease) in assumed health care costs trend rate would increase/ (decrease) the accumulated post employment benefit obligations as of December 31, 2004 and 2003, by £1 million, and would increase/ (decrease) the total of the service and interest cost components of net post-employment health care cost for the period then ended by approximately £nil million.

		UK pensions benefits						US pensions benefits						US postretirement benefits
		Year ended			15 months ended			Year ended			15 months ended			Year ended			15 months ended
		December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
Change in benefit obligation		2004			2003			2004			2003			2004			2003
		(£ million)
Benefit obligation at beginning of period			477			1,311			90			95			12			9
	Service cost		17			34			—			—			—			—
	Members contributions		—			6			—			—			—			—
	Interest expense		26			53			5			7			1			1
	Benefits paid		(12	)		(50	)		(5	)		(7	)		(1	)		(1	)
	Age-related national insurance rebates		5			5			—			—			—			—
	Bulk transfer to scheme		27			—			—			—			—			—
	Actuarial loss arising in the year		60			128			5			7			—			3
	Separation of MAB		—			(1,010	)		—			—			—			—
	Exchange		—			—			(6	)		(12	)		(1	)		—
Benefit obligation at end of period			600			477			89			90			11			12

F-85

      The following table sets forth movements in fair value of the plan assets and the projected benefit obligation of the principal plan.

		UK pensions benefits						US pensions benefits						US postretirement benefits
		Year ended			15 months ended			Year ended			15 months ended			Year ended			15 months ended
		December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
Changes in plan assets		2004			2003			2004			2003			2004			2003
		(£ million)
Fair value of plan assets at beginning of period			355			996			48			49			—			—
	Contributions payable		72			45			11			1			1			1
	Age-related national insurance rebates		5			5			—			—			—			—
	Benefits paid		(12	)		(50	)		(5	)		(7	)		(1	)		(1	)
	Bulk Transfer to scheme		14			—			—			—			—			—
	Actual return on assets		38			—			5			—			—			—
	Actuarial loss on assets		—			81			—			10			—			—
	Separation of MAB		—			(722	)		—			—			—			—
	Exchange		—			—			(4	)		(5	)		—			—
Fair value of plan assets at end of period			472			355			55			48			—			—
Accumulated benefit obligation (all vested)			519			409			87			88			—			—
Fair value of plan assets			472			355			55			48			—			—
Projected benefit obligation			(600	)		(477	)		(89	)		(90	)		(11	)		(12	)
Net plan obligation			(128	)		(122	)		(34	)		(42	)		(11	)		(12	)
Unrecognized transitional asset, net of amortization			—			(1	)		—			—			—			—
Unrecognized prior service cost			5			5			—			—			—			—
Unrecognized net loss			199			142			23			20			3			3
Net amount recognized			76			24			(11	)		(22	)		(8	)		(9	)
The amounts recognized in the balance sheet consist of:
Prepaid pension cost			57			—			—			—			—			—
Accrued pension cost			(54	)		(54	)		(31	)		(40	)		(8	)		(8	)
Pension costs			—			—			—			—			—			(1	)
Intangible asset			3			6			—			—			—			—
Other comprehensive income (before tax)			70			72			20			18			—			—
Net amount recognized			76			24			(11	)		(22	)		(8	)		(9	)

Additional information required by US GAAP in respect of Group’s share options

Accounting and disclosure of stock-based compensation

      FAS 123 ‘Accounting for Stock-Based Compensation’, established accounting disclosure standards for stock-based employee compensation plans. The statement gives companies the option of continuing to account for such costs under the intrinsic value accounting provisions set out in Accounting Principles Board Opinion 25 “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations. Prior to Separation, for the purposes of US GAAP, the Group accounted for those plans under the recognition and measurement provisions of APB 25. Under APB 25 these awards would be accounted for as variable plans and the charge would be based on the intrinsic value of the shares using the share price at the balance sheet date. Had the Group chosen to account for such costs under FAS 123, net (loss)/income for the 15 months ended December 31, 2003 would have been a loss of £631 million (2002 £497 million income), basic net income per

F-86

ordinary share and ADS would have been (86.1)p (2002 68.0p) and diluted net income per ordinary share and ADS would have been (86.1)p (2002 67.7p).

      Effective from the date of Separation, the Group adopted the fair value recognition provisions of FAS 123. The Group selected the modified prospective method of adoption described in FAS 148 ‘Accounting for Stock-Based Compensation — Transition and Disclosure’. Compensation costs recognized since Separation is the same as that which would have been recognized had the fair value method of FAS 123 been applied from its original effective date.

      Details of the fair values of stock awards in the year are given in Note 28. Because options vest over several years and additional options grants are expected, the effects of these hypothetical calculations are not likely to be representative of similar future calculations.

Concentrations of credit risk

      Potential concentrations of credit risk to the Group consist principally of short-term cash investments, trade loans and trade debtors.

      The Group only deposits short-term cash surpluses with counterparties with an A credit rating or better, or those providing adequate security and, by policy, limits the amount of credit exposure to any one bank or institution. Trade debtors in the United Kingdom comprise a large, widespread customer base. Trade debtors in the United States are widely dispersed and include a significant amount of debtors due from InterContinental Hotels franchisees.

      At December 31, 2004, the Group did not consider there to be any significant concentration of credit risk.

Fair values of financial instruments

      The following information is presented in compliance with the requirements of US GAAP. The carrying amounts and fair values of the material financial instruments of the Group are as follows:

		December 31,						December 31,
		2004						2003
		Carrying			Fair			Carrying			Fair
		amount			value			amount			value
		(£ million)
Assets
Cash			43			43			55			55
Current asset investments			116			116			377			381
Listed investments			1			4			64			66
Unlisted investments			98			98			108			108
Liabilities
Total borrowings:
	Loan capital and noncurrent bank loans		(1,174	)		(1,174	)		(988	)		(992	)
	Current bank loans and overdrafts		(25	)		(25	)		(13	)		(13	)
Off-balance sheet instruments
Interest rate swaps						(3	)					(29	)
Foreign exchange contracts						9						(1	)

      The following methods and assumptions were used by the Group in establishing its fair value disclosures for financial instruments:

      Cash: the carrying amount reported in the balance sheet for cash at bank approximates to its fair value.

      Current asset investments: the carrying amount reported in the balance sheet for current asset investments approximates their fair value.

F-87

      Listed investments: these investments are valued based on market prices.

      Unlisted investments: the fair value of these investments approximates their replacement cost.

      Borrowings: the fair value of the Group’s loan capital and noncurrent bank loans (including short-term portion) are estimated using quoted prices, or where such prices are not available, discounted cash flow analyses, based on available market rates of interest for similar types of arrangements and maturities. The carrying amount of the bank loans and overdrafts approximates their fair value.

      Off-balance sheet instruments: the fair value of the Group’s interest rate swaps is based on discounted cash flow analyses. The fair value of other instruments is based on contracted and relevant exchange rates.

Additional information required by US GAAP in respect of accounting for the impairment of fixed assets and fixed assets to be disposed of

      A summary of the impairment charges that have been recognized under US GAAP is as follows:

					Three months		12 months			15 months
		Year ended			ended		ended			ended			Year ended
		December 31,			December 31,		December 31,			December 31,			September 30,
		2004			2002		2003			2003			2002
		(£ million)
Assets to be disposed of			—			—		9			9			14
Assets to be held and used			18			—		6			6			—
Total			18			—		15			15			14
Disclosed as:
Impairment charges recognized under UK GAAP:
	Operating exceptional — impairment charges		28			—		51			51			77
	Non-operating exceptional — provision for loss on disposal		74			—		9			9			14
Charge for the year under UK GAAP			102			—		60			60			91
Less: Adjustment to impairment recognized under US GAAP			(84	)		—		(45	)		(45	)		(77	)
Total charge before cumulative effect of a change in accounting principle			18			—		15			15			14
Add: Cumulative effect on adoption of FAS 142 under US GAAP			—			712		—			712			—
			18			712		15			727			14
Charged against:
Intangible assets — goodwill			—			712		—			712			—
Tangible assets			18			—		15			15			14
			18			712		15			727			14

      The £712 million goodwill impairment charge recognized as a result of the implementation of FAS 142 under US GAAP includes £225 million in respect of Americas Hotels owned and leased operations and £487 million in respect of EMEA hotels owned and leased operations. The FAS 142 impairment charges recorded in respect of these two reporting units have arisen as a result of the present value of projected cash flows of these reporting units being insufficient to cover the carrying value of the net asset, including both pre and post 1998 goodwill. Reporting units have been determined by reference to the way IHG conducts business and reflects internal management structures. FAS 142 does not provide prescriptive guidance for the allocation

F-88

of goodwill hence for the purposes of the impairment review trademark balances have been allocated to reporting units based on historic revenue figures and goodwill has been allocated on the basis of historic operating profit, which management consider to be the most appropriate methodology.

      The operating exceptional charge recognized under UK GAAP of £28 million recognized in 2004, and £51 million recognized in 2003, and £77 million recognized in 2002 relate to various hotels within Americas, EMEA and Asia Pacific, where it has been necessary to make an impairment charge for the difference in these hotels’ carrying values compared to the higher of value in use or net realizable value.

      With the exception of the impairment charge of £18 million in 2004 and £6 million in 2003 in respect of short leasehold properties, the UK GAAP impairment charge is reversed under US GAAP as the impairment test is first performed using undiscounted cash flows and is therefore shown as a reduction in the difference between the charge under UK GAAP and US GAAP in the reconciliation to US GAAP accounting principles.

Additional information required by US GAAP in respect of accounting for intangible assets subject to amortization

      Other intangible assets subject to amortization consist of:

	December 31, 2004							December 31, 2003
			Accumulated			Net book				Accumulated			Net book
	Cost		amortization			value		Cost		amortization			value
	(£ million)
Management & franchise contracts		307		(270	)		37		326		(291	)		35
Other		4		(1	)		3		4		—			4
		311		(271	)		40		330		(291	)		39

      The estimated aggregate amortization expense for each of the next five years is £5 million, £5 million, £5 million, £4 million and £4 million. The weighted average remaining life of intangible assets subject to amortization is 12 years.

Additional information required by US GAAP in respect of accounting for intangible assets not subject to amortization

	December 31, 2004						December 31, 2003
	Hotels		Soft drinks		Total		Hotels		Soft drinks		Total
	(£ million)
Goodwill		840		124		964		907		122		1,029
Trademarks		474		—		474		513		—		513
Total		1,314		124		1,438		1,420		122		1,542

Additional pro forma information required by US GAAP in respect of FAS 142

      FAS 142 requires that in the period of adoption, and until all periods presented are accounted for in accordance with the standard, a reconciliation of reported net income to the adjusted net income should be disclosed along with adjusted earnings per share, as if the standard had been adopted for each period.

F-89

      Net income/(loss) and, basic and diluted earnings per ordinary share and ADS, adjusted to exclude amortization expense no longer required due to the adoption of FAS 142, are as follows:

					Unaudited			Unaudited
					three months			12 months		15 months
			Year ended		ended			ended		ended			Year ended
			December 31,		December 31,			December 31,		December 31,			September 30,
			2004		2002			2003		2003			2002
			(£ million, except per ADS amounts)
Net income/(loss) in accordance with US GAAP, as reported				340		(652	)		29		(623	)		499
	Add back: goodwill amortization			—		—			—		—			69
		trademarks amortization		—		—			—		—			13
Pro forma net income/(loss) in accordance with US GAAP				340		(652	)		29		(623	)		581
Pro forma basic net income/(loss) per ordinary share and ADS				47.9p		(88.9	)p		4.0p		(84.9	)p		68.3p
	Add back: goodwill amortization			—		—			—		—			9.4p
		trademarks amortization		—		—			—		—			1.8p
Pro forma basic net income/(loss) per ordinary share and ADS				47.9p		(88.9	)p		4.0p		(84.9	)p		79.5p
Pro forma diluted net income/(loss) per ordinary share and ADS				45.7p		(88.9	)p		4.0p		(84.9	)p		68.0p
	Add back: goodwill amortization			—		—			—		—			9.4p
		trademarks amortization		—		—			—		—			1.8p
Pro forma diluted net income/(loss) per ordinary share and ADS				45.7p		(88.9	)p		4.0p		(84.9	)p		79.2p

Additional information required by US GAAP in respect of taxation

Analysis of tax (credit)/charge on continuing operations in accordance with US GAAP

	Year ended			Year ended			Year ended
	December 31, 2004			December 31, 2003			December 31, 2002
	(£ million)
Current taxes		(60	)		(48	)		93
Deferred taxes		7			2			(6	)
		(53	)		(46	)		87

F-90

Reconciliation of UK statutory tax rate to US GAAP tax charge on income from continuing operations

	Year ended			Year ended			Year ended
	December 31, 2004			December 31, 2003			December 31, 2002
	(%)
UK corporate tax standard rate		30.0			30.0			30.0
Permanent differences		1.1			(17.8	)		(4.0	)
Net effect of different rates of tax in overseas business		6.7			178.5			5.0
Adjustment to tax charge in respect of prior periods		(20.4	)		(574.2	)		(5.6	)
Other		(0.2	)		0.6			(0.5	)
Exceptional items		(35.5	)		(128.2	)		7.1
Effective current tax rate on continuing operations		(18.3	)		(511.1	)		32.0

                  Deferred taxation in accordance with US GAAP

	Deferred tax
	(£ million)
At September 30, 2002		862
Exchange and other adjustments		(36)
Profit and loss account		(8)
Separation of MAB		(97)
At December 31, 2003		721
Exchange and other adjustments		(20)
Profit and loss account		—
Adjustment to other intangible assets(1)		(110)
At December 31, 2004		591

(1) In 2004, the adjustment to other intangible assets relates to the recognition of pre-acquisition losses in respect of which a valuation allowance had previously been made.

F-91

      The analysis of the deferred taxation liability required by US GAAP is as follows:

		December 31, 2004			December 31, 2003
		(£ million)
Deferred taxation liabilities:
	Excess of book value over taxation value of fixed assets		590			667
	Other temporary differences		197			188
			787			855
Deferred taxation assets:
	Taxation effect of losses carried forward		(113	)		(37	)
	Taxation effect of pension cost liability		(6	)		(13	)
	Other temporary differences		(77	)		(84	)
			(196	)		(134	)
			591			721
Of which:
	Current		(45	)		(4	)
	Noncurrent		636			725
			591			721

      The taxation effect of losses carried forward is stated net of a valuation allowance of £305 million (2003 £317 million).

      On release, £16 million (2003 £16 million) of the valuation allowance would be recognized in goodwill. A reduction of £88 million has been made to the opening valuation allowance in respect of a change in judgement regarding the realizability of deferred tax assets. There are no material expiration dates in respect of operating losses.

      No deferred tax is provided in respect of temporary differences relating to the unremitted earnings of certain overseas subsidiaries and joint ventures on the basis that the differences are permanent in nature. It is not practicable to determine the amounts unprovided.

F-92

Additional information required under US GAAP in respect of restructuring provisions

	IHG												MAB
	Employee			Facilities			Other			IHG			MAB			Group
	costs			costs			costs			total			reorganization			total
	(£ million)
Balance at October 1, 2001		—			—			—			—			9			9
Profit and loss account		—			—			—			—			2			2
Balance at September 30, 2002		—			—			—			—			11			11
Expenditure		—			—			—			—			(1	)		(1	)
Balance at December 31, 2002		—			—			—			—			10			10
Exchange and other adjustments		—			(3	)		—			(3	)		(6	)		(9	)
Profit and loss account		30			13			15			58						58
Expenditure		(23	)		(3	)		(11	)		(37	)		(1	)		(38	)
Separation of MAB		—			—			—			—			(3	)		(3	)
Balance at December 31, 2003		7			7			4			18			—			18
Expenditure		(7	)		(3	)		(4	)		(14	)		—			(14	)
Balance at December 31, 2004		—			4			—			4			—			4

New Accounting Standards

      FIN 46, “Consolidation of Variable Interest Entities” (“the Interpretation”), was effective for all enterprises with variable interest in variable interest entities created after January 31, 2003. FIN 46(R), which was revised in December 2003, was effective for all entities to which the provisions of FIN 46 were not applied as of December 24, 2003. We applied the provisions of FIN 46(R) to all entities subject to the Interpretation as of December 31, 2004. Under FIN 46(R), if an entity is determined to be a variable interest entity (“VIE”), it must be consolidated by the enterprise that absorbs the majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, the “primary beneficiary”.

      The Group’s evaluation of the provisions of FIN 46 as it relates to its various forms of arrangements focused primarily on a review of the key terms of its equity investment agreements, management contracts and franchise agreements against the criteria in FIN 46 to determine if any of these arrangements qualify as VIEs. In general, a VIE represents a structure used for business purposes that either does not have equity investors with voting rights or that has equity investors that do not provide sufficient financial resources for the entity to support its activities. However, other contractual arrangements could qualify an entity as a VIE and designate which party to the contract is the primary beneficiary.

      The Group’s evaluation of its equity investments, management contracts and franchise agreements identified one management contract, due to the terms of performance guarantees, and one equity investment, in which it has variable interests. For those entities in which the Group holds a variable interest, it determined that it was not the primary beneficiary and as such was not required to consolidate the VIEs. The performance guarantee associated with the management contracts with HPT does not expose the Group to the majority of expected cash flow variability and therefore those hotels have not been consolidated. As of December 31, 2004, the maximum exposure to loss on these contracts, consisting of future management fees and the potential obligation to fund the performance guarantee, totaled an aggregate amount of approximately £63 million over the life of the contracts. The Group also has one significant equity interest in an entity that is a VIE. In November 2003, the Group purchased a one-third share of an equity venture that owns the InterContinental Warsaw which is managed by the Group. The equity investment in the VIE totaled £13 million at December 31, 2004 and £12 million at December 31, 2003

      In June 2004, the Emerging Issues Task Force issued EITF Issue No. 03-1 “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments”. This issue sets forth

F-93

guidance with respect to the meaning of other-than-temporary impairment and its application to debt and equity securities within the scope of FAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” (“FAS No. 115”) and equity securities that are not subject to the scope of FAS No. 115 and not accounted for under the equity method of accounting. The Task Force reached a consensus that the EITF 03-1 application guidance should be used to determine when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of an impairment loss. There were no unrealized losses requiring additional disclosures in the Group’s December 2004 financial statements. The Group will continue to evaluate the impact of EITF 03-1 on its financial position and results of operations.

      In November 2004, the FASB issued FAS 151 “Inventory Costs, an amendment of Accounting Research Bulletin No. 43, Chapter 4.” FAS 151 requires the abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) be recorded as current period charges and that the allocation of fixed production overheads to inventory be based on the normal capacity of the production facilities. FAS 151 is effective for our company on January 1, 2006. The Group does not believe that the adoption of FAS 151 will have a material impact upon its financial position and results of operations.

      In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment, a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation.” Generally, the approach in FAS 123(R) is similar to the approach described in FAS 123. FAS 123(R) requires all share-based payments to employees, including grants of share options, to be recognized in the income statement based on their fair values. The Group plans to adopt FAS 123(R) for the financial year ended December 2005.

      In December 2004, the FASB issued SFAS No. 153 “Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29” which replaces the current exception from fair value measurement of non-monetary exchanges of similar productive assets with a general exception from fair value measurement for exchanges of non-monetary assets that do not have commercial substance. SFAS No. 153 shall be applied prospectively and is effective for non-monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS No. 153 cannot be predicted at this time because it will depend on whether applicable non-monetary transactions take place in the future.

F-94

INTERCONTINENTAL HOTELS GROUP PLC

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

				Additions
		Balance at		charged to								Balance at
		beginning		costs and		Exchange						end of
		of period		expenses		differences			Deductions			period
Year ended December 31, 2004
Provisions for bad and doubtful debts			45		20		(3	)		(19	)		43
15 months ended December 31, 2003
Provisions for bad and doubtful debts			55		9		(6	)		(13	)		45
	Three months ended December 31, 2003 (unaudited)
	Provision for bad and doubtful debts		55		2		(2	)		(5	)		50
	12 months ended December 31, 2003 (unaudited)
	Provision for bad and doubtful debts		50		7		(4	)		(8	)		45
Year ended September 30, 2002
Provisions for bad and doubtful debts			41		24		1			(9	)		55

S-1

SIGNATURES

      The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

INTERCONTINENTAL HOTELS GROUP PLC

(Registrant)

By:  /s/ Richard Solomons

Name: Richard Solomons

Title:   Finance Director

Date: 3rd May, 2005

EX-4.12

Exhibit 4(a)(ii)

EXECUTION COPY

£1,600,000,000

FACILITY AGREEMENT

dated 9 November 2004

for

INTERCONTINENTAL HOTELS GROUP PLC

arranged by
THE BANK OF TOKYO-MITSUBISHI, LTD.
BARCLAYS CAPITAL
CITIGROUP GLOBAL MARKETS LIMITED
HSBC BANK plc
J.P. MORGAN plc
LLOYDS TSB BANK plc
SG CORPORATE & INVESTMENT BANKING
THE ROYAL BANK OF SCOTLAND plc
WESTLB AG, LONDON BRANCH

with

  HSBC BANK plc

acting as Agent

Linklaters

Ref: PHPS/JLM/VR

CONTENTS

CLAUSE		PAGE
	SECTION 1 INTERPRETATION
1.	Definitions and interpretation		1
	SECTION 2 THE FACILITIES
2.	The Facilities		15
3.	Purpose		15
4.	Conditions of Utilisation		15
	SECTION 3 UTILISATION
5.	Utilisation		17
6.	Optional Currencies		18
	SECTION 4 REPAYMENT, PREPAYMENT AND CANCELLATION
7.	Repayment		21
8.	Prepayment and cancellation		22
	SECTION 5 COSTS OF UTILISATION
9.	Interest		25
10.	Interest Periods		26
11.	Changes to the calculation of interest		27
12.	Fees		28
	SECTION 6 ADDITIONAL PAYMENT OBLIGATIONS
13.	Tax gross up and indemnities		29
14.	Increased costs		35
15.	Other indemnities		35
16.	Mitigation by the Lenders		37
17.	Costs and expenses		37
	SECTION 7 GUARANTEE
18.	Guarantee and indemnity		38
	SECTION 8 REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
19.	Representations		41
20.	Information undertakings		43
21.	Financial covenants		46
22.	General undertakings		49
23.	Events of Default		52
	SECTION 9 CHANGES TO PARTIES
24.	Changes to the Lenders		56
25.	Changes to the Obligors		59

i

	SECTION 10 THE FINANCE PARTIES
26.	Role of the Agent and the Arranger	62
27.	Conduct of business by the Finance Parties	66
28.	Sharing among the Finance Parties	66
	SECTION 11 ADMINISTRATION
29.	Payment mechanics	68
30.	Set-off	70
31.	Notices	70
32.	Calculations and certificates	72
33.	Partial invalidity	72
34.	Remedies and waivers	72
35.	Amendments and waivers	72
36.	Counterparts	73
	SECTION 12 GOVERNING LAW AND ENFORCEMENT
37.	Governing law	74
38.	Enforcement	74

THE SCHEDULES

SCHEDULE	PAGE
SCHEDULE 1 The Original Lenders		75
SCHEDULE 2 Conditions Precedent		76
SCHEDULE 3 Requests		78
SCHEDULE 4 Mandatory Cost formulae		80
SCHEDULE 5 Form of Transfer Certificate		83
SCHEDULE 6 Form of Accession Letter		86
SCHEDULE 7 Form of Resignation Letter		87
SCHEDULE 8 Form of Compliance Certificate		88
SCHEDULE 9 Security		89
SCHEDULE 10 Timetables		90
SCHEDULE 11 Form of LMA Confidentiality Undertaking		92
SCHEDULE 12 Form of Term Out Notice		97
SCHEDULE 13 Form of Margin Certificate		98

ii

THIS AGREEMENT is dated 9 November 2004 and made between:

(1)	INTERCONTINENTAL HOTELS GROUP PLC incorporated in England and Wales with registration number 4551528 (“IHG”);
(2)	SIX CONTINENTS PLC incorporated in England and Wales with registration number 913450 (together with IHG, the “Original Borrowers”);
(3)	SIX CONTINENTS PLC incorporated in England and Wales with registration number 913450 (together with IHG, the “Original Guarantors”);
(4)	THE BANK OF TOKYO-MITSUBISHI, LTD., BARCLAYS CAPITAL, CITIGROUP GLOBAL MARKETS LIMITED, HSBC BANK plc, J.P. MORGAN plc, LLOYDS TSB BANK plc, SG CORPORATE & INVESTMENT BANKING, THE ROYAL BANK OF SCOTLAND plc and WESTLB AG, LONDON BRANCH as mandated lead arrangers (whether acting individually or together the “Arranger”);
(5)	THE FINANCIAL INSTITUTIONS listed in Schedule 1 as lenders (the “Original Lenders”); and
(6)	HSBC BANK plc as agent of the other Finance Parties (the “Agent”).

IT IS AGREED as follows:

SECTION 1

INTERPRETATION

1.	DEFINITIONS AND INTERPRETATION
1.1	Definitions
	In this Agreement:
	“Accession Letter” means a document substantially in the form set out in Schedule 6 (Form of Accession Letter).
	“Additional Borrower” means a company which becomes an Additional Borrower in accordance with Clause 25 (Changes to the Obligors).
	“Additional Cost Rate” has the meaning given to it in Schedule 4 (Mandatory Cost formulae).
	“Additional Guarantor” means a company which becomes an Additional Guarantor in accordance with Clause 25 (Changes to the Obligors).
	“Additional Obligor” means an Additional Borrower or an Additional Guarantor.
	“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.
	“Agency Fee Letter” means the letter dated 9 November 2004 between the Agent and IHG setting out the fees referred to in Clause 12.3 (Agency fee).
	“Agent’s Spot Rate of Exchange” means the spot rate of exchange at which the Agent is able to purchase the relevant currency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.

1

“Applicable Accounting Principles” means those accounting principles, standards and practices on which the preparation of the Original Financial Statements was based and those accounting policies which were used in the preparation of those financial statements.

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

“Availability Period” means:

(a)	in relation to Facility A, the period from and including the date of this Agreement to and including the date falling one month prior to the Termination Date applicable to Facility A; and
(b)	in relation to Facility B, the period from and including the date of this Agreement to and including the date which is the earlier of:

(i)	the date which falls one month prior to the Termination Date applicable to Facility B; and
(ii)	the Term Out Date.

“Available Commitment” means, in relation to a Facility, a Lender’s Commitment under that Facility minus:

(a)	the Base Currency Amount of its participation in any outstanding Loans under that Facility; and
(b)	in relation to any proposed Utilisation, the Base Currency Amount of its participation in any Loans that are due to be made under that Facility on or before the proposed Utilisation Date,

other than, in relation to any proposed Utilisation under Facility A or any proposed Utilisation under Facility B before the Term Out Date only, that Lender’s participation in any Loans that are due to be repaid or prepaid on or before the proposed Utilisation Date.

“Available Facility” means, in relation to a Facility, the aggregate for the time being of each Lender’s Available Commitment in respect of that Facility.

“Base Currency” or “£” means Sterling.

“Base Currency Amount” means, in relation to a Loan, the amount specified in the Utilisation Request delivered by a Borrower for that Loan (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent’s Spot Rate of Exchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the Agent receives the Utilisation Request) adjusted to reflect any repayment (other than, in relation to Facility B after the Term Out Date, a repayment arising from a change of currency), prepayment, consolidation or division of the Loan.

“Borrower” means an Original Borrower or an Additional Borrower, unless it has ceased to be a Borrower in accordance with Clause 25 (Changes to the Obligors).

“Borrowings” has the meaning given to it in Clause 21 (Financial covenants).

2

“Boston Lease” means the lease entered into or to be entered into in respect of the proposed InterContinental Boston located at 500 Atlantic Avenue, Boston, Massachusetts.

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

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

“Britvic” means Britannia Soft Drinks Limited and its subsidiaries for the time being.

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

(a)	(in relation to any date for payment, purchase or sale of a currency other than euro) the principal financial centre of the country of that currency; or
(b)	(in relation to any date for payment, purchase or sale of euro) any TARGET Day.

“Cash” has the meaning given to it in Clause 21 (Financial covenants).

“Cash Equivalent Investments” has the meaning given to it in Clause 21 (Financial covenants).

“Commitment” means a Facility A Commitment or a Facility B Commitment.

“Company” means, at any time prior to the New Parent Scheme Date, IHG and, at any time from and including the New Parent Scheme Date, the New Parent.

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 8 (Form of Compliance Certificate).

“Confidentiality Undertaking” means a confidentiality undertaking in the form set out in Schedule 11 (Form of LMA Confidentiality Undertaking) or in any other form agreed between the Company and the Agent.

“Consolidated Gross Assets” means the consolidated fixed assets plus consolidated current assets of the Group.

“Default” means an Event of Default or any event or circumstance specified in Clause 23 (Events of Default) which would (with the expiry of a grace period and/or the giving of notice) be an Event of Default.

“EBITDA” has the meaning given to it in Clause 21 (Financial covenants).

“EURIBOR” means, in relation to any Loan in euro:

(a) the applicable Screen Rate; or

3

(b) (if no Screen Rate is available for the Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the 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.

“euro” or “€” means the single currency of the Participating Member States.

“Event of Default” means any event or circumstance specified as such in Clause 23 (Events of Default).

“Existing Facility” means the $2,650,000,000 facility agreement dated 13 February 2003 (as amended by an amendment letter dated 26 February 2003) between IHG, the lenders and arrangers named in it and HSBC Bank plc as agent.

“Facility” means Facility A or Facility B.

“Facility A” means the revolving loan facility made available under this Agreement as described in Clause 2.1(a) (The Facilities).

“Facility A Commitment” means:

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

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

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

“Facility A Repayment Date” means the Termination Date applicable to Facility A.

“Facility B” means the revolving loan facility or, after the Term Out Date, the term loan facility made available under this Agreement as described in Clause 2.1(b) (The Facilities).

“Facility B Commitment” means:

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

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

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

4

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

“Final Facility B Termination Date” means the date which is 24 Months from the date of this Agreement.

“Finance Document” means this Agreement, the Agency Fee Letter, the Mandate Letter, any Accession Letter, any Resignation Letter and any other document designated as such by the Agent and the Company.

“Finance Party” means the Agent, the Arranger or a Lender.

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

(a)	moneys borrowed;
(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, commercial paper or any similar instrument (entered into or issued primarily as a method of raising finance);
(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 (and excluding, for the avoidance of doubt, the Boston Lease);
(e)	receivables sold or discounted (other than any receivables to the extent they are sold or discounted on a non-recourse basis);
(f)	any amount:

(i)	raised under any other transaction (including any forward sale or purchase agreement) required by GAAP to be shown as a borrowing in the audited consolidated balance sheet of the Group; or
(ii)	raised under any other transaction entered into primarily as a method of raising finance not required by GAAP to be shown as a borrowing in the audited consolidated balance sheet of the Group;

(g)	for the purpose of Clause 23.5 (Cross default) only, 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 marked to market value shall be taken into account);
(h)	shares which are expressed to be redeemable prior to the Termination Date for Facility A other than those which are issued in connection with the New Parent Scheme or those where redemption of such shares is conditional;
(i)	any counter-indemnity obligation in respect of a guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; and

5

(j) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above,

but excluding indebtedness owing by a member of the Group to another member of the Group.

“Fitch” means Fitch Ratings.

“GAAP” means generally accepted accounting principles, standards and practices in the United Kingdom.

“Group” means, at any time prior to the New Parent Scheme Date, IHG and its Subsidiaries for the time being and, at any time from and including the New Parent Scheme Date, the New Parent and its Subsidiaries for the time being.

“Guarantor” means an Original Guarantor or an Additional Guarantor, unless it has ceased to be a Guarantor in accordance with Clause 25 (Changes to the Obligors).

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

“IFRS” means, at any time, the current version of accounting standards set out by the International Accounting Standards Board (IASB) in London, England.

“Information Memorandum” means the document in the form approved by IHG concerning the Group which, at IHG’s request and on its behalf, is to be prepared in relation to this transaction and shall be distributed after the date of this Agreement by the Arranger to selected financial institutions for the purpose of primary syndication of the Facilities.

“Interest Expense” has the meaning given to it in Clause 21 (Financial covenants).

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

“Joint Venture Entity” means any joint venture company, corporation, partnership, trust or other entity in any jurisdiction in which a member of the Group owns 50 per cent. or less of the issued share capital, equity or voting rights.

“Lender” means:

(a)	any Original Lender; and
(b)	any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 24 (Changes to the Lenders),

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

“LIBOR” means, in relation to any Loan:

(a)	the applicable Screen Rate; or
(b)	(if no Screen Rate is available for the currency or Interest Period of that Loan) 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 London interbank market,

6

as of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Loan and for a period comparable to the Interest Period for that Loan.

“LMA” means the Loan Market Association.

“Loan” means a Facility A Loan or a Facility B Loan.

“Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than 66 ²/₃ per cent. of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66 ²/₃ per cent. of the Total Commitments immediately prior to the reduction).

“Managed Assets” means any assets of a member of the Group which are sold and become the subject of a management or franchise agreement in favour of the Group.

“Mandate Letter” means the letter dated 9 November 2004 between the Arranger and IHG relating to, amongst other things, the primary syndication of the Facilities.

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

“Margin” means at any time the rate per annum determined by reference to the ratio of Net Borrowings, as at the last day of the last preceding Margin Period, to EBITDA for that Margin Period (the “Margin Ratio”) in accordance with the following table:

Net Borrowings/EBITDA	Margin (per cent. p.a.)
Higher than 2.75:1	0.60
Equal to or lower than 2.75:1 but higher than 2.25:1	0.50
Equal to or lower than 2.25:1 but higher than 1.75:1	0.425
Equal to or lower than 1.75:1 but higher than 1.25:1	0.375
Equal to or lower than 1.25:1	0.325

However:

(a)	until the delivery of the first Margin Certificate required pursuant to Clause 20.3 (Margin Certificate) the applicable Margin shall be 0.375 per cent. per annum;
(b)	any increase or decrease in the applicable Margin, as the case may be, will take effect for all purposes under this Agreement from the date falling 2 Business Days after receipt by the Agent of a Margin Certificate as required pursuant to Clause 20.3 (Margin Certificate);

7

(c)	if the Company does not deliver the relevant Margin Certificate to the Agent in accordance with the terms of Clause 20.3 (Margin Certificate), the Margin shall, as from the date immediately following the last date on which such Margin Certificate should have been delivered until the date such Margin Certificate is delivered, be 0.60 per cent. per annum;
(d)	if at any time an Event of Default is continuing, the Margin shall, until the date such Event of Default ceases to be continuing, be 0.60 per cent. per annum;
(e)	if at any time a decrease in the Margin is to take effect a Default is continuing, such decrease shall not take effect at that time but such decrease shall take effect with effect from the date such Default ceases to be continuing; and
(f)	in this definition, “EBITDA” shall have the same meaning as EBITDA as defined in Clause 21.3 (Definitions) save that the reference to “Relevant Period” in that definition shall, for the purposes of calculating the Margin, be substituted with “Margin Period” and EBITDA shall be adjusted to take into account the pro forma impact of any acquisitions or disposals (other than of Managed Assets) made during the Margin Period by a member of the Group.

“Margin Certificate” means a certificate substantially in the form set out in Schedule 13 (Form of Margin Certificate).

“Margin Period” means the period of 12 months ending on each Quarter Date.

“Margin Ratio” has the meaning given to it in the definition of Margin.

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

(a)	the ability of the Obligors (taken as a whole) to perform and comply with their payment obligations under any Finance Document; or
(b)	the ability of the Company to perform and comply with its obligations under Clause 21 (Financial covenants).

“Material Subsidiary” means, at any time, any Subsidiary of the Company:

(a) whose gross assets represent 5 per cent. or more of Consolidated Gross Assets or whose EBITDA represents 5 per cent. or more of consolidated EBITDA of the Group, in each case, as calculated by reference to the latest financial statements of such Subsidiary (which shall be audited if such statements are prepared by that Subsidiary) and the latest audited consolidated financial statements of the Group adjusted in such manner as the auditors of the Company may determine (which determination shall be conclusive in the absence of manifest error) (i) to reflect the gross assets and EBITDA of any person which has become or ceased to be a member of the Group since the end of the financial year to which the latest audited consolidated financial statements of the Group relate where such adjustment is requested by the Company and (ii) so that for the purposes of this definition, the gross assets of the relevant Subsidiary shall be calculated on the same basis as Consolidated Gross Assets are calculated and/or, as the case may be, EBITDA of the relevant Subsidiary shall be calculated on the same basis as

8

consolidated EBITDA for the Group (but, in each case, relating only to the relevant Subsidiary) and making such adjustments and eliminations as are required to show the same as the contribution of the relevant Subsidiary to Consolidated Gross Assets and/or, as the case may be, consolidated EBITDA of the Group; or

(b) to which is transferred all or substantially all of the business, undertaking or assets of a Subsidiary which immediately prior to such transfer is a Material Subsidiary, whereupon the transferor Subsidiary shall cease to be a Material Subsidiary and the transferee Subsidiary shall become a Material Subsidiary under this sub-paragraph (b) upon the completion of such transfer.

Any determination made by the auditors of the Company as to whether a Subsidiary of the Company is or is not a Material Subsidiary at any time shall be conclusive in the absence of manifest error.

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

(a)	if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; and
(b)	if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month.

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

“Moody’s” means Moody’s Investors Services Inc.

“Net Borrowings” has the meaning given to it in Clause 21 (Financial covenants).

“Net Interest Payable” has the meaning given to it in Clause 21 (Financial covenants).

“New Parent” means the company registered in England and Wales or such other jurisdiction approved by all Lenders (acting reasonably) which shall ultimately be the Holding Company of IHG on and following the New Parent Scheme Date.

“New Parent Scheme” means the scheme under which:

(a)	the New Parent is inserted above IHG;
(b)	the existing share capital of IHG is cancelled and new shares are issued to the New Parent; and
(c)	the existing shareholders of IHG receive shares in the New Parent on a proportionate basis to their existing holdings.

“New Parent Scheme Date” means, in relation to the New Parent Scheme, the date upon which:

(a)	the court order in relation to the reduction of share capital of the New Parent has been filed;
(b)	the shares in the New Parent are listed on the relevant exchanges; and

9

(c) the New Parent has acceded to this Agreement as an Additional Guarantor in accordance with Clause 25.4 (Additional Guarantors).

“Obligor” means the Company, a Borrower or a Guarantor.

“Optional Currency” means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.3 (Conditions relating to Optional Currencies).

“Original Financial Statements” means the audited consolidated financial statements of the Group for the financial period ended 31 December 2003.

“Original Obligor” means an Original Borrower or an Original Guarantor.

“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.

“Project Finance Indebtedness” means Financial Indebtedness (in respect of which Security has been given) incurred by a member of the Group (a “Project Group Member”) for the purposes of financing the acquisition, construction, development and/or operation of an asset (a “Project Asset”) where the provider of the Financial Indebtedness has no recourse against any member of the Group, except for recourse to:

(a)	the Project Asset of the Project Group Member or receivables arising from the Project Asset;
(b)	a Project Group Member for the purpose of enforcing Security given by it so long as:

(i)

the recourse is limited to recoveries in respect of the Project Asset; and

(ii)

if the Project Asset does not comprise all or substantially all of the business of that Project Group Member, the provider of the Financial Indebtedness does not have the right to take any steps towards its winding up or dissolution or the appointment of a liquidator, administrator, receiver or similar officer or person, other than in respect of the Project Asset or receivables arising therefrom; or

(c) a member of the Group to the extent only of its shareholding in a Project Group Member.

“Project Group Member” has the meaning given to it in the definition of Project Finance Indebtedness provided that the principal assets and business of such member of the Group is constituted by Project Assets and it has no other Financial Indebtedness except Project Finance Indebtedness.

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

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

“Quotation Day” means, in relation to any period for which an interest rate is to be determined:

(a)	(if the currency is Sterling) the first day of that period;
(b)	(if the currency is euro) two TARGET Days before the first day of that period; or

10

(c) (for any other currency) two Business Days before the first day of that period,

unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations for that currency and period would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

“Reference Banks” means, in relation to LIBOR, Mandatory Costs and EURIBOR the principal London offices of Citibank, N.A., The Royal Bank of Scotland plc and HSBC Bank Plc or such other banks as may be appointed by the Agent in agreement with the Company (such agreement not to be unreasonably withheld).

“Relevant Interbank Market” means, in relation to euro, the European interbank market and, in relation to any other currency, the London interbank market.

“Relevant Period” has the meaning given to it in Clause 21 (Financial covenants).

“Repeating Representations” means each of the representations set out in Clauses 19.1 (Status) to 19.4 (Power and authority), paragraph (a) of Clause 19.6 (No Default) and 19.8 (Pari passu ranking).

“Resignation Letter” means a letter substantially in the form set out in Schedule 7 (Form of Resignation Letter).

“Rollover Loan” means one or more Facility A Loans or one or more Facility B Loans prior to the Term Out Date:

(a) made or to be made on the same day that one or more maturing Facility A Loans or Facility B Loans, as the case may be, is or are due to be repaid;

(b) the aggregate amount of which is equal to or less than the maturing Facility A Loan(s) or, as the case may be, Facility B Loan(s) (unless it is more than the maturing Facility A Loan(s) or Facility B Loan(s) solely because it arose as a result of the operation of Clause 6.2 (Unavailability of a currency));

(c) in the same currency as the maturing Facility A Loan(s) or Facility B Loan(s) (unless it arose as a result of the operation of Clause 6.2 (Unavailability of a currency)); and

(d) made or to be made to the same Borrower under the same Facility for the purpose of refinancing the maturing Facility A Loan(s) or Facility B Loan(s).

“S&P” means Standard & Poor’s Ratings Service.

“Screen Rate” means:

(a) in relation to LIBOR, the British Bankers Association Interest Settlement Rate for the relevant currency and period; and

(b) in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period,

11

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.

“Security” means a mortgage, pledge, lien, hypothecation, security interest or other charge or encumbrance entered into for the purpose of securing any obligation of any person.

“Selection Notice” means a notice substantially in the form set out in Part II of Schedule 3 (Selection Notice) given in accordance with Clause 10 (Interest Periods) in relation to a Term Loan.

“Specified Time” means a time determined in accordance with Schedule 10 (Timetables).

“Sterling” or “£” means the lawful currency for the time being of the United Kingdom.

“Subsidiary” means a subsidiary within the meaning of section 736 of the Companies Act 1985 and, for the purpose of Clause 21 (Financial covenants) and in relation to financial statements of the Group, a subsidiary undertaking within the meaning of section 258 of the Companies Act 1985, but in this Agreement “Subsidiary” shall:

(a)	for all purposes, other than in relation to Clause 21 (Financial covenants), exclude Britvic provided that if at any time after the date of this Agreement the Company obtains or acquires, directly or indirectly, 75 per cent. or more of the ordinary issued share capital of Britvic, Britvic shall become a Subsidiary for all purposes under this Agreement; and
(b)	for all purposes exclude each Project Group Member.

“Syndication Date” has the meaning given to that term in the Mandate Letter.

“TARGET” means Trans-European Automated Real-time Gross Settlement Express Transfer payment system.

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

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

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

“Termination Date” means:

(a)	in relation to Facility A, the date which is 60 Months after the date of this Agreement; and
(b)	in relation to Facility B, subject to Clause 7.3 (Term Out Option), the date which is 364 days after the date of this Agreement.

“Term Loan” means any Facility B Loan converted to a term loan pursuant to the Term Out Option.

“Term Out Date” means the date on which the exercise of the Term Out Option has or shall become effective.

“Term Out Notice” has the meaning given to that term in Clause 7.3 (Term Out Option).

12

“Term Out Option” means the term out option set out in Clause 7.3 (Term Out Option).

“Total Commitments” means the aggregate of the Total Facility A Commitments and the Total Facility B Commitments being £1,600,000,000 at the date of this Agreement.

“Total Facility A Commitments” means the aggregate of the Facility A Commitments, being £1,100,000,000 at the date of this Agreement.

“Total Facility B Commitments” means the aggregate of the Facility B Commitments, being £500,000,000 at the date of this Agreement.

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

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

(a)	the proposed Transfer Date specified in the Transfer Certificate; and
(b)	the date on which the Agent executes the Transfer Certificate.

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

“US Dollars” or “$” means the lawful currency for the time being of the United States of America.

“Utilisation” means a utilisation of a Facility.

“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 Part I of Schedule 3 (Utilisation Request).

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

1.2	Construction
(a)	Unless a contrary indication appears, any reference in this Agreement to:

(i)	the “Agent”, the “Arranger”, any “Finance Party”, any “Guarantor”, any “Lender”, any “Obligor” or any “Party” 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 Capital” is a reference to the investment banking division of Barclays Bank PLC.
(iv)	a “Finance Document” or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended or novated;
(v)	“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;

13

(v)	a “person” includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having separate legal personality) or two or more of the foregoing;
(vii)	a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, which is generally complied with by those to whom it is addressed) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
(viii)	“SG Corporate & Investment Banking” is a reference to the corporate and investment banking division of Société Générale;
(ix)	a “subsidiary” has the meaning given to it in section 736 of the Companies Act 1985 and “subsidiary undertaking” has the same meaning given to it in section 258 of the Companies Act 1985;
(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 or an Event of Default is “continuing” if it has not been remedied or waived.

1.3 Third Party Rights

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 this Agreement.

14

SECTION 2

THE FACILITIES

2.	THE FACILITIES
2.1	The Facilities
	Subject to the terms of this Agreement, the Lenders make available to the Borrowers:

(a)	a multicurrency revolving loan facility in an aggregate amount equal to the Total Facility A Commitments; and
(b)	a multicurrency revolving loan facility with a term out option in an aggregate amount equal to the Total Facility B Commitments.

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, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

3.	PURPOSE
3.1	Purpose
(a)	Each Borrower shall apply all amounts borrowed by it under Facility A towards general corporate purposes of the Group.
(b)	Each Borrower shall apply all amounts borrowed by it under Facility B towards bridging sources of refinancing (including proceeds from the disposal program set out in the Information Memorandum).
3.2	Monitoring
	No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

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 Part I of Schedule 2 (Conditions Precedent) which shall be in form and substance reasonably satisfactory to the Agent. The Agent shall notify the Company and the Lenders promptly upon being so satisfied.

15

4.2	Further conditions precedent
(a)	The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) if on the date of the Utilisation Request and on the proposed Utilisation Date:

(i)	in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan and, in the case of any other Loan, no Default is continuing or would result from the proposed Loan; and
(ii)	the Repeating Representations to be made by each Obligor are true in all material respects.

(b)	The Lenders will only be obliged to comply with Clause 6.3 (Change of currency) if, on the first day of an Interest Period, no Default is continuing or would result from the change of currency and the Repeating Representations to be made by each Obligor are true in all material respects.
4.3	Conditions relating to Optional Currencies
(a)	A currency will constitute an Optional Currency in relation to a Loan if it is euro or US Dollars or:

(i)	it is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Utilisation Date for that Loan; and
(ii)	it has been approved by the Agent (acting on the instructions of all the Lenders) on or prior to receipt by the Agent of the relevant Utilisation Request or Selection Notice for that Loan.

(b) If by the Specified Time the Agent has received a written request from the Company for a currency to be approved under paragraph (a)(ii) above, the Agent will notify the Lenders of that request by the Specified Time. Based on any responses received by the Agent by the Specified Time, the Agent will confirm to the Company by the Specified Time:

(i)	whether or not the Lenders have granted their approval; and
(ii)	if approval has been granted, the minimum amount (and, if required, integral multiples) for any subsequent Utilisation in that currency.

4.4	Maximum number of Loans
(a)	A Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation:

(i)	more than 14 Facility A Loans would be outstanding; or
(ii)	more than 6 Facility B Loans would be outstanding.

(b)	A Borrower may not request that a Term Loan be divided if, as a result of the proposed division, more than 6 Term Loans would be outstanding.
(c)	Any Loan made by a single Lender under Clause 6.2 (Unavailability of a currency) shall not be taken into account in this Clause 4.4.

16

SECTION 3

UTILISATION

5.	UTILISATION
5.1	Delivery of a Utilisation Request
	A Borrower may utilise a Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.

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)	it identifies the Facility to be utilised;
(ii)	the proposed Utilisation Date is a Business Day within the Availability Period applicable to that Facility;
(iii)	the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount);
(iv)	the proposed Interest Period complies with Clause 10 (Interest Periods); and
(v)	it specifies the account and bank (which must be in the principal financial centre of the country of the currency of the Utilisation or, in the case of euro, the principal financial centre of a Participating Member State in which banks are open for general business on that day or London or, such other financial centre as the relevant Borrower, with the consent of the Agent, may select) to which the proceeds of the Utilisation are to be credited.

(b)	Only one Loan may be requested in each Utilisation Request.
5.3	Currency and amount
(a)	The currency specified in a Utilisation Request must be the Base Currency or an Optional Currency.
(b)	The amount of the proposed Loan must be:

(i)	if the currency selected is the Base Currency, a minimum of £10,000,000 and in multiples of £1,000,000, or if less, the Available Facility;
(ii)	if the currency selected is US Dollars, a minimum of $20,000,000 and in multiples of $1,000,000, or, if less the Available Facility; or
(iii)	if the currency selected is euro, a minimum of €20,000,000, and in multiples of €1,000,000, or if less, the Available Facility; or
(iv)	if the currency selected is an Optional Currency other than US Dollars or euro, the minimum amount (and, if required, integral multiple) as agreed between the Agent, the Lenders and the Company provided that if no such agreement is reached between the Agent, the Lenders and the Company the minimum amount shall be the equivalent at

17

that time of £10,000,000 and multiples of £1,000,000, such amount to be rounded as reasonably determined by the Agent and notified to the Company; and

(v) in any event such that its Base Currency Amount is less than or equal to the Available Facility.

5.4	Lenders’ participation
(a)	If the conditions set out in 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 determine the Base Currency Amount of each Loan which is to be made in an Optional Currency and shall notify each Lender of the amount, currency and the Base Currency Amount of each Loan and the amount of its participation in that Loan, in each case by the Specified Time.
6.	OPTIONAL CURRENCIES
6.1	Selection of currency
(a)	A Borrower (or the Company on behalf of a Borrower) shall select the currency of a Loan:

(i)	(in the case of an initial Utilisation) in a Utilisation Request; and
(ii)	(in relation to a Term Loan after the initial Utilisation) in a Selection Notice.

(b)	If a Borrower (or the Company on behalf of a Borrower) fails to issue a Selection Notice in relation to a Term Loan, it shall be deemed to have requested that the Loan will remain denominated for its next Interest Period in the same currency in which it is then outstanding.
(c)	If a Borrower (or the Company on behalf of a Borrower) issues a Selection Notice requesting a change of currency and the first day of the requested Interest Period is not a Business Day for the new currency, the Agent shall promptly notify the Company, the relevant Borrower and the Lenders and the Loan will remain in the existing currency (with Interest Periods running from one Business Day until the next Business Day) until the next day which is a Business Day for both currencies, on which day the requested Interest Period will begin.
6.2	Unavailability of a currency
	If before the Specified Time on any Quotation Day:

(a)	a Lender notifies the Agent that the Optional Currency requested is not readily available to it in the amount required; or
(b)	a Lender notifies the Agent that compliance with its obligation to participate in a Loan in the proposed Optional Currency would contravene a law or regulation applicable to it,

the Agent will give notice to the relevant Borrower to that effect by the Specified Time on that day. In this event, any Lender that gives notice pursuant to this Clause 6.2 will be required to participate in the Loan in the Base Currency (in an amount equal to that Lender’s proportion of the Base Currency Amount or, in respect of a Rollover Loan, an amount equal to that Lender’s proportion of the Base Currency Amount of the Rollover Loan that is due to be made) and its

18

participation will be treated as a separate Loan denominated in the Base Currency during that Interest Period.

6.3	Change of currency
(a)	If a Term Loan is to be denominated in different currencies during two successive Interest Periods:

(i)	if the currency for the second Interest Period is an Optional Currency, the amount of the Loan in that Optional Currency will be calculated by the Agent as the amount of that Optional Currency equal to the Base Currency Amount of the Loan at the Agent’s Spot Rate of Exchange at the Specified Time;
(ii)	if the currency for the second Interest Period is the Base Currency, the amount of the Loan will be equal to the Base Currency Amount;
(iii)	(unless the Agent and the Borrower agree otherwise in accordance with paragraph (b) below) the Borrower that has borrowed the Loan shall repay it on the last day of the first Interest Period in the currency in which it was denominated for that Interest Period; and
(iv)	(subject to Clause 4.2 (Further conditions precedent)) the Lenders shall re-advance the Loan in the new currency in accordance with Clause 6.5 (Agent’s calculations).

(b) If the Agent and the Borrower that has borrowed the Term Loan agree, the Agent shall:

(i)	apply the amount paid to it by the Lenders pursuant to paragraph (a)(iv) above (or so much of that amount as is necessary) in or towards purchase of an amount in the currency in which the Term Loan is outstanding for the first Interest Period; and
(ii)	use the amount it purchases in or towards satisfaction of the relevant Borrower’s obligations under paragraph (a)(iii) above.

(c)

If the amount purchased by the Agent pursuant to paragraph (b)(i) above is less than the amount required to be repaid by the relevant Borrower, the Agent shall promptly notify that Borrower and that Borrower shall, on the last day of the first Interest Period, pay an amount to the Agent (in the currency of the outstanding Term Loan for the first applicable Interest Period) equal to the difference.

(d)

If any part of the amount paid to the Agent by the Lenders pursuant to paragraph (a)(iv) above is not needed to purchase the amount required to be repaid by the relevant Borrower, the Agent shall promptly notify that Borrower and pay that Borrower, on the last day of the first Interest Period that part of that amount (in the new currency).

6.4

Same Optional Currency during successive Interest Periods

(a)

If a Term Loan is to be denominated in the same Optional Currency during two successive Interest Periods, the Agent shall calculate the amount of any Term Loan in the Optional Currency for the second of those Interest Periods (by calculating the amount of Optional Currency equal to the Base Currency Amount of that Term Loan at the Agent’s Spot Rate of Exchange at the Specified Time) and (subject to paragraph (b) below):

(i) if the amount calculated is less than the existing amount of that Term Loan in the Optional Currency during the first Interest Period, promptly notify the Borrower that has

19

borrowed that Term Loan and that Borrower shall pay, on the last day of the first Interest Period, an amount equal to the difference; or

(ii) if the amount calculated is more than the existing amount of that Term Loan in the Optional Currency during the first Interest Period, promptly notify each Lender and, if no Event of Default is continuing, each Lender shall, on the last day of the first Interest Period, pay its participation in an amount equal to the difference.

(b)	If the calculation made by the Agent pursuant to paragraph (a) above shows that the amount of the Term Loan in the Optional Currency for the second of those Interest Periods converted into the Base Currency at the Agent’s Spot Rate of Exchange at the Specified Time has increased or decreased by less than 5 per cent. compared to its Base Currency Amount (taking into account any payments made pursuant to paragraph (a) above), no notification shall be made by the Agent and no payment shall be required under paragraph (a) above.
6.5	Agent’s calculations
(a)	All calculations made by the Agent pursuant to this Clause 6 will take into account any repayment, prepayment, consolidation or division of Term Loans to be made on the last day of the first Interest Period.
(b)	Each Lender’s participation in a Loan will, subject to paragraph (a) above, be determined in accordance with paragraph (b) of Clause 5.4 (Lenders’ participation).

20

SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION

7.	REPAYMENT
7.1	Repayment of Facility A Loans
	Each Borrower which has drawn a Facility A Loan shall repay that Facility A Loan on the last day of its Interest Period.

7.2	Repayment of Facility B Loans
(a)	Subject to Clause 7.3 (Term Out Option), each Borrower which has drawn a Facility B Loan shall repay that Facility B Loan on the last day of its Interest Period.
(b)	Each Borrower shall repay each Term Loan made to it on the Final Facility B Termination Date.
7.3	Term Out Option
(a)	The Company may elect to convert all or part of the Facility B Loans into Term Loans.
(b)	The Company may exercise the term out option by not less than 5 Business Days notice (substantially in the form set out in Schedule 12 (Form of Term Out Notice)) (the “Term Out Notice”) to the Agent. Only one such notice may be given and such notice is irrevocable.
(c)	That notice shall specify the Facility B Loan(s) in relation to which the Term Out Option is being exercised and the proposed Term Out Date (which shall be a date on or prior to the original Termination Date relating to Facility B).
(d)	The Agent shall promptly notify each Lender of the Facility B Loans specified in the Term Out Notice.
(e)	If the Term Out Option is so exercised and the matters set out in paragraph (f) below are satisfied, then on the Term Out Date:

(i)	the Facility B Loan(s) to be converted shall be converted into Term Loan(s);
(ii)	any Available Commitment under Facility B shall be automatically cancelled;
(iii)	the Termination Date for Facility B shall be extended to the date which is 24 Months from the date of this Agreement; and
(iv)	the fee specified in Clause 12.4 (Term Out fee) shall become due and payable.

(f) The following must be satisfied on the Term Out Date for the Term Out Option to be effected as specified in (e) above:

(i)	the Repeating Representations are true in all material respects; and
(ii)	no Default is continuing or would result from the Facility B Loan(s) being converted into Term Loan(s).

21

8.	PREPAYMENT AND CANCELLATION
8.1	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;
(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 (being no earlier than the last day of any applicable grace period permitted by law).

8.2	Change of control
(a)	If at any time before the New Parent Scheme Date (excluding for this purpose paragraph (c) of such definition) any person or group of persons acting in concert gains control of IHG (other than as a result of, or in connection with, the New Parent Scheme):

(i)	IHG shall promptly notify the Agent upon becoming aware of that event;
(ii)	a Lender shall not be obliged to fund a Utilisation (except for a Rollover Loan); and
(iii)	if a Lender so requires and notifies the Agent within 30 days of IHG notifying the Agent of the event, the Agent shall, by not less than 30 days’ notice to IHG, cancel the Commitment of that Lender and declare the participation of that Lender in all outstanding Loans, together with accrued interest, and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Commitment of that Lender will be cancelled and all such outstanding amounts will become immediately due and payable.

(b) If at any time after the New Parent Scheme Date (excluding for this purpose paragraph (c) of such definition) any person or group of persons acting in concert gains control of the New Parent:

(i)	the New Parent shall promptly notify the Agent upon becoming aware of that event;
(ii)	a Lender shall not be obliged to fund a Utilisation (except for a Rollover Loan); and
(iii)	if a Lender so requires and notifies the Agent within 30 days of the New Parent notifying the Agent of the event, the Agent shall, by not less than 30 days’ notice to the New Parent, cancel the Commitment of that Lender and declare the participation of that Lender in all outstanding Loans, together with accrued interest, and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Commitment of that Lender will be cancelled and all such outstanding amounts will become immediately due and payable.

(c) For the purpose of paragraphs (a) and (b) above “control” has the meaning given to it in section 840 of the Taxes Act.

22

(d) For the purpose of paragraph (a) and (b) above “acting in concert” has the meaning given to it in the City Code on Takeovers and Mergers.

8.3	Voluntary cancellation
	The Company may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice in writing, cancel the whole or any part (being a minimum amount of £20,000,000 and in multiples of £5,000,000) of an Available Facility. Any cancellation under this Clause 8.3 shall reduce the Commitments of the Lenders rateably under that Facility.

8.4	Voluntary prepayment
	A Borrower to which a Loan has been made, may, if it gives the Agent not less than 5 Business Days (or such shorter period as the Majority Lenders may agree) prior notice in writing, prepay the whole or any part of a Loan (but, if in part, being an amount that reduces the Base Currency Amount of the Loan by a minimum amount of £20,000,000 and in multiples of £5,000,000).

8.5	Right of repayment and cancellation in relation to a single Lender
(a)	If:

(i)	any sum payable to any Lender by an Obligor is required to be increased under paragraph (c) of Clause 13.2 (Tax gross-up);
(ii)	any Lender claims indemnification from the Company under Clause 13.3 (Tax indemnity) or Clause 14.1 (Increased costs); or
(iii)	any Lender notifies the Agent of its Additional Cost Rate under paragraph 3 of Schedule 4 (Mandatory Cost formulae),

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/or 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 (or, as the case may be, the specified Borrower) to which a Loan is outstanding shall repay that Lender’s participation in that Loan.
8.6	Restrictions
(a)	Any notice of cancellation or prepayment given by any Party under this Clause 8 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
(b)	Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.
(c)	No Borrower may reborrow all or any part of a Term Loan which is prepaid or repaid.

23

(d)	Unless a contrary indication appears in this Agreement, any part of Facility A which is prepaid or any part of Facility B which is prepaid prior to the Term Out Date may be reborrowed in accordance with the terms of this Agreement.
(e)	The Borrowers shall not repay or prepay all or any part of the Loans or cancel all or any part of the Commitments 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 8 it shall promptly forward a copy of that notice to either the Company or the affected Lender, as appropriate.

24

SECTION 5

COSTS OF UTILISATION

9.	INTEREST
9.1	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)	LIBOR or, in relation to any Loan in euro, EURIBOR; and
(c)	Mandatory Cost, if any.

9.2	Payment of interest
	The Borrower to which a Loan has been made shall pay accrued interest on that Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six monthly intervals after the first day of the Interest Period).

9.3	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 overdue amount 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 the sum of 1 per cent. and the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 9.3 shall be immediately payable by the Obligor on demand by the Agent.
(b)	If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

(i)	the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
(ii)	the rate of interest applying to the overdue amount during that first Interest Period shall be the sum of 1 per cent. and the rate which would have applied if the overdue amount had not become due.

(c)	Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
9.4	Notification of rates of interest
	The Agent shall promptly notify the Lenders and the relevant Borrower of the determination of a rate of interest under this Agreement.

25

10.	INTEREST PERIODS
10.1	Selection of Interest Periods
(a)	A Borrower (or the Company on behalf of a Borrower) may select an Interest Period for a Loan in the Utilisation Request for that Loan or (if the Loan has already been borrowed) in a Selection Notice.
(b)	Each Selection Notice for a Term Loan is irrevocable and must be delivered to the Agent by the Borrower (or the Company on behalf of the Borrower) to which that Term Loan was made not later than the Specified Time.
(c)	If a Borrower (or the Company) fails to deliver a Selection Notice to the Agent in accordance with paragraph (b) above, the relevant Interest Period will be one Month.
(d)	Subject to this Clause 10, a Borrower (or the Company) may select an Interest Period of 1, 2, 3 or 6 Months or any other period agreed between the Company and the Agent (acting on the instructions of all the Lenders).
(e)	An Interest Period for:

(i)	a Loan shall not extend beyond the Termination Date applicable to its Facility; and
(ii)	for a Term Loan shall not extend beyond the Final Facility B Termination Date.

(f)	Each Interest Period for a Term Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period.
(g)	A Facility A Loan and a Facility B Loan prior to the Term Out Date has one Interest Period only.
10.2	Non-Business Days
	If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

10.3	Consolidation and division of Term Loans
(a)	Subject to paragraph (b) below, if two or more Interest Periods:

(i)	relate to Term Loans in the same currency;
(ii)	end on the same date; and
(iii)	are made to the same Borrower,

the relevant Term Loans will, unless that Borrower (or the Company on its behalf) specifies to the contrary in the Selection Notice for the next Interest Period, be consolidated into, and treated as, a single Term Loan on the last day of the Interest Period.

(b) Subject to Clause 4.4 (Maximum number of Loans) and Clause 5.3 (Currency and amount), if a Borrower (or the Company on its behalf) requests in a Selection Notice that a Term Loan be divided into two or more respective Term Loans that Term Loan will, on the last day of its Interest Period, be so divided with Base Currency Amounts specified in that Selection Notice, being an aggregate Base Currency Amount equal to the Base Currency Amount of the respective Term Loan immediately before its division.

26

11.	CHANGES TO THE CALCULATION OF INTEREST
11.1	Absence of quotations
	Subject to Clause 11.2 (Market disruption), if LIBOR or, if applicable, 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 LIBOR or EURIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

11.2	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 rate per annum which is the sum of:

(i)	the applicable Margin;
(ii)	the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost 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 LIBOR or, EURIBOR for the relevant currency and Interest Period; or
(ii)	before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in a Loan exceed 35 per cent. of that Loan) that the cost to it of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR or, if applicable, EURIBOR.

11.3	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.
11.4	Break Costs
(a)	Each Borrower shall, within five Business Days of a 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.
(b)	Each Lender shall, together with its demand provide a certificate confirming the amount and basis of calculation of its Break Costs for any Interest Period in which they accrue.

27

12.	FEES
12.1	Commitment fee
(a)	The Company shall pay to the Agent (for the account of each Lender) a fee in the Base Currency computed on a day to day basis at a percentage rate per annum equal to:

(i)	40 per cent. of the relevant Margin which would apply to a Facility A Loan drawn on that day on that Lender’s Available Commitment under Facility A for the Availability Period applicable to Facility A; and
(ii)	30 per cent. of the relevant Margin which would apply to a Facility B Loan drawn on that day on that Lender’s Available Commitment under Facility B for the Availability Period applicable to Facility B.

(b)	The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the relevant Availability Period, on the last day of the Availability Period and, if cancelled in full, on the cancelled amount of the relevant Lender’s Available Commitment at the time the cancellation is effective.
12.2	Arrangement, underwriting and syndication fees
	The Company shall pay, or procure that the same is paid, to the Arranger (for its own account) an arrangement fee and (for its own account and the account of the Lenders as applicable) an underwriting and syndication fee each in the amount and at the times agreed in the Mandate Letter.

12.3	Agency fee
	The Company shall pay, or procure that the same is paid, to the Agent (for its own account) an agency fee in the amount and at the times agreed in the Agency Fee Letter.

12.4	Term Out fee
	The Company shall pay to the Agent (for the account of each Lender) a term out fee in the Base Currency in an amount equal to 0.05 per cent. flat on that Lender’s participation in the Base Currency Amount of the Facility B Loan(s) in relation to which the Term Out Option has been exercised, such fee to be paid on the Term Out Date.

28

SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS

13.	TAX GROSS UP AND INDEMNITIES
13.1	Definitions
(a)	In this Agreement:
	“Protected Party” means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
	“Qualifying Lender” means:

(i) a Lender (other than a lender within sub-paragraph (B) below) which is beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document and is:

(A) a Lender:

1.	which is a bank (as defined for the purpose of section 349 of the Taxes Act) making an advance under a Finance Document; or
2.	in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 349 of the Taxes Act) at the time that that advance was made,

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

(B) a Lender which is:

1.	a company resident in the United Kingdom for United Kingdom tax purposes;
2.	a partnership each member of which is:

(a)	a company so resident in the United Kingdom; or
(b)	a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (for the purposes of section 11(2) of the Taxes Act) the whole of any share of interest payable in respect of that advance that falls to it by reason of sections 114 and 115 of the Taxes Act; or

3. a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (for the purposes of section 11(2) of the Taxes Act) of that company; or

(C) a Treaty Lender; or

29

(ii) a building society (as defined for the purposes of section 477A of the Taxes Act).

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

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

(A)	a company so resident in the United Kingdom; or
(B)	a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (for the purposes of section 11(2) of the Taxes Act) the whole of any share of interest payable in respect of that advance that falls to it by reason of sections 114 and 115 of the Taxes Act; or

(iii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (for the purposes of section 11(2) of the Taxes Act) of that company.

“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 the amount by which a payment made by an Obligor to a Finance Party is increased under Clause 13.2 (Tax gross-up) or a payment under Clause 13.3 (Tax indemnity).

“Treaty Lender” means a Lender which:

(i)	is treated as a resident of a Treaty State for the purposes of the Treaty;
(ii)	does not carry on a business in the United Kingdom through a permanent establishment with which that Lender’s participation in the Loans is effectively connected; and
(iii)	fulfils any conditions which must be fulfilled under the double taxation agreement for residents of that Treaty State to obtain exemption from United Kingdom taxation on interest (subject to the completion of any necessary procedural formalities).

	“Treaty State” means a jurisdiction having a double taxation agreement (a “Treaty”) with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest.
	“UK Non-Bank Lender” means where a Lender becomes a Party after the day on which this Agreement is entered into, a Lender which gives a Tax Confirmation in the Transfer Certificate which it executes on becoming a Party.
(b)	Unless a contrary indication appears, in this Clause 13 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.

30

13.2	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.
(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. Similarly, a Lender shall promptly notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall promptly notify the Company and that Obligor.
(c)	If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(d)	An Obligor is not required to make an increased payment to a Lender under paragraph (c) above for a Tax Deduction in respect of tax imposed by the United Kingdom from a payment of interest on a Loan, if on the date on which the payment falls due:

(i)

the payment could have been made to the relevant Lender without a Tax Deduction if it was a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority; or

(ii)

(A)	the relevant Lender is a Qualifying Lender solely under sub-paragraph (i)(B) of the definition of Qualifying Lender;
(B)	the Board of the Inland Revenue has given (and not revoked) a direction (a “Direction”) under Section 349C of the Taxes Act (as that provision has effect on the date on which the relevant Lender became a Party) which relates to that payment and that Lender has received from that Obligor or the Company a certified copy of that Direction; and
(C)	the payment could have been made to the Lender without any Tax Deduction in the absence of that Direction; or

(iii)	the relevant Lender is a Qualifying Lender solely under sub-paragraph (i)(B) of the definition of Qualifying Lender and it has not, other than by reason of any change after the date of this Agreement in (or in the interpretation, administration or application of) any law, or any published practice or concession of any relevant taxing authority, given a Tax Confirmation to the Company; or
(iv)	the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender complied with its obligations under paragraph (g) below.

31

(e)	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.
(f)	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 for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
(g)	A Treaty Lender and each Obligor which makes a payment to which that Treaty Lender is entitled shall co-operate in promptly completing any procedural formalities (including completing and submitting appropriate documents to the applicable taxation authorities) necessary for that Obligor to obtain authorisation to make that payment without a Tax Deduction.
(h)	A UK Non-Bank Lender shall promptly notify the Company and the Agent if there is any change in the position from that set out in the Tax Confirmation.
(i)	Each Lender severally warrants to the Company that it is a Qualifying Lender on the date it becomes a Party to this Agreement. If at any time after this Agreement is entered into any Lender becomes aware that it is not or will not or will cease to be a Qualifying Lender, it shall promptly notify the Agent and the Company.
13.3	Tax indemnity
(a)	The Company shall (within five 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 13.2 (Tax gross-up);
	or
(B)	would have been compensated for by an increased payment under Clause 13.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in paragraph (d) of Clause 13.2 (Tax gross-up) applied.

32

(c)	A Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall promptly notify the Company.
(d)	A Protected Party shall, on receiving a payment from an Obligor under this Clause 13.3, notify the Agent.
13.4	Tax Credit
	If an Obligor makes a Tax Payment and the relevant Finance Party determines 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 that Tax Credit,

the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in no better and no worse position in respect of its worldwide tax liabilities than it would have been in had the Tax Payment not been required to be made by the Obligor.

13.5	Stamp taxes
	The Company shall pay and, within five Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

13.6	Value added tax
(a)	All amounts set out, or expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or 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 (c) below, if VAT is chargeable on any supply made by any Finance Party to any Party under a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party).
(b)	If VAT is chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance Document, and any Party (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in respect of that consideration), such Party shall also pay to the Supplier (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT. The Recipient will promptly pay to the Relevant Party an amount equal to any credit or repayment from the relevant tax authority which it reasonably determines relates to the VAT chargeable on that supply.
(c)	Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Finance Party against all VAT incurred by the Finance Party in respect of the costs or expenses save to the extent that neither the Finance Party nor any other member of any group of which it is a member for VAT purposes is entitled to repayment or credit in respect of such VAT.

33

13.7	PTR Scheme
(a)	Each Treaty Lender:

(i)	irrevocably appoints the Agent to act as syndicate manager under, and authorises the Agent to operate, and take any action necessary or desirable under, the PTR Scheme in connection with the Facilities;
(ii)	shall co-operate with the Agent in completing any procedural formalities necessary under the PTR Scheme, and shall promptly supply to the Agent such information as the Agent may request in connection with the operation of the PTR Scheme;
(iii)	without limiting the liability of any Borrower under this Agreement, shall, within 5 Business Days of demand, indemnify the Agent for any liability of loss incurred by the Agent as a result of the Agent acting as syndicate manager under the PTR Scheme in connection with the Treaty Lender’s participation in any Loan (except to the extent the liability or loss arises directly from the Agent’s gross negligence or wilful misconduct); and
(iv)	shall, within 5 Business Days of demand, indemnify each Borrower for any Tax which such Borrower becomes liable to pay in respect of any prepayments made to such Treaty Lender arising as a result of any incorrect information supplied by such Treaty Lender under paragraph (iii) above which results in a provisional authority issued by the UK Inland Revenue under the PTR Scheme being withdrawn.

(b) Each Borrower acknowledges that it is fully aware of its contingent obligations under the PTR Scheme and shall:

(i)	promptly supply to the Agent such information as the Agent may request in connection with the operation of the PTR Scheme; and
(ii)	act in accordance with any provisional notice issued by the UK Inland Revenue under the PTR Scheme.

(c)	The Agent agrees to provide, as soon as reasonably practicable, a copy of any provisional authority issued to it under the PTR Scheme in connection with any Loan to those Borrowers specified in such provisional authority.
(d)	All Parties acknowledge that the Agent:

(i)	is entitled to rely completely upon information provided to it in connection with sub- paragraph (a) or (b) above;
(ii)	is not obliged to undertake any enquiry into the accuracy of such information, nor into the status of the Treaty Lender or, as the case may be, Borrower providing such information; and
(iii)	shall have no liability to any person for the accuracy of any information it submits in connection with paragraph (a)(i) above.

(e) In this Clause “PTR Scheme” means the Provisional Treaty Relief scheme as described in Inland Revenue Guidelines dated January 2003 and administered by the Inland Revenue’s Centre for Non-Residents.

34

14.	INCREASED COSTS
14.1	Increased costs
(a)	Subject to Clause 14.3 (Exceptions) the Company shall, within five Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation 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 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,

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

14.2	Increased cost claims
(a)	A Finance Party intending to make a claim pursuant to Clause 14.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Company.
(b)	Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount and reasonable details of the calculation of its Increased Costs.
14.3	Exceptions
(a)	Clause 14.1 (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 13.3 (Tax indemnity) (or would have been compensated for under Clause 13.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 13.3 (Tax indemnity) applied);
(iii)	compensated for by the payment of the Mandatory Cost; or
(iv)	attributable to the negligence or wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.

(b)	In this Clause 14.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 13.1 (Definitions).
15.	OTHER INDEMNITIES
15.1	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

35

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 five 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.
15.2	Other indemnities

The Company shall (or shall procure that an Obligor will), within five Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party as a result of:

(a)	the occurrence of any Event of Default;
(b)	a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 28 (Sharing among the Finance Parties);
(c)	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 (other than by reason of default or negligence by that Finance Party alone); or
(d)	a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by a Borrower or the Company.

15.3 Indemnity to the Agent

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

(a)	investigating any event which it reasonably believes is an Event of Default; or
(b)	entering into or performing any foreign exchange contract for the purpose of paragraph (b) of Clause 6.3 (Change of currency); or
(c)	acting or relying on any notice, request or instruction made by an Obligor which it reasonably believes to be genuine, correct and appropriately authorised.

36

16.	MITIGATION BY THE LENDERS
16.1	Mitigation
(a)	Each Finance Party 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 8.1 (Illegality), Clause 13 (Tax gross-up and indemnities), Clause 14 (Increased costs) or paragraph 3 of Schedule 4 (Mandatory Cost formulae) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
(b)	Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.

16.2	Limitation of liability
(a)	The Company shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 16.1 (Mitigation).
(b)	A Finance Party is not obliged to take any steps under Clause 16.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
17.	COSTS AND EXPENSES
17.1	Transaction expenses
	The Company shall promptly on demand pay the Agent and the Arranger the amount of all reasonable costs and expenses (including legal fees) reasonably incurred by any of them (subject to a maximum in respect of legal fees as agreed with the Company) in connection with the negotiation, preparation, printing, execution and syndication of:

(a)	this Agreement and any other documents referred to in this Agreement; and
(b)	any other Finance Documents executed after the date of this Agreement.

17.2 Amendment costs

If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 29.9 (Change of Currency), the Company shall, within five Business Days of demand, reimburse the Agent for the amount of all reasonable costs and expenses (including legal fees) reasonably incurred by the Agent in evaluating, negotiating or complying with that request.

17.3 Enforcement costs

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

37

SECTION 7

GUARANTEE

18.	GUARANTEE AND INDEMNITY
18.1	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 payment obligations under the Finance Documents;
(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 pay that amount as if it was the principal obligor; and
(c)	indemnifies each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any payment obligation guaranteed by it is or becomes unenforceable, invalid or illegal. The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.

18.2 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.

18.3	Reinstatement
	If any payment by an Obligor or any discharge given by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:

(a)	the liability of each Obligor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and
(b)	each Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, avoidance or reduction had not occurred.

18.4	Waiver of defences
	The obligations of each Guarantor under this Clause 18 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 18 (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 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

38

	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 (however fundamental) or replacement of a Finance Document or any other document or security;
(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.

18.5 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 18. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

18.6 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, while a Default is continuing, 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 18.

18.7	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:

(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; and/or
(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.

39

18.8	Release of Guarantors’ right of contribution
	If any Guarantor (a “Retiring Guarantor”) ceases to be a Guarantor in accordance with the terms of the Finance Documents for the purpose of any sale or other disposal of that Retiring Guarantor then on the date such Retiring Guarantor ceases to be a Guarantor:

(a)

that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and

(b)

each other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents 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 any Finance Document or of any other security taken pursuant to, or in connection with, any Finance Document where such rights or security are granted by or in relation to the assets of the Retiring Guarantor.

18.9 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.

40

SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

19. REPRESENTATIONS

Each Obligor makes the representations and warranties set out in this Clause 19 (except for the representations and warranties in Clause 19.11 (No misleading information) which are deemed to be made by the Company on the Syndication Date) to each Finance Party, on the date of this Agreement.

19.1	Status
(a)	It is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation.
(b)	It and each of its Material Subsidiaries has the power to own its assets and carry on its business as it is being conducted.
19.2	Binding obligations

The obligations expressed to be assumed by it in each Finance Document are subject to any general principles of law limiting its obligations which are specifically referred to in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation) or Clause 25 (Changes to the Obligors) legal, valid, binding and enforceable obligations.

19.3	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 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 breach of which would have a Material Adverse Effect.

19.4 Power and authority

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

19.5	Validity and admissibility in evidence
	All Authorisations required:

(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 its jurisdiction of incorporation,
	have been obtained or effected and are in full force and effect (or, in each case, will be when required).

41

19.6	No default
(a)	No Event of Default is continuing or could reasonably be expected to result from the making of any Utilisation.
(b)	No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which has or could reasonably be expected to have a Material Adverse Effect.
19.7	Financial statements
(a)	The Original Financial Statements were prepared in accordance with GAAP consistently applied.
(b)	The Original Financial Statements give a true and fair view of the consolidated financial condition and operations of the Group during the relevant financial period.
(c)	There has been no material adverse change in the business or financial condition of the Group since 31 December 2003.
19.8	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.

19.9 No proceedings pending or threatened

No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which are reasonably likely to be adversely determined and, if adversely determined, could be reasonably likely to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against it or any of its Subsidiaries.

19.10	Repetition
	The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on:

(a)	the date of each Utilisation Request and the first day of each Interest Period; and
(b)	in the case of an Additional Obligor, the day on which the company becomes (or it is proposed that the company becomes) an Additional Obligor.

19.11	No misleading information
(a)	Any written factual information provided by or on behalf of any member of the Group for the purposes of the Information Memorandum, was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
(b)	The financial projections contained in the Information Memorandum have been prepared on the basis of recent historical information and on the basis of assumptions believed by it at the time to be reasonable.
(c)	Nothing has occurred or been omitted from the Information Memorandum and no information has been given or withheld that results in the information referred to in paragraph (a) contained in the Information Memorandum being untrue or misleading in any material respect.

42

20. INFORMATION UNDERTAKINGS

The undertakings in this Clause 20 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	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 120 days after the end of each of its financial years:

(i)	its audited consolidated financial statements for that financial year; and
(ii)	the financial statements of each Obligor for that financial year (which shall be audited if that Obligor produces audited financial statements); and

(b) as soon as the same become available, but in any event within 90 days after the end of the first half of each of its financial years, its consolidated financial statements for that financial half year.

20.2	Compliance Certificate
(a)	The Company shall supply to the Agent, with each set of financial statements delivered pursuant to paragraph (a)(i) or (b) of Clause 20.1 (Financial statements), a Compliance Certificate setting out:

(i)	(in reasonable detail) computations as to compliance with Clause 21 (Financial covenants); and
(ii)	an updated list of Material Subsidiaries,

in each case, as at the date at which those financial statements were drawn up.

(b)	Each Compliance Certificate shall be signed by a director or an authorised signatory on behalf of the Company.
20.3	Margin Certificate
(a)	The Company shall supply to the Agent a Margin Certificate within 80 days of each Quarter Date setting out a computation of the Margin Ratio.
(b)	Each Margin Certificate shall be signed by a director on behalf of the Company.
20.4	Requirements as to financial statements
(a)	Each set of financial statements delivered by the Company pursuant to Clause 20.1(a) (Financial statements) shall be certified by an authorised signatory on behalf of the relevant company as fairly representing its (or, as the case may be, its consolidated) financial condition and operations as at the end of and for the period in relation to which those financial statements were drawn up.
(b)	The Company shall procure that each set of financial statements of the Group delivered pursuant to Clause 20.1 (Financial statements) is prepared using GAAP for any financial year ending on or prior to 31 December 2004 and IFRS for any financial year ending thereafter and it shall deliver to the Agent:

(i) sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 21 (Financial covenants) has

43

been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements; and

(ii) a description of any change necessary for those financial statements to reflect the Applicable Accounting Principles upon which the Original Financial Statements were prepared.

(c)	Any reference in this Agreement to the financial statements of the Group delivered pursuant to Clause 20.1 (Financial statements) shall be construed as a reference to those financial statements as adjusted to reflect the Applicable Accounting Principles.
20.5	Information: miscellaneous
	The Company shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):

(a)	all documents dispatched by the Company to its shareholders (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; and
(c)	promptly, such further information regarding the financial condition, business and operations of any member of the Group as any Finance Party (through the Agent) may reasonably request except to the extent that disclosure of the information would breach any law regulation, stock exchange requirement or duty of confidentiality.

20.6	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 a director or authorised signatory on its behalf certifying that no Default is continuing (or if continuing, specifying the steps, if any, being taken to remedy it).
20.7	Use of websites
(a)	The Company may satisfy its obligation under this Agreement to deliver any information in relation to those Lenders (the “Website Lenders”) who accept this method of communication by posting this information onto an electronic website designated by the Company and the Agent (the “Designated Website”) if:

(i)	the Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;
(ii)	the Company and the Agent are aware of the address of and any relevant password specifications for the Designated Website; and
(iii)	the information is in a format previously agreed between the Company and the Agent.

44

	If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then the Agent shall notify the Company accordingly and the Company shall supply the information to the Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event the Company shall supply the Agent with at least one copy in paper form of any information required to be provided by it.
(b)	The Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Company and the Agent.
(c)	The Company shall promptly upon becoming aware of its occurrence notify the Agent if:

(i)	the Designated Website cannot be accessed due to technical failure;
(ii)	the password specifications for the Designated Website change;
(iii)	any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(iv)	any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
(v)	the Company becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.

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

(d)	Any Website Lender may request, through the Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. The Company shall comply with any such request within ten Business Days.
20.8	“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 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

45

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 similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(c)	The Company shall, by not less than 5 Business Days’ prior written notice to the Agent, notify the Agent (which shall promptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Obligor pursuant to Clause 25 (Changes to the Obligors).
(d)	Following the giving of any notice pursuant to paragraph (c) above, if the accession of such Additional Obligor obliges the Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Company 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 on behalf of any prospective new Lender) in order for the Agent or such Lender or 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 accession of such Subsidiary to this Agreement as an Additional Obligor.

21.	FINANCIAL COVENANTS
21.1	Financial Condition
	The Company shall ensure that:

(a)	the ratio of EBITDA to Net Interest Payable for the Relevant Period ending on 31 December 2004 and for each Relevant Period thereafter will not be less than 3.5:1; and
(b)	the ratio of Net Borrowings, as at the last day of each Relevant Period to EBITDA for that Relevant Period will not be more than 3.25:1, where:

(i)	the first test period for this covenant shall be the Relevant Period ending 31 December 2004; and
(ii)	EBITDA for the purpose of this covenant shall be adjusted to take into account the pro forma impact of any acquisitions or disposals (other than of Managed Assets) made during the Relevant Period by a member of the Group.

21.2	Financial covenant calculations
(a)	For the purposes of this Agreement, Borrowings (including Financial Indebtedness for the purpose of calculating Borrowings), EBITDA, Net Borrowings and Net Interest Payable shall be:

(i) calculated and interpreted on a consolidated basis in accordance with the Applicable Accounting Principles of the Company and shall be expressed in sterling; and

46

(ii) extracted (except as needed to reflect the terms of this Clause 21) from the financial statements of the Group delivered under Clause 20.1 (Financial statements) and Clause 20.2 (Compliance Certificate),

and “Group” shall, for the purpose of this Clause 21, include Britvic.

(b) During any Relevant Period in which the New Parent Scheme Date occurs, for any calculation of Borrowings (including Financial Indebtedness for the purpose of calculating Borrowings), EBITDA, Net Borrowings and Net Interest Payable, “Group” shall mean:

(i)	IHG and its Subsidiaries during that period at any time up to the New Parent Scheme Date; and
(ii)	the New Parent and its Subsidiaries during that period at any time from and including the New Parent Scheme Date.

21.3	Definitions
	In this Agreement:
	“Borrowings” means, as at any particular time, the aggregate outstanding principal, capital or nominal amount (and any fixed or minimum premium payable on redemption) of the Financial Indebtedness of members of the Group, other than:

(a)	any indebtedness referred to in paragraph (g) of the definition of Financial Indebtedness;
(b)	any Project Finance Indebtedness; and
(c)	any indebtedness referred to in paragraphs (f)(ii), (i) and (j) of the definition of Financial Indebtedness except, in the case of paragraphs (i) and (j), to the extent any such obligation or liability specified in such paragraphs has been provided for in the financial statements of the Group delivered under Clause 20.1 (Financial statements) or is disclosed as a contingency in the notes thereto and is quantified,

and deducting, to the extent included, amounts attributable to interests of third parties in members of the Group.

For this purpose, any amount outstanding or repayable in a currency other than sterling shall on that day be taken into account in its sterling equivalent at the rate of exchange that would have been used had an audited consolidated balance sheet of the Group been prepared as at that day in accordance with the GAAP applicable to the Original Financial Statements.

“Cash” means any credit balances on any deposit, savings, current or other account, and any cash in hand, which is:

(a)	freely withdrawable on demand;
(b)	not subject to any Security (other than permitted pursuant to Clause 22.3 (Negative pledge));
(c)	denominated and payable in freely transferable and freely convertible currency; and
(d)	capable of being remitted to an Obligor in the United Kingdom.

“Cash Equivalent Investments” means:

47

(a)	securities issued or fully guaranteed or insured by the Government of the United States or any member state of the European Union which is rated at least AA by S&P and/or Fitch or Aa by Moody’s;
(b)	commercial paper or other debt securities issued by an issuer rated at least A-1 by S&P and/or Fitch or P-1 by Moody’s; and
(c)	certificates of deposit or time deposits of any commercial bank (which has outstanding debt securities rated at least A- by S&P or A3 by Moody’s),

in each case not subject to any Security (other than permitted pursuant to Clause 22.3 (Negative pledge)) denominated and payable in freely transferable and freely convertible currency and the proceeds of which are capable of being remitted to an Obligor in the United Kingdom.

“EBITDA” means, in relation to any Relevant Period, the total consolidated operating profit of the Group for that Relevant Period:

(a) before taking into account:

(i)	Net Interest Payable;
(ii)	Tax; and
(iii)	all extraordinary and exceptional items; and

(b)	after adding back all amounts provided for depreciation and amortisation; and
(c)	deducting, to the extent included, amounts attributable to interests of third parties in members of the Group.

“Net Borrowings” means, as at any particular time, Borrowings less Cash and Cash Equivalent Investments.

“Net Interest Payable” means, in relation to any Relevant Period, the aggregate amount of interest and any other finance charges accrued by the Group in that Relevant Period in respect of Borrowings including:

(a)	the interest element of leasing and hire purchase payments;
(b)	commitment fees, commissions and guarantee fees; and
(c)	amounts in the nature of interest payable in respect of any shares other than equity share capital,

adjusted (but without double counting) by:

(i)	deducting interest income of the Group in respect of that Relevant Period;
(ii)	adding back the net amount payable (or deducting the net amount receivable) by members of the Group in that Relevant Period as a result of close-out or termination of any interest or (so far as they relate to interest) currency hedging activities;
(iii)	adding back the amount payable as a premium on any bond buy-back by members of the Group in that Relevant Period;
(iv)	deducting, to the extent included, the amount payable by members of the Group in that Relevant Period for arrangement or related fees in respect of Borrowings including, for

48

the avoidance of doubt, any un-amortised fees to be written-off in respect of the Existing Facility (to include, for the avoidance of doubt, underwriting, syndication and fees of a similar nature)); and

(v) deducting, to the extent included, the amount of interest and other finance charges attributable to interests of third parties in members of the Group and adjusting, as appropriate, the additions or deductions specified in paragraphs (i) to (iv) (inclusive) above as a consequence of interests of third parties in members of the Group.

“Relevant Period” means:

(a)	each financial year of the Company; and
(b)	each period beginning on the first day of the second half of a financial year of the Company and ending on the last day of the first half of its next financial year.

22. GENERAL UNDERTAKINGS

The undertakings in this Clause 22 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.

22.1	Authorisations
	Each Obligor shall promptly:

(a)	obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b)	supply certified copies to the Agent of,

any Authorisation required under any law or regulation of its jurisdiction of incorporation to enable it to perform its obligations under the Finance Documents and to ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of any Finance Document.

22.2 Compliance with laws

Each Obligor shall comply with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.

22.3	Negative pledge
(a)	No Obligor shall (and the Company shall ensure that no other member of the Group will) create or permit to subsist any Security over any of its assets.
(b)	Paragraph (a) above does not apply to:

(i)	any Security listed in Schedule 9 (Security) except to the extent the principal amount secured by that Security exceeds the amount stated in that Schedule;
(ii)	any cash management, netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;
(iii)	any lien arising by operation of law and in the ordinary course of business;
(iv)	any Security over or affecting any asset acquired by a member of the Group after the date of this Agreement to the extent that:

49

(A)	the Security was not created in contemplation of the acquisition of that asset by a member of the Group; and
(B)	the principal amount secured has not been increased in contemplation of or since the acquisition of that asset by a member of the Group;

(v) any Security over or affecting any asset of any company which becomes a member of the Group after the date of this Agreement, where the Security is created prior to the date on which that company becomes a member of the Group, to the extent that:

(A)	the Security was not created in contemplation of the acquisition of that company; and
(B)	the principal amount secured has not increased in contemplation of or since the acquisition of that company;

(vi)	any Security created pursuant to any Finance Document;
(vii)	any title transfer or retention of title arrangement entered into by any member of the Group in the ordinary course of business;
(viii)	pledges of goods, the related documents of title and/or other related documents arising or created in the ordinary course of business as security for indebtedness to a bank or financial institution directly relating to the goods or documents over which that pledge exists;
(ix)	any Security over cash or other investments for bank guarantees given in the ordinary course of trading securing liabilities of up to £50,000,000 or to meet any margin requirement in respect of derivative transactions;
(x)	any Security resulting from the rules and regulations of any clearing system or stock exchange over shares and/or other securities held in that clearing system or stock exchange;
(xi)	any Security securing Project Finance Indebtedness;
(xii)	any Security provided in relation to the InterContinental executive top-up scheme securing liabilities of up to £20,000,000;
(xiii)	any Security replacing any Security permitted under paragraph (i) above or this paragraph (xiii) and securing the same indebtedness or obligations whose principal amount does not exceed the maximum principal amount secured, or which could be secured, by the replaced Security when it is replaced;
(xiv)	any Security provided in connection with the Boston Lease;
(xv)	any Security securing indebtedness the principal amount of which (when aggregated with the principal amount of any other indebtedness which has the benefit of Security given by any member of the Group other than any permitted under paragraphs (i) to (xiv) above) does not exceed 5 per cent. of the Consolidated Gross Assets of the Group (or its equivalent in another currency or currencies as calculated using the most recently delivered financial statements of the Group; or
(xvi)	any other Security created or outstanding with the prior consent of the Majority Lenders.

50

22.4	Subsidiary Indebtedness
(a)	The Company shall ensure that the portion of Financial Indebtedness which is borrowed or incurred by Subsidiaries that are not Guarantors under this Agreement shall not at any time exceed the aggregate of:

(i)	£200,000,000; and
(ii)	£200,000,000 (provided such amount relates exclusively to Financial Indebtedness specified in paragraphs (f)(ii), (i) and (j) of the definition of Financial Indebtedness),

and provided that Financial Indebtedness for the purpose of this Clause 22.4 shall exclude:

(A)	amounts borrowed under this Agreement;
(B)	qualifying amounts specified in paragraph (b) below which are secured as permitted pursuant to paragraphs (iv) or (v) of Clause 22.3 (Negative pledge) or otherwise is outstanding for the period of up to 6 months following the relevant acquisition; and
(C)	amounts which would be included as Financial Indebtedness under paragraph (d) of the definition of Financial Indebtedness due to a change in GAAP after the date of this Agreement but would not be treated as Financial Indebtedness using Applicable Accounting Principles.

(b) Where a member of the Group acquires an asset or a company after the date of this Agreement in respect of which Financial Indebtedness is outstanding (other than Project Finance Indebtedness), where:

(i)	that Financial Indebtedness was not created in contemplation of the acquisition of that asset or company; and
(ii)	that Financial Indebtedness has not increased in contemplation of or since that acquisition,

then that Financial Indebtedness shall be taken into account for the purposes of the exclusion specified in paragraph (a) above.

22.5	Change of business
	Save as disclosed in the Information Memorandum, the Company shall procure that no substantial change is made to the general nature of the business of the Group taken as a whole from that anticipated to be carried on at the date of this Agreement but this shall not prevent any member of the Group engaging in any ancillary or related business.
22.6	Insurance
	Each Obligor shall (and the Company shall ensure that each other member of the Group will) maintain insurances on and in relation to its business and assets with reputable underwriters or insurance companies against those risks, and to the extent, usually insured against by prudent companies located in the same or a similar location and carrying on a similar business.
22.7	Acquisitions
	No Obligor shall (and the Company shall ensure that no other member of the Group will) complete (without the approval of the Majority Lenders which shall not be unreasonably withheld

51

or delayed) any acquisition (whether through a single transaction or series of related transactions with the same party or with parties connected with one another) where the consideration for the acquisition exceeds 25 per cent. of the Group’s market capitalisation at the time of the London Stock Exchange market close on the day falling immediately prior to the date of formal announcement of such acquisition by the Company.

22.8	Britvic
	The Company and its Subsidiaries shall at all times act on arms-length terms with Britvic.

22.9	Return of Funds
(a)	The Company shall not reduce, purchase, repay, cancel or redeem any of its shares or pay any special dividend, in each case, for the purpose of distribution to shareholders, in an amount exceeding £200,000,000 (each a “Return of Funds”) at any time (other than by way of open market purchases) unless, at the time the Company is legally committed to proceed with that Return of Funds (the “Record Date”), the ratio of Net Borrowings, as at the most recently ended Quarter Date prior to that Record Date (the “Test Date”) to EBITDA for the 12 months period ending on that Quarter Date (the “Test Period”) is less than 3.25:1.
(b)	For the purposes of this Clause 22.9, the definitions set out in Clause 21.2 (Financial covenant calculations) shall apply save that:

(i)	EBITDA shall be adjusted to take into account the pro forma impact of any disposals (other than of a Managed Asset) made by a member of the Group; and
(ii)	Net Borrowings shall be adjusted to take into account the pro forma impact of (but without double counting):

(A)	any actual or proposed Return of Funds; and
(B)	the proceeds (net of tax and other charges) received from any disposals made by a member of the Group,

in each case made, or to be made, during the period since the Test Date up to and including the Record Date; and

(iii) the reference to “Relevant Period” in the definition of EBITDA shall be substituted with “Test Period”.

22.10	Disposal of Receivables
(a)	No Obligor shall (and the Company shall ensure that no other member of the Group will) sell, transfer or otherwise dispose of any of its trade receivables.
(b)	Paragraph (a) above does not apply to any sale, transfer or other disposal of any of its receivables where the aggregate face value of all such receivables that are outstanding at any time does not exceed £35,000,000 (or its equivalent in another currency or currencies).
23.	EVENTS OF DEFAULT
	Each of the events or circumstances set out in Clause 23 is an Event of Default.

52

23.1	Non-payment
	An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:

(a)	its failure to pay is caused by administrative or technical error; and
(b)	payment is made within 5 Business Days of its due date.

23.2	Financial covenants
	Any requirement of Clause 21 (Financial covenants) is not satisfied.

23.3	Other obligations
(a)	An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 23.1 (Non-payment) and Clause 23.2 (Financial covenants)).
(b)	No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 20 days of the earlier of Agent giving notice to the Company or the Company becoming aware of the failure to comply.
23.4	Misrepresentation
(a)	Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.
(b)	No Event of Default under paragraph (a) above will occur if the circumstances giving rise to a misrepresentation or misstatement is/are capable of remedy and is/are remedied within 20 days of the Agent giving notice to the Company requiring such remedy or (if earlier) the Company becoming aware of the failure to comply.
23.5	Cross default
(a)	Any Financial Indebtedness of any member of the Group is not paid when due nor within any applicable grace period.
(b)	Any Financial Indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).
(c)	Any creditor of any member of the Group becomes entitled to declare any Financial Indebtedness of any member of the Group due and payable prior to its specified maturity as a result of an event of default (however described).
(d)	No Event of Default will occur under this Clause 23.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) and (b) above is less than £25,000,000 (or its equivalent in any other currency or currencies) and Financial Indebtedness for the purposes of this Clause 23.5 shall exclude, in each case, Project Finance Indebtedness.
23.6	Insolvency
(a)	An Obligor or a Material Subsidiary is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial

53

difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.

(b) A moratorium is declared or takes effect in respect of all or a material part (or a particular type of) the indebtedness of an Obligor or a Material Subsidiary.

23.7	Insolvency proceedings
(a)	Any corporate action or legal proceeding is taken (subject to paragraph (d) below) for the winding-up or dissolution of an Obligor or Material Subsidiary, or the appointment of a liquidator, administrator, administrative receiver, compulsory manager or other similar officer is appointed in respect of, an Obligor or Material Subsidiary other than for a solvent winding-up, dissolution or liquidation of an Obligor (other than the Company or the Guarantors) or a Material Subsidiary.
(b)	Any corporate action or legal proceeding is taken (subject to paragraph (d) below), or an agreement is entered into or proposed by an Obligor or Material Subsidiary, for the suspension of payments by, a moratorium of any indebtedness of, or a general composition, compromise or assignment for the benefit of the creditors of, an Obligor or Material Subsidiary.
(c)	A receiver, administrative receiver, compulsory manager or other similar officer is appointed in respect of an Obligor or Material Subsidiary or any of its assets, or any Security is enforced over an Obligor’s or Material Subsidiary’s assets, having an aggregate value of and in respect of indebtedness aggregating not less than £25,000,000 (or its equivalent in any other currency or currencies).
(d)	A person presents a petition for the winding up, liquidation, dissolution, administration or suspension of payments of an Obligor or Material Subsidiary except:

(i)	where such petition is being contested in good faith and by appropriate means and is in any event dismissed within 30 days of its presentation; or
(ii)	where such presentation is frivolous or vexatious or an abuse of process and is in any event dismissed within 30 days of its presentation.

23.8	Creditors’ process
	Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of an Obligor or Material Subsidiary having an aggregate value of and in respect of indebtedness aggregating at least £25,000,000 and is not discharged within 30 days.

23.9	Ownership of the Obligors
(a)	At any time before the New Parent Scheme Date, an Obligor (other than IHG) is not or ceases to be a Subsidiary of IHG.
(b)	At any time from and including the New Parent Scheme Date, an Obligor (other than the New Parent) is not or ceases to be a Subsidiary of the New Parent.
23.10	Unlawfulness
	It is or becomes unlawful for an Obligor to perform any of its material obligations under the Finance Documents.

54

23.11	Repudiation
	An Obligor repudiates a Finance Document or evidences an intention to repudiate a Finance Document.
23.12	Cessation of business
	Save for the New Parent Scheme, an Obligor ceases to carry on its business except pursuant to a reconstruction, amalgamation, merger or consolidation on solvent terms or, for the avoidance of doubt, by way of a disposal.
23.13	Acceleration
	On and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders, by notice to the Company:

(a)	cancel the Total Commitments whereupon they shall immediately be cancelled;
(b)	declare that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or
(c)	declare that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders.

55

SECTION 9

CHANGES TO PARTIES

24.	CHANGES TO THE LENDERS
24.1	Assignments and transfers by the Lenders
	Subject to this Clause 24, a Lender (the “Existing Lender”) may:

(a)	assign any of its rights; or
(b)	transfer by novation any of its rights and obligations,

	to another bank or financial institution which is a Qualifying Lender or, following the occurrence of an Event of Default which is continuing, to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets which, in each case, is a Qualifying Lender (the “New Lender”).
24.2	Conditions of assignment or transfer

(a)	The consent of the Company is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is to another Lender or an Affiliate of a Lender or following the occurrence of an Event of Default which is continuing.
(b)	The consent of the Company to an assignment or transfer must not be unreasonably withheld or delayed. The Company will be deemed to have given its consent ten days after the Existing Lender has requested it unless consent is expressly refused by the Company within that time.
(c)	The consent of the Company to an assignment or transfer must not be withheld solely because the assignment or transfer may result in an increase to the Mandatory Costs.
(d)	A partial transfer by a Lender shall be in a minimum amount of £10,000,000.
(e)	An assignment will only be effective on:

(i)	receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender; and
(ii)	performance by the Agent of all “know your customer” or other checks relating to any person that it is required to carry out in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.

(f)	A transfer will only be effective if the procedure set out in Clause 24.5 (Procedure for transfer) is complied with.
(g)	If:

(i)	a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(ii)	as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender

56

acting through its new Facility Office under Clause 13 (Tax gross-up and indemnities) or Clause 14 (Increased Costs),

	then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.
24.3	Assignment or transfer fee
	The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of £1,250.
24.4	Limitation of responsibility of Existing Lenders

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

(i)	the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;
(ii)	the financial condition of any Obligor;
(iii)	the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or
(iv)	the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

and any representations or warranties implied by law are excluded.

(b) Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(i)	has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and
(ii)	will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

(c) Nothing in any Finance Document obliges an Existing Lender to:

(i)	accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 24; or
(ii)	support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise.

24.5 Procedure for transfer

(a) Subject to the conditions set out in Clause 24.2 (Conditions of assignment or transfer) a transfer is effected in accordance with paragraph (b) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The

57

Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

(b)	The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.
(c)	On the Transfer Date:

(i)	to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the “Discharged Rights and Obligations”);
(ii)	each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;
(iii)	the Agent, the Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Arranger and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and
(iv)	the New Lender shall become a Party as a “Lender”.

24.6	Copy of Transfer Certificate to Company
	The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Company a copy of that Transfer Certificate.
24.7	Disclosure of information
	Any Lender may disclose, on a need to know basis, to any of its Affiliates and any other person:

(a)	to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement for the purpose of that actual or potential assignment or transfer;
(b)	with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or any Obligor for the purpose of that actual or potential sub-participation or transfer; or
(c)	to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation,

58

any information about any Obligor, the Group and the Finance Documents as that Lender shall consider appropriate if, in relation to paragraphs (a) and (b) above, the person to whom the information is to be given has entered into a Confidentiality Undertaking. This Clause supersedes any previous agreement relating to the confidentiality of this information.

24.9	Confidentiality
	Each Finance Party undertakes with each Obligor:

(a) to keep confidential and not to disclose to anyone any information (including any projections) relating to the Group, any member of the Group, Britvic or any Finance Document, in whatever form, and including 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 except:

(i)	for any lawfully obtained from any other source, or that is or becomes public knowledge, other than as a direct or indirect result of any breach of any obligation of confidentiality; or
(ii)	as permitted by Clause 24.7 (Disclosure of information) or by a Confidentiality Undertaking envisaged by that Clause;

(b)	to use that information only for the purpose of, or as permitted by, the Finance Documents; and
(c)	to use all reasonable endeavours to ensure that any person to whom that Finance Party passes any such information (unless disclosed under paragraph (c) of Clause 24.7 (Disclosure of information) acknowledges and complies with the provisions of this Clause 24.8 as if that person were also bound by it.

25.	CHANGES TO THE OBLIGORS
25.1	Assignments and transfer by Obligors
	No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
25.2	Additional Borrowers

(a) IHG may request that the New Parent becomes an Additional Borrower with effect at any time on or after the New Parent Scheme Date. The New Parent shall become an Additional Borrower if:

(i)	IHG delivers to the Agent a duly completed and executed Accession Letter in relation to the New Parent becoming an Additional Borrower;
(ii)	IHG confirms that no Default is continuing or would occur as a result of the New Parent becoming an Additional Borrower; and
(iii)	the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent) in relation to the New Parent, each in form and substance reasonably satisfactory to the Agent.

(b) Subject to compliance with the provisions of paragraphs (c) and (d) of Clause 20.8 (“Know your customer” checks), the Company may request that any of its Subsidiaries becomes an Additional Borrower. That Subsidiary shall become an Additional Borrower if:

59

(i)	all Lenders (acting reasonably) approve the addition of that Subsidiary and which they shall do so if that Subsidiary is a wholly owned subsidiary incorporated in the United Kingdom;
(ii)	the Company delivers to the Agent a duly completed and executed Accession Letter;
(iii)	the Company confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower; and
(iv)	the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent) in relation to that Additional Borrower, each in form and substance reasonably satisfactory to the Agent.

(c) The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance reasonably satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent).

25.3 Resignation of a Borrower

(a)	The Company may request that a Borrower (other than IHG prior to the New Parent Scheme Date and the New Parent from and including the New Parent Scheme Date) ceases to be a Borrower by delivering to the Agent a Resignation Letter.
(b)	The Agent shall accept a Resignation Letter and notify the Company and the Lenders of its acceptance if:

(i)	no Default is continuing or would result from the acceptance of the Resignation Letter (and the Company has confirmed this is the case); and
(ii)	that Borrower is under no actual or contingent obligations as a Borrower under any Finance Documents,

whereupon that company shall cease to be a Borrower and shall have no further rights or obligations under the Finance Documents.

25.4 Additional Guarantors

(a) The New Parent shall, on the New Parent Scheme Date, become an Additional Guarantor and IHG shall:

(i)	deliver to the Agent a duly completed and executed Accession Letter in relation to the New Parent becoming an Additional Guarantor;
(ii)	confirm that no Default is continuing or would occur as a result of the New Parent becoming an Additional Guarantor; and
(iii)	procure that the Agent receives all of the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent) in relation to the New Parent, each in form and substance reasonably satisfactory to the Agent.

(b) Subject to compliance with the provisions of paragraphs (c) and (d) of Clause 20.8 (“Know your customer” checks), the Company may request that any of its Subsidiaries become an Additional Guarantor. That Subsidiary shall become an Additional Guarantor if:

(i) the Company delivers to the Agent a duly completed and executed Accession Letter; and

60

(ii) the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent) in relation to that Additional Guarantor, each in form and substance reasonably satisfactory to the Agent.

(c) The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance reasonably satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent).

25.5	Repetition of Representations
	Delivery of an Accession Letter constitutes confirmation by the New Parent or, as the case may be, the relevant Subsidiary that the Repeating Representations are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.
25.6	Resignation of a Guarantor

(a)	The Company may request that a Guarantor (other than IHG prior to the New Parent Scheme Date and the New Parent after the New Parent Scheme Date) ceases to be a Guarantor by delivering to the Agent a Resignation Letter.
(b)	The Agent shall accept a Resignation Letter and notify the Company and the Lenders of its acceptance if:

(i)	no Default is continuing or would result from the acceptance of the Resignation Letter (and the Company has confirmed this is the case); and
(ii)	the Majority Lenders have consented to the Company’s request (which they shall do if in relation to any Subsidiary of the Company, Clause 22.4 (Subsidiary Indebtedness) is being complied with at such time).

61

SECTION 10

THE FINANCE PARTIES

26.	ROLE OF THE AGENT AND THE ARRANGER
26.1	Appointment of the Agent

(a)	Each other Finance Party appoints the Agent to act as its agent under and in connection with the Finance Documents.
(b)	Each other Finance Party authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.

26.2 Duties of the Agent

(a)	The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.
(b)	Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(c)	If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.
(d)	If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent or the Arranger) under this Agreement it shall promptly notify the other Finance Parties.
(e)	The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.

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

(a)	Nothing in this Agreement constitutes the Agent or the Arranger as a trustee or fiduciary of any other person.
(b)	Neither the Agent nor the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

26.5	Business with the Group
	The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.
26.6	Rights and discretions of the Agent

(a) The Agent may rely on:

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

62

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

(b) The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

(i)	no Default has occurred (unless it has actual knowledge of a Default arising under Clause 23.1 (Non-payment));
(ii)	any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and
(iii)	any notice or request made by the Company (other than a Utilisation Request or Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors.

(c)	The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.
(d)	The Agent may act in relation to the Finance Documents through its personnel and agents.
(e)	The Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.
(f)	Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

26.7 Majority Lenders’ instructions

(a)	Unless a contrary indication appears in a Finance Document, the Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.
(b)	Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties.
(c)	The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.
(d)	In the absence of instructions from the Majority Lenders (or, if appropriate, the Lenders), the Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.
(e)	The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Finance Document.

63

26.8	Responsibility for documentation
	Neither the Agent nor the Arranger:

(a)	is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arranger, an Obligor or any other person given in or in connection with any Finance Document or the Information Memorandum; or
(b)	is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document.

26.9 Exclusion of liability

(a)	Without limiting paragraph (b) below, the Agent will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.
(b)	No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent may rely on this Clause.
(c)	The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose.
(d)	Nothing in this Agreement shall oblige the Agent or the Arranger to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arranger.

26.10	Lenders’ indemnity to the Agent
	Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant to a Finance Document).
26.11	Resignation of the Agent

(a)	The Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving notice to the other Finance Parties and the Company.
(b)	Alternatively the Agent may resign by giving notice to the other Finance Parties and the Company, in which case the Majority Lenders (after consultation with the Company) may appoint a successor Agent.

64

(c)	If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the Agent (after consultation with the Company) may appoint a successor Agent (acting through an office in the United Kingdom).
(d)	The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.
(e)	The Agent’s resignation notice shall only take effect upon the appointment of a successor.
(f)	Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 26. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(g)	After consultation with the Company the Majority Lenders may, by notice to the Agent, require it to resign in accordance with paragraph (b) above. In this event, the Agent shall resign in accordance with paragraph (b) above.

26.12 Confidentiality

(a)	In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.
(b)	If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.

26.13 Relationship with the Lenders

(a)	The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
(b)	Each Lender shall supply the Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 4 (Mandatory Cost formulae).

26.14

Credit appraisal by the Lenders

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

(a)	the financial condition, status and nature of each member of the Group;
(b)	the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;
(c)	whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other

65

agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and

(d)

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

26.15	Reference Banks
	If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Agent shall (in agreement with the Company, such agreement not to be unreasonably withheld) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.
26.16	Deduction from amounts payable by the Agent
	If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.
27.	CONDUCT OF BUSINESS BY THE FINANCE PARTIES
	No provision of this Agreement will:

(a)	interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b)	oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c)	oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

28.	SHARING AMONG THE FINANCE PARTIES
28.1	Payments to Finance Parties
	If a Finance Party (a “Recovering Finance Party”) receives or recovers any amount from an Obligor other than in accordance with Clause 29 (Payment mechanics) and applies that amount to a payment due under the Finance Documents then:

(a)	the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to the Agent;
(b)	the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 29 (Payment mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and

66

(c) the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 29.5 (Partial payments).

28.2	Redistribution of payments
	The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with Clause 29.5 (Partial payments).
28.3	Recovering Finance Party’s rights

(a)	On a distribution by the Agent under Clause 28.2 (Redistribution of payments), the Recovering Finance Party will be subrogated to the rights of the Finance Parties which have shared in the redistribution.
(b)	If and to the extent that the Recovering Finance Party is not able to rely on its rights under paragraph (a) above, the relevant Obligor shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due and payable.

28.4	Reversal of redistribution
	If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

(a)

each Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause 28.2 (Redistribution of payments) shall, upon request of the Agent, pay to the Agent for account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay); and

(b)

that Recovering Finance Party’s rights of subrogation in respect of any reimbursement shall be cancelled and the relevant Obligor will be liable to the reimbursing Finance Party for the amount so reimbursed.

28.5 Exceptions

(a)	This Clause 28 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor.
(b)	A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(i)	it notified that other Finance Party of the legal or arbitration proceedings; and
(ii)	that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

67

SECTION 11

ADMINISTRATION

29.	PAYMENT MECHANICS
29.1	Payments to the Agent

(a)

On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

(b)

Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre in a Participating Member State or London) with such bank as the Agent specifies.

29.2	Distributions by the Agent
	Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 29.3 (Distributions to an Obligor) and Clause 29.4 (Clawback), be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London).
29.3	Distributions to an Obligor
	The Agent may (with the consent of the Obligor or in accordance with Clause 30 (Set-off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
29.4	Clawback

(a)

Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

(b)

If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.

29.5 Partial payments

(a) If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order:

68

(i)	first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent or the Arranger under the Finance Documents;
(ii)	secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;
(iii)	thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and
(iv)	fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

(b)	The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.
(c)	Paragraphs (a) and (b) above will override any appropriation made by an Obligor.

29.6	No set-off by Obligors
	All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
29.7	Business Days

(a)	Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
(b)	During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

29.8 Currency of account

(a)	Subject to paragraphs (b) to (e) below, the Base Currency is the currency of account and payment for any sum due from an Obligor under any Finance Document.
(b)	A repayment of a Loan or Unpaid Sum or a part of a Loan or Unpaid Sum shall be made in the currency in which that Loan or Unpaid Sum is denominated on its due date.
(c)	Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.
(d)	Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
(e)	Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.

29.9 Change of currency

(a) Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

(i) any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in,

69

	the currency or currency unit of that country designated by the Agent (acting reasonably and after consultation with the Company; and
(ii)	any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably and after consultation with the Company).

(b) If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Company) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.

30.	SET-OFF
	Without prejudice to the normal rights of the Finance Parties at law, after the occurrence of an Event of Default which is continuing, a Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. That Finance Party shall promptly notify that Obligor of any such set-off or conversion.
31.	NOTICES
31.1	Communications in writing
	Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
31.2	Addresses
	The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

(a)	in the case of the Company, that identified with its name below;
(b)	in the case of each Lender or any other Obligor, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and
(c)	in the case of the Agent, that identified with its name below,

	or any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days’ notice.
31.3	Delivery

(a) Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

(i) if by way of fax, when received in legible form; or

70

(ii) if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

	and, if a particular department or officer is specified as part of its address details provided under Clause 31.2 (Addresses), if addressed to that department or officer.
(b)	Any communication or document to be made or delivered to the Agent will be effective only when actually received by the Agent and then only if it is expressly marked for the attention of the department or officer identified with the Agent’s signature below (or any substitute department or officer as the Agent shall specify for this purpose).
(c)	All notices from or to an Obligor shall be sent through the Agent.
(d)	Any communication or document made or delivered to the Company in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors.

31.4	Notification of address and fax number
	Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 31.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties.
31.5	Electronic communication

(a) Any communication to be made between the Agent and a Lender or an Obligor and the Agent under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent and the relevant Lender or, as appropriate, the relevant Obligor and the Agent:

(i)	agree that, unless and until notified to the contrary, this is to be an accepted form of communication;
(ii)	notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
(iii)	notify each other of any change to their address or any other such information supplied by them.

(b)	Any electronic communication made between the Agent and a Lender or an Obligor and the Agent will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender to the Agent or an Obligor to the Agent only if it is addressed in such a manner as the Agent shall specify for this purpose.
(c)	The ability of an Obligor to use electronic communications is without prejudice to its obligation to submit any Utilisation Request, Selection Notice, Accession Letter, Resignation Letter, Term Out Notice or Compliance Certificate in the form required under this Agreement or any other document or notice which requires the signature of any director or authorised signatory of an Obligor.

31.6 English language

(a)	Any notice given under or in connection with any Finance Document must be in English.
(b)	All other documents provided under or in connection with any Finance Document must be:

71

(i)	in English; or
(ii)	if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

32.	CALCULATIONS AND CERTIFICATES
32.1	Accounts
	In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
32.2	Certificates and Determinations
	Any certification or determination by a Finance Party of a rate or amount under any Finance Document shall set out the basis of calculation in reasonable detail and is prima facie evidence of the matters to which it relates.
32.3	Day count convention
	Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 365 days in the case of sterling or 360 days in the case of euros and US Dollars or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.
33.	PARTIAL INVALIDITY
	If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
34.	REMEDIES AND WAIVERS
	No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.
35.	AMENDMENTS AND WAIVERS
35.1	Required consents

(a)	Subject to Clause 35.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.
(b)	The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause.

72

35.2 Exceptions

(a) An amendment or waiver that has the effect of changing or which relates to:

(i)	the definition of “EURIBOR”, “LIBOR” or “Majority Lenders” in Clause 1.1 (Definitions);
(ii)	an extension to the date of payment of any amount under the Finance Documents;
(iii)	a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;
(iv)	an increase in or an extension of any Commitment;
(v)	a change to the Borrowers or Guarantors other than in accordance with Clause 25 (Changes to the Obligors);
(vi)	any provision which expressly requires the consent of all the Lenders; or
(vii)	Clause 2.2 (Finance Parties’ rights and obligations), Clause 24 (Changes to the Lenders), Clause 28 (Sharing among the Finance Parties), or this Clause 35,

shall not be made without the prior consent of all the Lenders.

(b) An amendment or waiver which relates to the rights or obligations of the Agent or the Arranger may not be effected without the consent of the Agent or the Arranger.

36.	COUNTERPARTS
	Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

73

SECTION 12

GOVERNING LAW AND ENFORCEMENT

37.	GOVERNING LAW
	This Agreement is governed by English law.
38.	ENFORCEMENT
38.1	Jurisdiction

(a)	The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a “Dispute”).
(b)	The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.
(c)	This Clause 38.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

38.2	Service of process
	Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales):

(a)	irrevocably appoints the Company as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and
(b)	agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

74

SCHEDULE 1

THE ORIGINAL LENDERS

Name of Original Lender	Facility A Commitment		Facility B Commitment
The Bank of Tokyo-Mitsubishi, Ltd.	£	122,222,222.22	£	55,555,555.56
Barclays Bank PLC	£	122,222,222.22	£	55,555,555.56
Citibank, N.A.	£	122,222,222.22	£	55,555,555.56
HSBC Bank plc	£	122,222,222.22	£	55,555,555.56
JPMorgan Chase Bank	£	122,222,222.22	£	55,555,555.56
Lloyds TSB Bank plc	£	122,222,222.22	£	55,555,555.55
Société Générale	£	122,222,222.22	£	55,555,555.55
The Royal Bank of Scotland plc	£	122,222,222.23	£	55,555,555.55
WestLB AG, London Branch	£	122,222,222.23	£	55,555,555.55

75

SCHEDULE 2

CONDITIONS PRECEDENT

PART I

CONDITIONS PRECEDENT TO INITIAL UTILISATION

1. The Company

(a)	A copy of the constitutional documents of each Original Obligor.
(b)	A copy of a resolution of the board of directors and/or a committee of the board of directors of each Original Obligor (together with a copy of the resolutions appointing such committee):

(i)	approving the terms of, and the transactions contemplated by, the Finance Documents and resolving that it execute the Finance Documents;
(ii)	authorising a specified person or persons to execute the Finance Documents on its behalf; and
(iii)	authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request and Selection Notice) to be signed and/or despatched by it under or in connection with the Finance Documents.

(c)	A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.
(d)	A copy of any necessary resolution signed by the holders of the issued shares in each Original Guarantor (other than IHG) which is a Subsidiary of IHG and is incorporated in England and Wales, approving the terms of, and the transactions contemplated by, the Finance Documents to which the Original Guarantor is a party.
(e)	A certificate of IHG (signed by a duly authorised officer) confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on any Original Obligor to be exceeded.
(f)	A certificate of each Original Obligor (signed by an authorised signatory) certifying that each copy document relating to it specified in this Part I of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.
(g)	The Original Financial Statements of each Original Obligor.
(h)	A cancellation notice (which shall be irrevocable) in respect of the Existing Facility to be effective on the date of this Agreement and such that the Existing Facility will be cancelled and prepaid in full on the first Utilisation Date under this Agreement.

2.	Legal opinions
	A legal opinion of Clifford Chance, Limited Liability Partnership, legal advisers to the Arranger and the Agent in England, substantially in the form distributed to the Original Lenders prior to signing this Agreement.

76

PART II
CONDITIONS PRECEDENT REQUIRED TO BE
DELIVERED BY AN ADDITIONAL OBLIGOR

1.	An Accession Letter, duly executed by the Additional Obligor and (if different) the Company.
2.	A copy of the constitutional documents of the Additional Obligor.
3.	A copy of a resolution of (or of a committee of) the board of directors of the Additional Obligor:

(a)	approving the terms of, and the transactions contemplated by, the Accession Letter and the Finance Documents and resolving that it execute the Accession Letter;
(b)	authorising a specified person or persons to execute the Accession Letter on its behalf; and
(c)	authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including, in relation to an Additional Borrower, any Utilisation Request or Selection Notice) to be signed and/or despatched by it under or in connection with the Finance Documents.

4.	A specimen of the signature of each person authorised by the resolution referred to in paragraph 3 above.
5.	A copy of any necessary resolutions signed by all the holders of the issued shares of the Additional Guarantor (other than the New Parent) which are members of the Group, approving the terms of, and the transactions contemplated by, the Finance Documents to which the Additional Guarantor is a party.
6.	A certificate of the Additional Obligor (signed by an authorised signatory) confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on it to be exceeded.
7.	A certificate of the Additional Obligor (signed by an authorised signatory) certifying that each copy document listed in this Part II of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of the Accession Letter.
8.	If available, the latest audited financial statements of the Additional Obligor.
9.	A legal opinion of Clifford Chance, Limited Liability Partnership, legal advisers to the Arranger and the Agent in England.
10.	If the Additional Obligor is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Arranger and the Agent in the jurisdiction in which the Additional Obligor is incorporated.
11.	If the proposed Additional Obligor is incorporated in a jurisdiction other than England and Wales, evidence that the process agent specified in Clause 38.2 (Service of process), if not an Obligor, has accepted its appointment in relation to the proposed Additional Obligor.

77

SCHEDULE 3

REQUESTS

PART I

UTILISATION REQUEST

From:	[Borrower]
To:	[Agent]
Dated:

Dear Sirs

InterContinental Hotels Group PLC — £1,600,000,000 Facility Agreement
dated 9 November 2004 (the “Agreement”)

1.	We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.
2.	We wish to borrow a Loan on the following terms:

Proposed Utilisation Date:	[                    ] (or, if that is not a Business Day, the next Business Day)
Facility to be utilised:	[Facility A]/[Facility B]1
Currency of Loan:	[                    ]
Amount:	[                    ] or, if less, the Available Facility
Interest Period:	[                    ]

3.	We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Utilisation Request.
4.	The proceeds of this Loan should be credited to [account].
5.	This Utilisation Request is irrevocable.

Yours faithfully

authorised signatory for

[name of relevant Borrower]

¹    Delete as appropriate.

78

PART II

SELECTION NOTICE

APPLICABLE TO A TERM LOAN

From:	[Borrower or the Company on behalf of [name of relevant Borrower]]
To:	[Agent]
Dated:

Dear Sirs

InterContinental Hotels Group PLC — £1,600,000,000 Facility Agreement
dated 9 November 2004 (the “Agreement”)

1.	We refer to the Agreement. This is a Selection Notice. Terms defined in the Agreement have the same meaning in this Selection Notice unless given a different meaning in this Selection Notice.
2.	We refer to the following Term Loan[s] in [identify currency] with an Interest Period ending on [                    ].1
3.	[We request that the above Term Loan[s] be divided into [                    ] Term Loan with the following Base Currency Amounts and Interest Periods:]2
	or
	[We request that the next Interest Period for the above Term Loan[s] is [                    ]].3
4.	We request that the above Term Loan[s] [is]/[are] [denominated in the same currency for the next Interest Period]/[denominated in the following currencies: [          ]. As this results in a change of currency we confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Selection Notice. The proceeds of any change in currency should be credited to [account]].
5.	This Selection Notice is irrevocable.

Yours faithfully

authorised signatory for
[the Borrower or the Company on behalf of]
[name of relevant Borrower]

¹    Insert details of all Term Loans in the same currency which have an Interest Period ending on the same date.

²    Use this option if division of Term Loans is requested.

³    Use this option if sub-division is not required.

79

SCHEDULE 4

MANDATORY COST FORMULAE

1.	The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.
2.	On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum.
3.	The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Agent. This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in all Loans made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office.
4.	The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Agent as follows:

(a) in relation to a sterling Loan:

AB + C(B – D) + E x 0.01
	per cent. per annum
100 – (A + C)

(b) in relation to a Loan in any currency other than sterling:

E x 0.01
	per cent. per annum.
300

Where:

A	is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.
B	is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Loan is an Unpaid Sum, the additional rate of interest specified in paragraph (a) of Clause 9.3 (Default interest)) payable for the relevant Interest Period on the Loan.
C	is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.
D	is the percentage rate per annum payable by the Bank of England to the Agent on interest bearing Special Deposits.

80

E  is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.

5. For the purposes of this Schedule:

(a)	“Eligible Liabilities” and “Special Deposits” have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;
(b)	“Fees Rules” means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;
(c)	“Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and
(d)	“Tariff Base” has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.

6.	In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places.
7.	If requested by the Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.
8.	Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender:

(a)	the jurisdiction of its Facility Office; and
(b)	any other information that the Agent may reasonably require for such purpose.

Each Lender shall promptly notify the Agent of any change to the information provided by it pursuant to this paragraph.

9.

The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bank for the purpose of E above shall be determined by the Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office.

81

10.	The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.
11.	The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.
12.	Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all Parties.
13.	The Agent may from time to time, after consultation with the Company and the Lenders, determine and notify to all Parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all Parties.

82

SCHEDULE 5

FORM OF TRANSFER CERTIFICATE

To:	[                    ] as Agent
From:	[The Existing Lender] (the “Existing Lender”) and [The New Lender] (the “New Lender”)
Dated:

InterContinental Hotels Group PLC — £1,600,000,000 Facility Agreement
dated 9 November 2004 (the “Agreement”)

1.	We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.
2.	We refer to Clause 24.5 (Procedure for transfer):

(a)	The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all or part of the Existing Lender’s Commitment, rights and obligations referred to in the Schedule in accordance with Clause 24.5 (Procedure for transfer).
(b)	The proposed Transfer Date is [                    ].
(c)	The Facility Office, administrative office (if different) and address, fax number and attention details for notices of the New Lender for the purposes of Clause 31.2 (Addresses) are set out in the Schedule.

3.	The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (c) of Clause 24.4 (Limitation of responsibility of Existing Lenders).
4.	The New Lender represents that it is a Qualifying Lender.
[5.]	[The New Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:

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

(i)	a company so resident in the United Kingdom; or
(ii)	a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (for the purposes of section 11(2) of the Taxes Act) the whole of any share of interest payable in respect of that advance that falls to it by reason of sections 114 and 115 of the Taxes Act; or

(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest

83

payable in respect of that advance in computing the chargeable profits (for the purposes of section 11(2) of the Taxes Act) of that company.¹

[5/6]	This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.
[6/7]	This Transfer Certificate is governed by English law.

¹    Include if New Lender comes within paragraph (ii) of the definition of Qualifying Lender in Clause 13.1 (Definitions)

84

THE SCHEDULE

Commitment/rights and obligations to be transferred

[insert relevant details]

[Facility Office, administrative office (if different) address, fax number and attention details for notices and account details for payments.]

[Existing Lender]	[New Lender]
By:	By:

This Transfer Certificate is accepted by the Agent and the Transfer Date is confirmed as [                    ].

[Agent]

By:

85

SCHEDULE 6

FORM OF ACCESSION LETTER

To:	[                    ] as Agent
From:	[Subsidiary]/[New Parent] and [InterContinental Hotels Group PLC/New Parent]1
Dated:

Dear Sirs

InterContinental Hotels Group PLC — £1,600,000,000 Facility Agreement
dated 9 November 2004 (the “Agreement”)

1.	We refer to the Agreement. This is an Accession Letter. Terms defined in the Agreement have the same meaning in this Accession Letter unless given a different meaning in this Accession Letter.
2.	[Subsidiary/New Parent] agrees to become an Additional [Borrower]/[Guarantor] and to be bound by the terms of the Agreement as an Additional [Borrower]/[Guarantor] pursuant to [Clause 25.2 (Additional Borrowers)]/[Clause 25.4 (Additional Guarantors)] of the Agreement [with effect from the New Parent Scheme Date as notified to you]2. [Subsidiary/New Parent] is a company duly incorporated under the laws of [name of relevant jurisdiction].
3.	[Subsidiary’s] administrative details are as follows:
	Address:
	Fax No:
	Attention:
4.	This Accession Letter is governed by English law.
	[This Guarantor Accession Letter is entered into by deed.]

[InterContinental Hotels Group PLC/New Parent]3	[Subsidiary]
By:	By:

1	Refer to InterContinental Hotel Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.
2	For accession of New Parent only.
3	Refer to InterContinental Hotel Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.

86

SCHEDULE 7

FORM OF RESIGNATION LETTER

To:	[                    ] as Agent
From:	[resigning Obligor] and [InterContinental Hotels Group PLC/New Parent]1
Dated:

Dear Sirs

InterContinental Hotels Group PLC — £1,600,000,000 Facility Agreement
dated 9 November 2004 (the “Agreement”)

1.	We refer to the Agreement. This is a Resignation Letter. Terms defined in the Agreement have the same meaning in this Resignation Letter unless given a different meaning in this Resignation Letter.
2.	Pursuant to [Clause 25.3 (Resignation of a Borrower)]/[Clause 25.6 (Resignation of a Guarantor)], we request that [resigning Obligor] be released from its obligations as a [Borrower]/[Guarantor] under the Agreement.
3.	We confirm that:

(a)	no Default is continuing or would result from the acceptance of this request; and
(b)	the provisions of [Clause 25.3 (Resignation of a Borrower]/[Clause 25.6 (Resignation of a Guarantor)] are otherwise complied with.

4. This Resignation Letter is governed by English law.

[InterContinental Hotels Group PLC/New Parent]2	[Subsidiary]
By:	By:

1	Refer to InterContinental Hotel Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.
2	Refer to InterContinental Hotel Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.

87

SCHEDULE 8

FORM OF COMPLIANCE CERTIFICATE

To:	[                    ] as Agent
From:	[InterContinental Hotels Group PLC/New Parent]1
Dated:

Dear Sirs

InterContinental Hotels Group PLC — £1,600,000,000 Facility Agreement
dated 9 November 2004 (the “Agreement”)

1.	We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
2.	We confirm that:

(a)	the ratio of EBITDA to Net Interest Payable for the Relevant Period ending [                    ] was [                    ]:1; and
(b)	the ratio of Net Borrowings, as at the last day of the Relevant Period ending [                    ], to EBITDA for that Relevant Period was [                    ]:1.

	Computations of the above (in reasonable detail) are attached to this Compliance Certificate.
3.	The Material Subsidiaries as at the period ending [                    ] are [                    ].
4.	[We confirm that no Default is continuing.]2

Signed:
	Director/Authorised Signatory
	of
	[InterContinental Hotels Group PLC/New Parent]3

1	Refer to InterContinental Hotels Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.
2	If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.
3	Refer to InterContinental Hotels Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.

88

SCHEDULE 9

SECURITY

Member of the Group	Counterparty	Maturity Date	Principal
			amount
			secured
American Hotel B.V.	FGH Bank N.V.	12/12/2007	£12,700,000
Intercontinental Hotel Betriebsgesellschaft m.b.H	CreditAnstalt Bankverein	30/06/2007	£17,600,000
Hotelera El Carmen S.A.	Banco Central Hispanoamericano S.A.	28/01/2010	£8,600,000
Penta Hotels München GmbH & Co.	Frankfurter Hypothekenbank	15/09/2008	£800,000
BVH Hotelbesitzgesellschaft mbH & Co. Verwaltungs-KG	Frankfurter Hypothekenbank	30/06/2008	£10,300,000
Holiday Inns B.V.	The Law Debenture Pension Trust Corporation plc	Not applicable (Executive Top- Up Plan)	£20,000,000

89

SCHEDULE 10

TIMETABLES

     “D-” refers to the number of Business Days before the relevant Utilisation Date/the first day of the relevant Interest Period.

							Loans in
			Loans in		Loans in US		other
	Loans in euro		Sterling		Dollars		currencies
Request for approval as an Optional Currency, if required (Clause 4.3		—		—		—		D-5
(Conditions relating to Optional Currencies))								10:30 a.m.
Agent notifies the Lenders of the request (Clause 4.3		—		—		—		D-5
(Conditions relating to Optional Currencies))								3:00 p.m.
Responses by Lenders to the request (Clause 4.3		—		—		—		D-4
(Conditions relating to Optional Currencies))								1:00 p.m.
Agent notifies the Company if a currency is approved as an		—		—		—		D-4
Optional Currency in accordance with Clause 4.3								5:00 p.m.
(Conditions relating to Optional Currencies)
Delivery of a duly completed Utilisation Request (Clause 5.1		D-3		D-1		D-3		D-3
(Delivery of a Utilisation Request) or a Selection Notice (Clause 10.1		10:30 a.m.		10:30 a.m.		10:30 a.m.		10:30 a.m.
(Selection of Interest Periods))
Agent determines (in relation to a Utilisation) the Base Currency		D-3		D-1		D-3		D-3
Amount of the Loan, if required under Clause 5.4 (Lenders’ participation) and notifies the Lenders of the Loan in accordance with Clause 5.4 (Lenders’ participation)		11:00 a.m.		11:00 a.m.		11:00 a.m.		11:00 a.m.

90

							Loans in
			Loans in		Loans in US		other
	Loans in euro		Sterling		Dollars		currencies
Agent receives a notification from a Lender under Clause 6.2	Quotation Day			—	Quotation Day		Quotation Day
(Unavailability of a currency)		3:00 p.m.				3:00 p.m.		3:00 p.m.
Agent gives notice in accordance with Clause 6.2	Quotation Day			—	Quotation Day		Quotation Day
(Unavailability of a currency)		5:00 p.m.				5:00 p.m.		5:00 p.m.
Agent determines amount of the Term Loan in Optional Currency		D-3		—		D-3		D-3
in accordance with Clause 6.3 (Change of currency)		11:00 a.m.				11:00 a.m.		11:00 a.m.
Agent determines amount of the Term Loan in Optional Currency		D-3		—		D-3		D-3
in accordance with Clause 6.4(a) (Same Optional Currency during successive Interest Periods)		11:00 a.m.				11:00 a.m.		11:00 a.m.
Agent determines amount of Term Loan in Optional Currency		D-3		—		D-3		D-3
converted into Base Currency in accordance with Clause 6.4 (b)		11:00 a.m.				11:00 a.m.		11:00 a.m.
(Same Optional Currency during successive Interest Periods)
LIBOR or EURIBOR is fixed	Quotation Day		Quotation Day		Quotation Day		Quotation Day
	as of		as of		as of		as of
		11:00 a.m.		11:00 a.m		11:00 a.m		11:00 a.m
	Brussels time

91

SCHEDULE 11

FORM OF LMA CONFIDENTIALITY UNDERTAKING

LMA CONFIDENTIALITY LETTER (SELLER)

[Letterhead of Seller/Seller’s agent/broker]

To:

[insert name of Potential Purchaser/Purchaser’s agent/broker

Re: The Agreement

Company:

Date:

Amount:

Agent:

Dear Sirs

We understand that you are considering [acquiring]¹/[arranging the acquisition of]² an interest in the Agreement (the “Acquisition”). In consideration of us agreeing to make available to you certain information, by your signature of a copy of this letter you agree as follows:

1.	Confidentiality Undertaking
	You undertake (a) to keep the Confidential Information confidential and not to disclose it to anyone except as provided for by paragraph 2 below and to ensure that the Confidential Information is protected with security measures and a degree of care that would apply to your own confidential information, (b) to use the Confidential Information only for the Permitted Purpose, (c) to use all reasonable endeavours to ensure that any person to whom you pass any Confidential Information (unless disclosed under paragraph 2[(c)/(d)]3 below) acknowledges and complies with the provisions of this letter as if that person were also a party to it, and (d) not to make enquiries of any member of the Group or any of their officers, directors, employees or professional advisers relating directly or indirectly to the Acquisition.
2.	Permitted Disclosure
	We agree that you may disclose Confidential Information:

(a) to members of the Purchaser Group and their officers, directors, employees and professional advisers to the extent necessary for the Permitted Purpose and to any auditors of members of the Purchaser Group;

92

(b)	subject to the requirements of the Agreement, in accordance with the Permitted Purpose so long as any prospective purchaser has delivered a letter to you in equivalent form to this letter;]
[(b/c)]3	subject to the requirements of the Agreement, to any person to (or through) whom you assign or transfer (or may potentially assign or transfer) all or any of the rights, benefits and obligations which you may acquire under the Agreement or with (or through) whom you enter into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, the Agreement or the Borrower or any member of the Group so long as that person has delivered a letter to you in equivalent form to this letter; and
[(c/d)]3	(i) where requested or required by any court of competent jurisdiction or any competent judicial, governmental, supervisory or regulatory body, (ii) where required by the rules of any stock exchange on which the shares or other securities of any member of the Purchaser Group are listed or (iii) where required by the laws or regulations of any country with jurisdiction over the affairs of any member of the Purchaser Group.

3.	Notification of Required or Unauthorised Disclosure
	You agree (to the extent permitted by law) to inform us of the full circumstances of any disclosure under paragraph 2[(c)/(d)]3 or upon becoming aware that Confidential Information has been disclosed in breach of this letter.
4.	Return of Copies
	If we so request in writing, you shall return all Confidential Information supplied to you by us and destroy or permanently erase all copies of Confidential Information made by you and use all reasonable endeavours to ensure that anyone to whom you have supplied any Confidential Information destroys or permanently erases such Confidential Information and any copies made by them, in each case save to the extent that you or the recipients are required to retain any such Confidential Information by any applicable law, rule or regulation or by any competent judicial, governmental, supervisory or regulatory body or in accordance with internal policy, or where the Confidential Information has been disclosed under paragraph 2[(c)/(d)]3 above.
5.	Continuing Obligations
	The obligations in this letter are continuing and, in particular, shall survive the termination of any discussions or negotiations between you and us. Notwithstanding the previous sentence, the obligations in this letter shall cease (a) if you become a party to or otherwise acquire (by assignment or sub-participation) an interest, direct or indirect, in the Agreement or (b) twelve months after you have returned all Confidential Information supplied to you by us and destroyed or permanently erased all copies of Confidential Information made by you (other than any such Confidential Information or copies which have been disclosed under paragraph 2 above (other than sub-paragraph 2(a)) or which, pursuant to paragraph 4 above, are not required to be returned or destroyed).

93

6.	No Representation; Consequences of Breach, etc
	You acknowledge and agree that:

(a)

neither we, [nor our principal]4 nor any member of the Group nor any of our or their respective officers, employees or advisers (each a “Relevant Person”) (i) make any representation or warranty, express or implied, as to, or assume any responsibility for, the accuracy, reliability or completeness of any of the Confidential Information or any other information supplied by us or the assumptions on which it is based or (ii) shall be under any obligation to update or correct any inaccuracy in the Confidential Information or any other information supplied by us or be otherwise liable to you or any other person in respect to the Confidential Information or any such information; and

(b)

we [or our principal]4 or members of the Group may be irreparably harmed by the breach of the terms hereof and damages may not be an adequate remedy; each Relevant Person may be granted an injunction or specific performance for any threatened or actual breach of the provisions of this letter by you.

7.	No Waiver; Amendments, etc
	This letter sets out the full extent of your obligations of confidentiality owed to us in relation to the information the subject of this letter. No failure or delay in exercising any right, power or privilege hereunder will operate as a waiver thereof nor will any single or partial exercise of any right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privileges hereunder. The terms of this letter and your obligations hereunder may only be amended or modified by written agreement between us and the Company.
8.	Inside Information
	You acknowledge that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation relating to insider dealing and you undertake not to use any Confidential Information for any unlawful purpose.
9.	Nature of Undertakings
	The undertakings given by you under this letter are given to us and (without implying any fiduciary obligations on our part) are also given for the benefit of [our principal,]4 the Company and each other member of the Group.
10.	[Third Party Rights]

(a) Subject to paragraph 6 and to paragraph 9 the terms of this letter may be enforced and relied upon only by you and us and the operation of the Contracts (Rights of Third Parties) Act 1999 is excluded.

94

(b) Notwithstanding any provisions of this letter, the parties to this letter do not require the consent of any Relevant Person (except for the Company) or any member of the Group to rescind or vary this letter at any time.

11.	Governing Law and Jurisdiction
	This letter (including the agreement constituted by your acknowledgement of its terms) shall be governed by and construed in accordance with the laws of England and the parties submit to the non-exclusive jurisdiction of the English courts.
12.	Definitions
	In this letter (including the acknowledgement set out below) terms defined in the Agreement shall, unless the context otherwise requires, have the same meaning and:
	“Confidential Information” means any information relating to the Company, any member of the Group, the Agreement and/or the Acquisition provided to you by us or any of our affiliates or 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 knowledge other than as a direct or indirect result of any breach of this letter or (b) is known by you before the date the information is disclosed to you by us or any of our affiliates or advisers or is lawfully obtained by you thereafter, other than from a source which is connected with the Group and which, in either case, as far as you are aware, has not been obtained in violation of, and is not otherwise subject to, any obligation of confidentiality;
	“Group” means the Company and each of its holding companies and subsidiaries and each subsidiary of each of its holding companies (as each such term is defined in the Companies Act 1985);
	“Permitted Purpose” means [subject to the terms of this letter, passing on information to a prospective purchaser for the purpose of]2 considering and evaluating whether to enter into the Acquisition; and
	“Purchaser Group” means you, each of your holding companies and subsidiaries and each subsidiary of each of your holding companies (as each such term is defined in the Companies Act 1985).

Please acknowledge your agreement to the above by signing and returning the enclosed copy.

Yours faithfully

For and on behalf of

[Seller/Seller’s agent/broker]

To:	[Seller]
	[Seller’s agent/broker]

95

     The Borrower and each other member of the Group

We acknowledge and agree to the above:

For and on behalf of

[Potential Purchaser/Purchaser’s agent/broker]

1	delete if addressee is acting as broker or agent.
2	delete if addressee is acting as principal.
3	delete as applicable.
4	delete if letter is sent out by the Seller rather than the Seller’s broker or agent.

96

SCHEDULE 12

FORM OF TERM OUT NOTICE

From:	[InterContinental Hotels Group PLC/New Parent]1
To:	[Agent]
Dated:

Dear Sirs

InterContinental Hotels Group PLC — £1,600,000,000 Facility Agreement
dated 9 November 2004 (the “Agreement”)

1.	We refer to the Agreement. This is a Term Out Notice. Terms defined in the Agreement have the same meaning in this Term Out Notice unless given a different meaning in this Term Out Notice.
2.	We elect to exercise the Term Out Option pursuant to Clause 7.3 (Term Out Option) of the Agreement in relation to [all Facility B Loans/the following Facility B Loans[s]]:

Amount:	[                    ]
Currency:	[                    ]
Interest Period:	[                    ].

3. This Term Out Notice is irrevocable.

Yours faithfully

authorised signatory for
[InterContinental Hotels Group PLC/New Parent]²

1	Refer to InterContinental Hotels Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.
2	Refer to InterContinental Hotels Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.

97

SCHEDULE 13

FORM OF MARGIN CERTIFICATE

To:	[                     ] as Agent
From:	InterContinental Hotels Group PLC/New Parent1
Dated:

Dear Sirs

InterContinental Hotels Group PLC — £1,600,000,000 Facility Agreement
dated 9 November 2004 (the “Agreement”)

1.	We refer to the Agreement. This is a Margin Certificate. Terms defined in the Agreement have the same meaning when used in this Margin Certificate unless given a different meaning in this Margin Certificate.
2.	We confirm that the ratio of Net Borrowings, as at the last day of the last preceding Margin Period, to EBITDA for that Margin Period was [higher than 2.75:1]/[in the range of [                    ]: 1 to [                    ]:1]/[equal to or lower than 1:25:1].2 Computations of the above (in reasonable detail) are attached to this Margin Certificate.

Signed:
	Director
	of
	[InterContinental Hotels Group PLC/New Parent]3

1	Refer to InterContinental Hotels Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.
2	Delete as appropriate.
3	Refer to InterContinental Hotels Group PLC before the New Parent Scheme Date and the New Parent after the New Parent Scheme Date.

98

The Company

INTERCONTINENTAL HOTELS GROUP PLC

Address:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Fax No:	01753 410101
Attention:	The Company Secretary
cc:	Treasurer
	InterContinental Hotels Group PLC
	No 1 First Avenue
	Centrum 100
	Burton on Trent
	Staffordshire DE14 2WB
Fax No:	01283 514767
By:

The Original Borrowers

INTERCONTINENTAL HOTELS GROUP PLC

Address:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Fax No:	01753 410101
Attention:	The Company Secretary
cc:	Treasurer
	InterContinental Hotels Group PLC
	No 1 First Avenue
	Centrum 100
	Burton on Trent
	Staffordshire DE14 2WB
Fax No:	01283 514767
By:

99

SIX CONTINENTS PLC

Address:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Fax No:	01753 410101
Attention:	The Company Secretary
cc:	Treasurer
	InterContinental Hotels Group PLC
	No 1 First Avenue
	Centrum 100
	Burton on Trent
	Staffordshire DE14 2WB
Fax No:	01283 514767
By:

The Original Guarantors

INTERCONTINENTAL HOTELS GROUP PLC

By:

SIX CONTINENTS PLC

By:

100

The Arranger

THE BANK OF TOKYO-MITSUBISHI, LTD.

By:

BARCLAYS CAPITAL

By:

CITIGROUP GLOBAL MARKETS LIMITED

By:

HSBC BANK plc

By:

J.P. MORGAN plc

By:

LLOYDS TSB BANK plc

By:

SG CORPORATE & INVESTMENT BANKING

By:

THE ROYAL BANK OF SCOTLAND plc

By:

WESTLB AG, LONDON BRANCH

By:

101

The Original Lenders

THE BANK OF TOKYO-MITSUBISHI, LTD.

By:

BARCLAYS BANK PLC

By:

CITIBANK, N.A.

By:

HSBC BANK plc

By:

JPMORGAN CHASE BANK

By:

LLOYDS TSB BANK PLC

By:

SOCIÉTÉ GÉNÉRALE

By:

THE ROYAL BANK OF SCOTLAND plc

By:

WESTLB AG, LONDON BRANCH

By:

102

The Agent

HSBC BANK plc

Address:	8 Canada Square Level 24 London E14 5HQ
Fax No:	020 7991 4348
Attention:	CORPORATE TRUST AND LOAN AGENCY
By:

103

EX-4.21

Exhibit 4 (b)(i)

PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT is made as of July 1, 2003, by and between INTERCONTINENTAL HOTELS GROUP RESOURCES, INC., a Delaware corporation (the “Seller”) and HPT IHG PROPERTIES TRUST, a Maryland real estate investment trust (together with its permitted successors and assigns, the “Purchaser”).

W I T N E S S E T H :

     WHEREAS, the Seller is the owner of the Properties identified on Exhibit A; and

     WHEREAS, the Purchaser desires to purchase all of the Properties from the Seller and the Seller wishes to sell all of the Properties to the Purchaser, subject to and upon the terms and conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the Seller and the Purchaser hereby agree as follows:

     SECTION 1 DEFINITIONS.

     Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings set forth below, in the Section of this Agreement referred to below, or in such other document or agreement referred to below:

     1.1 “Agreement” shall mean this Purchase and Sale Agreement, together with Exhibits A — I and Schedules 6.1(d), 6.1(f) — (i), 6.1(k), 6.1(m) — 6.1(o), 6.1(r) and 6.1(t) attached hereto, as it and they may be amended from time to time.

     1.2 “Apportionment Time” shall have the meaning given such term in Section 9.1 of this Agreement.

     1.3 “Assets” shall mean, with respect to any Property, collectively, all of the Real Property, the FF&E, the FAS, the Contracts, the Improvements, the Inventories and the Intangible Property now owned or hereafter acquired by the Seller in connection with or relating to such Property other than any Excluded Assets with respect to such Property.

-1-

     1.4 “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which banking institutions in the Commonwealth of Massachusetts or the State of Georgia are authorized by law or executive action to close.

     1.5 “Closing” shall mean the consummation of the purchase and sale transactions contemplated by this Agreement.

     1.6 “Closing Date” shall mean the date on which the

     Closing shall occur.

     1.7 “Contracts” shall mean, with respect to any Property, all hotel licensing agreements and other service contracts, equipment leases, booking agreements and other arrangements or agreements to which the Seller is a party affecting the ownership, repair, maintenance, leasing or operation of such Property, to the extent the Seller’s interest therein is assignable or transferable; provided, however, that the term “Contracts” shall not include any management agreements or any Excluded Assets.

     1.8 “Diligence Expiration Date” shall mean July 1, 2003.

     1.9 “Excluded Assets” shall mean, with respect to any Property:

     (a) any right, title or interest in the name “Staybridge, ” “Intercontinental” and other System Marks (as defined in the Management Agreement);

     (b) all licenses and permits necessary for Manager to manage the Properties pursuant to the Management Agreement;

     (c) all computer software licensed for use by Seller or affiliates of Seller, including accounts receivable software;

     (d) any and all motor vehicles;

     (e) any and all menus, stationery, or other items indicating that the Properties are owned by Seller;

     (f) any and all personal property of the employees of the Properties;

     (g) books, ledger sheets, files and records with respect to the operation of the Properties; and

     (h) all contracts relating to such Property or its operations, other then the Contracts and the Permitted Encumbrances;

-2-

     (i) alcoholic beverages inventories; and

     (j) leased two way radios.

     1.10 “FAS” shall mean all items included within “Property and Equipment” under the Uniform System of Accounts, including, but not limited to, linen, china, glassware, tableware, uniforms and similar items, whether used in connection with public space or guest rooms, other than Excluded Assets.

     1.11 “FF&E” shall mean, with respect to any Property, all appliances, machinery, devices, fixtures, appurtenances, equipment, furniture, furnishings and articles of tangible personal property of every kind and nature whatsoever located in or at, or used in connection with the ownership, operation or maintenance of, such Property, but in any event excluding any Excluded Assets.

     1.12 “Hotel” shall mean, with respect to any Property, the Staybridge Suites hotel located on such Property.

     1.13 “HPT” shall mean Hospitality Properties Trust, a Maryland real estate investment trust.

     1.14 “HPT Guaranty” shall mean the Guaranty Agreement substantially in the form attached hereto as Exhibit C to be made by HPT at the Closing for the benefit of IHG and the Seller, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     1.15 “HPT Parties” shall mean, collectively, HPT, the Purchaser and the Tenant.

     1.16 “IHG” shall mean Intercontinental Hotels Group PLC, a United Kingdom corporation.

     1.17 “IHG Guaranty” shall mean the Guaranty Agreement substantially in the form attached hereto as Exhibit D, to be made by IHG at the Closing for the benefit of the Tenant and HPT, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     1.18 “Improvements” shall mean, with respect to any Property, all buildings, fixtures, walls, fences, landscaping and other structures and improvements situated on, affixed or appurtenant to, the Real Property with respect to such Property.

     1.19 “Intangible Property” shall mean, with respect to any Property, all transferable or assignable permits, certificates

-3-

of occupancy, operating permits, sign permits, development rights and approvals, certificates, licenses, warranties and guarantees, the Contracts, telephone exchange numbers identified with such Property held by the Seller and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character with respect to such Property held by the Seller other than Excluded Assets.

     1.20 “Inventories” shall mean, with respect to any Property, all “Inventories” as defined in the Uniform System of Accounts other than Excluded Assets.

     1.21 “Lease” shall mean the Lease Agreement substantially in the form attached hereto as Exhibit E, to be entered into by the Purchaser and the Tenant at the Closing, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     1.22 “Management Agreement” shall mean the Management Agreement substantially in the form attached hereto as Exhibit F, to be entered into by the Tenant and the Seller at the Closing, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     1.23 “Operating Costs” shall have the meaning given to such term in the Management Agreement.

     1.24 “Permitted Encumbrances” shall mean, with respect to any Property, (a) liens for taxes, assessments and governmental charges with respect to such Property not yet due and payable or due and payable but not yet delinquent; (b) applicable zoning regulations and ordinances and other governmental laws, ordinances and regulations provided the same do not prohibit or impair in any material respect the use of such Property as a Staybridge Suite hotel, as contemplated by this Agreement, the Management Agreement and the Lease; (c) such other nonmonetary encumbrances as do not, in the Purchaser’s reasonable opinion, impair marketability and do not prohibit or impair in any material respect the use of such Property as a fully functioning Staybridge Suite hotel as contemplated by this Agreement, the Lease, and the Management Agreement; and (d) such other nonmonetary encumbrances with respect to such Property which are not objected to by the Purchaser in accordance with Sections 2 .4 and 2.5.

     1.25 “Properties” shall mean, collectively, all of the Assets relating to the properties identified on Exhibit A, the legal descriptions of which are set forth in Exhibits B-1 through B-16.

-4-

     1.26 “Property” shall mean any one of the Properties.

     1.27 “Purchase Price” shall mean One Hundred Eighty Five Million Dollars ($185,000,000). The Purchase Price shall be allocated among the Properties as set forth in Exhibit A.

     1.28 “Purchaser” shall have the meaning given such term in the preamble to this Agreement.

     1.29 “Real Property” shall mean, with respect to any Property, the real property described in the applicable Exhibits B-1 through B-16, together with all easements, rights of way, privileges, licenses and appurtenances which the Seller may now own or hereafter acquire with respect thereto.

     1.30 “Seller” shall have the meaning given such term in the preamble to this Agreement.

     1.31 “Seller’s Knowledge” shall mean the actual (and not the imputed, or constructive) knowledge of Michael L. Goodson, Senior Vice President, Finance and Business Development, of IHG and Robert C. Gunkel, Vice President, Asset Management and Project Finance, of IHG (collectively, the “Designated Representatives”) after due inquiry of each general manager of the Hotels and other appropriate personnel employed by the Seller or its Affiliates; provided, however, the Designated Representatives shall not be obligated to make inquiry of any personnel employed at a Hotel other than the general manager thereof.

     1.32 “Surveys” shall have the meaning given such term in Section 2.5.

     1.33 “Tenant” shall mean HPT TRS IHG-1, Inc., a Maryland corporation.

     1.34 “Title Commitments” shall have the meaning given such term in Section 2.4.

     1.35 “Title Company” shall mean Lawyers Title Insurance Corporation or such other title insurance company as shall have been approved by the Purchaser and the Seller.

     1.36 “Transaction Documents” shall mean, collectively, this Agreement, the Management Agreement, the Lease, the HPT Guaranty and the IHG Guaranty.

     1.37 “True-up” shall have the meaning ascribed thereto in Section 9.1.

-5-

     1.38 “Uniform System of Accounts” shall mean A Uniform System of Accounts for Hotels, Ninth Revised Edition, 1996, as published by the Hotel Association of New York City, as the same may be further revised from time to time.

     SECTION 2 PURCHASE AND SALE; DILIGENCE.

     2.1 Purchase and Sale. In consideration of the mutual covenants herein contained, the Purchaser hereby agrees to purchase from the Seller, and the Seller hereby agrees to sell to the Purchaser, all of the Seller’s right, title and interest in and to the Properties for the Purchase Price subject to and in accordance with the terms and conditions of this Agreement.

     2.2 Diligence Inspections. At all times prior to the Closing, the Seller shall permit the Purchaser and its representatives to inspect the Properties and the Improvements (including, without limitation, all roofs, electric, mechanical and structural elements, and HVAC systems therein) and to perform due diligence, soil analysis and environmental investigations, to examine the books of account and records of the Seller with respect to the Properties, including, without limitation, all leases and agreements affecting the Properties, and make copies thereof, at such reasonable times as the Purchaser or its representatives may request by reasonable prior notice to the Seller (which notice may be oral). At all such times, the Purchaser and its representatives shall not unreasonably disrupt or interfere with the ongoing operation of the Properties or any of the guests at the Hotels. To the extent that, in connection with such investigations, the Purchaser or its agents, representatives or contractors, damages or disturbs any of the Assets, the Purchaser shall return the same to substantially the same condition which existed immediately prior to such damage or disturbance to the extent so damaged by Purchaser or its agents. The Purchaser shall indemnify, defend and hold harmless the Seller from and against any and all liabilities, claims, demands, expenses, losses, costs or damages (including, without limitation, reasonable attorneys’ fees) which the Seller may incur to the extent resulting from any act or omission of the Purchaser or its representatives, agents or contractors in connection with such examinations and inspections. The foregoing indemnity shall survive the Closing and the termination of this Agreement.

     2.3 Option to Terminate. If the results of the inspections performed by or on behalf of the Purchaser pursuant to Section 2.2 shall be unsatisfactory to the Purchaser in any respect or if the Purchaser otherwise determines not to proceed to Closing, the Purchaser shall have the right to terminate this

-6-

Agreement at any time prior to the Diligence Expiration Date, by the giving of notice thereof to the Seller on or before the Diligence Expiration Date.

     2.4 Title Matters.

     (a) Prior to the date hereof, the Seller and the Purchaser have ordered from the Title Company and directed the Title Company promptly to deliver to the Purchaser and the Seller a preliminary title commitment for an ALTA extended owner’s policy of title insurance with respect to each of the Properties, together with complete and legible copies of all instruments and documents referred to as exceptions to title (collectively, the “Title Commitments”).

     (b) On or before the Diligence Expiration Date, the Purchaser shall give the Seller notice of any title exceptions (other than Permitted Encumbrances) which adversely affect such Property in any material respect and as to which the Purchaser reasonably objects. If, for any reason, the Seller is unable or unwilling to take such actions as may be required to cause such exceptions to be removed from the Title Commitments, the Seller shall give the Purchaser notice thereof; it being understood and agreed that the failure of the Seller to give such notice within five (5) days after Purchaser gives its notice of objection shall be deemed an election by the Seller not to remedy such matters. If the Seller shall be unwilling or unable to remove any title defects to which the Purchaser has reasonably objected, the Purchaser may elect (i) to terminate this Agreement, or (ii) to consummate the transactions contemplated hereby, notwithstanding such title defect, without any abatement or reduction in the Purchase Price on account thereof. The Purchaser shall make any such election by notice to the Seller given on or prior to the Closing Date. Failure of the Purchaser to give such notice shall be deemed an election by the Purchaser to proceed in accordance with clause (ii) above. Except as otherwise expressly provided herein or agreed to in writing by the Seller, the Seller shall be under no obligation to remove or otherwise cure a title exception, and any failure or refusal of Seller to do so shall not be a default of Seller hereunder. Seller’s election to attempt to cure title exceptions shall not create any obligation of Seller to do so. Notwithstanding the foregoing, the Seller shall cause all mortgages and deeds of trust as well as any other monetary liens encumbering any Property arising by, through or under the Seller to be released at or prior to the Closing.

-7-

     2.5 Survey Matters.

     (a) Prior to the date hereof, the Purchaser has arranged for the preparation of an as-built ALTA survey with respect to each of the Properties (collectively, the “Surveys”) , by a licensed surveyor in the jurisdiction in which each such Property is located, which (i) contains an accurate legal description of the applicable Property, (ii) shows the exact location, dimension and description (including applicable recording information) of all utilities, easements, encroachments and other physical matters affecting such Property, the number of striped parking spaces located thereon and all applicable building set-back lines, (iii) states whether the applicable Property is located within a 100-year flood plain, and (iv) includes a certification substantially in the form set forth in Exhibit G, for the benefit of the parties identified therein.

     (b) On or before the Diligence Expiration Date, the Purchaser shall give the Seller notice of any matters shown on such Survey (other than Permitted Encumbrances) which adversely affect any such Property in any material respect and as to which the Purchaser reasonably objects. If, for any reason, the Seller is unable or unwilling to take such actions as may be required to remedy the objectionable matters, the Seller shall give the Purchaser prompt notice thereof; it being understood and agreed that the failure of the Seller to give such notice within five (5) days after Purchaser gives its notice of objection shall be deemed an election by the Seller not to remedy such matters. If the Seller shall be unable or unwilling to remove any survey defect to which the Purchaser has reasonably objected, the Purchaser may elect (i) to terminate this Agreement, or (ii) to consummate the transactions contemplated hereby, notwithstanding such defect, without any abatement or reduction in the Purchase Price of the affected Property on account thereof. The Purchaser shall make any such election by notice to the Seller given on or prior to the Closing. Failure of the Purchaser to give such notice shall be deemed an election by the Purchaser to proceed in accordance with clause (ii) above.

     SECTION 3 PURCHASE AND SALE.

     3.1 Closing. The Closing shall be held at the offices of Sullivan & Worcester LLP, One Post Office Square, Boston, Massachusetts, or at such other location as the Seller and the Purchaser may agree, on July 1, 2003 or on such other date as the Seller and the Purchaser may agree.

-8-

     3.2 Purchase Price. At the Closing, the Purchase Price shall be payable by wire transfer of immediately available funds to an account or accounts to be designated by the Seller prior to the Closing.

     SECTION 4 CONDITIONS TO PURCHASER’S OBLIGATION TO CLOSE.

     The obligation of the Purchaser to acquire each of the Properties shall be subject to the satisfaction or waiver of the following conditions precedent on and as of the Closing Date:

     4.1 Property Documents. The Seller shall have delivered to the Purchaser:

     (a) With respect to each of the Properties, a good and sufficient New York bargain and sale deed with covenants against grantor’s acts, or its local equivalent, in proper statutory form for recording, duly executed and acknowledged by the Seller, conveying good and marketable title to the Real Property portion of such Property, free from all liens and encumbrances other than the Permitted Encumbrances;

     (b) A bill of sale and assignment agreement, in the form attached hereto as Exhibit H, duly executed and acknowledged;

     (c) A bill of sale and assignment agreement, in the form attached hereto as Exhibit I duly executed and acknowledged;

     (d) To the extent the same are in the Seller’s possession or control, original, fully executed copies of all agreements constituting Assets; and

     (e) A copy of the final duly issued certificate of occupancy for each of the Properties.

     4.2 General Documents. The following documents shall have been duly executed and delivered:

     (a) the IHG Guaranty, duly executed by IHG;

     (b) the Management Agreement, duly executed by the Seller;

     (c) certificates of duly authorized officers of the Seller confirming the continued truth and accuracy of the representations and warranties of the Seller in this Agreement;

     (d) certified copies of applicable resolutions and certificates of incumbency with respect to each of the Seller and IHG; and

-9-

     (e) such other conveyance documents, certificates, deeds, affidavits and other instruments as the Purchaser or the Title Company may reasonably require to effectuate the transactions contemplated by this Agreement.

     4.3 Condition of Properties, Etc.

     (a) No action shall be pending or threatened for the condemnation or taking by power of eminent domain of all or any material portion of the Properties; and

     (b) All material licenses, permits and other authorizations necessary for the current use, occupancy and operation of the Properties shall be in full force and effect.

     4.4 Title Policies. The Title Company shall be prepared, subject only to payment of the applicable premium and endorsement fees and delivery of all conveyance documents in recordable form, to issue title insurance policies to the Purchaser with respect to each of the Properties, in form and substance satisfactory to the Purchaser in accordance with Section 2.4, together with such affirmative coverages as the Purchaser may reasonably require and shall have been determined by the Title Company as available as provided in Section 2.4.

     4.5 Opinions of Counsel.

     (a) The Purchaser shall have received one or more written opinions from counsel to the Seller, in form and substance reasonably satisfactory to the Purchaser, regarding the organization and authority of the Seller and IHG and such other persons or entities as the Purchaser may reasonably require, the enforceability of this Agreement, the other Transaction Documents and such other matters with respect to the transactions contemplated by this Agreement and the other Transaction Documents as the Purchaser may reasonably require together with certified copies of all charter documents.

     (b) The Purchaser shall have received a zoning diligence memorandum from local counsel to the Purchaser, in form and substance reasonably satisfactory to the Purchaser, regarding the compliance of the Properties located in Florida or Texas with respect to zoning, licensing and such other matters as the Purchaser may reasonably require.

     4.6 No Defaults. There shall be no default on the part of any of the Seller or IHG under any of the Transaction Documents, and there shall be no facts or circumstances which with the passage of time, the giving of notice or both would constitute

-10-

such a default or which would pursuant to the terms of the Transaction Documents entitle any HPT Party to terminate any Transaction Document.

     SECTION 5 CONDITIONS TO SELLER’S OBLIGATION TO CLOSE.

     The obligation of the Seller to convey the Properties on the Closing Date to the Purchaser is subject to the satisfaction or waiver of the following conditions precedent on and as of the Closing Date:

     5.1 Purchase Price. The Purchaser shall deliver to the Seller the Purchase Price as provided in Section 3.2 (subject to the adjustments and prorations as provided in this Agreement).

     5.2 Property Documents. The Purchaser shall have delivered to the Seller duly executed and acknowledged counterparts of the documents described in Sections 4.1(b) and 4.1(c).

     5.3 General Documents. The following documents shall have been duly executed and delivered:

     (a) the Management Agreement, duly executed by Tenant;

     (b) the HPT Guaranty, duly executed by HPT;

     (c) certificates of duly authorized officers of the Purchaser confirming the continued truth and accuracy of the representations and warranties of the Purchaser in this Agreement;

     (d) certified copies of applicable resolutions and certificates of incumbency with respect to each of the HPT Parties; and

     (e) such other documents, certificates, affidavits and other instruments as the Seller or the Title Company may reasonably require to effectuate the transactions contemplated by this Agreement.

     5.4 Opinion of Counsel. The Seller shall have received one or more written opinions from counsel to the HPT Parties, in form and substance reasonably satisfactory to the Seller, regarding the organization and authority of the HPT Parties and such other persons or entities as the Seller may reasonably require, the enforceability of this Agreement, the other Transaction Documents and such other matters with respect to the transactions contemplated by this Agreement and the other

-11-

Transaction Documents as the Seller may reasonably require together with certified copies of all charter documents.

     5.5 No Defaults. There shall be no default on the part of any of the HPT Parties under any of the Transaction Documents, and there shall be no facts or circumstances which with the passage of time, the giving of notice or both would constitute such a default or which would pursuant to the terms of the Transaction Documents entitle the Seller to terminate any Transaction Document.

     SECTION 6 REPRESENTATIONS AND WARRANTIES OF THE SELLER.

     6.1 Representation of Seller. To induce the Purchaser to enter into this Agreement, the Seller covenants, represents and warrants to the Purchaser as follows:

     (a) The Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has all requisite power and authority under the laws of such jurisdiction and its respective charter documents to enter into and perform its obligations under the Transaction Documents and to consummate the transactions contemplated thereby. The Seller is duly qualified to transact business in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where such failure to qualify would not have a material adverse effect on the Seller or the transactions contemplated hereby.

     (b) The Seller has taken (or will take, prior to the Closing Date) all necessary action to authorize the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party, and upon the execution and delivery of any document to be delivered by the Seller on or prior to the Closing Date, such document shall constitute the valid and binding obligation and agreement of each of the Seller that is a party thereto, enforceable against Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors and general principles of equity.

     (c) The execution, delivery or performance of the Transaction Documents by the Seller, and the compliance with the terms and provisions thereof, will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any Property pursuant to the

-12-

terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which the Seller is bound.

     (d) Except as may be set forth on Schedule 6.1 (d), to the Seller’s Knowledge, no action or proceeding is pending or threatened, and no investigation looking toward such an action or proceeding has begun, which (i) questions the validity of the Transaction Documents or any action taken or to be taken pursuant thereto, (ii) will result in any material adverse change in the business, operation, affairs or condition of any of the Properties, (iii) may result in or subject any of the Properties to a material liability, (iv) involves condemnation or eminent domain proceedings against any material part of any of the Properties or (v) is likely to materially and adversely affect the ability of the Seller to perform its obligations hereunder.

     (e) Other than (i) the Permitted Encumbrances, (ii) the documents to be assigned to the Purchaser pursuant to the terms hereof, true and complete copies of which have been made available to the Purchaser and (iii) agreements and easements with governmental bodies and utility companies which are reasonably necessary for the development and operation of the Properties as contemplated by this Agreement and the documents and instruments which are contemplated to be executed and delivered by the parties hereto and their affiliates pursuant to the terms hereof, there are no material agreements, leases, licenses or occupancy agreements affecting the Properties which will be binding on the Purchaser subsequent to the Closing Date.

     (f) Except as may be set forth in Schedule 6.1(f) or in the written inspection reports obtained by the Purchaser in connection herewith, to the Seller’s Knowledge, there is no fact or condition which materially and adversely affects the physical condition of any of the Properties which has not been set forth in this Agreement, or in the other documents, certificates or statements furnished to or obtained by the Purchaser in connection with the transactions contemplated hereby.

     (g) All utilities and services necessary for the use and operation of the Properties (including, without limitation, road access, water, electricity and telephone) are available thereto, and are of sufficient capacity to meet adequately all needs and requirements necessary for the current use and operation of the Properties. To the Seller’s Knowledge, except as may be set forth in Schedule 6.1(g), no fact, condition or proceeding exists which would result in the termination or impairment of the furnishing of such utilities to any of the Properties.

-13-

     (h) Except as may be set forth in Exhibit 6.1 (h), to the Seller’s Knowledge or in the written inspection reports obtained by Purchaser in connection therewith, (i) the Properties and the use and operation thereof do not violate any material federal, state, municipal or other governmental statutes, ordinances, by-laws, rules, regulations or any other legal requirements, including, without limitation, those relating to construction, occupancy, zoning, adequacy of parking, environmental protection, occupational health and safety or fire safety applicable thereto; and (ii) there are in effect all material licenses, permits and other authorizations necessary for the current use, occupancy and operation thereof. To the Seller’s Knowledge, except as may be set forth in Schedule 6.1(h), there is no threatened request, application, proceeding, plan, study or effort which would materially adversely affect the present use or zoning of any of the Properties or which would modify or realign any adjacent street or highway.

     (i) Except as may be set forth on Schedule 6.1 (i), other than the amounts disclosed by current tax bills, true and correct copies of which have been made available to Purchaser, no taxes or special assessments of any kind (special, bond or otherwise) are or have been levied with respect to any of the Properties, or any portion thereof, which are outstanding or unpaid, other than amounts not yet due and payable or, if due and payable, not yet delinquent.

     (j) The Seller is not a “foreign person” within the meaning of Section 1445 (f) (3) of the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

     (k) Except as may be set forth on Schedule 6.1(k) or otherwise disclosed in writing to the Purchaser, to the Seller’s Knowledge, none of the Seller or any other occupant or user of any of the Properties, or any portion thereof, have stored or disposed of (or engaged in the business of storing or disposing of) or have released or caused the release of any hazardous waste, contaminants, oil, radioactive or other material on any of the Properties, or any portion thereof, the removal of which is required or the maintenance of which is prohibited or penalized by any applicable federal, state or local statutes, laws, ordinances, rules or regulations. To the Seller’s Knowledge, except as may be set forth on Schedule 6.1(k) or otherwise disclosed in writing to the Purchaser, the Properties are free from any such hazardous waste, contaminants, oil, radioactive and other materials, except any such materials maintained in accordance with applicable law.

-14-

     (l) To the Seller’s Knowledge, there are no defects or inadequacies in any of the Properties which, if uncorrected, would result in a termination of insurance coverage or an increase in the premiums charged therefor.

     (m) Except as may be set forth in Schedule 6.1 (m), to the Seller’s Knowledge, each of the Properties is in good working order and repair, mechanically and structurally sound, free from material defects in materials and workmanship and not subject to any unrepaired casualty.

     (n) Except as may be set forth on Schedule 6.1 (n), all tax returns for privilege, gross receipts, excise, sales and use, personal property and franchise taxes required by law to be filed by the Seller with respect to the Properties prior to the Closing Date will be prepared and duly filed prior to the Closing (or after Closing with respect to pre-Closing matters) and all taxes, if any, shown on such returns or otherwise determined to be due, together with any interest or penalties thereon, will be paid by the Seller prior to the Closing, or in a timely manner following Closing.

     (o) Except as may be set forth on Schedule 6.1(o), there are in effect all material licenses (including liquor licenses, if required), permits and other authorizations necessary for the then current use, occupancy and operation of the Properties.

     (p) Seller has good and marketable title to the FF&E, FAS and Inventories, and such FF&E, FAS and Inventories were “new” at the time of installation or acquisition, and have not been used prior to their use at the Properties.

     (q) The FF&E, FAS and Inventories located at or otherwise used in connection with each Property (i) comply in all material respects with the Brand Standards (as defined in the Management Agreement) and (ii) are otherwise at adequate, appropriate levels and at levels that are at least equal to those found at other similarly-situated Staybridge Suites hotels.

     (r) Except as may be set forth in Schedule 6.1 (r), to the Seller’s Knowledge there exists no violation of any law, regulation, order or requirement issued by any governmental authority against or affecting any of the Properties and none of the Seller have received any notice or order from any governmental authority requiring any repairs, maintenance or improvements to any Property which have not been fully performed.

-15-

     (s) Each Property constitutes a separate parcel for purposes of ad valorem real property taxes, and is not subject to a lien for non-payment of real property taxes relating to any other property.

     (t) Except as may be set forth on Schedule 6 . 1 (t), to the Seller’s Knowledge, there exists no material default on the part of the Seller with respect to any Permitted Encumbrance, other than those defaults which can be cured or discharged by the payment of money and for which an allowance for the payment thereof has been made at Closing.

     (u) Each of the financial statements of IHG heretofore delivered to the Purchaser have been properly prepared in accordance with the Accounting Principles (as defined in the Management Agreement) , are true, correct and complete in all material respects and fairly present the consolidated financial condition of IHG at and as of the dates thereof and the results of its operations for the periods covered thereby. Each of the financial statements of the Hotels heretofore delivered to the Purchaser have been properly prepared in accordance with the Accounting Principles, are true, correct and complete in all material respects and fairly present the financial condition, of the Hotels covered thereby at and as of the dates thereof and the results of their operations for the periods covered thereby.

     (v) Seller is not a debtor in any voluntary or involuntary proceeding in bankruptcy.

     6.2 Survival. The representations and warranties made in this Agreement by the Seller are made as of the date hereof except as otherwise expressly provided in this Agreement. All representations and warranties made in this Agreement by the Seller shall survive the Closing; provided, however, except with respect to claims asserted in regard to the representations and warranties contained in Sections 6.1(a), 6.1(b), 6.1H) and 6.1(n), the Purchaser shall not commence any action for the breach by the Seller of any of the representations and warranties contained in this Section 6 after the first anniversary of the Closing Date unless prior to such first anniversary the Purchaser is legally precluded from commencing such action.

     6.3 No Other Representations.

     (a) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY DOCUMENTS TO BE EXECUTED AND DELIVERED BY THE SELLER AT THE CLOSING, THE SELLER DISCLAIM THE MAKING OF ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE

-16-

PROPERTIES OR MATTERS AFFECTING THE PROPERTIES, WHETHER MADE BY THE SELLER, ON THEIR BEHALF OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE PHYSICAL CONDITION OF THE PROPERTIES, TITLE TO OR THE BOUNDARIES OF THE REAL PROPERTY, PEST CONTROL MATTERS, SOIL CONDITIONS, THE PRESENCE, EXISTENCE OR ABSENCE OF HAZARDOUS WASTES, TOXIC SUBSTANCES OR OTHER ENVIRONMENTAL MATTERS, COMPLIANCE WITH BUILDING, HEALTH, SAFETY, LAND USE AND ZONING LAWS, REGULATIONS AND ORDERS, STRUCTURAL AND OTHER ENGINEERING CHARACTERISTICS, TRAFFIC PATTERNS, MARKET DATA, ECONOMIC CONDITIONS OR PROJECTIONS, THE FITNESS OF THE PROPERTIES FOR USE AS A HOTEL, THE FINANCIAL PERFORMANCE OR POTENTIAL OF THE PROPERTIES AND ANY OTHER INFORMATION PERTAINING TO THE PROPERTIES OR THE MARKET AND PHYSICAL ENVIRONMENTS IN WHICH THEY ARE LOCATED. THE PURCHASER ACKNOWLEDGES (I) THAT THE PURCHASER HAS ENTERED INTO THIS AGREEMENT WITH THE INTENTION OF MAKING AND RELYING UPON ITS OWN INVESTIGATION OR THAT OF THIRD PARTIES WITH RESPECT TO THE PHYSICAL, ENVIRONMENTAL, FINANCIAL, ECONOMIC AND LEGAL CONDITION OF EACH PROPERTY; AND (II) THAT THE PURCHASER IS NOT RELYING UPON ANY STATEMENTS, REPRESENTATIONS OR WARRANTIES OF ANY KIND, OTHER THAN THOSE SPECIFICALLY SET FORTH IN THIS AGREEMENT OR IN ANY DOCUMENT TO BE EXECUTED AND DELIVERED TO THE PURCHASER AT THE CLOSING, MADE BY THE SELLER. THE PURCHASER FURTHER ACKNOWLEDGES THAT IT HAS NOT RECEIVED FROM OR ON BEHALF OF THE SELLER ANY ACCOUNTING, TAX, LEGAL, ARCHITECTURAL, ENGINEERING, PROPERTY MANAGEMENT OR OTHER ADVICE WITH RESPECT TO THIS TRANSACTION AND IS RELYING SOLELY UPON THE ADVICE OF THIRD PARTY ACCOUNTING, TAX, LEGAL, ARCHITECTURAL, ENGINEERING, PROPERTY MANAGEMENT AND OTHER ADVISORS. SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, THE PURCHASER SHALL PURCHASE THE PROPERTIES IN THEIR “AS IS” CONDITION ON THE CLOSING DATE.

     (b) PURCHASER ACKNOWLEDGES THAT, TO THE EXTENT REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED IN THIS SECTION 6 ARE “CONSPICUOUS” DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION OR ORDER.

     SECTION 7 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

     To induce the Seller to enter in this Agreement, the Purchaser covenants, represents and warrants to the Seller as follows:

     7.1 Status and Authority of the Purchaser. The Purchaser is duly organized and validly existing under the laws of the jurisdictions of its formation, and has all requisite power and authority under the laws of such jurisdiction and under its charter documents to enter into and perform its obligations under the Transaction Documents to which it is a party and to consummate the transactions contemplated thereby. The Purchaser

-17-

is duly qualified and in good standing in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where such failure to qualify would not have a material adverse effect on the Purchaser or the transactions contemplated hereby.

     7.2 Action of the Purchaser. The Purchaser has taken (or will take, prior to the Closing Date) all necessary action to authorize the execution, delivery and performance of each of the Transaction Documents to which it is a party, and upon the execution and delivery of any document to be delivered the Purchaser on or prior to the Closing Date such document shall constitute the valid and binding obligation and agreement of the Purchaser that is party thereto, enforceable against the Purchaser in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors and general principles of equity.

     7.3 No Violations of Agreements. Neither the execution, delivery or performance of the Transaction Documents by the Purchaser, nor compliance with the terms and provisions thereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, or charge upon any property or assets of the Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which the Purchaser is bound .

     7.4 Litigation. To the actual (and not the imputed or constructive) knowledge of John Murray, President of HPT, after due inquiry of appropriate personnel employed by the Purchaser no action or proceeding is pending or threatened, and no investigation looking toward such an action or proceeding has begun, which (a) questions the validity of the Transaction Documents or any action taken or to be taken pursuant hereto or (b) is likely to materially and adversely affect the ability of any of the Purchaser to perform its obligations hereunder.

     7.5 Bankruptcy. None of the Purchaser is a debtor in any voluntary or involuntary proceeding in bankruptcy.

     The representations and warranties made in this Agreement by the Purchaser are made as of the date hereof. All representations and warranties made in this Agreement by the Purchaser shall survive the Closing; provided, however, except with respect to claims asserted in regard to the representations and warranties contained in Sections 7.1 and 7.2. the Seller

-18-

shall not commence any action for the breach by the Purchaser of any of the representations and warranties contained in this Section 7 after the first anniversary of the Closing Date unless prior to such first anniversary the Seller is legally precluded from commencing such action.

     SECTION 8 COVENANTS OF THE SELLER.

     Between the date hereof and the Closing, and, with respect to the terms of Section 8.7, thereafter:

     8 .1 Notice of Material Changes or Untrue Representations . Upon learning of any material change in any condition with respect to the Properties or of any event or circumstance which makes any representation or warranty of the Seller under this Agreement untrue, the Seller shall promptly notify the Purchaser thereof (the Purchaser agreeing, on learning of any such fact or condition, promptly to notify the Seller thereof).

     8.2 Compliance with Laws, Etc. The Seller shall comply in all material respects with (i) all laws, regulations and other requirements from time to time applicable of every governmental body having jurisdiction over the Properties, or the use or occupancy thereof, and (ii) all material terms, covenants and conditions of all agreements affecting the Properties.

     8.3 Approval of Agreements. The Seller shall not enters into, modify, amend or terminate any material agreement with respect to the Properties, which would encumber or be binding upon the Properties from and after the Closing Date, without in each instance obtaining the prior written consent of the Purchaser, which consent shall not be unreasonably withheld.

     8.4 Compliance with Agreements. The Seller shall comply with each and every material term, covenant and condition contained in the Contracts or in any material document or agreement affecting the Properties, and shall monitor compliance thereunder consistent with past practices.

     8.5 Operation of the Properties. Subject to events beyond the reasonable control of the Seller, the Seller shall continue to operate the Properties in a good and businesslike fashion consistent with past practices and to maintain the Properties in good working order and condition in a manner consistent with past practice and the Brand Standards.

     8.6 Insurance. The Seller shall maintain “all risk” property insurance on a replacement cost basis with respect to the Properties.

-19-

     8.7 Books. The Seller hereby agree to make all of its books, ledger sheets, files and records with respect to the operation of the Properties (excluding any portions thereof which the Seller reasonably determine to be confidential or proprietary) available to the Purchaser for review and inspection for a period of two (2) years after the Closing Date. The provisions of this Section 8.7 shall survive Closing under this Agreement.

     SECTION 9 APPORTIONMENTS.

     9.1 Apportionments.

     (a) At the Closing, the following adjustments and prorations shall be computed as of 12:01 a.m. (local time at each Property) on the Closing Date (“Apportionment Time”) . All items of revenue, cost and expense with respect to the period prior to the Apportionment Time shall be for the account of IHG and the Seller. All revenues attributable to guests of the Hotels for the night prior to the Closing Date shall be for the account of Seller. All items of revenue, cost and expense of such Property with respect to the period from and after the Apportionment Time shall be for the account of the Tenant. All adjustments and prorations shall be on an accrual basis in accordance with generally accepted accounting principles. Seller shall be entitled to receive any refunds of any taxes (real, personal or sales) for any periods prior to Closing, regardless of when received.

     (b) At the Closing, a fair and reasonable estimated accounting of all adjustments and prorations shall be performed and agreed to by IHG, the Seller, the Purchaser and the Tenant . Subsequent final adjustments and payments (the “True-up”) shall be made in cash or other immediately available funds as soon as practicable after the Closing Date for such Property, based upon an accounting performed by the Seller and acceptable to the Purchaser and the Tenant. In the event the parties have not agreed with respect to the adjustments required to be made pursuant to this Section 9.1(b), upon application by any such party, a certified public accountant reasonably acceptable to the parties hereto shall determine any such adjustments which have not theretofore been agreed to by the parties hereto. The charges for such accountant shall be borne equally by the parties to such disputed adjustment. All adjustments to be made as a result of the final results of the True-up shall be paid to the party entitled to such adjustment within thirty (30) days after the final determination thereof.

- 20 -

     9.2 Closing Costs. The Seller, on one hand, and the Purchaser, on the other hand, shall share equally all costs and expenses associated with the transaction contemplated hereby, including, without limitation, recording, sales and transfer fees and taxes, local counsel fees (limited to those incurred in connection with usual and customary local counsel services in similar commercial real estate transactions) , title insurance premiums for the owner’s policies, market studies and appraisals, title, survey and environmental reports, engineering studies, and the taxes (if any) associated with the transfer of the FF&E, the FAS and Inventories; provided, however, each party shall pay its own attorneys’ and accountants’ fees and costs in connection with this transaction. In addition, the Seller shall pay any costs associated with the transfer of the roof warranties. The parties shall make appropriate allocations of the Purchase Price for purposes of determining any transfer or recording taxes due in connection herewith.

     9.3 The obligations of the parties under this Section 9 shall survive the Closing.

     SECTION 10 DEFAULT.

     10.1 Default by the Seller. If prior to the Closing the Seller shall have made any representation or warranty herein which shall be untrue in any material respect when made or updated as herein provided or if the Seller shall fail to perform any of the material covenants and agreements contained herein and such failure continues for a period of ten (10) days after notice thereof from the Purchaser, the Purchaser may terminate this Agreement in its entirety.

     10.2 Default by the Purchaser. If prior to the Closing the Purchaser shall have made any representation or warranty herein which shall be untrue or misleading in any material respect, or if the Purchaser shall fail to perform any of the covenants and agreements contained herein to be performed by it and such failure shall continue for a period of ten (10) days, the Seller may, as its sole and exclusive remedy, at law and in equity, terminate this Agreement, whereupon, the Purchaser shall pay to the Seller, as liquidated damages and not as a penalty, an amount equal to five percent (5%) of the Purchase Price. Purchaser and Seller acknowledge and agree that if this Agreement is terminated by reason of Purchaser default hereunder before the Closing, the damages that Seller will sustain as a result thereof will be substantial, but the actual damages will be difficult or impossible to ascertain.

     SECTION 11 MISCELLANEOUS.

- 21 -

     11.1 Agreement to Indemnify.

     (a) Subject to any express provisions of this Agreement to the contrary, from and after Closing, the Seller shall indemnify and hold harmless the Purchaser from and against any and all obligations, claims, losses, damages, liabilities, and expenses (including, without limitation, reasonable attorneys’ and accountants’ fees and disbursements) arising out of (i) a breach by the Seller of any representation or warranty set forth herein, (ii) events or contractual obligations, acts, or omissions of the Seller that occurred in connection with the ownership or operation of any Property prior to the Closing Date or (iii) any damage to property of others or injury to or death of any person or any claims for any debts or obligations occurring on or about or in connection with any Property or any portion thereof at any time or times prior to the Closing Date and during the ownership of such Property by Seller or any of its affiliates.

     (b) whenever an HPT Party shall learn through the filing of a claim or the commencement of a proceeding or otherwise of the existence of any liability for which the Seller are or may be responsible under this Agreement, the Purchaser shall notify the Seller promptly and furnish such copies of documents (and make originals thereof available) and such other information as the Purchaser may have that may be used or useful in the defense of such claims and shall afford the Seller the full opportunity to defend the same in the name of the Purchaser and shall generally cooperate with the Seller in the defense of any such claim.

     (c) The provisions of this Section 11.1 shall survive the Closing.

     11.2 Brokerage Commissions. Each of the parties hereto represents to the other parties that it dealt with no broker, finder or like agent in connection with this Agreement or the transactions contemplated hereby, and that it reasonably believes that there is no basis for any other person or entity to claim a commission or other compensation for bringing about this Agreement or the transactions contemplated hereby. The Seller shall indemnify and hold harmless the Purchaser and its successors and assigns from and against any loss, liability or expense, including reasonable attorneys’ fees, arising out of any claim or claims for commissions or other compensation for; bringing about this Agreement or the transactions contemplated hereby made by any broker, finder or like agent, if such claim or claims are based in whole or in part on dealings with the Seller. The Purchaser shall indemnify and hold harmless the

- 22 -

Seller and their respective successors and assigns from and against any loss, liability or expense, including, reasonable attorneys’ fees, arising out of any claim or claims for commissions or other compensation for bringing about this Agreement or the transactions contemplated hereby made by any broker, finder or like agent, if such claim or claims are based in whole or in part on dealings with the Purchaser. Nothing contained in this section shall be deemed to create any rights in any third party. The provisions of this Section 11.2 shall survive the Closing hereunder and any termination of this Agreement.

     11.3 Publicity. Except as may be required by law or as may be reasonably necessary, on a confidential basis, to inform any rating agencies, potential sources of financing, financial analysts, to perform its obligations and duties contained in this Agreement or to receive legal, accounting and/or tax advice or to entities involved in a sale of a controlling interest in the Seller, the Purchaser, or any of their affiliates, the parties agree that no party shall, with respect to this Agreement and the transactions contemplated hereby, contact or conduct negotiations with public officials, make any public pronouncements, issue press releases or otherwise furnish information regarding this Agreement or the transactions contemplated hereby to any third party without the consent of the other parties, which consent shall not be unreasonably withheld; provided, however, that, if such information is required to be disclosed by law, the party so disclosing the information shall use reasonable efforts to give notice to the other parties as soon as such party learns that it must make such disclosure.

     11.4 Public Companies. HPT and IHG are both publicly traded companies. None of IHG, HPT or their affiliates and representatives shall trade in the securities of the other party during the pendency of this transaction until all material facts concerning this transaction are publicly announced and the market has had the opportunity to absorb the announcement.

     11.5 Notices.

     (a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing and the same shall be delivered either by hand, by telecopier with written acknowledgment of receipt (provided a copy is sent by Federal Express or similar expedited commercial carrier for delivery the next Business Day), or by mail or Federal Express or similar expedited commercial carrier,

- 23 -

addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).

     (b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

All such notices shall be addressed,

     If to the Seller to:

          InterContinental Hotels Group Resources, Inc.
          c/o Six Continents Hotels, Inc.
          3 Ravinia Drive, Suite 100
          Atlanta, Georgia 30346
          Attn: Vice President of Operations
          [Telecopier No. (770) 604-8875

     with a copy to:

          InterContinental Hotels Group Resources, Inc.
          c/o Six Continents Hotels, Inc.
          3 Ravinia Drive, Suite 100
          Atlanta, Georgia 30346
          Attn: General Counsel — Operations
          [Telecopier No. (770) 604-5802

     If to any HPT Party, to:

          Hospitality Properties Trust
          400 Centre Street
          Newton, Massachusetts 02458
          Attn: John G. Murray
          [Telecopier No. (617) 969-5730]

- 24 -

     with a copy to:

          Sullivan & Worcester LLP
          One Post Office Square
          Boston, Massachusetts 02109
          Attn: Warren M. Heilbronner, Esq.
          [Telecopier No. (617) 338-2880]

     By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

     11.6 Waivers, Etc. Any waiver of any term or condition of this Agreement, or of the breach of any covenant, representation or warranty contained herein, in any one instance, shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty, nor shall any failure at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such party’s right at a later time to enforce or require performance of such provision or any other provision hereof. This Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected, except by an instrument in writing executed by or on behalf of the party against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought.

     11.7 Assignment; Successors and Assigns. This Agreement and all rights and obligations hereunder shall not be assignable by any party without the written consent of the other parties, except that the Purchaser may assign this Agreement to any entity wholly owned, directly or indirectly, by the Purchaser; provided, however, that, in the event this Agreement shall be assigned to any entity wholly owned, directly or indirectly, by the Purchaser, HPT shall remain fully and primarily liable for the obligations of the “Purchaser” hereunder. In addition, Purchaser shall have the right to require that the Properties or any part thereof be conveyed directly to its designee. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. This Agreement is not intended and shall not be construed to create

- 25 -

any rights in or to be enforceable in any part by any other persons.

     11.8 Severability. If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case. Except for obligations which by their terms are to survive Closing or which by their express terms are to be performed following Closing, the terms and provisions of this Agreement shall not survive the Closing and shall merge into the deeds from the Seller to the Purchaser. The provisions of the immediately preceding sentence shall survive the Closing.

     11.9 Counterparts. Etc. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof. This Agreement may not be amended or modified in any respect other than by the written agreement of all of the parties hereto.

     11.10 Governing Law.

     (a) This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the State of New York applicable to contracts between residents of New York which are to be performed entirely within New York, regardless of (i) where this Agreement is executed or delivered, (ii) where any payment or other performance required by this Agreement is made or required to be made, (iii) where any breach of any

- 26 -

provision of this Agreement occurs, or any cause of action otherwise accrues, (iv) where any action or other proceeding is instituted or pending, (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party, (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than New York, (vii) the location of the Properties or any applicable Property, or (viii) any combination of the foregoing.

     (b) All actions and proceedings arising out of or in any way relating to this Agreement shall be brought, heard, and determined exclusively in an otherwise appropriate federal or state court located within New York County, New York. The parties hereby (i) submit to the exclusive jurisdiction of any New York federal or state court of otherwise competent jurisdiction for the purpose of any action or proceeding arising out of or relating to this Agreement and (ii) voluntarily and irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise in any such action or proceeding, any claim or defense that it is not personally subject to the jurisdiction of such a court, that such a court lacks personal jurisdiction over any party or the matter, that the action or proceeding has been brought in an inconvenient or improper forum, that the venue of the action or proceeding is improper, or that this Agreement may not be enforced in or by such a court. To the maximum extent permitted by applicable law, each party consents to service of process by registered mail, return receipt requested, or by any other manner provided by law.

     (c) To the maximum extent permitted by applicable law, each of the parties hereto waives its rights to trial by jury with respect to this Agreement or matters arising in connection herewith.

     11.11 Performance on Business Days. In the event the date on which performance or payment of any obligation of a party required hereunder is other than a Business Day, the time for payment or performance shall automatically be extended to the first Business Day following such date.

     11.12 Attorneys’ Fees. If any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing party’s costs and expenses, including reasonable attorneys’ fees incurred in connection therewith, in preparation therefor and on appeal therefrom, which amounts shall be

- 27 -

included in any judgment therein. The terms of this Section 11.12 shall survive the Closing.

     11.13 Section and Other Headings. The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. Unless the context clearly requires otherwise, the words “herein”, “hereunder”, and “hereby”, whenever used in this Agreement, shall refer to this Agreement as a whole, and not only to the sections, subsections, paragraphs or subparagraphs of this Agreement in which such words appear.

     11.14 Time of Essence. Time is of the essence of this Agreement and each term and provision hereof.

     11.15 Limitation of Liability. No advisor, trustee, director, officer, employee, beneficiary, shareholder, member, partner, participant, representative or agent of IHG or HPT shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into pursuant to the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times heretofore or hereafter. In no event shall any of the Purchaser or the Seller be entitled to punitive, consequential or special damages under this Agreement, and each of the Purchaser and the Seller hereby waives any right to claim, pursue or collect same. The provisions of this Section 11.15 shall survive any termination of this Agreement and the Closing hereunder.

     11.16 State Specific Provisions.

     CA: None.

     CO: None.

     FL:

               Radon Disclosure. The Purchaser acknowledges the following Radon Gas disclosures required by Florida Statute 404.056, Subsection 8:

RADON GAS: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in

- 28 -

buildings in Florida. Additional information regarding Radon and Radon testing may be obtained from county public health units.

GA: None.

MO: None.

MA: None.

MI: None.

NC: None.

TX: None.

WA: None.

     11.17 Nonliability of Trustees. THE DECLARATIONS OF TRUST ESTABLISHING PURCHASER, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT, AND THE SELLER HEREBY AGREES THAT, THE NAME “HPT IHG PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, PURCHASER. ALL PERSONS DEALING WITH PURCHASER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF PURCHASER, FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

- 29 -

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as a sealed instrument as of the date first above written.

SELLER: INTERCONTINENTAL HOTELS GROUP RESOURCES, INC.
By:	/s/ Robert C. Gunkel
	Its: Robert C. Gunkel
	Vice President

PURCHASER: HPT IHG PROPERTIES TRUST
By:	/s/ John G. Murray
	Its: John G. Murray
	President

- 30 -

EX-4.22

Exhibit 4(b)(ii)

AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT

by and between

BHR TEXAS, L.P.
INTERCONTINENTAL HOTELS GROUP RESOURCES, INC.
CROWNE PLAZA LAX, LLC
HOLIDAY PACIFIC PARTNERS LIMITED PARTNERSHIP
220 BLOOR STREET HOTEL INC.
STAYBRIDGE MARKHAM, INC.

as Seller,

and

HPT IHG-2 PROPERTIES TRUST

as Buyer

February 9, 2005

LIST OF SCHEDULES AND EXHIBITS

SCHEDULES

Schedule	Document	Reference Paragraph
A	Definitions
6.1	Closing Procedure	Paragraph 6.1
	Seller’s Reps And Warranties
8.1(D)	Pending or Threatened Litigation	Paragraph 8.1(D)
8.1(E)	List of Leases	Paragraph 8.1(E)
8.1(F)	Conditions Materially Affecting The Property	Paragraph 8.1(F)
8.1(G)	Conditions Materially Affecting Utilities And Services	Paragraph 8.1(G)
8.1(H)	Violation of Laws Relating To Zoning, Construction, Health And Fire Safety, Etc.	Paragraph 8.1(H)
8.1(I)	Unpaid (Delinquent) Taxes or Special Assessments	Paragraph 8.1(I)
8.1(K-1)	Hazardous Materials	Paragraph 8.1(K-1)
8.1(M)	Material Defects In Property	Paragraph 8.1(M)
8.1(N)	Unpaid Taxes	Paragraph 8.1(N)
8.1(O)	Unobtained Licenses And Permits	Paragraph 8.1(O)
8.1(R)	Violation Of Laws	Paragraph 8.1(R)
8.1(T)	Material Defaults With Respect To Permitted Title Exceptions	Paragraph 8.1(T)
8.1(W)	Information With Respect To Leases And Ground Leases	Paragraph 8.1(W)
8.1(Z)	Toronto InterContinental Hotel Employment Matters	Paragraph 8.1(Z)

EXHIBITS

Exhibit	Document	Reference Paragraph
A-1	Houston InterContinental Hotel	Schedule A
A-2	Austin, TX InterContinental Hotel	Schedule A
A-3	White Plains Crowne Plaza Hotel	Schedule A
A-4	Redondo Beach Crowne Plaza Hotel	Schedule A
A-5	Los Angeles Crowne Plaza Hotel	Schedule A
A-6	Hilton Head Crowne Plaza Hotel	Schedule A
A-7	Atlanta Airport Holiday Inn Hotel	Schedule A
A-8	Memphis Holiday Inn Hotel	Schedule A
A-9	Anaheim Holiday Inn Hotel	Schedule A
A-10	Anaheim Staybridge Suites Hotel	Schedule A
A-11	Toronto Staybridge Suites Hotel	Schedule A
A-12	Toronto InterContinental Hotel	Schedule A
A-13	General property descriptions, title holder and allocation of purchase price (for all Hotels)	Schedule A, Paragraph 6.2(R), Paragraph 9.1
B-1	Special Warranty Deed	Paragraph 6.2(A)
B-2	Assignment of Ground Lease	Paragraph 6.2(A)
C-1	Bill of Sale (Hotel)	Paragraph 6.2(B)
C-2	Bill of Sale (Personal Property)	Paragraph 6.2(B)
D	Assignment and Assumption of Leases	Paragraph 6.2(C)
E	Assignment of Contracts, Warranties and Other Interests	Paragraph 6.2(D)
F-1	Notice of Sale (to the Tenants)	Paragraph 6.2(E)
F-2	Notice of Assignment (to service contract providers)	Paragraph 6.2(E)
G-1	Non-Foreign Certificate (Domestic)	Paragraph 6.2(F)
G-2	Non-Foreign Certificate (Canadian)	Paragraph 6.2(F)
H	Affidavit of Title	Paragraph 6.2(G)
I	Closing Statement Agreement	Paragraph 6.2(H)
J	Authority Certificate	Paragraph 6.2(I)
K	Certificate of Reaffirmation	Paragraph 6.2(J)
L-1	Tenant Estoppel Certificate	Paragraphs 5.1.9, 6.2(T)

Exhibit	Document	Reference Paragraph
L-2	Landlord Consent and Estoppel Certificate	Paragraph 5.1.9, Paragraph 6.2(R)
L-3	Toronto InterContinental Hotel Consent and Estoppel Certificate	Paragraph 5.1.9, Paragraph 6.2(R)
M	IHG Parent Guaranty	Schedules A, 6.2(P), Schedule A
N	List of Contracts	Schedule A, Paragraph 8.1(E)
O	Reserved
P	Management Agreement	Schedule A, Paragraph 6.2(N), Paragraph 17
Q	HPT Guaranty	Paragraph 6.3(F), Schedule A
R	Amendment to Management Agreement	Paragraph 10.4.2
S	IHG Press Releases/Public Announcements	Paragraph 11.2
T-1	Registrable Form of Transfer of Registered Owner’s interest in the Staybridge Suites Hotel	Paragraph 6.2(A-2)
T-2	Conveyance of Staybridge Markham, Inc.’s Beneficial Interest in the Toronto Staybridge Suites Hotel	Paragraph 6.2(A-2)
T-3	Authorization of Transfer with respect to transfer of Registered Owner’s interest in the Toronto Staybridge Suites Hotel by applicable Canadian Seller	Paragraph 6.2(A-2)
T-4	Registrable Form of Assignment and Assumption Agreement with respect to the Toronto InterContinental Hotel Ground Lease	Paragraph 6.2(A-2)
T-5	Conveyance of 220 Bloor Street Hotel Inc.’s Beneficial Interest under the Toronto InterContinental Hotel Ground Lease	Paragraph 6.2(A-2)
T-6	Authorization and Direction with respect to transfer of Registered Tenant’s leasehold interest in the Toronto InterContinental Hotel Ground Lease	Paragraph 6.2(A-2)
T-7	Assignment and Assumption Agreement with respect to the Toronto InterContinental Hotel Ground Lease	Paragraph 6.2(A-2)
U	GST Indemnity	Paragraph 6.3(G)
V	Ground Leases	Schedule A
W	Reliance Letter	Paragraph 10.1(D)

Exhibit	Document	Reference Paragraph
X	Third Amendment to Management Agreement – Staybridge	Paragraph 6.2(S)
X-1	First Amendment to Management Agreement – Candlewood	Paragraph 6.2(S)
Y	Required Work	Paragraph 5.7

AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT

     THIS AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of February 9, 2005, by and between BHR TEXAS, L.P., a Delaware limited partnership, INTERCONTINENTAL HOTELS GROUP RESOURCES, INC., a Delaware corporation, CROWNE PLAZA LAX, LLC, a Georgia limited liability company, HOLIDAY PACIFIC PARTNERS LIMITED PARTNERSHIP, a Delaware limited partnership, 220 BLOOR STREET HOTEL INC., an Ontario corporation, and STAYBRIDGE MARKHAM, INC., an Ontario corporation (such parties are referred to individually and collectively, as the context may require, as “Seller”), and HPT IHG-2 PROPERTIES TRUST, a Maryland real estate investment trust (“Buyer”).

R E C I T A L S:

     WHEREAS, Seller is the owner (or ground lessee, as applicable) of the following hotels: (i) InterContinental Hotel in Houston, Texas, (ii) InterContinental Hotel in Austin, Texas, (iii) Crowne Plaza Hotel in White Plains, New York, (iv) Crowne Plaza Hotel in Redondo Beach, California, (v) Crowne Plaza Hotel in Los Angeles, California, (vi) Crowne Plaza Hotel in Hilton Head, South Carolina, (vii) Holiday Inn Hotel in Atlanta, Georgia, (viii) Holiday Inn Hotel in Memphis, Tennessee, (ix) Holiday Inn Hotel in Anaheim, California, (x) Staybridge Suites Hotel in Anaheim, California, (xi) Staybridge Suites Hotel in Markham, Ontario, Canada, and (xii) InterContinental Hotel in Toronto, Ontario, Canada . The land on which the foregoing hotels are located is more particularly described on Exhibits A-1 through A-12 (collectively, the “Land”);

     WHEREAS, certain summary information for each aforementioned hotel (individually a “Hotel” and collectively, the “Hotels”) is set forth on Exhibit A-13;

     WHEREAS, Buyer desires to acquire the Property from Seller for the aggregate purchase price of Three Hundred Thirty-One Million and No/100 Dollars ($331,000,000.00), subject to the terms and conditions hereinafter set forth (“Aggregate Purchase Price”) and Seller desires to convey the Property to Buyer all upon the terms and conditions hereinafter set forth;

     WHEREAS, Seller and Buyer are parties to that certain Purchase and Sale Agreement dated as of December 17, 2004, as amended as of December 22, 2004, January 14, 2005, January 26, 2005, February 2, 2005 and February 8, 2005 (as amended from time to time, the “Original Agreement”), pursuant and subject to the terms and conditions of which Buyer has agreed to purchase the Hotels from Seller;

     WHEREAS, Seller and Buyer desire to amend and restate the Original Agreement as herein provided; and

     WHEREAS, except as provided herein, Buyer and Seller acknowledge that the Property is to be conveyed in its entirety, in accordance with the terms hereof and individual Hotels may not be excluded from this transaction by either party. Except as provided herein, any termination of this Agreement by Buyer or Seller as provided herein shall be effective as to all the Hotels and all Property.

     NOW, THEREFORE, for and in consideration of the promises, covenants, representations and warranties hereinafter set forth, the sum of Ten Dollars ($10.00) and other good and valuable consideration in hand paid by Seller to Buyer and by Buyer to Seller upon the execution of this Agreement, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto hereby agree to amend and restate the Original Agreement in its entirety as follows:

     1. Deadlines and Definitions.

          1.1 Deadlines. Wherever used in this Agreement, the following terms shall have the meanings set forth below:

          “Closing Deadline” shall mean:

          (a) Subject to the terms of Paragraph 6, February 23, 2005; and

          (b) with respect to any Hotels not purchased at the time of the initial Closing and the Austin, TX InterContinental Hotel, June 1, 2005 (as such date may be extended pursuant to the terms hereof).

          “Due Diligence Deadline” shall mean February 9, 2005.

          1.2 Definitions. In addition, wherever used in this Agreement, the terms set forth on Schedule A shall have the meanings set forth on Schedule A.

     2. Purchase and Sale. Seller agrees to convey, transfer and assign, and Buyer, and/or its permitted designee, agrees to acquire, accept and assume, the Property, on the terms, conditions and provisions set forth in this Agreement.

     3. Purchase Price. The Aggregate Purchase Price, subject to the prorations and credits set forth herein, shall be $331,000,000.00 and shall be due and payable as follows:

          3.1 Reserved.

          3.2 Purchase Price.

          (a) Subject to the terms hereof, including, without limitation, Paragraph 6, on the applicable Closing Date, Buyer shall pay to Seller the total allocated values of such Hotels as such value is set forth on Exhibit A-13 that are transferred on such date to Buyer, subject to the application of the Deposit (to the extent made hereunder) against the Purchase Price (defined below), and such other credits, prorations and adjustments set forth herein, in cash by federal reserve bank wire transfer to such account and bank as Seller shall designate in writing to Buyer at or prior to Closing. The total value of all the Hotels set forth on Exhibit A-13 is referred to as the “Purchase Price”.

          (b) Buyer shall pay Twenty-Five Million and No/100 Dollars ($25,000,000.00) (“Additional Purchase Price”) to Seller by federal reserve bank wire transfer to such account and bank as Seller shall designate in writing to Buyer in installments as follows: (i)

- 2 -

$10,000,000.00 on December 31, 2005, (ii) $10,000,000.00 on December 31, 2006, (iii) $5,000,000.00 on December 31, 2007.

          3.3 Purchase Price Allocation.

          (a) The Purchase Price shall be allocated among the Real Property and Personal Property for tax and financial accounting purposes in accordance with Exhibit A-13. Buyer and Seller shall file, and shall cause their respective affiliates to file, all tax returns (including amended returns and claims for refunds) and information reports in a manner consistent with such Exhibit A-13.

          (b) Each Seller hereby appoints BHR Texas, L.P., acting by or through any one or more of its duly authorized officers, as their representative (the “Seller Representative”) to act for them with respect to all matters relating to this Agreement, including without limitation (a) waiver of one or more of the conditions set forth in Paragraph 10 and (b) the amendment or modification of this Agreement or any other Closing Document. The appointment of the Seller Representative is coupled with an interest, is irrevocable and shall not be revoked by, and shall survive, the liquidation, dissolution or bankruptcy of any Seller. The Purchase Price and such Additional Purchase Price (after giving effect to all adjustments and allocations as provided for herein) shall be paid to the Seller Representative or as it may direct on behalf of and for the benefit of all Sellers. The Seller Representative in turn will remit to each other Seller hereunder so much thereof as each such other Seller may be entitled. Buyer shall have no responsibility with respect to the allocation of distribution of the Purchase Price or such Additional Purchase Price among or to any Seller except for the payment thereof to the Seller Representative.

     4. Buyer’s Due Diligence and Inspection Rights; Termination Right.

          4.1 Review of Property and Property Documents. Until Closing, and subject to the terms of Paragraph 4.2, Seller shall provide Buyer and Buyer’s Representatives with access to the Property and the Property Documents, wherever located, upon reasonable prior notice at reasonable times during business hours, with the right and license to conduct Due Diligence with respect to the Property. Subject to Paragraphs 7.3 and 7.4, Buyer covenants and agrees that it will inspect the Hotels at its sole cost and expense and will not allow any liens to attach against the Hotels as a result of its Due Diligence. If Buyer or Seller Terminates this Agreement, then upon written request from Seller, Buyer shall endeavor to deliver promptly to Seller (at no cost to Buyer) copies of all Buyer’s Diligence Reports in its possession (except for such materials which Buyer deems confidential or proprietary), but with no liability for the accuracy thereof and no representation that Seller or any other party may rely thereon. Seller represents that it has not altered or intentionally withheld any part of the Property Documents delivered to Buyer.

          4.2 Guidelines for Inspection Rights. Buyer’s rights to conduct Due Diligence shall be subject to the following further requirements: (a) Due Diligence must not unreasonably interfere with the operation or management of the Hotels or unreasonably disturb the rights of guests or Tenants; (b) Buyer must provide Seller with at least twenty-four (24) hours prior written notice of its intent to perform Due Diligence on the Property and Seller shall have the right to have a representative of Seller present during any such entry upon the Property by

- 3 -

Buyer or Buyer’s Representatives; (c) Buyer shall not contact any Tenant, Hotel contractor, Hotel guest, or Hotel employee without Seller’s prior written consent, which consent shall not be unreasonably withheld or delayed; (d) Seller or its designated representative shall have the right to pre-approve (which approval shall not be unreasonably withheld or delayed), and be present during, any physical testing of the Property; (e) Buyer shall immediately return the Property to the condition existing prior to any tests and inspections; (f) Due Diligence activities may not unreasonably affect the appearance of the Hotels in any way; and (g) Buyer may not conduct any invasive sampling, boring, testing, or analysis of soils, surface water or groundwater at the Property without first having obtained prior written approval of Seller, which approval shall not be unreasonably withheld or delayed. Prior to such time as Buyer or any of Buyer’s Representatives enter the Property, Buyer shall (i) obtain policies of general liability insurance which insure Buyer and Buyer’s Representatives with liability insurance limits of not less than $1,000,000 combined single limit for personal injury and property damage and name Seller as an additional insured and which are with such insurance companies, provide such additional coverages with appropriate limits as Seller shall reasonably require, and (ii) provide Seller with certificates of insurance evidencing that Buyer has obtained the aforementioned policies of insurance. Notwithstanding any provision in this Agreement to the contrary, except in connection with the preparation of a so-called “Phase I” environmental report with respect to the Property or the issuance of a standard “zoning letter” with respect to the Property, Buyer shall not contact any governmental official or representative regarding hazardous materials on, or the environmental condition of, the Property, or the status of compliance of the Property with zoning, building code or similar Laws, without Seller’s prior written consent thereto, which consent shall not be unreasonably withheld or delayed.

          4.3 Title and Survey Examination. Seller, on or prior to the Effective Date, delivered to Buyer a copy of Seller’s most recent Survey of the Property and a Title Commitment.

          A. Title and Survey Objections. Buyer shall have until the Due Diligence Deadline to notify Seller in writing of any Title Objections. If Buyer fails to notify Seller of any Title Objections on or before such date, then, notwithstanding any other provisions set forth herein, such failure to notify Seller shall constitute a waiver of such right to object to such matters existing as of the Effective Date and disclosed in the Title Commitment or Survey. Seller shall notify Buyer within three (3) Business Days of its receipt of such notice if Seller has elected to Remove any such Title Objections. If Seller fails to respond within such timeframe, Seller shall be deemed to have declined to remove such Title Objections (other than Required Removal Items). If Seller does not covenant in writing to Buyer that Seller will Remove the Title Objections prior to Closing (other than Required Removal Items), Buyer shall have until the applicable Closing Date to elect in writing, either to (a) Terminate this Agreement, and thereafter the parties shall have no further rights or obligations hereunder, except for those which expressly survive any such termination, or (b) waive its Title Objections (other than Required Removal Items) and proceed with the transaction pursuant to the remaining terms and conditions of this Agreement. If Buyer fails to give Seller notice of its election by such time, it shall be deemed to have elected to Terminate this Agreement. Any such Title Objection so waived by Buyer shall be deemed to constitute a Permitted Title Exception and the Closing shall occur as herein provided without any reduction of or credit against the Aggregate Purchase Price.

- 4 -

          B. Cure of Title Matters. At Closing, if this Agreement is not Terminated as permitted herein, Seller shall Remove or cause to be Removed any Title Objections to the extent (and only to the extent) that the same constitute Required Removal Items.

          C. Buyer’s Right To Terminate. If Seller fails to Remove any Title Objection (other than Required Removal Items) prior to Closing that it has agreed to remove pursuant to subsection (A) above, then Buyer shall be able to Terminate this Agreement by written notice to Seller on or prior to the Closing Date and thereafter the parties shall have no further rights or obligations hereunder except for those which expressly survive any such termination.

          D. Pre-Closing “Gap” Defects. Whether or not Buyer shall have furnished to Seller any notice of Title Objections before the Due Diligence Deadline, Buyer may at or prior to Closing notify Seller in writing of any defects in the Title Commitment or Survey appearing in the Title Commitment or Survey for the first time at any time after the Effective Date. With respect to any Title Objections set forth in such notice, Buyer shall have the same rights as those which apply to any notice of defects in title resulting from a notice of title defects by Buyer on or before the Due Diligence Deadline and Seller shall have the same rights and obligations to cure the same at or prior to Closing. If necessary, the date for Closing shall be extended by written notice from Seller to Buyer (by not more than fifteen (15) days) to allow Seller to cure such pre-closing “gap” defects.

          4.4 As-Is, Where-Is, With All Faults Sale. (a) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY DOCUMENTS TO BE EXECUTED AND DELIVERED BY SELLER AT THE CLOSING, SELLER DISCLAIMS THE MAKING OF ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE PROPERTY OR MATTERS AFFECTING THE PROPERTY, WHETHER MADE BY SELLER, ON ITS BEHALF OR OTHERWISE INCLUDING, WITHOUT LIMITATION, THE PHYSICAL CONDITION OF THE PROPERTY, TITLE TO OR THE BOUNDARIES OF THE REAL PROPERTY, PEST CONTROL MATTERS, SOIL CONDITIONS, THE PRESENCE, EXISTENCE OR ABSENCE OF HAZARDOUS WASTES, TOXIC SUBSTANCES OR OTHER ENVIRONMENTAL MATTERS, COMPLIANCE WITH BUILDING, HEALTH, SAFETY, LAND USE AND ZONING LAWS, REGULATIONS AND ORDERS, STRUCTURAL AND OTHER ENGINEERING CHARACTERISTICS, TRAFFIC PATTERNS, MARKET DATA, ECONOMIC CONDITIONS OR PROJECTIONS, THE FITNESS OF THE PROPERTY FOR USE AS A HOTEL, THE FINANCIAL PERFORMANCE OR POTENTIAL OF THE PROPERTY AND ANY OTHER INFORMATION PERTAINING TO THE PROPERTY OR THE MARKET AND PHYSICAL ENVIRONMENTS IN WHICH THEY ARE LOCATED. BUYER ACKNOWLEDGES (I) THAT BUYER HAS ENTERED INTO THIS AGREEMENT WITH THE INTENTION OF MAKING AND RELYING UPON ITS OWN INVESTIGATION OR THAT OF THIRD PARTIES WITH RESPECT TO THE PHYSICAL, ENVIRONMENTAL, FINANCIAL, ECONOMIC AND LEGAL CONDITION OF THE PROPERTY; AND (II) THAT BUYER IS NOT RELYING UPON ANY STATEMENTS, REPRESENTATIONS OR WARRANTIES OF ANY KIND, OTHER THAN THOSE SPECIFICALLY SET FORTH IN THIS AGREEMENT OR IN ANY DOCUMENT TO BE EXECUTED AND DELIVERED TO BUYER AT THE CLOSING, MADE BY SELLER. BUYER FURTHER ACKNOWLEDGES THAT IT HAS NOT RECEIVED FROM OR ON BEHALF OF SELLER ANY ACCOUNTING, TAX,

- 5 -

LEGAL, ARCHITECTURAL, ENGINEERING, PROPERTY MANAGEMENT OR OTHER ADVICE WITH RESPECT TO THIS TRANSACTION AND IS RELYING SOLELY UPON THE ADVICE OF THIRD PARTY ACCOUNTING, TAX, LEGAL, ARCHITECTURAL, ENGINEERING, PROPERTY MANAGEMENT AND OTHER ADVISORS. SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, BUYER SHALL PURCHASE THE PROPERTY IN THEIR “AS IS” CONDITION ON THE CLOSING DATE.

          (b) BUYER ACKNOWLEDGES THAT, TO THE EXTENT REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED IN THIS PARAGRAPH 4.4 ARE “CONSPICUOUS” DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION OR ORDER.

          4.5 Termination Right. If Buyer, in its sole and absolute discretion, determines not to proceed with the Transaction or is not satisfied with any matters relating to the Property, Buyer may Terminate this Agreement by written notice to Seller at any time on or prior to the Due Diligence Deadline. If Buyer does not timely exercise such right to Terminate this Agreement, then Buyer shall be deemed to have accepted the condition of the Property (subject to Seller’s compliance with the representations, warranties and covenants of this Agreement, and the conditions set forth in Paragraph 10) and shall thereafter have no right to Terminate this Agreement on account of such Due Diligence termination right under this Paragraph 4.5. If after the Due Diligence Deadline Buyer conducts further Due Diligence, Buyer acknowledges and agrees that Buyer shall have no further right to terminate this Agreement with respect to such further Due Diligence or otherwise in accordance with this Paragraph 4.5 after the Due Diligence Deadline.

     5. Covenants.

          5.1 Seller’s Covenants: Effective Date to Closing Date. Seller agrees that between the Effective Date and the Closing Date (or for such other period as otherwise indicated herein):

               5.1.1 No Alteration of Title. Seller shall not transfer or alter or encumber in any way Seller’s title to the Real Property as it exists as of the Effective Date without written notice to, and the prior written consent of, Buyer. If Buyer fails to object in writing to any such proposed instrument within five (5) Business Days after receipt of the aforementioned notice, Buyer shall be deemed to have approved the proposed instrument. Buyer’s consent shall not be unreasonably withheld or delayed with respect to any such instrument that is proposed by Seller.

               5.1.2 New Leases and Modifications to Existing Leases. If Seller desires to (i) enter into any new Lease or Ground Lease, (ii) cancel, modify, amend, extend or renew any existing Lease, (iii) consent to any assignment or sublease in connection with any Lease or Ground Lease, (iv) accept any prepayment of rent thereunder (more than thirty (30) days in advance), or (v) take any other material action with respect to any Lease or Ground Lease, Seller shall deliver to Buyer written notice of such action, which notice shall contain information regarding the proposed action that Seller believes is reasonably necessary to enable Buyer to make informed decisions with respect to the advisability of the proposed action. Seller

- 6 -

shall not be entitled to take such action without Buyer’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed (and if no response by Buyer is made within five (5) Business Days after Buyer’s receipt of such request and all documents related thereto, such consent shall be deemed to have been granted). Seller shall promptly provide Buyer with true, correct and complete copies of any Lease, modification, or amendment entered into by Seller. Notwithstanding any provision of this Agreement to the contrary, without any requirement for notice or consent from Buyer, Seller may, but shall not be obligated to, take any action with respect to any Lease that the Manager may, without the consent of Owner, take under the Management Agreement as if it had been in effect in its current form as of the Effective Date.

               5.1.3 Contracts. If Seller desires to (i) enter into any new Contracts, (ii) cancel, modify, amend, extend or renew any existing Contracts, (iii) waive any default under or accept any surrender of any Contracts, or (iv) take any other material action with respect to any Contract, Seller shall deliver to Buyer written notice of such action, which notice shall contain information regarding the proposed action that Seller believes is reasonably necessary to enable Buyer to make informed decisions with respect to the advisability of the proposed action. Except for Contracts that can be terminated, without penalty, upon thirty (30) days (or less) written notice from the owner of the Property, Seller shall not be entitled to take such action without Buyer’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed (and if no response by Buyer is made within five (5) Business Days after Buyer’s receipt of such request and all documents related thereto, such consent shall be deemed to have been granted); upon delivery of such written consent, such Contract or modification thereof shall thereupon be included within the definition of “Contracts” set forth herein. Seller shall promptly provide Buyer with true, correct and complete copies of any Contract, modification, or amendment entered into by Seller. Notwithstanding any provision of this Agreement to the contrary, without any requirement for notice or consent from Buyer, Seller may, but shall not be obligated to, take any action with respect to any Contracts that the Manager may, without the consent of Owner, take under the Management Agreement as if it had been in effect in its current form as of the Effective Date.

               5.1.4 Reserved.

               5.1.5 Tax Appeals. Seller, or Manager on its behalf, shall have the right to continue and to control the progress of and to make all decisions with respect to any contest of the real estate taxes and personal property taxes for the Property due and payable during the Closing Tax Year and all prior Tax Years. Buyer shall have the right to control the progress of and to make all decisions with respect to any tax contest of the real estate taxes and personal property taxes for the Property due and payable during all Tax Years subsequent to the Closing Tax Year. All real estate and personal property tax refunds and credits received after Closing with respect to the Property for the Closing Tax Year shall be applied in accordance with the terms and provisions of the Management Agreement. Buyer and Seller agree to cooperate with each other and to execute any and all documents reasonably requested in furtherance of the foregoing. The provisions of this Paragraph 5.1.5 shall survive the Closing. Notwithstanding the foregoing, Seller shall not conduct any such contest unless the requirements applicable to the Manager’s ability to make a similar contest under the Management Agreement are satisfied as if it had been in effect in its current form as of the Effective Date.

- 7 -

               5.1.6 Personal Property. Seller shall not remove any of the Personal Property, Leases, Contracts or Other Interests from the Real Property nor use any of the Personal Property prior to the Closing Date except such use thereof as is normal and customary in the operation and maintenance of the Property.

               5.1.7 Intellectual Property. In the absence of an express assignment of any Leases, licenses, permits, Contracts, or Other Interests, no Leases, licenses, permits, Contracts, or Other Interests shall be transferred or assigned to Buyer at Closing. Buyer also acknowledges that Seller and the Seller Parties are subject to the Management Agreement, retaining all right, title and interest in and to all their respective intellectual property rights that may be used within or comprise any part of the Property except as may be specifically licensed to Buyer pursuant to a separate license agreement with Seller or in accordance with the terms of the Management Agreement.

               5.1.8 Liquor License. The liquor licenses for the Hotels are personal to Seller and will not be assigned to Buyer except to the extent required by law for the Hotels to continue to have such licenses. Manager will be responsible for applying for and obtaining any liquor licenses for the Property from the applicable local and/or provincial and state authorities and otherwise be liable for and conduct in accordance with applicable law all liquor operations at the Property on and after the Closing Date in accordance with the terms and provisions of the Management Agreement.

               5.1.9 Tenant Estoppels; Ground Lease Estoppels. Seller shall use reasonable efforts to obtain from each tenant under the Leases an estoppel certificate duly executed by and delivered by such tenant in the form of Exhibit L-1 with respect to each of the Leases (the “Estoppel Certificate”) and as otherwise required pursuant to the terms of such Leases. Seller shall use reasonable efforts to obtain, and subject to the provisions of Paragraph 6.2(R), (a) from each ground lessor under the Ground Leases (other than with respect to the Ground Lease relating to the Toronto InterContinental Hotel) an estoppel certificate duly executed and delivered by such lessor in the form of Exhibit L-2, and as otherwise required pursuant to the terms of such Ground Leases; and (b) with respect to the Ground Lease relating to the Toronto InterContinental Hotel from the ground lessor thereunder a consent and estoppel certificate duly executed and delivered by such ground lessor in the form of Exhibit L-3, or such other form satisfactory to Buyer acting reasonably (collectively, the “Ground Lease Estoppel Certificate”).

               5.1.10 Change in Brands. Seller shall not change, and it shall cause its affiliates not to change, the Brand (as defined in the Management Agreement) now in effect with respect to any Hotel.

               5.1.11 Reserved.

               5.1.12 Seller’s Actions. Seller shall use reasonable efforts prior to the applicable Closing Date to satisfy all of the closing conditions set forth in Paragraphs 10.1 (H) and (I) and 10.4.3 and otherwise cooperate with Buyer to complete any documentation required to effectuate the matters contained therein.

- 8 -

          5.2 Seller’s Covenants After the Closing Date. On and after the Closing Date, Seller agrees that it shall, or cause its affiliates to, do the following:

               5.2.1 Capital Expenditures. On or before the fifth anniversary of the Initial Closing Date, Seller shall undertake (and/or cause PR Seller to undertake), Capital Replacements (as such term is used in either the Management Agreement or the PR Lease, as the case may be) equal to or in excess of $25,000,000 in the aggregate, net of any applicable goods and services tax or any similar value added tax that is refundable (but not net of any nonrefundable sales taxes), at one or more of the Hotels (or at the PR Hotel) pursuant to a “scope of work” report prepared by Seller and delivered to Buyer prior to such expenditures, such work to be determined in Seller’s discretion and otherwise subject to the Management Agreement and the PR Lease other than the requirement that such work be set forth in any Capital Replacements Budget (delivered pursuant to the Management Agreement) or the FF&E Estimate (delivered pursuant to the PR Lease). Any default of Buyer in funding its obligations under Paragraph 3.2(b) shall suspend Seller’s obligations under this Paragraph 5.2.1 for so long as such default continues.

               5.2.2 Furniture, Fixture and Equipment Percentage. Seller shall, and shall cause its affiliates to, comply with Section 5.2(g) of the Management Agreement.

               5.2.3 Reserved.

          5.3 Bulk Sales. Buyer waives compliance by the Canadian Sellers with the provisions of the Bulk Sales Act (Ontario). The applicable Canadian Sellers shall indemnify and hold Buyer and its shareholders, directors, officers, employees, agents and representatives harmless of and from, and will pay for any loss, liability, damage or expense (including legal fees and expenses) suffered by, imposed upon or asserted against it or any of them as a result of, in respect of, connected with, or arising out of, under, or pursuant to the failure of the parties to comply with the Bulk Sales Act (Ontario) in respect of the transaction of purchase and sale contemplated under this Agreement relating to the Toronto InterContinental Hotel or Toronto Staybridge Suites Hotel, as applicable.

          5.4 Approvals and Notifications. Each of Buyer and Seller, as applicable, will, as promptly as practicable after the execution of this Agreement (i) make, or cause to be made, all such filings and submissions to any Governmental Authority as may be required or desirable (in Buyer or Seller’s respective discretion) to consummate the purchase and sale of the Property in accordance with the terms of this Agreement, and (ii) use its commercially reasonable efforts to take, or cause to be taken, all other actions which are necessary or advisable (in Buyer or Seller’s respective discretion) in order for Buyer or Seller to fulfill its obligations under this Agreement. Each of Buyer and Seller will coordinate and cooperate with the other in exchanging such information and supplying such assistance as may be reasonably requested in connection with the foregoing including, without limitation, providing copies of notices and information supplied to or filed with any Governmental Authority (except for notices and information which Buyer or Seller, as the case may be, acting reasonably, considers highly confidential and sensitive which may be filed on a confidential basis, but which may be shared with Buyer’s or Seller’s, as the case may be, outside legal counsel or as otherwise provided in

- 9 -

Paragraph 11.2 or which constitute Confidential Materials), and all notices and correspondence received from any Governmental Authority.

          5.5 Reserved.

          5.6 Reserved.

          5.7 Required Work. Seller shall within twenty four (24) months of the initial Closing Date:

          (a) (i) address the property conditions described as an “immediate need” in the property condition reports prepared by ATC Associates, Inc. and attached hereto as Exhibit Y, and (ii) mitigate the effects of moisture related issues within the “mold sensitive” areas identified in the reports by ATC Associates, Inc., for the Hilton Head Crowne Plaza Hotel, Austin, TX InterContinental Hotel, the Houston InterContinental Hotel or the PR Hotel;

          (b) Seller agrees to complete, or cause to be completed, all projects actually in process and identified in the property condition reports prepared by ATC Associates, Inc. for the Hilton Head Crowne Plaza Hotel, White Plains Crowne Plaza Hotel or the PR Hotel; and

Seller shall be entitled to use the $25,000,000.00 allocated for capital expenditures in Paragraph 5.2.1 to satisfy its obligations set forth in this Paragraph.

     6. Closing. Subject to the satisfaction (or waiver) of the conditions precedent set forth in Paragraphs 10.1 and 10.2 with respect to all Hotels, with respect to the Austin, TX InterContinental Hotel, Paragraph 10.4, and with respect to the Atlanta, Airport Holiday Inn Hotel, Paragraph 10.5, the time and place of initial Closing shall be held at 9:00 a.m. eastern standard time at or through the offices of Buyer’s attorneys on the Closing Date specified by Buyer to Seller on not less than five (5) Business Days’ prior written notice or such other time and location mutually agreed to by the parties. Buyer shall have the right to extend the Closing Deadline by exercising the Extension Option (with respect to all Hotels, other than the Austin, TX InterContinental Hotel). The term, “Extension Option” as used herein shall mean the option of Buyer to extend the Closing Deadline through March 31, 2005 upon (i) giving the Seller written notice of the exercise of such option not less than five (5) Business Days prior to the applicable Closing Deadline, and (ii) posting the Deposit in accordance with the terms of Paragraph 18.

          6.1 Closing Mechanics. Closing shall be conducted through escrow with the Closing Agent using an escrow procedure mutually acceptable to both Seller and Buyer, or, if either Buyer or Seller determines in good faith that such an escrow Closing is not practical, through a so-called “New York style” closing (in which authorized representatives of Seller and Buyer attend the Closing). Seller and Buyer agree to execute and deliver into escrow on the day prior to the Closing Date (or, if applicable, execute at a “pre-closing” at 10:00 a.m. eastern standard time on the last Business Day prior to the Closing Date but not deliver until the “New York style” closing) all Closing Documents with funding and release to occur on the Closing Date. Upon Closing, Buyer shall deliver to Seller the total allocated value of the Hotels being purchased on such date (as such value is set forth on Exhibit A-13 hereof) and the other items

- 10 -

required of Buyer as elsewhere set forth herein, and Seller shall deliver to Buyer possession of the Property, subject only to the Permitted Title Exceptions, and the other items required of Seller as elsewhere set forth herein. Notwithstanding anything contained in this Agreement to the contrary, including Paragraph 10, Buyer and Seller agree that the initial Closing hereunder and the consummation of the transaction under the PR Stock Agreement shall occur in accordance with the procedure set forth in a separate letter agreement duly executed and delivered by each such party in connection with the initial Closing.

          6.2 Seller’s Deliveries. At Closing, Seller shall deliver or cause to be delivered to Buyer, or, at Buyer’s direction, the Manager, the following (each of which shall be in form and substance reasonably satisfactory to Buyer):

          A. Deed or Assignment of Ground Lease. A Special Warranty Deed (or Canadian equivalent) in the form of Exhibit B-1 for the Real Property owned in fee by Seller (or in such form as may be customary for use in such jurisdiction and otherwise acceptable to Buyer) and an Assignment of Ground Lease in the form of Exhibit B-2 for the Real Property leased by Seller, except the Toronto InterContinental Hotel and the Toronto Staybridge Suites Hotel, for which the transfer, Assignment of Ground Lease and the related documentation with respect to the transfer of the legal and beneficial interests in such Real Property shall be in the forms prescribed in Paragraph 6.2(A-2) herein (or in such form as may be customary for use in such jurisdiction and otherwise acceptable to Buyer). Buyer shall not receive a Ground Lease Assignment with respect to the Ground Lease (the “LAX Ground Lease”) relating to the Los Angeles Crowne Plaza Hotel from Koar International Airport Center Investment Partnership.

          A-2. Transfers and Assignments Regarding Canadian Hotels. With respect to the Toronto Staybridge Suites Hotel (i) a registrable form of transfer of InterContinental Hotels Group (Canada) Inc.’s registered legal interest in the subject Real Property to a New Brunswick nominee corporation to be designated by Buyer (the “Nominee”), in the form of Exhibit T-1; (ii) a conveyance of Staybridge Markham, Inc.’s beneficial interest in the subject Real Property to Buyer in the form of Exhibit T-2; and (iii) an Authorization and Direction from Staybridge Markham, Inc. to InterContinental Hotels Group (Canada) Inc. authorizing the transfer of its legal interest in the subject Real Property to Buyer in the form of Exhibit T-3. With respect to the leasehold interest under the Ground Lease of the underlying Real Property comprising the Toronto InterContinental Hotel (i) a registrable form of Assignment and Assumption Agreement by and between Inter-Continental Holdings (Canada) Inc. and the Nominee in the form of Exhibit T-4; (ii) a conveyance of 220 Bloor Street Hotel Inc.’s beneficial interest under the aforementioned Ground Lease to Buyer in the form of Exhibit T-5; (iii) an Authorization and Direction from 220 Bloor Street Hotel Inc. to Inter-Continental Holdings (Canada) Inc. authorizing the assignment of its registrable interest under the Lease to the Nominee in the form of Exhibit T-6; and (iv) an Assignment and Assumption Agreement among City of Toronto, Buyer, 220 Bloor Street Hotel Inc. and Inter-Continental Holdings (Canada) Inc. as contemplated in the aforementioned ground lease, in the form of Exhibit T-7 (and Buyer agrees to execute and deliver all of such documents on Closing each of which shall be substantially in the form attached hereto or as otherwise satisfactory to Buyer acting reasonably). Each of the foregoing agreements shall be duly executed and delivered by Seller.

- 11 -

          B. Bill of Sale. A Bill of Sale for each Hotel and certain Personal Property related thereto substantially in the forms of Exhibit C-1 and Exhibit C-2, duly executed and delivered by Seller.

          C. Statutory Declarations. (i) A Statutory Declaration concerning certain PPSA registrations affecting the Toronto InterContinental Hotel and the Toronto Staybridge Suites Hotel, duly executed and delivered by an authorized officer of InterContinental Hotels Group (Canada), Inc.; and (b) a certificate of Inter-Continental Holdings (Canada) Inc. describing certain transactions occurring in 2004 resulting in 220 Bloor Street Hotel Inc. and Inter-Continental Holdings (Canada) Inc. holding beneficial and registered legal title to the leasehold interest under the Ground Lease of the underlying Real Property comprising the Toronto InterContinental Hotel, duly executed and delivered by InterContinental Holdings (Canada) Inc., each such Statutory Declaration to be in form and substance satisfactory to Buyer.

          D. Reserved.

          E. Notices of Assignment and Assumption. If applicable, a written notice to the tenant under a Lease stating that such Lease has been transferred to Buyer, such notice to be in the form of reasonably agreed to by the parties, duly executed and delivered by Seller (the “Tenant Notice”).

          F. Withholding and Tax Certificates. For each Seller, regarding all Hotels in the United States owned by it, a certificate duly executed and delivered by the applicable Seller, in the form of Exhibit G-1 with respect to Section 1445 of the Code stating whether or not Seller is a foreign person as defined in said Section 1445 and applicable regulations thereunder, and regarding all Hotels owned by each Canadian Seller in Canada, a statutory declaration duly executed and delivered by the applicable Seller in the form of Exhibit G-2 with respect to Section 116 of the Income Tax Act (Canada) stating whether or not the Canadian Seller is a non-resident of Canada within the meaning of said Section 116.

          G. Affidavit of Title/Gap Indemnity. An Affidavit of Title for each Hotel duly executed and delivered by Seller with respect to liens and title matters in substantially the form of Exhibit H, or in such other form as may be required by the Title Company.

          H. Closing Statement. A Closing Statement Agreement in the form of Exhibit I attached hereto and incorporated herein by this reference. Seller and Buyer shall authorize and instruct the Closing Agent to file, as the “reporting person,” Internal Revenue Service Form 1099-B (“Proceeds from Real Estate, Broker, and Barter Exchange Transactions”), if and as required by Section 6045(d) of the Code.

          I. Evidence of Authority. For each entity holding title to the Hotels and the Manager, evidence that Seller and the Manager have the requisite power and authority to execute and deliver, and perform under, this Agreement and all Closing Documents, consisting of a certificate of an Assistant Secretary of Seller and/or Manager, as the case may be, and duly executed and delivered by such Assistant Secretary, with respect to the authority to act on behalf of Seller or Manager of the individual executing on behalf of Seller or Manager all documents contemplated by this Agreement, in the form of Exhibit J.

- 12 -

          J. Reaffirmation. A reaffirmation of the representations, warranties and covenants set forth herein in the form of Exhibit K duly executed and delivered by Seller.

          K. Transfer Tax Declaration. If applicable, a duly completed real estate transfer tax declaration or return.

          L. Delivery of Keys and Property Documents. The Property Documents and all keys to the Property or any portion thereof.

          M. Opinions. One or more written opinions from counsel to Seller in customary form and substance reasonably satisfactory to Buyer, regarding the authorization, execution, delivery and enforceability of the (i) Management Agreement, (ii) IHG Parent Guaranty, and (iii) such other opinions as may be reasonably required by Buyer.

          N. Management Agreement. The Management Agreement in the form attached hereto as Exhibit P, duly executed and delivered by Manager.

          O. Retail Sales Tax Clearance Certificates. Certificates of payment issued by the Minister of Revenue of Ontario under Section 6 of the Retail Sales Tax Act (Ontario) to the effect that all requisite taxes under such Act and similar legislation relating to the Toronto InterContinental Hotel and the Toronto Staybridge Suites Hotel (other than relating to the conveyance and transfer of the Hotels to the Buyer) have been paid by the applicable Canadian Seller.

          P. IHG Parent Guaranty. The IHG Parent Guaranty in the form attached hereto as Exhibit M, duly executed and delivered by IHG.

          Q. Other Instruments. Such other instruments or documents as may be reasonably requested by Buyer or the Title Company, or reasonably necessary, to effect or carry out the purposes of this Agreement, subject to Seller’s prior approval thereof, which approval shall not be unreasonably withheld or delayed.

          R. Ground Lease Consent and Estoppel. A Ground Lease Estoppel Certificate and Consent to Assignment of Ground Lease, duly executed by the respective lessor in the form of Exhibit L-2 with respect to each of the Ground Leases and in the form of Exhibit L-3 with respect to the Ground Lease relating to the Toronto InterContinental Hotel or in such other form as Buyer and Seller may agree; and provided however, to the extent that Seller is unable or fails to deliver a Ground Lease Estoppel Certificate relating to a Property (such Property being referred to as “GL Property”), Seller shall have the right to delay the transfer of such GL Property to Buyer through June 1, 2005 in order to satisfy such condition. In the event such Closing with respect to the GL Property occurs on a date other than the Closing Date, the parties shall agree to amend the Management Agreement to subject such GL Property to the terms thereof in a manner consistent with the proposed modifications thereto regarding the addition of the Austin, TX InterContinental Hotel Property on a date other than the Initial Closing Date. After June 1, 2005, to the extent that Seller is unable or fails to satisfy the foregoing condition, Buyer, as its sole remedy, shall have the right to Terminate this Agreement as to such GL

- 13 -

Property, and to the extent applicable, the Purchase Price hereunder shall be adjusted in accordance with the allocated value for such Hotel as set forth on Exhibit A-13.

          S. Amendments to Other Management Agreements. The Third Amendment to Management Agreement dated as of the Initial Closing Date between InterContinental Hotel Group Resources, Inc. (“Staybridge Manager”) and HPT TRS IHG-1, Inc. (“TRS-1”) in the form attached hereto as Exhibit X, duly executed and delivered by Staybridge Manager and which amends that certain Management Agreement, dated as of July 1, 2003 (as amended from time to time), between Staybridge Manager and TRS-1; and the First Amendment to Management Agreement dated as of the Initial Closing Date between Staybridge Manager and TRS-1 in the form attached hereto as Exhibit X-1, duly executed and delivered by Staybridge Manager and which amends that certain Management Agreement, dated as of October 27, 2003, between Candlewood Manager and TRS-1 (such amendments being collectively referred to as “Other Management Agreement Amendments”).

          T. Tenant Estoppel Certificates. Tenant Estoppel Certificates from each of the tenants under the Leases to the extent received by Seller.

          U. Reserved.

          V. Post-Closing Agreement. A Post-Closing Agreement dated the applicable Closing Date in the form reasonably agreed to by the parties hereto, duly executed by Seller.

          6.3 Buyer’s Deliveries. At the Closing, Buyer shall deliver or cause to be delivered to Seller the following:

          A. Net Purchase Price. The net Purchase Price due at Closing under this Agreement for the Hotel or Hotels being transferred on such applicable date.

          B. Opinions. One or more written opinions from counsel to Buyer in customary form and substance reasonably satisfactory to Seller, regarding the authorization, execution, delivery and enforceability of the (i) Management Agreement, (ii) HPT Guaranty, and (iii) such other opinions as may be reasonably required by Seller.

          C. Closing Document Counterparts. Executed counterparts of any of the Closing Documents described in Paragraph 6.2 which are to be signed by Buyer.

          D. Management Agreement; Amendments to Other Management Agreements. Executed counterparts of the (a) Management Agreement described in Paragraph 6.2(N) signed by Buyer, and (b) the Other Management Agreement Amendments described in Paragraph 6.2(S) above, in each case duly executed and delivered by TRS-1.

          E. Other Instruments. Such other instruments or documents as may be reasonably requested by Seller or the Title Company, or reasonably necessary, to effect or carry out the purposes of this Agreement, subject to Buyer’s prior approval thereof, which approval shall not be unreasonably withheld or delayed.

- 14 -

          F. HPT Guaranty. The HPT Guaranty in the form attached hereto as Exhibit Q duly executed and delivered by HPT.

          G. GST Indemnity. The GST certificate and indemnity contemplated by Paragraph 7.5.3 in the form of Exhibit U.

     7. Prorations, Credits and Closing Costs.

          7.1 Proration Items.

          (a) At the Closing, the following adjustments and prorations shall be computed as of 12:01 a.m. (local time at each Property) on the Closing Date (“Apportionment Time”). All items of revenue, cost and expense with respect to the period prior to the Apportionment Time shall be for the account of Seller. All revenues attributable to guests of the Hotels for the night prior to the Closing Date shall be for the account of Seller. All items of revenue, cost and expense of such Property with respect to the period from and after the Apportionment Time shall be for the account of Buyer or its designee. All adjustments and prorations shall be on an accrual basis in accordance with generally accepted accounting principles. Seller or its designee shall be entitled to receive any refunds of any taxes (real, personal or sales) for any periods prior to Closing, regardless of when received.

          (b) At the Closing, a fair and reasonable estimated accounting of all adjustments and prorations shall be performed and agreed to by Seller and Buyer. Subsequent final adjustments and payments (the “True-up”) shall be made in cash or other immediately available funds as soon as practicable after the Closing Date for the Property based upon an accounting performed by the Seller and acceptable to Buyer. In the event the parties have not agreed with respect to the adjustments required to be made pursuant to this Paragraph 7.1 upon application by any such party, a certified public accountant reasonably acceptable to the parties hereto shall determine any such adjustments which have not theretofore been agreed to by the parties hereto. The charges for such accountant shall be borne equally by the parties to such disputed adjustment. All adjustments to be made as a result of the final results of the True-up shall be allocated as set forth above to the party entitled to such adjustment within thirty (30) days after the final determination thereof. The provisions of Paragraph 7 shall survive the Closing. Notwithstanding anything contained herein to the contrary, any amounts owed to Seller under this Paragraph 7 shall not be paid to Seller. Rather all such amounts shall be credited to Manager’s contribution to Initial Working Capital under the Management Agreement.

          7.2 Closing Statement and Schedules. On or before five (5) days prior to the Closing Date, Seller shall deliver to Buyer a current schedule of the items and amounts to be prorated or credited as set forth in this Paragraph 7, and a draft closing statement for the Transaction.

          7.3 Seller’s Closing Costs. Seller shall pay the following: (a) the fees and expenses of Seller’s attorneys, (b) the costs (including recording costs) of any cure of title defects required of Seller hereunder, (c) the commission due any broker retained by Seller, (d) one half of all escrow agent fees (if any are charged in connection with this Transaction), (e) one half of costs and expenses and premiums in connection with the preparation of the Title Reports

- 15 -

and the issuance of the Title Policies (including all endorsements reasonably requested by Buyer), (f) one half of all recording charges due on recordation of any Closing Documents, (g) one half of the costs and expenses of the Surveyor to prepare the Survey, (h) one half of all of the costs of transfer, documentary, excise, recording, sales or other nonrefundable taxes or assessments imposed by virtue of the Transaction, including, without limitation, any Ontario retail sales tax (“RST”) imposed pursuant to the Retail Sales Tax Act (Ontario) and any Ontario land transfer tax (“LTT”) imposed pursuant to the Land Transfer Tax Act (Ontario), provided Buyer shall provide reasonable cooperation to Seller in reducing the total amounts described herein, (i) one half of the cost and expense of any local counsel mutually retained by Buyer and Seller in any jurisdiction where a Property is located including counsel located in Texas previously retained by Buyer prior to the Effective Date with respect to zoning matters and one-half the cost of counsel retained by the trustee in connection with the industrial revenue bond structure for the Atlanta Airport Holiday Inn Hotel, (j) one half of the costs and expenses of all environmental and engineering reports regarding any Property furnished to Buyer and any recommended and/or follow-up studies required or suggested thereby or as otherwise heretofore requested by Buyer in connection with its Due Diligence hereunder, and (k) one half of the costs of any zoning reports or related zoning due diligence studies requested by Buyer in connection with its Due Diligence hereunder.

          7.4 Buyer’s Closing Costs. Buyer shall pay the following: (a) except as otherwise provided herein, the costs of Buyer’s Due Diligence, (b) one half of the costs and expenses of all environmental and engineering reports regarding any property furnished to Buyer and any recommended and/or follow-up studies required or suggested thereby or as otherwise heretofore requested by Buyer in connection with its Due Diligence hereunder, (c) the fees and expenses of Buyer’s attorneys, (d) the commission due any broker retained by Buyer, (e) all lenders’ fees related to any financing to be obtained by Buyer; (f) one half of all recording charges due on recordation of any Closing Documents, (g) one half of all escrow agent fees (if any are charged in connection with this Transaction), (h) one half of the costs and expenses from the Title Company to prepare the title reports, (i) one half of the costs, expenses and premiums for the Title Commitment and Title Policy (including all endorsements reasonably requested by Buyer), (j) one half of the costs and expenses of the Surveyor to prepare the Survey, (k) one half of all costs of all transfer, documentary, excise, recording, sales or other nonrefundable taxes or assessments imposed by virtue of the Transaction, including, without limitation, any RST imposed pursuant to the Retail Sales Tax Act (Ontario) and any LTT imposed pursuant to the Land Transfer Tax Act (Ontario), provided that Seller shall provide reasonable cooperation to Buyer in reducing the total amounts described herein, (l) one half of the cost and expense of any local counsel mutually retained by Buyer and Seller in any jurisdiction where a Property is located and counsel located in Texas previously retained by Buyer prior to the Effective Date with respect to zoning matters, and one half the cost of counsel retained by the trustee in connection with the industrial revenue bond structure for the Atlanta Airport Holiday Inn, and (m) one half of the costs of any zoning reports or related zoning due diligence studies requested by Buyer in connection with its Due Diligence hereunder.

          7.5 Canadian Taxes.

               7.5.1 Payment of RST and LTT. Payments of RST, LTT and other nonrefundable taxes pursuant to Paragraph 7.3(h) or Paragraph 7.4(k) shall be made by Seller

- 16 -

and/or Buyer, as applicable, directly to the relevant tax authority (such payments to be remitted by Buyer’s solicitors, in the case of amounts due upon registration of transfer of the Toronto Hotels), and Buyer and Seller, as applicable, shall provide evidence thereof satisfactory to each other.

               7.5.2 Liability for GST. Subject to Paragraphs 7.5.3 and 7.5.4, Buyer shall pay, in addition to the Purchase Price, all goods and services tax (“GST”) imposed pursuant to the Excise Tax Act (Canada) that is applicable to the sale and transfer of the Toronto InterContinental Hotel and Toronto Staybridge Suites Hotel and the other Property relating thereto (the “Canadian Property”) to the Canadian Seller, if any, on Closing by certified cheque or bank draft, and Manager shall, pursuant to its obligations under the Management Agreement to contribute amounts to the Working Capital for the Hotels, provide for the funding of such GST to the extent such GST relates to property transferred to the Owner (as defined in the Management Agreement).

               7.5.3 Exception for GST on Realty. Buyer shall not be required to pay GST to the Canadian Seller in accordance with Paragraph 7.5.2 on the sale and transfer of any real property (namely, the Toronto InterContinental Hotel and Toronto Staybridge Suites Hotel but excluding the Property relating thereto) if Buyer provides the Canadian Seller on or before the Closing Date with a certificate of Buyer, in a form reasonably acceptable to the Canadian Seller, confirming among other things that Buyer is registered for the purposes of the Excise Tax Act (Canada) on the Closing Date; that Buyer is holding the Canadian Property for its own account and not in trust for or as agent for another party; and an indemnity whereby Buyer agrees to indemnify and save harmless the applicable Canadian Seller from and against any and all losses, costs, damages and liabilities that may be suffered or incurred by the applicable Canadian Seller as a result of Buyer’s failure to register for the purposes of the GST imposed under the Excise Tax Act (Canada) or Buyer’s failure to perform its obligations under such Act in connection with the purchase of the Canadian Property.

               7.5.4 Exception for GST on Personalty. The parties hereto will use their commercially reasonable efforts in good faith to minimize (or eliminate) any taxes payable under the Excise Tax Act (Canada) in respect of the Closing by, among other things, making such elections and taking such steps as may be provided for under that Act (including, for greater certainty, making a joint election in a timely manner under Section 167 of that Act) if such elections are applicable to the transactions contemplated herein and as may reasonably be requested by Buyer in connection with the Closing and acceptable to the Canadian Sellers in their sole discretion, acting reasonably. Should the parties agree to make the election under Section 167 of the Excise Tax Act, Buyer shall indemnify and hold Seller harmless in respect of any GST, penalties, interest and other amounts which may be assessed against Seller as a result of the transaction under this Agreement or any portion thereof not being eligible for such election or as a result of Buyer’s failure to file the election within the prescribed time.

     8. Representations and Warranties.

          8.1 Seller’s Representations and Warranties. To induce Buyer to enter into this Agreement, Seller covenants, represents and warrants to Buyer as follows:

- 17 -

          A. Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has all requisite power and authority under the laws of such jurisdiction and its respective charter documents to enter into and perform its obligations under the Closing Documents and to consummate the transactions contemplated thereby. Seller is duly qualified to transact business in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where such failure to qualify would not have a material adverse effect on Seller or the transactions contemplated hereby.

          B. Seller has taken (or will take, prior to the Closing Date) all necessary action to authorize the execution, delivery and performance of this Agreement and the other Closing Documents to which it is a party, and upon the execution and delivery of any document to be delivered by Seller on or prior to the Closing Date, such document shall constitute the valid and binding obligation and agreement of Seller enforceable against Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors and general principles of equity.

          C. The execution, delivery or performance of the Closing Documents by Seller, and the compliance with the terms and provisions thereof, will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under any Contract or Governing Document by which Seller is bound, or result in the creation of any lien, charge or encumbrance upon any Property pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which Seller is bound.

          D. Except as may be set forth on Schedule 8.1(D), to Seller’s Knowledge, no action or proceeding is pending or threatened, and no investigation looking toward such an action or proceeding has begun, which (i) questions the validity of this Agreement and the other Closing Documents or any action taken or to be taken pursuant thereto, (ii) will result in any material adverse change in the business, operation, affairs or condition of any Property, (iii) may result in or subject any Property to a material liability, (iv) involves condemnation or eminent domain proceedings against any material part of Property or (v) is likely to materially and adversely affect the ability of Seller to perform its obligations hereunder.

          E. Other than (i) the Permitted Title Exceptions, (ii) the documents to be assigned to Buyer pursuant to the terms hereof, true and complete copies of which have been delivered to Buyer, (iii) the Leases set forth on Schedule 8.1(E), (iv) the Contracts set forth on Exhibit N, (v) the Ground Leases; and (vi) agreements and easements with governmental bodies and utility companies which are reasonably necessary for the development and operation of the Property as contemplated by this Agreement and the Closing Documents, there are no material agreements, leases, licenses or occupancy agreements affecting the Property which will be binding on Buyer subsequent to the Closing Date.

          F. Except as may be set forth in Schedule 8.1(F) or in the written inspection reports delivered to Buyer in connection herewith, to Seller’s Knowledge, there is no fact or condition which materially and adversely affects the physical condition of the Property which has not been set forth in this Agreement, or in the other documents, certificates or statements furnished to or obtained by Buyer in connection with the transactions contemplated hereby.

- 18 -

          G. All utilities and services necessary for the use and operation of the Property (including, without limitation, road access, water, electricity and telephone) are available thereto, and are of sufficient capacity to meet adequately all needs and requirements necessary for the current use and operation of the Property. To Seller’s Knowledge, except as may be set forth in Schedule 8.1(G), no fact, condition or proceeding exists which would result in the termination or impairment of the furnishing of such utilities to the Property.

          H. Except as may be set forth in Schedule 8.1(H), or in the written inspection reports (including environmental reports) delivered to Buyer in connection herewith, to Seller’s Knowledge (i) the Property and the use and operation thereof do not violate any material federal, state, municipal or other governmental statutes, ordinances, by-laws, rules, regulations or any other legal requirements, including, without limitation, those relating to construction, occupancy, zoning, adequacy of parking, environmental protection, occupational health and safety or fire safety applicable thereto; and (ii) there are in effect all material licenses, permits and other authorizations necessary for the current use, occupancy and operation thereof. To Seller’s Knowledge, except as may be set forth in Schedule 8.1(H), there is no threatened request, application, proceeding, plan, study or effort which would materially adversely affect the present use or zoning of the Property or which would modify or realign any adjacent street or highway.

          I. Except as may be set forth in Schedule 8.1(I), other than the amounts disclosed by current tax bills, true and correct copies of which have been delivered to Buyer, no taxes or special assessments of any kind (special, bond or otherwise) are or have been levied with respect to the Property, or any portion thereof, which are outstanding or unpaid, other than amounts not yet due and payable, or if due and payable, not yet delinquent (and to the extent any such taxes or special assessments are due and payable on the Effective Date and prior to the Closing Date, such amount will be paid at Closing in accordance with Paragraph 7).

          J. Each Seller, other than each Canadian Seller, is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code.

          K. Each Canadian Seller is not a non-resident of Canada within the meaning of the Income Tax Act (Canada).

          K-1 Except as may be set forth in Schedule 8.1(K-1), or in the written inspection reports (including environmental reports) delivered to Buyer in connection herewith, to Seller’s Knowledge, none of Seller or any other occupant or user of any of the Property, or any portion thereof, have stored or disposed of (or engaged in the business of storing or disposing of) or have released or caused the release of any hazardous waste, contaminants, oil, radioactive or other material on the Property, or any portion thereof, the removal of which is required or the maintenance of which is prohibited or penalized by any applicable federal, state or local statutes, laws, ordinances, rules or regulations. To Seller’s Knowledge, except as may be set forth in Schedule 8.1(K-1), or in the written inspection reports (including environmental reports) delivered to Buyer in connection herewith, the Property is free from any such hazardous waste, contaminants, oil, radioactive and other materials, except any such materials maintained in accordance with applicable law.

- 19 -

          L. To Seller’s Knowledge, except as contained in the written inspection reports (including environmental reports) delivered to Buyer in connection herewith, there are no defects or inadequacies in the Property which, if uncorrected, would result in a termination of insurance coverage or an increase in the premiums charged therefor.

          M. Except as may be set forth in Schedule 8.1(M), or in the written inspection reports delivered to Buyer in connection herewith, to Seller’s Knowledge, the Property is in good working order and repair, mechanically and structurally sound, free from material defects in materials and workmanship and not subject to any unrepaired casualty.

          N. Except as may be set forth in Schedule 8.1(N), all tax returns for privilege, gross receipts, excise, sales and use, personal property and franchise taxes required by law to be filed by Seller with respect to Property prior to the Closing Date will be prepared and duly filed prior to the Closing (or after Closing with respect to pre-Closing matters) and all taxes, if any, shown on such returns or otherwise determined to be due, together with any interest or penalties thereon, will be paid by Seller prior to the Closing, or in a timely manner following Closing.

          O. Except as may be set forth in Schedule 8.1(O), or in the written inspection reports delivered to Buyer in connection herewith, there are in effect all material licenses (including liquor licenses, if required), permits and other authorizations necessary for the then current use, occupancy and operation of the Property.

          P. Seller has good title to the Property free and clear of all Liens other than Permitted Title Exceptions.

          Q. The Personal Property located at or otherwise used in connection with the Property (i) complies in all material respects with the applicable Brand Standards (as defined in the Management Agreement) and (ii) is otherwise at adequate, appropriate levels and at levels that are at least equal to those found at other similarly-situated Staybridge Suites, Crowne Plaza, Holiday Inn, or InterContinental, as applicable, hotels.

          R. Except as may be set forth in Schedule 8.1(R), or in the written inspection reports (including without limitation environmental condition reports and property condition reports from ATC Associates, Inc.) delivered to Buyer in connection herewith, to Seller’s Knowledge there exists no violation of any law, regulation, order or requirement issued by any Governmental Authority against or affecting the Property and Seller has not received any notice or order from any Governmental Authority requiring any repairs, maintenance or improvements to any Property which have not been fully performed.

          S. Each Real Property constitutes a separate parcel for purposes of ad valorem real property taxes, and is not subject to a lien for non-payment of real property taxes relating to any other property.

          T. Except as may be set forth on Schedule 8.1(T), to Seller’s Knowledge, there exists no material default on the part of Seller with respect to any Permitted Title Exception, other than those defaults which can be cured or discharged by the payment of money and for which an allowance for the payment thereof has been made at Closing.

- 20 -

          U. Each of the financial statements of IHG heretofore delivered to Buyer have been properly prepared in accordance with the Accounting Principles (as defined in the Management Agreement), are true, correct and complete in all material respects and fairly present the consolidated financial condition of IHG at and as of the dates thereof and the results of its operations for the periods covered thereby. Each of the financial statements for the Hotels heretofore delivered to Buyer have been properly prepared in accordance with the Accounting Principles, are true, correct and complete in all material respects and fairly present the financial condition of the Hotels covered thereby at and as of the dates thereof and the results of their operations for the periods covered thereby.

          V. Seller is not a debtor in any voluntary or involuntary proceeding in bankruptcy.

          W. Other than the Leases and Ground Leases listed in Schedule 8.1(W) and the Permitted Title Exceptions, there are no contracts or agreements with respect to the use or occupancy of the Property. The copies of the Leases and the Ground Leases heretofore delivered by Seller to Buyer are true, correct and complete copies thereof; neither the Leases nor the Ground Leases have been amended except as evidenced by amendments similarly delivered to Buyer and constitute the entire agreement between Seller and the tenants (or the ground lessor, as applicable) thereunder. Except as otherwise set forth in Schedule 8.1(W): (i) to Seller’s Knowledge, each of the Leases is in full force and effect on the terms set forth therein and to Seller’s Knowledge each tenant, thereunder is legally required to pay all sums and perform all material obligations set forth therein without concessions, abatements, offsets, defenses or other basis for relief or adjustment; (ii) to Seller’s Knowledge, each of the Ground Leases is in full force and effect on the terms set forth therein and the ground lessors thereunder are legally required to perform all material obligations set forth therein without concessions, defenses or other basis for relief or adjustment; (iii) no such tenant (or ground lessor with respect to the performance of any obligations under the Ground Lease, as applicable) has asserted in writing or, to Seller’s Knowledge, has any defense to, offsets or claims against, rent payable by it or the performance of its other obligations under its Lease (or Ground Lease, as applicable); (iv) Seller has no outstanding obligation to provide any such tenant with an allowance to construct, or to construct at Seller’s expense, any tenant improvements; (v) no such tenant is in arrears in the payment of any sums or in the performance of any material obligation required of it under its Lease beyond any applicable grace period, and no such tenant has prepaid any rent or other charges; (vi) to Seller’s Knowledge no such tenant or ground lessor, as applicable, has filed a petition in bankruptcy or for the approval of a plan of reorganization or management under the Federal Bankruptcy Code or under any other similar state law, or made an admission in writing as to the relief therein provided, or otherwise become the subject of any proceeding under any federal or state bankruptcy or insolvency law, or has admitted in writing its inability to pay its debts as they become due or made an assignment for the benefit of creditors, or has petitioned for the appointment of or has had appointed a receiver, trustee or custodian for any of its property; (vii) no such tenant or ground lessor, as applicable, has requested in writing a modification of its Lease or Ground Lease, respectively, or a release of its obligations under its Lease or Ground Lease, respectively, in any material respect or has given written notice terminating its Lease or Ground Lease, or has been released of its obligations thereunder in any material respect prior to the normal expiration of the term thereof; (viii) except as set forth in the Leases, no guarantor has been released or discharged, voluntarily or involuntarily, or by operation of law, from any

- 21 -

obligation under or in connection with any Lease or any transaction related thereto; (ix) all security deposits paid by tenants, are as set forth in Schedule 8.1(W); (x) all lease commissions due with respect to each of the Leases has been paid, except as otherwise set forth on Schedule 8.1(W); and (xi) the other information set forth in Schedule 8.1(W) is true, correct and complete in all material respects. No default or breach exists under any Lease or Ground Lease on the part of Seller. Notwithstanding the above, Seller makes no representation or warranty hereunder with respect to the LAX Ground Lease.

          X. An appropriate Seller affiliate is a “registrant” under Part IX of the Excise Tax Act (Canada). 220 Bloor Street Hotel Inc.’s registration number is: 84822 5546 RC0001; Staybridge Markham, Inc.’s registration number is: 84875 0071 RC 0001.

          Y. The Designated Representatives are the persons (either individually or as a whole) to whom any condition which would render any of the statements in Paragraph 8.1 untrue, inaccurate or incorrect in any material respect (without regard to any knowledge qualifier contained in such statement) should be communicated to, directly or indirectly, by any general manager of a Hotel that first knows such condition. James Manley is the person to whom any condition which would render any of the statements in Paragraph 8.1(Z) untrue, inaccurate or incorrect in any material respect (without regard to any knowledge qualifier contained in such statement) should be communicated to, directly or indirectly, by any general manager of a Hotel that first knows such condition.

          Z. Except as set forth in Schedule 8.1(Z), with respect to the Hotels located in Canada:

               (i) No collective agreement is currently being negotiated by the Canadian Seller or any other Person in respect of any of the Hotels in Canada or the employees working at any of the Hotels in Canada and the only collective agreements in force with respect to the employees working at any of the Hotels in Canada are the Collective Agreements, true, correct and complete copies of which have been provided to Buyer. To Seller’s (Canada) Knowledge, (i) none of the Hotels in Canada has committed any breaches of their obligations under the Collective Agreements; (ii) there are no grievances or arbitration proceedings thereunder; and (iii) there are no written or oral agreements or course of conduct which modify the terms of the Collective Agreements;

               (ii) Except in respect of the Collective Agreements, no trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent holds bargaining rights with respect to any of the employees working at any of the Hotels in Canada by way of certification, interim certification, voluntary recognition, or succession rights, or has applied or, to Seller’s (Canada) Knowledge, threatened to apply to be certified as the bargaining agent of the employees working at any of the Hotels in Canada. To Seller’s (Canada) Knowledge, there are no threatened or pending union organizing activities involving the employees working at any of the Hotels in Canada. There is no labour strike, dispute, work slowdown or stoppage pending or involving or, to Seller’s (Canada) Knowledge, threatened against or in relation to any of the Hotels in Canada and no such event has occurred within the last five (5) years; and

- 22 -

               (iii) No trade union has applied to have any of the Hotels in Canada declared a related employer pursuant to the Labour Relations Act (Ontario).

          AA. The Canadian Seller is not engaged in any activities and does not provide any of the services of a business described in subsection 14.1(5) of the Investment Canada Act (Canada). The aggregate value of the Property in Canada, the control of which is being acquired as a result of the transactions contemplated by this Agreement, calculated in accordance with the Investment Canada Act (Canada) and the regulations thereunder, is less than CDN$237 million.

          BB. Neither the aggregate value of Canadian Seller’s assets in Canada nor the gross revenues from sales in or from Canada generated from those assets exceeds the applicable value determined pursuant to section 110 of the Competition Act (Canada), as amended, and the regulations thereunder.

          CC. None of this Agreement and the schedules, exhibits and other documents delivered in connection herewith and therewith, when read together as a whole, and with the documents or information delivered to Buyer in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading.

          8.2 Reserved.

          8.3 Claims of Breach Prior To Closing. If at or prior to the Closing, to Seller Knowledge’s any Seller’s Warranty becomes untrue, inaccurate or incorrect in any material respect (without regard to any materiality or knowledge qualifier contained therein), Seller shall give Buyer written notice thereof within ten (10) Business Days of obtaining such knowledge (but, in any event, prior to the Closing). After the Due Diligence Deadline but prior to the Closing, if to Buyer’s Knowledge any Seller’s Warranty is or becomes untrue, inaccurate or incorrect in any material respect, Buyer shall give Seller written notice thereof within five (5) Business Days of obtaining such knowledge (but, in any event, prior to the Closing). In either such event, Seller shall have the right to cure such misrepresentation or breach and shall be entitled to a reasonable adjournment of the Closing upon written notice to Buyer (not to exceed fifteen (15) days) to attempt such cure. Seller shall notify Buyer within three (3) Business Days of its receipt of such notice if Seller has elected to cure such untrue, inaccurate or incorrect Seller’s Warranty. If Seller fails to respond within such timeframe, Seller shall be deemed to have declined to cure such untrue, inaccurate or incorrect Seller’s Warranty.

     If to Buyer’s Knowledge prior to the applicable Closing Date any Seller’s Warranty is or becomes untrue, inaccurate or incorrect in any material respect as of the date made, and Seller is unable or unwilling to so cure such misrepresentation or breach, then Buyer, as its sole remedy shall elect either (a) to waive such misrepresentation or breach and consummate the Transaction without any reduction of or credit against the Aggregate Purchase Price, or (b) to Terminate this Agreement by written notice given to Seller on or before the Closing Date, in which event Buyer shall be entitled to recover from Seller within five (5) days of demand, all of Buyer’s out-of-pocket costs (including legal fees) incurred with respect to the transactions contemplated by this Agreement.

- 23 -

     If Buyer Knows prior to the applicable Closing Date that any Seller’s Warranty becomes untrue, inaccurate or incorrect in any material respect through no fault of Seller, and Seller is unable or unwilling to so cure such misrepresentation or breach, then Buyer, as its sole remedy shall elect either (a) to waive such misrepresentation or breach and consummate the Transaction without any reduction of or credit against the Aggregate Purchase Price, or (b) to Terminate this Agreement by written notice given to Seller on or before the Closing Date.

     If any of Seller’s Warranties are untrue, inaccurate or incorrect but are not, in the aggregate, untrue, inaccurate or incorrect in any material respect, Buyer shall be required to consummate the Transaction without any reduction of or credit against the Aggregate Purchase Price. If on the Closing Date, to Buyer’s Knowledge any of Seller’s Warranties are untrue, inaccurate or incorrect in any material respect and Buyer nevertheless chooses to consummate the Transaction, Buyer waives any right to seek damages against Seller if such breach would otherwise have allowed Buyer to terminate this Agreement pursuant to its terms.

     The untruth, inaccuracy or incorrectness of Seller’s Warranties shall be deemed material only if Buyer’s aggregate damages resulting from the untruth, inaccuracy or incorrectness of all Seller’s Warranties are reasonably estimated to equal or exceed three hundred thousand dollars ($300,000.00).

          8.4 Survival and Limits On Buyer’s Claims. Seller’s Warranties shall survive the applicable Closing and not be merged therein for a period of one (1) year and Seller shall only be liable to Buyer hereunder for a breach of Seller’s Warranties made herein or in any of the documents executed by Seller at the applicable Closing with respect to which an action has been commenced by Buyer against Seller on or before one (1) year after the date of the applicable Closing. Notwithstanding the foregoing, whether or not the Closing occurs, if Buyer is otherwise entitled to bring an action for damages against Seller, Buyer shall not commence any such action until its damages are reasonably estimated to aggregate $300,000.00 (such amount being, the “Damages Threshold”). In determining the amount of the Damages Threshold, Buyer shall be able to aggregate dollar amounts for actions that it may bring hereunder and for actions that PR Buyer may bring under the PR Stock Agreement. All covenants set forth in this Agreement, unless waived by Buyer, shall survive until fully performed. To the extent that Buyer is able to recover any damages from Seller, it shall be entitled to the entire amount of such damages notwithstanding the Damages Threshold.

          8.5 Buyer’s Representations and Warranties. Buyer, as of the Effective Date, represents and warrants to Seller as follows, and as a condition precedent to Seller’s obligation to consummate the Transaction at Closing pursuant to the terms of this Agreement, the following representations of Buyer shall be true and correct in all material respects as of the applicable Closing Date:

          A. Status and Authority of Buyer. Buyer is duly organized and validly existing under the laws of the jurisdiction of its formation, and has all requisite power and authority under the laws of such jurisdiction and under its charter documents to enter into and perform its obligations under the Closing Documents to which it is a party and to consummate the transactions contemplated thereby. Buyer is (or will be as of the Closing Date) duly qualified and in good standing in each jurisdiction in which the nature of the business conducted by it

- 24 -

requires such qualification, except where such failure to qualify would not have a material adverse effect on Buyer or the transactions contemplated hereby.

          B. Action of Buyer. Buyer has taken (or will take, prior to the Closing Date) all necessary action to authorize the execution, delivery and performance of each of the Closing Documents to which it is a party, and upon the execution and delivery of any document to be delivered by Buyer on or prior to the Closing Date such document shall constitute valid and binding obligation and agreement of Buyer enforceable against Buyer in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors and general principles of equity.

          C. No Violations of Agreements. Neither the execution, delivery or performance of the Closing Documents by Buyer, nor compliance with the terms and provisions thereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, or charge upon any property or assets of Buyer pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which Buyer is bound.

          D. Litigation. To Buyer’s Knowledge, no action or proceeding is pending or threatened, and no investigation looking toward such an action or proceeding has begun, which (a) questions the validity of the Closing Documents or any action taken or to be taken pursuant hereto or (b) is likely to materially and adversely affect the ability of Buyer to perform its obligations hereunder.

          E. Bankruptcy. Buyer is not a debtor in any voluntary or involuntary proceeding in bankruptcy.

          F. Sophisticated Buyer. Buyer is an experienced investor that specializes in the investment in and ownership of hotel properties in geographically diverse markets. Buyer is a sophisticated real estate owner and investor with particular experience in the acquisition and ownership of hotels similar to the Hotels.

          G. GST Registration. On Closing, Buyer will be a “registrant” under Part IX of the Excise Tax Act (Canada) and prior to Closing shall provide Seller with its GST registration number.

          H. Reporting. John Murray is the person to whom any condition which would render any of the statements in this Paragraph 8.5 untrue, inaccurate or incorrect in any material respect (without regard to any knowledge qualifier contained in such statement) should be communicated to, directly or indirectly, by any senior employee of HPT that first knows such condition.

          8.6 Reserved.

     9. Casualty and Condemnation. Seller shall maintain the property insurance coverage currently in effect for the Property, or comparable coverage, through the Closing Date. If after the Effective Date and on or prior to the Closing Date, any portion of the improvements

- 25 -

is materially damaged or destroyed by fire or other casualty, or there shall be commenced or instituted against any Property any Condemnation Proceeding, Seller shall promptly (and in no event more than two (2) Business Days after the occurrence of such casualty or Condemnation Proceeding) give written notice of such event to Buyer, and the following provisions shall apply notwithstanding the contrary terms of any applicable Laws with respect to the subject matter of Paragraph 9:

          9.1 Major Event. If such damage or destruction or Condemnation Proceeding results in any Hotel or Hotels becoming Unsuitable for Its Permitted Use, as reasonably determined by Buyer or Seller, (such damage or Condemnation Proceeding shall be referred to as a “Major Event”), then both Buyer and Seller shall have the right to Terminate this Agreement as to either (a) only the affected Hotel or Hotels; or (b) if three (3) or more Hotels are rendered Unsuitable for Its Permitted Use, as to all Hotels hereunder, in each case by written notice to the other party given no later than ten (10) Business Days after the giving of Seller’s notice of such event, and the Closing Date shall be extended, if necessary, to provide sufficient time for Buyer or Seller to make such election. In the case of a Major Event, and so long as neither party has elected to Terminate this Agreement as to all Hotels, in addition to the foregoing termination right, Seller or Buyer shall have the option to extend the Closing Date for up to ninety (90) days for either (a) all Hotels or (b) solely as to the Hotel(s) affected by the Major Event (to allow Seller to repair/restore the affected Hotel in a manner satisfactory to Buyer) (in which case the Closing for the unaffected Hotels shall proceed as set forth herein, except the Purchase Price shall be reduced by the allocated value of the affected Hotel as set forth on Exhibit A-13). To the extent that Buyer or Seller elects to postpone Closing pursuant to the provisions of this Paragraph, Buyer shall have the ability to conduct a limited Due Diligence review (such review shall be limited to the conditions directly related to any restoration and repair of such Hotel) with respect to such affected Hotel up to and including the date that is ten (10) calendar days prior to the extended closing date for such Hotel(s) and Buyer shall have the right to Terminate this Agreement solely as to the Hotel affected by the Major Event only for reasons directly related to any restoration and repair of such Hotel. To the extent that this Agreement is terminated as to an affected Hotel, the Purchase Price shall be reduced by the allocated value of such affected Hotel as set forth on Exhibit A-13.

          9.2 Closing Despite Casualty/Condemnation. If a casualty or Condemnation Proceeding occurs and neither Buyer nor Seller Terminates this Agreement with respect to the affected Hotel(s) or all Hotels on account thereof, then at Closing (a) the conveyance of the Property shall be less such portion of the Property so taken by (or, as applicable, shall be subject to) said Condemnation Proceeding, without adjustment of the Purchase Price, (b) Seller shall assign to Buyer (without recourse to Seller) all the rights to all awards or insurance proceeds with respect to such casualty or Condemnation Proceeding (except for business interruption coverage with respect to rental payments prior to Closing); (c) Buyer and Seller shall cause Owner and Manager to waive any of their respective ability to terminate the Management Agreement as to such affected Hotel or Hotels as a result of such Hotel or Hotels being “Unsuitable for Its Permitted Use” pursuant to the terms of the Management Agreement; and (d) Seller shall provide a credit at Closing equal to (i) Seller’s deductible under Seller’s insurance policy, plus all proceeds or awards previously paid to Seller with respect to such casualty or Condemnation Proceeding, less (ii) an amount equal to the sum of (A) the costs, expenses and fees, including reasonable attorneys’ fees, expenses and disbursements, incurred by

- 26 -

Seller in connection with receiving such proceeds or award, (B) any portion of any Condemnation Proceeding award that is allocable to loss of use of the Property prior to Closing, and the proceeds of any rental loss, business interruption or similar insurance to the extent allocable to the period prior to the Closing Date, and (C) the reasonable and actual costs incurred by Seller in stabilizing and/or repairing the Property following such casualty or condemnation.

     10. Other Conditions to Closing. The obligation of Buyer and Seller to close the Transaction shall be further subject to the satisfaction at or prior to Closing of the conditions precedent set forth in this Paragraph 10.

          10.1 Conditions to Buyer’s Obligations. The conditions precedent to Buyer’s obligations at Closing referenced above are as follows, any or all of which may be expressly waived by Buyer in writing, at its sole option.

          A. Representations. Seller’s Warranties, subject to Paragraph 8.3, shall be true and correct in all material respects on and as of the Closing Date, except as modified in a manner permitted by the Agreement, as if made on and as of such date except to the extent that they expressly relate to an earlier date.

          B. Title Policy. At Closing, Buyer shall have received from the Title Company the Title Policy (or a specimen or proforma policy thereof or “marked” Title Commitment) together with an irrevocable written obligation of the Title Company to issue a Title Policy in the form of such specimen or proforma policy.

          C. Seller Compliance. Seller shall have performed all of the covenants, undertakings and obligations to be performed or complied with by Seller at or prior to the Closing.

          D. Reliance Letters. Seller shall have delivered a reliance letter or letters addressed to Buyer and its permitted assignees or designees from ATC Associates, Inc. substantially in the form attached hereto as Exhibit W and as otherwise reasonably acceptable to Buyer.

          E. Sale of Crowne Plaza (Puerto Rico) Inc. Stock. The closing under the PR Stock Agreement shall simultaneously occur; provided that the provisions of this Paragraph shall not apply in the event that such closing has not been consummated by reason of PR Buyer’s default thereunder.

          F. Reserved.

          G. Reserved.

          H. Collective Bargaining Agreements. Buyer shall have received evidence satisfactory to it that the rights and obligations under that certain (a) Collective Bargaining Agreement dated as of July 1, 2000 between Bass Hotels and Resorts d/b/a Crowne Plaza Hotel and International Union of Operating Engineers Local No. 501, AFL-CIO shall have been assigned pursuant to an Assignment and Assumption Agreement dated the Initial Closing Date from Seller to Manager related to the Redondo Beach Hotel; and Collective Bargaining

- 27 -

Agreement dated as of March 1, 2003 between Town Park Hotel Corporation d/b/a Crowne Plaza Redondo Beach & Marina Hotel and Chauffeurs, Sales Drivers, Beach & Warehousemen and Helpers Union, Local 572 International Brotherhood of Teamsters, AFL-CIO shall have been assigned pursuant to an Assignment and Assumption Agreement dated the Initial Closing Date from Seller to Manager related to the Redondo Beach Hotel; and (b) Collective Bargaining Agreement signed as of May 17, 2004 between Hotel Inter-Continental Toronto and United Steelworkers of America shall have been assigned pursuant to an Assignment and Assumption Agreement dated the Initial Closing Date from Seller to Manager relating to the Toronto InterContinental Hotel.

          10.2 Conditions to Seller’s Obligations. The conditions precedent to Seller’s obligations at Closing referenced above are as follows, any or all of which may be expressly waived by Seller in writing, at its sole option.

          A. Representations. Buyer’s warranties set forth in Paragraph 8.3, shall be true and correct in all material respects on and as of the Closing Date, except as modified in a manner permitted by the Agreement, as if made on and as of such date except to the extent that they expressly relate to an earlier date.

          B. Buyer Compliance. Buyer shall have performed all of the covenants, undertakings and obligations to be performed or complied with by Buyer at or prior to the Closing.

          C. Sale of Crowne Plaza (Puerto Rico) Inc. Stock. The closing under the PR Stock Agreement shall simultaneously occur; provided that the provisions of this Paragraph shall not apply in the event that such closing has not been consummated by reason of PR Seller’s default thereunder.

          10.3 Waiver of Conditions. By closing the Transaction as it pertains to those Hotel(s) being transferred on an applicable Closing Date, Seller and Buyer shall be conclusively deemed to have waived the benefit of any remaining unfulfilled conditions set forth in Paragraph 10.1 and 10.2, respectively as they apply to such Closing.

          10.4 Additional Austin, InterContinental Closing Conditions. In addition to the conditions contained in Paragraphs 10.1 and 10.2, the conditions precedent to Seller’s or Buyer’s obligation to consummate the Closing with respect to the Austin, TX InterContinental Hotel are as follows, any or all of which may be expressly waived by Buyer or Seller, at their sole option.

               10.4.1 Buyer and Seller shall have consummated the Transaction with respect to those Hotels being transferred on the Initial Closing Date.

               10.4.2 Manager and Owner shall have executed and delivered an amendment to the Management Agreement in order to subject the Austin, TX InterContinental Hotel to the terms and provisions thereof, such amendment to be in the form attached hereto as Exhibit R.

- 28 -

               10.4.3 Buyer shall have received satisfactory evidence that the annual fee with respect to the waste water permit affecting the Austin, TX InterContinental Hotel has been paid in full by Seller.

          10.5 Additional Atlanta, Airport Holiday Inn Hotel Closing Conditions. To the extent that Buyer consents to assume the industrial revenue bond obligations relating to the Atlanta Airport Holiday Inn Hotel, in addition to the conditions contained in Paragraphs 10.1 and 10.2, the conditions precedent to Seller’s or Buyer’s obligation to consummate the Closing with respect to the Atlanta, GA, Holiday Inn Hotel are as follows, any or all of which may be expressly waived by Buyer or Seller, at their sole option.

               10.5.1 Buyer and Seller shall have received such documentation reasonably required by them (and applicable Law) to transfer to Buyer (and allow Buyer’s assumption of) certain Industrial Revenue Bond obligations owed by Seller and related tax benefits running to the benefit of Seller, in each case relating to the Atlanta, Airport Holiday Inn Hotel, such documentation to be duly executed and delivered by the appropriate parties thereto and be in form and substance satisfactory to Buyer and Seller.

    11. Transaction Issues: Brokers, Confidentiality and Indemnity.

          11.1 Brokers. Seller and Buyer expressly acknowledge that Seller’s Broker has acted as the exclusive broker with respect to the Transaction and with respect to this Agreement. Seller shall pay any brokerage commission due to Seller’s Broker in accordance with the separate agreement between Seller and Seller’s Broker. Seller agrees to hold Buyer harmless and indemnify Buyer from and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) suffered or incurred by Buyer as a result of any claims by Seller’s Broker or any other party claiming to have represented Seller as broker in connection with the Transaction. Buyer agrees to hold Seller harmless and indemnify Seller from and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) suffered or incurred by Seller as a result of any claims by any other party claiming to have represented Buyer as broker in connection with the Transaction.

          11.2 Publicity. Except for the Press Releases or Public Announcements the forms of which are attached hereto as Exhibit S, or if no such forms are attached, such other forms as are reasonable under the circumstances or as may be required by law or as may be reasonably necessary, on a confidential basis, to inform any rating agencies, potential sources of financing, financial analysts, to perform its obligations and duties contained in this Agreement or to receive legal, accounting and/or tax advice, the parties agree that no party shall, with respect to this Agreement and the transactions contemplated hereby, contact or conduct negotiations with public officials, make any public pronouncements, issue press releases or otherwise furnish information regarding this Agreement or the transactions contemplated hereby to any third party without the consent of the other party, which consent shall not be unreasonably withheld; provided, however, that, if such information is required to be disclosed by law, the party so disclosing the information shall use reasonable efforts to give notice to the other parties as soon as such party learns that it must make such disclosure.

- 29 -

     Buyer acknowledges that certain Ground Leases that affect the Hotels require landlord consent to any assignment of those rights and/or release of Seller from continued liability under such lease. Buyer hereby consents to Seller’s disclosure to any such landlords of Buyer’s identity and financial information. Buyer agrees to cooperate (at no material cost and expense) with Seller and any such landlord and to provide such Buyer financial information as may be reasonably requested by such landlord in order to consent to the proposed assignment.

          11.3 Indemnity.

               11.3.1 Buyer hereby agrees to indemnify, defend, and hold Seller and each of the other Seller Parties free and harmless from and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) arising out of or resulting from (a) the breach of the terms of Paragraph 11.2 or (b) the entry on the Property and/or the conduct of any Due Diligence by Buyer or any of Buyer’s Representatives at any time prior to the Closing; provided, however, that Buyer’s obligations under this clause (b) shall not apply to the mere discovery of a pre-existing environmental or physical condition at the Property. The foregoing indemnity shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement.

               11.3.2 From and after Closing, Seller shall indemnify and hold harmless Buyer from and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) arising out of (i) a breach by Seller of any representation, warranty or covenant set forth herein (however, such indemnity shall not extend beyond the one (1) year survival period set forth in Paragraph 8.4), (ii) events or contractual obligations, acts, or omissions of Seller that occurred in connection with the ownership or operation of the Property prior to the Closing Date and during the ownership of the Property by Seller or any of its affiliates, or (iii) any damage to property of others or injury to or death of any person or any claims for any debts or obligations occurring on or about or in connection with the Property or any portion thereof at any time or times prior to the Closing Date and during the ownership of the Property by Seller or any of its affiliates.

               11.4 Employment Indemnity. The Canadian Seller shall fully indemnify, defend and hold harmless Buyer and any of its affiliates for, from and against any cost, loss, damage or expense (including, but not limited to, reasonable attorneys’ fees and disbursements and court costs and other expenses of litigation, whether or not taxable under local law) related to any action, cause of action, complaint, application, contract and covenant, whether express or implied, claim and/or demand for damages, indemnity, costs, interest, loss or injury brought, made or commenced against Buyer and/or any of its affiliates by (i) any union on behalf of any employee working at any of the Hotels in Canada or on its own behalf for any reason, (ii) by any employee working at any of the Hotels in Canada in respect of or arising out of their employment or the termination of their employment with the Canadian Seller and/or the Manager, or (iii) by any organization or governmental entity relating in any way to any of the employees working at any of the Hotels in Canada, it being understood and agreed that the Employment Indemnity described in this Paragraph 11.4 shall be of no force or effect to the extent that the claims described in this Paragraph 11.4, and in particular, the claims referred to in (i), (ii) or (iii), result or arise due to any acts or omissions of Buyer or any of its affiliates. The provisions of this Paragraph 11.4 shall survive the Closing.

- 30 -

     12. Default At or Prior to Closing.

          12.1 Buyer Default. If Buyer defaults in the observance or performance of its covenants and obligations hereunder, and such default continues for five (5) Business Days after the date of receipt of written notice from Seller demanding cure of such default, provided Seller is not in default, Seller shall be entitled, as its sole and exclusive remedy hereunder, to Terminate this Agreement by written notice to Buyer of such termination and to receive (x) if such termination election is made on or prior to the initial Closing, liquidated damages equal to five percent (5%) of the Purchase Price with respect to the allocated value of all Hotels (taking into account any reduction to such Purchase Price in accordance with Paragraph 9.1 or otherwise provided for herein); or (y) if such election is made at any time after the initial Closing, five percent (5%) of the Purchase Price allocated to the Austin, TX InterContinental Hotel, as full liquidated damages for such default of Buyer, the parties hereto acknowledging the difficulty of ascertaining the actual damages in the event of such a default, that it is impossible more precisely to estimate the damages to be suffered by Seller upon Buyer’s default, that such liquidated damages is intended not as a penalty, but as full liquidated damages and that such amount constitutes a reasonable good faith estimate of the potential damages arising therefrom, it being otherwise difficult or impossible to estimate Seller’s actual damages which would be suffered by Seller in the event of default by Buyer. Except with respect to any right, obligation or liability which survives Closing or termination of this Agreement, including any indemnification provisions set forth in this Agreement, Seller’s right to Terminate this Agreement and receive full liquidated damages, are Seller’s sole and exclusive remedies in the event of a default hereunder by Buyer, and Seller hereby waives, relinquishes and releases any and all other rights and remedies (except any that survive Closing or termination pursuant to the express provisions of this Agreement), including, but not limited to: (1) any right to sue Buyer for damages or to prove that Seller’s actual damages exceed the amount of liquidated damages set forth above which is hereby provided Seller as full liquidated damages, (2) any right to sue Buyer for specific performance, or (3) any other right or remedy which Seller may otherwise have against Buyer, either at law, or equity or otherwise. Notwithstanding anything contained herein to the contrary, if Buyer has made the Deposit hereunder and Seller Terminates this Agreement in accordance with clause (x) of the first sentence hereof, then Seller shall be able to receive as its sole remedy payment of the Deposit as full liquidated damages. The provisions of this Paragraph 12.1 shall survive the termination hereof.

          12.2 Seller Default. If Seller defaults in the observance or performance of its covenants and obligations hereunder, and such default continues for the greater of five (5) Business Days after the date of receipt of written notice from Buyer demanding cure of such default, then Buyer shall be entitled either, at Buyer’s option, (i) without waiving the right to elect the option to Terminate this Agreement, to sue Seller for specific performance of this Agreement, but only if such suit is filed within one hundred eighty (180) days after the occurrence of Seller’s alleged default, unless Buyer is legally precluded from bringing such suit pursuant to bankruptcy law requirements within such one hundred eighty day period or (ii) to Terminate this Agreement by the delivery to Seller of notice of such termination and Buyer shall be entitled to all of its out-of pocket costs (including legal fees) incurred in connection with the transactions contemplated by this Agreement payable within five (5) days of demand; provided however that Buyer shall not be able to recover any of its out-of-pocket costs (including legal fees) to the extent Seller fails or is unable to deliver any Ground Lease Estoppel Certificate

- 31 -

pursuant to Paragraph 6.2 so long as such failure or inability is not due to any fault of Seller. Buyer’s rights to so Terminate this Agreement or sue for specific performance are Buyer’s sole and exclusive remedies hereunder in the event of a default hereunder by Seller, and Buyer hereby waives, relinquishes and releases any and all other rights and remedies (except any that survive Closing or termination pursuant to the express provisions of this Agreement), including, but not limited to: (1) any right to sue for damages, or (2) any other right or remedy which Buyer may otherwise have against Seller either at law, in equity or otherwise. Buyer agrees that its failure to timely commence an action for specific performance within such the period noted above shall be deemed a waiver by it of its right to commence an action for specific performance as well as a waiver by it of any right it may have to file or record a notice of lis pendens or notice of pendency of action or similar notice against any portion of the Property. The provisions of this Paragraph 12.2 shall survive the termination hereof.

     13. Notices. All notices, consents, approvals and other communications which may be or are required to be given by either Seller or Buyer under this Agreement shall be properly given only if made in writing and sent by (a) hand delivery, or (b) certified mail, return receipt requested, or (c) a nationally recognized overnight delivery service (such as Federal Express, UPS Next Day Air or Airborne Express), or (d) telecopying to the telecopy number listed below (provided that a copy of such notice is also sent within one Business Day to the party by one of the other methods listed herein), with all postage and delivery charges paid by the sender and addressed to the Buyer or Seller, as applicable as set forth below, or at such other address (or telecopy number) as each may request in writing in accordance with the provisions hereof. Such notices delivered by hand, by telecopy, or overnight delivery service shall be deemed received on the date of delivery and, if mailed, shall be deemed received upon the earlier of actual receipt or two days after mailing. Said notice addresses are as follows (and Seller and Buyer shall have the right to designate changes to their respective notice addresses, effective five (5) days after the delivery of written notice thereof):

If to Seller: InterContinental Hotels Group
Three Ravinia Drive
Suite 100
Atlanta, Georgia 30346-2121
Attention: Robert Chitty
Telephone No.: (770) 604-5321
Telecopy No.: (770) 604-5075

With a copy to: InterContinental Hotels Group
Three Ravinia Drive
Suite 100
Atlanta, Georgia 30346-2121
Attention: Legal Dept. - Paul Huang
Telephone No.: (770) 604-2644
Telecopy No.: (770) 604-5075

- 32 -

With a copy to: Alston & Bird LLP
1201 West Peachtree Street
Atlanta, GA 30309-3424
Attention: Timothy J. Pakenham
Telephone No.: (404) 881-7755
Telecopy No.: (404) 881-7777

If to Buyer: Hospitality Properties Trust
400 Centre Street
Newton, MA 02458
Attention: John Murray
Telephone No.: (617) 964-8389
Telecopy No.: (617) 969-5730

With a copy to: Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Attention: Warren M. Heilbronner
Telephone No.: (617) 338-2946
Telecopy No.: (617) 338-2880

     14. General Provisions.

          14.1 Execution Necessary. This Agreement shall not be binding upon Seller or Buyer, respectively, until fully executed and delivered by a proper official of Seller or Buyer, respectively, and no action taken by either of their representatives shall be deemed an acceptance of this Agreement until this Agreement has been so executed by them and delivered to each other.

          14.2 Counterparts. This Agreement may be executed in separate counterparts. It shall be fully executed when each party whose signature is required has signed at least one counterpart even though no one counterpart contains the signatures of all of the parties to this Agreement.

          14.3 Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Buyer shall not have the right to assign or delegate any right, duty or obligation of Buyer under this Agreement in whole or in part to any other party other than its affiliates without the prior written consent of Seller, which consent Seller may grant or withhold in its sole and absolute discretion, and any such assignment shall be null and void ab initio. Notwithstanding the foregoing, Buyer shall have the right to cause Seller to convey the Property or portions thereof to an affiliate of Buyer which is wholly owned by Buyer or wholly owned by the owners of Buyer, or to an affiliate which is owned, in part, by Buyer and which is controlled by Buyer as to property, operating and management issues, and which affiliate shall be designated in writing by Buyer, together with delivery to Seller of evidence reasonably satisfactory to Seller of the valid legal existence of Buyer’s affiliate, its qualification (if necessary) to do business in the jurisdiction in which the Property is

- 33 -

located and of the authority of Buyer’s affiliate to execute and deliver any and all documents required of Buyer under the terms of this Agreement, which items shall be received by Seller not less than three (3) Business Days prior to the Closing Date; notwithstanding the foregoing, the exercise of such right by Buyer shall not relieve Buyer of any of its obligations and liabilities hereunder including obligations and liabilities which survive the Closing or the termination of this Agreement, nor shall any such assignment alter, impair or relieve such affiliate from the waivers, acknowledgements and agreements of Buyer set forth herein, all of which are binding upon the affiliate(s) of Buyer. In the event of any permitted designation by Buyer, any affiliate shall assume any and all obligations and liabilities of Buyer under this Agreement but, notwithstanding such assumption, Buyer shall continue to be liable hereunder.

          14.4 Governing Law. This Agreement shall be governed by the laws of the State of New York.

          14.5 Entire Agreement. This Agreement and all the exhibits and schedules referenced herein and annexed hereto contain the entire agreement of the parties hereto with respect to the matters contained herein, and no prior agreement or understanding (including without limitation any letter of intent or similar proposals or correspondence between Buyer and Seller pertaining to any of the matters connected with this Transaction shall be effective for any purpose. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument signed by the party against whom the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.

          14.6 Time is of the Essence. TIME IS OF THE ESSENCE of the Transaction and this Agreement. If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regularly scheduled Business Day.

          14.7 Interpretation. The titles, captions and paragraph headings are inserted for convenience only and are in no way intended to interpret, define, limit or expand the scope or content of this Agreement or any provision hereof. Even though the defined term for a party hereunder may be used in the singular in this Agreement such term shall also include any other person or entity, jointly or severally, included within such definition. If any time period under this Agreement ends on a day other than a Business Day, then the time period shall be extended until the next Business Day. This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing this Agreement to be drafted. If any words or phrases in this Agreement shall have been stricken out or otherwise eliminated, whether or not any other words or phrases have been added, this Agreement shall be construed as if the words or phrases so stricken out or otherwise eliminated were never included in this Agreement and no implication or inference shall be drawn from the fact that said words or phrases were so stricken out or otherwise eliminated.

- 34 -

          14.8 Survival. Except as set forth herein, the covenants, agreements, indemnities, representations and warranties contained herein shall not survive the Closing Date or any termination of this Agreement.

          14.9 Further Assurances. Each party agrees to execute and deliver to the other such further documents or instruments as may be reasonable and necessary in furtherance of the performance of the terms, covenants and conditions of this Agreement; provided, however, that the execution and delivery of such documents by such party shall not result in any additional liability or cost to such party.

          14.10 Exclusive Application. Nothing in this Agreement is intended or shall be construed to confer upon or to give to any person, firm or corporation other than Buyer and Seller (and their permitted successors or assigns) hereto any right, remedy or claim under or by reason of this Agreement. Except as set forth herein, all terms and conditions of this Agreement shall be for the sole and exclusive benefit of the parties hereto and may not be assigned.

          14.11 Partial Invalidity. If all or any portion of any of the provisions of this Agreement shall be declared invalid by Laws applicable thereto, then the performance of said offending provision shall be excused by the parties hereto; provided, however, that, if the performance of such excused provision affects any material aspect of this Transaction, the party for whose benefit such excused provision was inserted may request that the other party enter into a modification or separate agreement which sets forth in valid fashion the substance of such offending provision in a manner which counsel to both parties determine is valid.

          14.12 No Implied Waiver. Unless otherwise expressly provided herein, no waiver by Seller or Buyer of any provision hereof shall be deemed to have been made unless expressed in writing and signed by such party. No delay or omission in the exercise of any right or remedy accruing to Seller or Buyer upon any breach under this Agreement shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring. The waiver by Seller or Buyer of any breach of any term, covenant or condition herein stated shall not be deemed to be a waiver of any other breach, or of a subsequent breach of the same or any other term, covenant or condition herein contained.

          14.13 Rights Cumulative. All rights, powers, options or remedies afforded to Seller or Buyer either hereunder or by Law shall be cumulative and not alternative, and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by Law, unless expressly provided to the contrary herein.

          14.14 Attorney’s Fees. Should either party employ an attorney or attorneys to enforce any of the provisions hereof or to protect its interest in any manner arising under this Agreement, or to recover damages for breach of this Agreement, the non-prevailing party in any action pursued in a court of competent jurisdiction (the finality of which is not legally contested) agrees to pay to the prevailing party all reasonable costs, damages and expenses, including attorneys’ fees, expended or incurred in connection therewith.

          14.15 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION

- 35 -

WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, THE PROPERTY OR THE RELATIONSHIP OF BUYER AND SELLER HEREUNDER. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING (AND NOT BE MERGED THEREIN) OR ANY EARLIER TERMINATION OF THIS AGREEMENT.

          14.16 Facsimile Signatures. Signatures to this Agreement transmitted by telecopy or other electronic means shall be valid and effective to bind the party so signing. Each party agrees to promptly deliver an execution original to this Agreement with its actual signature to the other party, but a failure to do so shall not affect the enforceability of this Agreement, it being expressly agreed that each party to this Agreement shall be bound by its own telecopied or electronic signature and shall accept the telecopied or electronic signature of the other party to this Agreement.

          14.17 No Recordation. Seller and Buyer each agrees that neither this Agreement nor any memorandum or notice hereof shall be recorded and Buyer agrees (a) not to file any notice of pendency or other instrument (other than a judgment) against the Property or any portion thereof in connection herewith and (b) to indemnify Seller against all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller by reason of the filing by Buyer of such notice of pendency or other instrument. Notwithstanding the foregoing, (a) if the same is permitted pursuant to applicable Laws, Buyer shall be entitled to record a notice of lis pendens if Buyer is entitled to seek (and is actually seeking) specific performance of this Agreement by Seller in accordance with the terms of Paragraph 12.2 hereof, and (b) Buyer shall be entitled to file a copy of all or a portion of this Agreement (or make specific reference hereto) with the Securities and Exchange Commission in connection with any of its filings required by Law or regulation pertaining thereto.

          14.18 Maximum Aggregate Liability. Notwithstanding any provision to the contrary contained in this Agreement or any documents executed by Seller pursuant hereto or in connection herewith, the maximum aggregate liability of Seller and the Seller Parties, and the maximum aggregate amount which may be awarded to and collected by Buyer, in connection with this Agreement and the PR Stock Agreement for (i) the breach of any of Seller’s Warranties for which a claim is timely made by Buyer, (ii) any Seller indemnity obligations arising from a breach of Seller’s Warranties and (iii) any representation of the PR Seller under the PR Stock Agreement which pursuant to the terms thereof survive only for one year after the closing thereunder shall not exceed Seller’s Liability Limit. This Paragraph 14.18 is not intended to conflict in any way with the provisions of the PR Indemnity and to the extent of any conflict with the provisions hereof and the PR Indemnity, the terms of the PR Indemnity shall control. The provisions of this section shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement.

          14.19 Exhibits and Schedules. All exhibits and schedules referred to in, and attached to, this Agreement are hereby incorporated herein in full by this reference.

          14.20 Jurisdiction. With respect to any suit, action or proceedings relating to the Transaction, this Agreement, the Property or the relationship of Buyer and Seller hereunder (“Proceedings”) each party irrevocably (a) submits to the exclusive jurisdiction of the Courts of

- 36 -

the County of New York, State of New York and the United States District Court for the Southern District of New York, and (b) waives any objection which it may have at any time to the laying of venue of any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party. The provisions of this Paragraph 14.20 shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement.

          14.21 Interpretation of Agreement after Initial Closing Date. The parties hereto acknowledge that this Agreement, and the rights and obligations set forth herein, shall remain in full force and effect after the Initial Closing Date with respect to Seller’s obligation to sell, and Buyer’s obligation to buy, the Austin, TX InterContinental Hotel and that each will interpret this Agreement in accordance with that intent.

          14.22 Currency. Each reference herein to any dollar amount is a reference to such amount of United States dollars (except as set forth in Paragraph 8.1(AA)).

          14.23 SEC Matters. Seller shall cooperate with Buyer or any of its affiliates in connection with the preparation of any documents to be filed under the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”) and shall use commercially reasonable efforts to provide such persons with financial statements and other financial information that Buyer requests relating to periods prior to the Closing Date and to obtain consents from Seller’s independent accountants in connection therewith.

          14.24 Planning Act. All of the mutual covenants, conditions, agreements and payments contained in this Agreement with respect to the Toronto InterContinental Hotel and the Toronto Staybridge Suites Hotel shall be conditional upon compliance with the Planning Act (Ontario). The Canadian Sellers covenant with Buyer that the Canadian Sellers shall obtain prior to the Closing all necessary consents under the Planning Act (Ontario) for the conveyance of the Toronto InterContinental Hotel and the Toronto Staybridge Suites Hotel to Buyer or its designee and shall comply with any conditions imposed with respect to any such consent, all at Canadian Sellers’ expense.

          14.25 Management Agreement. Buyer and Seller acknowledge that the Hotels acquired by Buyer hereunder shall be subject to the Management Agreement (in the form attached hereto and as it may be modified by the terms hereof and thereof).

     15. Additional Termination Rights. (a) If the Transaction has not occurred on or prior to December 31, 2005, other than by reason of a default by a party hereto, and unless mutually extended by the parties hereto, this Agreement shall automatically Terminate and this Agreement shall be of no force and effect between the parties except for those obligations which survive such termination. (b) If any condition to the initial Closing is not satisfied or waived by March 31, 2005 either party, so long as such party is not in default hereunder, may Terminate this Agreement by written notice to the other party (subject to any rights of such non-defaulting party hereunder) and this Agreement shall be of no force and effect between the parties except for those provisions which expressly survive such termination. (c) On or before the applicable

- 37 -

Closing Date, if the PR Stock Agreement is terminated then this Agreement shall also Terminate, provided however that if such termination results from (i) a default by PR Seller, then Buyer shall have all of its rights hereunder against Seller as if Seller was in default hereunder; or (ii) a default by PR Buyer, then Seller shall have all of its rights hereunder against Buyer as if Buyer was in default hereunder.

     16. Retention of Hotel Employees. Each of Buyer and Seller acknowledges that an affiliate of Seller will manage the Hotel in accordance with the Management Agreement described in Paragraph 17 and that Seller or an affiliate will employ all hotel employees at the Hotel with Seller or the Manager having the responsibilities relative to the employment of and services of these employees as set forth in the Management Agreement. Seller and Manager shall continue to recognize the Collective Agreements and all certifications set out in Schedule 8.1(Z).

     17. On-Going Management of Hotel. Buyer and Seller each acknowledge that Seller is unwilling to sell the Hotels unless Buyer and Seller’s designated affiliate enter into a long term, non-terminable hotel Management Agreement for the Property. At Closing, Seller’s designated affiliate and Buyer shall execute the Management Agreement attached hereto as Exhibit P.

     18. Deposit. As a condition to Buyer exercising the Extension Option, Buyer shall deposit at the time of making the Extension Option, Twenty Five Million and No/100 Dollars ($25,000,000.00, such amount, together with any interest earned thereon, the “Deposit”), in immediately available funds, with the Title Company or with an escrow agent mutually satisfactory to the parties hereto (“Escrow Agent”) on the terms and conditions set forth in this Paragraph 18. The Deposit shall be held and delivered by Escrow Agent in accordance with the provisions of this Paragraph 18.

          18.1 Deposit. Escrow Agent shall invest the Deposit in interest-bearing instruments reasonably satisfactory to both Buyer and Seller, shall not commingle the Deposit with any funds of Escrow Agent or others, and shall promptly provide Buyer and Seller with confirmation of the investments made.

          18.2 Delivery at Closing. If the initial Closing occurs, Escrow Agent shall deliver the Deposit to, or upon the instructions of, Buyer and Seller on the Closing Date to be applied against that portion of the Purchase Price due on such date.

          18.3 Return or Delivery of Deposit Outside Closing. Escrow Agent shall deliver the Deposit to Seller or Buyer only upon receipt of a written demand therefor from such party, after which Escrow Agent shall give written notice to the other party of such demand. Thereafter, (a) if Escrow Agent does not receive a written objection from the other party to the proposed payment within ten (10) days after the giving of such notice, then Escrow Agent is hereby authorized to make such payment, but (b) if Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions signed by Seller and Buyer or a final judgment of a court.

- 38 -

          18.4 Stakeholder. The parties acknowledge that the Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable to either of the parties for any action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any Liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller or Buyer resulting from Escrow Agent’s mistake of Law or in the performance of its duties hereunder or any other document executed in connection with the Deposit. Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred in connection with the performance of Escrow Agent’s duties hereunder or in any other document executed in connection with the Deposit, except with respect to actions or omissions taken or made by Escrow Agent in bad faith, in disregard of this Agreement, such other documents executed in connection with the Deposit or involving negligence on the part of Escrow Agent.

          18.5 Taxes. The party receiving the Deposit (or the benefit thereof) shall pay any income taxes on any interest earned on the Deposit. Buyer and Seller agree that, prior to Buyer making the Deposit, they will report their respective taxpayer identification numbers to Escrow Agent.

          18.6 Execution by Escrow Agent. To the extent that Buyer makes the Deposit, the parties hereto shall amend this Agreement to make Escrow Agent a party hereto in order to confirm Escrow Agent’s agreement to provisions hereof and that it will receive and shall hold the Deposit, in escrow, and shall disburse the Deposit pursuant to the provisions of this Agreement. Buyer and Seller shall be free to amend or modify this Agreement without Escrow Agent’s signature as long as such amendment does not affect Escrow Agent’s liability hereunder.

          18.7 Buyer’s Termination Rights and Return of Deposit. If Buyer elects to Terminate this Agreement in accordance with (x) Paragraph 8.3, the first sentence of Paragraph 9.1 (to the extent that this Agreement is terminated) or Paragraph 12.2; or (y) Paragraph 15 (so long as Buyer is not in default hereunder), Buyer shall be entitled to the return of the Deposit. Under all other circumstances, the Deposit shall be non-refundable to Buyer. Buyer’s right to receive the Deposit is in addition to (and not in limitation of) any other right it has hereunder to collect certain damages, out-of-pocket costs or such other amounts from Seller.

     19. Additional Disclosure Items.

          19.1 Industrial Revenue Bond. With respect to the Atlanta Airport Holiday Inn Hotel, Buyer acknowledges it is aware of Seller’s obligations with respect to the $20,000,000 in aggregate principal amount of Development Authority of Clayton County Taxable Economic Development Revenue Bonds (Bass Resources, Inc. Project), Series 1999 (the “Industrial Revenue Bond”) that encumber the Hotel. Prior to the Closing Date Seller shall elect to either (i) pay-off the Industrial Revenue Bond in full and convey the Atlanta Airport Holiday Inn Hotel free and clear of the lien associated with the Industrial Revenue Bonds, or (ii) require Buyer with Buyer’s consent to purchase the Atlanta Airport Holiday Inn Hotel subject to the terms of the Industrial Revenue Bond.

- 39 -

          19.2 Collective Bargaining Agreement. With respect to the Redondo Beach Crowne Plaza Hotel and Toronto InterContinental Hotel, Buyer acknowledges that each of the foregoing Hotels is subject to a collective bargaining agreement. Buyer and Seller agree to cooperate with each other and the Manager as to any union notices or consents required by such collective bargaining agreements. In accordance with the terms of the Management Agreement, the Manager will be the employer responsible for such employees under each collective bargaining agreement.

     20. Limitation of Liability. No advisor, trustee, director, officer, employee, beneficiary, shareholder, member, partner, participant, representative or agent of Buyer or Seller shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into pursuant to the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times heretofore or hereafter. In no event shall any of Buyer or Seller be entitled to punitive, consequential or special damages under this Agreement, and each of Buyer and Seller hereby waives any right to claim, pursue or collect same. The provisions of this Paragraph 20 shall survive any termination of this Agreement and the Closing hereunder.

     21. Nonliability of Trustees. THE DECLARATIONS OF TRUST ESTABLISHING BUYER, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT, AND SELLER HEREBY AGREES THAT, THE NAME “HPT IHG-2 PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF BUYER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, BUYER. ALL PERSONS DEALING WITH BUYER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF BUYER, FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

     22. Monies from Seller. To the extent that Seller is obligated under this Agreement to reimburse Buyer for any of its out-of-pocket costs or to pay Buyer any other amounts hereunder, then to the extent necessary in Buyer’s judgment to preserve InterContinental Hotels Group Resources, Inc.’s status as a Code Section 856(d)(9)(A) “eligible independent contractor” at a Code Section 856(d)(9)(D) “qualified lodging facility” owned or leased by Buyer or its affiliates, all such amounts shall be paid from those entities comprising Seller other than InterContinental Hotels Group Resources, Inc.

[Signature Pages Follow]

- 40 -

     IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement under seal as of the day and year first above written.

SELLER: Holiday Pacific Partners Limited Partnership, a Delaware limited partnership
By:	Holiday Pacific Equity Corporation,
	a Delaware corporation, as its general partner

By:
	Robert J. Chitty, as its Vice President

BHR Texas, L.P., a Delaware limited partnership
By:	InterContinental Hotels Group Resources, Inc.,
	a Delaware corporation, as its general partner
By:
	Robert J. Chitty, as its Vice President

InterContinental Hotels Group Resources, Inc., a Delaware corporation
By:
	Robert J. Chitty, as its Vice President

220 Bloor Street Hotel Inc., an Ontario corporation
By:
	Robert J. Chitty, as its Vice President

[Signature Page To Amended and Restated Purchase and Sale Agreement]

Crowne Plaza LAX, LLC, a Georgia limited liability company
By:	InterContinental Hotels Group Resources, Inc.,   a Delaware corporation, as its general partner

By:
	Robert J. Chitty, as its Vice President

Staybridge Markham, Inc., an Ontario corporation
By:
	Robert J. Chitty, as its Vice President

BUYER: HPT IHG-2 Properties Trust, a Maryland real estate investment trust
By:
	Name:	John G. Murray
	Title:	President

[Signature Page to Purchase and Sale Agreement]

SCHEDULE A

Attached to and made a part of that certain:
Amended and Restated Purchase and Sale Agreement
by and between
BHR TEXAS, L.P.
INTERCONTINENTAL HOTELS GROUP RESOURCES, INC.
CROWNE PLAZA LAX, LLC
HOLIDAY PACIFIC PARTNERS LIMITED PARTNERSHIP
220 BLOOR STREET HOTEL INC.
STAYBRIDGE MARKHAM, INC.

AS SELLER

AND

HPT IHG-2 PROPERTIES TRUST

AS BUYER

(Dated as of February 9, 2005)

     “Agreement” shall mean this Amended and Restated Purchase and Sale Agreement between Seller and Buyer including all schedules, exhibits and other attachments hereto, and documents incorporated herein by reference.

     “Anaheim Holiday Inn Hotel” shall mean that certain Holiday Inn Hotel located on that certain tract or parcel of land in Anaheim, California, more particularly described on Exhibit A-9.

     “Anaheim Staybridge Suites Hotel” shall mean that certain Staybridge Suites Hotel located on that certain tract or parcel of land in Anaheim, California, more particularly described on Exhibit A-10.

     “Atlanta Airport Holiday Inn Hotel” shall mean that certain Holiday Inn Hotel located on that certain tract or parcel of land in Clayton County, Georgia, more particularly described on Exhibit A-7.

     “Austin, TX InterContinental Hotel” shall mean that certain InterContinental Hotel located on that certain tract or parcel of land in Austin, Texas, more particularly described on Exhibit A-2.

     “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which banking institutions in The Commonwealth of Massachusetts or the State of Georgia are authorized by law or executive action to close.

     “Buyer” shall mean the buyer referenced in the first paragraph of this Agreement.

     “Buyer’s Diligence Reports” shall mean the results of any examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations and/or investigations prepared by or for or otherwise obtained by Buyer or Buyer’s Representatives in connection with Buyer’s Due Diligence.

     “Buyer’s Knowledge” or “Buyer Knows” shall mean the actual (and not the imputed or constructive) knowledge of John Murray of HPT.

     “Buyer’s Representatives” shall mean Buyer’s officers, employees, agents, advisors, representatives, attorneys, accountants, consultants, lenders, investors, contractors, architects and engineers.

     “Canadian Seller” shall mean 220 Bloor Street Hotel Inc. and Staybridge Markham, Inc. and as owner and ground lessee, respectively, of the Toronto InterContinental Hotel and the Toronto Staybridge Suites Hotel.

     “Closing” shall mean the consummation and closing of the Transaction.

     “Closing Agent” shall mean the Title Company or such other party as is selected by Buyer and Seller to fund the Closing in escrow.

     “Closing Date” shall mean as the context so requires, (i) the date on which Buyer acquires title to the Property in accordance with the terms hereof which date shall be on or before the Closing Deadline as defined in Paragraph 1.1 of this Agreement except for the Austin, TX InterContinental Hotel or any other Hotel for which the acquisition by Buyer has been delayed in accordance with terms of this Agreement; or (ii) with respect to the Austin, TX InterContinental Hotel, June 1, 2005; or (iii) with respect to any Hotel not acquired on the date pursuant to clause (i) or (ii) hereof, the date as may be agreed to by the parties in accordance with the terms and provisions of this Agreement.

     “Closing Deadline” is defined in Paragraph 1.1 of this Agreement.

     “Closing Documents” shall mean the documents and instruments delivered by Buyer and Seller, in order to consummate the Transaction.

     “Closing Tax Year” shall mean the Tax Year in which the Closing Date occurs.

     “Code” shall mean the United States Internal Revenue Code of 1986 and the Treasury Regulations promulgated thereunder, each as from time to time amended.

     “Collective Agreements” means the collective agreements in respect of the Hotels in Canada and all related documents including letters of understanding, letters of intent and other written communications with bargaining agents for employees working at any of the Hotels in Canada which impose any obligations upon the Canadian Seller or any of its affiliates, all as listed and described in Schedule 8.1(Z).

- 2 -

     “Condemnation Proceeding” shall mean any proceeding in condemnation, expropriation, eminent domain or any written request for a conveyance in lieu thereof, or any notice that such proceedings have been or will be commenced against any portion of the Property.

     “Confidential Materials” shall mean excerpts of any books, computer software, databases, records or files (whether in a electronic or printed format) that consist of or contain any of the following: appraisals; budgets; strategic plans for the Property; internal analyses; information regarding the marketing of the Property for sale; submissions relating to obtaining internal authorization for the sale of the Property by Seller or any direct or indirect owner of any beneficial interest in Seller; attorney and accountant work product; attorney-client privileged documents; internal correspondence of Seller, any direct or indirect owner of any beneficial interest in Seller, or any of their respective affiliates and correspondence between or among such parties; or other information or materials in the possession or control of Seller, Seller’s property manager or any direct or indirect owner of any beneficial interest in Seller which such party deems proprietary or confidential.

     “Consent to Assignment of Ground Lease” shall mean a consent and assignment to Ground Lease delivered by the landlord under a Ground Lease to Seller, in form and substance satisfactory to Buyer.

     “Contracts” shall mean all contracts respecting leasing, management, maintenance or operation of the Real Property, including, but not limited to, equipment leases, agreements with respect to building systems, service, construction, and maintenance contracts, but specifically excluding any license to Seller of computer hardware, software, or system(s) or any other item constituting Excluded Assets . A summary list of the Contracts (including identity of contract parties and type of service) is shown on Exhibit N and made a part hereof.

     “Due Diligence” shall mean the investigation by Buyer and Buyer’s Representatives of the feasibility and desirability of purchasing the Property, including all audits, surveys, examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations, investigations and verifications with respect to the Property, the Property Documents, title matters, applicable land use and zoning Laws and other Laws applicable to the Property, the physical condition of the Property, the economic status of the Property, and other information and documents regarding the Property, including, but not limited to, investigations of the legal and physical status of the Property by such consultants, engineers, architects and/or entomologists as Buyer requires, tests and assessments with respect to environmental matters, soil tests, asbestos analysis, mold analysis, structural review, examination of title to the Property, preparation of a Survey of the Land, and verification of all information made or to be made available to Buyer with respect to Property.

     “Due Diligence Deadline” is defined in Paragraph 1.1 of this Agreement.

     “Effective Date” shall mean December 17, 2004, the date of the Original Agreement.

     “Excluded Assets” shall mean, with respect to any Property:

- 3 -

     (i) any right, title or interest in the name “Staybridge,” “InterContinental,” Holiday Inn,” or “Crowne Plaza”, as applicable, hotel and other System Marks (as defined in the Management Agreement);

     (ii) all licenses and permits necessary for Manager to manage such Property pursuant to the Management Agreement;

     (iii) all computer software that is the property of Seller or any of its affiliates and for which Seller or such affiliate is the owner or copyright holder and not a mere licensee;

     (iv) any and all motor vehicles;

     (v) any and all menus, stationery, or other items indicating that such Property is owned by the Seller;

     (vi) any and all personal property of the employees of the Properties;

     (vii) books, ledger sheets, files and records with respect to the operation of such Property;

     (viii) all contracts relating to such Property or its operations, other then the Contracts, Leases and the Permitted Title Exceptions;

     (ix) alcoholic beverages inventories; and

     (x) leased two way radios.

     “Governing Documents” shall mean the certificate or articles of incorporation, bylaws, declaration of trust, formation or governing agreement or other charter documents or organizational or governing documents or instruments.

     “Governmental Authority” means any U.S. or Canadian federal, provincial or municipal government or governmental authority or official having jurisdiction over the Property, and includes any court, board, commission, department, administrative agency or regulatory body thereof.

     “Ground Lease” shall mean, as the context so requires, each of the ground leases set forth on Exhibit V.

     “Ground Lease Estoppel Certificate” shall have the meaning assigned to such term in Paragraph 5.1.9 of this Agreement.

     “Hilton Head Crowne Plaza Hotel” shall mean that certain Crowne Plaza Hotel located on that certain tract or parcel of land in Hilton Head, South Carolina, more particularly described on Exhibit A-6.

- 4 -

     “Hotel” shall mean any individual hotel located on the Land and described on Exhibits A-1 through A-12.

     “Houston InterContinental Hotel” shall mean that certain InterContinental Hotel located on that certain tract or parcel of land in Houston, Texas, more particularly described on Exhibit A-1.

     “HPT” shall mean Hospitality Properties Trust, a Maryland real estate investment trust.

     “HPT Guaranty” shall mean the Guaranty Agreement substantially in the form attached hereto as Exhibit Q made by Hospitality Properties Trust for the benefit of Manager and PR Tenant (as defined therein), as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “IHG” shall mean InterContinental Hotels Group, PLC, a United Kingdom corporation.

     “IHG Parent Guaranty” shall mean the Amended and Restated Consolidated Guaranty Agreement substantially in the form attached hereto on Exhibit M to be made by IHG for the benefit of HPT, Owner and certain of their affiliates, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “Initial Closing Date” shall mean the date on which Buyer acquires title to the Property in accordance with the terms hereof (other than the Austin, TX InterContinental Hotel or any other Hotel for which the acquisition by Buyer has been delayed in accordance with the terms of this Agreement) which date shall be on or before the Closing Deadline.

     “Land” shall mean those certain tracts or parcels of land, more particularly described on Exhibits A-1 to A-12.

     “Law” shall mean any United States or Canadian federal, state, provincial or local or municipal law, statute, ordinance, code, order, decrees, or other governmental rule, regulation or requirement, including common law.

     “Leases” shall mean all leases, subleases, rental agreements and other occupancy agreements for the use or occupancy of any portion of the Real Property, or improvements located thereon if any, together with all amendments to, modifications of, renewals and extensions thereof.

     “Lien” shall mean any mortgage, charge, deed of trust, security deed, lien, judgment, pledge, conditional sales contract, security interest, past-due taxes, past-due assessments, contractor’s lien, materialmen’s lien, construction lien, judgment or similar encumbrance against the Property of a monetary nature.

     “Liabilities” shall mean any and all direct or indirect damages, demands, claims, payments, problems, conditions, obligations, actions or causes of action, assessments, losses, liabilities, costs and expenses of any kind or nature whatsoever, including, without limitation, penalties, interest on any amount payable to a third party, lost income and profits, and any legal

- 5 -

or other expenses (including, without limitation, reasonable attorneys’ fees and expenses) reasonably incurred in connection with investigating or defending any claims or actions, whether or not resulting in any liability. In no event shall “Liabilities” include the right of Seller or Buyer to collect punitive, consequential, or special damages under this Agreement, and each of Buyer and Seller waive any right to collect the same.

     “Los Angeles Crowne Plaza Hotel” shall mean that certain Crowne Plaza Hotel located on that certain tract or parcel of land in Los Angeles, California, more particularly described on Exhibit A-5.

     “Management Agreement” shall mean that certain agreement for management services between Buyer and Manager in the form attached hereto as Exhibit P.

     "Manager” shall mean the IHG Management (Maryland) LLC, and any of its permitted successors and assigns.

     “Memphis Holiday Inn Hotel” shall mean that certain Holiday Inn Hotel located on that certain tract or parcel of land in Memphis, Tennessee, more particularly described on Exhibit A-8.

     “Other Interests” shall mean the following other interests of Seller in and to the Real Property, Leases, Contracts, or Personal Property, or pertaining thereto: (a) to the extent that the same are in effect as of the Closing Date, and not retained by Seller or its affiliates pursuant to the terms hereof or the Management Agreement or constitute Excluded Assets, any licenses (but excluding any franchise license rights or liquor licenses), permits and other written authorizations necessary for the use, operation or ownership of the Real Property, and (b) any guaranties and warranties in effect with respect to any portion of the Real Property or the Personal Property as of the Closing Date.

     “Owner” shall mean the Owner under the Management Agreement.

     “Permitted Title Exceptions” shall mean, subject to Buyer’s rights to review and make objection to the status of title and survey as set forth in this Agreement, and the right of Buyer to Terminate this Agreement pursuant to Paragraph 4.5 if the Due Diligence is not satisfactory, the following: (a) the Leases and any new Leases entered into between the Effective Date and the Closing Date in accordance with the terms of this Agreement; (b) all real estate taxes and assessments not yet due and payable as of the Closing Date; (c) local, state and federal (if applicable) zoning and building Laws; (d) the Record Exceptions disclosed by the Title Commitment and not Removed or required to be Removed as provided for in Paragraph 4 hereof; (e) the state of facts disclosed by a current Survey of the Land obtained by Buyer and not Removed or required to be Removed as provided for in Paragraph 4 hereof; and (f) any other matters approved as Permitted Title Exceptions in writing by Buyer prior to Closing or deemed approved as Permitted Title Exceptions pursuant to this Agreement.

     “Personal Property” shall mean (a) all Property Documents; (b) all keys and combinations to all doors, cabinets, safes, enclosures and other locking items or areas on or about

- 6 -

the improvements; (c) the food and beverage inventory of the Hotel; and (d) all tangible personal property, including, but not limited to, all “Inventories”, as such term is defined in the Uniform System of Accounts, and all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery, equipment, specialized hotel equipment and other tangible personal property, in each case, owned or leased by Seller in connection with the ownership, operation or maintenance of the Hotel, including without limitation all china, glassware, silverware, linens, towels, curtains, uniforms, works of art, engineering, maintenance, and housekeeping supplies, draperies, materials and carpeting, used or intended for use, but not for sale, in connection with the operation of the Hotel, all equipment used in the operation of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners, lobby, reservation desk and all supplies, merchandise, food and beverages held for sale in connection with the operation of the Hotel, which are on hand on the Effective Date; but specifically excluding (i) any Confidential Materials, (ii) any computer hardware, software, or system that is licensed to Seller, and (iii) any Excluded Assets.

     “PR Buyer” shall mean Buyer.

     “PR Hotel” shall mean that certain InterContinental Hotel located in San Juan, Puerto Rico and leased by an affiliate of Manager to an affiliate of Owner pursuant to that certain lease Agreement to be entered pursuant to the terms of the PR Stock Agreement.

     “PR Indemnity” shall mean that certain Indemnity Agreement made by PR Seller and Holiday Hospitality Franchising, Inc. for the benefit of Buyer.

     “PR Lease” shall mean that certain Lease Agreement to be delivered by HPT IHG PR, Inc., as landlord, and InterContinental Hotels (Puerto Rico) Inc., as tenant, in accordance with the transactions described in the PR Stock Agreement.

     “PR Property” shall have the meaning ascribed to the term “Property” in the PR Lease.

     “PR Seller” shall mean Six Continents International Holdings B.V., a Netherlands closed limited liability company.

     “PR Stock Agreement” shall mean that certain Stock Purchase Agreement pursuant to which an affiliate of Manager has agreed to sell the stock of the owner of the PR Property to an affiliate of Owner, as the same may be amended from time to time.

     “Property” shall mean the Real Property, the Leases, the Contracts, the Personal Property and the Other Interests, but specifically excluding any right to or interest in any liquor license and intellectual property rights referenced in Paragraph 5 hereto and other items constituting Excluded Assets.

     “Property Documents” shall mean all books, records and files of Seller and of the Manager for any Property related thereto (other than those books, records or files containing Confidential Materials, provided, however that Seller shall make available extracts of non-confidential information contained in such books, records or files).

     “Purchase Price” is defined in Paragraph 3.2.

- 7 -

     “Real Property” shall mean the Land, including, without limitation, (a) the Hotel and any other buildings located on the Land and all other improvements, (b) all easements and rights-of-way appurtenant to the Land and other easements, rights-of-way, grants of right, licenses, privileges or other agreements for the benefit of, belonging to or appurtenant to the Land whether or not situated upon the Land, including, without limitation, signage rights and parking rights or agreements, all whether or not specifically referenced on Exhibits A-1 to A-12, (c) all mineral, oil and gas rights, riparian rights, water rights, sewer rights and other utility rights allocated to the Land, (d) all right, title and interest, if any, of the owner of the Land in and to any and all strips and gores of land located on or adjacent to the Land, and (e) all right, title and interest of the owner of the Land in and to any roads, streets and ways, public or private, open or proposed, in front of or adjoining all or any part of the Land and serving the Land.

     “Record Exceptions” shall mean all instruments recorded in the real estate records or land titles registry of the County or municipality in which the Land is located which affect the status of title to the Real Property or the Land subject to any leasehold interest evidenced by a Ground Lease.

     “Redondo Beach Crowne Plaza Hotel” shall mean that certain Crowne Plaza Hotel located on that certain tract or parcel of land in Redondo Beach, California, more particularly described on Exhibit A-4.

     “Remove” with respect to any exception to the title of the Real Property, shall mean that Seller causes the Title Company to remove or affirmatively insure over the same as an exception to the Title Policy, to the reasonable satisfaction of Buyer, without any additional cost to Buyer, whether such removal or insurance is made available in consideration of payment, bonding, indemnity of Seller or otherwise.

     “Required Removal Items” shall mean, collectively, any Title Objections to the extent (and only to the extent) that the same (a) have not been caused by Buyer or any Buyer’s Representatives, and (b) are either: (i) Liens evidencing monetary encumbrances (other than liens for general real estate taxes or assessments not yet due and payable) which can be Removed by payment of liquidated amounts, (ii) liens or encumbrances (including, but not limited to, monetary liens) created by Seller after the Effective Date and not consented to by Buyer; or (iii) items which Seller has agreed to Remove pursuant to Paragraph 4.3 of this Agreement.

     “Seller” shall mean the Seller referenced in the first paragraph of this Agreement.

     “Seller’s Broker” shall mean The Plasencia Group, Inc.

     “Seller’s (Canada) Knowledge” shall mean the actual (and not the imputed or constructive knowledge) of James P. Manley.

     “Seller’s Liability Limit” shall mean an amount that does not exceed in the aggregate five percent (5%) of the sum of the total allocated values of all the Hotels set forth on Exhibit A-13 to this Agreement and the purchase price of the common stock of the PR Seller as set forth in the PR Stock Agreement, plus $25,000,000.00.

- 8 -

     “Seller’s Knowledge” shall mean the actual (and not the imputed or constructive) knowledge of Robert Chitty, Robert Gunkel, and Thomas Brettschneider (collectively, the “Designated Representatives”).

     “Seller Parties” shall mean and include, collectively, (a) Seller; (b) its counsel; (c) any broker retained by Seller; (d) Seller’s property manager; (e) any direct or indirect owner of any beneficial interest in Seller; (f) any officer, director, employee, or agent of Seller, its counsel, any Broker retained by Seller, Seller’s property manager or any direct or indirect owner of any beneficial interest in Seller; and (g) any other entity or individual affiliated or related in any way to any of the foregoing.

     “Seller’s possession”, “in the Seller’s possession” or words of similar import shall be deemed to mean to the extent the material or other item referred to by such phrase is located at the Hotel or in Seller’s corporate headquarters.

     “Seller’s Representatives” shall mean Seller’s officers, employees, agents, advisors, representatives, attorneys, accountants, consultants, investors, contractors, architects and engineers.

     “Seller’s Warranties” shall mean Seller’s representations and warranties set forth in this Agreement and the limited warranty of title set forth in the deed executed by Seller in connection with Closing, as the same may be modified or waived by Buyer pursuant to this Agreement.

     “Survey” shall mean a survey of the Land obtained by Buyer pursuant to Paragraph 4.

     “Tax Year” shall mean the year period commencing on January 1 of each calendar year and ending on December 31 of each calendar year.

     “Tenant” shall mean a tenant under a Lease; collectively, all tenants under the Leases are referred to as the “Tenants”.

     “Terminate” shall mean the termination of this Agreement, by Buyer or Seller as applicable as set forth in this Agreement, in which event thereafter neither party hereto shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth in this Agreement expressly survives termination hereof.

     “Title Commitment” shall mean the Commitment of the Title Company to issue the Title Policy relating to Real Property, as applicable, as the same may be updated from time to time.

     “Title Company” shall mean either Fidelity National Title or such other title company selected by Buyer.

     “Title Objections” shall mean any defects in title (including any Record Exceptions which are not acceptable to Buyer) or Survey (including the description of the Land) which may be revealed by Buyer’s examinations thereof to which Buyer timely objects in accordance with the terms of Paragraph 4.3.

- 9 -

     “Title Policy” shall mean the ALTA Owner’s Policy of Title Insurance (or such other comparable form of title insurance policy as is available in the jurisdiction in which the Property is located) issued by the Title Company in the amount of the Purchase Price and in the form of the Title Commitment, and containing such endorsements as reasonably requested by Buyer.

     “Toronto InterContinental Hotel” shall mean that certain InterContinental Hotel located on that certain tract or parcel of land in Toronto, Ontario leased pursuant to that certain Ground Lease dated November 18, 1987 from The Corporation of the City of Toronto, more particularly described on Exhibit A-12 in which the registered leasehold interest thereof is vested in Inter-Continental Holdings (Canada) Inc. and the beneficial leasehold interest thereof is vested in 220 Bloor Street Hotel Inc.

     “Toronto Staybridge Suites Hotel” shall mean that certain Staybridge Suites Hotel located on that certain tract or parcel of land in Markham, Ontario, more particularly described on Exhibit A-11 the registered owner of which is InterContinental Hotels Group (Canada) Inc. and the beneficial owner of which is Staybridge Markham, Inc.

     “Transaction” shall mean the purchase and sale transactions occurring on the applicable Closing Date contemplated by this Agreement.

     “Uniform System of Accounts” shall mean the Uniform System of Accounts for the Lodging Industry, prepared by The Hotel Association of New York City, Inc., in effect as of the date hereof.

     “Unsuitable for Its Permitted Use” shall mean with respect to a Hotel, a state or condition of such Hotel such that (a) following any damage or destruction involving such Hotel, such Hotel cannot be operated in the good faith judgment of Buyer, Seller or Manager on a commercially practicable basis and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such damage or destruction and otherwise as required under Article 15 of the Management Agreement, using only the net proceeds of insurance obtained in connection therewith and other funds that Seller or Manager elect to provide pursuant to the terms of Article 15 of the Management Agreement within twelve (12) months following such damage or destruction or such shorter period of time as to which business interruption insurance is available to cover amounts to be paid to Owner under the Management Agreement upon the effectiveness thereof and other costs related to the Hotel following such damage or destruction, or (b) as the result of a partial taking by a Condemnation Proceeding, such Hotel cannot be operated in the good faith judgment of Seller, Buyer or Manager on a commercially practicable basis in light of then existing circumstances.

     “White Plains Crowne Plaza Hotel” shall mean that certain Crowne Plaza Hotel located on that certain tract or parcel of land in White Plains, New York, more particularly described on Exhibit A-3.

- 10 -

1.	Deadlines and Definitions.		2
	1.1	Deadlines	2
	1.2	Definitions	2
2.	Purchase and Sale		2
3.	Purchase Price		2
	3.1	Reserved.	2
	3.2	Purchase Price.	2
	3.3	Purchase Price Allocation.	3
4.	Buyer’s Due Diligence and Inspection Rights; Termination Right.		3
	4.1	Review of Property and Property Documents	3
	4.2	Guidelines for Inspection Rights	3
	4.3	Title and Survey Examination	4
	4.4	As-Is, Where-Is, With All Faults Sale	5
	4.5	Termination Right	6
5.	Covenants.		6
	5.1	Seller’s Covenants: Effective Date to Closing Date	6
	5.2	Seller’s Covenants After the Closing Date	9
	5.3	Bulk Sales	9
	5.4	Approvals and Notifications	9
	5.5	Reserved.	10
	5.6	Reserved.	10
	5.7	Required Work	10
6.	Closing		10
	6.1	Closing Mechanics	10
	6.2	Seller’s Deliveries	11
	6.3	Buyer’s Deliveries	14
7.	Prorations, Credits and Closing Costs.		15
	7.1	Proration Items.	15
	7.2	Closing Statement and Schedules	15
	7.3	Seller’s Closing Costs	15
	7.4	Buyer’s Closing Costs	16
	7.5	Canadian Taxes.	16
8.	Representations and Warranties.		17
	8.1	Seller’s Representations and Warranties	17
	8.2	Reserved.	23
	8.3	Claims of Breach Prior To Closing	23
	8.4	Survival and Limits On Buyer’s Claims	24
	8.5	Buyer’s Representations and Warranties	24
	8.6	Reserved.	25
9.	Casualty and Condemnation		25
	9.1	Major Event	26
	9.2	Closing Despite Casualty/Condemnation	26
10.	Other Conditions to Closing		27
	10.1	Conditions to Buyer’s Obligations	27
	10.2	Conditions to Seller’s Obligations	28
	10.3	Waiver of Conditions	28

	10.4	Additional Austin, InterContinental Closing Conditions	28
	10.5	Additional Atlanta, Airport Holiday Inn Hotel Closing Conditions	29
11.	Transaction Issues: Brokers, Confidentiality and Indemnity.		29
	11.1	Brokers	29
	11.2	Publicity	29
	11.3	Indemnity.	30
	11.4	Employment Indemnity	30
12.	Default At or Prior to Closing.		31
	12.1	Buyer Default	31
	12.2	Seller Default	31
13.	Notices		32
14.	General Provisions.		33
	14.1	Execution Necessary	33
	14.2	Counterparts	33
	14.3	Successors and Assigns	33
	14.4	Governing Law	34
	14.5	Entire Agreement	34
	14.6	Time is of the Essence	34
	14.7	Interpretation	34
	14.8	Survival	35
	14.9	Further Assurances	35
	14.10	Exclusive Application	35
	14.11	Partial Invalidity	35
	14.12	No Implied Waiver	35
	14.13	Rights Cumulative	35
	14.14	Attorney’s Fees	35
	14.15	Waiver of Jury Trial	35
	14.16	Facsimile Signatures	36
	14.17	No Recordation	36
	14.18	Maximum Aggregate Liability	36
	14.19	Exhibits and Schedules	36
	14.20	Jurisdiction	36
	14.21	Interpretation of Agreement after Initial Closing Date	37
	14.22	Currency	37
	14.23	SEC Matters	37
	14.24	Planning Act	37
	14.25	Management Agreement	37
15.	Additional Termination Rights		37
16.	Retention of Hotel Employees		38
17.	On-Going Management of Hotel		38
18.	Deposit		38
	18.1	Deposit	38
	18.2	Delivery at Closing	38
	18.3	Return or Delivery of Deposit Outside Closing	38
	18.4	Stakeholder	39
	18.5	Taxes	39

	18.6	Execution by Escrow Agent	39
	18.7	Buyer’s Termination Rights and Return of Deposit	39
19.	Additional Disclosure Items.		39
	19.1	Industrial Revenue Bond	39
	19.2	Collective Bargaining Agreement	40
20.	Limitation of Liability		40
21.	Nonliability of Trustees		40
22.	Monies from Seller		40

EX-4.23

EXHIBIT 4(b)(iii)

CONFORMED COPY

Dated 22 April 2005

BRITANNIA SOFT DRINKS LIMITED

INTERCONTINENTAL HOTELS GROUP PLC

ALLIED DOMECQ PLC

WHITBREAD GROUP PLC

and

PEPSICO, INC.

BSD IPO AGREEMENT

Linklaters

One Silk Street
London EC2Y8HQ

Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222
Ref Stuart Bedford/David Martin

Table of Contents

Contents		Page
1	Interpretation	1
1.1	Definitions	1
1.2	Subordinate Legislation	4
1.3	Modification etc. of Statutes	4
1.4	Interpretation Act 1978	4
1.5	References	4
1.6	Companies Act	5
1.7	Headings and Recitals	5
1.8	BSD Joint Venture Agreement	5
2	PepsiCo’s Rights as Minority BSD Shareholder	5
2.1	Board Representation	5
2.2	Pre-Emption Rights	6
2.3	Provision of information to PepsiCo director	6
3	IPO	6
3.1	Intention to IPO	6
3.2	IPO Commencement Date	6
3.3	IPO Conditions	6
3.4	IPO Period	8
3.5	Participation and Cooperation in the Conduct of the IPO	9
3.6	Entitlement to BSD Shares	11
3.7	Dilutive Events	17
3.8	Illustrative Shareholdings	18
3.9	Transfer of title	18

i

4	Termination of BSD IPO Agreement	18
4.1	Termination	18
4.2	Effect of Termination	18
5	Termination of BSD Shareholders’ Agreement	19
5.1	Termination Events	19
5.2	Consequences of Termination	19
5.3	PepsiCo Put	19
6	Confidentiality	20
6 1	Definition of Confidential Information	20
6.2	Confidentiality Undertakings	21
6.3	Permitted Disclosure	21
6.4	Notification of Unauthorised Disclosure	21
7	General Provisions	21
7.1	Whole Agreement	21
7.2	Group Interests	22
7.3	Third Party Rights	22
7.4	Variation	22
7.5	Further Assurance	22
7.6	Notices	22
7.7	Appointment of Process Agent	23
7.8	Invalidity	24
7.9	Counterparts	24
7.10	Governing Law and Jurisdiction	24
Schedule 1 Illustrative Shareholdings		26

ii

This Agreement is made on 22 April 2005 between:

(1)	Britannia Soft Drinks Limited registered in England and Wales with company number 47094 having its registered office at Britvic House, Broomfield Road, Chelmsford, Essex, CM1 1TU (“BSD”);
(2)	Intercontinental Hotels Group PLC registered in England and Wales with company number 4551528 having its registered office at 67 Alma Road, Windsor, Berkshire, SL4 3HD (“IHG”);
(3)	Allied Domecq PLC registered in England and Wales with company number 3771147 having its registered office at The Pavilions, Bridgwater Road, Bedminster Down, Bristol, BS13 8AR (“Allied”);
(4)	Whitbread Group PLC registered in England and Wales with company number 29423 having its registered office at CityPoint, 1 Ropemaker Street, London, EC2Y 9HX (“Whitbread”); and
(5)	PepsiCo, Inc., a corporation organised under the laws of the State of North Carolina, with general offices at 700 Anderson Hill Road, Purchase, New York (“PepsiCo”).

Recitals

(A)	PepsiCo and Britvic entered into the EBAs and the FPA on 10 March 2004.
(B)	PepsiCo also became a shareholder of BSD on 10 March 2004.
(C)	The Parties entered into the Existing BSD IPO Agreement on 10 March 2004 which, inter alia, set out their agreement as to PepsiCo’s rights as a minority shareholder of BSD and the terms on which the Parties would agree to proceed with an initial public offering and stock exchange listing of BSD.
(D)	The Parties wish to terminate the Existing BSD IPO Agreement and replace it with this Agreement.

It is agreed as follows:

1	Interpretation
1.1	Definitions

In this Agreement (including the Recitals), unless the context otherwise requires:

“Accounts” means the consolidated management accounts of BSD, prepared by BSD on a basis consistent with the applicable Accounting Policies, for the Financial Conditions Period;

“Accounting Date” means the last day of the Accounting Period which immediately precedes the first Accounting Period before the Announcement Period;

“Accounting Period” means any of the 4 (or occasionally 5) week periods in respect of which BSD prepares consolidated management accounts;

“Accounting Policies” means the accounting principles, standards, conventions and practices used in the preparation of BSD’s audited consolidated accounts for the year ended 2 October 2004; provided that, to the extent that such principles, standards, conventions and practices are inapplicable or not used in relation to any item(s) to be included in BSD’s consolidated management accounts for the Financial Conditions Period,

1

this definition will include those accounting principles, standards, conventions and practices which would have been applicable or would have had effect on 2 October 2004 in relation to such item;

“Admission” means the admission of BSD Shares to listing on the Official List of the UKLA, and to trading on the London Stock Exchange’s market for listed securities, in connection with the IPO;

“Agreement” means this Agreement, as it may be amended or supplemented from time to time, and includes the Schedules hereto;

“Announcement Date” means the date of public announcement by BSD of the firm intention to implement the IPO;

“Announcement Period” means the Accounting Period in which the Announcement Date falls;

“Associated Company” means, in relation to a Party, any holding company, subsidiary or any other subsidiaries of any such holding company;

“Base Combined Percentage” means 9 per cent. of the issued BSD Shares from time to time;

“Britvic” means Britvic Soft Drinks Limited, a company registered in England and Wales with company number 517211, and having its registered office at Britvic House, Broomfield Road, Chelmsford, Essex, CM1 1TU;

“BSD Board” means the board of directors of BSD, or any successor entity to BSD, from time to time;

“BSD Joint Venture Agreement” means the joint venture agreement in relation to BSD between, inter alia, BSD, IHG, Whitbread and Allied dated 10 February 1986, as amended;

“BSD Shares” means ordinary shares of £1 each in the capital of BSD or, following any scheme of arrangement or reconstruction effected prior to the IPO in accordance with Clause 3.5.2(ii), the ordinary shares in the holding company of Britvic and its subsidiaries and fellow subsidiaries in which PepsiCo and the Original BSD Shareholders hold shares and references to a shareholding in BSD or similar expression will be construed accordingly;

“BSD Share Offering” means the IPO and each Subsequent Offering;

“Business Day” means a day on which clearing banks are ordinarily open for business in both London and New York;

“Code” means the City Code on Takeovers and Mergers, as from time to time in force;

“Confidential Information” has the meaning given in Clause 6.1;

“Dilutive Event” means any subsequent issue of BSD Shares on a non pre-emptive basis by BSD following the IPO, including, without limitation, as a result of the exercise of employee share options or an issue of BSD Shares in consideration for an acquisition;

“EBAs” means the two agreements known as the Exclusive Bottling Appointments, both entered into on 10 March 2004 between PepsiCo and Britvic and Seven-Up International, a division of the Concentrate Manufacturing Company of Ireland (an Associated Company of PepsiCo) and Britvic, respectively;

2

“Existing BSD IPO Agreement” means the agreement in relation to the potential IPO of BSD between the Shareholders and BSD dated 10 March 2004;

“Final BSD Share Offering” means the BSD Share Offering following which each Original BSD Shareholder holds less than 3% of issued BSD Shares;

“Financial Conditions Period” means the period of 13 Accounting Periods ending on the Accounting Date;

“FPA” means the agreement known as the Franchise Performance Agreement between Pepsi-Cola International, Cork (an Associated Company of PepsiCo) and Britvic dated 10 March 2004;

“Initial Combined Percentage” means ninety-five per cent. of the issued BSD Shares as at the date of this Agreement;

“Initial Percentage” means five per cent. of the issued BSD Shares as at the date of this Agreement;

“IPO” means the initial public offering of BSD Shares (comprising an offer of BSD Shares for sale by the Original BSD Shareholders and, if so resolved by the BSD Board, an offer of new BSD Shares for subscription) and Admission of the BSD Shares;

“IPO Board” means the BSD Board comprising the individuals whom the Shareholders agree, subject to PepsiCo’s rights under Clause 2.1, will be the directors of BSD (or any successor entity of BSD) at the time, and in the event, of Admission;

“IPO Commencement Date” has the meaning specified in Clause 3.2.1;

“IPO Conditions” means the circumstances specified in Clause 3.3;

“IPO Minimum” means such number of shares as is 50 per cent. of the total issued ordinary share capital of BSD immediately following the IPO (including any new BSD Shares issued in connection with the IPO);

“IPO Period” has the meaning specified in Clause 3.4;

“IPO Window” has the meaning specified in Clause 3.3;

“Listing Rules” means the Listing Rules made by the UKLA for the purposes of Part VI of the Financial Services and Markets Act 2000 (as amended or supplemented from time to time);

“London Stock Exchange” means London Stock Exchange plc;

“Mandatory Offer” has the meaning given in Clause 3.6.8;

“Maximum Percentage” means 25 per cent. of the issued BSD Shares from time to time, plus one share;

“Official List” means the Official List of the UKLA;

“Original BSD Shareholders” means IHG, Allied and Whitbread;

“Panel” means The Panel on Takeovers and Mergers;

“Parties” means the parties to this Agreement; and “Party” means any one of them;

“Participating Original BSD Shareholder” means any Original BSD Shareholder which is selling BSD Shares in a BSD Share Offering;

3

	“Permitted Subsidiary” means, in relation to any Shareholder, any wholly-owned (direct or indirect) subsidiary of such Shareholder;
	“Reporting Accountants” means the accountants engaged, or proposed to be engaged, by BSD to advise it in connection with the IPO;
	“Requisite Number” has the meaning given in Clause 3.6.1(ii);
	“SARs” means the Rules Governing Substantial Acquisitions of Shares issued on behalf of the Panel;
	“Shareholders” means the Original BSD Shareholders and PepsiCo;
	“Subsequent Offering” means any sale or offering of BSD Shares made by any one or more (as the case may be) of the Original BSD Shareholders other than a sale made pursuant to Clause 3.6.2(i) and (iii) to (ix);
	“Tropicana” means Tropicana United Kingdom Limited, a company registered in England and Wales with company number 2576034, having its registered office at 1600 Arlington Business Park, Theale, Reading, RG7 4SA and a wholly owned subsidiary of PepsiCo; and
	“UKLA” means the UK Listing Authority or any successor body or authority thereto.
1.2	Subordinate Legislation
	Any reference to a statutory provision shall include any subordinate legislation made from time to time under that provision.
1.3	Modification etc. of Statutes
	References to a statute or statutory provision include that statute or provision as from time to time modified, re-enacted or consolidated.
1.4	Interpretation Act 1978
	The Interpretation Act 1978 shall apply in this Agreement in the same way as it applies to an enactment.
1.5	References

1.5.1	References to “Clauses” and “Schedules” are to clauses and schedules of this Agreement.
1.5.2	References to a Shareholder being a “holder” of BSD Shares are to such Shareholder in its capacity as the direct owner of the shares and, where the context requires, in its capacity as having an indirect interest through ownership by a Permitted Subsidiary; and “holding” and “holds” shall, unless the context otherwise requires, be interpreted accordingly.
1.5.3	Any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms.
1.5.4	References to any Shareholder, PepsiCo or any Original BSD Shareholder include, unless the context otherwise requires, Permitted Subsidiaries of such Shareholder, PepsiCo or Original BSD Shareholder.

4

1.5.5   References to any agreement include that agreement as amended or restated from time to time or, in the case of FPA only, any agreement substituted therefor.

1.6   Companies Act

1.6.1	The expressions “holding company” and “subsidiary” shall have the meanings set out in Section 736 of the Companies Act 1985.
1.6.2	The expression “equity security” shall have the meaning set out in Section 94 of the Companies Act 1985.

1.7	Headings and Recitals
	Headings and Recitals in this Agreement are included for convenience only and shall be ignored in construing this Agreement.
1.8	BSD Joint Venture Agreement
	Save as provided in Clause 7.2.1, if there is any ambiguity or conflict between the terms of this Agreement and the terms of the BSD Joint Venture Agreement, the terms of this Agreement shall prevail.
2	PepsiCo’s Rights as Minority BSD Shareholder
2.1	Board Representation

2.1.1   From the date of this Agreement until Admission:

(i)	PepsiCo shall have the right to appoint a director to the BSD Board and, for the avoidance of doubt, such right shall apply in relation to appointments by PepsiCo of a non-executive director to the IPO Board;
(ii)	any director appointed by PepsiCo pursuant to Clause 2.1.1 may be removed by PepsiCo and PepsiCo shall be entitled to appoint another director in his or her place; and
(iii)	the Original BSD Shareholders shall exercise their rights as holders of BSD Shares to give effect to the rights of PepsiCo under this Clause 2.1, including taking all such steps as are necessary to ensure that PepsiCo’s nominee is appointed to or removed from the BSD Board.
(iv)	if there has been:

(a)	a non-renewal of the EBAs by PepsiCo;
(b)	a termination of the EBAs by PepsiCo other than as a result of Britvic’s breach; or
(c)	a termination of the EBAs by Britvic as a result of PepsiCo’s breach,

or, if earlier, notice has been given in respect of any of paragraphs (a) and (b) above, then PepsiCo’s rights, and the Original BSD Shareholders’ obligations, under Clause 2.1.1 shall cease with immediate effect upon the occurrence of such event or the giving of such notice and PepsiCo shall immediately prior to such cessation remove any director it has appointed to the BSD Board (including, for the avoidance of doubt, any appointee to the IPO Board).

5

2.1.2   At any general meeting of BSD held after Admission at which:

(i)	a resolution is proposed for the election or re-election (as the case may be) of a PepsiCo nominee to the BSD Board, each of the Original BSD Shareholders agrees to exercise any votes it then (directly or indirectly) holds in favour of the resolution; or
(ii)	a resolution is proposed for the removal of a PepsiCo nominee, each of the Original BSD Shareholders agrees to exercise any votes it then (directly or indirectly) holds against such resolution,

unless (in either case) it would not be in the best interests of BSD to do so.

2.2	Pre-Emption Rights
	Prior to the time of Admission, the Shareholders shall exercise their rights as holders of BSD Shares so as to procure that BSD shall not allot equity securities which are to be wholly paid up in cash unless it has first offered such equity securities in accordance with Section 89 of the Companies Act 1985.
2.3	Provision of information to PepsiCo director
	BSD shall ensure that the director appointed by PepsiCo is sent notice of, and documents relating to, any meetings of the BSD Board and, where such director is a member, any meetings of any committee of the BSD Board at the same time as such notice or such documents are sent respectively to the other members of the BSD Board or the relevant committee of the BSD Board. Any such notice or documents shall be circulated in accordance with the provisions of the Articles.
3	IPO
3.1	Intention to IPO
	The Parties intend to undertake the IPO and this Clause 3 sets out the conditions to the IPO and the rights and obligations of the parties in relation to the process for effecting the IPO.
3.2	IPO Commencement Date

3.2.1	The BSD Board may resolve at any time that, subject to satisfaction of the IPO Conditions, BSD shall proceed with preparations for the IPO. Subject to Clause 3.4.2(iii), the date of such resolution shall be the “IPO Commencement Date”.
3.2.2	The BSD Board shall notify each Shareholder in writing of a resolution under Clause 3.2.1 within 5 days of the IPO Commencement Date.

3.3   IPO Conditions

3.3.1	Subject to the remainder of this Clause 3.3 and Clause 3.4, the IPO may proceed with an Admission date which is within the period between 1 January 2005 and 31 December 2008 (the “IPO Window”).
3.3.2	The IPO may not proceed if:

(i)   the number of BSD Shares to be sold by the Original BSD Shareholders (including any BSD Shares sold to PepsiCo pursuant to Clauses 3.6.1) and

6

3.7   and issued by BSD (in each case) in connection with the IPO would (in aggregate) be fewer than the IPO Minimum;

(ii)   PepsiCo has, at any time prior to the Announcement Date, given a bona fide valid notice of breach pursuant to clause 6(a) of either EBA; provided that, if PepsiCo has given such a notice, it will be deemed not to be effective (for the purposes only of this Clause 3.3.2(ii)) if:

(a)	the specified breach has been remedied within 90 days of receipt of the notice of breach (the “Remedy Period”);
(b)	in circumstances where the Remedy Period has not expired as at the Announcement Date, the BSD Board has passed a resolution confirming that the specified breach will be remedied within the Remedy Period; or
(c)	on or before the Announcement Date, PepsiCo has withdrawn, or agreed to withdraw, such notice.

(iii)	at the IPO Commencement Date, the FPA has an unexpired term of less than two calendar years; or
(iv)	either of the following financial tests has not been satisfied:

(a)   EBITDA/Interest of BSD shall exceed 5.5x where:

(I)   “EBITDA” is the profit after taxation shown in the Accounts with the following charges set out in the Accounts being added back (or where appropriate deducted):

(A)	the charge for taxation;
(B)	net Interest payable/receivable;
(C)	any amount attributable to amortisation of goodwill or other intangible assets and the charge for depreciation of tangible fixed assets including any impairment charge;

EBITDA shall be adjusted to negate the effects of the following items (which shall be derived from the Accounts):

(A)	any profit or loss resulting from the release of unutilised fair value provisions;
(B)	items treated as extraordinary or exceptional items, as determined by reference to Financial Reporting Standard 3; and

(II)   “Interest” is the amount shown as net interest charged or received in the Accounts; and

(b)   Net Debt/EBITDA shall be less than 2.5x where:

(I)   “Net Debt” is the net amount of bank loans, other loans, overdrafts, finance lease payables and cash (including cash equivalents) and bank balances extracted from the balance sheet in the Accounts;

7

(II)   “EBITDA” has the meaning given in Clause 3.3.2(iv)(a)(I),

3.3.3   BSD shall, as soon as reasonably practicable (but in any event no longer than 15 Business Days after the Accounting Date), provide to the Shareholders reasonable evidence in writing (comprising schedules extracting the relevant information from the BSD management accounts and a confirmation that such schedules have been prepared on a basis consistent with the Accounting Policies (which shall hereafter be referred to as the “Financial Conditions Submission”)) that the financial conditions specified in Clause 3.3.2(iv) have been satisfied (and BSD shall provide promptly any further evidence or information reasonably requested by any Shareholder in relation to the satisfaction of the financial conditions). Any Shareholder may, within 5 Business Days of receipt of the Financial Conditions Submission, give written notice to each of the other Shareholders and BSD that it is not satisfied that the financial conditions have been met. If no such notice has been given within the specified period, the financial conditions shall be deemed to have been satisfied for the purposes of Clause 3.3. If such notice is given (and not withdrawn prior to the end of the specified period), BSD shall procure that the Reporting Accountants prepare a written determination as to whether the financial conditions set out in Clause 3.3.2(iv) have been satisfied. In providing such determination, the Reporting Accountants will be acting as an expert, not an arbitrator, and, in the absence of manifest error or fraud, the determination by the Reporting Accountants will be final and binding on the Parties.

3.4   IPO Period

3.4.1	Subject to the following provisions of this Clause 3.4, the IPO may only proceed if the date of Admission falls within the period of 12 months from the IPO Commencement Date (the “IPO Period”).
3.4.2	If the BSD Board resolves during the IPO Period to discontinue preparations for the IPO, then that IPO Period shall cease. If the BSD Board subsequently wishes to resume preparations for the IPO, then:

(i)	the BSD Board must pass another resolution pursuant to Clause 3.2.1, subject to satisfaction of the IPO Conditions;
(ii)	notice of such resolution must be given to Shareholders pursuant to Clause 3.2.2; and
(iii)	the date of such resolution shall be the IPO Commencement Date (and any previous IPO Commencement Date shall cease to be relevant for the purposes of this Agreement) and a new IPO Period shall commence therefrom.

3.4.3	If the IPO Period expires before the time of Admission and the BSD Board wishes to continue with preparations for the IPO, then Clauses 3.4.2(i), (ii) and (iii) shall apply.
3.4.4	If the BSD Board passes a resolution pursuant to Clause 3.2.1 (including where such resolution is passed pursuant to Clauses 3.4.2 or 3.4.3) within the 12 months prior to 31 December 2008, then the IPO Period shall be the period from the date of that resolution to 31 December 2008.

8

3.5   Participation and Cooperation in the Conduct of the IPO

3.5.1

For the duration of the IPO Period, each of the Parties shall co-operate with the other Parties and their respective financial and other advisers to achieve the IPO in accordance with the Listing Rules, the rules and regulations of the London Stock Exchange and other applicable laws and regulation.

3.5.2

For the duration of the IPO Period, and without imposing any obligation to sell shares in BSD, each of the Shareholders shall, to the extent relevant to such Shareholder (having regard to its shareholding in BSD, its representation (if any) on the BSD Board (including, where relevant, the IPO Board) and its role in the process for implementing the IPO), use all reasonable endeavours to assist BSD in taking all actions necessary to achieve the IPO including, without limitation, cooperating and participating as reasonably required to implement, as appropriate, the following actions:

(i)	converting BSD into a public limited company;
(ii)	reorganising the share capital structure of BSD (including, without limitation, insertion of a new holding company by way of an arrangement or compromise under Section 425 of the Companies Act 1985) provided that, following such reorganisation, each Shareholder would have rights as a shareholder in BSD (or any successor entity to BSD) equivalent to those it had in BSD prior to the reorganisation. PepsiCo acknowledges and agrees that any reorganisation undertaken prior to Admission in accordance with this Clause 3.5.2(ii) shall not give rise to any breach of or termination right under the EBA and that the EBA shall be construed accordingly;
(iii)	determining the number of BSD Shares to be offered as is considered appropriate by the sponsoring bank(s) engaged for the IPO;
(iv)	subject to Clause 2.1, changing the composition of the Board (such that its composition is appropriate for a company in which the shares are to be admitted to the Official List and to trading on the London Stock Exchange (having regard to applicable corporate governance standards)) and procuring that the director(s) it has nominated enter into appropriate service contracts or letters of appointment;
(v)	adopting new articles of association appropriate for a listed company;
(vi)	instructing the Reporting Accountants;
(vii)	meeting the financial reporting requirements set out in the Listing Rules (for example as to trading history, extracts from audited accounts of prior years, cash flow and profit forecasts and working capital report);
(viii)	establishing or amending employee/executive share option schemes and obtaining relevant Inland Revenue clearance;
(ix)	agreeing with the sponsoring bank(s) the sale/subscription price of the BSD Shares offered for sale and/or subscription in the IPO;
(x)	carrying out verification of the prospectus and other documents pertinent to the IPO in respect of which verification is required;

9

(xi)

procuring that its appointee, or appointees, to the BSD Board provide any confirmations or consents which are reasonably necessary to secure Admission; and

(xii)

entering into any agreements (including any lock-up agreement reasonably required by the sponsoring bank(s)) or executing any other documents in connection with the IPO as may reasonably be required by the sponsoring bank(s) or as may be required by any regulatory authority and on terms reasonably acceptable to each Shareholder who is a party to such an agreement or document and in a manner or form that does not create a concert party issue for the purposes of the Code.

3.5.3   Notwithstanding Clause 2.1 and the Articles, each of the Shareholders shall be bound to remove forthwith any director it has appointed to the IPO Board from office if such director (a “Relevant Director”) fails or is unable to co-operate promptly with the IPO process or fails, is unable or delays either to provide any confirmations or consents necessary or to sign any documents (including, without limitation, a responsibility statement) reasonably necessary to secure Admission. The Shareholder who appointed the Relevant Director shall have the right to appoint a replacement therefor; provided that:

(i)	such appointment will not disrupt the timetable for the IPO in the sole opinion of the sponsoring bank(s) acting reasonably; and
(ii)	if such replacement director also fails to co-operate (as aforesaid) and is removed in accordance with this Clause 3.5.3, such Shareholder shall forego its rights to make a further appointment to the IPO Board.

3.5.4   The Original BSD Shareholders acknowledge and agree that the obligations of co-operation and assistance imposed upon PepsiCo pursuant to Clauses 3.5.1 to 3.5.3 shall not restrict or modify in any way any rights which PepsiCo may have under the remaining provisions of this Agreement and under the EBAs and the FPA. PepsiCo undertakes for the duration of the IPO Period that it shall exercise such rights (including any purported service of a notice of breach of the EBA expressed to be pursuant to clause 6 thereof) bona fide and for the sole or predominant purpose of advancing or protecting its legitimate interests under the EBAs and FPA and not for any other sole or predominant purpose, including without limitation and by way of example only, for the purpose of:

(i)	frustrating or delaying either the IPO or the IPO process; or
(ii)	securing an advantage or a benefit other than an advantage or a benefit under the EBAs or FPA (or any related agreement) which would or might accrue to PepsiCo in the ordinary course of events or which may be secured by PepsiCo by the exercise of its rights thereunder.

3.5.5   BSD shall use all reasonable endeavours to ensure that any disclosure of confidential or other commercially sensitive information, whether in the prospectus or in any announcement or other public document issued by BSD in connection with the IPO, is no more than is reasonably required in order for BSD, its directors and advisers (including without limitation the sponsor to BSD) to satisfy their respective obligations under, or the requirements of:

10

(i)	any applicable laws, rules and regulations, regulatory bodies or courts of competent jurisdiction (including, for the purposes of the UK, the Financial Services and Markets Act, the Listing Rules, the UKLA, the rules and regulations of the London Stock Exchange (or any other stock exchange on which the BSD Shares are to be listed or quoted) and the rules of the Code); or
(ii)	any subsequent enquiry or investigation by any governmental, official or regulatory body which is lawfully entitled to require any such disclosure.

3.6   Entitlement to BSD Shares

3.6.1   Subject to Clause 3.6.7 and applicable law and regulation (including UKLA’s decision to grant the application for Admission), the rights and obligations of the Parties to acquire and dispose of BSD Shares, both upon and after the IPO, are set out below:

(i)	subject to paragraphs (ii) to (x) below, PepsiCo shall have the right to acquire at the time of (or, where applicable, by participation in) the IPO and each Subsequent Offering such number of BSD Shares as would ensure that, if PepsiCo exercised its rights in full, PepsiCo’s shareholding in BSD would increase from the Initial Percentage to the Maximum Percentage whilst the aggregate shareholding of the Original BSD Shareholders decreases from the Initial Combined Percentage to the Base Combined Percentage;
(ii)	subject to paragraphs (iv), (v), (vi), (vii) and (ix) below, in respect of each BSD Share Offering, PepsiCo shall be entitled to acquire, from the Participating Original BSD Shareholders, in the proportions established under Clauses 3.6.3 or 3.6.4 or paragraph (vii) below (as the case may require), up to such number (the “Requisite Number”) of BSD Shares as would ensure that, following such BSD Share Offering and acquisition by PepsiCo (assuming PepsiCo exercises its rights in full), PepsiCo’s shareholding in BSD will have increased, as a proportion of the difference between the Initial Percentage and the Maximum Percentage, to the same extent as the aggregate shareholding of the Original BSD Shareholders has decreased, as a proportion of the difference between the Initial Combined Percentage and the Base Combined Percentage;
(iii)	subject to paragraph (vii), if PepsiCo exercises its rights to acquire BSD Shares under this Clause 3.6.1, PepsiCo shall acquire and the Participating Original BSD Shareholders shall sell such BSD Shares and the BSD Shares so acquired by PepsiCo shall be in addition to any BSD Shares which are sold by the Participating Original BSD Shareholders in the BSD Share Offering to persons other than PepsiCo; provided always that, if the Participating Original BSD Shareholders do not or would not as a result of the sales made or to be made in the relevant BSD Share Offering hold a sufficient number of shares to enable PepsiCo to acquire the Requisite Number:

(a)   in the case of the IPO, PepsiCo shall be entitled to participate in the IPO to the extent of any shortfall; and

11

(b)   in the case of any Subsequent Offering, the provisions of paragraph (viii) shall apply.

(iv)	if PepsiCo elects not to exercise its rights under this Clause 3.6.1 in relation to any BSD Share Offering (or exercises such rights in part only), PepsiCo shall be treated as if it had exercised its rights in full for the purposes of determining the Requisite Number for subsequent BSD Share Offerings pursuant to paragraph (ii) above (and thus shall not be entitled to make up any shortfall at the time of any Subsequent Offering);
(v)	if PepsiCo elects not to take up its rights in full under any offer by way of rights made by BSD, then, notwithstanding any rights that would otherwise arise under paragraph (ii) above, PepsiCo shall not be entitled to acquire shares under this Clause 3.6.1 in respect of such offer by way of rights and, for the purposes of determining the Requisite Number for subsequent BSD Share Offerings pursuant to paragraph (ii) above, PepsiCo shall be treated as if it had exercised its rights in full;
(vi)	if PepsiCo intends to exercise its rights under this Clause 3.6.1 in connection with any BSD Share Offering, it shall provide written confirmation to the Original BSD Shareholders as to the number (the “Specified Number”) of BSD Shares it will acquire in relation to such offering :

(a)

in the case of the IPO, three Business Days prior to the anticipated date of publication of the relevant prospectus, and PepsiCo’s confirmation of the Specified Number shall create a binding obligation on PepsiCo to acquire the Specified Number of BSD Shares provided that the price per BSD Share is within five per cent. of the price, or of the upper or lower limit of the price range notified to PepsiCo by BSD and such price or price range is subsequently specified in the relevant prospectus provided further that, if a different price or price range is to be specified in the relevant prospectus, the Original BSD Shareholders shall notify PepsiCo forthwith and PepsiCo shall confirm whether or not it wishes to change the Specified Number; and

(b)

in the case of any Subsequent Offering, within three Business Days of the date on which notice of the Subsequent Offering is given to PepsiCo by any one or more of the Participating Original BSD Shareholders, and PepsiCo’s confirmation of the Specified Number shall create a binding obligation on PepsiCo to acquire such BSD Shares at the price at which the BSD Shares were sold or offered in the Subsequent Offering; provided that nothing in this Agreement shall require the Original BSD Shareholders to give prior notice to PepsiCo of any Subsequent Offering,

provided that in the case of the IPO, if the number of BSD Shares sold by the Original BSD Shareholders in the IPO is less than originally anticipated, the Requisite Number and the Specified Number shall be reduced proportionately;

12

(vii)   without prejudice to Clause 3.6.7:

(a)

when determining the aggregate shareholding the Original BSD Shareholders would have following any BSD Share Offering for the purposes of paragraph (ii) above, any Original BSD Shareholder who would, following such offering, hold 3 per cent. or less of the then issued BSD Shares will be deemed to hold precisely 3 per cent. of the then issued BSD Shares; and

(b)

notwithstanding Clauses 3.6.3 and 3.6.4, if, as a result of a sale made as part of a BSD Share Offering (or as a result of a sale to PepsiCo under this Clause 3.6.1), a Participating Original BSD Shareholder ceases to hold in excess of 3 per cent. of the then issued BSD Shares (the “Minimum Threshold”), such Participating Original BSD Shareholder shall (save as otherwise agreed between the Participating Original BSD Shareholders) sell no further BSD Shares to PepsiCo unless there is no other Participating Original BSD Shareholder who holds in excess of the Minimum Threshold;

(viii)   subject to paragraph (vii)(b), in relation to any Subsequent Offering in which any one or more of the Participating Original BSD Shareholder(s) do(es) not hold a sufficient number of BSD Shares to make up its proportion of the Requisite Number, PepsiCo may seek to acquire the aggregate shortfall in the Requisite Number of BSD Shares (the “Shortfall Number”):

(a)

by making an offer to acquire the Shortfall Number from the other Original BSD Shareholder(s) at the price at which the BSD Shares were sold or offered in the Subsequent Offering; such offer to be capable of acceptance in whole or in part within three Business Days by the other Original BSD Shareholders pro rata to their holding(s) in BSD at the time of such Subsequent Offering (unless the other Original BSD Shareholder(s) agree between them to sell the Requisite Number other than on a pro rata basis); or

(b)

if, and only if, PepsiCo first makes an offer in accordance with paragraph (a) above and the number of BSD Shares to be acquired by PepsiCo pursuant to the offer, at the expiry of the three Business Day acceptance period referred to in paragraph (a) (the “Acceptance Date”), is less than the Shortfall Number, by way of market purchases of BSD Shares for the balance provided that PepsiCo’s right to make such market purchases shall cease after a period of seven Business Days from the Acceptance Date or such longer period as is necessary to enable PepsiCo to acquire such BSD Shares in compliance with the SARs;

(ix)   in relation to any Subsequent Offering, if the number of BSD Shares to be sold or, offered by the relevant Original BSD Shareholder(s) constitutes less than 1 per cent. (the “Acquisition Threshold”) of the issued BSD ordinary share capital immediately prior to such Subsequent Offering, PepsiCo shall have no right to acquire any BSD Shares at the time of such Subsequent Offering, but the Requisite Number of BSD Shares which PepsiCo would otherwise have been entitled to acquire under paragraph (ii)

13

	above (the “Rolled-up Shares”) shall be added to the number of BSD Shares which PepsiCo would otherwise be able to acquire from the relevant Original BSD Shareholder(s) at the time of the next Subsequent Offering (the “Trigger Offering”) where the number of shares to be sold or offered would be equal to or exceed the Acquisition Threshold;
(x)	all BSD Shares acquired by PepsiCo pursuant to Clause 3.6.1(ix) from the Original BSD Shareholders as part of a Trigger Offering shall be acquired at the price at which BSD Shares are sold or issued in the Trigger Offering;
(xi)	save as set out in paragraphs (i) to (x) above and Clause 3.7.2, PepsiCo shall not be entitled to acquire BSD Shares (or other equity securities of BSD) unless:

(a)	such acquisition is made in connection with or pursuant to an offer (as defined in the Code) for the ordinary share capital of BSD made by PepsiCo in accordance with the Code; or
(b)	such acquisition is made pursuant to a compromise or arrangement under Section 425 of the Companies Act 1985 providing for the acquisition by PepsiCo of more than 50 per cent. of the ordinary share capital of BSD; or
(c)	such acquisition is made as a result of an allotment to PepsiCo (pro rata to PepsiCo’s holding of BSD Shares prior to the announcement of the offer) of rights to BSD Shares or other equity securities of BSD under any offer by way of rights made by BSD or PepsiCo subsequently taking up such rights; and

(xii)   from the Announcement Date until the date which is the earlier of (if applicable) the expiry of the IPO Window without the IPO proceeding to Admission and termination of this Agreement, and subject to Clause 7.2 (but notwithstanding any other provision of this Agreement), PepsiCo shall not be entitled to dispose of BSD Shares or any interest in BSD Shares except by way of:

(a)	(i) an acceptance of a general offer for the ordinary share capital of BSD made in accordance with the Code or (ii) the provision of an irrevocable undertaking to accept such an offer or (iii) a sale of BSD Shares to an offeror who has announced a firm intention to make an offer (whether or not subject to a pre-condition) for all of the ordinary share capital of BSD under Rule 2.5 of the Code;
(b)	any disposal pursuant to a compromise or arrangement under Section 425 of the Companies Act 1985;
(c)	any disposal pursuant to scheme of reconstruction under Section 110 of the Insolvency Act 1986 in relation to BSD;
(d)	any disposal of nil paid rights in relation to new BSD Shares allotted to PepsiCo pursuant to an offer by way of rights made by BSD; and
(e)	any disposal made to satisfy a condition to a waiver granted by the Panel in respect of a requirement on PepsiCo to make a Mandatory Offer.

14

3.6.2   Subject to Clause 7.2, no Original BSD Shareholder shall dispose of BSD Shares or any interest in BSD Shares upon or after the IPO except that this restriction shall not apply to any disposal made by an Original BSD Shareholder:

(i)	of BSD Shares in connection with the IPO (including any sale of BSD Shares to PepsiCo at the time of the IPO made pursuant to Clause 3.6.1) in accordance with Clause 3.6.3;
(ii)	of BSD Shares in connection with any Subsequent Offering (including any sale of BSD Shares to PepsiCo at the time of such Subsequent Offering made pursuant to Clause 3.6.1) in accordance with Clause 3.6.4;
(iii)	of BSD Shares in connection with any Dilutive Event (pursuant to an offer made by PepsiCo under Clause 3.7.2(i)) in accordance with Clause 3.6.5;
(iv)	of BSD Shares to one or both of the other Original BSD Shareholders in accordance with Clause 3.6.6;
(v)	of any nil paid rights in relation to new BSD Shares allotted to such Original BSD Shareholder pursuant to any offer by way of rights made by BSD;
(vi)	by way of (i) an acceptance of a general offer for the ordinary share capital of BSD made in accordance with the Code or (ii) the provision of an irrevocable undertaking to accept such an offer or (iii) a sale of BSD Shares to an offeror who has announced a firm intention to make an offer (whether or not subject to a pre-condition) for all of the ordinary share capital of BSD under Rule 2.5 of the Code;
(vii)	of BSD Shares pursuant to a compromise or arrangement under Section 425 of the Companies Act 1985;
(viii)	of BSD Shares pursuant to scheme of reconstruction under Section 110 of the Insolvency Act 1986 in relation to BSD; and
(ix)	of BSD Shares made to satisfy a condition to a waiver granted by the Panel in respect of a requirement on such Original BSD Shareholder to make a Mandatory Offer.

3.6.3

In relation to disposals of BSD Shares to be made by the Original BSD Shareholders in connection with the IPO (including any sales to PepsiCo pursuant to Clause 3.6.1), the Original BSD Shareholders shall consult together and each Original BSD Shareholder shall confirm whether or not it intends to participate in such disposals (each Original BSD Shareholder intending to participate being an “IPO Participant”) and, if there is more than one IPO Participant, each IPO Participant shall, unless otherwise agreed among them, dispose of their BSD Shares pro rata to their holdings in BSD prior to IPO.

3.6.4

In relation to disposals of BSD Shares proposed to be made by any Original BSD Shareholders in connection with any Subsequent Offering (including any sales made to PepsiCo pursuant to Clause 3.6.1), all such disposals shall be made only: (a) following expiry or release by the sponsoring bank(s) of any lock-up agreements entered into by the Original BSD Shareholders at the time of the IPO; and (b) so as to ensure an orderly market is maintained in BSD Shares. Without prejudice to the foregoing, in relation to any Subsequent Offering where an Original

15

BSD Shareholder is proposing, within any period of 7 days, to dispose of BSD Shares constituting 1 per cent. or more of the issued ordinary share capital of BSD:

(i)	such Original BSD Shareholder shall (subject to applicable law and regulation) notify as soon as is reasonably practicable the other Original BSD Shareholders of its intention to dispose of any or all of its BSD Shares and the intended timing of such disposal;
(ii)	following such notification, the Original BSD Shareholders shall consult in good faith as soon as reasonably practicable (having regard to the intended timing of the proposed disposal of BSD Shares) in relation to their participation in, the structure of and the number of BSD Shares to be offered or disposed of in such Subsequent Offering; and
(iii)	where more than one Original BSD Shareholder confirms its intention to participate in any such Subsequent Offering (“Participating Shareholders”), such Participating Shareholders shall, unless otherwise agreed between them, only dispose of their shares simultaneously and through the same selling agent pro rata to their holdings in BSD immediately prior to such Subsequent Offering.

3.6.5	In relation to any offer made to the Original BSD Shareholders by PepsiCo pursuant to Clause 3.7.2(i), each Original BSD Shareholder shall confirm whether or not it intends to accept the offer (in whole or in part) in respect of its pro rata share. If any Original BSD Shareholder confirms it does not intend to accept such offer (or confirms that it accepts the offer in part only), the other Original BSD Shareholder(s) shall be entitled to sell further BSD Shares to enable PepsiCo to acquire the balance (and, if more than one of the other Original BSD Shareholders confirms it intends to sell further BSD Shares, such sales shall be made on a pro rata basis unless they otherwise agree).
3.6.6	If an Original BSD Shareholder wishes to dispose of any BSD Shares to another Original BSD Shareholder, it shall notify both of the other Original BSD Shareholders. If, within five Business Days of such notification, each of the other Original BSD Shareholders confirms an intention to participate in the disposal of such BSD Shares, they shall, unless they agree otherwise, only be permitted to acquire such shares pro rata to their holdings in BSD immediately prior to such disposal.
3.6.7	When an Original BSD Shareholder’s holding of BSD Shares falls to 3 per cent. or below of the issued BSD Shares (the “Minority BSD Shareholder”), all the provisions of this Clause 3.6 (other than Clause 3.6.1(vii)(b)) shall cease to apply to that Minority BSD Shareholder, so that:

(i)	the Minority BSD Shareholder may not, save as otherwise agreed between the Original BSD Shareholders, sell any BSD Shares to PepsiCo unless and until each Original BSD Shareholder has reduced its holding of BSD Shares to or below the Minimum Threshold of the issued BSD Shares; and
(ii)	the Minority BSD Shareholder may otherwise dispose of any BSD Shares held by it to any person other than PepsiCo.

3.6.8   Notwithstanding any other provision in this Agreement, each party agrees that it will not make any acquisition of BSD Shares which would give rise to an obligation of

16

another party to make an offer for the equity share capital of BSD under Rule 9.1 of the Code (“Mandatory Offer”). If any Shareholder (the “Acquiring Shareholder”) acquires (or is treated for the purposes of the Code as having acquired) BSD Shares, and such acquisition gives rise to a requirement to make a Mandatory Offer, the following shall apply (without prejudice to any other rights or remedies the other Shareholders may have in relation to such acquisition):

(i)   the Acquiring Shareholder shall use all reasonable endeavours to obtain a waiver from the Panel and shall promptly make all share sales necessary and take all such other actions as are reasonable to achieve it and, if no waiver is given, shall have sole responsibility for:

(a)	making a Mandatory Offer in accordance with the Code; and
(b)	making available sufficient cash resources to satisfy full acceptance of such Mandatory Offer; and

(ii)   the Acquiring Shareholder shall extend the Mandatory Offer to the other Shareholders.

3.6.9   For the purposes of this Clause 3.6:

(i)	“acquire” includes to purchase, subscribe for, accept an allotment of, borrow, take options over, take a charge or pledge over or otherwise acquire any right over or interest in shares or other equity securities of BSD (and includes an agreement to do any of the foregoing) and “acquisition” shall be interpreted accordingly; and
(ii)	“dispose” includes to sell, lend, sell “short”, grant options over, charge, pledge or otherwise dispose of any rights over or interest in shares (and includes any agreement to do any of the foregoing) and “disposal” shall be interpreted accordingly.

3.6.10   Each Shareholder acknowledges that neither the provisions of this Clause 3.6, nor any other provision of this Agreement, is intended to constitute an arrangement pursuant to which such Shareholder would be deemed to be acting in concert with any other Shareholder(s) for the purposes of the Code.

3.7   Dilutive Events

3.7.1

Subject to Clauses 3.7.2 and 3.7.3, on the occurrence of a Dilutive Event PepsiCo shall be entitled to acquire such number of BSD Shares as would ensure that PepsiCo’shareholding in the enlarged share capital of BSD would, if PepsiCo exercised its rights in full, increase, as a proportion of the difference between the Initial Percentage and the Maximum Percentage, to the same extent in the aggregate shareholding of the Original BSD Shareholders has decreased, as a proportion of the difference between the Initial Combined Percentage and the Base Combined Percentage, as a result of the Dilutive Event (the “Dilutive Acquisition Number”).

3.7.2

PepsiCo shall be entitled to acquire up to the Dilutive Acquisition Number of BSD Shares:

(i)   by making an offer to acquire such BSD Shares from the Original BSD Shareholder(s) at the closing middle market price for the BSD Shares on

17

the date immediately preceding the making of such offer; such offer to be capable of acceptance in whole or in part within three Business Days of receipt of the offer (the “Acceptance Date”) by the Original BSD Shareholders pro rata to their holding(s) in BSD immediately following the Dilutive Event provided that the other Original BSD Shareholder(s) may agree between them to sell the Dilutive Acquisition Number other than on a pro rata basis; or

(ii)

if and only if PepsiCo first makes an offer in accordance with paragraph (i) above and the number of BSD Shares in respect of which acceptances have been received by PepsiCo thereunder, is less than the Dilutive Acquisition Number, be entitled to acquire the balance by way of market purchases provided that PepsiCo’s right to make such market purchases shall cease after a period of seven Business Days from the Acceptance Date or such longer period as is necessary to enable PepsiCo to acquire such BSD Shares in compliance with the SARs.

3.7.3   In relation to each Dilutive Event:

(i)	with respect to the determination of the Dilution Acquisition Number, the provisions of Clauses 3.6.1(iv) and (v) shall apply mutatis mutandis; and
(ii)	the provisions of Clauses 3.6.1(vii) and (ix) shall apply mutatis mutandis.

3.8	Illustrative Shareholdings
	For illustrative purposes only, Schedule 1 sets out the relative shareholdings of the Original BSD Shareholders and PepsiCo as a result of the operation of Clauses 3.6.1(ii) and (vii) under various scenarios.
3.9	Transfer of title
	In relation to all transfers of BSD Shares made by the Original BSD Shareholders to PepsiCo pursuant to Clauses 3.6 and 3.7:

3.9.1	the full legal and beneficial title to such BSD Shares shall be transferred; and
3.9.2	such BSD Shares shall be transferred free from all Encumbrances.

4	Termination of Existing BSD IPO Agreement
4.1	Termination
	Notwithstanding the provisions of Clause 5.2 of the Existing BSD IPO Agreement, each of the Shareholders and PepsiCo agree that the Existing BSD IPO Agreement shall be terminated upon the signing of this Agreement.
4.2	Effect of Termination
	Each of the Shareholders and BSD hereby mutually releases and discharges each other party, with effect from the signing of this Agreement, from all obligations, duties, liabilities, losses or expenses arising out of or in any way connected with any provisions of the Existing BSD IPO Agreement.

18

5	Termination of this Agreement
5.1	Termination Events
	Subject to Clause 5.2, this Agreement shall terminate:

5.1.1   if Admission occurs within the IPO Window, on the earlier of:

(i)	the date of completion of the Final BSD Share Offering; or
(ii)	three years after the date of Admission (or, if later, 31 December 2008); or

5.1.2   if Admission does not occur within the IPO Window, on 31 December 2008 or, if earlier, the date upon which the BSD Board either resolves that it does not intend to or determines that it is not practicable to proceed with an IPO within the IPO Window.

5.2   Consequences of Termination

5.2.1	On termination of this Agreement, the provisions of Clause 6 (Confidentiality) and Clause 7 (General Provisions) shall survive termination and, if termination of this Agreement occurs pursuant to Clause 5.1.2, then Clause 2.1 (Board Representation) and Clause 5.3 (Put Option) shall also survive termination; provided that Clause 2.1 shall cease to have effect immediately upon the earlier of:
5.2.2	PepsiCo holding fewer than [613,664] BSD Shares or such other number as is equivalent taking into account any consolidation, subdivision, reconstruction or amalgamation of the BSD share capital;
5.2.3	PepsiCo ceasing to hold in excess of 2.5 per cent. of the issued BSD Shares; and
5.2.4	the occurrence of an event or the giving of a notice of the type referred to in Clause 2.1.1(iv).

5.3   PepsiCo Put

5.3.1   If there has been:

(i)	a termination of this Agreement under Clause 5.1.2; and
(ii)	a termination of the EBAs by Britvic (other than as a result of PepsiCo’s breach) or a non-renewal of the EBAs by Britvic or a termination of the EBAs by PepsiCo as a result of Britvic’s breach,

	PepsiCo shall have the right to sell, and require BSD to buy (the “PepsiCo Put”), all (but not some only) of the BSD Shares held (directly or indirectly) by it (the “PepsiCo Shares”) at a price determined in accordance with Clause 5.3.4 below (the “Put Price”).
5.3.2	On the satisfaction of the conditions specified in Clauses 5.3.1(i) and 5.3.1(ii), if PepsiCo wishes to sell the PepsiCo Shares, it shall notify BSD, not later than 5 Business Days following the date on which the later of the two conditions is satisfied, that it wishes to exercise the PepsiCo Put. Following such notification, the Put Price shall be determined in accordance with Clause 5.3.4.
5.3.3	PepsiCo shall notify BSD of the Put Price and, following the notification of such Put Price, the Original BSD Shareholders shall procure that BSD shall acquire the

19

	PepsiCo Shares from PepsiCo at the Put Price as soon as reasonably practicable after such notification.
5.3.4	The Put Price for the PepsiCo Shares, for the purposes of Clause 5.3.1, shall mean a price fixed on the basis of a fair market valuation by agreement between PepsiCo and BSD at the relevant time or, in the absence of such agreement, by an independent chartered accountant who is to be appointed by agreement between PepsiCo and BSD (or, failing agreement on such appointment within 7 days of PepsiCo’s notification that it wishes to exercise the PepsiCo Put, such accountant shall be appointed upon the nomination of the President of the Institute of Chartered Accountants in England and Wales). Such accountant shall act as an expert not as an arbitrator and his decision shall, in the absence of fraud or manifest error, be final and binding on the Parties. For the purposes of determining such fair market valuation, the valuation shall reflect any change in value of the PepsiCo Shares resulting from the termination of this Agreement and the termination or non-renewal of the EBAs.
5.3.5	For the avoidance of doubt, where there has been:

(i)	a termination of this Agreement under Clause 5.1.1;
(ii)	a non-renewal of the EBAs by PepsiCo;
(iii)	a termination of the EBAs by Britvic as a result of PepsiCo’s breach; or
(iv)	a termination of the EBAs by PepsiCo other than as a result of Britvic’s breach,

	then PepsiCo shall have no right, pursuant to Clause 5.3.1, to sell its BSD Shares to BSD.
5.3.6	In relation to any transfer of BSD Shares made by PepsiCo pursuant to this Clause 5.3:

(i)	PepsiCo shall transfer the full legal and beneficial title to such BSD Shares; and
(ii)	such BSD Shares shall be transferred free from all Encumbrances.

6	Confidentiality
6.1	Definition of Confidential Information
	For the purpose of this Agreement, Confidential Information:

6.1.1   includes, but is not limited to, any information and data (of whatever nature and however recorded or preserved) relating to:

(a)	the content or existence of this Agreement; and
(b)	any Party, its business or activities and which is disclosed by the disclosing Party, its representatives or advisers to a receiving Party, its representatives or its advisers; and

20

6.1.2   does not include information which:

(a)	is within or comes into the public domain (other than as a result of a breach by the receiving Party or its representatives or advisers of obligations of confidentiality); or
(b)	a Party obtains from a third party who owes no duty of confidentiality in respect of such information.

6.2	Confidentiality Undertakings
	Each Party undertakes severally to the other Parties that it shall (and shall use all reasonable endeavours to procure that its respective employees and agents shall) keep any Confidential Information strictly confidential and shall use any Confidential Information exclusively for the purpose of this Agreement, except as permitted under Clause 6.3 below.
6.3	Permitted Disclosure

6.3.1   Clause 6.2 shall not apply so as to prevent disclosure of Confidential Information by any Party where:

(a)	the Party to whom the information is confidential has given prior written consent to such disclosure;
(b)	such disclosure is required to be made by any relevant listing authority or stock exchange (or the rules or regulations of such body), or by law and/or in accordance with an order of a court of competent jurisdiction or order of a competent governmental body acting with lawful authority; or
(c)	the disclosure is made solely for the use of each Party’s professional advisers under obligations of confidentiality.

6.3.2   Each of the Parties hereby consents, subject to the following provisions of this Clause, to the other Parties making a public announcement (in a form agreed to by all Parties) in relation to the signing of this Agreement, the EBA and the FPA and the fact that agreement has been reached between them as to the basis on which an IPO may be effected. The Parties shall consult with a view to agreeing the form of such announcement provided that, in default of agreement, no Party shall make an announcement except to the extent that disclosure is required by any relevant listing authority or stock exchange or by law.

6.4	Notification of Unauthorised Disclosure
	Each of the Parties shall inform the other Parties as soon as practicable following any unauthorised disclosure of Confidential Information of which it is or becomes aware.
7	General Provisions
7.1	Whole Agreement
	This Agreement contains the whole agreement between the Parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract and supersedes any previous written or oral agreement between the Parties in relation to the matters dealt with in this Agreement.

21

7.2   Group Interests

7.2.1	Without prejudice, in the case of the Original BSD Shareholders, to the terms of the BSD Joint Venture Agreement, any Shareholder may transfer any or all of its BSD Shares to a Permitted Subsidiary and any such Permitted Subsidiary may transfer any or all of the BSD Shares it holds to its Shareholder or another Permitted Subsidiary of such Shareholder. The Parties acknowledge and IHG and Allied respectively confirm that the BSD Shares of the IHG Group are held by its Permitted Subsidiary, Six Continents Investments Limited, and the BSD Shares of the Allied Group are held by its Permitted Subsidiary, Allied Domecq Overseas (Canada) Limited. The Parties acknowledge, and PepsiCo confirms, that the Consideration Shares shall be issued to and held by a Permitted Subsidiary of PepsiCo.
7.2.2	If at any time any BSD Shares are held by a Permitted Subsidiary of a Shareholder, such Shareholder shall procure that the Permitted Subsidiary complies with the terms of this Agreement as if it were subject to the obligations of that Shareholder and, in the event that such entity is to cease to be a Permitted Subsidiary, that such Permitted Subsidiary transfers its holding of BSD Shares to the Shareholder or another Permitted Subsidiary prior to such event occurring.
7.2.3	Each Party undertakes to procure that its ultimate holding company for the time being, if not already a party to this Agreement, shall become such a party in addition to the Party, on such terms as the other Parties reasonably require.

7.3	Third Party Rights
	A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement, save that this restriction shall not apply to any Permitted Subsidiary of a Shareholder in respect of any period where such Permitted Subsidiary is or has been a shareholder of BSD.
7.4	Variation
	No variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the Parties to this Agreement.
7.5	Further Assurance
	At any time after the date of this Agreement, each Party shall and shall use all reasonable endeavours to procure that any necessary third party shall execute such documents and do such acts and things as may be reasonably necessary for the purpose of giving effect to the provisions of this Agreement.
7.6	Notices

7.6.1   Any notice or other communication in connection with this Agreement shall be in writing (a “Notice”) and shall be sufficiently given or served if delivered or sent:

in the case of BSD to:	Britvic House
	Broomfield Road
	Chelmsford
	Essex, CM1 1TU

22

Fax:	01245 504435
Attention:	The Company Secretary
in the case of IHG to:	67 Alma Road
	Windsor, Berkshire, SL4 3HD
Fax:	01753 410101
Attention:	The Company Secretary
in the case of Allied to:	The Pavilions
	Bridgwater Road
	Bedminster Down
	Bristol, BS13 8AR
Fax:	0117 978 5284
Attention:	The Company Secretary
in the case of Whitbread to:	City Point
	1 Ropemaker Street
	London, EC2Y 9HX
Fax:	0207 806 5457
Attention:	The Company Secretary
in the case of PepsiCo to:	700 Anderson Hill Road
	Purchase
	New York 10577
Fax:	00 1 194 253 3051
Attention:	The General Counsel

•	or (in any case) to such other address or fax number in the United Kingdom as the relevant Party may have notified to the others in accordance with this Clause.
7.6.2	Any Notice may be delivered by hand or sent by fax. Without prejudice to the foregoing, any Notice shall conclusively be deemed to have been received on the next Business Day in the place to which it is sent, if sent by fax, or at the time of delivery, if delivered by hand.

7.7

Appointment of Process Agent

PepsiCo irrevocably appoints Wotsits Brands Limited of 1600 Arlington Business Park, Theale, Reading, Berkshire RG7 4SA as its agent to accept service of process in England in any legal action or proceedings arising out of or in connection with this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by PepsiCo. If such process agent ceases to be able to act as such or to have an address in England, or if PepsiCo wishes to replace the process agent, PepsiCo irrevocably agrees to

23

	appoint a new process agent in England reasonably acceptable to the other parties and to deliver to the parties within 14 days a copy of a written acceptance of appointment by the process agent. Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law.
7.8	Invalidity
	If any term in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, under any enactment or rule of law, such term or part shall to that extent be deemed not to form part of this Agreement, but the legality, validity or enforceability of the remainder of this Agreement shall not be affected.
7.9	Counterparts
	This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any Party may enter into this Agreement by executing any such counterpart.
7.10	Governing Law and Jurisdiction
	This Agreement shall be governed by and construed in accordance with English law and the Parties irrevocably agree that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement, save that the expert determination procedure in Clause 3.3.3 shall apply to determine whether the financial conditions specified in that Clause have been satisfied.

Executed by the parties on the date set out above.

SIGNED for and on behalf of
Britannia Soft Drinks Limited
by PAUL STEPHEN MOODY	PAUL STEPHEN MOODY
SIGNED for and on behalf of
InterContinental Hotels Group PLC
by RICHARD SOLOMONS	RICHARD SOLOMONS
SIGNED for and on behalf of
Allied Domecq PLC
by PHILIP BOWMAN	PHILIP BOWMAN

24

SIGNED for and on behalf of
Whitbread Group PLC
by DAVID RICHARDSON	DAVID RICHARDSON
SIGNED for and on behalf of
PepsiCo Inc.
by JOANNE AVERISS	JOANNE AVERISS

25

Schedule 1
Illustrative Shareholdings

1   Example to demonstrate the application of Clause 3.6.1(ii)

	Original BSD
	Shareholders		PepsiCo		Aggregate
	%		%		%
Starting point		95.00		5.00		100.00
Subsequent holdings (taking into account both the shares offered to public and shares sold to PepsiCo)		50.00		15.47		65.47
		40.00		17.79		57.79
		30.00		20.12		50.12
		20.00		22.44		42.44
		10.00		24.77		34.77
		9.00		25.00		34.00

2   Example to demonstrate the application of Clause 3.6.1(vii)

IHG	Allied		Whitbread		Total		PepsiCo
If the Original BSD Shareholders start at:
10		5		5		20		22.44
And then move to:
5		2.5		2.5		10		n/a
Deemed position, taking into account the sales to PepsiCo is:
5		3		3		11		24.53

Sold as follows:	IHG		Allied		Whitbread		Total
PepsiCo		1.16		0.47		0.47		2.09
Public		3.84		2.03		2.03		7.91
Total		5.00		2.50		2.50		10.00

26

EX-4.24

Exhibit 4(b)(iv)

CONFORMED COPY

Dated
10 March 2005

Six Continents PLC

and

IHC London (Holdings) Limited

and

LGR Acquisition

and

LGR Holdings Limited

SHARE PURCHASE AGREEMENT

relating to Six Continents Hotels & Holidays Limited, Holiday Inn Limited, NAS Cobalt No. 2 Limited
and London Forum Hotel Limited

Linklaters

One Silk Street
London EC2Y 8HQ

Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222

Ref Kate Cheetham

Share Purchase Agreement

This Agreement is made on 10 March 2005

between:

(1)	SIX CONTINENTS PLC, a company incorporated in England and Wales whose registered office is at 67 Alma Road, Windsor, Berkshire, SL4 3HD (“SCPLC”);
(2)	IHC LONDON (HOLDINGS) LIMITED, a company incorporated in England and Wales whose registered office is at 67 Alma Road, Windsor, Berkshire, SL4 3HD (“IHC Holdings”);
(3)	LGR ACQUISITION, a company incorporated in England and Wales whose registered office is at 88 Wood Street, London EC2V 7AJ (the “Purchaser”); and
(4)	LGR HOLDINGS LIMITED, a company incorporated in England and Wales whose registered office is at 88 Wood Street, London EC2V 7AJ (“Holdco”).

Whereas:

(A)	The Sellers have agreed to sell the Assets (as defined below) and to assume the obligations imposed on the Sellers under this Agreement; and
(B)	the Purchaser has agreed to purchase the Assets and to assume the obligations imposed on the Purchaser under this Agreement.

It is agreed as follows:

1	Interpretation
	In this Agreement, unless the context otherwise requires, the provisions in this Clause 1 apply:
1.1	Definitions
	“Accounts Date” means 31 December 2003;
	“Additional Deferred Consideration Amount” means the amount (if any) payable pursuant to Clause 3.2.4;
	“Affiliate” means, with respect to the Purchaser, another person who, directly or indirectly, owns or will own any shares in the Purchaser;
	“Agreed Terms” means, in relation to a document, such document in the terms agreed between the Sellers and the Purchaser and signed for identification by the Sellers’ Lawyers and the Purchaser’s Lawyers with such alterations as may be agreed in writing between the Sellers and the Purchaser from time to time and, for ease of reference, a list of documents in the agreed terms is set out at Schedule 4;
	“Annual Accounts” has the meaning given to it in the Portfolio Management Agreement;
	“Assets” means the Shares, rights and other assets agreed to be sold pursuant to Clause 2.1;
	“Audited Accounts” means, in relation to any Group Company, the audited accounts of that Group Company for the period ended on the Accounts Date;

1

“Brand Standards” means the brand standards applicable as at the date of this Agreement to the Hotels, as solely set out in documents 08 001 to 08 003, Group Information in the property information pack Data Room and documents 25 001 to 25 007, Portfolio Information in the second round Data Room;

“Business Day” means a day which is not a Saturday, Sunday or a public holiday in England;

“Certificated Properties” means those properties details of which are set out in Part 1 of Schedule 3 in respect of which Certificates of Title have been prepared and “Certificated Property” means any one of them;

“Certificates of Title” means the certificates of title in relation to the Certificated Properties prepared by the Sellers’ Lawyers or Wright Johnston & Mackenzie (as the case may be) dated as at the date of this Agreement and addressed to the Purchaser and the Purchaser’s Lenders;

“Companies” means the companies details of which are set out in paragraph 1 of Schedule 2 and “Company” means any one of them;

“Companies Acts” means the Companies Act 1985 and the Companies Act 1989, in each case as amended from time to time;

“Completion” means the completion of the sale of the Assets pursuant to Clauses 6.1, 6.2, 6.3 and 6.4 of this Agreement;

“Completion Amount” means the Initial Share Consideration plus the Estimated Net Current Assets;

“Completion Date” means the date on which Completion takes place;

“Consolidated Financial Summary” means the pro-forma consolidated financial summary of the management accounts of the Hotels for the 12 months commencing 1 January 2004 and ended 31 December 2004 in the Agreed Terms;

“Construction Document” means any building contract, contract of engagement, warranty agreement, decennial insurance policy and other similar agreement the benefit of which is now vested in a Group Company or any member of the Sellers’ Group in relation to the design, construction, development, refurbishment and fitting out of any of the Hotels and where the liability of the other party to the relevant Group Company or member of the Sellers’ Group has not expired at Completion;

“Consultancy Agreement” means an agreement (other than a contract of employment) with a Group Company, pursuant to which an individual provides personal services for a term of more than three months;

“Consultant” means an individual who undertakes to perform personally any services to a Group Company pursuant to a Consultancy Agreement on an annual fee (on the basis of a full time consultancy) in excess of £50,000;

“Contracts” means the Sellers’ Group Contracts, the Split Contracts and the Retained Contracts;

“Contracts Consideration” means the sum of £1, being the consideration payable by the Purchaser to SCPLC under this Agreement in respect of the transfer of the rights arising under the Sellers’ Group Contracts referred to in Clause 2.1;

2

“Control” means the ability, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise (including being the general partner, officer or director of the person in question) to (i) direct or cause the direction of the management and policies of a person, or (ii) vote more than 50 per cent. of the voting interests of such person. A person or persons shall be deemed to direct or cause the directions of the management and policies of a person (and accordingly satisfy clause (i) of the foregoing test for “Control”) if the consent or approval of such person(s) shall be required with respect to major decisions concerning the entity;

“Corporation Tax” has the meaning given to that term in Section 6 of ICTA;

“Data Room” means the on-line data room comprising the property information pack, the data room and the second round data room containing documents and information relating to the Group Companies and the Properties made available by the Sellers, the contents of which are listed in Schedule 1 to the Disclosure Letter;

“Deeds of Non-Disturbance” means the deeds of non-disturbance as defined in the Individual Hotel Management Agreements in the Agreed Terms;

“Deferred Consideration” means the aggregate of the Additional Deferred Consideration Amount, the First Deferred Consideration Amount, the Second Deferred Consideration Amount and the Third Deferred Consideration Amount (in each case, if any);

“Disclosure Letter” means the letter dated on the same date as this Agreement from the Sellers to the Purchaser disclosing:

(i)	information constituting exceptions to the Sellers’ Warranties; and
(ii)	details of other matters referred to in this Agreement;

“Dormant Subsidiaries” means the subsidiaries set out in paragraph 2 of Schedule 2 and identified as such;

“Draft 2004 Accounts” has the meaning given to it in Part 1 of Schedule 6;

“Employing Company” means the entity responsible for employing the Relevant Employees after Completion for the purpose of providing services to the Purchaser or the Purchaser’s Group;

“Encumbrance” means any claim, charge, mortgage, lien, option, equity, power of sale, hypothecation, retention of title, right of pre-emption, right of first refusal or other third party right or security interest of any kind with the exception of liens arising by operation of law in the ordinary course of business of any Group Company;

“Environment”, “Environmental Authority”, “Environmental Law” and “Environmental Permit” have the meanings given to them in paragraph 10.1 of Schedule 7;

“Estimated Net Current Assets” means the sum of £(14,320,000) (the negative sum of fourteen million three hundred and twenty thousand pounds) being a realistic estimate of the Net Current Assets;

“Excluded Rights” means all subsisting rights of any Group Company as at Completion arising under the Split Contracts to the extent the rights and obligations under such contracts relate to any property or other asset which is or was owned by any member of the Sellers’ Group and which is not being transferred to the Purchaser pursuant to this Agreement and under the Retained Contracts respectively;

3

“Event” means any act, omission, event or transaction (including without limitation the execution of and completion of all provisions of this Agreement and becoming being or ceasing to be a member of a group of companies (howsoever defined) for the purposes of any Tax);

“Financial Reporting Year” means the period from (and including) 1 January to 31 December;

“First Deferred Consideration Amount” means the amount (if any) payable pursuant to Clause 3.2.1;

“Franchise Agreements” mean the franchise agreements entered into individually for each of the 63 Hotels which are listed in Schedule 1 of the Portfolio Management Agreement in the Agreed Terms;

“GAAP” means generally accepted accounting standards, the legal principles set out in Schedules 4 and 4A to the Companies Act 1985, rulings and abstracts of the Urgent Issues Task Force of the ASB and guidelines, conventions, rules and procedures of accounting practice in the United Kingdom which are regarded as permissible by the ASB;

“Group” means the Group Companies, taken as a whole;

“Group Accounting Policies” means the accounting policies used in preparing the audited accounts of the Group Companies:

“Group Companies” means the Companies and the Subsidiaries and “Group Company” means any one of them;

“Group Relief” means any amount eligible for relief under Sections 402-413 of the ICTA, any tax refund which is capable of being surrendered under Section 102 of the FA 1989, any relievable tax which is capable of being surrendered pursuant to regulations made under Section 806H ICTA or utilisation of any losses pursuant to an election under Section 171A or 179A of the TCGA or for the purposes of Clause 5 of the Tax Deed of Covenant under Article 43 and related articles of the Consolidated Version of the Treaty Establishing the European Community (OJC 325/33 24.12.2002) as amended from time to time;

“Guaranteed Leases” means the leases details of which are set out in Part 1 and Part 2 of Schedule 12;

“Hazardous Substances” has the meaning given to it in paragraph 10.1 of Schedule 7;

“Hotels” means the hotel businesses as operated at the Properties as at the date hereof and “Hotel” means any one of them;

“ICTA” means the Income and Corporation Taxes Act 1988;

“IHG Shares” means any shares in the capital of InterContinental Hotels Group PLC;

“Indemnified Leases” means the leases referred to in Part 1 of Schedule 12;

“Individual Hotel Management Agreements” means the respective individual hotel management agreements between InterContinental Hotels Group (Management Services) Limited and the Purchaser for each of the 63 Hotels which are listed in Schedule 1 of the Portfolio Management Agreement in the Agreed Terms and the 10 hotels which are listed in Schedule 1 of the Named Assets Summary of Terms;

“Initial Share Consideration” means £300,100,659;

4

“Intellectual Property” means trade marks, service marks, trade names, domain names, logos, get-up, patents, inventions, registered and unregistered design rights, copyrights, semi-conductor topography rights, database rights and all other similar rights in any part of the world (including Know-how) including, where such rights are obtained or enhanced by registration, any registration of such rights and applications and rights to apply for such registrations;

“Inter-Group Debt” means all indebtedness due at Completion from the Group Companies to the Sellers’ Group and all indebtedness due at Completion from the Sellers’ Group to the Group Companies (excluding in each case any amounts taken into account in calculating Inter-Group Payables and amounts taken into account in calculating any Inter-Group Receivables), being the amounts specified in Schedule 11;

“Inter-Group Debt Balance” means the aggregate amount of the Inter-Group Debt specified in Schedule 11 being £659,899,341;

“Inter-Group Payables” has the meaning given to it in Part 1 of Schedule 6;

“Inter-Group Receivables” has the meaning given to it in Part 1 of Schedule 6;

“Know-how” means confidential and proprietary industrial and commercial information and techniques in any form including (without limitation) drawings, formulae, test results, reports, project reports and testing procedures, instruction and training manuals, tables of operating conditions, market forecasts, lists and particulars of customers and suppliers;

“Lease” means in relation to each Uncertificated Property which is leasehold, the lease(s) or underlease(s) or licence(s) under which the relevant Group Company holds such Uncertificated Property and includes the other documents supplemental thereto;

“Letting Document” means any lease, underlease, tenancy, licence or other agreement or arrangement (in each case as amended) giving rise to third party rights of occupation to which an Uncertificated Property is subject;

“Licences” means any Justices Licence, Public Entertainment Licences (including for the avoidance of doubt music, dancers, special entertainment and cinematograph licences), Gaming Licence, marriage permit, extended hours or special hours certificate, Section 68 Supper Hours Certificate or other similar licence in relation to the activities carried on at the Hotels but excluding for the avoidance of doubt Environmental Permits;

“Listed Hotels” means the Hotels listed in Schedule 13;

“Long-Term Liabilities” has the meaning given to it in Part 1 of Schedule 6;

“Losses” means all losses, liabilities, costs (including, without limitation, legal costs and reasonable experts’ and consultants’ fees), charges, reasonable expenses, actions, proceedings, claims and demands;

“Material Letting Document” means a Letting Document under which at the date of this Agreement the basic rent or other principal fee payable is equivalent to £50,000 per annum or more;

“Management Accounts” means the unaudited balance sheets and profit and loss accounts of each of the Hotels respectively for the 12 months ended 31 December 2004 and the one month ended 31 January 2005 respectively;

5

“Management Agreements” mean the Portfolio Management Agreement and the Individual Hotel Management Agreements in the Agreed Terms;

“Master Technology Agreements” mean the master technology agreements as defined in the Individual Hotel Management Agreements in the Agreed Terms;

“Named Assets Summary of Terms” means the summary of terms in the Agreed Terms relating to the Individual Hotel Management Agreements to be entered into in respect of the hotels listed on Schedule 1 thereof;

“Net Current Asset Adjustment” means the amount by which the Net Current Assets together with the Long-Term Liabilities and Provisions (as such terms are defined in and as determined in accordance with Clause 8 and Schedule 6) (if any) exceed the Estimated Net Current Assets and are payable pursuant to Clause 8.2.1(i) (such amount being expressed as a positive figure) or the amount by which the Net Current Assets together with the Long-Term Liabilities and Provisions (as such terms are defined in and as such term is determined in accordance with Clause 8 and Schedule 6) (if any) are less than the Estimated Net Current Assets and are payable pursuant to Clause 8.2.1(ii) (such amount being expressed as a negative figure);

“Net Current Assets” means the cash sum representing the value of Stock, Debtors and Cash minus Trade Creditors as at 11.00 am on the Completion Date as such terms are defined in and as determined in accordance with Clause 8 and Schedule 6;

“Net Current Asset Statement” means the statements to be prepared by the Sellers in accordance with Clause 8.1 and Schedule 6;

“Pensions Regulator” means the Pensions Regulator established by the Pensions Act 2004;

“Planning Acts” means the Town and Country Planning Act 1990, the Planning (Listed Buildings and Conservation Areas) Act 1990, the Planning (Hazardous Substances) Act 1990, the Planning (Consequential Provisions) Act 1990, the Planning and Compensation Act 1991, the Local Government Planning and Land Act 1980, the Local Government (Miscellaneous Provisions) Act 1982, the Housing and Planning Act 1986 and the Highways Act 1980 and the Planning and Compulsory Purchase Act 2004;

“Portfolio Management Agreement” means the portfolio management agreement in the Agreed Terms;

“Posthouse Agreement” means the Share and Business Sale and Purchase Agreement (including, for the avoidance of doubt and without limitation, Schedule 11 thereof) dated 4 April 2001 between Hospitality Holdings Limited, Forte (UK) Limited, Compass Group Plc, NAS Cobalt No.1 Limited and NAS Cobalt No.2 Limited (as amended pursuant to an agreement dated 29 June 2001 between such parties) and the IP Sale and Purchase Agreement dated 4 April 2001 between Hospitality Holdings Limited, Forte (UK) Limited, Compass Group Plc and Bass Hotels & Resorts Inc.;

“Pre-Sale Reorganisation” means the pre-sale reorganisation of the Sellers’ Group as referred to in the pre-sale reorganisation paper in the Agreed Terms;

“Pre-Sale Reorganisation Documents” means the documents in the Data Room pursuant to which the Pre-Sale Reorganisation was implemented;

6

“Properties” means the Certificated Properties and the Uncertificated Properties, details of which are set out in Parts 1 and 2 respectively of Schedule 3 and “Property” means any one of them;

“Provisions” has the meaning given to it in Schedule 6;

“Purchaser’s Group” means the Purchaser, its subsidiaries, any holding company of the Purchaser and any subsidiaries of any holding company or subsidiary of the Purchaser from time to time;

“Purchaser’s Lawyers” means Paul Hastings, Janofsky & Walker (Europe) LLP of 88 Wood Street, London EC2V 7AJ;

“Purchaser’s Lenders” means the lenders as defined in the Senior Facilities Agreement entered into on or around the date hereof between inter alia, the Lenders, Citigroup Global Markets Limited as Mandated Lead Arranger, Citibank International plc, as Instructing Agent and Citicorp Trustee Company Limited as Security Trustee; and the lender as defined in the Mezzanine Facility Agreement entered into on or around the date hereof between the Company and Eurolieum Sarl;

“Purchaser Retained Contracts” means those contracts listed in Part 2 of Schedule 10;

“Purchaser’s Scheme” means the retirement benefits scheme, personal pension scheme or schemes nominated by the Purchaser in accordance with Clause 7.1.1;

“Relevant Employees” means those employees of the Group Companies who are immediately prior to the date of this Agreement and/or Completion employed in the Group, (which for the purposes of this Agreement shall be deemed to include those employees whose employment relationship with InterContinental Hotels Group Services Limited will transfer to InterContinental Hotels Limited on Completion by virtue of TUPE and subject to the terms of a services agreement entered into on or about the date of this Agreement between InterContinental Hotels Group Services Limited and the Companies) which for the avoidance of doubt shall exclude any agency staff and independent contractors;

“Relevant Extent” means (i) in respect of any right or obligation of any member of the Sellers’ Group pursuant to Clause 14.3 relating to a Split Contract or a Sellers’ Group Contract, solely to the extent the rights and obligations under such contract relate to any property or other asset which is or was owned by any member of the Sellers’ Group and which is not being transferred to the Purchaser pursuant to this Agreement and (ii) in respect of any right or obligation of any member of the Purchaser’s Group pursuant to Clause 14.3 relating to a Split Contract or a Sellers’ Group Contract, solely to the extent the rights and obligations under such contract relate to any of the Properties or other assets being transferred to the Purchaser pursuant to this Agreement or, in relation to the Posthouse Agreement, to the Strand Palace Hotel and Annexe;

“Remedial Action” has the meaning given to it in Clause 9.6;

“Retained Contracts” means the agreements to which a Group Company is a party which do not relate to any of the Hotels (including the Vendor Guarantee between InterContinental Hotels Group (UK) Limited and Revlake Limited (now London MayFair Hotel Limited) dated 21 August 2003), to the extent that at Completion the same remain to be completed or performed or remain in force, but excluding the Purchaser Retained Contracts or any agreement other than a Construction Document relating to the ownership, use or occupation of any of the Properties;

7

“Retained Employees” means the IHG Personnel as defined in the Portfolio Management Agreement;

“SCPLC Guarantee” means the guarantee dated 12 October 2004 given by SCPLC in respect of various obligations of InterContinental Hotels Limited;

“Second Deferred Consideration Amount” means the amount (if any) payable pursuant to Clause 3.2.2;

“Sellers” means SCPLC and IHC Holdings and “Seller” means either of them;

“Sellers’ Group” means the Sellers and their subsidiaries from time to time but excluding the Group Companies;

“Sellers’ Group Contracts” means the agreements to which a member of the Sellers’ Group is a party which relate partly but not exclusively to one or more of the Hotels or the Group Companies to the extent that at Completion the same remain to be completed or performed or remain in force, including without limitation those listed in Part 3 of Schedule 10 but excluding any agreement other than a Construction Document relating to the ownership, use or occupation of any of the Properties;

“Sellers’ Lawyers” means Linklaters of One Silk Street, London EC2Y 8HQ;

“Sellers’ Pension Scheme” means the InterContinental Hotels UK Pension Plan which is currently governed by a trust deed and rules dated 31 January 2003;

“Sellers’ Warranties” means the warranties given by the Sellers pursuant to Clause 9 and Schedule 7 and “Sellers’ Warranty” means any one of them;

“Senior Employee” means any employee employed or engaged in relation to the Group on an annual base salary (on the basis of full-time employment) in excess of £100,000;

“Shares” means all the issued ordinary share capital of the Companies;

“Significant Employees” means those Relevant Employees of the Group Companies earning an annual base salary in excess of £30,000;

“Split Contracts” means the agreements to which a Group Company is a party which relate partly but not exclusively to one or more of the Hotels to the extent that at Completion the same remain to be completed or performed or remain in force, including but not limited to those listed in Part 1 of Schedule 10 but excluding any agreement other than a Construction Document relating to the ownership, use or occupation of any of the Properties;

“Subsidiaries” means the subsidiaries listed in paragraph 2 of Schedule 2 and “Subsidiary” means any one of them;

“Target TPOP” has the meaning given to it in Clause 3.2.1, 3.2.2, 3.2.3 or 3.2.4, as the case may be;

“Taxation” or “Tax” means any form of taxation, national insurance or social security contribution, withholding, duty, impost or tariff in each case in the nature of taxation, whenever and wherever imposed, collected or assessed by, or payable to, a Tax Authority and, without prejudice to the generality of the foregoing, includes income tax, corporation tax, capital gains tax, value added tax, Customs & Excise duties, stamp duty land tax, stamp duty reserve tax and stamp duty whether chargeable directly or primarily against or attributable directly or primarily to the Group Companies or any other person, and including

8

	all interest and penalties thereon but excluding the uniform business rate, water rates, property rates, council taxes and all other similar rates and charges and other local authority rates or charges and also excluding deferred tax.;
	“Tax Authority” or “Taxation Authority” means the Commissioners of Inland Revenue, the Commissioners of Customs and Excise, or any authority or body, whether of the United Kingdom or elsewhere and whether national or otherwise having the power or authority or other function in relation to Tax;
	“Tax Deed of Covenant” means the deed of covenant against Taxation in the Agreed Terms;
	“Tax Statute” means any primary or secondary statute, instrument, enactment, order, law, by-law or regulation making any provision for or in relation to Tax;
	“Tax Warranties” means those of the Sellers’ Warranties which relate to Tax being contained in paragraph 13 of Schedule 7 to this Agreement and paragraph 8.6 of Schedule 7 to this Agreement (but only so far as it relates to Tax) and the warranties given by the Sellers under the Tax Deed of Covenant and “Tax Warranty” means any one of them;
	“Third Deferred Consideration Amount” means the amount (if any) payable pursuant to Clause 3.2.3;
	“Third Party Consents” means all consents, licences, approvals, permits, authorisations or waivers required from third parties for the assignment or transfer to the Purchaser or member of the Sellers’ Group, as the case may be, of any rights under any of the Contracts and “Third Party Consent” means any one of them;
	“TPOP” has the meaning given to it in the Portfolio Management Agreement;
	“Transfer Agreements” means those agreements dated 28 February 2005 between, on the one hand, InterContinental Hotels Limited and InterContinental Hotels Group (Management Services) Limited and, on the other, InterContinental Hotels Group (UK) Limited and InterContinental Hotels Group (Management Services) Limited in the Data Room (documents 07 003 and 09 002 in the Capital Reduction and Restructuring Documentation section of the second round Data Room);
	“TUPE” means the Transfer of Undertakings (Protection of Employment) Regulations 1981 (as amended);
	“Uncertificated Properties” means those properties details of which are set out in Part 2 of Schedule 3 and “Uncertificated Property” means any one of them; and
	“VAT” means United Kingdom Value Added Tax.
1.2	Modification etc. of Statutes

References to a statute or statutory provision include:

1.2.1	that statute or provision as from time to time modified, re-enacted or consolidated whether before or after the date of this Agreement;
1.2.2	any subordinate legislation made from time to time under that statute or statutory provision,

9

	except to the extent that any statute, statutory provision or subordinate legislation made or enacted after the date of this Agreement would create or increase a liability of the Sellers under this Agreement or the Tax Deed of Covenant.
1.3	Singular, plural, gender
	References to one gender include all genders and references to the singular include the plural and vice versa.
1.4	References to persons and companies
	References to:

1.4.1	a person include any company, partnership or unincorporated association (whether or not having separate legal personality); and
1.4.2	a company shall include any company, corporation or any body corporate, wherever incorporated.

1.5	References to subsidiaries and holding companies
	The words “holding company” and “subsidiary” shall have the same meaning in this Agreement as their respective definitions in the Companies Act 1985.
1.6	Audited Accounts
	Any reference to the “Audited Accounts” shall include the directors’ and auditors’ reports, relevant balance sheets and profit and loss accounts and related notes together with all documents which are or would be required by law to be annexed to the accounts of the company concerned to be laid before that company in general meeting in respect of the accounting reference period in question.
1.7	Schedules etc.
	References to this Agreement shall include any Recitals and Schedules to it and references to Clauses and Schedules are to Clauses of, and Schedules to, this Agreement. References to paragraphs and Parts are to paragraphs and Parts of the Schedules.
1.8	Headings
	Headings shall be ignored in interpreting this Agreement.
1.9	Information
	References to books, records or other information mean books, records or other information in any form including paper, electronically stored data, magnetic media, film and microfilm.
2	Agreement to Sell the Assets
2.1	On and subject to the terms of this Agreement the Sellers (each as to the Shares set out against its name in Schedule 1) agree to sell, and the Purchaser agrees to purchase, the Shares and SCPLC agrees to transfer or procure the transfer to the Purchaser of the rights of the Sellers’ Group arising under the Sellers’ Group Contracts solely to the extent such rights relate to any of the Properties or other assets being transferred to the Purchaser

10

	pursuant to this Agreement or, in relation to the Posthouse Agreement, to the Strand Palace Hotel and Annexe, on the terms set out in Clause 14.3.
2.2	Subject to Clause 2.3, the Shares shall be sold by the Sellers with full title guarantee free from Encumbrances and together with all rights and advantages attaching to them as at Completion (including, without limitation, the right to receive all dividends or distributions declared, made or paid on or after Completion save to the extent that such dividends are declared and made as permitted under paragraph (xiii) of Clause 5.1.3).
2.3	There shall be excluded from the sale of the Assets under this Agreement the Excluded Rights, which shall be retained by the Sellers.
2.4	The Sellers shall procure that on or prior to Completion any and all rights of pre-emption over the Shares are waived irrevocably by the persons entitled thereto.
2.5	The Purchaser is not obliged to complete the purchase of any of the Shares unless the purchase of all of the Shares is completed simultaneously.
3	Consideration
3.1	Amount

3.1.1 The consideration for the purchase of the Shares under this Agreement which shall be divisible among the Sellers pro-rata to the allocation as set out in column 3 of Schedule 1 shall be an amount in cash equal to the sum of:

(i)	the Completion Amount;
(ii)	the Net Current Asset Adjustment; and
(iii)	the Deferred Consideration, which sums (if any) shall be paid by the Purchaser to the Sellers within 10 Business Days of determination of the TPOP in the Annual Accounts for the relevant Financial Reporting Year pursuant to the terms of the Portfolio Management Agreement.

3.1.2	The initial consideration for the purchase of the Shares shall be allocated as set out in Schedule 1 (and the Net Current Asset Adjustment and the Deferred Consideration attributable to the particular Shares shall be allocated pro-rata to the allocation as set out in column 3 of Schedule 1) and paid by the Purchaser to the Sellers in accordance with Clauses 6.3 and 8.2.
3.1.3	The Contracts Consideration shall be paid by the Purchaser to SCPLC in accordance with Clause 6.3.

3.2 Deferred Consideration

3.2.1	If the TPOP in respect of the Financial Reporting Year ending 31 December 2005 is equal to or exceeds £79 million (or such amount as adjusted pursuant to Clause 3.2.5) (the “Target TPOP”), the sum of £3 million (the “First Deferred Consideration Amount”) shall be payable by the Purchaser to the Sellers in accordance with Clause 3.1.1(iii).
3.2.2	If the TPOP in respect of the Financial Reporting Year ending 31 December 2006 is equal to or exceeds £86 million (or such amount as adjusted pursuant to Clause

11

	3.2.5) (the “Target TPOP”), the sum of £4.5 million (the “Second Deferred Consideration Amount”) shall be payable by the Purchaser to the Sellers in accordance with Clause 3.1.1(iii).
3.2.3	If the TPOP in respect of the Financial Reporting Year ending 31 December 2007 is equal to or exceeds £93 million (or such amount as adjusted pursuant to Clause 3.2.5) (the “Target TPOP”), the sum of £7.5 million (the “Third Deferred Consideration Amount”) shall be payable by the Purchaser to the Sellers in accordance with Clause 3.1.1(iii).
3.2.4	If the TPOP in respect of the Financial Reporting Year ending 31 December 2007 is equal to or exceeds £102 million (or such amount as adjusted pursuant to Clause 3.2.5) (the “Target TPOP”), the sum of £25 million (the “Additional Deferred Consideration Amount”) shall be payable in addition to the Third Deferred Consideration Amount by the Purchaser to the Sellers in accordance with Clause 3.1.1(iii).
3.2.5	If any Hotel listed in Schedule 1 of the Portfolio Management Agreement is no longer part of the Portfolio (as defined in the Portfolio Management Agreement), the Target TPOP for the relevant Financial Reporting Year(s) shall be reduced by the amount set out against its name in Schedule 15 multiplied by that percentage represented by the number of days from the date on which such Hotel ceases to be part of the Portfolio to the last day of the relevant Financial Reporting Year (as numerator) over 365 (as denominator).
3.2.6	The Purchaser agrees that it will not, and it shall procure that none of the Group Companies will, take any action intended to frustrate the payment of, or which is primarily intended to reduce the amount of, the Deferred Consideration.
3.2.7	Subject to the provisions of the Management Agreements, the Sellers shall not and shall procure that no member of the Sellers’ Group or their employees shall take any action with respect to the Hotels which is intended to increase the Deferred Consideration payable to the Sellers through a means which is other than a bona fide improvement of the ongoing business profitability of the Hotels including any change to accounting or budget practice with respect to the Hotels.

3.3 Reduction of Consideration

3.3.1

If any payment is made by any Seller to the Purchaser in respect of any claim for any breach of this Agreement or pursuant to an indemnity under this Agreement (or any agreement entered into under this Agreement), the payment shall be made by way of adjustment of the consideration paid by the Purchaser for the particular Shares to which the payment and/or claim relates under this Agreement and the consideration shall be deemed to have been reduced by the amount of such payment.

3.3.2

If:

(i) the payment and/or claim relates to the shares in more than one Group Company, it shall be allocated in a manner which reflects the impact of the matter to which the payment and/or claim relates, failing which it shall be allocated rateably to the shares in the Group Companies concerned by reference to the proportions in which the consideration is allocated in accordance with Clause 3.1.2; or

12

(ii) the payment and/or claim relates to no particular shares in any Group Company, it shall be allocated rateably to all the Shares by reference to the proportions in which the consideration is allocated in accordance with Clause 3.1.2,

	and in each case the consideration shall be deemed to have been reduced by the amount of such payment.
3.3.3	For the purposes of this Clause 3.3, “this Agreement” includes the Tax Deed of Covenant.

4	Conditions
4.1	Condition Precedent
	The agreement to sell and purchase the Shares contained in Clause 2 is conditional upon satisfaction of the following condition, or its satisfaction subject only to Completion:
	to the extent that the sale of the Assets which are the subject of this Agreement and the related transactions referred to herein either constitutes (or is deemed to constitute under Article 4(5)) a concentration falling within the scope of Council Regulation (EC) 139/2004 (as amended) (the “Regulation”) or is to be examined by the European Commission as a result of a decision under Article 22(3) of the Regulation:

(i)	the European Commission taking a decision (or being deemed to have taken a decision) under Article 6(1)(b) of the Regulation declaring the Transaction compatible with the common market without imposing any conditions or obligations that are not on terms reasonably satisfactory to the Purchaser; or
(ii)	the European Commission taking a decision (or being deemed to have taken a decision) to refer the whole or part of the Transaction to the competent authorities of the United Kingdom under Article 4(4) or 9(3) of the Regulation and the European Commission taking a decision in accordance with Clause 4.1.2(i) above with respect to any part of the Transaction retained by it.

4.2 Responsibility for Satisfaction

4.2.1

The Purchaser shall use all reasonable endeavours to ensure the satisfaction of the condition set out in Clause 4.1 as soon as possible after the date of this Agreement.

4.2.2

The Purchaser shall make any anti-trust filing required pursuant to Clause 4.1 as soon as reasonably practicable but in any event shall submit a draft filing to the European Commission no later than the seventh Business Day following the date of this Agreement. The Purchaser shall make, subject to Clause 4.2.3, a final filing with the European Commission in respect of the Regulation as soon as practicable thereafter, but in any event no later than eight Business Days following the date on which a draft filing to the European Commission is made, or such other date as soon as practicable thereafter in the event the final filing is delayed as a result of the actions or inaction of the European Commission in respect of the filing.

13

4.2.3	The Sellers shall co-operate with the Purchaser in respect of any filing required pursuant to Clause 4.1 and shall make available, subject to commercial confidentiality and to the confidentiality requirements of the Government of Singapore, all information that the Purchaser deems reasonably necessary for that purpose or all information which is requested by the appropriate regulatory bodies.
4.2.4	The Purchaser shall consult with the Sellers and the Sellers’ Lawyers in respect of any filing required pursuant to Clause 4.1 and subject to the confidentiality requirements of the Government of Singapore shall provide the Sellers and the Sellers’ Lawyers with a reasonable opportunity to review such filing prior to its submission to the appropriate regulatory bodies.

4.3 Non-Satisfaction/Waiver

4.3.1

The Purchaser shall give notice to the Sellers of the satisfaction of the condition set out in Clause 4.1 within two Business Days of becoming aware of the same.

4.3.2

If the condition set out in Clause 4.1 is not satisfied on or before the date which is 15 weeks from the date of this Agreement save as expressly provided, this Agreement (other than Clauses 1, 13 and 14.5 to 14.19) shall lapse and neither the Sellers nor the Purchaser shall have any claim against the other under it, save for any claim arising from breach of any obligation contained in Clause 4.2.

5	Pre-Completion
5.1	The Sellers’ Obligations in Relation to the Conduct of Business
	Except as may be required to give effect to and comply with this Agreement or any law or regulation or to implement or complete the Pre-Sale Reorganisation or in so far as the Purchaser has given its written consent (such consent not to be unreasonably withheld or delayed), the Sellers undertake to procure that between the date of this Agreement and Completion each Group Company:

5.1.1	shall carry on its business in all material respects as a going concern in the ordinary course as carried on prior to the date of this Agreement;
5.1.2	shall maintain in force all existing insurance policies in all material respects on the same terms and similar level of cover prevailing at the date of this Agreement for the benefit of the Group Companies;
5.1.3	without prejudice to the generality of Clause 5.1.1, shall not:

(i)	enter into any agreement or incur any commitment involving any capital expenditure in excess of £150,000 per item and £1,000,000 in aggregate, in each case exclusive of VAT, except to the extent that such expenditure would be consistent with the relevant Group Company or Hotel’s capital budget as specifically referred to in document 04009 in the property information pack Data Room;
(ii)	enter into or amend any agreement or incur any commitment not in the ordinary course of business which is either not capable of being terminated without compensation at any time or with 12 months’ notice or less or which involves or may involve total annual expenditure in excess of £500,000, exclusive of VAT;

14

(iii)	acquire or dispose of, or agree to acquire or dispose of, any material asset (including any real property), or enter into or amend any agreement or incur any commitment to do so, in each case involving consideration, expenditure or liabilities in excess of £500,000, exclusive of VAT, other than in the ordinary course of business and on an arm’s length basis provided always that in relation to any Property the provisions of sub-clause 5.1.3(viii) below shall apply instead of this sub-clause 5.1.3(iii);
(iv)	acquire or agree to acquire any share, shares or other interest in any company, partnership or other venture;
(v)	incur any additional borrowings or incur any other indebtedness which are not Inter-Group Receivables or Inter-Group Payables otherwise than in the ordinary course of business and on an arm’s length basis;
(vi)	create, allot or issue, or grant any option to subscribe for, any share capital;
(vii)	amend, to any material adverse extent, any of the terms on which goods, facilities or services are supplied, such supplies being material in the context of any Group Company, except where required to do so in order to comply with any applicable legal or regulatory requirement;
(viii)	in relation to any Property:

(a)	except in the case of an emergency or in order to undertake Remedial Action or works required under Part III of the Disability Discrimination Act 1995, carry out any material structural alteration or addition to, or materially effect any change of use of, such Property other than (1) the ongoing kitchen refurbishment works at Holiday Inn Maidstone (2) the ongoing kitchen refurbishment works at Holiday Inn Farnborough and (3) the ongoing works to demolish staff blocks to form car parking at Holiday Inn Farnborough;
(b)	terminate or serve any notice to terminate, surrender or accept any surrender of or waive the terms of any lease, tenancy or licence pursuant to which any of the Properties are held or in relation to any Material Letting Document;
(c)	unless under a statutory or other legal obligation so to do, agree any new rent or fee payable or any rent review under any lease, tenancy or licence pursuant to which any of the Properties are held or in relation to any Material Letting Document;
(d)	enter into or vary any agreement, option, transfer, lease, tenancy, licence or other commitment pursuant to which any of the Properties are held or in relation to any Material Letting Document;
(e)	sell, convey, transfer, assign or charge any Property or any part or grant any rights or easements over any Property or any part (except as may be granted to a tenant in a permitted letting) or enter into any material covenants affecting any Property or any part or agree to do any of the foregoing;
(f)	unless under a statutory or other legal obligation so to do, grant any lease or underlease of any Property or any part provided always that

15

	a Group Company shall be permitted to lease or underlease any part of a Property which is not a material part as part of its business in the ordinary course where such lease or underlease is (i) granted for a term not exceeding three years and (ii) outside the security of tenure provisions of the Landlord and Tenant Act 1954;
(g)	carry out any new activity on any Property which activity has not been carried out prior to the date of this Agreement as part of the relevant Group Company’s business in the ordinary course, where such activity would result in a material breach of a title restriction affecting that Property;

(ix) save as required by law:

(a)	make any material amendment to the terms and conditions of employment (including, without limitation, remuneration, pension entitlements and other benefits) of any Senior Employee (other than minor increases in the ordinary course of business which the Sellers shall notify to the Purchaser as soon as reasonably possible);
(b)	provide or agree to provide any gratuitous payment or benefit to any such person or any of his dependants;
(c)	dismiss any Senior Employee (other than in accordance with normal disciplinary procedures); or
(d)	engage or appoint any additional Senior Employee;

(x)	settle an insurance claim in excess of £500,000 materially below the amount claimed;
(xi)	enter into any guarantee, indemnity or other agreement to secure any obligation of a third party (excluding obligations of any Group Company) or create any Encumbrance over any of its assets (including any Property) or undertaking in any such case other than in the ordinary course of business and on an arm’s length basis;
(xii)	make any material change to its accounting practices or policies (except to the extent required to comply with any changes in GAAP) or amend its memorandum or articles of association; or
(xiii)	declare, make or pay any dividend or other distribution to shareholders except that each of the Companies shall be entitled to make or pay dividends of up to £1,000,000 in aggregate provided that such dividends have been declared and paid before the date on which the conditions set out in Clause 4.1 are fulfilled,

	provided that nothing in this Agreement shall prevent the payment of any dividend by a Group Company, which is permitted under Clause 5.1.3(xiii), between the date of this Agreement and the date on which the conditions set out in Clause 4.1 are fulfilled.
5.1.4	shall maintain in force and renew where required all Licences necessary for the continued operation of any Hotel or material to the business of any Hotel;

16

5.2	The Sellers’ Obligations in Relation to the Financing of the Business
	Each of the Sellers undertake that save in relation to the payment of dividends permitted under Clause 5.1.3(xiii), between the date of this Agreement and Completion, they will:

5.2.1	not lend any money or offer any form of financing to any Group Company which is not an Inter-Group Receivable nor alter the amount or material terms of the Inter-Group Debt;
5.2.2	procure that no Group Company borrows any money from nor incurs any other financing liabilities or obligations to the Sellers’ Group (other than trading debt or liabilities arising in the ordinary course or Inter-Group Payables); and
5.2.3	procure that no member of the Sellers’ Group borrows any money from nor incurs any other financing liabilities or obligations to the Group (other than trading debt or liabilities arising in the ordinary course),

	unless the Purchaser has agreed to this in writing, such consent not to be unreasonably withheld or delayed.
5.3	Sellers’ Undertakings

5.3.1	At the request of the Purchaser, the Sellers have made applications for landlords’ consents to charge certain Properties. From the date of this Agreement up to Completion, the Sellers shall (at the Purchaser’s cost) make such additional applications to landlords regarding waivers or amendments to forfeiture provisions or such similar matters as the Purchaser may reasonably request and shall use all reasonable endeavours to obtain such landlords’ consents as soon as reasonably practicable and shall promptly keep the Purchaser informed of progress.
5.3.2	The Sellers shall continue to use all reasonable endeavours to complete the transfer of the legal estate in respect of the Strand Palace Hotel London from InterContinental Hotels Limited to Waseley Roadside Restaurants Limited and shall keep the Purchaser fully advised at all times of progress in this respect.
5.3.3	The Sellers undertake that they will prior to Completion apply, or procure an application, to Companies House to remove from the register any entries in relation to the charge in favour of the Law Debenture Trust in respect of Crowne Plaza Heathrow which has been satisfied.
5.3.4

(i) Promptly following the date of this Agreement, the Purchaser shall at its own cost appoint a suitably qualified expert (the “Purchaser’s Expert”) to review as soon as reasonably practicable the works identified in document 07 in the Group Information section of the property information pack Data Room entitled “IHG’s UK DDA policy, summary of works and status”, document 51 002 “DDA progress summary” in the Portfolio Information section of the second round Data Room, document 51 003 “DDA Audits — stage 3 status summary” in the Portfolio Information section of the second round Data Room (together, the “Sellers’ Proposed DDA Works”) and item 03 011 for each Hotel in the second round Data Room ( being the Stage 2 DDA Audits).

17

(ii)	If in the Purchaser’s Expert’s reasonable and proper opinion the completion of the Sellers’ Proposed DDA Works in relation to the Listed Hotels only would not make the Listed Hotels compliant with the requirements of Part III of the Disability Discrimination Act 1995 (as determined in accordance with the Sellers’ own internal policies as set out in document 07 in the Group Information section of the property information pack in the Data Room), then the Purchaser shall procure that the Purchaser’s Expert promptly supplies to the Sellers (at the Sellers’ cost) full details (including specifications and initial costings) of those further works required to procure such compliance (the “Further Works”). If the Sellers disagree with any element of the Further Works, they may refer the matter to an independent expert in accordance with Clause 5.3.4(v) below.
(iii)	The Sellers shall, subject to obtaining all necessary consents (which the Sellers shall use all reasonable endeavours to obtain and the Purchaser shall co-operate with the Sellers and assist in obtaining such consents if reasonably required), carry out the Sellers’ Proposed DDA Works and (subject to any pending referral to the independent expert) the Further Works as soon as reasonably practicable using competent contractors approved by the Purchaser (acting reasonably).
(iv)	The Sellers shall indemnify the Purchaser against any Losses incurred by the Purchaser or any member of the Purchaser’s Group arising from any failure by the Sellers to carry out the Sellers’ Proposed Works and (subject to any pending referral to the independent expert) the Further Works.
(v)	Any dispute or difference between the parties in connection with matters arising under this Clause 5.3.4, may be referred by either party to an independent person acting as an expert who has been professionally qualified for not less than 10 years and who is an accredited consultant from the Centre for Accessible Environment, such independent person to be appointed by the parties jointly or, in default of agreement, on the application of either party by the President (or next senior available officer) for the time being of the Royal Institution of Chartered Surveyors or such other professional body as may be suitable given the nature of the dispute. The parties agree to be bound by the decision of such expert and that the costs of such expert shall be borne as the expert may direct (or in the absence of direction, equally). Accordingly, if any relevant matter is referred to the expert by the Sellers under this clause, the reference to Further Works shall be to such works as determined by such expert.

5.3.5

(i) The Purchaser shall carry out such works as are required either to put the building known as Shoppenhangers Manor located at HI Maidenhead (“Shoppenhanger’s Manor”) into good condition and repair including ensuring compliance with all requirements of health and safety law and obtaining all necessary planning and building regulation consent in respect of such work or to close such building permanently as soon as reasonably practicable after Completion.

18

(ii)	Subject to sub clause 5.3.5(iv) below, the Sellers shall indemnify the Purchaser in respect of any costs incurred by it or any member of the Purchaser’s Group in carrying out the works referred to in paragraph (i) above.
(iii)	Until such time as the Purchaser has complied with its obligation under paragraph (i) above the Sellers shall, subject to sub clause 5.3.5(iv) below, indemnify the Purchaser (for itself and as agent for any other member of the Purchaser’s Group) against any Losses to the extent they arise out of any claim against the Purchaser (or any member of the Purchaser’s Group) in respect of the personal injury or death of any person at Shoppenhanger’s Manor.
(iv)	The aggregate amount of the Sellers under the indemnities referred to in sub clause 5.3.5(ii) above shall not exceed £2,000,000 and the Sellers not be liable in respect of any Losses under the indemnities referred to in this sub clause 5.3.5 to the extent such losses are covered by a policy of insurance.

5.3.6	The Sellers shall indemnify and hold harmless the Purchaser (for itself and as agent for any other member of the Purchaser’s Group) for any Losses to the extent they arise out of the letter of claim dated 28 February 2005 against Intercontinental Hotels Group Limited from the liquidators of Sylvan Refurbishment Limited in relation to the claim by Sylvan Refurbishment Limited against Kensington Forum Hotel Limited.
5.3.7	The Sellers undertake to procure that at Completion all of the shares in Holiday Inn (Reading) Limited are transferred with full title guarantee to the Purchaser and will indemnify the Purchaser in respect of any failure so to do.
5.3.8	The Sellers shall indemnify the Purchaser (for itself and as agent for any member of the Purchaser’s Group) against any Losses to the extent they arise under Clause 5.8(c) of the Posthouse Agreement as a result of any claim under the Business IP Agreement which is in breach of Clause 5.8(b) of the Posthouse Agreement.

6	Completion
6.1	Date and Place
	Subject to Clause 4, Completion shall take place at the offices of the Sellers’ Solicitors no later than the tenth Business Day following fulfilment of the condition set out in Clause 4.1, or at such other location, time or date as may be agreed between the Sellers and the Purchaser.
6.2	Completion Obligations
	On Completion, the Sellers and the Purchaser shall comply with their respective obligations specified in Schedule 5.
6.3	Payment on Completion
	On Completion, the Purchaser shall pay the Completion Amount to the Sellers and the Contracts Consideration to SCPLC.

19

6.4	Repayment of Inter-Group Debt Balance
	On Completion the Purchaser shall procure repayment by the relevant Group Companies of the Inter-Group Debt Balance.
6.5	Breach of Completion Obligations
	If the Sellers fail to comply with any material obligation in paragraph 1.1.1, 1.1.2, 1.1.3, 1.1.4, 1.1.12 or 1.1.15 of Schedule 5, or the Purchaser fails to comply with the obligations in Clauses 6.3, 6.4 or paragraphs 2.1 to 2.3 of Schedule 5, the Purchaser, in the case of non-compliance by the Sellers, or the Sellers, in the case of non-compliance by the Purchaser, shall be entitled (in addition to and without prejudice to all other rights or remedies available, including the right to claim damages) by written notice to the other served on the Completion Date:

6.5.1	to terminate this Agreement (other than Clauses 1, 13 and 14.5 to 14.19) without liability on its part; or
6.5.2	to effect Completion so far as practicable having regard to the defaults which have occurred; or
6.5.3	to fix a new date for Completion (not being more than 20 Business Days after the agreed date for Completion) in which case the provisions of Schedule 5 shall apply to Completion as so deferred but provided such deferral may only occur once.

7	Pensions and Employee Incentives
7.1	The Purchaser undertakes that:

7.1.1	it or the Employing Company will set up or nominate a pension scheme by a date (the “Joining Date”) which is within four months of the Completion Date which will be an exempt approved scheme or capable of approval as an exempt approved scheme for the purposes of either Chapter I or Chapter IV of Part XIV of ICTA;
7.1.2	within seven days after the Completion Date all Relevant Employees who are in the service of the Purchaser or the Employing Company and who have not reached their retirement date under the Sellers’ Pension Scheme shall be invited in writing to become members of the Purchaser’s Scheme with effect on and from the Joining Date, but (if the Joining Date is later than the Completion Date) on terms that are at least as favourable to them as if the Joining Date had been the Completion Date;
7.1.3	the Purchaser’s Scheme shall at the Joining Date provide benefits for Relevant Employees who join the Purchaser’s Scheme in accordance with Clause 7.1.2. The Relevant Employees will contribute between 3 per cent and 5 per cent of basic salary (or more if they so choose). If the Relevant Employee was a member of the defined contribution section of the Seller’s Pension Scheme, the Purchaser or other member of the Purchaser’s Group will contribute an amount equal to the amount being contributed by the Relevant Employee to the Purchaser’s Scheme (up to a maximum of 5 per cent of basic salary) plus administration costs. However, if employer contributions to the defined contribution section of the Sellers’ Pension Scheme in respect of any Relevant Employee were double the amount contributed by such Relevant Employee to that section of the Sellers’ Pension Scheme, the Purchaser or Employing Company will contribute double the amount being

20

contributed by such Relevant Employee to the Purchaser’s Scheme (subject to a maximum of 10 per cent. of basic salary) plus administrative costs. If the Relevant Employee was a member of the defined benefit section of the Seller’s Pension Scheme, the Purchaser or the Employing Company will contribute double the amount being contributed by the Relevant Employee to the Purchaser’s Scheme (subject to a maximum of the lesser of 10 per cent. of basic salary and Inland Revenue limits on contributions) plus administrative costs. The Purchaser may also nominate an alternative scheme which provides the Relevant Employees with comparable or more favourable benefits;

7.1.4

it or the Employing Company shall with effect on and from the Completion Date use all reasonable endeavours to arrange for life cover at the same rate that applied immediately prior to the Completion Date and incapacity cover (on the same basis as that defined in Rules 7(4), 7(5) and 7(6) of the DC Section of the Seller’s Pension Scheme) in respect of all Relevant Employees who join the Purchaser’s Scheme in accordance with Clause 7.1.2.

	If no later than 13 weeks after the Joining Date a Relevant Employee who has become a member of the Purchaser’s Scheme with effect from that date requests a transfer to that scheme of the cash equivalent of his benefits under the defined benefits section of the Sellers’ Pension Scheme, the Sellers shall use their best endeavours to procure that the sum transferred is no less than 125 per cent. of his unreduced statutory cash equivalent under the Pension Schemes Act 1993 (calculated in accordance with the method and assumptions applicable under the Sellers’ Pension Scheme in March 2005, as applied to market conditions at the start of the month of the member’s request). The Purchaser undertakes that that sum will be used entirely to provide further benefits for and in respect of that member and shall not be used to pay for administrative expenses.
	Both the Seller and the Purchaser undertake that they have not given and will not give any undertaking or assurance that does not reflect the terms of this Clause 7.1.
7.2	The following will apply only if regulations are made under the Pensions Act 2004 which change the basis on which debts are payable by an employer to a multi-employer pension scheme and which have effect on or before Completion. The Sellers will use their best endeavours to ensure that an actuarial valuation of the Sellers’ Pension Scheme is carried out as at Completion as soon as is reasonably practicable for the purposes of establishing whether any debt is owed by any of the Group Companies to the Sellers’ Pension Scheme under Section 75 or 75A of the Pensions Act 1995 as amended. The Sellers will initiate discussions with the Pensions Regulator and/or the trustees of the Sellers’ Pension Scheme (depending on the terms of the regulations) as soon as is reasonably practicable with a view to establishing the amount due under Section 75 or Section 75A, the parties which are to pay the amount due and the timing of the payments. The Sellers will use all reasonable endeavours to ensure that agreement is reached on those matters with the Pensions Regulator and/or the trustees (as the case may be) within 12 months of the signature of the actuarial valuation to:

7.2.1	limit the Purchaser’s, the Employing Company’s and the Purchaser’s Group’s exposure to such liability; and
7.2.2	ensure that the Purchaser, the Employing Company and the Purchaser’s Group need not rely on the indemnity in Clause 7.3 for more than five years following Completion.

21

	However, for a maximum period of five years from the date of Completion, the Sellers will not be required to agree to any proposal which would increase the amount which would otherwise have had to be paid or which would accelerate payment of that amount. For the avoidance of doubt, on the expiry of five years from the date of Completion, the Seller undertakes to comply with any order or direction from the Pensions Regulator relating to payment of any debt owed by any of the Group Companies to the Seller’s Pension Scheme under Section 75 or 75A of the Pensions Act 1995 as amended.
7.3	The Sellers shall indemnify and keep indemnified the Purchaser, any other member of the Purchaser’s Group and the Employing Company against all and any liabilities, costs and expenses which the Purchaser, such other Group member or the Employing Company may incur or be responsible for in relation to any pension scheme or arrangement in which any of the Group Companies has participated prior to Completion (including, without limitation, the Sellers’ Pension Scheme) under or in connection with or as a result of Section 75 or 75A of the Pensions Act 1995 (as amended under the Pensions Act 2004 or any regulations promulgated thereunder). If the Pensions Regulator and the trustees of the Sellers’ Pension Scheme releases the Purchaser or any other member of the Purchaser’s Group or the Employing Company from such a liability, the indemnity will cease to apply in respect of the party so released for so long as the party remains released.
7.4	The Sellers shall indemnify and keep indemnified the Purchaser, any other member of the Purchaser’s Group and the Employing Company in respect of any liability incurred directly or indirectly as a result of a claim by any Relevant Employee who has transferred to the employment of a Group Company between August 1993 and the date of this Agreement as a result of the operation of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (as amended) that he is entitled to the payment of an early retirement benefit (on redundancy or otherwise).
7.5	Without prejudice to any liability under the Tax Deed of Covenant, the parties agree that the collection of income tax under PAYE and primary National Insurance contributions and the payment of these amounts to the Inland Revenue relating to any share option or other share incentive over IHG Shares which was granted before Completion to any Relevant Employee shall be dealt with as described in Clause 7.6.
7.6	SCPLC is responsible for the collection of any income tax under PAYE and primary National Insurance contributions which may be due in respect of the acquisition of IHG Shares by a Relevant Employee.
7.7	The Sellers shall indemnify and keep indemnified the Purchaser, any other member of the Purchaser’s Group and the Employing Company against all and any liabilities, costs and expenses which the Purchaser, such other Group member or the Employing Company may incur or be responsible for in respect of the Retained Employees as a result of being treated as the de facto employer of the Retained Employees in relation to any pension scheme or arrangement operated by any member of the Sellers’ Group in which any of the Group Companies has participated or is treated by the Pension Regulator as having participated after Completion (including, without limitation, the Sellers’ Pension Scheme).

22

8	Post-Completion Adjustments
8.1	Net Current Asset Statement
	The Sellers shall procure that they shall draw up the Net Current Asset Statement (the “Net Current Asset Statement”) in accordance with Parts 1 — 4 of Schedule 6 setting out the Net Current Assets together with the Long-Term Liabilities (if any) and Provisions (if any).
8.2	Adjustment to Consideration

8.2.1 Net Current Assets, Long-Term Liabilities and Provisions

(i)	If the Net Current Assets (after deducting Long-Term Liabilities (if any) and Provisions (if any)) exceed the Estimated Net Current Assets by more than £100,000, the Purchaser shall pay to the Sellers an additional amount equal to the excess of the Net Current Assets over the Estimated Net Current Assets as an increase in the consideration.
(ii)	If the Net Current Assets (after deducting Long-Term Liabilities (if any) and Provisions (if any)) are less than the Estimated Net Current Assets, and the amount of such deficit is greater than £100,000, the Sellers shall repay to the Purchaser an amount equal to such deficit as a reduction in the consideration.
(iii)	Any payments pursuant to this Clause 8.2.1 shall be made on or before ten Business Days after the date on which the process described in Part 2 of Schedule 6 for the preparation of the Net Current Asset Statement is complete.

8.2.2	Interest
	Any payment to be made in accordance with this Clause 8.2 shall include interest thereon calculated from the Completion Date to the date of payment at a rate per annum of 2 per cent above the base rate from time to time of Barclays Bank PLC. Such interest shall accrue from day to day.
8.2.3	Payment and Allocation
	Where any payment is required to be made pursuant to this Clause 8.2:

(i)	the Completion Amount shall be deemed to have been reduced or increased accordingly; and
(ii)	the allocation of the consideration shall be adjusted pro-rata to the pre-adjustment allocation set out in Schedule 1.

9	Warranties and Indemnities
9.1	Sellers’ Warranties

9.1.1	Subject to Clause 9.2, the Sellers warrant to the Purchaser that the statements set out in Schedule 7 are true and accurate as of the date of this Agreement.
9.1.2	The only Sellers’ Warranties given:

23

(i)	in respect of the Certificated Properties are those contained in paragraphs 4.1, 4.2 and 4.4 of Schedule 7 and each of the other Sellers’ Warranties shall be deemed not to be given in respect of the Certificated Properties;
(ii)	in respect of the Uncertificated Properties are those contained in paragraphs 4.1, 4.3 and 4.4 of Schedule 7 and each of the other Sellers’ Warranties shall be deemed not to be given in respect of the Uncertificated Properties;
(iii)	in respect of Environment are those contained in paragraph 10 of Schedule 7 and each of the other Sellers’ Warranties shall be deemed not to be given in respect of the Environment;
(iv)	in respect of Tax are those contained in paragraph 13 of Schedule 7 and paragraph 8.6 of Schedule 7 (but only insofar as it relates to Tax) the warranties given by the Sellers under the Tax Deed of Covenant and each of the other Sellers’ Warranties shall be deemed not to be given in respect of Tax; and
(v)	in respect of the Disability Discrimination Act 1995 is that contained in paragraph 4.4.5 of Schedule 7 and each of the other Sellers’ Warranties shall be deemed not to be given in respect thereof.

9.1.3

The Sellers acknowledge that the Purchaser has entered into this Agreement in reliance upon the Sellers’ Warranties.

9.1.4

Any Sellers’ Warranty qualified by the expression “to the best of the Sellers’ knowledge, information and belief” or any similar expression shall, unless otherwise stated, be deemed to refer to the actual knowledge of those persons set out in column (1) of Schedule 9 whose position is stated opposite his name, such persons having made all reasonable and careful enquiries, in each case in relation to those Sellers’ Warranties set out against each such person’s name in column (3) of Schedule 9.

9.2 Sellers’ Disclosures

9.2.1 The Sellers’ Warranties are subject to:

(i)	the specific matters which are fairly and specifically disclosed in or pursuant to this Agreement or the Disclosure Letter or expressly provided for under the terms of this Agreement;
(ii)	other than as provided in Clause 9.2.2 only, any information which is fairly and specifically disclosed in any document placed in the Data Room prior to midnight on 28 February 2005 and listed in Schedule 1, Part 1 to the Disclosure Letter or any document that was placed in the Data Room after midnight on 28 February 2005 provided it is listed in Schedule 1, Part 4 to the Disclosure Letter; and
(iii)	the limitations of liability set out in Clauses 10 and 11.5.5.

9.2.2

(i) paragraphs 2, 3.2, 10 and 15 of the Sellers’ Warranties are not subject to any information contained in any document in the Data Room save as provided in this Clause 9.2.2;

24

(ii)	the Sellers’ Warranties in paragraphs 2 and 3.2 are subject to any information which is fairly and specifically disclosed in any document in sections 1-4 of Part 3 of Schedule 1 to the Disclosure Letter;
(iii)	the Sellers’ Warranties in paragraph 10 are subject to any information which is fairly and specifically disclosed in any document in section 5, Part 3 of Schedule 1 to the Disclosure Letter;
(iv)	the Sellers’ Warranties in paragraph 15 are subject to any information which is fairly and specifically disclosed in any document in section 6, Part 3 of Schedule 1 to the Disclosure Letter; and
(v)	the Sellers’ Warranties shall only be subject to any information disclosed in the documents listed in Schedule 1, Part 2 (being documents placed in the Data Room after midnight on 28 February 2005) to the extent that a specific disclosure is made in the Disclosure Letter or the document falls within the sections of the Data Room referred to in Clauses 9.2.2(ii)-(v).

9.2.3 None of the Sellers’ Warranties in paragraphs 9, 10 and 15 shall be treated as applying to Shoppenhanger’s Manor.

9.3 Notification

9.3.1 Without prejudice to Clause 9.4, if after the signing of this Agreement and before Completion:

(i)	the Sellers shall become aware that any of the Sellers’ Warranties has been breached, is untrue, inaccurate or misleading in any material respect; or
(ii)	any event shall occur or matter shall arise of which the Sellers become aware which results or is likely to result in any of the Sellers’ Warranties being untrue, inaccurate or misleading in any material respect at Completion,

	the Sellers shall immediately notify the Purchaser in writing as soon as practicable and in any event prior to Completion setting out such details as are available and, if reasonably requested by the Purchaser, will use their reasonable endeavours to prevent or remedy the notified occurrence.
9.3.2	For the avoidance of doubt, but without limitation, any amendment, having a material effect to a Certificate of Title between the date of this Agreement and the Completion Date shall not prevent the Purchaser from claiming against the Sellers under this Agreement for a breach which it would otherwise be entitled to claim for.

9.4	Updating of the Sellers’ Warranties to Completion
	Subject to Clause 9.2, the Sellers further warrant to the Purchaser that the Sellers’ Warranties will be true and accurate at Completion in all material respects as if they had been repeated at Completion.
9.5	Sellers’ Indemnities
	The Sellers shall indemnify and hold harmless the Purchaser (for itself and as agent for any other member of the Purchaser’s Group) against all Losses to the extent such losses arise or result from:

25

9.5.1	a failure to implement the Pre-Sale Reorganisation in accordance with the provisions of the Pre-Sale Reorganisation Documents or as a result of or in connection with any failure to execute or deliver the Pre-Sale Reorganisation Documents or to the extent such Losses (i) constitute a direct cost or expense (other than in respect of any Taxation) of implementing the Pre-Sale Reorganisation or (ii) relate to any third party claim (other than in respect of any Taxation) arising or resulting from the implementation of the Pre-Sale Reorganisation which would not have arisen but for such implementation; or
9.5.2	any warranty, indemnity or covenant which was given by any Group Company in connection with the disposal, pursuant to an agreement entered into prior to the date of this Agreement, of any company business, or property unless and to the extent the Purchaser or any other member of the Purchaser’s Group recovers or is entitled to recover on the basis set out in sub clause 10.10.2 any such Losses under the Posthouse Agreement in respect of such warranty, indemnity or covenant, or
9.5.3	the ownership by InterContinental Hotels Limited of the legal estate in respect of the Strand Palace Hotel, London and the transfer of the same to any third party unless and to the extent the Purchaser or any other member of the Purchaser’s Group recovers or is entitled to recover on the basis set out in Clause 10.10.2 any such Losses under the Posthouse Agreement in respect of the same,

	provided that the Purchaser shall not be entitled to make any claim pursuant to this Clause 9.5 in respect of any such Losses to the extent it has or would have a claim or right of action against, or a right to indemnification from, the Sellers under the Tax Deed of Covenant in respect of such Losses.
9.6	Contamination Indemnity

9.6.1	Definitions
	For the purposes of this Clause 9.6 of the Agreement the following expressions shall have the following meanings:
	“Completed”, “Conduct Party” and “Other Party” shall each bear the meanings set out in sub clause 9.6.5:
	“Contamination” means any Hazardous Substances present in soil, or in groundwater or surface water at, in, on or under any of the Specified Hotels or Specified Additional Hotels or migrating therefrom in each case at Completion, whose presence therein or migration therefrom (i) (a) has been specifically identified in the ENVIRON Investigation in the case of the Specified Hotels or (b) in the case of any Specified Additional Hotel derives from a specific risk factor (including, without limitation, nearby underground storage tanks or the presence of a nearby landfill) reasonably identified in relation to the relevant Specified Additional Hotel by Environ (UK) Limited in their Phase 1 environmental report which factor caused or substantially contributed to Environ (UK) Limited’s risk ranking of such Specified Additional Hotel as a “medium or medium-high” risk and (ii) at Completion would have caused an Environmental Authority to require the Sellers to undertake clean up works or other remedial measures to discharge a liability under or breach of Environmental Law and/or to put the relevant Specified

26

Hotel or Specified Additional Hotel into compliance with Environmental Law if such Environmental Authority had had knowledge thereof at such time;

“Emergency” means an immediate and serious risk of significant harm to human health or safety or to the structural safety of a Specified Hotel or Specified Additional Hotel resulting from Contamination;

“ENVIRON Investigation” means the intrusive Phase II investigations into soil and groundwater at the Specified Hotels undertaken on behalf of the Purchaser by Environ (UK) Limited in March 2005 the cost of which shall be borne by the Purchaser and shall fall out with any indemnity set out in this clause;

“Environmental Expert” means the expert appointed pursuant to clause 9.6.6;

“Environmental Losses” means:

(a)	any reasonable expenditure incurred by the Purchaser or any member of the Purchaser’s Group in the implementation of any Remedial Action Recommendation (including for the avoidance of doubt but without limitation any reasonable costs, fees (including legal and consultant fees) or charges) and any indirect or consequential losses suffered by any member of the Purchaser’s Group as a result of the closure of the whole or a substantial part of the relevant Specified Hotel to the extent such closure was necessary for such implementation PROVIDED ALWAYS THAT this head of Environmental Losses shall not be recoverable in respect of any Specified Additional Hotels;
(b)	any reasonable expenditure incurred by the Purchaser or any member of the Purchaser’s Group in undertaking any Remedial Action agreed or determined to be necessary in an Emergency and undertaken pursuant to sub clause 9.6.4 (including for the avoidance of doubt but without limitation any reasonable costs, fees (including legal and consultant fees) or charges) and any indirect or consequential losses suffered by any member of the Purchaser’s Group as a result of the closure of the whole or a substantial part of the relevant Specified Hotel or Specified Additional Hotel to the extent such closure was necessary for undertaking the applicable Remedial Action; and
(c)	any Losses suffered or incurred by the Purchaser or any member of the Purchaser’s Group arising from any liability under or breach of Environmental Law (or any settlement or court order in respect of such liability or breach) in respect of which an Environmental Trigger Event under limb (c) of that definition has occurred relating to any Contamination to the extent in relation to any Specified Hotels only that a Remedial Action Recommendation relating to such Contamination had not been Completed at the date of such Environmental Trigger Event including in each case any indirect or consequential losses to the extent suffered by any member of the Purchaser’s Group in respect of the closure of the whole or a substantial part of the relevant Specified Hotel or Specified Additional Hotel as a result of such Contamination to the extent such closure was necessary;

“Environmental Trigger Event” means:

27

(a)	in relation to any Specified Hotels only, the agreement or determination of Remedial Action Recommendations;
(b)	an Emergency; or
(c)	service on or the receipt by any member of the Purchaser’s Group from any third party or any Environmental Authority of written notification of the commencement of (or an intention or threat to commence) any civil or criminal proceedings or suit or any formal regulatory enforcement proceedings in each case under Environmental Law against the Purchaser or any member of the Purchaser’s Group in respect of Contamination;

	“Remedial Action” means such measures as are necessary and cost-effective to remove, remedy, restore, clean-up, mitigate, abate, contain, dispose, control, treat or ameliorate any Contamination (and any related cost-effective and necessary measures to assess, sample, analyse or further investigate such Contamination) that (a) would have been required of the Sellers or any member of the Seller’s Group by any Environmental Authority to discharge a liability under or breach of Environmental Law in respect of such Contamination and/or to put the relevant Specified Hotel or Specified Additional Hotel into compliance with Environmental Law if such Environmental Authority had knowledge of such Contamination immediately before Completion or (b) are necessary to contain, limit or abate an Emergency;
	“Remedial Action Recommendations” means (i) any written recommendations to remediate any Contamination made in respect of a Specified Hotel by ENVIRON as part of the ENVIRON Investigation which have been agreed to constitute Remedial Action by the Sellers and (ii) where the Sellers have not agreed with the recommendations made by ENVIRON as part of the Environ Investigation, any measures which are determined to constitute Remedial Action in relation to the subject matter of the ENVIRON recommendation in respect of such Specified Hotel by the Environmental Expert;
	“Specified Additional Hotels” means HI Hemel Hempstead, HI Oxford, HI Maidstone, HI Brentwood, CP Leeds, HI Hull Marina, HI Leicester and HI South Mimms; and
	“Specified Hotels” means CP Heathrow, HI Basingstoke, HI Glasgow City, HI Haydock, HI London — Brent Cross, HI Hampstead, HI Stoke-on-Trent, HI Gatwick Airport, and HI Chester.
9.6.2	Environmental Indemnity

(i) Subject to the other provisions of this Agreement, the Sellers shall indemnify and keep indemnified the Purchaser (for itself and as agent for each member of the Purchaser’s Group) from and against any Environmental Losses PROVIDED THAT the Sellers shall not be liable in respect of any claim under this indemnity unless an Environmental Trigger Event has occurred with respect to the subject matter of that claim, and in such an event the Sellers shall only be obliged to make any payment under this indemnity when and to the extent the Purchaser or the relevant member of the Purchaser’s Group has actually paid out an amount equal to such Environmental Losses.

28

(ii) Subject to sub clause 9.6.2(i), the Sellers shall pay the Purchaser in cleared funds any amount payable pursuant to this indemnity on or before the date falling 10 Business Days after the amount of Environmental Losses has been finally agreed or determined in accordance with this indemnity.

9.6.3	Contribution payable by the Purchaser
	The Purchasers shall duly and punctually pay, satisfy, and discharge and shall indemnify the Sellers in respect of the first £50,000 of the aggregate of (i) any expenditure on Remedial Action Recommendations in relation to the Specified Hotels agreed or determined in accordance with this indemnity, whether such Remedial Action Recommendation is implemented by any member of the Purchaser Group or by any of the Sellers and (ii) any Environmental Losses. Where the amount of such expenditure and Environmental Losses exceeds in the aggregate £50,000 (including interest), but is no more than £100,000, such amount shall be borne in its entirety by the Purchaser who shall duly and punctually pay, satisfy, and discharge and shall indemnify the Sellers in respect thereof. If the amount of such expenditure and Environmental Losses exceeds in the aggregate £100,000 the Sellers shall be liable for any amount in excess of the first £50,000 thereof.
9.6.4	Limitations on the Environmental Indemnity

(i)	Time Limits
	The Sellers shall not be liable under this indemnity in respect of any claim under sub clause 9.6.2:

(I)	where it relates to a Specified Hotel unless a Remedial Action Recommendation relating directly to the subject matter of the claim is agreed or determined in accordance with this indemnity in respect of the Specified Hotel;
(II)	where it relates to a Specified Hotel for any new claim relating directly to the subject matter of a Remedial Action Recommendation unless the Environmental Trigger Event relating to such claim occurs before the relevant Remedial Action Recommendation was Completed;
(III)	where it relates to a Specified Hotel for the failure to Complete any Remedial Action Recommendation as a direct result of the acts or omissions of the Purchaser or any member of the Purchaser’s Group or for any new claim relating directly to the subject matter of such a Remedial Action Recommendation to the extent such new claim occurred before the relevant Remedial Action Recommendation was Completed and the failure to Complete such Remedial Action Recommendation was directly attributable to the acts or omissions of the Purchaser or any member of the Purchaser’s Group; or
(IV)	in respect of claims relating to Specified Hotels or Specified Additional Hotels in relation to which the applicable

29

Environmental Trigger Event falls under limits (b) or limits (c) of this definition, unless written notice of such claim is given by the Purchaser to the Sellers setting out reasonable details (including an estimate of the amount of the claim and the Environmental Trigger Event relied upon) prior to the fifth anniversary of Completion.

(ii)	Other limits
	The Sellers shall not be liable in relation to any claim under sub clause 9.6.2 to the extent that the claim or the Environmental Losses result from or would not have occurred but for, or have been increased as a result of:

(a)	any construction, development or demolition works at any Specified Hotel or Specified Additional Hotel (or part thereof) after Completion;
(b)	the disclosure of information (or the authorisation of such disclosure) by the Purchaser or any member of the Purchaser’s Group to any Environmental Authority or any third parties without the prior written consent of the Sellers (such consent not to be unreasonably withheld or delayed) except where such disclosure is required under Environmental Law or is required under any other law or under court order or under any finance agreement entered into for the purpose of financing this transaction;
(c)	the undertaking, authorising, initiation or procuring of any intrusive investigations at or in respect of any of the Specified Hotels or Specified Additional Hotels by the Purchaser or any member of the Purchaser’s Group without the prior written consent of the Sellers (such consent not to be unreasonably withheld or delayed), except in the case of Specified Hotels where such investigations are the ENVIRON Investigations or are part of the Remedial Action Recommendations or in the case of Specified Hotels or Specified Additional Hotels where such investigations are required by Environmental Law or court order;
(d)	if the Purchaser or any member of the Purchaser’s Group is the Conduct Party,

(i)	the failure of the Purchaser or such member of the Purchaser’s Group to implement the Remedial Action Recommendations as soon as reasonably practicable and in accordance with sub clause 9.6.5;
(ii)	the Purchaser or any member of the Purchaser’s Group undertaking or procuring works which exceed Remedial Action standards or criteria applicable in the jurisdiction at Completion;

(e) if the Sellers are the Conduct Party, the failure of the Purchaser or the applicable member of the Purchaser’s Group to comply with their obligations under sub clause 9.6.5.

9.6.5 Remedial Action

30

(i)	In the case of Remedial Action in an Emergency the cost of which is or may become the subject of a claim under sub clause 9.6.2, if it is not reasonably practicable, having regard to the immediacy and severity of the danger to human health and safety or to structural safety of a Specified Hotel or Specified Additional Hotels, to comply with the procedure set out in the rest of this sub clause 9.6.5, the Purchaser may undertake such Remedial Action as is immediately required to limit, contain or abate the Emergency provided that the Purchaser shall provide written notice to the Sellers of the Emergency and the Remedial Action so undertaken as soon as reasonably practicable thereafter and in any event within 5 Business Days and that any further Remedial Action relating to such Emergency shall be subject to the procedure set out in the rest of this sub clause.
(ii)	The Purchaser shall as soon as practicable (and in any event within 10 Business Days of receipt of such notification or of reaching such recommendation) notify the Sellers of any recommendations made by ENVIRON as part of the ENVIRON Investigation or any measures the Purchaser recommends to be undertaken in an Emergency or where an Environmental Trigger Event under limb (c) of that definition has occurred in each case providing reasonable information thereon. To the extent the Sellers agree the recommendations should be implemented they shall notify the Purchaser in writing as soon as reasonably practicable and in any event within 15 Business Days of receipt of the Purchaser’s notice of their agreement and the parties shall act in good faith to agree a detailed scope of works for such Remedial Action within 10 Business Days of the Sellers’ notice.
(iii)	To the extent that the Sellers dispute any recommendations made by ENVIRON as part of the ENVIRON Investigation or any measures the Purchaser recommends to be undertaken in an Emergency or where an Environmental Trigger Event under limb (c) of that definition has occurred., the Sellers shall notify the Purchaser in writing within 15 Business Days of the Purchaser’s notice of such disagreement and either party shall be entitled to refer the matter to the Environmental Expert for expert determination pursuant to sub clause 9.6.6.
(iv)	Where a Remedial Action Recommendation has been agreed or determined in relation to a Specified Hotel, or for Specified Hotels and Specified Additional Hotels, where Remedial Action relating to an Emergency which falls outside sub clause 9.6.5(i) above, or where an Environmental Trigger Event under limb (c) of that definition has occurred has been agreed or determined, the Sellers shall have conduct of any Remedial Action arising therefrom unless (i) they notify the Purchaser in writing within 7 Business Days of such agreement or determination that they elect not to have such conduct or (ii) the Purchaser is unable to procure the necessary consent for them to do so pursuant to the terms of any lease under which such Specified Hotel or Specified Additional Hotels may be held. The Purchaser shall give and shall procure that any member of the Purchaser’s Group, subject always to the terms of any lease under which such Specified Hotel or Specified Additional Hotels may be held, gives the Sellers and their advisers all such access to any Specified Hotel

31

	or Specified Additional Hotels and all such co-operation, information and assistance as is reasonably necessary to permit the Sellers to discharge their obligations as Conduct Party.
(v)	If the Sellers elect not to or cannot have (as a result of failure to procure the necessary consent under the terms of any applicable lease) conduct of such Remedial Action, the Purchaser shall have conduct thereof. The party or parties with conduct of such Remedial Action is hereafter referred to as the “Conduct Party”, and the party or parties without conduct shall be referred to as the “Other Party”.
(vi)	The Conduct Party shall carry out such Remedial Action in such a manner as to cause as little interference, disturbance or inconvenience as is reasonably practicable to the business carried on at the relevant Specified Hotel or Specified Additional Hotels and shall work with the Other Party or any member of the Other Party’s group to minimise any such interference, disturbance or inconvenience and where possible to coordinate such Remedial Action with any planned maintenance programme at the relevant Specified Hotel or Specified Additional Hotels.
(vii)	The Conduct Party shall use its reasonable efforts to procure that the Other Party may attend and participate in any material discussions concerning the Remedial Action. The Conduct Party shall use its reasonable efforts to procure that the Other Party receives and has reasonable opportunity to comment upon any change to the scope of works or the terms of reference for the Remedial Action and the appointment of and contractual terms under which any environmental consultant or contractor is to be engaged to undertake such Remedial Action and that any such consultant or contractor is engaged on terms such that it owes a duty of care to the Other Party.
(viii)	Subject to the rest of this sub clause 9.6.5 the Conduct Party shall use its reasonable endeavours to procure that any Remedial Action agreed or determined to be required is implemented:

(a)	at its cost save as otherwise provided under clause 9.6.3;
(b)	as soon as reasonably practicable but having regard to (vi) above;
(c)	by appropriately qualified and experienced environmental consultants (or other contractors) as approved by the Other Party (such approval not to be unreasonably withheld or delayed);
(d)	in compliance with Environmental Law or any court order or settlement as the case may be; and
(e)	in accordance with the scope of works and using all reasonable endeavours to ensure that it is undertaken competently and diligently in accordance with good environmental practice.

(ix) The Conduct Party shall keep the Other Party regularly informed as to progress of the Remedial Action or of any matter which could materially affect the scope, design or execution of any Remedial Action and shall provide the Other Party with copies of any draft reports and investigations relevant or relating to such Remedial Action.

32

(x)

The Conduct Party shall obtain the Other Party’s prior written approval (not to be unreasonably withheld or delayed) to any draft reports becoming final and to any material correspondence with any third party (including with the principal environmental consultant or contractor engaged upon the Remedial Action) or any Environmental Authority in relation to the Remedial Action and shall not make any admission of liability or any settlement or compromise in relation to any such Remedial Action with any third party or any Environmental Authority without the Other Party’s prior written consent (not to be unreasonably withheld or delayed).

(xi)

Upon completion of any Remedial Action undertaken pursuant to a Remedial Action Recommendation, the Conduct Party shall procure that its principal environmental consultant (or other contractor) shall supply to the Other Party within 15 Business Days of completion of the Remedial Action a written certificate stating that such Remedial Action has been completed materially in accordance with the scope of works and that in its professional opinion no further Remedial Action would have been required of the Sellers or any member of the Seller’s Group by any Environmental Authority acting reasonably in respect of the subject matter of the applicable Remedial Action Recommendation in order to discharge a liability under or breach of Environmental Law and/or to put the relevant Specified Hotel into compliance with Environmental Law if such Environmental Authority had had knowledge thereof immediately before Completion (“Completed”). In the event that the applicable consultant or contractor is unwilling to give such certificate, either party shall be entitled to refer the matter to the Environmental Expert for expert determination as to whether the Remedial Action has been Completed.

9.6.6	Expert Determination
	In the event that the parties disagree as to:

(i)	whether any Remedial Action is required in respect of the Contamination; or
(ii)	whether any measures proposed by ENVIRON in respect of any Specified Hotel as part of the ENVIRON Investigation constitute Remedial Action and what measures should be undertaken as a Remedial Action Recommendation; or
(iii)	what constitutes necessary and cost effective Remedial Action to contain, limit, or abate an Emergency; or
(iv)	what constitutes necessary and cost-effective Remedial Action where an Environmental Trigger Event under limb (c) of that definition has occurred; or
(v)	whether the Remedial Action undertaken in respect of any Specified Hotel pursuant to a Remedial Action Recommendation has been Completed,

either the Sellers or the Purchaser may notify the other of its intention to refer the issue in dispute to expert determination. The expert shall be such experienced environmental consultant from a reputable firm of environmental consultants in the United Kingdom as may be agreed upon by the parties. Failing agreement on the appointment of an expert within 10 Business Days, either party may refer the

33

matter to the President of the Law Society who shall appoint an expert environmental consultant to determine the dispute. The decision of the expert shall be binding on the parties and he shall act as an expert not an arbitrator and his fees and expenses shall be borne as he shall direct.

9.7 Purchaser’s and Holdco’s Warranties

9.7.1	The Purchaser and Holdco each warrants to the Sellers that the statements set out in Schedule 8 are true and accurate.
9.7.2	The Purchaser and Holdco each further warrants to the Sellers that the warranties set out in Schedule 8 will be fulfilled down to, and will be true and accurate in all respects at Completion, as if they had been repeated at Completion.

10	Limitation of Sellers’ Liability
10.1	Time Limitation for Claims
	The Sellers shall not be liable for breach of any Sellers’ Warranty or under the Tax Deed of Covenant in respect of any claim unless a notice of the claim is given by the Purchaser to the Sellers:

10.1.1	in the case of any claim under the Tax Warranties or under the Tax Deed of Covenant within six years and 6 months following Completion in accordance with the provisions of Clause 3.5 of the Tax Deed of Covenant; and
10.1.2	in the case of any other claim save for a claim under paragraph 10 of Schedule 7 (environment warranties), within 15 months following Completion, or
10.1.3	in the case of any claim under paragraph 10 of Schedule 7 (environment warranties), within 18 months following Completion

	except that there shall be no time limitation for giving notice of any claim under paragraphs 1.1 and 14 of Schedule 7.
	Any claim notified by the Purchaser to the Sellers pursuant to this Clause shall specify the matters set out in Clause 11.2.
10.2	Minimum Claims

10.2.1	The Sellers shall not be liable for breach of any Sellers’ Warranty in respect of any individual claim (or a series of claims arising from substantially identical facts or circumstances) where the liability agreed or determined (disregarding the provisions of this Clause 10.2) in respect of any such claim or series of claims does not exceed £500,000.
10.2.2	Where the liability agreed or determined in respect of any such claim or series of claims exceeds £500,000, the Sellers shall be liable for the amount of the claim or series of claims as agreed or determined and not merely for the excess.

10.3 Aggregate Minimum Claims

10.3.1 The Sellers shall not be liable for any Sellers’ Warranty in respect of any claim unless the aggregate amount of all claims for which the Sellers would otherwise be liable for breach of any Sellers’ Warranty and under the Tax Deed of Covenant (disregarding the provisions of this Clause 10.3) exceeds £10,000,000.

34

10.3.2 Where the liability agreed or determined in respect of all claims referred to in Clause 10.3.1 exceeds £10,000,000, the Sellers shall be liable for the aggregate amount of all claims as agreed or determined and not merely for the amount of the excess.

10.4	Maximum Liability
	The aggregate liability of the Sellers in respect of all breaches of the Sellers’ Warranties shall not exceed an amount equal to (i) in the case of any claim under paragraphs 1.1 and 14 of Schedule 7, £960,000,000; and (ii) in the case of any other claim, £250,000,000 and under the Tax Deed of Covenant shall not exceed an amount equal to £500,000,000.
10.5	Provisions
	The Sellers shall not be liable under this Agreement in respect of any claim if proper allowance, provision or reserve is made in the Net Current Asset Statement or the Audited Accounts for the matter giving rise to the claim.
10.6	Matters Arising Subsequent to this Agreement
	The Sellers shall not be liable under this Agreement in respect of any matter, act, omission or circumstance (or any combination thereof), including the aggravation of a matter or circumstance and any losses arising therefrom, to the extent that the same would not have occurred but for:

10.6.1	Agreed matters
	any matter or thing done or omitted to be done pursuant to and in compliance with an express provision of this Agreement or the Tax Deed of Covenant or otherwise at the specific request in writing or with the approval in writing of the Purchaser;
10.6.2	Acts of the Purchaser
	any act, omission or transaction of the Purchaser or any member of the Purchaser’s Group or any of the Group Companies, or their respective directors, officers, employees or agents or successors in title:

(i)	outside the ordinary course of business as now carried on or any negligent act, omission or transaction; or any negligent default of any such person or persons after Completion; or
(ii)	otherwise than pursuant to a legally binding commitment to which any member of the Group is subject on or before Completion;

10.6.3 Changes in legislation

(i) the passing of, or any change in, after the date of this Agreement, any law, rule, regulation or administrative practice of any government, governmental department, agency or regulatory body (including, without prejudice to the generality of the foregoing, any increase in the rates of Taxation or any imposition of Taxation or any withdrawal of relief from Taxation not actually (or prospectively) in effect at the date of this Agreement) other than any changes to Section 75 or Section 75A of the Pensions Act 1995 (or, for the purposes of Clause 7.8, any changes to Sections 38 or 43 of the Pensions Act 2004) made under the Pensions Act 2004 or any regulations promulgated thereunder; or

35

(ii) any change after the date of this Agreement of any generally accepted interpretation or application of any legislation;

10.6.4	Accounting and Taxation Policies
	any change in accounting or Taxation policy, bases or practice of the Purchaser or any of the Group Companies introduced or having effect after Completion excluding for the avoidance of doubt the bringing of accounting periods to an end at Completion.

10.7	Insurance
	The Sellers shall not be liable under this Agreement in respect of any claim to the extent that the Losses in respect of which such claim is made are actually recovered pursuant to a policy of insurance (net of any reasonable third party costs and expenses incurred by the Purchaser’s Group in respect of such recovery) or would have been covered if such policy of insurance had been maintained beyond Completion.
10.8	Net Financial Benefit
	The Sellers shall not be liable under this Agreement in respect of any Losses or Environmental Losses suffered by the Purchaser or any Group Company to the extent of any corresponding Taxation savings by or net quantifiable Taxation benefit to the Purchaser or any Group Company arising from such Losses or the facts giving rise to such Losses (for example, without limitation, where the amount (if any) by which any Taxation for which the Purchaser or any Group Company would otherwise have been accountable or liable to be assessed is actually reduced or extinguished as a result of the matter giving rise to such liability). For the purposes of this Clause 10.8, “corresponding Taxation savings” and “net quantifiable Taxation benefit” shall not include any increase in the acquisition cost that would be taken into account on a future disposal of an asset as a result of any payment to which this Clause 10.8 applies.
10.9	Mitigation of Losses
	The Purchaser shall procure that all reasonable steps are taken and all reasonable assistance is given to avoid or mitigate any Losses or Environmental Losses which in the absence of mitigation might give rise to a liability in respect of any claim under this Agreement.
10.10	Purchaser’s Right to Recover

10.10.1	Recovery for actual liabilities
	The Sellers shall not be liable under this Agreement in respect of any contingent liability unless and until such contingent liability becomes an actual liability and is due and payable.
10.10.2	Prior to recovery from the Sellers etc.
	If, before any Seller pays an amount in discharge of any claim under this Agreement, the Purchaser or any Group Company recovers or is entitled to recover (whether by payment, discount, credit, relief, insurance or otherwise) from a third party a sum which indemnifies or compensates the Purchaser or Group Company (in whole or in part) in respect of the loss or liability which is the subject matter of the claim, the Purchaser shall procure that, before steps are taken to enforce a

36

	claim against the relevant Seller following notification under Clause 11 of this Agreement, all reasonable steps are taken to enforce such recovery and any actual recovery (less any reasonable costs incurred in obtaining such recovery) shall reduce or satisfy, as the case may be, such claim to the extent of such recovery.
10.10.3	Following recovery from the Sellers etc.
	If any Seller has paid an amount in discharge of any claim under this Agreement and the Purchaser or any Group Company is entitled to recover (whether by payment, discount, credit, relief, insurance or otherwise) from a third party a sum which indemnifies or compensates the Purchaser or Group Company (in whole or in part) in respect of the loss or liability which is the subject matter of the claim, the Purchaser shall procure that all steps are taken as the relevant Seller may reasonably require to enforce such recovery and shall, or shall procure that the relevant Group Company shall, pay to the relevant Seller as soon as practicable after receipt an amount equal to (i) any sum recovered from the third party less any costs and expenses incurred in obtaining such recovery less any Taxation attributable to the recovery after taking account of any tax relief available in respect of any matter giving rise to the claim or if less (ii) the amount previously paid by the relevant Seller to the Purchaser less any Taxation attributable to it.

10.11	Double Claims
	The Purchaser shall not be entitled to recover from the Sellers under this Agreement more than once in respect of the same Losses or Environmental Losses suffered.
10.12	Fraud
	None of the limitations contained in this Clause 10 shall apply to any claim which arises or is increased, or to the extent to which it arises or is increased, as the consequence of, or which is delayed as a result of, fraud or wilful concealment by any Seller, any member of the Sellers’ Group or any of their respective directors, officers or employees.
10.13	Interpretation
	In Clauses 10.8, 10.9 and 10.11, “this Agreement” includes the Tax Deed of Covenant.
11	Claims
11.1	Notification of Potential Claims
	If the Purchaser or any Group Company becomes aware of any fact, matter or circumstance that is reasonably likely to give rise to a claim against the Sellers under this Agreement or against SCPLC under the SCPLC Guarantee in connection with the Guaranteed Leases, the Purchaser shall as soon as reasonably practicable and in any event within 20 Business Days give notice in writing to the Sellers setting out such information and supplying copies of any relevant correspondence as is available to the Purchaser or Group Company as is reasonably necessary to enable the Sellers to assess the merits of the claim, to act to preserve evidence and to make such provision as the Sellers may consider necessary. Failure to give notice within such period shall not affect the rights of the Purchaser except to the extent that any Seller is prejudiced by the failure.

37

11.2	Notification of Claims under this Agreement
	Notices of claims against the Sellers under this Agreement shall be given by the Purchaser to the Sellers within the time limits specified in Clause 10.1 or Clause 9.6.4(i) in respect of claims under Clause 9.6, specifying in reasonable detail the legal and factual basis of the claim and the evidence on which the Purchaser relies and, if practicable, an estimate of the amount of Losses which are, or are to be, the subject of the claim (including any Losses which are contingent on the occurrence of any future event).
11.3	Commencement of Proceedings
	Any claim notified pursuant to Clause 11.2 shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn six months after the notice is given pursuant to Clause 11.2 or, in the case of any contingent liability, six months after such contingent liability becomes an actual liability and is due and payable unless legal proceedings in respect of it (i) have been commenced by being both issued and served and (ii) are being and continue to be pursued with reasonable diligence.
11.4	Investigation by the Sellers
	In connection with any matter or circumstance that may give rise to a claim against the Sellers under this Agreement or against SCPLC under the SCPLC Guarantee in connection with the Guaranteed Leases:

11.4.1

the Purchaser shall allow, and shall procure that the relevant Group Company allows, the Sellers and their financial, accounting, environmental or legal advisers reasonable access on reasonable notice to investigate the matter or circumstance alleged to give rise to a claim and whether and to what extent any amount is payable in respect of such claim; and

11.4.2

the Purchaser shall disclose to the Sellers all material of which the Purchaser is aware which relates to the claim and shall, and shall procure that any other relevant members of the Purchaser’s Group shall, give, subject to their being paid all reasonable costs and expenses, all such information and assistance, including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents and records, as the Sellers or their financial, accounting or legal advisers may reasonably request. The Sellers agree to keep all such information confidential and to use it only for the purpose of investigating and defending the claim in question.

11.5	Conduct of Third Party Claims
	If the matter or circumstance that may give rise to a claim against the Sellers under this Agreement or against SCPLC under the SCPLC Guarantee in connection with the Guaranteed Leases is a result of or in connection with a claim by or liability to a third party then, subject to Clause 11.5.5 and without prejudice to the rights of the insurers of the Purchaser’s Group:

11.5.1 subject to the Sellers indemnifying the Purchaser or other member of the Purchaser’s Group concerned against all Losses, the Purchaser shall, or the Purchaser shall procure that any other members of the Purchaser’s Group shall, take such action as the Sellers may reasonably request to avoid, dispute, deny, defend, resist, appeal, compromise or contest such claim or liability;

38

11.5.2	the Sellers shall be entitled at their own expense and in their absolute discretion, by notice in writing to the Purchaser, to take such action as they shall deem necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest such claim or liability (including, without limitation, making counterclaims or other claims against third parties) in the name of and on behalf of the Purchaser or other member of the Purchaser’s Group concerned and to have the conduct of any related proceedings, negotiations or appeals and in so doing shall, so far as practicable, consult with the Purchaser before taking such action;
11.5.3	the Purchaser or other member of the Purchaser’s Group concerned may not admit, compromise, dispose of or settle such claim or liability without the written consent of SCPLC on behalf of the Sellers; and
11.5.4	if the Sellers make any request pursuant to Clause 11.5.1 or the Purchaser wishes to take any action to settle a claim or liability in accordance with the provisions of Clause 11.5.5, the Purchaser shall, and the Purchaser shall procure that any other members of the Purchaser’s Group shall, take all reasonable steps to procure that the Sellers are provided on reasonable notice with all material correspondence and documentation relating to the claim as the Sellers may reasonably request. The Sellers agree to keep all such correspondence and information confidential and to use it only for the purpose of dealing with the relevant claim.
11.5.5	If the matter or circumstance that may give rise to a claim against the Sellers under this Agreement is a result of or in connection with a claim by or liability to a third party the subject matter of which is fundamental to the business of the Group and which claim or liability would affect the goodwill of the Hotels in a material adverse way then, without prejudice to the rights of the insurers of the Purchaser’s Group, the Purchaser shall be entitled, at its own expense and subject to it complying with the provisions of this paragraph 11.5.5, to settle such claim or liability with the Sellers’ prior written consent (which consent shall not be unreasonably withheld or delayed) provided that:

(i)	the Purchaser shall notify the Sellers of any intention to settle such claim or liability and in so doing give the Sellers a reasonable time (being no less than 10 Business Days) to respond to such notification, and shall consult with the Sellers, in each case before taking any action, to settle such claim or liability;
(ii)	if the Sellers unreasonably withhold such consent the Purchaser shall be entitled, in its absolute discretion, to settle such claim or liability without prejudice to its ability to claim against the Sellers under this Agreement for any Losses it has suffered in respect of such claim or liability; and
(iii)	if the Sellers reasonably withhold such consent and such claim or liability is settled by or on behalf of the Purchaser, the Sellers shall not be liable under this Agreement in respect of such claim or liability.

11.6 Clauses 10.5, 10.6, 10.7, 10.10, 10.12 and 11 of this Agreement shall not apply to Tax Warranties.

39

11.7	This Clause 11 shall not govern the conduct of Remedial Action undertaken pursuant to Clause 9.6.
12	SCPLC Guarantee
12.1	Holdco shall indemnify SCPLC against any Losses arising out of SCPLC’s obligations under the SCPLC Guarantee in respect of the Indemnified Leases.
12.2	The indemnity in Clause 12.1 above shall expire on the earlier of (i) the expiry of SCPLC’s obligations under the SCPLC Guarantee and (ii) the date on which all liabilities under the Indemnified Leases are reduced to nil.
12.3	Subject to Clause 12.4, the indemnity in Clause 12.1 above shall be reduced to the extent any of the Indemnified Leases cease to be vested in any member of the Purchaser’s Group but, for the avoidance of doubt, should any Indemnified Lease re-vest in any member of the Purchaser’s Group then the indemnity in Clause 12.1 shall be increased accordingly.
12.4	Holdco shall pay SCPLC a guarantee fee of £650,000 per annum for a period of five years from the Completion Date, which fee shall be paid quarterly in advance. The first quarterly instalment of such fee shall be paid on the Completion Date.
12.5	From Completion Holdco shall procure that InterContinental Hotels Limited pays all rents reserved by and performs and observes all tenant’s covenants, conditions, agreements, declarations and other provisions contained or referred to in or arising under any Guaranteed Leases whether currently owned or previously owned by InterContinental Hotels Limited and, in the event of any default by InterContinental Hotels Limited, Holdco shall procure that such rents are paid and all other such covenants, conditions, agreements, declarations and other such provisions and obligations are performed and observed.
12.6

12.6.1

SCPLC hereby waives for so long as InterContinental Hotels Limited remains a member of the Purchaser’s Group (but subject to sub clause 12.6.2) any rights of subrogation, contribution or other rights (whether arising in law or equity) it may have against InterContinental Hotels Limited in relation to any claim made or other proceeding brought (before or after the date of this Agreement) against SCPLC under the SCPLC Guarantee. This waiver is given for the benefit of the Purchaser and InterContinental Hotels Limited.

12.6.2

The waiver set out in sub clause 12.6.1 will not terminate on any sale of InterContinental Hotels Limited by or on behalf of the Purchaser’s Lenders or their successors if such sale results from the enforcement by any such lender or successor of any security over InterContinental Hotels Limited.

40

13	Confidentiality
13.1	Announcements
	Pending Completion, no announcement or circular in connection with the existence or the subject matter of this Agreement shall be made or issued by or on behalf of the Sellers or the Purchaser without the prior written approval of the Sellers and the Purchaser. This shall not affect any announcement or circular required by law or any regulatory body or the rules of any recognised stock exchange on which the shares of any party or any member of the Sellers’ Group or the Purchaser’s Group respectively are listed, but the party with an obligation to make an announcement or issue a circular shall consult with the other party insofar as is reasonably practicable before complying with such an obligation.
13.2	Confidentiality

13.2.1 Subject to Clause 13.1 and Clause 13.2.2:

(i) each of the Sellers and the Purchaser shall treat as strictly confidential and not disclose or use any information received or obtained as a result of entering into this Agreement (or any agreement entered into pursuant to this Agreement) which relates to:

(a)	the provisions of this Agreement and any agreement entered into pursuant to this Agreement; or
(b)	the negotiations relating to this Agreement (and any such other agreements);

(ii)	the Sellers shall treat as strictly confidential and not disclose or use any information relating to the Group Companies following Completion and any other information relating to the business, existence or contents of the financial or other affairs (including future plans and targets and the SCPLC Guarantee) of the Purchaser’s Group;
(iii)	the Purchaser shall treat as strictly confidential and not disclose or use any information relating to the business, financial or other affairs (including future plans and targets) of the Sellers’ Group or, prior to Completion, the Group Companies.

13.2.2 Clause 13.2 shall not prohibit disclosure or use of any information if and to the extent:

(i)	the disclosure or use is required by law, any regulatory body or any recognised stock exchange on which the shares of any Seller or the Purchaser are listed or any member of the Sellers’ Group or the Purchaser’s Group respectively;
(ii)	the disclosure or use is required to vest the full benefit of this Agreement in the Sellers or any of them or the Purchaser;
(iii)	the disclosure or use is required for the purpose of any judicial proceedings arising out of this Agreement or any other agreement entered into under or pursuant to this Agreement or the disclosure is made to a Tax Authority in connection with the Tax affairs of the disclosing party;

41

(iv)	the disclosure is made to professional advisers of the Sellers or the Purchaser on terms that such professional advisers undertake to comply with the provisions of Clause 13.2 in respect of such information as if they were a party to this Agreement;
(v)	the disclosure is made by the Purchaser to its lenders, shareholders or Affiliates who, in its reasonable opinion, need to know such Confidential Information for purposes relating to the subject matter of this Agreement provided such information disclosed is not of the sort referred to in Clause 13.2.1(iii) and provided that such disclosure is made on terms that the recipient undertakes to comply with the provisions of Clause 13.2.1 in respect of such information as though they were a party to this Agreement;
(vi)	the information is or becomes publicly available (other than by breach of the Confidentiality Agreement or of this Agreement);
(vii)	the other parties have given prior written approval for the disclosure or use; or
(viii)	the information is independently developed after Completion,

provided that, prior to disclosure or use of any information pursuant to Clause 13.2.2(i), (ii) or (iii) except in the case of disclosure to a Tax Authority, the party concerned shall promptly notify the other parties of such requirement with a view to providing those other parties with the opportunity to contest such disclosure or use or otherwise to agree the timing and content of such disclosure or use.

14	Other Provisions
14.1	Further Assurances

14.1.1	Each of the Sellers and the Purchaser shall, and shall use reasonable endeavours to procure that any necessary third party shall, from time to time execute such documents and perform such acts and things as any Seller or the Purchaser may reasonably require to transfer the Shares to the Purchaser and to give each of them the full benefit of this Agreement.
14.1.2	Pending registration of the Purchaser as owner of the Shares, the Sellers shall exercise all voting and other rights in relation to such Shares in accordance with the Purchaser’s instructions.
14.1.3	If any property, right or asset which does not form part of the business of the Group has been transferred to the Purchaser, the Purchaser shall transfer such property, right or asset as soon as practicable back to a member of the Sellers’ Group nominated by the Sellers.
14.1.4	The Purchaser shall, and shall procure that the relevant Group Companies shall, retain for a reasonable period, such reasonable period to include (for the avoidance of doubt and without limitation) such period as is required under any applicable Tax Statute, from Completion the books, records and documents of the Group Companies to the extent they relate to the period prior to Completion and shall, and shall procure that the relevant Group Companies shall, allow the Sellers reasonable access to such books, records and documents, including the right to take copies, at the Sellers’ expense.

42

14.1.5

The Purchaser shall assist and co-operate with the Sellers in procuring prior to Completion that each of the Group Companies whose name contains or includes the names Holiday Inn, InterContinental, IHG, Posthouse, Six Continents or Spirit shall change its name so that it does not contain any such name or any name which is likely to be confused with the same.

14.1.6

The Purchaser shall not, and shall procure that no member of the Purchaser’s Group shall, after Completion, use in any way whatsoever any trading names or registered or unregistered trade marks owned by or licensed to the Sellers’ Group (including, without limitation, the names Holiday Inn, InterContinental, IHG, Posthouse, Six Continents and Spirit) other than as permitted under the Management Agreements.

14.2 Release of Guarantees

14.2.1

Save in relation to the guarantee referred to in Clause 12 to which the provisions of that Clause shall apply, the Purchaser shall use reasonable endeavours to procure by Completion or, to the extent not done by Completion, within 30 days thereafter or, to the extent not done within such period, as soon as reasonably practicable thereafter, the release of any member of the Sellers’ Group from any securities, guarantees or indemnities given by or binding upon any member of the Sellers’ Group in respect of any liability of the Group Companies. Pending such release, the Purchaser shall indemnify the members of the Sellers’ Group against all amounts paid by any of them pursuant to any such securities, guarantees and indemnities in respect of such liability of the Group Companies.

14.2.2

The Sellers shall use reasonable endeavours to procure by Completion or, to the extent not done by Completion, within 30 days thereafter, or, to the extent not done within such period, as soon as reasonably practicable thereafter, the release of each Group Company from any securities, guaranties or indemnities given by or binding upon the Group Company in respect of any liability of any member of the Sellers’ Group. Pending such release, the Sellers shall indemnify the Group Companies against all amounts paid by any of them pursuant to any such securities, guarantees and indemnities in respect of such liability of the Sellers.

14.3 Contracts

14.3.1

In relation to any Contract which is not listed in Schedule 10 or a Retained Contract and is not assignable without a Third Party Consent, this Agreement shall not be construed as an assignment or an attempted assignment and the Sellers and the Purchaser shall each use reasonable endeavours both before and after Completion to obtain all necessary Third Party Consents as soon as possible and shall keep each other informed of progress in obtaining such Third Party Consents. The Sellers or the Purchaser, as the case may be, shall deliver to the other, on Completion or, if later, as soon as possible after receipt, any Third Party Consent and an assignment or novation duly executed by the appropriate parties.

14.3.2

In connection with the obtaining of any Third Party Consent referred to in Clause 14.3.1, the Purchaser or the relevant Seller, as the case may be, shall supply to the other such information and references regarding the financial position of the Purchaser or relevant Seller, as the case may be, as may be reasonably requested by the other party or any relevant third party and shall enter into such undertakings

43

	or procure such guarantees in favour of any relevant third party as may be reasonably requested in respect of any liabilities or obligations to which the Purchaser or the relevant Seller, as the case may be, will become subject or which the Purchaser or the relevant Seller, as the case may be, will incur on assignment.
14.3.3	In relation to the Retained Contracts, the parties agree that:

(i)	notwithstanding the provisions of Clauses 14.3.1 and 14.3.2, the Purchaser shall, or shall procure that the relevant member of the Purchaser’s Group shall, at the Sellers’ request, use all reasonable endeavours with the co-operation of the Sellers to procure the novation of the Retained Contracts to such member of the Sellers’ Group as the Sellers identify in their request, as soon as reasonably practicable following Completion and the Purchaser shall provide or procure the provision of any information or guarantees reasonably requested by the person, firm or company concerned and the Purchaser shall, or shall procure that the relevant member of the Purchaser’s Group shall, as soon as possible after receipt, deliver such novation to the Sellers;
(ii)	until the benefit and burden of the relevant Retained Contract is transferred in accordance with the provisions of Clause 14.3.3(i), the Purchaser shall, or shall procure that the relevant member of the Purchaser’s Group shall, to the extent it is lawfully able to do so, hold it on trust for the Sellers or any other member of the Sellers’ Group absolutely and receive any payment made, goods delivered or other benefit received to any member of the Purchaser’s Group pursuant to such contract as trustee and as soon as reasonably practicable following receipt of the same shall forward and transfer to the relevant member of the Sellers’ Group such payment, goods or other benefit or, where it is not lawfully able to do so, make such other arrangements with the Sellers to provide to the relevant member of the Sellers’ Group the benefits of the Retained Contracts, including the enforcement at the cost and for the account of the Sellers of all rights of the relevant Group Company against any other party thereto;
(iii)	until the benefit and burden of the relevant Retained Contract is transferred in accordance with the provisions of Clause 14.3.3(i), the Purchaser shall, or shall procure that the relevant member of the Purchaser’s Group shall, carry out, perform and discharge the Group Companies’ obligations under the Retained Contracts other than any obligations of the Sellers pursuant to sub-Clause 14.3.3(iv) and (so far as it lawfully may) do all such things as the Sellers may reasonably require to enable due performance of the Retained Contracts and shall indemnify and keep indemnified the Sellers against any Losses incurred by any member of the Sellers’ Group arising from the failure by any member of the Purchaser’s Group to carry out, perform or discharge such obligations or do such things as the Sellers may reasonably require to enable due performance of the Retained Contracts and against any Losses which any member of the Sellers’ Group may suffer by reason of their taking any reasonable action to avoid, resist or defend any Loss referred to in this paragraph; and
(iv)	the Sellers undertake to perform, or to procure the performance (unless prohibited by law from doing so), of all Retained Contracts in accordance

44

with their terms and conditions as sub-contractor of the relevant member of the Purchaser’s Group provided that such sub-contracting is permitted under the terms of the relevant Retained Contract and, where sub-contracting is not permissible, the Sellers undertake to perform, or procure the performance (unless prohibited by law from doing so), of the relevant Retained Contract as agent of the Purchaser or the other member of the Purchaser’s Group as appropriate in accordance with its terms and conditions and in each case to indemnify the Purchaser against any Losses incurred by any member of the Purchaser’s Group in respect of any failure on the part of a member of the Sellers’ Group to perform the obligations contained in this sub-Clause 14.3.3(iv).

14.3.4	In relation to the Purchaser Retained Contracts, the Purchaser shall procure that the relevant member of the Purchaser’s Group complies with the terms of the relevant Transfer Agreement applicable to such Purchaser Retained Contracts.
14.3.5	In relation to the Split Contracts, the parties agree that:

(i)

the Purchaser shall, or shall procure that the relevant member of the Purchaser’s Group shall, to the extent it is lawfully able to do so, (i) hold any payments, goods or other benefits received under the Split Contracts to the Relevant Extent on trust for the Sellers or any other member of the Sellers’ Group and as soon as reasonably practicable following receipt of the same shall forward and transfer to the Sellers such payments, goods and other benefits or, where it is not lawfully able to do so, make such other arrangements with the Sellers to provide to the relevant member of the Sellers’ Group the benefits of the Split Contracts to the Relevant Extent, including the enforcement at the cost and for the account of the Sellers of all rights of the relevant Group Company against any other party thereto; and (ii) carry out or perform its obligations under the Split Contracts and (so far as it lawfully may) do all such things as the Sellers may reasonably require to enable due performance by the Sellers’ Group of the Split Contracts to the Relevant Extent and shall indemnify and keep indemnified the Sellers against any Losses incurred by any member of the Sellers’ Group arising from the failure by any member of the Purchaser’s Group to carry out, perform or discharge such obligations or do such things as the Sellers may reasonably require to enable due performance of the Split Contracts to the Relevant Extent and against any Losses which any member of the Sellers’ Group may suffer by reason of their taking any reasonable action to avoid, resist or defend any liability referred to in this paragraph;

(ii)

the Sellers undertake to perform, or to procure the performance (unless prohibited by law from doing so), to the Relevant Extent, of all Split Contracts in accordance with their terms and conditions as sub-contractor of the relevant member of the Purchaser’s Group provided that such sub-contracting is permitted under the terms of the relevant Split Contract and, where sub-contracting is not permissible, the Sellers undertake to perform, or procure the performance (unless prohibited by law from doing so), to the Relevant Extent, of the relevant Split Contract as agent of the Purchaser or the other member of the Purchaser’s Group as appropriate in accordance

45

with its terms and conditions and in each case to indemnify the Purchaser against any Losses incurred by any member of the Purchaser’s Group in respect of any failure on the part of a member of the Sellers’ Group to perform the obligations contained in this sub-Clause 14.3.5(ii); and

(iii)

if the Sellers so request, the Purchaser shall take such action, or procure that such action is taken, as is reasonably necessary to agree an arrangement with the counterparty or counterparties to the relevant Split Contract whereby the Split Contract is terminated and replaced by two or more contracts (including one with the Purchaser and one with any member of the Sellers’ Group) and provided that, so far as the terms of any contract to be entered into by the Purchaser or other member of the Purchaser’s Group or the Sellers or any other member of the Sellers’ Group is concerned, such terms shall be no worse than the equivalent terms contained in the relevant Split Contract, reflecting the relevant requirements of the Sellers and the Purchaser.

14.3.6 In relation to the Sellers’ Group Contracts, the parties agree that:

(i)

the Sellers shall, or shall procure that relevant member of the Sellers’ Group shall, to the extent they are lawfully able to do so, (i) hold any payments, goods or other benefits received under the Sellers’ Group Contracts to the Relevant Extent on trust for the relevant member of the Purchaser’s Group and as soon as reasonably practicable following receipt of the same shall forward and transfer to the Purchaser such payments, goods and other benefits or, where it is not lawfully able to do so, make such other arrangements with the Purchaser to provide to the relevant member of the Purchaser’s Group the benefits of the Sellers’ Group Contracts to the Relevant Extent, including the enforcement at the cost and for the account of the Purchaser of all rights of the relevant member of the Sellers’ Group against any other party thereto; and (ii) carry out or perform its obligations (unless prohibited by law from doing so), of all Sellers’ Group Contracts and (so far as it lawfully may) do all such things as the Purchaser may reasonably require to enable due performance by the Purchaser’s Group of the Sellers’ Group Contracts to the Relevant Extent and shall indemnify and keep indemnified the Purchaser against any Losses incurred by any member of the Purchaser’s Group arising from the failure by any member of the Sellers’ Group to carry out, perform or discharge such obligations or do such things as the Purchaser may reasonably require to enable due performance of the Sellers’ Group Contracts to the Relevant Extent and against any Losses which any member of the Purchaser’s Group may suffer by reason of their taking any reasonable action to avoid, resist or defend any Loss referred to in this paragraph;

(ii)

the Purchaser undertakes to perform, or to procure the performance (unless prohibited by law from doing so), to the Relevant Extent, of all the Sellers’ Group Contracts in accordance with their terms and conditions as sub-contractor of the relevant member of the Sellers’ Group provided that such sub-contracting is permitted under the terms of the relevant Sellers’ Group Contract, and where sub-contracting is not permissible, the Purchaser undertakes to perform, or procure the performance (unless

46

prohibited by law from doing so), to the Relevant Extent, of the relevant Sellers’ Group Contract as agent of any Seller or other member of the Sellers’ Group as appropriate in accordance with its terms and conditions and in each case to indemnify the Sellers against any Losses incurred by any member of the Sellers’ Group in respect of any failure on the part of a member of the Purchaser’s Group to perform the obligations contained in this sub-Clause 14.3.6(ii); and

(iii)

if the Purchaser so requests, the Sellers shall take such action, or procure that such action is taken as is reasonably necessary to agree an arrangement with the counterparty or counterparties to the relevant Sellers’ Group Contract whereby the Sellers’ Group Contract is terminated and replaced by two or more contracts (including one with the Purchaser and one with any member of the Sellers’ Group) and provided that, so far as the terms of any contract to be entered into by the Purchaser or any member of the Purchaser’s Group or the Sellers or any member of the Sellers’ Group is concerned, such terms shall be no worse than the equivalent terms contained in the relevant Sellers’ Group Contract, reflecting the relevant requirements of the Sellers and the Purchaser.

14.3.7

Insurance

The Purchaser agrees that, following Completion, the Sellers’ Group shall not be required to maintain any of the insurance policies maintained prior to Completion by or on behalf of the Sellers’ Group in relation to any Group Company. If any Seller decides to maintain any of such policies, the Purchaser shall not be entitled to benefit from such policies and the Purchaser will put in place such insurances as it shall require in relation thereto.

14.4 Sellers’ Liability

14.4.1

The liability of each of the Sellers under or in relation to a breach of this Agreement shall be joint and several.

14.4.2

Any liability to the Purchaser under this Agreement may in whole or in part be released, compounded or compromised or time or indulgence given by the Purchaser in its absolute discretion as regards any of the Sellers under such liability without in any way prejudicing or affecting its rights against any other or others of the Sellers under the same or a like liability whether joint and several or otherwise.

14.5 Whole Agreement

14.5.1	This Agreement contains the whole agreement between the Sellers and the Purchaser relating to the subject matter of this Agreement at the date of this Agreement to the exclusion of any terms implied by law which may be excluded by contract and supersedes any previous written or oral agreement between the Sellers and the Purchaser in relation to the matters dealt with in this Agreement.
14.5.2	The Purchaser acknowledges that it has not been induced to enter this Agreement by any representation, warranty or undertaking not expressly incorporated into it and (without prejudice to the generality of the foregoing) that neither the Sellers nor any other member of the Sellers’ Group makes any representation or warranty as

47

	to the accuracy of the forecasts, estimates, projections, statements of intent or statements of opinion provided to the Purchaser or its representatives or advisers on or prior to the date of this Agreement (whether in presentations or otherwise) or in or pursuant to the Disclosure Letter.
14.5.3	So far as is permitted by law and except in the case of fraud, each of the Sellers and the Purchaser agrees and acknowledges that its only right and remedy in relation to any warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement to the exclusion of all other rights and remedies (including those in tort or arising under statute).
14.5.4	In Clauses 14.5.1 to 14.5.3, “this Agreement” includes the Disclosure Letter, the Confidentiality Agreement and all documents entered into pursuant to this Agreement.

14.6	Reasonableness
	Each of the Sellers and the Purchaser confirms it has received independent legal advice relating to all the matters provided for in this Agreement, including the terms of Clause 14.5 (Whole Agreement) and agrees that the provisions of this Agreement (including the Disclosure Letter, the Confidentiality Agreement and all documents entered into pursuant to this Agreement) are fair and reasonable.
14.7	Assignment

14.7.1

Except as otherwise expressly provided in this Agreement, neither the Sellers nor the Purchaser may, without the prior written consent of the other, assign, grant any security interest over, hold on trust or otherwise transfer the benefit of the whole or any part of this Agreement nor shall the Purchaser be entitled to make any claim against any Seller in respect of any Losses which it does not suffer in its own capacity as beneficial owner of the Shares.

14.7.2

Except as otherwise expressly provided in this Agreement, the Sellers or the Purchaser may, without the consent of the other, assign to a connected company the benefit (but not the burden) of the whole or any part of this Agreement provided that:

(i)	such assignment shall not be absolute but shall be expressed to have effect only for so long as the assignee remains a connected company of the party concerned;
(ii)	the assignee shall not be entitled to receive under this Clause any greater amount than that to which the Purchaser or Sellers, as appropriate, would have been entitled;
(iii)	an additional payment will not be required to be made to the assignee as a result of such an assignment.

	For the purposes of this Clause, a “connected company” is a company which is a subsidiary of the party concerned or which is a holding company of such party or a subsidiary of such holding company.
14.7.3	The Purchaser may charge and/or assign the benefit of this Agreement to any bank or financial institution or other person by way of security or otherwise for the purposes of or in connection with the financing or refinancing (whether in whole or

48

in part) by the Purchaser of the acquisition of the Assets provided that the Sellers shall incur no greater liability than if any such assignment had not taken place. Without limitation to the foregoing, any such bank, financial institution or person (or any administrative receiver appointed by any of the foregoing or any other person appointed to enforce any such security) may charge or assign such rights on, for the purpose of or in connection with, any enforcement of the security under such finance arrangements.

14.8 Third Party Rights

14.8.1	A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of, or enjoy any benefit under, this Agreement except to the extent set out in sub clause 14.8.2.
14.8.2	Any person may enforce and rely upon Clause 12.6 to the same extent as if it were a party.
14.8.3	This Agreement may be terminated and any term may be amended or waived without the consent of any persons referred to in sub clause 14.8.2.

14.9	Variation
	No variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the Sellers and the Purchaser.
14.10	Time of the Essence
	Time shall be of the essence of this Agreement both as regards any dates and periods mentioned and as regards any dates and periods which may be substituted for them in accordance with this Agreement or by agreement in writing between the Sellers and the Purchaser.
14.11	Method of Payment
	Wherever in this Agreement provision is made for the payment by one party to the other, such payment shall be effected by crediting for same day value the account specified by the payee to the payer reasonably in advance and in sufficient detail to enable payment by telegraphic or other electronic means to be effected on or before the due date for payment.
14.12	Costs

14.12.1	The Sellers shall bear all costs incurred by them in connection with the preparation, negotiation and entry into of this Agreement and the sale of the Assets and any Losses as referred to in sub clause 9.5.1 of this Agreement.
14.12.2	The Purchaser shall bear all such costs incurred by it in connection with the preparation, negotiation and entry into of this Agreement and the purchase of the Assets.

14.13	Stamp Duty, Fees and Taxes
	The Purchaser shall bear the cost of all stamp duty and all registration and transfer taxes and duties as a result of the transactions contemplated by this Agreement. The Purchaser shall be responsible for arranging the payment of such stamp duty and all other such fees, taxes and duties, including fulfilling any administrative or reporting obligation imposed by

49

	the jurisdiction in question in connection with the payment of such taxes and duties. The Purchaser shall indemnify the Sellers and the other members of the Sellers’ Group against any Losses suffered by the Sellers or any other member of the Sellers’ Group as a result of the Purchaser failing to comply with its obligations under this Clause 14.13.
14.14	Interest
	Save as expressly provided herein, if the Sellers or the Purchaser defaults in the payment when due of any sum payable under this Agreement, its liability shall be increased to include interest on such sum from the date when such payment is due until the date of actual payment (after as well as before judgment) at a rate per annum of 4 per cent above the base rate from time to time of Barclays Bank PLC. Such interest shall accrue from day to day.
14.15	Grossing-up of Indemnity Payments, VAT

14.15.1	Where any payment is made under this Agreement pursuant to an indemnity, compensation or reimbursement provision, credit shall be given for any tax relief available for the recipient or Group Company in respect of the matter giving rise to the payment and, if that sum is subject to a charge to Taxation in the hands of the recipient (other than Taxation attributable to a payment being properly treated as an adjustment to the consideration paid by the Purchaser for the Group), the sum payable shall be increased to such sum as will ensure that after payment of such Taxation the recipient shall be left with a sum equal to the sum that it would have received in the absence of such a charge to Taxation.
14.15.2	Where any sum constituting an indemnity, compensation or reimbursement to any party to this Agreement (the “Party”) is paid to a person other than the Party but is treated as taxable in the hands of the Party, the payer shall promptly pay to the Party such sum as shall reimburse the Party for all Taxation suffered by it in respect of the payment (after giving credit for any tax relief available to the Party in respect of the matter giving rise to the payment).
14.15.3	Where under the terms of this Agreement one party is liable to indemnify or reimburse another party in respect of any costs, charges or expenses, the payment shall on presentation by the relevant party to the other party of a VAT invoice include an amount equal to any VAT thereon not otherwise recoverable by the other party, subject to that party using all reasonable endeavours to recover such amount of VAT as may be practicable.
14.15.4	If any payment under this Agreement constitutes the consideration for a taxable supply for VAT purposes, then in addition to that payment the payer shall pay against delivery of a VAT invoice any VAT due.
14.15.5	For the avoidance of doubt, for the purposes of this Clause 14.15, a tax relief shall not include any increase in the acquisition cost that would be taken into account on a future disposal of an asset as a result of any payment to which this clause applies.

14.16 Notices

14.16.1 Any notice or other communication in connection with this Agreement (each, a “Notice”) shall be:

50

(i)	in writing;
(ii)	delivered by hand, fax, pre-paid first class post or courier.

14.16.2	A Notice to any Seller shall be sent to the following address, or such other person or address as InterContinental Hotels Group PLC on behalf of the Sellers may notify to the Purchaser from time to time:
	InterContinental Hotels Group PLC 67 Alma Road, Windsor, Berkshire, SL4 3HD
	Fax: 08701 974 256
	Attention: The Company Secretary
	with a copy to:
	SVP Legal and General Counsel 67 Alma Road, Windsor, Berkshire, SL4 3HD
	Fax: 08701 971 463
14.16.3	A Notice to the Purchaser shall be sent to the following address, or such other person or address as the Purchaser may notify to the Sellers from time to time:
	LGR Acquisition 88 Wood Street, London EC2V 7AJ
	LGR Holdings Limited 88 Wood Street, London EC2V 7AJ
14.16.4	A Notice shall be effective upon receipt and shall be deemed to have been received:

(i)	60 hours after posting, if delivered by pre-paid first class post;
(ii)	at the time of delivery, if delivered by hand or courier;
(iii)	at the time of transmission in legible form, if delivered by fax.

14.17 Invalidity

14.17.1

If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, the provision shall apply with whatever deletion or modification is necessary so that the provision is legal, valid and enforceable and gives effect to the commercial intention of the parties.

14.17.2

To the extent it is not possible to delete or modify the provision, in whole or in part, under Clause 14.17.1, then such provision or part of it shall, to the extent that it is illegal, invalid or unenforceable, be deemed not to form part of this Agreement and the legality, validity and enforceability of the remainder of this Agreement shall, subject to any deletion or modification made under Clause 14.17.1, not be affected.

14.18	Counterparts
	This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. The Sellers and the Purchaser may enter into this Agreement by signing any such counterpart.

51

14.19 Governing Law and Submission to Jurisdiction

14.19.1

This Agreement shall be governed by and construed in accordance with English law.

14.19.2

Each of the Sellers and the Purchaser irrevocably agrees that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement and that accordingly any proceedings arising out of or in connection with this Agreement shall be brought in such courts. Each of the Sellers and the Purchaser irrevocably submits to the jurisdiction of such courts and waives any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum.

In witness whereof this Agreement has been duly executed.

52

SIGNED by	M. J. FOXON
on behalf of Six Continents PLC
SIGNED by	M. J. FOXON
on behalf of IHC London (Holdings) Limited
SIGNED by	MARK NEWMAN
on behalf of LGR Acquisition	CHRIS MORRISH
	RYAN PRINCE
SIGNED by	MARK NEWMAN
on behalf of LGR Holdings Limited	CHRIS MORRISH
	RYAN PRINCE

53

Schedule 1

Details of Shares to be sold

		(3)
	(2)	Consideration
(1)	Number of Shares/Name of	Allocation
Name of Seller	Company	£
Six Continents PLC	150,000,001 ordinary shares of £1 each in the capital of NAS Cobalt No.2 Limited	£112,043,659
	121,644,721 ordinary shares of 10 pence each and 121,644,721 5 per cent. non-cumulative preference shares of 10 pence each respectively in the capital of Six Continents Hotels & Holidays Limited	£27,769,000
	120,000,001 ordinary shares of £1 each and 20,000 preference shares of £1 each respectively in the capital of Holiday Inn Limited	£105,044,000
IHC London (Holdings) Ltd	300 ordinary shares of £1 each in the capital of London Forum Hotel Limited	£40,924,000

54

Schedule 2

The Companies and the Subsidiaries

Part 1 — Particulars of the Companies

Name of Company:	Holiday Inn Limited
Registered number:	04160818
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	15/02/2001, United Kingdom
Issued share capital:	£140,000,001 divided into:
	120,000,001 ordinary shares of £1 each
	20,000 preference shares of £1 each
Authorised share capital:	£140,050,000 divided into:
	120,050,000 ordinary shares of £1 each
	20,000 preference shares of £1 each
Registered shareholders and shares held:	Six Continents PLC:
	120,000,001 ordinary shares of £1 each
	20,000 preference shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

55

Name of Company:	London Forum Hotel Limited
Registered number:	00483582
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	21/06/1950, United Kingdom
Issued share capital:	£300 divided into:
	300 ordinary shares of £1 each
Authorised share capital:	£40,300 divided into:
	40,300 ordinary shares of £1 each
Registered shareholders and shares held:	IHC London (Holdings) Limited:
	300 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

56

Name of Company:	NAS Cobalt No.2 Limited
Registered number:	04160938
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	15/02/2001, United Kingdom
Issued share capital:	£150,000,001 divided into:
	150,000,001 ordinary shares of £1 each
Authorised share capital:	£150,050,000: divided into
	150,050,000 ordinary shares of £1 each
Registered shareholders and shares held:	Six Continents PLC:
	150,000,001 ordinary shares of £1 each
Directors:	Catherine Springett
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

57

Name of Company:	Six Continents Hotels & Holidays Limited
Registered number:	00368815
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	20/08/1941, United Kingdom
Issued share capital:	£24,328,944.20 divided into:
	121,644,721 5 per cent. non-cumulative preference shares of 10p each
	121,644,721 ordinary shares of 10p each
Authorised share capital:	£25,000,000 divided into:
	125,000,000 5 per cent. non-cumulative preference shares of 10p each
	125,000,000 ordinary shares of 10p each
Registered shareholders and shares held:	Six Continents PLC:
	121,644,721 5 per cent. non-cumulative preference shares of 10p each
	121,644,721 ordinary shares of 10p each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

58

Part 2 — Particulars of the Subsidiaries

Name of Company:	CP Heathrow Limited
Registered number:	05167865
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	01/07/2004, United Kingdom
Issued share capital:	£20,000,000 divided into:
	20,000,000 ordinary shares of £1 each
Authorised share capital:	£35,000,100 divided into:
	35,000,100 ordinary shares of £1 each
Registered shareholders and shares held:	Kensington PH Limited:
	20,000,000 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

59

Name of Company:	Centre Hotels (Cranston) Limited (dormant)
Registered number:	SC004676
Registered office:	Holiday Inn
	107 Queensferry Road
	Edinburgh EH4 3HL
Date and place of incorporation:	19/11/1900, United Kingdom
Issued share capital:	£5,793,030.40 divided into:
	85,440 7 per cent. cumulative preference shares of £1 each
	57,075,904 ordinary shares of 10p each
Authorised share capital:	£6,085,440 divided into:
	85,440 7 per cent. cumulative preference shares of £1 each
	60,000,000 ordinary shares of 10p each
Registered shareholders and shares held:	InterContinental Hotels Group (UK) Limited:
	85,440 7 per cent. cumulative preference shares of £1 each
	57,075,904 ordinary shares of 10p each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

60

Name of Subsidiary:	Holiday Inn (Basildon) Limited
Registered number:	04721005
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	Holiday Inn Finance Properties Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

61

Name of Subsidiary:	Holiday Inn (Birmingham City) Limited
Registered number:	04720951
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

62

Name of Subsidiary:	Holiday Inn (Birmingham M6 J7) Limited
Registered number:	04712826
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

63

Name of Subsidiary:	Holiday Inn (Brentwood) Limited
Registered number:	04712792
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

64

Name of Subsidiary:	Holiday Inn (Carlisle) Limited
Registered number:	04720983
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	Holiday Inn Finance Properties Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

65

Name of Subsidiary:	Holiday Inn (Chester) Limited
Registered number:	04712836
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

66

Name of Subsidiary:	Holiday Inn (Colchester) Limited
Registered number:	04712808
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

67

Name of Subsidiary:	Holiday Inn (Coventry) Limited
Registered number:	04721088
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	Holiday Inn Finance Properties Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

68

Name of Subsidiary:	Holiday Inn (Edinburgh) Limited
Registered number:	04721007
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

69

Name of Subsidiary:	Holiday Inn (Edinburgh North) Limited
Registered number:	04712766
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Group (UK) Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

70

Name of Subsidiary:	Holiday Inn (Farnborough) Limited
Registered number:	04712785
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

71

Name of Subsidiary:	Holiday Inn Finance Properties Limited
Registered number:	03363702
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	01/05/1997, United Kingdom
Issued share capital:	£9,350,001 divided into:
	9,350,001 ordinary shares of £1 each
Authorised share capital:	£9,500,000 divided into:
	9,500,000 ordinary shares of £1 each
Registered shareholders and shares held:	NAS Cobalt No.2 Limited:
	9,350,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

72

Name of Subsidiary:	Holiday Inn (Guildford) Limited
Registered number:	04721041
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 shares of £1 each.
-Registered shareholders and shares held:	Holiday Inn Limited:
	100,001 ordinary shares of £1 each
Directors:	Alan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

73

Name of Subsidiary:	Holiday Inn (Hemel Hempstead) Limited
Registered number:	04721014
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

74

Name of Subsidiary:	Holiday Inn (High Wycombe) Limited
Registered number:	04721091
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	Holiday Inn Finance Properties Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

75

Name of Subsidiary:	Holiday Inn (Ipswich) Limited
Registered number:	04712870
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

76

Name of Subsidiary:	Holiday Inn (Lancaster) Limited
Registered number:	04720994
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

77

Name of Subsidiary:	Holiday Inn (Leicester) Limited
Registered number:	04721079
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	Leased Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

78

Name of Subsidiary:	Holiday Inn (London Gatwick) Limited
Registered number:	04721762
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	03/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

79

Name of Subsidiary:	Holiday Inn (London Heathrow Ariel) Limited
Registered number:	04712802
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

80

Name of Subsidiary:	Holiday Inn (London Heathrow M4 J4) Limited
Registered number:	04721060
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

81

Name of Subsidiary:	Holiday Inn (London Regents Park) Limited
Registered number:	04720936
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	Holiday Inn Finance Properties Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

82

Name of Subsidiary:	Holiday Inn (Maidenhead) Limited
Registered number:	04712759
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Group (UK) Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

83

Name of Subsidiary:	Holiday Inn (Milton Keynes) Limited
Registered number:	04720922
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

84

Name of Subsidiary:	Holiday Inn (Norwich) Limited
Registered number:	04721090
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	1 ordinary share of £1
	Leased Hotels Limited:
	100,000 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

85

Name of Subsidiary:	Holiday Inn (Reading) Limited
Registered number:	04721028
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,000 ordinary shares of £1 each
	InterContinental Hotels Group Limited:
	1 ordinary share of £1
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

86

Name of Subsidiary:	Holiday Inn (Southampton) Limited
Registered number:	04720965
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

87

Name of Subsidiary:	Holiday Inn (Southampton Eastleigh) Limited
Registered number:	04721087
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	Holiday Inn Finance Properties Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

88

Name of Company:	Holiday Inn UK Limited (dormant)
Registered number:	04225199
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	30/05/2001, United Kingdom
Issued share capital:	£1 divided into:
	1 ordinary share of £1 each
Authorised share capital:	£1,000 divided into:
	1,000 ordinary shares of £1 each
Registered shareholders and shares held:	NAS Cobalt No.2 Limited:
	1 ordinary share of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

89

Name of Company:	Holiday Inns Garden Court Limited (dormant)
Registered number:	02189067
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	05/11/1987, United Kingdom
Issued share capital:	£100 divided into:
	100 ordinary shares of £1 each
Authorised share capital:	£100 divided into:
	100 ordinary shares of £1 each
Registered shareholders and shares held:	Holiday Inns (England) Limited:
	1 ordinary share of £1 each
	Six Continents Hotels & Holidays Limited:
	99 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

90

Name of Company:	HI (London Heathrow M4 J4) No.2 Limited
Registered number:	05174337
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	08/07/2004, United Kingdom
Issued share capital:	£100,000 divided into:
	100,000 ordinary shares of £1 each
Authorised share capital:	£100,100 divided into:
	100,100 ordinary shares of £1 each
Registered shareholders and shares held:	Holiday Inn (London Heathrow M4 J4) Limited:
	100,000 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

91

Name of Subsidiary:	IHG (Brent Cross) Limited
Registered number:	04712776
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	26/03/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Group (UK) Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

92

Name of Subsidiary:	IHG (Leeds) Limited
Registered number:	04721094
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	£100,001 divided into:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Group (UK) Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

93

Name of Subsidiary:	IHG (Strathclyde) Limited
Registered number:	04721093
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2003, United Kingdom
Issued share capital:	InterContinental Hotels Group (UK) Limited:
	100,001 ordinary shares of £1 each
Authorised share capital:	£50,000,000 divided into:
	50,000,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Group (UK) Limited:
	100,001 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

94

Name of Company:	InterContinental Group Limited (dormant)
Registered number:	00872077
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	22/02/1966, United Kingdom
Issued share capital:	£100 divided into:
	100 ordinary shares of £1 each
Authorised share capital:	£100 divided into:
	100 ordinary shares of £1 each
Registered shareholders and shares held:	Centre Hotels (Cranston) Limited:
	100 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

95

Name of Company:	InterContinental Holdings Limited (dormant)
Registered number:	01295183
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	21/01/1977, United Kingdom
Issued share capital:	£100 divided into:
	50 ‘A’ ordinary shares of £1 each
	50 ‘B’ shares of £1 each
Authorised share capital:	£100 divided into:
	50 ‘A’ ordinary shares of £1 each
	50 ‘B’ shares of £1 each
Registered shareholders and shares held:	Kenneth Frederick Butcher:
	1 ‘A’ ordinary share of £1
	InterContinental Hotels Group (UK) Limited:
	49 ‘A’ ordinary shares of £1 each
	InterContinental Hotels Group (UK) Limited:
	50 ‘B’ shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

96

Name of Subsidiary:	InterContinental Hotels Limited
Registered number:	03203484
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/05/1996, United Kingdom
Issued share capital:	£100,395,050 divided into:
	401,580,200 ordinary shares of 25p each
Authorised share capital:	£113,000,000 divided into:
	452,000,000 ordinary shares of 25p each
Registered shareholders and shares held:	NAS Cobalt No.2 Limited:
	401,580,200 ordinary shares of 25p each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

97

Name of Subsidiary:	InterContinental Hotels Group (UK) Limited
Registered number:	00719804
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	29/03/1962, United Kingdom
Issued share capital:	£100 divided into:
	100 ordinary £1 shares
Authorised share capital:	£100 divided into:
	100 ordinary shares of £1 each
Registered shareholders and shares held:	Six Continents Hotels & Holidays Limited:
	100 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

98

Name of Subsidiary:	Kensington PH Limited
Registered number:	04407187
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	02/04/2002, United Kingdom
Issued share capital:	£1 divided into:
	1 ordinary share of £1
Authorised share capital:	£100 divided into:
	100 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Limited:
	1 ordinary share of £1
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

99

Name of Subsidiary:	Leased Hotels Limited
Registered number:	00955200
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	30/05/1969, United Kingdom
Issued share capital:	£20,000,000 divided into:
	10,000 ‘A’ ordinary shares of £1 each
	10,000 ‘B’ ordinary shares of £1 each
Authorised share capital:	£20,000,000 divided into:
	10,000 ‘A’ ordinary shares of £1 each
	10,000 ‘B’ ordinary shares of £1 each
Registered shareholders and shares held:	NAS Cobalt No.2 Limited:
	10,000 ‘A’ ordinary shares of £1 each
	10,000 ‘B’ ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

100

Name of Subsidiary:	Pendigo Hotels Limited
Registered number:	03929826
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	21/02/2000, United Kingdom
Issued share capital:	£6,750,002 divided into:
	6,750,002 ordinary shares of £1 each
Authorised share capital:	£7,500,000 divided into:
	7,500,000 ordinary shares of £1 each
Registered shareholders and shares held:	Six Continents Hotels & Holidays Limited:
	6,750,002 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

101

Name of Company:	SCH (UK) Limited (dormant)
Registered number:	04635669
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	13/01/2003, United Kingdom
Issued share capital:	£1 divided into:
	1 ordinary share of £1
Authorised share capital:	£1,000 divided into:
	1,000 ordinary shares of £1 each
Registered shareholders and shares held:	InterContinental Hotels Group (UK) Limited:
	1 ordinary share of £1 each
Directors:	Catherine Springett
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

102

Name of Subsidiary:	Spirit Health and Fitness Limited
Registered number:	01510665
Registered office:	67 Alma Road
	Windsor
	Berkshire SL4 3HD
Date and place of incorporation:	04/08/1980, United Kingdom
Issued share capital:	£75,000 divided into:
	75,000 ordinary shares of £1 each
Authorised share capital:	250,000 ordinary shares of £1 each
Registered shareholders and shares held:	NAS Cobalt No.2:
	75,000 ordinary shares of £1 each
Directors:	Allan Scott McEwan
	Catherine Springett
	Nigel Peter Stocks
	Richard Thomas Winter
Secretary:	Catherine Engmann
Accounting reference date:	31/12
Auditors:	Ernst & Young LLP

103

Schedule 3
The Properties
(Clause 1.1)

Part 1
Certificated Properties

Property: Crowne Plaza Birmingham NEC

Reference Number: 2

All that leasehold property known as Crowne Plaza Birmingham NEC at National Exhibition Centre, Birmingham, West Midlands registered at the Land Registry with Title Absolute under Title Number WM722535 which is presently vested in Pendigo Hotels Limited (Company No. 3929826).

Property: Crowne Plaza London — Heathrow

Reference Number: 4

All that freehold property known as Crowne Plaza London — Heathrow at land and buildings on the west side of Stockley Road and the north side of Cherry Lane, West Drayton registered at the Land Registry with Title Absolute under Title Number NGL160680 which is presently vested in Kensington PH Limited (Company No. 4407187)

Property: Holiday Inn Brentwood

Reference Number: 14

All that freehold property known as Holiday Inn Brentwood at Brook Street, Brentwood registered at the Land Registry with Title Absolute under Title Number EX323558 which is presently vested in Holiday Inn (Brentwood) Limited (Company No. 4712792).

Intra-Group leases:

All that leasehold property known as Holiday Inn Hotel, Brook Street, Brentwood as more particularly described in the Lease dated 2 April 2003 made between Holiday Inn (Brentwood) Limited (1) and Six Continents Hotels Limited (2) which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Cambridge

Reference Number: 16

All that freehold property known as Holiday Inn Cambridge at Bridge Road, Impington registered at the Land Registry with Title Absolute under Title Number CB197152 which is presently vested in Holiday Inn Limited (Company No.4160818).

Property: Holiday Inn Edinburgh

Reference Number: 26

All and Whole that leasehold property known as Holiday Inn Edinburgh at Corstorphine Road extending to 8.368 square yards of ground situated to the north of Corstorphine Road, Edinburgh and shown delineated on the plan annexed to the Lease between the Royal Zoological Society of Scotland and Trust Houses Forte Hotels Limited dated 6 and 19 July and registered in the Books of Council & Session on 3 August 1972. Please note that the title to this property is in the process of being registered in the Land Register for Scotland under Title Number MID59025 but the Land Certificate for this property has not yet been received.

104

Intra-Group leases:

All and Whole that leasehold property known as Holiday Inn Edinburgh at Corstorphine Road, sub leased by the Sub-Lease between Holiday Inn (Edinburgh) Limited and Intercontinental Hotels Limited dated 27 November 2003 and registered in the Books of Council and Session on 16 March 2004. The Sub Lease was for an initial period of one year from 7 April 2003 and is currently continuing on tacit relocation.

Property: Holiday Inn Guildford

Reference Number: 34

All that leasehold property known as Holiday Inn Guildford, Egerton Road, Guildford, Surrey registered at the Land Registry with Title Absolute under Title Number SY546878 which is presently vested in Holiday Inn (Guildford) Limited (Company No. 4721041).

Intra-Group leases:

All that leasehold property known as Holiday Inn Guildford, Egerton Road, Guildford, Surrey as more particularly described in a Lease dated 28 November 2003 made between Holiday Inn (Guildford) Limited (1) and Holiday Inn Limited (2) which is property vested in Holiday Inn Limited (Company No. 4160818).

Property: Holiday Inn London — Heathrow M4 J4

Reference Number: 37

All that freehold property known as Holiday Inn Heathrow Airport at Heathrow Airport, London registered at the Land Registry with Title Absolute under Title Number NGL118697 which is presently vested in HI (London Heathrow M4 J4) No. 2 Limited (Company No. 5174337).

Intra-Group leases:

All that leasehold property known as Holiday Inn Heathrow Airport at Heathrow Airport, London registered at the Land Registry with Title Absolute under Title Number NGL119140 which is presently vested in HI (London Heathrow M4 J4) No. 2 Limited (Company No. 5174337).

Property: Holiday Inn Bloomsbury

Reference Number: 47

All that leasehold property known as Holiday Inn Bloomsbury at parts of the basement, the surface of the ground floor, the lift shaft to the basement car park, the first to the fifth floors, the roof, the plant rooms at sixth floor level and the roofs of the plant rooms of the building known as the Bloomsbury Centre Hotel, Coram Street, London registered at the Land Registry with Title Absolute under Title Number NGL145048 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Bloomsbury at parts of the basement, the surface of the ground floor, the lift shaft to the basement car park, the first to the fifth floors, the roof, the plant rooms at sixth floor level and the roofs of the plant rooms of the building known as the Bloomsbury Centre Hotel, Coram Street, London registered at the Land Registry with Title Absolute under Title Number NGL672413 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 3363702)

All that leasehold property known as Holiday Inn Bloomsbury at parts of the basement, the surface of the ground floor, the lift shaft to the basement car park, the first to the fifth floors, the roof, the

105

plant rooms at sixth floor level and the roofs of the plant rooms of the building known as the Bloomsbury Centre Hotel, Coram Street, London registered at the Land Registry with Title Absolute under Title Number NGL672460 which is presently vested in InterContinental Hotels Limited. (Company No. 3203484).

Property: Holiday Inn London — Kensington Forum

Reference Number: 50

All that freehold property known as Holiday Inn — Kensington Forum at 1 to 23 (odd numbers) Ashburn Place, 97 to 109 (odd numbers) Cromwell Road and gardens on the east side of Ashburn Gardens registered at the Land Registry with Title Absolute under Title Number LN226776 which is presently vested in London Forum Hotel Limited (Company No. 483582).

Property: Holiday Inn London — Regent’s Park

Reference Number: 52

All that leasehold property known as Holiday Inn Regent’s Park at Bolsover Street, London registered at the Land Registry with Title Absolute under Title Number NGL254774 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Regent’s Park at Bolsover Street, London registered at the Land Registry with Title Absolute under Title Number NGL674253 which is presently vested in Holiday Inn (London Regents Park) Limited (Company No. 4720936).

All that leasehold property known as Holiday Inn Regent’s Park at Bolsover Street, London registered at the Land Registry with Title Absolute under Title Number NGL674326 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Maidenhead

Reference Number: 54

All that freehold property known as Holiday Inn at Maidenhead at Shoppenhangers Road, Maidenhead SL6 2RA registered at the Land Registry with Title Absolute under Title Number BK49552 which is presently vested in Holiday Inn (Maidenhead) Limited (Company No. 4712759).

Intra-Group leases:

All that leasehold property known as Holiday Inn Maidenhead at Shoppenhangers Road, Maidenhead SL6 2RA as more particularly described in the Lease dated 7 April 2003 between (1) Holiday Inn (Maidenhead) Limited and (2) Six Continents Hotels (UK) Limited which is presently vested in InterContinental Hotels Group (UK) Limited (Company No. 719804).

Property: Holiday Inn Milton Keynes

Reference Number: 56

All that freehold property known as Holiday Inn Milton Keynes at Saxon Gate, Milton Keynes registered at the Land Registry with Title Absolute under Title Number BM183247 which is presently vested in Holiday Inn (Milton Keynes) Limited (Company Number 4720922).

All that leasehold property known as the Terrace forming part of Holiday Inn Milton Keynes at Saxon Gate, Milton Keynes registered at the Land Registry with Title Absolute under Title Number BM156838 which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

106

All those leasehold rights over Summer Court forming part of Holiday Inn Milton Keynes at Saxon Gate, Milton Keynes as more particularly described in a Lease of Rights dated 16 November 1989 between (1) Shell Pensions Trust Limited and (2) Trusthouse Forte (UK) Limited which is referred to in the Property Register of Title Number BM156838 and is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Milton Keynes at Saxon Gate, Milton Keynes registered at the Land Registry with Title Absolute under Title Number BM259862 which is presently vested in Holiday Inn (Milton Keynes) Limited (Company Number 4720922).

All that leasehold property known as Holiday Inn Milton Keynes at Saxon Gate, Milton Keynes as more particularly described in a Lease dated 7 April 2003 between (1) Holiday Inn (Milton Keynes) Limited and (2) Six Continents Hotels Limited which is presently vested in InterContinental Hotels Limited (Company Number 3203484).

107

Part 2
Uncertificated Properties

Property: Crowne Plaza Leeds

Reference Number: 3

All that leasehold property known as Crowne Plaza Leeds being land known as land on the south side of Wellington Street, Leeds registered at the Land Registry with Title Absolute under Title Number WYK410379 which is presently vested in IHG (Leeds) Limited (Company Number 4721094).

Intra-Group leases:

All that leasehold property known as Crowne Plaza Leeds being land known as land on the south side of Wellington Street, Leeds as more particularly described in a Lease dated 7 April 2003 made between IHG (Leeds) Limited (1) and Six Continents Hotels (UK) Limited (2) which is presently vested in Intercontinental Hotels Group (UK) Limited (Company no. 00719804).

Property: Crowne Plaza, Manchester Airport

Reference Number: 5

All that leasehold property known as Crowne Plaza Manchester Airport at Ringway Road, Manchester Airport, M90 3NS registered at the Land Registry with Title Absolute under Title Number LA74751 which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

Property: Holiday Inn Ashford

Reference Number: 6

All that freehold property known as Holiday Inn Ashford at Canterbury Road, Ashford registered at the Land Registry with Title Absolute under Title Number K278847 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Aylesbury

Reference Number: 7

All that freehold property known as Holiday Inn Aylesbury at Aston Clinton Road, Aylesbury registered at the Land Registry with Title Absolute under Title Number BM254556 which is presently vested in Holiday Inn Limited (Company No. 4160818).

Property: Holiday Inn Basildon

Reference Number: 8

All that leasehold property known as Holiday Inn Basildon at Pipps Hill Road South Basildon registered at the Land Registry with Good Leasehold Title under Title Number EX303185 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Basildon at Pipps Hill Road South Basildon registered at the Land Registry with Good Leasehold Title under Title Number EX437595 which is presently vested in Holiday Inn (Basildon) Limited (Company No. 4721005).

108

All that leasehold property known as Holiday Inn Basildon at Pipps Hill Road South Basildon registered at the Land Registry with Good Leasehold Title under Title Number EX437596 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Basingstoke

Reference Number: 9

All that freehold property known as Holiday Inn Basingstoke at Basingstoke, Hampshire registered at the Land Registry with Title Absolute under Title Number HP409818 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 3363702)

Intra-Group leases:

All that leasehold property known as Holiday Inn Basingstoke at Basingstoke, Hampshire registered at the Land Registry with Title Absolute under Title Number HP409820 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Bexley

Reference Number: 10

All that freehold property known as Holiday Inn Bexley at Southwold Road, Bexley DA5 1ND registered at the Land Registry with Title Absolute under Title Number SGL103988 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 3363702).

Intra-Group leases:

All that leasehold property known as Holiday Inn Bexley at Southwold Road, Bexley DA5 1ND registered at the Land Registry with Title Absolute under Title Number SGL539696 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn (Birmingham City)

Reference Number: 11

All that freehold property known as Holiday Inn (Birmingham City) at the site of the former Church of St Jude, St Judes Passage registered at the Land Registry with Title Absolute under Title Number WK181110 which is presently vested in Holiday Inn (Birmingham City) Limited (Company No.4720951).

All that freehold property known as Holiday Inn (Birmingham City) at north side of St Judes Passage registered at the Land Registry with Title Absolute under Title Number WM76126 which is presently vested in Holiday Inn (Birmingham City) Limited (Company No.4720951).

All that leasehold property known as part of Albany Hotel, Queensway registered at the Land Registry with Title Absolute under Title Number WK208751 which is presently vested in Holiday Inn (Birmingham City) Limited (Company No. 4720951).

All that leasehold property known as Holiday Inn (Birmingham City) in St Judes Passage registered at the Land Registry with Title Absolute under Title Number WM110046 which is presently vested in Holiday Inn (Birmingham City) Limited (Company No. 4720951).

All that leasehold property known as Holiday Inn (Birmingham City) at land on the south side of St Judes Passage registered at the Land Registry with Title Absolute under Title Number WK172709 which is presently vested in Holiday Inn (Birmingham City) Limited (Company No. 4720951).

109

Intra-Group leases:

All that leasehold property known as Holiday Inn Hotel, Smallbrook as more particularly described in the Lease dated 7 April 2003 made between Holiday Inn (Birmingham City) Limited (1) and Six Continents Hotels Limited (2) which is presently vested in InterContinental Hotels Limited (Company No. 3203484)

Property: Holiday Inn Birmingham M6 J7

Reference Number: 12

All that freehold property known as Holiday Inn Birmingham M6 J7 at Chapel Lane, Great Barr registered at the Land Registry with Title Absolute under Title Number WM371964 which is presently vested in Holiday Inn (Birmingham M6 J7) Limited (Company No. 4712826).

Intra-Group leases:

All that leasehold property known as Holiday Inn Birmingham M6 J7 at Chapel Lane, Great Barr as more particularly described in the Lease dated 2 April 2003 made between Holiday Inn (Birmingham M6 J7) Limited (1) and Six Continents Hotels Limited (2) which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Bolton

Reference Number: 13

All that leasehold property known as Holiday Inn Bolton at Beaumont Road, Bolton BL3 4TA registered at the Land Registry with Title Absolute under Title Number GM876460 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Bolton at Beaumont Road, Bolton BL3 4TA registered at the Land Registry with Title Absolute under Title Number GM543662 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 3363702).

All that leasehold property known as Holiday Inn Bolton at Beaumont Road, Bolton BL3 4TA registered at the Land Registry with Title Absolute under Title Number GM874034 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Bristol

Reference Number: 15

All that freehold property known as Holiday Inn Bristol — Filton at Conifers, Filton Road, Hambrook BS16 1QG registered at the Land Registry with Title Absolute under Title Number AV194979 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 3363702).

All that freehold property known as Holiday Inn Bristol — Filton at Conifers, Filton Road, Hambrook BS16 1QG registered at the Land Registry with Title Absolute under Title Number GR229008 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

All that freehold property known as Holiday Inn Bristol — Filton at Conifers, Filton Road, Hambrook BS16 1QG registered at the Land Registry with Title Absolute under Title Number AV233027 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

All that freehold property known as Holiday Inn Bristol — Filton at Conifers, Filton Road, Hambrook BS16 1QG registered at the Land Registry with Title Absolute under Title Number AV194981 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

110

Intra-Group leases:

All that leasehold property known as Holiday Inn Bristol — Filton at Conifers, Filton Road, Hambrook BS16 1QG registered at the Land Registry with Title Absolute under Title Number GR204922 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Cardiff City

Reference Number: 17

All that leasehold property known as Holiday Inn Cardiff City at Cowbridge Road East registered at the Land Registry with Title Absolute under Title Number WA299317 the legal title to which is presently vested in InterContinental Hotels Limited (Company No. 03203484) but the beneficial interest is presently vested in Holiday Inn Limited (Company No. 4160818).

All that leasehold property known as Car Park at Holiday Inn Cardiff City at Castle Street registered at the Land Registry with Title Absolute under Title Number WA971992 the legal title to which is presently vested in InterContinental Hotels Limited (Company No. 03203484) but the beneficial interest is presently vested in Holiday Inn Limited (Company No. 4160818).

Intra-Group leases:

All that leasehold property known as Holiday Inn Cardiff City at Cowbridge Road East registered at the Land Registry with Title Absolute under Title Number WA553976 the legal title to which is presently vested in Holiday Inn Finance Properties Limited (Company No. 03363702) but the beneficial interest is presently vested in Holiday Inn Limited (Company No. 4160818).

All that leasehold property known as Holiday Inn Cardiff City at Cowbridge Road East registered at the Land Registry with Title Absolute under Title Number WA555721 the legal title to which is presently vested in InterContinental Hotels Limited (Company No. 03203484) but the beneficial interest is presently vested in Holiday Inn Limited (Company No. 4160818).

Property: Holiday Inn Cardiff North

Reference Number: 18

All that leasehold property known as Holiday Inn Cardiff North at Church Road, Pentwyn, Cardiff CF10 1XD registered at the Land Registry with Good Leasehold Title under Title Number CYM2714 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Carlisle

Reference Number: 19

All that leasehold property known as Holiday Inn Carlisle at Kingston Road registered at the Land Registry with Title Absolute under Title Number CU69108 which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Carlisle at Kingston Road registered at the Land Registry with Title Absolute under Title Number CU69175 which is presently vested in Holiday Inn (Carlisle) Limited (Company No. 04720983).

All that leasehold property known as Holiday Inn Carlisle at Kingston Road registered at the Land Registry with Title Absolute under Title Number CU69169 which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

111

Property: Holiday Inn Chester South

Reference Number: 20

All that freehold property known as Holiday Inn Chester South at Wrexham Road, Ecclestone CH4 9DQ registered at the Land Registry with Title Absolute under Title Number CH390982 which is presently vested in Holiday Inn (Chester) Limited (Company No.4712836).

All that freehold property known as Holiday Inn Chester South at Wrexham Road, Ecclestone CH4 9DQ registered at the Land Registry with Title Absolute under Title Number CH296907 which is presently vested in Holiday Inn (Chester) Limited (Company No.4712836).

All that freehold property known as Holiday Inn Chester South at Wrexham Road, Ecclestone CH4 9DQ registered at the Land Registry with Title Absolute under Title Number CH110818 which is presently vested in Holiday Inn (Chester) Limited (Company No.4712836).

Intra-Group leases:

All that leasehold property known as Holiday Inn Chester South at Wrexham Road, Ecclestone CH4 9DQ as more particularly described in a Lease comprising the Root of Title dated 2 April 2003 made between Holiday Inn (Chester) Limited and Six Continents Hotels Limited and shown edged red on the plan attached thereto which is presently vested in InterContinental Hotels Limited (Company No.03203484).

Property: Holiday Inn Colchester

Reference Number: 21

All that freehold property known as Holiday Inn Colchester registered at the Land Registry with Title Absolute under Title Number EX399231 which is presently vested in Holiday Inn (Colchester) Limited (Company No. 4712808).

Intra-Group leases:

All that leasehold property known as Holiday Inn Colchester as more particularly described in a Lease comprising the Root of Title dated 2 April 2003 made between Holiday Inn (Colchester) Limited and Six Continents Hotels Limited and shown edged red on the plan attached thereto which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

Property: Holiday Inn Coventry

Reference Number: 22

All that freehold property known as Holiday Inn Coventry at Hinkley Road, Walsgrave, registered at the Land Registry with Title Absolute under Title Number WK331188 which is presently vested in Holiday Inn (Coventry) Limited (Company No. 4721088).

All that freehold property known as Holiday Inn Coventry at Hinkley Road, Walsgrave, registered at the Land Registry with Title Absolute under Title Number WK331187 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Coventry at Hinkley Road, Walsgrave, registered at the Land Registry with Title Absolute under Title Number WK333651 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

112

Property: Holiday Inn Derby/Nottingham

Reference Number: 23

All that freehold property known as Holiday Inn Derby/Nottingham at Bostock Lane, Sandiacre registered at the Land Registry with Title Absolute under Title Number DY205335 which is presently vested in InterContinental Hotels Limited (Company No.3203484).

Property: Holiday Inn Eastleigh

Reference Number: 25

All that leasehold property known as Holiday Inn Eastleigh at Leigh Road, Eastleigh registered at the land Registry with Title Absolute under Title Number HP289984 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Eastleigh at Leigh Road, Eastleigh registered at the Land Registry with Title Absolute under Title Number HP450910 which is presently vested in Holiday Inn (Southampton Eastleigh) Limited (Company No. 4721087).

All that leasehold property known as Holiday Inn Eastleigh at Leigh Road, Eastleigh registered at the Land Registry with Title Absolute under Title Number HP450911 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn, Edinburgh North

Reference Number: 27

All and Whole that feuhold property known as Holiday Inn, Queensferry Road, Edinburgh being the subjects shown coloured red and blue on the plan annexed and signed as relative to Disposition by Bass Limited in favour of Bass Limited dated 21 October and recorded GRS Midlothian 23 November 1976. Please note that these subjects are in the process of being registered in the Land Register for Scotland under Title Number MID42893 but a Land Certificate from the Registers of Scotland is still awaited.

The Property also enjoys a right of access over the area shown on the plan annexed to Deed of Servitude containing Disposition by British Railways Board in favour of Cedro Investments Limited dated 5 and registered 27 February 1971.

Intra-Group leases:

All and whole that leasehold property known as Holiday Inn, Queensferry Road, Edinburgh sub leased by the Sub-Lease between Holiday Inn (Edinburgh North) Limited and Six Continents Hotels (UK) Limited (now known as Intercontinental Hotels Group (UK) Limited) dated 1 April and registered in the Books of Council and Session on 30 July 2003. The Sub Lease was for an initial period of one year and is currently continuing on tacit relocation.

Property: Holiday Inn Fareham

Reference Number: 28

All that leasehold property known as Holiday Inn — Fareham at St Margaret’s Roundabout, Southampton Road, Titchfield registered at the Land Registry with Title Absolute under Title Number HP438631 the legal title to which is presently vested in InterContinental Hotels Ltd (Company No. 3203484) but the beneficial interest is presently vested in Holiday Inn Limited (Company No. 4160818).

113

Property: Holiday Inn, Farnborough

Reference Number: 29

All that freehold property known as Holiday Inn Hotel at Lynchford Road, Farnborough registered at the Land Registry with Title Absolute under Title Number HP347356 which is presently vested in Holiday Inn (Farnborough) Limited (Company No. 4712785).

All that freehold property known as 4, 6 and 8 Farnborough Road, Farnborough registered at the Land Registry with Title Absolute under Title Number HP524145 which is presently vested in Holiday Inn (Farnborough) Limited (Company No. 4712785).

Intra-Group leases:

All that leasehold property known as Holiday Inn Hotel, Lynchford Road, Farnborough as more particularly described in a Lease dated 2 April 2003 made between Holiday Inn (Farnborough) Limited (1) and Six Continents Hotels Limited (2) and which is presently vested in InterContinental Hotels Limited (formerly known as Six Continents Hotels Limited) (Company No. 3203484).

Property: Holiday Inn Gatwick, Povey Cross Road

Reference Number: 30

All that leasehold property known as Holiday Inn Gatwick at Povey Cross Road, Gatwick, Surrey registered at the Land Registry with Title Absolute under Title Number SY574001 the legal title to which is presently vested in InterContinental Hotels Limited (Company No. 3203484) but the beneficial interest is presently vested in Holiday Inn (London Gatwick) Limited (Company No. 4721762).

Intra-Group leases:

All that leasehold property known as Holiday Inn Gatwick at Povey Cross Road, Gatwick, Surrey as more particularly described in a Lease to be made between Holiday Inn (London Gatwick) Limited (1) and Six Continents Hotels Limited (now known as InterContinental Hotels Limited (Company No. 3203484) (2)) pursuant to an agreement for sale and leaseback dated 7 April 2003 between the same parties.

Property: Holiday Inn Glasgow Airport

Reference Number: 31

All and Whole that leasehold property formerly known as Forte Crest Hotel and now known as Holiday Inn Glasgow Airport registered in the Land Register for Scotland under Title Number REN71989 without exclusion of indemnity and shown outlined in red on the Title Plan annexed thereto.

Property: Holiday Inn Glasgow City

Reference Number: 32

All and Whole that leasehold property known sometime as the Forte Posthouse Hotel and now as Holiday Inn at Bothwell Street registered in the Land Register for Scotland under Title Number GLA123299 without exclusion of indemnity and shown outlined in red on the Title Plan annexed thereto.

114

Property: Holiday Inn Gloucester

Reference Number: 33

All that leasehold property known as Holiday Inn Gloucester at Gilpin Avenue registered at the Land Registry with Title Absolute under Title Number GR60043 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Gloucester at Gilpin Avenue registered at the Land Registry with Title Absolute under Title Number GR131235 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 3363702).

All that leasehold property known as Holiday Inn Gloucester at Gilpin Avenue registered at the Land Registry with Title Absolute under Title Number GR142744 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn, Haydock and land adjoining the same

Reference Number: 35

All that freehold property known as Holiday Inn Hotel, Lodge Land, Haydock registered at the Land Registry with Title Absolute under Title Number MS368448 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

All that freehold property known as land and buildings on the east side of Lodge Lane, Haydock registered at the Land Registry with Title Absolute under Title Number MS254554 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn London, Heathrow Ariel

Reference Number: 36

All that freehold property known as Holiday Inn Hotel at Bath Road, Harlington registered at the Land Registry with Title Absolute under Title Number AGL55447 which is presently vested in Holiday Inn (London Heathrow Ariel) Limited (Company No. 4712802).

Intra-Group leases:

All that leasehold property known as Holiday Inn Hotel at Bath Road, Harlington, London Heathrow as more particularly described in a Lease of the Property dated 2 April 2003 made between (1) Holiday Inn (London Heathrow Ariel) Limited and (2) Six Continents Hotels Limited which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Hemel Hempstead

Reference Number: 38

All that leasehold property known as Holiday Inn Hemel Hempstead at Breakspear Way, Hemel Hempstead registered at the Land Registry with Good Leasehold Title under Title Number HD362101 which is presently vested in Holiday Inn (Hemel Hempstead) Limited (Company No. 4721014).

All that unregistered leasehold property known as staff accommodation at First Floor Maisonette, 89 Waterhouse Street, Hemel Hempstead as more particularly described in a Renewal Lease dated 25 March 2002 made between (1) David A Deans and (2) Posthouse Hotels Limited and shown edged green on the plan attached thereto which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

115

Intra-Group leases:

All that leasehold property known as Holiday Inn Hotel at Breakspear Way, Hemel Hempstead as more particularly described in a Lease of the Property dated 28 November 2003 made between (1) Holiday Inn (Hemel Hempstead) Limited and (2) InterContinental Hotels Limited (2) which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn High Wycombe

Reference Number: 39

All that leasehold property known as Holiday Inn High Wycombe at Crest Road, Handy Cross, High Wycombe registered at the Land Registry with Title Absolute under Title Number BM152754 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn High Wycombe at Crest Road, Handy Cross, High Wycombe registered at the Land Registry with Title Absolute under Title Number BM161991 which is presently vested in Holiday Inn (High Wycombe) Limited (Company No. 4721091).

All that leasehold property known as Holiday Inn High Wycombe at Crest Road, Handy Cross, High Wycombe registered at the Land Registry with Title Absolute under Title Number BM161992 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Hull Marina

Reference Number: 40

All that leasehold property known as Holiday Inn Hull Marina at Castle Street, Kingston Upon Hull registered at the Land Registry with Title Absolute under Title Number HS148908 the legal title to which is presently vested in InterContinental Hotels Limited (Company No. 3203484) but the beneficial interest is presently vested in Holiday Inn Limited (Company No. 4160818.

Property: Holiday Inn Ipswich

Reference Number: 41

All that freehold property known as Holiday Inn Ipswich at London Road, Sproughton, Ipswich registered at the Land Registry with Title Absolute under Title Number SK164428 which is presently vested in Holiday Inn (Ipswich) Limited (Company No. 4712870).

Intra-Group leases:

All that leasehold property known as Holiday Inn Ipswich at London Road, Sproughton, Ipswich as more particularly described in a Lease of the Property dated 2 April 2003 made between (1) Holiday Inn (Ipswich) Limited and (2) Six Continents Hotels Limited which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Lancaster

Reference Number: 42

All that freehold property known as Holiday Inn Lancaster at Caton Road, Lancaster registered at the Land Registry with Title Absolute under Title Number LA731319 which is presently vested in Holiday Inn (Lancaster) Ltd (Company No. 4720994).

116

Intra-Group leases:

All that leasehold property known as Holiday Inn Lancaster at Caton Road, Lancaster as more particularly described in a Lease comprising the Root of Title dated 7 April 2003 made between Holiday Inn (Lancaster) Limited (1) and Six Continents Hotels Limited (2) which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Leeds-Brighouse

Reference Number: 43

All that freehold property known as Holiday Inn Leeds-Brighouse at land on the northeast side of Wakefield Road, Brighouse registered at the Land Registry with Title Absolute under Title Number WYK391163 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 3363702).

Intra-Group leases:

All that leasehold property known as Holiday Inn Leeds-Brighouse at land on the north east side of Wakefield Road, Brighouse registered at the Land Registry with Title Absolute under Title Number WYK463345 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Bradford

Reference Number: 44

All that freehold property known as Holiday Inn Bradford at North East of Leeds Road, Bramhope registered at the Land Registry with Title Absolute under Title Number WYK361015 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

All that leasehold property known as Holiday Inn Bradford at Bramhope registered at the Land Registry with Good Leasehold Title under Title Number WYK361014 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Leicester

Reference Number: 45

All that leasehold property known as Holiday Inn Leicester at Saint Nicholas Circle, Leicester registered at the Land Registry with Title Absolute under Title Number LT57900 which is presently vested in Intercontinental Hotels Group (UK) Limited (Company No. 719804).

Property: Holiday Inn Leicester West

Reference Number: 46

All that freehold property known as Holiday Inn Leicester West at the junction of Narborough Road and Braunstone Lane East registered at the Land Registry with Title Absolute under Title Number LT123747 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Leicester West at Narborough Road Leicester registered at the Land Registry with Title Absolute under Title Number LT61752 which is presently vested in Holiday Inn (Leicester) Limited (Company No. 4721079).

All that leasehold property known as Holiday Inn Leicester West at Narborough Road, Leicester registered at the Land Registry with Title Absolute under Title Number LT61753 which is presently vested in Intercontinental Hotels Limited (Company No. 3203484).

117

Property: Holiday Inn, Brent Cross

Reference Number: 48

All that freehold property known as Holiday Inn, Brent Cross being land on the south side of Tilling Road and the north side of Tempelhof Avenue, Brent Cross registered at the Land Registry with Title Absolute under Title Number NGL695276 which is presently vested in IHG (Brent Cross) Limited (Company No. 4712776).

Intra-Group leases:

All that leasehold property known as Holiday Inn, Brent Cross being land on the south side of Tilling Road and the north side of Tempelhof Avenue, Brent Cross as more particularly described in a Lease comprising the Root of Title dated 2 April 2003 made between (1) IHG (Brent Cross) Limited and (2) Six Continents Hotels (UK) Limited which is presently vested in InterContinental Hotels Group (UK) Limited (Company No. 719804).

Property: Holiday Inn, Hampstead

Reference Number: 49

All that leasehold property known as Holiday Inn, Hampstead at 215, Haverstock Hill, Hampstead registered at the Land Registry with Good Leasehold Title under Title Number NGL156625 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Mayfair

Reference Number: 51

All that unregistered leasehold property known as Holiday Inn Mayfair at 3 Berkeley Street, London W1 as more particularly described in a Lease comprising the Root of Title dated 20 April 2000 made between CGU Life Assurance Limited (1) and Bass Hotels & Resorts (UK) Limited (2) which is presently vested in InterContinental Hotels Group (UK) Limited (Company No. 719804).

Property: Holiday Inn Sutton

Reference Number: 53

All that leasehold property known as Holiday Inn Sutton at Cheam Road, Sutton registered at the Land Registry with Title Absolute under Title Number SGL530893 which is presently vested in InterContinental Hotels Group (UK) Limited (Company No. 00719804).

Property: Holiday Inn Maidstone

Reference Number: 55

All that freehold property known as Holiday Inn Maidstone at London Road, Wrotham Heath, Sevenoaks, TN15 7RS registered at the Land Registry with Title Absolute under Title Number K99811 which is presently vested in Holiday Inn Limited (Company No. 04160818).

Property: Holiday Inn Newcastle City

Reference Number: 57

All that leasehold property known as Holiday Inn Newcastle City at New Bridge Street, Newcastle upon Tyne registered at the Land Registry with Title Absolute under Title Number TY67493 which is presently vested in Intercontinental Hotels Limited (Company No. 03203484).

118

Intra-Group leases:

All that leasehold property known as Holiday Inn Newcastle City at New Bridge Street, Newcastle upon Tyne registered at the Land Registry with Title Absolute under Title Number TY246852 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 03363702).

All that leasehold property known as Holiday Inn Newcastle City at New Bridge Street, Newcastle upon Tyne registered at the Land Registry with Title Absolute under Title Number TY257160 which is presently vested in Intercontinental Hotels Limited (Company No. 03203484).

Property: Holiday Inn Norwich

Reference Number: 58

All that freehold property known as Holiday Inn Norwich at Hall Road, Norwich registered at the Land Registry with Title Absolute under Title Number NK291172 which is presently vested in Holiday Inn (Norwich) Limited (Company No. 4721090).

Intra-Group leases:

All that leasehold property known as Holiday Inn Norwich at Hall Road, Norwich registered at the Land Registry with Title Absolute under Title Number NK28120 which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

Property: Holiday Inn Oxford

Reference Number: 59

All that leasehold property known as Holiday Inn Oxford at Oxford (Peartree) Service Area, Oxford registered at the Land Registry with Title Absolute under Title Number ON240389 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Peterborough

Reference Number: 60

All that freehold property known as Holiday Inn Peterborough at London Road, Norman Cross registered at the Land Registry with Title Absolute under Title Numbers CB121803, CB180813 and CB163436 which is presently vested in Holiday Inn Limited (Company No. 4160818).

Intra-Group leases:

All that leasehold property known as Holiday Inn Peterborough at London Road, Norman Cross registered at the Land Registry with Title Absolute under Title Number CB121804 which is presently vested in Holiday Inn Limited (Company No. 4160818).

Property: Holiday Inn Portsmouth

Reference Number: 61

All that leasehold property known as Holiday Inn Portsmouth at Pembroke Road, Pembroke Park, Southsea registered at the Land Registry with Title Absolute under Title Number HP259590 which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Portsmouth at Pembroke Road, Pembroke Park, Southsea registered at the Land Registry with Title Absolute under Title Number HP411115 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 03363702).

119

All that leasehold property known as Holiday Inn Portsmouth at Pembroke Road, Pembroke Park, Southsea registered at the Land Registry with Title Absolute under Title Number HP411114 which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

Property: Holiday Inn Reading South

Reference Number: 62

All that freehold property known as Holiday Inn Reading South at Basingstoke Road, Reading registered at the Land Registry with Title Absolute under Title Number BK91391 which is presently vested in Holiday Inn (Reading) Limited (Company No. 4721028).

Intra-Group leases:

All that leasehold property known as Holiday Inn Reading South at Basingstoke Road, Reading registered at the Land Registry with Title Absolute under Title Number BK110370 which is presently vested in Holiday Inn (Reading) Limited (Company No. 4721028).

All that leasehold property known as Holiday Inn Reading South at Basingstoke Road, Reading as more particularly described in a Lease dated 7 April 2003 made between Holiday Inn (Reading) Limited and Six Continents Hotels Limited which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Rochester

Reference Number: 63

All that freehold property known as Holiday Inn Rochester at the west side of Maidstone Road, Chatham registered at the Land Registry with Title Absolute under Title Number K826944 which is presently vested in Holiday Inn Limited (Company No. 4160818).

Intra-Group leases:

All that leasehold property known as Holiday Inn Rochester at the west side of Maidstone Road, Chatham registered at the Land Registry with Title Absolute under Title Number K689735 which is presently vested in Holiday Inn Limited (Company No. 4160818).

Property: Holiday Inn Rugby/Northampton

Reference Number: 64

All that freehold property known as Holiday Inn Rugby at Crick, Rugby, Northamptonshire registered at the Land Registry with Title Absolute under Title Number NN184536 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Runcorn

Reference Number: 65

All that freehold property known as Holiday Inn Runcorn at Wood Lane, Runcorn registered at the Land Registry with Title Absolute under Title Number CH409361 which is presently vested in Holiday Inn Limited (Company No. 04160818).

Intra-Group leases:

All that leasehold property known as Holiday Inn Runcorn at Wood Lane, Runcorn registered at the Land Registry with Title Absolute under Title Number CH261099 which is presently vested in Holiday Inn Limited (Company No. 04160818).

120

All that leasehold property known as Holiday Inn Runcorn at Wood Lane, Runcorn registered at the Land Registry with Title Absolute under Title Number CH334502 which is presently vested in Holiday Inn Limited (Company No. 04160818).

All that leasehold property known as Holiday Inn Runcorn at Wood Lane, Runcorn registered at the Land Registry with Title Absolute under Title Number CH334646 which is presently vested in Holiday Inn Limited (Company No. 04160818).

Property: Holiday Inn South Mimms

Reference Number: 66

All that freehold property known as Holiday Inn South Mimms at Wash Lane, South Mimms registered at the Land Registry with Title Absolute under Title Number HD84061 which is presently vested in Holiday Inn Limited (Company No. 04160818).

All that freehold property known as Holiday Inn South Mimms at Wash Lane, South Mimms registered at the Land Registry with Title Absolute under Title Number HD314012 which is presently vested in Holiday Inn Limited (Company No. 04160818).

Intra-Group leases:

All that leasehold property known as Holiday Inn South Mimms at Wash Lane, South Mimms registered at the Land Registry with Title Absolute under Title Number HD274592 which is presently vested in Holiday Inn Limited (Company No. 04160818).

Property: Holiday Inn Southampton

Reference Number: 67

All that leasehold property known as Holiday Inn Southampton at Herbert Walker Avenue, Southampton registered at the Land Registry with Good Leasehold Title under Title Number HP187263 which is presently vested in Holiday Inn (Southampton) Limited (Company No. 4720965).

Intra-Group leases:

All that leasehold property known as Holiday Inn Southampton at Herbert Walker Avenue, Southampton as more particularly described in a Lease dated 7 April 2003 made between Holiday Inn (Southampton) Limited and Six Continents Hotels Limited which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Stoke on Trent

Reference Number: 68

All that freehold property known as Holiday Inn Stoke on Trent at Clayton Road, Clayton, Newcastle-Under-Lyme registered at the Land Registry with Title Absolute under Title Number SF225403 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Swindon

Reference Number: 69

All that leasehold property known as Holiday Inn Swindon at Marlborough Road, Swindon as more particularly described in a Lease comprising the Root of Title dated 2 June 1972 made between The Mayor Aldermen and Burgesses of the Borough of Swindon (1) and Leased Hotels Limited (2) and shown edged pink on the plan attached thereto which is presently vested in Leased Hotels Limited (Company No. 955200).

121

Intra-Group leases:

All that leasehold property known as Holiday Inn Swindon at Marlborough Road, Swindon registered at the Land Registry with Title Absolute under Title Number WT157259 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Taunton

Reference Number: 70

All that freehold property known as Holiday Inn Taunton at the North Side of Ilminster Road, Taunton registered at the Land Registry with Title Absolute under Title Number ST61081 which is presently vested in Holiday Inn Finance Properties Limited (Company No. 03363702).

All that freehold property known as Holiday Inn Taunton at the North Side of Ilminster Road, Taunton registered at the Land Registry with Title Absolute under Title Number ST57639 which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Taunton at the North Side of Ilminster Road, Taunton registered at the Land Registry with Title Absolute under Title Number ST68466 which is presently vested in InterContinental Hotels Limited (Company No. 03203484).

Property: Holiday Inn Wakefield

Reference Number: 71

All that freehold property known as Holiday Inn Wakefield at Wakefield Road, Wakefield, West Yorkshire registered at the Land Registry with Title Absolute under Title Number WYK93190 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Holiday Inn Warrington

Reference Number: 72

All that freehold property known as Holiday Inn Warrington at Woolston, Warrington, Cheshire registered at the Land Registry with Title Absolute under Title Number CH325746 which is presently vested in InterContinental Hotels Group (UK) Limited (Company No. 719804).

Property: Holiday Inn Washington

Reference Number: 73

All that freehold property known as Holiday Inn Washington at Emerson, Washington, Sunderland registered at the Land Registry with Title Absolute under Title Number TY271158 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Intra-Group leases:

All that leasehold property known as Holiday Inn Washington at Emerson, Washington, Sunderland as more particularly described in a Lease comprising the Root of Title dated 3 March 1972 made between Washington Development Corporation (1) and Leased Hotels Limited (2) and shown edged red on the plan attached thereto which is presently vested in Leased Hotels Limited (Company No. 955200).

All that leasehold property known as Holiday Inn, Washington at Emerson, Washington, Sunderland registered at the Land Registry with Title Absolute under Title Number TY218632 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

122

Property: Holiday Inn York

Reference Number: 74

All that leasehold property known as Holiday Inn York at Tadcaster Road, York registered at the Land Registry with Title Absolute under Title Number NYK182519 which is presently vested in InterContinental Hotels Limited (Company No. 3203484).

Property: Express by Holiday Inn Strathclyde

Reference Number: 75

All and Whole that leasehold property known as Express by Holiday Inn Strathclyde on the south west side of Bellshill Road, Motherwell at Strathclyde Country Park, Hamilton Road, Motherwell ML1 3ED registered in the Land Register for Scotland under Title Number LAN111552 without exclusion of indemnity and shown outlined in red on the Title Plan annexed thereto.

Intra-Group leases:

All and Whole that leasehold property known as Express by Holiday Inn Strathclyde sub leases by the Sub Lease by IHG (Strathclyde) Limited in favour of Intercontinental Hotels Group (UK) Limited dated 27 November 2003 and registered 19 August 2004. The Sub Lease was for an initial period of one year and is currently continuing on tacit relocation.

123

Schedule 4

Documents in the Agreed Terms

Certificates of Title

Consolidated Financial Summary

Pro forma Deeds of Non-Disturbance for Portfolio Management Agreement, Individual Hotel Management Agreement and Franchise Agreement

Pro forma Franchise Agreement

Pro forma Individual Hotel Management Agreement

Initial Annual Plan

Initial Capital Plan

Master Technology Agreement

Pro forma Named Assets Summary of Terms

Portfolio Management Agreement

Pre-Sale Reorganisation paper

Pro forma Purchasing Agreement

Tax Deed of Covenant

Written resignations of the directors and secretary of Group Companies

124

Schedule 5
Completion Obligations
(Clause 6.2)

1	Sellers’ Obligations
1.1	General Obligations
	On Completion, the Sellers shall deliver or make available to the Purchaser the following:

1.1.1	evidence that each of the Sellers or the relevant member of the Sellers’ Group (as applicable) is authorised to execute the documents listed in paragraph 1.1.2 to 1.1.8 below;
1.1.2	the Portfolio Management Agreement duly executed by InterContinental Hotels Group (Management Services) Limited;
1.1.3	Individual Hotel Management Agreements in respect of each of the 13 Hotels listed in Schedule 1 of the Portfolio Management Agreement duly executed by InterContinental Hotels Group (Management Services) Limited;
1.1.4	Franchise Agreements in respect of each of the 63 Hotels listed in Schedule 1 of the Portfolio Management Agreement duly executed by Six Continents Hotels, Inc.;
1.1.5	Individual Hotel Management Agreements in respect of each of the 10 Hotels listed in Schedule 1 of the Named Assets Summary of Terms in a form reflecting such Named Assets Summary of Terms duly executed by InterContinental Hotels Group (Management Services) Limited;
1.1.6	duly executed Deeds of Non-Disturbance in respect of each of (i) the Portfolio Management Agreement; (ii) the Individual Hotel Management Agreements in respect of each of the 63 Hotels listed in Schedule 1 of the Portfolio Management Agreements; (iii) the Individual Hotel Management Agreements in respect of each of the 10 Hotels listed in Schedule 1 of the Named Assets Summary of Terms and (iv) the Franchise Agreements in respect of each of the 63 Hotels listed in Schedule 1 of the Portfolio Management Agreement;
1.1.7	the Purchasing Agreement and Master Technology Agreement duly executed in respect of each of the Hotels;
1.1.8	the Tax Deed of Covenant duly executed by the Sellers;
1.1.9	transfers of the Shares duly executed by the registered holders in favour of the Purchaser or as it may direct accompanied by the relative share certificates (or an express indemnity in a form satisfactory to the Purchaser in the case of any certificate found to be missing);
1.1.10	the written resignations of each of the directors and secretary of each Group Company from his office as a director or secretary in the Agreed Terms to take effect on the date of Completion;
1.1.11	such waivers or consents as the Purchaser may require signed by members of the Companies to enable the Purchaser to be registered as holder[s] of the Shares;
1.1.12	the certificates of incorporation, any certificates of incorporation on change of name, corporate seals (if any), cheque books, statutory and other books of each

125

Group Company (duly written up-to-date), the share certificates in respect of each of the Subsidiaries and transfers of all shares in the Subsidiaries held by nominees in favour of the Purchaser or as it may direct;

1.1.13	(if the Purchaser so requires) irrevocable powers of attorney (in such form as the Purchaser may reasonably require) executed by each of the holders of the Shares in favour of the Purchaser to enable the Purchaser (pending registration of the relevant transfers) to exercise all voting and other rights attaching to the Shares and to appoint proxies for this purpose;
1.1.14	a certified copy of any power of attorney, under which any document to be delivered to the Purchaser under this paragraph 1 has been executed;
1.1.15	any releases which the parties have obtained under Clause 14.2;
1.1.16	certificates of title in relation to the Certificated Properties updated, reissued and dated as at the Completion Date to reflect matters which have occurred or have been disclosed since the Certificates of Title but, for the avoidance of doubt, no conveyancing searches shall be updated;
1.1.17	bank statements of all bank accounts of all Group Companies as at the date of Completion; and
1.1.18	the original or copy title deeds and other documents relating to the Properties as listed in the Data Room other than as set out in Schedule 4 to the Disclosure Letter.

1.2	Board Resolutions of the Group Companies
	On Completion, the Sellers shall procure the passing of Board Resolutions of each Group Company inter alia:

1.2.1	(if so required by the Purchaser) revoking all existing authorities to bankers in respect of the operation of its bank accounts and giving authority in favour of such persons as the Purchaser may nominate to operate such accounts;
1.2.2	approving the registration of the share transfers referred to in paragraph 1.1.5 of this Schedule subject only to their being duly stamped;
1.2.3	accepting the resignations referred to in paragraph 1.1.6 of this Schedule and appointing such persons (within the maximum number permitted by the Articles of Association) as the Purchaser may nominate as directors and secretary;
1.2.4	changing their accounting reference date to the Completion Date; and
1.2.5	changing its registered office in accordance with instructions given by the Purchaser,

	and shall hand to the Purchaser duly certified copies of such Resolutions.
2	The Purchaser’s Obligations
	On Completion, the Purchaser shall deliver or make available to the Sellers:
2.1	evidence of the due fulfilment of the condition set out in Clause 4;

126

2.2	evidence that the Purchaser is authorised to execute this Agreement and the other documents listed in this paragraph 2;
2.3	the Portfolio Management Agreement duly executed by the Purchaser;
2.4	Individual Hotel Management Agreements in respect of each of the 63 Hotels listed in Schedule 1 of the Portfolio Management Agreements duly executed by the Purchaser;
2.5	Individual Hotel Management Agreements in respect of each of the 10 Hotels listed in Schedule 1 of the Named Assets Summary of Terms in a form reflecting such Named Assets Summary of Terms duly executed by the Purchaser;
2.6	the Purchasing Agreement and the Master Technology Agreement duly executed in respect of each of the Hotels;
2.7	The Purchaser undertakes to make all necessary filings with the Registrar of Companies in relation to each of the matters referred to in paragraph 1 above, within seven days of the Completion Date.

127

Schedule 6
Net Current Asset Statement
(Clause 8.1)

Part 1
Definitions

For the purposes of this Schedule 6:

“Accruals” means the monetary value of all goods and services received by any Group Company before the Completion Date which have not been paid for by that Company as at 11.00am on the Completion Date including interest owed by the Group Companies in respect of the Inter-Group Debt Balance, any wages, salaries, PAYE, VAT, accrued income Tax and rates, holiday pay and employer’s and employee’s NIC accruals for the calendar month in which the Completion Date falls and any amounts in respect of bonuses for 2004 and prior years and for the period up to Completion in respect of Relevant Employees, which will be apportioned on a pro-rata basis;

“Accrued Income” means the monetary value of all goods and services provided by any Group Company before the Completion Date for which revenue has not been received by that Company as at 11.00am on the Completion Date including interest due to the Group Companies in respect of any amounts included in calculating the Inter-Group Debt Balance;

“Appointment Notice” means a notice given by SCPLC or the Purchaser, as the case may be, to the other pursuant to paragraph 4.2 of Part 2 of this Schedule 6, requiring that the draft Net Current Asset Statement be referred to the Reporting Accountants;

“Cash” means the aggregate amount of cash at the Hotels and the balances in the Group Companies’ cash books;

“Current Guest Accounts” means uninvoiced accounts of guests staying at any Property as at Completion who are booked to remain at that Property after Completion and uninvoiced or invoiced but unpaid accounts of corporate clients in respect of guests who have stayed at any Property prior to Completion;

“Current Guest Deposits” means advance deposits and receipts of guests who will be staying at or using the services provided at any Property following the Completion Date and any sums credited to corporate client accounts in respect of guests who will be staying at or using the services provided at any Property following the Completion Date;

“Debtors” means all the book and other debts arising out of or attributable to the operations of any Group Company as at 11.00am on the Completion Date including Accrued Income, Employee Loans, Prepayments, rights to repayments of Tax and rates, payments for the surrender of Group Relief and to receive payment for services rendered before Completion but not invoiced before such date which shall include that portion of Current Guest Accounts relating to the period prior to Completion but, for the avoidance of doubt, not including deferred tax, any amount included in calculating the Inter-Group Debt Balance or any Inter-Group Receivables or any such book or other debts owed by a Group Company to another Group Company;

“Deferred Income” means all payments received by the Group Companies before the Completion Date relating to a service to be provided by that Company on or after the Completion Date including any Current Guest Deposits and Health Club Membership Fees;

“Draft 2004 Accounts” means the draft 2004 accounts of each of the Group Companies respectively in the Agreed Terms;

128

“Employee Loans” means any loan made to an employee, consultant or officer of any Group Company or any other person who provides services to any Group Company by any member of the Sellers’ Group, full details of which are contained in the Disclosure Letter;

“Group Relief Schedule” means the schedule of group reliefs and amounts payable for the financial years 2004 and 2005 respectively prepared by the Sellers and delivered with the Net Current Asset Statement;

“Health Club Membership Fees” means all membership fees paid to the Group Companies by members of the health club located at any Property and run by any such company which relate to the period of membership following the Completion Date;

“Inter-Group Payables” means all indebtedness due at Completion from the Group Companies to the Sellers’ Group (excluding any amount included in calculating Inter-Group Debt) and including any trading debt or liabilities arising in the ordinary course owed by the Group Companies to a member of the Sellers’ Group as at close of business on the Completion Date;

“Inter-Group Receivables” means all indebtedness due at Completion from the Sellers’ Group to the Group Companies (excluding any amount included in calculating Inter-Group Debt) and including any trading debt or liabilities arising in the ordinary course owed by a member of the Sellers’ Group to the Group Companies as at the close of business on the Completion Date;

“Long-Term Liabilities” means any long-term liabilities of the Group Companies at Completion (as determined in accordance with this Schedule 6) but excludes any deferred tax, contingent liabilities or provisions;

“Prepayments” means all prepayments made by the Group Companies before the Completion Date which relate to a supply to any such company of goods and/or services to be provided on or after the Completion Date;

“Provisions” means any provision of a Group Company which is required to be made at Completion in accordance with the policies set out in paragraph 1 of Part 3 of this Schedule and which, for the avoidance of doubt, has not been taken account of in Net Current Assets;

“Purchaser’s Disagreement Notice” means a notice given by the Purchaser to the Sellers in the manner set out in Clause 14.16 pursuant to paragraph 4.1 stating that the draft Net Current Asset Statement does not comply with the provisions of this Schedule 6;

“Reporting Accountants” means KPMG or, if that firm is unable or unwilling to act in any matter referred to them under this Agreement, a firm of Chartered Accountants to be agreed by the Sellers and the Purchaser within five Business Days of a notice by one to the other requiring such agreement or failing such agreement to be nominated on the application of either of them by or on behalf of the President for the time being of the Institute of Chartered Accountants in England and Wales;

“Sellers’ Disagreement Notice” means a notice given by SCPLC to the Purchaser in the manner set out in Clause 14.16 pursuant to paragraph 4.2 stating its reasons for disagreement with the Purchaser’s Disagreement Notice;

“Stock” means all stock of unconsumed foodstuffs, soft drinks, beers, wines, spirits and other alcohol and tobacco products, bottles, cases, pallets, unused consumable items and consumable stores, health and beauty treatment products, light equipment and accessories still listed on the inventory, fuel, cleaning materials, stationery and maintenance supplies whether opened or unopened and all other items which have prior to the date hereof, in the ordinary course, been regarded as stock which are unused, owned beneficially by any Group Company and held at any

129

Property at Completion excluding any items of stock which are unsaleable, unusable, spoilt or out of date;

“Stock Statement” means the statement of the aggregate value of the Stock at each of the Hotels as shown in the Management Accounts of each of the Hotels as at 31 January 2004, to be prepared by SCPLC in accordance with Clause 8.1 and this Schedule;

“Trade Creditors” means all indebtedness of the Group Companies as at 11.00am on the Completion Date including, without limitation, creditors (including members of the Sellers’ Group), overdrafts, monies held on account, bills of exchange, Tax, obligations to make payments for the surrender of Group Relief, Accruals, and Deferred Income but excluding, for the avoidance of doubt, deferred tax, any amounts included in calculating the Inter-Group Debt Balance, Inter-Group Payables and any indebtedness owed to a Group Company to another Group Company.

130

Part 2
Determination and Confirmation of Net Current Assets, Long-Term Liabilities and Provisions

1	Stock Statement
	SCPLC shall on the Completion Date produce the Stock Statement as at 11.00am on the Completion Date as agreed with the Purchaser.
2	Submission of the Net Current Asset Statement
2.1	Net Current Asset Statement
	SCPLC shall use its reasonable endeavours to procure that, as soon as practicable following the date on which the audited accounts for each of the Group Companies for the financial period ending on the Completion Date have been produced but in any event no later than 90 Business Days after the Completion Date, it prepares and delivers to the Purchaser the draft Net Current Asset Statement for each Company and in aggregate, as at the Completion Date:

2.1.1	including the value of the Stock as set out in the Stock Statement determined in accordance with this Schedule 6;
2.1.2	in accordance with the principles and methodology set out in Part 3 of this Schedule 6;
2.1.3	in the format of the pro forma Net Current Asset Statement set out in Part 4 of this Schedule 6;
2.1.4	including the Group Relief Schedule; and
2.1.5	including any Long-Term Liabilities and Provisions.

3	Access to Information
	In order to allow SCPLC to prepare, and the Purchaser to review, the Net Current Asset Statement:
3.1	the Purchaser shall:

3.1.1	keep up-to-date and make available to SCPLC and its representatives its books and records relating to the Group Companies (with the right to take copies at SCPLC’s expense) during normal office hours and co-operate with it with regard to the calculation and review of the draft Net Current Asset Statement;
3.1.2	insofar as it is reasonable to do so, make available the services of the employees of the relevant Group Companies to assist SCPLC and its representatives to undertake the matters contemplated by this paragraph 3; and
3.1.3	provide or ensure the provision of all other information and assistance which may reasonably be requested by SCPLC.

3.2 SCPLC shall procure that after the preparation of the draft Net Current Asset Statement, it shall give the Purchaser and its representatives access to the working papers and files (with the right to take copies at the Purchaser’s expense) and personnel which or who are relevant to the review of the draft Net Current Asset Statement by the Purchaser or its

131

representatives subject to the Purchaser providing or procuring the provision of any hold harmless undertaking that SCPLC’s accountants may require.

4	Preparation
4.1	Within 60 Business Days of receipt by the Purchaser of the draft Net Current Asset Statement, the Purchaser may serve a Purchaser’s Disagreement Notice and attach a schedule of those items in respect of which it disagrees with the draft Net Current Asset Statement together with reasons for the disagreement in reasonable detail. In the absence of such notice, the draft Net Current Asset Statement for each Company and in aggregate shall become the Net Current Asset Statement and shall be final and binding on the parties for all purposes.
4.2	If the Purchaser gives a Purchaser’s Disagreement Notice, SCPLC may serve a Sellers’ Disagreement Notice stating its reasons for disagreement (in reasonable detail) with the Purchaser’s Disagreement Notice within 10 Business Days of receipt by SCPLC of the Purchaser’s Disagreement Notice. If SCPLC does not serve such a valid Sellers’ Disagreement Notice, the draft Net Current Asset Statement for each Company and in aggregate as amended to reflect the matters specified in the Purchaser’s Disagreement Notice shall be the Net Current Asset Statement and shall be final and binding on the parties for all purposes. Within a further 10 Business Days, SCPLC and the Purchaser shall attempt in good faith to reach agreement in respect thereof and if they are unable to do so then either SCPLC or the Purchaser may, by notice to the other, give an Appointment Notice. The Purchaser shall procure that after the service of a Purchaser’s Disagreement Notice, it shall give SCPLC and its accountants access to the Purchaser’s accountants’ working papers and files (with the right to take copies at SCPLC’s expense) and personnel which or who are relevant to the review of the Purchaser’s Disagreement Notice by SCPLC or its accountants subject to the Sellers providing or procuring the provision of any hold harmless undertaking that the Purchaser’s accountants may require. If an Appointment Notice is served, the Reporting Accountants shall be engaged jointly on the terms set out in this Part 2; provided that neither SCPLC nor the Purchaser shall unreasonably refuse its agreement to terms proposed by the Reporting Accountants or the other party.
4.3	Except to the extent that the parties agree otherwise, the Reporting Accountants shall determine their own procedure but:

4.3.1 apart from procedural matters and as otherwise set out in this Agreement shall determine only:

(i)	whether any of the arguments for an alteration to the draft Net Current Asset Statement put forward in the Sellers’ Disagreement Notice or the Purchaser’s Disagreement Notice is correct in whole or in part; and
(ii)	if so, what alterations should be made to the draft Net Current Asset Statement in order to correct the relevant inaccuracy in it;

4.3.2	shall apply the accounting policies, principles, practices, terms and conditions, methods and bases referred to in this Schedule 6;
4.3.3	shall make their determination pursuant to paragraph 4.3.1 above as soon as is reasonably practicable;
4.3.4	the procedure of the Reporting Accountants shall:

132

(i)	give the parties a reasonable opportunity to make written and oral representations to them;
(ii)	require that the parties supply each other with a copy of any written representations at the same time as they are made to the Reporting Accountants;
(iii)	permit each party to be present while oral submissions are being made by any other party;

4.3.5	for the avoidance of doubt, the Reporting Accountants shall only address and resolve differences of the parties and shall not otherwise be entitled to determine the scope of their own jurisdiction; and
4.3.6	there is no presumption that the treatment of any matter in dispute should or should not be changed from that in the draft Net Current Asset Statement and no objection should be made to any matter raised by the Purchaser’s Disagreement Notice on the grounds that the matter in respect of which such notice is raised is below any materiality level which might otherwise apply.

4.4	The determination of the Reporting Accountants pursuant to paragraph 4.3.1 shall (i) be made in writing and sent to the parties at such time as they shall determine and (ii) unless otherwise agreed by the parties, include reasons for each relevant determination.
4.5	The Reporting Accountants shall act as experts and not as arbitrators and their determination of any matter falling within their jurisdiction shall be final and binding on the parties save in the event of manifest error (when the relevant part of their determination shall be void and the matter shall be remitted to the Reporting Accountants for correction). In particular, without limitation, their determination shall be deemed to be incorporated into the draft Net Current Asset Statement for each Company and in aggregate, which, as adjusted, shall then be final and binding on the Sellers and the Purchaser save as aforesaid.
4.6	The parties shall co-operate with the Reporting Accountants and comply with their reasonable requests made in connection with the carrying out of their duties under this Agreement. In particular, without limitation, (i) the Purchaser shall keep up to date and, subject to reasonable notice, make available to SCPLC, SCPLC’s representatives and the Reporting Accountants its books and records relating to the relevant Group Companies during normal office hours during the period from the appointment of the Reporting Accountants down to the making of the relevant determination and (ii) during such period SCPLC shall and shall procure that its representatives shall subject to the Purchaser providing or procuring the provision of any hold harmless undertaking that SCPLC’s accountants may reasonably require and subject to reasonable notice make available to the Purchaser, the Purchaser’s representatives and the Reporting Accountants the working papers and files relating to the preparation of the draft Net Current Asset Statement.
4.7	Subject to paragraph 4.9, nothing in this paragraph 4 shall entitle a party or the Reporting Accountants access to any information or document which is protected by legal professional privilege, or which has been prepared by the other party or its accountants and other professional advisers with a view to assessing the merits of any claim or argument.

133

4.8

A party shall not be entitled by reason of paragraph 4.9 to refuse to supply such part or parts of documents as contain only the facts on which the relevant claim or argument is based.

4.9

Each party shall, and shall procure that its accountants and other advisers shall, instruct the Reporting Accountants to keep all information and documents provided to them pursuant to this paragraph 4 confidential and shall not use the same for any purpose, except for disclosure or use in connection with the preparation of the Net Current Asset Statement, the proceedings of the Reporting Accountants or another matter arising out of this Agreement or in defending any claim or argument or alleged claim or argument relating to this Agreement or its subject matter.

134

Part 3
Accounting policies to be adopted in the Net Current Asset Statement

1	Preparation of Valuation
	The Net Current Asset Statement and any element of it shall be prepared in accordance with the policies that are referred to, and in the order of priority shown, in this paragraph 1:
1.1	in accordance with the provisions of this Part 3 of Schedule 6;
1.2	save to the extent inconsistent with or contradictory to paragraph 1.1, on a basis consistent with the Audited Accounts, using the same accounting principles, policies and practices, and in accordance with the law and applicable standards, principles and practices generally accepted in the United Kingdom as if they were statutory accounts required to be prepared under the Companies Acts;
1.3	notwithstanding paragraph 1.2 above the Net Current Asset Statement will reflect the change in group policy made in 2004 so as to recharge to group subsidiaries the attributable proportion of all pensions contributions made to the InterContinental Hotels UK Pension Plan on their behalf, and any unpaid liability arising from such recharge will be reflected in the Net Current Asset Statement. No prepayment will be recognised in respect of such pensions recharges;
1.4	save to the extent inconsistent with or contradictory to paragraphs 1.1 to 1.3, in accordance with GAAP as at the Completion Date; and
1.5	shall exclude the Inter-Group Debt Balance.
2	Specific Accounting Policies
2.1	The Net Current Asset Statement for each Company and in aggregate shall be drawn up on a going concern basis as at close of business on the Completion Date and the relevant assets and liabilities shall, subject to this Part 3, be as set out in the audited accounts of each of the Group Companies for the period ended on the Completion Date. No account shall be taken of events taking place or information becoming available after the date the Sellers deliver the draft Net Current Asset Statement to the Purchaser pursuant to paragraph 2.1 of Part 2 above.
2.2	The Net Current Asset Statement will exclude any effects of the change of control or ownership of the Group contemplated by this Agreement. Where judgement is required in determining the value of assets and liabilities, the Net Current Asset Statement should reflect the normal practices adopted in the Audited Accounts and subject thereto will reflect the decisions of the management of the Group up to and including the Completion Date and not those of the management of the Group or the Purchaser after that date.
3	Cash, Stock and Debtors, Deferred Income and Prepayments
3.1	Doubtful debts
	Doubtful debt provisions will be included applying consistent principles to those used in the Audited Accounts.

135

3.2	Debtors
	All Debtors of the Group Companies as at the Completion Date shall be included.
3.3	Stock not included
	Any items of Stock which are unsaleable, unusable, spoilt or out of date shall be excluded from the Stock.
3.4	Deferred Income and Prepayments
	Deferred Income and Prepayments will be apportioned on a time basis in relation to the period to which the Deferred Income or the Prepayment relates, as at 11.00am on the Completion Date.
3.5	Cash
	Cash shall be determined by reference to the cash book balance used by the Group Companies as opposed to the Group Companies’ bank statement balance and shall include any Cash held at the relevant Property.
4	Current Liabilities
4.1	Tax
	To recognise either an asset or a liability for Taxation (as appropriate), provision shall be made to reflect any asset or liability for Taxation (as appropriate) arising on activities in the accounting period ending on the Completion Date but allowing for the effect of such Group Relief surrender as the Sellers shall specify in the Group Relief Schedule.
4.2	Inter-company trading amounts so far as they are solely between Group Companies shall be nil at the Completion Date.
4.3	All Trade Creditors of the Group Companies as at the Completion Date shall be included.
4.4	Deferred tax shall not be treated as a current liability.
5	Aggregation
	Each entry shall be the aggregate of the separate amounts in respect of any heading for each of the Group Companies.
6	Group Relief Schedule
	The Group Relief Schedule shall show the amounts to be taken into account in the preparation of the Net Current Asset Statement for the accounting periods ending after 31 December 2003 (the “Current Periods”) in respect of:

6.1.1	surrenders of Group Relief by Group Companies to other Group Companies and to the Sellers’ Group;
6.1.2	surrenders of a Group Relief by companies in the Sellers’ Group to Group Companies; and
6.1.3	liability to make payments and right to receipts in respect of such surrenders to be taken into account in the calculation of Debtors and Trade Creditors;

136

6.1.4 and the Net Current Asset Statement shall be prepared on the basis that the specified surrenders are made. The Group Relief Schedule shall in addition be deemed to incorporate all surrenders of group relief already made at Completion in respect of accounting periods ended on or before 31 December 2003 (the “Past Periods”) but the Net Current Asset Statement will be prepared on the basis that there are no outstanding liabilities or debtors in respect of group relief for Past Periods to be included in the Group Relief Schedule. For the purposes of this paragraph 6 and Clause 8 of the Tax Deed of Covenant, “Sellers’ Group” shall be defined as in Clause 1.2 of the Tax Deed.

7	Long-Term Liabilities
	Long-Term Liabilities shall, for the avoidance of doubt, exclude any deferred tax and provisions.

137

Part 4
Pro forma Net Current Asset Statement

Pro forma Net Current Asset Statement in respect of the Net Current Assets Amount

Asset/Liability	Amount (£)			Amount (£)
Current Assets
Debtors		l
Inter-Group Receivables					l
Stock		l
Cash		l
Less
Current Liabilities
Trade Creditors		(l	)
Inter-Group Payables					(l	)
Net Current Assets/(Liabilities) Amount					l
Less
Long-Term Liabilities (if any)					(l	)
Provisions (if any)					(l	)
Total

138

Schedule 7
Warranties given by the Sellers
(Clause 9)

1	Corporate Information
1.1	The Shares and the Group Companies

1.1.1	Each Seller is entitled to sell and transfer to the Purchaser the full legal and beneficial ownership of the Shares set opposite its name in column 2 to Schedule 1 free from all Encumbrances on the terms of this Agreement without the consent of any other party.
1.1.2	The Shares comprise the whole of the issued and allotted share capital of the Companies, have been properly and validly issued and allotted and are each fully paid.
1.1.3	A Group Company is the sole legal and beneficial owner of all the issued and allotted shares in the Subsidiaries listed in Part 2 to Schedule 2 free from all Encumbrances other than 1 ordinary share in Holiday Inn (Reading) Limited in respect of which the registered holder is InterContinental Hotels Group Limited.
1.1.4	The shares in the Subsidiaries comprise the whole of the issued and allotted share capital of the Subsidiaries, have been properly and validly issued and allotted and each are fully paid.
1.1.5	No person has the right (whether exercisable now or in the future and whether contingent or not) to call for the allotment, conversion, issue, registration, sale or transfer, amortisation or repayment of any share capital or any other security giving rise to a right over, or an interest in, the capital of any Group Company under any option, agreement or other arrangement (including conversion rights and rights of pre-emption).
1.1.6	The Shares and the shares in the Subsidiaries have not been and are not listed on any stock exchange or regulated market.
1.1.7	No Group Company has any interest in, or has agreed to acquire, any share capital or other security referred to in paragraph 1.1.5 of this Schedule 7 of any other company (wherever incorporated) other than (a) the Subsidiaries set out in Schedule 2 or (b) an interest of less than 0.1 per cent in companies listed on any stock exchange or in regulated investment funds which, in either case, the Group Company holds for cash management purposes.
1.1.8	No Group Company has, outside its country of incorporation, any branch or permanent establishment.
1.1.9	In the last three years, no Group Company has given any financial assistance in connection with the acquisition of shares which assistance is prohibited under sections 151 to 158 (inclusive) of the Companies Act 1985.
1.1.10	In the last three years, all dividends or distributions declared, made or paid by any Group Company have been declared, made or paid in accordance with its memorandum and articles of association and the applicable provisions of the Companies Acts.

139

1.1.11 The particulars contained in Schedule 2 are true and accurate.

1.2 Insolvency etc.

1.2.1	No Group Company is insolvent whether as defined by Section 123 of the Insolvency Act 1986 or otherwise unable to pay its debts as they fall due.
1.2.2	No administrator, receiver (including an administrative receiver) or liquidator has been appointed in respect of the whole or any part of the assets or undertaking of the Group, and no petition has been presented in relation to such assets and undertaking.
1.2.3	There are no proceedings other than those referred to in paragraph 1.2.2 of this Schedule 7 in relation to any compromise or arrangement with creditors or any winding up, bankruptcy or other insolvency proceedings concerning any Group Company and, so far as the Sellers are aware, no events have occurred which, under applicable laws, would justify such proceedings.
1.2.4	No member of the Sellers’ Group nor any Group Company has received any notice of an intention to appoint an administrator by a qualifying floating charge held (as defined in paragraph 14 of Schedule B1 to the Insolvency Act 1986).
1.2.5	So far as the Sellers are aware, no steps have been taken to enforce any security over any assets of any Group Company and no event has occurred to give the right to enforce such security.

1.3 Constitutional Documents, Corporate Registers, Minute Books and Powers of Attorney

1.3.1	The constitutional documents of the Group Companies in the Data Room are true and accurate copies of the constitutional documents of the Group Companies and complete in all material respects and, so far as the Sellers are aware, there have not been and are not any breaches by any Group Company of its constitutional documents which would have a material adverse effect on the business of the Group.
1.3.2	The registers and minute books required to be maintained by each Group Company under the laws of England and Wales (and including Centre Hotels (Cranston) Limited):

(i)	are up-to-date;
(ii)	are maintained in accordance with applicable law; and
(iii)	contain records of all matters required to be dealt with in such books and records,

	in each case in all material respects.
1.3.3	All registers and statutory books referred to in paragraph 1.3.2 are in the possession (or under the control) of the relevant Group Company and no notice that any of them is incorrect and should be rectified has been received.
1.3.4	All filings, publications, registrations and other formalities required by applicable law to be delivered or made by the Group Companies to company registries in

140

England and Wales (or Scotland in respect of Centre Hotels (Cranston) Limited) have been duly delivered or made on a timely basis.

1.3.5 Other than as listed in Schedule 2 of the Disclosure Letter, there are no powers of attorney nor other authority to bind or commit any Group Company to any obligation not in the ordinary course of the relevant Group Company’s business in force given by any of the Group Companies to any person who is not a director or employee of a Group Company.

2	Audited Accounts
2.1	Latest Audited Accounts
	The audited accounts of the Group Companies for the financial period ended on the Accounts Date:

2.1.1	have been prepared in accordance with applicable law and with the accounting principles, standards and practices generally accepted at the Accounts Date;
2.1.2	subject to paragraph 2.1.1, have been prepared on a basis consistent, in all material respects, with that adopted in preparing the audited accounts of such Group Companies for the previous two financial years; and
2.1.3	make proper provision or reserve for all bad and doubtful debts,

	so as to give a true and fair view of the state of affairs of the Group Companies at the Accounts Date and of the profits or losses for the period concerned.
2.2	Management Accounts and Consolidated Financial Summary

2.2.1	The Management Accounts and the Consolidated Financial Summary have been prepared with due care materially in accordance with the Group Accounting Policies applied on a consistent basis;
2.2.2	the profits and losses of the Hotels for the relevant period as shown in the Consolidated Financial Summary before the pro-forma adjustments set out in such Summary are materially accurate; and
2.2.3	excluding the Properties and any Property-related adjustments, the Draft 2004 Accounts of the Group Companies setting out the assets and liabilities of the Group as at 31 December are materially accurate, it being acknowledged that such balances are in draft form and subject to final audit;
2.2.4	the aggregate reserves of the Group Companies as at 31 December 2004, as adjusted for the impact of the Pre-Sale Reorganisation but excluding any adjustment for impairment charges in respect of fixed assets, are not less than £300 million,

it being acknowledged (i) that the Management Accounts have been prepared for internal purposes only and have not been audited; (ii) that the Management Accounts are interim accounts where cut-off and closing procedures are usually not performed to the same standard as for year-end accounts and where income and expenses may not be fully reflected in the Management Accounts relating to the period in which they were incurred and (iii) that the Consolidated Financial Summary is extracted from the management

141

	accounts of the Hotels for the relevant period (which have been prepared on the same basis as the Management Accounts) and has not been audited.
2.3	Since the Accounts Date
	Since the Accounts Date and up to the date hereof:

2.3.1	the business of the Group has been carried on as a going concern in the ordinary course, without any material interruption or material alteration in its nature, scope or manner and specifically, on a Hotel by Hotel basis, there has been no material diminution in expenditure with respect to sales and marketing, repair and maintenance, IT and payroll that has had a material adverse effect on the overall profitability of the business of the relevant Hotel;
2.3.2	no material capital commitments have been entered into by any Group Company other than is contemplated by such Group Company’s capital budget. For these purposes a material capital commitment is one involving capital expenditure of over £1,000,000 for Hotels with more than 120 rooms or £500,000 for any other Hotels, in each case exclusive of VAT;
2.3.3	no Group Company has declared, made or paid or agreed to declare, make or pay any dividend or other distribution of profits or assets to the Sellers;
2.3.4	no Group Company has issued or agreed to issue any share or loan capital or any other security giving rise to a right over its capital;
2.3.5	no Group Company has redeemed or purchased or agreed to redeem or purchase any of its share capital; and
2.3.6	save as disclosed in the Data Room in section 04 and sub-sections 02-10 in the Capital Reduction and Restructuring Documentation section for any Group Company in the second round data room and section 02 for any Group Company in the data room, no shareholder resolutions of any Group Company have been passed other than resolutions relating to ordinary business at any Annual General Meeting.

3	Financial Obligations
3.1	Details of all outstanding guarantees, indemnities, mortgages, charges, pledges, liens, assignments, suretyship or other security agreement or arrangement given other than in the ordinary course of business:

3.1.1	by any Group Company; or
3.1.2	for the benefit of any Group Company,

	in excess of £500,000 are disclosed in the Data Room.
3.2	No Group Company has any outstanding or available financial facilities (which for the avoidance of doubt shall exclude any operating leases in the ordinary course) owed to or made available by any person which is not a Group Company or a member of the Sellers’ Group.

142

4	Properties
4.1	General

4.1.1	The Properties comprise all the land and buildings owned, leased, in the possession of or occupied by a member of the Group.
4.1.2	The Group Company named in Schedule 3 as owner of a Property is the sole legal and beneficial owner of and beneficially entitled to the whole of the proceeds of sale of that Property.
4.1.3	The information contained in Parts 1 and 2 of Schedule 3 as to the tenure of the Properties and the details set out therein are true and accurate.
4.1.4	No member of the Group has any actual or contingent liability in respect of any estate or interest in property whether arising as original tenant, assignee, guarantor or otherwise howsoever other than in respect of the Properties or any properties forming part of the Pre-Sale Reorganisation.
4.1.5	No works have been carried out since 4 April 2001 which might result in a material revision of the current rateable value of any of the Properties.

4.2 Certificated Properties

4.2.1	The Sellers have provided to the Sellers’ Lawyers and Wright Johnston & Mackenzie all documents relating to the Certificated Properties of which they have knowledge together with such other information in their possession as is material for the purposes of giving the Certificates of Title.
4.2.2	To the best of the knowledge, information and belief of the Sellers, the information contained in the Certificates of Title is complete and accurate in all respects.

4.3 Uncertificated Properties

4.3.1	The written replies supplied by the Sellers’ Lawyers and Wright Johnston & Mackenzie to the pre-contract standard enquiries in respect of the Uncertificated Properties are in all material respects true, accurate and not misleading and where those replies are qualified by reference to the awareness, knowledge, information or belief of the Sellers, are correct to the standard referred to in Clause 9.1.4. Where those replies are qualified by reference to significance or materiality, then the level of significance or materiality is £500,000 per item. Such replies would still be the same if those enquiries were repeated at the date of this Agreement.
	Possession and occupation
4.3.2	A member of the Group is in actual occupation and possession of the whole of each of the Uncertificated Properties, none of which is vacant, and (except by virtue of the Letting Documents) no other person is in or actually or conditionally entitled to possession, occupation, use or control of any of the Uncertificated Properties.
	Title
4.3.3	There is no financial charge, standard security, mortgage or other security interest (save for rent charges, if any) in or over or affecting any of the Uncertificated Properties.

143

4.3.4	No Uncertificated Properties are affected by a subsisting contract for sale.
4.3.5	Save as disclosed in the Property section (section 3 of the second round Data Room, section 4 of the Data Room and section 4 of the property information pack) of the Data Room only, no Uncertificated Properties are affected by a subsisting pre-emption right or option to enter into a contract for sale, the provisions of which remain to be performed.
4.3.6	A member of the Group has in its possession or unconditionally held to its order all the original documents of title and other documents and papers relating to the Uncertificated Properties.
4.3.7	There are no insurance policies relating to any question of title affecting any of the Uncertificated Properties.
	Insolvency
4.3.8	No member of the Group is aware of any circumstances which could render any transaction relating to such member of the Group’s title to any Uncertificated Property liable to be set aside under the provisions of insolvency legislation.
	Notice of breach of encumbrances
4.3.9	No member of the Group has received written notice of any breach of any covenants, obligations, title conditions, restrictions, stipulations, easements, servitudes or other matters set out or referred to in the deeds and documents relating to the Uncertificated Properties which notice remains outstanding.
4.3.10	None of the Uncertificated Properties are subject to any liability for the payment of any outgoings relating to property ownership of a recurring nature except uniform business rates, water rates, sewerage charges, insurance premiums and other similar charges (all of which are paid up to date and no such payments are in dispute) and in the case of leaseholds, rent, insurance rent and service charge.
	Adverse rights
4.3.11	So far as the Sellers are aware, no one is in adverse possession of any Uncertificated Properties.
4.3.12	So far as the Sellers are aware, no third party has given written notice to any member of the Group alleging that it has acquired any rights adversely affecting any of the Uncertificated Properties which notice remains subsisting.
	Notices
4.3.13	No notices materially affecting any property matter in respect of the Uncertificated Properties have been given by any member of the Group and no such notices have been received by any member of the Group the subject matter of which would have a material adverse effect on the continued use of the Uncertificated Property as a hotel together with leisure facilities and other ancillary uses if so used at the date of this Agreement.
	Planning
4.3.14	So far as the Sellers are aware, during the period of:

144

(i)	four years immediately prior to the date of this Agreement no development at the Uncertificated Properties has been undertaken in breach of the Planning Acts; and
(ii)	ten years immediately prior to the date of this Agreement no material change of use at the Uncertificated Properties has been undertaken in breach of the Planning Acts.

4.3.15	No application for planning permission in relation to any of the Uncertificated Properties is awaiting determination and no planning decision or deemed refusal is the subject of any appeal nor has been granted within six months prior to the date of this Agreement.
4.3.16	No written notice has been received which remains outstanding in relation to any compulsory purchase notice, order, proposal, scheme or resolution affecting any of the Uncertificated Properties or any access to any of them.
4.3.17	So far as the Sellers are aware, there are no outstanding obligations on any Group Company pursuant to any agreement affecting an Uncertificated Property made pursuant to Section 106 of the Town and Country Planning Act 1990 (or Section 75 of the Town and Country Planning (Scotland) Act 1997), Section 38 of the Highways Act 1980 (or Section 48 of the Roads (Scotland) Act 1984) or Section 33 of the Local Government (Miscellaneous Provisions) Act 1982.
	Leasehold Properties
4.3.18	In relation to such of the Uncertificated Properties as are leasehold:

(i)	no collateral assurances, undertakings or concessions have been made in writing, so as to be legally enforceable, by any party to the Leases;
(ii)	so far as the Sellers are aware, no undocumented collateral assurances, undertakings or concessions have been made by any party to the Leases;
(iii)	the last instalments of rent, additional rent, service charge (if any) and of all other payments due under such Leases respectively have been paid and were accepted by the landlord or its agents without qualification and no such payments are in dispute;
(iv)	all steps in rent reviews have been duly taken and no rent reviews are or should be currently under negotiation or the subject of a reference to an expert or arbitrator (or arbiter in Scotland) or the Courts;
(v)	no written notice alleging any breach of the covenants (or obligation) contained in the Lease, whether on the part of the landlord or the tenant, remains outstanding; and
(vi)	no notice of forfeiture under Section 146 of the Law of Property Act 1925 or (in Scotland) formal lease irritancy warning notice, has been served on any Group Company.
	Material Letting Documents

4.3.19 In relation to any Material Letting Documents:

(i)

145

(a)	no collateral assurances, undertakings or concessions have been made in writing, so as to be legally enforceable, by any party to the Material Letting Documents and no surety or tenant or licensee has been expressly released from any obligation;
(b)	so far as the Sellers are aware, no undocumented collateral assurances, undertakings or concessions have been made by any party to the Material Letting Documents;

(ii)	all rent, additional rent, service charges or other payments under the Material Letting Documents have been paid to date and no rent has been commuted, waived or paid in advance of the due date for payment and no such payment is in dispute;
(iii)	all steps in rent reviews have been duly taken and no rent reviews are or should be currently under negotiation or the subject of a reference to an expert or arbitrator (or arbiter in Scotland) or the Courts;
(iv)	no written notice alleging any breach of any covenant (or obligation) or condition contained in the Material Letting Documents, whether on the part of the landlord or the tenant, remains outstanding;
(v)	so far as the Sellers are aware, there has been no sub-letting, parting with possession or sharing of occupation by any tenant who occupies any part of the Uncertificated Properties under the Letting Documents; and
(vi)	no notices under Sections 25 or 26 of the Landlord and Tenant Act 1954 have been served or received in relation to any Material Letting Documents at any Uncertificated Property.

	Disputes
4.3.20	There are no current material disputes, actions, claims or demands between a Group Company and any adjoining or neighbouring owner:

(i)	with respect to any boundary walls and fences or with respect to any easement, right or means of access to any of the Uncertificated Properties or their current use and occupation; or
(ii)	in relation to any property neighbouring an Uncertificated Property or the current use or occupation of such neighbouring property;

	and so far as the Sellers are aware none are anticipated.
	Title documents
4.3.21	The Sellers have provided in the Data Room true and complete copies of all deeds and documents relevant to the title of any member of the Group to any of the Uncertificated Properties.

4.4 Construction

4.4.1 As at the date of this Agreement, in respect of the Properties there are no building, construction, refurbishment, repair, engineering or other works in progress nor are there any individual contracts in respect of which the Group or a member of the Sellers’ Group continue to have obligations in each case with an individual contract value in excess of £1,000,000.

146

4.4.2	The Sellers have provided in the Data Room true and complete copies of all building contracts and appointments affecting the Properties which have an individual contract value in excess of £1,000,000 and which have been entered into since 4 April 2001 (save in respect or in the case of the two Certificated Properties known as Crowne Plaza London Heathrow and Holiday Inn London Kensington Forum only, the last six years immediately prior to the date of this Agreement).
4.4.3	In this paragraph 4.4.3, the expression “Construction Documentation” shall mean building contracts relating to the Properties (i) in respect of which a certificate of practical completion has been issued since 4 April 2001 (save in respect of the two Certificated Properties known as Crowne Plaza London Heathrow and Holiday Inn London Kensington Forum, where the last six years immediately prior to the date of this Agreement shall apply) and/or (ii) relating to works in progress and “Relevant Claim” shall mean a written claim the value of which is in excess of £500,000.
	In respect of the Construction Documentation there are no outstanding:

(i)	Relevant Claims for financial compensation, extension of time or variation; or
(ii)	Relevant Claims against any member of the Sellers’ Group or the Group by any counterparty to the Construction Documentation alleging failure by the relevant member of the Sellers’ Group or Group to perform its obligations under the relevant Construction Documentation; or
(iii)	Relevant Claims against any counterparty to the Construction Documentation for failure by such counterparty to perform any obligation of that counterparty under the Construction Documentation.

4.4.4

As at the date of this Agreement there are no construction works being undertaken by or on behalf of any Group Company at a Property, where the contract value of such works exceeds 10 per cent. of the net book value of the relevant Property as at the Accounts Date.

4.4.5

The planned programme for works pursuant to the Disability Discrimination Act 1995 as set out in document 07 in the Group Information section of the property information pack “IHG’s UK DDA policy, summary of works and status”, document 51 002 “DDA progress summary” in the Portfolio Information section of the second round data room, document 51 003 “DDA Audits — stage 3 status summary” in the Portfolio Information section of the second round Data Room and item 03 011 for each Hotel “Stage 2 DDA Audits” in the second round Data Room in the Data Room has been adhered to.

5	Ownership of Assets
	All assets included in the Audited Accounts or acquired by any of the Group Companies since the Accounts Date, other than the Properties, and any assets disposed of or realised in the ordinary course of business, and excepting rights and retention of title arrangements arising by operation of law in the ordinary course of business:

5.1.1 are owned by the Group Companies;

147

5.1.2	are, where capable of possession, in the possession or under the control of the relevant Group Company; and
5.1.3	none of such assets is the subject of an Encumbrance or the subject of any factoring arrangement, conditional sale or credit agreement.

6	Information Technology, Data Protection and Intellectual Property
6.1	For the purposes of this paragraph 6:
	“Data Protection Legislation” means the Data Protection Act 1998 and any subordinate legislation or orders made under that Act;
	“Group IT” means all Information Technology which is owned by any Group Company or which has in the last two years been used in connection with the business of any Group Company other than Retained IT;
	“Information Technology” means computer systems, communication systems, software and hardware;
	“Material Intellectual Property” means all rights and interests held by any of the Group Companies in Intellectual Property (whether as owner, licensee or otherwise) which at or immediately before Completion is used in relation to the Group and which is material to the business of the Group; and
	“Retained IT” means Information Technology owned by, or licensed to, the Sellers’ Group.
	Information Technology
6.2	Each of the Group IT is owned by or licensed to the relevant Group Company.
6.3	All arrangements relating to, and licences of, Group IT which is material to the business of the Group are summarised in the Data Room and:

6.3.1	are in full force and effect, no notice having been given by either side to terminate them;
6.3.2	no circumstances exist or have existed which would entitle a party to terminate them, vary them and/or make a claim for money or a money equivalent in respect of them; and
6.3.3	so far as the Sellers are aware the obligations of the parties thereto have been fully complied with,

	and no disputes, claims or proceedings have arisen or are foreseeable in respect of those arrangements and licences.
6.4	There are, and in the past two years there have been, no performance reductions or breakdowns of, or logical or physical intrusions to, any Information Technology or loss of data which have had (or are having) a material adverse effect on the business of the Group and the Sellers are not aware of any fact or matter (including, but not limited to, a change of control of any of the Group Companies) which may give rise to such a material adverse effect.
6.5	The Group Companies have in place procedures which are in accordance with current good industry practice:

148

6.5.1	to prevent unauthorised access to and the introduction of viruses and other contaminants into the Group IT;
6.5.2	to take and store back-up copies of the software and data in the Group IT; and
6.5.3	to ensure that the business of the Group Companies can continue without material disruption in the event of breakdown or performance reduction of the Group IT or loss of data, whether due to natural disaster, power failure or otherwise.

	Data Protection
6.6	In the last two years each Group Company has complied in all material respects with all applicable requirements of any Data Protection Legislation.
6.7	In the last two years no notice alleging non-compliance with the Data Protection Legislation (including any enforcement notice, deregistration notice or transfer prohibition notice) has been received by any of the Group Companies from any relevant regulator.
6.8	In the last two years no undertaking has been made in relation to Data Protection Legislation by any Group Company to any relevant regulator.
6.9	In the last two years so far as the Sellers are aware, no correspondence, dispute, enquiry or information notice has been made or audit undertaken or proposed by any relevant regulator under Data Protection Legislation in relation to any Group Company.
	Intellectual Property
6.10	So far as the Sellers are aware, all the Material Intellectual Property (whether registered or not) and all pending applications therefor are (or where appropriate in the case of pending applications, will upon registration be) legally owned by, licensed to or used under the authority of the owner by the Group Companies.
7	Contracts
7.1	Contracts
	Other than as disclosed in the Data Room, no Group Company is a party to or subject to any contract, transaction, arrangement, understanding or obligation (other than in relation to any property, property lease or contract of employment) which is material to the business of the Group and which:

7.1.1	is not in the ordinary course of business;
7.1.2	is not on an arm’s length basis;
7.1.3	is of a long-term nature, that is unlikely to have been fully performed, in accordance with its terms, more than 12 months after the date on which it was entered into or undertaken;
7.1.4	restricts its freedom to carry on its business in any part of the world in such manner as it thinks fit so as to have a material adverse effect on the Group; or
7.1.5	involves the supply of goods and/or services on terms under which retrospective or future discounts, price reductions or other financial incentives are given, the aggregate sales value of which (exclusive of VAT) will be more than 5 per cent of turnover of the business of the Group (exclusive of VAT) for the preceding financial year.

149

7.2	Compliance with Contracts
	So far as the Sellers are aware:

7.2.1	the terms of all contracts referred to in paragraph 7.1 above have been complied with in all material respects by the relevant Group Companies; and
7.2.2	as at the date hereof, no notice of termination or of intention to terminate has been received in respect of any contract referred to in paragraph 7.1 above and, so far as the Sellers are aware, there are no grounds for termination, rescission, avoidance or repudiation of any such contract; and
7.2.3	details of all acquisitions or disposals of businesses or undertakings or shares (being in each case a transaction with a value of £1,500,000 or more) by any Group Company in the last three years, together with details of any material actual or contingent liabilities that the Sellers are aware of in connection with any such disposal or acquisition, are contained in the Disposal Agreements section and the Capital Reduction and Restructuring Documentation section of the second round Data Room.

7.3	Joint Ventures etc.
	No Group Company is, or has agreed to become, a member of any joint venture, consortium, partnership or other unincorporated association (other than a recognised trade association in relation to which the Group Company has no liability or obligation except for the payment of annual subscription or membership fees).
7.4	Agreements with Connected Parties

7.4.1

There are no existing contracts or arrangements material to the business of the Group between, on the one hand, any Group Company and, on the other hand, any Seller or any other member of the Sellers’ Group other than on normal commercial terms in the ordinary course of business.

7.4.2

No Group Company is party to any contract nor is there any outstanding indebtedness (actual or contingent) material to the business of the Group with any current or former employee or current or former director or officer of any such Group Company or any person connected (within the meaning of section 839 of the Income and Corporation Taxes Act 1988) with any of such persons, or in which any such person as aforesaid is interested (whether directly or indirectly), other than on normal commercial terms in the ordinary course of business.

8	Employees and Employee Benefits
8.1	Employees and Terms of Employment

8.1.1 The Disclosure Letter contains accurate details, in relation to each Hotel at the date of this Agreement, of:

(i)	the name of each person who is a director of a Group Company;
(ii)	the total number, salary and other benefits, of Relevant Employees;
(iii)	the salary and other benefits, period of continuous employment, location and age of each Significant and Senior Employee;

150

(iv)	specimen terms and conditions of each category of Relevant Employee;
(v)	the length of notice which must be given by the relevant Group Company to terminate the contract of employment of each Significant Employee;
(vi)	all employment handbooks relating to any of the Relevant Employees;
(vii)	so far as the Sellers are aware, all written employment policies relating to any of the Relevant Employees; and
(viii)	the total number of, and aggregate fees incurred for, agency staff engaged for a period of one continuous year or more by any Group Company.

8.1.2	As at the date of this Agreement, no Group Company has given or received notice to terminate the contract of employment of any Significant Employee which is yet to expire nor, so far as the Sellers are aware, has any such notice been threatened and no dispute is outstanding between any Group Company and any of the Group Companies’ current or former Relevant Employees relating to their employment (provided that such dispute has been escalated to at least the stage of a disciplinary matter or a written grievance which relates to a breach of any material statutory obligation or a breach of contract) or the termination of their employment by the Group Companies.
8.1.3	Each Relevant Employee is employed by a Group Company.
8.1.4	So far as the Sellers are aware, no Group Company has made an offer which is outstanding to, or is bound by an agreement to, make any changes to any contractual terms or conditions of employment (as referred to in paragraphs 8.1.1(iv) and (vi) of this Schedule 7) of any of the Relevant Employees.
8.1.5	At the date of this Agreement, no Relevant Employee is on sick leave which has lasted for eight weeks or more.
8.1.6	At the date of this Agreement, no Significant Employee is absent on ordinary or additional maternity leave.
8.1.7	No offers of employment which are outstanding have been made by any Group Company to, or accepted by, any individual who is, or would be (if the offer was accepted) a Significant Employee, save in the ordinary course of business to replace staff.
8.1.8	So far as the Sellers are aware, no questionnaire has been served on any of the Group Companies by a Relevant Employee under the Disability Discrimination Act 1995, the Sex Discrimination Act 1975, the Race Relations Act 1976, the Equal Pay Act 1970, the Equality of Employment (Religion or Belief) Regulations 2003, or the Equality of Employment (Sexual Orientation) Regulations 2003 which at the date of this Agreement remains unanswered in full or in part.
8.1.9	So far as the Sellers are aware, at the date of this Agreement every Relevant Employee of the Group Companies who requires a work permit to work in the United Kingdom has a current work permit to work in the United Kingdom.
8.1.10	No Group Company is a party to, bound by or proposing to introduce in respect of any of its directors or Relevant Employees any redundancy payment scheme in addition to statutory redundancy pay, nor is there any formal policy in place for redundancy selection.

151

8.1.11

So far as the Sellers are aware, no Group Company has incurred any liability which remains undischarged at the date of this Agreement in connection with the termination of employment of any Significant Employee (including redundancy payments) or for failure to comply with any order for the reinstatement or re-engagement of any Relevant Employee. At the date of this Agreement there is no outstanding order for the re-instatement or re-engagement of any of the Relevant Employees or a former employee of a Group Company.

8.1.12

So far as the Sellers are aware, at the date of this Agreement no Group Company is involved in any material industrial or trade dispute or negotiation with any trade union or other group or organisation representing Relevant Employees and there is no outstanding liability on the part of the Group Companies or any of them in respect of any such dispute and so far as the Sellers are aware, at the date of this Agreement there is nothing likely to give rise to such a dispute or claim.

8.2 Termination of Employment

8.2.1	Between 1 July 2004 and the date of this Agreement, no Senior Employee has given or received notice terminating his or her employment.
8.2.2	Between 1 July 2004 and the date of this Agreement, there have been no proposals to terminate the employment of any Senior Employee.

8.3	Works Councils and Employee Representative Bodies
	The Disclosure Letter lists all employee representative bodies which by law or any collective bargaining agreement have the right to be informed and consulted on matters which affect the Relevant Employees.
8.4	Consultancy Arrangements
	No Group Company is a party to any Consultancy Agreement and there are no proposals for any Group Company to enter into any Consultancy Agreement.
8.5	Collective Bargaining Agreements etc.
	There are no national collective bargaining agreements or industry-wide collective agreements, union recognition agreements, collective agreements, European Works Council or other agreements between the Group Companies and trade unions or representative bodies except those listed in the Disclosure Letter.
8.6	Bonus or other Profit-related Schemes

8.6.1	There are attached to the Disclosure Letter the rules or other documentation relating to all share incentive, share option, profit sharing, bonus or other incentive arrangements for or affecting any Relevant Employees and there are no proposals to introduce any further arrangements.
8.6.2	Employee Share Incentives

(i)	The Sellers have provided the Purchaser with details of the Relevant Employees who hold share options under the share incentive and share option arrangements referred to in paragraph 8.6.1 of this Schedule 7.
(ii)	No Group Company is or may become liable for any National Insurance contributions arising out of the grant, exercise or release of options under

152

	the share incentive and share option arrangements referred to in paragraph 8.6.1 of this Schedule 7 which are not fully provided for in the Accounts.
(iii)	The InterContinental Hotels Group Sharesave Plan is approved by the Inland Revenue under the Income Tax (Earnings and Pensions) Act 2003 and has been operated at all times in accordance with that legislation.
(iv)	No Group Company is liable to pay any amount to an employee trust in relation to any Relevant Employee.

8.7 Pensions

8.7.1	For the purpose of these warranties:
	“Pension Scheme” means the InterContinental Hotels UK Pension Plan
8.7.2	The Pension Scheme is the only arrangement to which the Group Companies have or could have any liability for the purpose of providing benefits on retirement or death.
8.7.3	The Sellers have supplied to the Purchaser documents containing full, accurate and up to date details of the Pension Scheme to the extent that these relate to any obligations and liabilities under it in respect of the Group Companies and the Relevant Employees. These documents include, but are not limited to, the following:

(i)	the trust deeds, rules and other documents which currently govern the Pension Scheme;
(ii)	all current announcements and explanatory booklets relating to the Pension Scheme;
(iii)	the latest actuarial valuation and report for the Pension Scheme, and any subsequent draft valuation and report, and any subsequent and relevant actuarial advice;
(iv)	the latest trustee report and accounts; and
(v)	proposed changes to any information contained in any of the documents listed in paragraph 8.7.3(i) above.

8.7.4	The Pension Scheme is approved as an exempt approved scheme (within the meaning of Chapter I or Chapter IV of Part XIV of the Income and Corporation Taxes Act 1988), and the Sellers are not aware of any reason why this approval could be withdrawn.
8.7.5	No claim, dispute, complaint or investigation has arisen which relates to the provision of retirement or death benefits in respect of the Relevant Employees and former employees of the Group Companies, and the Sellers are not aware of any such claim, dispute, complaint or investigation that is pending or threatened.
8.7.6	In relation to the Relevant Employees and former employees of the Group Companies, all amounts due in the normal course of events to the Pension Scheme have been paid.
8.7.7	All benefits under the defined contribution section of the Pension Scheme (other than those which are fully insured) are calculated on a money purchase basis only

153

and there is no obligation on any Group Company or under the Pension Scheme (other than in the case of those benefits which are fully insured) to provide any specified level of benefits in respect of the Relevant Employees.

8.7.8

So far as the Sellers are aware, the Group Companies comply and have at all times complied in all material respects with all legal and regulatory requirements (including equal treatment) and the schedule or contributions and the payment schedule relevant to the Pension Scheme and the Group Companies’ participation in the Pension Scheme. So far as the Sellers are aware, the Group Companies comply and have at all times complied in all material respects with any duty to facilitate access to a stakeholder pension scheme (under section 3 of the Welfare Reform and Pensions Act 1999) and with any equal treatment or other anti-discrimination requirements relevant to the provision of retirement or death benefits.

9	Legal Compliance
9.1	Licences and Consents
	All licences, consents, authorisations, orders, warrants, confirmations, permissions, certificates, approvals, registrations and authorities necessary for and material to the carrying on of the business of the Group as now carried on have been obtained, are in force and, so far as the Sellers are aware, are being complied with in all material respects as at the date hereof. None of the Sellers is aware of any reason why any of them should be suspended, cancelled, modified or revoked or not renewed on the same terms (including as a result of the change of control of the Group Companies).
9.2	Compliance with Laws

9.2.1	So far as the Sellers are aware, there is no investigation, disciplinary proceeding or enquiry by, or order, decree, decision or judgment of, any court, tribunal, arbitrator, governmental agency or regulatory body outstanding against any Group Company or any person for whose acts or defaults it may be vicariously liable which will have a material adverse effect upon the business of any relevant Hotel or Group Company.
9.2.2	No Group Company has received any written notice during the past 12 months from any court, tribunal, arbitrator, governmental agency or regulatory body with respect to a violation and/or failure to comply with any such applicable law or regulation, or requiring it to take or omit any action which in any case would have a material adverse effect on the business of a Hotel or Group Company.
9.2.3	So far as the Sellers are aware, the Group Companies are conducting, and since 4 April 2001 have conducted, their business materially in accordance with all applicable laws and regulations.

10	Environment
10.1	For the purposes of this paragraph 10:
	“Environment” means all or any of the following media (alone or in combination): air (including the air within buildings and the air within other natural or man-made structures whether above or below ground); water (including water under or within land or in drains or

154

	sewers, inland waters and coastal waters); soil and land (including surface land, subsurface strata sea bed and river bed, and natural and man made structures) and any ecological systems and living organisms supported by these media, including man and his property;
	“Environmental Authority” means any governmental body or agency or local authority or competent body having jurisdiction to determine any matter arising under Environmental Law;
	“Environmental Law” means all statutes, civil or criminal law, common law, bye-laws, regulations and subordinate legislation, final and binding court and other tribunal decisions and any statutory guidance, notes, judgments, decisions, notices, orders, circulars and codes of practice issued thereunder (including, without limitation, the laws and directives of the European Union) in each case to the extent the same have force of law in the UK and are applicable to any Group Company at Completion concerning (i) the pollution or protection of or prevention of pollution to the Environment; (ii) occupational or public health and safety, including conditions of the workplace; (iii) emissions, discharges or releases into the Environment of Hazardous Substances or (iv) the release, use, treatment, storage, management, disposal, transportation, generation or handling of Hazardous Substances;
	“Environmental Permit” means any licence, approval, authorisation, permission, notification, waiver, order or exemption which is issued, granted or required under Environmental Law which is material to the operation of the business of the Group or the occupation or use of any of the Properties on or before Completion;
	“Hazardous Substances” means any natural or artificial substance of any nature (whether in the form of a solid, liquid, gas or vapour alone or in combination with any other substance) which is causing or is capable of causing harm or damage to the Environment or to public health or capable of causing a nuisance, including but not limited to controlled, special, hazardous, toxic or dangerous wastes or pollutants; and
	“Relevant Period” means the period from 4 April 2001 ending on the date hereof.
10.2	So far as the Sellers are aware, each Group Company is conducting, and during the Relevant Period has conducted, the business of the Group in material compliance with Environmental Law.
10.3	All Environmental Permits required under Environmental Law:

10.3.1	have been obtained;
10.3.2	are in force;
10.3.3	so far as the Sellers are aware, have in all material respects been complied with during the Relevant Period; and
10.3.4	no Group Company has received written notice from any Environmental Authority that any Environmental Permit will be suspended, cancelled, revoked or not renewed on substantially the same terms in the 12 months following Completion and, so far as the Sellers are aware, no circumstances exist which will lead to such suspension, cancellation, revocation or inability to renew the same on substantially the same terms in the 12 months following Completion.

10.4 No Group Company has received any written notice during the Relevant Period of any civil, criminal or regulatory claim, investigation or other proceeding or suit asserting it is in

155

	breach of or liable under Environmental Law or Environmental Permits by any Environmental Authority or any third party (including any employee) and, so far as the Sellers are aware (i) no such claim is pending or threatened and (ii) no circumstances exist which will lead to such a claim in respect of any material liability under or breach of Environmental Laws or Environmental Permits.
10.5	The Sellers have disclosed copies of the asbestos registers and management action plans relating to any Property which have been produced for them within the Relevant Period and document 36.004, Portfolio Information in the Data Room provides an accurate update of remediation works undertaken as at the date hereof in relation to asbestos at categories A1-B2 of the Hotels.
10.6	Copies of all final version environmental surveys, audits, assessments, technical audits, geotechnical findings, soil and groundwater testing and health and safety assessments relating to any of the Properties produced within the two years prior to the date hereof and in the Sellers’ possession, together with copies of any final version Phase 2 investigations or other intrusive environmental investigations which were commissioned by the Sellers for the purpose of entering into the Posthouse Agreement, have been disclosed in the Data Room.
11	Litigation
11.1	Current Proceedings

11.1.1

No Group Company (nor any person for whose acts or defaults a Group Company is vicariously liable) is involved whether as claimant or defendant or other party in any claim, legal action, proceeding, suit, litigation, prosecution, investigation, enquiry, mediation, arbitration or other judicial proceedings or hearings before any statutory or governmental body, department, board or agency (other than as claimant in the collection of debts arising in the ordinary course of its business none of which exceeds £500,000) which is material to the business of any Hotel or Group Company.

11.1.2

No director of any Group Company is involved whether as claimant or defendant or other in any such claim, legal action or other matter as referred to in paragraph 11.1.1 of this Schedule 7 to the extent the same relates to the business of any Hotel or Group Company.

11.2	Pending or Threatened Proceedings
	So far as the Sellers are aware, no such claim, legal action, proceeding, suit, litigation, prosecution, investigation, enquiry or arbitration of material importance is pending or threatened by or against any Group Company.
11.3	No Court Orders etc
	The Group Companies are not bound by any existing judgments or rulings, and in the last three years have not given any continuing undertakings arising from legal proceedings to any court, governmental agency, regulator or third party, which in any case has had a material adverse effect on the Group.

156

12	Insurance
12.1	Particulars of Insurances
	Accurate summary particulars of the insurances of the Group Companies material to the business of the Group are contained in the Disclosure Letter to which summaries of the policies are attached.
12.2	Details on Policies
	In respect of the insurances referred to in paragraph 12.1:

12.2.1	all premiums have been duly paid to date;
12.2.2	such insurances are in full force and effect and have not been voided by the relevant insurers;
12.2.3	no Seller has received any notification that such insurances are not valid or enforceable; and
12.2.4	all statutory requirements to purchase insurance have been complied with by the Group Companies including any statutory requirements to keep evidence of such insurance.

13	Tax
	Warranties 13.1.1 to 13.1.3, 13.2, 13.8 and 13.4.1 are given only so far as the Sellers are aware in relation to any accounting periods ended on or before 29 March 2001 of Group Companies that were acquired under the Posthouse Agreement.
13.1	Tax Returns and Compliance

13.1.1	Each Group Company has at all times submitted all relevant Corporation Tax returns to the relevant Tax Authorities by the requisite dates.
13.1.2	Each Group Company has discharged every Corporation Tax liability which has fallen due.
13.1.3	Each Group Company has properly made all deductions, withholdings and retentions required to be made in respect of any actual or deemed payment made or benefit provided on or before Completion and has to the extent required by law accounted for all such deductions, withholdings and retentions.
13.1.4	In the last three years, no Group Company has been subject to any investigation or non-routine audit or visit by any Tax Authority.

13.2	General Provisions for Tax
	To the extent required by generally accepted accounting principles, provision or reserve was made in the Audited Accounts in respect of all material Tax for which each Group Company at the Accounts Date was or may have been liable or accountable.
13.3	Stamp Duty and SDLT
	Each document in the possession or under the control of a Group Company, or to the production of which a Group Company is entitled, and on which a Group Company relies

157

or may rely on as purchaser or lessee and which in the United Kingdom or elsewhere requires any stamp or mark to denote that:

13.3.1	any duty, tax or fee required to be paid by law has been paid; or
13.3.2	a duty tax or fee referred to in this paragraph 13.3 is not required to be paid, or that the document in question or the Event evidenced by it qualifies from a relief or exemption from such duty tax or fee; or
13.3.3	the document has been produced to the appropriate authority, has been properly stamped or marked as appropriate

and no such document which is outside the United Kingdom would attract stamp duty if it were to be brought into the United Kingdom.

13.3.4 The Sellers warrant to the Purchaser that:

(i)	no Group Company has made a claim for relief from stamp duty or SDLT under a Relieving Provision which may be withdrawn pursuant to the application of a Clawback Provision including, without limitation, the application of any Clawback Provision as a result of the execution of this Agreement;
(ii)	no Group Company is liable for stamp duty or SDLT of another company pursuant to a Secondary Recovery Provision.

13.3.5 In this paragraph:

(i)	“Relieving Provision” means FA 1930 Section 42; FA 1995 Section 151; FA 1986 Section 76; FA 2003 Schedule 7 paragraph 1; FA 2003 Schedule 7 paragraph 7; and FA 2003 Schedule 7 paragraph 8;
(ii)	“Clawback Provision” means FA 2002 Section 111; FA 2002 Section 113; FA 2002 Schedule 35 paragraph 3; Schedule 35 paragraph 4; FA 2003 Schedule 7 paragraph 3; FA 2003 Schedule 7 paragraph 4(7); FA 2003 Schedule 7 paragraph 9; and FA 2003 Schedule 7 paragraph 11;
(iii)	“Secondary Recovery Provision” means FA 2002 Schedule 34 paragraph 8; FA 2002 Schedule 35 paragraph 9; FA 2003 Schedule 7 paragraph 5; and FA 2003 Schedule 7 paragraph 12.

13.3.6 With respect to the transfer of the properties set out at Schedule 10 to the Disclosure Letter, each respective transferor and transferee entered into the contracts to sell each property (being the contracts referred to in the penultimate column of the table contained in Schedule 10 to the Disclosure Letter) on or before 9 April 2003 and no contract was subsequently varied.

13.4 Value Added Tax

13.4.1	Each Group Company has complied in all respects with all Tax Statutes relevant to VAT and guidance published by all relevant Tax Authorities in any form whatsoever and has made and obtained full, complete, correct and up-to-date records and invoices and other documents appropriate or requisite for the purposes of such Tax Statutes and guidance.
13.4.2	There will be set out in the Disclosure Letter at Completion, with express reference to this paragraph, full particulars of each item which a Group Company uses in the

158

course or furtherance of its business and for the purposes of that business, otherwise than solely for the purpose of selling the item, being items to which Part XV of the Value Added Tax Regulations 1995 applies and in respect of which the period of adjustment will not have expired by Completion. Such particulars are sufficient to enable the Group Companies (or any group of which it will form part for the purposes of Sections 43 to 43C of the Value Added Tax Act 1994 following Completion) to comply with their obligations under the said Part XV.

13.4.3

There are set out in the Disclosure Letter full particulars of:

(i)	any land in which a Group Company has an interest and in relation to which an election has been made to waive exemption from VAT pursuant to the provisions of Schedule 10 Value Added Tax Act 1994; and
(ii)	any buildings or civil engineering works owned by a Group Company and completed for the purposes of Group 1, Schedule 9 Value Added Tax Act 1994 within the last three years.

13.4.4 Each Group Company obtains credit for all input tax paid or suffered by it in relation to its hotel business.

13.5	Residence for Tax purposes
	Each Group Company was incorporated in the UK and for the purposes of UK Tax is and has always been resident in the UK and will remain so at the Completion Date and no Group Company has ever been regarded as being resident or having a permanent establishment, branch or agency or place of business outside the UK or as being within the charge to Tax of any jurisdiction other than the UK.
13.6	Transfer pricing
	No Group Company is a party to any transaction or arrangement with a member of the Sellers’ Group under which after Completion it may be required to pay for or provide any asset or services or facilities of any kind an amount which is other than that which would prevail between arm’s length parties.
13.7	Tax avoidance
	No Group Company has engaged in or been a party to any transaction or transactions which will result in a liability to Tax for an accounting period starting after Completion and which is part of a scheme or arrangement in respect of which the main (or one of the main) purposes was or might be held to have been the avoidance, deferral or reduction of Tax.
13.8	Clearances

13.8.1	All consents or clearances which have been obtained in respect of any transaction to which any Group Company has been a party have been secured on the basis of full and accurate disclosure to the relevant Tax Authority.
13.8.2	To the extent that they relate to Group Companies, true and complete copies of all applications for clearance made and all consents or clearances obtained since the Accounts Date (together with all relevant particulars) have been disclosed in the Disclosure Letter.

159

14 Authority and Capacity

14.1.1	Each of the Sellers and each Group Company is validly existing and is a company duly incorporated under the law of its jurisdiction of incorporation.
14.1.2	Each of the Sellers has the legal right and all requisite power and authority to enter into and perform this Agreement and any other documents to be executed by it pursuant to or in connection with this Agreement.
14.1.3	The documents referred to in paragraph 14.1.2 will, when executed, constitute valid and binding obligations on each of the Sellers, in accordance with their respective terms. Each of the Sellers has taken or will have taken by Completion all corporate action required by it to authorise it to enter into and to perform this Agreement and any other documents to be executed by it pursuant to or in connection with this Agreement.
14.1.4	Compliance with the terms of this Agreement and the documents referred to in it shall not breach or constitute a default under any order, judgment, decree or other restriction applicable to any of the Sellers.

15	Brand Standards
	Other than as disclosed in document 04 009 for each Property in the property information pack Data Room, as at the date of this Agreement the Hotels (as defined in the Portfolio Management Agreement) comply in all material respects with the Brand Standards.

160

Schedule 8
Warranties given by the Purchaser
(Clause 9.7)

1	Authority and Capacity
1.1	Incorporation
	Each of the Purchaser and Holdco is validly existing and a company duly incorporated under the laws of England and Wales.
1.2	Authority to Enter into Agreement

1.2.1	Each of the Purchaser and Holdco has the legal right and full power and authority to enter into and perform this Agreement and any other documents to be executed by each of them pursuant to or in connection with this Agreement (including, in the case of the Purchaser, the documents referred to in paragraph 2 of Schedule 5).
1.2.2	The documents referred to in paragraph 1.2.1 will, when executed, constitute valid and binding obligations on the Purchaser and Holdco respectively in accordance with their respective terms.

1.3 Authorisation

1.3.1	Each of the Purchaser and Holdco has taken or will have taken by Completion all corporate action required by it to authorise it to enter into and perform this Agreement and any other documents to be executed by it pursuant to or in connection with this Agreement.
1.3.2	Compliance with the terms of this Agreement and the documents referred to in it shall not breach or constitute a default under any order, judgment, decree or other restriction applicable to the Purchaser.

2	Shareholders
2.1	The issued and allotted share capital of the Purchaser is held by the following shareholders in the proportions stated and has been properly and validly issued and allotted and is fully paid.

Shareholders	Shares held in Purchaser	Percentage shareholdings
Holdco	2 ordinary shares of £1 each	100

2.2 The issued and allotted share capital of Holdco is held by the following shareholders in proportions stated and has been properly and validly issued and allotted and is fully paid.

Shareholders	Shares held in Holdco	Percentage shareholdings
LBREP II LGR Holdings LLC	4,600 ‘A’ ordinary shares of £0.01	46
Sterling Hotels Pte Limited	4,600 ‘A’ ordinary shares of £0.01	46

161

Shareholders	Shares held in Holdco	Percentage shareholdings
Realstar Holdings (UK) Limited	800 ‘B’ ordinary shares of £0.01	8

162

Schedule 9
Sellers’ Knowledge

(1)	(2)	(3)
Person	Area of Business/Position	Sellers' Warranties
Jenny Atkinson	Vice President — Human Resources & Development	8.1 to 8.6 Employment
Alan Bell	Property Director	4.1 to 4.3 Properties
Annie Brown	Vice President — Commercial Development, UK & Ireland	7.2 Compliance with Contracts 11.2 Pending or Threatened Proceedings
Larry Callaghan	Senior Vice President — Information Technology EMEA	6.3.3, 6.4 Information Technology
David Coles	Vice President — Pensions	8.7 Pensions
Catherine Engmann	Company Secretariat	1.3.1 Constitutional Documents
Marten Foxon	Senior Vice President — Transactions EMEA	All warranties other than any Tax Warranties that are given “so far as the Sellers are aware” or otherwise qualified by the Sellers’ awareness or belief
Colin Garwood	Vice President — Tax	13.1.1 to 13.1.3, 13.2 and 13.4.1
Mike Goodson	Senior Vice President — Capital & Asset Management EMEA	All warranties other than any Tax Warranties that are given “so far as the Sellers are aware” or otherwise qualified by the Sellers’ awareness or belief
David Osborn	Health & Safety Manager — Risk Management EMEA	10.2, 10.3, 10.4 Environment
Carl Ridgley	Property Manager	4.1 to 4.3 Properties
Rob Shepherd	Vice President — Operations	4.4 Construction 9.1 Licences and Consents 9.2 Compliance with Laws 10.2, 10.3, 10.4 Environment
Catherine Springett	Head of Company Secretariat	1.2.3, 1.2.5 Insolvency etc. 1.3.1 Constitutional Documents
Nigel Stocks	Senior Vice President and General Counsel EMEA	All warranties that are given “so far as the Sellers are aware”, or otherwise qualified by the Sellers’ awareness or belief

163

Schedule 10

Part 1
Split Contracts

Sale and Purchase Agreement (which includes the tax covenant at Schedule 11) and subsequent Amendment Agreement relating to the acquisition of the Posthouse Hotels between Hospitality Holdings Limited, Forte (UK) Limited, Compass Group PLC, NAS Cobalt No. 1 Limited and NAS Cobalt No. 2 Limited dated 4 April 2001.

Discount Energy Purchase Contract between Combined Power (North) Limited, Combined Power (Central) Limited, Combined Power (South) Limited, Combined Power (North West) Limited, Combined Power Limited and Posthouse Hotels Limited dated 9 March 2001.

Master Agreement for the Supply, Installation and Maintenance of the Ascari Guest Information System between Granada Business Technology Limited and Posthouse Hotels Limited dated 20 March 2002.

Settlement Agreement between SOS Industries Limited, InterContinental Hotels Group (UK) Limited and InterContinental Hotels Limited dated 10 October 2003.

164

Part 2
Purchaser Retained Contracts

International Management Agreement for Crowne Plaza London — Blackfriars between Foray 1068 Ltd and Holiday Inns (UK) dated 29 June 1998.

Management Agreement for Holiday Inn Aberdeen (and subsequent amendment to the Management Agreement) between Protel (Aberdeen) Limited and Forte (UK) Limited dated 6 August 1996.

Management Agreement for Crowne Plaza Cambridge, Amendment to the Management Agreement and Second Amendment to Management Agreement between Shamrock Public Houses, Holiday Inn Limited and Holiday Inns (UK), Inc. dated 14 February 1995.

Management Agreement for Holiday Inn Ealing between Cornwall Gardens PTE Ltd. and Holiday Inns (UK) Limited dated 10 May 1996.

Management Agreement for Belfast Posthouse Hotel Ormeau Avenue between Peter Gerard Curistan and Posthouse Hotels Limited dated 23 February 1999.

Agreement for the Provision of Management Services — Spirit managed health club between Glandor Properties Limited and Spirit Health and Fitness Limited dated 30 January 2001.

Operating and Management Agreement between Bass Hotels & Resorts (UK) Limited and Waterloo Real Estate Incorporated in respect of Knightsbridge Inter-Continental Hotel, London dated 21 May 1999.

Management Agreement for The Posthouse World Trade Centre Hotel between Posthouse Hotels Limited and Fedamore Limited dated 7 July 2000.

Disposal Agreement in relation to Plots G & H West Portway Industrial Estate, Andover between InterContinental Hotels Group (UK) Limited and Central & Country Developments Limited dated 4 November 2004.

165

Part 3
Sellers’ Group Contracts

Global Services Agreement (and related Participation Agreement) between Six Continents Hotels, Inc. and MCI Worldcom Communications, Inc. dated 30 October 2003.

Amendment No. 8 to the MCI Skyline VSAT Service Agreement between MCI Global Resources, Inc., Overseas Telecommunications Inc. and Six Continents Hotels, Inc.

Strategic Alliance Agreement and Extension to the Strategic Alliance Agreement between Holiday Inns of Belgium N.V., Bartech E.M.E.A., S.A.R.L. and Progress Bartech Financing (UK) Limited dated 16 June 1998.

Software Licence Agreement between Newmarket International Limited and Six Continents PLC dated 4 June 2004.

Gas Supply Agreement between Total Gas and Power Ltd and InterContinental Hotels Group dated 1 November 2003.

Agreement for the Supply of Electricity between London Energy plc and InterContinental Hotels Group plc dated 7 July 2004.

166

Schedule 11
Inter-Group Debt

167

Schedule 12
Guaranteed Leases

Part 1
Indemnified Leases

Leasehold property

	Duration of Lease
Property	(Expiry Date)	Landlord's Details
Basildon Cranes Farm Road Basildon Essex SS14 3DG	19/09/2069	Vexland Limited 10 Upper Berkeley Street London W1H 7PE
Cardiff City Castle Street Cardiff South Glamorgan CF10 1XD	30/03/2072	The Property Director Cardiff City Council County Hall Atlantic Wharf Cardiff CF1 5UW
Cardiff City — Car Park Castle Street Cardiff South Glamorgan CF10 1XD	25/01/2022	Cardiff Rugby Football Club Ltd., Cardiff Arms Park, Westgate Street, Cardiff CF10 1JA
Eastleigh Leigh Road Eastleigh Hampshire SO50 9PG	30/04/2107	Property Services Eastleigh Borough Council Civic Offices Leigh Road Eastleigh Hampshire SO50 9YN
Gatwick Airport Povey Cross Road Horley Surrey RH6 0BA	01/11/2085	S & R Management Limited Russell House 140 High Street Edgware Middlesex HA8 7LW
Glasgow Airport Abbotsinch Paisley Renfrewshire PA3 2TR	10/11/2069	BAA Lynton Plc Albany House Petty France London SW1H 9EE

168

	Duration of Lease
Property	(Expiry Date)	Landlord's Details
Glasgow City Bothwell Street Glasgow G2 7EN	31/08/2070	Development & Regeneration Services Glasgow City Council 229 George Street Glasgow G1 1QU
Gloucester Crest Way Barnwood Gloucester GL4 3RX	28/11/2104	Trustees of Barnwood House Trust c/o Bruton Knowles 65 London Road Gloucester GL1 3HF
Hemel Hempstead Breakspear Way Hemel Hempstead Hertfordshire HP2 4UA	29/09/2062	English Partnerships Central Business Exchange Central Milton Keynes MK9 2EA
High Wycombe Handycross High Wycombe Buckinghamshire HP11 1TL	29/03/2081	Wycombe Borough Council Queen Victoria Road High Wycombe Buckinghamshire HP11 1BB
London — Bloomsbury 1 Kings Cross Road London WC1X 9HX	18/08/2068	Bloomsbury Property Investment Ltd Riverside House 11 – 12 Riverside Road Norwich Norfolk NR1 1SQ
London — Hampstead 215 Haverstock Hill London NW3 4RB	29/09/2067	Lakewalk Limited 101 Uphill Road Mill Hill London NW7 4QD
London — Regents Park Carburton Street London W1W 5EE	03/04/2066	Courtaulds CIF Nominees Ltd (c/o CB Richard Ellis) & S I Pensions Trustees Ltd (c/o Colliers CRE)

169

	Duration of Lease
Property	(Expiry Date)	Landlord's Details
Manchester Airport CP Ringway Road Wythenshawe Manchester M90 3NS	26/08/2062	Corporate Property Manchester Airport Manchester M91 8PP
Newcastle City New Bridge Street Newcastle Upon Tyne NE1 8BS	09/11/2076	Property Services Newcastle upon Tyne City Council Civic Centre Newcastle upon Tyne NE1 8PP
Nottingham City St James’s Street Nottingham Nottinghamshire NG1 6BN	28/09/2068	Topwell No. 9 Ltd & Topwell No. 10 Ltd c/o Workman & Partners Hanover House 30 – 32 Charlotte Street Manchester M1 4ED
Plymouth Cliff Road The Hoe Plymouth Devon PL1 3DL	05/05/2069	Phillips Pension Fund The Phillips Centre 420 – 430 London Road Croydon CR9 3QR
Portsmouth Pembroke Road Portsmouth Hampshire PO1 2TA	22/03/2096	Friends First UK Commercial Property Limited Park Lodge Pixham End Dorking Surrey RH4 1QP
Swansea Kingsway Circle Swansea West Glamorgan SA1 5LS	23/06/2058	R G D Thomas 145 / 146 St Helen’s Road Swansea SA1 4DE
Swansea Retail Unit 398 Kingsway Swansea West Glamorgan SA1 5BZ	23/06/2058	As above.

170

	Duration of Lease
Property	(Expiry Date)	Landlord's Details
Swansea — Retail Unit 399 Kingsway 1&3 Belle Vue Way Swansea West Glamorgan SA1 5BZ	23/06/2058	As above.
Swindon Marlborough Road Swindon Wiltshire SN3 6AQ	02/06/2071	The Council of the Borough of Thamesdown Civic Offices Swindon Wiltshire SN1 2JH
Strand Palace 366-375 Strand London	01/07/2038	Daejan Investments Limited 52 / 54 High Holborn London

171

Part 2
Other Guaranteed Leases

	Duration of Lease
Property	(Expiry Date)	Landlord's Details
Carlisle Parkhouse Road Carlisle Cumbria CA3 0HR	28/09/2092	VR Hotel (Carlisle) Limited c/o Prime Estates Property Management Leconfield House Curzon Street London W1J 5JA
Bolton Beaumont Road Bolton Manchester North BL3 4TA	20/09/2092	VR Hotel (Bolton) Limited c/o Prime Estates Property Management Leconfield House Curzon Street London W1J 5JA
Cardiff- North Pentwyn Road Cardiff South Glamorgan CF23 7XA	25/07/2071	Restlane Ltd c/o Prime Estates Property Management Leconfield House Curzon Street London W1J 5JA
Leeds/Bradford Leeds Road Bramhope Leeds West Yorkshire LS16 9JJ	28/10/2070	Ellinson Estates Limited Holtwhite House 92 Chase Side Enfield EN2 0QN
York Tadcaster Road York North Yorkshire YO24 1QF	23/11/2070	Burford UK Properties Limited c/o Jones Lang LaSalle Property Management 22 Hanover Square London W1A 2BN

172

Schedule 13
Listed Hotels

Holiday Inn Ashford Central

Holiday Inn Bolton M61 J 5

Holiday Inn Bristol Filton

Holiday Inn Cardiff North

Holiday Inn Carlisle M6 J44

Holiday Inn Chester South

Holiday Inn Edinburgh

Holiday Inn Edinburgh North

Holiday Inn Glasgow Airport

Holiday Inn Haydock M6 J23

Holiday Inn London Hampstead

Holiday Inn Rugby/Northampton M1 J18

Holiday Inn Runcorn

Holiday Inn Stoke on Trent M6 J15

Holiday Inn Warrington

Holiday Inn York

Crowne Plaza Leeds

Crowne Plaza Manchester Airport

Express by Holiday Inn Strathclyde

173

Schedule 14

[Schedule not used]

174

Schedule 15
TPOP

Full Year	TPOP			Allocated		Minimum
2005				Base Cost		Return			2005		2006		2007		2007
GBP £'000's	£'000			£'000		%			Target		Target		Target		Aspirational
HI Kensington Forum LC		9.6			136.2		7.0	%		9.6		10.4		11.2		12.3
Cluster 1 — FORUM		9.6			136.2		7.0	%		9.6		10.4		11.2		12.3
CP London — Heathrow LC		5.8			73.3		8.0	%		5.8		6.4		6.9		7.5
HI Gatwick Airport LC		1.6			17.6		8.9	%		1.6		1.7		1.9		2.0
HI Heathrow Ariel LC		1.1			13.4		8.4	%		1.1		1.2		1.3		1.4
HI Heathrow M4 Jct 4 LC		4.0			56.4		7.0	%		4.0		4.3		4.6		5.1
Cluster 2 — LONDON AIRPORTS		12.5			160.6		7.8	%		12.5		13.6		14.7		16.1
HI London — Brent Cross LC		1.3			15.5		8.3	%		1.3		1.4		1.5		1.7
HI London — Mayfair LC		0.9			10.1		9.1	%		0.9		1.0		1.1		1.2
HI London Bloomsbury LC		2.8			37.6		7.4	%		2.8		3.0		3.3		3.6
HI London Regents Park LC		2.1			28.2		7.4	%		2.1		2.3		2.4		2.7
Cluster 3 — LONDON CITY		7.1			91.4		7.7	%		7.1		7.7		8.3		9.1
CP Manchester Airport LC		2.0			24.7		8.1	%		2.0		2.2		2.4		2.6
CP Birmingham NEC LC		2.4			21.6		11.1	%		2.4		2.6		2.8		3.1
HI Birmingham M6 Jct 7 LC		1.0			9.9		9.8	%		1.0		1.0		1.1		1.2
HI Leicester LC		1.5			16.2		9.2	%		1.5		1.6		1.7		1.9
HI Milton Keynes LC		1.5			17.4		8.7	%		1.5		1.6		1.8		1.9
HI Coventry M6 Jct 2 LC		1.0			10.6		9.5	%		1.0		1.1		1.2		1.3
CP Leeds LC		1.2			15.0		8.3	%		1.2		1.4		1.5		1.6
HI Stoke on Trent M6 Jct 15 LC		0.6			6.3		9.7	%		0.6		0.7		0.7		0.8
HI Peterborough A1 (M) Jct 16 LC		0.3			3.5		8.3	%		0.3		0.3		0.3		0.4
HI Derby Nottingham LC		0.6			6.1		9.1	%		0.6		0.6		0.7		0.7
HI Rugby Northampton LC		0.5			5.6		8.8	%		0.5		0.5		0.6		0.6
Cluster 4 — MIDLANDS		12.6			136.9		9.2	%		12.6		13.7		14.8		16.2
HI Edinburgh LC		1.4			19.7		7.2	%		1.4		1.6		1.7		1.8
HI Glasgow Airport LC		0.9			12.0		7.2	%		0.9		0.9		1.0		1.1
HI Lancaster LC		0.4			7.0		6.4	%		0.4		0.5		0.5		0.6
HI Runcorn LC		0.7			8.5		8.5	%		0.7		0.8		0.8		0.9
HI Chester South LC		0.6			6.6		9.4	%		0.6		0.7		0.7		0.8
HI York LC		0.3			2.3		10.7	%		0.3		0.3		0.3		0.3
HI Haydock M6 Jct 23 LC		0.4			6.8		6.5	%		0.4		0.5		0.5		0.6
HI Washington LC		0.4			4.5		9.3	%		0.4		0.4		0.5		0.5
EX Strathclyde LC		0.4			4.0		10.2	%		0.4		0.4		0.5		0.5
HI Wakefield M1 Jct 40 LC		0.3			4.5		7.3	%		0.3		0.4		0.4		0.4
HI Edinburgh North LC		0.5			6.6		7.3	%		0.5		0.5		0.6		0.6
HI Hull Marina LC		0.7			8.5		8.1	%		0.7		0.7		0.8		0.9
HI Warrington LC		0.4			4.5		8.3	%		0.4		0.4		0.4		0.5
HI Leeds Brighouse LC		0.9			9.9		8.8	%		0.9		0.9		1.0		1.1
Cluster 5 — NORTH		8.3			105.2		7.9	%		8.3		9.0		9.8		10.7
HI Cambridge LC		1.4			16.4		8.8	%		1.4		1.6		1.7		1.9
HI Brentwood M25 Jct 28 LC		1.2			16.7		7.0	%		1.2		1.3		1.4		1.5
HI Basildon LC		1.1			10.3		10.5	%		1.1		1.2		1.3		1.4
HI Hemel Hempstead M1 Jct 8 LC		1.4			15.3		9.1	%		1.4		1.5		1.6		1.8
HI Aylesbury LC		0.8			11.3		7.5	%		0.8		0.9		1.0		1.1
HI Norwich LC		0.7			7.5		8.8	%		0.7		0.7		0.8		0.9
HI High Wycombe M40 Jct 4 LC		0.8			8.9		8.4	%		0.8		0.8		0.9		1.0
HI Colchester LC		0.5			5.6		9.0	%		0.5		0.5		0.6		0.7
HI Ipswich LC		0.8			8.5		9.8	%		0.8		0.9		1.0		1.1
Cluster 6 — SE (N OF M4)		8.7			100.5		8.6	%		8.7		9.4		10.2		11.2
HI Reading South LC		1.4			16.0		8.5	%		1.4		1.5		1.6		1.8
HI Maidenhead LC		1.8			21.6		8.4	%		1.8		2.0		2.1		2.3
HI Guildford LC		2.4			27.2		8.6	%		2.4		2.6		2.8		3.0
HI Rochester LC		0.7			8.2		8.6	%		0.7		0.8		0.8		0.9
HI Farnborough LC		0.8			11.0		6.9	%		0.8		0.8		0.9		1.0
HI London — Sutton LC		1.4			15.3		9.0	%		1.4		1.5		1.6		1.8
HI Bexley LC		0.8			8.9		8.6	%		0.8		0.8		0.9		1.0
HI Maidstone LC		0.7			8.0		8.4	%		0.7		0.7		0.8		0.9
HI Ashford Central LC		0.4			3.8		9.5	%		0.4		0.4		0.4		0.5
Cluster 7 — SE (S OF M4)		10.2			120.0		8.5	%		10.2		11.1		12.0		13.1
HI Bristol Filton LC		1.8			19.3		9.1	%		1.8		1.9		2.1		2.3
HI Portsmouth LC		0.8			8.2		9.7	%		0.8		0.9		0.9		1.0
HI Cardiff City Centre LC		1.0			10.3		9.6	%		1.0		1.1		1.2		1.3
HI Oxford LC		1.4			14.3		10.0	%		1.4		1.6		1.7		1.9
HI Southampton LC		1.0			10.6		9.4	%		1.0		1.1		1.2		1.3
HI Eastleigh LC		1.0			12.0		8.8	%		1.0		1.1		1.2		1.4
HI Gloucester LC		0.8			8.7		9.0	%		0.8		0.8		0.9		1.0
HI Fareham LC		0.8			8.9		9.3	%		0.8		0.9		1.0		1.1
HI Swindon LC		0.3			3.5		8.2	%		0.3		0.3		0.3		0.4
HI Taunton M5 Jct 25 LC		0.9			9.2		9.4	%		0.9		0.9		1.0		1.1
HI Basingstoke LC		0.5			5.9		7.7	%		0.5		0.5		0.5		0.6
Cluster 8 — SW & WALES		10.2			110.9		9.2	%		10.2		11.1		12.0		13.2
63 Hotels		79.1			961.8		8.2	%		79.1		86.0		93.0		102.0
HI Newcastle City LC		1.0			9.2		10.8	%
HI Glasgow City West LC		0.5			9.4		5.5	%
HI Birmingham City LC		1.3			12.7		9.9	%
HI London Hampstead LC		0.1			1.4		6.2	%
HI Bolton M61 Jct 5 LC		(0.3	)		—	#DIV/0!
HI Cardiff North LC		(0.1	)		—	#DIV/0!
HI Carlisle M6 Jct 44 LC		0.2			2.8		6.0	%
HI Leicester West LC		0.7			6.3		10.9	%
HI Leeds / Bradford Airport LC		(0.1	)		—	#DIV/0!
HI South Mimms LC		0.5			5.6		8.6	%
10 Hotels		3.7			47.4		7.7	%
73 Hotels		82.7			1,009.2		8.2	%

175

Table of Contents

Contents		Page
1	Interpretation		1
2	Agreement to Sell the Assets		10
3	Consideration		11
4	Conditions		13
5	Pre-Completion		14
6	Completion		19
7	Pensions and Employee Incentives		20
8	Post-Completion Adjustments		23
9	Warranties and Indemnities		23
10	Limitation of Sellers’ Liability		34
11	Claims		37
12	SCPLC Guarantee		40
13	Confidentiality		41
14	Other Provisions		42
Schedule 1 Details of Shares to be sold			54
Schedule 2 The Companies and the Subsidiaries			55
Schedule 3 The Properties (Clause 1.1)			104
Schedule 4 Documents in the Agreed Terms			124
Schedule 5 Completion Obligations (Clause 6.2)			125
Schedule 6 Net Current Asset Statement (Clause 8.1)			128
Schedule 7 Warranties given by the Sellers (Clause 9)			139
Schedule 8 Warranties given by the Purchaser (Clause 9.7)			161
Schedule 9 Sellers’ Knowledge			163

i

Contents	Page
Schedule 10		164
Part 1 Split Contracts		164
Part 2 Purchaser Retained Contracts		165
Part 3 Sellers’ Group Contracts		166
Schedule 11 Inter-Group Debt		167
Schedule 12 Guaranteed Leases		168
Schedule 13 Listed Hotels		173
Schedule 14		174
Schedule 15 TPOP		175

ii

EX-4.25

Exhibit 4(b)(v)

AMENDED AND RESTATED STOCK PURCHASE AGREEMENT

by and between

SIX CONTINENTS INTERNATIONAL HOLDINGS B.V.

as Seller,

and

HPT IHG-2 PROPERTIES TRUST

as Buyer

February 9, 2005

TABLE OF CONTENTS

1.	Deadlines and Definitions.	2
	1.1 Deadlines	2
	1.2 Definitions	2
2.	Transfer of Shares	2
3.	Purchase Price	2
4.	Buyer’s Due Diligence and Inspection Rights; Termination Right.	2
	4.1 Review of Property and Property Documents	2
	4.2 Guidelines for Inspection Rights	3
	4.3 Title and Survey Examination	3
	4.4 As-Is, Where-Is, With All Faults Sale	4
	4.5 Termination Right	5
5.	Covenants.	5
	5.1 Seller’s Covenants: Effective Date to Closing Date	5
	5.2 Seller’s Covenants After the Closing Date	10
	5.3 Approvals and Notifications	10
	5.4 SEC Matters	10
	5.5 Access to Records	10
	5.6 Required Work; Generators	11
6.	Closing	11
	6.1 Closing Mechanics	11
	6.2 Seller’s Deliveries	12
	6.3 Buyer’s Deliveries	14
7.	Closing Costs.	15
	7.1 Seller’s Closing Costs	15
	7.2 Buyer’s Closing Costs	15
8.	Representations and Warranties.	15
	8.1 Seller’s Representations and Warranties	15
	8.2 [Reserved.]	22
	8.3 Claims of Breach Prior To Closing	22
	8.4 Survival and Limits On Buyer’s Claims	23
	8.5 Buyer’s Representations and Warranties	23
9.	Casualty and Condemnation	25
	9.1 Major Event	25
	9.2 Closing Despite Casualty/Condemnation	25
10.	Other Conditions to Closing	26
	10.1 Conditions to Buyer’s Obligations	26
	10.2 Conditions to Seller’s Obligations	27
	10.3 Waiver of Conditions	27
11.	Transaction Issues: Brokers, Confidentiality and Indemnity.	27
	11.1 Brokers	28
	11.2 Publicity	28
	11.3 Indemnity	28
12.	Default At or Prior to Closing.	28
	12.1 Buyer Default	29

	12.2 Seller Default	29
13.	Notices	30
14.	General Provisions.	31
	14.1 Execution Necessary	31
	14.2 Counterparts	31
	14.3 Successors and Assigns	31
	14.4 Governing Law	32
	14.5 Entire Agreement	32
	14.6 Time is of the Essence	32
	14.7 Interpretation	32
	14.8 Further Assurances	32
	14.9 Exclusive Application	32
	14.10 Partial Invalidity	33
	14.11 No Implied Waiver	33
	14.12 Rights Cumulative	33
	14.13 Attorney’s Fees	33
	14.14 Waiver of Jury Trial	33
	14.15 Facsimile Signatures	33
	14.16 No Recordation	34
	14.17 Exhibits and Schedules	34
	14.18 Jurisdiction	34
	14.19 Currency	34
15.	Additional Termination Rights	34
16.	Limitation of Liability	34
17.	Conflicting Terms	35
18.	Nonliability of Trustees	35

- ii -

SCHEDULE OF EXHIBITS AND SCHEDULES

EXHIBIT	TITLE	REFERENCE PARAGRAPH
A.	Legal Description of Land	Recitals
B.	Hotel Lease Agreement	Recitals
C.	Indemnification Agreement	Recitals
D.	List of Assets and Liabilities to Be Transferred Out of the Company Prior to Closing Date	5.1(K), 6.2(M) and 8.1(BB)
E.	Puerto Rico Comfort Letter		5.1	(L)
E-1	New Tax Concession
F.	Tenant Estoppel Certificate		5.1	(N)
G.	Ground Lease Estoppel		5.1	(N)
H.	Affidavit of Title		6.2	(D)
I.	Authority Certificate		6.2	(F)
J.	Reaffirmation of Representations		6.2	(G)
K.	Leases		8.1	(E)
L.	List of Contracts		8.1	(E)
M.	Press Release		11.2
N.	Letter Regarding Guarantee		6.2	(Q)
O.	Lessee Guarantee		6.2	(T)
P.	Required Work		5.6

SCHEDULE			TITLE	REFERENCE PARAGRAPH
	A		Definitions		1.2
			Seller’s Reps and Warranties
	6.1		Closing Procedure		6.1
	8.1	(D)	Pending or Threatened Litigation		8.1	(D)
	8.1	(F)	Conditions Materially Affecting the Property		8.1	(F)
	8.1	(G)	Conditions Affecting Utilities and Services		8.1	(G)
	8.1	(H)	Violation of Laws Relating to Zoning, Construction, Health and Fire Safety, etc.		8.1	(H)
	8.1	(I)	Unpaid (Delinquent) Taxes or Special Assessments		8.1	(I)
	8.1	(K)	Hazardous Materials		8.1	(K)
	8.1	(M)	Material Defects in Property		8.1	(M)
	8.1	(N)	Unpaid Taxes, Etc.		8.1	(N)
	8.1	(O)	Unobtained Licenses and Permits		8.1	(O)
	8.1	(R)	Violation of Laws		8.1	(R)
	8.1	(T)	Material Defaults with Respect to Permitted Title Exceptions		8.1	(T)
	8.1	(W)	Information with Respect to Leases and Ground Leases		8.1	(W)
	8.1	(AA)	List of Material Governmental Licenses, Permits, Concessions and Franchises		8.1	(AA)

SCHEDULE	TITLE	REFERENCE PARAGRAPH
8.1(BB)(iii)	Pending or Threatened Litigation Continuing After Closing	8.1(BB)(iii)

- ii -

AMENDED AND RESTATED STOCK PURCHASE AGREEMENT

          THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of February 9, 2005, by and between SIX CONTINENTS INTERNATIONAL HOLDINGS B.V., a Netherlands closed limited liability company (“Seller”), and HPT IHG-2 PROPERTIES TRUST, a Maryland real estate investment trust (“Buyer”).

R E C I T A L S:

          WHEREAS, Seller owns all of the issued and outstanding shares of common stock, with a par value of One Hundred Dollars ($100) per share (the “Company Shares”), of Crowne Plaza (Puerto Rico) Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (the “Company”);

          WHEREAS, the Company is the owner of the InterContinental San Juan Resort and Casino in San Juan, Puerto Rico (the “Hotel”), including (i) fee simple title (“pleno dominio”) to the land described on Exhibit A (the “Owned Real Property”), (ii) a valid and assignable leasehold estate in and to the leased land also described on Exhibit A (the “Leased Real Property”) and (iii) the Property (as hereinafter defined);

          WHEREAS, Seller and Buyer are parties to that certain Stock Purchase Agreement dated as of December 17, 2004, as amended as of December 22, 2004, January 14, 2005, January 26, 2005, February 2, 2005 and February 8, 2005 (the “Original Agreement”), pursuant and subject to the terms and conditions of which Buyer has agreed to purchase the Company Shares from Seller;

          WHEREAS, Seller and Buyer desire to amend and restate the Original Agreement as herein provided;

          WHEREAS, this Agreement contemplates a transaction in which Buyer will purchase from Seller, and Seller will sell to Buyer, all of the Company Shares for an aggregate purchase price of One Hundred Nineteen Million and No/100 Dollars ($119,000,000.00), plus an amount equal to the amount of Working Capital of the Company at Closing and Buyer will thereby acquire all the outstanding capital stock of the Company, all upon the terms and conditions set forth herein;

          WHEREAS, simultaneously with the execution of this Agreement by Buyer and Seller, Buyer and certain related parties of Seller and the Company (each, a “Seller Related Party,” collectively, the “Seller Related Parties”) are entering into an Amended and Restated Purchase and Sale Agreement (as amended from time to time, the “Purchase and Sale Agreement”) pursuant to which Buyer will purchase certain other hotels and properties owned by the Seller Related Parties;

          WHEREAS, a Seller Related Party (such party being the “Lessee”), on one hand, and the Company or a related party of Buyer (such party being the “Lessor”), on the other hand, shall enter into a Lease Agreement in the form attached hereto as Exhibit B (the “Hotel Lease Agreement”) pursuant to which the Lessor will lease the Hotel to the Lessee; and

          WHEREAS, on the Closing Date, Buyer, Seller and Holiday Hospitality Franchising, Inc., a Delaware corporation (“HHF”), will enter into an Indemnification Agreement substantially in the form attached hereto as Exhibit C (the “Indemnification Agreement”), pursuant to which Seller and HHF will indemnify Buyer and its affiliates with respect to certain potential losses and damages.

          NOW, THEREFORE, for and in consideration of the promises, covenants, representations and warranties hereinafter set forth, the sum of Ten Dollars ($10.00) and other good and valuable consideration in hand paid by Seller to Buyer and by Buyer to Seller upon the execution of this Agreement, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto hereby agree to amend and restate the Original Agreement in its entirety as follows:

          1. Deadlines and Definitions.

               1.1 Deadlines. Wherever used in this Agreement, the following terms shall have the meanings set forth below:

          “Closing Deadline” shall be the same date as the initial “Closing Deadline” set forth in, and as such date may be extended in accordance with the terms of, the Purchase and Sale Agreement.

          “Due Diligence Deadline” shall mean February 9, 2005.

               1.2 Definitions. In addition, wherever used in this Agreement, the terms set forth on Schedule A shall have the meanings set forth on Schedule A.

          2. Transfer of Shares. Subject to the terms and conditions of this Agreement on the Closing Date, Buyer agrees to purchase from Seller, and Seller agrees to sell to Buyer, all of the Company Shares for the consideration specified below in Paragraph 3.

          3. Purchase Price. Subject to the terms and conditions of this Agreement, on the Closing Date, Buyer shall pay to Seller (1) an aggregate amount of One Hundred Nineteen Million and No/100 Dollars ($119,000,000.00), in cash by wire transfer, for the Company Shares (the “Purchase Price”), and (2) an aggregate amount, in cash by wire transfer, equal to Thirty Two Million Seven Hundred Thousand and No/00 Dollars ($32,700,000.00)] on account of the Working Capital of the Company (such amount, together with the Purchase Price, the “Adjusted Purchase Price”).

          4. Buyer’s Due Diligence and Inspection Rights; Termination Right.

               4.1 Review of Property and Property Documents. Until Closing, and subject to the terms of Paragraph 4.2, Seller shall provide, and shall cause the Company to provide, Buyer and Buyer’s Representatives with access to the Property and the Property Documents, wherever located, upon reasonable prior notice at reasonable times during business hours, with the right and license to conduct Due Diligence with respect to the Property. Subject to Paragraphs 7.1 and 7.2, Buyer covenants and agrees that it will inspect the Hotel at its sole cost and expense and will not allow any liens to attach against the Hotel as a result of its Due

-2-

Diligence. If Buyer or Seller Terminates this Agreement, then upon written request from Seller, Buyer shall endeavor to deliver promptly to Seller (at no cost to Buyer) copies of all Buyer’s Diligence Reports in its possession (except for such materials which Buyer deems confidential or proprietary), but with no liability for the accuracy thereof and no representation that Seller or any other party may rely thereon. Seller represents that neither it nor the Company has altered or intentionally withheld any part of the Property Documents delivered to Buyer.

               4.2 Guidelines for Inspection Rights. Buyer’s rights to conduct Due Diligence shall be subject to the following further requirements: (a) Due Diligence must not unreasonably interfere with the operation or management of the Hotel or unreasonably disturb the rights of guests or Tenants; (b) Buyer must provide Seller with at least twenty-four (24) hours prior written notice of its intent to perform Due Diligence on the Property and Seller shall have the right to have a representative of Seller and/or the Company present during any such entry upon the Property by Buyer or Buyer’s Representatives; (c) Buyer shall not contact any Tenant, Hotel contractor, Hotel guest, or Hotel employee without Seller’s prior written consent, which consent shall not be unreasonably withheld or delayed; (d) Seller or its designated representative shall have the right to pre-approve (which approval shall not be unreasonably withheld or delayed), and be present during, any physical testing of the Property; (e) Buyer shall immediately return the Property to the condition existing prior to any tests and inspections; (f) Due Diligence activities may not unreasonably affect the appearance of the Hotel in any way; and (g) Buyer may not conduct any invasive sampling, boring, testing, or analysis of soils, surface water or groundwater at the Property without first having obtained prior written approval of Seller, which approval shall not be unreasonably withheld or delayed. Prior to such time as Buyer or any of Buyer’s Representatives enter the Property, Buyer shall (i) obtain policies of general liability insurance which insure Buyer and Buyer’s Representatives with liability insurance limits of not less than $1,000,000 combined single limit for personal injury and property damage and name the Company as an additional insured and provide such additional coverages with appropriate limits as Seller and/or the Company shall reasonably require, and (ii) provide the Company with certificates of insurance evidencing that Buyer has obtained the aforementioned policies of insurance. Notwithstanding any provision in this Agreement to the contrary, except in connection with the preparation of (i) a so-called “Phase I” environmental report with respect to the Property or (ii) a zoning report with respect to the Property, Buyer shall not contact any governmental official or representative regarding hazardous materials on, or the environmental condition of, the Property, or the status of compliance of the Property with zoning, building code or similar Laws, without Seller’s prior written consent thereto, which consent shall not be unreasonably withheld or delayed.

               4.3 Title and Survey Examination. Seller, on or prior to the Effective Date, delivered, or caused the Company to deliver, to Buyer a copy of Seller’s or the Company’s, as applicable, most recent Survey of the Property and a Title Commitment.

               A. Title and Survey Objections. Buyer shall have until the Due Diligence Deadline to notify Seller in writing of any Title Objections. If Buyer fails to notify Seller of any Title Objections on or before such date, then, notwithstanding any other provisions set forth herein, such failure to notify Seller shall constitute a waiver of such right to object to such matters existing as of the Effective Date and disclosed in the Title Commitment or Survey. Seller shall notify Buyer within three (3) Business Days of its receipt of such notice if Seller has

-3-

elected to Remove, or to cause the Company to Remove, any such Title Objections. If Seller fails to respond within such timeframe, Seller shall be deemed to have declined to remove such Title Objections (other than Required Removal Items). If Seller does not covenant in writing to Buyer that Seller will Remove, or cause the Company to Remove, the Title Objections prior to Closing (other than Required Removal Items), Buyer shall have until the Closing Date to elect in writing, either to (a) Terminate this Agreement, and the parties shall have no further rights or obligations hereunder, except for those which expressly survive any such termination, or (b) waive its Title Objections (other than Required Removal Items) and proceed with the transaction pursuant to the remaining terms and conditions of this Agreement. If Buyer fails to give Seller notice of its election by such time, it shall be deemed to have elected to Terminate this Agreement. Any such Title Objection so waived by Buyer shall be deemed to constitute a Permitted Title Exception and the Closing shall occur as herein provided without any reduction of or credit against the Purchase Price.

               B. Cure of Title Matters. At Closing, if this Agreement is not Terminated as permitted herein, Seller shall Remove or cause to be Removed any Title Objections to the extent (and only to the extent) that the same constitute Required Removal Items.

               C. Buyer’s Right To Terminate. If Seller fails to Remove or cause to be removed any Title Objection (other than Required Removal Items) prior to Closing that it has agreed to remove (or cause to be removed) pursuant to subsection (A) above, then Buyer’s sole remedy shall be to Terminate this Agreement by written notice to Seller on or prior to the Closing Date, and the parties shall have no further rights or obligations hereunder except for those which expressly survive any such termination.

               D. Pre-Closing “Gap” Defects. Whether or not Buyer shall have furnished to Seller any notice of Title Objections before the Due Diligence Deadline, Buyer may at or prior to Closing notify Seller in writing of any defects in the Title Commitment or the Survey appearing in the Title Commitment or the Survey for the first time at any time after the Effective Date. With respect to any Title Objections set forth in such notice, Buyer shall have the same rights as those which apply to any notice of defects in title resulting from a notice of title defects by Buyer on or before the Due Diligence Deadline and Seller shall have the same rights and obligations to cure (or cause to be cured) the same at or prior to Closing. If necessary, the date for Closing shall be extended by written notice from Seller to Buyer (by not more than fifteen (15) days) to allow Seller to cure such pre-closing “gap” defects.

               4.4 As-Is, Where-Is, With All Faults Sale. (a) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY DOCUMENTS TO BE EXECUTED AND DELIVERED BY SELLER AT THE CLOSING, SELLER DISCLAIMS THE MAKING OF ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE PROPERTY OR MATTERS AFFECTING THE PROPERTY, WHETHER MADE BY SELLER, ON ITS BEHALF OR OTHERWISE INCLUDING, WITHOUT LIMITATION, THE PHYSICAL CONDITION OF THE PROPERTY, TITLE TO OR THE BOUNDARIES OF THE REAL PROPERTY, PEST CONTROL MATTERS, SOIL CONDITIONS, THE PRESENCE, EXISTENCE OR ABSENCE OF HAZARDOUS WASTES, TOXIC SUBSTANCES OR OTHER ENVIRONMENTAL MATTERS, COMPLIANCE WITH BUILDING, HEALTH, SAFETY, LAND USE AND ZONING LAWS, REGULATIONS AND

-4-

ORDERS, STRUCTURAL AND OTHER ENGINEERING CHARACTERISTICS, TRAFFIC PATTERNS, MARKET DATA, ECONOMIC CONDITIONS OR PROJECTIONS, THE FITNESS OF THE PROPERTY FOR USE AS A HOTEL, THE FINANCIAL PERFORMANCE OR POTENTIAL OF THE PROPERTY AND ANY OTHER INFORMATION PERTAINING TO THE PROPERTY OR THE MARKET AND PHYSICAL ENVIRONMENTS IN WHICH THEY ARE LOCATED. BUYER ACKNOWLEDGES (I) THAT BUYER HAS ENTERED INTO THIS AGREEMENT WITH THE INTENTION OF MAKING AND RELYING UPON ITS OWN INVESTIGATION OR THAT OF THIRD PARTIES WITH RESPECT TO THE PHYSICAL, ENVIRONMENTAL, FINANCIAL, ECONOMIC AND LEGAL CONDITION OF THE PROPERTY; AND (II) THAT BUYER IS NOT RELYING UPON ANY STATEMENTS, REPRESENTATIONS OR WARRANTIES OF ANY KIND, OTHER THAN THOSE SPECIFICALLY SET FORTH IN THIS AGREEMENT OR IN ANY DOCUMENT TO BE EXECUTED AND DELIVERED TO BUYER AT THE CLOSING, MADE BY SELLER. BUYER FURTHER ACKNOWLEDGES THAT IT HAS NOT RECEIVED FROM OR ON BEHALF OF SELLER ANY ACCOUNTING, TAX, LEGAL, ARCHITECTURAL, ENGINEERING, PROPERTY MANAGEMENT OR OTHER ADVICE WITH RESPECT TO THIS TRANSACTION AND IS RELYING SOLELY UPON THE ADVICE OF THIRD PARTY ACCOUNTING, TAX, LEGAL, ARCHITECTURAL, ENGINEERING, PROPERTY MANAGEMENT AND OTHER ADVISORS. SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, BUYER SHALL PURCHASE THE PROPERTY IN THEIR “AS IS” CONDITION ON THE CLOSING DATE.

               (b) BUYER ACKNOWLEDGES THAT, TO THE EXTENT REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED IN THIS PARAGRAPH 4.4 ARE “CONSPICUOUS” DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION OR ORDER.

               4.5 Termination Right. If Buyer, in its sole and absolute discretion, determines not to proceed with the Transaction or is not satisfied with any matters relating to the Property, Buyer may Terminate this Agreement by written notice to Seller at any time on or prior to the Due Diligence Deadline. If Buyer does not timely exercise such right to Terminate this Agreement, then Buyer shall be deemed to have accepted the condition of the Property (subject to Seller’s compliance with the representations, warranties and covenants of this Agreement, and the conditions set forth in Paragraph 10) and shall thereafter have no right to Terminate this Agreement on account of such Due Diligence termination right under this Paragraph 4.5. If after the Due Diligence Deadline Buyer conducts further Due Diligence, Buyer acknowledges and agrees that Buyer shall have no further right to terminate this Agreement with respect to such further Due Diligence or otherwise in accordance with this Paragraph 4.5 after the Due Diligence Deadline.

       5. Covenants.

               5.1 Seller’s Covenants: Effective Date to Closing Date. Seller agrees that after the Effective Date:

               A. Capital Stock. Seller shall not, and shall cause the Company not to, redeem, repurchase, sell, pledge or otherwise dispose of any shares of the capital stock of the

-5-

Company, or issue any new shares of capital stock of the Company, or grant any options, warrant or other rights to purchase shares of capital stock of the Company, without the prior written consent of Buyer.

               B. Corporate Documents. Seller shall not, and shall cause the Company not to, cause any amendment, supplement, waiver or modification to or of any of the Governing Documents of the Company, without the prior written consent of Buyer.

               C. No Alteration of Title. Seller shall not, and shall cause the Company not to, transfer or alter or encumber in any way the Company’s title to the Real Property as it exists as of the Effective Date without written notice to, and the prior written consent of, Buyer. If Buyer fails to object in writing to any such proposed instrument within five (5) Business Days after receipt of the aforementioned notice, Buyer shall be deemed to have approved the proposed instrument. Buyer’s consent shall not be unreasonably withheld or delayed with respect to any such instrument that is proposed by Seller.

               D. New Leases and Modifications to Existing Leases. If the Company desires to (i) enter into any new Lease or Ground Lease, (ii) cancel, modify, amend, extend or renew any existing Lease or any Ground Lease, (iii) consent to any assignment or sublease in connection with any Lease or any Ground Lease, (iv) accept any prepayment of rent thereunder (more than thirty (30) days in advance), or (v) take any other material action with respect to any Lease or any Ground Lease, Seller shall deliver to Buyer written notice of such action, which notice shall contain information regarding the proposed action that Seller believes is reasonably necessary to enable Buyer to make informed decisions with respect to the advisability of the proposed action. Seller shall not permit the Company to take such action without Buyer’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed (and if no response by Buyer is made within five (5) Business Days after Buyer’s receipt of such request and all documents related thereto, such consent shall be deemed to have been granted). Seller shall promptly provide Buyer with true, correct and complete copies of any Lease, modification, or amendment of a Lease entered into by the Company. Notwithstanding any provision of this Agreement to the contrary, without any requirement for notice or consent from Buyer, the Company may, but shall not be obligated to, take any action with respect to any Lease that the Lessee may, without the consent of the Lessor, take under the Hotel Lease Agreement as if it had been in effect as of the Effective Date.

               E. Contracts. If the Company desires to (i) enter into any new Contracts, (ii) cancel, modify, amend, extend or renew any existing Contracts, (iii) waive any default under or accept any surrender of any Contracts, or (iv) take any other material action with respect to any Contract, Seller shall deliver to Buyer written notice of such action, which notice shall contain information regarding the proposed action that Seller believes is reasonably necessary to enable Buyer to make informed decisions with respect to the advisability of the proposed action. Except for Contracts that can be terminated, without penalty, upon thirty (30) days (or less) written notice from the Company, Seller shall not permit the Company to take such action without Buyer’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed (and if no response by Buyer is made within five (5) Business Days after Buyer’s receipt of such request and all documents related thereto, such consent shall be deemed to have been granted); upon delivery of such written consent, such Contract or modification

-6-

thereof shall thereupon be included within the definition of “Contracts” set forth herein. Seller shall promptly provide Buyer with true, correct and complete copies of any Contract, modification, or amendment entered into by the Company. Notwithstanding any provision of this Paragraph 5.1(E) to the contrary, without any requirement for notice or consent from Buyer, the Company may, but shall not be obligated to, take any action with respect to any Contracts that the Lessee could, without the consent of Lessor, take under the Hotel Lease Agreement as if it had been in effect as of the Effective Date.

               F. Mortgage Discharges. On or before the Closing Date, Seller shall record, or cause to be recorded, at its sole expense, those certain Mortgage Discharges and Cancellations in the appropriate land records in order to remove certain mortgage or other liens as encumbrances against the Real Property; as follows: (a) $9,480,000 mortgage recorded at page 121 of volume 750 of Carolina; (b) 2. $38,000,000 mortgage (reduced to $20,172,961.00) recorded at page 122 of volume 750 of Carolina; (c) a fixture filing recorded at overleaf of page 124 of volume 750 of Carolina; (d) the $45,000,000 mortgage in favor of Column Financial, Inc.; (e) the Financing Statement in favor of Column Financial, Inc.; (f) the $38,000,000 mortgage in favor of the Puerto Rico Industrial, Medical, Higher Education and Environmental Pollution Control Facilities Financing Authority; (g) the $9,480,000 mortgage in favor of bearer of mortgage note; and (h) the $1,000,000 in favor of Column Financial, Inc. encumbering the leasehold.

               G. Personal Property. Seller shall not, and Seller shall take all actions required to ensure the Company does not, remove any of the Personal Property Leases, Contracts, or Other Interests, and the Excluded Property, from the Real Property nor use any of the Personal Property prior to the Closing Date except such use thereof as is normal and customary in the operation and maintenance of the Hotel.

               H. Other Consents and Approvals. Seller and Buyer shall cooperate and use commercially reasonable efforts (and Seller shall cause the Company to cooperate and use commercially reasonable efforts) to promptly obtain all approvals and consents to the Transaction, such approvals to be in form and substance satisfactory to Seller and Buyer and their respective counsel, including any approval from any agency or department of the government of Puerto Rico (including, without limitation, the Puerto Rico Tourism Company and the Commissioner of Financial Institutions) and any consents or approvals from third parties to any of the Contracts, Leases or other agreements, provided that exercise of commercially reasonable efforts shall not require the payment of any fee or other economic consideration for any such approval or consent from any party other than to a governmental agency.

               I. Intellectual Property. Buyer acknowledges that subject to the Hotel Lease Agreement, Seller Related Parties are retaining all right, title and interest in and to all their respective intellectual property rights that may be used within or comprise any part of the Property except as may be specifically licensed to the Company pursuant to a separate license agreement with Lessee or in accordance with the terms of the Hotel Lease Agreement.

               J. Liquor License. Buyer acknowledges and agrees that the Lessee will be responsible for applying for and obtaining any liquor licenses for the Property from the applicable local and/or state authorities and otherwise be liable for and conduct in accordance

-7-

with applicable law all liquor operations at the Property on and after the Closing Date in accordance with the terms and provisions of the Hotel Lease Agreement.

               K. Allowable Transactions. Promptly after the Effective Date, but in any event on or prior to the Closing Date, Seller shall cause the Company to transfer to Lessee (1) all of its assets listed on Exhibit D for net book value, and (2) all of its Liabilities of every nature whatsoever, whether actual or contingent. Further, all employees of the Company shall be transferred to Lessee, so that as of the Closing Date, the Company shall have no employees. Finally, Seller shall cause the Company to settle any intercompany accounts between the Company, on one hand, and Seller or a Seller Related Party, on the other hand. Copies of all documentation required to accomplish the matters contemplated by this Paragraph shall be provided to Buyer and its counsel prior to their execution and at Closing. The parties shall cooperate in addressing any reasonable comments on such documentation provided by Buyer or its counsel.

               L. Puerto Rico Comfort Letter/Tax Concession. Attached as Exhibit E is a copy of the “comfort” letter dated December 2, 2004 issued by the Puerto Rico Tourism Company. The new tax concession referenced in such comfort letter was issued on December 15, 2004 and is attached hereto as Exhibit E-1. Seller shall use commercially reasonable efforts to (and shall cause the Company to use commercially reasonable efforts to) obtain the approval of the Puerto Rico Tourism Company for the transfer of the Company Shares from Seller to Buyer as expeditiously as possible and to have the amended tax concession described therein issued as promptly as possible after the Effective Date for the benefit of Buyer. The parties shall cooperate in all respects to obtain the amended concession as expeditiously as reasonably possible following the Effective Date. In connection with the issuance of the amended concession, each party shall take (and Seller shall cause the Company to take) all actions reasonably necessary to ensure that “clean” debt certificates with respect to the Company and Seller (i.e., reflecting no debt) are issued by all appropriate and required agencies or departments of the government of Puerto Rico (or by any municipal or local agencies or departments). Seller shall allow Buyer’s representatives to participate in any written application, hearing, telephone call or meeting involving the Puerto Rico Tourism Company that in any way relates to the matters contemplated by this paragraph, and shall provide Buyer and its counsel reasonable notice of any such application, hearing, telephone call or meeting. Seller shall provide in advance copies of any and all documentation submitted to the Puerto Rico Tourism Company and shall provide a copy of any and all documentation received from the Puerto Rico Tourism Company.

               M. Casino License/Commissioner Approval. Promptly after the Effective Date, Seller shall cause the Company and Lessee to take all required actions reasonably required to ensure that Lessee obtains a license to operate the casino at the Hotel as expeditiously as reasonably possible following the Effective Date and in any event on or prior to the Closing Date. Seller shall cause the Company and Lessee to disclose to the Commissioner of Financial Institutions the fact that the Company Shares will be transferred from Seller to Buyer. The parties shall cooperate in all respects to obtain such approvals and license as provided above. Seller shall keep Buyer and its counsel informed of any and all communications with the Commissioner of Financial Institutions or other governmental agencies relating to such matters.

-8-

               N. Tenant Estoppels; Ground Lease Estoppels. Seller shall use reasonable efforts to obtain from each tenant under the Leases an estoppel certificate duly executed by and delivered by such tenant in the form of Exhibit F (each a “Tenant Estoppel Certificate”) with respect to each of the Leases and as otherwise required pursuant to the terms of such Leases. Seller shall obtain an estoppel certificate in the form of Exhibit G (each a “Ground Lease Estoppel Certificate”) duly executed and delivered by such ground lessor under each Ground Lease and as otherwise required pursuant to the terms of such Ground Leases.

               O. Change in Brands. Seller shall not permit the Company to change, and it shall cause its affiliates not to change, the brand now in effect with respect to the Hotel.

               P. Permits. Seller shall use reasonable efforts to obtain all of the permits set forth in Paragraph 10.1(K).

               Q. Seller’s Actions. Seller shall use reasonable efforts prior to the Closing Date to satisfy all of the closing conditions set forth in Paragraphs 10.1(K) through (J) and cooperate with Buyer (as applicable) to complete any documentation required to effectuate the matters contained therein.

-9-

               5.2 Seller’s Covenants After the Closing Date. All payments received by Buyer or the Company after the Closing with respect to the revenue generated by the Hotel prior to the Closing shall belong to Seller and Buyer or the Company, as applicable, shall promptly deliver to Seller all such payments. Subject to the terms of the Hotel Lease Agreement, all trade payables or other Liabilities that relate to Hotel prior to the Closing, whether invoices are received by Buyer or Seller, shall be paid by Seller or Lessee (for the account of the Company if applicable) on or prior to the date such payment is due. Any bills or other notices received by Buyer that relate to Hotel operations prior to the Closing shall be promptly delivered to Seller. The provisions of this paragraph shall survive the Closing.

               5.3 Approvals and Notifications. Each of Buyer and Seller, as applicable, will, as promptly as practicable after the execution of this Agreement (i) make, or cause to be made, all such filings and submissions to any governmental authority as may be required or desirable (in Buyer or Seller’s respective discretion) to consummate the purchase and sale of the Company Shares in accordance with the terms of this Agreement, and (ii) use its commercially reasonable efforts to take, or cause to be taken, all other actions which are necessary or advisable (in Buyer or Seller’s respective discretion) in order for Buyer or Seller to fulfill its obligations under this Agreement. Each of Buyer and Seller will coordinate and cooperate (and Seller will cause the Company to coordinate and cooperate) with the other in exchanging such information and supplying such assistance as may be reasonably requested in connection with the foregoing including, without limitation, providing copies of notices and information supplied to or filed with any governmental authority (except for notices and information which Buyer or Seller, as the case may be, acting reasonably, considers highly confidential and sensitive which may be filed on a confidential basis, but which may be shared with Buyer’s or Seller’s, as the case may be, outside legal counsel or as otherwise provided in Paragraph 11.2), and all notices and correspondence received from any governmental authority.

               5.4 SEC Matters. Seller shall cooperate and shall cause the Company to cooperate with Buyer or any of its affiliates in connection with the preparation of any documents to be filed under the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”) and shall use commercially reasonable efforts to provide such persons with financial statements and other financial information that Buyer requests relating to periods prior to the Closing Date and to obtain consents from Seller’s and the Company’s independent accountants in connection therewith. The provisions of this paragraph shall survive the Closing.

               5.5 Access to Records. After the Closing Date and during normal business hours, Buyer shall afford to Seller, its lenders, counsel, accountants, and other representatives, reasonable access to the books, contracts, and records, insofar as the same relate to the Company and the Property and do not otherwise constitute Confidential Materials and shall furnish such persons with all information or copies thereof (including financial, tax and operating data) concerning the Company and the Property as they reasonably may request. Requests for such information shall be coordinated with Seller’s designated representatives, and Buyer shall use its commercially reasonable efforts to assist the Seller, its lenders, counsel, accountants, and other representatives in their examination.

-10-

               5.6 Required Work; Generators.

               (A) Seller shall within twenty four (24) months of the Closing Date:

(i)	(a) address the property conditions described as an “immediate need” in the property condition reports prepared by ATC Associates, Inc. for the Hotel and attached hereto as Exhibit P, and (b) mitigate the effects of moisture related issues within the “mold sensitive” areas identified in the reports by ATC Associates, Inc for the Hotel; and
(ii)	have Seller’s engineers conduct a written evaluation of the emergency power generators located at the Hotel in order to ascertain such generator’s ability to function property during an emergency and the operating noise levels; such review shall present the engineer’s conclusions as to whether the current condition of the generators satisfactorily meets the needs of the Hotel, and, if necessary, suggest a plan to remedy any deficiencies revealed ins such evaluation. Seller and Buyer agree to cooperate to establish a scope of work plan and schedule for completion of any deficiency identified in such review; and
(iii)	Seller agrees to complete all projects actually in process and identified in the property condition reports prepared by ATC Associates, Inc. for the Hotel.

          6. Closing. Subject to the satisfaction (or waiver) of the conditions precedent set forth in Paragraphs 10.1 and 10.2, the time and place of Closing shall be held at 9:00 a.m. Eastern standard time at or through the offices of Buyer’s attorneys on the Closing Date specified by Buyer to Seller on not less than five (5) Business Days prior written notice or such other time and location mutually agreed to by the parties.

               6.1 Closing Mechanics. The Closing shall be conducted through escrow with the Closing Agent using an escrow procedure mutually acceptable to both Seller and Buyer, or, if either Buyer or Seller determines in good faith that such an escrow Closing is not practical, through a so-called “New York style” closing (in which authorized representatives of Seller and Buyer attend the Closing). Seller and Buyer agree to execute and deliver into escrow on the day prior to the Closing Date (or, if applicable, execute at a “pre-closing” at 10:00 a.m. Eastern standard time on the last Business Day prior to the Closing Date but not deliver until the “New York style” closing) all Closing Documents with funding and release to occur on the Closing Date. Upon Closing, Buyer shall deliver to Seller the Adjusted Purchase Price and the other items required of Buyer as elsewhere set forth herein, and Seller shall deliver to Buyer the Company Shares and the other items required of Seller as elsewhere set forth herein. Notwithstanding anything contained in this Agreement to the contrary, including Paragraph 10, Buyer and Seller agree that the Closing hereunder and the consummation of the initial transaction under the Purchase and Sale Agreement shall occur in accordance with the procedure

-11-

set forth in a separate letter agreement duly executed and delivered by each such party in connection with the Closing.

               6.2 Seller’s Deliveries. At Closing, Seller shall deliver, or cause to be delivered to Buyer, the following:

               A. Stock Certificates. Certificate(s) representing the Company Shares, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, bearing or accompanied by all requisite stock transfer stamps, and free and clear of any and all Liens.

               B. Good Standing Certificate. A certificate of the applicable public official to the effect that the Company is a validly existing corporation in good standing in the Commonwealth of Puerto Rico as of a date not more than five (5) days prior to the Closing Date.

               C. Governing Documents. True and correct copies of (i) Governing Documents (other than the bylaws) of the Company certified by the applicable public official of the Commonwealth of Puerto Rico, and (ii) bylaws of the Company certified by the Secretary or Assistant Secretary of the Company.

               D. Affidavit of Title/Gap Indemnity. An Affidavit of Title for the Hotel duly executed and delivered by Seller with respect to liens and title matters in substantially the form of Exhibit H or as may otherwise be customary in Puerto Rico or in such form as may be required by the Title Company.

               E. Closing Statement. A Closing Statement Agreement duly executed and delivered by Seller in a form sufficient to account for the Transaction.

               F. Evidence of Authority. Evidence that Seller has the requisite power and authority to execute and deliver, and perform under, this Agreement and all Closing Documents, consisting of a certificate of an Assistant Secretary of Seller duly executed and delivered by such Assistant Secretary with respect to the authority to act on behalf of Seller of the individual executing on behalf of Seller all documents contemplated by this Agreement, in the form of Exhibit I.

               G. Reaffirmation. A reaffirmation of the representations, warranties and covenants set forth in Paragraph 8.1 hereof in the form of Exhibit J duly executed and delivered by Seller.

               H. Hotel Lease Agreement. A counterpart of the Hotel Lease Agreement duly executed and delivered by the Lessee; provided, however, that Buyer and Seller agree that the Hotel Lease Agreement shall be revised as to form (not substance) as may be necessary to allow it to be executed as a public instrument and recorded in the Registry of Property of Puerto Rico. Buyer agrees that Seller or Lessee may file the Hotel Lease Agreement in the said Registry of Property. Buyer and Seller shall each furnish such evidence of authority to the persons executing the Hotel Lease Agreement as may be required to accomplish its recording in the Registry of Property of Puerto Rico. All costs, taxes and expenses associated with the cancellation of any revenue stamps and recording stamps and vouchers charged or assessed in

-12-

connection with the protocolizacion of the Hotel Lease Agreement in Puerto Rico or the recording and cancellation of the Hotel Lease Agreement in the Puerto Rico Registry of Property are herein referred to collectively as “Lease Recording Charges.”

               I. Indemnification Agreement. An executed counterpart of the Indemnification Agreement duly executed and delivered by Seller and HHF.

               J. Other Instruments. Such other instruments or documents as may be reasonably requested by Buyer or the Title Company, or reasonably necessary, to effect or carry out the purposes of this Agreement, subject to Seller’s prior approval thereof, which approval shall not be unreasonably withheld or delayed.

               K. Delivery of Keys and Property Documents. The Property Documents and all keys to the Property or any portion thereof.

               L. Opinions. One or more written opinions from counsel to Seller in customary form and substance reasonably satisfactory to Buyer, regarding the authorization, execution, delivery and enforceability of the (i) Hotel Lease Agreement, (ii) the Indemnification Agreement and (iii) such other opinions as may be mutually agreed to by the parties.

               M. Transfer of Assets and Assumption of Liabilities. Evidence satisfactory to Buyer that the assets and Liabilities listed on Exhibit D have been transferred or assigned to Lessee and that Lessee has assumed and agreed to pay the Company’s Liabilities pursuant to Paragraph 5.1(K).

               N. Tax Concession. Any documentation filed with the Puerto Rico Tourism Company since the Effective Date and, if issued, the amended tax concession from the Puerto Rico Tourism Company and, if issued, the consent to the transfer of the Company Shares to Buyer.

               O. Casino License. Evidence satisfactory to Buyer that the casino license has been issued to Lessee.

               P. Special Partnership Election. True and correct copies of the election filed by the Company to elect to be treated as a “special partnership” (the “Special Partnership Election”) under Subchapter K of Chapter 2 of Subtitle A of the Puerto Rico Internal Revenue Code of 1994, as amended (the “PR Code”), and the reply received from the Puerto Rico Treasury Department concerning such election.

               Q. Letter regarding Guaranty. A letter agreement dated as of the Closing Date from IHG for the benefit of the Beneficial Parties (as defined therein) in the form of Exhibit N duly executed and delivered by IHG.

               R. Ground Lease Consent and Estoppel. A Ground Lease Estoppel Certificate duly executed by the respective lessor with respect to each of the Ground Leases and any consents that may be required as a result of the Transaction under the terms of the Ground Leases in each case in form and substance reasonably acceptable to Buyer.

-13-

               S. Tenant Estoppel Certificates. Tenant Estoppel Certificates from each of the tenants under the Leases to the extent received by Seller or the Company.

               T. Lessee Guaranty. The Guaranty Agreement, in substantially the form of Exhibit O, duly executed and delivered by Lessee.

               U. Post-Closing Agreement. A Post-Closing Agreement dated the Closing Date in the form reasonably agreed to by the parties hereto, duly executed by Seller.

               6.3 Buyer’s Deliveries. At the Closing, Buyer shall deliver or cause to be delivered to Seller the following:

               A. Adjusted Purchase Price. The Adjusted Purchase Price due at Closing under this Agreement by wire transfer to such bank account outside of Puerto Rico as Seller shall designate.

               B. Closing Document Counterparts. Executed counterparts of any of the Closing Documents described in Paragraph 6.2 which are to be signed by Buyer.

               C. Hotel Lease Agreement. An executed counterpart of the Hotel Lease Agreement.

               D. Indemnification Agreement. An executed counterpart of the Indemnification Agreement.

               E. Opinions. One or more written opinions from counsel to Buyer in customary form and substance reasonably satisfactory to Seller, regarding (i) the authorization, execution, delivery and enforceability of the Hotel Lease Agreement and (ii) such other opinions as may be mutually agreed to by the parties.

-14-

          7. Closing Costs.

               7.1 Seller’s Closing Costs. Seller shall pay the following: (a) the fees and expenses of Seller’s and the Company’s attorneys, (b) the costs (including recording costs) of any cure of title defects required of Seller hereunder, (c) the commission due any broker retained by Seller, (d) half of all escrow agent fees (if any are charged in connection with this Transaction), (e) half of costs and expenses and premiums in connection with the preparation of the title reports and the issuance of the Title Policy (including a non-imputation and all other endorsements reasonably requested by Buyer), (f) half of all recording charges due on recordation of any Closing Documents, (g) half of the costs and expenses of the Surveyor to prepare the Survey, (h) half of the cost and expense of any local counsel mutually retained by Buyer and Seller in Puerto Rico, (i) half of the costs and expenses of all environmental and engineering reports regarding any Property furnished to Buyer and any follow-up studies required or suggested thereby or otherwise heretofore requested by Buyer, (j) half of the costs of any zoning reports or related zoning due diligence studies requested by Buyer in connection with its Due Diligence hereunder and (k) half of the Lease Recording Charges.

               7.2 Buyer’s Closing Costs. Buyer shall pay the following: (a) except as otherwise provided herein, the costs of Buyer’s Due Diligence, (b) half of the costs and expenses of all environmental and engineering reports regarding any property furnished to Buyer and any recommended and/or follow-up studies required or suggested thereby or otherwise heretofore requested by Buyer, (c) the fees and expenses of Buyer’s attorneys, (d) the commission due any Broker retained by Buyer, (e) all lenders’ fees related to any financing to be obtained by Buyer; (f) half of all recording charges due on recordation of any Closing Documents, (g) half of all escrow agent fees (if any are charged in connection with this Transaction), (h) half of the costs and expenses from the Title Company to prepare the title reports, (i) half of the costs, expenses and premiums for the Title Commitment and Title Policy (including a non-imputation and all other endorsements reasonably requested by Buyer), (j) half of the costs of the costs of the Surveyor to prepare the Survey, (k) half of the cost and expense of any local counsel mutually retained by Buyer and Seller in Puerto Rico, (l) half of the costs of any zoning reports or related zoning due diligence studies requested by Buyer in connection with its Due Diligence hereunder and (n) half of the Lease Recording Charges.

          8. Representations and Warranties.

               8.1 Seller’s Representations and Warranties. To induce Buyer to enter into this Agreement, Seller covenants, represents and warrants to Buyer as follows:

               A. Each of Seller and the Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has all requisite power and authority under the laws of such jurisdiction and its respective charter documents to enter into and perform its obligations under the Closing Documents and to consummate the transactions contemplated thereby. Each of Seller and the Company is duly qualified to transact business in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where such failure to qualify would not have a material adverse effect on Seller or the transactions contemplated hereby.

-15-

               B. Seller has taken (or will take, prior to the Closing Date) all necessary action to authorize the execution, delivery and performance of this Agreement and the other Closing Documents to which it is a party, and upon the execution and delivery of any document to be delivered by Seller on or prior to the Closing Date, such document shall constitute the valid and binding obligation and agreement of Seller enforceable against Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors and general principles of equity.

               C. The execution, delivery or performance of the Closing Documents by Seller, and the compliance with the terms and provisions thereof, will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, any Contract or Seller’s Governing Documents or result in the creation of any lien, charge or encumbrance upon any Property pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which Seller is bound.

               D. Except as may be set forth on Schedule 8.1(D), to Seller’s Knowledge, no action or proceeding is pending or threatened, and no investigation looking toward such an action or proceeding has begun, which (i) questions the validity of this Agreement or any of the other Closing Documents or any action taken or to be taken pursuant thereto, (ii) will result in any material adverse change in the business, operation, affairs or condition of the Company or the Property, (iii) may result in or subject the Company to a material liability, (iv) involves condemnation or eminent domain proceedings against any material part of the Property or (v) is likely to materially and adversely affect the ability of Seller to perform its obligations hereunder.

               E. Other than (i) the Permitted Title Exceptions, (ii) the Leases set forth on Exhibit K, (iii) the Contracts set forth on Exhibit L, (iv) the Ground Leases, and (v) agreements and easements with governmental bodies and utility companies which are reasonably necessary for the development and operation of the Property as contemplated by this Agreement and the Closing Documents, there are no material agreements, leases, licenses or occupancy agreements affecting the Property which will be binding on the Company subsequent to the Closing Date.

               F. Except as may be set forth in Schedule 8.1(F) or in the written inspection reports delivered to Buyer in connection herewith, to Seller’s Knowledge, there is no fact or condition which materially and adversely affects the physical condition of the Property which has not been set forth in this Agreement, or in the other documents, certificates or statements furnished to or obtained by Buyer in connection with the transactions contemplated hereby.

               G. All utilities and services necessary for the use and operation of the Property (including, without limitation, road access, water, electricity and telephone) are available thereto, and are of sufficient capacity to meet adequately all needs and requirements necessary for the current use and operation of the Property. To Seller’s Knowledge, except as may be set forth in Schedule 8.1(G), no fact, condition or proceeding exists which would result in the termination or impairment of the furnishing of such utilities to the Property.

               H. Except as may be set forth in Schedule 8.1(H), or in the written inspection reports (including environmental reports) delivered to Buyer in connection herewith, to Seller’s

-16-

Knowledge (i) the Property and the use and operation thereof do not violate any material federal, state, Commonwealth of Puerto Rico, municipal or other governmental statutes, ordinances, by-laws, rules, regulations or any other legal requirements, including, without limitation, those relating to construction, occupancy, zoning, adequacy of parking, environmental protection, occupational health and safety or fire safety applicable thereto; and (ii) there are in effect all material licenses, permits and other authorizations necessary for the current use, occupancy and operation thereof. To Seller’s Knowledge, except as may be set forth in Schedule 8.1(H), there is no threatened request, application, proceeding, plan, study or effort which would materially adversely affect the present use or zoning of the Property or which would modify or realign any adjacent street or highway.

               I. Except as may be set forth in Schedule 8.1(I), other than the amounts disclosed by current tax bills, true and correct copies of which have been delivered to Buyer, no taxes or special assessments of any kind (special, bond or otherwise) are or have been levied with respect to the Property, or any portion thereof, which are outstanding or unpaid, other than amounts not yet due and payable.

               J. [Reserved.]

               K. Except as may be set forth in Schedule 8.1(K), or in the written inspection reports (including environmental reports) delivered to Buyer in connection herewith, to Seller’s Knowledge, none of Seller, the Company or any other occupant or user of any of the Property, or any portion thereof, have stored or disposed of (or engaged in the business of storing or disposing of) or have released or caused the release of any hazardous waste, contaminants, oil, radioactive or other material on the Property, or any portion thereof, the removal of which is required or the maintenance of which is prohibited or penalized by any applicable federal, state, Commonwealth of Puerto Rico or local statutes, laws, ordinances, rules or regulations. To Seller’s Knowledge, except as may be set forth in Schedule 8.1(K), or in the written inspection reports (including environmental reports) delivered to Buyer in connection herewith, the Property is free from any such hazardous waste, contaminants, oil, radioactive and other materials, except any such materials maintained in accordance with applicable law.

               L. To Seller’s Knowledge, except as contained in the written inspection reports (including environmental reports) delivered to Buyer in connection herewith, there are no defects or inadequacies in the Property which, if uncorrected, would result in a termination of insurance coverage or an increase in the premiums charged therefor.

               M. Except as may be set forth in Schedule 8.1(M), or in the written inspection reports delivered to Buyer in connection herewith, to Seller’s Knowledge, the Property is in good working order and repair, mechanically and structurally sound, free from material defects in materials and workmanship and not subject to any unrepaired casualty.

               N. Except as may be set forth in Schedule 8.1(N):

                    (i) All income and other material Tax Returns that are required to be filed on or before the Closing Date with respect to the Company have been or will be duly and timely filed, and all material Taxes (whether or not shown on such Tax Returns) that are required

-17-

to be paid with respect to the Company have been or will be duly and timely paid. All such Tax Returns are correct and complete in all material respects. There are no Liens on any of the Company’s assets or properties resulting from any failure (or alleged failure) to pay any Tax, other than Permitted Title Exceptions.

                    (ii) The Company has complied in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of Taxes and has, within the time and the manner prescribed by Law, withheld and paid over to the proper taxing authorities all material amounts required to be so withheld and paid over under applicable laws.

                    (iii) No U.S. federal, state, Commonwealth of Puerto Rico, local or foreign audits, examinations, investigations or other administrative proceedings or court proceedings have been commenced or are presently pending or threatened with regard to any Taxes or Tax Returns with respect to the Company. There is no unresolved dispute or claim concerning any Tax liability of the Company either claimed or raised by any Tax authority in writing.

                    (iv) There are no outstanding requests, agreements, consents or waivers to extend the statutory period of limitations applicable to the assessment of any Taxes or deficiencies against the Company. No power of attorney has been granted by or with respect to the Company with respect to any matter relating to Taxes.

                    (v) The Company is not a party to, is not bound by and has no obligation under any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement, and the Company has no potential liability or obligation to any person as a result of, or pursuant to, any such agreement, contract or arrangement.

                    (vi) The Company has not received written notice of any claim made by an authority in a jurisdiction where the Company does not file Tax Returns, that the Company is or may be subject to taxation by that jurisdiction.

                    (vii) The Real Property constitutes one or more separate parcels for purposes of ad valorem real property Taxes, and is not subject to a lien for non-payment of real property Taxes relating to any other property.

                    (viii) Commencing with the Company’s 2001 taxable year, the Company has had in effect a Special Partnership Election which has not been revoked or altered and remains in full force and effect. No property of the Company is subject to the “built-in-gain” provisions of Section 1397 of the PR Code nor to the recapture provisions of Sections 1117 and/or 1118 of the PR Code.

                    (ix) Seller is a direct, wholly-owned subsidiary of Six Continents Overseas Holdings Limited, a United Kingdom limited company, which is a direct, wholly-owned subsidiary of Six Continents PLC, a United Kingdom corporation, which is a direct, wholly-owned subsidiary of InterContinental Hotels Group, PLC, a publicly traded United Kingdom corporation.

-18-

               O. Except as may be set forth in Schedule 8.1(O), or in the written inspection reports delivered to Buyer in connection herewith, there are in effect all material licenses (including liquor licenses, if required), permits and other authorizations necessary for the current use, occupancy and operation of the Property.

               P. The Company has good title to the Personal Property free and clear of all Liens other than Permitted Title Exceptions.

               Q. The Personal Property located at or otherwise used in connection with the Property (i) complies in all material respects with the Inter Continental brand standards and (ii) is otherwise at adequate, appropriate levels and at levels that are at least equal to those found at other InterContinental hotels.

               R. Except as may be set forth in Schedule 8.1(R), or in the written inspection reports (including without limitation environmental reports and reports from ATC Associates, Inc.) delivered to Buyer in connection herewith, to Seller’s Knowledge there exists no violation of any law, regulation, order or requirement issued by any governmental authority against or affecting the Property and neither Seller nor the Company has received any notice or order from any governmental authority requiring any repairs, maintenance or improvements to are Property which have not been fully performed.

               S. [Reserved.]

               T. Except as may be set forth on Schedule 8.1(T), to Seller’s Knowledge, there exists no material default on the part of Seller or the Company with respect to any Permitted Title Exception, other than those defaults which can be cured or discharged by the payment of money and for which an allowance for the payment thereof has been made at Closing.

               U. Each of the financial statements of HHF heretofore delivered to Buyer have been properly prepared in accordance with the Accounting Principles (as defined in the Management Agreement (as defined in the Purchase and Sale Agreement)), is true, correct and complete in all material respects and fairly present the consolidated financial condition of HHF at and as of the dates thereof and the results of its operations for the periods covered thereby. Each of the financial statements for the Hotel heretofore delivered to Buyer has been properly prepared in accordance with the Accounting Principles, is true, correct and complete in all material respects and fairly present the financial condition of the Hotel covered thereby at and as of the dates thereof and the results of their operations for the periods covered thereby.

               V. Neither Seller nor the Company is a debtor in any voluntary or involuntary proceeding in bankruptcy.

               W. Other than the Leases listed in Schedule 8.1(W), the Ground Leases and the Permitted Title Exceptions, there are no contracts or agreements with respect to the use or occupancy of the Property. The copies of the Leases and the Ground Leases heretofore delivered by Seller to Buyer are a true, correct and complete copies thereof; neither the Leases nor the Ground Leases have been amended except as evidenced by amendments similarly delivered and

-19-

constitute the entire agreement between the Company and the tenants (or the ground lessor, as applicable) thereunder. Except as otherwise set forth in Schedule 8.1(W): (i) to Seller’s Knowledge, each of the Leases is in full force and effect on the terms set forth therein and to Seller’s Knowledge each tenant, thereunder is legally required to pay all sums and perform all material obligations set forth therein without concessions, abatements, offsets, defenses or other basis for relief or adjustment; (ii) to Seller’s Knowledge, each of the Ground Leases is in full force and effect on the terms set forth therein and the ground lessors thereunder are legally required to perform all material obligations set forth therein without concessions, defenses or other basis for relief or adjustment; (iii) no such tenant (or ground lessor with respect to the performance of any obligations under the Ground Lease, as applicable) has asserted in writing or, to Seller’s Knowledge, has any defense to, offsets or claims against, rent payable by it or the performance of its other obligations under its Lease (or Ground Lease, as applicable); (iv) the Company has no outstanding obligation to provide any such tenant with an allowance to construct, or to construct at Seller’s expense, any tenant improvements; (v) no such tenant is in arrears in the payment of any sums or in the performance of any material obligation required of it under its Lease beyond any applicable grace period, and no such tenant has prepaid any rent or other charges; (vi) to Seller’s Knowledge, no such tenant or ground lessor, as applicable, has filed a petition in bankruptcy or for the approval of a plan of reorganization or management under the Federal Bankruptcy Code or under any other similar state law, or made an admission in writing as to the relief therein provided, or otherwise become the subject of any proceeding under any federal or state bankruptcy or insolvency law, or has admitted in writing its inability to pay its debts as they become due or made an assignment for the benefit of creditors, or has petitioned for the appointment of or has had appointed a receiver, trustee or custodian for any of its property; (vii) no such tenant or ground lessor, as applicable, has requested in writing a modification of its Lease or Ground Lease, respectively, or a release of its obligations under its Lease or Ground Lease, respectively, in any material respect or has given written notice terminating its Lease or Ground Lease, or has been released of its obligations thereunder in any material respect prior to the normal expiration of the term thereof; (viii) except as set forth in the Leases, no guarantor has been released or discharged, voluntarily or involuntarily, or by operation of law, from any obligation under or in connection with any Lease or any transaction related thereto; (ix) all security deposits paid by tenants, are as set forth in Schedule 8.1(W); (x) all lease commissions due with respect to each of the Leases has been paid, except as otherwise set forth on Schedule 8.1(W); and (xi) the other information set forth in Schedule 8.1(W) is true, correct and complete in all material respects. No default or breach exists under any Lease or Ground Lease on the part of the Company.

               X. The authorized capital stock of the Company consists of five hundred thousand (500,000) shares of common stock, One Hundred and No/Dollars ($100) par value per share, all of which are owned by Seller free and clear of all Liens. Each of the Company Shares has been validly issued and is fully paid and non-assessable with no personal liability attaching to the ownership thereof. No person other than Seller owns beneficially or otherwise an ownership interest in the Company or any right, option or warrant to acquire any form of ownership interest in the Company, and the Company has no commitment to issue any such ownership interest or rights, options or warrants. No securities of the Company are subject to any contractual restrictions, including any preemptive right, right of first refusal or similar agreement. All securities of the Company were issued in compliance with all applicable Federal, Commonwealth of Puerto Rico and local securities laws.

-20-

               Y. (i) Each of the financial statements of the Company for the past five fiscal years (copies of which have been provided to Buyer) fairly presents in all material respects the financial position of the Company as of its date or the periods therein set forth, as the case may be, in each case in accordance with generally accepted accounting principles (“GAAP”) consistently applied during the periods involved and, with respect to any unaudited interim financial statements, except for the omission of footnote disclosure and, to the extent consistent with generally accepted accounting principles, normally recurring year-end audit adjustments.

                    (ii) Subject to normal year-end adjustments, if any, the books of account and other similar records of the Company are true and complete in all material respects and have been maintained in accordance with sound business practice. The Company has made and kept books, records and accounts which, in reasonable detail, accurately and fairly reflect its transactions. The Company maintains a system of accounting controls sufficient to provide reasonable assurances that, in all material respects: (a) transactions are executed in accordance with management’s general or specific authorization; (b) transactions are recorded as necessary (i) to permit preparation of financial statements in conformity with GAAP and (ii) to maintain accountability for assets; (c) access to assets is permitted only in accordance with management’s general or specific authorization; and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

               Z. Except for the matters described in Paragraphs 5.1(L) and 5.1(M), the execution, delivery and performance by Seller of this Agreement require no action by or in respect of, or filing with, any governmental body, agency, official or authority.

               AA. The Company is not in violation of, or has never violated, any applicable provisions of any laws, statutes, ordinances or regulations, except for violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect. Schedule 8.1 (AA) correctly describes each governmental license, permit, concession or franchise (a “Permit”) material to the business of the Company, together with the name of the governmental agency or entity issuing such Permit.

               BB. As of immediately after the Closing, the Company will not:

(i)	own the assets or retain the liabilities listed on Exhibit D;
(ii)	have any indebtedness or Liabilities of any nature whatsoever (whether actual or contingent), other than such liabilities incurred in the ordinary course of business which are to be paid by Seller or Lessee after the Closing (which shall be paid in accordance with Paragraph 5.2);
(iii)	except as disclosed on Schedule 8.1(BB)(iii), have any litigation, pending or to the Seller’s Knowledge, threatened; or
(iv)	have any employees, consultants or advisors, or any obligations of any nature (whether monetary or otherwise) to any former employees, consultants or advisors.

-21-

               CC. Neither the Company, nor any of its predecessors, has ever conducted any business other than owning and operating the Hotel or owned any assets except such assets as were necessary or incidental to owning and operating the Hotel.

               DD. None of this Agreement and the schedules, exhibits and other documents delivered in connection herewith and therewith, when read together as a whole, and with the documents or information delivered to Buyer in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading.

               EE. The Designated Representatives are the persons (either individually or as a whole) to whom any condition which would render any of the statements in Paragraph 8.1 untrue, inaccurate or incorrect in any material respect (without regard to any knowledge qualifier contained in such statement) should be communicated to, directly or indirectly, by any general manager of the Hotel that first knows such condition.

               8.2 [Reserved.]

               8.3 Claims of Breach Prior To Closing. If, at or prior to the Closing, to Seller Knowledge’s, any Seller’s Warranty becomes untrue, inaccurate or incorrect in any material respect (without regard to any materiality or knowledge qualifier contained therein), Seller shall give Buyer written notice thereof within ten (10) Business Days of obtaining such knowledge (but, in any event, prior to the Closing). After the Due Diligence Deadline but prior to the Closing, if to Buyer’s Knowledge any Seller’s Warranty is or becomes untrue, inaccurate or incorrect in any material respect, Buyer shall give Seller written notice thereof within five (5) Business Days of obtaining such knowledge (but, in any event, prior to the Closing). In either such event, Seller shall have the right to cure (or cause to be cured) such misrepresentation or breach and shall be entitled to a reasonable adjournment of the Closing upon written notice to Buyer (not to exceed fifteen (15) days) to attempt such cure. Seller shall notify Buyer within three (3) Business Days of its receipt of such notice if Seller has elected to cure such untrue, inaccurate or incorrect Seller’s Warranty. If Seller fails to respond within such time frame, Seller shall be deemed to have declined to cure such untrue, inaccurate or incorrect Seller’s Warranty.

          If any Seller’s Warranty is untrue, inaccurate or incorrect in any material respect as of the date made, and Seller is unable or unwilling to so cure (or cause to be cured) such misrepresentation or breach, then Buyer, as its sole remedy shall elect either (a) to waive such misrepresentation or breach and consummate the Transaction without any reduction of or credit against the Purchase Price, or (b) to Terminate this Agreement by written notice given to Seller on or before the Closing Date, in which event Buyer shall be entitled to recover from Seller within five (5) days of demand, all of Buyer’s out-of-pocket costs (including legal fees) incurred with respect to the transactions contemplated by this Agreement.

          If Buyer Knows prior to the Closing Date that any Seller’s Warranty becomes untrue, inaccurate or incorrect in any material respect through no fault of Seller, and Seller is unable or unwilling to so cure (or cause to be cured) such misrepresentation or breach, then Buyer, as its sole remedy shall elect either (a) to waive such misrepresentation or breach and consummate the

-22-

Transaction without any reduction of or credit against the Purchase Price, or (b) to Terminate this Agreement by written notice given to Seller on or before the Closing Date.

          If any of Seller’s Warranties are untrue, inaccurate or incorrect but are not, in the aggregate, untrue, inaccurate or incorrect in any material respect, Buyer shall be required to consummate the Transaction without any reduction of or credit against the Purchase Price. If on the Closing Date, to Buyer’s Knowledge any of Seller’s Warranties are untrue, inaccurate or incorrect in any material respect and Buyer chooses to consummate the Transaction, Buyer waives any right to seek damages against Seller if such breach would otherwise have allowed Buyer to terminate this Agreement pursuant to its terms.

          The untruth, inaccuracy or incorrectness of all Seller’s Warranties shall be deemed material only if Buyer’s aggregate damages resulting from the untruth, inaccuracy or incorrectness of Seller’s Warranties are reasonably estimated to equal or exceed one hundred thousand dollars ($100,000.00).

               8.4 Survival and Limits On Buyer’s Claims. Seller’s Warranties (other than 8.1(X), 8.1(BB) and 8.1(CC) which shall survive indefinitely; and 8.1(A), 8.1(B), 8.1(C), 8.1(D), 8.1(K), 8.1(N), 8.1(U), 8.1(V), 8.1(Y), 8.1(Z) and 8.1(DD) which shall survive for the duration of the applicable statute of limitations) shall survive the Closing and not be merged therein for a period of one (1) year. Covenants set forth in this Agreement shall survive until fully performed. Notwithstanding the foregoing, with respect to claims first asserted after the thirtieth (30^th) anniversary of the Effective Date for breaches of Seller’s Warranties under 8.1(X), 8.1(BB) and 8.1(CC) and any corresponding claims under the Indemnification Agreement, Buyer shall look solely to any collateral hereafter pledged securing Seller’s obligations hereunder for satisfaction of such claim; provided, however, nothing contained herein is intended to, nor shall it, limit or reduce the rights of Buyer’s affiliate under the Management Agreement (as defined in the Purchase and Sale Agreement) or of the Company under the Hotel Lease Agreement or limit or reduce the obligations of any guarantor of either such agreement.

               8.5 Buyer’s Representations and Warranties. Buyer, as of the Effective Date, represents and warrants to Seller as follows, and as a condition precedent to Seller’s obligation to consummate the Transaction at Closing pursuant to the terms of this Agreement, the following representations of Buyer shall be true and correct in all material respects as of the Closing Date:

               A. Status and Authority of Buyer. Buyer is duly organized and validly existing under the laws of the jurisdiction of its formation, and has all requisite power and authority under the laws of such jurisdiction and under its charter documents to enter into and perform its obligations under the Closing Documents to which it is a party and to consummate the transactions contemplated thereby. Buyer is duly qualified and in good standing in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where such failure to qualify would not have a material adverse effect on Buyer or the transactions contemplated hereby.

               B. Action of Buyer. Buyer has taken (or will take, prior to the Closing Date) all necessary action to authorize the execution, delivery and performance of each of the Closing

-23-

Documents to which it is a party, and upon the execution and delivery of any document to be delivered by Buyer on or prior to the Closing Date such document shall constitute valid and binding obligation and agreement of Buyer enforceable against Buyer in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors and general principles of equity.

               C. No Violations of Agreements. Neither the execution, delivery or performance of the Closing Documents by Buyer, nor compliance with the terms and provisions thereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, or charge upon any property or assets of Buyer pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which Buyer is bound.

               D. Litigation. To Buyer’s Knowledge, no action or proceeding is pending or threatened, and no investigation looking toward such an action or proceeding has begun, which (a) questions the validity of the Closing Documents or any action taken or to be taken pursuant hereto or (b) is likely to materially and adversely affect the ability of Buyer to perform its obligations hereunder.

               E. Bankruptcy. Buyer is not a debtor in any voluntary or involuntary proceeding in bankruptcy.

               F. Reporting. John Murray is the person to whom any condition which would render any of the statements in this Paragraph 8.5 untrue, inaccurate or incorrect in any material respect (without regard to any knowledge qualifier contained in such statement) should be communicated to, directly or indirectly, by any senior employee of HPT that first knows such condition.

               G. Sophisticated Buyer. Buyer is an experienced investor that specializes in the investment in and ownership of hotel properties in geographically diverse markets. Buyer is a sophisticated real estate owner and investor with particular experience in the acquisition and ownership of hotels similar to the Hotel. Buyer further represents and warrants that it is purchasing the Company Shares solely for investment, with no present intention to resell or distribute within the meaning of the Securities Act. Buyer hereby acknowledges that the Company Shares have not been registered pursuant to the Securities Act and may not be transferred in the absence of such registration or an exemption available under the Securities Act.

-24-

          9. Casualty and Condemnation. Seller shall maintain, or cause the Company to maintain, the property insurance coverage currently in effect for the Property, or comparable coverage, through the Closing Date. If after the Effective Date and on or prior to the Closing Date, any portion of the Property is materially damaged or destroyed by fire or other casualty, or there shall be commenced or instituted against the Property any Condemnation Proceeding, Seller shall promptly (and in no event more than two (2) Business Days after the occurrence of such casualty or Condemnation Proceeding) give written notice of such event to Buyer, and the following provisions shall apply notwithstanding the contrary terms of any applicable Laws with respect to the subject matter of Paragraph 9:

               9.1 Major Event. If such damage or destruction or Condemnation Proceeding results in the Hotel becoming Unsuitable for Its Permitted Use, as reasonably determined by Buyer or Seller, (such damage or Condemnation Proceeding shall be referred to as a “Major Event”), then both Buyer and Seller shall have the right to Terminate this Agreement by written notice to the other party given no later than ten (10) Business Days after the giving of Seller’s notice of such event, and the Closing Date shall be extended, if necessary, to provide sufficient time for Buyer or Seller to make such election. In the case of a Major Event, and so long as neither party has elected to Terminate this Agreement, in addition to the foregoing termination right, Seller or Buyer shall have the option to extend the Closing Date for up to ninety (90) days for the Hotel (to allow Seller to repair/restore the Hotel in a manner satisfactory to Buyer). To the extent that Buyer or Seller elects to postpone Closing pursuant to the provisions of this Paragraph, Buyer shall have the ability to conduct a limited Due Diligence review (such review shall be limited to the conditions directly related to any restoration and repair of the Hotel) with respect to the Hotel up to and including the date that is ten (10) calendar days prior to the extended closing date for the Hotel and Buyer shall have the right to Terminate this Agreement solely as to the Hotel for reasons directly related to any restoration and repair thereof.

               9.2 Closing Despite Casualty/Condemnation. If a casualty or Condemnation Proceeding occurs and neither Buyer nor Seller Terminates this Agreement, then at Closing (a) the conveyance of the Property shall be less such portion of the Property so taken by (or, as applicable, shall be subject to) said Condemnation Proceeding, without adjustment of the Purchase Price, (b) Seller shall assign, or cause to be assigned, to Buyer (without recourse to Seller) all the rights to all awards or insurance proceeds with respect to such casualty or Condemnation Proceeding (except for business interruption coverage with respect to rental payments prior to Closing); (c) Buyer and Seller shall, or shall cause the Lessor and Lessee of the Hotel, to waive any of their respective ability to terminate the Hotel Lease Agreement as to the Hotel as a result of the Hotel being “Unsuitable for Its Permitted Use” pursuant to the terms of the Hotel Lease Agreement; and (d) Seller shall provide a credit at Closing equal to (i) the Company’s deductible under the Company’s insurance policy, plus all proceeds or awards previously paid to the Company with respect to such casualty or Condemnation Proceeding, less (ii) an amount equal to the sum of (A) the costs, expenses and fees, including reasonable attorneys’ fees, expenses and disbursements, incurred by Seller or the Company in connection with receiving such proceeds or award, (B) any portion of any Condemnation Proceeding award that is allocable to loss of use of the Property prior to Closing, and the proceeds of any rental loss, business interruption or similar insurance to the extent allocable to the period prior to the

-25-

Closing Date, and (C) the reasonable and actual costs incurred by Seller or the Company in stabilizing and/or repairing the Property following such casualty or condemnation.

          10. Other Conditions to Closing. The obligation of Buyer and Seller to close the Transaction shall be further subject to the satisfaction at or prior to Closing of the conditions precedent set forth in this Paragraph.

               10.1 Conditions to Buyer’s Obligations. The conditions precedent to Buyer’s obligations at Closing referenced above are as follows, any or all of which may be expressly waived by Buyer in writing, at its sole option.

               A. Representations. Seller’s Warranties shall be true and correct in all material respects on and as of the Closing Date, except as modified in a manner permitted by Paragraphs 8.2 and 8.3, as if made on and as of such date except to the extent that they expressly relate to an earlier date.

               B. Title Policy. At Closing, Company shall have received from the Title Company the Title Policy (or a specimen or proforma policy thereof or “marked” Title Commitment) together with an irrevocable written obligation of the Title Company to issue a Title Policy in the form of such specimen or proforma policy.

               C. Seller Compliance. Seller shall have performed, and shall have caused the Company and Lessee to have performed, all of the covenants, undertakings and obligations to be performed or complied with by Seller at or prior to the Closing.

               D. Closing Deliveries. Buyer shall have received the closing deliveries listed in Paragraph 6.2 hereof.

               E. Purchase and Sale Agreement. Buyer and Seller Related Parties shall have entered into and consummated (or shall be in the process of consummating simultaneously with this Transaction) the initial closing of the transaction affecting all hotels under the Purchase and Sale Agreement.

               F. Tax Concession/Approval. All actions required to obtain the amendments to the tax concession and the Puerto Rico Tourism Company approval contemplated by Paragraph 5.1(L) shall have been taken, in each case in a manner reasonably satisfactory to Buyer.

               G. Casino License. Lessee shall have obtained the license to operate the Hotel’s casino and shall have taken the actions contemplated by Paragraph 5.1(M).

               H. Pre-Closing Transfer. Seller shall have caused the Company to transfer certain assets and employees and otherwise effectuated the matters set forth in Paragraph 5.1(K) in each case in a manner reasonably satisfactory to Buyer.

               I. Working Capital. The Company shall have Working Capital in the aggregate amount of at least Thirty Two Million Seven Hundred Thousand and No/00 Dollars ($32,700,000.00), plus the sum of (1) any proceeds received by Seller or the Company on

-26-

account of any claims under property insurance coverage relating to the Property, or comparable coverage, which has not been applied to repair/restore the Property, (2) any proceeds received by Seller or the Company on account of any Condemnation Proceeding relating to the Property which has not been applied to repair/the Property, and (3) an amount equal to the “deductible” which is absorbed by the Company prior to claiming an insured loss under property insurance coverage relating to the Property, or comparable coverage for which proceeds have been paid under (1) above, which has not been applied to repair/restore the Property .

               J. Governmental Approvals. Any other approvals from federal, state, Commonwealth of Puerto Rico or local government authorities required as a result of the Transactions contemplated hereby, including if applicable any approvals required by the Hart-Scott-Rodino Antitrust Improvement Act of 1976 (“HSR”), shall have been obtained.

               10.2 Conditions to Seller’s Obligations. The conditions precedent to Seller’s obligations at Closing referenced above are as follows, any or all of which may be expressly waived by Seller in writing, at its sole option:

               A. Representations. Buyer’s warranties set forth in Paragraph 8.5, shall be true and correct in all material respects on and as of the Closing Date, except as modified in a manner permitted by this Agreement, as if made on and as of such date except to the extent that they expressly relate to an earlier date.

               B. Buyer Compliance. Buyer shall have performed all of the covenants, undertakings and obligations to be performed or complied with by Buyer at or prior to the Closing.

               C. Purchase and Sale Agreement. Buyer and the Seller Related Parties shall have entered into and consummated (or shall be in the process of consummating simultaneously with this Transaction) the initial closing of the transaction affecting all hotels under the Purchase and Sale Agreement.

               D. Closing Deliveries. Seller shall have received the closing deliveries listed in Paragraph 6.3 hereof.

               E. Casino License. Lessee shall have obtained the license to operate the Hotel’s casino and shall have taken the actions contemplated by Paragraph 5.1(m).

               F. Governmental Approvals. Any other approvals from federal, state, Commonwealth of Puerto Rico or local government authorities required as a result of the Transactions contemplated hereby, including if applicable any approvals required by the HSR, shall have been obtained.

               10.3 Waiver of Conditions. No waiver of a closing condition by either party shall limit its rights to seek indemnification or any other legal remedy available to such party.

          11. Transaction Issues: Brokers, Confidentiality and Indemnity.

-27-

               11.1 Brokers. Seller and Buyer expressly acknowledge that Seller’s Broker has acted as the exclusive broker with respect to the Transaction and with respect to this Agreement. Seller shall pay any brokerage commission due to Seller’s Broker in accordance with the separate agreement between Seller and Seller’s Broker. Seller agrees to hold Buyer harmless and indemnify Buyer from and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) suffered or incurred by Buyer as a result of any claims by Seller’s Broker or any other party claiming to have represented Seller as broker in connection with the Transaction. Buyer agrees to hold Seller harmless and indemnify Seller from and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) suffered or incurred by Seller as a result of any claims by any other party claiming to have represented Buyer as broker in connection with the Transaction.

               11.2 Publicity. Except for the Press Releases or Public Announcements the forms of which are attached hereto as Exhibit M, or if no such forms are attached, such other forms as are reasonable under the circumstances or as may be required by law or as may be reasonably necessary, on a confidential basis, to inform any rating agencies, potential sources of financing, financial analysts, to perform its obligations and duties contained in this Agreement or to receive legal, accounting and/or tax advice, the parties agree that no party shall, with respect to this Agreement and the transactions contemplated hereby, contact or conduct negotiations with public officials, make any public pronouncements, issue press releases or otherwise furnish information regarding this Agreement or the transactions contemplated hereby to any third party without the consent of the other party, which consent shall not be unreasonably withheld; provided, however, that, if such information is required to be disclosed by law, the party so disclosing the information shall use reasonable efforts to give notice to the other parties as soon as such party learns that it must make such disclosure.

          Buyer acknowledges that certain Ground Leases that affect the Hotel require landlord consent to any assignment of those rights and/or release of the Company or Seller from continued liability under such lease. Buyer hereby consents to Seller’s disclosure to any such landlords of Buyer’s identity and financial information. Buyer agrees to cooperate (at no material cost and expense) with Seller and any such landlord and to provide such Buyer financial information as may be reasonably requested by such landlord in order to consent to the proposed assignment.

               11.3 Indemnity. Buyer hereby agrees to indemnify, defend, and hold Seller and each of the other Seller Parties free and harmless from and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) arising out of or resulting from (a) the breach of the terms of Paragraph 11.2 or (b) the entry on the Property and/or the conduct of any Due Diligence by Buyer or any of Buyer’s Representatives at any time prior to the Closing; provided, however, that Buyer’s obligations under this clause (b) shall not apply to the mere discovery of a pre-existing environmental or physical condition at the Property. The foregoing indemnity shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement.

          12. Default At or Prior to Closing.

-28-

               12.1 Buyer Default. If Buyer defaults in the observance or performance of its covenants and obligations hereunder, and such default continues for five (5) Business Days after the date of receipt of written notice from Seller demanding cure of such default, provided Seller is not in default, Seller shall be entitled, as its sole and exclusive remedy hereunder, to Terminate this Agreement by written notice to Buyer of such termination and, provided the deposit contemplated by Paragraph 18 of the Purchase and Sale Agreement, as amended from time to time, has not been posted by Buyer, to receive liquidated damages equal to five percent (5%) of the Purchase Price on or prior to the Closing Date as full liquidated damages for such default of Buyer, the parties hereto acknowledging the difficulty of ascertaining the actual damages in the event of such a default, that it is impossible more precisely to estimate the damages to be suffered by Seller upon Buyer’s default, that such liquidated damages are intended not as a penalty, but as full liquidated damages and that such amount constitutes a reasonable good faith estimate of the potential damages arising therefrom, it being otherwise difficult or impossible to estimate Seller’s actual damages which would be suffered by Seller in the event of default by Buyer. Except with respect to any right, obligation or liability which survives Closing or termination of this Agreement, including any indemnification provisions set forth in this Agreement, Seller’s right to Terminate this Agreement is Seller’s sole and exclusive remedy in the event of a default under this Agreement by Buyer, and Seller hereby waives, relinquishes and releases any and all other rights and remedies (except any that survive Closing or termination pursuant to the express provisions of this Agreement), including, but not limited to: (1) any right to sue Buyer for damages, (2) any right to sue Buyer for specific performance, or (3) any other right or remedy which Seller may otherwise have against Buyer, either at law, or equity or otherwise. To the extent that Seller’s Related Party is entitled to the deposit in accordance with the Purchase and Sale Agreement, Seller shall not be able to receive any damages hereunder for Buyer’s breach of the terms hereof.

               12.2 Seller Default. If Seller defaults in the observance or performance of its covenants and obligations hereunder, and such default continues for the greater of five (5) Business Days after the date of receipt of written notice from Buyer demanding cure of such default, then Buyer shall be entitled either, at Buyer’s option, (i) without waiving the right to elect the option to Terminate this Agreement, to sue Seller for specific performance of this Agreement, but only if such suit is filed within one hundred eighty (180) days after the occurrence of Seller’s alleged default, unless Buyer is legally precluded from bringing such suit pursuant to bankruptcy law requirements within such one hundred and eighty day period or (ii) to Terminate this Agreement by the delivery to Seller of notice of such termination and Buyer shall be entitled to all of its out-of pocket costs (including legal fees) incurred in connection with the transactions contemplated by this Agreement payable within five (5) days of demand; provided however that Buyer shall not be able to recover any of its out-of-pocket costs (including legal fees) to the extent Seller fails or is unable to deliver any Ground Lease Estoppel Certificate pursuant to Paragraph 5.1(N), so long as such failure or inability is not due to the fault of Seller. Prior to the Closing, Buyer’s rights to so Terminate this Agreement or sue for specific performance, are Buyer’s sole and exclusive remedies hereunder in the event of a default hereunder by Seller, and Buyer hereby waives, relinquishes and releases any and all other rights and remedies (except any that survive Closing or termination pursuant to the express provisions of this Agreement), including, but not limited to: (1) any right to sue for damages, or (2) any other right or remedy which Buyer may otherwise have against Seller either at law, in equity or otherwise. Buyer agrees that its failure to timely commence an action for specific performance

-29-

within the period noted above shall be deemed a waiver by it of its right to commence an action for specific performance as well as a waiver by it of any right it may have to file or record a notice of lis pendens or notice of pendency of action or similar notice against any portion of the Property.

          13. Notices. All notices, consents, approvals and other communications which may be or are required to be given by either Seller or Buyer under this Agreement shall be properly given only if made in writing and sent by (a) hand delivery, (b) certified mail, return receipt requested, (c) a nationally recognized overnight delivery service (such as Federal Express, UPS Next Day Air or Airborne Express), or (d) telecopying to the telecopy number listed below (provided that a copy of such notice is also sent within one Business Day to the party by one of the other methods listed herein), with all postage and delivery charges paid by the sender and addressed to the Buyer or Seller, as applicable as set forth below, or at such other address (or telecopy number) as each may request in writing in accordance with the provisions hereof. Such notices delivered by hand, by telecopy, or overnight delivery service shall be deemed received on the date of delivery and, if mailed, shall be deemed received upon the earlier of actual receipt or two days after mailing. Said notice addresses are as follows (and Seller and Buyer shall have the right to designate changes to their respective notice addresses, effective five (5) days after the delivery of written notice thereof):

If to Seller:	InterContinental Hotels Group Three Ravinia Drive Suite 100 Atlanta, Georgia 30346-2121 Attention: Robert Chitty Telephone No.: (770) 604-5321 Telecopy No.: (770) 604-5075
With a copy to:	InterContinental Hotels Group Three Ravinia Drive Suite 100 Atlanta, Georgia 30346-2121 Attention: Legal Dept. - Paul Huang Telephone No.: (770) 604-2644 Telecopy No.: (770) 604-5075
With a copy to:	Alston & Bird LLP 1201 West Peachtree Street Atlanta, GA 30309-3424 Attention: Timothy J. Pakenham Telephone No.: (404) 881-7755 Telecopy No.: (404) 881-7777

-30-

If to Buyer:	Hospitality Properties Trust 400 Centre Street Newton, MA 02458 Attention: John Murray Telephone No.: (617) 964-8389 Telecopy No.: (617) 969-5730
With a copy to:	Sullivan & Worcester LLP One Post Office Square Boston, MA 02109 Attention: Warren M. Heilbronner Telephone No.: (617) 338-2946 Telecopy No.: (617) 338-2880

          14. General Provisions.

               14.1 Execution Necessary. This Agreement shall not be binding upon Seller or Buyer, respectively, until fully executed and delivered by a proper official of Seller, or Buyer, respectively, and no action taken by either of their representatives shall be deemed an acceptance of this Agreement until this Agreement has been so executed by them and delivered to each other.

               14.2 Counterparts. This Agreement may be executed in separate counterparts. It shall be fully executed when each party whose signature is required has signed at least one counterpart even though no one counterpart contains the signatures of all of the parties to this Agreement.

               14.3 Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Buyer shall not have the right to assign or delegate any right, duty or obligation of Buyer under this Agreement in whole or in part to any other party other than its affiliates without the prior written consent of Seller, which consent Seller may grant or withhold in its sole and absolute discretion, and any such assignment shall be null and void ab initio. Notwithstanding the foregoing, Buyer shall have the right to cause Seller to transfer the Company Shares or portions thereof to an affiliate of Buyer which is wholly owned by Buyer or wholly owned by the owners of Buyer, or to an affiliate which is owned, in part, by Buyer and which is controlled by Buyer as to property, operating and management issues, and which affiliate shall be designated in writing by Buyer, together with delivery to Seller of evidence reasonably satisfactory to Seller of the valid legal existence of Buyer’s assignee, its qualification (if necessary) to do business in the jurisdiction in which the Property is located and of the authority of Buyer’s affiliate to execute and deliver any and all documents required of Buyer under the terms of this Agreement, which items shall be received by Seller not less than three (3) Business Days prior to the Closing Date. Notwithstanding the foregoing, the exercise of such right by Buyer shall not relieve Buyer of any of its obligations and liabilities hereunder including obligations and liabilities which survive the Closing or the termination of this Agreement, nor shall any such assignment alter, impair or relieve such affiliate from the waivers, acknowledgements and agreements of Buyer set forth herein, all of

-31-

which are binding upon the affiliate(s) of Buyer. In the event of any permitted designation by Buyer, any affiliate shall assume any and all obligations and liabilities of Buyer under this Agreement but, notwithstanding such assumption, Buyer shall continue to be liable hereunder.

               14.4 Governing Law. This Agreement shall be governed by the laws of the State of New York.

               14.5 Entire Agreement. This Agreement and all the exhibits and schedules referenced herein and annexed hereto contain the entire agreement of the parties hereto with respect to the matters contained herein, and no prior agreement or understanding (including without limitation any letter of intent or similar proposals or correspondence between Buyer and Seller pertaining to any of the matters connected with this Transaction shall be effective for any purpose. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument signed by the party against whom the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.

               14.6 Time is of the Essence. TIME IS OF THE ESSENCE of the Transaction and this Agreement. If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regularly scheduled Business Day.

               14.7 Interpretation. The titles, captions and paragraph headings are inserted for convenience only and are in no way intended to interpret, define, limit or expand the scope or content of this Agreement or any provision hereof. Even though the defined term for a party hereunder may be used in the singular in this Agreement such term shall also include any other person or entity jointly and severally included within such definition. If any time period under this Agreement ends on a day other than a Business Day, then the time period shall be extended until the next Business Day. This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing this Agreement to be drafted. If any words or phrases in this Agreement shall have been stricken out or otherwise eliminated, whether or not any other words or phrases have been added, this Agreement shall be construed as if the words or phrases so stricken out or otherwise eliminated were never included in this Agreement and no implication or inference shall be drawn from the fact that said words or phrases were so stricken out or otherwise eliminated.

               14.8 Further Assurances. Each party agrees to execute and deliver to the other such further documents or instruments as may be reasonable and necessary in furtherance of the performance of the terms, covenants and conditions of this Agreement; provided, however, that the execution and delivery of such documents by such party shall not result in any additional liability or cost to such party.

               14.9 Exclusive Application. Nothing in this Agreement is intended or shall be construed to confer upon or to give to any person, firm or corporation other than Buyer and Seller (and their permitted successors or assigns) hereto any right, remedy or claim under or by

-32-

reason of this Agreement. Except as set forth herein, all terms and conditions of this Agreement shall be for the sole and exclusive benefit of the parties hereto and may not be assigned.

               14.10 Partial Invalidity. If all or any portion of any of the provisions of this Agreement shall be declared invalid by Laws applicable thereto, then the performance of said offending provision shall be excused by the parties hereto; provided, however, that, if the performance of such excused provision affects any material aspect of this Transaction, the party for whose benefit such excused provision was inserted may request that the other party enter into a modification or separate agreement which sets forth in valid fashion the substance of such offending provision in a manner which counsel to both parties determine is valid.

               14.11 No Implied Waiver. Unless otherwise expressly provided herein, no waiver by Seller or Buyer of any provision hereof shall be deemed to have been made unless expressed in writing and signed by such party. No delay or omission in the exercise of any right or remedy accruing to Seller or Buyer upon any breach under this Agreement shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring. The waiver by Seller or Buyer of any breach of any term, covenant or condition herein stated shall not be deemed to be a waiver of any other breach, or of a subsequent breach of the same or any other term, covenant or condition herein contained.

               14.12 Rights Cumulative. All rights, powers, options or remedies afforded to Seller or Buyer either hereunder or by Law shall be cumulative and not alternative, and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by Law, unless expressly provided to the contrary herein.

               14.13 Attorney’s Fees. Should either party employ an attorney or attorneys to enforce any of the provisions hereof or to protect its interest in any manner arising under this Agreement, or to recover damages for breach of this Agreement, the non prevailing party in any action pursued in a court of competent jurisdiction (the finality of which is not legally contested) agrees to pay to the prevailing party all reasonable costs, damages and expenses, including attorneys’ fees, expended or incurred in connection therewith.

               14.14 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, THE PROPERTY OR THE RELATIONSHIP OF BUYER AND SELLER HEREUNDER. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING (AND NOT BE MERGED THEREIN) OR ANY EARLIER TERMINATION OF THIS AGREEMENT.

               14.15 Facsimile Signatures. Signatures to this Agreement transmitted by telecopy or other electronic means shall be valid and effective to bind the party so signing. Each party agrees to promptly deliver an execution original to this Agreement with its actual signature to the other party, but a failure to do so shall not affect the enforceability of this Agreement, it being expressly agreed that each party to this Agreement shall be bound by its own telecopied or electronic signature and shall accept the telecopied or electronic signature of the other party to this Agreement.

-33-

               14.16 No Recordation. Seller and Buyer each agrees that neither this Agreement nor any memorandum or notice hereof shall be recorded and Buyer agrees (a) not to file any notice of pendency or other instrument (other than a judgment) against the Property or any portion thereof in connection herewith and (b) to indemnify Seller against all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller by reason of the filing by Buyer of such notice of pendency or other instrument. Notwithstanding the foregoing, (a) if the same is permitted pursuant to applicable Laws, Buyer shall be entitled to record a notice of lis pendens against the Owned Real Property if Buyer is entitled to seek (and is actually seeking) specific performance of this Agreement by Seller in accordance with the terms of Paragraph 12.2 hereof, and (b) Buyer shall be entitled to file a copy of all or a portion of this Agreement (or make specific reference hereto) with the Securities and Exchange Commission in connection with any of its filings required by Law or regulation pertaining thereto.

               14.17 Exhibits and Schedules. All exhibits and schedules referred to in, and attached to, this Agreement are hereby incorporated herein in full by this reference.

               14.18 Jurisdiction. With respect to any suit, action or proceedings relating to the Transaction, this Agreement, the Property or the relationship of Buyer and Seller hereunder (“Proceedings”) each party irrevocably (a) submits to the exclusive jurisdiction of the Courts of the County of New York, State of New York and the United States District Court for the Southern District of New York, and (b) waives any objection which it may have at any time to the laying of venue of any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party. The provisions of this Paragraph shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement.

               14.19 Currency. Each reference herein to any dollar amount is a reference to such amount of United States dollars.

          15. Additional Termination Rights. (a) If the Transaction has not occurred on or prior to December 31, 2005, other than by reason of a default by a party hereto, and unless mutually extended by the parties hereto, this Agreement shall automatically Terminate and this Agreement shall be of no force and effect between the parties except for those obligations which survive such termination. (b) If any condition to the Closing is not satisfied or waived by March 31, 2005 either party, so long as such party is not in default hereunder, may Terminate this Agreement by written notice to the other party (subject to any rights of such non-defaulting party hereunder) and this Agreement shall be of no force and effect between the parties except for those provisions which expressly survive such termination. (c) On or before the Closing Date, if the Purchase and Sale Agreement is terminated then this Agreement shall also Terminate, provided however that if such termination results from (i) a default by a “Seller” thereunder, then Buyer shall have all of its rights hereunder against Seller as if Seller was in default hereunder; or (ii) a default by the “Buyer” thereunder, then Seller shall have all of its rights hereunder against Buyer as if Buyer was in default hereunder.

          16. Limitation of Liability. No advisor, trustee, director, officer, employee, beneficiary, shareholder, member, partner, participant, representative or agent of Buyer or Seller

-34-

shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into pursuant to the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times heretofore or hereafter. In no event shall any of Buyer or Seller be entitled to punitive, consequential or special damages under this Agreement, and each of Buyer and Seller hereby waives any right to claim, pursue or collect same. The provisions of this Paragraph shall survive any termination of this Agreement and the Closing hereunder.

          17. Conflicting Terms. Seller acknowledges that certain provisions in this Agreement and the Indemnification Agreement may be inconsistent or may conflict with one another. In the event of an inconsistency or conflict between the terms of this Agreement and the terms of the Indemnification Agreement, the terms of the Indemnification Agreement shall control.

          18. Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING BUYER, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT, AND SELLER HEREBY AGREES THAT, THE NAME “HPT IHG-2 PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF BUYER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, BUYER. ALL PERSONS DEALING WITH BUYER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF BUYER, FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

[Signatures on the Following Page]

-35-

     IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement under seal as of the day and year first above written.

SELLER: SIX CONTINENTS INTERNATIONAL HOLDINGS B.V., a Netherlands closed limited liability company
By:
	Robert Chitty, its attorney-in-fact
	pursuant to a power of attorney dated July 12, 2004
BUYER: HPT IHG-2 PROPERTIES TRUST, a Maryland real estate investment trust
By:
	Name:	John G. Murray
	Title:	President

[Signature Page to Amended and Restated Stock Purchase Agreement]

SCHEDULE A

attached to and made a part of that certain:
Amended and Restated Stock Purchase Agreement
by and between

SIX CONTINENTS INTERNATIONAL HOLDINGS B.V.

as Seller

and

HPT IHG-2 PROPERTIES TRUST

as Buyer

Dated as of February 9, 2005

          “Adjusted Purchase Price” is defined in Paragraph 3 of this Agreement.

          “Agreement” shall mean this Amended and Restated Stock Purchase Agreement between Seller and Buyer including all schedules, exhibits and other attachments hereto, and documents incorporated herein by reference.

          “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which banking institutions in The Commonwealth of Massachusetts or the State of Georgia are authorized by law or executive action to close.

          “Buyer” shall mean the buyer referenced in the first paragraph of this Agreement.

          “Buyer’s Diligence Reports” shall mean the results of any examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations and/or investigations prepared by or for or otherwise obtained by Buyer or Buyer’s Representatives in connection with Buyer’s Due Diligence.

          “Buyer’s Knowledge” or “Buyer Knows” shall mean the actual (and not the imputed or constructive) knowledge of John Murray of Buyer.

          “Buyer’s Representatives” shall mean Buyer’s officers, employees, agents, advisors, representatives, attorneys, accountants, consultants, lenders, investors, contractors, architects and engineers.

          “Closing” shall mean the consummation and closing of the Transaction.

          “Closing Agent” shall mean the Title Company or such other party as is selected by Buyer and Seller to fund the Closing in escrow.

          “Closing Date” shall mean the date on which the Closing occurs, which shall be on or before the Closing Deadline as defined in Paragraph 1.1 of this Agreement.

          “Closing Deadline” is defined in Paragraph 1.1 of this Agreement.

          “Closing Documents” shall mean the documents and instruments delivered by Buyer and Seller, in order to consummate the Transaction.

          “Company” is defined in the Recitals to this Agreement.

          “Company Shares” is defined in the Recitals to this Agreement.

          “Condemnation Proceeding” shall mean any proceeding in condemnation, expropriation, eminent domain or any written request for a conveyance in lieu thereof, or any notice that such proceedings have been or will be commenced against any portion of the Property.

          “Confidential Materials” shall mean excerpts of any books, computer software, databases, records or files (whether in a electronic or printed format) that consist of or contain any of the following: appraisals; budgets; strategic plans for the Property; internal analyses; information regarding the marketing of the Property for sale; submissions relating to obtaining internal authorization for the sale of the Company Shares by Seller or any direct or indirect owner of any beneficial interest in Seller; attorney and accountant work product; attorney-client privileged documents; internal correspondence of Seller, any direct or indirect owner of any beneficial interest in Seller, the Company, or any of their respective affiliates and correspondence between or among such parties; or other information or materials in the possession or control of Seller, any direct or indirect owner of any beneficial interest in Seller, the Company or the Company’s property manager which such party deems proprietary or confidential.

          “Contracts” shall mean all contracts respecting leasing, management, maintenance or operation of the Real Property, including, but not limited to, equipment leases, agreements with respect to building systems, service, construction, and maintenance contracts, but specifically any license to the Company of computer hardware, software or systems. A summary list of the Contracts (including identity of contract parties and type of service) is shown on Exhibit L and made a part hereof.

          “Designated Representatives” shall mean Robert Chitty, Robert Gunkel and Thomas Brettschneider, each of IHG.

          “Due Diligence” shall mean the investigation by Buyer and Buyer’s Representatives of the feasibility and desirability of acquiring the Property as a result of Buyer’s purchase of the Company Shares, including all audits, surveys, examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations, investigations and verifications with respect to the Property, the Property Documents, title matters, applicable land use and zoning Laws and other Laws applicable to the Property, the physical condition of the Property, the economic status of the Property, and other information and documents regarding the Property, including, but not limited to, investigations of the legal and physical status of the Property by such consultants,

-2-

engineers, architects and/or entomologists as Buyer requires, tests and assessments with respect to environmental matters, soil tests, asbestos analysis, mold analysis, structural review, examination of title to the Property, preparation of a Survey of the Land, and verification of all information made or to be made available to Buyer with respect to Property.

          “Due Diligence Deadline” is defined in Paragraph 1.1 of this Agreement.

          “Effective Date” shall mean December 17, 2004, the date of the Original Agreement.

          “Excluded Property” shall mean the assets to be transferred by the Company pursuant to clause (1) of Paragraph 5.1(K).

          “GAAP” is defined in Paragraph 8.1(Y) of this Agreement.

          “Governing Documents” shall mean the certificate or articles of incorporation, bylaws, declaration of trust, formation or governing agreement or other charter documents or organizational or governing documents or instruments.

          “Ground Lease” shall mean the ground leases granting the Company’s interest in the Leased Real Property.

          “Ground Lease Estoppel Certificate” is defined in Paragraph 5.1(N) of this Agreement.

          “HHF” is defined in the Recitals to this Agreement.

          “Hotel” is defined in the Recitals to this Agreement.

          “Hotel Lease Agreement” is defined in the Recitals to this Agreement.

          “IHG” shall mean InterContinental Hotels Group PLC, a corporation organized under the laws of the United Kingdom.

          “Indemnification Agreement” is defined in the Recitals to this Agreement.

          “Land” shall mean those certain tracts or parcels of land (whether owned or leased), more particularly described on Exhibit A.

          “Law” shall mean any federal, state, Commonwealth of Puerto Rico, local or foreign law, statute, ordinance, code, order, decrees, or other governmental rule, regulation or requirement, including common law.

          “Lease Recording Charges” is defined in Paragraph 6.2(H).

          “Leased Real Property” is defined in the Recitals to this Agreement.

          “Leases” shall mean all leases, subleases, rental agreements and other occupancy agreements for the use or occupancy of any portion of the Real Property, or improvements

-3-

located thereon, if any, together with all amendments to, modifications of, renewals and extensions thereof, but excluding the Hotel Lease Agreement.

          “Lessee” is defined in the Recitals to this Agreement.

          “Lessor” is defined in the Recitals to this Agreement.

          “Liabilities” shall mean any and all direct or indirect damages, demands, claims, payments, problems, conditions, obligations, actions or causes of action, assessments, losses, liabilities, costs and expenses of any kind or nature whatsoever, including, without limitation, penalties, interest on any amount payable to a third party, lost income and profits, and any legal or other expenses (including, without limitation, reasonable attorneys’ fees and expenses) reasonably incurred in connection with investigating or defending any claims or actions, whether or not resulting in any liability. In no event shall “Liabilities” include the right of the Buyer, Seller or the Company to collect punitive, consequential, or special damages under this Agreement, and each of Buyer, Seller and the Company, by and through the Seller, waive any right to collect the same.

          “Lien” shall mean any mortgage, charge, deed of trust, security deed, lien, judgment, pledge, conditional sales contract, security interest, past-due Taxes, past-due assessments, contractor’s lien, materialmen’s lien, construction lien, judgment or similar encumbrance against the Property or the Company Shares of a monetary nature.

          “Major Event” is defined in Paragraph 9.1 of this Agreement.

          “Other Interests” shall mean the following other interests of Seller in and to the Real Property, Leases, Contracts, or Personal Property, or pertaining thereto: (a) to the extent that the same are in effect as of the Closing Date, any licenses (but excluding any franchise license rights or liquor licenses), permits and other written authorizations necessary for the use, operation or ownership of the Real Property, and (b) any guaranties and warranties in effect with respect to any portion of the Real Property or the Personal Property as of the Closing Date.

          “Owned Real Property” is defined in the Recitals to this Agreement.

          “Permit” is defined in Paragraph 8.1(AA) of this Agreement.

          “Permitted Title Exceptions” shall mean, subject to Buyer’s rights to review and make objection to the status of title and survey as set forth in this Agreement, and the right of Buyer to Terminate this Agreement pursuant to Paragraph 4.5 if the Due Diligence is not satisfactory, the following: (a) the Leases and any new Leases entered into between the Effective Date and the Closing Date in accordance with the terms of this Agreement; (b) all Liens for real estate Taxes and assessments not yet due and payable as of the Closing Date; (c) local, state, federal or foreign (if applicable) zoning and building Laws; (d) the Record Exceptions disclosed by the Title Commitment and not Removed or required to be Removed as provided in Paragraph 4 hereof; (e) the state of facts disclosed by a current Survey of the Land obtained by Buyer and not Removed or required to be Removed as provided in Paragraph 4 hereof; and (f) any other matters approved as Permitted Title Exceptions in writing by Buyer prior to Closing or deemed approved as Permitted Title Exceptions pursuant to this Agreement.

-4-

          “Personal Property” shall mean (a) all Property Documents; (b) all keys and combinations to all doors, cabinets, safes, enclosures and other locking items or areas on or about the Property and any improvement on the Land; (c) the food and beverage inventory of the Hotel; and (d) all tangible personal property, including, but not limited to, all “Inventories”, as such term is defined in the Uniform System of Accounts, and all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery, equipment, specialized hotel equipment and other tangible personal property, in each case, owned or leased by Seller (in its own name or by and through the Company) in connection with the ownership, operation or maintenance of the Hotel, including without limitation all china, glassware, silverware, linens, towels, curtains, uniforms, works of art, engineering, maintenance, and housekeeping supplies, draperies, materials and carpeting, used or intended for use, but not for sale, in connection with the operation of the Hotel, all equipment used in the operation of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners, lobby, reservation desk and all supplies, merchandise, food and beverages held for sale in connection with the operation of the Hotel, which are on hand on the Effective Date; but specifically excluding (i) any Confidential Materials and (ii) any computer hardware, software, or system that is licensed to Seller.

          “PR Code” is defined in Paragraph 6.2P of this Agreement.

          “Proceedings” is defined in Paragraph 14.18 of this Agreement.

          “Property” shall mean the Real Property, the Leases, the Contracts, the Personal Property and the Other Interests, but specifically excluding any right or interest to any liquor license rights and intellectual property.

          “Property Documents” shall mean all books, records and files of Seller and the Company and of the management agent for the Property related to the Property (other than Confidential Materials; provided, however that Seller shall make available extracts of non-confidential information contained in such books, records or files).

          “Purchase and Sale Agreement” is defined in the Recitals to this Agreement.

          “Purchase Price” is defined in Paragraph 3 of this Agreement.

          “Real Property” shall mean the Land, including, without limitation, (a) the Hotel and any other buildings located on the Land and all other improvements, (b) all easements and rights-of-way, appurtenant to the Land and other easements, rights-of-way, grants of right, licenses, privileges or other agreements for the benefit of, belonging to or appurtenant to the Land whether or not situated upon the Land, including, without limitation, signage rights and parking rights or agreements, all whether or not specifically referenced on Exhibit A, (c) all mineral, oil and gas rights, riparian rights, water rights, sewer rights and other utility rights allocated to the Land, (d) all right, title and interest, if any, of the owner of the Land in and to any and all strips and gores of land located on or adjacent to the Land, and (e) all right, title and interest of the owner of the Land in and to any roads, streets and ways, public or private, open or proposed, in front of or adjoining all or any part of the Land and serving the Land.

-5-

          “Record Exceptions” shall mean all instruments recorded in the real estate records of the locality in which the Land is located which affect the status of title to the Real Property or which affect the recordation of any Ground Lease with a first priority rank on the Leased Real Property.

          “Remove” with respect to any exception to title shall mean that Seller causes the Title Company to remove or affirmatively insure over the same as an exception to the Title Policy, without any additional cost to Buyer, whether such removal or insurance is made available in consideration of payment, bonding, indemnity of Seller or otherwise.

          “Required Removal Items” shall mean, collectively, any Title Objections to the extent (and only to the extent) that the same (a) have not been caused by Buyer or any Buyer’s Representatives, and (b) are either: (i) Liens evidencing monetary encumbrances (other than liens for general real estate Taxes or assessments not yet due and payable) which can be Removed by payment of liquidated amounts, (ii) liens or encumbrances (including, but not limited to, monetary liens) created by Seller or the Company after the Effective Date and not consented to or deemed consented to by Buyer; or (iii) items which Seller has agreed to Remove pursuant to Paragraph 4.3 of this Agreement.

          “Securities Act” is defined in Paragraph 5.4 of this Agreement.

          “Securities Exchange Act” is defined in Paragraph 5.4 of this Agreement.

          “Seller” shall mean the Seller referenced in the first paragraph of this Agreement.

          “Seller Parties” shall mean and include, collectively, (a) Seller; (b) the Company (c) counsel to Seller and/or the Company; (d) any Broker retained by Seller or the Company; (e) the Company’s property manager; (f) any direct or indirect owner of any beneficial interest in Seller; (g) any officer, director, employee, or agent of Seller or the Company, or their counsel; and (h) any other entity or individual affiliated or related in any way to any of the foregoing.

          “Seller Related Parties” is defined in the Recitals to this Agreement.

          “Seller Related Party” is defined in the Recitals to this Agreement.

          “Seller’s Broker” shall mean The Plasencia Group, Inc.

          “Seller’s Knowledge” shall mean the actual (and not the imputed or constructive) knowledge of the Designated Representatives.

          “Seller’s Warranties” shall mean Seller’s representations and warranties set forth in this Agreement as the same may be modified or waived by Buyer pursuant to this Agreement.

          “Special Partnership Election” is defined in Paragraph 6.2P of this Agreement.

          “Survey” shall mean a survey of the Land obtained by Buyer pursuant to Paragraph 4.

-6-

          “Tax” shall mean any and all federal, state, Commonwealth of Puerto Rico, local or non-U.S. taxes, fees, levies, duties, tariffs, imposts, and other similar charges on or with respect to net income, alternative or add-on minimum, gross income, gross receipts, sales, use, ad valorem, franchise, capital, paid-up capital, profits, greenmail, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, Section 59A of the Internal Revenue Code of 1986, as amended, or windfall profit tax, custom, duty, value added, volume of business or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any governmental entity responsible for the imposition of any such tax.

          “Tax Return” shall mean any return, claim, election, information return, declaration, report, statement and other document required to be filed in respect of Taxes.

          “Tenant” shall mean a tenant under a Lease; collectively, all tenants under the Leases are referred to as the “Tenants.”

          “Tenant Estoppel Certificate” is defined in Paragraph 5.1(N).

          “Terminate” shall mean the termination of this Agreement, by Buyer or Seller as applicable as set forth in this Agreement, in which event thereafter neither party hereto shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth in this Agreement expressly survives termination hereof.

          “Title Commitment” shall mean the commitment of the Title Company to issue the Title Policy.

          “Title Company” shall mean Chicago Title Insurance Company.

          “Title Objections” shall mean any defects in title (including any Record Exceptions which are not acceptable to Buyer) or Survey (including the description of the Land) which may be revealed by Buyer’s examinations thereof to which Buyer timely objects in accordance with the terms of Paragraph 4.3.

          “Title Policy” shall mean the ALTA Owner’s Policy of Title Insurance (or such other comparable form of title insurance policy as is available in the jurisdiction in which the Property is located) issued by the Title Company in the amount of the Purchase Price and in the form of the Title Commitment, and containing, unless prohibited by applicable statutes or regulations, such non-imputation and such other endorsements reasonably required by Buyer.

          “Transaction” shall mean the purchase of the Company Shares by Buyer and the other transactions contemplated by this Agreement.

          “Uniform System of Accounts” shall mean the Uniform System of Accounts for the Lodging Industry, prepared by The Hotel Association of New York City, Inc., in effect as of the date hereof.

          “Unsuitable for Its Permitted Use” shall mean a state or condition of the Hotel such that (a) following any damage or destruction to the Hotel, the Hotel cannot be operated in the

-7-

good faith judgment of Buyer or Seller on a commercially practicable basis and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such damage or destruction within twelve (12) months following such damage or destruction or such shorter period of time as to which business interruption insurance is available to cover rent and other costs related to the Hotel following such damage or destruction, or (b) as the result of a partial taking by condemnation, the Hotel cannot be operated, in the good faith judgment of Buyer or Seller on a commercially practicable basis in light of then existing circumstances.

          “Working Capital” shall mean cash on deposit in same day funds with a U.S. bank of national reputation reasonably acceptable to Buyer, free and clear of all Liens.

-8-

EX-4.35

Exhibit 4(c)(v)

THIS AGREEMENT is made on the 13^th day of December 2004 BETWEEN SIX CONTINENTS PUBLIC LIMITED COMPANY whose registered office is situated at 67 Alma Road, Windsor, Berkshire SL4 3HD (hereinafter called “the Company”) of the first part and Andrew Cosslett of Gate House, Pollards Park, Nightingale Lane, Chalfont St Giles, HP8 4SN (hereinafter called “the Executive”) of the second part.

Words importing the singular include the plural and vice versa, words importing the gender include every gender and references to persons include bodies incorporate and unincorporate.

     NOW IT IS HEREBY AGREED as follows :

1. The Executive warrants that he is not prevented from taking up and performing the employment contemplated by this Agreement as a result of any obligation or duty owed to a third party whether contractual or otherwise but excluding any such obligation or duty fully disclosed by the Executive to the Company prior to the date of this Agreement.

2. 2.1 Subject to clause 2.2 below, the Company will employ the Executive and the Executive will serve the Company as Chief Executive of Intercontinental Hotels Group PLC and the Executive shall perform the duties and exercise the powers which may from time to time be reasonably assigned to or vested in him by the Directors of Intercontinental Hotels Group PLC or a duly authorised committee thereof (hereinafter called “the Board”) including such duties and powers in relation to any Associated Company (as hereinafter defined) of the Company (hereinafter together with the Company called “the Group” and the expression “Group Company” shall mean a member of the Group) as the Board shall reasonably cause to be assigned to or vested in him.

2.2 Notwithstanding any other provision of this Agreement, during the Restraint Period the Executive shall not have assigned to him any duties or powers relating to the Britvic Group nor shall he perform any duties or exercise any powers relating to the Britvic Group nor shall he be engaged or be concerned in the business of the Britvic Group.

For the purposes of this clause 2.2:

(i)	“Britvic Group” shall mean Britannia Soft Drinks Limited and its subsidiaries (applying the definition of “subsidiary” set out in Section 736 of the Companies Act 1985); and
(ii)	“Restraint Period” shall be the period from the Commencement Date until 26 weeks thereafter.

3. 3.1 This Agreement shall commence on 31^st March 2005 or such earlier date as the parties shall agree (the “Commencement Date”) and, subject to the provisions for earlier termination herein contained, continue until terminated at any time by:

3.1.1 at any time before the first anniversary of the Commencement Date, the Company giving to the Executive written notice expiring on or at any time after the second anniversary of the Commencement Date; or

3.1.2 at any time on or after the first anniversary of the Commencement Date, the Company giving to the Executive not less than twelve months’ previous written notice; or

3.1.3. the Executive giving to the Company not less than six months’ previous written notice; or

3.1.4 the Executive reaching age 60.

With reference to sub-Clauses 3.1.1, 3.1.2 and 3.1.3 the Company shall have the absolute discretion to waive the requirement for the Executive to work during his notice period for a maximum period of six months and the Executive agrees that during any period in which the Company has waived this requirement (a “Garden Leave Period”) he shall undertake such work as the Company may from time to time reasonably require of him and shall not, unless required by the Company, enter or attend the premises of the Company or any other Group Company or contact or have any communication with any employee, officer, director, agent or consultant of the Company or any other Group Company in relation to the business of the Company or any other Group Company. The Company agrees that at the end of the Garden Leave Period it will not require the Executive to return to work for the remainder of his notice period.

2

4.	The Executive’s normal place of work shall be 67 Alma Road, Windsor, Berkshire but the Executive shall work at such location or locations as shall be necessary or convenient for the performance of his duties pursuant to Clause 2.
5.	5.1 The Executive’s employment is subject to the Terms and Conditions of Employment contained in the Employee Handbook, of which the Executive hereby acknowledges he has a full knowledge and understanding. Copies of this document may be obtained from Human Resources. The Company undertakes that any changes in such Terms and Conditions shall be updated in the Handbook.
	5.2     In the event of any conflict arising between this Agreement and the Memorandum of Terms and Conditions of Employment contained in the Handbook the terms of this Agreement shall prevail.
	5.3     Details of disciplinary and grievance procedures are contained in the Handbook. The Executive should apply to the Chairman of the Board if he is dissatisfied with any disciplinary decision relating to him. If during the course of employment the Executive should have any grievance in connection with that employment, he should in the first instance raise it with the Chairman of the Board..
6.	6.1 Subject to the Company’s right to suspend the Executive under sub- Clauses 3.1 and 16.10, the Executive shall unless prevented by ill-health throughout the said term devote the whole of his working time under this Agreement, and his attention and abilities to the business of the Group except as provided in sub-Clause 6.2 below and shall obey the reasonable and lawful orders from time to time of the Board and in all respects conform to and comply with the directions and requests made by the Board and shall well and faithfully serve the Group and use his best endeavours to promote the interests thereof.
	6.2     The Executive shall not without the consent of the Company (such consent not to be unreasonably withheld) be directly or indirectly engaged or concerned or interested in any other business (which consent may be given subject to such terms or conditions which the Company may require, the breach of which shall be deemed to be a breach of this Agreement). This sub-clause shall also apply to any other activity during hours in which the Executive would not normally be engaged in duties on the Company’s behalf. However, the Executive may be the holder of not in excess of five (5) per cent, of the outstanding voting shares of any publicly traded company.

3

	6.3     The Executive shall be entitled to purchase goods or services from the companies within the Group with the benefit of such discounts and commissions as are from time to time authorised by the Executive Committee.
	6.4     As soon as reasonably practicable after the Executive becomes aware of any wrongdoing by any employee of any Group Company where the Executive reasonably concludes that the wrongdoing is sufficiently serious the Executive will bring the wrongdoing to the attention of the Executive Committee.
7.	7.1     Subject as hereinafter provided the Executive shall during the continuance of this Agreement be remunerated for his services under this Agreement (inclusive of any remuneration to which he may be entitled as an officer of the Company or any company within the Group) by the payment of an annual gross salary of £650,000 per annum (or such higher amount as may be agreed between the Board and the Executive) payable not less frequently than monthly in arrears. In the event of any increase of salary being so agreed the increase shall thereafter have effect as if it were specifically provided for as a term of this Agreement.
	7.2     Any advance of a cash float to cover business expenses or an advance of pay which has not been recovered will be repayable by the Executive in the event of the termination of this employment. Any moneys repayable will be deducted from the outstanding final salary payment or holiday pay and any shortfall will be recoverable from the Executive.
8.	In addition to the said fixed salary the Executive shall be reimbursed by the Company such travelling general and entertainment expenses as shall properly be incurred by and properly claimed by him and vouched for in connection with the Group’s business.
9.	The Executive shall be entitled throughout the term of this Agreement to the following benefits :
	9.1     Use of a suitable motor car as approved by the Company for use in connection with the performance of his duties and for his own personal and private use, all costs to be borne by the Company except fuel costs incurred during holidays outside the United Kingdom.
	The Executive is to ensure that the motor car is at all times in a proper state and has a current MOT Test Certificate and that in connection with its use

4

he shall at all times observe Company car user guidelines and be the holder of a proper driving licence.

9.2     Membership of the following Group schemes on such terms as are from time to time in force:

9.2.1     Intercontinental UK Executive Pension Plan — Final Salary Section (including the Intercontinental Executive Top Up Scheme) in respect of which a contracting-out certificate is in force for the said employment. Details of pension arrangements are contained in the current handbook on the Intercontinental Executive Pension Plan.

9.2.2     Intercontinental UK Private Healthcare Plan.

	9.3     Payment by the Company of up to two subscriptions to recognised professional bodies where such professional body is directly related to the Executive’s current job or to his normal professional skill.
10.	10.1     The Executive shall be entitled to five weeks’ paid holiday in each year at such time or times as may be agreed between him and the Company and shall also be entitled to all relevant Public and Bank Holidays in England and Wales.
	Holidays are earned on a monthly pro-rata basis by reference to the current holiday year. Holiday pay is based upon the gross salary of the Executive payable pursuant to sub-Clause 7.1 above. In the event that the Executive does not take 5 weeks holiday in any year, whatever the reason, he shall not be entitled to receive pay in lieu of holidays not taken. If the Executive leaves the Company he may receive payment for any pro-rata holiday entitlement earned but not taken for the current holiday year.
	10.2     The Executive will be required to work a minimum of 35 hours per week and such additional hours as the requirements of his duties dictate. There shall be no normal working hours and there shall be no entitlement to additional remuneration for any additional work undertaken by the Executive except and to the extent such remuneration may have been agreed between him and the Board.
11.	11.1     The Executive may during his employment have access to information about the business and finances of the Company and of each Associated Company and customers of the Company or any Associated Company and its and their dealings, transactions, affairs, plans and

5

proposals, all of which information is or may be secret or confidential and important to the Company and its Associated Companies and any such customers. In this Agreement such information is called “Confidential Information” and includes, without limitation, confidential or secret information relating to:-

11.1.1 ideas;

11.1.2 business methods;

11.1.3 finances;

11.1.4 prices;

11.1.5 business, financial, marketing, development or manpower plans;

11.1.6 customer lists or details;

11.1.7 computer systems and software;

11.1.8 know-how or other matters connected with the products or services manufactured, marketed, provided or obtained by the Company or its Associated Companies or any such customers.

11.2     The Executive shall not without the prior written consent of the Company other than in the proper performance of his duties either during his employment or at any time after its termination:-

11.2.1     disclose to any person (except to those authorised by the Company to know), or

11.2.2     use for his own purposes or for any purposes other than those of the Company, or

11.2.3     through any failure to exercise all due care and diligence, cause or permit any unauthorised disclosure of,

any Confidential Information save that these restrictions shall cease to apply to information which (otherwise than through the default of the Executive) becomes available to the public generally.

6

	11.3     All notes, memoranda, papers, documents, correspondence and writing (which shall include information recorded or stored in writing or on magnetic tape or disc or otherwise recorded or stored for reproduction whether by mechanical or electronic means and whether or not such reproduction will result in a permanent record being made) which from time to time may be in the possession of the Executive (whether made by the Executive or not) relating to the business of the Company or its Associated Companies shall be and remain the property of the Company or Associated Company to whose business they relate and shall be delivered by the Executive to the Company or Associated Company to which they belong immediately upon request and in any event upon termination of the Executive’s employment and the Executive shall not make or keep any copies or extracts of such notes, memoranda, records, papers, documents, correspondence and writing.
	11.4     The provisions of sub-Clauses 11.1, 11.2 and 11.3 shall apply mutatis mutandis in relation to each of the companies within the Group to trade secrets or confidential information which the Executive may have received or obtained while in the service of the Company and the Executive will upon the request of any such company enter into a separate agreement or undertaking with such company to the like effect.
	11.5     Nothing in this Agreement will prevent the Executive from making a “protected disclosure” in accordance with the provisions of the Employment Rights Act 1996 (as amended by the Public Interest Disclosure Act 1998).
12.	Where deemed necessary by the Company or statute, the Executive should at all times during the period of his employment with the Company (hereinafter called “the Employment”) maintain his membership, where appropriate, of all professional, trade and other bodies necessary for the full performance of his duties hereunder.
13.	13.1     If the Executive (whether alone or with others) shall at any time during the period of the Employment make an invention (whether or not patentable) within the meaning of the Patents Act 1977 (hereinafter called “Invention”) relating to or capable of being used in the business of the Company or any other member of the Group he shall promptly disclose to the Company full details thereof to enable the Company to assess the Invention and to determine whether under the applicable law the Invention is the property of the Company provided that any Invention which does not belong to the Company shall be treated as confidential by the Company.

7

13.2     If any Invention belongs to the Company or any Associated Company the Executive shall consider himself as a trustee for the Company or any Associated Company (as the case may be) in relation to each such Invention and shall, at the request and expense of the Company, do all things necessary to vest all right, title and interest in any such Invention in the Company or any Associated Company (as the case may be) or its nominee absolutely as legal and beneficial owner and to secure and preserve full patent or other appropriate forms of protection therefore in any part of the world.

13.3     If any Invention does not belong to the Company or any Associated Company, the Company shall have the right to acquire for itself or its nominee the Executive’s rights therein within three months after disclosure pursuant to sub-Clause 13.1 on fair and reasonable terms to be agreed or in default of agreement within one month to be acquired at a price to be determined by a single expert to be nominated in default of agreement, at the request of either the Company or the Executive, by the President for the time being of the Chartered Institute of Patent Agents or in default by the Courts.

13.4     If the Executive (whether alone or with others) shall at any time during the period of the Employment create or make any discovery, design or other work (whether registerable or not and whether or not a copyright work), which is not an Invention or made or created by the Executive and wholly unconnected with the Employment (hereinafter called “Works”), the Executive shall forthwith disclose to the Company full details thereof and shall consider himself as a trustee for the Company in relation to all such Works. The Executive shall at the request and expense of the Company execute and do all instruments and things necessary to vest all right, title and interest in and to any such Works in the Company or its nominee absolutely as legal and beneficial owner.

13.5     In consideration of the Company entering into this Agreement the Executive hereby assigns to the Company by way of assignment of future copyright the copyright, design and other proprietary rights if any for the full term thereof throughout the world in respect of all copyright works created or made by the Executive during the period of the Employment (except only those copyright works created or made by the Executive and wholly unconnected with the Employment).

13.6     If the Executive (whether alone or with others) shall at any time during the period of the Employment generate any idea, method or information relating to the business, finances or affairs of the Company or

8

capable of use by the Company which is not an Invention or Works (hereinafter called “Information”) he shall promptly disclose to the Company full details thereof and the Executive acknowledges such Information belongs to the Company.

	13.7     The Executive hereby irrevocably waives any rights the Executive may have under Chapter IV (moral rights) of Part I of the Copyright, Designs and Patents Act 1988 and any foreign corresponding rights in respect of all Works.
	13.8     Rights and obligations under Clause 13 shall continue in force after the termination of this Agreement in respect of each Invention, Works and Information and shall be binding upon the representatives of the Executive.
14.	If the Executive shall unreasonably have refused or failed to agree or accept employment which is (a) suitable for him having regard to his status and responsibilities and (b) is offered to him on terms (whether financial or otherwise) no less favourable to him than the terms currently in effect under this Agreement either by:

(a)	a company or person which has acquired or agreed to acquire the whole or a substantial part of the undertaking and assets of the Company; or
(b)	a company or person which shall own or have agreed to acquire a controlling interest in the equity share capital of the Company; or
(c)	any subsidiary or associate of either of the above; or
(d)	any subsidiary or associated company of the Company; then the Executive shall have no claim against the Company by reason of the subsequent termination of this Agreement.

15.	The Executive may be required by the Company at any time to undergo an appropriate medical examination as determined by a doctor appointed by the Company.
16.	16.1     The appointment of the Executive hereunder shall be subject to termination by the Company at the latter’s absolute discretion:-

16.1.1 By six months’ notice in writing given at any time while the Executive is incapacitated by reason of ill-health or otherwise from

9

performing his duties hereunder having been so incapacitated for a continuous period of not less than three hundred and sixty five days or for more than one period of sickness totalling three hundred normal working days or more in any one period of one hundred and four weeks and, subject to the Company being satisfied by medical opinion, the provisions of the Intercontinental Executive Pension Plan for early retirement due to ill-health shall apply.

16.1.2 Forthwith by summary written notice if the Executive shall have committed any material breach or repeated or continued (after written warning) any breach of his obligations hereunder (whether expressed or implied) or shall have been guilty of conduct which has brought himself or any company within the Group into disrepute or shall have been bankrupted or compounded with his creditors generally.

16.2	If during the continuance of his employment the Executive shall be incapacitated as referred to in sub-Clause 16.1.1 he shall receive the full amount of his salary hereunder and all other benefits to which he is entitled for the first twenty-six weeks of such incapacity, one half of such salary and the full amount of such benefits for the next thirteen weeks and thereafter the provision of salary and benefits shall be at the discretion of the Company. The Board may require the Executive to furnish satisfactory medical evidence of such incapacity and the cause thereof.
16.3	In the case of termination under sub-Clause 16.1 the Company shall have the absolute discretion to waive the requirement for the Executive to work during his notice period.
16.4	The Executive’s office as a director of Intercontinental Hotels Group PLC or any other Group Company is subject to the Articles of Association of the relevant company (as amended from time to time). If the provisions of this Agreement conflict with the provisions of the Articles of Association, the Articles of Association will prevail but without prejudice to any rights the Executive has or may have to compensation under this Agreement or otherwise.
16.5	The Executive must resign from any office held in any Group Company (other than as a director of Intercontinental Hotels Group PLC) if he is asked to do so by the Company.
16.6	If the Executive does not resign as an officer of a Group Company, having been requested to do so in accordance with sub-Clause 16.5, the Company

10

will be appointed as his attorney to effect his resignation. By entering into this Agreement, the Executive irrevocably appoints the Company as his attorney to act on his behalf to execute any document or do anything in his name necessary to effect his resignation in accordance with sub-Clause 16.5. If there is any doubt as to whether such a document (or other thing) has been carried out within the authority conferred by this sub-Clause 16.6, a certificate in writing (signed by any director or the secretary of the Company) will be sufficient to prove that the act or thing falls within that authority.

16.7	The termination of any directorship or other office held by the Executive (other than his directorship of Intercontinental Hotels Group PLC) will not terminate the Executive’s employment or amount to a breach of terms of this Agreement by the Company.
16.8	During his employment the Executive will use his best endeavours not to act or fail to do any act within his control which could cause him to be disqualified from continuing to act as a director of any Group Company.
16.9	The Executive must not, during the period of his employment under this Agreement, resign his office as a director of any Group Company without the consent of Intercontinental Hotels Group PLC (such consent not be unreasonably withheld) except that if the Executive has reasonable cause he may resign his office as a director of any Group Company which is not Intercontinental Hotels Group PLC or, a subsidiary of Intercontinental Hotels Group PLC (as defined in section 735 of the Companies Act 1985) or a company falling within the terms of Clause 21.2 or Clause 21.3 hereof.
16.10	Without prejudice to the Executive’s right to remuneration and other benefits hereunder if the Executive is suspected of gross misconduct, the Company shall have the right at any time to require the Executive not to attend at any place of work or otherwise to suspend the Executive from the performance of any duties under this Agreement and during the period of such suspension the Company may assign his duties, titles, or powers to another. The Company undertakes to conduct the investigation into any such misconduct expeditiously and inform the Executive regularly as to its progress.
17.	The expiration or determination of this Agreement for any reason shall not affect the obligations entered into hereunder on the part of the Executive and expressed to operate or have effect thereafter.

11

18.	18.1 In this Clause 18 the expressions below have the meaning ascribed to them respectively below:
	“Competing Enterprise” shall mean any person, corporation, partnership, venture or other entity (“entity”) which engages either (i) in the business of managing, franchising, running, leasing, owning or joint venturing at least 50 hotels, or (ii). which purchases or take options on hotel rooms (“hotel booking”) and in the case of (i) and (ii) the entity’s shares are publicly traded and such entity has a market capitalisation of not less than one billion pounds sterling (for these purposes “market capitalisation” shall be the aggregate market value of the ordinary shares of the entity);
	“Garden Leave Period” has the meaning given in sub-Clause 3.1;
	“Relevant Period” means the period of six months beginning with the date the Executive’s employment terminates but reduced by one day for each day of a Garden Leave Period;
	“Restricted Activities” means executive, managerial, directorial, administrative, strategic, business development or supervisory responsibilities and activities relating to all aspects of hotel ownership, hotel management, hotel franchising, hotel joint-venturing or hotel booking but excluding (a) the Executive’s employment by a unit of a Competing Enterprise which unit is not itself engaged in Restricted Activities, so long as the Executive’s duties and responsibilities with respect to such employment are limited to the business of such unit, or (b) the Executive’s employment by an entity which includes a Competing Enterprise where such Competing Enterprise produces revenues that account for less than 5% of the gross revenues of the entity and such Competing Enterprise is not a material part of the Executive’s responsibilities.
	18.2     The Executive agrees that during the Relevant Period he will not without the prior written consent of the Company:

(i)     become associated with or engage in any Restricted Activities with respect to any Competing Enterprise whether as officer, employee, principal, partner, agent, executive, independent contractor or shareholder (other than as a holder of not in excess of 5% of the outstanding voting shares of any publicly traded company); and

(ii)     solicit or attempt to solicit for employment with or on behalf of any corporation, partnership, venture or other business entity, any

12

person who was a band 4 level or above employee of the Company or any other Group Company (including for this purpose any General Manager of any hotel owned by the Company or any other Group Company) and with whom the Executive had contact or dealings in performing the duties of his employment at any time during the period of 12 months ending on the date the Executive’s employment terminated.

	18.3     The Executive agrees that each of the paragraphs contained in sub- Clause 18.2 above constitute an entirely separate and independent covenant on his part and the validity of one paragraph shall not be affected by the validity or unenforceability of another.
	18.4     The Executive agrees that he will at the request and cost of the Company enter into a direct agreement or undertaking with any Group Company whereby he will accept restrictions and provisions corresponding to the restrictions and provisions contained in sub-Clauses 18.1(i), and 18.2(ii) above (or such of them as may be reasonable and appropriate in the circumstances) in relation to such activities and such areas and for such a period as such company may reasonably require for the protection of its legitimate interests but provided that the duration of such restrictions and provisions are no greater than the Relevant Period.
	18.5     The Executive agrees that having regard to the facts and matters set out above the restrictive covenants contained in this Clause 18 are necessary for the protection of the business and confidential information of the Company and other Group Companies.
	18.6     The Executive and the Company agree that while the restrictions imposed in this Clause 18 are considered necessary for the protection of the Company and other Group Companies it is agreed that if any one or more of such restrictions shall either taken by itself or themselves together be adjudged to go beyond what is reasonable in all the circumstances for the protection of the Company’s or any Group Company’s legitimate interest but would be adjudged reasonable if any particular restriction or restrictions were deleted or if any part or parts of the wording thereof were deleted, restricted or limited in a particular manner then the said restrictions shall apply with such deletions, restrictions or limitations as the case may be.
19.	19.1     Upon termination of this Agreement howsoever arising the Executive will resign without claim for compensation from all offices (including directorships) held in any company within the Group (but

13

	without prejudice to any claim for compensation the Executive has or may have under this Agreement or otherwise) and will authorise the Company to appoint a person to execute any such resignation in his name.
	19.2     All equipment, records, papers and documents kept or made by or supplied to the Executive relating to the business of the Group shall be and remain the property of the Group and on the termination of the Executive’s employment hereunder shall so far as they are in his possession be delivered up to the Company.
20.	Subject to the provisions of and so far as may be consistent with the Companies Act 1985 as amended by the Companies Act 1989, the Uncertificated Securities Regulations 2001 and every other statute for the time being in force concerning companies and affecting the Company, the Company hereby agrees that the Executive shall be indemnified by the Company out of the Company’s own funds against and/or exempted by the Company from all costs, charges, losses, expenses and liabilities incurred by the Executive in actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers and/or otherwise in relation to or in connection with his duties, powers or office including (without prejudice to the generality of the foregoing) any liability incurred by the Executive in defending any proceedings, civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him as an officer or employee of the Company and in which judgment is given in his favour (or the proceedings are otherwise disposed of without any finding or admission of any material breach of duty on his part) or in which he is acquitted or in connection with any application under any statute for relief from liability in respect of any such act or omission in which relief is granted to him by the court.

21.	‘Associated Company’ is defined as any company which for the time being is:
	21.1     a company having an ordinary share capital (as defined in section 832 of the Income and Corporation Taxes Act 1988) of which not less than 10 per cent is owned directly or indirectly by the Company applying the provisions of section 838 of the Income and Corporation Taxes Act 1988 in the determination of ownership; and/or
	21.2     a holding company (as defined in section 736 of the Companies Act 1985) of the Company; and/or

14

	21.3     a subsidiary (as defined in section 736 of the Companies Act 1985) of any such holding company other than the Company; and/or
	21.4     any other company on behalf of which the Executive carries out duties at the request of the Company; and/or
	21.5     any other company to which any company in the Group renders managerial or administrative services in the ordinary course of its business.
22.	Notices may be given by either party by first class recorded delivery letter addressed to the other party at (in the case of the Company) its registered office for the time being and (in the case of the Executive) his last known address and any such notice shall be deemed to have been given at the time at which the letter would be delivered in the ordinary course of first class post.
23.	To the extent permitted by law, no person other than the parties to this Agreement and the Group shall have the right to enforce any term of this Agreement under the Contracts (Rights of Third Parties) Act 1999. For the avoidance of doubt, save as expressly provided in this clause the application of the Contracts (Rights of Third Parties) Act 1999 is specifically excluded from this Agreement, although this does not affect any other right or remedy of any third party which exists or is available other than under this Act.
24.	This Agreement shall be governed by and interpreted in accordance with English law and the parties hereby agree to submit to the exclusive jurisdiction of the English Courts.

15

AS WITNESS the hands of the parties the day and year first before written

EXECUTED as a DEED by

SIX CONTINENTS PUBLIC LIMITED COMPANY acting by:

Director
Director
EXECUTED as a DEED by
Andrew Cosslett
in the presence of:
Witness Name
Witness Occupation	SVP & Head of Reward
Witness Address	67 Alma Road Windsor SL4 3HD

16

EX-8

Exhibit 8.

Name of Company	Country of Incorporation
“The Londoner” (Hotel) Ltd.	England
220 Bloor Street Hotel Inc	Ontario, Canada
220 Bloor Street West Partnership	Ontario, Canada
Airport Garden Hotel NV	Belgium
American Commonwealth Assurance Co. Ltd.	Bermuda
American Hotel B.V.	The Netherlands
Arabian Hotel Management Co. LLC	Oman
Asia Pacific Holdings Limited	England
Athenaeum Hotel & Touristic Enterprises S.A. (12.5%)	Greece
Avendra LLC 4.50%	Delaware, USA
B.V. Amstel Maatschappij	The Netherlands
Barclay Operating Corp.	New York, USA
BBJV Investments Limited	England
BCH Hotel Investment, Pte Ltd (10%)	Singapore
BHMC Canada Inc.	Canada
BHR Holdings B.V.	The Netherlands
BHR Luxembourg S.A.R.L.	Luxembourg
BHR Overseas (Europe) B.V.	The Netherlands
BHR Overseas (Finance) B.V.	The Netherlands
BHR Pacific Holdings, Inc.	Delaware, USA
BHR Services (France) S.A.S.	France
BHR Texas LP	Delaware, USA
BHR US Holdings B.V.	The Netherlands
BHTC Canada Inc.	Canada
BIBOH	England
Blackfriars Hotels Ltd. (33.3%)	England
Brascan Imobiliaria Hotelaria e Turismo S.A.	Brazil
Bristol House Club	Texas, USA
Bristol Kansas Beverage Company	Kansas, USA
Bristol Lodging Beverage Company	Texas, USA
Bristol Oakbrook Tenant Company	Delaware, USA
Bristol Plano Club	Texas, USA
Bristol Solo’s Club, Inc.	Delaware, USA
Bristol Texas Beverage Company	Texas, USA
Britannia Soft Drinks Ltd (47.5%)	England
British Vitamin Products Ltd.	England
Britvic Corona Ltd.	England
Britvic Holdings Ltd.	England
Britvic International Ltd.	England
Britvic Ltd.	England
Britvic Pensions Limited	England
Britvic Soft Drinks Ltd.	England
Brussels Europa S.A.	Belgium
BVH Hotelbesitzgesellschaft mbH & Co. Verwaltungs KG(67.5%)	Germany
BVH Hotelbesitzgesellschaft mbH (67.4%)	Germany
C.A. Hotel Guayana	Venezuela
Café Barritz	N/A
Canabolas Caravan Motel Pty Ltd.	Australia
Carlton InterContinental (Cannes) SNC	France
Cavendish Technology Company Partnerships Ltd.	England
Cayo Largo Hotel Assoc. SNC por ASE	Georgia, USA
Centra Victoria Pty Ltd.	Australia
Centre Hotels (Cranston) Limited	Scotland
Centro de Servicios Hoteleros S.A. de C.V.	Mexico
Centrum Finance (Guernsey) Ltd.	Channel Islands
Ceylan Holding A.S.	Turkey
CIMS L.P.	Illinois, USA
Compania Hotelera Nuevos Horizontes	Venezuela
Compania Inter-Continental de Hoteles El Salvador S.A.	Venezuela
Cooper Leasing Company Ltd	England
Corporaction Turistica Real	BVI San Salvador
Cosmostar Holdings Ltd.	British Virgin Islands
Covachas Festivas de America SA	Costa Rica
Crowne Plaza (Asia Pacific) Ltd.	Hong Kong
Crowne Plaza (Puerto Rico) Inc.	Puerto Rico
Crowne Plaza Amsterdam (Management) BV	The Netherlands
Crowne Plaza Hilton Head Holding Co.	Delaware, USA
Crowne Plaza LAX, LLC	Georgia, USA
Culross Finance Ltd.	Cayman
Delaville SpA	Italy
Delta Hotels Limited	Scotland
Dessarrolladora Holiday Inn, S.A. de C.V. (99%)	Mexico
Dessarrolladora Siba, S.A. de C.V.	Mexico
Dorint/IC Management GmbH	Germany
Edinburgh George Hotel Ltd.	England
Eurasia Hotel Ltd.	Hong Kong
FBM Dallas, Inc.	Delaware, USA
FBM Houston, Inc.	Delaware, USA
FBM I-10E, Inc.	Delaware, USA
FelCor Lodging Trust Incorporated (12.2%/total Gp Int 17.1%)	Delaware, USA
FI Scottsdale, Inc.	Delaware, USA
FPS Leominster, Inc.	Delaware, USA
Frankfurt Intercontinental Hotels GmbH	Germany
Garden Court France SNC (90%)	France
General Innkeeping Acceptance Corporation	Tennessee, USA
Gestion Hotelera Gestel, C.A.(50%)	Venezuela
GIAC Leasing Corporation	Tennessee, USA
Golden Hotel Prague Hotels Services s.r.o.	Czech Republic
Grand Hotel du Congo SZARL (50%)	Rep of Congo, Zaire
Grand Hotel Inter-Continental Paris SNC	France
Greenbank Drinks Co. Ltd.	England
Guest Card LLC	North Carolina, USA
H.D. Rawlings Ltd.	England

Name of Company	Country of Incorporation
H.I (Burswood) Pty Ltd.	Australia
H.I. (Canberra) Pty Ltd.	Australia
H.I. (Canberra) Trust	Australia
H.I. (Coogee) Pty Ltd.	Australia
H.I. (Coogee) Trust	Australia
H.I. (Melbourne) Pty Ltd.	Australia
H.I. (Melbourne) Trust	Australia
H.I. (Newcastle) Pty Ltd.	Australia
H.I. (Newcastle) Trust	Australia
H.I. (Perth) Pty Ltd.	Australia
H.I. (Perth) Trust	Australia
H.I. (Potts Point) Pty Ltd.	Australia
H.I. (Potts Point) Trust	Australia
H.I. (Terrigal) Pty. Ltd.	Australia
H.I. (Terrigal) Trust	Australia
H.I. (Townsville) Pty Ltd.	Australia
H.I. (Townsville) Trust	Australia
H.I. Mexicana Servicios, SA de CV	Mexico
H.I. Sara Hospitality Sdn Bhd (30%)	Malaysia
H.I. Soaltee Hotel Co. (P) Ltd. (26%)	Hong Kong
H.I. Soaltee Management Company Ltd (74%)	Hong Kong
H.I. Sugarloaf LLC	Georgia, USA
Hale International Ltd.	British Virgin Islands
Harvey’s Bar/Remington’s	N/A
HB Mass Tenant LLC	Delaware, USA
HC International Holdings, Inc.	Delaware, USA
HH France Holdings SARL	France
HH Hotels (EMEA) BV	The Netherlands
HH Hotels (EMEA) BV — Egyptian Branch	Egypt
HH Hotels (EMEA) BV — Russian Branch	Russia
HH Hotels (Romania) SRL	Romania
HH Hotels Tunisia SARL	Tunisia
HI (Ireland) Ltd.	Eire
HI East Houston, Inc.	Delaware, USA
HI Hotels Australia Trust	Australia
HI Jackson, Inc.	Delaware, USA
HI Marietta, Inc.	Delaware, USA
HIA (T) Pty Ltd.	Australia
HIA, Inc.	Tennessee, USA
HIM (Aruba) NV	Aruba
HOB Hotelbesitz-und Verwaltungs GmbH & Co; Objekt Graummansweg KG (99%)	Germany
HOB Hotelbesitz-und Verwaltungs GmbH (100%)	Germany
Hochstrasse 3 Hotelgesellschaft mbH	Germany
Hofburg Kongresszentrum Betriebsgesellschaft mbH	Austria
Holiday Hospitality Franchising, Inc.	Delaware, USA
Holiday Inn (Basildon) Ltd.	England
Holiday Inn (Birmingham City) Ltd.	England
Holiday Inn (Birmingham M6 J7) Ltd.	England
Holiday Inn (Birmingham) Ltd.	England
Holiday Inn (Brentwood) Ltd.	England
Holiday Inn (Carlisle) Ltd.	England
Holiday Inn (Chester) Ltd.	England
Holiday Inn (Colchester) Ltd.	England
Holiday Inn (Coventry) Ltd.	England
Holiday Inn (Dijon) SARL	France
Holiday Inn (Edinburgh North) Ltd.	England
Holiday Inn (Edinburgh) Ltd.	England
Holiday Inn (Farnborough) Ltd.	England
Holiday Inn (Guildford) Ltd.	England
Holiday Inn (Hemel Hempstead) Ltd.	England
Holiday Inn (High Wycombe) Ltd.	England
Holiday Inn (Ipswich) Ltd.	England
Holiday Inn (Lancaster) Ltd.	England
Holiday Inn (Leicester) Ltd.	England
Holiday Inn (London Gatwick) Ltd.	England
Holiday Inn (London Heathrow Ariel) Ltd.	England
Holiday Inn (London Heathrow) Ltd.	England
Holiday Inn (London Regents Park) Ltd.	England
Holiday Inn (Maidenhead) Ltd.	England
Holiday Inn (Milton Keynes) Ltd.	England
Holiday Inn (Norwich) Ltd.	England
Holiday Inn (Reading) Ltd.	England
Holiday Inn (Southampton Eastleigh) Ltd.	England
Holiday Inn (Southampton) Ltd.	England
Holiday Inn (UK) Ltd.	England
Holiday Inn Aruba NV	Aruba
Holiday Inn Cairns Pty Ltd.	Australia
Holiday Inn Finance Properties Ltd	England
Holiday Inn Hotelgesellschaft mbH	Germany
Holiday Inn Limited	England
Holiday Inn Mexicana S.A.	Mexico
Holiday Inn Operadora Mexico S.A. de C.V.	Mexico
Holiday Inn Worldwide Insurance Co. (see SCH Insurance Co) 75%	Vermont, USA
Holiday Inns (Abu Dhabi) Ltd.	Hong Kong
Holiday Inns (Andina) Inc. (now SC (Andina) Inc.) 70%	Tennessee, USA
Holiday Inns (Beijing) Inc. (now SC Reservations (Philippines) Inc)	Tennessee, USA
Holiday Inns (Beijing) Ltd.	Hong Kong
Holiday Inns (Casablanca) Ltd	Hong Kong
Holiday Inns (China) Ltd.	Hong Kong
Holiday Inns (Chongqing), Inc.	Tennessee, USA
Holiday Inns (Courtalin) Holdings SAS	France
Holiday Inns (Courtalin) SAS	France
Holiday Inns (Dalian), Inc.	Tennessee, USA
Holiday Inns (Downtown Beijing) Ltd.	Hong Kong

Name of Company	Country of Incorporation
Holiday Inns (Dubai) Ltd.	Hong Kong
Holiday Inns (Eindhoven) BV	The Netherlands
Holiday Inns (Eindhoven) BV — American Branch	South Carolina
Holiday Inns (Eindhoven) BV — Austrian Branch	Austria
Holiday Inns (England) Ltd.	England
Holiday Inns (Germany) LLC	Tennessee, USA
Holiday Inns (Germany) LLC — German Branch	Germany
Holiday Inns (Guangzhou), Inc.	Tennessee, USA
Holiday Inns (Guilin), Inc.	Tennessee, USA
Holiday Inns (Indonesia) B.V.	The Netherlands
Holiday Inns (Indonesia) Ltd.	Hong Kong
Holiday Inns (Jamaica) Inc.	Tennessee, USA
Holiday Inns (Jamaica) Inc. — Jamaica Branch	Jamaica
Holiday Inns (Korea) Ltd.	Hong Kong
Holiday Inns (Kuwait) Ltd.	Hong Kong
Holiday Inns (Macau) Ltd.	Hong Kong
Holiday Inns (Malaysia) Ltd.	Hong Kong
Holiday Inns (Manama) Ltd.	Hong Kong
Holiday Inns (Middle East) Ltd.	Hong Kong
Holiday Inns (Muscat) Ltd.	Hong Kong
Holiday Inns (Nepal) Ltd.	Hong Kong
Holiday Inns (Philippines), Inc.	Tennessee, USA
Holiday Inns (Philippines), Inc. — Philippines Branch	Philippines
Holiday Inns (Phuket) Ltd.	Hong Kong
Holiday Inns (Riyadh) Ltd.	Hong Kong
Holiday Inns (Salalah) Ltd.	Hong Kong
Holiday Inns (Saudi Arabia), Inc.	Tennessee, USA
Holiday Inns (Shanghai) Ltd.	Hong Kong
Holiday Inns (South East Asia) Inc.	Tennessee, USA
Holiday Inns (South East Asia) Inc. — Singapore Branch	Singapore
Holiday Inns (Suisse) SA	Switzerland
Holiday Inns (Thailand) Ltd.	Hong Kong
Holiday Inns (The Netherlands) Inc.	Tennessee, USA
Holiday Inns (The Netherlands) Inc. — Dutch Branch	The Netherlands
Holiday Inns (UK), Inc.	Tennessee, USA
Holiday Inns (UK), Inc. — Malta Branch	Malta
Holiday Inns (UK), Inc. — UK Branch	England
Holiday Inns (Urumqi) Ltd.	Hong Kong
Holiday Inns (Xiamen) Ltd.	Hong Kong
Holiday Inns (Yemen) Ltd.	Hong Kong
Holiday Inns Australia Pty Ltd.	Australia
Holiday Inns B.V.	The Netherlands
Holiday Inns B.V. — Austria Branch	Austria
Holiday Inns B.V. — UK Branch	England
Holiday Inns Crowne Plaza (Beijing), Inc.	Tennessee, USA
Holiday Inns Crowne Plaza (Hong Kong), Inc.	Tennessee, USA
Holiday Inns de Espana S.A.	Spain
Holiday Inns France et Cie SAS	France
Holiday Inns Garden Court Ltd.	England
Holiday Inns Holdings (Australia) Pty Ltd.	Australia
Holiday Inns Inc.	Delaware, USA
Holiday Inns International BV	The Netherlands
Holiday Inns International BV — Belgium Branch	Belgium
Holiday Inns Investment (Nepal) Ltd.	Hong Kong
Holiday Inns Mexico Holdings, Inc.	Kentucky, USA
Holiday Inns NV	Belgium
Holiday Inns of America (UK) Ltd.	England
Holiday Inns of Belgium NV	Belgium
Holiday Inns of Belgium NV — Swedish Branch	Sweden
Holiday Inns SpA	Italy
Holiday Inns von Deutschland GmbH	Germany
Holiday Pacific Equity Corporation	Delaware, USA
Holiday Pacific LLC	Delaware, USA
Holiday Pacific Partners, LP (12.7%)	Delaware, USA
Hooper Struve & Co. Ltd	England
Hospitality Corporation	Greece
Hospitality Network Corporation 35%	Japan
Hotel del Lago C.A. (0.4%)	Venezuela
Hotel Equities Fiji Ltd.	Fiji
Hotel Equities South Pacific Ltd.	Vanuatu
Hotel Forum (Holdings) Ltd.	England
Hotel Inter-Continental London (Holdings) SAS	France
Hotel Inter-Continental London Ltd.	England
Hotel Inter-Continental SAS	France
Hotelera el Carmen S.A.	Spain
Hotelera Holiday Inns Andina Limitada	Chile
Hotelera Holiday Inns Andina Ltd-Chile Branch	Chile
Hoteles Estelar de Colombia S.A. (4%)	Colombia
Hoteles Holiday Inn S.A. de C.V.	Mexico
Hoteles Y Centros Especializados S.A.	Mexico
Hoteles Y Turismo HIH Srl	Venezuela
IC Loipersdorf Hotel Betriebs GmbH	Austria
IC US (Holdings) LP	Delaware, USA
Idris Limited	England
IHC (Thailand) Ltd.	Thailand
IHC Buckhead LLC	Georgia, USA
IHC Edinburgh (Holdings) Ltd.	England
IHC Franchising LLC	Delaware, USA
IHC Hopkins (Holdings) Corp.	Delaware, USA
IHC Hotel Ltd.	England
IHC Inter-Continental (Holdings) Corp.	Delaware, USA
IHC London (Holdings) Ltd.	England
IHC May Fair (Holdings) Ltd.	England
IHC May Fair Hotel Ltd.	England

Name of Company	Country of Incorporation
IHC M-H (Holdings) Corp.	Delaware, USA
IHC Overseas (U.K.) Ltd.	England
IHC UK (Holdings) Ltd	England
IHC United States (Holdings) Corp.	New York, USA
IHC Willard (Holdings) Corp.	Delaware, USA
IHG (Brent Cross) Ltd.	England
IHG (Leeds) Ltd.	England
IHG (maryland) LLC	Maryland, USA
IHG (Strathclyde) Ltd.	England
IHG (Victoria Park) Pty Ltd	Australia
IHG Customer Service Ltd	England
IHG Cyprus Limited	Cyprus
IHG Franchising LLC	Delaware, USA
IHG Management (Maryland) LLC
IHG Systems Pty Ltd	Australia
Illinois Hotels Corp.	Delaware, USA
Inn Keeper Supply, S.A. de C.V.	Mexico
INNvest Realty Corp.	Tennessee, USA
Insurance Resource Services, Inc.	Delaware, USA
InterContinental (Branston) 1 Ltd	England
Inter-Continental (Holdings) Canada Inc.	Canada
Inter-Continental Central Park South LLC	New York, USA
Inter-Continental D.C. Operating Corp.	Delaware, USA
Inter-Continental Europe Finance BV	The Netherlands
Inter-Continental Europe Holdings BV	The Netherlands
Inter-Continental Florida Investment Corp.	Delaware, USA
Inter-Continental Florida L.P.	Delaware, USA
Inter-Continental Florida Operating Corp.	Delaware, USA
Inter-Continental Florida Partner Corp.	Delaware, USA
InterContinental Group Ltd	England
Inter-Continental Holding (Germany) GmbH	Germany
InterContinental Holdings Ltd	England
InterContinental Hong Kong Ltd.	Hong Kong
Inter-Continental Hospitality Corp.	Delaware, USA
Inter-Continental Hotel Betriebsgesellschaft mbH	Austria
Inter-Continental Hotel Investment (S) Pte. Ltd.	Singapore
Intercontinental Hotel Stuttgart Betriebs GmbH & Co. KG	Germany
InterContinental Hoteleira Limitada	Brazil
Inter-Continental Hotels (Indonesia) B.V.	The Netherlands
Inter-Continental Hotels (Montreal) Operating Corp.	Quebec, Canada
Inter-Continental Hotels (Montreal) Owning Corp.	Quebec, Canada
Inter-Continental Hotels (Overseas) Ltd.	England
InterContinental Hotels (Puerto Rico) Inc	Puerto Rico
Inter-Continental Hotels (Singapore) Pte. Ltd.	Singapore
Inter-Continental Hotels Betriebsgesellschaft mbH	Germany
Inter-Continental Hotels Corporation	Delaware, USA
Inter-Continental Hotels Corporation — Cairo Branch
Inter-Continental Hotels Corporation — Jordan Branch	Jordan
Inter-Continental Hotels Corporation — Malaysia Branch	Malaysia
Inter-Continental Hotels Corporation — Malta Branch	Malta
Inter-Continental Hotels Corporation — Philippines Branch	Philippines
Inter-Continental Hotels Corporation — Poland Branch	Poland
Inter-Continental Hotels Corporation — Portugal Branch	Portugal
Inter-Continental Hotels Corporation — Tel Aviv Branch	Israel
Inter-Continental Hotels Corporation de Venezuela C.A.	Venezuela
Intercontinental Hotels Corporation Limited	Bermuda
Intercontinental Hotels Corporation Limited — Egypt Branch	Egypt
Intercontinental Hotels Corporation Limited — Saudi Branch	Saudi
Inter-Continental Hotels Corporation Pty Ltd.	Australia
InterContinental Hotels Group (Asia Pacific) Pte Ltd	Singapore
InterContinental Hotels Group (Canada) Inc.	Canada
InterContinental Hotels Group (Espana) SA	Spain
InterContinental Hotels Group (Japan) Inc.	Tennessee
InterContinental Hotels Group (Japan) Inc. — Japan Branch	Japan
InterContinental Hotels Group (UK) Ltd	England
InterContinental Hotels Group Customer Services Ltd.	England
InterContinental Hotels Group do Brasil Ltda	Brazil
InterContinental Hotels Group Finance (CI) Ltd.	Jersey
InterContinental Hotels Group Healthcare Trustee Ltd	England
InterContinental Hotels Group Limited
InterContinental Hotels Group Operating Corp.	USA
InterContinental Hotels Group PLC	England
InterContinental Hotels Group Resources Inc	Delaware, USA
InterContinental Hotels Group Resources Inc — Guam Branch	Guam
InterContinental Hotels Group Services Company	England
InterContinental Hotels Group Services Company — Spanish Branch	Spain
Inter-Continental Hotels Italia, SrL	Italy
InterContinental Hotels Ltd	England
Intercontinental Hotels Management GmbH	Germany
InterContinental Hotels Nevada Corporation	Nevada
Inter-Continental Hotels of San Francisco Inc.	Delaware, USA
Inter-Continental Hotels Saudi Arabia Ltd.	Saudi Arabia
Inter-Continental Jeddah Corp.	Delaware, USA
Inter-Continental Management (Australia) Pty Limited	Australia
Inter-Continental Netherlands CV	The Netherlands
Inter-Continental Overseas Holding Corporation	Delaware, USA
Inter-Continental Overseas Holding Corporation — Bermuda Branch	Bermuda
Inter-Continental Overseas Holding Corporation — Egyptian Branch	Egypt
Inter-Continental Overseas Holding Corporation — Jamaican Branch	Jamaica
Inter-Continental Szalloda Budapest Rt.	Hungary
Intercora Limited (65%)	Bermuda
International Airport Hotel Ltd.	Ireland
Inthotel SA (92%)	Spain
Kensington PH Ltd.	England

Name of Company	Country of Incorporation
Kenya Hotel Properties Ltd. (33.8%)	Kenya
Kumul Hotels Ltd. (18%)	Papua New Guinea
Laper S.A.	Switzerland
Leased Hotels Ltd.	England
LIMNA Hotelbetriebsgesellschaft mbH (67.4%)	Germany
LIMNA Hotelbetriebsgesellschaft mbH Verwaltungs KG(67.5%)	Germany
London Essence Co. Ltd.	England
London Forum Hotel Ltd.	England
Louisiana Acquisitions Corp.	Delaware, USA
Maya Baiduri Sdn Bhd (50%)	Malaysia
Mifala Holdings (Vanuatu) Ltd.	Vanuatu
NAS Cobalt No. 2 Ltd.	England
Netherlands International Hotels BV (17%)	The Netherlands
Nuevas Fronteras S.A. (23.66%)	Argentina
Omega Hotels Limited	Eire
Openworld Ltd. (5.97%)
Orbis Travel Bureau (12%)	New York, USA
Orchid Brands Ltd.	England
Orchid Drinks Ltd.	England
OSPR Pty Ltd.	Australia
Panacon	Louisiana, USA
Parkroyal Motor Hotels Pty Ltd.	Australia
Pegasus Systems Inc.	Delaware, USA
Pendigo Hotel Ltd.	England
Penrod Club Texas (Non Profit)	Texas, USA
Pershing Associates (7.5%)	District of Columbia
Pins & Pockets Club, Inc.	Texas, USA
Pollstrong Ltd	England
Powell Pine, Inc.	Delaware, USA
Premier Hotels (Christchurch) Ltd.	New Zealand
President Hotel & Tower Co Ltd. (30%)	Singapore
Priscilla Holiday of Texas, Inc.	Delaware, USA
PT Jakarta International Hotels & Development 0.5151%	Indonesia
PT SC Hotels & Resorts Indonesia	Indonesia
R. White & Sons Ltd.	England
R. White & Sons Ltd.	England
RDP Royal Palm Hotel Ltd.	Delaware, USA
Red — Changes from 30.09.03 to 30.06.04
Red Devil Energy Drinks Ltd.	England
Rednor Inc.	Utah, USA
Resort Services International (Cayo Largo) LP SE	Delaware, USA
RH Resort Staff Co. Pty Ltd	Australia
Robinsons Soft Drinks Ltd.	England
Santa Fe	Mexico
SC (Andina) Inc. (formerly Holiday Inns (Andina) Inc. 70%	Tennessee, USA
SC Car Leasing Ltd.	England
SC Cellars Ltd.	England
SC ESOP Trustee (Jersey) Ltd.	Jersey
SC Finance Investments Co.	England
SC Finance Investments Two Co.	England
SC Hotels (Singapore) Pte Ltd	Singapore
SC Hotels & Resorts (Asia Pacific) Pte Ltd.	Singapore
SC Hotels & Resorts (Australia) Pty Ltd.	Australia
SC Hotels & Resorts (Greater China) Ltd	Hong Kong
SC Hotels & Resorts (India) Private Ltd.	India
SC Hotels & Resorts (Jamaica) Ltd	Jamaica
SC Hotels International Services, Inc.	Delaware, USA
SC Hotels Management Services, Inc.	Delaware, USA
SC Hotels Services (Guangzhou) Ltd.	China
SC Hotels UK Pensions SARL	Luxembourg
SC Investment Minorities Ltd.	England
SC Investments Number 2 Ltd.	England
SC Investments Number 3 Ltd.	England
SC IT Enabled Services (India) Private Limited	India
SC Leisure Group Ltd.	England
SC Luxembourg Investments SARL	Luxembourg
SC Minority Holdings Ltd.	England
SC NAS 2 Ltd.	England
SC NAS 3 Ltd.	England
SC QUEST Ltd	England
SC Racing Gilbraltar Ltd.	Gibraltar
SC Reservations (Philippines) Inc — Philippines Branch	Phillippines
SC Reservations (Philippines) Inc (formerly Holiday Inn (Beijing) Inc	Tennessee, USA
SC Southwick (UK) Ltd.	England
SC Trademarks Ltd.	England
SC Wine Bars Ltd.	England
SCH (Barbados) Ltd.	Barbados
SCH (China) Investments Ltd.	Hong Kong
SCH (UK) Ltd.	England
SCH Insurance Company 75%	Vermont, USA
SCH Minority Holdings LLC	Delaware, USA
SCH Residence (France) SNC	France
SCIH Branston 1	England
SCIH Branston 2	England
SCIH Branston 3	England
SFH Associates L.P.	California, USA
SIBA ATLAS	Mexico
SIBA ESTACIONAMIENTS	Mexico
Sienna Hotel Sp.Z.o.o.	Poland
Six Continents (NAS) PLC	England
Six Continents Corporate Services Co	England
Six Continents Holdings Ltd.	England
Six Continents Hotels and Holidays Ltd.	England
Six Continents Hotels de Colombia SA	Colombia

Name of Company	Country of Incorporation
Six Continents Hotels Group Company — Spanish Branch	Spain
Six Continents Hotels International Ltd.	England
Six Continents Hotels, Inc.	Delaware
Six Continents International Holdings BV	The Netherlands
Six Continents Investments Ltd.	England
Six Continents Leisure Ltd.	England
Six Continents Overseas Holdings Ltd.	England
Six Continents PLC	England
Six Continents Profit Share Scheme Trustee Ltd.	England
Six Continents Restaurants Ltd.	England
SixCo Financing 1 Ltd.	England
SixCo Financing 2 Ltd.	England
SixCo North America, Inc.	Delaware
SNC de L’Hotel Inter-Continental Paris	France
Soaltee Hotel Ltd. (10%)	Nepal
Societe des Grands Hotels du Liban (2%)	Lebanon
Societe des Hotels InterContinental France SNC	France
Societe des Hotels Reunis SAS	France
Societe Immobiliere Kinoise SZARL (50%)	Rep of Congo, Zaire
Societe Nouvelle du Grand Hotel SA	France
Solo’s	N/A
Southern Pacific Hotel Corp. (BVI) Ltd.	British Virgin Islands
Southern Pacific Hotel Corp. (NZ) Ltd.	New Zealand
Southern Pacific Hotel Corp. Holdings Pty Ltd.	Australia
Southern Pacific Hotel Corp. Pty Ltd.	Australia
Southern Pacific Hotel Corp. Sdn Bhd	Malaysia
Southern Pacific Hotels (Indonesia) Ltd.	British Virgin Islands
Southern Pacific Hotels (Technical Services) Limited	British Virgin Islands
Southern Pacific Hotels (Vanuatu) Ltd.	Vanuatu
Southern Pacific Hotels Malaysia Ltd.	British Virgin Islands
Southern Pacific Hotels Operations Ltd.	British Virgin Islands
Southern Pacific Hotels Properties Limited	British Virgin Islands
Southern Pacific Hotels Pty Ltd.	Australia
Southern Table Water Co. Ltd.	England
Southwick Ltd.	Cayman
SPH International Pty Ltd.	Australia
SPHC (Asia) Limited	Hong Kong
SPHC (IP) Pty Ltd.	Australia
SPHC (NZ) Holdings Ltd.	New Zealand
SPHC Australia Ltd.	Singapore
SPHC Equities Ltd.	New Zealand
SPHC Group Pty Ltd.	Australia
SPHC Management Ltd.	Papua New Guinea
SPHC Nominees Pty Ltd	Australia
SPHC Operations (NZ) Ltd.	New Zealand
Spirit Health and Fitness Ltd.	England
SSABCO Ltd. (liquidation candidate)	England
St Lucia Management Services LLC	Delaware, USA
Staybridge Markham Inc	Ontario, Canada
Sunfresh Soft Drinks Ltd.	England
Tahiti Bachcomber SA (15.8%)	Tahiti
TAK How Investment Limited (10%)	Hong Kong
Tape Systems Ltd.(85%)	England
TH Management Ltd.	New Zealand
The GL Hotels Limited (12.6%)	India
The GL Hotels Ltd. (12.6%)	India
The Hotel Clearing Corp.	Delaware, USA
THISCO	Delaware, USA
Tian An Hotels International Limited (50%)	Hong Kong
TLCI Limited	New Zealand/Cook Islands
Top of the Cross Pty Ltd.	Australia
TotRusUs (Russian Branch of HH Hotels (EMEA) BV	Russia
Travel Holdings (Australia) Pty Ltd.	Australia
Travelodge Cook Islands Ltd. (See TLCI Limited)	New Zealand/Cook Islands
Travlex Systems Pty Ltd.	Australia
Trent Technology Ltd.	England
Trifaith Investments Ltd.	British Virgin Islands
Union Leasing Company Ltd.	England
Universal de Hoteles SA	Colombia
Victoria Hotels (Christchurch) Ltd.	New Zealand
VP Hotels Pty Ltd.(now IHG(Victoria Park) Pty Ltd	Australia
White Shield Insurance Company Ltd.	Gibraltar
Willard Associates (15.47%)	District of Columbia
World Res Europe Limited	England
World Trade Center Montreal Hotel Corp. (74.11%)	Quebec, Ontario
Xenia Hotel Abwicklungs GBMH (in liquidation)
Yokohama Grand Intercontinental Hotel Co. Ltd. (5%)	Japan

EX-12.1

Exhibit 12(a)

302 CERTIFICATION

I, Andrew Cosslett, certify that:

1.	I have reviewed this annual report on Form 20-F of InterContinental Hotels Group PLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.	The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(c)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: May 3, 2005	By:	/s/ Andrew Cosslett
		Name:	Andrew Cosslett
		Title:	Director and Chief Executive Officer

EX-12.2

Exhibit 12(b)

302 CERTIFICATION

I, Richard Solomons, certify that:

1.	I have reviewed this annual report on Form 20-F of InterContinental Hotels Group PLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.	The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(c)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: May 3, 2005	By:	/s/ Richard Solomons
		Name:	Richard Solomons
		Title:	Finance Director

EX-13.1

Exhibit 13(a)

906 CERTIFICATION

The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2004 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Andrew Cosslett, the Chief Executive Officer and Richard Solomons, the Finance Director of InterContinental Hotels Group PLC, each certifies that, to the best of his knowledge:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of InterContinental Hotels Group PLC.

Date: May 3, 2005

/s/ Andrew Cosslett
Name:	Andrew Cosslett
Title:	Chief Executive Officer
/s/ Richard Solomons
Name:	Richard Solomons
Title:	Finance Director