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, 2005
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 10 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 10 pence each                              432,936,345

      Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:     Yes þ          No o

      If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:     Yes o          No þ

      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 whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  þ Accelerated filer  o Non-accelerated filer  o

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

Item 17 o          Item 18 þ

      If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes                     o                          No                     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		16
	Summary		16
	Segmental Information		20
	Hotels		24
	Soft Drinks		44
	Trademarks		45
	Organizational Structure		45
	Property, Plants and Equipment		45
	Environment		46
Item 5.	Operating and Financial Review and Prospects		46
	Introduction		46
	Critical Accounting Policies Under IFRS and US GAAP		47
	Operating Results		49
	Liquidity and Capital Resources		57
Item 6.	Directors, Senior Management and Employees		60
	Directors and Senior Management		60
	Compensation		63
	Board Practices		64
	Employees		67
	Share Ownership		68
Item 7.	Major Shareholders and Related Party Transactions		69
	Major Shareholders		69
	Related Party Transactions		69
Item 8.	Financial Information		69
	Consolidated Statements and Other Financial Information		69
	Significant Changes		70
Item 9.	The Offer and Listing		70
	Plan of Distribution		71
	Selling Shareholders		71
	Dilution		71
	Expenses of the Issue		71

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		Page
Item 10.	Additional Information		71
	Memorandum and Articles of Association		71
	Material Contracts		74
	Exchange Controls		76
	Taxation		76
	Documents on Display		80
Item 11.	Quantitative and Qualitative Disclosures About Market Risk		80
Item 12.	Description of Securities Other Than Equity Securities		82
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies		82
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds		82
Item 15.	Controls and Procedures		82
Item 16.	[Reserved]		82
Item 16A.	Audit Committee Financial Expert		82
Item 16B.	Code of Ethics		82
Item 16C.	Principal Accountant Fees and Services		83
Item 16D.	Exemptions from the Listing Standards for Audit Committees		83
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers		83
PART III
Item 17.	Financial Statements		84
Item 18.	Financial Statements		85
Item 19.	Exhibits		85
EX-4.B.V: NEW ZEALAND SHARE SALE DEED
EX-4.B.VI: AUSTRALIA SHARE AND UNIT SALE DEED
EX-4.B.VII: BRITVIC UNDERWRITING AGREEMENT
EX-4.B.VIII: SALE AND PURCHASE AGREEMENT
EX-4.C.II: RICHARD HARTMAN'S LETTER OF APPOINTMENT
EX-4.C.IV: STEVAN PORTER'S LETTER OF APPOINTMENT
EX-4.C.VI: RICHARD SOLOMONS' LETTER OF APPOINTMENT
EX-4.C.VIII: ANDREW COSSLETT'S LETTER OF APPOINTMENT
EX-8: LIST OF SUBSIDIARIES
EX-12.A: CERTIFICATION
EX-12.B: CERTIFICATION
EX-13.A: CERTIFICATION

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 InterContinental Hotels Limited or Six Continents Limited;

•  “Britvic” refers to Britannia Soft Drinks Limited for the period up to November 18, 2005, and thereafter, Britannia SD Holdings Limited (renamed Britvic plc on November 21, 2005) which became the holding company of the Britvic Group on November 18, 2005;

•  “Britvic Group” refers to Britvic and its subsidiaries from time to time;

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

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

•  “Hotels” or “IHG Hotels” refers to the hotels business of the Group;

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

•  “IHL” refers to InterContinental Hotels Limited, previously InterContinental Hotels Group PLC, former parent company of the Group and re-registered as a private limited company on June 27, 2005;

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

•  “ordinary share” or “share” refers, before April 14, 2003, to the ordinary shares of 28 pence each in Six Continents Limited; following that date and until December 10, 2004 to the ordinary shares of £1 each in IHL; following that date and until June 27, 2005 to the ordinary shares of 112 pence each in IHL and following June 27, 2005 to the ordinary shares of 10 pence each in IHG.

•  “Six Continents” refers to Six Continents Limited; previously Six Continents PLC and re-registered as a private limited company on June 6, 2005;

•  “Soft Drinks” and “Britvic business” refer to the soft drinks business of InterContinental Hotels Group PLC, which the Company had through its controlling interest in Britvic and which the Company disposed of by way of an initial public offering effective December 14, 2005; 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, references to “pounds sterling”, “sterling”, “£”, “pence” or “p” are to UK currency and references to “A$” are to Australian (“A”) 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 = $1.73, 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, 2005. On March 28, 2006 the Noon Buying Rate was £1.00 = $1.75. For information regarding rates of exchange between pounds sterling and US dollars from fiscal 2001 to the present, see “Item 3. Key Information — Exchange Rates”.

4

      The Company’s fiscal year ends on December 31. 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 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, 2005 are shown as 2005 and references to the year ended December 31, 2004 are shown as 2004, unless otherwise specified, references to the fiscal period ended December 31, 2003, are shown as 2003 and references to other fiscal years are shown in a similar manner.

      The Company’s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) which differ from the accounting principles generally accepted in the United States (“US GAAP”). The significant differences applicable to the Group are explained in Note 32 of Notes to the Financial Statements.

      IHG believes that the reporting of profit and earnings measures before other operating income and expenses 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 other operating income and expenses. Throughout this document earnings per share is also calculated excluding the effect of all other operating income and expenses, special interest, special tax and gain on disposal of assets and is referred to as adjusted earnings per share.

      The Company furnishes JP Morgan Chase Bank, N.A., 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 IFRS. 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 IFRS, which contain unaudited interim consolidated financial information. Upon receipt thereof, the Depositary mails all such reports to registered 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 registered holders of ADRs and mails to all registered holders of ADRs notices of shareholders’ meetings received by the Depositary. The Company is not required to report quarterly financial information. During 2005, the Company reported interim financial information at June 30, 2005 in accordance with the Listing Rules of the UK Listing Authority. In addition, it provided a trading update at March 31, 2005 and at September 30, 2005 and intends to continue to provide quarterly financial information during fiscal 2006, although it has not made any decision with respect to reporting quarterly financial information after 2006.

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”; (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-

5

looking statements. These factors include, among others, 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 risks relating to identifying, securing and retaining management and franchise agreements, the effect of political and economic developments, the ability to recruit and retain key personnel, the risks involved with the Group’s reliance on technologies and systems and with developing and employing new technologies and systems, the Group’s ability to maintain adequate insurance, the future balance between supply and demand for the Group’s hotels, events that adversely impact domestic or international travel, including terrorist incidents and epidemics such as Severe Acute Respiratory Syndrome (“SARS”) or avian flu, the risk of failures in the Group’s proprietary reservation system and increased competition in reservation infrastructure, the lack of selected development opportunities, the risks of litigation, the risks associated with its ability to borrow and satisfy debt covenants, compliance with data privacy regulations and risks associated with funding the defined benefits under its pension schemes.

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 years ended December 31, 2005 and 2004 has been prepared for the first time in line with International Financial Reporting Standards (“IFRS”) and is derived from the 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. There is no available comparative data for the years ended prior to December 31, 2004 as consolidated financial data were prepared in accordance with accounting principles generally accepted in the United Kingdom (“UK GAAP”). The selected consolidated financial data set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report.

7

Consolidated Profit and Loss Account Data

		Years ended December 31,
		2005(1)(2)			2005(1)			2004(1)
		$			£			£
		(in millions, except per share and ADS amounts)
Amounts in accordance with IFRS
Revenue:
	Continuing operations		1,555			852			731
	Discontinued operations		1,931			1,058			1,473
			3,486			1,910			2,204
Total operating profit before other operating income and expenses:
	Continuing operations		347			190			134
	Discontinued operations		272			149			212
			619			339			346
Other operating income and expenses:
	Continuing operations		(40	)		(22	)		(49	)
			(40	)		(22	)		(49	)
Total operating profit:
	Continuing operations		307			168			85
	Discontinued operations		272			149			212
			579			317			297
Financial income			55			30			70
Financial expenses			(115	)		(63	)		(103	)
Profit before tax			519			284			264
Tax			(146	)		(80	)		127
Profit after tax			373			204			391
Gain on disposal of assets, net of tax			568			311			19
Profit available for shareholders			941			515			410
Attributable to:
	Equity holders of the parent		906			496			383
	Minority equity interest		35			19			27
Profit for the year			941			515			410
Earnings per ordinary share:
	Basic		173.9	¢		95.2	p		53.9	p
	Diluted		170.0	¢		93.1	p		53.3	p
	Adjusted(4)		69.9	¢		38.2	p		33.9	p

Footnotes on page 10.

8

												Three months			12 months			15 months
												ended			ended			ended			Year ended
			Year ended December 31,									December 31,			December 31,			December 31,			September 30,
			2005(1)(2)			2005(1)			2004(1)			2002			2003			2003(1)			2002(1)			2001(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			189			104			257			14			(63	)		(49	)		102			130
	Discontinued operations:
		Income from discontinued operations		75			41			62			46			92			138			226			521
		Surplus on disposal		384			210			21			—			—			—			171			25
	Total discontinued operations			459			251			83			46			92			138			397			546
Cumulative effect on prior years of adoption of FAS 142				—			—			—			(712	)		—			(712	)		—			—
	Net income/(loss)			648			355			340			(652	)		29			(623	)		499			676
Per ordinary share and American Depositary Share(5)
Basic
Income/(loss) before cumulative effect on prior years of change in accounting principle:
	Continuing operations			36.4	¢		20.0	p		36.2	p		1.9	p		(8.6	)p		(6.7	)p		14.0	p		17.8	p
	Discontinued operations			88.0	¢		48.2	p		11.7	p		6.3	p		12.6	p		18.9	p		54.3	p		74.6	p
Cumulative effect on prior years of adoption of FAS 142				—			—			—			(97.1	)p		—			(97.1	)p		—			—
Net income/(loss)				124.4	¢		68.2	p		47.9	p		(88.9	)p		4.0	p		(84.9	)p		68.3	p		92.4	p
Diluted
Income/(loss) before cumulative effect on prior years of change in accounting principle:
	Continuing operations			35.6	¢		19.5	p		35.7	p		1.9	p		(8.6	)p		(6.7	)p		13.9	p		17.7	p
	Discontinued operations			86.0	¢		47.1	p		11.5	p		6.3	p		12.6	p		18.9	p		54.1	p		74.2	p
Cumulative effect on prior years of adoption of FAS 142				—			—			—			(97.1	)p		—			(97.1	)p		—			—
Net income/(loss)				121.6	¢		66.6	p		47.2	p		(88.9	)p		4.0	p		(84.9	)p		68.0	p		91.9	p

Footnotes on page 10.

9

Consolidated Balance Sheet Data

	December 31,
	2005(3)		2005		2004
	$		£		£
	(in millions)
Amounts in accordance with IFRS
Goodwill and intangible assets		411		238		206
Property, plant and equipment		2,340		1,356		1,926
Investments and other financial assets		267		155		122
Current assets		1,220		707		598
Non-current assets classified as held for sale		481		279		1,826
Total assets		4,719		2,735		4,678
Current liabilities(6)		1,370		794		926
Long-term debt(6)		707		410		1,156
Share capital		85		49		723
IHG shareholders’ equity		1,870		1,084		1,821

	December 31,
	2005(3)		2005		2004		2003		2002		2001
	$		£		£		£		£		£
	(in millions)
Amounts in accordance with US GAAP
Goodwill and intangible assets		2,407		1,395		1,384		1,587		2,702		2,902
Property, plant and equipment		2,905		1,684		3,454		3,916		6,552		6,343
Investments and other financial assets		243		141		115		174		189		205
Current assets		1,284		744		699		978		983		1,209
Non-current assets classified as held for sale		445		258		300		—		—		—
Total assets		7,284		4,222		5,952		6,655		10,426		10,659
Current liabilities(6)		2,112		1,224		2,021		1,496		2,109		2,033
Long-term debt(6)		62		36		52		523		622		779
Share capital		74		43		697		739		243		242
IHG shareholders’ equity		3,477		2,015		2,796		3,380		6,221		6,381

(1)	The results for 2002 and 2001 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. For the year 2005, Hotels include 12 months and Soft Drinks 50 weeks and three days ended December 14, 2005.
(2)	US dollar amounts have been translated at the weighted average rate for the year of £1.00 = $1.83 solely for convenience.
(3)	US dollar amounts have been translated at the Noon Buying Rate on December 31, 2005 of £1.00 = $1.73 solely for convenience.
(4)	Adjusted earnings per share are disclosed in order to show performance undistorted by other operating income and expenses, abnormal interest and tax and gain on disposal of assets.
(5)	Each American Depositary Share represents one ordinary share.
(6)	Long-term debt under IFRS 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 4.6 pence per share on October 17, 2005. The IHG board has proposed a final dividend of 10.7 pence per share, payable on June 5, 2006, if approved by

10

shareholders at the Annual General Meeting to be held on June 1, 2006, bringing the total IHG dividend for the year ended December 31, 2005 to 15.3 pence per share.

      On March 2, 2006, IHG announced its intention to pay a £500 million special dividend to shareholders during the second quarter of 2006.

      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 (as IHL then was) and Six Continents PLC (as Six Continents then was), 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.

     Ordinary dividend

	Pence per ordinary share						$ per ADS
	Interim		Final		Total		Interim		Final			Total
Year ended September 30,
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		4.30		10.00		14.30		0.077		0.191			0.268
2005		4.60		10.70		15.30		0.081		0.187	(2)		0.268

(1)	Restated to reflect an equivalent number of shares in InterContinental Hotels Group PLC.
(2)	The 2005 final dividend payable to ADS holders will be paid in USD and was set using the closing USD/GBP spot rate of February 28, 2006.

     Special Dividend

	Pence per
	ordinary share		$ per ADS
December 2004		72.00		1.39

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 March 17, 2006 was £1.00 = $1.76.

	Month’s		Month’s
	highest		lowest
Month	exchange rate		exchange rate
September 2005		1.84		1.76
October 2005		1.79		1.75
November 2005		1.78		1.71
December 2005		1.77		1.72
January 2006		1.79		1.74
February 2006		1.78		1.73
March 2006 (through March 17, 2006)		1.76		1.73

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	Period		Average
	end		rate(1)		High		Low
Year ended September 30,
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
2005		1.73		1.82		1.93		1.71

(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”.

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RISK FACTORS

      This section describes some of the risks that could materially affect the Group’s business. The factors below should be considered in connection with any financial and forward-looking information in this Form 20-F and the cautionary note regarding forward-looking 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 business, revenue, operating profit, earnings, net assets and liquidity and/or capital resources.

The Group is reliant on the reputation of its brands and the protection of its intellectual property rights

      An event that materially damages 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 Group or its franchisees to ensure compliance with the significant regulations applicable to hotel operations (including fire and life safety requirements), 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 Group is able to enforce adherence to its operating and quality 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 business, 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 business.

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

      The Group’s growth strategy depends on its success in identifying, securing and retaining management and franchise agreements. Competition with other hotel companies may generally reduce the number of suitable management, franchise and investment opportunities offered to the Group, and increase the bargaining power of property owners seeking to engage a manager or become a franchisee. The terms of new management or franchise agreements may not be as favourable as current arrangements and the Group may not be able to renew existing arrangements on the same terms.

      There can also be no assurance that the Group will be able to identify, retain or add franchisees to the Group 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 Group. 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.

13

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

      These include the risks of global and regional adverse political, economic and financial market developments, including recession, inflation and currency fluctuations 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 selling its investments in, certain countries, or otherwise adversely affect operations. For example, changes to tax rates or legislation in the jurisdictions in which the Group operates could decrease the proportion of profits the Group is entitled to retain, or the Group’s interpretation of various tax laws and regulations may prove to be incorrect, resulting in higher than expected tax charges. In addition, fluctuations in currency exchange rates between 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 recent years with the significant strengthening of the pound against the dollar. As the Group’s profits have become increasingly weighted towards North America, such fluctuations may have greater impact on the Group’s reported results.

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 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 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

      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 affect 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 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 employed 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 or 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.

The Group may face difficulties insuring its business

      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 business in which it operates. However, forces beyond the Group’s control including market forces, may limit the scope of coverage the Group can obtain as well as the Group’s ability to obtain coverage at reasonable rates. Other forces beyond the Group’s control, such as terrorist attacks or natural disasters may be uninsurable or simply too expensive to insure against. Inadequate or insufficient insurance could expose the Group to large claims or could result in the loss of capital invested in properties as well as the anticipated future revenue from properties, and could leave the Group responsible for guarantees, debt or other financial obligations related to the property.

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

      The future operating results of the Group could be adversely affected by industry over-capacity (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 Group.

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

      The room rates and occupancy levels of the Group 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 and avian flu), 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. A decrease in the demand for hotel rooms as a result of such events 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 Group.

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

The Group may experience a lack of selected development opportunities

      While the strategy of the Group is to extend the hotel network through activities that do not involve significant capital, in some cases the Group 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 Group is exposed to the risk of litigation

      The Group 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 US may include requests for punitive damages as well as compensatory damages. Exposure to litigation or fines imposed by regulatory authorities may affect the reputation of the Group even though the monetary consequences are not significant.

The Group is exposed to a variety of risks associated with its ability to borrow and satisfy debt covenants

      The Group is reliant on having access to borrowing facilities to meet its expected capital requirements and to maintain an efficient balance sheet. The majority of the Group’s borrowing facilities are only available if the financial covenants in the facilities are complied with. If the Group is not in compliance with the covenants, the lenders may demand the repayment of the funds advanced. If the Group’s financial performance does not meet market expectations it may not be able to refinance its existing facilities on terms

15

it considers favourable. The availability of funds for future financing is in part dependent on conditions and liquidity in the capital markets.

The Group is required to comply with data privacy regulations

      Existing and emerging data privacy regulations limit the extent to which the Group can use customer information for marketing or promotional purposes. Compliance with these regulations in each jurisdiction in which the Group operates may require changes in marketing strategies and associated processes which could increase operating costs or reduce the success with which products and services can be marketed to existing or future customers. In addition, non-compliance with privacy regulations may result in fines, damage to reputation or restrictions on the use or transfer of information.

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 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 benefits 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 March 17, 2006, being the latest practicable date prior to publication of this document, the Directors are not aware of any circumstances that would cause the trustees to deem it necessary to unilaterally increase the contribution rates.

ITEM 4.      INFORMATION ON THE COMPANY

SUMMARY

Group Overview

      The Group is a worldwide owner, operator and franchisor of hotels and resorts. Through its various subsidiaries it owned, managed, leased or franchised over 3,600 hotels and 537,000 guest rooms in nearly 100 countries and territories around the world, as at December 31, 2005. The Group’s brands include InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts, Holiday Inn Hotels & Resorts, Holiday Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo. The Group also manages the hotel loyalty program, Priority Club Rewards.

      With the disposal of the Group’s interests in Britvic, a manufacturer and distributor of soft drinks in the United Kingdom, by way of an initial public offering (“IPO”) in December 2005, the Group is now focused solely on hotel franchising, management and ownership.

      The Group’s revenue and earnings are derived from (i) hotel operations, which include operation of the Group’s owned hotels, management and other fees paid under management contracts, where the Group

16

operates third-parties’ hotels, and franchise and other fees paid under franchise agreements and (ii) until December 14, 2005, the manufacture and distribution of soft drinks.

      On March 17, 2006, InterContinental Hotels Group PLC had a market capitalization of approximately £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 a capital restructuring in June 2005, InterContinental Hotels Group PLC became the holding company for the Group. Six Continents Limited (formerly Six Continents PLC), which was formed in 1967, is the principal subsidiary company.

      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 410 100

      Internet address: www.ihgplc.com

      InterContinental Hotels Group PLC was incorporated in Great Britain on May 21, 2004 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 has undergone a major transformation in its operations and organization, as a result of the Separation (as discussed below) and a number of significant disposals during this period, which has narrowed the scope of its business.

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

Acquisitions and Dispositions

      Since the Separation in April 2003, the Group has sold or announced the sale of 168 hotels for aggregate proceeds of approximately £2.5 billion (see Figure 1). Of these 168 hotels, 150 have remained in the IHG system under Group brands through either franchise or management agreements. As of March 17, 2006 the Group had on the market a further seven InterContinental hotels all in Continental Europe. 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.

      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 sale 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 received upon the completion of the sale of the InterContinental Hotel in Austin, Texas on June 1, 2005. The Group continues to manage the hotels

17

(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 San Juan 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 Hotels 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 continues 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 LRG Acquisition Limited (“LRG”), a consortium comprising Lehman Brothers Real Estate Partners, GIC Real Estate and Realstar Asset Management. The transaction completed on May 24, 2005, with IHG receiving an initial £960 million in cash, before transaction costs, with a further £40 million to be received subject to meeting performance targets over the following three years. IHG entered into a management agreement on completion of this transaction with LRG for 63 of the hotels and currently operates a further five hotels under a temporary management agreement. One of the 63 hotels managed by IHG was removed from the IHG system on March 14, 2006.

      On September 1, 2005 the Group announced the sale of nine hotels in Australia and New Zealand to Eureka Funds Management Ltd (“Eureka”) for A$390 million in cash, before transaction costs, and the sale of the Holiday Inn, Suva, to a subsidiary of Fiji National Provident Fund (“FNPF”) for A$15 million in cash. Both transactions completed by October 31, 2005. IHG entered into management agreements on completion of these transactions with Eureka and FNPF for these hotels.

      On September 8, 2005 the Group announced the sale of InterContinental Hotel Paris for € 315 million. The transaction completed on November 1, 2005 at which time the hotel was removed from the IHG system.

      In a number of smaller transactions during 2005, the Group completed the sale of a further 13 hotels for proceeds of approximately £159 million.

      On January 25, 2006, the Group announced the sale to HPT of two hotels in the Americas. On March 13, 2006, the Group announced the sale to Westbridge Hospitality Fund LP, (“Westbridge”), of 24 hotels in the Europe, Middle East and Africa (“EMEA”) region. Westbridge is a joint venture between CADIM, a Montreal-based pension fund manager, and Westmont Hospitality, one of IHG’s largest franchisees. The portfolio has been sold for €352 million marginally above net asset value. IHG’s share of the proceeds is €345.2 million, before transaction costs, in cash and debt assumption, and the balance of € 6.8 million relates to third-party minority interests. IHG will franchise the hotels to the joint venture under 15 year franchise contracts.

      The Group has a further seven hotels in the EMEA region on the market. The book value of these hotels is approximately £300 million and they constitute the final tranche of hotels that IHG had previously announced it would sell.

      The asset disposal program which commenced in 2003 has significantly reduced the capital intensity of the Group whilst largely retaining the hotels in the IHG system through management and franchise agreements.

      Capital expenditure in 2005 totaled £183 million compared with £257 million in 2004. Capital expenditure for Hotels totaled £136 million, lower than 2004 as the Group continued its asset disposal program. Capital expenditure in 2005 for Hotels included the InterContinental London and Holiday Inn Munich refurbishments and a rolling rooms refurbishment program at the InterContinental Hong Kong.

      At December 31, 2005 capital committed, being contracts placed for expenditure on property, plant and equipment not provided for in the financial statements, totaled £76 million.

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      Following the completion of the expected hotel disposals in 2006, the Group will own 22 hotels.

FIGURE 1

Asset disposal program detail	Number of hotels		Proceeds		Net book value
			(£ billion)
Disposed to date		168		2.5		2.5
On the market		7		—		0.3
Remaining hotels		22		—		0.9

Return of Funds

      Since the Separation in April 2003, the Group has announced the return of £2.75 billion of funds to shareholders by way of special dividends, share repurchase programs and capital returns (see Figure 2).

      In 2005, 30.6 million shares were repurchased at an average price of 672 pence per share (total £206 million) as part of the second £250 million share repurchase program. On September 8, 2005, IHG announced a further £250 million share repurchase program to commence on completion of the second program. The precise timing of share purchases will be dependent upon, amongst other things, market conditions. By March 17, 2006, a total of 33.95 million shares had been repurchased under the second repurchase program at an average price per share of 686 pence per share (approximately £233 million). Purchases are made under the existing authority from shareholders which will be renewed at the Company’s Annual General Meeting. Any shares repurchased under these programs will be canceled.

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

      IHG returned a further £996 million to shareholders in July 2005 following its capital restructuring which enabled it to release the proceeds received in connection with the hotels disposals. Under the capital restructuring, shareholders received 11 new ordinary shares and £24.75 cash in exchange for every 15 existing ordinary shares held on June 24, 2005.

      On March 2, 2006, IHG announced that it intends to pay a £500 million special dividend to shareholders during the second quarter of 2006.

FIGURE 2

Return of funds program	Timing		Total return		Returned to date(i)		Still to be returned
					(£ million)
£501 million special dividend		Paid December 2004		501		501		Nil
First £250 million share buyback		Completed in 2004		250		250		Nil
Second £250 million share buyback		Ongoing		250		233		17
£996 million capital return		Paid 8 July 2005		996		996		Nil
Third £250 million share buyback		Yet to commence		250		—		250
£500 million special dividend		Second quarter 2006		500		—		500
Total				2,747		1,980		767

(i) As at March 17, 2006.

Hotels

      Hotels owns a number of hotel brands including InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts, Holiday Inn Hotels & Resorts, Holiday Inn Express (or Express by Holiday Inn outside of the Americas) (“Express”), Staybridge Suites, Candlewood Suites and Hotel Indigo, which at December 31,

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2005 comprised over 3,600 franchised, managed, owned or leased hotels and 537,000 guest rooms in nearly 100 countries and territories.

Soft Drinks

      In December 2005 IHG disposed of its interests in Britvic, one of the two leading manufacturers of soft drinks by value and volume in Great Britain, by way of IPO. IHG received aggregate proceeds of approximately £371 million (including two additional dividends, one of £47 million received in November 2005 and another of £89 million received in May 2005, but before any commissions or expenses). The Group results include the results of Soft Drinks for the period up until the IPO of Britvic on December 14, 2005.

SEGMENTAL INFORMATION

Geographic Segmentation

      The following table shows revenue and operating profit before other operating income and expenses in pounds sterling and percentage by geographical area, for the following periods: year ended December 31, 2005 and year ended December 31, 2004.

		Year ended			Year ended
		December 31,			December 31,
		2005			2004
		(£ million)
Revenue(1)(4)
	Americas		400			319
	Europe, the Middle East and Africa		326			301
	Asia Pacific		84			71
	Central		42			40
Continuing operations			852			731
	Americas		45			176
	Europe, the Middle East and Africa		956			1,234
	Asia Pacific		57			63
Discontinued operations(3)			1,058			1,473
Total			1,910			2,204
Operating profit before other operating income and expenses(1)(2)
	Americas		187			150
	Europe, the Middle East and Africa		47			24
	Asia Pacific		21			17
	Central		(65	)		(57	)
Continuing operations			190			134
	Americas		11			23
	Europe, the Middle East and Africa		127			182
	Asia Pacific		11			7
Discontinued operations(3)			149			212
Total			339			346

Footnotes on page 21.

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		Year ended			Year ended
		December 31,			December 31,
		2005			2004
		(%)
Revenue
	Americas		20.9			14.5
	Europe, the Middle East and Africa		17.1			13.7
	Asia Pacific		4.4			3.2
	Central		2.2			1.8
Continuing operations			44.6			33.2
	Americas		2.4			8.0
	Europe, the Middle East and Africa		50.0			56.0
	Asia Pacific		3.0			2.8
Discontinued operations			55.4			66.8
Total			100.0			100.0
Operating profit before other operating income and expenses
	Americas		55.2			43.4
	Europe, the Middle East and Africa		13.9			6.9
	Asia Pacific		6.2			4.9
	Central		(19.2	)		(16.5	)
Continuing operations			56.1			38.7
	Americas		3.2			6.6
	Europe, the Middle East and Africa		37.5			52.7
	Asia Pacific		3.2			2.0
Discontinued operations			43.9			61.3
Total			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 rate is 2005: £1 = $1.83; (2004: £1 = $1.82). In the case of the euro, the translation rate is 2005: £1 = €1.46; (2004: £1 = € 1.47).
(2)	Operating profit before other operating income and expenses does not include other operating income and expenses for all periods presented. Other operating income and expenses (charge unless otherwise noted) by region are the Americas (2005: £5 million; 2004: £15 million credit); Europe, the Middle East and Africa (2005: £12 million; 2004: £57 million); and Asia Pacific (2005: £5 million; 2004: £7 million).
(3)	Europe, the Middle East and Africa includes discontinued operations for Hotels (2005: £57 million; 2004: £105 million) and Soft Drinks (2005: £70 million; 2004: £77 million). The Americas and Asia Pacific discontinued operations all relate to Hotels. Hotels discontinued operations are all owned and leased.
(4)	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.

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Activity Segmentation

      The following table shows revenue and operating profit before other operating income and expenses in pounds sterling by activity and the percentage contribution of each activity for the following periods: year ended December 31, 2005 and year ended December 31, 2004.

			Year ended			Year ended
			December 31,			December 31,
			2005			2004
			(£ million)
Revenue(1)
	Hotels
		Americas		400			319
		Europe, the Middle East and Africa		326			301
		Asia Pacific		84			71
		Central(4)		42			40
Continuing operations				852			731
	Hotels(3)
		Americas		45			176
		Europe, the Middle East and Africa		285			528
		Asia Pacific		57			63
	Soft Drinks			671			706
Discontinued operations				1,058			1,473
Total				1,910			2,204
Operating profit before other operating income and expenses(1)(2)
	Hotels
		Americas		187			150
		Europe, the Middle East and Africa		47			24
		Asia Pacific		21			17
		Central(4)		(65	)		(57	)
Continuing operations				190			134
	Hotels(3)
		Americas		11			23
		Europe, the Middle East and Africa		57			105
		Asia Pacific		11			7
	Soft Drinks			70			77
Discontinued operations				149			212
Total				339			346

Footnotes on page 23.

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			Year ended			Year ended
			December 31,			December 31,
			2005			2004
			(%)
Revenue
	Hotels
		Americas		20.9			14.5
		Europe, the Middle East and Africa		17.1			13.7
		Asia Pacific		4.4			3.2
		Central		2.2			1.8
Continuing operations				44.6			33.2
	Hotels
		Americas		2.4			8.0
		Europe, the Middle East and Africa		14.9			24.0
		Asia Pacific		3.0			2.8
	Soft Drinks			35.1			32.0
Discontinued operations				55.4			66.8
Total				100.0			100.0
Operating profit before other operating income and expenses
	Hotels
		Americas		55.2			43.4
		Europe, the Middle East and Africa		13.9			6.9
		Asia Pacific		6.2			4.9
		Central		(19.2	)		(16.5	)
Continuing operations				56.1			38.7
	Hotels
		Americas		3.2			6.6
		Europe, the Middle East and Africa		16.8			30.3
		Asia Pacific		3.2			2.0
	Soft Drinks			26.7			22.4
	Discontinued operations			43.9			61.3
Total				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 rate is 2005: £1 = $1.83 (2004: £1 = $1.82). In the case of the euro, the translation rate is 2005: £1 = €1.46 (2004: £1 = € 1.47).
(2)	Operating profit before other operating income and expenses does not include other operating income and expenses for all periods presented. Other operating income and expenses items (charge unless otherwise noted) by business segment are the Americas (2005: £7 million; 2004: £15 million credit); Europe, the Middle East and Africa (2005: £10 million; 2004: £57 million); and Asia Pacific (2005: £5 million; 2004: £7 million).
(3)	Hotels discontinued operations are all owned and leased.
(4)	Central relates to global functions. Revenue relates to Holidex fee income.

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HOTELS

Overview

      InterContinental Hotels Group is an international hotel business which owns a portfolio of well-recognized and respected hotel brands, including InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts, Holiday Inn Hotels & Resorts, Holiday Inn Express (Express by Holiday Inn outside the Americas), Staybridge Suites, Candlewood Suites and Hotel Indigo, with 3,606 franchised, managed, owned and leased hotels and 537,533 guest rooms across nearly 100 countries and territories as at December 31, 2005. Approximately 97% of the Group’s rooms are operated under managed and franchised models.

      The Group operates in a global market, providing hotel rooms to guests. Total room capacity in hotels and similar establishments worldwide is estimated at 18.4 million rooms. This has been growing at approximately 3% per annum over the last five years. The hotel market is geographically concentrated with 12 countries accounting for two-thirds of worldwide hotel room supply. The Group has a leadership position (top three by room numbers) in six of these 12 countries — United States, United Kingdom, Mexico, Canada, Greater China and Australia — more than any other major hotel company.

      The hotel market is, however, a fragmented market with the four largest companies controlling only 11% of the global hotel room supply and the ten largest controlling less than 20%. The Group is the largest of these companies (by room numbers), with a 3% market share. The major competitors in this market include other major global hotel companies, smaller hotel companies and independent hotels.

      Within the global market, a relatively low proportion of hotel rooms are branded (see Figure 3), but there has been an increasing trend towards branded rooms and market research company, Mintel, estimates that the proportion of branded rooms in Europe has grown from 15% in 2000 to 25% in 2004. Larger branded companies are therefore gaining market share at the expense of smaller companies and independent hotels. The Group is well positioned to benefit from this trend. Hotel owners are increasingly recognising the benefits of belonging to a branded portfolio, particularly an extended brand family like the Group’s which can offer various brands to suit different opportunities owners may have. Furthermore, hotel ownership is increasingly being separated from hotel branding and this requires hotel owners to use third-parties like the Group to operate or brand their hotels.

FIGURE 3

Percentage of branded hotel rooms by region	2004
North America		65	%
Europe		25	%
South America		20	%
Middle East		25	%
East Asia		25	%

Source: Mintel

     US market data shows a steady increase in demand in the hotel market, broadly in line with Gross Domestic Product, and shows growth of approximately 1 – 1.5% per annum in real terms since 1967, driven by a number of underlying trends:

•  demographics — as the population ages, increased leisure time drives more travel and hotel visits;

•  disposable income rising as the global population becomes older and wealthier;

•  travel volumes increasing as low cost airlines grow rapidly;

•  globalization of trade and tourism;

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•  the increasing affluence and freedom to travel of the Chinese middle class; and

•  brand preference amongst consumers is increasing.

      Suppressing this demand are potential negative trends including increased terrorism, health and environmental considerations and economic factors such as rising oil prices. Currently, however, there are no indications that demand is being significantly affected by these factors.

      Supply growth in the industry is cyclical, averaging between zero and 5% per annum historically. The Group’s profit is to a large extent protected from supply pressure due to its model of third-party ownership of hotels under Group management and franchise contracts, although periods of extreme or prolonged pressure may adversely affect the Group.

Operations

      The Group currently operates 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 2005, 75% of the Group’s rooms were franchised, with 87% 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 agreed with 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 2005, 22% 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 own only hotels where it is considered strategically important to do so. Rooms owned or leased by the Group at the end of 2005 represented 3% 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.

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      The following table shows the number of hotels and rooms owned, managed or franchised by IHG at December 31, 2005, December 31, 2004 and December 31, 2003.

					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
2005		55		15,485		504		121,249		3,047		400,799		3,606		537,533
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

      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.

Strategy

      The Group’s strategy is to become the preferred hotel company for guests and owners, by building the strongest operating system in the industry, focused on the biggest markets and segments where scale really counts.

      The Group has four stated strategic priorities:

•  brand performance — to operate a portfolio of brands attractive to both owners and guests, that have clear market positions in relation to competitors;

•  excellent hotel returns — to generate higher owner returns through revenue delivery and improved operating efficiency;

•  market scale and knowledge — to accelerate profitable growth in the largest markets where the Group currently has scale; and

•  aligned organization — to create a more efficient organization with strong core capabilities.

      Executing the four strategic priorities is designed to achieve:

•  organic growth, from June 2005, of 50,000 to 60,000 net rooms by the end of 2008 taking total room numbers from approximately 538,000 to approximately 588,000 to 598,000;

•  out-performance of Total Shareholder Return (“TSR”) against a competitor set; and

•  improved Return on Capital Employed (“ROCE”).

      Growth is expected to come predominantly from managing and franchising rather than owning hotels. The managed and franchised model is attractive because it enables the Group to achieve its goals with limited capital. With a relatively fixed cost base, such growth yields high incremental margins for the Group, and is primarily how the Group has grown to date. For this reason, the Group has executed a disposal program of its owned hotels, releasing capital and enabling returns of funds to shareholders (see “Item 3. Key Information — Risk Factors”).

      The main characteristic of the managed and franchised business model on which the Group has focused is that it is highly cash generative, with high ROCE. Over 3,500 hotels operating under Group brands are managed or franchised.

      The Group aims to deliver its growth targets through one of the strongest operating systems in the industry which includes:

•  a strong brand portfolio across the major markets, including two iconic brands: InterContinental and Holiday Inn;

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•  market coverage — a presence in nearly 100 countries and territories;

•  hotel distribution — 3,606 hotels, 537,533 rooms, 126 million guest stays per annum;

•  IHG global reservation channels delivering over $4.8 billion of rooms sales value to owners of Group managed hotels, franchisees and to the Group itself (“global system rooms sales”) in 2005, including $1.7 billion global system rooms sales from the internet. IHG reservation systems take over 22 million calls per annum;

•  A loyalty program, Priority Club Rewards, contributing $3.8 billion of global system rooms sales; and

•  A strong web presence — holiday-inn.com is the industry’s most visited site, with 75 million total site visits per annum.

      With a clear target for rooms’ growth and many brands with significant market premiums offering excellent returns for owners, the Group is well placed to execute its strategy and achieve its goals.

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Segmental Results

      The following table shows revenue and operating profit before other operating income and expenses in pounds sterling of the IHG continuing Hotels business by activity and the percentage contribution of each activity for the following periods: year ended December 31, 2005 and year ended December 31, 2004.

			Year ended			Year ended
			December 31,			December 31,
			2005			2004
			(£ million)
Continuing revenue(1)(2)
	Americas
		Owned and leased		123			94
		Managed		64			30
		Franchised		213			195
				400			319
	EMEA
		Owned and leased		236			231
		Managed		55			43
		Franchised		35			27
				326			301
	Asia
		Owned and leased		56			47
		Managed		25			21
		Franchised		3			3
				84			71
	Central(3)			42			40
Total				852			731
Continuing operating profit before other operating income and expenses(1)(2)
	Americas
		Owned and leased		15			4
		Managed		20			6
		Franchised		186			167
		Regional overheads		(34	)		(27	)
				187			150
	EMEA
		Owned and leased		11			2
		Managed		31			24
		Franchised		26			21
		Regional overheads		(21	)		(23	)
				47			24
	Asia Pacific
		Owned and leased		10			9
		Managed		16			14
		Franchised		3			2
		Regional overheads		(8	)		(8	)
				21			17
	Central(3)			(65	)		(57	)
Total				190			134

Footnotes on page 29.

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			Year ended			Year ended
			December 31,			December 31,
			2005			2004
			(%)
Continuing revenue
	Americas
		Owned and leased		14.4			12.8
		Managed		7.5			4.1
		Franchised		25.0			26.7
				46.9			43.6
	EMEA
		Owned and leased		27.7			31.6
		Managed		6.5			5.9
		Franchised		4.1			3.7
				38.3			41.2
	Asia Pacific
		Owned and leased		6.6			6.4
		Managed		2.9			2.9
		Franchised		0.4			0.4
				9.9			9.7
	Central(3)			4.9			5.5
Total				100.0			100.0
Continuing operating profit before other operating income and expenses
	Americas
		Owned and leased		7.9			3.0
		Managed		10.5			4.5
		Franchised		97.9			124.6
		Regional overheads		(17.9	)		(20.1	)
				98.4			112.0
	EMEA
		Owned and leased		5.8			1.5
		Managed		16.3			17.9
		Franchised		13.7			15.7
		Regional overheads		(11.1	)		(17.2	)
				24.7			17.9
	Asia Pacific
		Owned and leased		5.3			6.7
		Managed		8.4			10.4
		Franchised		1.6			1.5
		Regional overheads		(4.2	)		(6.0	)
				11.1			12.6
	Central(3)			(34.2	)		(42.5	)
Total				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 2005: £1 = $1.83; (2004: £1 = $1.82).
(2)	Amounts are reported by origin.
(3)	Central relates to global functions. Revenue relates to Holidex fee income.

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     The following table shows revenue and operating profit in US dollars of the IHG continuing Hotels business by activity and the percentage contribution of each activity for the following periods: year ended December 31, 2005 and year ended December 31, 2004.

			Year ended			Year ended
			December 31,			December 31,
			2005			2004
			($ million)
Continuing revenue(1)
	Americas
		Owned and leased		224			171
		Managed		118			55
		Franchised		389			357
				731			583
	EMEA
		Owned and leased		431			421
		Managed		100			78
		Franchised		64			49
				595			548
	Asia Pacific
		Owned and leased		102			86
		Managed		45			38
		Franchised		6			5
				153			129
	Central(2)			76			73
Total				1,555			1,333
Continuing operating profit before other operating income and expenses(1)
	Americas
		Owned and leased		28			7
		Managed		36			12
		Franchised		340			304
		Regional overheads		(62	)		(50	)
				342			273
	EMEA
		Owned and leased		20			4
		Managed		57			44
		Franchised		47			38
		Regional overheads		(38	)		(42	)
				86			44
	Asia Pacific
		Owned and leased		19			17
		Managed		29			25
		Franchised		5			3
		Regional overheads		(15	)		(15	)
				38			30
	Central(2)			(119	)		(104	)
Total				347			243

Footnotes on page 31.

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			Year ended			Year ended
			December 31,			December 31,
			2005			2004
			(%)
Continuing revenue
	Americas
		Owned and leased		14.4			12.8
		Managed		7.6			4.1
		Franchised		25.0			26.8
				47.0			43.7
	EMEA
		Owned and leased		27.7			31.6
		Managed		6.4			5.8
		Franchised		4.1			3.7
				38.2			41.1
	Asia Pacific
		Owned and leased		6.6			6.4
		Managed		2.9			2.9
		Franchised		0.4			0.4
				9.9			9.7
	Central(2)			4.9			5.5
Total				100.0			100.0
Continuing operating profit before other operating income and expenses
	Americas
		Owned and leased		8.1			2.9
		Managed		10.4			4.9
		Franchised		98.0			125.1
		Regional overheads		(17.9	)		(20.5	)
				98.6			112.4
	EMEA
		Owned and leased		5.8			1.7
		Managed		16.4			18.1
		Franchised		13.5			15.6
		Regional overheads		(11.0	)		(17.3	)
				24.7			18.1
	Asia
		Owned and leased		5.5			7.0
		Managed		8.4			10.3
		Franchised		1.4			1.2
		Regional overheads		(4.3	)		(6.2	)
				11.0			12.3
	Central(2)			(34.3	)		(42.8	)
Total				100.0			100.0

(1)	Amounts are reported by origin.
(2)	Central relates to global functions. Revenue relates to Holidex fee income.

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Global System

      The Group supports revenue delivery into its hotels through its global reservation system and global loyalty program (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 Priority Club Rewards loyalty program. Members enjoy a variety of privileges and rewards as they stay at the Group’s hotels around the world. IHG has alliances with over 40 airlines, which enable members to collect frequent flyer miles, and with external partners such as car hire companies and credit card companies, which provide exposure and access to IHG’s system. Global system rooms sales generated from Priority Club Rewards members was $3.8 billion and represented approximately 32% of IHG global system rooms sales.

      Central Reservation System Technology: The Group operates the HolidexPlus reservation system. The HolidexPlus system receives 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 system immediately confirms reservations or indicates 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 2005, the internet channel continued to show strong growth, with global system rooms sales booked through the internet increasing by 23% to $1.7 billion. Approximately 14% of IHG global system rooms sales 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 (up from 13% in 2004). IHG made further progress in 2005 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 2005, IHG had certified most major third-party distributors including Travelocity, Travelocity Business, Priceline, Orbitz, Lastminute.com, Zuji, Hotel.de and HRS. About 86% of IHG global system rooms sales booked on the web is now booked directly through the Group’s own brand sites. Arabic and Hebrew language websites have been added to the Group’s seven local language websites already available.

      The Group estimates that, during 2005, global system rooms sales booked through these reservation systems (which include company reservation centers, global distribution systems and internet reservations) rose by approximately 19% to $4.8 billion, and the proportion of IHG global system rooms sales booked through IHG’s reservation channels increased from 38% to 41%.

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.

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;

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•  making the direct channels the best available; and

•  improving pricing structure.

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 was launched in the United Kingdom in 2005. Candlewood Suites operates exclusively in the United States.

	December 31, 2005
Brands	Room numbers		Hotels
InterContinental		46,262		137
Crowne Plaza		65,404		235
Holiday Inn		267,816		1,435
Express		133,554		1,590
Staybridge Suites		9,915		87
Candlewood Suites		12,683		112
Hotel Indigo		497		3
Other(1)		1,402		7
Total		537,533		3,606

(1)  Other comprises seven non-IHG branded hotels under IHG management.

InterContinental

	Americas		Americas		EMEA		EMEA
	total		O & L		total		O & L		Asia Pacific
Average room rate $(1)		141.55		224.83		167.10		234.37		154.07
Room numbers(2)		15,328		1,847		21,473		3,843		9,461

(1)	For the year ended December 31, 2005; quoted at constant US$ exchange rate. Owned and leased average room rate is for comparable InterContinental hotels.
(2)	As at December 31, 2005.

     InterContinental is IHG’s global premium hotel brand. The brand aims to meet the tastes of discerning business and leisure travellers. InterContinental hotels are generally located in prime locations in major cities and key resorts around the world. There were 137 InterContinental hotels in 60 countries and territories which represented 8.6% of all of IHG’s hotel rooms as at December 31, 2005.

      InterContinental hotels are principally owned, leased or managed by the Group. The brand is one of the largest international premium hotel brands based on room numbers and has more than 50 years of heritage. 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 2005, seven new InterContinental hotels were added to the portfolio. After dispositions there was a net gain of five in the total number of InterContinental hotels.

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Crowne Plaza

	Americas		Americas		EMEA		EMEA
	total		O & L		total		O & L		Asia Pacific
Average room rate $(1)		103.16		73.41		132.08		124.20		89.22
Room numbers(2)		37,074		293		16,031		2,063		12,299

(1)	For the year ended December 31, 2005; quoted at constant US$ exchange rate. Owned and leased average room rate is for comparable Crowne Plaza hotels.
(2)	As at December 31, 2005.

     Crowne Plaza is IHG’s global upscale hotel brand which had grown to 235 hotels worldwide by December 31, 2005. Defined as “the Place to Meet”, the brand is targeted at the business guest, with a particular focus on executive meetings and business events. Mostly located in principal cities, the upscale Crowne Plaza hotels provide the high level of comfort, amenities, services, facilities and meeting space expected by business and leisure travellers of a full service hotel. Crowne Plaza represented 12% of IHG hotel rooms as at December 31, 2005.

      Approximately 60% of the upscale Crowne Plaza hotels and resorts are franchised hotels. As at December 31, 2005, 57% 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 2005, 24 Crowne Plaza hotels were added to the portfolio while four were removed, resulting in a net increase of 20 hotels.

Holiday Inn

	Americas		Americas		EMEA		EMEA
	total		O & L		total		O & L		Asia Pacific
Average room rate $(1)		85.18		89.72		105.76		127.87		71.78
Room numbers(2)		195,004		1,882		50,944		3,031		21,868

(1)	For the year ended December 31, 2005; quoted at constant US$ exchange rate. Owned and leased average room rate is for comparable Holiday Inn hotels.
(2)	As at December 31, 2005.

     Holiday Inn is one of the world’s most recognized hotel brands, with a global reputation for full service, comfort and value. 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. The Holiday Inn brand continues to expand and evolve globally to provide convenient and productive facilities for business travellers as well as memorable holiday experiences for families.

      There were 1,435 Holiday Inn hotels located in more than 70 countries and territories which represented 50% of all IHG’s hotel rooms as at December 31, 2005. The brand is predominantly franchised. As at December 31, 2005, 73% of the Holiday Inn branded hotels were located in the Americas.

      During 2005, the Group sold 82 hotels in several transactions, retaining 78 under the Holiday Inn brand.

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Express

	Americas		EMEA		EMEA
	total		total		O & L		Asia Pacific
Average room rate $(1)		80.65		96.86		77.37		47.70
Room numbers(2)		115,810		16,971		1,604		773

(1)	For the year ended December 31, 2005; quoted at constant US$ exchange rate. Owned and leased average room rate is for comparable Express hotels.
(2)	As at December 31, 2005.

     Express is a rapidly growing, fresh and uncomplicated brand, offering limited-service comfort, convenience and good value. 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 and enter the midscale limited service market. The brand aims to provide the room quality of midscale hotels where guests enjoy smart bedrooms, contemporary bathrooms and complimentary breakfast.

      There were 1,590 Express hotels worldwide, which represented 25% of IHG’s hotel rooms as at December 31, 2005. Express is one of the largest brands in the US midscale limited service sector based on room numbers, and approximately 87% 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 2005, 135 new Holiday Inn Express hotels were added to the portfolio, while 57 hotels were removed from the portfolio, resulting in a net gain of 78 hotels. A further 421 franchise agreements were signed, adding to the system pipeline.

Staybridge Suites

	Americas
	total
Average room rate $(1)		92.80
Room numbers(2)		9,915

(1)	For the year ended December 31, 2005; quoted at constant US$ exchange rate.
(2)	As at December 31, 2005.

     Staybridge Suites is IHG’s organically developed long-stay upscale brand that offers guests a home away from home. The rooms offer more space than the typical hotel room, offering studios and one and two bedroom suites, complete with kitchens and living rooms, work stations and high-speed internet access, along with breakfast. As at December 31, 2005, there were 87 Staybridge Suites hotels, all of which are presently located in the Americas, representing 1.8% 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 2005, nine hotels were added to the portfolio with one removal.

      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.

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Candlewood Suites

	Americas
	total
Average room rate $(1)		62.03
Room numbers(2)		12,683

(1)	For the year ended December 31, 2005; quoted at constant US$ exchange rate.
(2)	As at December 31, 2005.

     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 carefully designed and purpose-built hotels created for stays of a week or longer with studio and one-bedroom suites featuring well-equipped kitchens, spacious work areas and an array of convenient amenities. As at December 31, 2005 there were 112 Candlewood Suites hotels. 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 2005, Candlewood Suites represented 2.4% of all of the Group’s rooms.

Hotel Indigo

      In April 2004, the Group launched its seventh brand, Hotel Indigo, which is a new, innovative brand, designed for the style-conscious traveller who seeks the ambience of a boutique hotel with the benefits and consistencies of a global hotel operation. Inspired by lifestyle retailing, it features inviting service, inspiring artwork, casual gourmet restaurants, airy guest rooms and 24-hour business amenities. The first Hotel Indigo opened in Atlanta, Georgia in the United States in October 2004. A further two were added to the system in Chicago and as at December 31, 2005 there were three Hotel Indigo hotels, with 497 rooms. The Group plans to open a further seven Hotel Indigo properties by the end of 2006.

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 other operating income and expenses, the Americas represented 49%, EMEA represented 43% and the Asia Pacific region represented 8% in the year ended December 2005.

      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)		71.9		19.6		8.5
Hotel level operating profit (before central overheads and other operating income and expenses)(2)		49%		43%		8%

(1)	As at December 31, 2005.
(2)	For the year ended December 31, 2005.

36

     The following table shows information concerning the geographical locations and ownership of IHG’s hotels as at December 31, 2005.

						Management
						contract and joint
		Owned or leased				ventures				Franchised				Total
		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
United States
	InterContinental		3		1,490		9		3,938		1		263		13		5,691
	Crowne Plaza		—		—		17		6,482		90		24,829		107		31,311
	Holiday Inn		3		758		46		14,228		843		157,191		892		172,177
	Express		—		—		1		252		1,355		108,084		1,356		108,336
	Staybridge		2		229		35		4,287		46		4,896		83		9,412
	Candlewood		—		—		76		9,218		36		3,465		112		12,683
	Hotel Indigo		—		—		2		305		1		192		3		497
	Other		—		—		2		295		—		—		2		295
Total			8		2,477		188		39,005		2,372		298,920		2,568		340,402
Rest of Americas
	InterContinental		1		357		12		3,779		19		5,501		32		9,637
	Crowne Plaza		1		293		2		357		23		5,113		26		5,763
	Holiday Inn		2		1,124		4		1,844		129		19,859		135		22,827
	Express		—		—		—		—		69		7,474		69		7,474
	Staybridge		—		—		2		335		2		168		4		503
	Candlewood		—		—		—		—		—		—		—		—
	Hotel Indigo		—		—		—		—		—		—		—		—
	Other		—		—		—		—		—		—		—		—
Total			4		1,774		20		6,315		242		38,115		266		46,204
Total Americas
	InterContinental		4		1,847		21		7,717		20		5,764		45		15,328
	Crowne Plaza		1		293		19		6,839		113		29,942		133		37,074
	Holiday Inn		5		1,882		50		16,072		972		177,050		1,027		195,004
	Express		—		—		1		252		1,424		115,558		1,425		115,810
	Staybridge		2		229		37		4,622		48		5,064		87		9,915
	Candlewood		—		—		76		9,218		36		3,465		112		12,683
	Hotel Indigo		—		—		2		305		1		192		3		497
	Other		—		—		2		295		—		—		2		295
Total			12		4,251		208		45,320		2,614		337,035		2,834		386,606

37

						Management
						contract and joint
		Owned or leased				ventures				Franchised				Total
		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
United Kingdom
	InterContinental		1		451		—		—		—		—		1		451
	Crowne Plaza		—		—		6		1,530		7		1,656		13		3,186
	Holiday Inn		—		—		69		11,757		41		5,625		110		17,382
	Express		—		—		1		120		102		10,586		103		10,706
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		—		—		—		—		—		—
Total			1		451		76		13,407		150		17,867		227		31,725
Europe
	InterContinental		8		3,007		13		4,542		3		1,097		24		8,646
	Crowne Plaza		8		2,063		7		1,886		20		4,402		35		8,351
	Holiday Inn		12		3,031		7		1,281		159		23,023		178		27,335
	Express		11		1,604		9		1,007		36		3,338		56		5,949
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		—		—		—		—		—		—
Total			39		9,705		36		8,716		218		31,860		293		50,281
The Middle East and Africa
	InterContinental		1		385		35		10,939		4		1,052		40		12,376
	Crowne Plaza		—		—		11		3,079		5		1,415		16		4,494
	Holiday Inn		—		—		18		3,556		14		2,671		32		6,227
	Express		—		—		—		—		2		316		2		316
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		—		—		—		—		—		—
Total			1		385		64		17,574		25		5,454		90		23,413
Total EMEA
	InterContinental		10		3,843		48		15,481		7		2,149		65		21,473
	Crowne Plaza		8		2,063		24		6,495		32		7,473		64		16,031
	Holiday Inn		12		3,031		94		16,594		214		31,319		320		50,944
	Express		11		1,604		10		1,127		140		14,240		161		16,971
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		—		—		—		—		—		—
Total			41		10,541		176		39,697		393		55,181		610		105,419

38

						Management
						contract and joint
		Owned or leased				ventures				Franchised				Total
		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
Far East and Australasia (Asia Pacific)
	InterContinental		1		495		18		6,606		8		2,360		27		9,461
	Crowne Plaza		—		—		32		10,468		6		1,831		38		12,299
	Holiday Inn		1		198		62		17,415		25		4,255		88		21,868
	Express		—		—		3		636		1		137		4		773
	Staybridge		—		—		—		—		—		—		—		—
	Candlewood		—		—		—		—		—		—		—		—
	Other		—		—		5		1,107		—		—		5		1,107
Total			2		693		120		36,232		40		8,583		162		45,508
Total
	InterContinental		15		6,185		87		29,804		35		10,273		137		46,262
	Crowne Plaza		9		2,356		75		23,802		151		39,246		235		65,404
	Holiday Inn		18		5,111		206		50,081		1,211		212,624		1,435		267,816
	Express		11		1,604		14		2,015		1,565		129,935		1,590		133,554
	Staybridge		2		229		37		4,622		48		5,064		87		9,915
	Candlewood		—		—		76		9,218		36		3,465		112		12,683
	Hotel Indigo		—		—		2		305		1		192		3		497
	Other		—		—		7		1,402		—		—		7		1,402
Total			55		15,485		504		121,249		3,047		400,799		3,606		537,533

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 2,834 hotels, the Americas represented the bulk of hotels and approximately 49% of Hotels’ operating profit before central costs and other operating income and expenses during the year ended December 31, 2005. 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 610 hotels at the end of 2005, EMEA represented approximately 43% of Hotels’ operating profit before central costs and other operating income and expenses during the year ended December 31, 2005. The key profit producing regions are the United Kingdom and the main continental European gateway cities.

Asia Pacific

      Asia Pacific represented 8.5% of Hotels’ rooms and 8% of Hotels’ operating profit before central costs and other operating income and expenses during the year ended December 31, 2005. IHG has a strong and growing presence in Asia Pacific, comprising 162 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. As at December 31, 2005 the Group had 51 hotels in Greater China and a further 38 in development.

39

Room Count and System Pipeline

      The IHG global system (that is, the number of hotels/rooms owned, leased, managed or franchised by the Group) grew significantly during 2005 ending the fiscal year at 3,606 hotels and 537,533 rooms, 66 hotels and 3,331 rooms higher than at December 31, 2004 (see Figure 4). During 2005, 254 hotels with 34,880 rooms were added to the system, while 188 hotels with 31,549 rooms were removed from the system. Of the hotels removed from the system, 139 (21,764 rooms) were in the Americas and 46 (7,896 rooms) were in EMEA. The EMEA removals included 6,338 rooms from the termination of franchise agreements in South Africa. Excluding the South African franchise removals and eight hotels (2,135 rooms) removed from the system due to hurricane damage, net system size increased by 101 hotels (11,804 rooms).

      One of the key elements of the asset disposal program is the retention of management contracts for the hotels sold. Of those sold between Separation and December 31, 2005, management contracts or franchise agreements were retained for 126 hotels. Overall, the number of owned and leased rooms fell by 22,935 while the number of managed and franchised rooms in the system grew by 22,296 rooms and 3,970 rooms respectively.

      At the end of 2005, the number of rooms in the pipeline (that is, contracts signed but hotels/ rooms yet to enter the system) was 108,512 — 31% up on December 31, 2004 and the highest ever for the Group (see Figure 5). This positions the Group well to achieve its stated goal of organic growth of 50,000 to 60,000 net rooms in the period June 2005 to December 2008. Whilst there is no guarantee that all of the pipeline will enter the system in that period, a number of initiatives are in place to both secure new deals and to reduce the time between a hotel signing with IHG and opening.

      The growth in pipeline was fuelled by record signings during 2005; 69,970 rooms were signed which was over 60% up on the average for the last five years. This partly reflects the increased investment in development resource particularly in the Americas and Asia Pacific.

      Since the year end, IHG has announced that it has signed contracts with a single owner to manage six hotels (over 4,500 rooms) in China’s Sichuan province, and it has announced further signings with a second owner to manage four hotels with over 1,400 rooms, also in China.

      There are no assurances that all of the hotels in the pipeline 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.

40

FIGURE 4

		Hotels					Rooms
				Change					Change
Global hotel and room count at December 31, 2005		2005		over 2004			2005		over 2004
Analyzed by brand:
	InterContinental		137		5			46,262		1,746
	Crowne Plaza		235		20			65,404		3,777
	Holiday Inn		1,435		(49	)		267,816		(10,971	)
	Holiday Inn Express		1,590		78			133,554		7,519
	Staybridge Suites		87		8			9,915		726
	Candlewood Suites		112		3			12,683		276
	Hotel Indigo		3		2			497		357
	Other brands		7		(1	)		1,402		(99	)
Total			3,606		66			537,533		3,331
Analyzed by ownership type:
	Owned and leased		55		(111	)		15,485		(22,935	)
	Managed		504		101			121,249		22,296
	Franchised		3,047		76			400,799		3,970
Total			3,606		66			537,533		3,331

FIGURE 5

		Hotels				Rooms
				Change				Change
Global pipeline at December 31, 2005		2005		over 2004		2005		over 2004
Analyzed by brand:
	InterContinental		27		6		9,353		2,513
	Crowne Plaza		54		17		13,514		4,201
	Holiday Inn		204		48		31,035		5,630
	Holiday Inn Express		429		71		38,066		6,351
	Staybridge Suites		79		27		8,195		2,843
	Candlewood Suites		83		37		7,467		3,583
	Hotel Indigo		8		5		882		494
Total			884		211		108,512		25,615
Analyzed by ownership type:
	Owned and leased		2		—		574		(96	)
	Managed		98		14		27,805		5,387
	Franchised		784		197		80,133		20,324
Total			884		211		108,512		25,615

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.

41

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 Worldwide, Inc., Choice Hotels International, Inc., Best Western International, Inc., Hilton Hotels Corporation, Cendant Corporation, Four Seasons Hotels Inc. and Accor S.A.

Key Relationships

      The Group has a number of significant relationships with hotel owning groups, where IHG manages hotels on behalf of the owners and earns fees based on the performance of the hotels.

      On January 25, 2006 IHG announced a restructured management agreement with Felcor Lodging Trust Inc., (“FelCor”), covering all of the hotels (15,790 rooms) owned by FelCor and managed by IHG. Seventeen hotels (6,301 rooms) will be retained by FelCor and managed by IHG, under revised contract terms (the contract duration has been extended to 2025 and the incentive fees on all the hotels have been rebased). HPT has purchased seven of the hotels (2,072 rooms) from FelCor for $160 million, which IHG will continue to manage under a separate management agreement. There is no increase in the guarantees to HPT (described in “Item 10. Additional Information — Material Contracts”) as a result of this transaction. Nine further hotels (2,463 rooms) can be sold by FelCor, retaining a Group brand. FelCor has the right to sell or convert a further 15 hotels (4,954 rooms); with or without an IHG brand.

      Since the year end, the Group has sold its entire shareholding in FelCor for $191 million in cash.

Performance Indicators

      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						Managed
			comparable						comparable						Franchised
						Change vs						Change vs						Change vs
			2005			2004			2005			2004			2005			2004
Americas
	InterContinental
		Occupancy		76.3	%		4.2	% pts.		66.9	%		6.4	% pts.		60.1	%		2.2	% pts.
		Average daily rate	$	224.83			11.2	%	$	145.42			5.1	%	$	111.82			10.1	%
		RevPAR	$	171.54			17.7	%	$	95.32			16.2	%	$	67.17			14.3	%
	Crowne Plaza
		Occupancy		66.1	%		3.8	% pts.		72.2	%		2.3	% pts.		61.9	%		(0.3	)% pts.
		Average daily rate	$	73.41			1.5	%	$	117.36			9.4	%	$	98.62			8.9	%
		RevPAR	$	48.52			7.6	%	$	84.78			12.9	%	$	61.02			8.4	%
	Holiday Inn
		Occupancy		70.6	%		2.9	% pts.		68.4	%		3.1	% pts.		61.8	%		1.5	% pts.
		Average daily rate	$	89.72			9.3	%	$	83.39			6.0	%	$	85.47			6.5	%
		RevPAR	$	63.33			14.0	%	$	57.01			11.0	%	$	52.80			9.2	%

42

		Owned & leased						Managed
		comparable						comparable						Franchised
					Change vs						Change vs						Change vs
		2005			2004			2005			2004			2005			2004
Express
	Occupancy		—			—			75.1	%		5.4	% pts.		66.7	%		2.2	% pts.
	Average daily rate		—			—		$	119.12			8.4	%	$	80.57			6.7	%
	RevPAR		—			—		$	89.51			16.8	%	$	53.71			10.3	%
Staybridge Suites
	Occupancy		75.1	%		4.4	% pts.		75.5	%		1.3	% pts.		73.7	%		2.9	% pts.
	Average daily rate	$	78.77			1.8	%	$	94.22			7.3	%	$	91.29			5.2	%
	RevPAR	$	59.12			8.1	%	$	71.16			9.1	%	$	67.28			9.5	%
Candlewood Suites
	Occupancy		—			—			75.0	%		3.6	% pts.		69.8	%		1.2	% pts.
	Average daily rate		—			—		$	61.03			9.2	%	$	64.99			3.3	%
	RevPAR		—			—		$	45.76			14.8	%	$	45.33			5.2	%

      Owned and leased, and managed statistics are for comparable hotels, and include only those hotels in the IHG system as of December 31, 2005 and owned and leased, or managed by the Group since January 1, 2004.

      The comparison with 2004 is at constant US$ exchange rates.

			Owned & leased						Managed
			comparable						comparable						Franchised
						Change vs						Change vs						Change vs
			2005			2004			2005			2004			2005			2004
EMEA
	InterContinental
		Occupancy		69.5	%		5.1	% pts.		62.7	%		1.7	% pts.		68.5	%		10.3	% pts.
		Average daily rate	$	234.37			5.0	%	$	141.75			6.6	%	$	158.71			6.4	%
		RevPAR	$	162.99			13.3	%	$	88.83			9.5	%	$	108.78			25.2	%
	Crown Plaza
		Occupancy		67.5	%		3.2	% pts.		73.2	%		0.6	% pts.		63.7	%		2.3	% pts.
		Average daily rate	$	124.20			(0.1	)%	$	134.68			13.3	%	$	131.74			5.7	%
		RevPAR	$	83.80			4.9	%	$	98.63			14.3	%	$	83.94			9.6	%
	Holiday Inn
		Occupancy		62.5	%		(2.6	)% pts.		71.1	%		1.4	% pts.		64.8	%		0.5	% pts.
		Average daily rate	$	127.87			(1.3	)%	$	107.41			4.6	%	$	102.95			4.1	%
		RevPAR	$	79.94			(5.3	)%	$	76.34			6.7	%	$	66.68			4.9	%
	Express
		Occupancy		65.5	%		4.1	% pts.		60.8	%		10.1	% pts.		69.4	%		1.3	% pts.
		Average daily rate	$	77.37			(2.7	)%	$	80.67			(3.0	)%	$	99.80			3.8	%
		RevPAR	$	50.64			3.8	%	$	49.06			16.4	%	$	69.27			5.9	%

      Owned and leased, and managed statistics are for comparable hotels, and include only those hotels in the IHG system as of December 31, 2005 and owned and leased, or managed by the Group since January 1, 2004.

      The comparison with 2004 is at constant US$ exchange rates.

43

			Owned & leased						Managed
			comparable						comparable						Franchised
						Change vs						Change vs						Change vs
			2005			2004			2005			2004			2005			2004
Asia Pacific
	InterContinental
		Occupancy		65.9	%		(4.3	)% pts.		71.0	%		(0.7	)% pts.		68.0	%		6.6	% pts.
		Average daily rate	$	283.79			18.9	%	$	146.66			5.8	%	$	142.36			10.4	%
		RevPAR	$	186.92			11.7	%	$	104.13			4.7	%	$	96.84			22.4	%
	Crowne Plaza
		Occupancy		—			—			77.1	%		1.8	% pts.		74.6	%		0.8	% pts.
		Average daily rate		—			—		$	91.48			8.3	%	$	99.60			0.5	%
		RevPAR		—			—		$	70.55			10.9	%	$	74.33			1.5	%
	Holiday Inn
		Occupancy		76.9	%		16.8	% pts.		75.2	%		(1.6	)% pts.		71.3	%		1.6	% pts.
		Average daily rate	$	97.79			5.5	%	$	74.14			12.7	%	$	67.35			6.0	%
		RevPAR	$	75.17			34.9	%	$	55.78			10.3	%	$	48.03			8.5	%
	Express
		Occupancy		—			—			64.9	%		7.4	% pts.		67.3	%		1.6	% pts.
		Average daily rate		—			—		$	71.20			(5.1	)%	$	59.75			(2.3	)%
		RevPAR		—			—		$	46.24			7.2	%	$	40.21			0	%
	Other
		Occupancy		—			—			65.8	%		(5.8	)% pts.		—			—
		Average daily rate		—			—		$	77.60			(1.6	)%		—			—
		RevPAR		—			—		$	51.08			(9.6	)%		—			—

      Owned and leased, and managed statistics are for comparable hotels, and include only those hotels in the IHG system as of December 31, 2005 and owned and leased, or managed by the Group since January 1, 2004.

      The comparison with 2004 is at constant US$ exchange rates.

Regulation

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

SOFT DRINKS

      The Group disposed of its interest in Britvic by way of an IPO in December 2005. The Group received aggregate proceeds of approximately £371 million (including two additional dividends, one of £47 million received in November 2005, and another of £89 million, received in May 2005, before any commissions or expenses).

      The Group results include the results of Soft Drinks for the period up until the IPO of Britvic on December 14, 2005.

      Britvic generated operating profits before other operating income and expenses of £70 million on revenues of £671 million in the period up to December 14, 2005. In the year ended December 31, 2004, Britvic generated operating profits before other operating income and expenses of £77 million on revenues of £706 million.

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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

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

      Six Continents Limited (formerly Six Continents PLC)

      InterContinental Hotels Group Services Company

      InterContinental Hotels Group (Management Services) Limited

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

Soft Drinks

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

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

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

note a	The Group exercised dominant influence and controlled Britannia Soft Drinks Limited up to 14 December 2005 when the Group disposed of all its interests. Accordingly, the Group’s investment was treated as a subsidiary undertaking until the date of disposal.
note b	The companies listed above include all those which principally affect the amount of profit and assets of the Group.

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 (excluding assets classified as held for sale) at December 31, 2005. Approximately 52% of the properties by value were directly owned, with 46% held under leases having a term of 50 years or longer. These numbers have significantly changed in 2005 reflecting hotel sales and the disposal of the Group’s interest in Britvic.

	Europe,
Net book value of land and buildings as	the Middle East
at December 31, 2005	and Africa		Americas		Asia Pacific		Total
	(£ million)
Hotels		609		241		204		1,054

      Group properties comprise hotels. Approximately 56% of the Group’s property values relate to the top five owned and leased hotels (in terms of value) of a total of 29 hotels.

      In the year ended December 31, 2005 property, plant and equipment have been written down by £7 million (2004; £48 million) following an impairment review of certain hotel assets based on current market trading conditions. The fair value has been measured by reference to recent transactions for hotel assets in these markets.

45

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 strong presence in the United States and European Union 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 the FTSE4Good Index Series in 2005.

      As an owner, manager and franchisor of hotels in about 100 countries, IHG has a wide range of environmental responsibilities and a unique opportunity to lead the worldwide hospitality industry in developing policies and practices.

      As the Group pursues its strategic growth, it aims to minimise the effect on the environment and to make sure that the Group:

•  is sensitive to environmental issues and considers all the potential effects of its projects and developments;

•  introduces, promotes, implements and enforces sound environmental policies;

•  establishes management responsibility and accountability for environmentally friendly practices; and

•  benchmarks performance against best industry practice.

      As part of this, in 2006 the Group will improve data collection and reporting to increase energy efficiency. The Group’s hotels already take steps to conserve resources, including energy and water, and to manage waste and recycling effectively. The objective is to benchmark these achievements more effectively so that clear targets for improvement can be set where necessary.

      As a founding member of the International Hotels Environment Initiative (“IHEI”), IHG has worked closely with others in the industry to produce the Sustainable Hotel Siting, Design & Construction Guidelines, launched by The Prince of Wales’ International Business Leaders Forum.

      The Group also operates “Conserving For Tomorrow”, an environmental program developed exclusively for IHG and used in more than 50 per cent of the Group’s properties. Guests are asked to use their linens and towels more than once to save on water, detergent, energy, labor, and replacement linen. Conserving For Tomorrow has an 80-90 per cent approval rating from hotel guests and for each average-sized, 100-room hotel it saves 6,000 gallons of water and 40 gallons of detergent each month.

      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 2005, such expenditure was not material in the context of their financial results.

      It is not possible to forecast the overall Group expenditure required 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.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

INTRODUCTION

Business and Overview

      The Group is a worldwide owner, operator and franchisor of hotels and resorts. Through its various subsidiaries it owned, managed, leased or franchised over 3,600 hotels and 537,000 guest rooms in nearly 100 countries and territories around the world, as at December 31, 2005. The Group’s brands include InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts, Holiday Inn Hotels & Resorts, Holiday

46

Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo. The Group also manages the hotel loyalty program, Priority Club Rewards.

      With the disposal of the Group’s interests in Britvic, a manufacturer and distributor of soft drinks in the United Kingdom, by way of an initial public offering in December 2005, the Group is now focused solely on hotel franchising, management and ownership.

      The Group’s revenue and earnings are derived from (i) hotel operations, which include operation of the Group’s owned hotels, management and other fees paid under management contracts, where the Group operates third-parties’ hotels, and franchise and other fees paid under franchise agreements and (ii) until December 14, 2005, the manufacture and distribution of soft drinks.

Operational Performance

      The Hotels business reported growth in all regions at the revenue and operating profit lines for continuing operations. The regional increases were driven by RevPAR growth of approximately 9% across the 3,600 hotels and was mostly driven by increases in rate.

      The performance of the Hotels business is evaluated primarily on a regional basis. The regional operations are split by similar product 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 other operating income and expenses, interest expense, interest income and income taxes.

      The Group believes the period-over-period movement in RevPAR to be a meaningful indicator for the performance of the Hotels business.

CRITICAL ACCOUNTING POLICIES UNDER IFRS 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.

Property, Plant and Equipment and Intangible Assets

     (i)  Goodwill and other Intangible Assets

      Definite lived intangible assets are capitalized and amortized over their anticipated life.

      Under IFRS, goodwill arising on acquisitions prior to October 1, 1998 was eliminated against equity. From October 1, 1998 to December 31, 2003, acquired goodwill was capitalized and amortized over a period not exceeding 20 years. Since January 1, 2004, goodwill continued to be capitalized but amortization ceased as at that date.

47

      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. From October 1, 2002, goodwill and indefinite life intangible assets are not amortized but are reviewed annually for impairment.

      Under IFRS, 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.

      Under US GAAP, 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

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

      Under IFRS, property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Assets that do not generate independent cash flows are combined into cash-generating units. If carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. Recoverable amount is the greater of fair value less cost to sell and value in use. Value in use is assessed based on estimated future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 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 is charged to the income statement. Under US GAAP, the assessment of an asset’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 income statement.

      During 2005, under IFRS the Company recorded an impairment of its property, plant and equipment of £7 million, all of which relates to Hotels and represents 0.5% of the total carrying value of property, plant and equipment. For the purposes of US GAAP, the Company recorded an impairment of its property, plant and equipment of £24 million.

Sale of Real Estate

      Under IFRS, the Company recognises the sales proceeds and related profit or loss on disposal on completion of the sales process. The Group considers the following questions in determining whether revenue and profit should be recorded:

• does the Company have a continuing managerial involvement of the degree associated with asset ownership;

• has the Company transferred the significant risks and rewards associated with asset ownership;

• can the Company reliably measure the proceeds; and

• will the Company actually receive the proceeds.

      For US GAAP, the Company 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

48

deferred and is recognized over the life of the long-term management contract retained on the property. The deferral of gains on such sales totaled £5 million in 2005 and £nil million in 2004.

Income Taxes

      The Company provides for deferred tax in accordance with IAS 12 “Income Taxes” 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 Company does not control remittance, gains rolled over into replacement assets, gains on previously revalued properties and other short-term temporary differences. Under US GAAP, deferred tax is computed, in accordance with FAS No. 109 “Accounting for Income Taxes”, 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 tax assets under IFRS are recognized to the extent that it is regarded as probable that the deductible temporary differences can be utilized. Under US GAAP, deferred tax assets are recognized in full and a valuation allowance is made to the extent that it is not more likely than not that they will be realized. Under US GAAP, the Company 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.

      Under both IFRS and US GAAP, accruals for tax contingencies require judgments on the expected outcome of tax exposures, whereas the actual results may vary resulting in releases of contingencies or cash tax settlements.

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 trade and other payables and provisions and other payables in the consolidated balance sheets in the Consolidated Financial Statements and is estimated using actuarial 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 Company is subject to various legal proceedings and claims, the outcomes of which are subject to significant uncertainty. Under both IFRS 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 IFRS. The principal differences between IFRS and US GAAP as they relate to the Group are discussed in Note 32 of Notes to the Financial Statements.

      The Group was required to produce its first set of audited financial statements in line with IFRS for the year ending December 31, 2005.

      The Group has taken the following exemptions available under IFRS 1 “First-time Adoption of International Financial Reporting Standards”:

(a)	Not to restate the comparative information disclosed in the 2005 financial statements in accordance with IAS 32 “Financial Instruments: Disclosure and Presentation” and IAS 39 “Financial Instruments: Recognition and Measurement”.
(b)	Not to restate business combinations before January 1, 2004.

49

(c)	To recognize all actuarial gains and losses on pensions and other post-employment benefits directly in equity at January 1, 2004.
(d)	To retain UK GAAP carrying values of property, plant and equipment, including revaluations, as deemed cost at transition.
(e)	Not to recognize separately cumulative foreign exchange movements up to January 1, 2004.
(f)	To apply IFRS 2 “Share-based Payments” to grants of equity instruments after November 7, 2002 that had not vested at January 1, 2005.

      The disclosures required by IFRS 1 are given in Note 30 of Notes to the Financial Statements.

      For the year ended December 31, 2005 the results include special items totaling a net credit of £297 million (2004 £142 million — see “year ended December 31, 2005 compared to year ended December 31, 2004 — Special Items”. For comparability of the periods presented, some performance indicators in this Operating and Financial Review and Prospects discussion have been calculated after eliminating these special items. Such indicators are prefixed with “adjusted”. A reconciliation to the amounts under IFRS including such special items is included in Note 9 of Notes to the Financial Statements.

Year ended December 2005 compared with year ended December 2004

Group

		Year ended			Year ended
		December 31,			December 31,
		2005			2004
		(£ million)
GROUP RESULTS
Revenue:
Continuing operations
	Hotels		852			731
Discontinued operations
	Hotels		387			767
	Soft Drinks		671			706
Total revenue			1,910			2,204
Operating profit before other operating income and expenses:
Continuing operations
	Hotels		190			134
Discontinued operations
	Hotels		79			135
	Soft Drinks		70			77
Total operating profit before other operating income and expenses			339			346
Other operating income and expenses:
Continuing operations
	Impairment of property, plant and equipment		(7	)		(48	)
	Restructuring costs		(13	)		(11	)
	Property damage		(9	)		—
	Employee benefits curtailment gain		7			—
	Reversal of previously recorded provisions		—			20
	Provision for investment in associates		—			(16	)
	Provision for investment in other financial assets		—			(2	)
	Write back of provision for investment in other financial assets		—			8
Operating profit			317			297

50

      IHG revenue from continuing operations for the year ended December 31, 2005 was £852 million (2004 £731 million). Operating profit before other operating income and expenses from continuing operations for the year ended December 31, 2005 was £190 million (2004 £134 million).

      Gain on disposals for the year ended December 31, 2005 after tax totaled a net profit of £311 million (2004 £19 million). Details of the gain on disposals are outlined under the heading “Gain on Disposal of Assets” on page 52.

      Net movement in cash and cash equivalents for the year ended December 31, 2005 was an inflow of £259 million (2004 outflow of £338 million) mainly driven by the receipt of £2,046 million from disposals. This was offset by a £996 million payment to shareholders as a result of the capital reorganisation on June 27, 2005. Cash inflow from operations for the year ended December 31, 2005 was £423 million, compared with £515 million for 2004.

      Basic earnings per share for the year ended December 31, 2005 was 95.2 pence (2004 53.9 pence). Adjusted earnings per share from continuing operations, after eliminating the effect of special items, was 24.9 pence for the year ended December 31, 2005 (2004 17.3 pence). Dividends for the year ended December 31, 2005 were 14.6 pence per share. A reconciliation of actual to adjusted earnings per share is set out in Note 9 of Notes to the Financial Statements.

     Special Items

      Special items totaled a net credit of £297 million in 2005 compared with a net credit of £142 million in 2004. The special items included:

• £13 million charge (2004 £11 million charge) relating to the delivery of the further restructuring of the Hotels business;

• £9 million charge (2004 £nil million) of property damage relating from fire and natural disasters;

• £7 million charge (2004 £48 million charge) for impairment of property, plant and equipment;

• £7 million credit (2004 £nil million)for employee benefits curtailment as a result of the UK hotels disposal;

• £nil million (2004 £20 million credit) relating to the reversal of previously recorded provisions;

• £nil million (2004 £16 million charge) relating to an impairment in the value of associate investments;

• £nil million (2004 £2 million charge) relating to impairment in the value in investments in other financial assets;

• £nil million (2004 £8 million credit) relating to write back in provisions in investments in other financial assets;

• £nil million (2004 £11 million expense) relating to one time net financial expenses;

• £8 million credit (2004 £183 million credit) representing 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; and

• £311 million gain (2004 £19 million gain) net of tax on disposal of assets.

      Special items are disclosed separately because of their size and incidence and are excluded from the calculation of adjusted earnings per share to give a more meaningful comparison of the Company’s performance.

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     Net Financing Costs

      Net financing costs totaled £33 million in 2005 the same as in 2004. In 2005, £9 million related to Soft Drinks and is classified as discontinued operations. The prior year net financing expense included a net £11 million charge that is treated as a special item and is excluded from the calculation of adjusted earnings per share.

     Taxation

      The effective rate of tax on profit before tax, excluding the impact of special items, was 28.6%. By also excluding the impact of prior year items, which are included wholly within continuing operations, the equivalent effective tax rate would be 37.8%. This rate is higher than the UK statutory rate of 30% due mainly to overseas profits being taxed at rates higher than the UK statutory rate. The equivalent effective rates for 2004, restated under IFRS, were 17.3% and 38.6% respectively.

      Taxation special items totaled an £8 million credit (2004 £183 million credit). In 2005, this represented the release of provisions which were special by reason of their size or incidence, relating to tax matters which were settled during the year, or in respect of which the statutory limitation period had expired. In 2004, taxation special items, in addition to such provision releases, included £83 million for the recognition of a deferred tax asset in respect of capital losses.

      Net tax paid in 2005 was £91 million (2004 £35 million) including £11 million in respect of disposals.

     Gain on Disposal of Assets

      The gain on disposal of assets, net of related tax, totaled £311 million in 2005 and mainly comprised a net gain on disposal of Soft Drinks of £284 million and a net gain on hotel asset disposals of £27 million.

     Earnings

      Basic earnings per share for 2005 were 95.2 pence, compared with 53.9 pence in 2004. Adjusted earnings per share, removing the non-comparable special items, were 38.2 pence, against 33.9 pence in 2004. Adjusted earnings per share for continuing operations were 24.9 pence, 44% up on last year.

     Dividends

      The Board has proposed a final dividend per share of 10.7 pence; with the interim dividend of 4.6 pence the normal dividend for 2005 totaled 15.3 pence.

     Capital Expenditure and Cash Flow

      The net movement in cash and cash equivalents for the year ended December 31, 2005 was an inflow of £259 million. This included a net cash inflow from operations of £423 million, and a net cash inflow from investing activities of £1,863 million.

      Proceeds from the disposal of operations and other financial assets totaled £2,046 million and included proceeds from the sale of Soft Drinks of £220 million and from the sale of hotels of £1,826 million.

      Capital expenditure for Hotels totaled £136 million compared with £187 million in 2004, as the Group continued its asset disposal program. Capital expenditure in 2005 for Hotels included refurbishment of the InterContinental London and Holiday Inn Munich City Centre and a rolling rooms refurbishment program at the InterContinental Hong Kong.

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Highlights for the year ended December 31, 2005

      The following is a discussion of the year ended December 31, 2005 compared with the year ended December 2004.

Continuing Hotels Results

		Year ended			Year ended
		December 31,			December 31,
		2005			2004			Change
		(£ million)						%
Revenue:
	Americas		400			319			25.4
	EMEA		326			301			8.3
	Asia Pacific		84			71			18.3
	Central		42			40			5.0
			852			731			16.6
Operating profit before other operating income and expenses:
	Americas		187			150			24.7
	EMEA		47			24			95.8
	Asia Pacific		21			17			23.5
	Central		(65	)		(57	)		14.0
			190			134			41.8

      Revenue. Continuing Hotels revenue increased £121 million (16.6%) from £731 million for the year ended December 31, 2004, to £852 million for the year ended December 31, 2005.

      Operating profit. Continuing Hotels operating profit before other operating income and expenses for the year ended December 31, 2005 was £190 million, up 41.8% (year ended December 31, 2004 £134 million).

Americas

Continuing Americas Results

		Year ended		Year ended
		December 31,		December 31,
		2005		2004		Change
		($ million)				%
Revenue:
	Owned and leased		224		171		31.0
	Managed		118		55		114.5
	Franchised		389		357		9.0
			731		583		25.4

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		Year ended			Year ended
		December 31,			December 31,
		2005			2004			Change
		($ million)						%
Operating profit before other operating income and expenses:
	Owned and leased		28			7			300.0
	Managed		36			12			200.0
	Franchised		340			304			11.8
			404			323			25.1
Regional overheads			(62	)		(50	)		24.0
Total $ million			342			273			25.3
Sterling equivalent £ million(i)			187			150			24.7

(i)  The results have been translated into pounds sterling at weighted average rates of exchange for the year. The translation rates are fiscal 2005: £1 = $1.83 (2004: £1 = $1.82).

     Total Americas continuing operating profit was $342 million, a 25.3% increase on continuing operating profit for the year ended December 31, 2004 of $273 million.

      Franchised revenue increased by 9.0% to $389 million as a result of strong trading and increased room count and signings. RevPARs across the brands showed strong growth, with Holiday Inn RevPAR 9.2% up on 2004, Holiday Inn Express 10.3% up and Crowne Plaza 8.4% up. The franchised estate increased by 3,878 rooms in the year with the most significant increase being in the Holiday Inn Express brand. Franchised revenue also benefited from the number of signings in 2005 with a record 47,245 room signings (50% up on 2004) leading to higher sales revenues than in 2004. Franchised operating profit rose by $36 million to $340 million.

      Continuing owned and leased revenue increased by over 30% driven by strong trading in the comparable estate (those hotels fully trading as owned and leased in both financial years). Comparable RevPARs were 17.7% up for InterContinental and 14.0% up for Holiday Inn with average daily rate growth fuelling the increased RevPAR. The InterContinental Buckhead, Atlanta, also contributed its first full year of trading after opening in November 2004. These revenue increases, together with improved operating efficiency in the hotels, led to continuing owned and leased operating profit increasing significantly over 2004, from $7 million to $28 million.

      Managed revenue increased from $55 million in 2004 to $118 million as a result of strong trading in the comparable estate boosted by the 13 hotels sold to HPT and the two hotels acquired by SHC. Managed revenue also includes $70 million (2004 $27 million) from properties (including the InterContinental San Juan sold in the year) that are structured, for legal reasons, as operating leases but with the same economic characteristics as a management contract. Overall, managed RevPARs grew by 16.2% for InterContinental, 12.9% for Crowne Plaza, 11.0% for Holiday Inn, 9.1% for Staybridge Suites and 14.8% for Candlewood Suites. Managed operating profit increased from $12 million to $36 million including $9 million (2004 $3 million) from the managed properties held as operating leases, including a contribution from the 15 hotels moving from ownership to management.

      Americas regional overheads increased to $62 million from $50 million in 2004, reflecting investment in additional development resources and information technology.

      Americas hotel and room count grew by a net 51 hotels (279 rooms) to 2,834 hotels (386,606 rooms). 190 hotels (22,043 rooms) entered the system and 139 hotels (21,764 rooms) left the system. Of the removals, 83 hotels (16,188 rooms) were Holiday Inn and 53 hotels (4,561 rooms) were Holiday Inn Express. Of the removals nearly 60% were enforced by IHG as a result of quality or financial concerns.

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      The Americas pipeline grew to record levels, 742 hotels (76,865 rooms), with 447 hotels (49,765 rooms) signing contracts during the year to enter the system. Of these signings, 19,355 rooms were Holiday Inn Express.

Europe, Middle East and Africa

Continuing EMEA Results

		Year ended			Year ended
		December 31,			December 31,
		2005			2004			Change
		(£ million)						%
Revenue:
	Owned and leased		236			231			2.2
	Managed		55			43			27.9
	Franchised		35			27			29.6
			326			301			8.3
Operating profit before other operating income and expenses:
	Owned and leased		11			2			450.0
	Managed		31			24			29.2
	Franchised		26			21			23.8
			68			47			44.7
Regional overheads			(21	)		(23	)		(8.7	)
Total £ million			47			24			95.8
Dollar equivalent $ million(i)			86			44			95.5

(i)  The results have been translated into US dollars at weighted average rates of exchange for the year. The translation rates are fiscal 2005: $1 = £0.55 (2004: $1 = £0.55).

     The EMEA operating model changed in 2005 as a result of the disposal of 73 hotels in the UK to LRG and a number of smaller transactions. As a result, the number of owned and leased hotels reduced by 85 whilst the number of managed hotels increased by 77, including 73 in connection with the LRG transaction.

      Revenue from continuing operations increased by 8.3% to £326 million and continuing operating profit before other operating income and expenses increased by 95.8% to £47 million.

      Owned and leased revenue from continuing operations increased by 2.2% from £231 million in 2004 to £236 million. Performance across the region was mixed with variable trading conditions in parts of Continental Europe. The refurbishment of the InterContinental London impacted the overall result with the hotel being disrupted for most of the year and closed in the final quarter of the year. Owned and leased operating profit from continuing operations increased by £9 million to £11 million.

      Managed revenue increased by £12 million to £55 million. The 2004 result benefited from the receipt in 2004 of approximately £4 million liquidated damages from the early termination of the InterContinental Barcelona management contract. The 2005 result was affected by a loss of earnings following the bombings in Beirut, but underlying trading was strong, particularly in the Middle East where managed RevPAR increased by 11.9%. Management fees are also included from LRG for the hotels sold in May 2005 (including incentive fees); Holiday Inn UK RevPAR overall was up to 4.6%.

      Franchised revenue for EMEA increased by £8 million to £35 million. Holiday Inn franchised RevPAR increased by 4.9% and Holiday Inn Express RevPAR increased by 5.9%. Franchised operating profit increased

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by £5 million to £26 million and included £7 million liquidated damages for the termination of franchise agreements in South Africa.

      EMEA hotel and room count at December 31, 2005 was broadly level with December 31, 2004 at 610 hotels (105,419 rooms) despite the termination of the master franchise agreement in South Africa (6,338 rooms). Two significant deals added hotels to the system during the year, five Holiday Inn hotels (602 rooms) in the UK from a franchise agreement with Stardon, a joint venture company formed between Starwood Capital Europe and Chardon Hotels, and 13 hotels (2,233 rooms) in the UK from a franchise agreement with Queens Moat Houses Limited.

      The EMEA pipeline at December 31, 2005 was 86 hotels (14,278 rooms).

Asia Pacific

Continuing Asia Pacific Results

		Year ended			Year ended
		December 31,			December 31,
		2005			2004			Change
		($ million)						%
Revenue:
	Owned and leased		102			86			18.6
	Managed		45			38			18.4
	Franchised		6			5			20.0
			153			129			18.6
Operating profit before other operating income and expenses:
	Owned and leased		19			17			11.8
	Managed		29			25			16.0
	Franchised		5			3			66.7
			53			45			17.8
Regional overheads			(15	)		(15	)		—
Total $ million			38			30			26.7
Sterling equivalent £ million(i)			21			16			31.2

(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 = $1.83 (2004: £1 = $1.82).

     Asia Pacific revenue from continuing operations increased by 18.6% to $153 million and operating profit before other operating income and expenses increased by 26.7% to $38 million.

      Continuing owned and leased operating profit grew from $17 million in 2004 to $19 million mainly reflecting strong trading in the InterContinental Hong Kong which achieved RevPAR growth of 11.7% over 2004, driven by average daily rate growth.

      Asia Pacific managed operating profit grew strongly from $25 million to $29 million, reflecting both the impact of improved RevPAR and an increase in room count over 2004. Greater China managed RevPAR increased by 13.6% and Australia, New Zealand and South Pacific managed RevPAR increased by 6.1%.

      Asia Pacific franchised operating profit increased by $2 million to $5 million.

      Regional overheads were level at $15 million despite increased resources for the planned expansion in Greater China. During 2005, a further nine hotels (2,839 rooms) opened in Greater China and 20 hotels (7,308 rooms) signed contracts and entered the pipeline.

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      Overall, the number of hotels in Asia Pacific increased by 13 hotels (3,383 rooms). During the year, ten owned and leased hotels (2,315 rooms) in Australia, New Zealand and Fiji were sold but retained with management contracts.

      Asia Pacific pipeline grew by 14 managed hotels (4,564 rooms) primarily in the InterContinental and Crowne Plaza brands. In addition, on February 15, 2006, IHG announced that it had signed contracts with a single owner to manage six hotels (over 4,500 rooms) in China’s Sichuan province, and on February 24, 2006 announced that it had signed contracts with an owner to manage four hotels, with over 1,400 rooms, also in China.

Central

Central

	Year ended			Year ended
	December 31,			December 31,
	2005			2004			Change
	(£ million)						%
Revenue		42			40			5.0
Gross central costs		(107	)		(97	)		10.3
Net central costs £ million		(65	)		(57	)		14.0
Dollar equivalent $ million(i)		(118	)		(102	)		15.7

(i)  The results have been translated into US dollars at weighted average rates of exchange for the year. The translation rates are fiscal 2005: $1 = £0.55 (2004: $1 = £0.55).

     Net central costs increased by £8 million reflecting increased governance costs, further investment to support development and the accounting treatment of share scheme costs. Under IFRS, the charges for share option schemes established after November 2002 are accounted for in the income statement. As share scheme awards are generally made annually and the accounting cost is spread over three years, 2005 is the first year that a full annual cost is taken into account.

Discontinued Operations

      For the year ended December 31, 2005 operating profit from hotels classified as discontinued was £79 million (2004 £135 million) and was £70 million (2004 £77 million) for the Soft Drinks business.

      The net gain on disposal of assets for hotels was £25 million (2004 £19 million) and for Soft Drinks was £286 million (2004 £nil million).

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

      In 2004 the Group refinanced its syndicated bank facility which gave the Group greater financial flexibility at a lower cost. The current size of the facility is £1.1 billion. As a result of the cost effective funding obtained from the bank market the Group repurchased its € 600 million 4.75% 2010 Notes in December 2004 and January 2005.

      At December 31, 2005 gross debt (including currency swaps liabilities of £367 million) amounted to £779 million comprising £488 million of euro denominated borrowings, £220 million of US dollar denominated borrowings and £71 million of Hong Kong dollar denominated borrowings.

      At December 31, 2005 committed bank facilities amounted to £1,163 million of which £751 million were unutilized. Uncommitted facilities totaled £14 million. In the Group’s opinion, the working capital is sufficient for the Group’s present requirements.

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      The Group also held short term deposits and investments at December 31, 2005 amounting to £686 million (including currency swap assets of £362 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

      IHG’s second £250 million on-market share repurchase program was announced in September 2004 and commenced in December 2004. In 2005, 30.6 million shares were repurchased at an average price of 672 pence per share making the total purchased under the second program £211 million. On September 8, 2005 IHG announced a further £250 million share repurchase program to commence on completion of the second program. The precise timing of share purchases will be dependent upon, amongst other things, market conditions. Purchases are under the existing authority from shareholders which will be renewed at the Annual General Meeting 2006. Any shares repurchased under this program will be canceled.

      On July 8, 2005, IHG returned a further £996 million capital to shareholders following the capital reorganization of the Group completed in June 2005. Under the reorganization, shareholders received 11 new ordinary shares and £24.75 cash in exchange for every 15 existing ordinary shares held on June 24, 2005.

      On March 2, 2006, IHG announced that a £500 million special dividend will be paid to shareholders in the second quarter of 2006.

      Since April 2003, IHG has announced the return of £2.75 billion of funds to shareholders by way of special dividends, share repurchase programs and capital returned.

      As of December 31, 2005, the Group had committed contractual capital expenditure of £76 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 £180 million in capital expenditure in 2006. 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.

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Contractual Obligations

      The Company had the following contractual obligations outstanding as of December 31, 2005:

	Total amounts		Less than						After
	committed		1 year		1-3 years		3-5 years		5 years
	(£ million)
Long-term debt		412		2		33		377		—
Operating lease obligations		274		36		56		33		149
Other long-term obligations(i)		82		6		12		8		56
Capital contracts placed		76		76		—		—		—
		844		120		101		418		205

(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 £134 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, 2005, the Group had outstanding letters of credit of £18 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, 2005, 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 two main schemes; the InterContinental Hotels UK Pension Plan, and the US based InterContinental Hotels Pension Plan.

      The InterContinental Hotels UK Pension Plan was established with effect from April 1, 2003. On an IAS 19 “Employee Benefits” basis, at December 31, 2005 the Plan had a deficit of £24 million. The defined benefits section of this Plan is generally closed to new members. In 2006, the Group expects to make projected regular contributions to the UK principal plan of £4 million.

      The US based InterContinental Hotels Pension Plan is closed to new members and pensionable service no longer accrues for current employee members. On an IAS 19 basis, at December 31, 2005 the Plan had a deficit of $71 million.

      The InterContinental Hotels Group will be exposed to the funding risks in relation to the defined benefit sections of the InterContinental Hotels UK Pension Plan and the US based 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”.

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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 March 17, 2006 are:

		Initially		Date of next
		appointed to		reappointment
Name	Title	the board		by shareholders*
Andrew Cosslett	Director and Chief Executive		2005		2007
Richard Hartman	Director and Managing Director, EMEA		2003		2007
David Kappler(1)	Director and Senior Independent Director		2004		2007
Ralph Kugler(1)	Director		2003		2007
Jennifer Laing(1)	Director		2005		2006
Robert C. Larson(1)	Director		2003		2006
Jonathan Linen(1)	Director		2005		2006
Stevan Porter	Director and President, The Americas		2003		2006
Sir David Prosser(1)	Director		2003		2007
Richard Solomons	Director and Finance Director		2003		2007
Sir Howard Stringer(1)	Director		2003		2007
David Webster	Chairman		2003		2007

(1)  Independent non-executive director.

*  Robert C. Larson, being over the age of 70, is required to retire and stand for re-election at each Annual General Meeting, if he wishes to continue to serve as a director. Sir David Prosser, Sir Howard Stringer and David Webster will be required, under the Company’s articles of association, to stand for re-election at the 2007 Annual General Meeting. Any further reappointments at the 2007 meeting would be on a voluntary basis.

Officers

Name	Title	Initially appointed
Tom Conophy	Executive Vice President and Chief Information Officer		2006
Peter Gowers	Executive Vice President and Chief Marketing Officer		2003
A. Patrick Imbardelli	President, Asia Pacific		2003
Tracy Robbins	Executive Vice President, Human Resources		2005
Richard Winter	Executive Vice President, Corporate Services, Group Company Secretary and General Counsel		2003

Former Directors and Officers

      Jim Larson served as an officer and Executive Vice President, Human Resources from April 2003 until December 2005.

Directors and Officers

     Tom Conophy

      Has over 25 years’ experience in the IT industry, including management and development of new technology solutions within the travel and hospitality business. He joined the Group in February 2006 from

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Starwood Hotels & Resorts International where he held the position of Executive Vice President and Chief Technology Officer. Responsible for IT systems and information management throughout the Group. Aged 45.

     Andrew Cosslett

      Appointed Chief Executive in February 2005. He joined the Group from Cadbury Schweppes plc where he was most recently President, Europe, Middle East & 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 also has over 11 years’ experience in brand marketing with Unilever. He is non-executive Chairman of Duchy Originals Foods Limited. Aged 50.

     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. Appointed Chief Marketing Officer in 2005, now has responsibility for worldwide brand management, reservations, e-commerce, global sales, relationship marketing and loyalty programs. Aged 33.

     Richard Hartman

      Has over 39 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. Responsible for the business of all the Hotel brands and properties in the EMEA region. Aged 60.

     A. Patrick Imbardelli

      Has over 24 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. Responsible for the business of all the Hotel brands and properties in The Asia Pacific Region. Aged 45.

     David Kappler

      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 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. Chairman of the Audit Committee. Aged 58.

     Ralph Kugler

      Appointed a director in April 2003, he is President, Unilever Home and Personal Care, and joined the Boards of Unilever plc and Unilever NV 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’ experience of general management and brand marketing. Aged 50.

     Jennifer Laing

      Appointed a director in August 2005, she is Associate Dean, External Relations at the London Business School. A fellow of the Marketing Society and of the Institute of Practitioners in Advertising, she has over 30 years’ experience in advertising including 16 years with Saatchi & Saatchi, to whom she sold her own agency. She also serves as a non-executive Director of Hudson Highland Group Inc., a US human resources company. Aged 58.

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     Robert C Larson

      Appointed a director in April 2003, he is a Managing Director of Lazard Alternative Investments LLC and Chairman of Lazard Frères Real Estate Investors, LLC. He is also Chairman of Larson Realty Group 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 71.

     Jonathan Linen

      Appointed a director in December 2005, he recently retired as Vice Chairman of the American Express Company, having held a range of senior positions including in New Product Development, Marketing and Sales and Travel Services throughout his career of over 35 years with American Express. A Management Development graduate of Harvard Business School, he also serves on the Board and Executive Committees of a number of US Companies and Councils. Aged 62.

     Stevan Porter

      Previously 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. Responsible for the business of all the Hotel brands and properties in The Americas region. Additionally, he has the role of Global Leader, Franchise Strategy, with responsibility for the development and deployment of best practice in franchising globally. Aged 51.

     Sir David Prosser

      Qualified actuary with over 40 years’ experience in financial services. Appointed a director in April 2003, he was, until December 31, 2005, Group Chief Executive of Legal & General Group Plc. He is a director of the Royal Automobile Club Limited and of Epsom Downs Racecourse Limited. Chairman of the Remuneration Committee. Aged 61.

     Tracy Robbins

      Has over 20 years’ experience in line and HR roles in service industries. She joined the Group in December 2005 from Compass Group PLC, a world leading food service company, where she was Group Human Resources Leadership & Development Director. Previously Group HR Director for Forte Hotels Group. Responsible for global talent management and leadership development, reward strategy and implementation. Aged 42.

     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. Appointed Finance Director of the Hotels business in October 2002 in anticipation of the Separation of Six Continents PLC in April 2003. Responsible for Group and regional finance, asset management, strategy, investor relations, tax and treasury. Aged 44.

     Sir Howard Stringer

      Has over 35 years’ experience in the media and entertainment industries. He was appointed a director in April 2003. He was appointed Group Chairman and Chief Executive Officer of Sony Corporation in 2005, continuing his distinguished career with Sony since 1997. He served as a non-executive director of Six Continents PLC from 2002 until April 2003. Aged 64.

     David Webster

      Appointed Deputy Chairman and Senior Independent Director of InterContinental Hotels Group on the Separation of Six Continents PLC in April 2003. Appointed non-executive Chairman on January 1, 2004. He

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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. Chairman of the Nomination Committee. Aged 61.

     Richard Winter

      Lawyer, qualified in 1973 and has over 20 years’ commercial law experience in private practice. He joined the Group in 1994 as Director of Group Legal and was appointed Company Secretary in 2000. Now responsible for corporate governance, risk management, internal audit, data privacy, company secretariat, group legal matters and corporate social responsibility. Aged 57.

COMPENSATION

      In fiscal 2005, the aggregate compensation (including pension contributions, bonus and awards under the long term incentive plans) of the directors and officers of the Company was £14.4 million. The aggregate amount set aside or accrued by the Company in fiscal 2005 to provide pension retirement or similar benefits for those individuals was £287,187. An amount of £6.9 million was charged in fiscal 2005 in respect of bonuses payable to them under performance related cash bonus schemes and long term incentive plans.

      Note 3 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.

Share Plans

      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 PLC shares. During fiscal 2005, 4,138,482 such options were exercised, leaving a total of 7,909,002 such options outstanding at prices ranging from 308.48p to 593.29p.

Executive Share Option Plan

      The Remuneration Committee, consisting solely of independent non-executive directors, may select employees within the Group, including executive directors, of the Company, to receive a grant of options to acquire ordinary shares in the Company. Under the terms of the Plan the option price may not be less than the market value of an ordinary share, or the nominal value if higher. The market value is either 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 share plan extends it to executives outside the United Kingdom. Grants of options under the Executive Share Option Plan have normally been made annually and except in exceptional circumstances, have not, in any year, exceeded three times annual salary for executive directors. A performance condition must be met before options can be exercised. The performance condition is set by the Remuneration Committee.

      In April 2005, options were granted to 58 employees over 2,104,570 IHG shares at 619.83p per share. For options granted in 2005, the Company’s adjusted earnings per share over the three-year performance period ending 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 2005 are exercisable between 2008 and 2015, subject to the achievement of the performance condition.

      Following a full review of incentive arrangements, the Remuneration Committee has concluded that share options are not the most effective incentive for the foreseeable future and therefore no further grants of options will be made. However, 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.

      As of March 17, 2006, options over 22,459,267 IHG PLC shares were outstanding under the Executive Share Option Plan.

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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 on a deferred basis. Matching shares may also be awarded up to 0.5 times the deferred amount. The bonus and matching shares are deferred and will normally be released at the end of each of the three years following deferral. Participation in the STDIP is at the discretion of the IHG PLC 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 March 17, 2006, there were 1,157,708 IHG PLC shares over which conditional rights 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. 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. As of March 17, 2006 there were 7,373,799 IHG PLC shares over which conditional rights 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 March 17, 2006, 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 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 immediately before invitations go out. As of March 17, 2006, options over 725,292 IHG PLC shares were outstanding 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 on page 68 and in Note 3 of the Notes to the Financial Statements.

BOARD PRACTICES

Contracts of Service

      The Remuneration Committee’s policy is for Executive Directors to have rolling contracts with a notice period of 12 months.

      Richard Hartman, Stevan Porter and Richard Solomons have service agreements with a notice period of 12 months. Andrew Cosslett entered into a service agreement with an initial notice period of 24 months, reducing month by month to 12 months of service. As at the date of this report, Andrew Cosslett’s notice period is 12 months. 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 useful.

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      David Webster ceased to act in his temporary capacity as interim Chief Executive following the appointment of Andrew Cosslett as Chief Executive on February 3, 2005. David Webster’s appointment as non-executive Chairman, effective from January 1, 2004, is subject to six months’ notice.

      Non-executive directors, Ralph Kugler, Robert C. Larson, Sir David Prosser and Sir Howard Stringer signed letters of appointment effective from the listing of IHG PLC in April 2003. These were renewed, effective from completion of the capital reorganisation of the Group and the listing of new IHG PLC shares on June 27, 2005. David Kappler signed a letter of appointment effective from his date of original appointment to the Board on June 21, 2004. This was also renewed, effective from June 27, 2005. Jennifer Laing and Jonathan Linen signed letters of appointment effective from their appointment dates, respectively August 25, 2005 and December 1, 2005.

      All non-executive directors’ appointments, with the exception of the Chairman, are subject to three months’ notice.

Directors’ Contracts

	Contract		Unexpired term/
Directors	effective date		notice period
Andrew Cosslett		2.3.05		12 months
Richard Hartman		4.15.03		12 months
Stevan Porter		4.15.03		12 months
Richard Solomons		4.15.03		12 months

      Each of the executive directors signed a letter of appointment, effective from completion of the capital reorganization of the Group and the listing of new IHG PLC shares on June 27, 2005. The terms of each appointment were as set out in each executive director’s original service agreement.

      See Note 3 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 3 of Notes to the Financial Statements for details of directors’ pension entitlements at December 31, 2005.

     Committees

      Each Committee of the Board has written terms of reference which have been approved by the Board.

     Executive Committee

      The Executive Committee is chaired by the Chief Executive. 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 businesses and, until its flotation as an independent company in December 2005, the Britvic business. It is authorised to approve capital and revenue investment within levels agreed by the Board. It reviews and recommends to the Board the most significant investment proposals.

     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. During 2005, the other Audit Committee members were

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Sir David Prosser, Ralph Kugler and, from August 25, 2005, Jennifer Laing. All Audit Committee members are independent. The Audit Committee is scheduled to meet at least four times a year. All Audit Committee members attended every meeting.

      The Audit Committee’s principal responsibilities are as follows:

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

•  review the Group’s processes for detecting and addressing fraud, misconduct and control weaknesses and to consider the 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;

•  assuming responsibility for the appointment, compensation, dismissal and the oversight 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 Group’s overall Guidelines for Proper Business Conduct.

      The Audit Committee discharges its responsibilities through a series of meetings throughout the year at which detailed reports are presented for review. The Audit Committee commissions reports, either from external advisers, the Head of Internal Audit, or Group management, after consideration of the major risks to the Group or in response to developing issues. The external auditor attends meetings of the Audit Committee as does the Head of Internal Audit, both of whom have the opportunity to meet privately with the Audit Committee, in the absence of Group management, at the conclusion of each meeting. All proposals for the provision of non-audit services by the external auditor are pre-approved by the Audit Committee or its delegated member, the overriding consideration being to ensure that the provision of non-audit services does not impact the external auditor’s independence and objectivity.

     Remuneration Committee

      The Remuneration Committee, chaired by Sir David Prosser, also comprises the following non-executive directors: David Kappler, Robert C Larson, Jonathan Linen and Sir Howard Stringer. It meets at least three times a year. The Committee advises the Board on overall remuneration policy. The Remuneration 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. The Nomination Committee is responsible for nominating, for the approval of the Board, candidates for appointment to the Board, and also for succession planning. The Nomination Committee generally engages external consultants to advise on candidates for Board appointments, and did so in connection with the appointments of Jennifer Laing and Jonathan Linen. Candidate profiles and objective selection criteria were prepared in advance of these engagements. The Committee also assists the Board in identifying and developing the role of the Senior Independent Director.

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     Disclosure Committee

      The Disclosure Committee, chaired by the Group’s Financial Controller and comprising of the Company Secretary and other senior executives, reports to the Chief Executive, 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.

     General Purposes Committee

      The General Purposes Committee comprises any two executive directors or any one executive director together with a senior officer from an agreed and restricted list of senior executives. It is always chaired by a director. It attends to business of a routine nature and to the administration of matters on an ad hoc basis, the principles of which have been agreed previously by the Board or an appropriate Committee.

      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 21,986 people worldwide in the year ended December 31, 2005. Of these, approximately 95% were employed on a full-time basis and 5% 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		Asia Pacific		Total
2005:
Hotels		4,610		6,145		6,329		1,911		18,995
Soft Drinks(i)		2,991		—		—		—		2,991
InterContinental Hotels Group		7,601		6,145		6,329		1,911		21,986
2004:
Hotels		9,676		6,601		8,241		2,317		26,835
Soft Drinks(i)		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		4,648		29,809
Discontinued operations		15,014		—		—		—		15,014
		28,886		5,585		5,704		4,648		44,823

(i)  With effect from December 14, 2005, the Group no longer employed any individuals in the Soft Drinks Sector.

     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 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, 2005, the minimum wage for individuals between 18 and under the age of 22 was £4.25 per hour and £5.05 per hour for individuals age 22 and above. This particularly impacts businesses in the

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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 of the Company at March 17, 2006 were as follows:

	Ordinary shares
	of 10 pence
Directors
Andrew Cosslett		94,741
Richard Hartman		183,682
David Kappler		1,908
Ralph Kugler		654
Jennifer Laing		—
Robert C. Larson		7,857	(1)
Jonathan Linen		10,000	(1)
Stevan Porter		175,834
Sir David Prosser		3,273
Richard Solomons		164,005
Sir Howard Stringer		5,548
David Webster		31,823
Officers
Tom Conophy		85,846
Peter Gowers		70,660
A. Patrick Imbardelli		137,783
Tracy Robbins		15,470
Richard Winter		83,378

(1) Held in the form of American Depositary Receipts

     The above shareholdings are all beneficial interests and include shares held for the benefit of directors and officers by trustees of the Company’s Executive Share Ownership Trust. The percentage of ordinary share capital owned by each of the directors is negligible.

      On March 17, 2006, the executive directors’ technical interest in unallocated IHG PLC ordinary shares held by the Trustees of the Employee Share Ownership Trust was 2,280,531 shares.

      The directors’ interests in options to subscribe for shares in InterContinental Hotels Group PLC as at December 31, 2005 are set out in Note 3 of Notes to the Financial Statements.

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

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

      As far as is known to management, IHG 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, the Company has been advised of the following interests in its shares, being greater than 3% of its issued share capital as at March 17, 2006:

	March 2006						April 2005						April 2004
	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		19,534,651			4.51%			26,773,575			4.44%				(1)			(1)
Legal & General Group Plc		13,753,588			3.17%			24,233,225			4.02%			29,924,045			4.10%
Barclays PLC			(1)			(1)		20,246,584			3.36%				(1)			(1)
AXA SA			(1)			(1)		18,121,201			3.00%				(1)			(1)
Dodge & Cox Funds			(1)			(1)			(1)			(1)		25,106,594			3.40%

(1) No notification of an above 3% shareholding received.

     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 March 17, 2006, 20,478,463 ADSs equivalent to 20,478,463 ordinary shares, or approximately 4.5% of the total ordinary shares in issue, were outstanding and were held by 1,181 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 March 17, 2006, there were a total of 75,331 record holders of ordinary shares, of whom 206 had registered addresses in the United States and held a total of 144,752 ordinary shares (0.03% of the total issued).

RELATED PARTY TRANSACTIONS

      The Company has not entered into any related party transactions or loans for the period beginning January 1, 2005 up to March 17, 2006.

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 and arbitration proceedings incidental to those operations. It is the Company’s view that such proceedings, either individually or in the aggregate, have not in the recent past and are not likely to have a significant effect on the Group’s financial position or profitability.

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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 JPMorgan Chase Bank, N.A. 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
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
2005		8.42		6.12		14.53		11.49

	£ 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		7.06		6.12		12.99		11.49
Third quarter		7.57		7.01		13.81		12.44
Fourth quarter		8.42		6.88		14.53		12.04
2006
First quarter (through March 17, 2006)		9.01		8.07		15.83		14.40

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	£ per
	ordinary share				$ per ADS
Month ended	High		Low		High		Low
September 2005		7.50		7.06		13.76		12.53
October 2005		7.25		6.88		12.79		12.04
November 2005		8.00		7.20		13.76		12.67
December 2005		8.42		7.90		14.53		13.77
January 2006		8.66		8.07		15.39		14.40
February 2006		8.88		8.51		15.57		14.79
March 2006 (through to March 17, 2006)		9.01		8.31		15.83		14.40

      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.

PLAN OF DISTRIBUTION

      Not applicable.

SELLING SHAREHOLDERS

      Not applicable.

DILUTION

      Not applicable.

EXPENSES OF THE ISSUE

      Not applicable.

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 June 27, 2005.

      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 5134420. 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, 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.

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     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.

      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.

      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 10 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.

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      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 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.

      Each Director shall retire every three years in Annual General Meeting and unless otherwise decided by the Directors, shall be eligible for re-election. Any director attaining 70 years of age shall retire at the next Annual General Meeting. Such a director may be re-elected but shall retire every year (and be eligible for re-election) at the next, and all subsequent, Annual General Meetings.

     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

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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 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.

IHG Facility Agreement

      On November 9, 2004, InterContinental Hotels Limited signed a five year £1,600 million bank facility agreement (the “IHG 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 facility was split into a £1.1 billion five year revolving credit facility and a £500 million 364 day revolving credit facility. The latter was canceled in November 2005.

      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. The Group’s new parent company InterContinental Hotels Group PLC, acceded to the IHG Facility Agreement in July 2005, following the capital restructuring described in Item 4.

Disposal to Hospitality Properties Trust

      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 received upon the completion of the sale of the InterContinental Hotel in Austin, on June 1, 2005). The Group continues 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.

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      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 LRG Acquisition and LRG Holdings Limited (“LRG”). Pursuant to the SPA, Six Continents and IHC Holdings (the “Sellers”) 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 “LRG Shares”) to LRG and to transfer to LRG certain contractual rights to the extent they related to the hotels LRG indirectly acquired under the SPA (the “LRG Hotels”) and which remained to be completed or performed, or remained in force, after completion of the sale of the LRG Shares to LRG.

      The agreed sale price for the LRG Shares was £1 billion. Receipt of £40 million of the total proceeds has been deferred, contingent upon certain pre-agreed performance targets being reached. Following completion, the Group continues to manage the LRG Hotels.

      Under the SPA, the Sellers gave certain warranties in relation to the assets disposed of and LRG 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.

     Australasian Hotels Disposals

      On September 1, 2005, Holiday Inn Holdings (Australia) Pty Limited, SPHC Group Pty Limited and HIA(T) Pty Limited (for the Australian assets) and Hale International Limited (for the New Zealand asset), all three of which are members of the Group, (“IHG”) entered into two sale and purchase agreements with HANZ (Australia) Pty Limited (for the Australian assets) and HANZ Holdings (New Zealand) Limited (for the New Zealand asset), both companies being subsidiaries of the Hotel Alternative (Australia and New Zealand) Private Syndicate managed by Eureka Funds Management Limited (“Eureka”) pursuant to which Eureka purchased from IHG nine hotels situated in Australia and New Zealand for AUS$390 million in cash (before transaction costs) which is AUS$75 million above the net book value of AUS$315 million. IHG has given to Eureka normal warranties in relation to the hotels and an indemnity for pre-completion tax liabilities. The transaction completed on October 31, 2005.

      The Group will continue to manage the hotels for Eureka under ten year management contracts entered into at the time of the transaction, with an option to extend for ten further years at the Group’s discretion.

     Britvic Underwriting Agreement

      An Underwriting Agreement was entered into on November 25, 2005 between, inter alia, Britvic, IHG in its capacity as a selling shareholder, the directors of Britvic, Citigroup and Deutsche Bank AG (as joint sponsors) and Citigroup, Deutsche Bank AG, Lehman Brothers International (Europe) and Merrill Lynch International (as joint Underwriters). This sets out the mechanics for the Britvic initial public offering and includes customary termination rights. Britvic has given customary warranties, indemnities and undertakings in the context of an agreement of this sort. IHG has also given customary warranties and indemnities in its capacity as a selling shareholder. Under this agreement, each of the selling shareholders will pay a commission equal to 2% of the offer price multiplied by the number of shares to be sold by that selling shareholder to the joint Underwriters. A further commission of up to 1% may be payable at each selling shareholder’s discretion.

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     Disposal to Westbridge

      On March 10, 2006 a Sale and Purchase Agreement (“SPA”) was entered into between BHR Luxembourg S.a.r.l. and other wholly owned subsidiaries of IHG as sellers (BHR Luxembourg S.a.r.l. being the principal seller) and Cooperatie Westbridge Europe I U.A. as purchaser and Westbridge Hospitality Fund L.P. as the purchaser’s guarantor. Under the SPA the sellers have agreed to sell 24 hotels situated across Europe in France, Germany, Belgium, the Netherlands, Austria, Italy and Spain. The sale of four hotels is by way of asset transfer, with the remaining 20 hotels being sold through a sale of the shares in the relevant IHG subsidiaries.

      The agreed sale price is €352 million. IHG’s share of the proceeds is €345.2 million (before transaction costs), in cash and the assumption of debt, and the balance of € 6.8 million relates to third-party minority interests.

      Completion is subject only to clearance by the German Federal Cartel Office (“Bundeskarlellamt”) and is expected to take place at the end of April 2006.

      Upon completion the hotels will continue to be operated by the purchaser under the same IHG brands under 15 year franchise agreements.

      Under the SPA the sellers gave certain customary warranties and indemnities to the purchaser.

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, such as

•  certain financial institutions;

•  insurance companies;

•  dealers and traders in securities or foreign currencies;

•  persons holding ordinary shares or ADSs as part of a hedge, straddle, conversion transaction or other integrated transaction;

•  persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

•  partnerships or other entities classified as partnerships for U.S. federal income tax purposes;

•  persons liable for the alternative minimum tax;

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•  tax-exempt organizations;

•  persons who acquired our ADSs or shares pursuant to the exercise of any employee stock option or otherwise as compensation.

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, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; or (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 current Double Taxation Convention between the United States and the United Kingdom (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 pre-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 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. U.S. Holders should consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to be taxed at this favorable rate.

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      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 any dividend paid in pounds 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, 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 dividends.

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 generally be liable for UK taxation on capital gains realized 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 or has become temporarily treated non-resident for UK tax purposes for a period of less than five years of assessment and who disposes of ordinary shares or ADSs during that period may, for the year of assessment when that individual becomes resident again in the UK, 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 in tax years beginning 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 2005 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,

78

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” received by certain non-corporate US holders 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 pursuant to the agreement and duly stamped, any liability to SDRT will usually be repaid, if already paid, or canceled. 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.

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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 100 F Street, NE 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 the financial risks that arise in relation to the 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 mitigate 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.

      At December 31, 2005, 36% of borrowings in major currencies were at fixed rates and 64% were at variable rates. Based on the December 31, 2005 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 would increase the annual interest charge by approximately £1 million whilst a similar rise in euro interest rates would increase the annual interest charge by approximately £4 million.

      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 annual interest charge by approximately £2 million and £6 million respectively.

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.

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At December 31, 2005

	Expected to mature before December 31,
	2006			2007			2008		2009			2010		Thereafter		Total			Fair value(i)
	(£ million, except percentages)
Long-Term Debt:
Fixed Rate (US dollar)		—			—			—		—			—		—		—			—
Average dollar interest rate		—			—			—		—			—		—		—			—
Fixed Rate (£)		—			—			—		—			—		—		—			—
Average interest rate		—			—			—		—			—		—		—			—
Fixed Rate (euro)		0.4			27.9			—		—			—		—		28.3			29.5
Average interest rate		7.8	%		7.0	%		—		—			—		—		7.0	%		—
Variable Rate (various currencies)		1.3			5.3			—		377.4			—		—		384.0			384.0
Average interest rate		2.9	%		2.9	%		—		4.0	%		—		—		3.9	%		—

	Expected to mature before December 31,
	2006			2007		2008		2009		2010		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		4.3	%		—		—		—		—		—		4.3	%		—
Principal (euro)		160			—		—		—		—		—		160			(1	)
Fixed rate payable		2.1	%		—		—		—		—		—		2.1	%		—
Variable rate receivable		2.5	%		—		—		—		—		—		2.5	%		—

(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, 2005. All forward exchange agreements mature within one year.

At December 31, 2005

	Receive for $
			Average
	Contract		contractual
	amount		exchange rate
	(£ million)
Sterling		17.4		1.72
Fair value of forward contracts		0.0

      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.

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      The Group had the following currency swap agreements at December 31, 2005:

	Deposited		Borrowed
	2005		2005
	(million)
Sterling to US dollar		£  58		$100
Sterling to euro		£304		€450

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-15(c) and 15d-15(e)). These are defined as those controls and procedures designed to ensure that information required to be disclosed in reports 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. David Kappler is independent as that term is defined under the listing Standards of the NYSE.

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.

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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:

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Audit fees		3.9		3.8
Audit related fees		2.7		1.6
Tax fees		0.6		0.5
Total		7.2		5.9

      Non-audit fees payable for UK services were £2.1 million (2004 £1.1 million).

      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.

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

							(d) Maximum
					(c) Total number		number (or
					of shares (or		approximate dollar
			(b) Average		units) purchased		value) of shares (or
	(a) Total number		price paid		as part of publicly		units) that may yet be
	of shares (or		per share		announced plans		purchased under the
Period of fiscal year	units) purchased		(or unit)		or programs		plans or programs
Month 1 (01.01.05 - 01.10.05)		1,750,000		6.46		1,750,000		89,689,655
Month 2 (no purchases in this month)		n/a				n/a
Month 3		8,735,000		6.33		8,735,000		80,954,655
Month 4 (04.01.05 - 04.26.05)		8,975,000		6.26		8,975,000		71,979,655
Month 5 (no purchases in this month)		n/a				n/a
Month 6 (06.01.05 - 06.30.05)		10		6.96		10		90,349,451
Month 7 (no purchases in this month)		n/a				n/a
Month 8 (no purchases in this month)		n/a				n/a
Month 9 (09.08.05 – 09.30.05)		3,270,000		7.20		3,270,000		87,079,451
Month 10 (10.01.05 – 10.24.05)		3,650,000		7.03		3,650,000		83,429,451
Month 11 (11.22.05 – 11.30.05)		550,000		7.88		550,000		82,879,451
Month 12 (12.01.05 – 12.31.05)		3,670,000		7.99		3,670,000		79,209,451
Total		30,600,010				30,600,010

      The share buyback program was initially announced on March 11, 2004 with the intention to repurchase £250m worth of shares (US$456,525,000). This program was completed on December 20, 2004.

      On September 9, 2004, the Company announced a further £250 million share repurchase program. By December 31, 2005 a further 31.4 million shares had been repurchased at an average price per share of 672 pence (total approximately GBP£211 million). By March 17, 2006 a total of 33.95 million shares had

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been repurchased under the second repurchase program at an average price per share of 686 pence per share (approximately £233 million).

      During fiscal 2005, 3,489,677 ordinary shares were purchased by the Company’s Employee Share Ownership Trust at prices ranging from 625 pence to 824 pence per share, for the purpose of satisfying future share awards to employees.

PART III

ITEM 17. FINANCIAL STATEMENTS

      Not applicable.

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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 Income Statement for the years ended December 31, 2005 and 2004		F-3
Consolidated Statement of Recognized Income and Expense for the years ended December 31, 2005 and 2004		F-4
Consolidated Balance Sheet for the years ended December 31, 2005 and 2004		F-5
Consolidated Statement of Changes in Shareholders’ Funds for the years ended December 31, 2005 and 2004		F-6
Consolidated Cash Flow Statement for the years ended December 31, 2005 and 2004		F-8
Notes to the Financial Statements		F-9
Schedule for the years ended December 31, 2005 and 2004
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. 333-126139) filed with the SEC on June 27, 2005)
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)	£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 (incorporated by reference to Exhibit 4(ii) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No 1-10409) dated May 3, 2005)
Exhibit 4(b)(i)	Purchase and Sale Agreement dated July 1, 2003 between InterContinental Hotels Group Resources Inc and HPT (incorporated by reference to Exhibit 4(b)(i) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated May 3, 2005)
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 (incorporated by

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	reference to Exhibit 4(b)(ii) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated May 3, 2005)
Exhibit 4(b)(iii)	Amended and Restated Stock Purchase Agreement dated February 9, 2005 between Six Continents International Holdings, B.V. and HPT IHG-2 (incorporated by reference to Exhibit 4(b)(v) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated May 3, 2005)
Exhibit 4(b)(iv)	Share Purchase Agreement dated March 10, 2005 between IHC London (Holdings) Limited, and LGR Acquisition (currently LRG Acquisition) and LGR Holdings Limited (currently LRG Holdings Limited) (incorporated by reference to Exhibit 4(b)(iv) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated May 3, 2005)
Exhibit 4(b)(v)	New Zealand Share Sale Deed dated September 1, 2005 between Hale International Limited, Six Continents Limited, HANZ Holdings (New Zealand) Limited and Eureka Funds Management Limited
Exhibit 4(b)(vi)	Australia Share and Unit Sale Deed dated September 1, 2005 between Holiday Inns Holdings (Australia) Pty Limited, SPHC Group Pty Limited, HIA(T) Pty Ltd, Six Continents Limited, HANZ (Australia) Pty Limited and Eureka Funds Management Limited
Exhibit 4(b)(vii)	Britvic Underwriting Agreement dated November 25, 2005 between, inter alia, Britvic, IHG, the directors of Britvic, Citigroup and Deutsche Bank AG (as joint sponsors) and Citigroup, Deutsche Bank AG, Lehman Brothers International (Europe) and Merrill Lynch International (as joint Underwriters)
Exhibit 4(b)(viii)	Sale and Purchase Agreement dated March 10, 2006 among BHR Luxembourg S.à.r.l., Others, Cooperatie Westbridge Europe I.U.A., Others and Westbridge Hospitality Fund L.P. relating to a portfolio of certain companies and businesses in continental Europe
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 Hartman’s letter of appointment dated April 2005, effective from June 27, 2005 on completion of the Scheme of Arrangement and the introduction of the new parent company to the Group
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)	Stevan Porter’s letter of appointment dated April 2005, effective from June 27, 2005 on completion of the Scheme of Arrangement and the introduction of the new parent company to the Group
Exhibit 4(c)(v)	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)(vi)	Richard Solomons’ letter of appointment dated April 2005, effective from June 27, 2005 on completion of the Scheme of Arrangement and the introduction of the new parent company to the Group

86

Exhibit 4(c)(vii)	Andrew Cosslett’s service contract dated December 13, 2004 (incorporated by reference to Exhibit 4(c)(v) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated May 3, 2005)
Exhibit 4(c)(viii)	Andrew Cosslett’s letter of appointment dated April 2005, effective from June 27, 2005 on completion of the Scheme of Arrangement and the introduction of the new parent company to the Group
Exhibit 8	List of Subsidiaries
Exhibit 12(a)	Certification of Andrew Cosslett filed pursuant to 17 CFR 240.13a-14(a)
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 15(a)	Consent of Ernst of Young LLP (included on page F-2)

87

INTERCONTINENTAL HOTELS GROUP PLC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Directors of InterContinental Hotels Group PLC

      We have audited the accompanying Consolidated Balance Sheets of InterContinental Hotels Group PLC as of December 31, 2005 and 2004, and the related Consolidated Income Statements, Consolidated Statement of Recognized Income and Expense, Consolidated Statement of Changes in Shareholders’ Funds and Consolidated Cash Flow Statement for each of the two years in the period ended December 31, 2005. 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 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 Group’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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of InterContinental Hotels Group PLC at December 31, 2005 and 2004, and the consolidated results of its operations and its consolidated cash flows for each of the two years in the period ended December 31, 2005, in conformity with International Financial Reporting Standards as adopted by the European Union which differ in certain respects from United States generally accepted accounting principles (see Note 32 of Notes to the Consolidated 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.

      As discussed in Note 22 of Notes to the Consolidated Financial Statements, the Company changed its method of accounting for financial instruments in 2005.

Ernst & Young LLP

London, England

March 1, 2006, except for

Note 31 — Post balance sheet events, and

Note 32 — Differences between International Financial Reporting Standards

and United States Generally Accepted Accounting Principles

as to which the date is

March 31, 2006.

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, 333-104691 and 333-126139) of InterContinental Hotels Group PLC of the reference to our name in “Item 3. Key Information” and our report dated March 1, 2006, except for Note 31 — Post balance sheet events and Note 32 — Differences between International Financial Reporting Standards and United States Generally Accepted Accounting Principles, as to which the date is March 31, 2006, on the consolidated Financial statements and schedule both included in the Annual Report (Form 20-F) for the year ended December 31, 2005.

Ernst & Young LLP

London, England

March 31, 2006

F-2

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED INCOME STATEMENT

		Year ended December 31,									Year ended December 31,
		2005									2004
		Continuing			Discontinued						Continuing			Discontinued
		operations			operations			Total			operations			operations			Total
		(£ million, except per ordinary share amounts)
Revenue (Note 2)			852			1,058			1,910			731			1,473			2,204
Cost of sales			(442	)		(775	)		(1,217	)		(398	)		(1,079	)		(1,477	)
Administrative expenses			(150	)		(74	)		(224	)		(140	)		(68	)		(208	)
			260			209			469			193			326			519
Depreciation and amortization (Note 2)			(70	)		(60	)		(130	)		(59	)		(114	)		(173	)
Other operating income and expenses (Note 5)			(22	)		—			(22	)		(49	)		—			(49	)
Operating profit (Note 2)			168			149			317			85			212			297
Financial income (Note 6)			30			—			30			70			—			70
Financial expenses (Note 6)			(54	)		(9	)		(63	)		(103	)		—			(103	)
Profit before tax			144			140			284			52			212			264
Tax (Note 7)			(28	)		(52	)		(80	)		194			(67	)		127
Profit after tax			116			88			204			246			145			391
Gain on disposal of assets, net of tax charge of £38 million (2004 credit of £4 million)			—			311			311			—			19			19
Profit available for shareholders			116			399			515			246			164			410
Attributable to:
	Equity holders of the parent(i)		116			380			496			246			137			383
	Minority equity interest		—			19			19			—			27			27
Profit for the year			116			399			515			246			164			410
Earnings per ordinary share: (Note 9)
	Basic		22.3	p		72.9	p		95.2	p		34.6	p		19.3	p		53.9	p
	Diluted		21.8	p		71.3	p		93.1	p		34.3	p		19.0	p		53.3	p

(i) A summary of the significant adjustments to profit available for IHG equity holders of the parent that would be required had United States generally accepted accounting principles been applied instead of International Financial Reporting Standards as adopted by the European Union is set out in Note 32 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 RECOGNIZED INCOME AND EXPENSE

		Year ended			Year ended
		December 31,			December 31,
		2005			2004
		(£ million)
Income and expense recognized directly in equity
	Gains on valuation of available-for-sale assets		31			—
	Gains on cash flow hedges		1			—
	Exchange differences on retranslation of foreign operations		29			(12	)
	Actuarial losses on defined benefit pension plans		(23	)		(51	)
	Deficit transferred in respect of previous acquisition		—			(6	)
			38			(69	)
Transfers to the income statement
	On cash flow hedges		(6	)		—
	On disposal of foreign operations		2			—
Tax on items taken directly to or transferred from equity			7			14
Net income/(expense) recognized directly in equity			41			(55	)
Profit for the year			515			410
Total recognized income and expense for the year			556			355
Attributable to:
	Equity holders of the parent		541			338
	Minority equity interest		15			17
			556			355
Effects of changes in accounting policy
Losses on valuation of available-for-sale assets			(10	)		—
Gains on cash flow hedges			6			—
			(4	)		—

(i) The statement of comprehensive income required under United States generally accepted accounting principles is set out in Note 32 of Notes to the Financial Statements.

F-4

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED BALANCE SHEET

	December 31,			December 31,
	2005			2004
	(£ million)
ASSETS
Property, plant and equipment — (Note 10)		1,356			1,926
Goodwill — (Note 12)		118			152
Intangible assets — (Note 13)		120			54
Investment in associates — (Note 14)		42			42
Other financial assets — (Note 15)		113			80
Total non-current assets		1,749			2,254
Inventories — (Note 16)		3			42
Trade and other receivables — (Note 17)		252			390
Current tax receivable		22			14
Cash and cash equivalents — (Note 18)		324			72
Other financial assets — (Note 15)		106			80
Total current assets		707			598
Non-current assets classified as held for sale — (Note 11)		279			1,826
Total assets		2,735			4,678
LIABILITIES
Loans and other borrowings — (Note 20)		(2	)		(32	)
Trade and other payables — (Note 19)		(468	)		(633	)
Current tax payable		(324	)		(261	)
Total current liabilities		(794	)		(926	)
Loans and other borrowings — (Note 20)		(410	)		(1,156	)
Employee benefits — (Note 3)		(76	)		(173	)
Provisions and other payables — (Note 19)		(107	)		(103	)
Deferred tax payable — (Note 25)		(210	)		(234	)
Total non-current liabilities		(803	)		(1,666	)
Liabilities classified as held for sale — (Note 11)		(34	)		(148	)
Total liabilities		(1,631	)		(2,740	)
Net assets		1,104			1,938
EQUITY
Equity share capital		49			723
Capital redemption reserve		1			46
Shares held by employee share trusts		(22	)		(22	)
Other reserves		(1,528	)		1,462
Unrealized gains and losses reserve		23			—
Currency translation reserve		19			(12	)
Retained earnings		2,542			(376	)
IHG shareholders’ equity(i)		1,084			1,821
Minority equity interest		20			117
Total equity		1,104			1,938

(i)  A summary of the significant adjustments to IHG shareholders’ equity that would be required had United States generally accepted accounting principles been applied instead of International Financial Reporting Standards as adopted by the European Union is set out in Note 32 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
																Shares
																held by
	Number of									Capital						employee			Unrealized		Currency						Total
	ordinary			Ordinary			Share			redemption			Other			share			gains and		translation			Retained			shareholders’
	shares(i)			shares(i)			premium(ii)			reserve(ii)			reserves(iii)			trusts(iv)			losses(v)		reserve(vi)			earnings			funds
	(£ million)
At January 1, 2004		739			739			14			—			1,462			(11	)		—		—			119			2,323
Total recognized income and expense for the year		—			—			—			—			—			—			—		(12	)		350			338
Share capital consolidation		(75	)		—			—			—			—			—			—		—			—			—
Issue of ordinary shares		4			4			12			—			—			—			—		—			—			16
Repurchase of 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
Equity-settled share-based cost		—			—			—			—			—			—			—		—			18			18
Equity dividends paid		—			—			—			—			—			—			—		—			(600	)		(600	)
At December 31, 2004		622			697			26			46			1,462			(22	)		—		(12	)		(376	)		1,821
Effect of implementing IAS 32/39		—			—			—			—			—			—			3		—			(7	)		(4	)
At January 1, 2005		622			697			26			46			1,462			(22	)		3		(12	)		(383	)		1,817
Total recognized income and expense for the year		—			—			—			—			—			—			20		31			490			541
Issue of ordinary shares		1			1			3			—			—			—			—		—			—			4
Repurchase of shares		(19	)		(22	)		—			—			—			—			—		—			(102	)		(124	)
Transfer to capital redemption reserve		—			—			—			22			—			—			—		—			(22	)		—
Capital reorganization		(161	)		(632	)		(29	)		(68	)		(2,990	)		—			—		—			2,723			(996	)
Proceeds from capital reorganization		—			—			—			—			—			4			—		—			—			4
Issue of ordinary shares		1			—			6			—			—			—			—		—			—			6
Repurchase of shares		(11	)		(1	)		—			—			—			—			—		—			(82	)		(83	)
Transfer to capital redemption reserve		—			—			—			1			—			—			—		—			(1	)		—
Purchase of own shares by employee share trusts		—			—			—			—			—			(29	)		—		—			—			(29	)
Release of own shares by employee share trusts		—			—			—			—			—			25			—		—			(17	)		8
Equity-settled share-based cost		—			—			—			—			—			—			—		—			17			17
Equity dividends paid		—			—			—			—			—			—			—		—			(81	)		(81	)
At December 31, 2005		433			43			6			1			(1,528	)		(22	)		23		19			2,542			1,084

(i) At December 31, 2003 the authorized share capital was £10,000,050,000, comprising 10,000,000,000 ordinary shares of £1 each and one redeemable preference share of £50,000.

The Company was incorporated and registered in England and Wales with registered number 5134420 on May 21, 2004 as a limited company under the Companies Act 1985 with the name Hackremco (No. 2154) Limited. On March 24, 2005 Hackremco (No. 2154) Limited changed its name to New InterContinental Hotels Group Limited. On April 27, 2005 New InterContinental Hotels Group Limited re-registered as a public limited company and changed its name to New InterContinental Hotels Group PLC. On June 27, 2005 New InterContinental Hotels Group PLC changed its name to InterContinental Hotels Group PLC.

On May 21, 2004 the Company had an authorized share capital of £100, divided into 100 ordinary shares of £1 each, of which one ordinary share was allotted, called up and fully paid on incorporation.

On December 10, 2004 shareholders approved a share capital consolidation on the basis of 25 new ordinary shares for every 28 existing ordinary shares. This provided for all the authorized ordinary shares of £1 each (whether issued or unissued) to be consolidated into new ordinary shares of 112 pence each. The share capital consolidation became effective on December 13, 2004. The consolidation had no impact on the authorized redeemable preference share.

F-6

On April 21, 2005 the authorized share capital was increased to £50,100 by the creation of 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 May 20, 2005 the authorized share capital of the Company was increased from £50,100 to £10,000,050,000 by the creation of 9,999,999,900 ordinary shares of £1 each. On May 20, 2005 all of the ordinary shares of £1 each were consolidated into ordinary shares of £6.25 each.

On June 27, 2005 the capital reorganization (by means of a scheme of arrangement under Section 425 of the Companies Act 1985) was completed. Under the arrangement, shareholders received 11 new ordinary shares and £24.75 cash in exchange for every 15 existing ordinary shares held on June 24, 2005. The entire issued share capital of InterContinental Hotels Group PLC was transferred to New InterContinental Hotels Group PLC at fair market value, in exchange for the issue of 443 million fully paid ordinary shares of 10 pence 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 443 million shares are recorded only at nominal value.

On June 30, 2005 £6.15 on every £6.25 ordinary share was canceled, thereby reducing the nominal value of each ordinary share to 10 pence.

On September 8, 2005 the redeemable preference share was redeemed at par value. The redeemable preference share did not carry any right to receive dividends nor to participate in the profits of the Company.

During 2004 and 2005, the Company undertook to return funds of up to £750 million to shareholders by way of three consecutive £250 million share repurchase programs, the second of which is expected to be completed in the first half of 2006. During the year, 30,600,010 (2004 46,385,981) ordinary shares were repurchased and canceled under the authorities granted by shareholders at general meetings held during 2003, 2004 and 2005. Of these, 19,460,010 (2004 46,385,981) were 112 pence (2004 100 pence) shares in the capital of InterContinental Hotels Limited (formerly InterContinental Hotels Group PLC) and 11,140,000 were 10 pence shares in the capital of InterContinental Hotels Group PLC (formerly New InterContinental Hotels Group PLC).

The authority given to the Company at the Annual General Meeting on June 1, 2005 to purchase its own shares was still valid at December 31, 2005. A resolution to renew the authority will be put to shareholders at the Annual General Meeting on June 1, 2006.

At December 31, 2005 the authorized share capital was £160,050,000, comprising 1,600,000,000 ordinary shares of 10 pence each and one redeemable preference share of £50,000.

(ii)	The share premium account and capital redemption reserve are not distributable.
(iii)	Other reserves comprises the revaluation reserve previously recognized under UK GAAP and the merger reserve.
(iv)	The shares held by employee share trusts comprises £21.7 million (2004 £21.8 million) in respect of 2.9 million (2004 3.1 million) InterContinental Hotels Group PLC ordinary shares held by employee share trusts, with a market value at December 31, 2005 of £25 million (2004 £20 million).
(v)	The net unrealized gains and losses reserve records movements for available-for-sale financial assets to fair value and the effective portion of the cumulative net change in the fair value of the cash flow hedging instruments related to hedged transactions that have not yet occurred.
(vi)	The currency translation reserve records the movement in exchange differences arising from the translation of the financial statements of foreign operations and exchange differences on foreign currency borrowings and currency swaps that provide a hedge against a net investment in foreign operations.

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

F-7

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED CASH FLOW STATEMENT

		Year ended			Year ended
		December 31,			December 31,
		2005			2004
		(£ million)
Profit for the year			515			410
Adjustments for:
	Net financial expenses		33			33
	Income tax charge/(credit)		80			(127	)
	Gain on disposal of assets, net of tax		(311	)		(19	)
	Other operating income and expenses		22			49
	Depreciation and amortization		130			173
	Equity settled share-based cost, net of payments		12			12
	Other gains and losses		—			4
Operating cash flow before movements in working capital			481			535
Decrease in inventories			—			1
Increase in receivables			—			(13	)
(Decrease)/increase in provisions and other payables			(32	)		50
Decrease in employee benefit obligation			(26	)		(58	)
Cash flow from operations			423			515
Interest paid			(59	)		(91	)
Interest received			29			72
Tax paid			(91	)		(35	)
Net cash from operating activities			302			461
Cash flow from investing activities
Purchases of property, plant and equipment — Hotels			(121	)		(175	)
Purchases of associates and other financial assets — Hotels			(15	)		(12	)
Disposal of assets, net of cash disposed of — Hotels			1,816			101
Proceeds from other financial assets — Hotels			10			5
Purchases of property, plant and equipment — Soft Drinks			(47	)		(70	)
Disposal of business, net of cash disposed of — Soft Drinks			220			—
Net cash from investing activities			1,863			(151	)
Cash flow from financing activities
Proceeds from the issue of share capital			10			16
Purchase of own shares			(207	)		(257	)
Payment to shareholders as a result of the capital reorganisation on June 27, 2005			(996	)		—
Purchase of own shares by employee share trusts			(29	)		(33	)
Proceeds on release of own shares by employee share trusts			16			16
Dividends paid to shareholders			(81	)		(600	)
Dividends paid to minority interests			(177	)		(26	)
(Decrease)/increase in borrowings			(442	)		258
Costs associated with new facilities			—			(5	)
Financial expense on early settlement of debt			—			(17	)
Net cash from financing activities			(1,906	)		(648	)
Net movement in cash and cash equivalents in the year			259			(338	)
Cash and cash equivalents at beginning of the year			72			411
Exchange rate effects			(7	)		(1	)
Cash and cash equivalents at end of the year			324			72

(i)  The significant differences between the cash flow statement presented above and that required under United States generally accepted accounting principles are described in Note 32 of Notes to the Financial Statements.

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

F-8

Note 1 — Corporate Information and Accounting Policies

Corporate information

      The consolidated financial statements of InterContinental Hotels Group PLC (“IHG”) for the year ended December 31, 2005 were authorised for issue in accordance with a resolution of the Directors on March 1, 2006. InterContinental Hotels Group PLC (the “Company”) is incorporated in Great Britain and registered in England and Wales.

Summary of significant accounting policies

     Basis of preparation

      The financial statements have been prepared on an historic cost basis, except for derivative financial instruments and available-for-sale financial assets that have been measured at fair value. The consolidated financial statements are presented in sterling and all values are rounded to the nearest million except where otherwise indicated.

Statement of compliance

      From January 1, 2005, as required by the European Union’s International Accounting Standard (“IAS”) Regulation and the Companies Act 1985, the Company has prepared its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”). IFRS as adopted by the EU differ in certain respects from IFRS as issued by the International Accounting Standards Board (“IASB”). However, the consolidated financial statements for the periods presented would be no different had the Company applied IFRS as issued by the IASB. References to “IFRS” and International Financial Reporting Standards hereafter should be construed as references to IFRS as adopted by the EU. As permitted, the Company has also early adopted the amendment to IAS 19 “Employee Benefits” published in December 2004.

IFRS exemptions

      IFRS 1 “First-time Adoption of International Financial Reporting Standards” has been applied in preparing this financial information. The Company has taken the following exemptions available under IFRS 1:

      a) Not to restate the comparative information disclosed in the 2005 financial statements in accordance with IAS 32 “Financial Instruments: Disclosure and Presentation” and IAS 39 “Financial Instruments: Recognition and Measurement”.

      b) Not to restate business combinations before January 1, 2004.

      c) To recognize all actuarial gains and losses on pensions and other post-employment benefits directly in equity at January 1, 2004.

      d) To retain UK GAAP carrying values of property, plant and equipment, including revaluations, as deemed cost at transition.

      e) Not to recognize separately cumulative foreign exchange movements up to January 1, 2004.

      f) To apply IFRS 2 “Share-based Payments” to grants of equity instruments after November 7, 2002 that had not vested at January 1, 2005.

      The disclosures required by IFRS 1 are given in Note 30 of Notes to the Financial Statements.

F-9

      The principle accounting policies of the Company are set out below.

Basis of consolidation

      The consolidated financial statements comprise the financial statements of the parent company and entities controlled by the Company. All inter-company balances and transactions have been eliminated.

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

      Shareholder approval was given on June 1, 2005 to recommended proposals for the return of approximately £1 billion to shareholders by way of a capital reorganization (by means of a scheme of arrangement under Section 425 of the Companies Act 1985). Under the arrangement, shareholders received 11 new ordinary shares and £24.75 cash in exchange for every 15 existing ordinary shares held on June 24, 2005. The overall effect of the transaction was that of a share repurchase at fair value, therefore no adjustment has been made to comparative earnings per share data (see Note 9).

      The capital reorganization of InterContinental Hotels Group PLC to New InterContinental Hotels Group PLC has been accounted for in accordance with the principles of merger accounting as applicable to group reorganizations. The consolidated financial statements are therefore presented as if New InterContinental Hotels Group PLC had been the parent company of the Group throughout the periods presented. Following this capital reorganization, InterContinental Hotels Group PLC changed its name to InterContinental Hotels PLC and re-registered as a private limited company, InterContinental Hotels Limited; New InterContinental Hotels Group PLC changed its name to InterContinental Hotels Group PLC.

Foreign currencies

      Transactions in foreign currencies are translated to the functional currency at the exchange rates ruling on the dates of the transactions. All foreign exchange differences arising on translation are recognized in the income statement except on foreign currency borrowings that provide a hedge against a net investment in a foreign operation. These are taken directly to the currency translation reserve until the disposal of the net investment, at which time they are recycled against the gain or loss on disposal.

      The assets and liabilities of foreign operations, including goodwill, are translated into sterling at the relevant rates of exchange ruling at the balance sheet date. The revenues and expenses of foreign operations are translated into sterling at weighted average rates of exchange for the period. The exchange differences arising on the retranslation are taken directly to the currency translation reserve. On disposal of a foreign operation, the cumulative amount recognized in the currency translation reserve relating to that particular foreign operation is recycled against the gain or loss on disposal.

Financial instruments

      The Company adopted IAS 32 “Financial Instruments: Disclosure and Presentation” and IAS 39 “Financial Instruments: Recognition and Measurement” at January 1, 2005. The balance sheet has been restated to include derivatives and equity securities at fair value, with any movement taken to the appropriate reserve.

      Under the transitional rules of IFRS 1, IAS 32 and IAS 39 are not applied to comparative balances. Comparative 2004 balances are presented using UK GAAP values as presented in the Company’s 2004 Annual Report and Financial Statements, where currency swap agreements were retranslated at exchange rates ruling at the balance sheet date with the net amount being included in borrowings. Financial income or expense arising from currency swap agreements is taken to the income statement on a gross basis over the term of the relevant agreements.

      Gains or losses arising on forward exchange contracts are taken to the income statement in line with the transactions they are hedging.

F-10

Derivative financial instruments and hedging

      Derivatives designated as hedging instruments are accounted for in line with the nature of the hedging arrangement. The Company’s detailed accounting policies with respect to hedging instruments are set out in note 21. Documentation outlining the measurement and effectiveness of the hedging arrangement is maintained throughout the life of the hedge relationship. Any ineffective element of a hedge arrangement is recognized in the income statement.

      The fair value of derivatives is calculated by discounting the expected future cash flows at prevailing interest rates.

Property, plant and equipment

      Property, plant and equipment are stated at cost less depreciation and any impairment.

      Borrowing costs are not capitalized. Repairs and maintenance costs are expensed as incurred.

      Land is not depreciated. All other property, plant and equipment are depreciated to a residual value over their estimated useful lives, namely:

Buildings	lesser of 50 years and unexpired term of lease;
Fixtures, fittings and equipment	3-25 years; and
Plant and machinery	4-20 years.

      All depreciation and amortization is charged on a straight line basis. Residual value is reassessed annually.

      Property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Assets that do not generate independent cash flows are combined into cash-generating units. If carrying values exceed estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. Recoverable amount is the greater of fair value less cost to sell and value in use. Value in use is assessed based on estimated future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Goodwill

      Goodwill arises on consolidation and is recorded at cost, being the excess of the cost of acquisition over the fair value at the date of acquisition of the Company’s share of identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

      Goodwill is tested for impairment at least annually by comparing carrying values with recoverable amounts.

Intangible assets

Software

      Acquired software licenses and software developed in-house are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives of three to seven years.

     Management contracts

      When assets are sold and a purchaser enters into a management or franchise contract with the Company, the Company capitalizes as part of the gain or loss on disposal an estimate of the fair value of the contract entered into. This value is amortized over the life of the contract which ranges from 10 to 25 years.

F-11

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 expensed unless forecast revenues exceed attributable forecast development costs, at which time they are capitalized and amortized over the life of the product.

      Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Associates

      An associate is an entity over which the Company has the ability to exercize 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 Company’s investment is recorded at cost adjusted by the Company’s share of post acquisition profits and losses. When the Company’s share of losses exceeds its interest in an associate, the Company’s carrying amount is reduced to £nil and recognition of further losses is discontinued except to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of an associate.

Financial assets

      Under IAS 39 current and non-current financial assets are classified as fair value through profit or loss; loans and receivables; held-to-maturity investments; or as available-for-sale. The Company determines the classification of its financial assets at initial recognition and are subsequently held at fair value or amortized cost. Changes in fair values of available-for-sale financial assets are recorded directly in the unrealized gains and losses reserve. Changes in fair values of financial assets classified as fair value through profit or loss are recorded in the income statement.

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

      Available-for-sale financial assets are tested for impairment at each balance sheet date. If impaired, the difference between carrying value and fair value is transferred from equity to the income statement to the extent that there is sufficient surplus in equity; any excess goes directly to the income statement.

Inventories

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

Trade receivables

      Trade receivables are recorded at their original amount less an allowance for any doubtful amounts. An allowance is made when collection of the full amount is no longer considered probable.

Cash and cash equivalents

      Cash comprises cash in hand and demand deposits.

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

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.

F-12

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

      Depreciation is not charged against property, plant and equipment classified as held for sale.

      The Company has taken advantage of the transitional provisions of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” and applied the standard for the period beginning January 1, 2004.

Trade payables

      Trade payables are non interest bearing and are stated at their nominal value.

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 the points at a later date for free accommodation or other benefits. The future redemption liability is included in trade and other payables and provisions and other payables and is estimated using actuarial methods to give eventual redemption rates and points values.

Self insurance

      The Company 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.

Provisions

      Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that a payment will be made and a reliable estimate of the amount can be made. If the effect of the time value of money is material, the provision is discounted.

Bank and other borrowings

      Bank and other borrowings are held at amortized cost. Finance charges, including issue costs, are charged to the income statement using an effective interest rate method.

      Borrowings are classified as non-current when the repayment date is more than 12 months from the balance sheet date or where they are drawn on a facility with more than 12 months to expiry.

Pensions

Defined contribution plans

      Payments to defined contribution schemes are charged to the income statement as they fall due.

Defined benefit plans

      Plan assets are measured at fair value and plan liabilities are measured on an actuarial basis, using the projected unit credit method and discounting at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the plan liabilities.

      The service cost of providing pension benefits to employees for the year is charged to the income statement. The cost of making improvements to pensions is recognized in the income statement on a straight line basis over the period during which any increase in benefits vests. To the extent that improvements in benefits vest immediately, the cost is recognized immediately as an expense.

      Actuarial gains and losses may result from: differences between the expected return and the actual return on plan assets; differences between the actuarial assumptions underlying the plan liabilities and actual

F-13

experience during the year; or changes in the actuarial assumptions used in the valuation of the plan liabilities. Actuarial gains and losses, and taxation thereon, are recognized in the consolidated statement of recognized income and expense.

      Actuarial valuations are normally carried out every three years.

Deferred tax

      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 Company 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, based on rates enacted or substantively enacted at the balance sheet date.

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 Company’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 Company.

      Owned and leased — primarily 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 Company’s brand names. Revenue is recognized when rooms are occupied and food and beverages are sold.

      Management fees — earned from hotels managed by the Company, 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 hotels’ profitability or cash flows. Revenue is recognized when earned and realized or realizable under the terms of the contract.

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

Share-based payments

      The cost of equity-settled transactions with employees is measured by reference to fair value at the date at which the shares are granted. Fair value is determined by an external valuer using option pricing models.

      The cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in which any performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date).

      The income statement charge for a period represents the movement in cumulative expense recognized at the beginning and end of that period. No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

F-14

      The Company has taken advantage of the transitional provisions of IFRS 2 in respect of equity-settled awards and has applied IFRS 2 only to equity-settled awards granted after November 7, 2002 that had not vested before January 1, 2005.

Leases

      Operating lease rentals are charged to the income statement on a straight line basis over the term of the lease.

Disposal of Assets

      The Company recognizes the sales proceeds and related profit or loss on disposal on completion of the sales process. The Company considers the following criteria in determining whether revenue and profit or loss should be recorded:

•  does the Company have a continuing managerial involvement to the degree associated with asset ownership;

•  has the Company transferred significant risks and rewards associated with asset ownership;

•  can the Company reliably measure the proceeds; and

•  will the Company actually receive the proceeds.

Discontinued operations

      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, geographical area of operations, or where there is a co-ordinated plan to dispose of a separate line of business or geographical area of operations.

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.

      On an ongoing basis, management evaluates its estimates and judgments, including those relating to revenue recognition, allowance for doubtful amounts, associates and financial assets, property, plant and equipment, goodwill, intangible assets, income taxes, financial instruments, hotel loyalty program, self-insurance, employee 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.

New standards and interpretations

      During the year, the International Accounting Standards Board (“IASB”) and International Financial Reporting Interpretations Committee (“IFRIC”) issued the following standards and interpretations with an effective date after the date of these financial statements. These standards and interpretations which are relevant to the Company have not been applied in the preparation of the Company’s financial statements:

IFRS 7	Financial Instruments: Disclosures Effective from January 1, 2007
IFRIC 4	Determining whether an arrangement contains a lease Effective from January 1, 2006

F-15

      The Company does not anticipate that the adoption of these standards and interpretations will have a material impact on the Company’s financial statements on adoption.

Note 2 — Segmental Analysis

      The results of foreign 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 = $1.83 (2004 £1 = $1.82). In the case of the euro, the translation rate is £1 = €1.46 (2004 £1 = € 1.47).

      Foreign currency denominated assets and liabilities have been translated into sterling at the rates of exchange on the balance sheet date. In the case of the US dollar, the translation rate is £1 = $1.73 (2004 £1 = $1.93). In the case of the euro, the translation rate is £1 = €1.46 (2004 £1 = € 1.41).

Hotels

      The primary segmental reporting format is determined to be three main geographical regions:

      the Americas;

      Europe, the Middle East and Africa (“EMEA”); and

      Asia Pacific.

      These, together with Central functions, form the principal format by which management is organized and makes operational decisions.

      The Company further breaks each geographic region into three distinct business models which offer different growth, return, risk and reward opportunities:

Franchised

      Where the Company neither owns nor manages the hotel, but licenses the use of a Company brand and provide access to reservation systems, loyalty schemes, and know-how. The Company derives revenues from a brand royalty or licensing fee, based on a percentage of room revenue.

Managed

      Where, in addition to licensing the use of a Company brand, the Company manages the hotel for third party owners. The Company derives revenues from base and incentive management fees and provides the system infrastructure necessary for the hotel to operate. Management contract fees are generally a percentage of hotel revenue and may have an additional incentive fee linked to profitability or cash flow. The terms of these agreements vary, but are often long-term (for example, 10 years or more). The 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. In order to gain access to central reservation systems, global and regional brand marketing and brand standards and procedures, owners are typically required to make a further contribution.

Owned and leased

      Where the 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 Company has sold, or plans to sell, the majority of its owned and leased portfolio and in future expects to only own hotels where it is considered strategically important to do so.

      Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

F-16

Soft Drinks

      Manufactures a variety of soft drink brands with distribution concentrated mainly in the UK.

Year ended December 31, 2005*

Revenue

						Asia				Total
		Americas		EMEA		Pacific		Central		Hotels
		(£ million)
Hotels
	Owned and leased		122		236		56		—		414
	Managed		65		55		25		—		145
	Franchised		213		35		3		—		251
	Central		—		—		—		42		42
	Continuing operations		400		326		84		42		852
	Discontinued operations — owned and leased		45		285		57		—		387
			445		611		141		42		1,239

		Continuing		Discontinued		Group
		(£ million)
Group
	Hotels		852		387		1,239
	Soft Drinks		—		671		671
Total revenue			852		1,058		1,910

Segmental result

														Total
		Americas			EMEA			Asia Pacific			Central			Hotels
		(£ million)
Hotels
	Owned and leased		15			11			11			—			37
	Managed		20			31			16			—			67
	Franchised		186			26			2			—			214
	Regional and central		(34	)		(21	)		(8	)		(65	)		(128	)
	Continuing operations		187			47			21			(65	)		190
	Discontinued operations — owned and leased		11			57			11			—			79
			198			104			32			(65	)		269

F-17

		Continuing			Discontinued			Group
		(£ million)
Group
	Hotels		190			79			269
	Soft Drinks		—			70			70
			190			149			339
Unallocated expenses:
	Other operating income and expenses		(22	)		—			(22	)
Operating profit			168			149			317
Net finance costs			(24	)		(9	)		(33	)
Profit before tax			144			140			284
Tax			(28	)		(52	)		(80	)
Profit after tax			116			88			204
Gain on disposal of assets, net of tax			—			311			311
Profit available for shareholders			116			399			515

*  Other than for Soft Drinks which reflects the 50 weeks and three days ended December 14.

Year ended December 31, 2005*

Assets and liabilities

						Asia				Total		Soft		Total
		Americas		EMEA		Pacific		Central		Hotels		Drinks		Group
		(£ million)
Segment assets			689		987		346		88		2,110		—		2,110
Non-current assets classified as held for sale			21		258		—		—		279		—		279
			710		1,245		346		88		2,389		—		2,389
Unallocated assets:
	Current tax receivable										22		—		22
	Cash and cash equivalents										324		—		324
Total assets											2,735		—		2,735
Segment liabilities			340		261		50		—		651		—		651
Liabilities classified as held for sale			1		33		—		—		34		—		34
			341		294		50		—		685		—		685
Unallocated liabilities:
	Current tax payable										324		—		324
	Deferred tax payable										210		—		210
	Loans and other borrowings										412		—		412
Total liabilities											1,631		—		1,631

F-18

Other segment information

						Asia				Total		Soft		Total
		Americas		EMEA		Pacific		Central		Hotels		Drinks		Group
		(£ million)
Continuing operations:
	Capital expenditure		24		27		28		13		92		—		92
	Depreciation and amortization(i)		19		28		8		15		70		—		70
	Impairment of property, plant and equipment		—		7		—		—		7		—		7
Discontinued operations:
	Capital expenditure		4		36		4		—		44		47		91
	Depreciation and amortization(i)		1		11		3		—		15		45		60

*	Other than for Soft Drinks which reflects the 50 weeks and three days ended December 14.
(i)	Included in the £130 million of depreciation and amortization is £23 million that relates to administrative expenses.

Year ended December 31, 2004*

Revenue

						Asia				Total
		Americas		EMEA		Pacific		Central		Hotels
		(£ million)
Hotels
	Owned and leased		93		231		47		—		371
	Managed		30		43		21		—		94
	Franchised		196		27		3		—		226
	Central		—		—		—		40		40
	Continuing operations		319		301		71		40		731
	Discontinued operations — owned and leased		176		528		63		—		767
			495		829		134		40		1,498

		Continuing		Discontinued		Group
		(£ million)
Group
	Hotels		731		767		1,498
	Soft Drinks		—		706		706
Total revenue			731		1,473		2,204

F-19

Segmental result

								Asia						Total
		Americas			EMEA			Pacific			Central			Hotels
		(£ million)
Hotels
	Owned and leased		4			2			9			—			15
	Managed		6			24			14			—			44
	Franchised		167			21			2			—			190
	Regional and central		(27	)		(23	)		(8	)		(57	)		(115	)
	Continuing operations		150			24			17			(57	)		134
	Discontinued operations — owned and leased		23			105			7			—			135
			173			129			24			(57	)		269

		Continuing			Discontinued			Group
		(£ million)
Group
	Hotels		134			135			269
	Soft Drinks		—			77			77
			134			212			346
Unallocated expenses:
	Other operating income and expenses		(49	)		—			(49	)
Operating profit			85			212			297
Net finance costs			(33	)		—			(33	)
Profit before tax			52			212			264
Tax			194			(67	)		127
Profit after tax			246			145			391
Gain on disposal of assets, net of tax			—			19			19
Profit available for shareholders			246			164			410

*  Other than for Soft Drinks which reflects the 53 weeks ended December 25.

F-20

Year ended December 31, 2004*

Assets and liabilities

						Asia				Total		Soft			Total
		Americas		EMEA		Pacific		Central		Hotels		Drinks			Group
		(£ million)
Segment assets			583		1,202		437		86		2,308		458			2,766
Non-current assets classified as held for sale			424		1,402		—		—		1,826		—			1,826
			1,007		2,604		437		86		4,134		458			4,592
Unallocated assets:
	Current tax receivable										14		—			14
	Cash and cash equivalents										60		12			72
Total assets											4,208		470			4,678
Segment liabilities			300		290		28		—		618		291			909
Liabilities classified as held for sale			24		124		—		—		148		—			148
			324		414		28		—		766		291			1,057
Unallocated liabilities:
	Current tax payable										248		13			261
	Deferred tax payable										246		(12	)		234
	Loans and other borrowings										1,185		3			1,188
Total liabilities											2,445		295			2,740

Other segment information

						Asia				Total		Soft		Total
		Americas		EMEA		Pacific		Central		Hotels		Drinks		Group
		(£ million)
Continuing operations:
	Capital expenditure		45		37		15		12		109		—		109
	Depreciation and amortization(i)		12		26		6		15		59		—		59
	Impairment of property, plant and equipment		14		30		4		—		48		—		48
Discontinued operations:
	Capital expenditure		15		58		5		—		78		70		148
	Depreciation and amortization(i)		17		44		7		—		68		46		114

*	Other than for Soft Drinks which reflects the 53 weeks ended December 25.
(i)	Included in the £173 million of depreciation and amortization is £23 million that relates to administrative expenses.

F-21

Note 3 — Staff costs and directors’ emoluments

     Costs

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Wages and salaries		465		570
Social security costs		61		66
Pension costs		19		21
Other plans		15		12
		560		669

     Employee numbers

      Average number of employees, including part-time employees:

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(Number)
Hotels		18,995		26,835
Soft Drinks		2,991		2,824
		21,986		29,659

     Employee benefits

      Retirement and death in service benefits are provided for eligible employees in the United Kingdom principally by the InterContinental Hotels UK Pension Plan. The plan covers approximately 400 employees of which 240 are in the defined benefit section and 160 are in the defined contribution section. The assets of the plan are held in self-administered trust funds separate from the Company’s assets. The Company also maintains a US-based InterContinental Hotels Pension Plan and post-employment benefits scheme. This plan is now closed to new members and pensionable service no longer accrues for current employee members. In addition, the Company 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 December 14, 2005, the Soft Drinks business, including the Britvic Pension Plan, was sold. The information provided below includes movements for the Britvic Pension Plan up to the date of disposal, at which point they have been removed.

      The amounts recognized in the income statement are:

	Pension plans
													Post-
													employment
	UK						US						benefits				Total
Recognized in administrative expenses	2005			2004			2005			2004			2005		2004		2005			2004
	(£ million)
Current service costs		19			18			—			—			—		—		19			18
Past service costs		—			1			—			—			—		—		—			1
Interest cost on benefit obligation		30			27			6			5			1		1		37			33
Expected return on plan assets		(32	)		(27	)		(5	)		(4	)		—		—		(37	)		(31	)
		17			19			1			1			1		1		19			21
Recognized in other operating income and expenses
Plan curtailment		(7	)		—			—			—			—		—		(7	)		—

The curtailment gain arose as a result of the sale of 73 UK hotel properties.

F-22

      The amounts recognized in the consolidated statement of recognized income and expense are:

	Pension plans
													Post-
													employment
	UK						US						benefits					Total
Actuarial gains and losses	2005			2004			2005			2004			2005		2004			2005			2004
	(£ million)
Actual return on scheme assets		79			41			4			5			—		—			83			46
Less: expected return on scheme assets		(32	)		(27	)		(5	)		(4	)		—		—			(37	)		(31	)
		47			14			(1	)		1			—		—			46			15
Other actuarial gains and losses		(67	)		(60	)		(3	)		(5	)		1		(1	)		(69	)		(66	)
		(20	)		(46	)		(4	)		(4	)		1		(1	)		(23	)		(51	)
Deficit transferred in respect of previous acquisition		—			(6	)		—			—			—		—			—			(6	)

      The assets and liabilities of the schemes are:

	Pension plans
													Post-
													employment
	UK						US						benefits						Total
	2005			2004			2005			2004			2005			2004			2005			2004
	(£ million)
Fair value of scheme assets		250			470			62			56			—			—			312			526
Present value of benefit obligations		(274	)		(600	)		(103	)		(88	)		(11	)		(11	)		(388	)		(699	)
Employee benefits liability — non-current		(24	)		(130	)		(41	)		(32	)		(11	)		(11	)		(76	)		(173	)

      The principal assumptions used by the actuaries to determine the benefit obligation were:

	Pension plans
									Post-
									employment
	UK				US				benefits
	2005		2004		2005		2004		2005		2004
	(%)
Wages and salaries increases		4.3		4.3		—		—		4.0		4.0
Pensions increases		2.8		2.8		—		—		—		—
Discount rate		4.7		5.3		5.5		5.8		5.5		5.8
Inflation rate		2.8		2.8		—		—		—		—
Healthcare cost trend rate assumed for next year										9.0		9.5
Ultimate rate that the cost trend rate trends to										4.5		4.5

      In 2015 the healthcare cost trend rate reaches the assumed ultimate rate. A one per cent point increase/(decrease) in assumed healthcare costs trend rate would increase/(decrease) the accumulated post-employment benefit obligations as of December 31, 2005 and 2004, by approximately £1 million, and would increase/(decrease) the total of the service and interest cost components of net post-employment healthcare cost for the period then ended by approximately £nil.

F-23

	Pension plans
	UK				US
Post-retirement mortality (years)	2005		2004		2005		2004
Current pensioners at 65 – malea		21		21		17		17
Current pensioners at 65 – femalea		24		24		22		22
Future pensioners at 65 – maleb		22		22		17		17
Future pensioners at 65 – femaleb		25		25		22		22

^a  Relates to assumptions based on longevity (in years) following retirement at the balance sheet date.

^b  Relates to assumptions based on longevity (in years) relating to an employee retiring in 2020.

     The post-retirement mortality assumptions allow for expected increases in longevity.

	Pension plans
													Post-
													employment
	UK						US						benefits						Total
Movement in benefit obligation	2005			2004			2005			2004			2005			2004			2005			2004
	(£ million)
Benefit obligation at beginning of year		600			477			88			90			11			11			699			578
Current service cost		19			18			—			—			—			—			19			18
Past service cost		—			1			—			—			—			—			—			1
Members’ contributions		2			2			—			—			—			—			2			2
Interest expense		30			27			6			5			1			1			37			33
Benefits paid		(11	)		(12	)		(6	)		(5	)		(1	)		(1	)		(18	)		(18	)
Plan curtailment		(7	)		—			—			—			—			—			(7	)		—
Deficit transferred in respect of previous acquisition		—			27			—			—			—			—			—			27
Actuarial loss/(gain) arising in the year		67			60			3			5			(1	)		1			69			66
Separation of Soft Drinks		(426	)		—			—			—			—			—			(426	)		—
Exchange adjustments		—			—			12			(7	)		1			(1	)		13			(8	)
Benefit obligation at end of year		274			600			103			88			11			11			388			699

      The defined benefit obligation comprises £328 million (2004 £647 million) arising from plans that are wholly or partly funded and £60 million (2004 £52 million) arising from unfunded plans.

      The combined assets of the principal schemes and expected rate of return were:

	2005				2004
	Long-term				Long-term
	rate of				rate of
	return				return
	expected		Value		expected		Value
	(%)		(£ million)		(%)		(£ million)
UK Schemes
Equities		7.5		138		8.0		272
Bonds		4.7		110		4.9		173
Other		4.1		2		8.0		25
Total market value of assets				250				470
US Schemes
Equities		9.6		38		9.6		34
Fixed income		5.5		24		5.5		22
Total market value of assets				62				56

F-24

	Pension plans
													Post-
													employment
	UK						US						benefits						Total
Movement in plan assets	2005			2004			2005			2004			2005			2004			2005			2004
	(£ million)
Fair value of plan assets at beginning of year		470			353			56			48			—			—			526			401
Company contributions		45			72			2			12			1			1			48			85
Members’ contributions		2			2			—			—			—			—			2			2
Assets transferred in respect of previous acquisition		—			14			—			—			—			—			—			14
Benefits paid		(11	)		(12	)		(6	)		(5	)		(1	)		(1	)		(18	)		(18	)
Expected return on assets		32			27			5			4			—			—			37			31
Actuarial gain/(loss) arising in the year		47			14			(1	)		1			—			—			46			15
Separation of Soft Drinks		(335	)		—			—			—			—			—			(335	)		—
Exchange adjustments		—			—			6			(4	)		—			—			6			(4	)
Fair value of plan assets at end of year		250			470			62			56			—			—			312			526

      History of experience gains and losses:

UK Pension plans	2005			2004			2003
	(£ million)
Fair value of scheme assets		250			470			353
Present value of benefit obligations		(274	)		(600	)		(477	)
Deficit in the scheme		(24	)		(130	)		(124	)
Experience adjustments arising on plan liabilities		(67	)		(60	)
Experience adjustments arising on plan assets		47			14

US Pension plans	2005			2004			2003
	(£ million)
Fair value of scheme assets		62			56			48
Present value of benefit obligations		(103	)		(88	)		(91	)
Deficit in the scheme		(41	)		(32	)		(43	)
Experience adjustments arising on plan liabilities		(3	)		(5	)
Experience adjustments arising on plan assets		(1	)		1

US Post-employment benefits	2005			2004			2003
	(£ million)
Present value of benefit obligations		(11	)		(11	)		(11	)
Experience adjustments arising on plan liabilities		1			(1	)

      The cumulative amount of actuarial gains and losses recognized since January 1, 2004 in the consolidated statement of recognized income and expense is £74 million (2004 £51 million). The Company is unable to determine how much of the pension scheme deficit recognized on transition to IFRS of £178 million and taken directly to total equity is attributable to actuarial gains and losses since inception of the schemes. Therefore, the Company is unable to determine the amount of actuarial gains and losses that would have been recognized in the consolidated statement of recognized income and expense before January 1, 2004.

F-25

Policy on remuneration of executive directors and senior executives

      The following policy has applied throughout the year and will apply in future years, subject to ongoing review.

Total level of remuneration

      The Remuneration 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;

•  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 PLC’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 Company 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 Company and the individual. IHG 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 Company values and the achievement of specific Key Performance Objectives. At the executive level, Key Performance Objectives are linked directly to the Company’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 both the Short Term Incentive Plan and the Short Term Deferred Incentive Plan, challenging performance goals are set and these must be achieved before the maximum bonus becomes payable. The Short Term Incentive Plan is linked to personal objectives and the Short Term Deferred Incentive Plan is

F-26

linked to the Company’s financial performance. For executive directors, the maximum bonus opportunity under the Short Term Incentive Plan in 2006 is 80% of salary and is payable in cash. The maximum bonus opportunity under the Short Term Deferred Incentive Plan in 2006 is 100% of salary, with 50% linked to adjusted earnings per share and 50% to earnings before special items, interest and taxation. The performance level required to trigger maximum bonus is 110% of budget for both measures. This 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 Company until the release date. The shares will normally be released at the end of the three years following deferral.

      The executive directors will be expected to hold all shares earned from the Company’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 Following a full review of incentive arrangements, the Committee has concluded that share options are not the most effective incentive for the foreseeable future and therefore no further grants of options will be made. However, the Committee believes that share ownership by executive directors and senior executives strengthened the link between the individual’s personal interest and that of the shareholders.

      For options granted in 2005, the Company’s adjusted earnings per share over the three-year period ending December 31, 2007 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 Company’s published results; such assessment is then reviewed by the external auditor.

      Executive directors were granted options on April 4, 2005 as shown in the table on page F-34.

      Executive share options are not pensionable.

      Executive directors are entitled to participate in all-employee share plans. 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 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 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 2005/07 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 cumulative annual growth (“CAGR”) in the number of rooms within the IHG system over the performance period relative to nine identified comparator companies: Carlson Hospitality Worldwide, Cendant, Choice, Hilton Group, Hilton Hotels Corp., Hyatt Hotels & Resorts, Marriott Hotels, Sol Melia and Starwood Hotels.

F-27

      In respect of TSR performance, 10% of the award will be released for the achievement of sixth place within the TSR group and 50% of the award will be released for the achievement of first or second place. In respect of rooms CAGR performance, 10% of the award will be released for the achievement of median growth and 50% of the award will be released for the achievement of upper quartile growth. Vesting between all stated points will be on a straight line basis.

      The asset disposal program, which can significantly impact Return on Capital Employed (“ROCE”), will complete during 2006. The Committee believes that a rooms’ growth related performance measure is now the more appropriate measure going forward, effectively aligning an appropriate element of incentive pay with the Group’s stated objective of increasing the number of rooms in the IHG system.

      Benefits under the Performance Restricted Share Plan are not pensionable and the awards lapse if the performance conditions are not met.

      During the year, IHG has remained within its headroom limits for the issue of new shares under the share incentive schemes. Prior to the capital reorganization of June 2005 and the consequent reduction in the Company’s share capital, the Company’s position under the Association of British Insurer’s guidelines (that dilution under discretionary schemes should not exceed 5% in 10 years) was that shares equivalent to only 4.58% of ordinary share capital had been allocated. Against the guideline that overall dilution under all schemes should not exceed 10% in 10 years, IHG had allocated only 4.95%. These figures exclude obligations which are to be settled with shares purchased in the market.

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 — revenue, 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 Remuneration Committee on the structure and level of pay and benefits in IHG’s markets.

Policy on external appointments

      The Company recognizes 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 Group’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. 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.

F-28

      Richard Hartman, Stevan Porter and Richard Solomons have service agreements with a notice period of 12 months. Andrew Cosslett entered into a service agreement with an initial notice period of 24 months, reducing month by month to 12 months after 12 months of service. As at the date of this report, Andrew Cosslett’s notice period is 12 months. 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.

      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 ceased to act in his temporary capacity as interim Chief Executive following the appointment of Andrew Cosslett as Chief Executive on February 3, 2005. David Webster’s appointment as non-executive Chairman, effective from January 1, 2004, is subject to six months’ notice.

      Non-executive directors, Ralph Kugler, Robert C. Larson, Sir David Prosser and Sir Howard Stringer signed letters of appointment effective from the listing of IHG PLC in April 2003. These were renewed, effective from completion of the capital reorganization of the Group and the listing of new IHG PLC shares on June 27, 2005. David Kappler signed a letter of appointment effective from his date of original appointment to the Board on June 21, 2004. This was also renewed, effective from June 27, 2005. Jennifer Laing and Jonathan Linen signed letters of appointment effective from their appointment dates, respectively August 25, 2005 and December 1, 2005.

      All non-executive directors’ appointments, with the exception of the Chairman, are subject to three months’ notice.

     b) Directors’ contracts

	Contract		Unexpired term/
Directors	effective date		notice period
Andrew Cosslett		2.3.05		12 months
Richard Hartman		4.15.03		12 months
Stevan Porter		4.15.03		12 months
Richard Solomons		4.15.03		12 months

Note: each of the executive directors signed a letter of appointment, effective from completion of the capital reorganization of the Group and the listing of new IHG PLC shares on June 27, 2005. The terms of each appointment were as set out in each Executive Director’s original service agreement.

     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. The latter is an unfunded arrangement. However, appropriate security is provided via a fixed charge on a hotel asset. 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.

      Currently, the pension arrangements for UK-based executive directors and other senior employees provide benefits from both the tax-approved InterContinental Hotels UK Pension Plan and the unfunded InterContinental Executive Top-Up Scheme. In response to the new pension regime resulting from the Finance Act 2004 and applying from April 2006, these plans will be amended to continue to provide, tax efficiently, similar benefits in total, but with a different split of benefits between the two plans.

      As an alternative to these arrangements, a cash allowance may be taken.

F-29

     Directors’ Emoluments

							Total emoluments
							excluding pensions
	Basic
	salaries		Performance				1.1.05 to		1.1.04 to
	and fees		payments		Benefits		12.31.05		12.31.04
	(£ thousand)
Executive Directors
Andrew Cosslett(1)		642		—		21		663		—
Richard Hartman		496		—		302		798		775
Stevan Porter(2)		402		—		27		429		368
Richard Solomons		406		—		17		423		400
Non-executive Directors
David Webster(3)		519		—		3		522		424
David Kappler(4)		80		—		—		80		35
Ralph Kugler(5)		50		—		—		50		42
Jennifer Laing(5)		18		—		—		18		—
Robert C. Larson(5)		50		—		—		50		42
Jonathan Linen(5)		4		—		—		4		—
Sir David Prosser(6)		65		—		—		65		50
Sir Howard Stringer(5)		50		—		—		50		42
Former directors(7)		488		413		16		917		1,249
Total		3,270		413		386		4,069		3,427

(1)	Andrew Cosslett joined the Company on February 3, 2005. The emoluments shown include a £53,737 cash payment made as part of his recruitment terms.
(2)	Emoluments for Stevan Porter include £41,140 that were chargeable to UK income tax and £19,088 reimbursement of interest and charges due to a payroll error.
(3)	Fees paid to David Webster represent £41,667 per month payable to him until May 2, 2005 in his capacity as interim Chief Executive and a fixed fee of £350,000 pa for his role as non-executive Chairman.
(4)	With effect from January 1, 2005, David Kappler is paid a total annual fee of £80,000, reflecting his roles as Senior Independent Director and Chairman of the Audit Committee.
(5)	With effect from January 1, 2005, an annual fee of £50,000 is payable to each of Ralph Kugler, Robert C. Larson and Sir Howard Stringer. All fees due to Ralph Kugler are paid to Unilever. Jennifer Laing and Jonathan Linen are paid an annual fee of £50,000 each effective from their dates of appointment, respectively August 25, 2005 and December 1, 2005.
(6)	With effect from January 1, 2005, Sir David Prosser is paid a total annual fee of £65,000, reflecting his role as Chairman of the Remuneration Committee.
(7)	Richard North resigned as a director and as Chief Executive on September 30, 2004 and ceased employment with the Company on December 31, 2004. The emoluments shown for 2004 are for the full year. This includes his participation in the Short Term Deferred Incentive Plan which, in accordance with plan rules, had to be paid in cash due to his employment ending. He was eligible to participate in the Short Term Deferred Incentive Plan for the 2005 performance year. This award was made in cash and pro-rated to September 30, 2005. Richard North’s severance arrangements also provided for him to receive a payment of one month’s basic salary in each month up to September 2005. Sir Ian Prosser retired on December 31, 2003. However, he had an ongoing healthcare benefit of £840 during the year.

     ‘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, details of which are set out in the STDIP table on page F-33.

      ‘Benefits’ incorporate all tax assessable benefits arising from the individual’s employment. For Messrs Cosslett, Hartman 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 counselling.

F-30

     Long-term Reward

     Performance Restricted Share Plan (“PRSP”)

      In 2005, there were three cycles in operation and one cycle which vested.

      The awards made in respect of the Performance Restricted Share Plan cycles ending on December 31, 2004, December 31, 2005, December 31, 2006 and December 31, 2007 and the maximum pre-tax number of ordinary shares due if performance targets are achieved in full are set out in the table below. In respect of the cycle ending on December 31, 2005, the Company finished in fifth place in the TSR group and achieved ROCE growth of 46%. Accordingly, 42.8% of the award vested on March 3, 2006.

																								Maximum		Expected
				Maximum								PRSP shares									Maximum			value based		value
	Maximum			PRSP shares					Market			vested during		Market					Actual/		PRSP			on share		based on
	PRSP			awarded during					price per			the year		price per					planned		shares			price of		share price
	shares held			the year 1.1.05			Award		share at			1.1.05 to		share at		Value at			vesting		held at			839.5p at		of 839.5p
	at 1.1.05			to 12.31.05			date		award			12.31.05		vesting		vesting			date		12.31.05			12.31.05		at 12.31.05
																£								£		£
Directors
Andrew Cosslett					68,216	(2)		4.1.05		617.5	p		—							3.3.06		68,216			572,674		245,105	(8)
					136,432	(3)		4.1.05		617.5	p		—							3.9.07		136,432			1,145,347
					276,200	(4)		6.29.05		706	p		—							3.7.08		276,200			2,318,699
Total																						480,848			4,036,720
Richard Hartman		111,930	(1)					6.18.03		445p			67,158		660p		443,243			3.11.05		—
		167,900	(2)					6.18.03		445p			—							3.3.06		167,900			1,409,521		603,275	(8)
		165,130	(3)					6.24.04		549.5p			—							3.9.07		165,130			1,386,267
					214,870	(4)		6.29.05		706p			—							3.7.08		214,870			1,803,834
Total																						547,900			4,599,622
Stevan Porter		113,810	(1)					6.18.03		445p			68,286		660p		450,688	(7)		3.11.05		—
		170,710	(2)					6.18.03		445p			—							3.3.06		170,710			1,433,111		613,372	(8)
		142,290	(3)					6.24.04		549.5p			—							3.9.07		142,290			1,194,525
					174,900	(4)		6.29.05		706p			—							3.7.08		174,900			1,468,286
Total																						487,900			4,095,922
Richard Solomons		110,110	(1)					6.18.03		445p			66,066		660p		436,036			3.11.05		—
		165,160	(2)					6.18.03		445p			—							3.3.06		165,160			1,386,519		593,431	(8)
		144,990	(3)					6.24.04		549.5p			—							3.9.07		144,990			1,217,192
					176,550	(4)		6.29.05		706p			—							3.7.08		176,550			1,482,138
Total																						486,700			4,085,849
Former Directors
Richard North		188,760	(1)					6.18.03		445p			113,256		660p		747,490			3.11.05		—
		283,140	(2)(5)					6.18.03		445p			—							3.3.06		259,545	(4)		2,178,881		932,562	(8)
		248,560	(3)(5)					6.24.04		549.5p			—							3.9.07		144,993	(4)		1,217,217
Total																						404,538			3,396,098
Sir Ian Prosser		65,410	(1)(6)					6.18.03		445p			39,246		660p		259,024			3.11.05		—
		65,410	(2)(6)					6.18.03		445p			—							3.3.06		65,410			549,117		235,023	(8)
Total																						65,410			549,117
Total																									20,763,328

(1)  This “transitional” award was based on performance to December 31, 2004 where the performance measure related to the Company’s Total Shareholder Return (“TSR”) against a group of 11 other comparator companies. The number of shares released was graded, according to where the Company finished 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.

F-31

(2)	This award is based on performance to December 31, 2005 where the performance measure relates to both the Company’s TSR against a group of 11 other comparator companies and growth in return on capital employed (“ROCE”). The number of shares released is graded, according to a) where the Company finishes in the TSR comparator group, with 50% of the award being released for first or second position and 10% of the award being released for sixth place; and b) growth in ROCE, with 50% of the award being released for 80% growth and 10% of the award being released for 30% growth.
(3)	This award is based on performance to December 31, 2006 where the performance measure relates to both the Company’s TSR against a group of 10 other comparator companies and growth in ROCE.
(4)	This award is based on performance to December 31, 2007 where the performance measure relates to both the Company’s TSR against a group of 10 other comparator companies and cumulative annual growth of rooms in the IHG system against a group of nine other comparator companies.
(5)	Richard North’s awards were pro-rated to reflect his contractual service during the applicable performance periods.
(6)	Sir Ian Prosser’s awards were pro-rated to reflect his actual service during the applicable performance periods.
(7)	The value of Stevan Porter’s shares at vesting includes £43,190 that was chargeable to UK income tax.
(8)	The Company finished in fifth place in the TSR group and achieved ROCE growth of 46%. Accordingly, 42.8% of the award vested on March 3, 2006, with 29,196; 71,861; 73,063 and 70,688 shares released to Messrs Cosslett, Hartman, Porter and Solomons respectively.

     Short Term Deferred Incentive Plan (STDIP)

      Messrs Cosslett, Hartman, Porter and Solomons participated in the STDIP during the year ended December 31, 2005, and received an award on March 8, 2006.

      The awards, inclusive of matching shares, are as follows:

					Market price
					per share at		Value
	Award date		No of shares		award		on award
							£
Andrew Cosslett		3.08.06		105,276		853.67		898,709
Richard Hartman		3.08.06		64,518		853.67		550,771
Stevan Porter		3.08.06		67,557		853.67		576,714
Richard Solomons		3.08.06		67,296		853.67		574,486

F-32

      Directors’ pre-tax interests during the year were:

		STDIP							STDIP
		shares							shares										Value
		awarded							vested										based on
	STDIP	during					Market		during			Market		STDIP					share
	shares	the year					price per		the year			price per		shares		Planned			price of
	held at	1.1.05 to			Award		share at		1.1.05 to		Vesting	share at	Value at	held at		vesting			839.5p at
	1.1.05	12.31.05			date		award		12.31.05		date	vesting	vesting	12.31.05		date			12.31.05
													£						£
Directors
Andrew Cosslett			79,832	(1)		4.1.05		617.5p		—					39,916		4.1.06			335,095
															39,916		4.1.07			335,095
Total															79,832					670,190
Richard Hartman			88,341	(2)		3.16.05		654p		—					29,447		3.16.06	(5)		247,208
															29,447		3.16.07			247,208
															29,447		3.16.08			247,208
Total															88,341					741,624
Stevan Porter			80,934	(3)		3.16.05		654p		—					26,978		3.16.06	(5)		226,481
															26,978		3.16.07			226,481
															26,978		3.16.08			226,481
Total															80,934					679,443
Richard Solomons			87,061	(4)		3.16.05		654p		—					29,020		3.16.06	(5)		243,623
															29,020		3.16.07			243,623
															29,021		3.16.08			243,632
Total															87,061					730,878

(1)	This special award was made to Andrew Cosslett as part of his overall recruitment terms. The shares will vest in equal portions on the first and second anniversary of the award date, subject to his continued employment until that time.
(2)	This award was based on financial year 2004 performance and the bonus target was 50% of base salary. Richard Hartman was awarded 70% (maximum) of his bonus target for EPS performance, 49% of his bonus target for EMEA earnings before interest and tax (EBIT) performance and 45% of his bonus target for his personal performance. Richard Hartman’s total bonus was therefore 164% of his bonus target. One matching share was awarded for every two bonus shares earned.
(3)	This award was based on financial year 2004 performance and the bonus target was 50% of base salary. Stevan Porter was awarded 70% (maximum) of his bonus target for EPS performance, 70% (maximum) of his bonus target for the Americas EBIT performance and 60% (maximum) of his bonus target for his personal performance. Stevan Porter’s total bonus was therefore 200% (maximum) of his bonus target. One matching share was awarded for every two bonus shares earned.
(4)	This award was based on financial year 2004 performance and the bonus target was 50% of base salary. Richard Solomons was awarded 70% (maximum) of his bonus target for EPS performance, 70% (maximum) of his bonus target for Company EBIT performance and 60% (maximum) of his bonus target for his personal performance. Richard Solomons’ total bonus was therefore 200% (maximum) of his bonus target. One matching share was awarded for every two bonus shares earned.
(5)	On March 16, 2006 being the first anniversary of award, the shares detailed in the table above were duly released to the individuals concerned.

F-33

     Share Options

	Ordinary shares under option
											Weighted
	Options held at		Granted		Lapsed		Exercised		Options		average
	1.1.05 or date		during the		during the		during the		held at		option		Option
Directors	of appointment		year		year		year		12.31.05		price		price
											(pence)		(pence)
Andrew Cosslett
				157,300										619.83
b										157,300
Total				157,300		—		—		157,300		619.83
Richard Hartman		834,022										435.70
				118,810										619.83
a										364,388		398.99
b										588,444		495.61
Total		834,022		118,810		—		—		952,832		458.66
Stevan Porter		658,319										449.47
				96,370										619.83
								178,176						409.36
b										576,513		490.34
Total		658,319		96,370		—		178,176		576,513		490.34
Richard Solomons		813,360										426.49
				100,550										619.83
								357,545				375.24
b										574,365		492.24
Total		831,360		100,550		—		357,545		574,365		492.24

(a)	Where the options are exercisable and the market price per share at December 31, 2005 was above the option price; and
(b)	Where options are not yet exercisable. A performance condition has to be met before these options can be exercised.

     Rolled over options, all of which are showing 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. Executive share options granted in 2003 and 2004 are exercisable between May 2006 and April 2014, subject to the achievement of the performance condition. Sharesave options granted in 2003 are exercisable between March 2007 and March 2009. Share options under the IHG Executive Share Option Plan were granted on April 4, 2005 at an option price of 619.83p. These options are exercisable between April 2008 and April 2015, subject to the achievement of the performance condition.

      Option prices range from 308.48p to 619.83p per IHG PLC share. The closing market value share price on December 30, 2005 was 839.50p and the range during the year was 634.98p to 839.50p per share.

      The gain on exercise by Directors in aggregate was £1,658,109 in the year ended December 31, 2005 (nil in the year ended December 31, 2004). The market value share prices on the exercise of options by Stevan Porter and Richard Solomons were 728p per share and 720.50p per share respectively.

F-34

     Directors’ Shareholdings

	December 31, 2005			January 1, 2005(1)
	InterContinental Hotels Group PLC			InterContinental Hotels Group PLC
	ordinary shares of 10p(4)			ordinary shares of 112p(2)(4)
Executive Directors
Andrew Cosslett		7,332			—
Richard Hartman		70,117			45,247
Stevan Porter		64,589			88,077
Richard Solomons		60,339			16,031
Non-executive Directors
David Kappler		1,908			2,602
Ralph Kugler		654			892
Jennifer Laing		—			—
Robert C. Larson		7,857	(3)		10,714	(3)
Jonathan Linen		—			—
Sir David Prosser		3,273			4,464
Sir Howard Stringer		5,548			7,566
David Webster		31,823			13,395

(1)	Or date of appointment, if later.
(2)	These share interests were in InterContinental Hotels Group PLC 112p ordinary shares prior to the capital reorganization effective from June 27, 2005. For every 15 existing InterContinental Hotels Group PLC shares held on June 24, 2005, shareholders received 11 new ordinary shares of 10p each and £24.75 in cash.
(3)	Held in the form of American Depositary Receipts.
(4)	These shareholdings are all beneficial interests and include shares held by Directors’ spouses and other connected persons. None of the Directors has a beneficial interest in the shares of any subsidiary.

     At December 31, 2005, the executive directors of the Company, as potential beneficiaries under the Company’s Employee Benefit Trust (the “Trust”), were each technically deemed to be interested in 2,940,245 unallocated IHG PLC shares held by the Trust. As at March 17, 2006 the number of shares held by the Trust in which these Directors hold a residual interest was 2,295,205 in total.

      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.

     Directors’ Pensions

      The following information relates to the pension arrangements provided for Messrs Cosslett, Hartman and 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.

      Richard Hartman, who reached the IC Plan normal pension age of 60 on January 30, 2006, ceased to be an active member of the IC Plan and ICETUS with effect from the date, and in future will participate in the InterContinental Hotels Group International Savings and Retirement Plan.

F-35

      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.

     Directors’ Pension Benefits

									Increases in
									transfer value
					Transfer value				over the
			Directors’		of accrued benefits				year, less		Increase		Increase		Accrued
	Age at		contributions						Directors’		in accrued		in accrued		pension at
	Dec 31, 2005		in the year		Jan 1, 2005		Dec 31, 2005		contributions		pension		pension		Dec 31, 2005
					£		£		£
			(note 1)								(note 2)		(note 3)		(note 4)
			£								£ pa		£ pa		£ pa
Directors
Andrew Cosslett		50		14,400		Nil		266,900		252,500		19,700		19,700		19,700
Richard Hartman		59		15,700		1,189,800		1,848,200		642,700		23,400		21,500		86,600
Richard Solomons		44		15,700		834,100		1,227,100		377,300		22,500		19,600		119,300

note 1:	Contributions paid in the year by the Directors under the terms of the plans.
note 2:	The absolute increase in accrued pension during the year.
note 3:	The increase in accrued pension during the year excluding any increase for inflation, on the basis that increases to accrued pensions are applied at October 1.
note 4:	Accrued pension is that which would be paid annually on retirement at 60, based on service to December 31, 2005.

     The figures shown in the above table 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 contribution to					Company’s contribution to
	DCP		401(k)			DCP		401(k)
	£		£			£		£
Stevan Porter		20,300		5,800	Stevan Porter		59,400		4,700

Note 4 — Auditors’ Remuneration paid to Ernst & Young LLP

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Audit fees		3.9		3.8
Audit related fees		2.7		1.6
Tax fees		0.6		0.5
		7.2		5.9

      Non-audit fees payable for UK services were £2.1 million (2004 £1.1 million).

      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.

F-36

Note 5 —   Special Items

	Year ended			Year ended
	December 31,			December 31,
	2005			2004
	(£ million)
Other operating income and expenses
Impairment of property, plant and equipment(i)		(7	)		(48	)
Restructuring costs(ii)		(13	)		(11	)
Property damage(iii)		(9	)		—
Employee benefits curtailment gain(iv)		7			—
Reversal of previously recorded provisions(v)		—			20
Provision for investment in associates(vi)		—			(16	)
Provision for investment in other financial assets		—			(2	)
Write back of provision for investment in other financial assets		—			8
		(22	)		(49	)
Financing
Financial income(vii)		—			22
Financial expenses(viii)		—			(16	)
Financial expense on early settlement of debt(ix)		—			(17	)
		—			(11	)
Tax
Tax credit on above items		—			22
Special tax credit(x)		8			161
		8			183
Gain on disposal of assets
Gain on disposal of assets		349			15
Tax (charge)/credit		(38	)		4
		311			19

The above items are treated as special by reason of their size or incidence (see Note 9).

(i)	Property, plant and equipment were written down by £7 million (2004 £48 million) following an impairment review of the hotel estate.
(ii)	Restructuring costs relate to the delivery of the further restructuring of the Hotels business.
(iii)	Damage to properties resulting from fire and natural disasters.
(iv)	A curtailment gain arose as a result of the sale of UK hotel properties.
(v)	Following adoption of IAS 39 at January 1, 2005, adjustments to market value are recorded directly in equity. In 2004, under UK GAAP, the adjustment is a reversal of previously recorded provisions.
(vi)	Relates to an impairment in value of associate investments.
(vii)	Relates to interest on special tax refunds.
(viii)	Relates to costs of closing out currency swaps and costs related to refinancing the Company’s debt.
(ix)	Relates to premiums paid on the repurchase of the Company’s public debt.
(x)	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.

F-37

Note 6 — Finance costs

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Financial income
Interest on tax refunds		—		22
Interest income		30		48
		30		70
Financial expenses
Financial expense on early settlement of debt		—		17
Costs of closing out currency swaps and refinancing the Group’s debt		—		16
Interest expense — Hotels		54		70
Interest expense — Soft Drinks		9		—
		63		103

Note 7 — Tax

Income tax

		Year ended			Year ended
		December 31,			December 31,
		2005			2004
		(£ million)
UK corporation tax at 30% (2004 30%):
	Current period		11			23
	Adjustments in respect of prior periods		(6	)		(48	)
			5			(25	)
Foreign tax:
	Current period		149			62
	Benefit of tax losses on which no deferred tax previously recognized		(2	)		(9	)
	Adjustments in respect of prior periods		(19	)		(82	)
			128			(29	)
Total current tax			133			(54	)

F-38

				Year ended			Year ended
				December 31,			December 31,
				2005			2004
				(£ million)
Deferred tax:
	Origination and reversal of temporary differences				(3	)		18
	Changes in tax rates				(2	)		(11	)
	Adjustments to estimated recoverable deferred tax assets				1			12
	Adjustments in respect of prior periods				(11	)		(96	)
Total deferred tax					(15	)		(77	)
Total income tax on profit for the year					118			(131	)
Further analyzed as tax relating to:
	Profit before special items				88			56
	Special items (Note 5):
		Other operating income and expenses:
			Impairment of property, plant and equipment		—			(14	)
			Restructuring costs		—			(8	)
			Provision for investment in other financial assets		—			3
		Financing:
			Financial expense on early settlement of debt		—			(5	)
			Other		—			2
		Special tax credit(i)			(8	)		(161	)
Tax charge /(credit)					80			(127	)
Gain on disposal of assets					38			(4	)
					118			(131	)
The tax charge /(credit), excluding gain on disposal of assets, can be further analyzed as relating to:
	Profit on continuing operations				28			(194	)
	Profit on discontinued operations				52			67
					80			(127	)

(i)  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.

F-39

Tax reconciliations

Reconciliation of tax charge /(credit) on total profit, including gain on disposal of assets

	Year ended			Year ended
	December 31,			December 31,
	2005			2004
	%			%
UK corporation tax at standard rate		30.0			30.0
Permanent differences		1.3			1.5
Net effect of different rates of tax in overseas businesses		2.9			6.3
Effect of changes in tax rates		(0.3	)		(3.9	)
Benefit of tax losses on which no deferred tax previously recognized		(0.1	)		(1.1	)
Effect of adjustments to estimated recoverable deferred tax assets		0.1			4.3
Adjustment to tax charge in respect of prior periods		(4.5	)		(22.6	)
Other		(0.1	)		0.6
Special items and gains on disposal of assets		(10.7	)		(61.9	)
		18.6			(46.8	)

Note 8 — Dividends paid and proposed

		Year ended		Year ended		Year ended		Year ended
		December 31,		December 31,		December 31,		December 31,
		2005		2004		2005		2004
		(pence per share)				(£ million)
Paid during the year:
	Final (declared in previous year)		10.00		9.45		61		70
	Interim		4.60		4.30		20		29
	Special interim		—		72.00		—		501
			14.60		85.75		81		600

      Proposed for approval at the Annual General Meeting (not recognized as a liability at December 31):

Final 10.70 10.00 46 62

      The proposed final dividend is payable on the shares in issue at March 31, 2006.

Note 9 — Earnings per ordinary share

      Basic earnings per ordinary share is calculated by dividing the profit for the year available for IHG equity holders of £496 million (2004 £383 million) by 521 million (2004 710 million), being the weighted average number of ordinary shares, excluding investment in own shares, in issue during the year.

      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 year. The resulting weighted average number of dilutive ordinary shares is 533 million (2004 718 million).

      Shareholder approval was given on June 1, 2005 to recommended proposals for the return of approximately £1 billion to shareholders by way of a capital reorganization (by means of a scheme of arrangement under Section 425 of the Companies Act 1985). Under the arrangement, shareholders received 11 new ordinary shares and £24.75 cash in exchange for every 15 existing ordinary shares held on June 24, 2005.

F-40

The overall effect of the transaction was that of a share repurchase at fair value, therefore no adjustment has been made to comparative data.

		Year ended						Year ended
		December 31,						December 31,
		2005						2004
		Continuing						Continuing
		operations			Total			operations			Total
		(£ million)
Basic earnings per share
Profit available for equity holders			116			496			246			383
Basic weighted average number of ordinary shares (millions)			521			521			710			710
Basic earnings per share (pence)			22.3			95.2			34.6			53.9
Adjusted earnings per share
Profit available for equity holders			116			496			246			383
Less adjusting items:
	Other operating income and expenses (Note 5)		22			22			49			49
	Financing (Note 5)		—			—			11			11
	Tax (Note 5)		(8	)		(8	)		(183	)		(183	)
	Gain on disposal of assets, net of tax		—			(311	)		—			(19	)
Adjusted earnings			130			199			123			241
Basic weighted average number of ordinary shares (millions)			521			521			710			710
Adjusted earnings per share (pence)			24.9			38.2			17.3			33.9
Diluted earnings per share
Profit available for equity holders			116			496			246			383
Diluted weighted average number of ordinary shares (millions) (see below)			533			533			718			718
Diluted earnings per share (pence)			21.8			93.1			34.3			53.3

		2005		2004
		(millions)
Diluted weighted average of ordinary shares is calculated as:
	Basic weighted average number of ordinary shares		521		710
	Dilutive potential ordinary shares — employee share options		12		8
			533		718

      Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by special items, to give a more meaningful comparison of the Company’s performance.

F-41

Note 10 — Property, Plant and Equipment

		Land			Fixtures,
		and			fittings and			Plant and
		buildings			equipment			machinery			Total
		(£ million)
Year ended December 31, 2004
Cost:
At January 1, 2004			3,004			1,635			165			4,804
	Exchange and other adjustments		(59	)		(34	)		—			(93	)
	Additions		50			140			27			217
	Net transfers to non-current assets classified as held for sale		(1,471	)		(667	)		—			(2,138	)
	Disposals		(83	)		(89	)		(10	)		(182	)
	Impairment		(20	)		—			—			(20	)
At December 31, 2004			1,421			985			182			2,588
Depreciation:
At January 1, 2004			168			608			97			873
	Exchange and other adjustments		(6	)		(9	)		—			(15	)
	Provided		12			131			18			161
	Net transfers to non-current assets classified as held for sale		(59	)		(253	)		—			(312	)
	On disposals		(11	)		(52	)		(10	)		(73	)
	Impairment		28			—			—			28
At December 31, 2004			132			425			105			662
Net book value at December 31, 2004			1,289			560			77			1,926
Year ended December 31, 2005
Cost:
At January 1, 2005			1,421			985			182			2,588
	Exchange and other adjustments		34			13			—			47
	Additions		15			107			18			140
	Net transfers to non-current assets classified as held for sale		(163	)		(150	)		—			(313	)
	Disposals		(152	)		(333	)		(200	)		(685	)
	Impairment		—			(7	)		—			(7	)
At December 31, 2005			1,155			615			—			1,770
Depreciation:
At January 1, 2005			132			425			105			662
	Exchange and other adjustments		—			14			—			14
	Provided		11			88			17			116
	Net transfers to non-current assets classified as held for sale		(10	)		(58	)		—			(68	)
	On disposals		(32	)		(156	)		(122	)		(310	)
At December 31, 2005			101			313			—			414
Net book value at December 31, 2005			1,054			302			—			1,356

F-42

      During the year ended December 31, 2005 property, plant and equipment have been written down by £7 million (2004 £48 million) following an impairment review of certain hotel assets based on current market trading conditions. The fair value has been measured by reference to recent transactions for hotel assets in relevant markets.

Note 11 — Held for Sale and Discontinued Operations

Hotels

      During the year ended December 31, 2005, the Company sold 112 hotels (2004 10 hotels) continuing the asset disposal program commenced in 2003. At December 31, 2004, 106 hotel properties were classified as held for sale. During 2005, an additional 35 hotel properties were added and three hotel properties were removed from the held for sale classification. At December 31, 2005 and December 31, 2004, no gain or loss arose on the measurement to fair value less cost to sell of held for sale assets.

	Year ended
	December 31,
Net assets of hotels on disposal	2005			2004
	(£ million)
Property, plant and equipment		1,961			100
Goodwill		20			—
Net working capital		1			(1	)
Cash and cash equivalents		16			—
Deferred tax payable		(121	)		(5	)
Minority equity interest		—			(11	)
Company’s share of net assets disposed of		1,877			83
Net cash inflow
Cash consideration (net of costs paid)		1,832			101
Cash disposed of		(16	)		—
		1,816			101
Total consideration
Cash consideration (net of cost paid)		1,832			101
Deferred consideration		40			—
Management contract value		82			—
Tax (charge)/credit		(38	)		4
Other		(12	)		(3	)
		1,904			102

		Year ended
		December 31,
Assets and liabilities held for sale		2005			2004
		(£ million)
Non-current assets classified as held for sale:
	Property, plant and equipment		279			1,826
Liabilities classified as held for sale:
	Deferred tax payable		(34	)		(148	)

F-43

	Year ended
	December 31,
Cash flows related to discontinued operations	2005			2004
	(£ million)
Operating profit before interest, depreciation and amortization		94			203
Investing activities		(44	)		(78	)
Financing activities		(13	)		(3	)

     Soft Drinks

      During December 2005, the Company disposed of all of its interests in the Soft Drinks business with the initial public offering of Britvic plc.

Net liabilities of Soft Drinks on disposal	2005
	(£ million)
Property, plant and equipment		234
Goodwill		18
Software		25
Inventories		36
Trade and other receivables		141
Cash and cash equivalents		1
Current liabilities		(162	)
Borrowings		(341	)
Employee benefits		(91	)
Deferred tax payable		8
Minority equity interest		66
Company’s share of net liabilities disposed of		(65	)
Net cash inflow
Cash consideration (net of costs paid)		221
Cash disposed of		(1	)
		220
Total consideration
Cash consideration (net of costs paid)		221
Other		(2	)
		219

Cash flows related to discontinued operations	2005			2004
	(£ million)
Operating profit before interest, depreciation and amortization		115			123
Investing activities		(47	)		(70	)
Financing activities		162			(25	)

F-44

Note 12 — Goodwill

		Goodwill
		(£ million)
Year ended December 31, 2004
Cost:
At January 1, 2004			158
	Exchange and other adjustments		(6	)
At December 31, 2004			152
Year ended December 31, 2005
Cost:
At January 1, 2005			152
	Disposals		(44	)
	Exchange and other adjustments		10
At December 31, 2005			118

      Goodwill acquired through past business combinations has been allocated to cash-generating units (“CGUs”) for impairment testing as follows:

		2005		2004
		(£ million)
Hotels
	Americas managed and franchised operations (comprising several CGUs)		82		75
	Asia Pacific managed and franchised operations		36		53
Soft Drinks			—		24
			118		152

      The recoverable amounts of the Hotels CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding discount rates and growth rates. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. Growth rates are based on both management development plans and industry growth forecasts.

     Americas managed and franchised operations

      The Company prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next year and extrapolates cash flows for the following four years based on an estimated growth rate of 4% (2004 5%). After this period, the terminal value of future cash flows is calculated based on a perpetual growth rate of approximately 2% (2004 2%). The rate used to discount the forecast cash flow ranges from 10.0% to 10.5% (2004 10.0% to 10.5%).

     Asia Pacific managed and franchised operations

      The Company prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next year and extrapolates cash flows for the following four years based on an estimated growth rate of 4% (2004 7%). After this period, the terminal value of future cash flows is calculated based on a perpetual growth rate of approximately 4% (2004 4%). The rate used to discount the forecast cash flows is 11.0% (2004 11.0%).

      The reduction in growth rates from 2004 is a result of the completion of several sale and manage back transactions in 2005 which had previously been included in forecast growth rates.

F-45

Note 13 — Intangible assets

					Management		Other
		Software			contracts		intangibles			Total
					(£ million)
Year ended December 31, 2004
Cost:
At January 1, 2004			22			—		23			45
	Additions		32			—		1			33
	Exchange and other adjustments		(2	)		—		(2	)		(4	)
At December 31, 2004			52			—		22			74
Amortization:
At January 1, 2004			2			—		7			9
	Provided		12			—		—			12
	Exchange and other adjustments		(1	)		—		—			(1	)
At December 31, 2004			13			—		7			20
Net book value at December 31, 2004			39			—		15			54
Year ended December 31, 2005
Cost:
At January 1, 2005			52			—		22			74
	Additions		14			82		5			101
	Disposals		(32	)		—		(1	)		(33	)
	Exchange and other adjustments		4			2		2			8
At December 31, 2005			38			84		28			150
Amortization:
At January 1, 2005			13			—		7			20
	Provided		9			3		2			14
	On disposals		(7	)		—		—			(7	)
	Exchange and other adjustments		2			—		1			3
At December 31, 2005			17			3		10			30
Net book value at December 31, 2005			21			81		18			120

F-46

Note 14 — Investments in associates

      The Company holds eight (2004 eight) investments accounted for as associates. The following table summarizes the financial information of the associates.

	Year ended			Year ended
	December 31,			December 31,
	2005			2004
	(£ million)
Share of associates’ balance sheet
Current assets		4			5
Non-current assets		93			92
Current liabilities		(9	)		(7	)
Non-current liabilities		(46	)		(48	)
Net assets		42			42
Share of associates’ revenue and profit
Revenue		18			14
Net profit		1			—
Related party transactions
Revenue from related parties		3			3
Amounts owed by related parties		2			1

Note 15 — Other Financial Assets

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Non-current
Equity securities available-for-sale		41		19
Other		72		61
		113		80
Current
Equity securities available-for-sale		104		80
Derivatives		2		—
		106		80

      Available-for-sale financial assets consist of equity investments in listed and unlisted shares. The fair value of unlisted equity shares has been estimated using valuation guidelines issued by the British Venture Capital Association and is based on assumptions regarding expected future earnings. Listed equity share valuation is based on observable market prices.

      Other financial assets consist mainly of trade deposits made in the normal course of business. The deposits have been designated as loans and receivables and are held at amortized cost. The fair value has been calculated by discounted future cash flows using prevailing interest rates.

F-47

Note 16 — Inventories

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Raw materials		—		9
Finished goods		2		23
Consumable stores		1		10
		3		42

Note 17 — Trade and other receivables

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Trade receivables		160		285
Other receivables		66		58
Other prepayments		26		47
		252		390

      An allowance has been made for doubtful amounts from the provision of services of £47 million (2004 £43 million).

Note 18 — Cash and cash equivalents

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Cash at bank and in hand		34		32
Short-term deposits		290		40
		324		72

      Short-term deposits are highly liquid investments with a maturity of three months or less, in various currencies.

F-48

Note 19 — Trade and other payables

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Current
Trade payables		84		159
Other tax and social security payable		12		50
Other payables		174		187
Accruals		186		232
Derivatives		6		—
Provisions (Note 24)		6		5
		468		633
Non-current
Other payables		107		97
Provisions (Note 24)		—		6
		107		103

Note 20 — Loans and other borrowings

	December 31, 2005						December 31, 2004
	Due within		Due after				Due within		Due after
	1 year		1 year		Total		1 year		1 year		Total
	(£ million)
Secured bank loans		2		36		38		2		49		51
Unsecured bank loans		—		374		374		12		1,104		1,116
Other unsecured borrowings		—		—		—		18		3		21
Total borrowings		2		410		412		32		1,156		1,188

Secured bank loans

      These mortgages are secured on the hotel properties to which they relate. The rates of interest and currencies of these loans vary. Amounts falling due after one year include £15 million (2004 £18 million) repayable by instalment. Amounts shown as due within one year are the mortgage repayments falling due within this period. The fair value of secured loans is calculated by discounting the expected future cash flows at prevailing interest rates.

Unsecured bank loans

      Unsecured bank loans are borrowings under the Company’s 2009 £1.1 billion Syndicated Facility and its short-term bilateral loan facilities. Amounts are classified as due within one year where the loan facility expires within this period. Covenants exist on these facilities and as at the balance sheet date the Company was not in breach of these covenants. 2004 comparatives include £9 million in respect of currency swaps shown as unsecured bank loans under UK GAAP. The carrying value of these loans approximates fair value.

Other unsecured borrowings

      In 2004, other unsecured borrowings relate to an £18 million tranche of the 2010 € 600 million Guaranteed Notes 4.75% and £3 million of other loan stock. Most of the Guaranteed Notes were repurchased in December 2004, the remaining £18 million was repurchased at par on January 7, 2005. The other loan stock relates to the Soft Drinks business, was non interest bearing and was repaid during the year.

F-49

	December 31, 2005						December 31, 2004
	Utilized		Unutilized		Total		Utilized		Unutilized		Total
	(£ million)
Facilities provided by banks
Committed		412		751		1,163		1,155		542		1,697
Uncommitted		—		14		14		14		50		64
		412		765		1,177		1,169		592		1,761

		December 31,
		2005		2004
		(£ million)
Unutilized facilities expire:
	within one year		39		90
	after one year but before two years		—		500
	after two years		726		2
			765		592

Note 21 — Financial risk management policies

Financial instruments

      The Group’s treasury policy is to manage financial risks that arise in relation to the underlying business needs. The activities of the treasury function are carried out in accordance with Board approved policies and are subject to regular audit. The treasury function does not operate as a profit center.

      The treasury function seeks to reduce the financial risk of the Group and manages liquidity to meet all foreseeable cash needs.

      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 mitigate the adverse impact of movements in interest rates and foreign exchange rates.

      Movements in foreign exchange rates, particularly the US dollar and euro, can affect the Group’s reported profit, 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.

      Credit risk on treasury transactions is minimised by operating a policy on the 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 for 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 all of the financial covenants in its loan documentation, none of which is expected to represent a material restriction on funding or investment policy in the foreseeable future.

F-50

      Medium and long-term borrowing requirements are met through the Syndicated facility. Short-term borrowing requirements are met from drawings under bilateral bank facilities.

Sensitivities

      Based on the year 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 would increase the net interest charge by approximately £1 million, whilst a similar movement in euro interest rates would increase the net interest charge by £4 million.

      A general weakening of the US dollar (specifically a one cent rise in the sterling : US dollar rate) would have reduced the Group’s profit before tax by an estimated £1 million.

Hedging

Interest rate risk

      The Group hedges its interest rate risk by taking out interest rate swaps to fix the interest flows on between 25% and 75% of its borrowings in major currencies. At December 31, 2005 the Group held interest rate swaps with notional principals of US $200 million and €160 million (2004 US $200 million, Australian $60 million, Hong Kong $300 million and € 215 million). The interest rate swaps are designated as cash flow hedges of the syndicated loan facility and they are held on the balance sheet at fair value in other financial assets and other payables.

Foreign currency risk

      The Group is exposed to foreign currency risk on income streams denominated in foreign currencies. The Group hedges a portion of forecast foreign currency income and asset disposal proceeds by taking out forward exchange contracts designated as cash flow hedges. The spot foreign exchange rate is designated as the hedged risk and so the Group takes the forward points on these contracts through finance expenses. The forward contracts all have maturities less than one year from the balance sheet date.

      Forward contracts are held at fair value on the balance sheet as other financial assets and other payables.

      Changes in cash flow hedge fair values are recognized in the unrealized gains and losses reserve to the extent that the hedges are effective. When the hedged item is recognized, the cumulative gains and losses on the hedging instrument are recycled to the income statement.

      During the year, £1.3 million of interest on forward contracts was recognized through finance income and a £4.6 million net foreign exchange gain was recognized in the income statement, recycled against the appropriate hedged item.

Hedge of net investment in a foreign operation

      The Group designates its foreign currency bank borrowings and currency swaps as net investment hedges of foreign operations. The designated risk is the spot foreign exchange risk; the interest on these financial instruments is taken through financial expenses and the swaps are held on the balance sheet at fair value in other financial assets and other payables. Variations in fair value due to changes in the underlying exchange rates are taken to the currency translation reserve until an operation is sold, at which point the cumulative currency gains and losses are recycled against the gain or loss on sale.

F-51

Note 22 — Financial Instruments

Interest rate risk

      For each class of interest bearing financial asset and financial liability, the following table indicates the range of interest rates effective at the balance sheet date, the carrying amount on the balance sheet and the periods in which they reprice, if earlier than the maturity date.

								Repricing analysis
					Total
		Effective			carrying			Less than			6 months				More than
As at December 31, 2005		interest rate			amount			6 months			- 1 year		1-2 years		2 years
		(%)			(£ million)
Cash and cash equivalents			0.0-4.5			(324	)		(324	)		—		—		—
Secured bank loans (fixed)*			6.5-7.8			28			—			—		28		—
Secured bank loans (floating)			2.9-8.5			10			10			—		—		—
Unsecured bank loans:
	Euro floating rate		2.9			141			141			—		—		—
	— effect of euro IR swaps*		(0.4	)					(55	)		—		55		—
	US dollar floating rate		4.7			162			162			—		—		—
	— effect of US dollar IR swaps*		0.2						(87	)		87		—		—
	Hong Kong dollar floating rate		4.7			71			71			—		—		—
	Net debt					88			(82	)		87		83		—
Effect of currency swaps:
	Receive and pay fixed*		(1.5	)		3			3			—		—		—
	Receive and pay floating		(2.0	)		2			2			—		—		—
						93			(77	)		87		83		—

*  These items bear interest at a fixed rate.

F-52

     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 at December 31, 2004 was:

																	Interest at fixed rate
																			Weighted
											Principal								average
					Currency												Weighted		period for
					swap						At variable			At fixed			average		which rate
As at December 31, 2004		Net debt			agreements			Total			rate*			rate			rate		is fixed
								(£ million)									%		(years)
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

*  Primarily based on the relevant inter-bank rate.

     Trade and other receivables and trade and other payables are not included in the above tables as they are non-interest bearing and are not subject to interest rate risk.

Fair values

      The table below compares carrying amounts and fair values of the Group’s financial instruments.

	December 31,						December 31,
	2005						2004*
	Carrying						Carrying
	value			Fair value			value			Fair value
	(£ million)
Financial assets
Cash and cash equivalents (Note 18)		324			324			72			72
Equity securities available-for-sale (Note 15)		145			145			99			102
Cash flow hedging derivatives (Note 15)		2			2			—			9
Other financial assets (Note 15)		72			72			61			61
Financial liabilities
Borrowings (Note 20)		(412	)		(412	)		(1,188	)		(1,188	)
Cash flow hedging derivatives (Note 19)		(6	)		(6	)		—			(3	)

*  2004 book value is based on UK GAAP.

F-53

Unrecognized gains and losses

      The Group’s unrecognized gains and losses for the period ended December 31, 2004 in derivative financial instruments were:

	Gains			Losses			Total
	(£ million)
Unrecognized at January 1, 2004		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	)

Note 23 — Share-Based Payments

Short Term Deferred Incentive Plan

      The IHG Short Term Deferred Incentive Plan (“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 award of free shares up to 0.5 times the deferred amount. The bonus and matching shares are deferred and released in three equal tranches on the first, second and third anniversaries of the award date, conditional on the participants remaining in the employment of a participating company. Participation in the STDIP is at the discretion of the Remuneration Committee. The number of shares is calculated by dividing a specific percentage of the participant’s annual performance related bonus by the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A number of executives participated in the plan during the year and conditional rights over 624,508 IHG PLC shares were awarded to participants.

Performance Restricted Share Plan

      The Performance Restricted Share Plan (“PRSP”) 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 salary for Executive Directors and four times salary in the case of other eligible employees. In determining the level of awards within this maximum limit, the Remuneration Committee takes into account the level of Executive Share Options granted to the same person. At December 31, 2005, conditional rights over 5,173,633 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

      For options granted, the option price is not less than the market value of an ordinary share, or the nominal value if higher. The market value is 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. A performance condition has to be met before options can be exercised. The performance condition is set by the Remuneration Committee.

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

F-54

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) 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 preceding the invitation date. The plan was not operating during 2005 and no options were granted in the year under the plan.

US Employee Stock Purchase Plan

      The US Employee Stock Purchase Plan will allow eligible employees resident in the US an opportunity to acquire Company American Depositary Shares (“ADS”s) 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 2005 and at December 31, 2005 no options had been granted under the plan.

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 308.48p to 593.29p. The exchanged options were immediately exercisable and are not subject to performance conditions. During 2005, 4,138,482 such options were exercised, leaving a total of 7,909,002 such options outstanding at prices ranging from 308.48p to 593.29p. The latest date that any options may be exercised is October 2012.

      The Company recognized £17 million (2004 £12 million) related to equity settled share-based payment transactions during the year.

      The aggregate consideration in respect of ordinary shares issued under option schemes during the year was £10 million (2004 £16 million).

      The following table sets forth awards and options granted during 2005. No awards were granted under the Sharesave Plan or US Employee Stock Purchase Plan during the year.

	Short Term Deferred		Performance Restricted		Executive Share
	Incentive Plan		Share Plan		Option Plan
Number of shares awarded in 2005		624,508		5,173,633		2,104,570

F-55

      In 2005 and 2004, the Company used separate option pricing models and assumptions for each plan. The following tables set forth information about how the fair value of each option grant is calculated:

	Short Term Deferred			Performance Restricted			Executive Share
2005	Incentive Plan			Share Plan			Option Plan
Valuation model	Binomial			Monte Carlo			Binomial
				Simulation and
				Binomial
Weighted average share price		652.8	p		702.0	p		627.0	p
Exercise price								620.0	p
Expected dividend yield		2.73	%		3.18	%		3.62	%
Risk-free interest rate								4.69	%
Volatility(a)								28	%
Term (years)(b)		2.0			3.0			6.5

	Short Term Deferred			Performance Restricted			Executive Share
2004	Incentive Plan			Share Plan			Option Plan
Valuation model	Binomial			Monte Carlo			Binomial
				Simulation and
				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 interest rate								4.73	%
Volatility(a)								31.33	%
Term (years)(b)		2.8			3.0			6.5

(a)	The expected volatility was determined by calculating the historical volatility of the Company’s share price corresponding to the expected life of the option or share award.
(b)	The expected term of the options is taken to the mid point between vesting and lapse, as historical exercise patterns have shown this to be appropriate.

F-56

     Movements in the options outstanding under these schemes for the years ended December 31, 2005 and December 31, 2004 are as follows:

	Short Term Deferred			Performance Restricted
	Incentive Plan			Share Plan
	Number of shares			Number of shares
	thousands			thousands
Outstanding at January 1, 2004		107			5,445
Granted		231			2,665
Vested		(47	)		—
Lapsed or canceled		(50	)		(375	)
Outstanding at December 31, 2004		241			7,735
Granted		625			5,174
Vested		(32	)		(1,278	)
Lapsed or canceled		(5	)		(997	)
Outstanding at December 31, 2005		829			10,634
Fair value of options granted during the period
At December 31, 2005		649.1	p		117.0	p
At December 31, 2004		448.3	p		125.1	p
Weighted average remaining contract life (years)
At December 31, 2005		1.1			1.2
At December 31, 2004		1.7			1.0

      The above awards do not vest until the performance conditions have been met.

F-57

	Sharesave Plan							Executive Share Option Plan
						Weighted							Weighted
	Number			Range of		average		Number			Range of option		average
	of shares			option prices		option price		of shares			prices		option price
	thousands			pence		pence		thousands			pence		pence
Options outstanding at January 1, 2004		1,373			420.5		420.5		27,220			295.3-593.3		424.9
Granted		—			—		—		6,951			494.2		494.2
Exercised		—			—		—		(7,430	)		295.3-593.3		408.2
Lapsed or canceled		(111	)		420.5		420.5		—			—		—
Options outstanding at December 31, 2004		1,262			420.5		420.5		26,741			308.5-593.3		447.6
Granted		—			—		—		2,105			619.8		619.8
Exercised		(118	)		420.5		420.5		(4,138	)		308.5-593.3		429.1
Lapsed or canceled		(280	)		420.5		420.5		(2,089	)		345.6-619.8		465.3
Options outstanding at December 31, 2005		864			420.5		420.5		22,619			308.5-619.8		465.4
Options exercisable
At December 31, 2005		—			—		—		8,710			308.5-619.8		434.3
At December 31, 2004		—			—		—		12,569			308.5-593.3		426.4
Fair value of options granted during the period
At December 31, 2005		—							164.0	p
At December 31, 2004		—							136.0	p

      Included within this balance are options over 7,909,002 (2004 12,568,562; 2003 19,998,299) shares that have not been recognized in accordance with IFRS 2 as the options were granted on or before November 7, 2002. These options have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.

      The weighted average share price at the date of exercise for share options vested during the year was 713.3 pence. The closing share price on December 30, 2005 was 839.5 pence and the range during the year was 635.0 pence to 839.5 pence per share.

      Summarized information about options outstanding at December 31, 2005 under the share option schemes is as follows:

		Options outstanding						Options exercisable
				Weighted
				average		Weighted				Weighted
		Number		remaining		average		Number		average
		outstanding		contract life		option price		exercisable		option price
		thousands		years		pence		thousands		pence
Range of exercise prices (pence)
	Sharesave Plan
420.5			864		1.9		420.5		—		—
	Executive Share Option Plan
308.5 to 353.8			1,734		4.6		342.7		1,734		342.7
353.9 to 498.0			18,526		7.0		457.8		6,315		441.8
498.1 to 619.8			2,359		7.9		614.9		661		602.2
			22,619		6.9		465.4		8,710		434.3

F-58

Note 24 — Provisions

		Hotels
		reorganisation(a)			Onerous			Total
					contracts(b)
		(£ million)
At January 1, 2005
	Current		4			1			5
	Non-current		4			2			6
			8			3			11
Income statement			—			(1	)		(1	)
Expenditure			(4	)		—			(4	)
At December 31, 2005 — all current			4			2			6

(a)	Relates to the Hotels reorganization charged to the non-operating special item in 2003 and is expected to be largely utilized in the year to December 31, 2006.
(b)	Primarily relates to onerous fixed lease contracts acquired with the InterContinental hotels business and having expiry dates to 2006.

Note 25 — Deferred tax payable

																Other
	Property,			Deferred												short-term
	plant and			gains on						Employee			Intangible			temporary
	equipment			loan notes			Losses			benefits			assets			differences*			Total
	(£ million)
At January 1, 2004		519			123			(37	)		(42	)		(37	)		(49	)		477
Disposals		(5	)		—			—			—			—			—			(5	)
Income statement		(17	)		—			(77	)		17			5			(5	)		(77	)
Statement of recognized income and expense		—			—			—			(14	)		—			—			(14	)
Exchange and other adjustments		(5	)		(1	)		1			—			2			4			1
At December 31, 2004		492			122			(113	)		(39	)		(30	)		(50	)		382
Disposals		(150	)		—			—			34			—			3			(113	)
Income statement		(87	)		—			(11	)		(5	)		32			56			(15	)
Statement of recognized income and expense		—			—			—			(5	)		—			(2	)		(7	)
Exchange and other adjustments		1			—			1			(1	)		(3	)		(1	)		(3	)
At December 31, 2005		256			122			(123	)		(16	)		(1	)		6			244

*  Other short-term temporary differences relate primarily to provisions and accruals, investments in associates and joint ventures and share-based payments.

		2005		2004
		(£ million)
Analyzed as:
	Deferred tax payable		210		234
	Liabilities classified as held for sale		34		148
At 31 December			244		382

      The deferred tax asset of £123 million (2004 £113 million) recognized in respect of losses includes £89 million (2004 £89 million) of capital losses available to be utilized against the realization of capital gains which are recognized as a deferred tax liability and £34 million (2004 £24 million) in respect of revenue tax losses.

F-59

      Tax losses with a value of £282 million (2004 £305 million), including capital losses with a value of £93 million (2004 £98 million), have not been recognized as their use is uncertain or not currently anticipated. These losses may be carried forward indefinitely.

      Deferred tax assets of £19 million (2004 £4 million) in respect of share-based payments, £7 million (2004 £10 million) in respect of employee benefits and £11 million (2004 £nil) in respect of other items have not been recognized as their use is uncertain or not currently anticipated.

      At December 31, 2005 the Company has not provided deferred tax in relation to temporary differences associated with undistributed earnings of subsidiaries. Quantifying the temporary differences is not practical. However, based on current enacted law and on the basis that the Company is in a position to control the timing and realization of these temporary differences, no material tax consequences are expected to arise.

Note 26 — Operating leases

      During the year ended December 31, 2005, £62 million (2004 £67 million) was recognized as an expense in the income statement in respect of operating leases.

      Total commitments under non cancelable operating leases are as follows:

	December 31,		December 31,
	2005		2004
	(£ million)
Due within one year		36		55
One to two years		31		51
Two to three years		25		47
Three to four years		19		38
Four to five years		14		31
More than five years		149		884
		274		1,106

      The average remaining term of these leases, which generally contain renewal options, is approximately 12 years. No material restrictions or guarantees exist in the Company’s lease obligations.

Note 27 — Capital commitments

	December 31,		December 31,
	2005		2004
	(£ million)
Contracts placed for expenditure on property, plant and equipment not provided for in the financial statements		76		53

Note 28 — Contingencies

      Contingent liabilities not provided for in the financial statements relate to:

	December 31,		December 31,
	2005		2004
	(£ million)
Guarantees		20		9

      In limited cases, the Company may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees is £134 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 Company.

      As of December 31, 2005, the Group had outstanding letters of credit of £18 million mainly relating to self-insurance programs.

F-60

      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, 2005, the Group was a guarantor of loans which could amount to a maximum of £15 million.

      The Company 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 Company.

Note 29 — Related party disclosures

      Key management personnel comprises the Board and Executive Committee.

	December 31,		December 31,
	2005		2004
	(£ million)
Total compensation of key management personnel
Short-term employment benefits		6.5		5.5
Post-employment benefits		0.2		0.2
Termination benefits		0.8		0.8
Equity compensation benefits		6.9		4.1
		14.4		10.6

      There were no transactions with key management personnel during either the year ended December 31, 2005 or the previous year.

Note 30 — Transition to IFRS

Income statement

		Year ended December 31, 2004
		UK GAAP			Remeasurement			IFRS
		(£ million)
Revenue			2,204			—			2,204
Cost of sales			(1,477	)		—			(1,477	)
Administrative expenses			(198	)		(10	)		(208	)
			529			(10	)		519
Depreciation and amortization			(198	)		25			(173	)
Other operating income and expenses			(29	)		(20	)		(49	)
Operating profit			302			(5	)		297
Financial income			70			—			70
Financial expenses			(103	)		—			(103	)
Profit before tax			269			(5	)		264
Tax			117			10			127
Profit after tax			386			5			391
(Loss)/gain on disposal of assets, net of tax			(59	)		78			19
Profit available for shareholders			327			83			410
Attributable to:
	Equity holders of the parent		299			84			383
	Minority equity interest		28			(1	)		27
Profit for the year			327			83			410

F-61

Income statement remeasurement

Administrative expenses

      Under UK GAAP, the cost of retirement benefits are provided 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 Company’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.

      Under UK GAAP, the cost of share-based payments is expensed based on the intrinsic value method over the performance period of each plan. Under IFRS, the fair value of all share-based payments is expensed over the vesting period of the related equity instruments, based on the Company’s best estimate of the number of shares that will vest. Fair value is determined by an external valuer using option pricing models applied to all share-based payments granted after November 7, 2002.

Depreciation and amortization

      Under UK GAAP, goodwill is amortized over 20 years. Under IFRS, goodwill is subject to annual impairment testing and is not amortized. Under IFRS, assets classified as held for sale are not subject to depreciation from the date the assets are designated as held for sale.

Other operating income and expenses

      Under UK GAAP, impairment of property, plant and equipment is first recorded against the revaluation reserve and then charged to the income statement. Under IFRS transitional rules, the Company elected to retain UK GAAP carrying values of freehold and leasehold hotels including revaluations. All impairments are taken directly to the income statement.

Income tax expense

      Mainly attributable to tax on impairment of property, plant and equipment previously recorded against the revaluation reserve under UK GAAP and the presentation of tax on disposal of assets.

(Loss)/gain on sale of assets

      Under IFRS, net asset carrying values have been reduced by the remeasurement of deferred tax, eliminating the provision for loss on disposal of operations recognized under UK GAAP.

F-62

Balance Sheet

	January 1, 2004
	UK GAAP			Remeasurement			Reclassifications			IFRS
	(£ million)
ASSETS
Property, plant and equipment		3,951			—			(20	)		3,931
Goodwill		158			—			—			158
Intangible assets		—			—			36			36
Investment in associates		53			—			—			53
Other financial assets		119			—			25			144
Total non-current assets		4,281			—			41			4,322
Inventories		44			—			—			44
Trade and other receivables		486			(47	)		(41	)		398
Current tax receivable		37			—			—			37
Cash and cash equivalents		432			—			(21	)		411
Total current assets		999			(47	)		(62	)		890
Total assets		5,280			(47	)		(21	)		5,212
LIABILITIES
Short-term borrowings		(13	)		—			6			(7	)
Trade and other payables		(683	)		86			(22	)		(619	)
Current tax payable		(389	)		—			—			(389	)
Total current liabilities		(1,085	)		86			(16	)		(1,015	)
Loans and other borrowings		(988	)		—			15			(973	)
Employee benefits		—			(177	)		—			(177	)
Provisions and other payables		(176	)		46			22			(108	)
Deferred tax payable		(314	)		(163	)		—			(477	)
Total non-current liabilities		(1,478	)		(294	)		37			(1,735	)
Total liabilities		(2,563	)		(208	)		21			(2,750	)
Net assets		2,717			(255	)		—			2,462
EQUITY
IHG shareholders’ equity		2,554			(215	)		(16	)		2,323
Minority equity interest		163			(40	)		16			139
Total equity		2,717			(255	)		—			2,462

F-63

Balance Sheet

	December 31, 2004
	UK GAAP			Remeasurement			Reclassifications			IFRS
	(£ million)
ASSETS
Property, plant and equipment		3,776			(1,811	)		(39	)		1,926
Goodwill		142			10			—			152
Intangible assets		—			—			54			54
Investment in associates		42			—			—			42
Other financial assets		57			—			23			80
Total non-current assets		4,017			(1,801	)		38			2,254
Inventories		42			—			—			42
Trade and other receivables		542			(110	)		(42	)		390
Current tax receivable		14			—			—			14
Cash and cash equivalents		83			—			(11	)		72
Other financial assets		76			—			4			80
Total current assets		757			(110	)		(49	)		598
Non-current assets classified as held for sale		—			1,826			—			1,826
Total assets		4,774			(85	)		(11	)		4,678
LIABILITIES
Short-term borrowings		(43	)		—			11			(32	)
Trade and other payables		(709	)		81			(5	)		(633	)
Current tax payable		(261	)		—			—			(261	)
Total current liabilities		(1,013	)		81			6			(926	)
Loans and other borrowings		(1,156	)		—			—			(1,156	)
Employee benefits		—			(173	)		—			(173	)
Provisions and other payables		(230	)		122			5			(103	)
Deferred tax payable		(248	)		14			—			(234	)
Total non-current liabilities		(1,634	)		(37	)		5			(1,666	)
Non-current liabilities classified as held for sale		—			(148	)		—			(148	)
Total liabilities		(2,647	)		(104	)		11			(2,740	)
Net assets		2,127			(189	)		—			1,938
EQUITY
IHG shareholders’ equity		1,977			(137	)		(19	)		1,821
Minority equity interest		150			(52	)		19			117
Total equity		2,127			(189	)		—			1,938

F-64

Balance Sheet Remeasurement

     Held for sale

      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 cost to sell. No depreciation is charged on assets held for sale.

Goodwill

      Under UK GAAP, goodwill is amortized over 20 years. Under IFRS, goodwill is subject to annual impairment testing and is not amortized.

Employee benefit obligations

      Under UK GAAP, scheme assets and liabilities are not recognized on the Company’s balance sheet. Under IFRS, any excess or deficit of scheme assets over scheme liabilities is recorded as an asset or liability, respectively, in the Company’s balance sheet. Each year, the scheme net assets or liabilities are adjusted for actuarial gains and losses which are recognized directly in reserves.

Provisions and other payables

      Under IFRS, net asset carrying values have been reduced by the remeasurement of deferred tax, eliminating the provision for loss on disposal of operations recognized under UK GAAP.

Deferred tax

      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 remitted earnings of investments where the Company 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.

Balance Sheet Reclassifications

Software

      Under IFRS, software is classified as an intangible asset.

Other intangible assets

      Under IFRS, amounts paid to hotel owners to secure management contracts and franchise agreements are classified as intangible assets.

Other financial assets

      Under IFRS, long-term receivables are classified as non-current other financial assets.

Cash and cash equivalents

      Bank overdrafts repayable on demand are a component of cash equivalents where the Company has a right of set off.

F-65

Trade and other payables

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

      Reclassifications which do not impact net assets but which increase non-current assets by £7 million (2004 opening £11 million), reduce current assets by £18 million (2004 opening £32 million) and current liabilities by £6 million (2004 opening increase by £16 million) and non-current liabilities by £5 million (2004 opening £37 million) have been made to the balance sheet at December 31, 2004 and January 1, 2004 respectively, as presented in the 2004 Annual Report and Financial Statements. A reclassification has also been made of £19 million (2004 opening £16 million), reducing IHG shareholders’ equity and increasing minority equity interest, in respect of dividends to minority shareholders.

     Cash flow

      The transition from UK GAAP to IFRS has no effect upon reported cash flows generated by the Company. The IFRS cash flow statement is presented in a different format from that required under UK GAAP with cash flows analyzed into three categories of activities — operating activities, investing activities and financing activities.

     Adoption of IAS 39

      The impact of adopting IAS 39 on January 1, 2005 was to reduce other financial assets by £4 million.

Note 31 — Post balance sheet events

      On January 25, 2006, the Group announced the sale to HPT of two hotels in the Americas. On March 13, 2006, the Group announced the sale to Westbridge Hospitality Fund LP, (“Westbridge”), of 24 hotels in the EMEA region. Westbridge is a joint venture between CADIM, a Montreal-based pension fund manager, and Westmont Hospitality, one of IHG’s largest franchisees. The portfolio has been sold for € 352 million in cash and debt assumption (before transaction costs), marginally above net asset value. IHG will franchise the hotels to the joint venture under 15 year franchise contracts.

Note 32 — Differences between International Financial Reporting Standards and United States Generally Accepted Accounting Principles

      The Company financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) which differ from the accounting principles generally accepted in the US (“US GAAP”). The significant differences, as they apply to the Company, are summarized below.

      This US GAAP information provides a reconciliation between profit available for IHG equityholders under IFRS and net income under US GAAP and between IHG shareholders’ equity under IFRS and IHG shareholders’ equity under US GAAP, respectively.

      The Company has reclassified certain prior year balance sheet information to conform with the current year presentation.

Classification of borrowings

      Under US GAAP, the amounts shown as repayable after one year for unsecured bank loans drawn under or supported by bank facilities with maturities of up to five years and amounting to £374 million (2004 £1,104 million) would be classified as current liabilities since the drawings on the facilities are repayable within one year.

F-66

Pensions

      Under IFRS, the cost of providing defined benefit retirement benefits is recognized over the service life of the scheme members. The 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. Under US GAAP, the projected benefit obligation (pension liability) in respect of the Company’s principal pension plans is matched against the fair value of the plans’ assets and is adjusted to reflect any unrecognized obligations or asset in determining the pension cost or credit for the year.

      Under IFRS, any excess or deficit of scheme assets over scheme liabilities is recorded as an asset or liability in the Company’s balance sheet. Actuarial gains and losses are recognized directly in equity.

      Under US GAAP, a corridor approach to the recognition of actuarial gains and losses is adopted, such that only actuarial gains and losses in excess of 10% of the greater of plan assets or obligations are recognized in the income statement and spread over the maximum period of the employees’ remaining service period.

      At December 31, 2005, 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 offsetting balance reported in other comprehensive income.

Intangible assets

      Under IFRS, goodwill arising on acquisitions prior to October 1, 1998 was eliminated against equity. From October 1, 1998 to December 31, 2003 acquired goodwill was capitalized and amortized over a period not exceeding 20 years. Since January 1, 2004 goodwill continued to be capitalized but amortization ceased as at that date.

      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. From October 1, 2002 goodwill and indefinite life intangible assets are not amortized but are reviewed annually for impairment.

      Under IFRS, development costs and software are included in intangible assets. Under US GAAP, these assets are included in property, plant and equipment.

      Under IFRS, purchase consideration which is contingent on future events is included in the cost of acquisition when receipt is probable and an amount can be reliably measured. Under US GAAP, contingent consideration is recognized when the related contingencies are resolved.

      Under IFRS, when assets are sold and a purchaser enters into a management or franchise contract with the Company, the Company capitalizes an intangible asset as part of the gain or loss on disposal at an estimate of the fair value of the contract entered into. This value is amortized over the life of the contract. Under US GAAP, an intangible asset is not recognized as there remains continuing involvement in the hotel operations.

Property, plant and equipment

      Under IFRS, the deemed cost at transition at January 1, 2004 is the UK GAAP carrying values, on that date including revaluations. Under US GAAP, property, plant and equipment are carried at cost less accumulated depreciation and impairment losses.

      Under IFRS, depreciation is based on the book value of assets, including revaluation where appropriate. Prior to October 1, 1999, freehold hotels were not depreciated, 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. From October 1, 1999, all properties were depreciated. There is now no difference between IFRS and US GAAP with regard to depreciation policies.

F-67

      Under IFRS, impairment is measured by comparing the carrying value of property, plant and equipment with the higher of fair value less cost to sell and value in use. Value in use is assessed based on estimated future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Under US GAAP, impairments of long-lived assets are assessed on the basis of undiscounted cash flows. If an impairment charge is required it is measured on the basis of discounted cash flows.

      The Company recognizes a profit on disposal of property, plant and equipment provided substantially all the risks and rewards of ownership have transferred. For the purposes of US GAAP, the Company would account 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.

      Prior to the IFRS transition date, cumulative foreign currency exchange gains and losses relating to the disposal of foreign operations were recorded within equity. Since January 1, 2004, foreign currency gains and losses are included in determining the profit or loss on disposal of foreign operations. At that date, the Company opted to set the currency translation reserve to nil. Under US GAAP, such gains and losses are also included in determining the profit or loss on disposal but are tracked from the date of acquisition of the foreign operation.

Staff costs

      The Company provides certain compensation arrangements in the US through a Rabbi Trust. Under IFRS, the net deficit is recorded as a provision and the net change in the underlying value of the assets and liabilities is recorded as a charge (or credit) to the income statement. Under US GAAP, the marketable securities held by the Rabbi Trust are 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 unrealized gains and losses are reported in other comprehensive income except for other than temporary movements which are recognized in the income statement.

Deferred tax

      The Company provides for deferred tax 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 Company does not control remittance, gains rolled over into the replacement assets, gains on previously revalued properties and other short-term temporary differences. Under US GAAP, deferred tax 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 tax assets under IFRS are recognized to the extent that it is regarded as probable that the deductible temporary differences can be utilized. Under US GAAP deferred tax assets are recognized in full and a valuation allowance is made to the extent that it is not more likely than not that they will be realized.

      Under IFRS, a deductible temporary difference arises in respect of estimated future tax deductions on share-based payments based upon the share price at the balance sheet date. Any excess of the asset recognized over the cumulative compensation expense recorded in the income statement multiplied by the statutory tax rate is recorded directly in equity. Under US GAAP, a deferred tax asset in respect of future deductible amounts is calculated only to the extent of the cumulative compensation expense recorded to date in the income statement. Where actual tax deductions received upon exercise exceed the amount of any deferred tax asset the excess is recorded in equity. Where actual tax deductions are less than the deferred tax asset, the write-down of the asset is recorded against equity to the extent of previous tax benefits recorded in this account with any remainder recorded in the income statement.

F-68

Derivative financial instruments and hedging

      The Company enters into derivative instruments to limit its exposure to interest rate and foreign exchange risk. In 2004 under IFRS transitional provisions, these instruments were measured at cost and accounted for as hedges, whereby gains and losses were deferred until the underlying transaction occurred. 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 are recognized in net income unless specific hedge criteria are met. The Company adopted both IAS 32 “Financial Instruments: Disclosure and Presentation” and IAS 39 “Financial Instruments: Recognition and Measurement” from January 1, 2005. There is now no difference between IFRS and US GAAP with regard to derivatives entered into after January 1, 2005.

Guarantees

      The Company gives guarantees in connection with obtaining long-term management contracts. Under IFRS, a contingent liability is not recognized. For the purposes of US GAAP, under Financial Accounting Standards Board 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 Company records the fair value of such guarantees as an asset and liability, which are amortized over the life of the contract.

Assets and liabilities held for sale

      Under IFRS, assets and liabilities are classified as held for sale when the criteria under IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” are met. Under US GAAP, similar criteria are applied to held for sale assets. However, FAS 66 “Accounting for Sales of Real Estate” excludes any assets from being included as held for sale where there will be a continuing involvement in the asset.

Discontinued operations

      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 co-ordinated plan to dispose of a separate line of business or geographical area of operations. Under US GAAP, operations are classified as discontinued when they are classified as held for sale and when the Company no longer believes it will have a significant continuing involvement.

F-69

Net income in accordance with US GAAP

      The significant adjustments required to convert profit available for IHG equity holders in accordance with IFRS to net income in accordance with US GAAP are:

			Year ended			Year ended
			December 31,			December 31,
			2005			2004
			(£ million)
Profit available for IHG equity holders in accordance with IFRS				496			383
Adjustments:
	Amortization of intangible assets			(1	)		(3	)
	Impairment of property, plant and equipment			(17	)		30
	Disposal of property, plant and equipment			(107	)		5
	Depreciation of property, plant and equipment			(31	)		(20	)
	Deferred revenue			15			5
	Gain on held for sale equity investment			—			(28	)
	Pension costs			(20	)		(9	)
	Staff costs			(1	)		2
	Change in fair value of derivatives(i)			6			52
	Provisions			(3	)		(5	)
	Deferred tax:
		on above adjustments		16			4
		methodology		(2	)		(79	)
				(145	)		(46	)
	Minority share of above adjustments			4			3
				(141	)		(43	)
Net income in accordance with US GAAP				355			340

See page F-71 for footnotes.

F-70

      The condensed consolidated income statement presented below reflects the adjustments to attributable profit for the year.

		Year ended			Year ended
		December 31,			December 31,
		2005			2004
		(£ million,
		except per ADS amounts)
Net sales			1,521			1,606
Operating and administrative expenses			(1,323	)		(1,374	)
Financial income and financial expenses			(24	)		(33	)
Income before income tax expense and minority interest			174			199
Income tax (expense)/credit			(56	)		79
(Loss)/gain on disposal of assets, net of tax(iv)			(14	)		3
Minority interest			—			(24	)
Income from continuing operations			104			257
Discontinued operations:
Result for period, net of tax and financial expenses(v)			41			62
Surplus on disposal, net of tax(vi)			210			21
Net income			355			340
Per ordinary share and American Depositary Share
Basic(ii)
	Continuing operations		20.0p			36.2p
	Discontinued operations		48.2p			11.7p
Net income			68.2p			47.9p
Diluted(iii)
	Continuing operations		19.5p			35.7p
	Discontinued operations		47.1p			11.5p
Net income			66.6p			47.2p

(i)	Comprises net gains in the fair value of derivatives that do not qualify for hedge accounting of £6 million (2004 £50 million) and net gains reclassified from other comprehensive income of £nil (2004 £2 million).
(ii)	Calculated by dividing net income in accordance with US GAAP of £355 million (2004 £340 million) by 521 million (2004 710 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 in accordance with US GAAP of £355 million income to reflect both the future compensation on share-based payments and 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 533 million (2004 720 million).
(iv)	Tax charge for the year ended December 31, 2005 of £3 million (2004 £2 million credit).
(v)	Tax charge for the year ended December 31, 2005 of £17 million (2004 £29 million). Financial expenses for the year ended December 31, 2005 of £9 million (2004 £1 million).
(vi)	Tax charge for the year ended December 31, 2005 of £28 million (2004 £3 million credit).

F-71

Comprehensive income

      Comprehensive income under US GAAP is as follows:

	Year ended			Year ended
	December 31,			December 31,
	2005			2004
	(£ million)
Net income in accordance with US GAAP		355			340
Other comprehensive income:
Transfer to Britvic of minimum pension liability on December 14, 2005, net of tax of £21 million		49			—
Minimum pension liability, net of tax credit of £20 million (2004 £1 million charge)		(48	)		8
Change in valuation of marketable securities, net of tax of £6 million (2004 £3 million)		9			29
Change in fair value of derivatives, net of tax credit of £2 million (2004 £nil million)		(4	)		(2	)
Currency translation differences		(132	)		83
		(126	)		118
Comprehensive income in accordance with US GAAP		229			458

      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 December 31, 2003		(51	)		2		4			10			(35	)
Movement in the year		8			29		(2	)		83			118
At December 31, 2004		(43	)		31		2			93			83
Movement in the year		1			9		(4	)		(149	)		(143	)
At December 31, 2005		(42	)		40		(2	)		(56	)		(60	)

      Of the £149 million currency translation movement in the year ended December 31, 2005 £17 million has been recorded in net income in accordance with US GAAP.

F-72

Shareholders’ equity in accordance with US GAAP

      The significant adjustments required to convert IHG shareholders’ equity in accordance with IFRS to IHG shareholders’ equity in accordance with US GAAP are:

				December 31,			December 31,
				2005			2004
				(£ million)
IHG shareholders’ equity in accordance with IFRS					1,084			1,821
Adjustments:
	Intangible assets:
		Cost: goodwill			761			781
		other intangible assets			655			612
		Accumulated amortization			(260	)		(217	)
					1,156			1,176
	Intangible asset — minimum pension liability				1			3
					1,157			1,179
	Property, plant and equipment:
		Cost			327			(29	)
		Assets classified as held for sale			21			1,526
		Accumulated depreciation			(19	)		31
					329			1,528
	Other financial assets				(14	)		3
	Non-current assets classified as held for sale				(21	)		(1,526	)
	Current assets:
		Pension prepayment			—			57
		Other receivables			31			22
		Derivatives			—			9
	Current liabilities:
		Deferred income on property transactions			(15	)		(5	)
		Other payables			8			10
		Derivatives			—			(1	)
	Non-current liabilities:
		Deferred income on property transactions			(309	)		(73	)
		Other payables			(41	)		(26	)
		Derivatives			—			(2	)
		Provisions			4			8
		Employee benefits			15			77
		Deferred tax payable:
			on above adjustments		(204	)		(357	)
			methodology		(10	)		—
	Liabilities held for sale				1			148
					931			1,051
	Minority share of above adjustments				—			(76	)
					931			975
IHG shareholders’ equity in accordance with US GAAP					2,015			2,796

F-73

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:

		Year ended			Year ended
		December 31,			December 31,
		2005			2004
		(£ million,
		except per ADS amounts)
Numerator:
	Numerator for basic and diluted earnings per ordinary share and ADS		104			257
Denominator:
	Denominator for basic earnings per ordinary share and ADS		521			710
	Effect of dilutive securities:
	Employee options and restricted stock awards		12			10
	Denominator for diluted earnings per ordinary share and ADS		533			720
Basic earnings per ordinary share and ADS from continuing operations			20.0	p		36.2	p
Diluted earnings per ordinary share and ADS from continuing operations			19.5	p		35.7	p

Consolidated statement of cash flows

      The consolidated statement of cash flows prepared under IFRS presents substantially the same information as that required under US GAAP but may differ with regard to classification of items within the statements.

      Under IFRS, interest or dividends paid or received are classified as part of operating cash flows unless they are linked directly to specific items and they are then classified as part of either investing or financing cash flows to coincide with the specific item. Under US GAAP, all interest or dividends paid or received must be classified as operating activities. Under IFRS, income tax should be classified as operating cash flow unless the tax paid can be specifically identified with financing or investing activities. Under US GAAP, income tax must be classified as an operating cash flow.

      The categories of cash flow activity under US GAAP can be summarized as follows:

		Year ended			Year ended
		December 31,			December 31,
		2005			2004
		(£ million)
Cash inflow from operating activities			302			444
Cash outflow on investing activities			1,863			(151	)
Cash outflow from financing activities			(1,906	)		(631	)
Increase/(decrease) in cash and cash equivalents			259			(338	)
Effect of foreign exchange rate changes			(7	)		(1	)
Cash and cash equivalents
	At start of the fiscal year		72			411
	At end of the fiscal year		324			72

F-74

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
	Year ended			Year ended			Year ended			Year ended			Year ended		Year ended
	December 31,			December 31,			December 31,			December 31,			December 31,		December 31,
	2005			2004			2005			2004			2005		2004
	(£ million)
Service cost		20			17			—			—			—		—
Interest cost		30			26			5			5			1		1
Expected return on plan assets		(33	)		(25	)		(4	)		(4	)		—		—
Net amortization and deferral		5			7			—			—			—		—
Recognized net actuarial gain		—			—			2			2			—		—
Net periodic pension cost		22			25			3			3			1		1

      The major assumptions used in computing the pension expense were:

	UK pension benefits				US pension benefits				US postretirement benefits
	Year ended		Year ended		Year ended		Year ended		Year ended		Year ended
	December 31,		December 31,		December 31,		December 31,		December 31,		December 31,
	2005		2004		2005		2004		2005		2004
Expected long-term rate of return on plan assets		5.80%		6.90%		8.00%		8.00%		—		—
Discount rate		4.70%		5.30%		5.50%		5.75%		5.50%		5.75%
Expected long-term rate of earnings increases		4.30%		4.30%		3.50%		3.50%		4.00%		4.00%

      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.

      The assumed health care cost trends rates for medical and dental plans at December 31, 2005 and 2004 are as follows:

	2005			2004
Health care cost trend rate assumed for next year		9.0	%		9.5	%
Rate that the cost trend rate gradually declines to		4.5	%		4.5	%
Year that rate reaches the assumed ultimate rate		2015			2014

      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, 2005 and 2004, 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.

      In 2006, the Company expects to make projected regular contributions to the UK principal plan of £4 million.

F-75

		UK pensions benefits						US pensions benefits						US postretirement benefits
		Year ended			Year ended			Year ended			Year ended			Year ended			Year ended
		December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
Change in benefit obligation		2005			2004			2005			2004			2005			2004
		(£ million)
Benefit obligation at beginning of year			600			477			89			90			11			12
	Service cost		20			17			—			—			—			—
	Members contributions		2			—			—			—			—			—
	Interest expense		30			26			5			5			1			1
	Benefits paid		(11	)		(12	)		(6	)		(5	)		(1	)		(1	)
	Curtailments		(7	)		—			—			—			—			—
	Age-related national insurance rebates		—			5			—			—			—			—
	Bulk transfer to scheme		—			27			—			—			—			—
	Actuarial loss arising in the year		67			60			3			5			—			—
	Separation of Britvic		(426	)		—			—			—			—			—
	Exchange		—			—			11			(6	)		1			(1	)
Benefit obligation at end of year			275			600			102			89			12			11

      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			Year ended			Year ended			Year ended			Year ended			Year ended
		December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
Changes in plan assets		2005			2004			2005			2004			2005			2004
		(£ million)
Fair value of plan assets at beginning of year			472			355			55			48			—			—
	Contributions payable		46			72			2			11			1			1
	Members contributions		2			5			—			—			—			—
	Benefits paid		(11	)		(12	)		(6	)		(5	)		(1	)		(1	)
	Bulk Transfer to scheme		—			14			—			—			—			—
	Actual return on assets		77			38			3			5			—			—
	Separation of Britvic		(335	)		—			—			—			—			—
	Exchange		—			—			7			(4	)		—			—
Fair value of plan assets at end of year			251			472			61			55			—			—
Accumulated benefit obligation (all vested)			264			519			100			87			—			—
Fair value of plan assets			251			472			61			55			—			—
Projected benefit obligation			(275	)		(600	)		(102	)		(89	)		(12	)		(11	)
Net plan obligation			(24	)		(128	)		(41	)		(34	)		(12	)		(11	)
Unrecognized prior service cost			1			5			—			—			—			—
Unrecognized net loss			76			199			27			23			3			3
Net amount recognized			53			76			(14	)		(11	)		(9	)		(8	)

F-76

	UK pensions benefits						US pensions benefits						US postretirement benefits
	Year ended			Year ended			Year ended			Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
Changes in plan assets	2005			2004			2005			2004			2005			2004
	(£ million)
The amounts recognized in the balance sheet consist of:
Prepaid pension cost		—			57			—			—			—			—
Accrued pension cost		(13	)		(54	)		(39	)		(31	)		(9	)		(8	)
Pension costs		—			—			—			—			—			—
Intangible asset		1			3			—			—			—			—
Other comprehensive income (before tax)		65			70			25			20			—			—
Net amount recognized		53			76			(14	)		(11	)		(9	)		(8	)

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:

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
	(£ million)
Assets to be disposed of		—		—
Assets to be held and used		24		18
Total		24		18
Disclosed as:
Impairment charges recognized under IFRS:
Charge for the year under IFRS		7		48
Adjustment to impairment recognized under US GAAP		17		(30	)
		24		18
Charged against:
Intangible assets — goodwill		—		—
Property, plant and equipment		24		18
		24		18

      Under IFRS, in the year ended December 31, 2005 property, plant and equipment have been written down by £7 million (2004 £48 million) following an impairment review of certain hotel assets based on current market trading conditions. The fair value has been measured by reference to recent transactions for hotel assets in relevant markets.

      Under US GAAP, the impairment charge recognized in 2005 relates to a specific property that historically was not subject to an impairment charge. In 2004, with the exception of the impairment charge of £18 million in respect of short leasehold properties, the IFRS impairment charge was reversed.

      Under US GAAP, the impairment test is first performed using undiscounted cash flows to assess whether an asset has been impaired. If it is determined that an impairment exists the charge is measured by comparing the value calculated using discounted cash flows and carrying value.

      The adjustment to the impairment recognized under IFRS is therefore the difference between the charge under IFRS and US GAAP and is shown in the reconciliation to US GAAP accounting principles.

F-77

Additional information required by US GAAP in respect of accounting for deferred gains

      For US GAAP, the Company 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 gains on such sales totaled £5 million in 2005 and £nil million in 2004.

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, 2005							December 31, 2004
			Accumulated			Net book				Accumulated			Net book
	Cost		amortization			value		Cost		amortization			value
	(£ million)
Management & franchise contracts		96		(42	)		54		329		(277	)		52
Other		—		—			—		4		(1	)		3
Total		96		(42	)		54		333		(278	)		55

      The estimated aggregate amortization expense for each of the next five years is £5 million. The weighted average remaining life of intangible assets subject to amortization is 8 years.

Additional information required by US GAAP in respect of accounting for intangible assets not subject to amortization

	December 31, 2005						December 31, 2004
	Hotels		Soft drinks		Total		Hotels		Soft drinks		Total
	(£ million)
Goodwill		811		—		811		840		124		964
Trademarks		530		—		530		474		—		474
Total		1,341		—		1,341		1,314		124		1,438

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
	December 31,		December 31,
	2005		2004
	(£ million)
Current taxes		59		(60	)
Deferred taxes		—		7
Total		59		(53	)

F-78

Reconciliation of UK statutory tax rate to US GAAP tax charge on income from continuing operations

	Year ended			Year ended
	December 31,			December 31,
	2005			2004
	(%)
UK corporate tax standard rate		30.0			30.0
Permanent differences		11.1			1.1
Net effect of different rates of tax in overseas business		10.2			6.7
Adjustment to tax charge in respect of prior periods		(16.6	)		(20.4	)
Other		(1.2	)		(0.2	)
Special items		3.0			(35.5	)
Effective current tax rate on continuing operations		36.5			(18.3	)

      The tax rate in 2005 compared with 2004 has been impacted primarily by an increased proportion of non UK profits within continuing operations and increases in the valuation allowance against deferred tax assets.

      The Company operates, manages and franchises hotels in a significant number of countries and consequently a wide range of matters of interpretation of tax law arise in the normal course of business. Although reliance is placed on generally available interpretations in these countries, there is no certainty that the relevant tax authorities will agree with the Company’s interpretation or that the Company’s interpretation will be upheld. Consequently it is possible that certain matters will be resolved adversely resulting in additional cash tax settlements. The Company provides against all quantifiable tax exposures based upon best estimates and management’s judgment and total tax provisions of £328 million were held at December 31, 2005. The wide range of potential tax issues which arise include, in particular, the application of transfer pricing regulations and the allocation of costs and revenues between countries (£17 million), the deduction of intra-group charges (£10 million), the scope of controlled foreign company regulations (£160 million), and the scope and basis of application of tax laws of particular jurisdictions (including whether taxable permanent establishments exist) (£37 million).

                  Deferred tax in accordance with US GAAP

	Deferred tax
	(£ million)
At January 1, 2004		721
Disposals		(5	)
Exchange and other adjustments		(15	)
Income statement		—
Adjustment to other intangible assets(i)		(110	)
At December 31, 2004		591
Disposals		(132	)
Exchange and other adjustments		27
Income statement		(29	)
At December 31, 2005		457

(i) 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-79

     The analysis of the deferred tax liability required by US GAAP is as follows:

		December 31,			December 31,
		2005			2004
		(£ million)
Deferred tax liabilities:
	Excess of book value over taxation value of property, plant and equipment		242			452
	Taxation effect of deferred gains		122			122
	Intangible assets		163			138
	Investments in associates, joint ventures and partnerships		41			—
	Other temporary differences		96			75
			664			787
Deferred tax assets:
	Taxation effect of losses carried forward		(123	)		(113	)
	Taxation effect of employee benefits		(14	)		(6	)
	Other temporary differences		(70	)		(77	)
			(207	)		(196	)
			457			591
Of which:
	Current		(40	)		(45	)
	Non-current		497			636
			457			591

      The taxation effect of losses carried forward is stated net of a valuation allowance of £282 million (2004 £305 million). The tax effect of employee benefits and other temporary differences are stated net of valuation allowances of £3 million (2004 £nil million) and £14 million (2004 £nil million) respectively.

      On release, £18 million (2004 £16 million) of the valuation allowance would be recognized in goodwill. An increase of £1 million (2004 reduction of £88 million) has been made to the opening valuation allowance in respect of a change in judgment 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 overseas subsidiaries and joint ventures which the group controls on the basis that the differences are permanent in nature. It is not practicable to determine the amounts unprovided.

Additional information required under US GAAP in respect of restructuring provisions

	Employee			Facilities			Other			IHG
	costs			costs			costs			total
	(£ million)
Balance at January 1, 2004		7			7			4			18
Expenditure		(7	)		(3	)		(4	)		(14	)
Balance at December 31, 2004		—			4			—			4
Expenditure		—			(1	)		—			(1	)
Balance at December 31, 2005		—			3			—			3

F-80

Variable Interest Entities

      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, 2005, 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 £72 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, 2005 and £13 million at December 31, 2004.

New Accounting Standards

      In December 2004, the FASB issued FAS No. 123(R), “Share-Based Payment” (“FAS No. 123R”), which is a revision of FAS No. 123, (“FAS No. 123”) “Accounting for Stock-Based Compensation”. Generally, the approach in FAS No. 123R is similar to the approach described in FAS No. 123. FAS No. 123R 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 No. 123R for the financial year ended December 2006.

      The Company believes that the adoption of FAS No. 123R, using the modified prospective method, will not have a material impact on the results for the fiscal year 2006.

F-81

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, 2005
Provisions for bad and doubtful debts		43		14		4			(14	)		47
Year ended December 31, 2004
Provisions for bad and doubtful debts		45		20		(3	)		(19	)		43

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: March 31, 2006

EX-4.B.V

Exhibit 4(b)(v)

New Zealand Share Sale
Deed

Hale International Limited

Six Continents Limited

HANZ Holdings (New Zealand) Limited

Eureka Funds Management Limited (as
trustee and manager of the Alternative
Investment (Hotel and New Zealand) Private
Syndicate)

Contents

Clause
Number	Heading	Page
	1 Definitions and interpretation		1
	2 Shares		11
	3 Payment of Deposit, Purchase Price and Adjustment Amount		12
	4 Termination if Australian Conditions Fail		13
	5 Pre-Completion		13
	6 Completion		18
	7 Adjustment Statement and Intercompany Receivables and Payables		20
	8 Warranties and indemnity		22
	9 Claims		28
	10 Confidentiality and announcements		30
	11 Notices		30
	12 Vendor & Purchaser Guarantees		32
	13 Liquor Licence		35
	14 Period After Completion		35
	15 Consents		36
	16 GST		36
	17 General Provisions		37
	Schedule 1		40
	Group Structure		40
	Schedule 2		41
	Warranties		41
	Schedule 3		53
	Purchaser and Purchaser Guarantor Warranties		53
	Schedule 4		55
	Adjustment Statement		55
	Schedule 5		58
	Pro Forma Accounts for IHG Business and Company as at Accounts Date		58

-i- New Zealand Share Sale Deed
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Clause
Number	Heading	Page
	Schedule 6		59
	Intentionally Blank		59
	Schedule 7		60
	Deposit Letter		60
	Schedule 8		62
	Disclosure Index		62
	Schedule 9		63
	Excluded Assets		63
	Schedule 10		64
	Property		64
	Schedule 11		65
	NZ Management Contract		65
	Schedule 12		66
	NZ Non Disturbance Deed		66
	Schedule 13		67
	Contracts		67
	Schedule 14		68
	Form of resignation		68
	Schedule 15		69
	Vendor’s knowledge		69
	Schedule 16		70
	Employee Information		70
	Schedule 17		72
	Disclosure Schedule		72
	Schedule 18		73
	Schedule 19		79
	Brands		79
	Schedule 20		81
	Consents		81
	Schedule 21		82
	Vendor Intercompany Debt Assignment Steps		82

-ii- New Zealand Share Sale Deed
Final

Date	1 September 2005
Parties
	Hale International Limited which has its registered office C/o HWR Services Limited, Craigmuir CHMB P O Box 71 Road Town Tortola, Tortola, British Virgin Islands. (Vendor)
	Six Continents Limited which has its registered office at 67 Alma Road, Windsor, Berkshire SL4 3HD ( Vendor’s Guarantor)
	HANZ Holdings (New Zealand) Limited C/o Russell McVeagh, Level 30, Vero Centre, 48 Shortland Street, Auckland, New Zealand (Purchaser)
	Eureka Funds Management Limited (ABN 47 107 346 841) as trustee and manager of the Alternative Investment (Hotel and New Zealand) Private Syndicate (HANZ Trust) of Level 10, 1 Alfred Street, Sydney, NSW 2000 (Purchaser Guarantor)

Recitals

A.	The Vendor agrees to sell and the Purchaser agrees to purchase the Sale Shares under the following terms and conditions.
B.	Contemporaneously with the execution of this Deed the Australian Sale Contract is to be executed and on Completion the following documents are to be executed:

(a)	the Australian Management Contracts and the Australian Non Disturbance Deeds; and
(b)	the NZ Management Contract and the NZ Non Disturbance Deed; and
(c)	the Portfolio Side Agreement and the Shared Services Agreement.

C.	In consideration of the Vendor agreeing to sell the Sale Shares to the Purchaser, the Purchaser Guarantor agrees to guarantee the Purchaser Guaranteed Obligations.
D.	In consideration of the Purchaser agreeing to buy the Sale Shares from the Vendor, the Vendor’s Guarantor agrees to guarantee the Vendor Guaranteed Obligations.

Operative provisions

1 Definitions and interpretation

Definitions

1.1 In this Deed unless the context requires another meaning:

-1- New Zealand Share Sale Deed
Final

Accounting Standards means:

(a)	the accounting standards in New Zealand under the Financial Reporting Act 1993 (including all applicable Financial Reporting Standards) and standards applicable for the purposes of the Companies Act 1993;
(b)	the requirements of the Financial Reporting Act 1993 and the Companies Act 1993 for the preparation and content of financial statements, director’s reports and auditor’s reports;
(c)	if no accounting standard applies under the Financial Reporting Act 1993 (including under a Financial Reporting Standard) in relation to an accounting practice, the standards used and understood by the New Zealand Accounting Standards Review Board and/or the Institute of Chartered Accountants of New Zealand ;
(d)	generally accepted and consistently applied accounting principles and practices in New Zealand, except those inconsistent with the standards or requirements referred to in paragraphs (a) (b) or (c).

Accounts means Business Accounts or Company Accounts or both, as the context requires.

Accounts Date means 31 July 2005.

Action Procedures means the procedures for instituting or defending legal action in the name of another party specified in clauses 9.6, 9.7 and 9.8.

Actual Adjustment Amount means the cash sum determined in accordance with Schedule 4.

Adjustment Amount means the difference between the Actual Adjustment Amount as shown in the Adjustment Statement and the Estimated Adjustment Amount.

Adjustment Statement means the statement prepared in accordance with clause 7 and Schedule 4.

Assessment means something which creates or evidences an obligation on the Vendor (directly or indirectly) to pay an ascertained amount of Tax at or before a fixed time, such as any document received from a Government Agency administering any Tax assessing, imposing, claiming or indicating an intention to claim any Tax (such as an assessment, penalty notice or demand).

Assets means the assets owned or used by the Company in conducting the Business and for the avoidance of doubt does not include the Brands.

Audit means in relation to any Tax, any audit, investigation, review, information request or any other enquiry of any kind undertaken by a Government Agency.

Auditor means Ernst & Young.

Australian Companies means:

(a)	H.I. (Coogee) Pty Limited ACN 089 606 628;
(b)	H.I. (Melbourne) Pty Limited ACN 081 088 959;
(c)	H.I. (Canberra) Pty Limited ACN 096 253 851;
(d)	(d) H.I. (Perth) Pty Limited ACN 081 089 616;
(e)	H.I. (Terrigal) Pty Limited ACN 081 759 560;

-2- New Zealand Share Sale Deed
Final

(f)	H.I. (Potts Point) Pty Limited ACN 081 089 090;
(g)	H.I. (Townsville) Pty Limited ACN 092 022 269;
(h)	Centra Victoria Pty Limited ACN 081 122 125;
and Australian Company means any one of them.

Australian Management Contracts means the management contract for each of the Australian Properties, substantially in the form set out in Schedules 11 and 23 of the Australian Sale Contract.

Australian Non Disturbance Deeds means the non disturbance deed for each of the Australian Properties, substantially in the form set out in Schedule 12 of the Australian Sale Contract.

Australian Properties means the Properties defined in the Australian Sale Contract.

Australian Sale Contract means the contract dated on or about the date of this Deed between the Purchaser and the Australian Vendors for the sale and purchase of the shares in the Australian Companies and the units in the Australian Trusts.

Australian Trusts means:

(a)	HI (Coogee) Trust;
(b)	HI (Canberra) Trust;
(c)	HI (Townsville) Trust;
(d)	HI (Melbourne) Trust;
(e)	HI (Perth) Trust;
(f)	HI (Terrigal) Trust;
(g)	HI (Potts Point) Trust;
and Australian Trust means any one of them.

Australian Vendors means Holiday Inns Holdings (Australia) Pty Limited, SPHC Group Pty Limited and HIA (T) Pty Limited.

Authorisation means:

(a)	any authorisation, approval, licence, permit, consent, qualification, accreditation, filing, registration, certificate, resolution, direction, declaration, or exemption; and
(b)	for anything which a Government Agency may prohibit or restrict within a specified period after it is notified, the expiry of that period without intervention or action by that Government Agency.

Books and Records means originals and copies in machine readable or printed form of all registers, books, reports, correspondence, files, records, accounts, documents and other material in the possession or control of the Company or the Vendor about or used in connection with the Company including all:

(a)	information contained in the Data Room;
(b)	operational and financial records contained in People Soft 2002;

-3- New Zealand Share Sale Deed
Final

(c)	employment records;
(d)	documents of title for the Assets; and
(e)	registers required to be maintained by the Companies Act 1993 or the constitution or other constituent documents of the Company and all minute books of meetings of directors and members on and from the date that is 6 years prior to the date of Completion;

but does not include any of the items referred to above which relate to the Brands.

Brands means the words, expressions, Iogos, marks and any other expressions which relate to any hotel brands owned by entities ultimately owned by InterContinental Hotels Group PLC, including without limitation the brands listed in Schedule 19.

Brand Standard Books means the brand standard books for InterContinental, Crowne Plaza and Holiday Inn brands made available at the Vendors’ Solicitor’s offices.

Business Accounts means the pro forma accounts of the IHG Business as at the Accounts Date, as set out in Schedule 5.

Business means the business carried on by the Company of owning and managing the InterContinental Hotel Wellington as at the date of this Deed.

Business Day means a day that is not a Saturday, Sunday or a public holiday or bank holiday in Sydney or Wellington.

Cash means the cash in hand at the Property and any cash held in a bank account of the Company.

Claim means any claim, cost, damages, debt, expense, Tax, GST, any related interest, expense, fine, penalty or other charge on any Tax, or Liability, loss, allegation, suit, action, demand, cause of action or proceeding of any kind irrespective of:

(a)	how or when it arises;
(b)	whether it is actual or contingent;
(c)	whether or not it is in respect of legal or other costs, damages, expenses, fees or losses;
(d)	whether or not it is in respect of a breach of trust or of a fiduciary or other duty or obligation; and
(e)	whether or not it arises at law or in any other way.

Company means SPHC Equities Limited.

Company Accounts means the pro forma accounts of the Company as at the Accounts Date, as set out in Schedule 5.

Company Intercompany Debt means any monies owed by the Company to the Vendor Group on the Vendor Intercompany Debt Repayment Date.

Completion means completion of the sale and purchase of the Sale Shares under clause 6 of this Deed.

Completion Date means 31 October 2005 or such other date as notified to the Purchaser in accordance with clause 6.4 or 6.6.

-4- New Zealand Share Sale Deed
Final

Completion Payment Amount means $55,078,485.

Confidential Information means all:

(a)	know-how, trade secrets, ideas, concepts, technical and operational information, owned or used by the Company, or other such information of the Vendor Group;
(b)	information concerning the affairs or property of the Company or the Business, property or transaction in which the Company may be or may have been concerned or interested;
(c)	details of any customers or suppliers of the Company and the Business;
(d)	information about the terms or effect of this Deed; and
(e)	information which by its nature or by the circumstances of its disclosure, is or could reasonably be expected to be regarded as confidential to:

(i)	the Company; or
(ii)	any third party with whose consent or approval the Company uses that information.

Confidentiality Deed Poll means the deed poll executed by the Purchaser on 22 April 2005.

Consent means any consent of a person listed in column 11 of Schedule 20 required under the documents listed in column 2 of Schedule 20 to the matters contemplated by this Deed.

Contracts means any contract or agreement to which the Company is a party or by which the Company may be bound and which:

(a)	is not capable of being terminated without compensation at any time or with 12 months’ notice or less and which involves or may involve total annual expenditure in excess of $25,000; or
(b)	involves or may involve total annual expenditure in excess of $250,000,

as listed in Schedule 13.

Control or Controlled means the possession directly or indirectly of the power, whether or not having statutory, legal or equitable force, and whether or not based on statutory, legal or equitable rights, directly or indirectly to control the membership of the board of directors or any other governing body of the relevant entity or to otherwise directly or indirectly direct or influence the direction of the management and policies of that entity whether by means of trust, agreements, arrangements, understandings, practices, the ownership of any interest in shares or stock of the entity or otherwise.

Data Room means the virtual data room made available to the Purchaser by the Vendor or the Australian Vendors or their respective advisers, including the website at “https://www.sydney.bakerextra.com” to which the Purchaser was provided a password to access the website together with the Brand Standards Books and Hotel Property Plans.

Demand means a written notice of, or demand for, an amount payable.

Deposit means the sum of $6,100,000.

Deposit Account means the bank account established under clause 3.

Deposit Letter means a letter substantially in the form of the letter set out in Schedule 7.

-5- New Zealand Share Sale Deed
Final

Disclosure Index means the index referred to in Schedule 8.

Disclosure Material means the material identified in the Disclosure Index and the Brand Standards Books and Hotel Property Plans which the Vendor has made available for inspection by the Purchaser and its representatives and, for the avoidance of doubt, includes the RFI Responses.

Disclosure Schedule means Schedule 17 of this Deed.

Dispute Notice means a written notice under clause 7.5 of any dispute about the Adjustment Statement.

Dollars and $ means the lawful currency of New Zealand, unless otherwise stated

Employee means all employees:

(a)	who are employed in the Business as at the date of this Deed; or
(b)	who are employed in the Business after the date of this Deed,
and who are still employed at Completion.

Estimated Adjustment Amount means $178,485 (as an adjustment in favour of the Vendor).

Excluded Assets means those assets, contracts and rights details of which are set out in Schedule 9.

Excluded Representation means any statement, representation, warranty, promise, undertaking or agreement in connection with the Sale Shares or the Company made by a member of the Vendor Group or any person acting, or purporting to act, on behalf of a member of the Vendor Group or resulting from or implied by conduct made in the course of communications or negotiations in connection with the Sale Shares or the Company not expressly set out in this Deed.

Expert means an independent firm of chartered accountants selected under clause 7.8.

Financial Reporting Standard means an “Applicable financial reporting standard” as defined in the Financial Reporting Act 1993.

Government Agency means:

(a)	a government, whether foreign, federal, state, territorial or local;
(b)	a department, office or minister of a government acting in that capacity; or
(c)	a commission, delegate, instrumentality, agency, board or other governmental, semi-governmental, judicial, administrative, monetary or fiscal authority, whether statutory or not.

GST means goods and services tax payable under the Goods and Services Tax Act 1985 (NZ) or any like tax.

HI (Coogee) Trust means the trust known as HI (Coogee) Trust, constituted by a trust deed dated 12 October 1999.

HI (Canberra) Trust means the trust known as HI (Canberra) Trust, constituted by a trust deed dated 23 March 2001.

-6- New Zealand Share Sale Deed
Final

HI (Ports Point) Trust means the trust known as HI (Potts Point) Trust, constituted by a trust deed dated 19 December 1997.

HI (Townsville) Trust means the trust known as HI (Townsville) Trust, constituted by a trust deed dated 19 April 2000.

HI (Melbourne) Trust means the trust known as HI (Melbourne) Trust, constituted by a trust deed dated 19 December 1997.

HI (Perth) Trust means the trust known as HI (Perth) Trust, constituted by a trust deed dated 19 December 1997.

HI (Terrigal) Trust means the trust known as HI (Terrigal) Trust, constituted by a trust deed dated 2 March 1998.

Holding Trust means the trust known as HIA Hotels Trust, constituted by a trust deed dated 19 June 1997.

Hotel Property Plans means the plans for the Property made available to the Purchaser at the Property.

IHG Business means the InterContinental Hotel Wellington business carried on by SPHC (NZ) Holdings Limited up until the completion date under the Restructuring Agreement, and excludes any other business or other activities carried on by SPHC (NZ) Holdings Limited.

Income Tax means tax imposed upon income, profits, or gains (including capital gains).

Industrial Instrument means a collective agreement as defined in the Employment Relations Act 2000.

Input Tax Credit has the meaning given to it in the Goods and Services TaxAct 1985.

Insurance Policies means all policies of insurance held by or for the benefit of the Company up to Completion.

Intercompany Payables has the meaning given to it in Schedule 4.

Intercompany Receivables has the meaning given to it in Schedule 4.

Interest Rate means the rate which is 2% above the minimum rate of interest charged by the Commonwealth Bank of Australia to corporate customers on overdrafts of $100,000 or more (as published from time to time in the Australian Financial Review or, if not published, as notified by the Commonwealth Bank of Australia to the Vendor).

Liabilities means all liabilities, whether actual or contingent, present or future, quantified or unquantified.

Liquor Licence means each liquor licence in respect of the Property identified in the Disclosure Material.

Loss means any damage, loss, claim, liability or expense.

Manager means Southern Pacific Hotel Corporation Pty Limited ACN 008 413 367.

Member Employee means Employees who are the Company’s Band 4 remuneration category and above.

NZ Management Contract means a management contract substantially in the form of the management contract set out in Schedule 11 of this Deed.

-7- New Zealand Share Sale Deed
Final

NZ Non Disturbance Deed means a non disturbance deed dated on or about the date of this deed, substantially in the form of the non disturbance deed set out in Schedule 12 of this Deed.

Permitted Encumbrance means:

(a)	a charge or lien arising in favour of a Government Agency by operation of statute for council rates unless there is default in payment of money secured by that charge or lien;
(b)	any mechanics’, workmen’s or other like lien arising in the ordinary course of business; or
(c)	any retention of title, equipment or asset lease, asset hire purchase agreement or equivalent security interest entered into in the ordinary course of day-to-day trading or operations;
(d)	in respect of the Property, encumbrance 5057388.3 in favour of AMP NZ Office Featherston Street Limited on certificate of title WN59A/373.

Plant and Equipment means all fixed and loose plant, equipment, machinery, furniture, fixtures and fittings, computer hardware, vehicles, and all other tangible assets owned by the Company.

Portfolio Side Agreement has the meaning given to it in the Australian Sale Contract.

Post-Completion Tax Period means any Tax period beginning after Completion and that portion of any Straddle Year beginning after Completion.

Pre-Completion Tax Period means any Tax period ending on or before Completion and that portion of any Straddle Year ending on Completion.

Property means the property detailed in Schedule 10 and all improvements on that property.

Purchase Price means the amount of $61,000,000.

Purchaser Group means the Purchaser and all other entities Controlled by the Purchaser’s ultimate holding company and after Completion, includes the Company.

Purchaser Guaranteed Obligations means the obligations of the Purchaser Guarantor as set out in clause 12.8.

Purchaser’s Financer means the National Australia Bank Limited.

Restructuring Agreement means the Agreement for Sale and Purchase of Real Estate dated 2 August 2005 between SPHC (NZ) Holdings Limited and the Company, pursuant to which the IHG Business and assets used in the IHG Business were sold to the Company with effect on 31 August 2005.

RFI Responses means the written answers to questions and requests for further information made by the Purchaser and its employees, representatives and advisers (including directors, partners, officers and employees of its advisers) through the formal request for information/RFI process and forming part of the Disclosure Material.

Sale means the sale and purchase of the Sale Shares in accordance with this Deed.

Sale Shares means all of the shares in SPHC Equities Limited together with all rights attaching to those shares as at Completion (including ordinary shares and redeemable preference shares).

-8- New Zealand Share Sale Deed
Final

Security Interest means an interest in an asset which provides security for, or protects against default by, a person for the payment or satisfaction of a debt, obligation or liability including a mortgage, charge, bill of sale, pledge, deposit, lien, encumbrance, hypothecation, arrangement for the retention of title, option, lease, hire or hire purchase, restriction as to transfer, use or possession, easement or subordination and includes a security interest as defined in the Personal Property Securities Act 1999 (NZ) (excluding a Permitted Encumbrance).

Shared Services Agreement means the shared services agreement between the Manager and the Company in the form set out in Schedule 25 of the Australian Sale Deed.

Specified Provision means a Warranty, indemnity or any covenant, undertaking, representation or warranty provided by the Vendor to the Purchaser pursuant to this Deed and for the avoidance of doubt includes the indemnities contained in Schedule 18.

Stakeholder means Jones Lang LaSalle Hotels (NSW) Pty Limited, as Vendor’s agent.

Straddle Year means a Tax Year commencing before but ending after Completion.

Tax means a tax, levy, charge, impost, deduction, withholding or duty of any nature (including stamp and transaction duty) including any penalty, interest or similar amounts charged in relation to any of the foregoing at any time:

(a)	imposed or levied by any Government Agency; or
(b)	required to be remitted to, or collected, withheld or assessed or re-assessed by, any Government Agency;.

Tax Demand means a Demand or assessment from a Government Agency requiring the payment of any Tax in respect of which the Vendor may be liable (directly or indirectly) under this Deed.

Tax Relief means any relief, allowance, exemption, exclusion, set-off, deduction, loss, rebate, refund, right to repayment or credit granted or available in respect of a Tax under any law.

Tax Return means all returns, lodgements and instalments made to a Taxation Authority;

Taxation Authority means any person or agency authorised by law to impose, collect or otherwise administer any Tax.

Tax Years means the income year ending on 31 December or other period in respect of which Income Tax is payable.

Transaction Bank means the National Australia Bank Limited.

Vendor means Hale International Limited.

Vendor’s Solicitors means Lee Salmon Long Barristers and Solicitors of Level 31, Vero Centre, 48 Shortland Street, Auckland, New Zealand.

Vendor Group means InterContinental Hotels Group PLC (which has its registered office at 67 Alma Road, Windsor, Berkshire SL4 3HD) and all entities Controlled by InterContinental Hotels Group PLC but excludes the Company.

Vendor Guaranteed Obligations means the obligations of the Vendor’s Guarantor as set out in clause 12.1.

Vendor Intercompany Debt means any monies owed by the Vendor Group to the Company on the Vendor Intercompany Debt Repayment Date.

-9- New Zealand Share Sale Deed
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Vendor Intercompany Debt Assignment Steps means the steps set out in Schedule 21 of this Deed or such other steps as specified by the Vendor and consented to by the Purchaser, such consent by the Purchaser not to be withheld so long as the steps achieve the objective of discharging all of the Vendor Intercompany Debt and the Company Intercompany Debt as at the Vendor Intercompany Debt Repayment Date.

Vendor Intercompany Debt Repayment Date means any date on or before the Completion Date as reasonably determined by the Vendor.

Warranties means the representations, warranties and covenants made by the Vendor under clause 8.3 and Warranty means any one of them.

Interpretation

1.2 In this Deed, unless the context otherwise requires:

(a) a reference:

(i)	to the singular includes the plural and vice versa;
(ii)	to a gender includes all genders;
(iii)	to a document (including this Deed) is a reference to that document (including any Schedules and Annexures) as amended, consolidated, supplemented, novated or replaced;
(iv)	to an agreement includes any deed, agreement or legally enforceable arrangement or understanding whether written or not;
(v)	to parties means the parties to this Deed and to a party means a party to this Deed;
(vi)	to a notice means all notices, approvals, demands, requests, nominations or other communications given by one party to another under or in connection with this Deed;
(vii)	to a person (including a party) includes:

(A)	an individual, company, other body corporate, association, partnership, firm, joint venture, trust or Government Agency;
(B)	the person’s successors, permitted assigns, substitutes, executors and administrators; and

(viii) to a law:

(A)	includes a reference to any constitutional provision, subordinate legislation, treaty, decree, convention, statute, regulation, rule, ordinance, proclamation, by-law, judgment, rule of common law or equity or rule of any applicable stock exchange; and
(B)	is a reference to that law as amended, consolidated, supplemented or replaced; and
(c)	is a reference to any regulation, rule, ordinance, proclamation, by-law or judgment made under that law;

(ix) to proceedings includes litigation, arbitration, and investigation;

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(x)	to a judgement includes an order, injunction, decree, determination or award of any court or tribunal;
(xi)	to time is a reference to Sydney time;

(b)	headings are for convenience only and are ignored in interpreting this Deed;
(c)	a warranty, representation, covenant or obligation given or entered into by more than one person binds them jointly and severally;
(d)	if a period of time is specified and dates from, after or before, a given day or the day of an act or event, it is to be calculated exclusive of that day;
(e)	if a payment or other act must (but for this clause) be made or done on a day which is not a Business Day, then it must be made or done on the next Business Day;
(f)	the words “including” or “includes” mean “including but not limited to” or “including without limitation”;
(g)	where a word or phrase is defined, its other grammatical forms have a corresponding meaning; and
(h)	this Deed must not be construed adversely to a party solely because that party was responsible for preparing it

Payments

1.3 Unless the context otherwise requires, where an amount is required to be paid to a party (Receiving Party) by another party (Paying Party) under this Deed, that amount must be paid by immediately available funds and in a form specified by the Paying Party (such as electronic wire transfer or bank cheque) to the Receiving Party, or otherwise as set out in the written direction of the Receiving Party if that written direction is received by the Paying Party more than 2 Business Days before the date upon which payment of the amount is due.

2 Shares

Sale and purchase

2.1 The Vendor sells and the Purchaser purchases, the Sale Shares, free from all Security Interests, for the Purchase Price and in accordance with this Deed.

All of the Sale Shares

2.2 Neither the Vendor nor the Purchaser will be obliged to complete the purchase of any of the Sale Shares unless the purchase of all of the Sale Shares is completed simultaneously.

Waiver of pre-emption rights

2.3 The Vendor waives and, prior to Completion, must obtain the waiver from all other relevant persons, of all restrictions on transfer (including pre-emption rights) that might exist for the Sale Shares, whether under the constitution of the Company or otherwise.

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3 Payment of Deposit, Purchase Price and Adjustment Amount

Payments on signing

3.1 Upon signing this Deed:

(a)	the Purchaser must pay the Deposit to the Stakeholder; and
(b)	the parties must direct the Stakeholder to immediately invest the Deposit:

(i)	in an interest bearing account with the Transaction Bank on 24 hour call;
(ii)	in the joint names of the Vendor and the Purchaser; and
(iii)	with the Stakeholder named as the sole signatory to the Deposit Account.

Release of deposit

3.2 Subject to clause 3.4, the Deposit and all interest earned on the Deposit is to be dealt with as follows:

(a)	on Completion, the parties must direct the Stakeholder to pay the Deposit together with 50% of the interest credited to the Deposit Account to the Vendor and the balance of the interest to the Purchaser;
(b)	the parties must direct the Stakeholder to pay the Deposit, together with all interest credited to the Deposit Account, to the Vendor if this Deed is terminated by the Vendor relying on default by the Purchaser; or
(c)	the parties must direct the Stakeholder to pay the Deposit, together with all interest credited to the Deposit Account, to the Purchaser if this Deed terminates by operation of clause 4.1.

Exclusion of interest

3.3 Interest earned on the Deposit does not form part of the Purchase Price.

Deduction of charges

3.4 No payment may be made to the Vendor and/or the Purchaser under this clause unless all bank charges and Taxes levied on or payable on the investment and withdrawal of the Deposit have been deducted.

Deposit letter

3.5 On signing this Deed, the Vendor and the Purchaser must sign and deliver the Deposit Letter to the Stakeholder.

Release and directions

3.6 Except as ordered by a court of competent jurisdiction, no payment may be made out of the Deposit Account except:

(a)	as provided in clause 3.2; and
(b)	upon receipt by the Stakeholder of a written direction signed by both parties.

3.7 Each party agrees to direct the Stakeholder in writing as required to give full effect to the provisions of this Deed.

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Payment of balance of Purchase Price

3.8 The Purchaser must pay the Completion Payment Amount to the Vendor at Completion.

Adjustment Amount

3.9 The Adjustment Amount will be payable in accordance with the provisions in clause 7.

Intercompany Amounts

3.10	The Vendor must pay to the Company the Intercompany Receivables in accordance with the provisions in clause 7.
3.11	The Purchaser must procure that the Company pays to the Vendor the Intercompany Payable in accordance with the provisions in clause 7.

Currency of Payments

3.12	The interest on the Deposit pursuant to clause 3.2 (which is denominated in Australian dollars) must be paid to the Vendor in Australian dollars.
3.13	The following payments will be denominated in New Zealand dollars but must be paid to the Vendor in Australian dollars at an exchange rate of AUD$0.9220 to NZ$1.00:

(a)	the Deposit;
(b)	the Completion Payment Amount; and
(c)	the Adjustment Amount.

3.14 For the avoidance of doubt, all other payments required under this Agreement must be made in New Zealand dollars.

4 Termination if Australian Conditions Fail

4.1 If the Australian Sale Contract is terminated by the purchaser or the vendors under the Australian Sale Contract pursuant to clause 4.5 of the Australian Sale Contract (condition precedent not satisfied or waived), this Agreement will automatically terminate.

5 Pre-Completion

Pre-Completion notices

5.1 At least 10 Business Days before the Completion Date the Purchaser must nominate to the Vendor in writing:

(a)	new directors of the Company;
(b)	the address of the new registered office of the Company; and
(c)	the new name of the Company which must not contain any words, expression which refer to any of the Brands or “SPHC” or any words or expression which are similar or may be mistaken to be referring to any of the Brands or “SPHC” and reasonably acceptable to the Vendor.

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Business to be conducted in ordinary course

5.2 Except as is disclosed in the Disclosure Schedule or as may be required to give effect to or comply with an express provision of this Deed or any law or regulation or in so far as the Purchaser has given its written consent (such consent not to be unreasonably withheld or delayed), until Completion the Vendor will use its reasonable endeavours to ensure that the Company:

(a)

conducts its Business in the ordinary course and substantially in the same manner as it was conducted prior to the date of this Deed other than in relation to the General Manager of the Company whose employment will be terminated by the Company prior to Completion on terms reasonably acceptable to the Purchaser and re-employing the General Manager in an entity within the Vendor Group prior to Completion on terms and conditions of employment no less favourable than those provided by the Company;

(b)

without prejudice to the generality of clause 5.2(a), does not:

(i) enter into any contract or commitment which involves any capital expenditure for more than $100,000 per item and $375,000 in aggregate, in each case exclusive of GST, except for any contract or commitment which:

(A)	is contracted or committed and paid in full by the Company before Completion;
(B)	is incurred to carry out emergency repairs (on such terms as are set out in clause 7.5 of the NZ Management Contract as if the NZ Management Contract was in effect); or
(c)	would be consistent with the Company’s capital budget for the financial year ending 31 December 2005 as contained in the Data Room or with the new budgets agreed between the Purchaser and the Vendor between the date of this Deed and Completion;

(ii)	enter into, amend or terminate 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 $100,000;
(iii)	acquire, dispose of, or create a Security Interest over, any of the Assets other than acquisitions or disposals in the ordinary course of business and for less than $150,000;
(iv)	distribute or return any capital or declare, approve payment of or pay any dividend to its members;
(v)	issue or agree to issue any shares, units, options, notes, debentures or securities which are convertible into shares in the Company;
(vi)	alter the Company’s constitution;
(vii)	without consulting with the Purchaser, employ any person:

(A)	where that employment would materially increase the operating costs of the Company; or
(B)	with an annual remuneration package of more than $150,000;

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(viii)	except in the ordinary course of business or as disclosed in the Data Room, terminate, change the terms of employment to a material extent, or pay or provide any bonus, to any Employee;
(ix)	acquire or agree to acquire any share, shares, notes, debenture or other interest (including a contractual interest) in any company, partnership, trust or other venture;
(x)	settle an insurance claim instituted by or on behalf of the Company where the sum claimed exceeds $250,000; or
(xi)	enter into any guarantee, indemnity or other agreement to secure any obligation of a third party (excluding obligations of the Company) or create any Security Interest over any of its assets or undertaking in any such case other that in the ordinary course of business.

5.2A	The Vendor shall, at least weekly (if feasible), meet with the Purchaser to review and discuss the conduct and trading results of the Business and to discuss the ongoing conduct of the Business and the hotel in accordance with clause 5.2.
5.2AA	The Vendor and Purchaser shall establish a liaison committee to be made up of appropriate persons nominated by them. The role of the liaison committee will be to: facilitate the Vendor and Purchaser liaising in respect of, and ensuring a smooth transition on, the sale of the Sale Shares; work together towards an orderly Completion (including the preparation of Adjustments Statements and other necessary documentation and information); and allow the Purchaser to become familiar with the Business. The Vendor and the Purchaser agree to use their best commercial endeavours to procure that the committee adequately performs its role.
5.2B	The Vendor will provide the Purchaser access to the Data Room between the date of this Deed and the date of Completion.
5.2C	Prior to Completion, the Vendor will use reasonable efforts to procure that the trade marks “Chameleon” and “emerge HEALTH CLUB AND SPA” are transferred into the name of the Company.

Obligations of Vendor on Completion

5.3 If, before Completion, the Purchaser becomes aware of a breach by the Vendor of clause 5.2 then the Purchaser shall:

(a)

promptly notify the Vendor and provide reasonable details of the breach; and

(b)

if the breach is capable of remedy, not make any claim in respect of that breach or take any other action against the Vendor under this Deed in respect of that breach without first giving the Vendor at least 20 Business Days to remedy the breach. For the avoidance of doubt, there is no obligation on the Vendor to remedy any such breach after being notified of the breach pursuant to clause 5.3(a). If any part of that 20 Business Day period falls after Completion, the Vendor may have access to the Property during that part of the period:

(i)	for the purposes of remedying the relevant breach; and
(ii)	if it complies with the Purchaser’s reasonable requirements in relation to access to the Property and the remedying of the breach; and

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(c) if the breach is not capable of remedy or if the Vendor has not remedied the breach within the time period specified in clause 5.3(b), any claim in respect of that breach will be treated as a warranty claim under clause 8 of this Deed.

Insurance Policies

5.4	The Vendor shall, and shall procure that each Vendor Group member shall continue in force all policies of insurance maintained by them in respect of the Assets, Property and the Business until Completion and will have the interest of the Purchaser noted on each such policy of insurance. For the avoidance of doubt, the Vendor shall pay, and shall procure that each Vendor Group member and the Company pays, all premiums falling due for payment prior to Completion in respect of the Insurance Policies when due. Up to Completion, the Vendor will not vary the terms of any Insurance Policy or replace any Insurance Policy with another policy of insurance unless the terms of the new policy are at least equivalent to the terms of the relevant Insurance Policy.
5.5	Subject to clause 5.7, the Insurance Policies will cease to apply to or cover the Company or the Business immediately following Completion except as otherwise provided under the NZ Management Contract.
5.6	From Completion:

(a) in respect of any Insurance Policy which is a “claims made” basis policy:

(i)	no Vendor Group member will be required to provide or make available to the Company any insurance coverage under any such policy; and
(ii)	the cessation of the application of or coverage under the Insurance Policies will, subject to the terms of the relevant policy, be without prejudice to any accrued claims notified to the relevant insurer which are pending at Completion; and

(b) in respect of any “occurrence” basis policy, the Company shall continue to benefit from the policy, subject to the terms of the relevant policy, in relation to events occurring prior to Completion but in respect of which no claim has yet arisen at the time of Completion.

5.7 The Vendor and the Purchaser agree that any claims made under any of the Insurance Policies in respect of the Company shall be administered and collected by the Vendor (or by a claims handler appointed by the Vendor) on behalf of the Company. The Vendor will consult with and seek the consent of the Purchaser in relation to settling any claim. The Purchaser shall, and shall procure that the Company shall:

(a)	cooperate fully with the Vendor to enable the Vendor to comply with the reasonable requirements of the relevant insurer; and
(b)	provide such information, assistance and access to Employees (or their successors) as the Vendor may reasonably require in connection with any such claim.

	Any monies and other benefits received by the Vendor as a result of such claims shall be paid over or provided to the Purchaser for the benefit of the Company, net of all reasonable costs and expenses of recovery (including all reasonable handling and collection charges by any claims handler appointed by the Vendor).
5.8	In respect of all claims under the Insurance Policies referred to in clause 5.7 which are notified to insurers prior to Completion and all claims subsequently brought under any Insurance Policy which relates to the Company, the Vendor and the Vendor Group:

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(a)	shall be responsible for the deductible on each relevant Insurance Policy; and
(b)	will not be entitled to seek reimbursement of such deductible from the Purchaser.

5.9 Clause 5.6 to 5.9 is a continuing obligation and will not merge or be extinguished on Completion or termination of this Deed.

Vendor Intercompany Debt

5.10 Notwithstanding any other provision hereof, on the Vendor Intercompany Debt Repayment Date, the Vendor must procure that the Vendor Intercompany Debt Assignment Steps are taken by the relevant Vendor Group members and the Company and that the Vendor Intercompany Debt and the Company Intercompany Debt is discharged.

Damage or Destruction

5.11 If before Completion any of the Assets or the Property are damaged, destroyed or otherwise affected, or the Company incurs a Liability or a Loss:

(a)	to a degree that materially and adversely affects the conduct or profitability of the Business or any of the Sale Shares; and
(b)	by Completion the Vendor has not adequately replaced or repaired the Assets or the Property affected or the Purchaser has not received or is not satisfied that it will promptly receive sufficient compensation under any Insurance Policy to cover the Purchaser’s or the Company’s loss suffered,
	then the Purchaser may elect to:
(c)	make an appropriate adjustment to the Purchase Price as agreed between the Vendor and the Purchaser to sufficiently compensate the Purchaser or the Company for its loss suffered, or failing agreement, as determined by an Expert in accordance with clauses 7.8, 7.11 and 7.12; or
(d)	otherwise vary the terms of this Deed, as agreed by the Vendor and the Purchaser.

Purchaser’s access prior to Completion

5.12 The Vendor must between the date of this Deed and Completion on receiving reasonable notice from the Purchaser:

(a)	provide or ensure the provision of all information and assistance which may reasonably be requested by the Purchaser; and
(b)	permit representatives of the Purchaser to have access to and take extracts from or copies of any books, correspondence, accounts or other records relating to the Business or the Properly in the Vendor’s possession or control or the possession or control of the Company,
	for the purpose of the Purchaser’s review of the accounts and financial statements of the Company, provided that such access and assistance does not unreasonably interfere with the conduct of the Business.

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6 Completion

Time and place of Completion

6.1 Completion must:

(a)	take place at the offices of Baker & McKenzie, Level 27, 50 Bridge Street, Sydney on the Completion Date, or at such other place as the parties may agree; and
(b)	take place contemporaneously with completion of the Australian Sale Contract.

Obligations of Purchaser on Completion

6.2 On Completion the Purchaser must:

(a)	pay the Completion Payment Amount to the Vendor;
(b)	open new bank accounts for the Company;
(c)	cause the Company to enter into the NZ Management Contract, NZ Non Disturbance Deed and the Shared Services Agreement; and
(d)	cause the relevant financier(s) to enter into the NZ Non Disturbance Deed.

Obligations of Vendor on Completion

6.3 At Completion the Vendor must:

(a) make available by leaving at the Property or deliver to the Purchaser:

(i)	a registrable transfer of the Sale Shares duly executed by the registered holder in favour of the Purchaser, together with any share certificates for the Sale Shares or a certificate by a director of the Company that no share certificates have been issued for the Sale Shares;
(ii)	all waivers or consents which the Purchaser may reasonably require to enable the Purchaser to be registered as holder of the Sale Shares;
(iii)	all of the following:

(A)	a copy of the Company constitution;
(B)	the Books and Records;
(C)	any Confidential Information in respect of the Company in the possession or control of the Vendor or the Company;
(D)	the certificate of incorporation of the Company;
(E)	the certificate of title for the Property;
(F)	executed originals to the extent available, or copies of the Contracts listed in Schedule 13; and

(iv) the executed resignations of each of the directors of the Company, in the form set out in Schedule 14, effective from the close of the meetings referred to in clause 6.3(c);

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provided, however, that in relation to items referred to in paragraphs (iii) above (together Records):

(v)	Purchaser recognises that certain Records may relate primarily to the Vendor Group generally rather than specifically to the Company and that the Vendor may retain such Records and will provide copies of the relevant portions to the Purchaser;
(vi)	Vendor may retain all Records prepared in connection with the sale of the Sale Shares, including bids received from other parties and analyses relating to the Company; and
(vii)	Vendor may retain any Tax returns, reports or forms, other than returns, reports or forms that relate solely to the Company and, on request, the Purchaser will be provided with copies or extracts of such returns, reports or forms only to the extent they relate to separate returns or separate Tax liability of the Company;

(b) cause a meeting of directors of the Company to be held and obtain at the meeting, subject to payment of stamp duty (if any):

(i)	the approval of the registration of the transfers of the Sale Shares;
(ii)	the cancellation of the existing certificates for the Sale Shares; and
(iii)	the issue of new certificates for the Sale Shares in favour of the Purchaser; and
(iv)	the closure of the Company bank accounts ; and
(v)	appropriate documents relating to a change in the name of the Company to a name reasonably acceptable to the Vendor;

(c) cause a meeting of shareholders of the Company to be held and obtain at the meeting:

(i)	the appointment of those persons nominated under clause 5.1 (a) as directors of the Company and who have consented in writing to act as directors;
(ii)	the acceptance of the resignations of directors received under clause 6.3(a)(v); and

(d) cause the Manager to execute to the NZ Management Agreement, NZ Non Disturbance Deed and Shared Services Agreement.

Non compliance

6.4	If, despite the Vendor’s best endeavours, the Vendor has not complied with any of the provisions of this clause 6 on the Completion Date, the Vendor may at its option, defer Completion for up to 3 months after 31 October 2005 (in which case the provisions of this clause 6.4 will apply to the deferred Completion).
6.5	If either party has not complied with any of the provisions of this clause 6 on the Completion Date and the Vendor have not made the election to extend Completion pursuant to clause 6.4, the other party may at its option:

(a)	proceed to Completion so far as is practical without affecting its rights under this Deed; or
(b)	terminate this Deed by notice to the non-complying party.

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Defer Completion

6.6 The Vendor may, at their option and on more than one occasion by notice in writing to the Purchaser, defer Completion for up to 3 months after 31 October 2005 (in which case the provisions of this clause 6.6 will apply to the deferred Completion).

7 Adjustment Statement and Intercompany Receivables and Payables Cash float

7.1 Prior to Completion, the Vendor may remove all cash from the Cash float, provided that 2 weeks prior to Completion, the Vendor has given to the Purchaser an estimate of the Cash float to be removed on Completion.

Adjustment Statement

7.2	The Vendor shall procure that as soon as practicable, but in any event within 60 Business Days following Completion, the preparation of the Adjustment Statement in accordance with Schedule 4 and provide a copy to the Purchaser.
7.3	The Purchaser must, in connection with the preparation of the Adjustment Statement:

(a)	provide or ensure the provision of all information and assistance which may reasonably be requested by the Vendor; and
(b)	permit representatives of the Vendor to have access to and take extracts from or copies of any books, correspondence, accounts or other records relating to the Property in the Purchaser’s possession or control or the possession or control of the Company.

7.4 The cost of preparing the Adjustment Statement will be borne equally by the Purchaser and the Vendor.

Dispute

7.5	If the Purchaser disputes the correctness of the Adjustment Statement, the Purchaser may within 10 Business Days of receiving the Adjustment Statement issue a Dispute Notice to the Vendor setting out in reasonable detail the basis of the dispute.
7.6	The parties must negotiate in good faith to resolve any dispute within 10 Business Days after the issue of a Dispute Notice.
7.7	If the dispute is not resolved under clause 7.6, the remaining matters in dispute must be promptly referred by the parties to the Expert for determination.
7.8	The parties must appoint the Expert, which must be an independent firm of chartered accountants selected by agreement between the parties or, failing agreement within 14 Business Days of any party issuing a Dispute Notice, as selected by the President for the time being of the Institute of Chartered Accountants of Australia.
7.9	The Expert must be directed by the parties to determine any matter in dispute as soon as practicable but in any case within 20 Business Days of its appointment by:

(a)	applying the principles set out in Schedule 4;
(b)	having regard to any written submissions made to the Expert by the parties or their representatives within 5 Business Days of the appointment of the Expert;

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(c)	making such enquiries or inspections as the Expert considers in its absolute discretion to be necessary; and
(d)	determining the form and content of the Adjustment Statement and the amount of the Actual Adjustment Amount and providing notice of its determination to all parties.

7.10	The determination of the Expert as to the matters in dispute, the form and content of the Adjustment Statement and the amount of the Actual Adjustment Amount will (in the absence of manifest error) be final and binding on the parties.
7.11	In making its determination the Expert will act as an expert and not as an arbitrator.
7.12	The costs of the Expert shall be borne equally by the Purchaser and the Vendor.

Adjustment

7.13 If:

(a) the Actual Adjustment Amount as shown in the Adjustment Statement:

(i)	is an adjustment in favour of the Vendor of less than $138,485 then the Vendor will pay an amount to the Purchaser equal to $178,485 less the Actual Adjustment Amount; or
(ii)	is an adjustment in favour of the Purchaser then the Vendor will pay an amount to the Purchaser equal to $178,485 plus the Actual Adjustment Amount in favour of the Purchaser;

(b)

the Actual Adjustment Amount as shown in the Adjustment Statement is an adjustment in favour of the Vendor greater than $218,485 then the Purchaser will pay an amount to the Vendor equal to the excess of the Actual Adjustment Amount over $178,485;

(c)

a Dispute Notice is not issued by the Purchaser in accordance with clause 7.5 then the payment under clause 7.13(a) or 7.13(b) shall be made within 15 Business Days after the date that the Purchaser received the Adjustment Statement and ifa Dispute Notice is issued then the payment under clause 7.13(a) or 7.13(b) shall be made within 5 Business Days of the date that the Expert makes its determination pursuant to clause 7.9.

Intercompany Debt

7.14	The Vendor must procure that the relevant Vendor Group member repay the Intercompany Receivable.
7.15	The Purchaser must procure that the Company repays the Intercompany Payable.
7.16	Ifa Dispute Notice is not issued by the Purchaser in accordance with clause 7.5 then the payment under clause 7.14 and/or 7.15 shall be made within 15 Business Days after the date that the Purchaser received the Adjustment Statement and ifa Dispute Notice is issued then the payment under clause 7.14 and/or 7.15 shall be made within 5 Business Days of the date that the Expert makes its determination pursuant to clause 7.9.

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8	Warranties and indemnity
	“As is” condition

8.1	Except as provided for in this Deed, the Business and the Assets are held by the Company:
	(a) in its state of repair and condition; and
	(b) subject to the Contracts,
	in each case as at the date of this Deed.
8.2	Other than as allowed under, or for a breach of, this Deed, the Purchaser shall not make any claim, objection or requisition against the Vendor or rescind or terminate this Deed in respect of:

(a)	the condition of the Business or the Assets, including without limitation, the Property; or
(b)	the terms of any Contract or any breach of any Contract by a party other than the Company.

Vendor Warranties and Indemnities

8.3

The Vendor represents, warrants and covenants to the Purchaser that each statement contained in Schedule 2 is true, accurate and not misleading as at the date of this Deed and on Completion (except where a warranty refers only to one of those dates or to another specific date, that warranty is given only at that date).

8.4

Any Warranty qualified by the expression “to the best of the Vendor’s knowledge” 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 15 and the knowledge that such persons ought reasonably to have, after making all due and careful enquiries, in each ease in relation to those Vendor’s Warranties set out against each such person’s name in column (3) of Schedule 15. The Vendor warrants that each person referred to in Schedule 15 is qualified to comment on and has the necessary knowledge, skills and experience to give evidence of the Vendors knowledge in respect of the relevant item.

Purchaser’s Warranties

8.5 The Purchaser and the Purchaser Guarantor each represent, warrant and covenant to and with the Vendor that each of the statements set out in Schedule 3 is true, accurate and not misleading as at the date of this Deed and on Completion (except where a warranty refers only to one of those dates or to another specific date, that warranty is given only at that date).

Other Warranties and conditions excluded and Statutory Actions

8.6	(a)	Except as expressly set out in this Deed, all terms, conditions, warranties and statements (whether express, implied, written, oral, collateral, statutory or otherwise) are excluded to the maximum extent permitted by law and, to the extent they cannot be excluded, the Vendor disclaims all Liability in relation to them to the maximum extent permitted by law.
	(b)	To the maximum extent permitted by law, and without limiting any right to sue for breach of contract under this Deed including clause 8.3, the Purchaser shall not make, and waives any right it may have to make, any claim against the Vendor or any of its

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directors, officers, employees, agents or advisers (including any director, partner, officer or employee of any adviser):

(i)	under section 52 of the Trade Practices Act 1974 (Cth), section 12DA of the Australian Securities and Investment Commission Act 2001 or Part 7.10 of the Corporations Act or the corresponding provision of any state or territory enactment;
(ii)	under any similar provision of any other enactment in any other jurisdiction including the Fair Trading Act 1986 (NZ); or
(iii)	in relation to any common law claim, or claim pursuant to the Contractual Remedies Act 1979 (NZ) or Contractual Mistakes Act 1981 (NZ), for misrepresentation, misstatement or mistake except to the extent arising from fraud;

in respect of the Sale or any other matters which are the subject of this Deed (including the Warranties) or the Disclosure Materials.

Disclosures

8.7 The Purchaser acknowledges the Warranties are given subject to, all matters:

(a)	fairly disclosed in the Disclosure Schedule;
(b)	fairly disclosed in the Disclosure Materials;
(c)	to the extent to which there is an adequate allowance, provision or reserve in the Accounts;
(d)	in the public domain which the Purchaser would have found if it made reasonable inquiries in respect of the Business of major New Zealand newsprint reports over the past 6 months;
(e)	which would be revealed by a search of any public records held by, or by making enquiries of, any Government Agency including the Companies Office Register maintained by the NZ Ministry of Economic Development and the Land Information New Zealand;
(f)	which would have been apparent from:

	(i)	an inspection of the Company’s Books and Records contained in the Data Room; and
	(ii)	the actual physical inspection of the Assets by the Purchaser, conducted between 9 to 15 July 2005 (inclusive),
provided that clauses 8.7(a), (b) and (0(i) do not apply in respect of the Warranties in Schedule 2 paragraphs 5.1 — 5.3 (inclusive),

Conditions of payment and Claims for breach

8.8 Despite any other provision of this Deed, each of the following applies in respect of this Deed.

(a) The Vendor is not liable to make any payment (whether by way of damages or otherwise) for any breach of any Specified Provision unless a Claim is made in writing by the Purchaser against the Vendor:

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(i)	in the case of any claim under paragraph 25 of Schedule 2 (tax warranties) and/or paragraph 5 of Schedule 18 (tax indemnities), within 6 years after the Completion Date; and
(ii)	in the case of any other claim, within 18 months after the Completion Date.

(b) The maximum aggregate amount that the Purchaser may recover from the Vendor (whether by way of damages or otherwise) in respect of all breaches of the Specified Provision is:

(i)	in the case of any warranty or indemnity in relation to any Tax, the Purchase Price;
(ii)	in the case of any claim under paragraphs 1, 2, 3, 4, 5, 6, 9.1 and 9.2 of Schedule 2, and clause 8.24(b) to (f), the Purchase Price; and
(iii)	in the case of any other claim, 25% of the Purchase Price.

(c)	The Vendor is not liable to make any payment (whether by way of damages or otherwise) for breach of any Specified Provision in respect of any individual claim (or a series of claims arising from an event or substantially similar circumstances) where the amounts finally adjudicated or agreed against the Vendor (disregarding the provisions of this clause 8.8(c)) in respect of any such claim or series of claims does not exceed $50,000. Where the liability agreed or determined in respect of any such claim or series of claims exceeds $50,000, the Vendor will be liable for the amount of the claim or series of claims as agreed or determined and not merely for the excess. For the purpose of calculating whether the $50,000 amount referred to in this clause has been exceeded, all claims in relation to Tax will be taken to constitute a single individual claim for an amount which is equal to the total of all amounts adjudicated or agreed against the Vendor in relation to Tax, calculated on a cumulative basis throughout the period referred to in clause 8.8(a)(i).
(d)	The Vendor is not liable to make any payment (whether by way of damages or otherwise) for any breach of any Specified Provision in respect of any claim unless the total of all amounts finally adjudicated or agreed against the Vendor (disregarding the provisions of this clause 8.8(d)) in respect of breaches of Specified Provision exceeds $400,000. Where the liability agreed or determined in respect of all claims exceeds $400,000, the Vendor will be liable for the aggregate amount of all claims as agreed or determined and not merely for the excess.
(e)	The Vendor’s Liability in respect of any breach of any Specified Provision will be reduced or extinguished (as the case may be) to the extent that the breach has arisen as a result of any act or omission on or after Completion by or on behalf of the Purchaser.
(f)	The Vendor’s Liability in respect of any breach of any Specified Provision will be reduced or extinguished (as the case may be) to the extent that the breach has arisen as a result of any act or omission by or on behalf of the Vendor where the Purchaser has requested in writing that act or omission.
(g)	If after the Vendor has made any payment to the Purchaser for any breach of any Specified Provision the Purchaser Group receives any benefit or credit by reason of matters to which the breach relates (including a Tax benefit or credit) then if the Purchaser has been fully compensated for the whole of the Loss it suffers (Purchaser’s Loss), the Purchaser must immediately repay to the Vendor a sum corresponding to the amount of the payment made by the Vendor to the Purchaser but only to the extent that any payment from the Vendor when added to any other

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payment received by the Purchaser in respect of the Purchaser’s Loss is in excess of the amount of the Purchaser’s Loss.

(h) The Vendor will not be liable to make any payment (whether by way of damages or otherwise) for any breach of any Specified Provision:

(i)	where the breach is as a result of any legislation not in force at the date of this Deed including legislation which takes effect retrospectively;
(ii)	where the breach is as a result of or in respect of a change in the judicial interpretation of the law in any jurisdiction after the date of this Deed;
(iii)	where the breach is as a result of or in respect of a change in the administrative practice of any Government Agency after the date of this Deed including any change which takes effect retrospectively;
(iv)	without limiting clause 8.8(g), to the extent that the Purchaser Group is actually indemnified against, or otherwise recovers from a person other than the Vendor in respect of any loss or damage arising out of the breach whether by way of contract, indemnity or otherwise; or
(v)	for any indirect, consequential or economic loss or loss of profit or revenue, however arising.

Acknowledgments

8.9  The Purchaser acknowledges and agrees that:

(a)	except as expressly set out in this Deed, neither the Vendor nor any person acting on behalf of or associated with the Vendor has made any representation, given any advice or given any warranty or undertaking, promise or forecast of any kind in relation to the Sale Shares, the Company, any of the Property, or this Deed;
(b)	without limiting paragraph (a), and except as expressly set out in this Deed and in the Accounts, no representation, no advice, no warranty, no undertaking, no promise and no forecast is given in relation to:

(i)	any economic, fiscal or other interpretations or evaluations by the Vendor or any person acting on behalf of or associated with the Vendor or any other person;
(ii)	future matters, including future or forecast costs, prices, revenues or profits; or
(iii)	the principles to be applied by any Government Agencies with respect to the regulation of the hotel industry and, in particular, matters affecting revenue, prices and charges and service levels.

8.10 The Purchaser acknowledges and agrees that without limiting clause 8.9, and except for the statements made in Schedule 2 and in this Deed, no statement or representation made by the Vendor:

(a)	has induced or influenced the Purchaser to enter into this Deed or agree to any or all of its terms;
(b)	has been relied on in any way as being accurate by the Purchaser;
(c)	has been warranted to the Purchaser as being true; or

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(d) has been taken into account by the Purchaser as being important to the Purchaser’s decision to enter into this Deed or agree to any or all of its terms.

8.11 The Purchaser acknowledges and agrees that it has competently and diligently carried out an investigation and has examined and acquainted itself concerning all available information which is relevant to the risks, contingencies and other circumstances which could affect its decision to enter into this Deed. The Vendor and the Purchaser each confirm and acknowledge that as at the date of this Deed nothing has come to their attention which would constitute a breach of the representations, warranties or covenants made by the Vendor in this Deed.

Insurance

8.12	Intentionally Deleted.
8.13	Intentionally Deleted.

Restructure of the Purchaser Group or change in accounting policies

8.14 The Vendor will not be liable for any breach of any Specified Provision to the extent that the breach would not have arisen but for any restructure or change in ownership of the Purchaser Group on or after Completion or any change in the accounting policies and changes in tax practices (in a manner consistent with clause 2.1 of Schedule 18) of the Purchaser Group on or after Completion.

Reduction of Purchase Price

8.15 Any monetary compensation received by the Purchaser from the Vendor as a result of any breach by the Vendor of any Specified Provision will be in reduction and refund of the Purchase Price.

Remedies for breach of Specified Provision

8.16 The Purchaser acknowledges that its sole remedy for a breach of a Specified Provision is damages other than specific performance of obligations.

No Liability where breach

8.17 Without limiting the operation of any other provision of this Deed, the Vendor’s Liability in respect of any breach of any Specified Provision will be reduced or extinguished to the extent the Vendor’s Liability has arisen as a result of any breach by the Purchaser of any provision of this Deed.

Mitigation of Losses

8.18 The Purchaser shall procure that all reasonable steps are taken and all reasonable assistance is given to avoid or mitigate any Losses which in the absence of mitigation might give rise to a liability in respect of any claim under this Deed.

Limitation in relation to Tax

8.19 The Vendor are not liable under a Claim for any Loss arising from any matter or circumstance set out in clause 2 of Schedule 18 and clause 1.2(b) of Schedule 18 applies to the Purchaser as if set out in full in this Deed.

Indemnification by Purchaser

8.20 Intentionally Deleted.

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8.21

Following Completion, the Purchaser agrees to indemnify the Vendor Group and its officers, directors, employees and agents and hold them harmless from the liabilities set out in paragraph 3 of Schedule 18.

8.22

The Purchaser and the Purchaser’s Guarantor shall indemnify the Vendor and the Vendor Group and its officers, directors, employees and agents and hold them harmless against any Liabilities, Loss, cost, damage and expense incurred by the Vendor or the Vendor Group in connection with any Claim against the Vendor or the Vendor Group to the extent that the Claim arises from or is connected with any breach by a Purchaser or the Purchaser’s Guarantor of any warranty of the Purchaser set out in Schedule 3 or of any other term of this Deed.

Indemnification by Vendor

8.23 Following Completion, the Vendor shall indemnify the Purchaser Group and its officers, directors, employees and agents and hold them harmless from the liabilities set out in paragraph 5 of Schedule 18.

8.24 The Vendor shall indemnify the Purchaser and the Purchaser Group and its officers, directors, employees and agents and hold them harmless against any Liabilities, Loss, cost, damage and expense incurred by the Purchaser or the Purchaser Group in connection with:

(a)	any Claim against the Purchaser or the Purchaser Group to the extent that the Claim arises from or is connected with any breach by the Vendor of any Specified Provision or of any other term of this Deed;
(b)	the restructure of the Vendor Group prior to Completion including any Claim by a liquidator, receiver or other person against the Company arising in connection with the sale and transfer of the IHG Business by SPHC (NZ) Holdings Limited to the Company, the Vendor Intercompany Debt Assignment Steps and the discharge of the Vendor Intercompany Debt and the Company Intercompany Debt;
(c)	any failure by SPHC (NZ) Holdings Limited to complete the transfer of the Property from SPHC(NZ) Holdings Limited to the Company prior to Completion in accordance with the Restructuring Agreement;
(d)	any failure by SPHC (NZ) Holdings Limited to complete the transfer of the Business and Assets other than the Property from SPHC(NZ) Holdings Limited to the Company prior to Completion in accordance with the Restructuring Agreement;
(e)	the deregistration of the Company from the New Zealand Companies Register on 4 March 2005 and reinstatement of the Company to the Register on 21 July 2005 or otherwise in respect of any Claim arising in connection with the period of deregistration and the period prior to deregistration; and
(f)	Any Claim which AMP NZ Office Featherstone Street Limited may have against the Company or the Purchaser or in respect of the Business or Assets as a result of the operation of the right of first refusal set out in clause 25 of the Management Agreement for Office Power Carpark and Hotel between AMP NZ Office, Featherstone Street Limited and SPHC (NZ) Holdings Limited dated 2 July 2001.

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9 Claims

Notification of Potential Claims

9.1 If the Purchaser or any member of the Purchaser Group becomes aware of any fact, matter or circumstance that gives rise to a claim against the Vendor under this Deed, the Purchaser must as soon as reasonably practicable and in any event within 60 Business Days, give a notice in writing to the Vendor setting out such information and supplying copies of all relevant correspondence as the Purchaser or other member of the Purchaser Group (acting reasonably) determines is reasonably necessary to enable the Vendor to assess the merits of the claim provided that no information prejudicial to the interests of the Purchaser Group need be disclosed.

9.2 Failure to give notice within such period shall not affect the rights of the Purchaser.

Notification of Claims under this Deed

9.3 Notices of claims against the Vendor under this Deed must be given by the Purchaser to the Vendor within the time limits specified in clause 8.8(a), specifying in reasonable detail the legal and factual basis of the claim and may include (in the Purchaser’s discretion) 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).

9.4 Notwithstanding clause 9.3 if:

(a) the Purchaser or any Purchaser Group member lodges a claim under the terms of any insurance policy of or applicable to the Purchaser or the Purchaser Group member (Insurance Claim); and

(b) pursues and conducts the Insurance Claim with due diligence (to the standard of a reasonable insured who would receive the benefit of any payment under the insurance policy),

then the time during which the Insurance Claim is being conducted by the Purchaser will not be counted towards the calculation of the time limit specified in clause 8.8(a) during which the Purchaser must commence legal proceedings under clause 8.8(a).

Commencement of Proceedings

9.5 Any claim notified pursuant to clause 9.3 will (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn 9 months after the notice is given pursuant to clause 9.3 or in the case of any contingent liability, 9 months after such contingent liability becomes an actual liability and is due and payable unless legal proceedings in respect of it:

(a)	have been commenced by being both issued and served; and
(b)	are being continue to be pursued with reasonable diligence.

Investigation by the Vendor

9.6  In connection with any matter or circumstance that may give rise to a claim against the Vendor under this Deed:

(a) the Purchaser will allow subject to the Purchaser’s rights and preservation of legal privilege, and must procure that the relevant Purchaser Group member allows, the Vendor and its financial, accounting or legal or other advisers to reasonably

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investigate (including reasonable physical inspections of the Property) 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

(b)

the Purchaser must disclose to the Vendor material of which the Purchaser is aware which relates to the claim and shall, and may procure that any other relevant members of the Purchaser Group shall, give, subject to their being paid all reasonable costs and expenses, 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 Vendor or its financial, accounting or legal advisers may reasonably request.

(c)

The Vendor agrees to keep all such information provided to it under this clause 9.6 confidential and to use it only for the purpose of investigating and defending the claim in question.

Conduct of Third Party Claims

9.7 If the matter or circumstance that may give rise to a claim against the Vendor under this Deed is a result of or in connection with a claim by or liability to a third party then:

(a)	subject to the Vendor indemnifying the Purchaser or the relevant member of the Purchaser Group concerned against all Losses and Liabilities to the reasonable satisfaction of the Purchaser or the relevant member of the Purchaser Group, the Purchaser must, or the Purchaser must procure that any other member of the Purchaser Group takes such action as the Vendor may reasonably request to avoid, dispute, deny, defend, resist, appeal, compromise or contest such claim;
(b)	the Vendor will be entitled to at its own expense and in its absolute discretion, but subject to consultation with the Purchaser and with the consent of the Purchaser, to take such action as it 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 Group concerned and to have the conduct of any related proceedings, negotiations or appeals provided that the Vendor in exercising its rights under this clause must have reasonable regard to the preservation of the reputation and relationships of the Purchaser and the Purchaser Group and must otherwise act in such a manner that will not prejudice the Purchaser’s or the Purchaser Group’s rights or position;
(c)	the Purchaser or other member of the Purchaser Group concerned may not admit, compromise, dispose of or settle such claim without the written consent of the Vendor (not to be unreasonably withheld);
(d)	if the Vendor makes any request pursuant to clause 9.7(a), the Purchaser must, and the Purchaser must procure that any other member of the Purchaser Group takes all reasonable steps to procure that the Vendor is provided on reasonable notice with all material correspondence and documentation relating to the claim as the Vendor may reasonably request that does not prejudice the rights or position of the Purchaser or the Purchaser Group.
(e)	The Vendor agrees to keep all such correspondence and information confidential and to use it only for the purpose of dealing with the relevant claim.

9.8 If the matter or circumstance that may give rise to a claim against the Vendor under this Deed is a result of or in connection with a claim by or liability to a third party in clause 9.7 is in

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relation to Tax, the provisions set out in clause 1 of Schedule 18 apply to the extent specifically provided for in clause 1 of Schedule 18 and otherwise the provisions of this clause 9 apply to such claims.

10 Confidentiality and announcements

Provisions to remain confidential

10.1 Subject to clauses 10.2 and 10.3 each party must not, without the prior written consent of the other parties disclose:

(a)	the content or effect of this Deed;
(b)	prior to Completion, any Confidential Information obtained by it.

Permitted disclosures

10.2 A party may make disclosures:

(a)	to those of its employees, officers, professional or financial advisers and bankers as the party reasonably thinks necessary to give effect to this Deed but only on a strictly confidential basis; and
(b)	in the case of the Purchaser, to the unit holder of the HANZ Trust; and
(c)	if required by law or rules of a securities exchange, after the form and terms of that disclosure have been notified to the other party and the other party has had a reasonable opportunity to comment on the form and terms.

Announcement

10.3 Any party may make announcements or statements at any time in the form and on the terms previously agreed by the parties in writing, which agreement must not be unreasonably withheld.

Confidentiality Deed Poll

10.4 As and from Completion, the Purchaser is released from its obligation to keep the Confidential Information (as that term is defined in the Confidentiality Deed Poll) confidential pursuant to the Confidentiality Deed Poll. For the avoidance of doubt, the Purchaser is not released from its obligations in relation to Recipient Advisors or Recipient Agents under the Confidentiality Deed Poll.

11 Notices

Requirements

11.1 All notices must be:

(a)	in legible writing and in English;
(b)	addressed to the recipient at the address or facsimile number set out below or to such other address or facsimile number as that party may notify to the other parties:

to the Vendor and Vendor’s Guarantor:

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Address: Level 9, 504 Pacific Highway, St. Leonards, NSW 2065 / 230 Victoria Street, #13-00 Buois Junction Towers, Singapore 188024

Attention: Chief Operating Officer ANZSP / Asia Pacific General Counsel

Facsimile no: +612 9437 6811/ +65 6395 6158

with a copy to Baker & McKenzie

Address: Level 27, AMP Centre, 50 Bridge Street, Sydney NSW 2000

Attention: Graeme Dickson

Facsimile no: +61 2 9225 1595

to the Purchaser and Purchaser Guarantor:

Address: -Goldfields House, Level 10, 1 Alfred Street, Sydney NSW 2000

Attention: Kumar Kalyanakumar

Facsimile no: +61 2 9252 7266

with a copy to Henry Davis York

Address: 44 Martin Place, Sydney NSW 2000

Attention: Roger Dobson

Facsimile no: +61 2 9947 6999

(c)	signed by the party or where the sender is a company by an officer of that company or under the common seal of that company; and
(a)	sent to the recipient by hand, prepaid post (airmail if to or from a place outside Australia) or facsimile.

Receipt

11.2 Without limiting any other means by which a party may be able to prove that a notice has been received by another party, a notice will be deemed to be duly received:

(a)	if sent by hand when left at the address of the recipient;
(b)	if sent by pre-paid post, 3 days (if posted within Australia to an address in Australia) or 10 days (if posted from one country to another) after the date of posting; or
(c)	if sent by facsimile, upon receipt by the sender of an acknowledgment or transmission report generated by the machine from which the facsimile was sent indicating that the whole facsimile was sent to the recipient’s facsimile number;

but if a notice is served by hand, or is received by the recipient’s facsimile on a day which is not a Business Day, or after 5.00 pm on a Business Day, recipient’s local time the notice is deemed to be duly received by the recipient at 9.00 am on the first Business Day after that day.

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12 Vendor & Purchaser Guarantees

Vendor’s Guarantee

12.1 In consideration of the Purchaser entering into this Deed, the Vendor’s Guarantor guarantees to the Purchaser the due and punctual performance of:

(a)	all the obligations, commitments, undertakings, warranties and indemnities of the Vendor under or pursuant to this Deed; and
(b)	without limiting the generality of paragraph (a), the obligations of the Vendor under the following provisions of this Deed:

(i)	obligation of the Vendor to make any payment to the Purchaser pursuant to clause 7.13; and
(ii)	obligation of the Vendor to make any payment to the Purchaser for a breach of any Specified Provision pursuant to clause 8.

12.2 If and whenever the Vendor defaults for any reason whatsoever in the performance of any of the Vendor Guaranteed Obligations, the Vendor’s Guarantor must promptly, upon demand, unconditionally perform or procure the performance of, and satisfy or procure the satisfaction of, the Vendor Guaranteed Obligations in regard to which such default has been made in the manner prescribed under this Deed and so that the same benefits shall be conferred on the Purchaser as they would have received if the Vendor Guaranteed Obligations had been duly performed and satisfied by the Vendor.

Separate and principal obligations

12.3 The guarantee and indemnity contained in clauses 12.1 to 12.7 is a principal obligation and is not ancillary or collateral to any other right or obligation. The Purchaser need not take any steps against the Vendor or any other person (other than by serving a demand on the Vendor’s Guarantor) before it enforces this guarantee and indemnity.

Obligations of Vendor’s Guarantor unaffected

12.4 The obligations of the Vendor’s Guarantor under this guarantee and indemnity will not be affected in any way by any act, omission, matter or thing, which except for this provision might operate to release it from its obligations under this clause.

Indemnity

12.5 As a separate and alternative obligation, any amount not paid by the Vendor’s Guarantor under this clause on the basis of a guarantee is recoverable from the Vendor’s Guarantor on the basis of an indemnity payable on demand. For the avoidance of doubt, notwithstanding any provision hereof other than clause 12.7, the parties agree and acknowledge that the scope and extent of the liability of the Vendor’s Guarantor for a breach of this Deed is no greater than the liability of the Vendor.

Time limit

12.6 The rights of the Purchaser and the obligation of the Vendor’s Guarantor pursuant to clauses 12.1 to 12.7 survive Completion but terminates:

(a) in the case of any claim by the Purchaser under paragraph 25 of Schedule 2 (tax warranties) and/or paragraph 5 of Schedule 18 (tax indemnity), within 6 years after the Completion Date; and

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(b) in case of any other claim by the Purchaser, within 18 months after the Completion Date,

unless there is a claim under clause 9 that remains unresolved between the parties or such extended period applies as referred to in clause 9.4, in which case the obligations of the Vendor’s Guarantor pursuant to clauses 12.1 to 12.7 will continue until the Vendor’s obligations in respect of such claim are fully and completely performed and satisfied.

Excluded Claims

12.7 Notwithstanding any other provision hereof, clauses 12.1 to 12.7 shall only apply to the Vendor Guaranteed Obligations and for the avoidance of doubt to the extent permitted by law but without limiting any right to sue for breach of contract under this Deed (including clause 8.3), does not apply to any Claim made by the Purchaser against the Vendor:

(a)	under section 52 of the Trade Practices Act 1974 (Cth), section 12DA of the Australian Securities and Investment Commission Act 2001 or Part 7.10 of the Corporations Act or the corresponding provision of any state or territory enactment;
(b)	under any similar provision of any other enactment in any other jurisdiction including the Fair Trading Act 1986 (NZ); or
(c)	in relation to any common law claim, or claim pursuant to the Contractual Remedies Act 1979 (NZ) or Contractual Mistakes Act 1981 (NZ), for misrepresentation, misstatement or mistake except to the extent arising from fraud,

in respect of the Sale or any other matters which are the subject of this Deed (including the Warranties) or the Disclosure Materials.

Purchaser’s Guarantee

12.8

In consideration of the Vendor entering into this Deed, the Purchaser Guarantor guarantees to the Vendor the due and punctual performance of all the obligations, commitments, undertakings, warranties and indemnities of the Purchaser under or pursuant to this Deed.

12.9

If and whenever the Purchaser defaults for any reason whatsoever in the performance of any of the Purchaser Guaranteed Obligations, the Purchaser Guarantor must promptly, upon demand, unconditionally perform or procure the performance of, and satisfy or procure the satisfaction of, the Purchaser Guaranteed Obligations in regard to which such default has been made in the manner prescribed under this Deed and so that the same benefits shall be conferred on Vendor as they would have received if the Purchaser Guaranteed Obligations had been duly performed and satisfied by the Purchaser.

Separate and principal obligations

12.10 The guarantee and indemnity contained in clauses 12.8 to 12.12 is a principal obligation and is not ancillary or collateral to any other right or obligation. The Vendor need not take any steps against the Purchaser or any other person (other than by serving a demand on the Purchaser Guarantor) before it enforces this guarantee and indemnity.

Obligations of Purchaser Guarantor unaffected

12.11 The obligations of the Purchaser Guarantor under this guarantee and indemnity will not be affected in any way by any act, omission, matter or thing, which except for this provision might operate to release it from its obligations under this clause.

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Indemnity

12.12 As a separate and alternative obligation, any amount not paid by the Purchaser Guarantor under this clause on the basis of a guarantee is recoverable from the Purchaser Guarantor on the basis of an indemnity payable on demand. For the avoidance of doubt, notwithstanding any provision hereof, the parties agree and acknowledge that the scope and extent of the liability of the Purchaser’s Guarantor for a breach of this Deed is no greater than the liability of the Purchaser.

Time limit

12.13 The rights of the Vendor and the obligation of the Purchaser’s Guarantor pursuant to clauses 12.8 to 12.14 survive Completion and are not limited to any particular time period but continue until all obligations of the Purchaser under this Deed have been fully and completely performed and satisfied.

Limitation

12.14 The Purchaser’s Guarantor enters into this Deed only in its capacity as trustee and manager of the HANZ Trust and in no other capacity. A Purchaser Guaranteed Obligation can be enforced against the Purchaser’s Guarantor only to the extent to which it is satisfied out of property of the HANZ Trust out of which the Purchaser’s Guarantor is actually indemnified for the Purchaser Guaranteed Obligation. This limitation of the Purchaser’s Guarantor’s liability applies despite any other provision of this Deed and extends to all Purchaser Guaranteed Obligations.

12.15 No party (other than the Purchaser’s Guarantor) may sue the Purchaser’s Guarantor in any capacity other than as responsible entity of the HANZ Trust, including to seek the appointment of a receiver (except in relation to property of the HANZ Trust), a liquidator, an administrator or any similar person to the Purchaser’s Guarantor or prove in any liquidation, administration or arrangement of or affecting the Purchaser’s Guarantor (except in relation to the property of the HANZ Trust).

12.16 The provisions of clauses 12.14 to 12.18 do not apply to any Purchaser Guaranteed Obligation to the extent it is not satisfied because under the constitution or by operation of law there is a reduction in the extent of the Purchaser’s Guarantor’s indemnification out of the property of the HANZ Trust, as a result of the Purchaser’s Guarantor’s fraud, negligence or breach of trust. The Purchaser’s Guarantor is not to be regarded as being negligent or in breach of trust to the extent to which any failure by the Purchaser’s Guarantor has been caused or contributed to by a failure by any other person to fulfil its obligations in relation to the HANZ Trust or any other act or omission of another person.

12.17 No attorney, agent, receiver or receiver and manager appointed in accordance with this Deed has authority to act on behalf of the Purchaser’s Guarantor in any way which exposes the Purchaser’s Guarantor to any personal liability and no act or omission of any such person will be considered fraud, negligence or breach of trust of the Purchaser’s Guarantor for the purpose of clause 12.16.

12.18 The Purchaser’s Guarantor is not obliged to do or refrain from doing anything under this Deed (including incur any liability) unless the Purchaser’s Guarantor’s liability is limited to the same manner as set out in clauses 12.14 to 12.18.

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13 Liquor Licence

Notice and Consents

13.1 The parties agree that the Purchaser will (at its cost) notify and obtain approval by the relevant Government Agencies within the relevant time period of the change of control of the Company and the appointment of new directors of the Company or take such other steps as may otherwise be necessary in relation to the Liquor Licence as a result of the share sale contemplated in this Deed.

13.2 At the request of the Purchaser, the Vendor must or must procure the Company and the directors of the Company (at the sole cost of the Purchaser) to sign all documents and do such other things as the Purchaser may reasonably require prior to Completion and after Completion in order for the Purchaser to give the notice take any other steps required under clause 13.1.

Purchaser Consent

13.3 The Vendor shall not make an application to vary the Liquor Licence without first seeking consent from the Purchaser.

Completion not delayed

13.4 The obtaining of any consents from or giving of any notices to, the Government Agencies in respect of the Liquor Licences is not a condition to Completion. The Purchaser may not delay Completion on the basis of a failure to receive consent from any Government Authority.

14 Period After Completion

14.1 Access to Records

(a) The Purchaser shall use its reasonable endeavours to procure that all Books and Records obtained from the Vendor under this Deed are preserved in respect of the period commencing on the Completion Date until the later of:

(i)	6 years from the Completion Date; and
(ii)	any date required by an applicable law.

(b) After Completion the Purchaser shall, provided the Purchaser’s or the Purchasers Group’s rights are not adversely affected, on reasonable notice by the Vendor acting reasonably and in good faith:

(i)	provide the Vendor and its advisers with reasonable access to the Books and Records obtained from the Vendor under this Deed and allow the Vendor to inspect and obtain copies or certified copies of such Books and Records at the Vendor’s expense; and
(ii)	provide the Vendor and its advisers with reasonable access to the personnel and premises of the Purchaser and the Company as the Purchaser considers is appropriate,

for the purposes of assisting the Vendor to prepare tax returns, accounts and other financial statements, discharge statutory obligations or comply with Tax or other legal

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requirements for financial disclosure or to conduct legal or arbitration proceedings, but not proceedings against the Purchaser or Purchaser Group.

(c)	The Vendor shall reimburse the Purchaser for its reasonable costs in retrieving any Books and Records and making personnel and premises available under this clause 14.1.
(d)	In providing any such Books and Records, the Purchaser is not obliged to waive privilege.
(e)	The Vendor shall comply with all steps required by the Purchaser to preserve the confidentiality of the Books and Records.
(f)	The Purchaser agrees that the Vendor may retain copies of any Books and Records which it may require to enable it to comply with any applicable law after the Completion Date.

Taxation Returns

14.2 The Vendor and the Purchaser acknowledge and agree that the provisions of clause 4 of Schedule 18 apply as if set out in full in this Deed.

15 Consents

15.1 Prior to Completion, the Vendor must use its reasonable endeavours to obtain consent to the change in control of the Company from each of the persons listed as contract counterparty in respect of each of the contracts listed in Schedule 20.

16 GST

GST to be added to amount payable

16.1 Unless otherwise expressly stated, all amounts payable under this Deed are expressed to be exclusive of GST. If GST is payable on a Taxable Supply, the amount payable for that Taxable Supply will be the amount expressed in this Deed plus GST. The recipient of the Taxable Supply must pay the GST to the supplier on the earlier of the time of making payment of the consideration on which the GST is calculated and the issue of an invoice relating to the Taxable Supply. The supplier must provide a tax invoice to the recipient as a pre condition for payment by the recipient of the GST.

Impact of GST on calculation of amounts payable

16.2 lf an amount payable under this Deed is calculated by reference to a Liability incurred by a party, then the Liability must be reduced by the amount of any Input Tax Credit to which that party is entitled in respect of that Liability. A party will be assumed to be entitled to a full Input Tax Credit unless it demonstrates that its entitlement is otherwise prior to the date on which payment must be made.

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17 General Provisions

Costs

17.1 Each party must pay its own costs in respect of this Deed and the documents contemplated by this Deed except that Purchaser must pay all stamp duty payable on and in connection with this Deed, the transfer of the Sale Shares and any other documents contemplated by this Deed (other than any document relating to the Vendor Intercompany Debt Assignment Steps or other restructure steps take by the Vendor Group prior to Completion).

Non-merger

17.2 To the extent applicable, the provisions of this Deed are continuing and will not merge or be extinguished on Completion.

Effect of termination

17.3 If this Deed terminates or is terminated under clause 4.1 or 6.5(b):

(a)	the parties are released from the obligation to continue to perform this Deed and any other obligations which by their nature survive termination; and
(b)	each party retains the rights it has against any other party for any past breach of the Deed.

Indemnities

17.4 The indemnities contained in this Deed are:

(a)	continuing, separate and independent obligations of the parties from their other obligations, and survive the termination of this Deed; and
(b)	absolute and unconditional and unaffected by anything which otherwise might have the effect of prejudicing, releasing, discharging or affecting the liability of the party giving the indemnity.

Invalid or unenforceable provisions

17.5 If a provision of this Deed is invalid or unenforceable in a jurisdiction:

(a)	it is to be read down or severed in that jurisdiction to the extent of the invalidity or unenforceability; and
(b)	it does not affect the validity or enforceability of:

(i)	that provision in another jurisdiction; or
(ii)	the remaining provisions.

Waiver and exercise of rights

17.6 A waiver by a party of a provision or of a right under this Deed is binding on the party granting the waiver only if it is given in writing and is signed by the party or an officer of the party granting the waiver.

17.7 A waiver is effective only in the specific instance and for the specific purpose for which it is given.

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17.8	A single or partial exercise of a right by a party does not preclude another or further exercise or attempted exercise of that right or the exercise of another right.
17.9	Failure by a party to exercise or delay in exercising a right does not prevent its exercise or operate as a waiver.

Amendment

17.10 This Deed may be amended only by a document signed by all parties.

Counterparts

17.11 This Deed may be signed in counterparts and all counterparts taken together constitute one document.

Further assurances

17.12 Each party must, at its own expense, whenever requested by another party, promptly do or arrange for others to do everything reasonably necessary to give full effect to this Deed and the transactions contemplated by this Deed.

Assignment

17.13 A party must not transfer, assign, create an interest in or deal in any other way with any of its rights under this Deed without the prior written consent of the other parties.

Entire Agreement

17.14 This Deed together with any documents referred to in this Deed or executed in connection with this Deed is the entire agreement of the parties about the subject matter of this Deed and supersedes any representations, negotiations, arrangements, understandings or agreements and all other communications.

Rights cumulative

17.15 The rights, remedies and powers of the parties under this Deed are cumulative and not exclusive of any rights, remedies or powers provided to the parties by law.

Consents and Approvals

17.16 If the doing of any act, matter or thing under this Deed is dependent on the consent or approval of a party or is within the discretion of a party, then, unless otherwise specified, the consent or approval may be given or the discretion must be exercised reasonably.

Jurisdiction

17.17 Each party irrevocably and unconditionally:

(a)	submits to the non-exclusive jurisdiction of the courts of New South Wales, Australia; and
(b)	waives any claim or objection based on absence of jurisdiction or inconvenient forum.

Service of process

17.18 Each party agrees that a document required to be served in proceedings about this Deed may be served:

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(a)	if originating process or a subpoena to be served on a company or registered body by being sent by post to or left at its registered office, and in all other cases at its address for service of notices under clause 11 ; or
(b)	in any other way permitted by law.

Governing Law

17.19 This Deed is governed by the laws of New South Wales, Australia.

Interest

17.20 Any payment to be made in accordance with this Deed shall attract interest for the period commencing on the date that payment is due and ending on the date that payment is received by the relevant party. Interest will accrue daily and be compounded at monthly intervals at the Interest Rate.

Independent Advice

17.21 Each of the Vendor and the Purchaser confirms it has received independent legal advice relating to all the matters provided for in this Deed and agrees that the provisions of this Deed (including the Disclosure Schedule and all documents entered into pursuant to this Deed) are fair and reasonable.

Time of the Essence

17.22 Time is of the essence of this Deed.

17.23 If the parties agree to vary a time requirement, the time requirement so varied is of the essence of this Deed.

17.24 An agreement to vary a time requirement must be in writing.

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Execution

Executed as an agreement.

Signed by
Hale International Limited
by a duly appointed attorney in the presence
of:

/s/ Phil Lee	/s/ Tony South
Signature of witness	Signature of attorney (I have no notice of revocation of the power of attorney under which I sign this document)
Phil Lee	Tony South
Name of witness (please print)	Name of attorney (please print)
Signed by Six Continents Limited by a duly appointed attorney in the presence of:
/s/ Phil Lee	/s/ Tony South
Signature of witness	Signature of attorney (I have no notice of revocation of the power of attorney under which I sign this document)
Phil Lee	Tony South
Name of witness (please print)	Name of attorney (please print)
Signed by HANZ Holdings (New Zealand) Limited by two directors:
/s/ Robert Thomas Kelly	/s/ Selliah Kalyanakumar
Signature of / director	Signature of director
Robert Thomas Kelly	Selliah Kalyanakumar
Name of director (please print)	Name of director (please print)

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Signed by Eureka Funds Management Limited by a director and secretary/director:
/s/ Robert Thomas Kelly	/s/ Selliah Kalyanakumar
Signature of secretary/director:	Signature of director
Robert Thomas Kelly	Selliah Kalyanakumar
Name of secretary/director (please print)	Name of director (please print)

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Schedule 1

Group Structure

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Schedule 2

Warranties

1    Accuracy of Information

1.1 To the best of the Vendor’s knowledge, the information set out in Schedule 1 (Group Structure), Schedule 10 (Property), Schedule 13 (Contracts) and the Disclosure Schedule) is complete, accurate and not misleading by omission or otherwise.

2    Power and Authority

2.1	The Vendor and the Vendor Guarantor are duly incorporated and validly exist under the law of its place of incorporation.
2.2	The Vendor and the Vendor Guarantor have the power and authority to execute this Deed and perform and observe all its terms and each transaction contemplated by this Deed to be performed and observed by them.
2.3	The execution and delivery of this Deed has been properly authorised by all necessary corporate action of the Vendor and the Vendor Guarantor.
2.4	This Deed constitutes a legal, valid and binding obligation of the Vendor and the Vendor Guarantor, enforceable in accordance with its terms by appropriate legal remedy.
2.5	The execution, delivery and performance by the Vendor and the Vendor Guarantor of this Deed and each transaction contemplated by this Deed do not or will not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:

(a)	any provision of the relevant constitution of the Vendor or the Vendor Guarantor;
(b)	any material term or provision of any security arrangement, undertaking, agreement or deed; or
(c)	any writ, order or injunction, judgment, law, rule or regulation to which it is a party is subject or by which it is bound.

3    Solvency

3.1 None of the following has occurred and is subsisting, or is threatened, in relation to the any of the Vendor, the Vendor’s Guarantor or the Company.

(a)	The appointment of a receiver, statutory or official manager or liquidator.
(b)	An application or an order made, proceedings commenced, a resolution passed or proposed in a notice of meeting or other steps taken for:

(i) the liquidation, winding up, dissolution, or administration of any of the Vendor, the Vendor Guarantor or the Company; or

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(ii) any of the Vendor, the Vendor Guarantor or the Company entering into an arrangement, compromise or composition with or assignment for the benefit of their creditors or a class of them.

(c) The Vendor, the Vendor Guarantor or the Company:

(i)	being (or taken to be under applicable legislation) unable to pay its debts, other than as the result of a failure to pay a debt or claim the subject of a good faith dispute; or
(ii)	stopping or suspending, or threatening to stop or suspend, payment of all or a class of their debts.

(d) The appointment of a controller, receiver, statutory or official manager, administrator receiver or similar officer to any of the assets and undertakings of the Vendor, the Vendor Guarantor or the Company.

3.2 The shares in the Company and the Assets are not liable to a claim by a trustee in bankruptcy or liquidator, or receiver or statutory or official manager.

4    The Company

4.1 The Company:

(a)	is duly incorporated and validly existing under the law of New Zealand; and
(b)	has the power to own the Assets and carry on the Business.

4.2	The only activity of the Company is the holding of the Assets and the conduct of the Business.
4.3	The Company does not hold or beneficially own any shares or other interest in any body corporate.
5	Sale Shares and Units
5.1	The Vendor is the legal and beneficial owner of the Sale Shares.
5.2	On Completion, the Purchaser will acquire the full beneficial ownership of all of the Sale Shares free and clear of any Security Interest (other than a Permitted Encumbrance) or Claim of any person.
5.3	The Sale Shares are all the issued shares in the capital of the Company. The Sale Shares have been validly allotted and issued (including that they have not been issued in violation of any pre-emptive or similar rights of any person) and are fully paid and no moneys are owing in respect of them.
5.4	No person has any right to call for the present or future issue or transfer of any share or debenture or other security (including a convertible security) in or of the Company.
5.5	The Company has not:

(a) given any financial assistance (as defined in the Companies Act 1993 (NZ)) in connection with the acquisition or issue of its shares otherwise than in accordance with the Companies Act 1993 (NZ);

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(b) redeemed or repaid any share capital, reduced its share capital or offered or agreed to buy back any of its shares otherwise than in accordance with the Companies Act 1993 (NZ).

5.6	All dividends or distributions declared, made or paid by the Company have been declared, made or paid in accordance with its constitution and in accordance with the Companies Act 1993 (NZ).
6	Constitution
6.1	The affairs and Business of the Company have been conducted in all material respects in accordance with its constitution.
6.2	The copy of the constitution of the Company in the Disclosure Materials is a true, accurate, complete and up to date copy of the constitution of the Company, there have been no amendments, resolutions, minutes or other instruments or documents that materially affect the constitution and the constitution complies with all material applicable laws.
6.3	All statutory books and records of the Company are complete, accurate and not misleading by omission or otherwise, and have been fully and properly kept and are up to date with true, accurate and complete entries and records.
6.4	The Company has:

(a)	complied with all material legal requirements for the filing of returns, particulars, notices and other documents with all Government Agencies;
(b)	complied with all material legal requirements in relation to the conduct of its Business in all material respects; and
(c)	conducted its Business and its affairs generally in accordance with all material applicable laws, orders, regulations, by-laws and other similar requirements.

7	Ownership of Assets and the Business
7.1	Except as disclosed in the Disclosure Material, all Assets:

(a)	are owned by the Company;
(b)	are, where capable of possession, in the possession or under the control of the Company; and
(c)	none of such Assets is the subject of a Security Interest or the subject of any factoring arrangement, conditional sale or credit agreement or Claim by any person.

7.2 The Assets are:

(a)	all the assets used in the Business; and
(b)	all the assets that are needed to conduct the Business in the manner in which it has been conducted in the 12 months before the date of this Deed,

other than the Brands and the Holidex Plus Reservation System.

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7.3	The Business and the Assets will be in the same state of repair and condition (subject to fair wear and tear) on Completion as they were as at the date of this Deed.
8	Authorisations and compliance
8.1	No material charge, fine, penalty, order for restitution or compensation or damages and no notice to clean up or take action has been made against the Company in respect of the obligations of it under any Authorisations required to conduct the Business which have not been complied with.
8.2	The Company has not received any fire safety or other notices in respect of the Property or the Assets from a Government Agency which have not been complied with.
8.3	There is no fact or circumstance which may result in the Business being in breach of any Authorisation or which may otherwise result in the revocation, suspension, cancellation, non-renewal or material variation of any Authorisation required to conduct the Business.
8.4	The Company has not, nor have its officers and employees (in the course of their employment) committed or omitted to do any act or thing the commission or omission of which is in material contravention of any law that may have a material adverse impact on the Business.
8.5	The Company is not a party to any contract which is in breach of the Commerce Act 1986 (NZ) or any applicable restrictive trade practices legislation. The Company has not engaged or engages in any conduct or practice which is in breach of that legislation.
9	Property

General

9.1	The Property comprises all the land and buildings owned, leased or occupied by the Company.
9.2	The Company is the legal and beneficial owner of the Property.
9.3	To the best of the Vendor’s knowledge:

(a)	the Company has not received any notice from any person claiming any right, title or interest in the Property;
(b)	no person other than the Company has any present or contingent legal or beneficial right, title or interest in any of the Property and without limitation the Property is free and clear of all Security Interests except for Permitted Encumbrances; and
(c)	the Property is not occupied or entitled to be occupied presently or in the future (as a result of any existing contract, arrangement or understanding) as to whole or part (whether by lease, sublease, agreement, arrangement or understanding) by any third party.

10	Superannuation
10.1	All employment-related superannuation contributions required under any relevant Industrial Instrument in respect of the Employees or prior employees or any applicable agreement for or with the Employees or prior employees have been made.

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10.2	The superannuation fund disclosed in Schedule 16 is the only superannuation fund to which the Company makes a superannuation contribution in relation to the Employees. The superannuation fund provides for a defined contribution in respect of the Employees.
10.3	The Company has satisfied its superannuation commitments (if any) and has made all payments necessary to sufficiently fund the superannuation scheme to a level at which all benefits prospectively and contingently payable to the Employees can be met, and has provided all documents and information as required and in the time required under the Superannuation Schemes Act 1989 in relation to the Employees and prior employees, and to the trustee or offeror of any of the superannuation schemes set out in Schedule 16.
10.4	The Company has not received written notice of any claim or complaint in relation to the superannuation arrangements of the relevant Member Employees or prior employees.
10.5	Except as set out in Schedule 16, the Company has no obligation to any Employees, or to the trustee or offeror of any other superannuation fund or similar arrangement whether under an agreement, contract or any other arrangement, whether express or implied or whether enforceable or otherwise:

(a)	to make superannuation contributions in respect of any Employee or other person; or
(b)	otherwise to make periodical or lump sum payments in relation to any Employee’s superannuation benefit and/or benefit upon retirement.

11 Industrial Relations

11.1	The Company has not signed, any Industrial Instrument or any other contractual agreement with any trade union or employee organisation of any kind, about the Employees.
11.2	There is no existing, threatened or pending industrial dispute or pay claim involving the Company or any of the Employees.
11.3	The Company has not received notification that it has not complied in any respect with, and there are no facts or circumstances which may give rise to any breach of, any contractual, statutory, legal and fiscal obligations of and in relation to its employment of the Employees including all codes of practice, Industrial Instrument and individual employment agreements.

12	Contracts
12.1	Each of the Contracts listed in Schedule 13:

(a)	are the only contracts that involve or may involve total annual expenditure in excess of $250,000;
(b)	is valid, binding and enforceable against the Company in accordance with its terms;
(c)	is at arms length and within the ordinary course of conduct of the Business; and
(d)	does not breach any restrictive trade practices legislation and has not involved in any breach by the Company of the Commerce Act 1986 (NZ) or Fair Trading Act 1986 (NZ).

12.2 In addition to the Contracts, there are no other contracts entered into by the Company that are material to the Business that are:

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(a)	outside the ordinary and proper course of the Business or otherwise materially unusual or onerous; or
(b)	incapable of being fulfilled or performed in accordance with their tenor on time, or only with undue or unusual expenditure of money or effort by the Company.

12.3	The Company has not received notice of termination, rescission, avoidance, repudiation or breach of any Contract or other contract referred to in warranty 12.2 and is not aware (after having made due and proper inquiries) of any fact, matter or circumstance which would lead to any party to a Contract to be in breach of any term of a Contract.
12.4	The Company is not, and has not 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 Company has no liability or obligation except for the payment of annual subscription or membership fees).
12.5	As at Completion, there are no existing contracts or arrangements material to the Business between, on the one hand, the Company and, on the other hand, any of the Vendor or any other member of the Vendor Group other than on normal commercial terms in the ordinary course of business.

13	Environment
13.1	The Company has not received:

(a)	notification that a law relating to the environment is breached by occupation or use of the Property or the Assets or by the operation of the Business; or
(b)	any notice requiring remediation of the Property or removal from the Property of any contaminant or hazardous substance.

13.2 The Company:

(a)	is conducting, and has conducted the Business; and
(b)	is using, and has used the Properly or the Assets,
in material compliance with a law relating to the environment.

13.3	Except as disclosed in the Disclosure Material, the Vendor is not aware (after having made due and proper inquiry) of the existence of any contaminant or hazardous substance in relation to any Property.
14	Disputes and Litigation
14.1	To the best of the Vendor’s knowledge, there are no disputes with any supplier or threatened disputes, including any dispute with a travel agency, consortia or airline.
14.2	The Company has not received notice that there are disputes or threatened disputes with any person including in relation to the local community due to the operations of the Property.
14.3	The Company in respect of its Business, is not involved in any proceeding before or investigation by any Government Agency, tribunal, committee or board of enquiry nor by any

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	royal commission of enquiry and no notice has been received to the effect that such proceeding or investigation is pending or threatened.
14.4	No statutory or contractual notices have been served on the Company in respect of any of the Assets or the Business which in any material respect impair, prevent or otherwise interfere with the use of or proprietary rights in the Assets or the Business.
14.5	Neither the Company nor any of its officers or employees (in the course of their employment) is involved in any prosecution, litigation, arbitration proceedings or administrative or governmental investigation or challenge as plaintiff, defendant, third party or in any other capacity. There are no such matters pending or threatened in respect of which verbal or written communication has been given or received by or against the Company or any director or officer of the Company in his/her capacity as such a director or officer.
14.6	There are no facts or circumstances which may give rise to any involvement by the Company in any material prosecution, litigation, arbitration proceedings or administrative or governmental investigation or challenge as plaintiff, defendant, third party or in any other capacity.
15	Intellectual Property
15.1	To the best of the Vendor’s knowledge:

(a)	The Company owns or possesses enforceable licences or other rights to use all intellectual property used in the Business at the date of this Deed and the Completion Date and has not received any notice of infringement of intellectual property rights from any other person.
(b)	The Company has not passed off any of its goods or services as those of any other person and the Company’s use of intellectual property in respect of the Business does not infringe the intellectual property rights of any other person.

16

Licences, Permits Etc

16.1

To the best of the Vendor’s knowledge, the Vendor has fully disclosed to the Purchaser and will at Completion hold all Authorisations, permits, licences, authorities, rights to use, approvals, registrations, qualifications, orders and consents necessary for carrying on the Business (collectively “Permits”) and the Permits will be valid and in good standing and the Company will not be in breach of and will not have received notification that it is in breach of any of them and will not have received notification for failure to comply with any requirements of any of them.

17	Liquor Licence
17.1	The Company has not received notification that it has not complied with the provisions of any applicable liquor licensing legislation or conditions attaching to any Liquor Licence in the proper running of the Property.
17.2	The Company has not received notification that there are complaint proceedings or threatened proceedings under any applicable liquor licensing legislation.

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18	Accounts
18.1	The Business Accounts and Company Accounts have been prepared:

(a)	in accordance with the Accounting Standards and otherwise with applicable law and with the accounting principles, standards and practices generally accepted at the Accounts Date; and
(b)	subject to paragraph (a) above, on a basis consistent, in all material respects, with that adopted in preparing the audited accounts of SPHC (NZ) Holdings Limited (to the extent applicable) for the previous two financial years,

	and give a true and fair view of the assets and liabilities and of the state of affairs, financial position, performance and results of the IHG Business and business of the Company respectively up to and as at the Accounts Date and of the profits and losses of the IHG Business and the Company respectively for the period concerned.
18.2	Since the Accounts Date, except for performing their respective obligations under the Restructuring Agreement, SPHC (NZ) Holdings has not, in respect of the period from the Accounts Date up to and including 31 August 2005, and the Company has not, in respect of the period from the Accounts Date:

(a)	conducted its business otherwise than in the ordinary course of business, has not disposed of, written down or written off any material assets other than in the ordinary course of business, and has not dealt with any person other than at arm’s length;
(b)	had any change in the financial position, prospects or solvency from that set out in the Business Accounts or Company Accounts (as applicable) except changes none of which individually or in the aggregate has had a adverse effect on SPHC (NZ) Holdings Limited or the Company (as applicable);
(c)	entered into any material capital commitments other than is contemplated by the SPHC (NZ) Holdings Limited’s or the Company’s capital budget as disclosed to the Purchaser in the Disclosure Materials. For these purposes a material capital commitment is one involving capital expenditure of over $250,000 exclusive of GST;
(d)	received any notice or threat of termination of any contract which could reasonably be expected to have a material adverse effect on the profitability of the Business;
(e)	defaulted in paying any material creditor by the date due for payment;
(f)	declared, made or paid any dividend or other distribution to the Vendor or other persons;
(g)	issued or agreed to issue any share capital or units (as applicable) or any other security giving rise to a right over its capital or units (as applicable), except for the issue by the Company of redeemable preference shares to fund its acquisition of the IHG Business pursuant to the Restructuring Agreement; and
(h)	redeemed or purchased or agreed to redeem or purchase any of its share capital or units (as applicable).

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19	Insurance
19.1	The insurance cover relating to the Company is current and, in force and, to the best of the Vendor’s knowledge, no fact or circumstance exists that would render any such insurance void or unenforceable in any respect.
19.2	To the best of the Vendor’s knowledge, the Company has and at all material times has had valid insurance cover in respect of its Business, its Employees and the Assets.

(a)	against all risks normally insured against by companies carrying on the same type of business as the Company or having similar assets;
(b)	for the full amount required by legislation;
(c)	for the full replacement value of its Assets on a per Property basis; and
(d)	from a well-established and reputable insurer.

19.3	To the best of the Vendor’s knowledge, the Company has not failed to give any material notice or present any claim under those policies in a due and timely manner.
20	Employees
20.1	As at the relevant date specified in Schedule 16, the information in relation to Full Time, Part Time, Fixed Term and Casual employees in Schedule 16:

(a)	contains a complete list of all persons employed by the Company on a Full Time or Part Time, Fixed Term or Casual basis;
(b)	contains the date from which each Full Time and Part Time, Fixed Term and Casual employee commenced employment with the Company;
(c)	Intentionally left blank.
(d)	contains all applicable rates of pay (broken down on an hourly, weekly, monthly or annual basis (as the case may be) for each Employee;
(e)	contains each Employee’s accrued long service leave entitlement;
(f)	contains each Employee’s accrued sick leave entitlement;
(g)	contains each Employee’s annual leave entitlement;
(h)	contains details of any contributions by the Company to any superannuation funds for Member Employees;
(i)	contains details of any discretionary and other bonuses to which any Employee may be entitled and details of bonuses paid in the previous 12 months; and
(j)	contains details of the Industrial Instruments that apply to the Employees (including details of any Employees who are not covered by any Industrial Instrument).

20.2 The Company has maintained in accordance with any applicable legislation complete and accurate leave, remuneration and superannuation records in respect of each Employee.

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20.3	The Company has complied in any material respects with any contractual, statutory, legal and fiscal obligations of and in relation to its employment of the Employees including any Industrial Instruments.
20.4	Each Employee is employed by the Company.
20.5	There is no employee share option scheme or like scheme with any of the Employees.
20.6	The Vendor or the Company have paid (in accordance with all applicable contracts, agreements, legislation and/or Industrial Instruments) to all Employees all salary, wages, bonuses, incentive payments and allowances, and have made payment on behalf of or in respect of all Employees of all necessary payments including Income Tax payments, which it is required to pay in respect of their period of employment with the Company to Completion by virtue of the terms of any such contract, agreement, legislation and/or Industrial Instrument.
20.7	All declarations of remuneration for the purposes of the Accident Compensation Corporation assessing levies have been made accurately, and all Accident Compensation Corporation premiums due under the Accident Insurance Act 1998 and the Injury Prevention, Rehabilitation and Compensation Act 2001 have been paid. Notification has been given of all actual or potential accident compensation claims. No notification has been received of an event which will increase the annual premium in any material respects.
21	Delegation of powers
21.1	There are no powers of attorney or other authorities given by the Company which could authorise any person to bind the Company or deal with the whole or any part of the Business or Assets.
21.2	There is no offer, tender, quotation or similar intimation given or made by the Company that is still outstanding and relates to the Sale Shares.
22	Intercompany Debts and Arrangements
22.1	As at the Completion Date there will be:

(a)	no loans to the Vendor Group and/or any director of any of the Vendor Group other than as provided for in the Adjustment Statement;
(b)	no transactions to acquire assets of the Company on an other than fair market value basis for the Company;
(c)	no amounts payable whether present, unascertained, immediate, future or contingent between the Vendor Group and the Company other than as provided for in the Adjustment Statement.

23	Undertakings
23.1	Summary details of all Security Interests, outstanding guarantees, indemnities, mortgages, charges, pledges, liens, assignments, suretyship or other security agreement or arrangement given other than in the ordinary course of business;

(a) by the Company; or

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(b) for the benefit of the Company

	in excess of $250,000 are fully disclosed in the Data Room and copies of such documents are up to date, complete, accurate and not misleading by omission or otherwise.
23.2	As at the Completion Date the Company:

(a)	has no 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; or
(b)	has not, except for the Permitted Encumbrances and any provisions contained in contracts forming part of the Disclosure Material, provided or granted any guarantees, indemnities, mortgages, charges, pledges, liens, suretyship or other security agreement or arrangement to any person.

23.3	As at the Completion Date the Company is not a party to any one or more derivative contracts in respect of which the Company may incur a liability in excess of $250,000.
24	Construction
24.1	In respect of the Property there are no building, construction, refurbishment, repair, engineering or other works in progress nor are there any individual contracts in respect of which the Company continues to have obligations in each case with an individual contract value in excess of $250,000 other than those set out in the Disclosure Schedule.
24.2	The Vendor has provided in the Data Room true and complete copies of all building contracts and appointments affecting the Property which have an individual contract value in excess of $250,000 and which have been entered into in the last three years immediately prior to the date of this Deed.
24.3	In this paragraph 24.3, the expression “Construction Documentation” shall mean building contracts relating to the Property:

(a)	in respect of which a certificate of practical completion was issued in the last three years immediately prior to the date of this Deed; and/or
(b)	relating to works in progress and “Relevant Claim” shall mean a written claim the value of which is in excess of $250,000.
In respect of the Construction Documentation there are no outstanding:

(a)	Relevant Claims for financial compensation, extension of time or variation; or
(b)	Relevant Claims against the Company by any counterparty to the Construction Documentation alleging failure by the Company to perform its obligations under the relevant Construction Documentation; or
(c)	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.

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25	Taxation
25.1	All Income Tax payable by or in respect of the Company for any Tax Year ending before Completion has been duly paid or will be provided for in the Adjustment Statement.
25.2	In relation to the Straddle Year, all Income Tax payable by or in respect of the Company for income, profits or gains derived, or transactions occurring, in that part of the Straddle Year which ends at Completion, has been duly paid or will be provided for in the Adjustment Statement.
25.3	There is no Audit of the Company being conducted by a Taxation Authority as at the date of this Deed in relation to the Taxes referred to in this warranty 25;
25.4	No Tax litigation between the Company and any Taxation Authority is unresolved as at the date of this Deed in relation to the Taxes referred to in this warranty 25.
25.5	The Company has obtained a New Zealand Inland Revenue Department number
25.6	On and from 31 March 2000:

(a)	as at Completion, all Tax returns and like documents in relation to the Taxes referred to in this warranty 25 required to be filed or lodged by or in respect of the Company with Taxation Authorities including pre-Completion returns in respect of any period before Completion have been or will be duly filed or lodged within the timeframe required by law. Such Tax returns and like documents contains correct information and on a proper basis;
(b)	there are no private binding tax rulings in respect of Income Tax or requests for tax rulings in respect of Income Tax lodged by the Company;
(c)	the Company has maintained proper records in accordance with the requirements of the law in relation to its Tax returns and like documents;
(d)	all necessary asset registers and supporting information required to enable the written down value or adjustment value of depreciating assets held by the Company to be determined and substantiated in accordance with the terms of the Income Tax Act 2004 (NZ) have been provided;
(e)	the Company has not entered into any agreement which now or in the future may extend the period of assessment or collection of any Income Tax; and
(f)	the Company has no permanent establishment (as that expression is defined in any relevant double taxation agreement current as at the date of this Deed) outside New Zealand.

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Schedule 3

Purchaser and Purchaser Guarantor Warranties

1 Power and Authority

(a)	The Purchaser and the Purchaser Guarantor are duly incorporated and validly exist under the law of its place of incorporation.
(b)	The Purchaser and the Purchaser Guarantor have the power and authority to execute and exchange this Deed and perform and observe all its terms and each transaction contemplated by this Deed to be performed and observed by it.
(c)	The execution and delivery of this Deed has been properly authorised by all necessary corporate action of the Purchaser and the Purchaser Guarantor.
(d)	This Deed constitutes a legal, valid and binding obligation of the Purchaser and the Purchaser Guarantor, enforceable in accordance with its terms by appropriate legal remedy.
(e)	The execution, delivery and performance by the Purchaser and the Purchaser Guarantor of this Deed and each transaction contemplated by this Deed does not or will not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:

(i)	any provision of the relevant constitution of the Purchaser or the Purchaser Guarantor;
(ii)	any material term or provision of any security arrangement, undertaking, agreement or deed; or
(iii)	any writ, order or injunction, judgment, law, rule or regulation to which they are a party or is subject or by which they are bound.

2 Solvency

(a) None of the following has occurred and is subsisting, or is threatened, in relation to the any of the Purchaser or the Purchaser Guarantor.

(i)	The appointment of an administrator or liquidator.
(ii)	An application or an order made, proceedings commenced, a resolution passed or proposed in a notice of meeting or other steps taken for:

(A)	the liquidation, dissolution, or administration of the Purchaser or the Purchaser Guarantor; or
(B)	the Purchaser or the Purchaser Guarantor entering into an arrangement, compromise or composition with or assignment for the benefit of its creditors or a class of them.

(iii) The Purchaser or the Purchaser Guarantor:

(A) being (or taken to be under applicable legislation) unable to pay its debts, other than as the result of a failure to pay a debt or claim the subject of a good faith dispute; or

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(B) stopping or suspending, or threatening to stop or suspend, payment of all or a class of its debts.

(iv) The appointment of a receiver, receiver and manager, administrator receiver or similar officer to any of the assets and undertakings of the Purchaser or the Purchaser Guarantor.

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Schedule 4

Adjustment Statement

For the purposes of this Schedule 4:

Accruals means the monetary value of all goods and services received by the Company before the Completion Date which have not been paid for by the Company as at 12:01am on the day after the Completion Date, any wages, salaries, PAYE, GST, accrued Income Tax and rates and annual leave entitlements for the calendar month in which the Completion Date falls and any amount in respect of bonuses for 2005 and prior years and for the period up to Completion in respect of Employees, which will be apportioned on a pro-rata basis.

Accrued Income means the monetary value of all goods and services provided by the Company before the Completion Date for which revenue has not been received by the Company as at 12:01am on the day after the Completion Date.

Cash means the aggregate amount of cash float at the Property and the balances in the Company’s general ledger.

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 advanced 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.

Receivables means all the book and other debts arising out of or attributable to the operations of the Company as at 12:01am on the day after the Completion Date including any Intercompany Receivables, Accrued Income, Prepayments, rights to repayments of Tax and rates, 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 or any such book or other debts owed by the Company to another member of the Vendor Group.

Deferred Income means all payments received by the Company before the Completion Date relating to a service to be provided by the Company on or after the Completion Date including any Current Guest Deposits.

Intercompany Payables means all indebtedness due at Completion from the Company to the Vendor Group.

Intercompany Receivables means all indebtedness due at Completion from the Vendor Group to the Company.

Inventory 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 for which the immediately packaging is unopened and all other items which have prior to the date of this Deed, in the ordinary course, been regarded as stock and used in the Business, which are unused and for which the immediate packaging is unopened, owned beneficially by the Company and held at the Property in connection with the

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Business at Completion but for the avoidance of doubt not including any of the Excluded Assets or stock items that are in circulation or that have already been expensed;

Payables means all indebtedness of the Company as at 12:01 am on the day after the Completion Date including, without limitation, Intercompany Payables, creditors, overdrafts, monies held on account, bills of exchange, Tax, Accruals and Deferred Income but excluding, for the avoidance of doubt, deferred tax.

Prepayments means all prepayments made by the Company before the Completion Date which relate to a supply to any such company of goods and/or services to be provided in the ordinary and usual course of business on or after the Completion Date.

Provisions means any provision of the Company which is required to be made at Completion in accordance with the policies set out in this Schedule 4.

1	General
1.1	The Adjustment Statement will be prepared by the Vendor in accordance with the Accounting Standards as adjusted for the specific items discussed below in Schedule 4 and adjusted for the principles used in the Accounts. The Actual Adjustment Amount will include any balance relating to inter-company balances as between, on the one hand, the Vendor Group, and on the other hand, Company. For the avoidance of doubt, notes to Accounts are not included in the Adjustment Statement.
2	Current Assets

Inventory

2.1 Any items of Inventory which are unsaleable, unusable, spoilt or out of date shall be excluded from the Inventory.

Other current assets

2.2 Other current assets comprise prepayments and other debtors (excluding those included in calculating the Receivables) and should be recognised to the extent that they are recoverable within one year of the Completion Date. Prepayments will be computed by reference to the time period to which the expenditure relates.

3 Current Liabilities

Provisions

3.1 Provisions include all employee entitlement provisions in respect of annual leave and long service leave equal to or less than 12 months. Employee entitlement provisions included within the Adjustment Statement are to be calculated at 70% of the face value of the provision to provide an effective after-tax position. For the avoidance of doubt, this provision shall not include any amounts in respect of severance or redundancy payments.

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4 Non Current Liabilities

Provisions

4.1 Provisions include all employee entitlement provisions in respect of long services leave for more than 12 months. Employee entitlement provisions included within the Adjustment Statement are to be calculated at 70% of the face value of the provision to provide an effective after-tax position.

5	Aggregation
5.1	Each entry shall be the aggregate of the separate amounts in respect of any heading for the Company.
6	Estimated Adjustment Amount
6.1	For the avoidance of doubt the Estimated Adjustment Amount equals $178,485 calculated as follows:

Current Assets
Cash	$	27,042
Receivables	$	722,575
Intercompany Receivables	$	700,000
Inventory	$	497,429
Other	$	—
Current Liabilities
Payables	$	(1,453,243	)
Intercompany Payables	$	—
Provisions	$	(315,318	)
Non Current Liabilities
Provisions	$	—
Estimated Adjustment Amount	$	178,485

Actual Adjustment Amount shall be calculated in accordance with the methodology used to determine the Estimated Adjustment Amount.

If the Actual Adjustment Amount is a negative number then it represents an adjustment in favour of the Purchaser and if the Actual Adjustment Amount is a positive number then it represents an adjustment in favour of the Vendor.

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Schedule 5 Pro Forma Accounts for IHG Business and Company as at Accounts Date

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Schedule 6

Intentionally Blank

NIL

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Schedule 7

Deposit Letter

1 September 2005

Jones Lang LaSalle Hotels (NSW) Pry Limited

Dear Sirs

Deposit Arrangements

We request that Jones Lang LaSalle Hotels (NSW) Pry Limited act as deposit holder in accordance with the Share Sale Deed to be entered into between Hale International Limited, Six Continents Limited, HANZ Holdings (New Zealand) Limited and Eureka Funds Management Limited as trustee and manager of the Alternative Investment (Hotel and New Zealand) Private Syndicate (Deed). We confirm that the Deed has been or will be executed today.

1. Terms

We understand that Jones Lang LaSalle Hotels (NSW) Pty Limited agrees to act as an Stakeholder on a short term basis in relation to the Deed on the following terms:

(a)	HANZ Holdings (New Zealand) Limited confirms that it has deposited the Deposit into a controlled moneys account with the Transaction Bank which is in the joint names of the Vendor and the Purchaser and to which the Stakeholder is the sole signatory to such account.
(b)	The Stakeholder is authorised to treat the Deposit as held under its role as Stakeholder in accordance with clause 3.1 of the Deed.
(c)	The Stakeholder must only release the Deposit in accordance with the terms of the Deed.

2. Limitations on Stakeholder’s liability

Jones Lang LaSalle Hotels (NSW) Pty Limited’s role is as Stakeholder as described in this letter and in the Deed. The Stakeholder’s duties are solely of a mechanical and administrative nature and the Stakeholder is not a trustee or fiduciary for any party. The Stakeholder will not be liable:

• for any error of judgment or any act done or omitted to be done by the Stakeholder or its officers, employees and agents, except for its own negligence or misconduct; or

• for any action taken or not taken by a party under the Deed.

Any capitalised term not otherwise defined in this letter has the meaning given to it in the Deed.

The signatories below accept the terms of engagement of the Stakeholder in accordance with the terms of this letter.

Yours sincerely

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Hale International Limited

Six Continents Limited

HANZ Holdings (New Zealand) Limited

Eureka Funds Management Limited as trustee and manager of the Alternative Investment (Hotel and New Zealand) Private Syndicate

Accepted by:

Jones Lang LaSalle Hotels (NSW) Pty Limited

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Schedule 8

Disclosure Index

The Disclosure Index consists of the attached:

1.	Master Due Diligence Index;
2.	Supplementary Due Diligence Index; and
3.	Supplementary Index — Sensitive Employment Contracts and Accommodation Agreements.

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Schedule 9

Excluded Assets

All equipment and material owned by a service provider under a contract for service with the Company or with the Manager including without limit under the service agreements contained in folder K/7 and A/5 of the Data Room.

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Schedule 10

Property

Hotel:	Title Reference:	Owner:
Intercontinental Wellington	WN59A/373	SPHC Equities Limited
Corner Grey and Featherston
Streets, Wellington, New
Zealand

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Schedule 11

NZ Management Contract

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Schedule 12

NZ Non Disturbance Deed

     The Non Disturbance Deed as set out in Schedule 7 of the New Zealand Management Contract.

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Schedule 13

Contracts

	Name of Agreement	Disclosure Index
(1)	Mercury Energy — Electricity	K/7/005
	Supply Agreement
(2)	Ecolab - Affiliation	K/7/016
	Agreement
(3)	Reivernet- Hotel Service	K/7/018
	Agreement
(4)	ANZ National -	K/8/001
	Accommodation Agreement

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Schedule 14

Form of resignation

To:

SPHC Equities Limited

Level 14, Westpac Tower

120 Albert Street

Auckland

I, [insert name], resign as a [director] of SPHC Equities Limited (“the Company”) to be effective from the close of the Directors’ meeting at which this resignation is tabled.

I hereby confirm that I have no claim against the Company in respect of any cause, matter or thing including (but without limitation) any claim for compensation for loss of office, breach of contract or for redundancy or unfair dismissal and that there is not outstanding any agreement or arrangement under which the Company has or could have any obligation to me.

Dated:

Signature of [insert name]

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Schedule 15

Vendor’s knowledge

(1)	(2)	(3)
Person	Area of Business	Vendor’s Warranties
Johanna McPherson	Senior Corporate Counsel	1.1, 6.2, 9.3, 9.4, 15.1, 16.1
Dennis Cook	Director — Statutory Reporting,	1.1, 6.2
	Tax & Treasury
George Lee	Director — Asset Management	1.l, 8, 9.3, 9.4, 14.1, 15.1, 16.1,
		19.2, 19.3

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473874837483438

Schedule 16

Employee Information

	Complete List of	Commencement		Accrued Long
	Full Time and	Date of each Full	Rates of Pay	Service Leave	Accrued Sick	Accrued Annual	Contributions to
	Part Time	Time and Part	for each	for each	Leave for each	Leave for each	superannuation	Accident
	employees	Time employee	employee	employee	employee	employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl.20.1(f))	cl.10.1)	(cl.20.7)
InterContinental Wellington (NZ)	* K/12.5/008 Rates and Allowances Schedule Date: 19/7/2005	* K/12.5/008 Rates and Allowances Schedule Date: 19/7/2005	* K/12.5/008 Rates and Allowances Schedule Date: 19/7/2005	* Not Applicable	* K/12.5/003 Sick Report Date: 29/3/2005	* K/12.5/002 Holiday Report Date: 29/3/2005	* K/12.3/001 New Zealand Retirement Trust Employer Application Date: 16/8/1996 * K/12.3/001 New Zealand Retirement Trust Deed Amendment Date: 22/7/2003 * K/12.3/002 Trust Deed Amendment for New Zealand Retirement Trust Date: 21/5/1999, 9/12/1998, 8/11/2001, 16/11/2001 * K/12.3/004		* K/12.5/006 General Ledger Reconciliation - Pre paid workmens compensation Date: 31/3/2005 * K/12.5/009 Workplace Cover Summary of Account Date: 20/6/2005 * K/12.5/010 Money Transfer Services Confirmation Report Date: 28/6/2005

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473874837483438

	Complete List of	Commencement		Accrued Long
	Full Time and	Date of each Full	Rates of Pay	Service Leave	Accrued Sick	Accrued Annual	Contributions to
	Part Time	Time and Part	for each	for each	Leave for each	Leave for each	superannuation	Accident
	employees	Time employee	employee	employee	employee	employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl.20.1(f))	cl.10.1)	(cl.20.7)
							Hotel Superannuation
							Summary
							Date: 20/4/2005 *
							K/12.3/005
							Salary and Benefits Summary
							Date: 27/7/2005

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Schedule 17

Disclosure Schedule

Preliminary

1.	A disclosure does not imply the existence of any representation, warranty or undertaking not expressly given in the Deed, nor does it extend the scope of any representation, warranty or undertaking which is expressly given.
2.	Capitalised terms in this Schedule have the same meanings as in the Deed, unless the context otherwise indicates.

General disclosures

1. The HVS Forecasts were prepared on the basis of the Marketing and Reservation Contributions set out in the 2005 Budget and are not based on the new Marketing and Reservation Contribution set out in the Australian and New Zealand Management Contracts referred to in Schedule 11 and disclosed in document A/7/035 of the Data Room

Specific disclosures

1. Without limiting the preceding paragraphs, the matters listed in the table below are specifically disclosed. The headings and paragraph references relate to specific Warranties in Schedule 2.

	Warranty
Item	No	Disclosures
Contracts	12.1	Telecom NZ Service Delivery Agreement Voice Services and
		Master Agreement - Both Agreements have expired, but
		Telecom continues to provide services on an informal basis.
		SPHC (NZ) Holdings Limited is reviewing supplier options
		regarding telecommunications and intends to maintain the
		arrangement with Telecom for the benefit of the Company
		pending Completion.
Power and	2.5(b)	Consents to change of control are required for some of the
Authority		contracts, as specified in Schedule 20.
Contracts	12.1	Not all contracts have been properly executed, and some
		contracts do not have the proper legal entity names described
		as parties.
Construction	24
		A construction contract has been entered into with Mainzeal
		Property & Construction Ltd a copy of which is contained in
		K/6.4/003 of the Data Room

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Schedule 18

Taxation clausesTax demands

1.1 Purchaser to notify Vendor

(a) The Purchaser must:

(i)	give the Vendor a copy of any relevant Assessment within 5 Business Days after the Assessment is received; and
(ii)	within 10 Business Days of becoming aware of a matter that may lead to the making or issue of a relevant Assessment, give full details of that matter to the Vendor.

1.2 Purchaser not to compromise claim

(a) The Purchaser must not, and shall ensure that the Company and any Purchaser Group member does not, take any action relating to an Assessment that might lead to liability on the part of the Vendor, if the Purchaser has received a notice from the Vendor under clause 1.3(a)(i) or until the time limits set out in clause 1.3(a)(ii) have expired.

1.3 Vendor to contest Assessment

(a) Following receipt of a notice under clause 1.1, the Vendor may advise the Purchaser of its intention to contest the Assessment by:

(i)

written notice to the Purchaser 5 Business Days before the due date stated in the Assessment for payment of any Tax; and

(ii)

payment of a sum of money to the Purchaser equal to the amount of Tax required to be paid to the relevant Government Agency while action is being taken (but only to the extent that the amount of Tax to be required to be paid to the relevant Government Agency has not been provided for in a proper provision in the accounts of the Company). Such payment is made by way of interest free loan and must be paid to the Purchaser 2 Business Days before the due date stated in the Assessment for payment of any Tax.

(b) On a written request from the Vendor, the Purchaser must pursue, or cause the person required to pay the Tax under the Assessment to pursue, any action required to contest the Assessment, including, but not limited to:

(i)	a written objection with the Government Agency;
(ii)	an action or appeal to a relevant tribunal body or taxation review authority; or
(iii)	an action or appeal in the High Court of Australia or New Zealand or any higher court or court of competent jurisdiction.

(c)	The Purchaser must notify the Vendor of any determination made by a Government Agency, tribunal or court relating to an action taken under clause 1.3(b) as soon as practicable.
(d)	The Purchaser must, and must cause the Company and Purchaser Group member to, follow all reasonable directions given by the Vendor relating to an action taken under clause 1.3(b), including using any professional advisers nominated by the Vendor.
(e)	The Purchaser must, and must cause the Company and Purchaser Group member to, provide the Vendor with all reasonable assistance on matters relating to an action taken

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under clause 1.3(b), including access to witnesses, documents, personnel and premises. Costs arising from clause (b), (d) and this clause (e) must be borne by the Vendor.

(f) The provisions of paragraphs (b), (d) and (e) are subject to the proviso that such action or directions or assistance does not prejudice the rights or tax position (present or future, actual or contingent) of the Purchaser.

1.4 Vendor not to contest Assessment

If the Vendor fails to give a notice under clause 1.3(a)(i) in the required time, the Purchaser may, without affecting its rights under this Deed, independently pursue any action relating to the Assessment, including payment of any Tax under the Assessment to the relevant Government Agency.

1.5 No admission to liability

Any decision by the Vendor either to contest or not contest an Assessment does not constitute an admission of liability on the part of the Vendor.

2 Limitations on Vendor liability

2.1 Limitations

(a) The Vendor is not liable for any Loss that arises where such Loss occurs as a result of:

(i)	the position taken by the Company post-Completion in relation to a Tax law is different to the position taken by the same entity prior to Completion;
(ii)	the Company fails to take action post-Completion as required by a Tax law, including failing to take action within the time allowed; or
(iii)	a Purchaser Group member or the Company fails to take an action that is assumed to have been taken when computing the provision for Tax in the Adjustment Statement.

(b) The limitation provided for in clause 2. l(a)(i) does not apply where a different position is required by law or where taking such a position as is reasonable. In such a case, the Purchaser must notify the Vendor of the inconsistent position no later than 15 Business Days before it is adopted by the Company.

3 Tax indemnity by Purchaser

3.1 Indemnification by Purchaser

(a) The Purchaser must indemnify the Vendor and its Affiliates and their employees, directors, employees and agents and hold them harmless from any Liability for Taxes for:

(i)	taxable periods ending after the Completion Date or, in the case of the year in which Completion occurs, relating to the period after Completion;
(ii)	disallowance of an income tax deduction for an expense, loss or outgoing attributable to a Purchaser Tax Act or to a breach by the Purchaser of any covenant contained in clause 4 of this Schedule 18 after the Completion Date;

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(iii)	any withholding required to be made or any notice required to be given at or after the Completion Date;
(iv)	disallowance of a Tax credit or rebate of Tax, such as a dividend rebate, relating to a matter referred to in (i) to (iii) above; or
(v)	amount specifically provided for in the Accounts or Adjustment Statement, or taken into account in determining the value at which any asset or liability is included in the Accounts or Adjustment Statement.

(b) The indemnification provided in clause 3.1 (a) shall survive Completion and will terminate 6 years after the Completion Date.

4	Tax Returns
4.1	Control of taxation returns, etc

(a)	The Vendor will (at its own costs and expense) prepare and procure and file all Income Tax returns of the Company for Tax Years ending on or before Completion (Pre-Completion Returns) and all other Tax returns of the Company to the extent they relate to any act, matter or transaction occurring before Completion (other relevant returns) and the Purchaser will (at its own cost and expense and in a timely manner) prepare or procure and file all Income Tax returns of the Company for Tax Years commencing before but ending on or after Completion (Straddle Returns).
(b)	The Vendor and Purchaser Group (as appropriate) must lodge any Pre-Completion Returns, Straddle Returns and other Tax Returns within the period required by the law.
(c)	At least 20 Business Days prior to lodging any Pre-Completion Returns, Straddle Returns and Tax Returns the Vendor or the Purchaser (as appropriate) must provide a copy of the proposed return to the other of them and must make any modifications reasonably requested by the other of them.
(d)	If after Completion any Government Agency undertakes an Audit of the Purchaser Group, or issues an Assessment to the Purchaser Group, which relates to any Pre-Completion Return, Straddle Return or Tax Return, or to any act, matter or transaction occurring before Completion (Warranty Items) the Purchaser must immediately give the Vendor written notice of the Audit or Assessment (together with copies of all documents received from the Government Agency) and provide full written details of the Audit or Assessment to the extent that it relates to the Warranties or clause 3 of this Schedule.
(e)	The Purchaser must procure that the Company uses to the full extent possible any deduction, rebate, credit, allowance, rollover, refund or other relief of any kind in respect of Tax which exists as at Completion and is reasonably available to reduce, limit, defer or otherwise mitigate a Liability to Tax which otherwise would or may give rise to a breach of clause 3 of this Schedule or a Warranty.
(f)	Intentionally Deleted.
(g)	The Vendor may require the Purchaser (or any member of the Purchaser Group) to challenge an Assessment in relation to clause 3 of this Schedule or a Warranty claim if the Vendor acts in a manner consistent with clause 1 of this Schedule and clause 9.6 of the Deed.

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(h) Nothing in this clause 4.1 will be taken to limit the Purchaser’s obligations under other provisions of the Deed.

4.2 Tax refunds

(a) The Purchaser must pay to the Vendor an amount equal to any credit, refund, rebate or reimbursement allowed by or received from a Government Agency in respect of:

(i)	any Tax paid by the Company before Completion except to the extent that the credit, refund, rebate or reimbursement is already provided for; or
(ii)	any Tax paid by the Company after Completion to the extent the Purchaser has received an amount under clause 3 of this Schedule or received an amount with respect to a Warranty for such Tax.
(iii)	Any amount paid by the Purchaser to the Vendor under this clause 4.2 will be in addition to an increase in the Purchase Price.

(b) The Purchaser Group must claim the maximum credit, refund, rebate or reimbursement in respect of the any Pre-Completion Returns, Straddle Returns and other relevant returns allowed by law.

4.3 Cooperation

The Vendor and Purchaser shall reasonably cooperate and shall cause their respective affiliates, officers, employees, agents, auditors and other representatives reasonably to cooperate, in preparing and filing all Tax returns, including maintaining and making available to each other all records necessary in connection with Taxes and in resolving all disputes and audits with respect to all taxable periods relating to Taxes. The Purchaser and Vendor recognise that the Vendor and their respective affiliates will need access, from time to time, after the Completion Date, to certain accounting and Tax records and information held by the Company to the extent such records and information pertain to events occurring prior to the Completion Date and therefore the Purchaser agrees to cause the Company to properly retain and maintain such records and allow the Vendor, their affiliates and their respective agents and representatives access to such records on the same terms and set out in clause 14.1 of the Deed.

5	Tax Indemnities
5.1	Intentionally Deleted.
5.2	Following the Completion, the Vendor shall indemnify the Purchaser Group and its officers, directors, employees and agents and hold them harmless from:

(a)	all Liability for Taxes of the Company for the Pre-Completion Tax Period and includes any Liability for any reassessment in respect of tax losses transferred to the Company during the Pre-Completion Tax Period;
(b)	any breach by Vendor Group or the Company (other than, after the Completion, the Company) of any covenant contained in clause 4 of this Schedule 18;
(c)	all Liability for Taxes arising as a consequence of the transfer of the Sale Shares. For the avoidance of doubt, this indemnity does not extend to any Purchaser Tax Act (as defined below);

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(d)	all Liability for Taxes in respect of the Vendor undertaking the Vendor Intercompany Debt Assignment Steps and any restructure of the Vendor’s Group prior to Completion; and
(e)	all Liability for Taxes in respect of the Vendor undertaking the pre Completion asset and business transfer in respect of the business of InterContinental Wellington from SPHC Holdings (NZ) Limited to SPHC Equities Limited.

5.3 Notwithstanding the foregoing, the Vendor shall not indemnify and hold harmless any of the Purchaser Group or their officers, directors, employees or agents from any Liability for Taxes attributable to:

(a)	Taxes of the Company for the Pre-Completion Tax Period to the extent of the accrual, if any, established therefore in the Accounts; or
(b)	any action taken after the Completion by the Purchaser Group, or any transferee of the Purchaser Group (other than any such action expressly required by applicable Law or by this Deed) (Purchaser Tax Act) or attributable to a breach by the Purchaser Group of any covenant contained in clause 4 of this Schedule 18.

5.4	Estimated Taxes paid by or on behalf of the Company on or prior to the Completion Date shall be credited to Taxes with respect to the Pre-Completion Tax Period.
5.5	The Vendor’s responsibility under this clause 5 of Schedule 18 to indemnify and hold harmless the Purchaser Group against, or to pay or cause to be paid, any Taxes shall not include any such responsibility with respect to any Taxes collected or withheld by the Company (including, without limitation, all sales and use taxes and all withholding or employment taxes) with respect to events occurring through the Completion Date, the proceeds of which are held by the Company on the Completion Date.
5.6	Following Completion, Purchaser shall, and shall cause the Company to, indemnify the Vendor Group and its respective officers, directors, employees and agents and hold them harmless from:

(a)	all Liability for Taxes of the Company for any taxable period ending after the Completion Date (except to the extent such taxable period began before the Completion Date, in which case Purchaser’s indemnity will cover only that portion of any such Taxes that are not attributable to the Pre-Completion Tax Period);
(b)	all Liability for Taxes attributable to a Purchaser Tax Act or to a breach by Purchaser of any covenant contained in clause 4 of this Schedule 18; and
(c)	all Liability for Taxes of the Company for the Pre-Completion Tax Period to the extent of the accrual, if any, established therefore in the Accounts.

5.7 In the case of any Straddle Period :

(a)

real, personal and intangible property taxes (other than stamp duty) arising as a consequence of entering into or completing this Deed (Property Taxes) of the Company for the Pre-Completion Tax Period shall be equal to the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Completion Tax Period and the denominator of which is the total number of days in the Straddle Period; and

(b)

the Taxes of the Company (other than Property Taxes) for the Pre-Completion Tax Period shall be computed as if such taxable period ended at the end of Completion. In

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making this computation, income, expenses and other amounts that are referable to a period shall be taken to be referable to each day in that period.

5.8

The Vendor’s indemnity obligation in respect of Taxes for a Straddle Period shall initially be effected by its payment to Purchaser of such Taxes for the Pre-Completion Tax Period. The Vendor shall pay such amount to the Purchaser after demand thereof is made by the Purchaser (but not earlier than 20 Business Days after the date on which the Taxes for the relevant taxable period are required to be paid to the relevant Taxation Authority).

5.9

If the amount of Taxes for the Straddle Period paid by the Vendor Group at any time plus the credit allowed under clause 5.4 of this Schedule 18 exceeds the amount of such Taxes for the Pre-Completion Tax Period, Purchaser shall pay to the Vendor the amount of such excess

(a)

in the case of Property Taxes, at the Completion (Completion Tax Adjustment Amount); and

(b)

in all other cases, within 20 Business Days after the Tax Return with respect to the final liability for such Taxes is required to be filed with the relevant Taxation Authority. The payments to be made pursuant to this clause or clause 5.8 by the Vendor or the Purchaser with respect to a Straddle Period shall be appropriately adjusted to reflect any final determination with respect to Straddle Period Taxes.

5.10	In the event that any party violates the provisions of clause 1 of this Schedule 18 (relating to the settlement or compromise of Tax Claims), such party shall not be entitled to any indemnity payments with respect to any indemnifiable claim (relating to such Tax Claims) pursuant to this clause 5 of Schedule 18.
5.11	The Purchaser acknowledges and agrees that it will not make any claim for indemnification in respect of the availability or otherwise of Tax losses in respect of the Post Completion Tax Period.

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Schedule 19

Brands

CENTRA

CROWNE PLAZA

E-ROOM@CROWNEPLAZA

HOLIDAY INN

INTERCONTINENTAL

PARKROYAL

PRIORITY CLUB

PRIORITY PRIVILEGE

AMBASSADOR

SIX CONTINENTS CLUB

Three Wave Device:

Other devices:

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80 New Zealand Share Sale Deed
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Schedule 20

Consents

Consent is required of:	Document description
Sky Network Television	Sky Network Bulk Commercial
Limited	Services Agreement (K/7/017)

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Schedule 21

Vendor Intercompany Debt Assignment Steps

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EX-4.B.VI

Exhibit 4(b)(vi)

Australian Share and Unit
Sale Deed

Holiday Inns Holdings (Australia) Pty Limited

SPHC Group Pty Limited

HIA (T) Pty Ltd

HIA (T) Pty Ltd as trustee for the HIA Hotels Trust

Six Continents Limited

HANZ (Australia) Pty Limited

Eureka Funds Management Limited (as
trustee and manager of the Alternative
Investment (Hotel and New Zealand) Private
Syndicate)

Contents

Clause
Number	Heading		Page
	1	Definitions and interpretation		2
	2	Shares		13
	3	Payment of Deposit, Purchase Price and Adjustment Amount		14
	4	Conditions		15
	5	Pre-Completion		15
	6	Completion		20
	7	Adjustment Statement and Intercompany Receivables and Payables		23
	8	Warranties and indemnity		25
	9	Claims		31
	10	Confidentiality and announcements		33
	11	Notices		33
	12	Vendors & Purchaser Guarantees		35
	13	Liquor Licence		37
	14	Period After Completion		38
	15	Consents		39
	16	GST		39
	17	General Provisions		40
	Schedule 1			43
	Group Structure :			43
	Schedule 2			45
	Warranties			45
	Schedule 3			59
	Purchaser and Purchaser Guarantor Warranties			59
	Schedule 4			61
	Adjustment Statement			61
	Schedule 5			65
	Pro Forma Accounts			65
	Schedule 6			66

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Business Names	66
Schedule 7	68
Deposit Letter	68
Schedule 8	70
Disclosure Index	70
Schedule 9	71
Excluded Assets	71
Schedule 10	72
Properties – Details of Freehold and Leasehold Properties	72
Schedule 11	74
Australian Management Contract	74
Schedule 12	75
Australian Non Disturbance Deed	75
Schedule 13	76
Contracts	76
Schedule 14	80
Form of resignation	80
Schedule 15	81
Vendor’s knowledge	81
Schedule 16	82
Employee Information	82
Schedule 17	97
Disclosure Schedule	97
Schedule 18	107
Taxation clauses	107
Schedule 19	114
Brands	114
Schedule 20	115
Consents	115
Schedule 21	119
Vendor Intercompany Debt Assignment Steps	119
Schedule 22	120
Section 32 Statement	120
Schedule 23	123
Australian Management Contract	123
Schedule 24	124
Portfolio Side Agreement	124

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Schedule 25	125
Shared Services Agreement	125
Schedule 26	126
Licensee	126
Execution	127

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Date	2005
Parties	Holiday Inns Holdings (Australia) Pty Limited (ABN 95 003 621 216) of Level 9, 504 Pacific Highway, St. Leonards, NSW 2065 (HIHA)
	SPHC Group Pty Limited (ABN 35 080 831 821) of Level 9, 504 Pacific Highway, St. Leonards, NSW 2065 (SPHC)
	HIA (T) Pty Ltd (ACN 078 818 890) (in its own capacity and in its capacity as trustee for the HIA Hotels Trust) of Level 9, 504 Pacific Highway, St. Leonards, NSW 2065 (HIAT)
	Six Continents Limited which has its registered office at 67 Alma Road, Windsor, Berkshire SL4 3HD (Vendors’ Guarantor)
	HANZ (Australia) Pty Limited (ACN 115 904 455) of Level 10, 1 Alfred Street, Sydney, NSW 2000 (Purchaser)
	Eureka Funds Management Limited (ABN 47 107 346 841) as trustee and manager of the Alternative Investment (Hotel and New Zealand) Private Syndicate (HANZ Trust) of Level 10, 1 Alfred Street, Sydney, NSW 2000 (Purchaser Guarantor)

Recitals

A. The Vendors agree to sell and the Purchaser agrees to purchase the Sale Shares and Units under the following terms and conditions.

B. Contemporaneously with the execution of this Deed the New Zealand Sale Contract is to be executed and on Completion the following documents are to be executed:

(a)	the Australian Management Contracts and the Australian Non Disturbance Deeds; and
(b)	the NZ Management Contract and the NZ Non Disturbance Deed; and
(c)	the Portfolio Side Agreement and the Shared Services Agreements.

C. In consideration of the Vendors agreeing to sell the Sale Shares and Units to the Purchaser, the Purchaser Guarantor agrees to guarantee the Purchaser Guaranteed Obligations.

D. In consideration of the Purchaser agreeing to buy the Sale Shares and Units from the Vendor, the Vendors’ Guarantor agrees to guarantee the Vendor Guaranteed Obligations.

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Operative provisions

1 Definitions and interpretation

Definitions

1.1		In this Deed unless the context requires another meaning:
	Accounting Standards means :

(a)	the accounting standards in Australia and standards applicable for the purposes of the Corporations Act 2001;
(b)	the requirements of the Corporations Act 2001 for the preparation and content of financial statements, director’s reports and auditor’s reports;
(c)	if no accounting standard applies under the Corporations Act 2001 in relation to an accounting practice, the standards used and understood by the Australian Accounting Standards Board and/or the Australian Accounting Bodies;
(d)	generally accepted and consistently applied accounting principles and practices in Australia, except those inconsistent with the standards or requirements referred to in paragraphs (a) (b) or (c); .

Accounts means the pro forma accounts of the Group Trusts and Group Companies as set out in Schedule 5.

Accounts Date means 31 December 2004.

Action Procedures means the procedures for instituting or defending legal action in the name of another party specified in clauses 9.6, 9.7 and 9.8.

Actual Adjustment Amount means the cash sum determined in accordance with Schedule 4.

Adjustment Amount means the difference between the Actual Adjustment Amount as shown in the Adjustment Statement and the Estimated Adjustment Amount.

Adjustment Statement means the statement prepared in accordance with clause 7 and Schedule 4.

Assessment means something which creates or evidences an obligation on the Vendors (directly or indirectly) to pay an ascertained amount of Tax at or before a fixed time, such as any document received from a Government Agency administering any Tax assessing, imposing, claiming or indicating an intention to claim any Tax (such as an assessment, penalty notice or demand)

Assets means the assets owned by the Group Companies and Group Trusts or used by the Group Companies and Group Trusts in conducting the Businesses and for the avoidance of doubt does not include the Brands.

Audit means in relation to any Tax, any audit, investigation, review, information request or any other enquiry of any kind undertaken by a Government Agency.

Auditor means Ernst & Young.

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Australian Management Contracts means the management contract for each of the Properties, substantially in the form set out in Schedule 11, between the Manager and Purchaser with the relevant amendments as set out in Schedule 23.

Australian Non Disturbance Deeds means the non disturbance deed for each of the Properties, substantially in the form set out in Schedule 12 between the Manager, Purchaser and the Purchaser’s Financier.

Authorisation means:

(a)	any authorisation, approval, licence, permit, consent, qualification, accreditation, filing, registration, certificate, resolution, direction, declaration, or exemption; and
(b)	for anything which a Government Agency may prohibit or restrict within a specified period after it is notified, the expiry of that period without intervention or action by that Government Agency.

Books and Records means originals and copies in machine readable or printed form of all registers, books, reports, correspondence, files, records, accounts, documents and other material in the possession or control of the Group Companies or the Vendors about or used in connection with the Group Companies or Group Trusts including all:

(a)	information contained in the Data Room;
(b)	operational and financial records contained in People Soft 2002;
(c)	employment records;
(d)	documents of title for the Assets; and
(e)	registers required to be maintained by the Corporations Act 2001 or the Constitution or the trust deed or other constituent documents of the Group Companies and Group Trusts and all minute books of meetings of directors and members or unit holders on and from the date that is 6 years prior to the date of Completion,

but does not include any of the items referred to above which relate to the Brands.

Brands means the words, expressions, logos, marks and any other expressions which relate to any hotel brands owned by entities ultimately owned by InterContinental Hotels Group PLC, including without limitation the brands listed in Schedule 19.

Brand Standard Books means the brand standard books for InterContinental, Crowne Plaza and Holiday Inn brands made available at the Vendors’ Solicitor’s offices.

Businesses means the businesses of owning and managing each of the following hotels: Crowne Plaza Canberra, Crowne Plaza Coogee, Crowne Plaza Terrigal, Holiday Inn, City Centre, Perth, Holiday Inn Melbourne, Holiday Inn on Flinders Melbourne, Holiday Inn Potts Point and Holiday Inn Townsville, carried on by the Group Companies and Group Trusts (as relevant) as at the date of this Deed and Business means each of them other than the right to the Brand, if any.

Business Day means a day that is not a Saturday, Sunday or a public holiday or bank holiday in Sydney.

Business Names means the business names and trade names set out in Schedule 6.

Cash means the cash in hand at the Properties and any cash held in a bank account of any of the Group Companies or Group Trusts.

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Claim means any claim, cost, damages, debt, expense, Tax, any related interest, expense, fine, penalty or other charge on any Tax, Liability, loss, allegation, suit, action, demand, cause of action or proceeding of any kind irrespective of:

(a)	how or when it arises;
(b)	whether it is actual or contingent;
(c)	whether or not it is in respect of legal or other costs, damages, expenses, fees or losses;
(d)	whether or not it is in respect of a breach of trust or of a fiduciary or other duty or obligation; and
(e)	whether or not it arises at law or in any other way.

Completion means completion of the sale and purchase of the Sale Shares and Units under clause 6 of this Deed.

Completion Date means 31 October 2005 or such other date as notified to the Purchaser in accordance with clause 6.4 or 6.6.

Completion Payment Amount means $297,735,139.

Confidential Information means all:

(a)	know-how, trade secrets, ideas, concepts, technical and operational information, owned or used by the Group Companies or Group Trusts, or other such information of the Vendor Group;
(b)	information concerning the affairs or property of the Group Companies or any Business, property or transaction in which any Group Company may be or may have been concerned or interested;
(c)	details of any customers or suppliers of the Group Companies, the Group Trusts or the Businesses;
(d)	information about the terms or effect of this Deed; and
(e)	information which by its nature or by the circumstances of its disclosure, is or could reasonably be expected to be regarded as confidential to:

(i)	the Group Companies or the Group Trusts; or
(ii)	any third party with whose consent or approval the Group Companies uses that information.

Confidentiality Deed Poll means the deed poll executed by the Purchaser on 22 April 2005.

Consent means any consent of a person listed in column 2 of Part A of Schedule 20 required under the documents listed in column 3 of Part A of Schedule 20 to the matters contemplated by this Deed.

Contracts means any contract or agreement to which any Group Company is a party or by which any Group Company may be bound and which:

(a) is not capable of being terminated without compensation at any time or with 12 months’ notice or less and involves or may involve total annual expenditure in excess of $25,000; or

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(b) involves or may involve total annual expenditure in excess of $250,000,

as listed in Schedule 13.

Control or Controlled means the possession directly or indirectly of the power, whether or not having statutory, legal or equitable force, and whether or not based on statutory, legal or equitable rights, directly or indirectly to control the membership of the board of directors or any other governing body of the relevant entity or to otherwise directly or indirectly direct or influence the direction of the management and policies of that entity whether by means of trust, agreements, arrangements, understandings, practices, the ownership of any interest in shares or stock of the entity or otherwise.

Data Room means the virtual data room made available to the Purchaser by the Vendors or their advisers, including the website at “https://www.sydney.bakerextra.com/” to which the Purchaser was provided a password to access the website together with the Brand Standards Books and Hotel Property Plans.

Demand means a written notice of, or demand for, an amount payable.

Deposit means the sum of $33,395,800

Deposit Account means the bank account established under clause 3.

Deposit Letter means a letter substantially in the form of the letter set out in Schedule 7.

Disclosure Index means the index referred to in Schedule 8.

Disclosure Material means the material identified in the Disclosure Index and the Brand Standards Books and Hotel Property Plans which the Vendors have made available for inspection by the Purchaser and its representatives and, for the avoidance of doubt, includes the RFI Responses.

Disclosure Schedule means Schedule 17 of this Deed.

Dispute Notice means a written notice under clause 7.5 of any dispute about the Adjustment Statement.

Dollars and $ means the lawful currency of Australia.

Employee means all employees:

(a)	who are employed in the Businesses as at the date of this Deed; or
(b)	who are employed in the Businesses after the date of this Deed,

and who are still employed at Completion.

Estimated Adjustment Amount means $2,827,061 (as an adjustment in favour of the Purchaser).

Excluded Assets means those assets, contracts and rights details of which are set out in Schedule 9.

Excluded Representation means any statement, representation, warranty, promise, undertaking or agreement in connection with the Sale Shares and Units or the Group Companies or Group Trusts made by a member of the Vendor Group or a Group Company or Group Trust or any person acting, or purporting to act, on behalf of any of such entities or resulting from or implied by conduct made in the course of communications or negotiations in

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connection with the Sale Shares and Units or the Group Companies or Group Trusts not expressly set out in this Deed.

Expert means an independent firm of chartered accountants selected under clause 7.8.

Freehold Properties means the properties detailed in Schedule 10 and all improvements on those properties.

Government Agency means:

(a)	a government, whether foreign, federal, state, territorial or local;
(b)	a department, office or minister of a government acting in that capacity; or
(c)	a commission, delegate, instrumentality, agency, board or other governmental, semi-governmental, judicial, administrative, monetary or fiscal authority, whether statutory or not.

Group Companies and Group Trusts Intercompany Debt means the moneys owed to the Vendor Group or the other Group Companies and Group Trusts by any of the Group Companies or Group Trusts on the Vendor Intercompany Debt Repayment Date.

Group Companies means each of the following in its personal capacity and other than Centra Victoria Pty Limited, in its capacity as trustee of the relevant Group Trust:

(a)	H.I. (Coogee) Pty Limited ACN 089 606 628;
(b)	H.I. (Melbourne) Pty Limited ACN 081 088 959;
(c)	H.I. (Canberra) Pty Limited ACN 096 253 851;
(d)	H.I. (Perth) Pty Limited ACN 081 089 616;
(e)	H.I. (Terrigal) Pty Limited ACN 081 759 560;
(f)	H.I. (Potts Point) Pty Limited ACN 081 089 090;
(g)	H.I. (Townsville) Pty Limited ACN 092 002 269;
(h)	Centra Victoria Pty Limited ACN 081 122 125;

and Group Company means any one of them.

Group Trusts means:

(a)	HI (Coogee) Trust;
(b)	HI (Canberra) Trust;
(c)	HI (Townsville) Trust;
(d)	HI (Melbourne) Trust;
(e)	HI (Perth) Trust;
(f)	HI (Terrigal) Trust;
(g)	HI (Potts Point) Trust;

and Group Trust means any one of them.

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GST means goods and services tax as defined in the A New Tax System (Goods and Services Tax) Act 1999 or any like tax.

HI (Coogee) Trust means the trust known as HI (Coogee) Trust, constituted by a trust deed dated 12 October 1999.

HI (Canberra) Trust means the trust known as HI (Canberra) Trust, constituted by a trust deed dated 23 March 2001.

HI (Potts Point) Trust means the trust known as HI (Potts Point) Trust, constituted by a trust deed dated 19 December 1997.

HI (Townsville) Trust means the trust known as HI (Townsville) Trust, constituted by a trust deed dated 19 April 2000.

HI (Melbourne) Trust means the trust known as HI (Melbourne) Trust, constituted by a trust deed dated 19 December 1997.

HI (Perth) Trust means the trust known as HI (Perth) Trust, constituted by a trust deed dated 19 December 1997.

HI (Terrigal) Trust means the trust known as HI (Terrigal) Trust, constituted by a trust deed dated 2 March 1998.

Holding Trust means the trust known as HIA Hotels Trust, constituted by a trust deed dated 19 June 1997.

Hotel Property Plans means the plans for the each of the Properties made available to the Purchaser at the relevant Properties.

Income Tax Assessment Act means the Income Tax Assessment Act, 1936 (Cth) and the Income Tax Assessment Act, 1997 (Cth).

Income Tax means tax imposed upon income, profits, or gains (including capital gains).

Industrial Instrument means a Federal or State award, certified or enterprise agreement, public sector industrial agreement or other industrial agreement, contract determination or contract agreement.

Input Tax Credit has the meaning given in section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth).

Insurance Policies means all policies of insurance held by or for the benefit of the Group Companies and Group Trusts up to Completion.

Intercompany Payables has the meaning given to it in Schedule 4.

Intercompany Receivables has the meaning given to it in Schedule 4.

Interest Rate means the rate which is 2% above the minimum rate of interest charged by the Commonwealth Bank of Australia to corporate customers on overdrafts of $100,000 or more (as published from time to time in the Australian Financial Review or, if not published, as notified by the Commonwealth Bank of Australia to any of the Vendors).

Landlords means the landlords of the Leased Properties.

Leased Properties means the properties detailed in Schedule 10 and all improvements on those properties.

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Liabilities means all liabilities, whether actual or contingent, present or future, quantified or unquantified.

Licensee means the licensees as noted in Schedule 26 for each of the Properties.

Liquor Licence means each liquor licence in respect of the Properties identified in the Disclosure Material.

Loss means any damage, loss, claim, liability or expense.

Manager means Southern Pacific Hotel Corporation Pty Limited ACN 008 413 367.

NZ Management Contract means a management contract substantially in the form of the management contract set out in Schedule 11 of the NZ Sale Contract.

NZ Non Disturbance Deed means a non disturbance deed dated on or about the date of this deed, substantially in the form of the non disturbance deed set out in Schedule 12 of the NZ Sale Contract.

NZ Sale Contract means the contract dated on or about the date of this Deed between the Purchaser and Hale International Ltd for the sale of all the shares of SPHC Equities Limited;

PAYG Credit means the Vendors’ entitlement to a credit under Sections 45-30, 45-865 and 45-910 of Schedule 1 of the Taxation Administration Act 1953 (Cth).

Permitted Encumbrance means:

(a)	a charge or lien arising in favour of a Government Agency by operation of statute for council rates and land tax unless there is default in payment of money secured by that charge or lien;
(b)	any mechanics’, workmen’s or other like lien arising in the ordinary course of business; or
(c)	any retention of title arrangement undertaken in the ordinary course of day-to-day trading.

Plant and Equipment means all fixed and loose plant, equipment, machinery, furniture, fixtures and fittings, computer hardware, vehicles, and all other tangible assets owned by the Group Companies.

Portfolio Side Agreement means the portfolio side agreement between the Purchaser, the Purchaser Guarantor, the Manager and SC Hotels & Resorts (Australia) Pty Limited in the form set out in Schedule 24 of this Deed.

Post-Completion Tax Period means any Tax period beginning after Completion and that portion of any Straddle Year beginning after Completion.

Pre-Completion Tax Period means any Tax period ending on or before Completion and that portion of any Straddle Year ending on Completion.

Properties means the Leased Properties and the Freehold Properties.

Property Leases means the leases and licences for the Leased Properties.

Purchase Price means the amount of $333,958,000..

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Purchaser Group means the Purchaser and all other entities Controlled by the Purchaser’s ultimate holding company and after Completion includes the Group Companies and Group Trusts.

Purchaser Guaranteed Obligations means the obligations of the Purchaser Guarantor as set out in clause 12.8.

Purchaser’s Financer means the National Australia Bank Limited.

Relative has the same meaning as in the Income Tax Assessment Act.

Relevant Schemes means:

(a)	all superannuation schemes, retirement benefit schemes or other pension schemes or arrangements; and
(b)	all employment benefit plans, programs or arrangements including medical, dental or life insurance;

to which any Group Company is a party or which any Group Company makes available or obtains for its officers or employees or former officers or employees.

Royalty Agreements means the agreements between Holiday Hospitality Corporation on the one hand and a Group Company or Group Trust on the other in relation to the use of any of the Brands or support for marketing, reservation, training and support services existing as at the date of this Deed.

RFI Responses means the written answers to questions and requests for further information made by the Purchaser and its employees, representatives and advisers (including directors, partners, officers and employees of its advisers) through the formal request for information/RFI process and forming part of the Disclosure Material.

Sale means the sale and purchase of the Sale Shares and Units in accordance with this Deed.

Sale Shares means all of the shares in each Group Company, together with all rights attaching to those shares as at Completion, as follows:

(a)	H.I. (Coogee) Pty Limited ACN 089 606 628;
(b)	H.I. (Melbourne) Pty Limited ACN 081 088 959;
(c)	H.I. (Canberra) Pty Limited ACN 096 253 851;
(d)	H.I. (Perth) Pty Limited ACN 081 089 616;
(e)	H.I. (Terrigal) Pty Limited ACN 081 759 560;
(f)	H.I. (Potts Point) Pty Limited ACN 081 089 090;
(g)	H.I. (Townsville) Pty Limited ACN 092 002 269;
(h)	Centra Victoria Pty Limited ACN 081 122 125.

Sale Shares and Units means:

(a) all of the shares in each Group Company, together with all rights attaching to those shares as at Completion, as follows:

(i) H.I. (Coogee) Pty Limited ACN 089 606 628;

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(ii)	H.I. (Melbourne) Pty Limited ACN 081 088 959;
(iii)	H.I. (Canberra) Pty Limited ACN 096 253 851;
(iv)	H.I. (Perth) Pty Limited ACN 081 089 616;
(v)	H.I. (Terrigal) Pty Limited ACN 081 759 560;
(vi)	H.I. (Potts Point) Pty Limited ACN 081 089 090;
(vii)	H.I. (Townsville) Pty Limited ACN 092 002 269;
(viii)	Centra Victoria Pty Limited ACN 081 122 125; and

(b) all of the units in each Group Trust, together with all rights attaching to those units as at Completion as follows:

(i)	HI (Coogee) Trust;
(ii)	HI (Canberra) Trust;
(iii)	HI (Townsville) Trust;
(iv)	HI (Melbourne) Trust;
(v)	HI (Perth) Trust;
(vi)	HI (Terrigal) Trust; and
(vii)	HI (Potts Point) Trust,

less any of those shares in Centra Victoria Pty Limited converted and bought back as part of the Vendor Intercompany Debt Assignment Steps.

Sale Units means all of the units in each Group Trust, together with all rights attaching to those units as at Completion as follows:

(a)	HI (Coogee) Trust;
(b)	HI (Canberra) Trust;
(c)	HI (Townsville) Trust;
(d)	HI (Melbourne) Trust;
(e)	HI (Perth) Trust;
(f)	HI (Terrigal) Trust; and
(g)	HI (Potts Point) Trust.

Security Interest means an interest in an asset which provides security for, or protects against default by, a person for the payment or satisfaction of a debt, obligation or liability including a mortgage, charge, bill of sale, pledge, deposit, lien, encumbrance, hypothecation, arrangement for the retention of title, option, lease, hire or hire purchase, restriction as to transfer, use or possession, easement or subordination (excluding a Permitted Encumbrance).

SGA Legislation means the Superannuation Guarantee (Administration) Act 1992 (Cth) and the Superannuation Guarantee (Administration) Regulations.

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Shared Services Agreement means the shared services agreement between the Manager and the relevant Group Company for each of the Properties in the form set out in Schedule 25 of this Deed.

Specified Provision means a Warranty, indemnity or any covenant, undertaking, representation or warranty provided by the Vendors to the Purchaser pursuant to this Deed and for the avoidance of doubt includes the indemnities contained in Schedule 18.

Stakeholder means Jones Lang LaSalle Hotels (NSW) Pty Limited, as Vendors’ agent.

Straddle Year means a Tax Year commencing before but ending after Completion.

Tax means a tax, levy, charge, impost, deduction, withholding or duty of any nature (including stamp and transaction duty) including any penalty, interest or similar amounts charged in relation to any of the foregoing at any time:

(a)	imposed or levied by any Government Agency; or
(b)	required to be remitted to, or collected, withheld or assessed or re-assessed by, any Government Agency;.

Tax Demand means a Demand or assessment from a Government Agency requiring the payment of any Tax in respect of which the Vendor may be liable (directly or indirectly) under this Deed.

Tax Relief means any relief, allowance, exemption, exclusion, set-off, deduction, loss, rebate, refund, right to repayment or credit granted or available in respect of a Tax under any law.

Tax Return means all returns, lodgements and instalments made to a Taxation Authority.

Taxable Supply has the meaning given in section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth).

Taxation Authority means any person or agency authorised by law to impose, collect or otherwise administer any Tax.

Tax Years means the income year ending on 31 December or other period in respect of which Income Tax is payable.

Transaction Bank means the National Australia Bank Limited.

Vendor Duty means the duty imposed under Part 3 of Chapter 4A of the Duties Act 1997.

Vendors means HIHA, HIAT (in its own capacity and in its capacity as trustee for the Holding Trust) and SPHC and Vendor means any one of them.

Vendors’ Solicitors means Baker & McKenzie of Level 27, 50 Bridge Street, Sydney NSW 2000.

Vendor Group means InterContinental Hotels Group PLC (which has its registered office at 67 Alma Road, Windsor, Berkshire SL4 3HD) and all entities Controlled by InterContinental Hotels Group PLC but excludes the Group Companies and Group Trusts.

Vendor Guaranteed Obligations means the obligations of the Vendors’ Guarantor as set out in clause 12.1.

Vendor Intercompany Debt means the monies owed by the Vendor Group or the Group Companies and Group Trusts to any of the Group Companies or Group Trusts on the Vendor Intercompany Debt Repayment Date.

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Vendor Intercompany Debt Assignment Steps means the steps set out in Schedule 21 of this Deed or such other steps as specified by the Vendors and consented to by the Purchaser, such consent by the Purchaser not to be withheld so long as the steps achieves the objective of discharging all of the Vendor Intercompany Debt and the Group Companies and Group Trusts Intercompany Debt as at the Vendor Intercompany Debt Repayment Date.

Vendor Intercompany Debt Repayment Date means any date on or before the Completion Date as reasonably determined by the Vendors.

Warranties means the representations, warranties and covenants made by the Vendors under clause 8.3 and Warranty means any one of them.

Interpretation

1.2 In this Deed, unless the context otherwise requires:

(a) a reference:

(i)	to the singular includes the plural and vice versa;
(ii)	to a gender includes all genders;
(iii)	to a document (including this Deed) is a reference to that document (including any Schedules and Annexures) as amended, consolidated, supplemented, novated or replaced;
(iv)	to an agreement includes any deed, agreement or legally enforceable arrangement or understanding whether written or not;
(v)	to parties means the parties to this Deed and to a party means a party to this Deed;
(vi)	to a notice means all notices, approvals, demands, requests, nominations or other communications given by one party to another under or in connection with this Deed;
(vii)	to a person (including a party) includes:

(A)	an individual, company, other body corporate, association, partnership, firm, joint venture, trust or Government Agency;
(B)	the person’s successors, permitted assigns, substitutes, executors and administrators; and
(C)	a reference to the representative member of the GST group to which the person belongs to the extent that the representative member has assumed rights, entitlements, benefits, obligations and liabilities which would remain with the person if the person was not a member of a GST group;

(viii) to a law:

(A)	includes a reference to any constitutional provision, subordinate legislation, treaty, decree, convention, statute, regulation, rule, ordinance, proclamation, by-law, judgment, rule of common law or equity or rule of any applicable stock exchange; and
(B)	is a reference to that law as amended, consolidated, supplemented or replaced; and

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(C) is a reference to any regulation, rule, ordinance, proclamation, by-law or judgment made under that law;

(ix)	to proceedings includes litigation, arbitration, and investigation;
(x)	to a judgement includes an order, injunction, decree, determination or award of any court or tribunal;
(xi)	to time is a reference to Sydney time;

(b)	headings are for convenience only and are ignored in interpreting this Deed;
(c)	a warranty, representation, covenant or obligation given or entered into by more than one person binds them jointly and severally;
(d)	if a period of time is specified and dates from, after or before, a given day or the day of an act or event, it is to be calculated exclusive of that day;
(e)	if a payment or other act must (but for this clause) be made or done on a day which is not a Business Day, then it must be made or done on the next Business Day;
(f)	the words “including” or “includes” mean “including but not limited to” or “including without limitation”;
(g)	where a word or phrase is defined, its other grammatical forms have a corresponding meaning; and
(h)	this Deed must not be construed adversely to a party solely because that party was responsible for preparing it

Payments

1.3 Unless the context otherwise requires, where an amount is required to be paid to a party (Receiving Party) by another party (Paying Party) under this Deed, that amount must be paid by immediately available funds and in a form specified by the Paying Party (such as electronic wire transfer or bank cheque) to the Receiving Party, or otherwise as set out in the written direction of the Receiving Party if that written direction is received by the Paying Party more than 2 Business Days before the date upon which payment of the amount is due.

2 Shares

Sale and purchase

2.1 The Vendors sell and the Purchaser purchases, the Sale Shares and Units, free from all Security Interests, for the Purchase Price and in accordance with this Deed.

All of the Sale Shares and Units

2.2 Neither the Vendors nor the Purchaser will be obliged to complete the purchase of any of the Sale Shares and Units unless the purchase of all of the Sale Shares and Units is completed simultaneously.

Waiver of pre-emption rights

2.3 The Vendors waive and, prior to Completion, must obtain the waiver from all other relevant persons, of all restrictions on transfer (including pre-emption rights) that might exist for the

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Sale Shares and Units, whether under the constitution of each of the Group Companies, trust deed of each of the Group Trusts or otherwise.

3 Payment of Deposit, Purchase Price and Adjustment Amount

Payments on signing

3.1 Upon signing this Deed:

(a)	the Purchaser must pay the Deposit to the Stakeholder; and
(b)	the parties must direct the Stakeholder to immediately invest the Deposit:

(i)	in an interest bearing account with the Transaction Bank on 24 hour call;
(ii)	in the joint names of the Vendors and the Purchaser; and
(iii)	with the Stakeholder named as the sole signatory to the Deposit Account.

Release of deposit

3.2 Subject to clause 3.4, the Deposit and all interest earned on the Deposit is to be dealt with as follows:

(a)	on Completion, the parties must direct the Stakeholder to pay the Deposit together with 50% of the interest credited to the Deposit Account to the Vendors and the balance of the interest to the Purchaser;
(b)	the parties must direct the Stakeholder to pay the Deposit, together with all interest credited to the Deposit Account, to the Vendors if this Deed is terminated by the Vendors relying on default by the Purchaser; or
(c)	the parties must direct the Stakeholder to pay the Deposit, together with all interest credited to the Deposit Account, to the Purchaser if this Deed is terminated by the Purchaser relying on default by the Vendors pursuant to clause 4.5.

Exclusion of interest

3.3 Interest earned on the Deposit does not form part of the Purchase Price.

Deduction of charges

3.4 No payment may be made to the Vendors and/or the Purchaser under this clause unless all bank charges and Taxes levied on or payable on the investment and withdrawal of the Deposit have been deducted.

Deposit letter

3.5 On signing this Deed, the Vendors and the Purchaser must sign and deliver the Deposit Letter to the Stakeholder.

Release and directions

3.6 Except as ordered by a court of competent jurisdiction, no payment may be made out of the Deposit Account except:

(a) as provided in clause 3.2; and

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(b) upon receipt by the Stakeholder of a written direction signed by both parties.

3.7 Each party agrees to direct the Stakeholder in writing as required to give full effect to the provisions of this Deed.

Payment of balance of Purchase Price

3.8 The Purchaser must pay the Completion Payment Amount to the Vendors at Completion.

Adjustment Amount

3.9 The Adjustment Amount will be payable in accordance with the provisions in clause 7.

Intercompany Amounts

3.10 The Vendors must pay to the relevant Group Company or Group Trust the Intercompany Receivables in accordance with the provisions in clause 7.

3.11 The Purchaser must procure that the relevant Group Company and Group Trust pays to the Vendors the Intercompany Payables in accordance with the provisions in clause 7.

4 Conditions

Conditions

4.1 Completion is conditional on the consent of the Secretary to the Department of Infrastructure pursuant the terms of the lease governing Holiday Inn Melbourne at 1-5 Spencer Street, Melbourne VIC, title reference Volume 10043 Folio 991 to the change of control of Centra Victoria Pty Limited.

Reasonable endeavours to fulfil

4.2 The Vendors must use their reasonable endeavours to fulfil the Condition set out in clause 4.1

4.3 The Purchaser must provide all information and documents required by the Secretary to the Department of Infrastructure as notified by the Vendors from time to time.

Waiver of certain Conditions

4.4 The Purchaser may in its absolute discretion waive the condition in clause 4.1by notice to the Vendors on or before Completion.

Termination for failure of Conditions

4.5 Subject to the Vendor electing to defer Completion pursuant to clause 6.4 or 6.6, if the condition in clause 4.1 is not satisfied or waived upon or prior to Completion then either party may terminate this Deed by notice to the other parties.

5 Pre-Completion

Pre-Completion notices

5.1 At least 10 Business Days before the Completion Date the Purchaser must nominate to the Vendors in writing:

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(a)	new directors, a new secretary and a new public officer of each of the Group Companies;
(b)	the address of the new registered office of each of the Group Companies; and
(c)	the new company names and trust names of each of the Group Companies and Group Trusts which must not contain any words or expression which refer to any of the Brands or any words or expression which are similar or may be mistaken to be referring to any of the Brands and reasonably acceptable to the Vendors.

Business to be conducted in ordinary course

5.2 Except as is disclosed in the Disclosure Schedule or as may be required to give effect to or comply with an express provision of this Deed or any law or regulation or in so far as the Purchaser has given its written consent (such consent not to be unreasonably withheld or delayed), until Completion the Vendors will use their reasonable endeavours to ensure that each Group Company and Group Trust:

(a)

conducts its Business in the ordinary course and substantially in the same manner as it was conducted prior to the date of this Deed other than in relation to the General Managers of each of the Properties whose employment will be terminated by the Group Companies prior to Completion on terms reasonably acceptable to the Purchaser and reemployed by an entity within the Vendor Group prior to Completion on at least substantially the same terms and conditions of employment as those provided by the relevant Group Company;

(b)

without prejudice to the generality of clause 5.2(a), does not:

(i) enter into any contract or commitment which involves any capital expenditure for more than $100,000 per item and $375,000 in aggregate, in each case exclusive of GST except for any contract or commitment which;

(A)	is contracted or committed and paid in full by the relevant Group Company or Group Trust before Completion;
(B)	is incurred to carry out emergency repairs (on such terms as are set out in clause 7.5 of the Australian Management Contracts as if the Australian Management Contracts were in effect); or
(C)	would be consistent with the relevant Group Company’s or Group Trust’s capital budget for the financial year ending 30 June 2005 as contained in the Data Room or with the new budgets agreed between the Purchaser and the Vendors between the date of this Deed and Completion;

(ii)	enter into, amend or terminate 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 $100,000;
(iii)	acquire, dispose of, or create a Security Interest over any of the Assets other than acquisitions or disposals in the ordinary course of business and for less than $150,000;
(iv)	distribute or return any capital or declare, approve payment of or pay any dividend to its members except for any distributions effected for the purpose

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	of distributing taxable income of any one or more of the Group Trusts to a unitholder of those Group Trusts;
(v)	issue or agree to issue any shares, units, options, notes, debentures or securities which are convertible into shares or units in the Group Companies or Group Trusts;
(vi)	alter any of the Group Company’s constitution or Group Trust’s trust deed, or do anything that may result in any breach of any Group Trust or cause the relevant trustee to lose its right of indemnity from the trust fund,;
(vii)	without consulting with the Purchaser, employ any person:

(A)	where that employment would materially increase the operating costs of the Group Companies or Group Trusts; or
(B)	with an annual remuneration package of more than $150,000;

(viii)	except in the ordinary course of business or as disclosed in the Data Room, terminate, change the terms of employment to a material extent, or pay or provide any bonus, to any Employee;
(ix)	acquire or agree to acquire any share, shares, note, debenture or other interest (including a contractual interest) in any company, partnership, trust or other venture;
(x)	in relation to any Leased Property, agree any new rent or fee payable under any lease, tenancy or licence which is material in the context of the Purchase Price, provided that no such consent shall be required in respect of any increase in rent payable in respect of any Leased Property pursuant to a rent review in accordance with the terms of the existing lease;
(xi)	settle an insurance claim instituted by or on behalf of a Group Company or Group Trust, where the sum claimed exceeds $250,000; or
(xii)	enter into any guarantee, indemnity or other agreement to secure any obligation of a third party (excluding obligations of any Group Company or Group Trust) or create any Security Interest over any of its assets or undertaking in any such case other that in the ordinary course of business.

5.2A	The Vendors shall, at least weekly (if feasible), meet with the Purchaser to review and discuss the conduct and trading results of the Business of each Group Company and Group Trust and the operation of the hotels forming part of the Vendors’ Business and to discuss the ongoing conduct of the Business and the hotels in accordance with clause 5.2.
5.2AA	The Vendors and Purchaser shall establish a liaison committee to be made up of appropriate persons nominated by them. The role of the liaison committee will be to: facilitate the Vendors and Purchaser liaising in respect of, and a smooth transition on, the sale of the Sale Shares and Units; work together towards an orderly Completion (including the preparation of Adjustments Statements and other necessary documentation and information); and allow the Purchaser to become familiar with the Businesses. The Vendors and the Purchaser agree to use their best commercial endeavours to procure that the committee adequately performs its role.
5.2B	The Vendors will provide the Purchaser access to the Data Room between the date of this Deed and the date of Completion.

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Obligations of Vendors on Completion

5.3 If, before Completion, the Purchaser becomes aware of a breach by the Vendors of clause 5.2 then the Purchaser shall:

(a)

promptly notify the Vendors and provide reasonable details of the breach; and

(b)

if the breach is capable of remedy, not make any claim in respect of that breach or take any other action against the Vendors under this Deed in respect of that breach without first giving the Vendors at least 20 Business Days to remedy the breach. For the avoidance of doubt, there is no obligation on the Vendors to remedy any such breach after being notified of the breach pursuant to clause 5.3(a). If any part of that 20 Business Day period falls after Completion, the Vendors may have access to any of the Properties during that part of the period:

(i)	for the purposes of remedying the relevant breach; and
(ii)	if it complies with the Purchaser’s reasonable requirements in relation to access to the Properties and the remedying of the breach; and

(c) if the breach is not capable of remedy or if the Vendors have not remedied the breach within the time period specified in clause 5.3(b), any claim in respect of that breach will be treated as a warranty claim under clause 8 of this Deed.

Insurance Policies

5.4 The Vendors shall, and shall procure that each Vendor Group member and each Group Company or Group Trust shall continue in force all policies of insurance maintained by them in respect of the Group Company, Group Trust, Properties and the Business until Completion and will have the interest of the Purchaser noted on each such policy of insurance. For the avoidance of doubt, the Vendors shall pay, and shall procure that each Vendor Group member and each Group Company or Group Trust pays, all premiums falling due for payment prior to Completion in respect of the Insurance Policies when due. Up to Completion, the Vendor will not vary the terms of any Insurance Policy or replace any Insurance Policy with another policy of insurance unless the terms of the new policy are at least equivalent to the terms of the relevant Insurance Policy.

5.5	Subject to clause 5.7, the Insurance Policies will cease to apply to or cover the Group Company or Group Trust or the Businesses immediately following Completion except as otherwise provided under the Australian Management Contracts.
5.6	From Completion:

(a) in respect of any Insurance Policy which is a “claims made” basis policy:

(i)	no Vendor Group member will be required to provide or make available to any Group Company or Group Trust any insurance coverage under any such policy; and
(ii)	the cessation of the application of or coverage under the Insurance Policies will, subject to the terms of the relevant policy, be without prejudice to any accrued claims notified to the relevant insurer which are pending at Completion; and

(b) in respect of any “occurrence” basis policy, the Group Company or Group Trust shall continue to benefit from the policy, subject to the terms of the relevant policy, in

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relation to events occurring prior to Completion but in respect of which no claim has yet arisen at the time of Completion.

5.7 The Vendors and the Purchaser agree that any claims made under any of the Insurance Policies in respect of any Group Company or Group Trust shall be administered and collected by the Vendors (or by a claims handler appointed by the Vendors) on behalf of the Group Company or Group Trust in question. The Vendors will consult with and seek the consent of the Purchaser in relation to settling any claim. The Purchaser shall, and shall procure that each Group Company or Group Trust in question shall:

(a)	cooperate fully with the Vendors to enable the Vendors to comply with the reasonable requirements of the relevant insurer; and
(b)	provide such information, assistance and access to Employees (or their successors) as the Vendors may reasonably require in connection with any such claim.

	Any monies and other benefits received by the Vendors as a result of such claims shall be paid over or provided to the Purchaser for the benefit of the Group Company or Group Trust in question, net of all reasonable costs and expenses of recovery (including all reasonable handling and collection charges by any claims handler appointed by the Vendors).
5.8	In respect of all claims under the Insurance Policies referred to in clause 5.7 which are notified to insurers prior to Completion and all claims subsequently brought under any Insurance Policy which relates to a Group Company or Group Trust, the Vendors and the Vendor Group:

(a)	shall be responsible for the deductible on each relevant Insurance Policy; and
(b)	will not be entitled to seek reimbursement of such deductible from the Purchaser.

5.9 Clause 5.6 to 5.9 is a continuing obligation and will not merge or be extinguished on Completion or termination of this Deed.

Vendor Intercompany Debt

5.10 Notwithstanding any other provision hereof, on the Vendor Intercompany Debt Repayment Date, the Vendors must procure that the Vendor Intercompany Debt Assignment Steps are taken by the relevant Vendor Group members and the relevant Group Companies and Group Trusts and that the Vendor Intercompany Debt and the Group Companies and Group Trusts Intercompany Debt is discharged.

5.11 The Purchaser acknowledges and agrees that the number of Sale Shares on the date of this Agreement may be reduced by the Vendor Intercompany Debt Assignment Steps.

5.11A  The Purchaser (as shareholder of the Group Companies and unitholder of the Group Trusts) will not and will procure that each Group Company and Group Trust (as relevant) provide an adequate acknowledgement to HIHA that it will not seek repayment of any receivables assigned under the Vendor Intercompany Debt Assignment Steps.

Damage or Destruction

5.12 If before Completion any of the Assets or the Properties are damaged, destroyed or otherwise affected, or a Group Company or a Group Trust incurs a Liability or a Loss:

(a)	to a degree that materially and adversely affects the conduct or profitability of any Business or any of the Sale Shares and Units; and
(b)	by Completion the Vendors have not adequately replaced or repaired the Assets or the Properties affected or the Purchaser has not received or is not satisfied that it will

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promptly receive sufficient compensation under any Insurance Policy to cover the Purchaser’s, the Group Company’s or the Group Trust’s loss suffered,

then the Purchaser may elect to:

(c)	make an appropriate adjustment to the Purchase Price as agreed between the Vendors and the Purchaser to sufficiently compensate the Purchaser, the Group Company or the Group Trust for its loss suffered, or failing agreement, as determined by an Expert in accordance with clauses 7.8, 7.11 and 7.12; or
(d)	otherwise vary the terms of this Deed, other than removing any of the Sale Shares and Units from the sale and as agreed by the Vendors and the Purchaser.

Purchaser’s access prior to Completion

5.13 The Vendors must between the date of this Deed and Completion on receiving reasonable notice from the Purchaser:

(a)	provide or ensure the provision of all information and assistance which may reasonably be requested by the Purchaser; and
(b)	permit representatives of the Purchaser to have access to and take extracts from or copies of any books, correspondence, accounts or other records relating to the Businesses or the Properties in the Vendors’ possession or control or the possession or control of the Group Companies,

for the purpose of the Purchaser’s review of the accounts and financial statements of the Group Companies and Group Trusts, provided that such access and assistance does not unreasonably interfere with the conduct of the Businesses.

6 Completion

Time and place of Completion

6.1 Completion must:

(a)	take place at the offices of the Vendors’ Solicitors on the Completion Date, or at such other place as the parties may agree; and
(b)	take place contemporaneously with completion of the NZ Sale Contract.

Obligations of Purchaser on Completion

6.2 On Completion the Purchaser must:

(a)	pay the Completion Payment Amount to the Vendors;
(b)	open new bank accounts for each of the Group Companies and Group Trusts;
(c)	enter into the Portfolio Side Agreement and cause the Purchaser Guarantor to enter into the Portfolio Side Agreement;
(d)	cause the relevant Group Companies to enter into the Australian Management Contracts, Australian Non Disturbance Deeds and the Shared Services Agreements; and
(e)	cause the relevant financier(s) to enter into the Australian Non Disturbance Deeds.

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Obligations of Vendors on Completion

6.3 At Completion the Vendors must:

(a) make available by leaving at the Properties or deliver to the Purchaser:

(i)	proper transfers of the Sale Shares and Units duly executed by the registered holders in favour of the Purchaser, together with the share certificates and/or unit certificates (as the case may be) for the Sale Shares and Units;
(ii)	all waivers or consents which the Purchaser may reasonably require to enable the Purchaser to be registered as holders of the Sale Shares and Units;
(iii)	all of the following for each of the Group Companies:

(A)	a copy of the constitution;
(B)	the common seal except for H.I.(Coogee) Pty Limited;
(C)	the Books and Records;
(D)	any Confidential Information in respect of the relevant Group Company in the possession or control of the Vendors or the Group Companies;
(E)	the certificates of incorporation;
(F)	originals or copies of certificates of registration of the Business Names;
(G)	certificates of title for the Freehold Properties (except in relation to Holiday Inn Townsville Title Reference 50359886) and the Crowne Plaza Canberra;
(H)	executed originals to the extent available or copies of the Contracts listed in Schedule 13; and
(I)	originals or copies of the executed leases for Holiday Inn Melbourne,

(iv) all of the following for each of the Group Trusts:

(A)	the original executed trust deed or a copy thereof; and
(B)	the Books and Records; and

(v) the executed resignations of each of the directors of the Group Companies, the secretary or secretaries of the Group Companies and public officers of the Group Companies in the form set out in Schedule 14, effective from the close of the meetings referred to in clause 6.3(c);

provided, however, that in relation to items referred to in paragraphs (iii) and (iv) above (together Records):

(vi) Purchaser recognises that certain Records may relate primarily to the Vendor Group generally rather than specifically to the Group Companies or Group Trusts and that the Vendors may retain such Records and will provide copies of the relevant portions to the Purchaser;

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(vii)	Vendors may retain all Records prepared in connection with the sale of the Sale Shares and Units, including bids received from other parties and analyses relating to the Group Companies or Group Trusts; and
(viii)	Vendors may retain any Tax returns, reports or forms other than returns, reports or forms that relate solely to the Group Companies or the Group Trusts, and, on request, Purchaser will be provided with copies or extracts of such returns, reports or forms only to the extent they relate to separate returns or separate Tax liability of any of the Group Companies or Group Trusts;

(b) cause a meeting of directors of each Group Company in its personal capacity to be held and obtain at the meeting, subject to payment of stamp duty (if any):

(i)	the approval of the registration of the transfers of the Sale Shares;
(ii)	the cancellation of the existing certificates for the Sale Shares; and
(iii)	the issue of new certificates for the Sale Shares in favour of the Purchaser;

(c)	for each of the Group Trusts, cause a resolution of the unitholders to be passed consenting to the transfer of the Sale Units to the Purchaser in accordance with the provisions of each Group Trusts’ trust deed;
(d)	for each of the Group Trusts, cause a meeting of directors of the relevant Group Company in its capacity as trustee of the relevant Group Trust to be held and obtain at the meeting, (in accordance with the provisions of each Group Trust’s trust deed):

(i)	the approval of registration of the transfers of the Sale Units;
(ii)	the cancellation of the existing certificate for the Sale Units; and
(iii)	the issue of a new certificate for the Sale Units in favour of the Purchaser;

(e) cause a meeting of directors of each Group Company or a meeting of members of each Group Company (as applicable) to be held and obtain at the meeting:

(i)	the appointment of those persons nominated under clause 5.1(a) as directors, secretary and public officer of the Group Companies and who have consented in writing to act as directors, secretary and public officer respectively;
(ii)	the acceptance of the resignations of directors and secretaries and public officer received under clause 6.3(a)(v);
(iii)	the closure of the Group Companies and Group Trusts bank accounts ; and
(iv)	the change in the name of the Group Companies (and the name of the Group Trusts of which the Group Companies are a trustee) to a name reasonably acceptable to the Vendors;

(f)	procure that SC Hotels & Resorts (Australia) Pty Ltd (a subsidiary of HIHA) transfers and does all things necessary to facilitate the transfer of the business names noted in Schedule 6 as being owned by SC Hotels & Resorts (Australia) Pty Ltd to the relevant Group Company;
(g)	cause the termination of the Royalty Agreements;
(h)	cause the Manager to execute to the Australian Management Agreements, Australian Non Disturbance Deeds, Shared Services Agreement and the Portfolio Side Agreement; and

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(i) cause SC Hotels & Resorts (Australia) Pty Limited to execute the Portfolio Side Agreement.

Non compliance

6.4 If, despite the Vendors’ best endeavours, the Vendors have not complied with any of the provisions of this clause 6 on the Completion Date, the Vendors may at their option, defer Completion for up to 3 months after 31 October 2005 (in which case the provisions of this clause 6.4 will apply to the deferred Completion).

6.5 If either party has not complied with any of the provisions of this clause 6 on the Completion Date and the Vendors have not made the election to extend Completion pursuant to clause 6.4, the other party may at its option:

(a)	proceed to Completion so far as is practical without affecting its rights under this Deed; or
(b)	terminate this Deed by notice to the non-complying party.

Defer Completion

6.6 The Vendors may, at their option and on more than one occasion by notice in writing to the Purchaser, defer Completion for up to 3 months after 31 October 2005 (in which case the provisions of this clause 6.6 will apply to the deferred Completion).

7 Adjustment Statement and Intercompany Receivables and Payables

Cash float

7.1 Prior to Completion, the Vendors may remove all cash from the Cash float, provided that 2 weeks prior to Completion, the Vendors have given to the Purchaser an estimate of the Cash float to be removed on Completion.

Adjustment Statement

7.2 The Vendors shall procure that as soon as practicable, but in any event within 60 Business Days following Completion, the preparation of the Adjustment Statement in accordance with Schedule 4 and provide a copy to the Purchaser.

7.3 The Purchaser must, in connection with the preparation of the Adjustment Statement:

(a)	provide or ensure the provision of all information and assistance which may reasonably be requested by the Vendors; and
(b)	permit representatives of the Vendors to have access to and take extracts from or copies of any books, correspondence, accounts or other records relating to the Properties in the Purchaser’s possession or control or the possession or control of the Group Companies.

7.4 The cost of preparing the Adjustment Statement will be borne equally by the Purchaser and the Vendors.

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Dispute

7.5 If the Purchaser disputes the correctness of the Adjustment Statement, the Purchaser may within 10 Business Days of receiving the Adjustment Statement issue a Dispute Notice to the Vendors setting out in reasonable detail the basis of the dispute.

7.6 The parties must negotiate in good faith to resolve any dispute within 10 Business Days after the issue of a Dispute Notice.

7.7 If the dispute is not resolved under clause 7.6, the remaining matters in dispute must be promptly referred by the parties to the Expert for determination.

7.8 The parties must appoint the Expert, which must be an independent firm of chartered accountants selected by agreement between the parties or, failing agreement within 14 Business Days of any party issuing a Dispute Notice, as selected by the President for the time being of the Institute of Chartered Accountants of Australia.

7.9 The Expert must be directed by the parties to determine any matter in dispute as soon as practicable but in any case within 20 Business Days of its appointment by:

(a)	applying the principles set out in Schedule 4;
(b)	having regard to any written submissions made to the Expert by the parties or their representatives within 5 Business Days of the appointment of the Expert;
(c)	making such enquiries or inspections as the Expert considers in its absolute discretion to be necessary; and
(d)	determining the form and content of the Adjustment Statement and the amount of the Actual Adjustment Amount and providing notice of its determination to all parties.

7.10 The determination of the Expert as to the matters in dispute, the form and content of the Adjustment Statement, and the amount of the Actual Adjustment Amount will (in the absence of manifest error) be final and binding on the parties.

7.11	In making its determination the Expert will act as an expert and not as an arbitrator.
7.12	The costs of the Expert shall be borne equally by the Purchaser and the Vendors.

Adjustment

7.13 If:

(a) the Actual Adjustment Amount as shown in the Adjustment Statement:

(i)	is an adjustment in favour of the Purchaser of less than $2,787,061then the Purchaser will pay an amount to the Vendors equal to $2,827,061 less the Actual Adjustment Amount; or;
(ii)	is an adjustment in favour of the Vendors then the Purchaser will pay an amount to the Vendors equal to $2,827,061 plus the Actual Adjustment Amount;

(b) the Actual Adjustment Amount as shown in the Adjustment Statement is an adjustment in favour of the Purchaser greater than $2,867,061 then the Vendors will pay an amount to the Purchaser equal to the excess of the Actual Adjustment Amount over $2,827,061;

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(c) a Dispute Notice is not issued by the Purchaser in accordance with clause 7.5 then the payment under clause 7.13(a) or 7.13(b) shall be made within 15 Business Days after the date that the Purchaser received the Adjustment Statement and if a Dispute Notice is issued then the payment under clause 7.13(a) or 7.13(b) shall be made within 5 Business Days of the date that the Expert makes its determination pursuant to clause 7.9.

Intercompany Debt

7.14 The Vendors must procure that the relevant Vendor Group member repay the Intercompany Receivable.

7.15 The Purchaser must procure that the relevant Group Company or Group Trust repays the Intercompany Payable.

7.16 If a Dispute Notice is not issued by the Purchaser in accordance with clause 7.5 then the payment under clause 7.14 and/or 7.15 shall be made within 15 Business Days after the date that the Purchaser received the Adjustment Statement and if a Dispute Notice is issued then the payment under clause 7.14 and/or 7.15 shall be made within 5 Business Days of the date that the Expert makes its determination pursuant to clause 7.9.

8 Warranties and indemnity

“As is” condition

8.1 Except as provided for in this Deed, the Businesses and the Assets are held by the Group Companies and Group Trusts:

(a)	in their state of repair and condition; and
(b)	subject to the Contracts,

in each case as at the date of this Deed.

8.2 Other than as allowed under, or for a breach of, this Deed, the Purchaser shall not make any claim, objection or requisition against the Vendors or rescind or terminate this Deed in respect of:

(a)	the condition of the Businesses or the Assets, including without limitation, the Properties; or
(b)	the terms of any Contract or any breach of any Contract by a party other than a Group Company or Group Trust.

Vendors Warranties and Indemnities

8.3 Each of the Vendors represent, warrant and covenant to the Purchaser that each statement contained in Schedule 2 is true, accurate and not misleading as at the date of this Deed and on Completion (except where a warranty refers only to one of those dates or to another specific date, that warranty is given only at that date).

8.4 Any Warranty qualified by the expression “to the best of the Vendors’ knowledge” 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 15 and the knowledge that such persons ought reasonably to have, after making all due and careful enquiries, in each case in relation to those Vendors’ Warranties set out against each such person’s name in column (3) of Schedule 15.

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The Vendors warrant that each person referred to in Schedule 15 is qualified to comment on and has the necessary knowledge, skills and experience to give evidence of the Vendors’ knowledge in respect of the relevant item.

Purchaser’s Warranties

8.5 The Purchaser and the Purchaser Guarantor each represent, warrant and covenant to and with the Vendors that each of the statements set out in Schedule 3 is true, accurate and not misleading as at the date of this Deed and on Completion (except where a warranty refers only to one of those dates or to another specific date, that warranty is given only at that date).

Other Warranties and conditions excluded and Statutory Actions

8.6 Except as expressly set out in this Deed, all terms, conditions, warranties and statements (whether express, implied, written, oral, collateral, statutory or otherwise) are excluded to the maximum extent permitted by law and, to the extent they cannot be excluded, the Vendors disclaim all Liability in relation to them to the maximum extent permitted by law.

(b) To the maximum extent permitted by law, and without limiting any right to sue for breach of contract under this Deed including clause 8.3, the Purchaser shall not make, and waives any right it may have to make, any claim against the Vendors or any of their directors, officers, employees, agents or advisers (including any director, partner, officer or employee of any adviser):

(i)	under section 52 of the Trade Practices Act 1974 (Cth), section 12DA of the Australian Securities and Investment Commission Act 2001 or Part 7.10 of the Corporations Act or the corresponding provision of any state or territory enactment;
(ii)	under any similar provision of any other enactment in any other jurisdiction; or
(iii)	in relation to any common law claim for misrepresentation, misstatement or mistake except to the extent arising from fraud,

in respect of the Sale or any other matters which are the subject of this Deed (including the Warranties) or the Disclosure Materials.

Disclosures

8.7 The Purchaser acknowledges the Warranties are given subject to, all matters:

(a)	fairly disclosed in the Disclosure Schedule;
(b)	fairly disclosed in the Disclosure Materials;
(c)	to the extent to which there is an adequate allowance, provision or reserve in the Accounts;
(d)	in the public domain which the Purchaser would have found if it made reasonable inquiries in respect of the Businesses of major Australian newsprint reports over the past 6 months;
(e)	which would be revealed by a search of any public records held by, or by making enquiries of, any Government Agency including the Australian Securities & Investments Commission;

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(f) which would have been apparent from:

(i)	an inspection of the Group Company’s or Group Trust’s Books and Records contained in the Data Room; and
(ii)	the actual physical inspection of the Assets by the Purchaser, conducted between 9 to 15 July 2005 (inclusive),

provided that clauses 8.7(a), (b) and (f)(i) do not apply in respect of the Warranties in Schedule 2 paragraphs 5.1 — 5.3 (inclusive).

Conditions of payment and Claims for breach

8.8 Despite any other provision of this Deed, each of the following applies in respect of this Deed.

(a) The Vendors are not liable to make any payment (whether by way of damages or otherwise) for any breach of any Specified Provision unless a Claim is made in writing by the Purchaser against the Vendors:

(i)	in the case of any claim under paragraph 25 of Schedule 2 (tax warranties) and/or paragraph 5 of Schedule 18 (tax indemnities), within 6 years after the Completion Date; and
(ii)	in the case of any other claim, within 18 months after the Completion Date.

(b) The maximum aggregate amount that the Purchaser may recover from the Vendors (whether by way of damages or otherwise) in respect of all breaches of the Specified Provisions is:

(i)	in the case of any warranty or indemnity in relation to any Tax, the Purchase Price;
(ii)	in the case of any claim under paragraphs 1, 2, 3, 4, 5, 6, 9.1, 9.2 and 9.4(a) of Schedule 2, the Purchase Price; and
(iii)	in the case of any other claim, 25% of the Purchase Price.

(c)

The Vendors are not liable to make any payment (whether by way of damages or otherwise) for breach of any Specified Provision in respect of any individual claim (or a series of claims arising from an event or substantially similar circumstances) where the amounts finally adjudicated or agreed against the Vendors (disregarding the provisions of this clause 8.8(c)) in respect of any such claim or series of claims does not exceed $250,000. Where the liability agreed or determined in respect of any such claim or series of claims exceeds $250,000, the Vendors will be liable for the amount of the claim or series of claims as agreed or determined and not merely for the excess. For the purpose of calculating whether the $250,000 amount referred to in this clause has been exceeded, all claims in relation to Tax will be taken to constitute a single individual claim for an amount which is equal to the total of all amounts adjudicated or agreed against the Vendors in relation to Tax, calculated on a cumulative basis throughout the period referred to in clause 8.8(a)(i).

(d)

The Vendors are not liable to make any payment (whether by way of damages or otherwise) for any breach of any Specified Provision in respect of any claim unless the total of all amounts finally adjudicated or agreed against the Vendors (disregarding the provisions of this clause 8.8(d)) in respect of breaches of Specified Provision exceeds $2,000,000. Where the liability agreed or determined in respect of all claims exceeds

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	$2,000,000, the Vendors will be liable for the aggregate amount of all claims as agreed or determined and not merely for the excess.
(e)	The Vendors’ Liability in respect of any breach of any Specified Provision will be reduced or extinguished (as the case may be) to the extent that the breach has arisen as a result of any act or omission on or after Completion by or on behalf of the Purchaser.
(f)	The Vendors’ Liability in respect of any breach of any Specified Provision will be reduced or extinguished (as the case may be) to the extent that the breach has arisen as a result of any act or omission by or on behalf of the Vendors where the Purchaser has requested in writing that act or omission.
(g)	If after the Vendors have made any payment to the Purchaser for any breach of any Specified Provision the Purchaser Group receives any benefit or credit by reason of matters to which the breach relates (including a Tax benefit or credit) then if the Purchaser has been fully compensated for the whole of the Loss it suffers (Purchaser’s Loss), the Purchaser must immediately repay to the Vendors a sum corresponding to the amount of the payment made by the Vendors to the Purchaser but only to the extent that any payment from the Vendors when added to any other payment received by the Purchaser in respect of the Purchaser’s Loss is in excess of the amount of the Purchaser’s Loss.
(h)	The Vendors will not be liable to make any payment (whether by way of damages or otherwise) for any breach of any Specified Provision:

(i)	where the breach is as a result of any legislation not in force at the date of this Deed including legislation which takes effect retrospectively;
(ii)	where the breach is as a result of or in respect of a change in the judicial interpretation of the law in any jurisdiction after the date of this Deed;
(iii)	where the breach is as a result of or in respect of a change in the administrative practice of any Government Agency after the date of this Deed including any change which takes effect retrospectively;
(iv)	without limiting clause 8.8(g), to the extent that the Purchaser Group is actually indemnified against, or otherwise recovers from a person other than the Vendors in respect of any loss or damage arising out of the breach whether by way of contract, indemnity or otherwise; or
(v)	for any indirect, consequential or economic loss or loss of profit or revenue, however arising.

(i) The Vendors are not liable under a Claim in relation to a Specified Provision if:

(i)	all of the Group Companies and Group Trusts have ceased to be wholly owned by a member of the Purchaser Group; or
(ii)	all of the Businesses, have ceased to be owned and controlled by a member of the Purchaser Group.

Acknowledgments

8.9 The Purchaser acknowledges and agrees that:

(a) except as expressly set out in this Deed, neither the Vendors nor any person acting on behalf of or associated with the Vendors has made any representation, given any advice or given any warranty or undertaking, promise or forecast of any kind in

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	relation to the Sale Shares and Units, the Group Companies, the Group Trusts, any of the Properties, or this Deed;
(b)	without limiting paragraph (a), and except as expressly set out in this Deed and in the Accounts, no representation, no advice, no warranty, no undertaking, no promise and no forecast is given in relation to:

(i)	any economic, fiscal or other interpretations or evaluations by the Vendors or any person acting on behalf of or associated with the Vendors or any other person;
(ii)	future matters, including future or forecast costs, prices, revenues or profits; or
(iii)	the principles to be applied by any Government Agencies with respect to the regulation of the hotel industry and, in particular, matters affecting revenue, prices and charges and service levels.

8.10 The Purchaser acknowledges and agrees that without limiting clause 8.9, and except for the statements made in Schedule 2 and in this Deed, no statement or representation made by the Vendors:

(a)	has induced or influenced the Purchaser to enter into this Deed or agree to any or all of its terms;
(b)	has been relied on in any way as being accurate by the Purchaser;
(c)	has been warranted to the Purchaser as being true; or
(d)	has been taken into account by the Purchaser as being important to the Purchaser’s decision to enter into this Deed or agree to any or all of its terms.

8.11 The Purchaser acknowledges and agrees that it has competently and diligently carried out an investigation and has examined and acquainted itself concerning all available information which is relevant to the risks, contingencies and other circumstances which could affect its decision to enter into this Deed. Each of the Vendors and the Purchaser confirms and acknowledges that as at the date of this Deed nothing has come to their attention which would constitute a breach of the representations, warranties or covenants made by the Vendors in this Deed.

Insurance

8.12	[Intentionally Deleted]
8.13	[Intentionally Deleted]

Restructure of the Purchaser Group or change in accounting policies

8.14 The Vendor will not be liable for any breach of any Specified Provision to the extent that the breach would not have arisen but for any restructure or change in ownership of the Purchaser Group on or after Completion or any change in the accounting policies and changes in tax practices (in a manner consistent with clause 2.1 of Schedule 18) of the Purchaser Group on or after Completion.

Reduction of Purchase Price

8.15 Any monetary compensation received by the Purchaser from the Vendors as a result of any breach by the Vendor of any Specified Provision will be in reduction and refund of the Purchase Price.

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Remedies for breach of Specified Provision

8.16 The Purchaser acknowledges that its sole remedy for a breach of a Specified Provision is damages other than specific performance of obligations.

No Liability where breach

8.17 Without limiting the operation of any other provision of this Deed, the Vendors’ Liability in respect of any breach of any Specified Provision will be reduced or extinguished to the extent the Vendors’ Liability has arisen as a result of any breach by the Purchaser of any provision of this Deed.

Mitigation of Losses

8.18 The Purchaser shall procure that all reasonable steps are taken and all reasonable assistance is given to avoid or mitigate any Losses which in the absence of mitigation might give rise to a liability in respect of any claim under this Deed.

Limitation in relation to Tax

8.19 The Vendors are not liable under a Claim for any Loss arising from any matter or circumstance set out in clause 2 of Schedule 18 and clause 1.2(b) of Schedule 18 applies to the Purchaser as if set out in full in this Deed.

Indemnification by Purchaser

8.20 [Intentionally Deleted]

8.21 Following Completion, the Purchaser agrees to indemnify the Vendor Group and its officers, directors, employees and agents and hold them harmless from the liabilities set out in paragraph 3 of Schedule 18.

8.22 The Purchaser and the Purchaser’s Guarantor shall indemnify the Vendors and the Vendor Group and its officers, directors, employees and agents and hold them harmless against any Liabilities, Loss, cost, damage and expense incurred by the Vendor or the Vendor Group in connection with any Claim against the Vendor or the Vendor Group to the extent that the Claim arises from or is connected with any breach by a Purchaser or the Purchaser’s Guarantor of any warranty of the Purchaser set out in Schedule 3 or of any other term of this Deed.

Indemnification by Vendor

8.23 Following Completion, the Vendors shall indemnify the Purchaser Group and its officers, directors, employees and agents and hold them harmless from the liabilities set out in paragraph 5 of Schedule 18.

8.24 The Vendors shall indemnify the Purchaser and the Purchaser Group and its officers, directors, employees and agents and hold them harmless against any Liabilities, Loss, cost, damage and expense incurred by the Purchaser or the Purchaser Group in connection with:

(a)	any Claim against the Purchaser or the Purchaser Group to the extent that the Claim arises from or is connected with any breach by a Vendor of any Specified Provision or of any other term of this Deed; and
(b)	the restructure of the Vendor Group prior to Completion including the Vendor Intercompany Debt Assignment Steps and the discharge of the Vendor Intercompany Debt and the Group Companies and Group Trusts Intercompany Debt.

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9 Claims

Notification of Potential Claims

9.1

If the Purchaser or any member of the Purchaser Group becomes aware of any fact, matter or circumstance that gives rise to a claim against the Vendors under this Deed, the Purchaser must as soon as reasonably practicable and in any event within 60 Business Days, give a notice in writing to HIHA setting out such information and supplying copies of all relevant correspondence as the Purchaser or other member of the Purchaser Group (acting reasonably) determines is reasonably necessary to enable the Vendors to assess the merits of the claim provided that no information prejudicial to the interests of the Purchaser Group need be disclosed.

9.2

Failure to give notice within such period shall not affect the rights of the Purchaser.

Notification of Claims under this Deed

9.3 Notices of claims against the Vendors under this Deed must be given by the Purchaser to the Vendors within the time limits specified in clause 8.8(a), specifying in reasonable detail the legal and factual basis of the claim and may include (in the Purchaser’s discretion) 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).

9.4 Notwithstanding clause 9.3 if:

(a)	the Purchaser or any Purchaser Group member lodges a claim under the terms of any insurance policy of or applicable to the Purchaser or the Purchaser Group member (Insurance Claim); and
(b)	pursues and conducts the Insurance Claim with due diligence (to the standard of a reasonable insured who would receive the benefit of any payment under the insurance policy),

then the time during which the Insurance Claim is being conducted by the Purchaser will not be counted towards the calculation of the time limit specified in clause 8.8(a) during which the Purchaser must commence legal proceedings under clause 8.8(a).

Commencement of Proceedings

9.5 Any claim notified pursuant to clause 9.3 will (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn 9 months after the notice is given pursuant to clause 9.3 or in the case of any contingent liability, 9 months after such contingent liability becomes an actual liability and is due and payable unless legal proceedings in respect of it:

(a)	have been commenced by being both issued and served; and
(b)	are being continue to be pursued with reasonable diligence.

Investigation by the Vendors

9.6 In connection with any matter or circumstance that may give rise to a claim against the Vendors under this Deed:

(a) the Purchaser will allow subject to the Purchaser’s rights and preservation of legal privilege, and must procure that the relevant Purchaser Group member allows, the Vendors and their financial, accounting or legal or other advisers to reasonably

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	investigate (including reasonable physical inspections of the Properties) 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
(b)	the Purchaser must disclose to the Vendors material of which the Purchaser is aware which relates to the claim and shall, and may procure that any other relevant members of the Purchaser Group shall, give, subject to their being paid all reasonable costs and expenses, 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 Vendors or their financial, accounting or legal advisers may reasonably request.
(c)	The Vendors agree to keep all such information provided to it under this clause 9.6 confidential and to use it only for the purpose of investigating and defending the claim in question.

Conduct of Third Party Claims

9.7 If the matter or circumstance that may give rise to a claim against the Vendors under this Deed is a result of or in connection with a claim by or liability to a third party then:

(a)	subject to the Vendors indemnifying the Purchaser or the relevant member of the Purchaser Group concerned against all Losses and Liabilities to the reasonable satisfaction of the Purchaser or the relevant member of the Purchaser Group, the Purchaser must, or the Purchaser must procure that any other member of the Purchaser Group takes such action as the Vendors may reasonably request to avoid, dispute, deny, defend, resist, appeal, compromise or contest such claim;
(b)	the Vendors will be entitled to at their own expense and in their absolute discretion, but subject to consultation with the Purchaser and with the consent of 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 Group concerned and to have the conduct of any related proceedings, negotiations or appeals provided that the Vendors in exercising its rights under this clause must have reasonable regard to the preservation of the reputation and relationships of the Purchaser and the Purchaser Group and must otherwise act in such a manner that will not prejudice the Purchaser’s or the Purchaser Group’s rights or position;
(c)	the Purchaser or other member of the Purchaser Group concerned may not admit, compromise, dispose of or settle such claim without the written consent of HIHA (not to be unreasonably withheld) on behalf of the Vendors;
(d)	if the Vendors make any request pursuant to clause 9.7(a), the Purchaser must, and the Purchaser must procure that any other member of the Purchaser Group takes all reasonable steps to procure that the Vendors are provided on reasonable notice with all material correspondence and documentation relating to the claim as the Vendors may reasonably request that does not prejudice the rights or position of the Purchaser or the Purchaser Group;
(e)	The Vendors agree to keep all such correspondence and information confidential and to use it only for the purpose of dealing with the relevant claim.

9.8 If the matter or circumstance that may give rise to a claim against the Vendors under this Deed is a result of or in connection with a claim by or liability to a third party in clause 9.7 is in

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relation to Tax, the provisions set out in clause 1 of Schedule 18 apply to the extent specifically provided for in clause 1 of Schedule 18 and otherwise the provisions of this clause 9 apply to such claims.

10 Confidentiality and announcements

Provisions to remain confidential

10.1 Subject to clauses 10.2 and 10.3 each party must not, without the prior written consent of the other parties disclose:

(a)	the content or effect of this Deed;
(b)	prior to Completion, any Confidential Information obtained by it.

Permitted disclosures

10.2 A party may make disclosures:

(a)	to those of its employees, officers, professional or financial advisers and bankers as the party reasonably thinks necessary to give effect to this Deed but only on a strictly confidential basis; and
(b)	in the case of the Purchaser, to the unitholder of the HANZ Trust; and
(c)	if required by law or rules of a securities exchange, after the form and terms of that disclosure have been notified to the other party and the other party has had a reasonable opportunity to comment on the form and terms.

Announcements

10.3 Any party may make announcements or statements at any time in the form and on the terms previously agreed by the parties in writing, which agreement must not be unreasonably withheld.

Confidentiality Deed Poll

10.4 As and from Completion, the Purchaser is released from its obligation to keep the Confidential Information (as that term is defined in the Confidentiality Deed Poll) confidential pursuant to the Confidentiality Deed Poll. For the avoidance of doubt, the Purchaser is not released from its obligations in relation to Recipient Advisors or Recipient Agents under the Confidentiality Deed Poll.

11 Notices

Requirements

11.1 All notices must be:

(a)	in legible writing and in English;
(b)	addressed to the recipient at the address or facsimile number set out below or to such other address or facsimile number as that party may notify to the other parties:

to the Vendors and Vendors’ Guarantor:

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Address: Level 9, 504 Pacific Highway, St. Leonards, NSW 2065 / 230 Victoria Street, #13-00 Buois Junction Towers, Singapore 188024

Attention: Chief Operating Officer ANZSP / Asia Pacific General Counsel

Facsimile no: +612 9437 6811/ +65 6395 6158

with a copy to Baker & McKenzie

Address: Level 27, AMP Centre, 50 Bridge Street, Sydney NSW 2000

Attention: Graeme Dickson

Facsimile no: +61 2 9225 1595

to the Purchaser and Purchaser Guarantor:

Address: Goldfields House, Level 10, 1 Alfred Street, Sydney NSW 2000

Attention: Kumar Kalyanakumar

Facsimile no: +61 2 9252 7266

with a copy to Henry Davis York

Address: 44 Martin Place, Sydney NSW 2000

Attention: Roger Dobson

Facsimile no: +61 2 9947 6999

(c)	signed by the party or where the sender is a company by an officer of that company or under the common seal of that company; and
(d)	sent to the recipient by hand, prepaid post (airmail if to or from a place outside Australia) or facsimile.

Receipt

11.2 Without limiting any other means by which a party may be able to prove that a notice has been received by another party, a notice will be deemed to be duly received:

(a)	if sent by hand when left at the address of the recipient;
(b)	if sent by pre-paid post, 3 days (if posted within Australia to an address in Australia) or 10 days (if posted from one country to another) after the date of posting; or
(c)	if sent by facsimile, upon receipt by the sender of an acknowledgment or transmission report generated by the machine from which the facsimile was sent indicating that the whole facsimile was sent to the recipient’s facsimile number;

but if a notice is served by hand, or is received by the recipient’s facsimile on a day which is not a Business Day, or after 5.00 pm on a Business Day, recipient’s local time the notice is deemed to be duly received by the recipient at 9.00 am on the first Business Day after that day.

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12 Vendors & Purchaser Guarantees

Vendors’ Guarantee

12.1 In consideration of the Purchaser entering into this Deed, the Vendors’ Guarantor guarantees to the Purchaser the due and punctual performance of:

(a)	all the obligations, commitments, undertakings, warranties and indemnities of the Vendor under or pursuant to this Deed; and
(b)	without limiting the generality of paragraph (a), the obligations of the Vendors under the following provisions of this Deed:

(i)	obligation of the Vendors to make any payment to the Purchaser pursuant to clause 7.13; and
(ii)	obligation of the Vendors to make any payment to the Purchaser for a breach of any Specified Provision pursuant to clause 8.

12.2 If and whenever the Vendors default for any reason whatsoever in the performance of any of the Vendor Guaranteed Obligations, the Vendors’ Guarantor must promptly, upon demand, unconditionally perform or procure the performance of, and satisfy or procure the satisfaction of, the Vendor Guaranteed Obligations in regard to which such default has been made in the manner prescribed under this Deed and so that the same benefits shall be conferred on the Purchaser as they would have received if the Vendor Guaranteed Obligations had been duly performed and satisfied by the Vendors.

Separate and principal obligations

12.3 The guarantee and indemnity contained in clauses 12.1 to 12.7 is a principal obligation and is not ancillary or collateral to any other right or obligation. The Purchaser need not take any steps against the Vendors or any other person (other than by serving a demand on the Vendors’ Guarantor) before it enforces this guarantee and indemnity.

Obligations of Vendors’ Guarantor unaffected

12.4 The obligations of the Vendors’ Guarantor under this guarantee and indemnity will not be affected in any way by any act, omission, matter or thing, which except for this provision might operate to release it from its obligations under this clause.

Indemnity

12.5 As a separate and alternative obligation, any amount not paid by the Vendors’ Guarantor under this clause on the basis of a guarantee is recoverable from the Vendors’ Guarantor on the basis of an indemnity payable on demand. For the avoidance of doubt, notwithstanding any provision hereof other than clause 12.7, the parties agree and acknowledge that the scope and extent of the liability of the Vendors’ Guarantor for a breach of this Deed is no greater than the liability of the Vendors.

Time limit

12.6 The rights of the Purchaser and the obligation of the Vendors’ Guarantor pursuant to clauses 12.1 to 12.7 survive Completion but terminates:

(a) in the case of any claim by the Purchaser under paragraph 25 of Schedule 2 (tax warranties) and/or paragraph 5 of Schedule 18 (tax indemnities), within 6 years after the Completion Date; and

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(b) in case of any other claim by the Purchaser, within 18 months after the Completion Date,

unless there is a claim under clause 9 that remains unresolved between the parties or such extended period applies as referred to in clause 9.4, in which case the obligations of the Vendors’ Guarantor pursuant to clauses 12.1 to 12.7 will continue until the Vendors’ obligations in respect of such claim are fully and completely performed and satisfied.

Excluded Claims

12.7 Notwithstanding any other provision hereof, clauses 12.1 to 12.7 shall only apply to the Vendor Guaranteed Obligations and for the avoidance of doubt to the extent permitted by law but without limiting any right to sue for breach of contract under this Deed (including clause 8.3), does not apply to any Claim made by the Purchaser against the Vendors:

(a)	under section 52 of the Trade Practices Act 1974 (Cth), section 12DA of the Australian Securities and Investment Commission Act 2001 or Part 7.10 of the Corporations Act or the corresponding provision of any state or territory enactment;
(b)	under any similar provision of any other enactment in any other jurisdiction; or
(c)	in relation to any common law claim for misrepresentation, misstatement or mistake except to the extent arising from fraud,

in respect of the Sale or any other matters which are the subject of this Deed (including the Warranties) or the Disclosure Materials.

Purchaser’s Guarantee

12.8

In consideration of the Vendors entering into this Deed, the Purchaser Guarantor guarantees to the Vendors the due and punctual performance of all the obligations, commitments, undertakings, warranties and indemnities of the Purchaser under or pursuant to this Deed.

12.9

If and whenever the Purchaser defaults for any reason whatsoever in the performance of any of the Purchaser Guaranteed Obligations, the Purchaser Guarantor must promptly, upon demand, unconditionally perform or procure the performance of, and satisfy or procure the satisfaction of, the Purchaser Guaranteed Obligations in regard to which such default has been made in the manner prescribed under this Deed and so that the same benefits shall be conferred on Vendors as they would have received if the Purchaser Guaranteed Obligations had been duly performed and satisfied by the Purchaser.

Separate and principal obligations

12.10 The guarantee and indemnity contained in clauses 12.8 to 12.12 is a principal obligation and is not ancillary or collateral to any other right or obligation. The Vendors need not take any steps against the Purchaser or any other person (other than by serving a demand on the Purchaser Guarantor) before it enforces this guarantee and indemnity.

Obligations of Purchaser Guarantor unaffected

12.11 The obligations of the Purchaser Guarantor under this guarantee and indemnity will not be affected in any way by any act, omission, matter or thing, which except for this provision might operate to release it from its obligations under this clause.

Indemnity

12.12 As a separate and alternative obligation, any amount not paid by the Purchaser Guarantor under this clause on the basis of a guarantee is recoverable from the Purchaser Guarantor on

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the basis of an indemnity payable on demand. For the avoidance of doubt, notwithstanding any provision hereof, the parties agree and acknowledge that the scope and extent of the liability of the Purchaser’s Guarantor for a breach of this Deed is no greater than the liability of the Purchaser.

Time limit

12.13 The rights of the Vendor and the obligation of the Purchaser’s Guarantor pursuant to clauses 12.8 to 12.14 survive Completion and are not limited to any particular time period but continue until all obligations of the Purchaser under this Deed have been fully and completely performed and satisfied.

Limitation

12.14	The Purchaser’s Guarantor enters into this Deed only in its capacity as trustee and manager of the HANZ Trust and in no other capacity. A Purchaser Guaranteed Obligation can be enforced against the Purchaser’s Guarantor only to the extent to which it is satisfied out of property of the HANZ Trust out of which the Purchaser’s Guarantor is actually indemnified for the Purchaser Guaranteed Obligation. This limitation of the Purchaser’s Guarantor’s liability applies despite any other provision of this Deed and extends to all Purchaser Guaranteed Obligations.
12.15	No party (other than the Purchaser’s Guarantor) may sue the Purchaser’s Guarantor in any capacity other than as responsible entity of the HANZ Trust, including to seek the appointment of a receiver (except in relation to property of the HANZ Trust), a liquidator, an administrator or any similar person to the Purchaser’s Guarantor or prove in any liquidation, administration or arrangement of or affecting the Purchaser’s Guarantor (except in relation to the property of the HANZ Trust).
12.16	The provisions of clauses 12.14 to 12.18 do not apply to any Purchaser Guaranteed Obligation to the extent it is not satisfied because under the constitution or by operation of law there is a reduction in the extent of the Purchaser’s Guarantor’s indemnification out of the property of the HANZ Trust, as a result of the Purchaser’s Guarantor’s fraud, negligence or breach of trust. The Purchaser’s Guarantor is not to be regarded as being negligent or in breach of trust to the extent to which any failure by the Purchaser’s Guarantor has been caused or contributed to by a failure by any other person to fulfil its obligations in relation to the HANZ Trust or any other act or omission of another person.
12.17	No attorney, agent, receiver or receiver and manager appointed in accordance with this Deed has authority to act on behalf of the Purchaser’s Guarantor in any way which exposes the Purchaser’s Guarantor to any personal liability and no act or omission of any such person will be considered fraud, negligence or breach of trust of the Purchaser’s Guarantor for the purpose of clause 12.16.
12.18	The Purchaser’s Guarantor is not obliged to do or refrain from doing anything under this Deed (including incur any liability) unless the Purchaser’s Guarantor’s liability is limited to the same manner as set out in clauses 12.14 to 12.18.

13 Liquor Licence

Notice and Consents

13.1 The parties agree that the Purchaser will (at its cost) procure any notices, consents or approvals required in order to change the beneficial ownership of all Liquor Licences or to

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notify and obtain approval by the relevant Government Agencies of the appointment of new directors of Group Companies and Group Trusts or as may otherwise be necessary as a result of the share sale contemplated in this Deed (including procuring consent to the appointment of new directors of Group Companies and Group Trusts of the relevant Government Agencies in Victoria in respect of the Liquor Licence 7 days prior to Completion).

13.2

At the request of the Purchaser, the Vendors must or must procure the Licensee, the directors of each Group Company and the Group Companies (at the sole cost of the Purchaser) to sign all documents and do such other things as the Purchaser may reasonably require prior to Completion and after Completion in order for the Purchaser to give the notice or procure the consent or approval as set out in clause 13.1.

Purchaser Consent

13.3 The Vendors shall not make an application to vary the Liquor Licence without first seeking consent from the Purchaser.

Completion not delayed

13.4 The obtaining of any consents from or giving of any notices to, the Government Agencies in respect of the Liquor Licences is not a condition to Completion. The Purchaser may not delay Completion on the basis of a failure to receive consent from any Government Authority.

14	Period After Completion
14.1	Access to Records

(a) The Purchaser shall use its reasonable endeavours to procure that all Books and Records obtained from the Vendors under this Deed are preserved in respect of the period commencing on the Completion Date until the later of:

(i)	6 years from the Completion Date; and
(ii)	any date required by an applicable law.

(b) After Completion the Purchaser shall, provided the Purchaser’s or the Purchasers Group’s rights are not adversely affected, on reasonable notice by the Vendors acting reasonably and in good faith:

(i)	provide the Vendors and their advisers with reasonable access to the Books and Records obtained from the Vendors under this Deed and allow the Vendors to inspect and obtain copies or certified copies of such Books and Records at the Vendors’ expense; and
(ii)	provide the Vendors and their advisers with reasonable access to the personnel and premises of the Purchaser and the Group Companies and Group Trusts as the Purchaser considers is appropriate,

for the purposes of assisting the Vendors to prepare tax returns, accounts and other financial statements, discharge statutory obligations or comply with Tax or other legal requirements for financial disclosure or to conduct legal or arbitration proceedings, but not proceedings against the Purchaser or Purchaser Group.

(c) The Vendors shall reimburse the Purchaser for its reasonable costs in retrieving any Books and Records and making personnel and premises available under this clause 14.1.

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(d)	In providing any such Books and Records, the Purchaser is not obliged to waive privilege.
(e)	The Vendors shall comply with all steps required by the Purchaser to preserve the confidentiality of the Books and Records.
(f)	The Purchaser agrees that the Vendors may retain copies of any Books and Records which it may require to enable it to comply with any applicable law after the Completion Date.

Taxation Returns

14.2 The Vendors and the Purchaser acknowledge and agree that the provisions of clause 4 of Schedule 18 apply as if set out in full in this Deed.

15 Consents

15.1 Prior to Completion, the Vendors must use its reasonable endeavours to:

(a)	obtain the Consent from each of the persons listed in column 2 of Part A of Schedule 20 pursuant to the terms of the documents listed in column 3 of Part A of Schedule 20; and
(b)	procure the relevant parties, including the member of the Vendor Group to consent to the assignment the documents listed in Part B of Schedule 20 to the relevant Group Company.

15.2 The Purchaser must:

(a)	provide all information and documents reasonably required by any of the persons listed in column 2 of Part A of Schedule 20 to provide the Consent; and
(b)	provide all information, documents and assistance reasonably required to effect the assignment of the documents listed in Part B of Schedule 20.

16 GST

GST to be added to amount payable

16.1 Unless otherwise expressly stated, all amounts payable under this Deed are expressed to be exclusive of GST. If GST is payable on a Taxable Supply, the amount payable for that Taxable Supply will be the amount expressed in this Deed plus GST. The recipient of the Taxable Supply must pay the GST to the supplier on the earlier of the time of making payment of the consideration on which the GST is calculated and the issue of an invoice relating to the Taxable Supply. The supplier must provide a tax invoice to the recipient as a pre condition for payment by the recipient of the GST.

Impact of GST on calculation of amounts payable

16.2 If an amount payable under this Deed is calculated by reference to a Liability incurred by a party, then the Liability must be reduced by the amount of any Input Tax Credit to which that party is entitled in respect of that Liability. A party will be assumed to be entitled to a full Input Tax Credit unless it demonstrates that its entitlement is otherwise prior to the date on which payment must be made.

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17 General Provisions

Costs

17.1 Each party must pay its own costs in respect of this Deed and the documents contemplated by this Deed except that Purchaser must pay all stamp duty (other than Vendor Duty) payable on and in connection with this Deed, the transfer of the Sale Shares and Units and any other documents contemplated by this Deed (other than any document relating to the Vendor Intercompany Debt Assignment Steps or other restructure steps taken by the Vendor Group prior to Completion).

Non-merger

17.2 To the extent applicable, the provisions of this Deed are continuing and will not merge or be extinguished on Completion.

Effect of termination

17.3 If this Deed is terminated under clauses 4.5 or 6.5(b):

(a)	the parties are released from the obligation to continue to perform this Deed and any other obligations which by their nature survive termination; and
(b)	each party retains the rights it has against any other party for any past breach of the Deed.

Indemnities

17.4 The indemnities contained in this Deed are:

(a)	continuing, separate and independent obligations of the parties from their other obligations, and survive the termination of this Deed; and
(b)	absolute and unconditional and unaffected by anything which otherwise might have the effect of prejudicing, releasing, discharging or affecting the liability of the party giving the indemnity.

Invalid or unenforceable provisions

17.5 If a provision of this Deed is invalid or unenforceable in a jurisdiction:

(a)	it is to be read down or severed in that jurisdiction to the extent of the invalidity or unenforceability; and
(b)	it does not affect the validity or enforceability of:

(i)	that provision in another jurisdiction; or
(ii)	the remaining provisions.

Waiver and exercise of rights

17.6	A waiver by a party of a provision or of a right under this Deed is binding on the party granting the waiver only if it is given in writing and is signed by the party or an officer of the party granting the waiver.
17.7	A waiver is effective only in the specific instance and for the specific purpose for which it is given.

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17.8	A single or partial exercise of a right by a party does not preclude another or further exercise or attempted exercise of that right or the exercise of another right.
17.9	Failure by a party to exercise or delay in exercising a right does not prevent its exercise or operate as a waiver.

Amendment

17.10 This Deed may be amended only by a document signed by all parties.

Counterparts

17.11 This Deed may be signed in counterparts and all counterparts taken together constitute one document.

Further assurances

17.12 Each party must, at its own expense, whenever requested by another party, promptly do or arrange for others to do everything reasonably necessary to give full effect to this Deed and the transactions contemplated by this Deed.

Assignment

17.13 A party must not transfer, assign, create an interest in or deal in any other way with any of its rights under this Deed without the prior written consent of the other parties.

Entire Agreement

17.14 This Deed together with any documents referred to in this Deed or executed in connection with this Deed is the entire agreement of the parties about the subject matter of this Deed and supersedes any representations, negotiations, arrangements, understandings or agreements and all other communications.

Rights cumulative

17.15 The rights, remedies and powers of the parties under this Deed are cumulative and not exclusive of any rights, remedies or powers provided to the parties by law.

Consents and Approvals

17.16 If the doing of any act, matter or thing under this Deed is dependent on the consent or approval of a party or is within the discretion of a party, then, unless otherwise specified, the consent or approval may be given or the discretion must be exercised reasonably.

Jurisdiction

17.17 Each party irrevocably and unconditionally:

(a)	submits to the non-exclusive jurisdiction of the courts of New South Wales; and
(b)	waives any claim or objection based on absence of jurisdiction or inconvenient forum.

Service of process

17.18 Each party agrees that a document required to be served in proceedings about this Deed may be served:

(a) if originating process or a subpoena to be served on a company or registered body by being sent by post to or left at its registered office, and in all other cases at its address for service of notices under clause 11; or

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(b) in any other way permitted by law.

Governing Law

17.19 This Deed is governed by the laws of New South Wales.

Interest

17.20 Any payment to be made in accordance with this Deed shall attract interest for the period commencing on the date that payment is due and ending on the date that payment is received by the relevant party. Interest will accrue daily and be compounded at monthly intervals at the Interest Rate.

Independent Advice

17.21 Each of the Vendors and the Purchaser confirms it has received independent legal advice relating to all the matters provided for in this Deed and agrees that the provisions of this Deed (including the Disclosure Schedule and all documents entered into pursuant to this Deed) are fair and reasonable.

Time of the Essence

17.22	Time is of the essence of this Deed.
17.23	If the parties agree to vary a time requirement, the time requirement so varied is of the essence of this Deed.
17.24	An agreement to vary a time requirement must be in writing.

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Schedule 1

Group Structure :

1. Hale International Limited owns 75,000 redeemable preference Shares in the company.

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Trust Structure

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Schedule 2

Warranties

1	Accuracy of Information
1.1	To the best of the Vendors’ knowledge, the information set out in Schedule 1 (Information about the Sale Shares and Units, Group Companies and Group Trusts), Schedule 10 (Properties), Schedule 13 (Contracts) and the Disclosure Schedule is complete, accurate and not misleading by omission or otherwise.
2	Power and Authority
2.1	The Vendors and the Vendor Guarantor are duly incorporated and validly exist under the law of its place of incorporation.
2.2	The Vendors and the Vendor Guarantor have the power and authority to execute this Deed and perform and observe all its terms and each transaction contemplated by this Deed to be performed and observed by them.
2.3	The execution and delivery of this Deed has been properly authorised by all necessary corporate action of the Vendors and the Vendor Guarantor.
2.4	This Deed constitutes a legal, valid and binding obligation of the Vendors and the Vendor Guarantor, enforceable in accordance with its terms by appropriate legal remedy.
2.5	The execution, delivery and performance by the Vendors and the Vendor Guarantor of this Deed and each transaction contemplated by this Deed do not or will not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:

(a)	any provision of the relevant constitution of the Vendors or the Vendor Guarantor;
(b)	any material term or provision of any security arrangement, undertaking, agreement or deed; or
(c)	any writ, order or injunction, judgment, law, rule or regulation to which it is a party or is subject or by which it is bound.

3	Solvency
3.1	None of the following has occurred and is subsisting, or is threatened, in relation to the any of the Vendors, the Vendors Guarantor or a Group Company.

(a)	The appointment of a voluntary administrator, deed administrator or liquidator.
(b)	An application or an order made, proceedings commenced, a resolution passed or proposed in a notice of meeting or other steps taken for:

(i) the winding up, dissolution, or administration of any of the Vendors, the Vendors Guarantor or the Group Companies; or

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(ii) any of the Vendors, the Vendors Guarantor or a Group Company entering into an arrangement, compromise or composition with or assignment for the benefit of their creditors or a class of them.

(c) The Vendors, the Vendors Guarantor or a Group Company:

(i)	being (or taken to be under applicable legislation) unable to pay its debts, other than as the result of a failure to pay a debt or claim the subject of a good faith dispute; or
(ii)	stopping or suspending, or threatening to stop or suspend, payment of all or a class of their debts.

(d) The appointment of a controller, receiver, receiver and manager, administrator receiver or similar officer to any of the assets and undertakings of the Vendors, the Vendors Guarantor or a Group Company.

3.2 None of the following has occurred and is subsisting, or is threatened, in relation to the any of the Holding Trust or the Group Trusts:

(a)	an order or petition or application for the sequestration of the estate of the trustee of the relevant trust;
(b)	a meeting of creditors to take control of trust property or a composition or arrangement with creditors being entered into;
(c)	a judgment entered against the trustee of the relevant trust, or seizure of trust assets in execution; or
(d)	any assets of any relevant trust placed in receivership.

3.3	The shares in the Group Companies and the units in the Group Trusts and the Assets are not liable to a claim by a trustee in bankruptcy or liquidator.
4	The Group Companies and Group Trusts
4.1	Each of the Group Companies:

(a)	are duly incorporated and validly existing under the law of its place of incorporation;
(b)	has the power to own the relevant Assets and carry on the relevant Business;

4.2	Each of the Group Trusts and Holding Trust are validly established, properly constituted and existing under the law of its place of establishment.
4.3	In respect of each Group Trust and Holding Trust:

(a)	the trustee of the relevant trust has the right to be fully indemnified out of the trust fund in respect of all obligations and liabilities incurred in connection with the trust and the assets of the trust as sufficient to satisfy that indemnity;
(b)	the trustee of the relevant trust is the sole trustee of that trust, has complied in all material respects with its duties and obligations as trustee at law in equity, under statute or otherwise and the terms of the trust instrument and is not in default of any of its material obligations as trustee of the relevant trust;

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(c)	the trustee of the relevant Group Trust had and has the power to carry on the Business and all of its activities and to own the Assets and make investments which have been or currently undertaken or made by the trustee in respect of the relevant Group Trust;
(d)	the relevant trust has not been resettled, nor has the trust been terminated or any event for the vesting of the assets of the trust occurred;
(e)	the relevant trust has been used solely for conducting of the relevant Business in accordance with the respective trust deed and no other purpose; and
(f)	the unitholder of the relevant trust is the sole beneficiary under the relevant trust and there has been no other beneficiary under the relevant trust.

4.4	The only activities of each Group Company (other than Centra Victoria Pty Ltd) are as acting as trustee of the relevant Group Trust, and no Group Company has incurred any liabilities or conducted any activities other than as trustee of the relevant Group Trust. The only activity of Centra Victoria Pty Ltd is as holding the relevant Assets and conducting the relevant Business of Centra Victoria Pty Ltd.
4.5	No Group Company is the holder or beneficial owner of any shares or holds any other interest in any body corporate other than as set out in Schedule 1.
4.6	The sole unitholder of each of the Group Trusts since the date of establishment of each Group Trust has been HIA (T) Pty Limited as trustee of the Holding Trust.
4.7	On or before Completion, HIA (T) Pty Limited as trustee of the Holding Trust, has ratified the breach of trust disclosed as a disclosure against warranty 4.3(b) and 6.2 in the Disclosure Schedule.
5	Sale Shares and Units
5.1	The Vendors are the legal and beneficial owners of the Sale Shares and Units.
5.2	On Completion, the Purchaser will acquire the full beneficial ownership of all of the Sale Shares and Units free and clear of any Security Interest (other than a Permitted Encumbrance) or Claim of any person.
5.3	The Sale Shares and Units are all the issued shares in the capital of the Group Companies and all the issued units in the Group Trusts. The Sale Shares and Units have been fully paid, validly allotted and issued (including that they have not been issued in violation of any pre-emptive or similar rights of any person) and are fully paid and no moneys are owing in respect of them.
5.4	No person has any right to call for the present or future issue or transfer of any share or debenture or other security (including a convertible security) in or of the Group Companies or any unit or option in or of a Group Trust.
5.5	No Group Company has:

(a)	given any financial assistance in connection with the acquisition of shares which assistance is prohibited under Part 2J.3 of the Corporations Act 2001 (Cth);
(b)	redeemed or repaid any share capital, reduced its share capital or offered or agreed to buy back any of its shares other than in accordance with the Corporations Act 2001 (Cth).

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5.6	All dividends or distributions declared, made or paid by any Group Company or Group Trust have been declared, made or paid in accordance with its constitution and trust deed (as applicable) and in accordance with the Corporations Act 2001 (Cth).
6	Constitution and trust deeds
6.1	The affairs of each of the Group Companies has been conducted in all material respects in accordance with the relevant constitution for each Group Company.
6.2	To the best of the Vendors’ knowledge, the Businesses and affairs of each Group Trust has been conducted in accordance with the relevant trust deed for each Group Trust.
6.3	The copies of the constitutions of the Group Companies and trust deeds of the Group Trusts in the Disclosure Materials are true, accurate, complete and up to date copies of the constitution of the Group Companies and trust deed of the Group Trusts, there have been no amendments, resolutions, minutes or other instruments or documents that materially affect the constitutions and trust deeds and the constitutions and trust deeds comply with all material applicable laws.
6.4	All statutory books and records of the Group Companies and all books and records of the Group Trust are complete, accurate and not misleading by omission or otherwise, and have been fully and properly kept and are up to date with true, accurate and complete entries and records.
6.5	The Group Companies and Group Trusts have:

(a)	complied with all material legal requirements for the filing of returns, particulars, notices and other documents with all Government Agencies;
(b)	complied with all material legal requirements in relation to the conduct of its Business in all material respects; and
(c)	conducted its Business and its affairs generally in accordance with all material applicable laws, orders, regulations, by-laws and other similar requirements.

6.6	Each trust deed of the Group Trusts has been duly executed and duly stamped in accordance with the laws of each state and territory of Australia.
7	Ownership of Assets and the Businesses
7.1	All Assets:

(a)	are owned by the Group Companies and Group Trusts;
(b)	are, where capable of possession, in the possession or under the control of the relevant Group Company or Group Trust; and
(c)	none of such Assets is the subject of a Security Interest or the subject of any factoring arrangement, conditional sale or credit agreement or Claim of any person.

7.2 The Assets are:

(a) all the assets used in the Businesses; and

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(b) all the assets that are needed to conduct the Business in the manner in which it has been conducted in the 12 months before the date of this Deed,

other than the Brands and the Holidex Plus Reservation System.

7.3	The Businesses and the Assets will be in the same state of repair and condition (subject to fair wear and tear) on Completion as they were as at the date of this Deed.
8	Authorisations and compliance
8.1	No material charge, fine, penalty, order for restitution or compensation or damages and no notice to clean up or take action has been made against the Group Companies or Group Trusts in respect of the obligations of them under any Authorisations required to conduct the Business which have not been complied with.
8.2	No Group Company has received any fire safety or other notices in respect of the Properties or the Assets from a Government Agency which have not been complied with.
8.3	There is no fact or circumstance which may result in the Business being in breach of any Authorisation or which may otherwise result in the revocation, suspension, cancellation, non-renewal or material variation of any Authorisation required to conduct the Business.
8.4	No Group Company, Group Trust nor their officers and employees (in the course of their employment) has committed or omitted to do any act or thing the commission or omission of which is in material contravention of any law that may have a material adverse impact on the Business.
8.5	No Group Company or Group Trust is party to any contract which is in breach of any applicable restrictive trade practices legislation. No Group Company has engaged or engages in any conduct or practice which is in breach of that legislation.
9	Properties

General

9.1	The Properties comprise all the land and buildings owned, leased or occupied by the Group Companies or Group Trusts.
9.2	The Group Companies and Group Trusts named in Schedule 10 as owner of a Freehold Property are the legal and beneficial owner (as indicated in Schedule 10) of the Freehold Properties.
9.3	For each Freehold Property, to the best of the Vendors’ knowledge:

(a)	none of the Group Companies has received any notice from any person claiming any right, title or interest in the Freehold Properties;
(b)	no person other than the Group Companies has any present or contingent legal or beneficial right, title or interest in any of the Freehold Properties and without limitation the Freehold Properties are free and clear of all Security Interests except for Permitted Encumbrances; and
(c)	none of the Freehold Properties is occupied or entitled to be occupied presently or in the future (as a result of any existing contract, arrangement or understanding) as to

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     whole or part (whether by lease, sublease, agreement, arrangement or understanding) by any third party.

9.4 For each Leased Property, to the best of the Vendors’ knowledge:

(a)	the relevant Group Company is entitled to the exclusive occupation and quiet enjoyment of the premises;
(b)	there is no current litigation or other proceeding whether current, pending or threatened, challenging the validity of the Property Lease or suggesting that it is otherwise not in full force and effect;
(c)	there has not been any default (beyond any applicable notice, grace or cure period) under any Property Lease by a Group Company except for defaults which individually or in the aggregate would not reasonably be expected to have a material adverse effect;
(d)	none of the Group Companies has received any notice from any person claiming any right, title or interest in the Leased Properties except for notices which individually or in the aggregate would not reasonably be expected to materially detract from the value or materially interfere with the present use of the Leased Properties; and
(e)	the relevant Group Company or Group Trust holds all legal and beneficial leasehold right, title and interest in the Leased Properties free and clear of all Security Interests except for Permitted Encumbrances.

10	Superannuation
10.1	All occupational superannuation contributions required under any relevant Industrial Instrument, award in respect of the Employees or prior employees or any applicable agreement for or with the Employees or prior employees have been made.
10.2	The superannuation funds disclosed in Schedule 16 are the only superannuation funds to which the Group Companies make a superannuation commitment in relation to the Employees. Each such superannuation fund provides accumulation benefits in respect of the Employees.
10.3	Each Group Company has satisfied its superannuation commitments (if any) and has made all payments necessary to avoid incurring any liability to pay the superannuation guarantee charge and has provided all documents and information as required and in the time required under the SGA Legislation in relation to the Employees and prior employees.
10.4	No Group Company has received written notice of any claim or complaint in relation to the superannuation arrangements of the Employees or prior employees.
10.5	Except as set out in Schedule 16, no Group Company has any obligation to any Employees, or to the trustee or offeror of any other superannuation fund or similar arrangement whether under an agreement, contract or any other arrangement, whether express or implied or whether enforceable or otherwise to:

(a)	make superannuation contributions in respect of the Employee at a rate above the prescribed minimum superannuation support under the SGA Act; or
(b)	otherwise make periodical or lump sum payments in relation to that person’s superannuation benefit and/or benefit upon retirement.

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11	Industrial Relations
11.1	None of the Group Companies has signed, any certified or enterprise agreement, or any other contractual agreement with any trade union or employee organisation of any kind, about the Employees.
11.2	There is no existing, threatened or pending industrial dispute or pay claim involving the Group Companies or any of the Employees.
11.3	None of the Group Companies have received notification that they have not complied in any respect with, and there are no facts or circumstances which may give rise to any breach of, any contractual, statutory, legal and fiscal obligations of and in relation to its employment of the Employees including all codes of practice, collective agreements and awards.
12	Contracts
12.1	Each of the Contracts listed in Schedule 13:

(a)	are the only contracts that involve or may involve total annual expenditure in excess of $250,000;
(b)	is valid, binding and enforceable against the Group Companies in accordance with its terms;
(c)	is at arms length and within the ordinary course of conduct of the Business; and
(d)	does not breach any restrictive trade practices legislation and has not involved in any breach by the Company of Part V of the Trade Practices Act 1974 (Cth).

12.2 In addition to the Contracts, there are no other contracts entered into by the Group Company or Group Trust that are material to the Businesses that:

(a)	is outside the ordinary and proper course of the Business or is otherwise materially unusual or onerous; or
(b)	is incapable of being fulfilled or performed in accordance with its tenor on time, or only with undue or unusual expenditure of money or effort by the Group Company or Group Trust.

12.3	No Group Company or Group Trust has received notice of termination, rescission, avoidance, repudiation or breach of any Contract or other contract referred to in warranty 12.2 (whether received directly or received by another Group Company or Group Trust) and is not aware (after having made due and proper inquiries) of any fact, matter or circumstance which would lead to any party to a Contract to be in breach of any term of a Contract.
12.4	No Group Company or Group Trust 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 or Group Trust has no liability or obligation except for the payment of annual subscription or membership fees).
12.5	As at Completion, there are no existing contracts or arrangements material to the Business between, on the one hand, any Group Company or Group Trust and, on the other hand, any of the Vendors or any other member of the Vendor Group other than on normal commercial terms in the ordinary course of business.

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13	Environment
13.1	No Group Company has received:

(a)	notification that a law relating to the environment is breached by occupation or use of any of the Properties or the Assets or by the operation of the Business; or
(b)	any notice requiring remediation of the Properties or removal from the Properties of any contaminant or hazardous substance.

13.2 The Group Companies and Group Trusts:

(a)	are conducting, and have conducted the Business; and
(b)	are using, and have used the Properties and the Assets,

	in material compliance with a law relating to the environment.
13.3	Except as disclosed in the Disclosure Material, the Vendors are not aware (after having made due and proper inquiry) of the existence of any contaminant or hazardous substance in relation to any Property.
14	Disputes and Litigation
14.1	To the best of the Vendors’ knowledge, there are no disputes with any supplier or threatened disputes, including any dispute with a travel agency, consortia or airline.
14.2	No Group Company has received notice that there are disputes or threatened disputes with any person including in relation to the local community due to the operations of the Properties.
14.3	The Group Companies in respect of their Business, are not involved in any proceeding before or investigation by any Government Agency, tribunal, committee or board of enquiry nor by any royal commission of enquiry and no notice has been received to the effect that such proceeding or investigation is pending or threatened.
14.4	No statutory or contractual notices have been served on any Group Company in respect of any of the Assets or the Business which in any material respect impair, prevent or otherwise interfere with the use of or proprietary rights in the Assets or the Business.
14.5	No Group Company or Group Trust or any of their officers or employees (in the course of their employment) is involved in any prosecution, litigation, arbitration proceedings or administrative or governmental investigation or challenge as plaintiff, defendant, third party or in any other capacity. There are no such matters pending or threatened in respect of which verbal or written communication has been given or received by or against a Group Company or any director or officer of a Group Company in his/her capacity as such a director or officer.
14.6	There are no facts or circumstances which may give rise to any involvement by a Group Company or a Group Trust in any material prosecution, litigation, arbitration proceedings or administrative or governmental investigation or challenge as plaintiff, defendant, third party or in any other capacity.

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15	Intellectual Property
15.1	To the best of the Vendors’ knowledge:

(a)	The Group Companies and Group Trusts own or possess enforceable licences or other rights to use all intellectual property used in the Business at the date of this Deed and the Completion Date and have not received any notice of infringement of intellectual property rights from any other person.
(b)	No Group Company has passed off any of its goods or services as those of any other person and each Group Company’s use of intellectual property in respect of the Business does not infringe the intellectual property rights of any other person.

16	Licences, Permits Etc
16.1	To the best of the Vendors’ knowledge, the Group Companies have fully disclosed to the Purchaser and hold all Authorisations, permits, licences, authorities, rights to use, approvals, registrations, qualifications, orders and consents necessary for carrying on the Businesses (collectively “Permits”) and the Permits are valid and in good standing and the Group Companies are not in breach of and have not received notification that they are in breach of any of them and has not received notification for failure to comply with any requirements of any of them.
17	Liquor Licence
17.1	The Group Companies have not received notification that they have not complied with the provisions of any applicable liquor licensing legislation or conditions attaching to any Liquor Licence in the proper running of the Properties.
17.2	The Group Companies have not received notification that there are complaint proceedings or threatened proceedings under any applicable liquor licensing legislation
18	Accounts

Accounts

18.1 The unaudited pro forma accounts of the Group Trusts for the financial period ended on the Accounts Date, a copy of which is attached as Schedule 5 have been prepared:

(a)	in accordance with the Accounting Standards and otherwise with applicable law and with the accounting principles, standards and practices generally accepted at the Accounts Date; and
(b)	subject to paragraph (a) above, on a basis consistent, in all material respects, with that adopted in preparing the audited accounts of such Group Companies and Group Trusts for the previous two financial years,

and give a true and fair view of the assets and liabilities and of the state of affairs, financial position, performance and results of each of the Group Companies and Group Trusts up to

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	and as at the Accounts Date and of the profits and losses of each Group Company and Group Trust for the period concerned.
18.2	Since the Accounts Date:

(a)	each of the Group Companies and Group Trusts have conducted its business in the ordinary course of business, have not disposed of, written down or written off any material assets of the Group Companies or Group Trusts other than in the ordinary course of business, and have not dealt with any person other than at arms length;
(b)	there has been no change in the financial position, prospects or solvency of the Group Companies and the Group Trusts from that set out in the Accounts except changes none of which individually or in the aggregate has had a adverse effect on the Group Companies and the Group Trusts;
(c)	no material capital commitments have been entered into by any Group Company or Group Trust other than is contemplated by such Group Company’s or Group Trust’s capital budget as disclosed to the Purchaser in the Disclosure Materials. For these purposes a material capital commitment is one involving capital expenditure of over $250,000 exclusive of GST;
(d)	no Group Company or Group Trust has received any notice or threat of termination of any contract which could reasonably be expected to have a material adverse effect on the profitability of any of the Businesses;
(e)	no Group Company or Group Trust has defaulted in paying any material creditor by the date due for payment;
(f)	no Group Company or Group Trust has declared , made or paid any dividend or other distribution to the Vendors or other persons;
(g)	no Group Company or Group Trust has issued or agreed to issue any share capital or units (as applicable) or any other security giving rise to a right over its capital or units (as applicable); and
(h)	no Group Company or Group Trust has redeemed or purchased or agreed to redeem or purchase any of its share capital or unit (as applicable).

19	Insurance
19.1	The insurance cover relating to the Group Companies and Group Trusts is, current and, in force and, to the best of the Vendors’ knowledge, no fact or circumstance exists that would render any such insurance void or unenforceable in any respect.
19.2	To the best of the Vendors’ knowledge, each of the Group Companies has and at all material times has had valid insurance cover in respect of its Businesses, its Employees and the Assets:

(a)	against all risks normally insured against by companies carrying on the same type of business as the Group Company or having similar assets;
(b)	for the full amount required by legislation;
(c)	for the full replacement value of its Assets on a per Property basis; and
(d)	from a well-established and reputable insurer.

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19.3	To the best of the Vendors’ knowledge, no Group Company has failed to give any material notice or present any claim under those policies in a due and timely manner.
20	Employees
20.1	As at the relevant date specified in Schedule 16, the information in relation to Full Time, Part Time and Casual employees in Schedule 16:

(a)	contains a complete list of all persons employed by the Group Companies on a Full Time or Part Time or Casual basis;
(b)	contains the date from which each Full Time and Part Time and Casual employee commenced employment with the Group Companies;
(c)	contains all applicable rates of pay (broken down on an hourly, weekly, monthly or annual basis (as the case may be) for each Employee;
(d)	contains each Employee’s accrued long service leave calculated as per the relevant state legislation;
(e)	contains each Employee’s accrued sick leave entitlement;
(f)	contains each Employee’s annual leave entitlement, including any loading entitlement calculated as per the relevant state legislation; and
(g)	contains details of any contributions by the Group Companies to any superannuation funds;
(h)	contains details of any discretionary and other bonuses to which any Employee may be entitled and details of bonuses paid in the previous 12 months;
(i)	contains details of the Industrial Instruments that apply to the Employees (including details of any Employees who are not covered by any Industrial Instrument).

20.2	The Group Companies have maintained in accordance with any applicable legislation complete and accurate leave, remuneration and superannuation records in respect of each Employee.
20.3	The Group Companies have complied in any material respect with any contractual, statutory, legal and fiscal obligations of and in relation to its employment of the Employees including any Industrial Instruments.
20.4	Each Employee is employed by the Group Companies.
20.5	There is no employee share option scheme or like scheme with any of the Employees.
20.6	The Vendors or the Group Companies have paid (in accordance with all applicable contracts, agreements, legislation and/or Industrial Instruments) to all Employees all salary, wages, bonuses, incentive payments and allowances, and have made payment on behalf of or in respect of all Employees of all necessary payments including Income Tax and payroll tax payments, which it is required to pay in respect of their period of employment with the Group Companies up to Completion by virtue of the terms of any such contract, agreement, legislation and/or Industrial Instrument.
20.7	All declarations of remuneration for the purposes of obtaining workers compensation insurance have been made accurately, and all workers compensation premiums have been

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	paid. Notification has been given of all actual or potential workers compensation claims. No notification has been received of an event which will increase the annual premium in any material respect.
21	Delegation of powers
21.1	There are no powers of attorney or other authorities given by the Group Companies which could authorise any person to bind the Group Company or deal with the whole or any part of the Business or Assets.
21.2	There is no offer, tender, quotation or similar intimation given or made by the Group Company that is still outstanding and relates to the Sale Shares and Units and shares of the Group Companies and units in the Group Trusts.
22	Intercompany Debts and Arrangements
22.1	As at the Completion Date there will be:

(a)	no loans to the Vendor Group and/or any director of any of the Vendor Group other than as provided for in the Adjustment Statement;
(b)	no transactions to acquire assets of the Group Companies or Group Trusts on an other than fair market value basis for the Group Company or Group Trust;
(c)	no amounts payable whether present, unascertained, immediate, future or contingent between the Vendor Group and the Group Companies and Group Trusts other than as provided for in the Adjustment Statement.

23	Undertakings
23.1	Summary details of all Security Interests, outstanding guarantees, indemnities, mortgages, charges, pledges, liens, assignments, suretyship or other security agreement or arrangement given other than in the ordinary course of business;

(a)	by any Group Company or Group Trust; or
(b)	for the benefit of any Group Company or Group Trust

	in excess of $250,000 are fully disclosed in the Data Room and copies of such documents are up to date, complete, accurate and not misleading by omission or otherwise.
23.2	As at the Completion Date no Group Company or Group Trust has:

(a)	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)	provided or granted any guarantees, indemnities, mortgages, charges, pledges, liens, suretyship or other security agreement or arrangement to any person which is not a Group Company.

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23.3	As at the Completion Date no Group Company is party to any one or more derivative contracts in respect of which a Group Company or Group Trust may incur a liability in excess of $250,000.
24	Construction
24.1	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 Group Companies or Group Trusts continue to have obligations in each case with an individual contract value in excess of $250,000 other than those set out in the Disclosure Schedule.
24.2	The Vendors 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 $250,000 and which have been entered into in the last three years immediately prior to the date of this Deed.
24.3	In this paragraph 24.3, the expression “Construction Documentation” shall mean building contracts relating to the Properties:

(a)	in respect of which a certificate of practical completion was issued in the last three years immediately prior to the date of this Deed; and/or
(b)	relating to works in progress and “Relevant Claim” shall mean a written claim the value of which is in excess of $250,000.
In respect of the Construction Documentation there are no outstanding:
(a)	Relevant Claims for financial compensation, extension of time or variation; or
(b)	Relevant Claims against any member of the Group Companies or Group Trusts by any counterparty to the Construction Documentation alleging failure by the relevant member of the Group Companies or Group Trusts to perform its obligations under the relevant Construction Documentation; or
(c)	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.

25	Taxation
25.1	All Income Tax payable by or in respect of a Group Company and Group Trust for any Tax Year ending before Completion has been duly paid or will be provided for in the Adjustment Statement.
25.2	In relation to the Straddle Year, all Income Tax payable by or in respect of a Group Company and Group Trust for income, profits or gains derived, or transactions occurring, in that part of the Straddle Year which ends at Completion, has been duly paid or will be provided for in the Adjustment Statement.
25.3	There is no Audit of the Group Companies or Group Trusts being conducted by a Taxation Authority as at the date of this Deed in relation to the Taxes referred to in this warranty 25.

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25.4	No tax litigation between any of the Group Companies and Group Trusts and any Taxation Authority is unresolved as at the date of this Deed in relation to the Taxes referred to in this warranty 25.
25.5	All the Group Companies and Group Trusts have obtained Australian Business Numbers.
25.6	On and from 31 March 2000:

(a)	as at Completion, all Tax returns and like documents in relation to the Taxes referred to in this warranty 25 required to be filed or lodged by or in respect of a Group Company and Group Trust with Taxation Authorities including pre-Completion returns in respect of any period before Completion have been or will be duly filed or lodged within the timeframe required by law. Such Tax returns and like documents contains correct information and on a proper basis;
(b)	there are no private tax rulings in respect of Income Tax or requests for tax rulings in respect of Income Tax lodged by any of the Group Companies or Group Trusts;
(c)	subject to the limitations contained in clause 25.6(d)(i), the Group Companies and Group Trusts have maintained proper records in accordance with the requirements of the law in relation to its Tax returns and like documents;
(d)	all necessary asset registers and supporting information required to enable:

(i)	the cost base or reduced cost base of the assets to which capital gains tax is relevant;
(ii)	the written down value or adjustment value of depreciating assets,

	held by any of the Group Companies and Group Trusts have been provided where available;
(e)	none of the Group Companies or Group Trusts have entered into an agreement which now or in the future may extend the period of assessment or collection of any Income Tax;
(f)	none of the Group Companies or Group Trusts have any permanent establishment (as that expression is defined in any relevant double taxation deed current as at the date of this Deed) outside Australia;
(g)	there has been no Capital Gains Tax rollover pursuant to Part IIIA of the Income Tax Act (1936), or pursuant to Part 3-1 or 3-3 of the Income Tax Act 1997, or Stamp Duty rollover pursuant to any State Duties legislation in relation to the Group Companies and Group Trusts; and
(h)	there has been no event that have given rise to a net forgiven amount pursuant to Schedule 2C to the Income Tax Assessment Act (1936) in relation to the Group Companies and Group Trusts.

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Schedule 3

Purchaser and Purchaser Guarantor Warranties

1 Power and Authority

(a)	The Purchaser and the Purchaser Guarantor are duly incorporated and validly exist under the law of its place of incorporation.
(b)	The Purchaser and the Purchaser Guarantor have the power and authority to execute and exchange this Deed and perform and observe all its terms and each transaction contemplated by this Deed to be performed and observed by it.
(c)	The execution and delivery of this Deed has been properly authorised by all necessary corporate action of the Purchaser and the Purchaser Guarantor.
(d)	This Deed constitutes a legal, valid and binding obligation of the Purchaser and the Purchaser Guarantor, enforceable in accordance with its terms by appropriate legal remedy.
(e)	The execution, delivery and performance by the Purchaser and the Purchaser Guarantor of this Deed and each transaction contemplated by this Deed does not or will not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:

(i)	any provision of the relevant constitution of the Purchaser or the Purchaser Guarantor;
(ii)	any material term or provision of any security arrangement, undertaking, agreement or deed; or
(iii)	any writ, order or injunction, judgment, law, rule or regulation to which they are a party or is subject or by which they are bound.

2 Solvency

(a) None of the following has occurred and is subsisting, or is threatened, in relation to the any of the Purchaser or the Purchaser Guarantor.

(i)	The appointment of an administrator or liquidator.
(ii)	An application or an order made, proceedings commenced, a resolution passed or proposed in a notice of meeting or other steps taken for:

(A)	the winding up, dissolution, or administration of the Purchaser or the Purchaser Guarantor; or
(B)	the Purchaser or the Purchaser Guarantor entering into an arrangement, compromise or composition with or assignment for the benefit of its creditors or a class of them.

(iii) The Purchaser or the Purchaser Guarantor:

(A) being (or taken to be under applicable legislation) unable to pay its debts, other than as the result of a failure to pay a debt or claim the subject of a good faith dispute; or

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(B) stopping or suspending, or threatening to stop or suspend, payment of all or a class of its debts.

(iv) The appointment of a receiver, receiver and manager, administrator receiver or similar officer to any of the assets and undertakings of the Purchaser or the Purchaser Guarantor.

3	Section 32
3.1	Prior to the payment of the Deposit and to the execution of this Deed, the Purchaser has received from the Vendors a statement required by section 32 of the Sale of Land Act (1962) as amended, a copy of which is attached as Schedule 22 to this Deed.

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Schedule 4

Adjustment Statement

Definitions

For the purposes of this Schedule 4:

Accruals means the monetary value of all goods and services received by any Group Company or Group Trust before the Completion Date which have not been paid for by that Group Company or Group Trust as at 12:01am on the day after the Completion Date, any wages, salaries, PAYE, GST, accrued Income Tax and rates and annual leave entitlements for the calendar month in which the Completion Date falls and any amount in respect of bonuses for 2005 and prior years and for the period up to Completion in respect of Employees, which will be apportioned on a pro-rata basis.

Accrued Income means the monetary value of all goods and services provided by a Group Company or Group Trust before the Completion Date for which revenue has not been received by that Group Company or Group Trust as at 12:01am on the day after the Completion Date.

Cash means the aggregate amount of cash float at the Properties and the balances in the Group Companies’ and Group Trusts’ general ledger.

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 advanced 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.

Receivables means all the book and other debts arising out of or attributable to the operations of any Group Company or Group Trust as at 12:01am on the day after the Completion Date including any Intercompany Receivables, Accrued Income, Prepayments, rights to repayments of Tax and rates, 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 or any such book or other debts owed by a Group Company or Group Trust to another Group Company or Group Trust.

Deferred Income means all payments received by the Group Companies and Group Trusts before the Completion Date relating to a service to be provided by that Group Company or Group Trust on or after the Completion Date including any Current Guest Deposits.

Intercompany Payables means all indebtedness due at Completion from the Group Companies to the Vendor Group.

Intercompany Receivables means all indebtedness due at Completion from the Vendor Group to the Group Companies or Group Trusts.

Inventory 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 for which the immediate packaging is unopened and all other items which have prior to the date of this Deed, in the ordinary course, been

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regarded as stock and used in the Business, which are unused and for which the immediate packaging is unopened, owned beneficially by the Group Trusts and the Group Companies and held at the Properties in connection with the Business at Completion but for the avoidance of doubt not including any of the Excluded Assets or stock or items that are in circulation or that have already been expensed;

Payables means all indebtedness of the Group Companies and Group Trusts as at 12:01am on the day after the Completion Date including, without limitation, Intercompany Payables creditors , overdrafts, monies held on account, bills of exchange, Tax, Accruals and Deferred Income but excluding, for the avoidance of doubt, deferred tax, and any indebtedness owed to a Group Company or Group Trust to another Group Company or Group Trust.

Prepayments means all prepayments made by the Group Companies and Group Trusts before the Completion Date which relate to a supply to any such company of goods and/or services to be provided in the ordinary and usual course of business on or after the Completion Date.

Provisions means any provision of a Group Company or Group Trust which is required to be made at Completion in accordance with the policies set out in this Schedule 4.

1.	General
1.1	The Adjustment Statement will be prepared by the Vendors in accordance with the Accounting Standards as adjusted for the specific items discussed below in Schedule 4 and adjusted for the principles used in the Accounts. The Actual Adjustment Amount will include any balance relating to inter-company balances as between, on the one hand, the Vendor Group, and on the other hand, Group Companies and Group Trusts. For the avoidance of doubt, notes to Accounts are not included in the Adjustment Statement.
2	Current Assets

Inventory

2.1 Any items of Inventory which are unsaleable, unusable, spoilt or out of date shall be excluded from the Inventory.

Other current assets

2.2	Other current assets comprise prepayments and other debtors (excluding those included in calculating the Receivables) and should be recognised to the extent that they are recoverable within one year of the Completion Date. Prepayments will be computed by reference to the time period to which the expenditure relates.
3	Current Liabilities

Provisions

3.1 Provisions include all employee entitlement provisions in respect of annual leave, annual leave loading and long service leave equal to or less than 12 months. Employee entitlement provisions included within the Adjustment Statement are to be calculated at 70% of the face value of the provision to provide an effective after-tax position. For the avoidance of doubt, this provision shall not include any amounts in respect of severance or redundancy payments.

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4 Non Current Liabilities

Provisions

4.1	Provisions include all employee entitlement provisions in respect of long services leave for more than 12 months. Employee entitlement provisions included within the Adjustment Statement are to be calculated at 70% of the face value of the provision to provide an effective after-tax position.
5	Aggregation
5.1	Each entry shall be the aggregate of the separate amounts in respect of any heading for each of the Group Companies and Group Trusts but must include the breakdown for each Property/Group Trust/Group Company.
6	Estimated Adjustment Amount
6.1	For the avoidance of doubt the Estimated Adjustment Amount equals $(2,827,061) calculated as follows:

Current Assets
Cash		$	1,015,672
Receivables		$	6,653,654
Intercompany Receivables		$	1,800,000
Inventory		$	832,507
Other		$	467,167
Current Liabilities
Interest bearing liability		$	(808,727	)
Payables		$	(9,880,478	)
Intercompany Payables	(	$	1,000,000	)
Provisions		$	(1,114,382	)
Non Current Liabilities
Provisions		$	(792,474	)
Estimated Adjustment Amount		$	(2,827,061	)

Actual Adjustment Amount shall be calculated in accordance with the methodology used to determine the Estimated Adjustment Amount. If the Actual Adjustment Amount is a negative number then it

-63-	Share and Unit Sale Deed
	Final

represents an adjustment in favour of the Purchaser and if the Actual Adjustment Amount is a positive number it represents an adjustment in favour of the Vendor.

-64-	Share and Unit Sale Deed
	Final

Schedule 5

Pro Forma Accounts

-65-	Share and Unit Sale Deed
	Final

Schedule 6

Business Names

Crowne Plaza Canberra

Business Name:	Registered No:
Crowne Plaza Canberra	F00102725
Binara One	F00115088
Red Salt Grill	F00117954

Crowne Plaza Coogee

Business Name:	Registered No:
Crowne Plaza Coogee Beach	BN97770481

Crowne Plaza Terrigal

Business Name:	Registered No:
Seasalt	BN98093769
Florida Beach Bar	K4977308
Lord Ashley Lounge	M4275335
Key Largo Night Club	M4275825
Crowne Plaza Terrigal	U8279648
Bodhi Spa*	BN98021907

* held by SC Hotels & Resorts (Australia) Pty Ltd

Holiday Inn Potts Point

Business Name:	Registered No:
Holiday Inn Potts Point	BN97835186

Holiday Inn Townsville

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	Final

Business Name:	Registered No:
Holiday Inn Townsville	BN17516237
Stokes St. Bar & Grill	BN17466362

Holiday Inn Melbourne

Business Name:	Registered No:
Clarendon St Grill	B1526727P
Holiday Inn Melbourne	B1564282D

Holiday Inn City Centre Perth

Business Name:	Registered No:
788 Bar Café	BN10105268
Level One Restaurant	BN10105256
Holiday Inn City Centre Perth	BN10266793

Holiday Inn on Flinders Melbourne

Business Name:	Registered No:
Holiday Inn on Flinders Melbourne	1368987L

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	Final

Schedule 7

Deposit Letter

[Insert date]

Jones Lang LaSalle Hotels (NSW) Pty Limited

Dear Sirs

Deposit Arrangements

We request that Jones Lang LaSalle Hotels (NSW) Pty Limited act as deposit holder in accordance with the Share and Unit Sale Deed to be entered into between Holiday Inns Holdings (Australia) Pty Limited, SPHC Group Pty Limited, Six Continents Limited, HANZ (Australia) Pty Limited and Eureka Funds Management Limited as trustee and manager of the Alternative Investment (Hotel and New Zealand) Private Syndicate (Deed). We confirm that the Deed has been or will be executed today.

1. Terms

We understand that Jones Lang LaSalle Hotels (NSW) Pty Limited agrees to act as an Stakeholder on a short term basis in relation to the Deed on the following terms:

(a)	HANZ (Australia) Pty Limited confirms that it has deposited the Deposit into a controlled moneys account with the Transaction Bank which is in the joint names of the Vendors and the Purchaser and to which the Stakeholder is the sole signatory to such account.
(b)	The Stakeholder is authorised to treat the Deposit as held under its role as Stakeholder in accordance with clause 3.1 of the Deed.
(c)	The Stakeholder must only release the Deposit in accordance with the terms of the Deed.

2. Limitations on Stakeholder’s liability

Jones Lang LaSalle Hotels (NSW) Pty Limited’s role is as Stakeholder as described in this letter and in the Deed. The Stakeholder’s duties are solely of a mechanical and administrative nature and the Stakeholder is not a trustee or fiduciary for any party. The Stakeholder will not be liable:

• for any error of judgment or any act done or omitted to be done by the Stakeholder or its officers, employees and agents, except for its own negligence or misconduct; or

• for any action taken or not taken by a party under the Deed.

Any capitalised term not otherwise defined in this letter has the meaning given to it in the Deed.

The signatories below accept the terms of engagement of the Stakeholder in accordance with the terms of this letter.

Yours sincerely

Holiday Inn Holdings (Australia) Pty Limited

-68-	Share and Unit Sale Deed
	Final

HIA (T) Pty Limited

SPHC Group Pty Limited

Six Continents Limited

HANZ (Australia) Pty Limited

Eureka Funds Management Limited as trustee and manager of the Alternative Investment (Hotel and New Zealand) Private Syndicate

Accepted by:

Jones Lang LaSalle Hotels (NSW) Pty Limited

-69-	Share and Unit Sale Deed
	Final

Schedule 8

Disclosure Index

The Disclosure Index consists of the attached:

1.	Master Due Diligence Index;
2.	Supplementary Due Diligence Index; and
3.	Supplementary Index – Sensitive Employment Contracts and Accommodation Agreements.

-70-	Share and Unit Sale Deed
	Final

Schedule 9

Excluded Assets

Liquor Licence Number 15000229 in respect of the National Convention Centre Canberra.

The business name “The National Convention Centre Canberra” (Registration Number F00115864).

Means all equipment and materials owned by a service provider under a contract for service with the Group Companies or with the Manager including without limitation under the business agreements contained in folders B/7, C/7, D/7, E/7, F/7, G/7, H/7, I/7 and A/5 of the Data Room

-71-	Share and Unit Sale Deed
	Final

Schedule 10

Properties – Details of Freehold and Leasehold Properties

Freehold Titles

Hotel:	Title Reference:	Owner:
Crowne Plaza Coogee	1/772123	HI (Coogee) Pty Ltd
238-246 Arden Street, Coogee NSW
Crowne Plaza Terrigal	1003/793659	HI (Terrigal) Pty Ltd
11 Ash Street, Terrigal NSW	1005/819949
Holiday Inn Potts Point	301/838703	HI (Potts Point) Pty Ltd
203-225 Victoria Street, Potts Point NSW
Holiday Inn Townsville	50359886	HI (Townsville) Pty Ltd
334 Flinders Mall, Townsville QLD
Holiday Inn Flinders	Volume 09912 Folio 719	HI (Melbourne) Pty Ltd
575 Flinders Lane, Melbourne VIC
Holiday Inn City Centre Perth	Volume 1226 Folio 657	HI (Perth) Pty Ltd
778-788 Hay Street, Perth WA	Volume 1250 Folio 117
	Volume 450 Folio 116A

-72-	Share and Unit Sale Deed
	Final

Leasehold Titles

Hotel:	Title Reference:	Landlord:	Tenant:
Crowne Plaza Canberra	Volume 1255 Folio 93	The Commonwealth of Australia	HI (Canberra) Pty Ltd
1 Binara Street, Canberra ACT
Holiday Inn Melbourne	Volume 10043 Folio 991	Secretary to the Department of Infrastructure	Centra Victoria Pty Ltd
1-5 Spencer Street, Melbourne VIC

-73-	Share and Unit Sale Deed
	Final

Schedule 11

Australian Management Contract

-74-	Share and Unit Sale Deed
	Final

Schedule 12

Australian Non Disturbance Deed

The Non-Disturbance Deed as set out in Schedule 7 of the Australian Management Contract.

-75-	Share and Unit Sale Deed
	Final

Schedule 13

Contracts

1. Crowne Plaza Canberra (ACT)

	Name of Agreement	Disclosure Index
(1)	Otis Elevator Company – Lift Maintenance Services	B/7/007
(2)	Ricoh Finance – Agreement	B/10/002
(3)	MagiNet Australia P/L Installation and Service	B/7/019
(4)	Qantas Holidays Rates and Allocations Agreement	B/8/002
(5)	ACTEWAGL Retail Gas Supply Agreement	B/7/004

2. Crowne Plaza Coogee (NSW)

	Name of Agreement	Disclosure Index
(6)	AGL Energy Sales & Marketing Ltd Gas Supply Agreement	C/7/001
(7)	MagiNet Australia P/L Installation and Service	C/9/027
(8)	Electronics by Design – Minibar Master System Agreement	C/7/011
(9)	Reivernet – Hotel Service Agreement	C/7/023

3. Crowne Plaza Terrigal (NSW)

	Name of Agreement	Disclosure Index
(10)	AHS Hospitality – Agreement	D/7/003

-76-	Share and Unit Sale Deed
	Final

(11)	AGL Agreement for Sale of Electricity	D/7/002
(12)	Videoplus Service Agreement	D/7/009
(13)	Ricoh Finance Agreement	D/7/008
(14)	MagiNet Australia P/L Installation and Service Agreement	D/7/014
(15)	OTIS Agreement for Extended Maintenance	D/7/013

4. Holiday Inn Potts Point (NSW)

	Name of Agreement	Disclosure Index
(16)	MagiNet Australia P/L Installation and Service Agreement	E/7/004
(17)	AGL Electricity Ltd – Supply Agreement	E/7/005
(18)	Lawrence Dry Cleaners Pty Ltd – Laundry Service Agreement	E/7/002

5. Holiday Inn Townsville (QLD)

	Name of Agreement	Disclosure Index
(19)	MagiNet Australia P/L Installation and Service Agreement	F/7/005
(20)	Sunlover Holidays Short Breaks Agreement	F/8/005
(21)	Reivernet – Hotel Service Agreement	F/7/007

-77-	Share and Unit Sale Deed
	Final

6. Holiday Inn Melbourne (VIC)

	Name of Agreement	Disclosure Index
(22)	AHS Hospitality Group P/L – Contract for Housekeeping Services	G/7/004
(23)	AGL – Agreement for Sale of Electricity	G/7/005
(24)	Galloway Environmental Waste Management P/L – Rental Agreement	G/7/008
(25)	Otis – Extension of Term of Maintenance Agreement	G/7/011
(26)	MagiNet Australia P/L Installation and Service Agreement	G/7/015
(27)	Thai Airways Crew Accommodation Agreement	G/8/001
(28)	Reivernet – Hotel Service Agreement	G/7/019

7. Holiday Inn On Flinders (VIC)

	Name of Agreement	Disclosure Index
(29)	AGL – Pricing Proposal for Holiday Inn Flinders	H/7/001
(30)	AHS Hospitality Group – Contract for House Keeping Services	H/7/002
(31)	OTIS Elevator Company Extension of Maintenance Agreement	H/7/007
(32)	MagiNet Australia P/L Installation and Service Agreement	H/7/008
(33)	Fuji Xerox – Customer Rental and Support Services	H/7/004

-78-	Share and Unit Sale Deed
	Final

	Agreement
(34)	Reivernet – Hotel Service Agreement	H/7/010

8. Holiday Inn City Centre Perth (WA)

	Name of Agreement	Disclosure Index
(35)	Alinta Commercial Gas Supply Agreement	I/7/003
(36)	MagiNet Australia P/L Installation and Service Agreement	I/7/023
(37)	Digital Document Solutions	I/7/005
(38)	Otis Elevators Elevator Maintenance	1/7/019
(39)	Reivernet – Hotel Service Agreement	I/7/025

-79-	Share and Unit Sale Deed
	Final

Schedule 14

Form of resignation

To:	The Directors
	[insert Entity Name]
	[insert Address]

I, [insert name], resign as a [director/secretary/public officer] of [Insert Entity] (“the Company”) to be effective from the close of the Directors’ meeting at which this resignation is tabled.

I hereby confirm that I have no claim against the Company in respect of any cause, matter or thing including (but without limitation) any claim for compensation for loss of office, breach of contract or for redundancy or unfair dismissal and that there is not outstanding any agreement or arrangement under which the Company has or could have any obligation to me.

Dated:

Signature of [insert name]

-80-	Share and Unit Sale Deed
	Final

Schedule 15

Vendor’s knowledge

(1)	(2)	(3)
Person	Area of Business	Vendors’ Warranties
Johanna McPherson	Senior Corporate Counsel	1.1, 6.2, 9.3, 9.4, 15.1, 16.1
Dennis Cook	Director — Statutory Reporting, Tax & Treasury	1.1, 6.2
George Lee	Director — Asset Management	1.1, 8, 9.3, 9.4, 14.1, 15.1, 16.1, 19.2, 19.3

-81-	Share and Unit Sale Deed
	Final

Schedule 16

Employee Information

		Commencement
	Complete List of	Date of each		Accrued Long		Accrued Annual
	Full Time and	Full Time and	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Part Time	for each	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
Crowne Plaza	*	*	*	*	*	*	*	*
Canberra (ACT)	B/12.5/016	B/12.5/019	B/12.5/018	B/12.5/017	B/12.5/017	B/12.5/017	B/12.3/001	B/12.5/015
	HRD E.O.M	Employee List	Employee List –	Leave Liability	Leave Liability Report	Leave Liability	Accrued Provident	Certificate of
	Employee Report	Date: 27/7/2005	Payroll	Report	Date: 19/7/ 2005	Report	Fund General Ledger Reconciliation	Currency
	Date: 22/7/2005		Date: 27/7/2005	Date: 19/7/ 2005		Date: 19/7/ 2005		Date: 30/6/2005
							Date: 5/4/2005	to 30/6/2006
							*
							B/12.3/002
							Mercer Portfolio
							Service Contribution
							Form
							Date: September 2004
							*
							B/12.3/003
							Hostplus – Application
							to become a
							participating employer
							Date: 25/6/2004
							*
							B/12.3/004
							AMP IHG Custom Super
							Contributions

-82- Share and Units Sale Deed Final

		Commencement
	Complete List of	Date of each		Accrued Long		Accrued Annual
	Full Time and	Full Time and	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Part Time	for each	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
							Date: 27/6/2005
							*
							B/12.3/005
							Mercer Portfolio Group
							Contributions
							Date: 27/6/2005
							*
							B/12.3/006
							Hostplus
							Superannuation
							Contributions
							Date: 27/6/2005
Crowne Plaza	*	*	*	*	*	*	*	*
Coogee (NSW)
	C/12.5/018	C/12.5/018	C/12.5/018	C/12.5/021	C/12.5/022	C/12.5/022	C/12.3/001	C/12.5/019
	Employee Data as	Employee Data as	Employee Data as	Long Service	Leave Liability Report	Leave Liability	Statement as to	CGU Invoice
	at 1 August 2005	at 1 August 2005	at 1 August 2005	Leave Report	Date: 26/7/2005	Report	superannuation contributions	Date: 15/3/2005
	Date: 1/8/2005	Date: 1/8/2005	Date: 1/8/2005	Date: 28/7/2005		Date: 26/7/2005		*
							Date: undated	C/12.5/020
							*	CGU Workers Compensation
							C/12.3/002
							Statement as to	Date: 14/1/2004
							superannuation	– 14/1/2005
							contributions and
							payment requisitions

-83- Share and Units Sale Deed Final

		Commencement
	Complete List of	Date of each		Accrued Long		Accrued Annual
	Full Time and	Full Time and	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Part Time	for each	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
							Date: 1/8/2005
Crowne Plaza	*	*	*	*	*	*	*	*
Terrigal (NSW)
	D/12.5/012	D/12.5/011	D/12.5/012	D/12.5/013	D/12.5/013	D/12.5/013	D/12.3/001	D/12.5/006
	Staff Listing by	Staff Listing by	Staff Listing by	Leave Liability	Leave Liability Report	Leave Liability	General Ledger	CGU Workers
	last name	employment date	last name	Report	Date: 26/7/2005	Report	Reconciliation	Compensation Premium Calculation
	Date: 29/7/2005	Date: 29/7/2005	Date: 29/7/2005	Date: 26/7/2005		Date: 26/7/2005
							*
							D/12.3/002	Date: Duration of Policy 30 June 2004 – 30 June 2005.
							Hostplus – Employer
							Record of contribution
							Date: 1/7/2004 –
							31/12/2004	*
							*	D/12.5/014
							D/12.3/003	CGU Insurance
							AMP – Employer	Invitation to renew
							Superannuation	Date: 11/6/2005
							Contributions
							Date: 29/7/2005

-84- Share and Units Sale Deed Final

		Commencement
	Complete List of	Date of each		Accrued Long		Accrued Annual
	Full Time and	Full Time and	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Part Time	for each	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
Holiday Inn Potts Point (NSW)	*	*	*	*	*	*	*	*
	E/12.5/004	E/12.5/004	E/12.5/021	E/12.5/021	E/12.5/018	E/12.5/018	E/12.3/001	E/12.5/011
	Total Employees	Total Employees	Long Service	Long Service	Leave Liability Report	Leave Liability	Statement as to	Workers
	Report	Report	Leave Report	Leave Report	Date: 26/7/2005	Report	superannuation	Compensation contributions
								Premium Forecast
	Date: undated	Date: undated	Date: July 2005	Date: July 2005		Date: 26/7/2005
	*	*					Date: 2 /5/2005	Date: Adjustment forecast for 04 – 05 and 05 -06
	E/12.5/020	E/12.5/020					*
	Employee Listing	Employee Listing					E/12.3/002
	Date: undated	Date: undated					AMP Custom Super – EFT Payment	*
								E/12.5/012
							Date: 30/7/2005	Date: undated
							*
							E/12.3/003
							Hostplus Super Fund
							Payment Requisition
							Date: 30/7/2005
							*
							E/12.3/004
							BT Lifetime Super –
							EFT Payment
							30/7/2005

-85- Share and Units Sale Deed Final

		Commencement
	Complete List of	Date of each		Accrued Long		Accrued Annual
	Full Time and	Full Time and	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Part Time	for each	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
							*
							E/12.3/005
							MLC Masterkey Super –
							EFT Payment
							Date: 30/7/2005
							*
							E/12.3/006
							NSW Electrical
							Superannuation Scheme
							Date: 30/7/2005
							*
							E/12.3/007
							Self Managed Super
							Fund – EFT Payment
							Date: 30/7/2005
							*
							E/12.3/008
							AM Corp – EFT Payment
							Date: 30/7/2005
							*
							E/12.3/009
							Superannuation Report
							Date: 26/7/2005

-86- Share and Units Sale Deed Final

		Commencement
	Complete List of	Date of each		Accrued Long		Accrued Annual
	Full Time and	Full Time and	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Part Time	for each	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
Holiday Inn Townsville (QLD)	*	*	*	*	*	*	*	*
	F/12.5/013	F/12.5/013	F/12.5/013	F/12.5/003	F/12.5/012	F/12.5/011	F/12.3/001	F/12.5/014
	Holiday Inn	Holiday Inn	Holiday Inn	Long Service	Sick Leave Liability	Annual Leave	Perpetual Investments	Letter re
	Townsville	Townsville	Townsville	Leave Report	Report	Liability Report	– March 05	Certificate of
	Employee details	Employee details	Employee details	Date: 31/3/ 2005	Date: 29/7/2005	Date: 29/7/2005	contributions	Currency
	Date: 27/7/2005	Date: 27/7/2005	Date: 27/7/2005				Date: March 2005
							*	Date: Current to 30/6/2006
							F/12.3/002
							Sunsuper – March 05
							contributions
							Date: March 2005
							*
							F/12.3/003
							InTrust Super – March
							05 contributions
							Date: March 2005
							*
							F/12.3/004
							InTrust Super Account
							Summary – April 2005
							Date: April 2005
							*
							F/12.3/005

-87- Share and Units Sale Deed Final

		Commencement
	Complete List of	Date of each		Accrued Long		Accrued Annual
	Full Time and	Full Time and	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Part Time	for each	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
							Perpetual Investments
							– April 2005
							contributions)
							Date: April 2005
							*
							F/12.3/006
							Sunsuper – April 2005
							contributions
							Date: April 2005
							*
							F/12.3/007
							AMP Life – March 2005
							contributions
							Date: March 2005
							*
							F/12.3/008
							InTrust – Voluntary
							Superannuation
							Deductions Report
							Date: 20 April 2005
							*
							F/12.3/009
							InTrust Superannuation
							– July 2005
							contributions

-88- Share and Units Sale Deed Final

		Commencement
	Complete List of	Date of each		Accrued Long		Accrued Annual
	Full Time and	Full Time and	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Part Time	for each	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
							Date: July 2005
							*
							F/12.3/010
							AMP Life – July 2005
							Contributions
							Date: July 2005
							*
							F/12.3/011
							Perpetual Investments
							– July 2005
							Contributions
							Date: July 2005
							*
							F/12.3/012
							Sunsuper – July 2005
							contributions
							Date: July 2005
	*	*	*	*	*	*	*	*
Holiday Inn
Melbourne	G/12.5/012	G/12.5/012	G/12.5/011	G/12.5/013	G/12.5/010	G/12.5/004	G/12.3/001	G/12.5/009
(VIC)
	Staff List	Staff List	Pay Rates	Long Service	Sick Leave Liability	Annual Leave	Hostplus Superannuation	Certificate of

-89- Share and Units Sale Deed Final

		Commencement
	Complete List of	Date of each		Accrued Long		Accrued Annual
	Full Time and	Full Time and	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Part Time	for each	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
	Date: 1/8/2005	Date: 1/8/2005	Date: 1/8/2005	Leave Liability	Report	Liability Report	Fund	Currency
				Report	Date: 1/8/ 2005	Date: 26 /4/2005	Application form	Date: 30 June
								2005 – 30 June 2006
				Date: 1/8/2005			Date: 12 /3/1992

-90- Share and Units Sale Deed Final

	Complete List of	Commencement		Accrued Long		Accrued Annual
	Full Time and	Date of each Full	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Time and Part Time	for	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	each employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
							*
							G/12.3/002
							Allowances Report Date: 31/3/2005
							*
							G/12.3/003
							MLC Superannuation Contributions — March 2005
							Date: March 2005
							*
							G/12.3/004
							HostPlus Superannuation Contributions — March 2005
							Date: March 2005
							*
							G/12.3/005
							AMP Life — March contributions
							Date: March 2005

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	Complete List of	Commencement		Accrued Long		Accrued Annual
	Full Time and	Date of each Full	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Time and Part Time	for	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	each employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
							*
							G/12.3/006
							Accrued Provident Fund – General Ledger Reconciliation
							Date: March 2005
							*
							G/12.3/007
							Allowances Report
							Date: 27 /6/2005
Holiday Inn On Flinders (VIC)	*	*	*	*	*	*	*	*
	H/12.5/009	H/12.5/009	H/12.5/010	H/12.5/011	H/12.5/008	H/12.5/001	H/12.3/001	H/12.5/006
	Staff List Date: 1/8/2005	Staff List Date: 1/8/ 2005	Pay Rates Date: 1/8/2005	Long Service Leave Liability Report	Sick Leave Liability Report Date: 1/8/ 2005	Annual Leave Liability Report Date: 26/4/2005	Accrued Provident Fund – General Ledger Reconciliation	Certificate of Currency Date: 30/6/2005 – 30/6/2006
				Date: 1/8/ 2005			Date: March 2005
							*
							H/12.3/002
							HostPlus contribution – January 2005
							Date: 7/4/ 2005
							*

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	Complete List of	Commencement		Accrued Long		Accrued Annual
	Full Time and	Date of each Full	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Time and Part Time	for	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	each employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
							H/12.3/003
							HostPlus contribution – March 2005
							Date: March 2005
							*
							H/12.3/004
							Colonial First State Investment Contribution – March 2005
							Date: 31/3/2005
							*
							H/12.3/005 AMP Super Contributions – March 2005
							Date: 31/3/2005
							*
							H/12.3/006
							Allowances Report
							Date: 27 /6/2005

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	Complete List of	Commencement		Accrued Long		Accrued Annual
	Full Time and	Date of each Full	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Time and Part Time	for	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	each employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
Holiday Inn City Centre Perth (WA)	*	*	*	*	*	*	*	*
	I/12.5/006	I/12.5/006	I/12.5/006	I/12.5/007	I/12.5/007	I/12.5/007	I/12.3/001	I/12.5/004
	Employee Listing as at 26 July 2005 Date: 26/7/2005	Employee Listing as at 26 July 2005 Date: 26/7/2005	Employee Listing as at 26 July 2005 Date: 26/7/2005	Leave Liability Report Date: 27/7/2005	Leave Liability Report Date: 27/7/2005	Leave Liability Report Date: 27/7/2005	AMP Custom Super – March contributions Date: March 2005	Workers Compensation Insurance Premium
							*
								Date: 31/3/2005
							I/12.3/002 Westscheme – March contribution advice	* I/12.5/005
							Date: March 2005	Certificate of Currency
							*
							I/12.3/003 MLC Employer Contributions Statement	Date: 30/6/2005 to 30/6/2006
							Date: 18/2/2005
							*
							I/12.3/004 REST superannuation – March contributions
							Date: March 2005

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	Complete List of	Commencement		Accrued Long		Accrued Annual
	Full Time and	Date of each Full	Rates of Pay	Service Leave		Leave (including	Contributions to
	Part Time	Time and Part Time	for	for each	Accrued Sick Leave	leave loading) for	superannuation	Workers
	employees	employee	each employee	employee	for each employee	each employee	funds (cl.20.1(g) and	Compensation
Hotel	(cl.20.1(a))	(cl.20.1(b))	(cl.20.1(c))	(cl.20.1(d))	(cl.20.1(e))	(cl. 20.1(f))	cl.10.2)	(cl.20.7)
							*
							I/12.3/005 Tyndall Optimum Master Superannuation – March contributions
							Date: March 2005
							*
							I/12.3/006 HostPlus contribution payments
							Date: 21/3/2005
							*
							I/12.3/007
							Allowances Report
							Date: 28/6/2005
							Comment: Please note that contributions are no longer made to Sun Super and Asgard as stated in the Allowances Report. The employees who were receiving benefits into these funds have been transferred from H.I City Centre Perth.

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Intentionally blank

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Schedule 17

Disclosure Schedule

Preliminary

1. A disclosure does not imply the existence of any representation, warranty or undertaking not expressly given in the Deed, nor does it extend the scope of any representation, warranty or undertaking which is expressly given.

2. Capitalised terms in this Schedule have the same meanings as in the Deed, unless the context otherwise indicates.

General disclosures

1. The HVS Forecasts were prepared on the basis of the Marketing and Reservation Contributions set out in the 2005 Budget and are not based on the new Marketing and Reservation Contribution set out in the Australian Management Contract referred to in Schedule 11 and disclosed in document A/7/035 of the Data Room

Specific disclosures

1. Without limiting the preceding paragraphs, the matters listed in the table below are specifically disclosed. The headings and paragraph references relate to specific Warranties in Schedule 2.

(a) Crown Plaza Canberra — H.I. (Canberra) Trust and H.I. (Canberra) Pty Ltd

Item	Warranty No	Disclosures
Power and Authority	2.5(b)	Consent to change of control are required for some of the contracts as specified in Part A of Schedule 20.
Sale Shares and Units	5.3	Minutes of Meeting recording the original allotment of shares to Christine Mary Maher on 19/03/01 could not be located. The number of units issued has been ascertained based on information available in the company records. It is possible that some units which have been issued may not be recorded in the trust’s unit register.
Constitution	4.3(b) and 6.2	The Trustee has performed under the Trust Deed from 1 October 2003 in breach of the terms of the Trust deed with respect to the determination of Accounting Period. The Trustee has performed in breach of the terms of the Trust Deed in each year since the establishment of the Trust by distributing “net income” as defined under the Income Tax

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Item	Warranty No	Disclosures
		Assessment Act without making a prior determination to distribute the same. The Trustee has performed in breach of the terms of the Trust Deed by distributing “net income” as defined under the Income Tax Assessment Act of the Trust from the period 1 October 2003 to 31 December.
Contracts	12.1(a)	Not all Contracts have been properly executed and some Contracts do not have the proper legal entity name described as parties. A Hotel Service Agreement with Reivernet substantially in the form contained in C/7/023 of the Data Room will shortly be entered into in respect of the hotel. S C Hotels & Resorts (Australia) Pty Ltd has entered into agreement with Carlton & United Beverages [see A/5/003 of the Data Room] and will shortly be entering into an agreement with Douwe Egberts [see A/5/002 of the Data Room] (each a “master agreement”). The Group Company will in due course execute a side agreement, addendum or other document confirming that it bound by the arrangements and covenants under the master agreement on the part of S C Hotels & Resorts (Australia) Pty Ltd in respect of the hotel
Disputes and Litigation	14	On 17 May 2005 the services of Ms Cheryl Parsons were terminated. Solicitors acting on behalf of Ms Cheryl Parsons wrote to the Hotel on 19 May 2005 raising issues with respect to a potential workers compensation claim and alleged breaches of the Occupational Health & Safety Act, 1999 and the Discrimination Act, 1991 (ACT). The allegations were not particularised. No litigation has been commenced with respect to the OH&S allegation and/or the discrimination allegation. No claim or litigation has been commenced in relation to this termination. The Vendor has received notice of the proposed development of Block 19 Section 65 [see B/14.3/005 in Data Room)]. The Vendor is considering its options in relation to the proposed development with a view of raising objections with the consent authority to the proposed development
Licences, Permits etc	16.1	The Vendors do not hold an original certificate of title in respect of the property. However, arrangements are being made for an application for the issue of a certificate of title from the land titles office.

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Employees 20.1(f) There may be some managers who have their superannuation contributions paid to funds other than those specified in Schedule 16.

(b) Crown Plaza Coogee — H.I. (Coogee) Trust and H.I. (Coogee) Pty Ltd

Item	Warranty No	Disclosures
Power and Authority	2.5(b)	Consent to change of control are required for some of the contracts as specified in Part A of Schedule 20.
Sale Shares and Units	5.3	The number of units issued has been ascertained based on information available in the company records. It is possible that some units which have been issued may not be recorded in the trust’s unit register.
Constitution	4.3(b) and 6.2	The Trustee has performed under the Trust Deed from 1 October 2003 in breach of the terms of the Trust deed with respect to the determination of Accounting Period. The Trustee has performed in breach of the terms of the Trust Deed in each year since the establishment of the Trust by distributing “net income” as defined under the Income Tax Assessment Act without making a prior determination to distribute the same. The Trustee has performed in breach of the terms of the Trust Deed by distributing “net income” as defined under the Income Tax Assessment Act of the Trust from the period 1 October 2003 to 31 December.
	6.5	The H.I. (Coogee) Trust Trust Deed may not have been stamped.
Contracts	12.1 (a)	Not all Contracts have been properly executed and some Contracts do not have the proper legal entity name described as parties. S C Hotels & Resorts (Australia) Pty Ltd has entered into agreement with Carlton & United Beverages [see A/5/003 of the Data Room] and will shortly be entering into an agreement with Douwe Egberts [see A/5/002 of the Data Room] (each a “master agreement”). The Group Company will in due course execute a side agreement, addendum or other document confirming that it

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		bound by the arrangements and covenants under the master agreement on the part of S C Hotels & Resorts (Australia) Pty Ltd in respect of the hotel
Properties	9	The land contained in certificate of title folio identifier 11\841828 is not owned by H.I. (Coogee) Pty Ltd and is not included in the sale.
Disputes	16	A letter of demand seeking 18 months termination payment in respect of the termination of the former Director of Food and Beverage and has been received, a copy of which is located in C/14.3/007 of the Data Room.
Employees	20.1(f)	There may be some managers who have their superannuation contributions paid to funds other than those specified in Schedule 16.

(c) Crown Plaza Terrigal — H.I. (Terrigal) Trust and H.I. (Terrigal) Pty Ltd

Item	Warranty No	Disclosures
Power and Authority	2.5(b)	Consent to change of control are required for some of the contracts as specified in Part A of Schedule 20.
Sale Shares and Units	5.3	Minutes of Meeting approving issue of 100 units to HIA (T) Pty Limited could not be located. The number of units issued has been ascertained based on information available in the company records. It is possible that some units which have been issued may not be recorded in the trust’s unit register.
Constitution	4.3(b) and 6.2	The Trustee has performed under the Trust Deed from 1 October 2003 in breach of the terms of the Trust deed with respect to the determination of Accounting Period. The Trustee has performed in breach of the terms of the Trust Deed by distributing “net income” as defined under the Income Tax Assessment Act of the Trust from the period 1 October 2003 to 31 December.
Properties	9	Certificates under section 16 of the Retail Leases Act for Shops 9 and 18 and the Retail Disclosure Statement for Shop 9 cannot be located.
Contracts	12.1 (a)	Not all Contracts have been properly executed and some Contracts do not have the proper legal entity name described as parties. A Hotel Service Agreement with Reivernet

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		substantially in the form contained in C/7/023 of the Data Room has been entered into but a copy cannot be located. S C Hotels & Resorts (Australia) Pty Ltd has entered into agreement with Carlton & United Beverages [see A/5/003 of the Data Room] and will shortly be entering into an agreement with Douwe Egberts [see A/5/002 of the Data Room] (each a “master agreement”). The Group Company will in due course execute a side agreement, addendum or other document confirming that it bound by the arrangements and covenants under the master agreement on the part of S C Hotels & Resorts (Australia) Pty Ltd in respect of the hotel
Disputes and Litigation	14	There are proceedings in respect of complaints under s104 of the Liquor Act 1982 [See D/14.3/008 of the Data Room]. A conference meeting of the Liquor Administration Board is scheduled to take place in the second or third week of October.
Disputes	16	1. Development Consent has not been issued in respect of storage cages located in the basement car park of the Hotel.
		2. A POPE licence has not been issued in respect of the Hotel.
		3. Construction and Occupation Certificates have not been issued in respect of the Bodhi Day Spa [see D/5.1/008 of the Data Room]
Employees	20.1(f)	There may be some managers who have their superannuation contributions paid to funds other than those specified in Schedule 16.

(d) Holiday Inn Potts Point — H.I. (Potts Point) Trust and H.I. (Potts Point) Pty Ltd

Item	Warranty No	Disclosures
Power and Authority	2.5(b)	Consent to change of control are required for some of the contracts as specified in Part A of Schedule 20.
Sale Shares and Units	5.3	Minutes of Meeting approving issue of 100 units to HIA (T) Pty Limited could not be located. The number of units issued has been ascertained based on information available in the company records. It is possible that some units which have been issued may not be recorded in the trust’s unit register.

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Constitution	4.3(b) and 6.2	The Trustee has performed under the Trust Deed from 1 October 2003 in breach of the terms of the Trust deed with respect to the determination of Accounting Period. The Trustee has performed in breach of the terms of the Trust Deed by distributing “net income” as defined under the Income Tax Assessment Act of the Trust from the period 1 October 2003 to 31 December.
Contracts	12.1(a)	Not all Contracts have been properly executed and some Contracts do not have the proper legal entity name described as parties. A Hotel Service Agreement with Reivernet substantially in the form contained in C/7/023 of the Data Room has been entered into but a copy cannot be located. S C Hotels & Resorts (Australia) Pty Ltd has entered into agreement with Carlton & United Beverages [see A/5/003 of the Data Room] and will shortly be entering into an agreement with Douwe Egberts [see A/5/002 of the Data Room] (each a “master agreement”). The Group Company will in due course execute a side agreement, addendum or other document confirming that it bound by the arrangements and covenants under the master agreement on the part of S C Hotels & Resorts (Australia) Pty Ltd in respect of the hotel
Disputes and Litigation	14.3 & 14.5	The Miscellaneous Workers Union commenced a claim before the NSW Industrial Relations Commission with respect to the termination of the services of Ms Verzosa in May 2005. The Application for re-instatement as a Housekeeping Supervisor will be determined following a hearing before Commissioner Cambridge of the NSW IRC in early November 2005.
Employees	20.1(f)	There may be some managers who have their superannuation contributions paid to funds other than those specified in Schedule 16.

(e) Holiday Inn Townsville — H.I. (Townsville) Trust and H.I. (Townsville) Pty Ltd

Item	Warranty No	Disclosures
Power and Authority	2.5(b)	Consent to change of control are required for some of the contracts as specified in Part A of Schedule 20.

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Sale Shares and Units 5.3 The number of units issued has been ascertained based on information available in the company records. It is possible that some units which have been issued may not be recorded in the trust’s unit register.

Constitution	4.3(b) and 6.2	The Trustee has performed under the Trust Deed from 1 October 2003 in breach of the terms of the Trust deed with respect to the determination of Accounting Period. The Trustee has performed in breach of the terms of the Trust Deed in each year since the establishment of the Trust by distributing “net income” as defined under the Income Tax Assessment Act without making a prior determination to distribute the same. The Trustee has performed in breach of the terms of the Trust Deed by distributing “net income” as defined under the Income Tax Assessment Act of the Trust from the period 1 October 2003 to 31 December.
Properties	9.3	As far as the Vendor is aware, eaves which extend out past the boundaries on Flinders Mall & Stokes Street have been part of the building since construction and form part of the fabric of the building.
Contracts	12.1(a)	Not all Contracts have been duly executed and some Contracts do not have the proper legal entity name described as parties. S C Hotels & Resorts (Australia) Pty Ltd has entered into agreement with Carlton & United Beverages [see A/5/003 of the Data Room] and will shortly be entering into an agreement with Douwe Egberts [see A/5/002 of the Data Room] (each a “master agreement”). The Group Company will in due course execute a side agreement, addendum or other document confirming that it bound by the arrangements and covenants under the master agreement on the part of S C Hotels & Resorts (Australia) Pty Ltd in respect of the hotel

(f) Holiday Inn Flinders — H.I. (Melbourne) Trust and H.I. (Melbourne) Pty Ltd

Item	Warranty No	Disclosures
Power and Authority	2.5(b)	Consent to change of control are required for some of the contracts as specified in Part A of Schedule 20.

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Sale Shares and Units 5.3 Minutes of Meeting approving issue of 100 units to HIA (T) Pty Limited could not be located

The number if units issued has been ascertained based on information available in the company records. It is possible that some units which have been issued may not be recorded in the trust’s unit register.

Constitution	4.3(b) and 6.2	The Trustee has performed under the Trust Deed from 1 October 2003 in breach of the terms of the Trust deed with respect to the determination of Accounting Period. The Trustee has performed in breach of the terms of the Trust Deed by distributing “net income” as defined under the Income Tax Assessment Act of the Trust from the period 1 October 2003 to 31 December.
	6.5	The H.I. (Melbourne) Trust Trust Deed may not have been stamped.
Contracts	12.1(a)	Not all Contracts have been duly executed and some Contracts do not have the proper legal entity name described as parties. S C Hotels & Resorts (Australia) Pty Ltd has entered into agreement with Carlton & United Beverages [see A/5/003 of the Data Room] and will shortly be entering into an agreement with Douwe Egberts [see A/5/002 of the Data Room] (each a “master agreement”). The Group Company will in due course execute a side agreement, addendum or other document confirming that it bound by the arrangements and covenants under the master agreement on the part of S C Hotels & Resorts (Australia) Pty Ltd in respect of the hotel

(g) Holiday Inn Melbourne — Centra Victoria Pty Limited

Item	Warranty No	Disclosures
Power and Authority	2.5(b)	Consent to change of control are required for some of the contracts as specified in Part A of Schedule 20.

Properties 9 1. The Lessee has been offering offered discount rates to IHG employees and other persons including hotel owners inconsistent with clause 6.2 of the Ground Lease [G/2.1/004 of the Data Room]. This clause prevents the

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	Lessee from granting any preferential or discounted room rates to anyone affiliated with, related to, in joint venture or partnership with the Lessee or the manager or operator of the Hotel without the consent of the Lessor.
2.	The hotel is being used as a regional base with anywhere up to 8 regional staff being based in the property at any one time inconsistent with Clause 6.3 of the Ground Lease which prevents the use of the office space and the premises from general corporate requirements of the Lessee limiting it to use for the management of the premises.
3.	The Ground Lease has been under the grandfathering provisions of GST legislation and from 1 July 2005 IHG has agreed to pay GST in addition to rent. IHG are awaiting draft variation of lease documentation in regard to the obligation to pay GST.
4.	There are joint operating agreements dealing with the joint operation and shared use of facilities at the Holiday Inn Melbourne, Melbourne Convention Centre and World Trade Centre and the shared carpark [see G/2.2/007, G/2.2/008, G/2.2/014 of the Data Room] There is non-compliance with the terms of the Joint Operating Agreements as detailed in G/2.2/012 and G/2.2/0.13 of the Data Room]

Contracts 12.1(a) Not all Contracts have been duly executed and some Contracts do not have the proper legal entity name described as parties.

(h) Holiday Inn City Centre Perth — H.I. (Perth) Trust and H.I. (Perth) Pty Ltd

Item	Warranty No	Disclosures
Power and Authority	2.5(b)	Consent to change of control are required for some of the contracts as specified in Part A of Schedule 20.
Sale Shares and Units	5.3	Minutes of Meeting approving issue of 100 units on 19/12/97 and 27,502,900 on 25/9/98 to HIA (T) Pty Limited could not be located. The number of units issued has been ascertained based on information available in the company records. It is possible that some units which have been issued may not be recorded in the trust’s unit register.

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Constitution	4.3(b) and 6.2	The Trustee has performed under the Trust Deed from 1 October 2003 in breach of the terms of the Trust deed with respect to the determination of Accounting Period. The Trustee has performed in breach of the terms of the Trust Deed by distributing “net income” as defined under the Income Tax Assessment Act of the Trust from the period 1 October 2003 to 31 December.
	6.5	The H.I. (Perth) Trust Trust Deed may not have been stamped.
Contracts	12.1(a)	Not all Contracts have been duly executed and some Contracts do not have the proper legal entity name described as parties. S C Hotels & Resorts (Australia) Pty Ltd has entered into agreement with Carlton & United Beverages [see A/5/003 of the Data Room] and will shortly be entering into an agreement with Douwe Egberts [see A/5/002 of the Data Room] (each a “master agreement”). The Group Company will in due course execute a side agreement, addendum or other document confirming that it bound by the arrangements and covenants under the master agreement on the part of S C Hotels & Resorts (Australia) Pty Ltd in respect of the hotel”
Environment	13.1, 13.2	Water collected in a pit within the basement level of the carpark is being pumped towards the stormwater system towards Hay Street. A permit is being sought to discharge the water into the sewer from the water corporation.
Licences, Permits etc	16.1	Rooms 205, 207, 209, 211 have been converted from office space to bedrooms. Permission is being sought (retrospectively) from the City of Perth for this work.
Employees	20.1(a)	Two Area employees, Damian Ten Bohmer Area Director of Sales & Marketing and Leah Lipman, Area Revenue Manager are employed by HI (Perth) Pty Ltd, however were not included in the list of employees supplied by the hotel as they are currently paid out of the InterContinental Hotel Burswood payroll. Holiday Inn Perth contributes a percentage of their wages.

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Schedule 18

Taxation clauses

1	Tax demands
1.1	Purchaser to notify Vendors

(a) The Purchaser must:

(i)	give the Vendors a copy of any relevant Assessment within 5 Business Days after the Assessment is received; and
(ii)	within 10 Business Days of becoming aware of a matter that may lead to the making or issue of a relevant Assessment, give full details of that matter to the Vendors.

1.2 Purchaser not to compromise claim

(a) The Purchaser must not, and shall ensure that each Group Company, Group Trust and any Purchaser Group member does not, take any action relating to an Assessment that might lead to liability on the part of the Vendors, if the Purchaser has received a notice from the Vendors under clause 1.3(a)(i) or until the time limits set out in clause 1.3(a)(ii) have expired.

1.3 Vendors to contest Assessment

(a) Following receipt of a notice under clause 1.1, the Vendors may advise the Purchaser of their intention to contest the Assessment by:

(i)

written notice to the Purchaser 5 Business Days before the due date stated in the Assessment for payment of any Tax; and

(ii)

payment of a sum of money to the Purchaser equal to the amount of Tax required to be paid to the relevant Government Agency while action is being taken (but only to the extent that the amount of Tax to be required to be paid to the relevant Government Agency has not been provided for in a proper provision in the accounts of the relevant Group Company or Group Trust). Such payment is made by way of interest free loan and must be paid to the Purchaser 2 Business Days before the due date stated in the Assessment for payment of any Tax.

(b) On a written request from the Vendors, the Purchaser must pursue, or cause the person required to pay the Tax under the Assessment to pursue, any action required to contest the Assessment, including, but not limited to:

(i)	a written objection with the Government Agency;
(ii)	an action or appeal to a relevant tribunal body; or
(iii)	an action or appeal in the Federal Court or any higher court or court of competent jurisdiction.

(c) The Purchaser must notify the Vendors of any determination made by a Government Agency, tribunal or court relating to an action taken under clause 1.3(b) as soon as practicable.

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(d)	The Purchaser must, and must cause each Group Company, Group Trust and Purchaser Group member to, follow all reasonable directions given by the Vendors relating to an action taken under clause 1.3(b), including using any professional advisers nominated by the Vendors.
(e)	The Purchaser must, and must cause each Group Company, Group Trust and Purchaser Group member to, provide the Vendors with all reasonable assistance on matters relating to an action taken under clause 1.3(b), including access to witnesses, documents, personnel and premises. Costs arising from clause (b), (d) and this clause (e) must be borne by the Vendors.
(f)	The provisions of paragraphs (b), (d) and (e) are subject to the proviso that such action or directions or assistance does not prejudice the rights or tax position (present or future, actual or contingent) of the Purchaser.

1.4 Vendors not to contest Assessment

If the Vendors fail to give a notice under clause 1.3(a)(i) in the required time, the Purchaser may, without affecting its rights under this Deed, independently pursue any action relating to the Assessment, including payment of any Tax under the Assessment to the relevant Government Agency.

1.5 No admission to liability

Any decision by the Vendors either to contest or not contest an Assessment does not constitute an admission of liability on the part of the Vendors.

2	Limitations on Vendor liability
2.1	Limitations

(a) The Vendors are not liable for any Loss that arises where such Loss occurs as a result of:

(i)	the position taken by a Group Company or Group Trust post-Completion in relation to a Tax law is different to the position taken by the same entity prior to Completion;
(ii)	a Group Company or Group Trust fails to take action post Completion as required by a Tax law, including failing to take action within the time allowed; or
(iii)	a Purchaser Group member, Group Company or Group Trust fails to take an action that is assumed to have been taken when computing the provision for Tax in the Adjustment Statement.

(b) The limitation provided for in clause 2.1(a)(i) does not apply where a different position is required by law or where taking such a position as is reasonable. In such a case, the Purchaser must notify the Vendors of the inconsistent position no later than 15 Business Days before it is adopted by the Group Company or Group Trust.

3	Tax indemnity by Purchaser
3.1	Indemnification by Purchaser

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(a) The Purchaser must indemnify the Vendors and their Affiliate and their employees, directors, employees and agents and hold them harmless from any Liability for Taxes for:

(i)	taxable periods ending after the Completion Date or, in the case of the year in which Completion occurs, relating to the period after Completion;
(ii)	disallowance of an income tax deduction for an expense, loss or outgoing attributable to a Purchaser Tax Act or to a breach by the Purchaser of any covenant contained in clause 4 of this Schedule 18 after the Completion Date;
(iii)	any withholding required to be made or any notice required to be given at or after the Completion Date;
(iv)	disallowance of a Tax credit or rebate of Tax, such as a dividend rebate, relating to a matter referred to in (i) to (iii) above; or
(v)	amount specifically provided for in the Accounts or Adjustment Statement, or taken into account in determining the value at which any asset or liability is included in the Accounts or Adjustment Statement.

(b) The indemnification provided in clause 3.1(a) shall survive Completion and will terminate 6 years after the Completion Date.

4	Tax Returns
4.1	Control of taxation returns, etc

(a)	The Vendors will (at its own costs and expense) prepare and procure and file all Income Tax returns of each Group Company and Group Trust for Tax Years ending on or before Completion (Pre-Completion Returns) and all other Tax returns of each Group Company and Group Trust to the extent they relate to any act, matter or transaction occurring before Completion (other relevant returns) and the Purchaser will (at its own cost and expense and in a timely manner) prepare or procure and file all Income Tax returns of each Group Company and Group Trust for Tax Years commencing on or after Completion.
(b)	The Vendors and Purchaser Group (as appropriate) must lodge any Pre-Completion Returns, and Tax Returns within the period required by the law.
(c)	At least 20 Business Days prior to lodging any Pre-Completion Returns and Tax Returns the Vendors or the Purchaser (as appropriate) must provide a copy of the proposed return to the other of them and must make any modifications reasonably requested by the other of them.
(d)	If after Completion any Government Agency undertakes an Audit of the Purchaser Group, or issues an Assessment to the Purchaser Group, which relates to any Pre-Completion Return, or Tax Return, or to any act, matter or transaction occurring before Completion (Warranty Items) the Purchaser must immediately give the Vendors written notice of the Audit or Assessment (together with copies of all documents received from the Government Agency) and provide full written details of the Audit or Assessment to the extent that it relates to the Warranties or clause 3 of this Schedule.
(e)	The Purchaser must procure that each Group Company and Group Trust uses to the full extent possible any deduction, rebate, credit, allowance, rollover, refund or other

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	relief of any kind in respect of Tax which exists as at Completion and is reasonably available to reduce, limit, defer or otherwise mitigate a Liability to Tax which otherwise would or may give rise to a breach of clause 3 of this Schedule or a Warranty.
(f)	[Intentionally Deleted]
(g)	The Vendors may require the Purchaser (or any member of the Purchaser Group) to challenge an Assessment in relation to clause 3 of this Schedule or a Warranty claim if the Vendors act in a manner consistent with clause 1 of this Schedule and clause 9.6 of the Deed.
(h)	Nothing in this clause 4.1 will be taken to limit the Purchaser’s obligations under other provisions of the Deed.

4.2 Tax refunds

(a) The Purchaser must pay to the Vendors an amount equal to any credit, refund, rebate or reimbursement allowed by or received from a Government Agency in respect of:

(i)	any Tax paid by a Group Company or Group Trust before Completion except to the extent that the credit, refund, rebate or reimbursement is already provided for; or
(ii)	any Tax paid by a Group Company or Group Trust after Completion to the extent the Purchaser has received an amount under clause 3 of this Schedule or received an amount with respect to a Warranty for such Tax.
(iii)	Any amount paid by the Purchaser to the Vendor under this clause 4.2 will be in addition to an increase in the Purchase Price.

(b) The Purchaser Group must claim the maximum credit, refund, rebate or reimbursement in respect of the any Pre-Completion Returns, and other relevant returns allowed by law.

4.3 PAYG Instalment Payments

(a)

The Purchaser shall procure that, following Completion, no Group Company or Group Trust acts in any way, including varying a PAYG instalment rate if any such act may, or may reasonably be expected to, reduce the entitlement to a PAYG Credit.

(b)

Following Completion, the Purchaser shall provide, and shall procure that any relevant Transaction Entity provides, the Vendors with a copy of any “Business Activity Statement”, “Instalment Activity Statement” or “Pay As You Go” instalment rate variation lodged with the Australian Taxation Office by or on behalf of any Group Company or Group Trust that is related to or in connection with any transactions which occurred, partly or wholly, prior to Completion within 5 Business Days of that lodgement.

4.4 Cooperation

The Vendors and Purchaser shall reasonably cooperate and shall cause their respective affiliates, officers, employees, agents, auditors and other representatives reasonably to cooperate, in preparing and filing all Tax returns, including maintaining and making available to each other all records necessary in connection with Taxes and in resolving all disputes and audits with respect to all taxable periods relating to Taxes. The Purchaser and Vendors recognise that the Vendors and their respective affiliates will need access, from time to time, after the Completion Date, to certain accounting and Tax

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records and information held by the Group Companies and Group Trusts to the extent such records and information pertain to events occurring prior to the Completion Date and therefore the Purchaser agrees to cause the Group Companies and Group Trusts to properly retain and maintain such records and allow the Vendors, their affiliates and their respective agents and representatives access to such records on the same terms and set out in clause 14.1 of the Deed.

5	Tax Indemnities
5.1	Clauses 5.2(c), 5.4, 5.6(a), 5.8 and 5.9 of this Schedule 18 do not apply in relation to any stamp or transaction duty, tax or charge imposed by any Government Agency (Duty) and for the purposes of those paragraphs the term “Taxes” does not include Duty.
5.2	Following the Completion, Vendors shall indemnify the Purchaser Group and its officers, directors, employees and agents and hold them harmless from:

(a)	all Liability for Taxes of the Group Company and Group Trusts for the Pre-Completion Tax Period and includes any Liability for any reassessment in respect of tax losses transferred to a Group Company during the Pre-Completion Tax Period;
(b)	any breach by Vendor Group or the Group Companies or Group Trusts (other than, after the Completion, the Group Companies and Group Trusts) of any covenant contained in clause 4 of this Schedule 18;
(c)	all liability for Taxes arising as a consequence of the transfer of the Sale Shares. For the avoidance of doubt, this indemnity does not extend to any Purchaser Tax Act (as defined below); and
(d)	all liability for Taxes in respect of the Vendors undertaking the Vendor Intercompany Debt Assignment Steps and any restructure of the Vendor’s Group prior to Completion.

5.3 Notwithstanding the foregoing, Vendors shall not indemnify and hold harmless any of Purchaser Group or officers, directors, employees or agents from any Liability for Taxes attributable to:

(a)	Taxes of the Group Companies or Group Trusts for the Pre-Completion Tax Period to the extent of the accrual, if any, established therefore in the Accounts; or
(b)	any action taken after the Completion by the Purchaser Group, or any transferee of the Purchaser Group (other than any such action expressly required by applicable Law or by this Deed) (Purchaser Tax Act) or attributable to a breach by the Purchaser Group of any covenant contained in clause 4 of this Schedule 18.

5.4

Estimated Taxes payable by or on behalf of the Group Companies or Group Trusts on or prior to the Completion Date shall be credited to Taxes with respect to the Pre-Completion Tax Period.

5.5

Vendors’ responsibility under this clause 5 of Schedule 18 to indemnify and hold harmless the Purchaser Group against, or to pay or cause to be paid, any Taxes shall not include any such responsibility with respect to any Taxes collected or withheld by the Group Companies or Group Trusts (including, without limitation, all sales and use taxes and all withholding or employment taxes) with respect to events occurring through the Completion Date, the proceeds of which are held by the Group Companies or Group Trusts on the Completion Date.

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5.6 Following Completion, Purchaser shall, and shall cause the Group Companies and Group Trusts to, indemnify the Vendor Group and its respective officers, directors, employees and agents and hold them harmless from:

(a)	all Liability for Taxes of the Group Companies and Group Trusts for any taxable period ending after the Completion Date (except to the extent such taxable period began before the Completion Date, in which case Purchaser’s indemnity will cover only that portion of any such Taxes that are not attributable to the Pre-Completion Tax Period);
(b)	all Liability for Taxes attributable to a Purchaser Tax Act or to a breach by Purchaser of any covenant contained in clause 4 of this Schedule 18; and
(c)	all Liability for Taxes of the Group Companies and Group Trusts for the Pre-Completion Tax Period to the extent of the accrual, if any, established therefore in the Accounts.

5.7 In the case of any Straddle Period:

(a)

real, personal and intangible property taxes (other than stamp duty or Vendor Duty) arising as a consequence of entering into or completing this Deed (Property Taxes) of the Group Companies and Group Trusts for the Pre-Completion Tax Period shall be equal to the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Completion Tax Period and the denominator of which is the total number of days in the Straddle Period; and

(b)

the Taxes of the Group Companies and Group Trusts (other than Property Taxes) for the Pre-Completion Tax Period shall be computed as if such taxable period ended at the end of Completion. In making this computation, income, expenses and other amounts that are referable to a period shall be taken to be referable to each day in that period.

5.8

Vendors’ indemnity obligation in respect of Taxes for a Straddle Period shall initially be effected by its payment to Purchaser of such Taxes for the Pre-Completion Tax Period. The Vendors shall pay such amount to the Purchaser after demand thereof is made by the Purchaser (but not earlier than 20 Business Days after the date on which the Taxes for the relevant taxable period are required to be paid to the relevant Taxation Authority).

5.9

If the amount of Taxes for the Straddle Period paid by the Vendor Group at any time plus the credit allowed under clause 5.4 of this Schedule 18 exceeds the amount of such Taxes for the Pre-Completion Tax Period, Purchaser shall pay to the Vendors the amount of such excess;

(a)

in the case of Property Taxes, at the Completion (Completion Tax Adjustment Amount); and

(b)

in all other cases, within 20 Business Days after the Tax Return with respect to the final liability for such Taxes is required to be filed with the relevant Taxation Authority. The payments to be made pursuant to this clause or clause 5.8 by the Vendors or the Purchaser with respect to a Straddle Period shall be appropriately adjusted to reflect any final determination with respect to Straddle Period Taxes.

5.10 In the event that any party violates the provisions of clause 1 of this Schedule 18 (relating to the settlement or compromise of Tax Claims), such party shall not be entitled to any indemnity payments with respect to any indemnifiable claim (relating to such Tax Claims) pursuant to this clause 5 of Schedule 18.

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5.11 The Purchaser acknowledges and agrees that it will not make any claim for indemnification in respect of the availability or otherwise of Tax losses in respect of the Post Completion Tax Period other than in respect of any potential Tax reassessment under the tax audit disclosed in the RFI Response in respect of the Pre-Completion Tax Period.

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Schedule 19

Brands

CENTRA

CROWNE PLAZA

E-ROOM@CROWNEPLAZA

HOLIDAY INN

INTERCONTINENTAL

PARKROYAL

PRIORITY CLUB

PRIORITY PRIVILEGE

AMBASSADOR

SIX CONTINENTS CLUB

Three Wave Device:

Other devices:

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Schedule 20

Consents

PART A

Column 1	Column 2	Column 3
Property	Consent is required of:	Document description
Crowne Plaza Coogee	AGL Energy Sales & Marketing Limited to consent to the change in control of H.I. (Coogee) Pty Limited.	Gas Supply Agreement dated 9 October 2003 [C/7001 of Disclosure Index]
Holiday Inn Townsville	Honeycombes Car Park Pty Ltd to consent to the change in control of H.I. (Townsville) Pty Limited.	Lease of Lot 1 in SP 123542 by H.I. (Townsville) Pty Limited dated 6 January 2004 [F/5.4/001]

PART B

Crowne Plaza Canberra (ACT)

Contract – By
Reference to			Whether consent of
location in Data			Service provider is
Room	Service/Business provider	IHG Entity Assignor	required
B/7/001	Carrier Air Conditioning Pty Ltd	Six Continents Hotels	No consent required.
	(Planned Maintenance Contract)
B/7/010	Foxtel Services	SC Hotels & Resorts (Australia) Pty Ltd	No consent required.
B/10/002	Ricoh Finance (a division of Ricoh Australia Pty Ltd) (Maintenance and Service Agreement)	SC Hotels & Resorts (Australia) Pty Ltd	Consent required.
B/10/004	Trilogy Computer Systems Australasia Pty Limited (Software Maintenance Agreement)	SC Hotels & Resorts (Australia) Pty Limited, trading as National Convention Centre	Consent required.

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Contract – By
Reference to			Whether consent of
location in Data			Service provider is
Room	Service/Business provider	IHG Entity Assignor	required
C/14.4/001	Micros Fidelo Australia Pty Ltd Hardware Maintenance Agreement, Intellectual Property City Licence and Intellectual Property Telephone Support Agreement	SC Hotels & Resorts (Australia) Pty Ltd	Consent required.
B/7/020	ACTEWAGL Retail & Electricity Contract	SC Hotels & Resorts (Australia) Pty Limited	Consent required

Crowne Plaza Coogee

Contract – By
Reference to			Whether consent of
location in Data			Service provider is
Room	Service/Business provider	IHG Entity Assignor	required
C/7/014	Micros Fidelio Australia Pty Ltd (Sales Contract)	Six Continents Hotels	Consent required.
C/7/015	Micros Fidelio Australia Pty Ltd (Intellectual Property Site Licence)	SC Hotels & Resorts (Australia) Pty Ltd	Consent required.
C/7/027	NEC Business Solutions Pty Ltd (NECare Service Agreement)	Six Continents Hotels	Consent required.
C/7/033	American Express Travel Related Services Company, Inc (Licence Agreement)	Six Continents Hotels, Inc.	Consent required.
C/7/023	ReiverNet Limited (Hotel Service Agreement)	InterContinental Hotels Group	Consent required.

Holiday Inn Townsville

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Contract – By
Reference to			Whether consent of
location in Data			Service provider is
Room	Service/Business provider	IHG Entity Assignor	required
F/7/004	Kone Elevators Pty Ltd (Kone Select Service Agreement)	SC Hotels & Resorts (Australia) Pty Ltd (formerly Bass Hotels & Resorts)	Consent required
F/7/007	ReiverNet Pty Limited (Hotel Services Agreement)	InterContinental Hotels Group (NSW)	Consent required.

Holiday Inn Melbourne (VIC)

Contract – By
Reference to			Whether consent of
location in Data			Service provider is
Room	Service/Business provider	IHG Entity Assignor	required
G/7/019	ReiverNet Pty Limited (Hotel Services Agreement)	InterContinental Hotels Group (NSW)	Consent required.

Holiday Inn On Flinders (VIC)

Contract – By
Reference to			Whether consent of
location in Data			Service provider is
Room	Service/Business provider	IHG Entity Assignor	required
H/7/010	ReiverNet Pty Limited (Hotel Services Agreement)	InterContinental Hotels Group (VIC)	Consent required.
H/14.4/001	Micro Fidelo Australia Pty Ltd Intellectual Property Site Licence & Support Agreement	SC Hotels & Resorts (Australia) Pty Ltd	Consent required.

Holiday Inn City Centre Perth

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Contract - By
Reference to			Whether consent of
location in Data			Service provider is
Room	Service/Business provider	IHG Entity Assignor	required
I/7/016	Telstra Corporation Limited (Telstra Business Service Agreement for Key Customers)	Southern Pacific Hotels Corporation Pty Ltd	Consent required.
I/7/025	ReiverNet Pty Limited (Hotel Services Agreement)	InterContinental Hotels Group (WA)	Consent required.
I/14.4/001	Micro Fidelo Australia Pty Ltd Intellectual Property Site Licence & Support Agreement	SC Hotels & Resorts (Australia) Pty Ltd	Consent required.

Terrigal (NSW)

Contract – By
Reference to			Whether consent of
location in Data			Service provider is
Room	Service/Business provider	IHG Entity Assignor	required
D/14.4/001	Micro Fidelo Australia Pty Ltd Intellectual Property Site Licence & Support Agreement	SC Hotels & Resorts (Australia) Pty Ltd	Consent required.

Potts Point (NSW)

Contract – By
Reference to			Whether consent of
location in Data			Service provider is
Room	Service/Business provider	IHG Entity Assignor	required
D/14.4/001	Micro Fidelo Australia Pty Ltd Intellectual Property Site Licence & Support Agreement	SC Hotels & Resorts (Australia) Pty Ltd	Consent required.

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Schedule 21

Vendor Intercompany Debt Assignment Steps

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Schedule 22

Section 32 Statement

VENDOR’S STATEMENT TO THE PURCHASER

OF REAL ESTATE UNDER

SECTION 32 OF THE SALE OF LAND ACT 1962 (“THE ACT”)

VENDOR	:	H.I. (Melbourne) Pty Ltd (ACN 081 088 959)
PROPERTY	:	575 Flinders Lane, Melbourne, VIC, 3000

IMPORTANT NOTICE TO PURCHASERS

The use to which you propose to put the property may be prohibited by planning or building controls applying to the locality or may require the consent or permit of the municipal council or other responsible authority. It is in your interest to undertake a proper investigation of permitted land use before you commit yourself to buy. You should check with the appropriate authorities as to the availability (and cost) of providing any essential services not connected to the property.

The property may be located in an area where commercial agricultural production activity may affect your enjoyment of the property. It is therefore in your interest to undertake an investigation of the possible amenity and other impacts from nearby properties and the agricultural practices and processes conducted there.

1	RESTRICTIONS — information concerning any easement, covenant or similar restriction affecting the property (registered or unregistered) —
1.1	Description —
	As set out in the attached copies of the creation of easement (if any), covenant (if any) and title documents.
1.2	Particulars of any existing failure to comply with their terms are as follows —
	The vendor is not aware of any existing failure to comply.
2	PLANNING & ROAD ACCESS — information concerning any planning instrument —
	Are as set out in the attached Certificate.
	The Property is within the Melbourne Metropolitan area (as defined in the Act). There is access to the Property by road.
3	OUTGOINGS & STATUTORY CHARGES — information concerning any rates, taxes, charges or other similar outgoings (including any body corporate charges) and any interest payable on any part of them —

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3.1	Is included in the attached certificate(s).
3.2	The amount owing under any other registered or unregistered statutory charge that secures an amount due under any other legislation is —

Amounts are as follows
Authority
City of Melbourne	$	17,954.70
State Revenue Office	$	31,616.66

4 SERVICES — Information concerning the supply of the following services —

Service	Connected	Name of Authority
Electricity	Available
Gas	Available
Water	Available	City West Water Limited
Sewerage	Available
Telephone	Available

	The Purchase will be responsible for any reconnection fees.
5	BUILDING APPROVALS — Particulars of any building approval granted during the past seven years under the Building Control Act 1981 (required only where property includes a residence)
	Not Applicable
	Particulars of any guarantee under Part 2 of the House Contracts Guarantee Act 1987 obtained within the preceding 7 years in the case of a residence constructed by an owner-builder within the meaning of that Act.
	Not applicable
	Particulars of any insurance under the Building Act 1993 in the case of a residence to which Section 137B of that Act applies constructed within the preceding 6 years and 6 months.
	Not applicable
6	NOTICES — Particulars of any notice, order, declaration, report or recommendation of a public authority or government department or approved proposal affecting the property including any—
6.1	Affecting the body corporate and any other liabilities (whether contingent, proposed or otherwise) where the property is in a subdivision containing a body corporate, including any relating to the undertaking of any repairs to the property -

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6.2	Quarantine or stock order imposed under the Stock Diseases Act 1968 (whether or not the quarantine or order is still in force) —
6.3	Notice pursuant to Section 6 of the Land Acquisition and Compensation Act 1986 —
	None to the vendor’s knowledge. The vendor has no means of knowing of all decisions of public authorities and government departments affecting the property unless communicated to the vendor
6.4	Particulars of any current land use restriction given in relation to the land under the Agricultural and Veterinary Chemicals (Control of Use) Act 1992 due to contamination —
	The vendor has no knowledge of any current land use restriction notice given in relation to the property under this Act.
7	TITLE — attached are copies of the following documents concerning the title —
7.1	Certificate of title volume 9912 folio 719.

PLEASE NOTE: THAT WHERE THE PROPERTY IS TO BE SOLD ON TERMS UNDER SECTION 32(2)(F) OF THE ACT OR SOLD SUBJECT TO A MORTGAGE THAT IS NOT TO BE DISCHARGED BY THE DATE OF POSSESSION (OR RECEIPT OF THE RENTS AND PROFITS) OF THE PROPERTY UNDER SECTION 32(2)(A) OF THE ACT — THEN THE VENDOR MUST PROVIDE AN ADDITIONAL STATEMENT CONTAINING THE PARTICULARS SPECIFIED IN SCHEDULES 1 AND 2 OF THE ACT.

Date of this statement day of 2005

Signature/s of vendor/s representative

THE PURCHASER ACKNOWLEDGES BEING GIVEN A DUPLICATE OF THIS STATEMENT SIGNED BY THE VENDORS BEFORE THE PURCHASER SIGNED ANY CONTRACT.

Date of this acknowledgment	day of 20 05
Signature/s of purchaser/s

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Schedule 23

Australian Management Contract — Amendments

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Schedule 24

Portfolio Side Agreement

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Schedule 25

Shared Services Agreement

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Schedule 26

Licensee

Hotel	Licensee
Crowne Plaza Canberra (ACT)	H.I. (Canberra) Pty Ltd
Crowne Plaza Coogee (NSW)	Gregory Cox
Crowne Plaza Terrigal (NSW)	Andrew Bayliss
Holiday Inn Potts Point (NSW)	Kent Breeze
Holiday Inn Townsville (QLD)	H.I. (Townsville) Pty Ltd
Holiday Inn Melbourne (VIC)	Centra Victoria Pty Ltd
Holiday Inn On Flinders (VIC)	H.I. (Melbourne) Pty Ltd
Holiday Inn City Centre Perth (WA)	H.I. (Perth) Pty Ltd

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Execution

Executed as a deed.

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Signed for and on behalf of
Holiday Inns Holdings (Australia) Pty
Limited
by a duly appointed attorney
in the presence of:

/s/ Phil Lee	/s/ Tony South
Signature of witness	Signature of attorney (I have no notice of revocation of the power of attorney under which I sign this document)
Phil Lee	Tony South
Name of witness (please print)	Name of attorney (please print)

Signed for and on behalf of
SPHC Group Pty Limited
by a duly appointed attorney
in the presence of:

/s/ Phil Lee	/s/ Tony South
Signature of witness	Signature of attorney (I have no notice of revocation of the power of attorney under which I sign this document)
Phil Lee	Tony South
Name of witness (please print)	Name of attorney (please print)

Signed for and on behalf of
HIA (T) Pty Limited
by a duly appointed attorney
in the presence of:

/s/ Phil Lee	/s/ Tony South
Signature of witness	Signature of attorney (I have no notice of revocation of the power of attorney under which I sign this document)
Phil Lee	Tony South
Name of witness (please print)	Name of attorney (please print)

Signed for and on behalf of
HIA (T) Pty Limited as trustee for the
HIA Hotels Trust
by a duly appointed attorney
in the presence of:

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/s/ Phil Lee	/s/ Tony South
Signature of witness	Signature of attorney (I have no notice of revocation of the power of attorney under which I sign this document)
Phil Lee	Tony South
Name of witness (please print)	Name of attorney (please print)

Signed for and on behalf of
Six Continents Limited
by a duly appointed attorney
in the presence of:

/s/ Phil Lee	/s/ Tony South
Signature of witness	Signature of attorney (I have no notice of revocation of the power of attorney under which I sign this document)
Phil Lee	Tony South
Name of witness (please print)	Name of attorney (please print)

Signed by
HANZ (Australia) Pty Ltd
by a director and secretary/director:

/s/ Robert Thomas Kelly	/s/ Selliah Kalyanakumar
Signature of secretary/director	Signature of director
Robert Thomas Kelly	Selliah Kalyanakumar
Name of secretary/director (please print)	Name of director (please print)

Signed by
Eureka Funds Management Limited
(as trustee of the HANZ Trust)
by a director and secretary/director:

/s/ Robert Thomas Kelly	/s/ Selliah Kalyanakumar
Signature of secretary/director	Signature of director
Robert Thomas Kelly	Selliah Kalyanakumar
Name of secretary/director (please print)	Name of director (please print)

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EX-4.B.VII

Exhibit 4(b)(vii)

Britvic plc

Ordinary Shares
(nominal value 20p each)

Sponsorship and Underwriting Agreement

Date: 25, November 2005

Citigroup Global Markets Limited
Citigroup Global Markets U.K. Equity Limited
Deutsche Bank AG
Lehman Brothers International (Europe)
Merrill Lynch International

c/o Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB

Dear Sirs and Mesdames

          Each of InterContinental Hotels Group PLC (“IHG”), Pernod Ricard S.A. (“Pernod”) and Whitbread Group PLC (“Whitbread”) (together, the “Selling Shareholders” and each a “Selling Shareholder”), propose, subject to the terms and conditions of this Agreement, to sell or procure the sale of the number of ordinary shares of Britvic plc, a public limited company incorporated under the laws of England and Wales with registered number 5604923 (the “Company”) set opposite its name in column (2) of Table 2 in the Purchase Memorandum (if any) (the “Firm Shares”), which ordinary shares are registered in the name of the entities set out in column (2) of the table in Schedule I and in the case of IHG and Pernod each such entity is a wholly-owned subsidiary of the Selling Shareholder with which it is affiliated. The entities named in Schedule II (the “Underwriters”, which will include any Underwriter substituted as provided in Section 9) have agreed, severally and not jointly and subject to the terms and conditions of this Agreement including without limitation the execution and delivery of the Purchase Memorandum by each of the Selling Shareholders and each of the Underwriters in accordance with Section 2(h) and this Agreement not having been terminated under Sections 6, 9 or 10, to procure purchasers for the Firm Shares, or to purchase the Firm Shares themselves. The offer of the Firm Shares is referred to in this Agreement as the “Offer”.

          In addition, certain of the Selling Shareholders identified in Schedule I and Table (2) of the Purchase Memorandum propose, subject to the terms and conditions of this

1

Agreement and upon notice from Citigroup Global Markets U.K. Equity Limited (the “Stabilisation Manager”), to sell or procure the sale to purchasers procured by the Stabilisation Manager or to the Stabilisation Manager, its Agreed Over-allotment Share Proportion (as defined in Section 2(e) below) of ordinary shares of the Company which do not exceed in aggregate 15% of the total number of ordinary shares of the Company that are comprised in the Offer as provided in Sections 2(c), (d) and (e) (the “Over-allotment Shares” and, collectively with the Firm Shares, the “Sale Shares”). The Selling Shareholders who propose to sell such Over-allotment Shares are referred to herein as the “Over-allotment Shareholders”. The ordinary shares of the Company are referred to in this Agreement as the “Shares”.

          Each of Citigroup Global Markets Limited, in its capacity as joint sponsor and in any other capacity in which it may act in relation to the Offer (“CGML”) and Citigroup Global Markets U.K. Equity Limited, in its capacity as joint global co-ordinator, stabilisation manager and in any other capacity in which it may act in relation to the Offer (“CGMUKE”) is referred to in this Agreement as “Citigroup” and Deutsche Bank AG, in its capacity as joint sponsor, joint global co-ordinator and in any other capacity in which it may act in relation to the Offer is referred to in this Agreement as “Deutsche Bank”. Certain other terms used in this Agreement are defined in Section 22.

          In connection with the Offer, the Company has, in accordance with the Prospectus Rules, prepared a prospectus dated 25 November 2005 (the “Prospectus”). Subject to each of their decisions to do so at the appropriate time, it is proposed that each of the Selling Shareholders, each of the Over-allotment Shareholders and each of the Underwriters will, promptly after agreement of the Offer Price, execute a purchase memorandum in the form set out in Schedule IV (the “Purchase Memorandum”) pursuant to which each Underwriter agrees, amongst other things, to underwrite the Firm Shares. The details of the Offer Price and related matters will be set out in a pricing supplement, which subject to its content might comprise a Supplementary Prospectus (the “Pricing Supplement”) and is expected to be published immediately thereafter. Collectively, the Pricing Supplement, the Prospectus and any other Supplementary Prospectus that the Company may be required to publish are referred to as the “Offering Memoranda”. The Company, subject to the Prospectus being approved by, and filed with, the FSA in accordance with the Prospectus Rules, confirms that it has authorised the distribution of the Prospectus by Citigroup, Deutsche Bank and the other Underwriters, including any amendments or supplements thereto each in connection with the offer and sale of the Sale Shares.

          The Underwriters intend to enter into an agreement among themselves (the “Agreement among Underwriters”) which regulates the activities of the syndicate regarding the offer and sale of the Sale Shares.

          1. Representations and Warranties.

          (a) The Company and each of the persons identified in Part A of Schedule III (the “Executive Directors”) severally represents and warrants to, and agrees with, each of Citigroup, Deutsche Bank and the other Underwriters that:

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          (i) Each of the Offering Memoranda has been prepared in connection with the Offer and contains, or will when published, all information required by, and complies with, or will when published comply with, the Financial Services and Markets Act 2000 (as amended) (the “FSMA”), the listing rules (the “Listing Rules”) of the Financial Services Authority (the “FSA”) the prospectus rules (the “Prospectus Rules”) and so far as the Company is aware (having not made enquiries other than as to matters in relation to the United Kingdom) all other relevant statutes and regulations and, having regard to the particular nature of the Company, its subsidiaries and its subsidiary undertakings (the “Group”, and each a “member of the Group”) and the other matters referred to in Section 87A of the FSMA, contain all such information as investors and their professional advisers would reasonably require, and reasonably expect to find there, to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the Company, the Group and of the rights attached to the Shares. The Offering Memoranda (except with respect to any information included in reliance upon and in conformity with information furnished to the Company by the Underwriters for use therein and set out in Schedule V, for which no representation or warranty is made) did not and will not, at their respective dates, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and all expressions of opinion, intention, belief or expectation of the Company or the persons identified in Schedule III (the “Directors”) contained in such documents are and will be, at their respective dates, truly and honestly held and made on reasonable grounds after due and careful consideration and enquiry.

          (ii) The press announcement dated 14 November 2005 did not, the press announcement in the Agreed Form to be dated the date of this Agreement, the press announcement to be dated the date the Pricing Supplement is published, to the extent any Supplementary Prospectus is published, the announcement to be dated the date of any such publication and the roadshow presentation slides and reference books, each in the Agreed Form (the “Roadshow Slides”) do not, and will not, as at their respective dates of issue, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and all expressions of opinion, intention, belief or expectation of the Company or the Directors contained in such announcements or document are and will be, at their respective dates, truly and honestly held and made on reasonable grounds after due and careful consideration and enquiry.

          (iii) The Company has been duly incorporated and is validly existing as a public limited company under the laws of England and Wales with registered number 5604923. Each other member of the Group has been duly incorporated and is validly existing as a body corporate under the laws of its jurisdiction of incorporation. The Company and each other member of the Group has full corporate power and authority to own or lease, as the case may be, and to operate and occupy its properties and conduct its business as described in the Prospectus and, to the extent applicable, to implement the Restructuring Arrangements and is in good standing under the laws of each jurisdiction that requires such qualification. The Company does not hold any securities or options to acquire securities in any company other than those identified in Part XIV (Additional Information) of the Prospectus.

          (iv) On admission of the Shares to the Official List of the FSA and to trading on the London Stock Exchange’s market for listed securities (collectively, “Admission”), the

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Company will have the authorised and issued share capital as set forth in Part XIV (Additional Information) of the Prospectus and such description will conform to the rights set forth in the instruments defining the same; upon Admission all of the issued Shares will have been duly and validly authorised and issued, will be fully paid and will not be subject to calls for further funds and the share capital of the Company will, upon Admission, conform to the description contained in Part XIV (Additional Information) of the Prospectus and the Prospectus accurately describes the rights attaching to the share capital of the Company; all the issued shares of each other member of the Group have been duly and validly authorised and issued, are fully paid and are not subject to calls for further funds and all shares of each other member of the Group are owned by the Company either directly or through wholly owned subsidiaries, free and are clear of any security interests, liens, encumbrances, equities or claims and third party interests and none of the outstanding share capital of any other member of the Group was issued in violation of the pre-emptive or similar rights of any security of such company; the existing holders of shares of the Company have no pre-emptive or other rights to acquire the Shares; and, except pursuant to the terms of this Agreement and as set forth in Part XIV (Additional Information) of the Prospectus, no options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into, or exchange any securities for, Shares, shares of any other member of the Group or any other class of equity capital of the Company or of any other member of the Group are outstanding; and except as set forth in Part XIV (Additional Information) of the Prospectus, there are no restrictions on subsequent transfers of the Shares under the Company’s articles of association or the laws of England and Wales.

          (v) The Company has complied with the provisions of Sections 135 to 138 of the Companies Act in effecting the reduction of share capital pursuant to a special resolution of the Company approved by written resolution dated 18 November, 2005 (the “Reduction of Share Capital”), and the Company has delivered to the Registrar of Companies for registration an order of the Court confirming the Reduction of Share Capital and the order has been so registered and the resolution reducing share capital has taken effect. The notice of such registration will be published in the manner directed by the court and will have been so published prior to Admission.

          (vi) This Agreement and each of the other agreements to be entered into in connection with the Offer have been duly authorised, executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to all applicable insolvency laws affecting creditors’ rights generally. Each of the agreements (the “Restructuring Agreements”) to be entered into in connection with the capital restructuring of the Company described in Paragraph 2.3 of Part XIV (Additional Information) (the “Restructuring Arrangements”) of the Prospectus has been duly authorised, executed and delivered by the Company and each other relevant member of the Group and, subject to Admission and to all applicable insolvency laws affecting creditors’ rights generally, constitutes a valid and legally binding obligation of the Company and each other relevant member of the Group enforceable in accordance with its terms.

          (vii) No consent, approval, authorisation, order, registration, clearance or qualification of, or with, any court, regulatory body, administrative agency, government body, arbitrator or other authority, agency or body having jurisdiction over the Company or any other member of the Group or any of their properties or any stock exchange authorities is required by

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the Company or any member of its Group for the transfer of the Sale Shares, save as described in Part XIV of the Prospectus, and for the execution and delivery by the Company of this Agreement and the Restructuring Agreements and to give effect to the transactions contemplated in this Agreement and the Restructuring Agreements or pursuant to the Restructuring Arrangements, except those that have been obtained or made, or will prior to Admission be obtained or made, as the case may be, and are or will be prior to Admission in full force and effect.

          (viii) Other than as described in Paragraph 3.2.1 (ix) of Part XIV (Additional Information) of the Prospectus, there are and will, following Admission, be no restrictions upon the voting or transfer of the Shares or upon the declaration or payment of any dividend or distribution thereon;

          (ix) Save as set out in Note 4 – “Events after the balance sheet date” to the special purpose financial information of the Company included in Part IX – “Financial Information (IFRS)” of the Prospectus, the Company has not traded or carried out any other activity since its date of incorporation.

          (x) Other than as described in Part XIV (Additional Information) of the Prospectus, under the current laws and regulations of England and Wales, all dividends and other distributions declared and payable on the share capital of the Company may be paid in pounds sterling that may be converted into foreign currency and freely transferred out of the United Kingdom and all such dividends and other distributions will not be subject to withholding under the laws and regulations of England and Wales and without the necessity of obtaining any governmental or other authorisation.

          (xi) The execution and delivery of this Agreement, the Restructuring Agreements, the consummation of the transactions contemplated in this Agreement and the Restructuring Agreements and the fulfilment of the terms of this Agreement and the Restructuring Agreements and the implementation of the Restructuring Arrangements and the making of the Offer, the distribution of the Offer Documents and any other document in connection with the Offer and Admission will not conflict with, constitute a default under, result in a breach or violation of, or imposition of, any lien, charge or encumbrance upon any property or assets of any member of the Group pursuant to (i) the memorandum or articles of association of the Company or the constitutional documents of any other member of the Group; (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company or any other member of the Group is a party or bound or to which any of its or their property or assets is subject or any license, permit or authorisation held by or issued to the Company or any other member of the Group; or (iii) any statute, law, rule, regulation, judgment, order or decree applicable to the Company or any other member of the Group or any court, regulatory body, administrative agency, government body, arbitrator or other authority, agency or body having jurisdiction over the Company or any other member of the Group or any of its or their properties or assets, as applicable, except in the case of (ii) and (iii) above any such breach, violation or imposition as would not have a material adverse effect on the performance by the Company of its obligations under this Agreement or the consummation of any of the transactions contemplated in this Agreement.

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          (xii) Neither the Company nor any other member of the Group is in violation or default of (i) any provision of its memorandum or articles of association or its equivalent or other constitutional documents; (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company or any other member of the Group is a party or bound or to which any of its or their property or assets is subject; or (iii) any statute, law, rule, regulation, judgment, order or decree applicable to the Company or any other member of the Group or any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or such other member of the Group or any of its or their properties or assets, as applicable, except in the case of (ii) any such breach or default as would not have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Group, whether or not arising from transactions in the ordinary course of business (a “Material Adverse Effect”). Each member of the Group has complied with and will comply with applicable securities laws and regulations in relation to the Offer.

          (xiii) The financial information of the Company as at 31 October 2005 together with the related notes included at Part IX of the Prospectus (the “Company IFRS financial statements”) has been prepared and audited in conformity with all relevant Statements of Standard Accounting Practice and Financial Reporting Standards currently in force, with the Prospectus Rules and with International Financial Reporting Standards (“IFRS”), applied on a consistent basis; the consolidated financial information for the Group in respect of the year ended 2 October 2005 together with the related schedules and notes included at Part IX of the Prospectus (the “Group IFRS financial statements”) has been prepared and audited in conformity with all relevant Statements of Standard Accounting Practice and Financial Reporting Standards currently in force, with the Prospectus Rules and with IFRS, applied on a consistent basis throughout the periods involved; the combined and consolidated financial information for the Group in respect of the four financial years respectively ended 28 September 2002, 27 September 2003, 3 October 2004 and 2 October 2005 together with the related schedules and notes included at Part VIII in the Prospectus (the “Group UK GAAP financial statements”) has been prepared and audited in conformity with all relevant Statements of Standard Accounting Practice and Financial Reporting Standards currently in force, with the Prospectus Rules and with generally accepted accounting principles consistently applied in the United Kingdom (“UK GAAP”), applied on a consistent basis throughout the periods involved;

          (xiv) Each of the financial statements: (i) give a true and fair view of the state of affairs and financial condition of the Group or the Company, as the case may be, as at the dates stated and of its profits and/or losses, cash flows and, where relevant, recognised gains and losses or changes in equity for the periods specified; (ii) in accordance with such accounting standards and such accounting principles, make proper provision for all liabilities, whether actual, deferred or contingent; (iii) comply with all applicable law and regulation; and (iv) have been prepared after due and careful enquiry by the Company and, where applicable, the relevant members of the Group and on the bases of preparation set out in the Prospectus and are presented therein on the bases of the accounting policies of the Group. Other than as described in Part VII of the Prospectus under the heading “Future liquidity, financing arrangements and commitments”, neither the Company nor any member of the Group has any off balance sheet financing, investment or liability.

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          (xv) The unaudited pro forma financial information (including the notes thereto) set out in Part IX (Pro Forma Financial Information) in the Prospectus presents fairly the information shown therein, has been duly and carefully prepared in accordance on the bases described therein and is presented therein on a basis consistent with the IFRS accounting policies of the Group; all the assumptions used in the preparation thereof are reasonable and there are no other material assumptions or sensitivities which should be taken into account in the preparation of such information and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. Such pro forma financial information takes into account (to the extent relevant) all matters of a material nature of which the Company and the Executive Directors are aware concerning the Group. The selected financial data and summary financial information with respect to the Company and the Group included in the Prospectus presents fairly the information shown therein and has been compiled on a basis consistent with the financial statements included in the Prospectus from which such selected financial information is derived, except as otherwise stated therein and the selected unaudited pro forma financial information presents fairly the information shown therein and has been extracted without material adjustment from Part IX of the Prospectus;

          (xvi) Part XI (Summary of Significant Differences between UK GAAP, US GAAP and IFRS) of the Prospectus is an accurate and fair description of the matters described therein and accurately describes the significant differences, so far as the Company is aware, between UK GAAP, generally accepted accounting principles as used in the United States (“US GAAP”) and international financial reporting standards (“IFRS”) as they relate to the Group.

          (xvii) The Group’s IFRS financial statements have been presented and prepared in a form consistent with that which will be adopted in the Company’s next published annual financial statements.

          (xviii) All information supplied by the Company or any other Group or any of such person’s officers or employees to Ernst & Young LLP (the “Reporting Accountants”) for the purposes of the Long Form Report and/or the Accountants’ Report and/or their Working Capital Report and/or their report relating to pro forma financial information and/or their comfort letters on significant change in financial or trading position of the Company and the Group (including indebtedness and contingent liabilities and guarantees) and/or their comfort letters on accuracy and extraction of financial and non-financial information included in the Prospectus and/or any of the Reporting Accountants’ other reports and comfort letters in connection with the Offer (collectively, the “Reporting Accountants’ Reports”), and in respect of any updates to such Reporting Accountants’ Reports, has been supplied in good faith after due and careful enquiry; such information was when supplied true and accurate in all material respects and no information has been withheld which might reasonably have affected the contents of the Reporting Accountants’ Reports in any material respect.

          (xix) All information contained in the Reporting Accountants’ Reports was and remains true and accurate in all material respects and is not misleading and no fact or matter has been omitted from the Reporting Accountants’ Reports which would be necessary to make the information therein not misleading; and the statements of opinion, intention or expectation attributed to the Company or the Directors in the Reporting Accountants’ Reports are accurate statements of the opinions, intentions or expectations held by the Company or the Directors, as

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the case may be, which are fairly based upon facts within the knowledge of the Company or the Directors and have been made after due and careful enquiry.

          (xx) The Reporting Accountants are independent public accountants with respect to the Group within the meaning of guidelines on independence issued by the Institute of Chartered Accountants of England and Wales.

          (xxi) The Directors have established procedures which provide a reasonable basis for them to make proper judgments as to the financial position and prospects of, and claims against, the Group; the Company and each other member of the Group maintains a system of financial and internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorisations; and (ii) transactions are recorded as necessary to permit the preparation of returns and reports, complete and accurate in all material respects, to regulatory bodies as and when required by them and the preparation of financial statements by the Company on a consolidated basis in accordance with UK GAAP, IFRS and the Companies Act and the rules and regulations thereunder, and to maintain asset accountability; and (iii) access to the Group’s assets is permitted only in accordance with management’s general or specific authorisation; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

          (xxii) The Directors have established procedures which, as at and from Admission, will enable the Company to comply with the Listing Rules and the Disclosure Rules on an ongoing basis.

          (xxiii) There are no, and during the past five years have been no, material weaknesses in the Company’s internal control over financial reporting (whether or not remediated) of the Company or the Group, no change in the Company’s internal control over financial reporting of the Company or the Group that has materially adversely affected, or is reasonably likely to materially adversely affect, the Company’s internal control over financial reporting, of the Company or the Group and there has been no fraud that involves any member of senior management or any member of the Group.

          (xxiv) Nothing has come to the attention of the Company or any member of its Group that the Company or any member of the Group is in violation of any relevant applicable legislation regarding bribery or other corrupt business practices.

          (xxv) The working capital available to the Group, taking into account available bank facilities, is sufficient for its present requirement (that is, for at least the next twelve months from the date of the Prospectus). The cashflow and working capital projections contained in the Working Capital Reports have been prepared after due and careful enquiry, all assumptions on which such projections are based are set out in the Working Capital Reports and are reasonable and such projections take into account all material matters of which the Company or the Executive Directors are aware concerning the Company, the other members of the Group or the markets in which any of them is carrying on, or is expecting or proposing to carry on, business and the Directors have a reasonable basis on which to make the working capital statement in the Prospectus as required by the Listing Rules and the Prospectus Rules.

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          (xxvi) So far as the Company is aware, no event has occurred and no circumstances have arisen (and the sale of the Sale Shares will not give rise to any such event or circumstance) such that any person is or would be entitled, or could, with the giving of notice or lapse of time or the fulfilment of any condition or the making of any determination, become entitled, to require repayment before its stated maturity of, or to take any step to enforce any security for, any material indebtedness of the Company or any other member of the Group. No person to whom any material indebtedness of the Company or any other member of the Group which is payable on demand is owed, has demanded or threatened to demand repayment of, or taken or threatened to take any step to enforce any security for, the same.

          (xxvii) All of the Group’s borrowing facilities (collectively, the “Facilities”), each of which is described in Part VII of the Prospectus, are in full force and effect. All matters and events which could entitle the providers of the Facilities to refuse to make any moneys under the Facilities available are entirely within the control of the Company or the control of other persons over whom the Company is able to exercise control and management. There is nothing known, or which could on reasonable enquiry be known, to the Company that might give cause to believe that undrawn amounts under any Facilities might not be available for drawing as and when required.

          (xxviii) No member of the Group has sustained, since the date of the last audited financial statements in the Prospectus, any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labour dispute or court or governmental action, order or decree; and, since the date as of which information is given in the Prospectus, there has not been any change in the share capital or long-term debt of any member of the Group or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders’ equity or results of operations of any member of the Group, other than as set forth or contemplated in Part XIV (Additional Information) of the Prospectus;

          (xxix) The verification file prepared to verify certain statements in each of the Prospectus and the other documents or materials prepared in connection with the Offer that have been or are to be verified (the “verified documents”) has been prepared by persons having, collectively, appropriate knowledge and responsibility to enable them to provide appropriate supporting materials in respect of such statements; all such supporting materials have been compiled in good faith after all reasonable enquiry; the industry and market-related information included in each of the verified documents is based on or derived from reputable industry sources; and the Company and the Directors after due and careful enquiry believe that the contents of the verification file constitute appropriate supporting materials for the statements in each of the verified documents in respect of which they have been compiled; the Shares and the Offer conform to the respective descriptions thereof contained in the Prospectus;

          (xxx) All statements made or information provided (which for the purpose of this sub-section 2(xxx) shall only include statements and information provided in writing, unless such statements and information have been provided by one or more of the Executive Directors, in which case the requirement that such statements be provided in writing shall not apply) by or on behalf of and with the knowledge of the Company to the FSA or to the Joint Sponsors or either of them (including in connection with any application for certain information to be omitted

9

from the Offering Memoranda or any of them), are (or, when made, will be) true and accurate in all material respects and are not (or, when made, will not be) misleading and there are no facts, so far as the Company is aware, which have not been disclosed to the FSA in connection therewith which by their omission make any such statements misleading or which are material for disclosure to the FSA. All expressions of opinion, intention or expectation made by or on behalf of and with the knowledge of the Company to the FSA or to the Joint Sponsors or either of them (including in connection with any application for certain information to be omitted from the Offering Memoranda or any of them), are (or, when made, will be) truly and honestly held and have been (or, when made, will be) made on reasonable grounds after due and careful consideration and enquiry.

          (xxxi) There are no matters other than those disclosed in the Prospectus or which, so far as the Company is aware, have been notified to the FSA which the Company and the Directors consider should reasonably be taken into account by the FSA in considering the suitability for admission of the Shares to the Official List or by the London Stock Exchange in considering the suitability for trading of the Shares on the London Stock Exchange.

          (xxxii) All documentation requested in the Document Request List has been provided in good faith by persons with appropriate knowledge to do so and, save to the extent referred to therein, the Company is not aware of the existence of any document not provided in response to the Document Request List which relates to the subject matter of the questions contained in the Document Request List and which might be material to an assessment of the Company or the Group.

          (xxxiii) No action, suit or proceeding (whether formal or informal) by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any member of the Group or its or their property or assets is pending or, to the best knowledge of the Company, threatened that, singly or in aggregate, could reasonably be expected to have a Material Adverse Effect.

          (xxxiv) All members of the Group referred to in the Certificates of Title (as defined below) have good and marketable title to and are solely legally and beneficially entitled to all real property owned, occupied or used by any member of the Group (which is, where required, registered at HM Land Registry with title absolute or the subject of a pending application for such registration) and good and marketable title to all personal property owned by them, in each case free and clear of all agreements for sale, estate contracts, options, rights of pre-emption, mortgages, charges, liens, encumbrances, claims, restrictions, cautions, notices or inhibitions and defects other than in each case: (i) as disclosed in the Prospectus; or (ii) as disclosed in the Certificates of Title (as defined below) and which do not materially affect the value of such property; or (iii) do not interfere in any material respect with the use made and proposed to be made of such property by any member of the Group; and any real property and buildings held under lease by any member of the Group described in the Prospectus are held by them under valid, subsisting and enforceable leases with such exceptions as are either not material or do not interfere in any material respect with the use made and proposed to be made of such property and buildings by any member of the Group.

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          (xxxv) The real property described in the Prospectus is the only real property owned by the Group that is material for the operation of the business of the Group and there are no material actual or contingent obligations or liabilities in respect of any real property other than such real property.

          (xxxvi) All information supplied by the Group to Eversheds LLP and Wright, Johnston & Mackenzie LLP for the purposes of preparing the certificates of title in agreed form in respect of the Group’s properties (the “Certificates of Title”) has been supplied in good faith after due and careful enquiry, and such information was when supplied and remains true and accurate in all material respects and no information has been withheld which might reasonably have affected the contents of the Certificates of Title in any respect.

          (xxxvii) No labour problem or dispute with the employees of the Company or any other member of the Group or any trade union or other organisation representing such employees exists or is threatened or, so far as the Company is aware, imminent, other than as could not reasonably be expected, whether singly or in the aggregate, to give rise to Material Adverse Effect.

          (xxxviii) The Company and each other member of the Group are insured against such losses and risks and in such amounts as the Company believes are prudent and customary in the businesses in which each member of the Group is engaged; all policies of insurance and fidelity or surety bonds insuring the Company or any other member of the Group or their respective businesses, assets, employees, officers and directors are in full force and effect and the Company and the Directors are not aware of any circumstances that would render any such policies of insurance and fidelity or surety bonds void or voidable; the Company and each other member of the Group are, so far as the Company is aware, in compliance with the terms of all such material policies and instruments; there are no claims by the Company or any other member of the Group under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; neither the Company nor any other member of the Group has been refused any insurance coverage sought or applied for; and neither the Company nor any other member of the Group has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

          (xxxix) Save as disclosed in the audited financial statements of the Group in the Prospectus, or in Part XIV (Additional Information) of the Prospectus, there are no material amounts owing or promised to any present or former directors, employees, consultants or independent contractors of the Company or any other member of the Group other than remuneration accrued due or for reimbursement of business expenses, no directors or senior management employees (which for these purposes shall mean those in Band 5 or above) any member of the Group have given or been given notice terminating their contracts of employment and no member of the Group has any outstanding undischarged material liability to pay any governmental or regulatory authority any taxation, contribution or other impost arising in connection with the employment or engagement of employees or directors or consultants or independent contractors by it;

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          (xl) Save to the extent to which provision or allowance has been made in the audited financial statements contained in the Prospectus, no liability has been incurred by any member of the Group for breach of any contract of service, contract for services or consultancy agreement or any compensation for any breach of contract, for redundancy payments (including protective awards), for breach of any statutory requirements or any compensation in relation to breach of any such statutory requirements, for failure to comply with any order for the reinstatement or re-engagement of any employee, or for the actual or proposed termination or suspension of employment or variation of any terms of employment of any present or former employee of any member of the Group to an extent, in any such case, that is material;

          (xli) Save as disclosed in the Prospectus, there are no material liabilities associated with or arising from any member of the Group participating in, or contributing to, either currently or in the past, any retirement benefits schemes or arrangements (occupational or personal) which are not funded, insured or provided for on a generally accepted basis either through a separate trust, insurance policy or provision in the accounts of the relevant member of the Group; and no such liability is likely to arise;

          (xlii) All amounts which have become due and payable to the trustees of the Scheme and to any insurance company in connection with the Scheme have been paid;

          (xliii) No member of the Group has any obligation to contribute towards the pension arrangements of its directors and employees or former directors or employees other than those referred to in the Prospectus;

          (xliv) The Company and each other member of the Group possess all licences, certificates, permits and other authorisations of and from all regulatory authorities and third parties necessary to own or lease their respective properties and assets and conduct their respective businesses substantially in the manner in which they are currently conducted, and neither the Company nor any other member of the Group has received any notice of proceedings relating to the revocation or modification of any such licence, certificate, permit or other authorisation which, singly or in the aggregate, if the subject of an unfavourable decision, ruling or finding, would have a Material Adverse Effect.

          (xlv) So far as the Company or any member of the Group is aware, there is not currently, nor prior to the date of this Agreement has there been, any investigation by any competition or equivalent regulatory authority concerning alleged anti-competitive agreements, arrangements or practices by the Company or other member of the Group, nor any litigation concerning alleged breaches of competition laws by the Company or other member of the Group in any jurisdiction where the Company or the member of the Group, as the case may be, has property or assets or carries on business; nor is the Company or any other member of the Group party to any agreement or arrangement in respect of which any filing, registration or notification is required or is advisable pursuant to any anti-trust, anti-monopoly, competition, fair trading, consumer protection or similar legislation (whether or not the same has in fact been made).

          (xlvi) The Directors have considered compliance of the Company with the provisions of The Combined Code on Corporate Governance appended to the Listing Rules and have established procedures to enable the Company from Admission to comply with its

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provisions. On or prior to Admission, the Company will have adopted a code on securities dealings no less exacting than The Model Code as contained in the Listing Rules and established procedures to secure compliance with such Code. The Directors have had explained to them by the Company’s English lawyers the nature of their responsibilities and obligations as directors of a listed company under the Listing Rules, the Disclosure Rules, the Prospectus Rules and the FSMA.

          (xlvii) The Company and all other members of the Group are (i) in compliance in all material respects with any and all applicable European Union, federal, state and local laws and regulations, ordinances, codes, policies or rules of common law or any judicial or administrative interpretation thereof having legal effect, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products or nuclear or radioactive material (collectively “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (“Environmental Laws”); (ii) have received and are in compliance in all material respects with all permits, licenses and other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) there are no pending or, so far as the Company is aware, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non compliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any member of the Group.

          (xlviii) In the ordinary course of its business, the Company periodically reviews the effect of Environmental Laws on the business, operations and properties of the Group, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that such associated costs and liabilities could not be reasonably expected, singly or in the aggregate, to have a Material Adverse Effect.

          (xlix) A member of the Group owns, or has licensed to it or otherwise has the benefit or use under the authority of the owners or licensees thereof of, all patents, patent rights, licences, inventions, trademarks, service marks, trade names, copyrights, database rights, domain names, confidential information and other know-how rights and intellectual property (in each case, whether registered or not and including applications for registration) (“Intellectual Property Rights”) that are required to carry on the business of the Group in the manner in which it is being conducted save for any loss the effect of which, either singly or in aggregate, could not reasonably be expected to have a Material Adverse Effect and there are no unresolved claims asserting infringement which if resolved against the Group could reasonably be expected, either singly or in aggregate, to have a Material Adverse Effect, nor is the Company aware of any other infringements or alleged infringements which are considered to be sufficiently material for disclosure in the Prospectus, by the Company or any other member of the Group of any Intellectual Property Rights of others and the Company has no knowledge of any circumstances

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which it knows are likely to give rise to any such infringement or alleged infringement. The Company is not aware of any material infringement or alleged infringement of the Group’s Intellectual Property Rights by a third party, and has no knowledge of any circumstances which it knows are likely to give rise to any such infringement or alleged infringement.

          (l) Except as disclosed in Paragraph 10 of Part XIV (Additional Information) of the Prospectus, and except in the case of IT Systems (as defined below), no member of the Group is obliged to pay a material royalty, grant a material licence or provide other material consideration to any third party in connection with its Intellectual Property Rights.

          (li) The Company has no knowledge of any material breach or threatened material breach of any licence under which any member of the Group uses Intellectual Property Rights of any third party or under which a third party uses any Intellectual Property Rights of any member of the Group; nor has any matter come to the attention of the Company or the Executive Directors in the day-to-day operations of the business (other than, for the avoidance of doubt, consumer purchasing trends described in the Prospectus) which is likely to cause a material detrimental effect to the brands BRITVIC, ROBINSONS, FRUIT SHOOT, J2O, TANGO, PEPSI, 7UP or R WHITES.

          (lii) The members of the Group are up to date in relation to all procedures, payments and other formalities they must perform to ensure full ownership of or rights to use, as the case may be, Intellectual Property Rights material to the business conducted by them and to maintain the enforceability of such rights against third parties.

          (liii) Except as disclosed in the Prospectus, no Intellectual Property material to the businesses of the Group has been granted to third parties by any member of the Group except in the ordinary course of the businesses of the Group.

          (liv) The Group has taken and will maintain reasonable measures to prevent the unauthorised dissemination or publication of confidential information which is material to the businesses, finances or prospects of the Group.

          (lv) All of the information technology necessary to carry on the Group’s business in the manner in which it is currently carried out, including hardware, proprietary and third party software, networks, peripherals and associated documentation (“IT Systems”) and business records used or required for use by the Group are either recorded, stored, maintained or operated or otherwise owned by a member of the Group or properly licensed to the relevant Group members and are not dependent on any facilities or systems which are not licensed to or authorised for use by or are not under the exclusive ownership or control of the Group.

          (lvi) Except as disclosed in Part V (Information on the Group’s Operations) of the Prospectus, there have been no material failures of any part of the IT Systems in the two years prior to the date of this Agreement. Members of the Group have taken appropriate steps to address such failures. Adequate precautions are in place to preserve the availability, security and integrity of the IT Systems, including in the event of any failure in the IT Systems, and the Group has established adequate measures and procedures in respect of business continuity and disaster recovery given the business in which it is engaged.

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          (lvii) The Group complies in all material respects with all applicable data protection laws and guidance from the office of the Information Commissioner relevant to its processing of personal data. No member of the Group has received any notice or allegation from a competent authority alleging that the Group has not complied with applicable data protection laws, guidelines and industry standards. No individual has claimed, and, so far as the Company is aware, no grounds exist for an individual to claim, material compensation from the Group for breaches of applicable data protection laws.

          (lviii) The transactions contemplated by this Agreement (including, for the avoidance of doubt, the Restructuring Arrangement) will not of themselves give rise to any liability to tax for any member of the Group, nor result in disallowance, withdrawal, drawback or restriction of any relief, deduction, exemption or credit claimed by any member of the Group, save to the extent that any stamp duty or stamp duty reserve tax arises as a result of the stamp duty application, made pursuant to section 77 Finance Act 1986, for exemption from stamp duty in respect of the share exchange described in paragraph 2.2(i) of Part XIV of the Prospectus, being refused by HM Revenue & Customs.

          (lix) Except as disclosed in Part XIII (Taxation) of the Prospectus and subject to applicability of the relevant exemptions to the Underwriters or the Stabilisation Manager, no stamp duty or stamp duty reserve tax (“SDRT”), capital duty or other issuance or transfer tax or duties is payable in the UK by or on behalf of any person in connection with the sale, transfer or delivery of the Shares pursuant to the Offer in the manner contemplated by this Agreement to purchasers procured by the Underwriters or the Stabilisation Manager, provided that none of the purchasers of the Shares is a person who is, or is a nominee or agent of, a person who is, mentioned in any of sections 67, 70, 93 or 96 of the Finance Act 1986.

          (lx) Each member of the Group has duly made all returns, given all notices and supplied all information required to be supplied to all relevant tax authorities, has maintained all records required to be maintained for tax purposes and has paid all Taxes required to be paid by it (which in relation to amounts payable pursuant to regulation 5(2) of SI 1998/3175 during the relevant accounting period shall be deemed to be reasonable estimates of such amounts); and save as provided for in the financial statements of the Group, no member of the Group is involved in any material dispute or investigation with any tax authority, nor has any enquiry been raised by any tax authority in respect of any member of the Group which is likely to be material, and, so far as the Directors are aware, there are no facts which are likely to cause any such material dispute or investigation, or to cause any tax authority to raise any enquiry which is likely to be material.

          (lxi) No member of the Group is, or at any time within the previous six years has been, a close company as defined in section 414 of the Taxes Act.

          (lxii) Each member of the Group is, to the extent required, registered for the purposes of VAT or any equivalent tax in any other relevant jurisdiction and has complied in all material respects with the terms of legislation relating to VAT or such equivalent tax.

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          (lxiii) No member of the Group is or has in the last three years been treated as a member of a group for the purposes of VAT legislation with any company which is not a member of the Group and has not applied for such treatment.

          (lxiv) No member of the Group is or has ever been a 51 per cent or 75 per cent subsidiary (as defined in section 838 of the Taxes Act) of, or otherwise connected or associated for any tax purpose in any way with, any company which is not a member of the Group.

          (lxv) All National Insurance contributions and sums payable to HM Revenue & Customs under the P.A.Y.E. system and any amounts of a corresponding nature payable to any foreign tax authority due and payable by any member of the Group up to the date hereof have been paid and each Group member has made all such deductions and retentions as should have been made under sections 203 to 203J of the Taxes Act and Part II of the Income Tax (Earnings and Pensions) Act 2003 and all regulations made thereunder or under any comparable laws or regulations of any relevant foreign jurisdiction.

          (lxvi) Neither the Company nor any other member of the Group has taken any action, nor have any other steps been taken or legal proceedings commenced or, so far as the Company is aware, been threatened against the Company or any other member of the Group for its winding up, dissolution or striking off or any similar or analogous proceeding in any other jurisdiction, or for the Company or any other member of the Group to enter into any arrangement or composition with or for the benefit of creditors, or for the appointment of a receiver, administrative receiver, trustee or person with a similar or analogous function.

          (lxvii) Save for the appointment of the Stabilisation Manager, no member of the Group or any person acting on its behalf has taken, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in stabilisation or manipulation of the price of any security of the Company.

          (lxviii) The Company has not taken any action or omitted to take any action (such as issuing any press release relating to any Shares without an appropriate legend) that may result in the loss by the Stabilisation Manager, of the ability to rely on any stabilisation safe harbour provided under the Buy-Back and Stabilisation Regulation and by the FSA under the FSMA and the price stabilising rules made thereunder.

          (lxix) The Company has not paid or agreed to pay to any person any compensation for soliciting another to purchase any Shares.

          (lxx) The Shares are eligible for admission to CREST and the Articles of Association comply with all requirements of CRESTCo.

          (lxxi) The Company is a “foreign issuer” (as defined in Regulation S).

          (lxxii) The Company reasonably believes that, at the time the Sale Shares are delivered pursuant to this Agreement, there will be no substantial U.S. market interest, as defined in Rule 902(j) of Regulation S under the Securities Act, in the Sale Shares or securities of the Company of the same class as the Sale Shares.

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          (lxxiii) None of the Company, its Affiliates, or any person acting on its or their behalf has (i) directly or indirectly, made offers or sales of any security, or solicited offers to buy, any security under circumstances that would require the registration of the Shares under the Securities Act; or (ii) engaged in any directed selling efforts with respect to the Shares. Terms used in this subsection have the meanings given to them by Regulation S.

          (lxxiv) None of the Company, its Affiliates, or any person acting on its or their behalf has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Shares in the United States.

          (lxxv) No registration under the Securities Act of the Shares is required for the offer and sale of the Sale Shares to or by the Underwriters in the manner contemplated in this Agreement and in the Prospectus.

          (lxxvi) The Sale Shares are eligible for resale pursuant to Rule 144A under the Securities Act and are not and were not, when issued, of the same class (within the meaning of Rule 144A(d)(3)(i) under the Securities Act) as securities which are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system.

          (lxxvii) The Company is not, and after giving effect to the Offer and sale of the Shares and the application of the proceeds thereof as described in the Prospectus will not be, an “investment company” as defined in the Investment Company Act, without taking account of any exemption arising out of the number of holders of the Company’s securities.

          (lxxviii) For the financial year ended 2 October 2005, the Company believes that it was not, and currently believes it is not, and currently does not expect to become, a “passive foreign investment company” as defined in Section 1297 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

          (lxxix) Within the preceding six months, neither the Company nor any person acting on its behalf has offered or sold to any person any Shares or any securities of the same or a similar class as the Shares, other than, for the avoidance of doubt, the Sale Shares offered or sold pursuant to the Offer.

          (lxxx) None of the Company, any other member of the Group or, to the knowledge of the Company, any director, officer, employee or Affiliate of the Company is currently subject to any sanctions administered by the U.S. Department of the Treasury (“OFAC”) or any similar sanctions imposed by the European Union, the United Nations or any other body, governmental or other, to which the Company or any of its Affiliates is subject (collectively, “other economic sanctions”); and the Company will not directly or indirectly use the proceeds of the Offer, or lend, contribute or otherwise make available such proceeds to any other member of the Group, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any sanctions administered by OFAC or any other economic sanctions.

          (lxxxi) None of the Company, any other member of the Group or, to the knowledge of the Company, any director, officer, agent, employee or Affiliate of the Company,

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is aware of or has taken any action, directly or indirectly, that could result in a violation by such persons of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the rules and regulations thereunder (the “FCPA”) (including, without limitation, making use of the mail or any means or instrument of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorisation of the payment of any money, or other property, gift, promise to give, or authorisation of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA), the OECD Convention on Bribery of Foreign Public Officials in International Business Transactions (the “OECD Convention”) or any similar law or regulation, to which the Company, any other member of the Group, any director, officer, agent, employee of any member of the Group or, to the knowledge of the Company, any Affiliate is subject; and the Company, each member of the Group and, to the knowledge of the Company, its Affiliates have conducted their businesses in compliance with the FCPA, the OECD Convention and any applicable similar law or regulation and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

               Any certificate signed by any Director and delivered to Freshfields Bruckhaus Deringer (on behalf of Citigroup, Deutsche Bank and the other Underwriters) in connection with the Offer will be deemed a representation and warranty by the Company, as to matters covered thereby, to Citigroup, Deutsche Bank and to each of the other Underwriters.

               Any certificate signed by any Director for and on behalf of himself and the other Directors and delivered to Freshfields Bruckhaus Deringer (on behalf of Citigroup, Deutsche Bank and the other Underwriters) in connection with the Offer will be deemed a representation and warranty by such Director and the Directors, as to matters covered thereby, to Citigroup, Deutsche Bank and to each of the other Underwriters.

          (b) Each of the Selling Shareholders (which, for the avoidance of doubt, includes the Over-allotment Shareholders) severally and not jointly represents and warrants to, and agrees with, each of Citigroup, Deutsche Bank and the other Underwriters that:

          (i) The statements of fact included in the Offering Memoranda insofar as they relate or refer to such Selling Shareholder are (or, when made, will be) true and accurate in all material respects and are not (or, when made, will not be) misleading.

          (ii) Such Selling Shareholder is not aware of any subsisting agreement between it and another shareholder of the Company which agreement could materially adversely affect the transactions contemplated by this Agreement.

          (iii) Such Selling Shareholder has, where necessary, duly executed a Power of Attorney (the “Power of Attorney”), appointing each of the persons indicated in such Power of Attorney as such Selling Shareholder’s attorney (the “Attorney”) with authority to execute and deliver this Agreement and the Purchase Memorandum on behalf of such Selling Shareholder, to authorise the delivery of the Sale Shares to be sold by such Selling Shareholder or its Connected Shareholder Person under this Agreement and otherwise to act on behalf of such Selling Shareholder in connection with the transactions contemplated by this Agreement, in each case,

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on and subject to the restrictions set out in the Power of Attorney. The appointments by such Selling Shareholder by the Power of Attorney are irrevocable for a period of 2 months; the obligations of such Selling Shareholder in this Agreement will not be terminated by operation of law, whether by dissolution or by the occurrence of any other event; if any such dissolution or other event should occur before delivery of the Sale Shares in this Agreement, title to the Sale Shares and certificates representing the Sale Shares will be delivered by or on behalf of such Selling Shareholder or its Connected Shareholder Person in accordance with the terms and conditions of this Agreement; and actions taken by the Attorneys pursuant to the Power of Attorney will be as valid as if such dissolution or other event had not occurred, regardless of whether or not the Attorneys, or any of them, will have received notice of such dissolution or other event.

          (iv) Such Selling Shareholder or its Connected Shareholder Person, as the case may be, is the sole legal and beneficial owner of the Firm Shares and the Over-allotment Shares to be sold by it pursuant to this Agreement and has full power and authority to enable it to enter into this Agreement and to transfer, or procure the transfer of, the legal and beneficial interest in all the Firm Shares and Over-allotment Shares to be sold by it pursuant to this Agreement free and clear of any security interests, liens, encumbrances, equities or claims; upon delivery of such Firm Shares and Over-allotment Shares and payment therefor pursuant to this Agreement, good and valid legal and beneficial title to such Firm Shares and Over-allotment Shares, free and clear of any security interests, liens, encumbrances, equities or claims, will be given to the purchasers thereof; and each Connected Shareholder Person is a wholly-owned subsidiary of the Selling Shareholder with which it is so connected.

          (v) Such Selling Shareholder has full right, power and authority and has taken all action necessary to enter into this Agreement and, where relevant, the Power of Attorney and such Selling Shareholder and any Connected Shareholder Person has full right, power and authority to sell, assign, transfer and deliver the Firm Shares and Over-allotment Shares, or to procure the transfer and delivery thereof, to be sold by such Selling Shareholder and to pay any fees, commissions and costs provided and to exercise its rights and perform its obligations pursuant to this Agreement and the arrangements contemplated by this Agreement in accordance with its terms, and this Agreement, and any other documents in relation thereto, have been duly authorised, executed and delivered by such Selling Shareholder and constitute valid and legally binding obligations of such Selling Shareholder enforceable in accordance with its terms, subject to all applicable insolvency rights affecting creditors’ rights generally.

          (vi) No consent, approval, authorisation, order, registration, clearance or qualification of, or with, any court, regulatory body, administrative agency, government body, arbitrator or other authority, agency or body is required for the sale of Firm Shares or any Over-allotment Shares by such Selling Shareholder or for the execution and delivery by such Selling Shareholder of this Agreement or, where relevant, the Power of Attorney or the consummation of the transactions contemplated in this Agreement, where relevant, and the Power of Attorney, except those that have been obtained or made, as the case may be, and are in full force and effect and except, in the case of IHG only, for the requirement for shareholder approval disclosed in paragraph 5 of Part 12 of the Prospectus.

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          (vii) The execution and delivery of this Agreement, and any other documents in relation thereto, and the Power of Attorney, the offer and sale of Firm Shares by such Selling Shareholder, the consummation of the transactions contemplated in this Agreement and the Power of Attorney and the fulfilment of the terms of this Agreement and the Power of Attorney will not conflict with, or constitute a default under, result in a breach or violation of, or imposition of any lien, charge or encumbrance upon any property or assets of such Selling Shareholder pursuant to (i) the memorandum or articles of association or equivalent constitutional documents of such Selling Shareholder; (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which such Selling Shareholder is a party or bound or to which any of its properties or assets is subject or any license, permit or authorisation held by or issued to such Selling Shareholder; or (iii) any statute, law, rule, regulation, judgment, order or decree applicable to such Selling Shareholder or any court, regulatory body, administrative agency, government body, arbitrator or other authority, agency or body having jurisdiction over such Selling Shareholder or any of its properties or assets, except in the case of (ii) any such breach, violation or imposition as would not have a material adverse effect on the performance of this Agreement or the consummation of any of the transactions contemplated in this Agreement.

          (viii) Neither such Selling Shareholder nor any person acting on its or their behalf (which for this purpose excludes the Stabilisation Manager) has taken, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in stabilisation or manipulation of the price of any security of the Company.

          (ix) None of such Selling Shareholder, its Affiliates, or any person acting on its or their behalf has (i) directly or indirectly, made offers or sales of any security, or solicited offers to buy, any security under circumstances that would require the registration of the Shares under the Securities Act; or (ii) engaged in any directed selling efforts with respect to the Shares. Terms used in this subsection have the meanings given to them by Regulation S.

          (x) None of such Selling Shareholder, its Affiliates, or any person acting on its or their behalf has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Shares in the United States.

          (xi) Each Selling Shareholder is a limited company, duly incorporated and validly existing or, in respect of a Selling Shareholder not incorporated in England and Wales, a corporation of good standing under the laws of the jurisdiction of its incorporation and has been in continuous existence since incorporation.

               Any certificate signed by any director or a duly authorised officer of each Selling Shareholder and delivered to Freshfields Bruckhaus Deringer (on behalf of Citigroup, Deutsche Bank and the other Underwriters) in connection with the Offer will be deemed a representation and warranty by such Selling Shareholder, as to matters covered thereby, to Citigroup, Deutsche Bank and each of the other Underwriters.

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          (c) Each of the persons identified in Part B of Schedule III (the “Non-Executive Directors”) severally represents and warrants to, and agrees with, Citigroup, Deutsche Bank and each of the other Underwriters that:

          (i) The Offering Memoranda have been prepared in connection with the Offer and contains, or will when published contain, all information required by, and complies with or will when published comply with, the FSMA, the Listing Rules, the Prospectus Rules, and all other relevant statutes and regulations and, having regard to the particular nature of the Group and the other matters referred to in Section 87A of the FSMA, contains or when published will contain all such information as investors and their professional advisers would reasonably require, and reasonably expect to find there, to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the Company and of the rights attached to the Shares. The Offering Memoranda did not and will not, at their respective dates, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and all expressions of opinion, intention, belief or expectation of the Company or the Directors contained in such documents are and will be truly and honestly held and made on reasonable grounds after due and careful consideration and enquiry.

          (ii) The press announcement dated 14 November 2005 did not, the press announcement in the agreed form to be dated the date of this Agreement, the press announcement to be dated the date the Pricing Supplement is published, to the extent any Supplementary Prospectus is published, the announcement to be dated the date of any such publication and the Roadshow Presentation Slides do not and will not as at their respective dates of issue, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and all expressions of opinion, intention, belief or expectation of the Company or the Directors contained in such announcements or documents are and will be truly and honestly held and made on reasonable grounds after due and careful consideration and enquiry.

          (iii) Such Non-Executive Director has considered compliance of the Company with the provisions of The Combined Code on Corporate Governance appended to the Listing Rules and the Company has established procedures to enable the Company from Admission to comply with its provisions. Such Non-Executive Director has had explained to him by the Company’s English lawyers the nature of his responsibilities and obligations as a director of a listed company under the Listing Rules, the Disclosure Rules, the Prospectus Rules and the FSMA.

          (iv) The Directors have established procedures which provide a reasonable basis for them to make proper judgments as to the financial position and prospects of, and claims against the Group, and the Company and each other member of the Group maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorisations; (ii) transactions are recorded as necessary to permit the preparation of returns and reports, complete and accurate in all material respects, to regulatory bodies as and when required by them and the preparation of financial statements in accordance with UK GAAP, IFRS and the Companies Act, and to

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maintain asset accountability; (iii) access to the Group’s assets is permitted only in accordance with management’s general or specific authorisation; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

          (v) The Directors have established procedures which, as at and from Admission, will enable the Company to comply with the Listing Rules and the Disclosure Rules on an ongoing basis.

          (vi) Save for the Company’s appointment of the Stabilisation Manager, such Non-Executive Director has not taken, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in stabilisation or manipulation of the price of any security of the Company.

          (d) In relation to each Executive Director, the representations, warranties and agreements given by him in Section 1(a) are qualified by and only given to the best of such Executive Director’s knowledge, information and belief, after having made reasonable inquiries (and for the purposes of determining whether enquiries were reasonable, regard shall be had to the specific responsibilities and role within the Group of such Executive Director).

          (e) In relation to each Non-Executive Director, the representations, warranties and agreements given by him in Section 1(c) are qualified by and only given to the best of such Non-Executive Director’s belief, after having made reasonable enquiries.

          (f) Where any of the representations, warranties and agreements given in Section 1 is qualified by a reference to awareness and/or knowledge and/or information and/or belief that reference shall be deemed to include a statement to the effect that it has been given after making due and careful enquiry.

          (g) The aggregate liability of each of the Selling Shareholders under this Agreement (including under the representations, warranties and indemnities given or made by such Selling Shareholder in this Agreement) will not exceed an amount equal to the aggregate of (i) the product of the Offer Price and the number of Firm Shares set out opposite its name in column (2) in Table 2 of the Purchase Memorandum and (ii) the product of the Offer Price and the number of Over-allotment Shares set out opposite its name in column (2) in Table 3 of the Purchase Memorandum which are actually sold by such Selling Shareholder and/or Over-allotment Shareholder pursuant to this Agreement (save that if a sale has not occurred as a result of default in the delivery of such Shares by such Selling Shareholder such sale shall be treated as having occurred for the purposes of the foregoing calculation), save to the extent that such liability results from the bad faith, fraud or wilful default of such Selling Shareholder.

          (h) The aggregate liability of each Director under the representations, warranties and agreements given or made by such Director in this Agreement will not exceed the amount set out opposite his name in Schedule III, save to the extent that such liability results from the bad faith, fraud or wilful default of such Director.

          (i) No claim shall be brought against any Director in respect of any representation, warranty or agreement given or made by such Director in Section 1 of this

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Agreement unless notice in writing of such claim (giving reasonable details of the claim) has been given by the claimant to such Director by no later than the date of publication of the Company’s interim financial results for the period ended 31 March 2007.

          2. Agreement to Sell.

          (a) Subject to the terms of this Agreement, the satisfaction or waiver of the conditions set out in Section 6 (including, without limitation, the execution and delivery of the Purchase Memorandum by each of the Selling Shareholders and each of the Underwriters in accordance with Section 2(h)) and this Agreement not having been terminated under Sections 6, 9 or 10, each of the Selling Shareholders agrees, severally and not jointly, to sell, or procure the sale of, with full title guarantee and free from all liens, charges and encumbrances with all the rights attaching thereto at the price per Sale Share to be set out in the Purchase Memorandum (“Offer Price”) on 9 December, 2005 or such later date as the Company, the Selling Shareholders, Citigroup and Deutsche Bank may agree in writing (the “First Closing Date”) at 8.00 a.m. on such date (the “First Closing Time”) the number of Firm Shares set out opposite its name in column (2) of Table 2 of the Purchase Memorandum to purchasers procured by the Underwriters or, failing which, to the Underwriters themselves. Without prejudice to the foregoing provisions of this Section 2(a), each of the Selling Shareholders currently proposes (but shall not be obliged) to sell, or procure the sale of, the number of Firm Shares set out opposite its name in column (3) of Schedule I;

          (b) Subject to the terms and conditions of this Agreement, the satisfaction or waiver (if capable of waiver) of the conditions set out in Section 6 (including, without limitation, the execution and delivery of the Purchase Memorandum by each of the Selling Shareholders and each of the Underwriters in accordance with Section 2(h)) and this Agreement not having been terminated under Sections 6, 9 or 10, each of the Underwriters agrees, severally and not jointly, to procure purchasers for or, failing which, to purchase itself, at the Offer Price per Share at the First Closing Time the number of Firm Shares set out opposite its name in column (2) of Table 1 of the Purchase Memorandum;

          (c) Insofar as Over-allotment Shares of an Over-allotment Shareholder are transferred to or for the benefit of purchasers procured in Stabilisation Transactions, the actions of the Stabilisation Manager in connection with such transfer shall be effected on behalf of and as agent for the relevant Over-allotment Shareholder or its Connected Shareholder Person. Otherwise, in carrying out Stabilisation Transactions, the Stabilisation Manager will act as principal and neither the Stabilisation Manager nor its agents will act as agent of the Company, any Selling Shareholder or any other Underwriter. The exercise of the powers pursuant to subsection (d) below (including, without limitation, the decision whether or not to exercise such powers) will, following consultation with Deutsche Bank, be at the absolute discretion of the Stabilisation Manager and its agents, and neither the Stabilisation Manager nor any of its directors, officers, employees or agents will be responsible or liable to, or owe any duties to, the Company, any Selling Shareholder, any other Underwriter or any other person in respect thereof (including, without limitation, in relation to the timing of any Stabilisation Transaction or the amount of any stabilisation loss).

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          (d) On or before 8 January, 2005, or such earlier date as may be notified by the Stabilisation Manager to the Company (the “Stabilisation End Date”), and to the extent permitted by applicable laws and regulations, the Stabilisation Manager, itself or through its agents, will be entitled (but not obliged) to engage in stabilising activity contemplated by the Buy Back and Stabilisation Regulation and the price stabilising rules made under section 144 of the FSMA (any such transactions are referred to in this Agreement as “Stabilisation Transactions”). Stabilisation Transactions, if commenced, may be discontinued at any time.

          (e) Subject to the terms and conditions of this Agreement and this Agreement not having been terminated under Sections 6, 9 or 10, the Stabilisation Manager will purchase (or procure purchasers for), and each of the Over-allotment Shareholders will sell or procure the sale of (the “Over-allotment Contract”) at the Offer Price with full title guarantee, at the time and on the date referred to below, its Agreed Over-allotment Share Proportion of the number of Over-allotment Shares as equals X at the aforementioned time, as calculated below (provided, however, that no such Over-allotment Shareholder shall be obliged to sell a fraction of an Over-allotment Share pursuant to this subsection 2(e)), where:

X=A-P+S1+S2-R

and
A =	the number of Shares over-allocated by the Stabilisation Manager (as notified by the Stabilisation Manager to the Over-allotment Shareholders on or before the First Closing Date) which will not in any event exceed 22,954,872 Shares in aggregate (unless otherwise so agreed in the Purchase Memorandum);
P =	the cumulative aggregate number of Shares (“Stabilisation Shares”) which the Stabilisation Manager or its agents have, on or before the Stabilisation End Date, acquired or agreed to acquire in Stabilisation Transactions;
S1 =	the cumulative aggregate number of Stabilisation Shares in which the Stabilisation Manager has ceased to have an interest within the meaning of Section 208 of the Companies Act (but subject to Section 209 of that Act) on the assumption that the Stabilisation Shares constitute relevant share capital of the Company;
S2 =	the number of Stabilisation Shares (if any) which, immediately prior to 12 noon on the Stabilisation End Date (but not earlier), does not fall to be included in S1, despite the Stabilisation Manager or its agents having entered into agreements to sell them, solely as a result of those agreements not having been completed at that time; and
R =	such number of Shares as may be specified by written notice from the Stabilisation Manager to the Over-allotment Shareholders not later than 12 noon on the Stabilisation End Date,

and provided that S1 + S2 – R may not exceed P at any time.

          The obligations of the Stabilisation Manager and the Over-allotment Shareholders under the Over-allotment Contract are conditional on the satisfaction, or waiver by the Stabilising Manager in its absolute discretion, of the Over-allotment Conditions and on the service of notice by the Stabilisation Manager to the Over-allotment Shareholders specifying the

24

number of Shares (if any) represented by R (as used above), and are subject to Sections 6, 9 and 10 of this Agreement.

          An Over-allotment Shareholder’s “Agreed Over-allotment Share Proportion” shall be the proportion set out opposite its name in Schedule I under the column headed “Agreed Over-allotment Share Proportion” or such other proportion as is set out opposite its name in Column (3) of Table 3 of the Purchase Memorandum. The obligation of each Over-allotment Shareholder to sell Over-allotment Shares pursuant to the above-mentioned arrangements is several and is limited to its Agreed Over-allotment Share Proportion of the Over-allotment Shares.

          For the avoidance of doubt, the obligation of the Stabilisation Manager to purchase or procure purchasers for, and of each Over-allotment Shareholder to sell or procure the sale of, Over-allotment Shares pursuant to this subsection 2(e) will be in respect of a number of Over-allotment Shares represented by X, as determined on the Stabilisation End Date.

          Subject to the above conditions, the sale of Over-allotment Shares pursuant to this subsection 2(e) will take place on the date notified (such notification to be made at least two Business Days prior to such date) by the Stabilisation Manager to the Over-allotment Shareholders (the “Over-allotment Closing Date” together with the First Closing Date, a “Closing Date”), but in no event earlier than the Stabilisation End Date, at the time on such date notified by the Stabilisation Manager to the Over-allotment Shareholders (the “Over-allotment Closing Time”, together with the First Closing Time, a “Closing Time”).

          (f) Each of the Company, the Selling Shareholders and the Directors, severally and not jointly, acknowledges that any information it or he or she receives or has received regarding the identity of persons expressing interest in acquiring Shares in the Offer and the prices at which they may be willing to do so will be based on non-binding indications of interest from those persons, implying no assurance or obligation that such persons will subsequently acquire Sale Shares at the prices indicated or otherwise. Each of the Company, the Selling Shareholders and the Directors, severally and not jointly, recognises that such information may constitute inside information in relation to the Company and/or its securities and agree that any such information obtained or received by it or him or any of such person’s officers or employees will be held in confidence.

          (g) As compensation to the Underwriters for their commitments in this Agreement, each Selling Shareholder (or Over-allotment Shareholder, as the case may be):

          (i) at each Closing Time, will pay to CGMUKE, for the accounts of the several Underwriters, an amount equal to 2 per cent. of the Offer Price multiplied by the number of Sale Shares sold by such Selling Shareholder or Over-allotment Shareholder, as the case may be, at such time together with any value added tax (“VAT”) chargeable thereon (on receipt of a valid VAT invoice), which payment may be effected by way of a deduction on each Closing Date in the amount payable by CGMUKE on behalf of the Underwriters in accordance with Section 3(e); and

          (ii) within 15 days after the First Closing Date in relation to the Firm Shares and on the Over-allotment Closing Date in relation to the Over-allotment Shares, may in its absolute and sole discretion pay to CGMUKE, for the accounts of the several Underwriters, an

25

amount equal to up to 1 per cent. of the Offer Price multiplied by the number of Sale Shares sold by such Selling Shareholder, or Over-allotment Shareholder, as the case may be, pursuant to this Agreement on the relevant Closing Date together with any VAT chargeable thereon (on receipt of a valid VAT invoice), the amount of such commission (if any) to be determined in its absolute and sole discretion by such Selling Shareholder or Over-allotment Shareholder, as the case may be. The allocation between the Underwriters of any commission paid pursuant to this sub-section 2(g)(ii) shall be determined by the Selling Shareholders at their absolute and sole discretion and the Underwriters agree that they will not reallocate any such commissions among themselves.

          (h) Promptly after agreement of the Offer Price, and subject, at its own absolute and sole discretion, to determining to do so, each of the Selling Shareholders, each of the Over-allotment Shareholders and each of the Underwriters will execute its counterpart of the Purchase Memorandum. Without prejudice to the foregoing provisions of this sub-section 2(h), if any Selling Shareholder proposes not to execute the Purchase Memorandum, the other Selling Shareholders may (but shall not be obliged to) agree to increase the number of Shares to be sold by them. When, but not until, one or more of the Underwriters have executed (at its or their absolute and sole discretion) the Purchase Memorandum and the Purchase Memorandum has been executed by each of the Selling Shareholders or such of the Selling Shareholders as are willing to sell (as set out above) and each of the Over-allotment Shareholders or such of the Over-allotment Shareholders as are willing to sell (as set out above) relating to all the Firm Shares allocated and the Over-allotment Shares, the executed Purchase Memorandum will take effect as part of this Agreement and each of the Underwriters concerned will be obliged, on and subject to the terms and conditions in this Agreement, to procure as agent for the Selling Shareholders, purchasers for or, failing which, itself purchase the number of Firm Shares shown opposite its name in column (2) of Table 1 of the Purchase Memorandum (if any) at the Offer Price on the First Closing Date.

          3. Settlement.

          (a) The Company undertakes to Citigroup, Deutsche Bank and the other Underwriters to ensure that on or before the Business Day next following the date of this Agreement:

          (i) in so far as it is within its power and control, all necessary filings are made with the Registrar of Companies in England and Wales to facilitate the transfer of Shares through CREST; and

          (ii) it uses all reasonable endeavours to procure that the Registrar confirms to CRESTCo that it is the registrar for the Shares; and

          (iii) a securities application form is submitted by it to CRESTCo and the Shares that are to be in uncertificated form are admitted into CREST with effect from Admission.

          (b) Each of the Selling Shareholders (including, for the avoidance of doubt, the Over-allotment Shareholders) undertakes severally to Citigroup, Deutsche Bank and each of the

26

other Underwriters to ensure that on or before the Business Day next following the date of the Purchase Memorandum, for the purpose of enabling Firm Shares to be transferred to purchasers procured by the Underwriters or, failing which, to the Underwriters and Over-allotment Shares to be transferred to purchasers procured by the Stabilisation Manager or to the Stabilisation Manager, pursuant to this Agreement, all its or its Connected Shareholder Person’s share certificates representing such Sale Shares are delivered as directed by CGMUKE together with:

          (i) Such number of CREST stock transfer forms as CGMUKE or its nominee may reasonably request, duly executed by or on behalf of such Selling Shareholder or its Connected Shareholder Person in favour of CGMUKE or its nominee (provided that CGMUKE will hold the Sale Shares as nominee on behalf of the relevant Selling Shareholders or their Connected Shareholder Persons (if applicable) as contemplated by sub-section 2(c) below), representing in aggregate the number of Firm Shares to be sold by the relevant Selling Shareholder or its Connected Shareholder Person to purchasers procured by the Underwriters or, failing which, to the Underwriters and the number of Over-allotment Shares which may be sold to purchasers procured by the Stabilisation Manager or to the Stabilisation Manager pursuant to this Agreement that are to be in uncertificated form; and

          (ii) Such number of stock transfer forms as CGMUKE or its nominee may reasonably request, duly executed by or on behalf of such Selling Shareholder or its Connected Shareholder Person, with the names of the transferees and the number of Sale Shares to be transferred left blank, representing in aggregate the number of Firm Shares to be sold by the relevant Selling Shareholder or its Connected Shareholder Person to purchasers procured by the Underwriters or, failing which, to the Underwriters and the number of Over-allotment Shares which may be sold to purchasers procured by the Stabilisation Manager or to the Stabilisation Manager pursuant to this Agreement that are to be in certificated form.

          (c) CGMUKE or its nominee(s) will hold the Sale Shares transferred to it pursuant to subsection (b) as trustee on trust for the Selling Shareholder or its Connected Shareholder Person or Over-allotment Shareholder or its Connected Shareholder Person, as the case may be, that transferred such Sale Shares to it until the satisfaction or waiver (if capable of waiver) (in accordance with Section 6) of the conditions contained in Section 6 or the transfer of such Sale Shares back to the relevant Selling Shareholder or its Connected Shareholder Person or Over-allotment Shareholder or its Connected Shareholder Person, as the case may be.

          (d) Upon satisfaction or waiver (in accordance with Section 6) of the conditions in Section 6, on the relevant Closing Date:

          (i) Each of the Selling Shareholders shall procure, to the extent that they have not already done so, the delivery of the stock transfer forms in respect of any Sale Shares that are to be transferred, in the case of Firm Shares to purchasers procured by the Underwriters or, failing which to the Underwriters, or in the case of Over-allotment Shares to purchasers procured by the Stabilisation Manager or to the Stabilisation Manager, pursuant to this Agreement and that the same are dated, completed, executed and delivered as required by Citigroup and Deutsche Bank, and the Company will procure that the Registrar will register the transferees of any such Shares in the register of members of the Company; and

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          (ii) CGMUKE or its nominee will hold the relevant number of Sale Shares transferred to it pursuant to subsection (b) above as trustee on trust for the purchasers of such Sale Shares, and CGMUKE or its nominee will be released from the trusts in such subsection.

          (iii) The Company will procure that the share certificates in respect of any Sale Shares in certificated form to be transferred on such date contain the following legend (unless otherwise determined by the Company in accordance with applicable law):

“THE ORDINARY SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE US SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) OR ANOTHER EXEMPTION FROM, OR TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THESE SHARES. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THESE SHARES MAY NOT BE DEPOSITED INTO ANY UNRESTRICTED DEPOSITARY RECEIPT FACILITY IN RESPECT OF THE COMPANY’S SHARES, ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK”; and

          (iv) The Company will procure that share certificates in respect of any Sale Shares in certificated form to be transferred on such date, duly issued and sealed by the Company, are dispatched by the Registrar to the purchasers therefor.

          (e) Against compliance by the parties to this Agreement (other than Citigroup, Deutsche Bank and the other Underwriters) with their obligations under this Agreement, CGMUKE agrees to make payment on behalf of the Underwriters of (i) the product of the Offer Price and the number of Firm Shares in respect of the First Closing Date or (ii) the product of the Offer Price and the number of Over-allotment Shares (if any) in respect of the Over-allotment Closing Date (less, in each such case, the commissions and expense reimbursements to be deducted pursuant to Sections 2 and 5 and less the Transfer Taxes that may be deducted pursuant to Sections 13(h) and (j)) to each of the Selling Shareholders (for itself or as trustee for its Connected Shareholder Person where relevant) for the Firm Shares and to each of the Over-allotment Shareholders (for itself or as trustee for its Connected Shareholder Person where relevant) for the Over-allotment Shares in each case sold by it or its Connected Shareholder Person on such Closing Date, in the case of Firm Shares to purchasers procured by the

28

Underwriters or, failing which, to the Underwriters themselves, or in the case of Over-allotment Shares to purchasers procured by the Stabilisation Manager or to the Stabilisation Manager. Such payment will be made in pounds sterling in immediately available funds for value before 3.00 p.m. on the relevant Closing Date to such bank account as the relevant Selling Shareholder or Over-allotment Shareholder, as the case may be, notifies to the Stabilisation Manager in writing no later than 2.00 p.m. on the Business Day falling two Business Days prior to the date on which such payment is due. Any amount required to be paid as provided by this Section 3(e) but which is not so paid shall carry interest from the time until the date of actual payment at the best rate reasonably obtainable by the Stabilisation Manager (from time to time) on such amount.

          (f) As soon as practicable on or following the Stabilisation End Date, the Company will procure the issue to the Selling Shareholders or Over-allotment Shareholders or their Connected Shareholder Persons (as applicable), as the case may be, of balancing certificates (if any) in respect of their respective holdings of Shares following the transfers of Sale Shares pursuant to this Agreement.

          (g) The documents to be delivered at each Closing Time by or on behalf of the parties pursuant to Section 6, including a cross-receipt for the Sale Shares and any additional documents requested by Citigroup, Deutsche Bank or the other Underwriters pursuant to Section 6(p), will be delivered at the London offices of Freshfields Bruckhaus Deringer (on behalf of the Underwriters) or such other location as the parties may agree (the “Closing Location”), and the Sale Shares will be delivered as specified in Section 2 above, all at such Closing Time. A meeting will be held at the Closing Location at 2.00 p.m., London time, on the Business Day next preceding such Closing Time, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties.

             If Admission has not taken place by 14 December 2005, or such later date (not later than 21 December 2005) as the parties to this Agreement may agree, or if this Agreement is terminated prior to Admission, CGMUKE or its nominee shall return all documents of title, indemnities and instruments of transfer delivered to them or their agents, input all requisite instructions into CREST and give such instructions to the Registrars as may be necessary in order to procure that the Shares which are to be sold by the Selling Shareholders (or their Connected Shareholder Persons) for which CREST transfers forms have been delivered to CGMUKE or its nominee are rematerialised into certificated form and all authorities and instructions given by the Selling Shareholders under this Agreement shall following such return lapse and cease to have effect.

          4. Representations and Warranties by the Underwriters.

          (a) Each Underwriter, severally but not jointly, acknowledges that the Sale Shares have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

          (b) Each Underwriter, severally and not jointly, represents and warrants to and agrees with the Company and the Selling Shareholders that:

29

          (i) None of it, its Affiliates, or any person acting on its or their behalf has offered or sold the Sale Shares, or will offer and sell the Sale Shares, except: (A) in the United States to those reasonably believed to be qualified institutional buyers (“QIBs”) within the meaning of Rule 144A under the Securities Act or another exemption from, or transaction not subject to, the registration requirements of the Securities Act, or (B) outside the United States in an offshore transaction in accordance with Regulation S under the Securities Act.

          (ii) It is an institutional “accredited investor” (as defined in Rule 501(a) of Regulation D).

          (iii) None of it, its Affiliates and any person acting on its or their behalf: (A) has engaged, or will engage, in any “general solicitation” or “general advertisement” (within the meaning of Rule 502(c) under the Securities Act), in connection with any offer or sale of the Shares in the United States or (B) has engaged, or will engage, in any “directed selling efforts” (as defined in Regulation S under the Securities Act) with respect to the Shares.

          (iv) It has not made, and will not make, an offer of any Shares to the public in any member state of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) in circumstances that would require a prospectus to be published in the Relevant Member State and it has not taken, and will not take, any action that would require the registration of the Prospectus, other than in the United Kingdom.

          5. Covenants.

          (I) The Company agrees with Citigroup, Deutsche Bank and each other Underwriter:

          (a) To supply to Citigroup, Deutsche Bank and each other Underwriter and to counsel for Citigroup, Deutsche Bank and the other Underwriters, without charge, on the date of this Agreement and thereafter from time to time, an electronic copy of and as many copies of the Prospectus and any amendments and supplements thereto as they may reasonably request.

          (b) Not to amend or supplement the Prospectus or the Pricing Supplement without the prior written consent of Citigroup and Deutsche Bank.

          (c) At any time prior to Admission, if at such time any event will have occurred as a result of which the Prospectus, as then amended or supplemented, would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, or if for any other reason it should be necessary or desirable to amend or supplement the Prospectus, to promptly (i) notify Citigroup and Deutsche Bank of any such event; (ii) subject to the requirements of Section 5(I)(b), prepare an amendment or supplement that will correct such statement or omission; and (iii) supply to Citigroup, Deutsche Bank and each other Underwriter and to counsel for Citigroup, Deutsche Bank and the other Underwriters, without charge, as many copies of the amended or supplemented Prospectus as they may reasonably request.

          (d) To promptly advise Citigroup and Deutsche Bank, and if requested by Citigroup and Deutsche Bank, confirm such advice in writing, at any time prior to completion of

30

the sale of the Sale Shares in the Offer by the Underwriters (as determined by Citigroup and Deutsche Bank), of (i) any change in the Company’s condition (financial or otherwise), prospects, earnings, business or properties; (ii) any change in information in the Prospectus that could reasonably be considered to be material; or (iii) any new material information relating to the Company or relating to any matter stated in the Prospectus.

          (e) Not to (and to procure that no member of the Group will) at any time, between the date of this Agreement and the later of 40 days after the First Closing Date and 20 Business Days after the Stabilisation End Date (the “Initial Period”), circulate, distribute, publish, issue or make (nor authorise any other person so to do) such announcements, documents or statements which relate to the Company, the Group, the Offer or otherwise relate to the assets, liabilities, profits, losses, financial or trading condition or the prospects, earnings or business of the Company or the Group (except for normal communications, advertisements, statements or announcements in the ordinary course of business), either individually or jointly with any other person without the prior consent of Citigroup and Deutsche Bank (such consent not to be unreasonably withheld or delayed) unless, in the reasonable judgment of the Company on the basis of legal advice and after notification to Citigroup and Deutsche Bank, such announcement, document or statement is required by law or applicable regulation or the requirement of any stock exchange including, without limitation, the FSMA, the London Stock Exchange and the FSA and the rules and regulations promulgated thereunder; and not to (and to procure that no member of the Group will) at any time during the period following the expiry of the Initial Period to the date falling six months after the date of Admission circulate, distribute, publish, issue or make (nor authorise any person to do so) such announcements, documents or statements as referred to above or relating to any matters, events or circumstances which may be necessary to be made known to the public in order to enable the shareholders of the Company and the public to appraise the position of the Company or to avoid the establishment of a false market in its securities, either individually or jointly with any other person, (including, without limitation, any matter whatsoever which would require notification by the Company to a Regulatory Information Service in accordance with the provisions of the Disclosure Rules) without first, where reasonably practicable and subject always to applicable law and regulation, (i) notifying Citigroup and Deutsche Bank as to the content, form and manner of publication of such announcements, documents or statements, (ii) making available drafts of any such announcements, documents or statements to Citigroup and Deutsche Bank in sufficient time prior to its publication to allow Citigroup and Deutsche Bank an opportunity to consider and comment on the same, and (iii) consulting with Citigroup and Deutsche Bank as to the content, form and manner of publication of such announcements, documents or statements.

          (f) Not to be or become, at any time prior to the expiration of two years after Admission, an open-end investment company, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registered under the Investment Company Act.

          (g) During the period of two years after the Closing Time, not to, and not to permit any of its Affiliates to, resell in the United States any of the Sale Shares which constitute “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act that have been acquired by any of them.

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          (h) Not to and not to permit any of its Affiliates or any person acting on its or their behalf to, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of the Shares under the Securities Act.

          (i) Not to and not to permit any of its Affiliates, or any person acting on its or their behalf to engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Shares in the United States.

          (j) Not to and not to permit any of its Affiliates, or any person acting on its or their behalf to engage in any directed selling efforts with respect to the Shares. Terms used in this subsection have the meanings given to them by Regulation S.

          (k) During any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act or it is not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) thereunder, to provide to each holder of such restricted securities and to each prospective purchaser (as designated by such holder) of such restricted securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) under the Securities Act.

          (l) To take reasonable precautions designed to ensure that any offer or sale, direct or indirect, in the United Sates of any Shares or any substantially similar securities issued by the Company, within six months subsequent to the date on which the distribution of the Sale Shares has been completed (as notified to the Company by Citigroup and Deutsche Bank), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Sale Shares in the United States contemplated by this Agreement as transactions exempt from the registration provisions of the Securities Act.

          (m) For a period beginning at the date of this Agreement and continuing to and including the date that is 180 days after Admission (the “Initial Lock-up Period”), without the prior written consent of Citigroup and Deutsche Bank, not to offer, issue, sell or contract to sell, issue options in respect of, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company or any Affiliate of the Company or any person in privity with the Company or any Affiliate of the Company), directly or indirectly, or announce the offer of, any Shares or any securities of the Company that are substantially similar to the Shares, including but not limited to any securities convertible into, or exchangeable for, or that represent the right to receive Shares or any such securities of the Company, or enter into any transaction with the same economic effect as, or agree to do, any of the foregoing; provided, however, that the Company may issue and sell shares or securities of the Company pursuant to any employee stock option plan or stock ownership plan of the Company described in the Prospectus and in effect on Admission and, for a period beginning on the date immediately following the expiry of the Initial Lock-up Period and continuing to and including the date that is 185 days from the expiry of the Initial Lock-up Period, without the prior written consent of Citigroup and Deutsche Bank (such consent not to be unreasonably withheld or delayed) not to offer, issue, sell or contract to sell, issue options in respect of, pledge or otherwise dispose of (or enter into any transaction which is designed to, or

32

might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company or any Affiliate of the Company or any person in privity with the Company or any Affiliate of the Company), directly or indirectly, or announce the offer of, any Shares or any securities of the Company that are substantially similar to the Shares, including but not limited to any securities convertible into, or exchangeable for, or that represent the right to receive Shares or any such securities of the Company, or enter into any transaction with the same economic effect as, or agree to do, any of the foregoing; provided, however, that the Company may issue and sell shares or securities of the Company pursuant to any employee stock option plan or stock ownership plan of the Company described in the Prospectus and in effect on Admission.

          (n) Save for the appointment of the Stabilisation Manager, not to (and to cause the other members of the Group, its Affiliates and any person acting on its or their behalf not to) take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in stabilisation or manipulation of the price of any security of the Company.

          (o) Not to take any action or omit to take any action (such as issuing any press release relating to any Shares without an appropriate legend) that may result in the loss by the Stabilisation Manager, of the ability to rely on any stabilisation safe harbour provided under the Buy-Back and Stabilisation Regulation and by the FSA under the FSMA and the price stabilising rules made thereunder.

          (p) To procure that (i) the Company’s new articles of association, in the form of the draft made available to Citigroup and Deutsche Bank, are adopted with effect from Admission, and (ii) the Restructuring Agreements and Restructuring Arrangements will become unconditional in all respects no later than Admission to the extent not already done so on the date of this Agreement, save only where such modification, variation, supplement or grant could reasonably be regarded as immaterial.

          (q) Not to, without the prior written consent of Citigroup and Deutsche Bank (such consent not to be unreasonably withheld or delayed), seek to modify, vary or supplement any of the terms and conditions of the Restructuring Arrangements or the Restructuring Agreements or to grant any release, waiver or indulgence in relation to any obligation of another party to any such agreement or extension of time for the performance of any such obligation.

          (r) Not to, without the prior written consent of Citigroup and Deutsche Bank, on or after the date of this Agreement and prior to the last Closing Date declare, make or pay any dividend or other distribution on any of its share capital nor increase, reduce or modify any part of it, other than pursuant to the Restructuring Arrangements.

          (s) To comply with its obligations to the FSA and under the Companies Act to furnish financial statements to its shareholders.

          (t) For a period ending with the publication of the Company’s interim results for its current financial year, to furnish to Citigroup and Deutsche Bank all reports or other communications (financial or other) generally made available to shareholders, and deliver to

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Citigroup and Deutsche Bank (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the FSA, the London Stock Exchange or any securities exchange on which any class of securities of the Company is listed.

          (u) To use its best efforts to obtain Admission at the First Closing Time and to provide all information and documentation required by the FSA from the Company to obtain and maintain Admission.

          (v) The Company will notify CRESTCo that the conditions set out in this Section 5 have been satisfied or waived as described below and will send an enablement letter to CRESTCo;

          (w) To ensure that sufficient copies of the Prospectus, the Pricing Supplement and any Supplementary Prospectus or supplement thereof are made available at the registered office of the Company, the other locations referred to in the Prospectus or supplement thereof and the Document Viewing Facility of the FSA as required by the FSA (and the announcement that the documents are available at the Document Viewing Facility is released).

          (x) To ensure that the documents stated in the Prospectus and the Pricing Supplement as being available for inspection shall be made available as stated.

          (y) To the extent not previously provided, to provide Freshfields Bruckhaus Deringer (on behalf of Citigroup and Deutsche Bank and the other Underwriters) the documents listed in Part A of Exhibit A, in the Agreed Form where so specified and otherwise in a form reasonably satisfactory to Citigroup and Deutsche Bank, on the date of this Agreement.

          (z) To the extent not previously provided, to provide Freshfields Bruckhaus Deringer (on behalf of the Citigroup and Deutsche Bank and the other Underwriters) the documents listed in Part B of Exhibit A, in the Agreed Form where so specified and otherwise in a form reasonably satisfactory to Citigroup and Deutsche Bank, on the date the Pricing Supplement is published.

          (aa) To the extent not previously provided, to provide Freshfields Bruckhaus Deringer (on behalf of Citigroup and Deutsche Bank and the other Underwriters) the documents listed in Part C of Exhibit A, in the Agreed Form where so specified and otherwise in a form reasonably satisfactory to Citigroup and Deutsche Bank, prior to the First Closing Date.

          (bb) To the extent not previously provided, to provide Freshfields Bruckhaus Deringer (on behalf of Citigroup and Deutsche Bank and the other Underwriters) the documents listed in Part D of Exhibit A, in the Agreed Form where so specified and otherwise in a form reasonably satisfactory to Citigroup and Deutsche Bank, prior to the Over-allotment Closing Date.

          (cc) Prior to any Closing Time, the Company shall furnish to Citigroup and Deutsche Bank such further information certificates or documents that Citigroup and Deutsche bank may reasonably request.

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          (II) Each Selling Shareholder severally and not jointly agrees with Citigroup, Deutsche Bank and each of the other Underwriters:

          (a) To advise promptly Citigroup and Deutsche Bank, and if requested by Citigroup and Deutsche Bank, confirm such advice in writing, at any time prior to completion of the sale of the Sale Shares in the Offer by the Underwriters (as determined by Citigroup and Deutsche Bank), of (i) any change in information in the Prospectus relating to such Selling Shareholder; or (ii) any new material information relating to the Company or the Group or relating to any matter stated in the Prospectus which comes to the attention of such Selling Shareholder (for the avoidance of doubt, such obligation not imposing on such Selling Shareholder any duty of enquiry).

          (b) Not to (and to procure that no member of its group will) at anytime, during the Initial Period, circulate, distribute, publish, issue or make (nor authorise any other person so to do) any announcements, documents or statements relating to the Company or the Offer, either individually or jointly with any other person without the prior consent of Citigroup and Deutsche Bank (such consent not to be unreasonably withheld or delayed) unless (i) in the reasonable judgment of such Selling Shareholder on the basis of legal advice (if reasonably practicable) and (if reasonably practicable) after notification to Citigroup and Deutsche Bank, such announcement, document or statement is required by law or applicable regulation or the requirement of any stock exchange including, without limitation, the FSMA, the London Stock Exchange and the FSA and the rules and regulations promulgated thereunder and (in the case of Pernod Ricard) the Autorité des Marchés Financiers and the Securities Exchange Commission, (ii) such information is already in the public domain, and (iii) with respect to IHG, where the announcements, documents or statements relate to or are in connection with the issue and publication of the IHG class 1 circular to its shareholders and/or the IHG extraordinary general meeting to be convened on or around 7 December 2005; and not to (and to procure that no member of its group will) at any time during the period ending on the date falling six months after the date of Admission circulate, distribute, publish, issue or make (nor authorise any person to do so) such announcements, documents or statements relating to the Company or the Offer without first, where reasonably practicable and subject always to applicable law and regulation, (i) notifying Citigroup and Deutsche Bank as to the content, form and manner of publication of such announcement, document of statement, (ii) making available drafts of those portions of any such announcements, documents or statements as relate to the Company or the Offer to Citigroup and Deutsche Bank in sufficient time prior to its publication to allow Citigroup and Deutsche Bank an opportunity to consider and comment on the same, and (iii) discussing with Citigroup and Deutsche Bank as to the content, form and manner of publication of such announcements, documents or statements. The provisions of this Section 5(II)(b) shall not apply to announcements of IHG’s preliminary results in respect of the financial year ending 31 December 2005, the annual report and account of IHG in respect of the year ending 31 December 2005 and the announcement of IHG’s first quarter results in respect of the period ending 31 March 2005 other than any reference to or commentary on the Company or other members of its Group contained in any such announcement, document or statement.

          (c) During the period of two years after the Closing Time, not to, and not permit any of its Affiliates to, resell in the United States any of the Sale Shares which constitute

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“restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act that have been acquired by any of them.

          (d) Not to and not to permit any of its Affiliates or any person acting on its or their behalf to, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of the Shares under the Securities Act.

          (e) Not to and not to permit any of its Affiliates, or any person acting on its or their behalf to engage in any directed selling efforts with respect to the Shares. Terms used in this subsection have the meanings given to them by Regulation S.

          (f) Not to and not to permit any of its Affiliates, or any person acting on its or their behalf to engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Shares in the United States.

          (g) Save for (i) the acceptance of a general offer made to all the holders of issued and allotted Shares for the time being (other than Shares held or contracted to be acquired by the offeror or its associates within the meaning of Section 430 of the Companies Act 1985) made in accordance with the City Code on Takeovers and Mergers on terms which treat all such holders alike; (ii) the provision of an irrevocable commitment or undertaking to accept such an offer (without any further agreement to transfer of dispose of any Shares or any interest therein); (iii) selling or otherwise disposing of Shares pursuant to any offer by the Company to purchase its own Shares which is made on identical terms to all holders of Shares in the Company; (iv) transferring or disposing of Shares pursuant to a compromise or arrangement between the Company and its creditors or any class of them or between the Company and its members or any class of them which is agreed to by the creditors or members and (where required) sanctioned by the court under sections 425-427A of the Companies Act; and (v) transferring Shares to an Affiliate of the Selling Shareholder provided that, prior to any such transfer, the relevant transferee has entered into a deed of undertaking in writing in favour of Citigroup and Deutsche Bank on the same terms as contained in this sub-section 5(II)(g); (vi) entering into, and transferring Shares in accordance with the terms of, the Stock Lending Agreement, for a period beginning at the date of this Agreement and continuing to and including the date that is 180 days after Admission, without the prior written consent of Citigroup and Deutsche Bank, not to, and to procure that none of its Affiliates, offer, issue, sell or contract to sell, issue options in respect of, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) or announce the offer of, directly or indirectly, any Shares (other than the Sale Shares to be sold pursuant to this Agreement) or any securities that are substantially similar to the Shares, including but not limited to any securities convertible into, or exchangeable for, or that represent the right to receive Shares or any such other securities, or enter into any transaction with the same economic effect as, or agree to do, any of the foregoing. To the extent any Selling Shareholder is released from any lock-up restrictions in relation to all or part of its holding of Shares (i) Citigroup and Deutsche Bank shall notify the other Selling Shareholders within two Business Days of such release, such notice to be served in writing to such address as stated in Schedule 1 or as may be notified in writing, by fax, e-mail or otherwise to Citigroup and Deutsche Bank and (ii) from the date of such release of the

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Selling Shareholder, each of the other Selling Shareholders shall be deemed to be released to the same such extent and over the same percentage of its holding from the lock-up restrictions in this Section 5(II)(g) which may attach to such holding of Shares (but, for the avoidance of doubt, the provisions of any other agreements relating to the transfer of Shares to which any Selling Shareholder is subject shall continue to apply).

          (h) Not to (and to cause its Affiliates and any person acting on its or their behalf (which for this purpose excludes the Underwriters)) not to take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in stabilisation or manipulation of the price of any security of the Company.

          (i) Not to take any action or omit to take any action (such as issuing any press release relating to any Shares without an appropriate legend) that may result in the loss by the Stabilisation Manager of the ability to rely on any stabilisation safe harbour provided under the FSMA.

          (j) To procure, so far as it has the power to do so that (i) the Company’s new articles of association, in the form of the draft made available to Citigroup and Deutsche Bank, are adopted with effect from Admission, and (ii) the Restructuring Agreements and Restructuring Arrangements will become unconditional in all respects no later than Admission to the extent not already done so on the date of this Agreement.

          (k) Not to, without the prior consent of Citigroup and Deutsche Bank (such consent not to be unreasonably withheld or delayed), seek to modify, vary or supplement any of the terms and conditions of the Restructuring Arrangements or the Restructuring Agreements to which it is a party or to grant any release, waiver or indulgence in relation to any obligation of another party to any such agreement or extension of time for the performance of any such obligation.

          (l) To provide all information and documentation required by the FSA from it to obtain Admission.

          (m) To the extent not previously provided and so far as it has the power to do so, to provide Freshfields Bruckhaus Deringer (on behalf of Citigroup and Deutsche Bank and the other Underwriters) the documents listed in numbers 10, 11, 12, 13 and 14 (as applicable) in Part B of Exhibit A, in the Agreed Form where so specified and otherwise in a form reasonably satisfactory to Citigroup and Deutsche Bank by the Selling Shareholders specified therein, on the date the Pricing Supplement is published.

          (n) To the extent not previously provided, to provide Freshfields Bruckhaus Deringer (on behalf of Citigroup and Deutsche Bank and the other Underwriters) the documents listed in numbers 3, 10, 11, 12 and 13 (as applicable) in Part C of Exhibit A, in the Agreed Form where so specified and otherwise in a form reasonably satisfactory to Citigroup and Deutsche Bank by the Selling Shareholders specified therein, prior to the First Closing Date.

          (o) To the extent not previously provided and so far as it has the power to do so, to provide Freshfields Bruckhaus Deringer (on behalf of Citigroup and Deutsche Bank and the other Underwriters) the documents listed in 3, 10, 11, 12 and 13 (as applicable) in Part D of

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Exhibit A, in a form reasonably satisfactory to Citigroup and Deutsche Bank by the Selling Shareholders specified therein, prior to the Over-allotment Closing Date.

          (III) Each of the Executive Directors and Non-Executive Directors agrees with Citigroup, Deutsche Banks and each of the other Underwriters:

          (a) Save for (i) the acceptance of a general offer made to all the holders of issued and allotted Shares for the time being (other than Shares held or contracted to be acquired by the offeror or its associates within the meaning of Section 430 of the Companies Act 1985) in accordance with the City Code on Takeovers and Mergers on terms which treat all such holders alike, (ii) the provision of an irrevocable commitment or undertaking to accept such an offer (without any further agreement to transfer of dispose of any Shares or any interest therein), (iii) selling or otherwise disposing of Shares pursuant to any offer by the Company to purchase its own Shares which is made on identical terms to all holders of Shares in the Company; (iv) transferring or disposing of Shares pursuant to a compromise or arrangement between the Company and its creditors or any class of them or between the Company and its members or any class of them which is agreed to by the creditors or members and (where required) sanctioned by the court under sections 425-427A of the Companies Act; and (v) transferring Shares to any connected person (as defined in section 346 of the Companies Act and on the basis that this sub-section shall apply to each of the Directors) of a Director provided that, prior to any such transfer, the relevant transferee has entered into a deed of undertaking in writing in favour of Citigroup and Deutsche Bank on the same terms as this sub-section 5(III)(a), for a period beginning at the date of this Agreement and continuing to and including the date that is 365 days after Admission, without the prior written consent of Citigroup and Deutsche Bank, not to offer, issue, sell or contract to sell, issue options in respect of, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by such Director or any person connected with such Director), directly or indirectly, or announce the offer of, any Shares or any securities that are substantially similar to the Shares, including without limitation any securities convertible into, or exchangeable for, or that represent the right to receive Shares or any such other securities, or enter into any transaction with the same economic effect as, or agree to do, any of the foregoing.

          (b) Save for the Company’s appointment of the Stabilisation Manager, not to (and to cause any person acting on its or their behalf not to) take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in stabilisation or manipulation of the price of any security of the Company.

          (c) Not to take any action or omit to take any action (such as issuing any press release relating to any Shares without an appropriate legend) that may result in the loss by the Stabilisation Manager, of the ability to rely on any stabilisation safe harbour provided by the FSA under the FSMA.

          (IV) (a) The Company agrees with Citigroup, Deutsche Bank and each of the other Underwriters to pay or cause to be paid (with, in each case, any related VAT in accordance with Section 5(IV)(d)), all and any costs, charges, fees and expenses arising directly or indirectly out of, or in connection with, the Offer, Admission and the arrangements contemplated by this

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Agreement, including without limitation: (i) the preparation, printing, reproduction and filing of the Offer Documents and each amendment or supplement to the Offer Documents; (ii) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Offer Documents, and all amendments or supplements, as may, in each case, be reasonably requested by Citigroup, Deutsche Bank and the other Underwriters for use in connection with Admission and/or the offer and sale of the Sale Shares; (iii) the preparation, printing (or reproduction) and delivery of this Agreement, the Agreement among Underwriters, the Restructuring Agreements, the Stock Lending Agreement, any closing documents and all other agreements or documents prepared, printed (or reproduced) or delivered in connection with the Offer (including the Restructuring Arrangements), the transfer and delivery of the Sale Shares in connection with the Offer and/or the arrangements contemplated by this Agreement; (iv) any registration or qualification of the Shares for offer and sale under the securities laws of any jurisdiction specified pursuant to Section 5(I)(h) (including filing fees and the reasonable fees and expenses of counsel for the Underwriters relating to such registration and qualification); (v) Admission (including listing fees); (vi) the transportation and other expenses incurred by or on behalf of the Company in connection with presentations to prospective purchasers of the Sale Shares; (vii) all public relations expenses; (viii) all fees, disbursements and expenses of the Company’s accountants and the fees and expenses of counsel for the Company and the reasonable fees and expenses of counsel for Citigroup, Deutsche Bank and the other Underwriters; (ix) the cost and charges of the Registrar and any transfer agent; (x) the transfer and delivery of the Sale Shares, including the cost of printing share certificates and (xi) all other costs, charges, fees and expenses incurred by the Company in connection with the Offer, Admission or the performance by the Company of its obligations under this Agreement.

     (b) Each of the Selling Shareholders undertakes to pay or cause to be paid (together with, in each case, any VAT chargeable thereon in accordance with Section 5(IV)(d) below) all costs, charges, fees and expenses incurred by it in connection with, or incidental to, the Offer, Admission and the arrangements contemplated by this Agreement, including (without limitation) all of its (but not the Company’s) legal, accountancy and other professional fees, disbursements and expenses incurred in connection with the sale of the Sale Shares. For the avoidance of doubt, the Selling Shareholders are not responsible for costs, charges, fees or expenses referred to in 5(IV)(a).

          (c) The Company agrees with Citigroup, Deutsche Bank and each of the other Underwriters to reimburse Citigroup and Deutsche Bank, on behalf of the Underwriters, with, in each case, any related irrecoverable VAT in accordance with Section 5(IV)(d)), for all their reasonable costs, charges, fees and expenses in connection with, the Offer, Admission and the arrangements contemplated by this Agreement, including without limitation, fees, disbursements and expenses of counsel for Citigroup, Deutsche Bank and the other Underwriters.

          (d) Where a sum is payable under this Agreement to Citigroup, Deutsche Bank or any of the other Underwriters or to any other Indemnified Party (for the purposes of this Section 5(IV)(d) and Section 5(IV)(e) only, each a “payee”), then the Company or the relevant Selling Shareholder (including for the avoidance of doubt, the relevant Over-allotment Shareholder (whichever is required to make the payment) will, in addition, pay, or cause to be paid to such payee, in respect of VAT:

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          (i) where the payment (or any part of it) constitutes the consideration (or any part thereof) for any supply of services, such amount as equals any VAT properly payable thereon on receipt of a valid VAT invoice;

          (ii) where the payment is to reimburse the payee for any cost, charge or expense incurred by it or them (except where the payment falls within (iii) below), such amount as equals any VAT charged to or incurred by the relevant payee in respect of any cost, charge or expense which gives rise to, or is reflected in, the payment and which the relevant payee certifies is not recoverable by it or any member of any group of which it is a member for VAT purposes by repayment or credit (such certificate to be conclusive in the absence of manifest error); and

          (iii) where the payment is in respect of costs or expenses incurred by the payee as agent for the Company or the Selling Shareholders (including for the avoidance of doubt, the Over-allotment Shareholders), as the case may be, and except where section 47(2A) or section 47(3) of the Value Added Tax Act 1994 applies, such amount as equals the amount included in the costs or expenses in respect of VAT provided that in such a case the relevant payee will use reasonable endeavours to procure that the actual supplier of the goods or services which such payee received as agent issues its own VAT invoice directly to the Company or the relevant Selling Shareholder (as the case may be).

          (e)(i) All sums payable to a payee under this Agreement will be paid without set-off or counterclaim, and free and clear of and without deduction or withholding save as required by law. If any amount is now or subsequently becomes required by law to be deducted or withheld in connection with any such payment, the Company, the Selling Shareholder or the Over-allotment Shareholder (whichever is required to make the payment) will increase the amount paid so that the net amount received by the payee will equal the full amount which would have been received by it had no such deduction or withholding been made. If the recipient of such a payment receives a credit for or refund of any Taxation payable by it by reason of the deduction of withholding for or on account of Taxation, then it shall reimburse to the other party such part of such additional amounts paid to it under this paragraph as the recipient of the payment certifies to the other party will leave it (after such reimbursement) in no better and no worse position than it would have been if the other party had not been required to make such deduction or withholding. Nothing in this Section 5(IV)(e)(i) shall oblige the recipient of the payment to disclose to the other party, nor shall the other party be entitled to inspect, any of the books and records of such person.

          (ii) If HM Revenue & Customs or any other tax authority brings into charge to Taxes (or into any computation of income, profit or gains for the purposes of any charge to Taxes) any sum payable to a payee under this Agreement or any sum withheld in accordance with this Agreement from any payment made to the payee (other than, in either case, the commissions due under Section 2(g) and other than interest) the Company and the Selling Shareholder including for the avoidance of doubt, the Over-allotment Shareholder, (whichever is liable under this Agreement to make such payment or withholding) shall pay such additional amount as shall be required to ensure that the total amount received by the payee, less the tax chargeable thereon (or that would be so chargeable but for the availability of relief in respect of that charge to tax) after giving credit for any relief available to the recipient of the payment in

40

respect of the matter giving rise to the payment, is equal to the amount that would otherwise be so received (additional payments being made on demand of the payee).

          (V) (a) If at any time after the Prospectus has been lodged with the FSA for approval and prior to Admission:

          (i) any event shall occur or condition shall exist as a result of which it is necessary, in the reasonable opinion of legal advisers to Citigroup and Deutsche Bank or to the Company, to amend or supplement the Prospectus or any Supplementary Prospectus in order that the Prospectus and/or any Supplementary Prospectus will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser;

          (ii) there is any significant new factor, material mistake or inaccuracy relating to the information set out in the Prospectus (as defined in Section 87G of the FSMA) of which the Company is, or becomes, aware prior to Admission and which requires the Company to deal with such change or matter in accordance with Section 87G of the FSMA, the Prospectus Rules and the Listing Rules; or

          (iii) it shall be necessary, in the reasonable opinion of such legal advisers, at any such time to amend or supplement the Prospectus and/or any Supplementary Prospectus in order to comply with the requirements of the FSMA and/or the Prospectus Rules and/or the Listing Rules (as the case may be),

          the Company, the Selling Shareholders (to the extent that any Selling Shareholder has actual knowledge of the same without imposing any obligation of enquiry) or the Directors (as the case may be) will (i) promptly bring such event or condition to the notice of Citigroup and Deutsche Bank and the Company shall promptly prepare and file with the FSA such amendment or supplement as may be necessary to correct such statement or omission or to make the Prospectus and/or any Supplementary Prospectus comply with such requirements. Before amending or supplementing any Offering Memorandum, the Company will furnish Citigroup and Deutsche Bank with a copy of each such proposed amendment or supplement, and will take account of any comments of Citigroup and Deutsche Bank, on behalf of the Underwriters; and (ii) furnish to Citigroup and Deutsche Bank such number of copies of such amendment or supplement as Citigroup and Deutsche Bank may reasonably request.

          6. Conditions to the Obligations of the Underwriters. The obligations of the Underwriters to procure purchasers for or, failing which, to purchase the Firm Shares to be delivered at the First Closing Time and the obligation of the Stabilisation Manager to procure purchasers for or to purchase Over-allotment Shares to be delivered at the Over-allotment Closing Time, as the case may be, will be subject to the accuracy of the representations and warranties of the Company, the Directors and the Selling Shareholders contained in this Agreement at the date of this Agreement and at such Closing Time, to the accuracy of the statements of the Company, the Directors and the Selling Shareholders made in any certificates to be delivered pursuant to the provisions of this Agreement, to the performance by the Company, the Directors and the Selling Shareholders of their respective obligations in this Agreement and to the following additional conditions:

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          (a) The Company having furnished to Citigroup and Deutsche Bank by such Closing Time a certificate in the agreed form as set out in Annex I signed by a Director, dated such Closing Date, to the effect that those signing such certificate have carefully examined the Prospectus, any amendment or supplement to the Prospectus and this Agreement and that:

          (i) the representations and warranties of the Company in this Agreement are true, accurate and not misleading on and as of the date of this Agreement and are true, accurate and not misleading on and as of such Closing Time with the same effect as if made at such Closing Time, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under this Agreement at or prior to such Closing Time; and

          (ii) since the date of the most recent financial statements included in the Prospectus, there has been no material adverse change, or any development involving a prospective material adverse change, in or affecting the condition (financial or otherwise), prospects, earnings, business or properties of the Company and the other members of the Group, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in the Prospectus.

          (b) The Directors having furnished to Citigroup and Deutsche Bank by such Closing Time a certificate in the agreed form as set out in Annex II signed by a Director for and on behalf of himself and the other Directors, dated such Closing Date, to the effect that those signing such certificate have carefully examined the Prospectus and this Agreement and that:

          (i) the representations and warranties of the Directors in this Agreement are true, accurate and not misleading on and as of the date of this Agreement and are true, correct and not misleading on and as of such Closing Time with the same effect as if made at such Closing Time, and the Directors have complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under this Agreement at or prior to such Closing Time; and

          (ii) since the date of the most recent financial statements included in the Prospectus, there has been no material adverse change, or any development involving a prospective material adverse change, in or affecting the condition (financial or otherwise), prospects, earnings, business or properties of the Company and the other members of the Group, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in the Prospectus.

          (c) Each Selling Shareholder having furnished to Citigroup and Deutsche Bank by such Closing Time a certificate in the agreed form as set out in Annex III, signed by one director or authorised signatory of each such Selling Shareholder, dated such Closing Date, to the effect that the representations and warranties of such Selling Shareholder in this Agreement are true, accurate and not misleading on and as of the date of this Agreement and are true, accurate and not misleading at and as of such Closing Time to the same effect as if made at such Closing Time.

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          (d) Subsequent to the date of this Agreement or, if earlier, the dates as of which information is given in the Prospectus, there shall not have been (i) any change specified in the certificates referred to in Sections 6(a), (b) and (c); or (ii) any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), prospects, earnings, business or properties of the Company and the other members of the Group, taken as a whole, whether or not arising from transactions in the ordinary course of business, the effect of which, in any such case, is, in the sole judgment of Citigroup and Deutsche Bank, so material and adverse as to make it impractical or inadvisable to proceed with the offer or delivery of the Sale Shares as contemplated in the Prospectus and this Agreement.

          (e) The Company having complied with the provisions of Section 5(I)(a) with respect to the furnishing of copies of the Prospectus on the date of this Agreement.

          (f) The documents listed in the Exhibit A having been delivered in accordance with Sections 5(I)(y), 5(I)(z), 5(I)(aa), 5(I)(bb), and Section 5(II)(m), 5(II)(n), 5(II)(o).

          (g) The documents referred to in Sections 4, 5 and 6 having been delivered by the dates specified in those Sections.

          (h) The Prospectus being approved pursuant to the Listing Rules and Prospectus Rules by the FSA not later than 5:00 pm on the date of this Agreement (or such later time and/or date as the Company, Citigroup and Deutsche Bank may agree in writing) and is published, filed and made available in accordance with the Listing Rules, the Prospectus Rules and the FSMA.

          (i) No matter referred to in Section 87G of the FSMA arising between the publication of the Prospectus and Admission and no Supplementary Prospectus being published by the Company.

          (j) Admission occurring at 8.00 a.m. on 14 December, 2005 (or such later time and/or date as the Company, Citigroup and Deutsche Bank may agree in writing).

          (k) The Company and each of the Directors having complied with all their respective obligations and having satisfied all conditions to be satisfied by any of them, in each case under this Agreement, the Restructuring Agreements and Restructuring Arrangements and or under the terms or conditions of the Offer, or any of them, which fall to be performed or satisfied on or prior to Admission.

          (l) Each of the Restructuring Agreements and the Restructuring Arrangements becoming and continuing to be enforceable against each of the parties thereto and having, and continuing to have, full force and effect, except where expressly provided in the Restructuring Agreements.

          (m) Each of the Restructuring Agreements and the Restructuring Arrangements becoming unconditional in all respects prior to Admission (save for any condition requiring the fulfilment of any of the conditions in this Section 6) and the Restructuring Arrangements having become incapable of termination or rescission and having been duly completed in accordance with their terms (subject only to Admission).

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          (n) The execution and delivery by the Selling Shareholders, Citigroup and Deutsche Bank and the other Underwriters in accordance with Section 2(h) of the Agreement by 9 December 2005 (or such later date as the Selling Shareholders, Citigroup and Deutsche Bank may agree).

          (o) The Stock Lending Agreement having been executed and delivered by the parties thereto.

          (p) The passing of the Class 1 Resolution (without amendment) at the extraordinary general meeting of the shareholders of IHG to be convened for 7 December 2005 (and not, without the prior written consent of Citigroup and Deutsche Bank at any adjournment thereof).

          (q) Prior to any Closing Time, nothing having come to the notice of Citigroup, Deutsche Bank or any of the other Underwriters that any statement contained in the Offer Documents is or has become untrue, incorrect or misleading in any respect, or any matter has arisen, which would, if the Offer was made at that time, constitute a material omission from the Offer Documents, or any of them, and which in any such case Citigroup and Deutsche Bank bona fide consider to be material in the context of the Offer or the underwriting of the Shares or Admission.

          Each of the Company, the Directors and the Selling Shareholders severally and not jointly undertakes to use its best endeavours to procure (so far as it lies within its or his power) that each of the conditions applicable to it is fulfilled by the due time (if any) for its fulfilment.

          If any of the conditions specified in this Section 6 are not fulfilled when and as provided in this Agreement or waived (if capable of waiver) in writing by Citigroup and Deutsche Bank (in their absolute discretion), or if any of the opinions and certificates mentioned above or elsewhere in this Agreement are not reasonably satisfactory in form and substance to Citigroup and Deutsche Bank and counsel for Citigroup, Deutsche Bank and the other Underwriters, this Agreement and all obligations of Citigroup, Deutsche Bank and the other Underwriters in this Agreement may be cancelled at, or at any time prior to, any Closing Time by Citigroup and Deutsche Bank. Notice of such cancellation will be given to the Company and each Selling Shareholder in writing or by facsimile or by telephone confirmed in writing or by facsimile.

          7. Reimbursement of Expenses. If the sale of the Sale Shares provided for in this Agreement is not consummated because any condition to the obligations of Citigroup, Deutsche Bank and the other Underwriters set forth in Section 6 is not satisfied because of any termination pursuant to Section 10 or because of any refusal, inability or failure on the part of the Company, any Director or any Selling Shareholder to perform any agreement in this Agreement or comply with any provision of this Agreement other than by reason of a default by any of Citigroup, Deutsche Bank or the other Underwriters, the Company will reimburse Citigroup, Deutsche Bank and the other Underwriters severally through CGMUKE on demand for all out-of-pocket expenses (including reasonable fees, disbursements and expenses of counsel and fees and expenses of other third parties as set out in Section 5(IV)) properly incurred by them in

44

connection with the Offer, Admission and the arrangements contemplated by this Agreement. If the Company is required to make any payments to Citigroup, Deutsche Bank or the other Underwriters under this Section 0 because of any Selling Shareholders’ refusal, inability or failure to satisfy any condition to the obligations of Citigroup, Deutsche Bank and the other Underwriters set forth in Section 6, such Selling Shareholders, pro rata in proportion to the percentage of their Sale Shares to which the refusal, inability or failure relates, will reimburse the Company on demand for all amounts attributable to the Selling Shareholders so paid (and, for the avoidance of doubt, the provisions of Section 5(IV)(d) and (e) apply).

          8. Indemnification and Contribution.

          (a) The Company agrees to indemnify and hold harmless each of Citigroup, Deutsche Bank and the other Underwriters and each person who controls each of Citigroup, Deutsche Bank and the other Underwriters within the meaning of either the Securities Act or the Exchange Act and each Affiliate, parent company, subsidiary, subsidiary undertaking and agent of any such person and each director, officer, employee of any such person (each an “Indemnified Party”) against Losses to which they or any of them may become subject whether under the Companies Act, the FSMA, the Listing Rules, the Prospectus Rules, the Securities Act, the Exchange Act or other statutory law or obligation, at common law or otherwise, insofar as such Losses or actions in respect thereof arise out of or are based upon or would not have arisen in the absence of (i) any untrue statement or alleged untrue statement of a material fact contained in any Offer Documents or in any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, or (ii) any breach or alleged breach by the Company or the Directors of its or their obligations in this Agreement (including any breach or alleged breach by the Company or the Directors of the representations, warranties or undertakings contained or referred to under this Agreement or any circumstances which constitute such a breach) and, in each case, agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any Loss, or action; provided, however, that the Company will not be liable in any such case to the extent that that (i) any Loss arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Offer Documents, or in any amendments thereof or supplements thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter through Citigroup or Deutsche Bank specifically for inclusion therein, being the information listed in Schedule V (the “Underwriter Information”) or (ii) such indemnification is not permissible due to Section 151 of the Companies Act.

          (b) The Company agrees to indemnify and hold harmless each Indemnified Party against Losses, to which such Indemnified Party may become subject insofar as the Losses or actions in respect thereof arise out of or are based upon or would not have arisen in the absence of the carrying out by an Indemnified Party of any of its obligations or services under or in connection with this Agreement or the offer or sale of the Shares on, prior to or after the date of this Agreement, save for matters indemnified pursuant to Section 0, including (without limitation):

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          (i) the distribution, issue or approval of documents or materials relating to the Company or in connection with Admission or the arrangements contemplated by the Offering Memoranda, or any of them, or this Agreement or any other agreement relating to the Offer; the offer or sale of the Shares (including the issue or approval of any financial promotion relating to the Company or Admission or the offer or sale of the Shares); and/or

          (ii) any failure or alleged failure by the Company or any of the Directors or their agents, employees or advisers to comply with the FSMA, the Listing Rules, the Prospectus Rules, the Disclosure Rules or any other requirements of applicable statute or regulation in relation to Admission or the arrangements contemplated by the Offer or by the Offering Memoranda, or any of them, or this Agreement or any other agreement relating to the Offer; and/or

          (iii) (in the case of the Joint Sponsors only) in their capacity as sponsors to the Company’s application for admission of the Shares to the Official List of the FSA and to trading on the London Stock Exchange,

provided that no liability will arise under this Section 0 to the extent that any Loss (i) is finally judicially determined to have resulted from the gross negligence or wilful default of such Indemnified Party or breach by it of its material obligations under this Agreement or of its material obligations under FSMA (provided always that any such breach does not arise out of or would not have arisen but for any neglect or default on the part of any other party to this Agreement, including any breach by any such other party of the representations, warranties or undertakings contained or referred to in this Agreement or any circumstances which constitute such a breach) or (ii) such indemnification is not permissible due to Section 151 of the Companies Act. For the avoidance of doubt, the indemnity contained in this Section 0 shall not extend to any Losses which are attributable to a decline in market value of the Shares suffered or incurred by any Indemnified Party solely as a result of it having (i) acquired or sold Shares in connection with any Stabilisation Transactions or (ii) been required to acquire Sale Shares pursuant to this Agreement unless in either case such Losses are caused by or result from or are attributable to or would not have arisen but for, in each case directly or indirectly, the neglect or default of the Company, including any breach by it of any of its obligations under this Agreement (including any breach by such Indemnifying Party of the representations, warranties or undertakings contained or referred to in this Agreement or any circumstances which constitute such a breach).

          (c) Each of the Selling Shareholders, severally and not jointly, agrees to indemnify and hold harmless each Indemnified Party against Losses to which they or any of them may become subject under the Companies Act, the FSMA, the Listing Rules, the Prospectus Rules, the Disclosure Rules, the Securities Act, the Exchange Act or other statutory law or obligation, at common law or otherwise, insofar as such Losses or actions in respect thereof arise out of or are based upon or would not have arisen in the absence of (i) any untrue statement or alleged untrue statement of a material fact contained in the Offer Documents or in any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading provided, however, that a Selling Shareholder will be liable in any such case only to

46

the extent that any such untrue statement or alleged untrue statement or omission or alleged omission relates to or refers to the relevant Selling Shareholder, or (ii) any breach or alleged breach by such Selling Shareholder of its obligations under this Agreement (including any breach or alleged breach by such Selling Shareholder of the representations, warranties or undertakings contained or referred to in this Agreement or any circumstances which constitute such a breach) and, in each case, agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any Loss or action; provided, however, that such Selling Shareholder will not be liable in any such case to the extent that any such Loss arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Offer Documents, or in any amendments thereof or supplements thereto, in reliance upon and in conformity with the Underwriter Information (as such term is defined in Section 0(a)).

          (d) Promptly after receipt by an Indemnified Party under this Section 0 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against an Indemnifying Party under this Section 0, notify the Indemnifying Party in writing of the commencement thereof; but the failure so to notify the Indemnifying Party (i) will not relieve it from liability unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the Indemnifying Party of significant rights and defences and (ii) will not, in any event, relieve the indemnifying party from any obligations to any Indemnified Party other than the indemnification obligations provided above. The Indemnifying Party will be entitled to appoint counsel of the Indemnifying Party’s choice at the Indemnifying Party’s expense to represent the Indemnified Party in any action for which indemnification is sought (in which case the Indemnifying Party will not thereafter be responsible for the fees and expenses of any separate counsel retained by the Indemnified Party except as set forth below); provided, however, that such counsel is satisfactory to the Indemnified Party. Notwithstanding the Indemnifying Party’s election to appoint counsel to represent the Indemnified Party in an action, the Indemnified Party will have the right to employ separate counsel, and the Indemnifying Party will bear the reasonable fees, costs and expenses of such separate counsel, if (i) the use of counsel chosen by the Indemnifying Party to represent the Indemnified Party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party reasonably concludes that there may be legal defences available to it and/or other Indemnified Parties that are different from or additional to those available to the Indemnifying Party; (iii) the Indemnifying Party does not employ counsel satisfactory to the Indemnified Party to represent the Indemnified Party within a reasonable time after notice of the institution of such action; or (iv) the Indemnifying Party authorises the Indemnified Party to employ separate counsel at the expense of the Indemnifying Party. An Indemnifying Party will not, without the prior written consent of Citigroup, Deutsche Bank and the other Underwriters, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought under this Agreement (whether or not Indemnified Parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent (i) includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, suit or proceeding and (ii) does not include a statement as to or an admission of fault, culpability or failure to act, by or on behalf of any Indemnified Party.

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          (e) The Company, the Directors and the Selling Shareholders will not make any claim against any Indemnified Party, to recover any Loss which the Company, the Directors or any of the Selling Shareholders or any other person may suffer or incur by reason of or arising out of the carrying out or the performance by any Indemnified Party, or on their behalf, of their obligations or services under this Agreement or in connection with the offer and sale of the Shares on, prior to or after the date of this Agreement, unless and to the extent that such Loss is finally judicially determined to have resulted from the gross negligence or wilful default of such Indemnified Party or breach by it of its material obligations under this Agreement or of its material obligations under FSMA (provided always that any such breach does not arise out of or would not have arisen but for any neglect or default on the part of any other party to this Agreement including any breach by such other party of the representations, warranties or undertakings contained in or referred to in this Agreement or circumstances which constitute such a breach).

          (f) The degree to which any Indemnified Party shall be entitled to rely on the work of any adviser to the Company or any other third party will be unaffected by any limitation which the Company, any Director or any of the Selling Shareholders may have agreed on the extent to which the Company, any other member of the Group, any Director or any of the Selling Shareholders and/or any member of its group may claim against such adviser or any third party or parties and/or of any waiver or release of any right of the Company, any other member of the Group, any Director, any of the Selling Shareholders and/or any member of its group to so claim (each a “Limitation”).

          (g) Each of the Company, the Directors and the Selling Shareholders will promptly notify Citigroup and Deutsche Bank of any Limitation (whenever arising) in respect of anything which may arise, directly or indirectly, out of or is based upon or is in connection with the Offer or the subject matter of the obligations or services to be performed under this Agreement. Where any damage or loss is suffered by the Company, any other member of the Group, any Director, any Selling Shareholder or any member of any Selling Shareholders’ group for which any Indemnified Party would otherwise be jointly and severally liable with any third party or third parties to the Company, any other member of the Group, any Director, any Selling Shareholder or any member of any Selling Shareholder’s group which has or have the benefit of a Limitation, the extent to which such damage or loss will be recoverable from the Indemnified Party shall be limited so as to be in proportion to the contribution of the Indemnified Party to the overall fault for such damage or loss, as agreed between the parties, or, in the absence of agreement, as determined in a final judgment by a court of competent jurisdiction but, in any event, the Indemnified Party shall have no greater liability than if the Limitation did not apply.

          (h) For the avoidance of doubt, “finally judicially determined” for the purposes of this Section 0 means, where a dispute has arisen under the terms of this Agreement which is to be resolved in accordance with the provision of Section 15, circumstances where:

          (i) a court of competent jurisdiction in accordance with Section 15 has delivered a final, conclusive and binding judgment upon the merits of the relevant dispute brought in accordance with Section 15 by the parties to this Agreement or, as the case may be, their respective successors to or assignees of the rights under this Agreement, which makes the matter res judicata in that court; and

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          (ii) following the judgment referred to in (i) above taking effect, neither party (or, as the case may be, their respective successors to or assignees of the rights under this Agreement) either:

(a) makes an application for permission to appeal; or

(b) elects to appeal as of right,

          the decision of the court of competent jurisdiction within the time limits specified from time to time by the procedural rules of the court of competent jurisdiction for any such application or election.

          (m) No claim shall be made by the Company, any of the Selling Shareholders, any of the Over-allotment Shareholders or any of their respective subsidiary undertakings or associates against any Indemnified Party in respect of the amount at which the Offer Price is fixed.

          9. Default by an Underwriter. If any one or more Underwriters defaults in its obligation to procure purchasers for, or to itself purchase, the Firm Shares it has agreed to procure purchasers for, or to itself purchase, and such failure constitutes a default in the performance of its or their obligations under this Agreement, the remaining Underwriters will be obliged severally to take up and pay for (in the respective proportions which the number of Firm Shares set opposite their names under column (2) of Table 1 in the Purchase Memorandum bears to the aggregate number of Firm Shares stated opposite the names of all the non-defaulting Underwriters) the Firm Shares which the defaulting Underwriter or Underwriters agreed but failed to procure purchasers for, or to itself purchase; provided, however, that in the event that the aggregate number of Firm Shares which the defaulting Underwriter or Underwriters agreed but failed to procure purchasers for, or to itself purchase, exceeds 10% of the aggregate number of Firm Shares which the Underwriters have agreed to procure purchasers for, or to themselves purchase, the remaining Underwriters will have the right to purchase all the Firm Shares but will not be under any obligation to purchase any of the Firm Shares, and if such non-defaulting Underwriters do not purchase all such Shares, this Agreement will terminate without liability on the part of any non-defaulting Underwriter, the Selling Shareholders, the Directors or the Company. In the event of a default by any Underwriter as set forth in this Section 0, any Closing Time will be postponed for such period, not exceeding five Business Days, as Citigroup and Deutsche Bank may determine in order that the required changes to any supplement to the Prospectus or to any other documents or any required arrangements may be effected. Nothing contained in this Agreement will relieve any defaulting Underwriter of its liability, if any, to the Company, the Selling Shareholders or any non-defaulting Underwriter for damages occasioned by its default under this Agreement.

          10. Termination. (a) This Agreement will be subject to termination in the absolute discretion of Citigroup and Deutsche Bank, by notice given to the Company and the Selling Shareholders prior to any Closing Time, if at any time prior to such time (i) trading in securities generally on the London Stock Exchange and the New York Stock Exchange is suspended or limited or minimum prices are established on either such exchange or there is a material disruption in commercial banking or securities settlement in the United Kingdom or the

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United States; or (ii) a banking moratorium is declared in London or by the U.S. federal or New York State authorities; or (iii) there has occurred any outbreak or escalation of hostilities, declaration by the United Kingdom or the United States of a national emergency or war or other calamity or crisis or any change in financial, political or economic conditions or currency exchange rates or controls in the United Kingdom or the United States or elsewhere the effect of which in each of the cases mentioned in this sub-section 10(a)(i) to (iii) is such as to make it, in the sole judgment of Citigroup and Deutsche Bank, impractical or inadvisable to proceed with the offer or delivery of the Sale Shares as contemplated in the Prospectus and this Agreement. (b) The termination of this Agreement pursuant to Sections 6, 9 and 10 shall be without prejudice to: (i) any claim in respect of a breach of this Agreement prior to its termination; and any obligation of Citigroup and Deutsche Bank, and the other Underwriters, the Company, any of the Selling Shareholders, any of the Over-allotment Shareholders or any of the Directors in respect of Shares which have already been sold and paid for, at the time of such termination. (c) For the avoidance of doubt, Citigroup and Deutsche Bank shall not be entitled to terminate or rescind this Agreement after Admission.

          11. Representations, Warranties and Indemnities to Survive. (a) The respective agreements, representations, warranties and other statements of the Company, the Directors, each Selling Shareholder and of the Underwriters and the respective indemnities of the Company and the Selling Shareholders as set forth herein or made by or on behalf of them pursuant to this Agreement will remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of Citigroup, Deutsche Bank, the other Underwriters or the Company or any of the Indemnified Persons referred to in Section 0, and will survive delivery of and payment for the Sale Shares. The provisions of Sections 0 and 0 will survive the termination or cancellation of this Agreement.

          (b) The Company and each of the Directors will immediately notify Citigroup, and Deutsche Bank and the Selling Shareholders (giving reasonable details) if it comes to the knowledge of the Company or any Director that any statement in Section 1 was untrue, inaccurate or misleading at the date of this Agreement or would be untrue, inaccurate or misleading if repeated by reference to the facts and circumstances existing at any time prior to the last Closing Date, or if the Company or any Director is in breach of any of its obligations under this Agreement.

          (c) Each of the Selling Shareholders will immediately notify Citigroup and Deutsche Bank (giving reasonable details) if it comes to the knowledge of such Selling Shareholder that any statement in Section 1 relating to the Selling Shareholders was untrue, inaccurate or misleading at the date of this Agreement or would be untrue, inaccurate or misleading if repeated by reference to the facts and circumstances existing at any time prior to the last Closing Date, or if such Selling Shareholder is in breach of any of its obligations under this Agreement (this section 11(c) not imposing on such Selling Shareholders any obligation of enquiry).

          12. Notices. All communications pursuant to this Agreement will be in writing and effective only on receipt, and, (a) if sent to Citigroup, Deutsche Bank or the other Underwriters, will be mailed, delivered or faxed to the Citigroup General Counsel’s office
(fax no.: 020-7508-9090) and confirmed to Citigroup at Citigroup Centre, Canada Square, Canary

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Wharf, London E14 5LB, Attention: General Counsel and to Steven Bishop and Steffan Till (fax no.: 020 7545 6301) and confirmed to Deutsche Bank at Winchester House, 1 Great Winchester Street, London EC2N 2EQ, Attention: Steven Bishop and Steffan Till; (b) if sent to the Stabilisation Manager, will be mailed, delivered or faxed to Stephen Morris (fax 020-7986-1103) and confirmed to the Stabilisation Manager at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, Attention: Stephen Morris (fax 020-7986-1103); (c) if sent to the Company, will be mailed, delivered or faxed to the Company Secretary (fax no.: 01245 504077) and confirmed to the Company at Britvic House, Broomfield Road, Chelmsford CM1 1TU, Attention: the Company Secretary; and (d) if sent to any Selling Shareholder or Over-allotment Shareholder, will be mailed, delivered or faxed and confirmed to it at the facsimile number and address set forth in Schedule I.

     In all dealings under this Agreement, Citigroup and Deutsche Bank will act on behalf of each of the Underwriters and the parties will be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by the Underwriters jointly or by Citigroup and Deutsche Bank on behalf of the Underwriters; and in all dealings with any Selling Shareholder (including, for the avoidance of doubt, any Over-allotment Shareholder) pursuant to this Agreement, Citigroup, Deutsche Bank and the Company will be entitled to act and rely upon any statement, request, notice or agreement on behalf of such Selling Shareholder made or given by any or all of the Attorneys for such Selling Shareholder identified in Schedule I.

          13. Miscellaneous.

          (a) The rights and obligations of each of Citigroup, Deutsche Bank and each of the other Underwriters under this Agreement are several. Each of Citigroup, Deutsche Bank and the other Underwriters will (save as otherwise agreed among them) have the right to protect and enforce its rights without joining Citigroup, Deutsche Bank or the other Underwriters in any proceedings. In addition, the rights and obligations of the Selling Shareholders under this Agreement are several. Accordingly, no Selling Shareholder shall be responsible in any way for any breach or failure of another Selling Shareholder to comply with its obligations under this Agreement.

          (b) The provisions of this Agreement are without prejudice to any liabilities which any of the parties may have under any law or statute (including, without limitation, the FSMA and the Securities Act).

          (c) If any provision in this Agreement should be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected thereby. No variation of this Agreement will be effective unless in writing and signed by or on behalf of each of the parties to this Agreement. Such variation will not require the approval of any other person under the Contracts (Rights of Third Parties) Act 1999 or otherwise.

          (d) (i) Each holder and prospective purchaser referred to in subsection 5(I)(k) will have the right under the Contracts (Rights of Third Parties) Act 1999 to enforce its rights against the Company under sub-section 5(I)(k) (ii) Each Indemnified Party will have the right under the

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Contract (Rights of Third Parties) Act 1999 to enforce its rights against the Company and the Selling Shareholders under the indemnification provisions of this Agreement, as amended from time to time. An Indemnified Party may only enforce its rights under this Agreement in any given case if the Underwriter with whom such Indemnified Party is affiliated agrees (without obligation) to take sole conduct of any such action on behalf of any such Indemnified Party. (iii) Save as provided in this sub-section, no-one other than a party to this Agreement will be entitled to directly enforce any term of this Agreement under the Contracts (Rights of Third Parties) Act 1999 or otherwise. (iv) None of Citigroup, Deutsche Bank or any of the other Underwriters will have responsibility to any other Indemnified Party or any person identified in subsection 5(I)(k) under or as a result of this Agreement.

          (e) No neglect, delay or indulgence by any of the parties to this Agreement in enforcing the agreements, representations, warranties, undertakings or indemnities set out in this Agreement or in enforcing any other term or condition of this Agreement will be construed as a waiver thereof. Notwithstanding any rule of law or equity to the contrary, any release, waiver or compromise or any other arrangement of any kind whatsoever which any of the parties to this Agreement may agree to or effect as regards one or more of the other parties in connection with this Agreement and, in particular (but without limitation), the agreements, representations, warranties, undertakings and indemnities set out or referred to in this Agreement will not affect the rights of any of the other parties to this Agreement nor the rights of any person as regards any other of such parties or any rights any person may have at common law or otherwise.

          (f) Subject to Section 0, none of Citigroup, Deutsche Bank or the other Underwriters will be liable to any other person for the failure by any of the other Underwriters to perform its obligations in this Agreement.

          (g) Each of the Company, the Directors and the Selling Shareholders hereby acknowledges and agrees that in acting as joint sponsors, joint global co-ordinators and joint bookrunners to the Company each of Citigroup and Deutsche Bank is and has been acting for the Company and the Selling Shareholders and no one else and will not regard and has not regarded any other person as its client or been responsible to anyone other than the Company and the Selling Shareholders for providing the protections afforded to clients of each of Citigroup or Deutsche Bank nor for providing advice in relation to the offer and sale of the Sale Shares.

          (h) Each of the Selling Shareholders for itself or on behalf of its Connected Shareholder Person in respect of the sales, purchases, transfers or acquisitions described in Section 13(h)(i)(A), the Over-allotment Shareholders for itself or on behalf of its Connected Shareholder Person in respect of the sales, purchases, transfers or acquisitions described in Sections 13(h)(i)(B), 13(h)(ii), 13(h)(iii) and the Company, in respect of the sales, purchases, transfers or acquisitions described in Section 13(h)(iv) and 13(h)(v), will severally and not jointly be liable to pay to and reimburse the Underwriters and/or the Stabilisation Manager, as the case may be, in respect of all and any stamp duty and/or SDRT, capital duty, issuance or transfer taxes or duties (whether within or outside the United Kingdom) and any related costs, fines, penalties or interest other than any such costs, fines, penalties or interest arising as a result of the unreasonable delay or default by the Underwriters or the Stabilisation Manager (“Transfer Taxes”) arising in respect of:

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(i) the Sale of

     (A) (i) (in a case where the Firm Shares are sold by the Selling Shareholder of the Firm Shares (or its Connected Shareholder Person) to purchasers procured by the Underwriters in accordance with this Agreement (but not for the avoidance of doubt to the Underwriters)), Firm Shares by that Selling Shareholder to the purchasers so procured, or (ii) (in a case where the Firm Shares are sold by the Selling Shareholder of the Firm Shares to the Underwriters), the Firm Shares sold by the Selling Shareholder of the Firm Shares (or its Connected Shareholder Person) to the Underwriters (but if the sale to the Underwriters was intended pursuant to this Agreement to be a sale to purchasers procured by the Underwriters, the Transfer Taxes paid pursuant to this paragraph A shall be those arising in relation to the sale by the Underwriters to the purchaser of the Firm Shares and not those arising in relation to their sale to the Underwriters by the Selling Shareholder and further provided that the liability of a Selling Shareholder in respect of the former sale in respect of Transfer Taxes pursuant to this proviso shall be capped at the relevant number of Firm Shares multiplied by the higher of (i) the rate specified in paragraph 3 Schedule 13 Finance Act 1999 (currently 0.5%), and (ii) the rate specified in section 87(6) Finance Act 1986 (currently 0.5%), multiplied by the Offer Price, (in the case of stamp duty, rounded up in the case of each transfer to nearest £5) plus any related costs, fines, penalties or interest other than costs, fines, penalties or interest arising as a result of the unreasonable delay or default by the Underwriters or the Stabilisation Manager);

     (B) (i) (in a case where the Overallotment Shares are sold by the relevant Overallotment Shareholder (or its Connected Shareholder Person) to purchasers procured by the Stabilisation Manager in accordance with this Agreement (but not for the avoidance of doubt to the Stabilisation Manager)), by that Over-allotment Shareholder to the purchasers so procured, or (ii) (in a case where the Over-allotment Shares are sold by the Overallotment Shareholder to the Stabilisation Manager), the Over-allotment Shares sold by the Overallotment Shareholder (or its Connected Shareholder Person) to the Stabilisation Manager (but if the sale to the Stabilisation Manager was intended pursuant to this Agreement to be a sale to purchasers procured by the Stabilisation Manager, the Transfer Taxes paid pursuant to this paragraph B shall be those arising in relation to the sale of the Overallotment Shares by the Stabilisation Manager to the purchaser and not those arising in relation to their sale to the Stabilisation Manager by the Overallotment Shareholder and further provided that the liability of the Overallotment Shareholder in respect of the former sale in respect of Transfer Taxes pursuant to this proviso shall (including in respect of interest and penalties) be capped at the relevant number of Overallotment Shares multiplied by the higher of (i) the rate specified in paragraph 3 Schedule 13 Finance Act 1999 (currently 0.5%), and (ii) the rate specified in section 87(6) Finance Act 1986 (currently 0.5%), multiplied by the Offer Price, (in the case of stamp duty, rounded up in the case of each transfer to nearest £5) plus any related costs, fines, penalties or interest other than costs, fines, penalties or interest arising as a result of the unreasonable delay or default by the Underwriters or the Stabilisation Manager);

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          (ii) the sale of, including any agreement to sell, Shares acquired by the Stabilisation Manager from the Over-allotment Shareholders (or their Connected Shareholder Persons) under the Stock Lending Agreement to purchasers procured by the Stabilisation Manager, or failing which, the Stabilisation Manager if and to the extent that the relevant stock loan is repaid using Over-allotment Shares acquired from the Over-allotment Shareholders (or their Connected Shareholder Persons) pursuant to Section 2;

          (iii) the transfer of, or acquisition of, or agreement to transfer or acquire, Shares from the Over-allotment Shareholders (or their Connected Shareholder Persons) under the Stock Lending Agreement and the transfer of, or disposal of, or agreement to transfer or dispose of, Shares to the Over-allotment Shareholders (or their Connected Shareholder Persons) under the Stock Lending Agreement; provided that the Over-allotment Shareholders (or their Connected Shareholder Persons) shall not be liable under this Section 13(h)(iii) for any stamp duty/SDRT arising in respect of the transfer and delivery of Shares to or by the Stabilisation Manager under the Stock Lending Agreement if and to the extent that any such liability would have been avoided but for any of the following:

(A)

the sale or transfer of the Shares not being effected on an EEA exchange or a recognised foreign exchange for the purposes of sections 80C and 89AA Finance Act 1986 as a result of the stock lending arrangements not being subject to the rules of the exchange or reported to the exchange on which the Shares are to be traded in accordance with its rules;

(B)

the failure of the Stabilisation Manager to redeliver Equivalent Securities to the relevant Lender (as both defined in the Stock Lending Agreement) other than as a result of breach of this Agreement by the Over-allotment Shareholders (or their Connected Shareholder Persons) or any other act or omission of the Over-allotment Shareholders (or their Connected Shareholder Persons) or as a result of breach of the Stock Lending Agreement by a Lender under that agreement;

(iv) any acquisition of, or agreement to acquire Shares in the open market if and to the extent used to transfer shares to the Over-allotment Shareholders (or their Connected Shareholder Persons) under the Stock Lending Agreement. Provided that the Company shall not be liable under this Section 13(h)(iv) if and to the extent that any such liability would have been avoided but for any of the following:

(A)	the Stabilisation Manager not being a member of the EEA exchange or a recognised foreign exchange (as those terms are defined in sections 80B and 88B Finance Act 1986) (each an “Exchange”) on which the Shares are to be traded;
(B)	the Stabilisation Manager not being an intermediary or recognised as such for the purposes of sections 80A(1)(b) and 88A(1)(b) Finance Act 1986; or

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(C) the sale or transfer of the Shares not being effected on the Exchange of which the Stabilisation Manager is a member and on which the Shares are to be traded for the purposes of sections 80A(1)(c) and 88A(1)(c) Finance Act 1986 as a result of the sale or transfer not being subject to the rules of the exchange or reported to the relevant Exchange in accordance with its rules,

(v) the sale and purchase of, including any agreement to sell or purchase, Shares acquired by the Stabilisation Manager from the Over-allotment Shareholders (or their Connected Shareholder Persons) under the Stock Lending Agreement, in respect of up to that number of transfers of Shares equal to X determined in accordance with the following formula:

X = Y-Z

Where:

Y = 15% of the total number of Shares which are comprised in the Offer; and

Z = the number of Shares in respect of which the payment of transfer duty is covered by Section 13(h)(ii);
       

provided that if Transfer Taxes arise under Sections 67, 70, 93 or 96 of the Finance Act 1986, in respect of the sales, purchases, transfers or acquisitions described in Sections 13(h)(i) to (v) above, the Selling Shareholders, the Over-allotment Shareholders and the Company will only reimburse the Stabilisation Manager or the Underwriters (as applicable) in accordance with Section 13(h), for the relevant liability to Transfer Taxes under those Sections in respect of Transfer Taxes up to an amount equal to the higher of (i) the rate specified in paragraph 3 Schedule 13 Finance Act 1999 (currently 0.5%), and (ii) the rate specified in section 87(6) Finance Act 1986 (currently 0.5%), multiplied by the Offer Price and multiplied by the relevant number of Shares (in the case of stamp duty, rounded up in the case of each transfer to the nearest £5), plus any related costs, fines, penalties or interest other than costs, fines, penalties or interest arising as a result of the unreasonable delay or default by the Underwriters or the Stabilisation Manager; and provided that the liability of each Selling Shareholder and each Over-allotment Shareholder under Section 13(h)(i) and (ii) above in respect of Transfer Taxes shall not exceed, in the case of a Selling Shareholder, the number of Firm Shares and in the case of an Over-allotment Shareholder the number of Over-allotment Shares sold by the Selling Shareholder or Over-allotment Shareholder (or their Connected Shareholder Persons), as the case may be, in each case multiplied by the higher of (i) the rate specified in paragraph 3 Schedule 13 Finance Act 1999 (currently 0.5%), and (ii) the rate specified in section 87(6) Finance Act 1986 (currently 0.5%), multiplied by the Offer Price, (in the case of stamp duty, rounded up in the case of each transfer to nearest £5) plus any related costs, fines, penalties or interest other than costs, fines, penalties or interest arising as a result of the unreasonable delay or default by the Underwriters or the Stabilisation Manager;

and provided further that no Selling Shareholder or Over-allotment Shareholder shall have any liability under Section 13(h)(iii) to the extent that the Transfer Taxes arise in circumstances

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where an Over-allotment Shareholder holds insufficient Shares to satisfy its obligations under the Over-allotment Contract. The parties to this Agreement will negotiate in good faith to agree arrangements to be put in place with a view to ensuring that no such Transfer Taxes are payable in the event of such circumstances arising;

and provided that liability of the Company under section 13(h)(v) above in respect of Transfer Taxes shall not exceed that number of transfers of Shares equal to X determined in accordance with Section 13(h)(v) multiplied by the higher of (i) the rate specified in paragraph 3 Schedule 13 Finance Act 1999 (currently 0.5%), or (ii) the rate specified in section 87(6) Finance Act 1986 (currently 0.5%), multiplied by the Offer Price, (in the case of stamp duty, rounded up in the case of each transfer to nearest £5) plus any related costs, fines, penalties or interest other than costs, fines, penalties or interest arising as a result of the unreasonable delay or default by the Underwriters or the Stabilisation Manager;.

          (j) Any amount payable by the Selling Shareholders or the Over-allotment Shareholders pursuant to Section 0 above will be paid as follows:

          (i) by CGMUKE deducting from the amount payable pursuant to this Agreement to the relevant party any sum payable by the Selling Shareholders or the Over-allotment Shareholders pursuant to Section 0 above (provided that such deduction shall not exceed the higher of (i) the rate specified in paragraph 3 Schedule 13 Finance Act 1999 (currently 0.5%), and (ii) the rate specified in section 87(6) Finance Act 1986 (currently 0.5%), multiplied by the Offer Price and by the number of Shares to which the amount payable to the relevant party relates). Such deduction may include CGMUKE’s reasonable estimate of the maximum amount of Transfer Taxes payable by the Selling Shareholders or the Over-allotment Shareholders pursuant to Section 0 above (provided that such deduction shall not exceed the higher of (i) the rate specified in paragraph 3 Schedule 13 Finance Act 1999 (currently 0.5%), and (ii) the rate specified in section 87(6) Finance Act 1986 (currently 0.5%), multiplied by the Offer Price and by the number of Shares to which the amount payable to the relevant party relates); provided that such estimate and a note showing the basis on which it was calculated is provided to the Selling Shareholders or the Over-allotment Shareholders, as the case may be, not later than two Business Days before such deduction is made;

          (ii) to the extent that the amount of Transfer Taxes actually payable by a Selling Shareholder or a Over-allotment Shareholder pursuant to Section 0 above exceeds the amount deducted by CGMUKE in respect thereof from the payment made by CGMUKE to the relevant party under this Agreement, the relevant Selling Shareholder or Over-allotment Shareholder, as the case may be, will promptly on demand pay to CGMUKE a sum sufficient to discharge such excess provided that a note is provided with such demand which sets out the basis upon which the Stabilisation Manager considers the amount demanded is actually payable by a Selling Shareholder or Over-allotment Shareholder, and the relevant Selling Shareholder or Over-allotment Shareholder, as the case may be, will indemnify Citigroup, Deutsche Bank, the other Underwriters and the Stabilisation Manager, as the case may be, against all losses, damages, charges and expenses suffered or incurred by Citigroup, Deutsche Bank, such other Underwriters and the Stabilisation Manager, as the case may be, in connection with enforcing its rights against it under this Section 13(j); and

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          (iii) to the extent that the amount in respect of Transfer Taxes actually payable by a Selling Shareholder or a Over-allotment Shareholder pursuant to Section 0 above is less than the amount deducted by CGMUKE in respect thereof from the payment made by CGMUKE to the relevant party under this Agreement, the excess and any interest received will be promptly repaid to the relevant Selling Shareholder or Over-allotment Shareholder, as the case may be, provided however, if such amount has been paid over to the relevant tax authority CGMUKE will only be obliged to repay the excess to the extent that it receives a refund (plus any interest actually refunded less any Tax thereon) from the relevant tax authority and CGMUKE will use reasonable efforts to secure the repayment from the relevant tax authority (with interest) and the relevant Selling Shareholder or the relevant Over-allotment Shareholder, as the case may be, will pay the reasonable external costs of CGMUKE in making such efforts.

          (k) The Company shall pay the Stabilisation Manager’s reasonable estimate of the maximum amount of Transfer Taxes payable by the Company pursuant to Section 13(h) above on written demand by the Stabilisation Manager, provided that a note is provided with such demand showing the basis on which the reasonable estimate was calculated, and Sections 13(i)(ii) and (iii) shall apply as if the references to a Selling Shareholder or an Over-allotment Shareholder were replaced by references to the Company and as if the reference in Section 13(i)(ii) and (iii) to an amount of Transfer Taxes payable by a Selling Shareholder or an Over-allotment Shareholder (or its Connected Shareholder Person) being deducted from the payment made to it under this Agreement were a reference to an amount of Transfer Taxes payable by the Company having being paid by the Company pursuant to this paragraph.

          (l) The Company and each Selling Shareholder (including, for the avoidance of doubt, each Over-allotment Shareholder) undertakes to each of Citigroup and Deutsche Bank not to give or, so far as is within its powers, permit to be given any direction to Citigroup, Deutsche Bank, the Company, the Selling Shareholders or any other person, and not to take any other action, which is inconsistent with its obligations, or any of the powers, authorities or discretions conferred by it in this Agreement and, in particular, not to create any adverse interest over the Sale Shares to be sold pursuant to this Agreement.

          (m) Subject to the due execution of the Purchase Memorandum, each Selling Shareholder (including, for the avoidance of doubt, each Over-allotment Shareholder) irrevocably and unconditionally instructs the Company, and the Company agrees, to give effect to any stock transfer form or application for registration in respect of Sale Shares delivered pursuant to the terms of this Agreement to the exclusion of any instruction it may receive from any Selling Shareholder after the execution of the Purchase Memorandum.

          (n) Each reference in this Agreement to the Joint Sponsors or either of them, or any of the Joint Bookrunners or the Underwriters by any description or in any capacity includes a reference to it in each other capacity in which it may act pursuant to this Agreement or otherwise with the agreement of the Company in connection with the Offer.

          (o) Each reference to the Selling Shareholders selling the Firm Shares and/or Over-allotment Shares shall be deemed to include a reference to such persons procuring the sale of such Shares from its Connected Shareholder Person. For the avoidance of doubt, in this Agreement and the Purchase Memorandum:

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          (a) Any obligation on a Selling Shareholder or an Over-allotment Shareholder to sell or transfer Shares shall, in the case of Shares of a Connected Shareholder Person, be construed as an obligation on such Selling Shareholder or Over-allotment Shareholder to procure the sale or transfer of such Shares and any reference to Shares being sold or transferred by a Selling Shareholder or Over-allotment Shareholder shall, in the case of Shares of a Connected Shareholder Person, be construed as referring to Shares being sold or transferred by the Connected Shareholder Person of such Selling Shareholder or Over-allotment Shareholder, as the case may be, and related expressions shall be construed accordingly;

          (b) Any sums due to or received by any Selling Shareholder or Over-allotment Shareholder pursuant to this Agreement in respect of the sale of any Shares which are Shares of a Connected Shareholder Person, shall be due to and received by such Selling Shareholder or Over-allotment Shareholder as trustee for its relevant Connected Shareholder Person;

          (c) Any obligation on a Selling Shareholder or Over-allotment Shareholder to pay or reimburse any sum under this Agreement in respect of commissions, expense reimbursements or Transfer Taxes shall be construed as an obligation on such Selling Shareholder or Over-allotment Shareholder to pay or reimburse such sum on behalf of its Connected Shareholder Person (if and to the extent applicable);

          (d) Any obligation on a Connected Shareholder Person to pay or reimburse any sum under this Agreement in respect of commissions, expense reimbursements or Transfer Taxes shall be construed as an obligation on such Selling Shareholder or Over-allotment Shareholder to pay or reimburse such sum on behalf of its Connected Shareholder Person (or, if not possible, as principal);

          (e) Any obligation on any person under this Agreement to transfer Shares to a Selling Shareholder or Over-allotment Shareholder shall be construed as an obligation to transfer such Shares to the relevant Selling Shareholder’s or Over-allotment Shareholder’s Connected Shareholder Person (if and to the extent applicable);

          (f) Any obligation on a Selling Shareholder or Over-allotment Shareholder to execute any form of transfer in respect of Shares shall be construed as an obligation on the relevant Selling Shareholder or Over-allotment Shareholder to procure the execution of such form by its Connected Shareholder Person (if and to the extent applicable); and

          (g) Any reference to a person holding Shares as nominee or trustee for a Selling Shareholder or Over-allotment Shareholder shall be construed as a reference to such person holding as nominee or trustee for the relevant Connected Shareholder Person.

          14. Appointment of Joint Sponsors, Joint Global Co-ordinators and Joint Bookrunners. The Company confirms its appointment of each of CGML and Deutsche Bank as joint sponsors in connection with Admission and each of the Company and the Selling Shareholders confirms the appointment of CGMUKE and Deutsche Bank as joint global co-ordinators and joint bookrunners for the purposes of co-ordinating the Offer.

          15. Jurisdiction. Each of the parties irrevocably (i) agrees that any legal suit, action or proceeding against the Company or any Selling Shareholder arising out of or based

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upon this Agreement or the transactions contemplated hereby may be instituted in any court of England and Wales; (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such proceeding; and (iii) submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding provided that if any suit, action or proceeding is brought against Citigroup, Deutsche Bank or any other Underwriter in a court in any other jurisdiction, Citigroup, Deutsche Bank or such Underwriter may, if it receives legal advice to the effect that it is advisable to do so, join the Company and/or any or all of the Selling Shareholders to such suit, action or proceeding, and the Company and the Selling Shareholders irrevocably submit to the jurisdiction of such courts in relation to any such suit, action or proceeding.

          16. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of England.

          17. Waiver of Immunity. To the extent that the Company or a Selling Shareholder has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process with respect to itself or any of its property, the Company and each Selling Shareholder hereby irrevocably waives and agrees not to plead or claim such immunity in respect of its obligations under this Agreement.

          18. Entire 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 each party hereto acknowledges that it has not been induced to enter into this Agreement by any representation, warranty or undertaking not expressly incorporated into it. Accordingly, no party to this Agreement shall have any liability or remedy in respect of any misrepresentation or untrue statement which is not contained in this Agreement or for any breach of representation or warranty which is not contained in this Agreement. Each party to this Agreement acknowledges that in entering into this Agreement it places no reliance on any representation, warranty or other statement which is not expressly set out or referred to in this Agreement. This Section 18 shall not exclude any liability for fraudulent misrepresentation.

          19. Counterparts. This Agreement may be signed in one or more counterparts, each of which will constitute an original and all of which together will constitute one and the same agreement.

          20. Headings. The section headings used in this Agreement are for convenience only and will not affect the construction of this Agreement.

          21. Time of the Essence. Time will be off the essence in this Agreement.

          22. Definitions. The terms which follow, when used in this Agreement, will have the meanings indicated:

“Admission” means admission of the Shares to the Official List of the FSA and to trading on the London Stock Exchange’s market for listed securities becoming effective in accordance with, respectively, the Listing Rules and the Admission and Disclosure Standards.

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“Admission and Disclosure Standards” means the requirements contained in the publication, “Admission and Disclosure Standards” dated 1 July 2005 containing, amongst other things, the admission requirements to be met by companies seeking admission to trading on the London Stock Exchange’s market for listed securities, as amended from time to time.

“Affiliate” will have the meaning specified in Rule 405 of the Securities Act provided that in relation to (i) each Selling Shareholder, the term Affiliate shall not include any member of the Group or any other Selling Shareholder or any other Selling Shareholder’s respective Affiliates and (ii) the Company, the term Affiliate shall not include any Selling Shareholder or any of its Affiliates.

“Agreement among Underwriters” means the agreement among Underwriters entered into between the Underwriters on 9 December 2005.

“Business Day” means any day for which banks are generally open for business in London and New York excluding Saturdays and Sundays.

“Buy-Back and Stabilisation Regulation” means Commission Regulation (EC) of 22 December 2004 implementing Directive 2003/6/EC as regards exemptions for buy-back programmes and the stabilisation of financial instruments (No. 2273/2013).

“CGML” means Citigroup Global Markets Limited, in its capacity as joint sponsor and in any other capacity in which it may act in relation to the Offer.

“CGMUKE” means Citigroup Global Markets U.K. Equity Limited, in its capacity as joint global co-ordinator and in any other capacity in which it may act in relation to the Offer.

“Citigroup” means each of CGML and CGMUKE.

“Class 1 Resolution” means the ordinary resolution to be proposed at the extraordinary general meeting of IHG convened for 7 December 2005 pursuant to the notice of extraordinary general meeting contained in the circular issued by IHG to its shareholders on 16 November 2005, giving details of its proposed sale of part or all of its interest in the Company.

“Closing Date” means the First Closing Date and any Over-allotment Closing Date.

“Combined Code” means the corporate governance code issued by the Financial Reporting Council.

“Commission” means the U.S. Securities and Exchange Commission.

“Companies Act” means the Companies Act 1985.

“Connected Shareholder Person” means Six Continents Investment Limited for IHG and Allied Domecq Overseas (Canada) Limited for Pernod Ricard, each a wholly owned subsidiary of the respective Selling Shareholder.

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“CREST” means the relevant system (as defined in the Regulations) in respect of which CRESTCo is the Operator (as defined in the Regulations).

“CRESTCo” means the CRESTCo Limited.

“CREST Member” means a person who has been admitted by CRESTCo as a system member (as defined in the Regulations).

“Deutsche Bank” means Deutsche Bank AG London, in its capacity as joint sponsor, joint global co-ordinator and in any other capacity in which it may act in relation to the Offer.

“Director” has the meaning set out in Section 1(a)(i).

“Director’s Questionnaire” means a questionnaire completed by a Director in the Agreed Form.

“Disclosure Rules” means the rules relating to the disclosure of information in respect of financial instruments which have been admitted to trading on a regulated market or for which a request for admission to trading on such a market has been made in accordance with Section 417(a) of the FSMA.

“Document Request List” means the diligence request list prepared by Linklaters, including any updates and supplements thereto.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Executive Director” has the meaning set out in Section 1(a).

“Firm Shares” means the Shares to be sold by each of the Selling Shareholders or its Connected Shareholder Person pursuant to the Offer in the proportions set out in column (2) of Table 2 of the Purchase Memorandum (for the avoidance of doubt, the Firm Shares shall not include the Over-allotment Shares).

“FSA” means The Financial Services Authority acting as the competent authority for the purposes of Part VI of the FSMA Act and in the exercise of its functions in respect of the admission to the Official List of the FSA, including where the context so permits any committee, employee, officer or servant to whom any function of the FSA may from time to time be delegated.

“FSMA” means the Financial Services and Markets Act 2000 (as amended).

“Group” has the meaning set out in Section 1(a)(i).

“IHG” means InterContinental Hotels Group PLC, a company incorporated in England and Wales with registered number 5134420 with registered business address of 67 Alma Road, Windsor, Berkshire SL4 3HD.

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“Indemnifying Party” means the Company and/or the Selling Shareholder, as the context may require.

“Investment Company Act” means the U.S. Investment Company Act of 1940, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Joint Venture Deed of Accession” means the deed dated 18 November 2005 between Britannia Soft Drinks Limited, InterContinental Hotels Group Plc, InterContinental Hotels Limited, Allied Domecq Limited, Pernod Ricard S.A., Whitbread Group Plc, Six Continents Investments Limited, Allied Domecq Overseas (Canada) Limited and Britannia SD Holdings Limited, relating to a Joint Venture Agreement dated 10 February 1986 (as amended).

“Listing Rules” means the listing rules of the FSA under Part VI of the FSMA.

“London Stock Exchange” means the London Stock Exchange plc.

“Loss” or “Losses” means any and all losses, claims, damages or liabilities and Taxes, joint or several (other than taxes incurred on actual net income, profits or gains and other than VAT unless the relevant person certifies it is not recoverable by it or any member of a group of which it is a member for VAT purposes and other than interest or penalties arising as a result of unreasonable default or delay by any indemnified person), provided that “Loss” or “Losses” shall not include:

(i) in relation to any sum payable by the Company in respect of a Loss under this Agreement (or which would be so payable but for this proviso), any Transfer Taxes (other than any related costs, fines, penalties or interest arising as a result of unreasonable delay or default by the Underwriters or the Stabilisation Manager) which the Company, the Selling Shareholders or the Over-allotment Shareholders are liable to pay under Section 13(h) or any Transfer Taxes which are incurred by the Underwriters or the Stabilising Manager as transferee or purchaser; and

(ii) in relation to any sum payable by any Selling Shareholder in respect of a Loss under this Agreement (or which would be so payable but for this proviso), any Transfer Taxes (other than any related costs, fines, penalties or interest arising as a result of unreasonable delay or default by the Underwriters or the Stabilisation Manager).

“Material Adverse Effect” has the meaning set out in section 1(a)(xii) of this Agreement.

“New IPO Agreement” means the IPO Agreement dated 18 November 2005 between Britannia SD Holdings Limited, InterContinental Hotels Group Plc, Pernod Ricard S.A., Whitbread Group Plc and PepsiCo Inc to replace the existing IPO agreement dated 22 April 2005.

“Non-executive Director” has the meaning set out in Section 1(c).

“Offer” means the offer of Firm Shares to institutional investors in certain jurisdictions, the terms and conditions governing which are set out in the Offering Memoranda.

“Offer Documents” means the Offering Memoranda, the press announcement dated the date of this Agreement to be issued in connection with the publication of the Prospectus and the press

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announcement to be issued in connection with the publication of the Pricing Supplement and pricing and allocation and in connection with the publication of any Supplementary Prospectus and any other document published or issued by or on behalf of the Company for the purposes of the Offer, each (other than the press announcement to be issued in connection with the publication of the Pricing Supplement and any Supplementary Prospectus) in the Agreed Form.

“Offer Price” has the meaning set out in Section 2(a).

“Offering Memoranda” means the Prospectus, the Pricing Supplement and any Supplementary Prospectuses.

“Over-allotment Conditions” means the following:

(i)	Admission having occurred and not having been terminated or suspended;
(ii)	the conditions set out in Section 6 having been satisfied (or waived by the Stabilisation Manager in its absolute and sole discretion);
(iii)	the documents referred to in Sections 5 and 6 of this Agreement having been delivered in accordance with those Sections;
(iv)	each of the Company, the Directors, the Selling Shareholders (including the Over-allotment Shareholders) having complied with all other agreements and obligations and satisfied all other conditions on its or his part under this Agreement to be performed or satisfied on or prior to the Over-allotment Closing Date (save for any breaches which have been remedied or waived to the reasonable satisfaction of the Stabilising Manager (following agreement with Deutsche Bank) prior to the Over allotment Closing Date); and
(v)	prior to the Over-allotment Closing Date, the provisions of sub-sections 3(b) and (d)(i) having been complied with.

“Over-allotment Contract” has the meaning set out in section 2(e) of this Agreement.

“Pernod Ricard” means Pernod Ricard S.A., a company incorporated in France with registered business address of 12 Place des Etats Unis, 75783 Paris Cedex 16, France.

“PepsiCo Letter” means the letter agreement dated 18 November 2005 between Britvic Soft Drinks Limited and PepsiCo Inc.

“Prospectus Rules” means the rules expressed to relate to transferable securities as defined in Section 73A(4) of the FSMA.

“Purchase Memorandum” means a memorandum in the form of the draft contained in Schedule IV, expected to be executed by each of the Selling Shareholders, each of the Over-allotment Shareholders and each of the Underwriters.

“Registrar” means Lloyds TSB, The Causeway, Worthing, West Sussex BN99 6DA.

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“Regulations” means the Uncertificated Securities Regulations 2001 (SI 2001/3755).

“Regulation D” means Regulation D under the Securities Act.

“Regulation S” means Regulation S under the Securities Act.

“Restructuring Agreements” has the meaning set out in Section 1(a)(vi).

“Restructuring Arrangements” has the meaning set out in Section 1(a)(vi).

“Sale Shares” means the Firm Shares and the Over-allotment Shares.

“Scheme” means the Britvic Pension Plan established under a trust deed and rules dated 1 April 2003 as described in paragraph 8 of Part XIV of the Prospectus.

“Securities Act” means the U.S. Securities Act of 1933, and the rules and regulations of the Commission promulgated thereunder.

“Seven-Up Letter” means the letter agreement dated 18 November 2005 between Britvic Soft Drinks Limited and Seven-Up International, a division of The Concentrate Manufacturing Company of Ireland.

“Share Exchange Agreement” means the agreement dated 18 November 2005 between Britannia SD Holdings Limited, InterContinental Hotels Group Plc, Pernod Ricard S.A., Whitbread Group Plc and PepsiCo Inc whereby InterContinental Hotels Group Plc, Pernod Ricard, Whitbread Group Plc and PepsiCo Inc procured the transfer of all the ordinary shares in Britannia Soft Drinks Limited to Britannia SD Holdings Limited in exchange for the issue of ordinary shares in Britannia SD Holdings Limited.

“Stabilisation Manager” means Citigroup Global Markets U.K. Equity Limited.

“Stocklending Agreement” means the securities lending agreement to be entered into between the Selling Shareholders (or their Connected Shareholder Persons) and Citigroup Global Markets U.K. Equity Limited on 9 December 2005.

“Supplementary Prospectus” means any supplement to the Prospectus published by the Company pursuant to section 87G of the FSMA and Rule 3.4 of the Prospectus Rules and “Supplementary Prospectuses” shall be construed accordingly.

“tax authority” means any taxing or other authority (whether within or outside the United Kingdom) competent to impose any liability to Taxes.

“Taxes” means all taxes, levies, imposts, duties, charges or withholdings of any nature whatsoever, together with all penalties, charges and interest relating to any of the foregoing and regardless of whether the person concerned is primarily liable or not, including (without limitation) corporation tax, advance corporation tax, income tax, capital gains tax, VAT, national insurance contributions, capital duty, stamp duty, stamp duty land tax, SDRT, and all other taxes

64

on gross or net income, profits or gains, distributions, receipts, sales, use, occupation, franchise, value added, and personal property;

“Termination Deed” means the deed dated 18 November 2005 relating to Britannia Soft Drinks Limited and Britannia SD Holdings Limited, between Britannia Soft Drinks Limited, InterContinental Hotels Limited, Allied Domecq Limited, Whitbread Group Plc, PepsiCo Inc, InterContinental Hotels Group Plc and Pernod Ricard.

“Whitbread” means Whitbread Group PLC, a company incorporated in England and Wales with registered number 29423, with registered business address of Whitbread House, Park Street West, Luton LU1 3BG.

“Working Capital Report” means the working capital report in the Agreed Form in respect of the Group prepared by Ernst & Young LLP, including any updates and supplements thereto.

23. Interpretation

     (a) The Introduction and Schedules to this Agreement from part of, and shall be deemed to be incorporated in, this Agreement.

     (b) In this Agreement, unless otherwise specified:

     (i) references to the Introduction, Sections, paragraphs, and Schedules are to the Introduction, Sections, paragraphs of, and Schedules to this Agreement;

     (ii) words and expressions defined in the Companies Act shall bear the same meaning;

     (iii) words denoting any gender shall include all genders;

     (iv) any reference to a “company” shall be construed so as to include any company, corporation or other body corporate, wherever and however incorporated or established;

     (v) the words “include(s)” and “including” shall be interpreted as if they were in each case followed by the words “without limitation”;

     (vi) any reference to “in writing” or “written” shall (except where the context requires otherwise) include written or produced by any legible and non-transitory substitute for writing or partly in one manner and partly in another;

     (vii) any reference to a statute, statutory provision or subordinate legislation (“legislation”) shall (except where the context requires otherwise) be construed as referring to:

     (aa) such legislation as amended and in force from time to time and to any legislation which (either with or without modification) re-enacts, consolidates or enacts in rewritten form any such legislation; and

65

     (bb) any former legislation which it re-enacts, consolidates or enacts in rewritten form;

     (ix) references to times of the day are to London time;

     (x) any document expressed to be “ in the Agreed Form” shall be such document in the form agreed between the Company, Citigroup and Deutsche Bank and the Selling Shareholders (as the case may be) and initialled for the purpose of identification by, or on behalf of, the Company, Citigroup and Deutsche Bank and the Selling Shareholders (as the case may be) as amended by agreement by, or on behalf of, the Company, Citigroup and Deutsche Bank and the Selling Shareholders (as the case may be) in writing following the date of this Agreement;

     (xi) any reference to “persons” includes natural persons, firms, partnerships, companies, corporations, associations, organisations, governments, states, foundations and trusts (in each case whether or not having separate legal personality); and

     (c) References to any English legal term for any action, remedy, method of judicial proceedings, legal document, legal status, court official or any other legal concept shall, in respect of jurisdiction other than England, be deemed to include the legal concept or term which most closely equates in that jurisdiction to the English legal term.

66

SCHEDULE I

SELLING SHAREHOLDERS

Column 1	Column 2	Column 3	Column 4	Column 5	Column 6
			Agreed
	Connected	Proposed	Over-allotment
	Shareholder	number of	Share	Address of Selling	Fax
Selling Shareholders	Person	Firm Shares	Proportion (%)	Shareholders	number
InterContinental Hotels Group PLC*	Six Continents Investment Limited	76,516,256	50	67 Alma Way Windsor Berkshire SL4 3HD	0175 - 3410101
Whitbread Group PLC*	Whitbread Group PLC	38,258,115	25	Whitbread House	01582 -396697
				Park Street
				West Luton LU1 3BG
Pernod Ricard S.A.*	Allied Domecq Overseas (Canada) Limited	38,258,115	25	12 Places des Etats Unis 75783 Paris Cedex 16, France	00 331 - 41 00 42 42

(*) Over-allotment Shareholder.

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SCHEDULE II

UNDERWRITERS

Underwriter	Address, telephone and facsimile number
Citigroup Global Markets U.K. Equity Limited	Citigroup Centre
	Canada Square
	Canary Wharf
	London E14 5LB
	For the attention of Equity Syndicate Desk
	Telephone:           020-7986-0740
	Facsimile:              020-7986-1103
Deutsche Bank AG London	Winchester House
	1 Great Winchester Street
	London EC2N 2DB
	For the attention of Equity Capital Markets
	Telephone:           020 7545 6304
	Facsimile:              020 7545 6301
Lehman Brothers International (Europe)	25 Bank Street
	Canary Wharf
	London E14 5LG
	For the attention of Head of European Capital Markets
	Telephone:           020 7102 7684
	Facsimile:              020 7067 8283
Merrill Lynch International	Merrill Lynch Financial Centre
	2 King Edward Street
	London EC1A 1HQ
	For the attention of Equity Capital Markets
	Telephone:           020 7628 1000
	Facsimile:              020 7995 2516

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SCHEDULE III

Part A

Executive Directors	Limit on Liability
Paul Moody	£	750,000
John Gibney	£	500,000

Part B

Non-Executive Directors	Limit on Liability
Joanne Averiss	£	10,000
Chris Bulmer	£	35,000
Gerald Corbett	£	180,000
Bob Ivell	£	35,000
Michael Shallow	£	35,000

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SCHEDULE IV

PURCHASE MEMORANDUM

Dated: [•] 2005

The Offer Price is £[•] per Share

This counterpart of the Purchase Memorandum, when taken together with all other counterparts of the Purchase Memorandum executed pursuant to the underwriting agreement dated [25] November 2005 between, inter alia, Britvic plc, Citigroup, Deutsche Bank and others as named therein (the “Agreement”), constitutes the Purchase Memorandum.

Upon the execution of this Purchase Memorandum, each of the Underwriters will severally be obligated to procure purchasers for or, failing which, to purchase itself the aggregate number of Firm Shares specified in Table 1 below and specified in Table 2 below the shareholders in the Britvic plc listed herein will be obligated to sell the number of Firm Shares and up to the number of Over-allotment Shares (if any) specified below in Table 3, in each case on and subject to the terms and conditions of the Agreement.

It is as agreed that the number of Firm Shares to be sold by each of the Selling Shareholders or its Connected Shareholder Person pursuant to the Offer is as specified in Column (2) of Table 2 of this Purchase Memorandum and the maximum number of Shares which are the subject of the Over-allotment Contract is as specified in Column (2) of Table 3 of this Purchase Memorandum.

Terms defined in the Agreement have the same meanings when used in this Purchase Memorandum.

Table 1

Underwriting Commitments

Column (1)	Column (2)
	Number of Firm Shares underwritten pursuant
Underwriter	to the Agreement
Citigroup Global Markets U.K. Equity Limited	[     ]
Deutsche Bank AG London	[     ]
Lehman Brothers International (Europe)	[     ]
Merrill Lynch International	[     ]
Total	[     ]

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Table 2

Selling Shareholders

Column (1)	Column (2)
	Number of Firm Shares to be sold pursuant to
Selling Shareholders	this Agreement
InterContinental Hotels Group PLC
Whitbread Group PLC
Pernod Ricard S.A.
Total

Table 3

Over-allotment Shareholders

Column (1)	Column (2)	Column (3)
	Maximum Number of Over-	Agreed Over-allotment Share
Over-allotment Shareholders	allotment Shares	Proportion (%)
InterContinental Hotels Group PLC
Whitbread Group PLC
Pernod Ricard S.A.
Total

This Purchase Memorandum may be executed by one or more of the parties hereto in any number of counterparts each of which shall be deemed to be an original, but all counterparts shall together constitute the same instrument.

In witness whereof this Purchase Memorandum has been entered into on [•] 2005 by the Selling Shareholders and the Underwriters.

[Execution provisions]

71

SCHEDULE V

UNDERWRITER INFORMATION

Underwriters’ names:

Citigroup Global Markets U.K. Equity Limited

Deutsche Bank AG London

Lehman Brothers International (Europe)

Merrill Lynch International

Underwriters’ addresses:

Citigroup Global Markets U.K. Equity Limited

Citigroup Centre

Canada Square

Canary Wharf

London E14 5LB

Deutsche Bank AG London

Winchester House

1 Great Winchester Street

London EC2N 2DB

Lehman Brothers International (Europe)

25 Bank Street

Canary Wharf

London E14 5LE

Merrill Lynch International

2 King Edward Street

London EC1A 1HQ

72

73

      If the foregoing is in accordance with your understanding of our agreement, please sign and return to us this Agreement, and upon the acceptance of this Agreement by, or on behalf of Citigroup, Deutsche Bank and each of the other Underwriters, this Agreement and such acceptance will represent a binding agreement among the Company, the Directors and each of the Selling Shareholders and the several Underwriters.

      Any person executing and delivering this Agreement as Attorney represents by so doing that he has been duly appointed as Attorney pursuant to a validly existing and binding Power of Attorney which authorises such Attorney to take such action.

      In witness whereof this Agreement has been entered into the day and year first before written.

Very truly yours,

Very truly yours,
Britvic PLC
By:	/s/  John Gibney
	Name: John Gibney
	Title:	Finance Director

InterContinental Hotels Group PLC
By:	/s/  Richard Solomons
	Name:	Richard Solomons
	Title:	Chief Financial Officer

Whitebread Group PLC
By:	/s/  Christopher Rogers
	Name:	Christopher Rogers
	Title:	Finance Director

Pernod Richard S.A.
By:	/s/  R. Burrows
	Name:	R. Burrows
	Title:	Director General

Signed and delivered as a Deed by
 

/s/  Paul Moody

Paul Moody

in the presence of:

/s/  Mark Austin

Name: Mark Austin
Address: 65 Fleet Street, London
Occupation: Solicitor
 

Signed and delivered as a Deed by
 

/s/  John Gibney

John Gibney

in the presents of:

/s/  Mark Austin

Name: Mark Austin
Address: 65 Fleet Street, London
Occupation: Solicitor
 

Signed and delivered as a Deed by

Joanne Averis

in the presence of:

/s/ Mark Austin      /s/ Joanne Averis

Name:  Mark Austin
Address:  65 Fleet Street, London
Occupation:  Solicitor
 

Signed and delivered as a Deed by
Chris Bulmer through his attorney Paul Moody
in the presence of:

/s/ Mark Austin       /s/ Paul Moody

Name:  Mark Austin

Address:  65 Fleet Street, London
Occupation:  Solicitor
 

Signed and delivered as a Deed by
Gerald Corbet through his attorney Paul Moody
in the presence of:

/s/ Mark Austin      /s/ Paul Moody

Name:  Mark Austin

Address:  65 Fleet Street, London
Occupation:  Solicitor
 

Signed and delivered as a Deed by Bob Ivell through his attorney Paul Moody in the presence of:
/s/ Mark Austin      /s/ Paul Moody
Name:	Mark Austin
Address: 65 Fleet Street, London Occupation: Solicitor
Signed and delivered as a Deed by
Michael Shallow
in the presence of:
/s/ Mark Austin      /s/ Michael Shallow
Name:	Mark Austin
Address: 65 Fleet Street, London Occupation: Solicitor

The foregoing Agreement
is hereby confirmed and
accepted as of the date
first above written.

 
Citigroup Global Markets Limited
Citigroup Global Markets U.K. Equity Limited

By:	/s/ David Wormsley
	Name:	David Wormsley
	Title:	Managing Director
Deutsche Bank AG London
By:	/s/ Charles Wilkinson		/s/ Jeremy Quin
	Name:	Charles Wilkinson	Jeremy Quin
	Title:	Managing Director	Managing Director

Lehman Brothers International (Europe)

By:	/s/ Stephen Pull
	Name:	Stephen Pull
	Title:	Managing Director
Merrill Lynch International
By:
	Name:
	Title:

vii

Lehman Brothers International (Europe)

By:
	Name:
	Title:
Merrill Lynch International
By:	/s/ Simon MacKenzie-Smith
	Name:	Simon MacKenzie-Smith
	Title:	Managing Director, Head of UK Investment Banking

vii

EXHIBIT A

Documents to be delivered to Citigroup and Deutsche Bank

Part A: Delivery on or prior to the date of the Agreement

Documents from the Company and Directors:

     1. A copy of the signed Form A as signed by a Director or the Secretary.

     2. Two certified copies of the final cross reference list identifying the pages of the Prospectus on which each item required by the schedules and building blocks of the Prospectus Rules can be found.

     3. Two originals of the letters duly signed by the Company in relation to paragraphs 8.4.2, 6.1.16, 8.4.3 of the Listing Rules and which also confirm that there has been no significant change in the financial or trading position of the Company on the Group since 2 October 2005 and confirming that these are established non-financial reporting procedures within the Company and dated the same date as the Prospectus.

     4. Two originals of the letter duly signed by the Company in relation to paragraph 8.3.4 of the Listing Rules and dated the same date as the Prospectus.

     5. Two certified copies of the responsibility and authority letters accepting responsibility for the information contained in, inter alia, the Prospectus dated the date of the Prospectus duly signed by each of the Directors.

     6. Two originals of the verification files dated the date of the Prospectus duly signed by or on behalf of each Director or by each of the persons responsible for the replies thereto.

     7. Two copies of the Prospectus bearing evidence of the approval of the FSA, pursuant to the Listing Rules and the Prospectus Rules.

     8. Two certified copies of the minutes of the meetings of the Board of Directors of the Company, or a duly authorised committee thereof, approving the Prospectus and (where appropriate) the other documents referred to in this Agreement and authorising the steps to be taken by the Company in connection with the offer and sale of the Sale Shares, including the execution of this Agreement, in the Agreed Form and at which meeting the Directors also confirm the adequacy of their systems and procedures in respect of disclosure of information and which the Directors confirm the adequacy of their financial reporting procedures.

     9. Two certified copies of the minutes of the meeting of the Board of Directors of the Company appointing any committee such as is referred to in paragraph 9 above.

     10. Two certified copies of the certificate of incorporation, the certificate of incorporation on change of name of the Company, the certificate of re-registration as a public limited company, the Memorandum and Articles of Association of the Company and the new Articles of Association of the Company to be adopted on Admission.

     11. Two certified copies of each of the other documents stated in the Prospectus as being available for inspection.

     12. Two certified copies of the Registrars’ agreement.

viii

     13. Two certified copies of each of the Powers of Attorney pursuant to which any party executes this Agreement.

     14. Two originals of the comfort letter in relation to the adequacy of the Company’s insurance cover and policies.

     15. Two certified copies of the Company’s disclosure policy.

     16. Two certified copies of the duly executed New IPO Agreement.

     17. Two certified copies of the duly executed Share Exchange Agreement.

     18. Two certified copies of the duly executed Termination Deed.

     19. Two certified copies of the duly executed Joint Venture Deed of Accession.

     20. Two certified copies of the duly executed Seven-Up Letter.

     21. Two certified copies of the duly executed PepsiCo Letter.

22. Two copies of the letter dated 3 November 2005 from Britannia Soft Drinks Limited to the Chairman at the trustees of the Scheme, and two copies of the Chairman’s reply dated 5 November 2005 setting out, inter alia, the agreed details of the additional contribution amounts to be paid into the Scheme.

     23. Two certified copies of the court order confirming the reduction of capital.

Documents from the Reporting Accountants:

     24. Two original copies of the Reporting Accountants’ long form report dated the date of the Prospectus and duly signed by the Reporting Accountants.

     25. Two copies of the Reporting Accountants’ accountants’ report dated the date of the Prospectus (as incorporated in the Prospectus) and duly signed by the Reporting Accountants.

     26. Two original copies of the Reporting Accountants’ working capital report dated the date of the Prospectus and duly signed by the Reporting Accountants.

     27. The following letters dated the date of the Prospectus from the Reporting Accountants:

     (a) two originals of the letter confirming the accuracy and correct extraction of certain financial information and non-financial operating data in the Prospectus;

     (b) two originals containing confirmations concerning the working capital statement in the Prospectus;

     (c) two copies of the letter reporting on the pro forma financial information in the Prospectus;

     (d) two originals of the letter providing comfort on there being no significant changes in the financial and trading position of the Company or the Group;

     (e) two originals of the letter confirming that the summary of taxation issues set out in the Prospectus accords with its understanding of the relevant current taxation legislation and Inland Revenue practice;

ix

     (f) two originals of the letter providing comfort on the schedule of capitalisation and indebtedness of the Company as at 25 November 2005;

     (g) two originals of the letter providing comfort in relation to paragraphs 8.4.2 and 8.3.4 of the Listing Rules;

     (h) two originals confirming their independence in accordance with paragraphs 6.1.3(2) of the Listing Rules; and

     (i) two copies providing its consent to inclusion of in the Prospectus of its reports and letters in the form and context in which they are included in the Prospectus.

     28. Two original signed letters dated the date of the Prospectus duly signed by the Reporting Accountants relating to the Statement of Auditing Standards No. 72, with respect to the financial statements and certain financial information contained in the Prospectus.

Other Documents:

     29. 4 originals of each of the Certificates of Title dated the date of the Prospectus and produced by Eversheds LLP.

     30. Two originals of the letters duly signed by Linklaters in relation to paragraphs 8.4.2 and 8.3.4 of the Listing Rules and dated the same date as the Prospectus

     31. Two copies of each of the due diligence request list (including any supplements and updates thereto) and the final data room index, each in the Agreed Form and prepared by Linklaters.

     32. Two originals copies of the duly executed PepsiCo lock-up agreement.

 x

Part B: Delivery on the date of the Pricing Supplement

Documents from the Company, Directors and Selling Shareholders:

1. Copies of the Pricing Supplement bearing evidence of the approval of the FSA, pursuant to the Listing Rules and the Prospectus Rules.

2. Two originals of the letter duly signed by the Company in relation to paragraphs 8.4.2 and 8.4.3 of the Listing Rules and dated the same date as the Pricing Supplement.

3. Two originals of the letter duly signed by the Company in relation to paragraph 8.3.4 of the Listing Rules and dated the same date as the Prospectus.

4. A copy of the signed Application for Admission of securities to the Official List in relation to the Shares certified by a Director or the secretary of the Company.

5. A copy of the signed Application for Admission of Securities to trading on the London Stock Exchange as signed by us

6. As relevant, two originals of the letter duly signed by the Company confirming after due and careful enquiry that the provided information contained in the Pricing Supplement and the Prospectus has been properly extracted from the Company’s accountancy records and dated the same date as the Pricing Supplement.

7. As relevant, two originals of the letter duly signed by the Company confirming that the non-financial operating data contained in the Pricing Supplement and the Prospectus has been properly extracted from the records of the Group.

8. Two originals of the letter duly signed by the Company confirming that there are established non-financial operating procedures within the Company.

9. Two originals of the letter duly signed by the Company confirming that there has been no significant change in the financial or trading position of the Company or the Group since 25/11 2005.

10. Two certified copies of the minutes of the meetings of the Board, or a duly authorized committee thereof (in which case, a certified copy of the minutes of the Board appointing such committee also to be supplied), approving the Pricing Supplement.

11. Two certified copies of each power of attorney pursuant to which any party executes the Purchase Memorandum.

12. Two originals of a certificate in the agreed form from each of the Company and the Selling Shareholders dated the date of the Pricing Supplement to the effect that the warranties given by that Warrantor in this Agreement are true and accurate in all respects on and as of the date of the Pricing Supplement by reference to the facts and circumstances subsisting at the relevant date as though they had been given and made on the date of the Pricing Supplement and that such Warrantor has complied with all the agreements and satisfied all the conditions on its part under this Agreement to be performed or satisfied by it on or prior to the date of the Pricing Supplement.

13. Two originals of the stock lending agreement dated the date of the Pricing Supplement duly signed by each of the Over-allotment Shareholders and to be entered into by each of the

xi

Over-allotment Shareholders and the Stabilisation Manager (or their Connected Shareholder Persons).

14. Two certified copies of the Class 1 Resolution that has been duly approved at the extraordinary general meeting of IHG shareholders convened on 7 December 2005.

15. A copy of the signed Issuer’s Declaration (in the form required by paragraph 3.3.5R(2) of the Listing Rules signed by a Director or the Secretary).

Documents from the Accountants:

16. One original of the Accountants’ bring-down comfort letter, duly signed by the Accountants and dated the same date as the Pricing Supplement.

17. Two originals of the letter referred to in paragraph 28 of Part A of Exhibit A dated the same date as the Pricing Supplement.

Other Documents:

18. Two originals of the letters duly signed by Linklaters in relation to paragraphs 8.4.2 and 8.3.4 of the Listing Rules and dated the same date as the Pricing Supplement.

xii

Part C: Delivery of documents on the First Closing Date prior to Admission

Documents from the Company, Selling Shareholders:

1. Two originals of a certificate in the form set out in Annex I from the Company dated the First Closing Date.

2. Two originals of a certificate in the form set out in Annex II from the Directors dated the First Closing Date.

3. Two originals of a certificate in the form set out in Annex III from the Selling Shareholders dated the First Closing Date.

Documents from the Reporting Accountants:

4. Two originals of the document referred to in paragraph 16 of Part B of Exhibit A dated the First Closing Date.

5. Two originals of the letter referred to in paragraph 28 of Part A of Exhibit A dated the First Closing Date.

Other Documents:

6. Two originals of the English Law opinion from Linklaters, English lawyers for the Company, addressed to Citigroup, Deutsche Bank and the other Underwriters in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

7. Two originals of the U.S. legal opinion from Linklaters, U.S. legal advisers from the Company addressed to Citigroup, Deutsche Bank and the other Underwriters in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

8. Two originals of the so called “Rule 10b-5 disclosure letter” from Linklaters.

9. Two originals of each of the English law opinions, U.S. legal opinions and so called “Rule 10b-5 disclosure letter” from Freshfields Bruckhaus Deringer.

10. Two originals of the legal opinion from Linklaters, legal advisers to IHG, addressed to Citigroup, Deutsche Bank and the other Underwriters in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

11. Two originals of the legal opinion from Macfarlanes, legal advisers to Pernod Ricard, addressed to Citigroup, Deutsche Bank and the other Underwriters in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

12. Two originals of the legal opinion from Slaughter & May, legal advisers to Whitbread, addressed to Citigroup, Deutsche Bank and the other Underwriters in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

13. Two originals of a signed cross-receipt in respect of the Firm Shares.

xiii

Part D: Delivery of documents on an Over-allotment Closing Date

Documents from the Company, Selling Shareholder:

1. Two originals of a certificate in the form set out in Annex I from the Company dated the relevant Over-allotment Closing Date.

2. Two originals of a certificate in the form set out in Annex II from the Directors dated the relevant Over-allotment Closing date.

3. Two originals of a certificate in the form set out in Annex III from the Selling Shareholder, Trustee dated the relevant Over-allotment Closing Date.

Document from the Reporting Accountant:

4. Two originals of the document referred to in paragraph 16 of Part B of Exhibit A dated the relevant Over-allotment Closing Date.

5. Two originals of the letter referred to in paragraph 28 of Part B of Exhibit A dated the relevant Over-allotment Closing Date.

Other Documents:

6. Two originals of the English Law opinion from Linklaters, English lawyers for the Company, addressed to Citigroup, Deutsche Bank and the other Underwriters, in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

7. Two originals of the U.S. legal opinion from Linklaters, U.S. legal advisers from the Company addressed to Citigroup, Deutsche Bank and the other Underwriters, in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

8. Two originals of the so called “Rule 10b-5 disclosure letter” from Linklaters.

9. Two originals of each of the English law, U.S. legal opinions from Freshfields Bruckhaus Deringer and the so called “Rule 10b-5 disclosure letter”.

10. Two originals of the legal opinion from Linklaters, legal advisers to IHG, addressed to Citigroup, Deutsche Bank and the other Underwriters in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

11. Two originals of the legal opinion from Macfarlanes, legal advisers to Pernod Ricard, addressed to Citigroup, Deutsche Bank and the other Underwriters in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

12. Two originals of the legal opinion from Slaughter & May, legal advisers to Whitbread, addressed to Citigroup, Deutsche Bank and the other Underwriters in a form reasonably satisfactory to Citigroup, Deutsche Bank and the other Underwriters.

13. Two originals of a signed cross-receipt in respect of the Over-allotment Shares.

xiv

ANNEX I

FORM OF CERTIFICATE

BRITVIC PLC

[To be typed on the Company’s Letterhead]

To be provided on the date of Pricing Supplement, First Closing Date and on any Over-allotment Closing Date

Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB

Deutsche Bank AG, London
Winchester House
Great Winchester Street
London EC2N 2DB

Lehman Brothers International (Europe)
25 Bank Street
Canary Wharf
London E14 5LE

Merrill Lynch International
2 King Edward Street
LondonEC1A 1HQ

[ • ] 2005

Dear Sirs

Agreed form certificate in relation to a global offer of ordinary shares in Britvic Plc (the “Company”)

Reference is made to Section 6(a) of the underwriting agreement dated 25 November 2005 entered into between, inter alios, Citigroup Global Markets Limited, Deutsche Bank AG London, Lehman Brothers International (Europe), Merrill Lynch International and the Company (the “Underwriting Agreement”). Capitalised terms used but not defined herein have the meaning ascribed to them in the Underwriting Agreement.

The Company has carefully examined the Prospectus, the Pricing Supplement and the Underwriting Agreement [and any Supplementary Prospectus].

The representations, warranties and undertakings given by the Company in the Underwriting Agreement are true, accurate and not misleading and have not been breached at the date of the Underwriting Agreement in any respect and there has been no change in the circumstances such that if repeated by reference to the facts and circumstances subsisting at the date hereof any of such representations, warranties or undertakings would not be untrue, inaccurate or misleading in any respect and would not be breached at the date hereof.

Since the date of the most recent financial statements included in the Prospectus, there has been no material adverse change, or any development involving a prospective material adverse change, in or affecting the condition (financial or otherwise), prospects, earnings, business or properties of the Company and the other members of the Group, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in the Prospectus.

xv

Yours faithfully

.......................................

Being a Director of the Company

For and on behalf of Britvic Plc

xvi

ANNEX II

FORM OF CERTIFICATE

BRITVIC PLC

[To be typed on the Company’s Letterhead]

To be provided on the date of Pricing Supplement, First Closing Date and on any Over-allotment Closing Date

Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB

Deutsche Bank AG, London
Winchester House
Great Winchester Street
London EC2N 2DB

Lehman Brothers International (Europe)
25 Bank Street
Canary Wharf
London E14 5LE

Merrill Lynch International
2 King Edward Street
LondonEC1A 1HQ

[ • ] 2005

Dear Sirs

Agreed form certificate in relation to a global offer of ordinary shares in Britvic Plc (the “Company”)

Reference is made to Section 6(b) of the underwriting agreement dated 25 November 2005 entered into between, inter alios, Citigroup Global Markets Limited, Deutsche Bank AG London, Lehman Brothers International (Europe), Merrill Lynch International and the Company (the “Underwriting Agreement”). Capitalised terms used but not defined herein have the meaning ascribed to them in the Underwriting Agreement.

The Directors have carefully examined the Prospectus, the Pricing Supplement and the Underwriting Agreement [and any Supplementary Prospectus].

The representations, warranties and undertakings given by the Directors in the Underwriting Agreement are true, accurate and not misleading and have not been breached at the date of the Underwriting Agreement in any respect and there has been no change in the circumstances such that if repeated by reference to the facts and circumstances subsisting at the date hereof any of such representations, warranties or undertakings would not be untrue, inaccurate or misleading in any respect and would not be breached at the date hereof.

Since the date of the most recent financial statements included in the Prospectus, there has been no material adverse change, or any development involving a prospective material adverse change, in or affecting the condition (financial or otherwise), prospects, earnings, business or properties of the Company and the other members of the Group, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in the Prospectus.

xvii

Yours faithfully

.......................................

Being a Director of the Company

For himself and, as a duly appointed attorney, for and on behalf of each other Director of the Company.

xviii

ANNEX III

FORM OF CERTIFICATE

[to be typed on the relevant Selling Shareholder’s letterhead]

To be provided on the date of Pricing Supplement, First Closing Date and on any Over-allotment Closing Date

Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB

Deutsche Bank AG, London
Winchester House
Great Winchester Street
London EC2N 2DB

Lehman Brothers International (Europe)
25 Bank Street
Canary Wharf
London E14 5LE

Merrill Lynch International
2 King Edward Street
LondonEC1A 1HQ

[ • ] 2005

Dear Sirs

Agreed form certificate in relation to a global offer of ordinary shares in Britvic Plc (the “Company”)

Reference is made to Section 6(c) of the underwriting agreement dated 25 November 2005 entered into between, inter alios, Citigroup Global Markets Limited, Deutsche Bank AG London, Lehman Brothers International (Europe), Merrill Lynch International and the Company (the “Underwriting Agreement”). Capitalised terms used but not defined herein have the meaning ascribed to them in the Underwriting Agreement.

[insert name of relevant Selling Shareholder], as a Selling Shareholder, has received a copy of the Prospectus, the Pricing Supplement and the Underwriting Agreement [and any Supplementary Prospectus] and has examined the same for the purposes of the delivery of this certificate.

The representations, warranties and undertakings given by [insert name of relevant Selling Shareholder], as a Selling Shareholder, in the Underwriting Agreement are true, accurate and not misleading and have not been breached at the date of the Underwriting Agreement in any respect and there has been no change in the circumstances such that if repeated by reference to the facts and circumstances subsisting at the date hereof any of such representations, warranties or undertakings would not be untrue, inaccurate or misleading in any respect and would not be breached at the date hereof.

Yours faithfully

.......................................

xix

[name]
[designation]
For and on behalf of [insert name of relevant Selling Shareholder]

xx

EX-4.B.VIII

Exhibit 4(b)(viii)

Dated 10^th March 2006

BHR Luxembourg S.à r.I.

and

Others

and

Cooperatie Westbridge Europe I U.A.

and Others

and

Westbridge Hospitality Fund L.P.

SALE AND PURCHASE AGREEMENT

relating to a portfolio of certain companies and businesses in continental Europe

KEEP THE ORIGINAL OF THIS DOCUMENT AND ALL CERTIFIED COPIES THEREOF OUTSIDE OF THE REPUBLIC OF AUSTRIA. BRINGING THIS DOCUMENT OR ANY CERTIFIED COPY OF THIS DOCUMENT INTO THE REPUBLIC OF AUSTRIA AS WELL AS ANY WRITTEN CONFIRMATION OR WRITTEN REFERENCE TO THIS DOCUMENT MAY CAUSE THE IMPOSITION OF AUSTRIAN STAMP DUTY.

Linklaters

One Silk Street
London EC2Y 8HQ

Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222

Table of Contents

Contents		Page
1	Interpretation		1
2	Agreement to Sell		10
3	Consideration		11
4	Conditions		13
5	Pre-Completion		15
6	Completion		18
7	Employees, Pensions and Employee Incentives		19
8	European Business Indemnities		23
9	Post-Completion Adjustments		25
10	Warranties and Indemnities		26
11	Limitation of Sellers’ Liability		29
12	Claims		32
13	Guarantee		34
14	Confidentiality		35
15	Other Provisions		37
Schedule 1 (Clauses 2.1 and 2.2) Part 1 Details of Shares to be sold			54
Part 2 Details of Spanish Business to be sold			58
Part 3 Details of Austrian Business to be sold			60
Part 4 Details of German Business to be sold			61

 i

Contents	Page
Schedule 2 The Companies and the Subsidiaries	63
Schedule 3 The Properties (Clause 1.1)	71
Schedule 4 Documents in the Agreed Terms (Clause 1.1)	77
Schedule 5 Completion Obligations (Clause 6.2)	78
Schedule 6 Share Sale Adjustments Net Current Asset Statement (Clause 9.1)	84
Schedule 7 European Business Sale Adjustments (Clause 9.1)	96
Schedule 8 Warranties given by the Sellers (Clause 10)	105
Schedule 9 Warranties given by the Purchasers and the Purchasers’ Guarantor (Clause 10.4)	123
Schedule 10 Sellers’ Knowledge (Clause 10.1.5)	124
Schedule 11 Split Contracts (Clause 15.3.3)	129
Schedule 12 Inter-Group Debt (Clause 6.4)	130
Schedule 13 Retirement Benefit Arrangements	131
Schedule 14 Permitted Pre-Completion Actions (Clause 5.1)	132
Schedule 15 Transferring Employees (Clause 10.4.3)	134
Schedule 16 Seller Retained Costs (Part 1 of Schedule 6)	135
Schedule 17 Litigation	142

ii

Share Purchase Agreement

This Agreement is made on 10^th March 2006

between:

(1)	BHR Luxembourg S.à r.l. a company incorporated in Luxembourg whose registered office is at L-1219 Luxembourg, 13, Rue Beaumont, 2nd Floor (the “Principal Seller”);
(2)	Each of the other Share Sellers and the Business Sellers whose names are set out in Schedule 1 (together with the Principal Seller, the “Sellers”);
(3)	Cooperatie Westbridge Europe I U.A. a company incorporated in The Netherlands whose registered office is at Naritaweg 165, 1043 BW Amsterdam (the “Principal Purchaser”);
(4)	Each of the other Share Purchasers and the Business Purchasers whose names are set out in Schedule 1 (together with the Principal Purchaser, the “Purchasers”); and
(5)	Westbridge Hospitality Fund, L.P. a company incorporated in Bermuda whose registered office is at Washington Mall West, 7 Reid Street, Hamilton HM11 acting through its general partner Westbridge Hospitality Management Limited whose registered address is at Washington Mall West, 7 Reid Street, Hamilton HM 11, Bermuda (the “Purchasers’ Guarantor”).

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;
(B)	The Purchasers have agreed to purchase the Assets and to assume the obligations imposed on the Purchasers under this Agreement; and
(C)	The Purchasers’ Guarantor has agreed to guarantee the obligations of the Purchasers 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 2004;
	“Aggregated Financial Summary” means the pro-forma aggregated financial summary of the profit and loss accounts derived from the management accounts of the Hotels for the 4 years commencing 1 January 2001 and ended 31 December 2004;
	“Agreed Terms” means, in relation to a document, such document in the terms agreed between the Sellers and the Purchasers and signed for identification by the Sellers’ Lawyers and the Purchasers’ Lawyers with such alterations as may be agreed in writing between the Principal Seller or the Sellers’ Lawyers on the one hand and the Principal

1

Purchaser or the Purchasers’ Lawyers on the other, from time to time and, for ease of reference, a list of documents in the agreed terms is set out at Schedule 4;

“Assets” means the Shares, the European Business, rights and other assets agreed to be sold pursuant to Clause 2;

“Assumed Liabilities” means the debts, liabilities, duties, costs, expenses or other obligations of every description, whether deriving from contract, common law, statute or otherwise, whether present or future, actual or contingent, ascertained or unascertained or disputed and whether owed or incurred severally or jointly and as principal or surety in respect of the European Business which are included in the European Business Net Asset Statement or are expressly assumed by the Purchasers under this Agreement or the Local Transfer Documents or any other document entered into pursuant to this Agreement;

“Audited Accounts” means, in relation to any Group Company, the audited accounts of that Group Company for the period ended on the Accounts Date;

“Austrian Business” means the business specified in Part A of Part 3 of Schedule 1 and agreed to be sold by the relevant Business Seller pursuant to Clause 2;

“Austrian Excluded Assets” means the property, rights and assets referred to in Part B of Part 3 of Schedule 1;

“Business Day” means a day which is not a Saturday, Sunday or a public holiday in England;

“Business Employees” means those employees of the Business Sellers who are, immediately prior to Completion, employed in the European Business (other than any specifically excluded by agreement with the Purchasers) and “Business Employee” means any one of them;

“Business Purchaser” means, in relation to each of the businesses referred to in Parts 2, 3 and 4 of Schedule 1, the company whose name is set out opposite the relevant business in Column 4 of such Schedule;

“Business Seller” means, in relation to each of the businesses referred to in Parts 2, 3 and 4 of Schedule 1, the company whose name is set out opposite the relevant business in Column 1 of such Schedule;

“Companies” means the companies details of which are set out in Part 1 of Schedule 2 and “Company” means any one of them;

“Completion” means the completion of the sale of the Assets pursuant to Clauses 6.1, 6.2 and 6.3 of this Agreement;

“Completion Amount” means: (i) the Initial Share Consideration plus the Estimated Net Current Assets; plus (ii) the Initial European Business Consideration plus the Estimated European Business Net Assets;

“Completion Date” means the date on which Completion takes place;

“Confidentiality Agreement” means the confidentiality agreement dated 8 September 2005 between Westmont International Development, Inc. and Intercontinental Hotels Group PLC pursuant to which the Sellers made available to the Purchasers certain confidential information relating to the Group Companies, the European Business and the Properties;

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“Consultancy Agreement” means an agreement other than a contract of employment between a Consultant and with a Group Company, pursuant to which such Consultant 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 €75,000;

“Data Room” means the on-line data room at http://www.datasite.com containing documents and information relating to the Group Companies, the European Business and the Properties made available by the Sellers, the contents of which are listed in the Schedule to the Disclosure Letter;

“Debt Assignment Agreement” means the assignment agreement in the Agreed Terms to be entered into and completed on Completion in order to assign the German Debt;

“Disclosure Letter” means the letter dated on the same date as this Agreement from the Principal Seller to the Purchasers disclosing:

(i)	information constituting exceptions to the Sellers’ Warranties; and
(ii)	details of other matters referred to in this Agreement;

“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 or the European Business;

“EONIA” means the Euro Overnight Index Average calculated by the European Central Bank;

“Environment” and “Environmental Law” have the meanings given to them in paragraph 10.1 of Schedule 8;

“Environmental Matter” means:

(a)	any contamination or pollution at, in, on or under or which emanates or migrates from the site occupied by the Holiday Inn Vienna South hotel, the Holiday Inn Hamburg Kielerstrasse hotel, the Express by Holiday Inn Valencia — San Louis hotel and the Express by Holiday Inn Alicante hotel; or
(b)	any breach of or obligation or liability under Environmental Law or any Environmental Permit relating to the Holiday Inn Vienna South hotel, the Holiday Inn Hamburg Kielerstrasse hotel, the Express by Holiday Inn Valencia -San Louis hotel and the Express by Holiday Inn Alicante hotel or the sites such hotels occupy;

“Estimated European Business Net Assets” means the sum of €1,069,000 (€(150,000) in respect of the Austrian Business, €608,000 in respect of the German Business and €611,000 in respect of the Spanish Business) being a realistic estimate of the European Business Net Assets as at 2400 hours (GET) at the end of the Completion Date;

“Estimated Net Current Assets” means the sum of €9,094,000 being a realistic estimate (derived from a company by company estimate) of Stock, Debtors, Inter-Group Receivables and Cash minus Trade Creditors, Inter-Group Payables, Corporate Income Tax and Seller Retained Costs (each as defined in Schedule 6) of the Group Companies as at 2400 hours (GET) at the end of the Completion Date;

3

“European Business” means the Austrian Business, the German Business and the Spanish Business;

“European Business Contracts” means all contracts, undertakings, arrangements and agreements which are to be transferred to the Business Purchasers in accordance with Clause 2.2.2 (excluding, for the avoidance of doubt, Sellers’ Group Contracts);

“European Business Net Assets Adjustment” means the amount by which the European Business Net Assets exceed the Estimated European Business Net Assets and payable pursuant to Clause 9.2.2(i) (such amount being expressed as a positive figure) or the amount by which the European Business Net Assets are less than the Estimated European Business Net Assets and payable pursuant to Clause 9.2.2(ii) (such amount being expressed as a negative figure);

“European Business Net Assets” means the cash sum representing the value of European Business Accrued Income, European Business Prepayments, European Business Guest Accounts, European Business Employees Accruals, European Business Stock and European Business Cash minus European Business Deferred Income, European Business Accruals and European Business Guest Deposits (each as defined in Schedule 7) as at 2400 hours (CET) at the end of the Completion Date as determined in accordance with Clause 9 and Schedule 7;

“European Business Net Asset Statement” means the statement to be prepared by the Principal Seller in respect of the European Business in accordance with Clause 9 and Schedule 7;

“Event” means any act, omission, event or transaction;

“Excluded Rights” means all subsisting rights of any Group Company as at Completion arising under the Split Contracts to the Relevant Extent;

“GAAP” means, in respect of each Company, generally accepted accounting standards, legal principles, guidelines, conventions, rules and procedures of accounting practice in the jurisdiction of incorporation of the relevant company;

“German Business” means the business specified in Part A of Part 4 of Schedule 1 and agreed to be sold by the relevant Business Seller pursuant to Clause 2;

“German Debt” means the loan of €35,000,000 from Holiday Inns (Germany) LLC to Holiday Inn Hotelgesellschaft mbH pursuant to a loan agreement to be entered into before Completion as permitted by Schedule 14;

“German Excluded Assets” means the property, rights and assets referred to in Part B of Part 4 of Schedule 1;

“Group” means the Group Companies and the European Business, taken as a whole;

“Group Companies” means the Companies and the Subsidiaries and “Group Company” means any one of them;

“Hazardous Substances” has the meaning given to it in paragraph 10.1 of Schedule 8;

“HI Vienna South Lease” means the lease between Holiday Inns BV (as lessee) and Immofinanz Immobilien Anlagen AG (as lessor) which was assigned to BHR Overseas (Finance) BV;

4

“Hotel Franchise Agreements” means the licence agreements between (1) each Group Company and each Business Purchaser and (2) Six Continents Hotels Inc. in the Agreed Terms;

“Hotels” means the hotel businesses as operated at the Properties as at the date hereof and “Hotel” means any one of them;

“Initial Share Consideration” means €226,998,216;

“Initial European Business Consideration” means €12,799,000 (€(1,800,000) in respect of the Austrian Business, €2,729,000 in respect of the German Business and €11,870,000 in respect of the Spanish Business);

“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 indebtedness arising in the ordinary course of business of such Group Companies and the German Debt), being the amounts specified in Schedule 12;

“Inter-Group Debt Balance” means the aggregate amount of the Inter-Group Debt specified in Part 1 of Schedule 12 less the aggregate amount of the Inter-Group Debt specified in Part 2 of Schedule 12 which equals €46,775,000;

“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 Property which is leasehold, the lease(s) or underlease(s) or licence(s) under which the relevant Group Company holds such 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 Property is subject;

“Local Transfer Documents” means, in respect of the European Business, the documents in the Agreed Terms, necessary to effect the transfer of the European Business;

“Losses” means all losses, damages, liabilities, costs (including, without limitation, legal costs and experts’ and consultants’ fees), charges, expenses, actions, proceedings, claims and demands;

5

“Material Issues Reports on Title” means the reports on title in relation to the Properties prepared by the Sellers’ Property Lawyers each dated 9 March 2006 and addressed to the Principal Purchaser;

“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 €75,000 per annum or more;

“Management Accounts” means the unaudited balance sheet and profit and loss account of each of the Hotels respectively for the 12 months ended 31 December 2005 and the 1 month ended 31 January 2006;

“Net Current Asset Adjustment” means the amount by which the Net Current Assets exceed the Estimated Net Current Assets and payable pursuant to Clause 9.2.1(i) (such amount being expressed as a positive figure) or the amount by which the Net Current Assets are less than the Estimated Net Current Assets and payable pursuant to Clause 9.2.1(ii) (such amount being expressed as a negative figure);

“Net Current Assets” means the cash sum representing the value of Stock, Debtors, Inter-Group Receivables and Cash minus Trade Creditors, Inter-Group Payables, Corporate Income Tax, Seller Retained Costs of the Group Companies and the Agreed Reduction as at 2400 hours (CET) at the end of the Completion Date minus the Agreed Reduction of €280,000 as determined in accordance with Clause 9 and Schedule 6;

“Net Current Asset Statement” means the statements to be prepared by the Principal Seller in accordance with Clause 9.1 and Schedule 6;

“Portfolio Franchise Agreement” means the franchise agreement between Six Continents Hotels Inc. and the Principal Purchaser in the Agreed Terms;

“Pre-Sale Reorganisation” means the pre-sale reorganisation of the Sellers’ Group and parts of the 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 and Disclosure Letter pursuant to which the Pre-Sale Reorganisation was implemented;

“Profit and Loss Transfer Agreements” means the profit and loss agreement between Holiday Inns (Germany) LLC (German branch) and Holiday Inn Hotelgesellschaft mbH and the profit and loss agreement between Holiday Inns (Germany) LLC (German branch) and Holiday Inns von Deutschland GmbH;

“Profit and Loss Transfer Agreements Adjustment” means the adjustment to the consideration for the Shares provided for in Clause 9.2.3 and Part 5 of Schedule 6;

“Properties” means the properties set out in Schedule 3 and “Property” means any one of them;

“Purchasers” means the Principal Purchaser, the Share Purchasers, the Business Purchasers and any Substitute Purchasers;

“Purchasers’ Group” means the Purchasers and their subsidiaries from time to time;

“Purchasers’ Lawyers” means Paul Hastings, Janofsky & Walker (Europe) LLP of 30 avenue de Messine, 75008 Paris, France;

6

“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 and the Business Employees;

“Relevant Extent” means: (i) in respect of any right or obligation of any member of the Sellers’ Group pursuant to Clause 15.3 in respect of a Split Contract, solely to the extent the rights and obligations under such contract relate to any property or other asset owned by any member of the Sellers’ Group which is not being transferred to the Purchasers pursuant to this Agreement; and (ii) in respect of any right or obligation of any member of the Purchasers’ Group pursuant to Clause 15.3 in respect of a Split 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 Purchasers pursuant to this Agreement;

“Relief means any loss, relief, allowance, credit, deduction, exemption or set-off in each case in respect of Tax or any right to the repayment of Tax;

“Retirement Benefit Arrangements” means those retirement benefit arrangements listed in Schedule 13;

“Sellers’ Group” means Intercontinental Hotels Group plc and its 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 (or which are not transferred as part of the sale of the European Business) 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;

“Sellers’ Lawyers” means Linklaters of One Silk Street, London EC2Y 8HQ United Kingdom;

“Sellers’ Property Lawyers” means Linklaters, Gassauer-Fleissner Rechtsanwalte GmbH, Chiomenti Studio Legale and Nauta Dutilh NV;

“Sellers’ Warranties” means the warranties given by the Principal Seller pursuant to Clause 10 and Schedule 8 and “Sellers’ Warranty” means any one of them;

“Senior Employee” means each General Manager of a Hotel and any other employee employed or engaged by a Group Company or who will transfer with the European Business on an annual base salary (on the basis of full-time employment) in excess of €100,000;

“Shares” means all the shares or interests in the capital of the Companies specified in Part 1 of Schedule 1 to the extent such shares held in Holiday Inns von Deutschland GmbH are not repurchased by such companies prior to Completion as permitted pursuant to this Agreement;

“Share Purchasers” means each of the companies listed in Schedule 1 as a purchaser of shares in the capital of one or more of the Companies;

“Share Sellers” means each of the companies listed in Schedule 1 as a seller of shares in the capital of one or more of the Companies;

“Spanish Business” means the business specified in Part 2 of Schedule 1 and agreed to be sold by the relevant Business Seller pursuant to Clause 2;

7

	“Spanish Excluded Assets” means the property, rights and assets referred to in Part B of Part 2 of Schedule 1;
	“Split Contracts” means the agreements to which a Group Company is a party (or which are transferred as part of the sale of the European Business) 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 11;
	“Subsidiaries” means the subsidiaries listed in paragraph 2 of Schedule 2 and “Subsidiary” means any one of them;
	“Taxation” or “Tax” means any form of taxation and duty, impost or tariff in each case in the nature of taxation, whether chargeable directly or primarily against or attributable directly or primarily to the Group Companies or any other person, and including all interest and penalties thereon (save to the extent such penalties or interest are attributable to unreasonable delay by the Purchasers or by any member of the Purchasers’ Group after Completion or to the failure of the Purchasers to comply with their obligations under either this Agreement or the Tax Deed of Covenant), but excluding the uniform business rates, water rates, property rates, council taxes and all other similar rates and charges and other local (including for the avoidance of doubt regional) authority rates or charges and also excluding Deferred Tax (as defined in Schedule 6);
	“Tax Authority” or “Taxation Authority” means any taxing or other authority competent to impose any liability in respect of Taxation or responsible for the administration and/or collection of Taxation;
	“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 8 to this Agreement and “Tax Warranty” means any one of them;
	“Third Party Consents” means all consents, licences, approvals, permits, authorisations or waivers required from third parties for the assignment or transfer to the relevant Purchaser of any of the Split Contracts or European Business Contracts and “Third Party Consent” means any one of them;
	“Transfer Regulations” means the local laws implementing the Acquired Rights Directive in the respective jurisdictions which means sections 3 - 6 AVRAG in Austria, section 613a BGB in Germany and Article 44 of the Spanish Workers’ Statute in Spain;
	“USALI” means the Uniform System of Accounts for the Lodging Industry (9th revised edition) published by the American Hotel and Lodging Association; and
	“VAT” means value added tax which may be levied in accordance with, but subject to permitted derogations from, EU Directive 77/388/EEC.
1.2	Modification etc. of Statutes
	References to a statute or statutory provision include:

8

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 past statute or statutory provision (as from time to time modified, re-enacted or consolidated) which that statute or provision has directly or indirectly replaced; and
1.2.3	any subordinate legislation made from time to time under that statute or statutory provision,

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 or any partnership.

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.

9

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,
1.10	Legal Terms
	References to any English law legal term shall in respect of any jurisdiction other than England, be construed as references to the term or concept which most nearly corresponds to it in that jurisdiction.
1.11	Good Discharge

1.11.1

Any consideration or other payment hereunder received by the Principal Seller in respect of or relating to the Assets shall be received by the Principal Seller on behalf of the Share Seller or Business Seller to which it relates and shall be a good discharge of the Purchasers’ obligation to pay the consideration or other payment due in respect of the Shares and the European Business and the Purchasers shall have no obligation to enquire into the application thereof.

1.11.2

Any consideration or other payment hereunder received by the Principal Purchaser in respect of or relating to the Assets shall be received by the Principal Purchaser on behalf of the Share Purchaser or Business Purchaser to which it relates and shall be a good discharge of the Sellers’ obligation to pay the consideration or other payment due in respect of the Shares and the European Business and the Sellers shall have no obligation to enquire into the application thereof.

2	Agreement to Sell
2.1	Sale of Shares

2.1.1	On and subject to the terms of this Agreement the Share Sellers (each as to the Shares set out against its name in Schedule 1) agree to sell, and the Share Purchasers agree to purchase (each as to the Shares set out against its name in Schedule 1), the Shares provided that, for the avoidance of doubt, this shall not include any shares in Holiday Inns von Deutschland GmbH repurchased in accordance with Schedule 14 of this Agreement.
2.1.2	Subject to Clause 2.3, the Shares shall be sold by the Share Sellers 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).
2.1.3	For the avoidance of doubt, the Sellers’ Group Contracts shall not be transferred to the Purchasers.

2.2 Sale of European Business

2.2.1 On and subject to the terms of this Agreement and the Local Transfer Documents, the Business Sellers agree to sell and the Business Purchasers agree to purchase each of the Austrian Business, the German Business and the Spanish Business as a going concern.

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2.2.2	There shall be included in the sale of the European Business under this Agreement or, where relevant, the Local Transfer Documents, those businesses set out in: (i) Part A of Part 2 of Schedule 1 (Spanish Business); (ii) Part A of Part 3 of Schedule 1 (Austrian Business); and (iii) Part A of Part 4 of Schedule 1 (German Business) each of which shall be sold free from Encumbrances.
2.2.3	There shall be excluded from the sale of the European Business under this Agreement or, where relevant, the Local Transfer Documents, the Spanish Excluded Assets, the Austrian Excluded Assets and the German Excluded Assets.
2.2.4	The Business Purchasers shall assume, duly and punctually pay, satisfy, discharge and perform or fulfil all the Assumed Liabilities except to the extent provided in this Agreement or the Local Transfer Documents. The Assumed Liabilities are assumed by the Business Purchasers subject to and so that the Business Purchasers shall have and be entitled to the benefit of the same rights, powers, remedies, claims, defences, obligations, conditions and incidents (including without limitation, rights of set-off and counterclaim) as the Business Sellers enjoyed.
2.2.5	The Business Sellers acknowledge and agree that the Business Purchasers shall not assume or have any liability in respect of the European Business which is not: (i) specifically assumed by the Business Purchasers under this Agreement or the Local Transfer Documents; or (ii) required or deemed to be assumed by the Business Purchasers by any applicable law.

2.3	Excluded Rights
	There shall be excluded from the sale of the Assets under this Agreement the Excluded Rights, which shall be retained by the Share Sellers.
3	Consideration
3.1	Amount

3.1.1 The consideration for the purchase of the Shares under this Agreement shall be an amount in cash equal to the sum of:

(i)	the Initial Share Consideration;
(ii)	the Estimated Net Current Assets;
(iii)	the Net Current Asset Adjustment; and
(iv)	any adjustment pursuant to Clause 9.2.3 in connection with the Profit and Loss Transfer Agreements.

3.1.2 The consideration for the purchase of the European Business under this Agreement shall be an amount in cash equal to the sum of:

(i)	the Initial European Business Consideration; and
(ii)	the Estimated European Business Net Assets; and
(iii)	the European Business Net Assets Adjustment,

for the avoidance of doubt, plus any applicable VAT.

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3.1.3	The consideration for the purchase of the Shares and European Business shall be allocated amongst the Sellers as set out in Schedule 1 (subject to the Net Current Asset Adjustment attributable to the particular Shares and the European Business Net Assets Adjustment attributable to the European Business and any adjustment pursuant to Clause 9.2.3) and paid by (or procured to be paid by) the Principal Purchaser to the Principal Seller in accordance with Clauses 6.3 and 9.2.
3.1.4	The relevant Business Sellers and the relevant Business Purchasers agree to take all necessary actions (including, without limitation, waiver of any applicable VAT exemptions) to ensure that the transfer of the Properties located in Spain will be subject to (and not exempt from) VAT in accordance with the Law 37/1992, of 28 December 1992, on VAT (“Ley 37/1992, de 28 de diciembre, del Impuesto sobre el Valor Añadido”),
3.1.5	The consideration for the German Debt shall be the consideration due under the Debt Assignment Agreement.
3.1.6	If following Completion any Group Company or any Purchaser receives the €500,000 receivable from a building contractor as compensation for the business interruption and loss of 18 parking spaces at the Hotel at HI Amsterdam pursuant to the letter dated 22 December 2003 referred to in the Disclosure Letter, the Principal Purchaser shall pay a further €500,000 to the Principal Seller within 5 Business Days of such receipt by way of adjustment to the consideration in accordance with Clause 3.2 below.

3.2 Adjustment of Consideration

3.2.1

If any payment is made by or to the Sellers to or from the Purchasers or from the Purchasers’ Guarantor in respect of any claim for any breach of or in respect of any claim under this Agreement or the Local Transfer Documents (or any agreement entered into pursuant to this Agreement), the payment shall be made by way of adjustment of the consideration paid by the relevant Purchasers for the particular Shares or particular European Business to which the payment and/or claim relates under this Agreement and the consideration shall be deemed to have been reduced or increased by the amount of such payment.

3.2.2

If:

(i)

the payment and/or claim relates to more than one part of the Shares and/or more than one part of the European Business, 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 or the European Business concerned by reference to the proportions in which the consideration is allocated in accordance with Clause 3.1.3; or

(ii)

the payment and/or claim relates to no particular part of the Shares or no particular European Business, it shall be allocated rateably to all the shares in the Group Companies and the Spanish Business, the Austrian Business and the German Business by reference to the proportions in which the consideration is allocated in accordance with Clause 3.1.3,

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	and in each case the consideration shall be deemed to have been reduced or increased by the amount of such payment.
3.2.3	Any VAT initially charged by the relevant Business Sellers to the relevant Business Purchasers shall be adjusted to reflect any adjustments to the consideration for such Assets pursuant to this Agreement and shall be adequately documented for VAT purposes.
3.2.4	For the purposes of this Clause 3.2, “this Agreement” includes the Tax Deed of Covenant and the Local Transfer Documents.

4	Conditions
4.1	Conditions Precedent
	The agreement to sell and purchase the Shares and the European Business contained in Clause 2 is conditional upon satisfaction of the following condition, or its satisfaction subject only to Completion:

4.1.1 Anti-trust:

(a)	the German Federal Cartel Office (the “Bundeskartellamt”) notifying the parties within one month of receipt of the complete notification that the conditions for a prohibition under Section 36 paragraph 1 of the German Act Against Restrictions of Competition (“GWB”) are not satisfied; or
(b)	the Bundeskartellamt not informing the parties within one month from the receipt of the complete notification that it has opened an in-depth investigation.

4.2 Responsibility for Satisfaction

4.2.1	The Purchasers and the Sellers 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 Purchasers shall make the anti-trust filing required pursuant to Clause 4.1 as soon as reasonably practicable but in any event shall submit a filing to the Bundeskartellamt no later than the fifth Business Day following the date of this Agreement.
4.2.3	The Sellers shall co-operate with the Purchasers in respect of such filing and shall make available, subject to confidentiality, all information that the Purchasers deem reasonably necessary for that purpose or all information which is requested by the Bundeskartellamt.
4.2.4	The Purchasers shall consult with the Principal Seller and the Sellers’ Lawyers in respect of such filing and shall agree its content with the Principal Seller and the Sellers’ Lawyers prior to its submission to the Bundeskartellamt.

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4.3 Non-Satisfaction/Waiver

4.3.1	The condition set out at Clause 4.1 may be waived by agreement of the Principal Purchaser and the Principal Seller.
4.3.2	The Purchaser shall give notice to the Principal Seller of the satisfaction of the condition set out in Clause 4.1 within two Business Days of becoming aware of the same.
4.3.3	If the condition set out in Clause 4.1 is not satisfied or waived on or before 30 June 2006, save as expressly provided, this Agreement (other than Clauses 1, 13, 14 and 15.5 to 15.22) shall lapse and neither the Sellers nor the Purchasers shall have any claim against the other(s) under it, save for any claim arising from breach of any obligation contained in Clause 4.2.

4.4 Austrian Business Sale

4.4.1	The Sellers shall use all reasonable endeavours to procure that before Completion they shall obtain the consent of the landlord of the HI Vienna South Lease to the proposed transfer of the lease to the relevant Business Purchaser in accordance with this Agreement (to the extent reasonably practicable, such consent to be obtained outside of Austria, or in any other stamp duty neutral form) and, unless otherwise agreed with the Principal Purchaser, at no increased cost to the Purchasers or the Group Companies (save for the bank guarantee referred to below) and the Purchasers shall co-operate with the Sellers in seeking such consent and shall provide all reasonable financial information requested by the landlord and enter into any appropriate documents required to effect such consent. For the avoidance of doubt, the Purchasers acknowledge that the Purchasers will be required to provide a bank guarantee to replace the Fortis Bank S.A./N.V. UK Branch bank guarantee previously provided to the landlord by Holiday Inns BV.
4.4.2	If such consent is not received (on terms satisfactory to the Sellers in their absolute discretion) 2 Business Days prior to Completion, the Austrian Business shall not be sold pursuant to this Agreement and all terms of this Agreement relating to the Austrian Business (including the Local Transfer Document for the Austrian Business transfer) shall cease to apply (other than Clauses 1, 13, 14 and 15.5 to 15.22) and neither the Sellers nor the Purchasers shall have any claim against the others hereunder.
4.4.3	For the avoidance of doubt, if the Austrian Business is not sold pursuant to this Agreement, the references to the Initial Business Consideration, the Estimated Business Net Assets and the European Business Net Assets Adjustment shall exclude any amounts attributable to the Austrian Business and all references to the European Business shall exclude the Austrian Business.

4.5 Material Adverse Change

4.5.1	Save as specified in Clauses 4.3, 4.4 and 6.5 and this Clause 4.5, the parties shall have no right to terminate this Agreement in whole or in part.
4.5.2	If prior to Completion:

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(i)	any of the Hotels are destroyed (excluding, to the extent that consent has not been obtained pursuant to Clause 4.4 above, the hotel HI Vienna South);
(ii)	any of the Hotels are damaged such that any Hotel cannot be operated at any capacity within one week of such damage; or
(iii)	any fact, matter or event which is outside the control of the Sellers occurs which results in or is likely to result in, an adverse effect in the business, financial condition, operating results or assets of the Group of at least €35 million (after taking into account insurance proceeds),

the Purchasers shall be entitled, by notice in writing from the Principal Purchaser to the Principal Seller, to terminate this Agreement (other than Clauses 1, 13, 14 and 15.5 to 15.22) and no party shall have any claim against the others under it and the occurrence of such events shall not give rise to any right to damages or compensation.

5	Pre-Completion
5.1	The Sellers’ Obligations in Relation to the Conduct of Business
	Except:

(i)	as may be required to give effect to and comply with this Agreement or any law or regulation; or
(ii)	for any permitted action set out in Schedule 14; or
(iii)	in so far as the Principal Purchaser has given its written consent (such consent not to be unreasonably withheld or delayed),

each of the Sellers undertakes to procure that between the date of this Agreement and Completion, each of the Business Sellers (in respect of the European Business) and 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 and the European Business respectively; and
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 €100,000 per Hotel and €500,000 in aggregate, in each case exclusive of VAT, except to the extent that such expenditure would be consistent with the relevant Group Company, European Business or Hotel’s capital budget as contained in the 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 6 months’ notice or less or which

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	involves or may involve total annual expenditure in excess of €50,000 for any Hotel and €200,000 for all Hotels in each case, exclusive of VAT;
(iii)	acquire or dispose of, or agree to acquire or dispose of, any material asset, 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 €50,000 for any Hotel and €200,000 for all Hotels in each case, exclusive of VAT, other than in the ordinary course of business;
(iv)	acquire or agree to acquire any share, shares or other interest in or dissolve or reorganise any company, partnership or other venture;
(v)	other than in the ordinary course of business on normal market terms, incur any additional borrowings or incur any other indebtedness which are not Inter-Group Receivables or Inter-Group Payables;
(vi)	repay or otherwise reduce any existing borrowings or other indebtedness which are not Inter-Group Receivables or Inter-Group Payables;
(vii)	create, allot or issue, or grant any option to subscribe for, any share capital;
(viii)	amend, to any material extent, any of the terms (and in particular the price, condition of payment and duration of contract) on which goods, facilities or services are supplied, such supplies being material in the context of the Group (including the European Business), except where required to do so in order to comply with any applicable legal or regulatory requirement;
(ix)	in relation to any Property:

(a)	carry out any structural alteration or addition to, or effect any change of use of, such Property other than as fairly disclosed in the Data Room;
(b)	terminate or serve any notice to terminate, surrender or accept any surrender of or waive the terms of any lease, tenancy or licence which is material in the context of the Property;
(c)	agree any new rent or fee payable under any lease, tenancy or licence which is material in the context of the Property, provided that no such consent shall be required in respect of any increase in rent payable in respect of any Property pursuant to a rent review in accordance with the terms of the existing lease;
(d)	enter into or vary any agreement, lease, tenancy, licence or other commitment which is material in the context of the Property;
(e)	sell, convey, transfer, assign or charge any Property or grant any rights or easements over any Property or enter into any covenants affecting any Property or agree to do any of the foregoing; or
(f)	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;

(x) save as required by law or as disclosed in the Data Room:

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(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 Principal Seller shall notify to the Principal 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;

(xi)	settle an insurance claim in excess of €250,000 materially below the amount claimed or commence or settle any litigation for an amount in excess of €100,000;
(xii)	enter into any guarantee, indemnity or other agreement to secure any obligation of a third party or create any Encumbrance over any of its assets or undertaking in any such case other than in the ordinary course of business and at arm’s length;
(xiii)	make any change to its accounting practices or policies (except to the extent required to comply with any changes in GAAP) or amend its constitutional documents; or
(xiv)	declare, make or pay any dividend or other distribution to shareholders.

5.2	Further Sellers’ Obligations in Relation to Financing
	Each of the Sellers undertakes that, between the date of this Agreement and Completion, it 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 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 Inter-Group Payables or Inter-Group Receivables);
5.2.3	procure that no member of the Sellers’ Group borrows any money from nor incurs any other financing liabilities or obligations to any Group Company (other than Inter-Group Payables or Inter-Group Receivables); and
5.2.4	procure that no Group Company repays or reduces any existing borrowings from or indebtedness to any member of the Sellers’ Group (other than Inter-Group Payables or Inter-Group Receivables),

unless the Purchaser has agreed to this in writing (such consent not to be unreasonably withheld or delayed) or such action is a permitted action set out in Schedule 14.

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5.3	Refurbishment of Munich City Centre
	The Principal Seller shall be responsible for co-ordinating and bearing the costs of: (i) completing the refurbishment of the Hotel at Munich City Centre in accordance with the list of works set out at document HI Mun Cty 4.1_4 of the Data Room; and (ii) obtaining a fire certificate and the technical inspection reports required under Section 69 Subsection 4 of the Bavarian Building Code (“Bayerische Bauordnung”) in respect of such works, in each case as soon as reasonably practicable.
	To the extent not done prior to Completion, this obligation shall continue following Completion and the Purchasers shall ensure that the Principal Seller is granted all necessary powers by the Group Companies to enable the Principal Seller to comply with its obligations under this Clause 5.3. For the avoidance of doubt, the Net Current Asset Statement will not include any amount in respect of this work.
	For the avoidance of doubt, the refurbishment referred to above does not include the re-commissioning of the health club and fitness centre (including the swimming pool) at the Hotel at Munich City Centre.
6	Completion
6.1	Date and Place

6.1.1

Subject to Clause 4, Completion shall take place at the offices of the Sellers’ Solicitors (and such other places as are necessary in order to satisfy the obligations set out in Schedule 5) on 28 April 2006 or on the fifth Business Day following fulfilment of the conditions set out in Clause 4.1, whichever is the later, or at such other location, time or date as may be agreed between the Principal Seller and the Principal Purchaser.

6.1.2

Completion shall become effective at 2400 hours (GET) on the Completion Date.

6.2	Completion Obligations
	On Completion, the Sellers and the Purchasers shall comply with their respective obligations specified in Schedule 5.
6.3	Payment on Completion
	On Completion, the Principal Purchaser shall pay the Completion Amount to the Principal Seller and the Contracts Consideration to the Principal Seller, together with any applicable VAT.
6.4	Repayment of Inter-Group Debt Balance and German Debt
	On Completion, the Purchasers shall procure repayment by the relevant Group Companies of the Inter-Group Debt Balance in full settlement of the Inter-Group Debt and shall pay for the assignment of the German Debt in accordance with the terms of the Debt Assignment Agreement.

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6.5

Breach of Completion Obligations

If any of the Sellers fails to comply with any material obligation in paragraphs 1.1 or 2 of Schedule 5, or any of the Purchasers fails to comply with the obligations in Clauses 6.3, 6.4 or paragraphs 1.2 or 2 of Schedule 5, then Completion shall not occur and the Principal Purchaser, in the case of non-compliance by the Sellers, or the Principal Seller, in the case of non-compliance by the Purchasers, 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 Principal Seller or the Principal Purchaser, as the case may be, served on the Completion Date:

6.5.1	to terminate this Agreement (other than Clauses 1, 13, 14 and 15.5 to 15.22) without liability on its part; or
6.5.2	to effect Completion so far as practicable having regard to the defaults which have occurred (provided that (unless otherwise agreed by the Principal Seller and the Principal Purchaser) Completion must take place in respect of all the Assets at the same time); 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 this Clause 6 and Schedule 5 shall apply to Completion as so deferred but provided such deferral may only occur once.

7	Employees, Pensions and Employee Incentives
	For the purposes of this Clause 7 the terms “contract of employment”, “collective agreement” and “trade union” shall have the same meanings respectively as in the Transfer Regulations.
7.1	Transfer of Employees
	The Business Sellers and the Business Purchasers accept that the Transfer Regulations apply to the sale of the European Business and the contract of employment and employment relationship of each of the Business Employees (including occupational pension scheme rights) shall transfer with effect from the Completion Date to the relevant Business Purchaser.
7.2	Compliance with Transfer Regulations
	The relevant Business Sellers and the relevant Business Purchasers shall do such things before, on and following Completion in relation to the Business Employees as they may be required to do under the Transfer Regulations, including the provision of the information letter in the Agreed Terms to the employees of Holiday Inn Hamburg Kieler Strasse as soon as reasonably practicable after the date of this Agreement.
7.3	Business Sellers’ Obligations prior to Transfer

7.3.1 The relevant Business Sellers shall be responsible for and discharge all obligations and all amounts due and accrued in respect of the Business Employees (including wages, salaries, emoluments, bonuses and commission, together with Taxation (including, for the avoidance of doubt, social security contributions) save to the extent that any such amounts are included in the European Business Employees Accruals in the European Business Net Asset Statement) prior to the Completion

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Date whether or not the obligations fall due for payment prior to the Completion Date.

7.3.2

The relevant Business Sellers shall indemnify the relevant Business Purchaser and keep the relevant Business Purchaser indemnified against all Losses which relate to or arise out of any act of omission by the relevant Business Sellers or any other event or occurrence and which the Purchasers incur pursuant to the Transfer Regulations, other than any Losses arising out of any act or omission of the Purchasers.

7.4	Purchaser Obligations
	The relevant Business Purchasers shall employ the Business Employees on no less favourable terms and conditions to those enjoyed immediately before Completion and if the Business Purchasers dismiss any of the Business Employees on grounds of redundancy or any other ground other than misconduct, the Business Purchasers shall comply with all relevant statutory procedures and shall make a payment to such Business Employee which is not less than the statutory entitlement of such Business Employee at the date of the dismissal.
7.5	Access to Information
	In accordance with their obligations under the Transfer Regulations, the Business Purchasers shall provide the Business Sellers in writing with such information and at such time as will enable the Business Sellers to carry out their duties under the Transfer Regulations (including individual or collective employee information obligations).
7.6	Purchasers’ Indemnity
	The Business Purchasers shall indemnify the Business Sellers and keep the Business Sellers indemnified against any Losses which relate to, arise out of or are connected with:

7.6.1	the employment of the Business Employees after the Completion Date;
7.6.2	a claim by any employee working in the European Business who gives notice of resignation on or before the Completion Date or objects to transfer as a result of a proposal by the Business Purchasers (or any member of the Purchasers’ Group) to change such employee’s terms and conditions of employment or work conditions or to offer any benefit after the Completion Date which is less favourable than that applicable to such employee before the Completion Date or to take any measures affecting the relevant Business Employees in connection with their transfer;
7.6.3	the change of employer occurring by virtue of the Transfer Regulations and/or this Agreement;
7.6.4	the employment by the Business Purchasers (or the Purchasers’ Group) after the Completion Date of any of the Business Employees other than on the same terms and conditions as those enjoyed on or immediately before the Completion Date;
7.6.5	the termination of employment of any Business Employee after the Completion Date;
7.6.6	any other act or omission by the Business Purchasers or any event, matter or any other occurrence having its origin after the Completion Date in relation to any contract of employment or collective agreement of one or more of the Business Employees pursuant to the Transfer Regulations; and

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7.6.7 any breach by the Business Purchasers of their obligations under Clause 7.5.

7.7 Pensions

7.7.1	General
	The Sellers and the Purchasers shall cooperate together and each use their respective best endeavours to ensure that, following Completion, they each comply with all notification and other legal requirements triggered on Completion in respect of the pension rights of Relevant Employees.

7.7.2 Germany

(i)

In relation to each of the German Group Companies, if, at Completion, the amount of the German Group Companies liabilities in respect of the Winterthur Defined Benefit Pension Plan is greater than the value of the insurance contracts held by the Sellers in respect of these liabilities (in both cases calculated using the accounting principles to be adopted in the Net Current Asset Statement as set out in Part 3 of Schedule 6 to this Agreement), the Sellers shall within six months of Completion pay to the Purchasers an amount equal to the difference.

(ii)

In relation to the German Business, the Business Seller shall as soon as practicable use its best endeavours to procure the transfer to the relevant Business Purchaser of any insurance contracts in respect of the pensions obligations attributable to the Business Employees whose employment is transferred to the relevant Business Purchaser. If, at Completion, the amount of the pensions obligations attributable to the Business Employees whose employment is transferred to the relevant Business Purchaser is greater than the value of the insurance contracts transferred by the Business Seller to the Business Purchaser in respect of these liabilities (in both cases calculated using the accounting principles to be adopted in the Net Current Asset Statement as set out in Part 3 of Schedule 6 to this Agreement), the Business Seller shall within six months of Completion pay to the Business Purchaser an amount equal to the difference.

7.7.3 The Netherlands

(i)

The Sellers and the Purchasers acknowledge that the Winterthur Collectief Contract N-179-0, Delta Lloyd Persoonlijk Pensioen Plan I525 and the Delta Lloyd Defined Benefit Pension Plan (together, the “Dutch Pension Plans”) shall be split between the Sellers and the Purchasers, so that the Purchasers shall assume all rights and obligations of the Netherlands Group Companies under the Dutch Pension Plans in respect of the employees whose employment is transferred to the Purchasers (the “Dutch Transferred Employees”). The Sellers and the Purchasers shall use their respective best endeavours to procure that the split of the Dutch Pension Plans shall be accomplished as soon as practicable and shall take effect on Completion.

(ii)

If the split cannot be effected within six months after Completion, the Sellers shall continue the Dutch Pension Plans in respect of the employees who remain employed within the Sellers’ Group and whose pensions and

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entitlements are derived from the Dutch Pension Plans and those former employees who immediately before Completion are no longer employed by the Sellers and whose pensions entitlements are derived from the Dutch Pension Plans (the “Dutch Retained Employees”), and the Purchasers shall terminate the Dutch Pension Plans in respect of the Dutch Transferred Employees. In this case, the Purchasers shall establish a new pension plan for the Dutch Transferred Employees which provides benefits which are no less favourable than those provided under the Dutch Pension Plans immediately before Completion, and the Sellers shall use their best endeavours to procure the transfer of the accrued rights of the Dutch Transferred Employees to the Purchasers, as soon as reasonably practicable. The Sellers shall provide to the Purchasers all information necessary to establish the entitlements of the Dutch Transferred Employees.

(iii)

Each party shall bear its own costs in respect of the split of the Dutch Pension Plans, including but not limited to any increases in the pension premiums which have to be paid to the relevant pension insurer. The Purchasers shall bear all costs regarding the pensions of the Dutch Transferred Employees in respect of the period after Completion.

7.7.4 Belgium

(i)

The Sellers and the Purchasers acknowledge that the Winterthur Defined Benefit Pension Plan (policy numbers 33520 (Holiday Inns NV) comprising individual policies BC 10570 (Holiday Inn Brussels Airport) and BC 14120 (Holiday Inns Crowne Plaza Antwerpen); and policy number 437910 (Airport Garden NV) comprising individual policy number BC 31760 (Crowne Plaza Brussels Airport)) (together, the “Belgian Pension Plans”) shall be split between the Sellers and the Purchasers, so that the Purchasers shall assume all rights and obligations of the Belgian Group Companies under the Belgian Pension Plans in respect of the employees whose employment is transferred to the Purchasers (the “Belgian Transferred Employees”). The Sellers and the Purchasers shall use their respective best endeavours to procure that the split of the Belgian Pension Plans shall be accomplished as soon as practicable and shall take effect on Completion.

(ii)

If the split cannot be effected within six months after Completion, the Sellers shall continue the Belgian Pension Plans in respect of the employees who remain employed within the Sellers’ Group and whose pensions and entitlements are derived from the Belgian Pension Plans and those former employees who immediately before Completion are no longer employed by the Sellers and whose pensions entitlements are derived from the Belgian Pension Plans (the “Belgian Retained Employees”), and the Purchasers shall terminate the Belgian Pension Plans in respect of the Belgian Transferred Employees. In this case, the Purchasers shall establish a new pension plan for the Belgian Transferred Employees which provides benefits which are no less favourable than those provided under the Belgian Pension Plans immediately before Completion, and the Sellers shall use their best endeavours to procure the transfer of the accrued rights

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of the Belgian Transferred Employees to the Purchasers, as soon as reasonably practicable. The Sellers shall provide to the Purchasers all information necessary to establish the entitlements of the Belgian Transferred Employees.

(iii) Each party shall bear its own costs in respect of the split of the Belgian Pension Plans, including but not limited to any increases in the pension premiums which have to be paid to the relevant pension insurer. The Purchasers shall bear all costs regarding the pensions of the Transferred Employees in respect of the period after Completion.

7.8 Non-solicitation

7.8.1

Save as permitted by Schedule 14, the Sellers undertake not to (and to procure that no member of the Sellers’ Group shall), for a period of 1 year from the date of Completion, induce or seek to induce any present Senior Employee to become employed by any member of the Sellers’ Group whether as employee, consultant or otherwise, whether or not such Senior Employee would thereby commit a breach of his contract of service. The placing of an advertisement of a post available to a member of the public generally and the recruitment of a person through an employment agency shall not constitute a breach of this Clause 7.8.1 provided that no member of the Sellers’ Group encourages or advises such agency to approach any Senior Employee.

7.8.2

The Purchasers undertake not to (and to procure that no member of the Purchasers’ Group shall), for a period of 1 year from the date of Completion, induce or seek to induce any present employee employed or engaged by the Sellers’ Group as a general manager of a hotel or on an annual base salary (on the basis of a full-time employment) in excess of €100,000 (a “Seller Senior Employee”) to become employed by any member of the Purchasers’ Group whether as employee, consultant or otherwise, whether or not such Seller Senior Employee would thereby commit a breach of his contract of service. The placing of an advertisement of a post available to a member of the public generally and the recruitment of a person through an employment agency shall not constitute a breach of this Clause 7.8.2 provided that no member of the Purchasers’ Group encourages or advises such agency to approach any Seller Senior Employee.

8	European Business Indemnities
8.1	Indemnities
	Subject to Completion:

8.1.1 the Business Purchasers shall indemnify and keep indemnified the Business Sellers against:

(i) the Assumed Liabilities and any liability incurred by the Business Sellers arising from the carrying on of the European Business by or on behalf of the Business Purchasers or any successors to the European Business after Completion, including, for the avoidance of doubt, any such liability which is

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or is deemed to be or becomes a liability of the Business Sellers by virtue of any applicable law; and

(ii) any Losses which the Business Sellers may suffer by reason of the Business Sellers taking any reasonable action to avoid, resist or defend against any liability referred to in Clause 8.1.1(i);

8.1.2 the Business Sellers shall indemnify and keep indemnified the Business Purchasers against:

(i)	any liability of the Business Sellers in respect of the European Business relating to any matter, event, act or omission occurring or any Taxes accrued prior to Completion which is not specifically assumed by the Business Purchasers under this Agreement or the Local Transfer Documents or required or deemed to be assumed by the Purchasers by any applicable law; and
(ii)	any Losses which the Business Purchasers may suffer by reason of the Business Purchasers taking any reasonable action to avoid or resist or defend against any liability referred to in (i) above.

The Purchasers shall procure that Holiday Inns BV does not make any claim against any member of the Sellers’ Group pursuant to the indemnity given by BHR Overseas (Finance) BV to Holiday Inns BV in the Pre-Sale Reorganisation Documents relating to the Austrian Business in respect of any liability referred to in Clause 8.1.1 above.

8.2 Environmental Matters

8.2.1

Subject to Clause 8.2.2 below, the Business Sellers agree to transfer (to the extent that they are able so to do) and the Business Purchasers agree to accept the transfer of, and to assume, duly and punctually pay, satisfy, discharge, perform or fulfil, all liabilities of the Business Sellers as at Completion to the extent that they relate to Environmental Matters. For the purpose of this Clause 8.2.1, “liabilities” means all liabilities, duties and obligations of every description, whether deriving from contract, public law agreement, any code of law, statute or otherwise, whether present or future, actual or contingent, ascertained or unascertained or disputed and whether owed or incurred severally or jointly or as principal or surety.

8.2.2

Clause 8.2.1 shall not apply to, and no Business Purchaser shall be obliged to accept the transfer of or assume, duly and punctually pay, satisfy, discharge, perform or fulfil, any liability of the Business Sellers for an Environmental Matter to the extent that such Environmental Matter was caused or knowingly permitted by the Business Sellers or any Group Company prior to Completion.

8.3 Conduct of Claims in respect of European Business Indemnities

8.3.1 If any of the Business Sellers becomes aware after Completion of any claim which constitutes or may constitute an Assumed Liability, the relevant Business Seller shall as soon as reasonably practicable (but in any event within such period as will afford the Purchasers reasonable opportunity of requiring the relevant Business Seller to lodge a timely appeal) give written notice thereof to the Purchasers and shall not admit, compromise, settle, discharge or otherwise deal with such claim without the prior agreement of the Principal Purchaser.

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8.3.2 The Business Sellers shall take such action as the Principal Purchaser may reasonably request to avoid, dispute, resist, appeal, compromise, defend or mitigate any claim which constitutes or may constitute an Assumed Liability subject to the relevant Business Seller being indemnified and secured to its reasonable satisfaction by the Purchasers against all Losses which may thereby be incurred. In connection with such claim, the relevant Business Seller shall make or procure to be made available to the Purchasers or its duly authorised agents on reasonable notice during normal business hours all relevant books of account, records and correspondence relating to the European Business which are in the possession of the relevant Business Seller (and shall permit the Purchasers to take copies thereof) for the purposes of enabling the Purchasers to ascertain or extract any information relevant to the claim.

9	Post-Completion Adjustments
9.1	Net Current Asset Statement and European Business Net Asset Statement
	The Principal Seller shall procure that as soon as practicable, but in any event within 90 days following Completion, it shall:

9.1.1	draw up the Net Current Asset Statement (the “Net Current Asset Statement”) in accordance with Schedule 6 setting out the Net Current Assets; and
9.1.2	the European Business Net Asset Statement (the “European Business Net Asset Statement”) in accordance with Schedule 7 setting out the European Business Net Assets.

The Net Current Asset Statement and the European Business Net Asset Statement shall be delivered to the Principal Purchaser at the same time, but thereafter the provisions of Schedules 6 and 7 shall apply separately to each such statement.

9.2 Adjustment to Consideration

9.2.1 Net Current Assets — Shares

(i)	If the Net Current Assets exceed the Estimated Net Current Assets, the Principal Purchaser shall pay to the Principal Seller an additional amount equal to the excess of the Net Current Assets over the Estimated Net Current Assets as an increase in the consideration for the Shares.
(ii)	If the Net Current Assets are less than the Estimated Net Current Assets, the Principal Seller shall repay to the Principal Purchaser an amount equal to such deficit as a reduction in the consideration for the Shares.
(iii)	Any payments pursuant to this Clause 9.2.1 shall be made on or before five 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.

9.2.2 European Business Net Assets

(i) If the European Business Net Assets exceed the Estimated European Business Net Assets, the Principal Purchaser shall pay to the Principal

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	Seller an additional amount equal to the excess of the European Business Net Assets over the Estimated European Business Net Assets as an increase in the consideration for the European Business.
(ii)	If the European Business Net Assets are less than the Estimated European Business Net Assets, the Principal Seller shall repay to the Principal Purchaser an amount equal to such deficit as a reduction in the consideration for the European Business.
(iii)	Any payments pursuant to this Clause 9.2.2 shall be made on or before five Business Days after the date on which the process described in Part 2 of Schedule 7 for the preparation of the European Business Net Asset Statement is complete.

9.2.3	Profit and Loss Transfer Agreements Adjustment
	The consideration payable for the Shares shall be further adjusted, as necessary, in accordance with the provisions of Part 5 of Schedule 6 and any payments pursuant to this Clause 9.2.3 and Part 5 of Schedule 6 shall be made on or before 5 Business Days after the date on which the process described in Part 5 of Schedule 6 for the determination and agreement of any Profit and Loss Transfer Agreements Adjustment is complete.
9.2.4	Payment and Allocation
	Where any payment is required to be made pursuant to this Clause 9.2:

(i)	the Completion Amount shall be deemed to have been reduced or increased accordingly; and
(ii)	the allocation of the consideration for the Shares and the European Business sold by each Seller shall be adjusted to reflect the actual value at Completion of the Net Current Assets or European Business Net Assets (as applicable) and any adjustment pursuant to Clause 9.2.3.

10	Warranties and Indemnities
10.1	Sellers’ Warranties

10.1.1	Subject to Clause 10.2, the Principal Seller warrants to the Purchasers that the statements set out in Schedule 8 are true and accurate as of the date of this Agreement.
10.1.2	The only Sellers’ Warranties given:

(i)	in respect of the Properties are those contained in paragraphs 4 and 9.1 of Schedule 8 and each of the other Sellers’ Warranties shall be deemed not to be given in respect of the Properties;
(ii)	in respect of Environment, Environmental Law and Environmental Permit are those contained in paragraph 10 of Schedule 8 and each of the other Sellers’ Warranties shall be deemed not to be given in respect of the Environment, Environmental Law and Environmental Permit; and

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(iii) in respect of Tax are those contained in paragraph 13 of Schedule 8 and each of the other Sellers’ Warranties shall be deemed not to be given in respect of Tax.

10.1.3	The Sellers acknowledge that the Purchasers have entered into this Agreement in reliance upon the Sellers’ Warranties.
10.1.4	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 10, in each case in relation to those Sellers’ Warranties set out against each such person’s name in column (3) of Schedule 10.

10.2	Sellers’ Disclosures
	The Sellers’ Warranties are subject to:

(i)	the matters which are fairly disclosed in or pursuant to this Agreement or the Disclosure Letter or expressly provided for under the terms of this Agreement;
(ii)	any information which is fairly disclosed in any document in the Data Room and listed in the Data Room Index scheduled to the Disclosure Letter; and
(iii)	the limitations of liability set out in Clause 11.

10.3 Updating of Sellers’ Warranties at Completion

10.3.1

Subject to Clause 10.2, the Principal Seller warrants to the Purchasers that the Sellers’ Warranties set out in paragraphs 1 (Corporate Information), 2.3 (Off- Balance Sheet Commitments), 3 (Guarantees), 4.1.1, 4.1.2 and 4.3.4 (Property), 5.1 (Ownership of Assets), 7.2.1 (Compliance with Contracts), 7.3 (Joint Ventures), 9.1.1 (Licences and Consents) 12.2.1 (Details on Insurance Policies), 12.2.3 (Details on Insurance Policies), and 14 (Authority and Capacity) of Schedule 8 will be true and accurate at Completion in all material respects as if they had been repeated at Completion.

10.3.2

No right to damages or compensation shall arise in favour of any Purchaser under Clause 10.3.1 in consequence of an event occurring or matter arising after the signing of this Agreement and before Completion which results or may result in any of the Sellers’ Warranties listed in Clause 10.3.1 not being true and inaccurate at Completion in all material respects had such Sellers’ Warranties been repeated at Completion if the event or matter could not reasonably have been avoided or prevented by any of the Sellers, any Group Company or by their respective directors, officers, employees or agents.

10.4	Principal Seller’s Indemnities
	The Principal Seller shall indemnify and hold harmless the Principal Purchaser (for itself and as agent for any other member of the Purchasers’ Group) from and against all Losses to the extent such losses arise or result from:

10.4.1 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

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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 of implementing the Pre-Sale Reorganisation; or
(ii)	relate to any third party claim arising or resulting from the implementation of the Pre-Sale Reorganisation which would not have arisen but for such implementation;

10.4.2	any warranty, indemnity or covenant which was given by any Group Company in connection with the disposal, pursuant to an agreement (excluding the Pre-Sale Reorganisation Documents) entered into prior to the date of this Agreement, of any company or business;
10.4.3	any claim against a Group Company in connection with the transfers of the employees listed in Schedule 15 from the Group Companies to the Sellers’ Group prior to Completion; or
10.4.4	the litigation against the Group Companies listed in Schedule 17,
provided that the Purchasers shall not be entitled to make any claim pursuant to this Clause 10.4 in respect of Taxation.

10.5 Purchasers’ Warranties

10.5.1	The Purchasers and the Purchasers’ Guarantor each warrants to the Sellers that the statements set out in Schedule 9 are true and accurate.
10.5.2	The Purchasers acknowledge that the Sellers have entered into this Agreement in reliance upon the statements set out in Schedule 9.

10.6 Airport Garden NV

The Purchasers shall:

10.6.1

ensure that Airport Garden Hotel NV pays 50% of the yearly rent and of the maintenance costs under the park long term lease entered into on 19 October 2001 between Airport Garden NV and the Municipality of Zaventem, as provided for in Clause 10 of the share purchase agreement of 27 April 2001 regarding the sale of the shares of Airport Garden Hotel NV, concluded between Airport Garden NV and Bass International Holdings NV (currently Six Continents International Holdings BV); and

10.6.2

indemnify and hold harmless the Sellers’ Group from and against all Losses to the extent such Losses arise or result from a failure of Airport Garden Hotel NV to pay the amount referred to in Clause 10.6.1 above.

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11	Limitation of Sellers’ Liability
11.1	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 Principal Purchaser to the Principal Seller:

11.1.1	in the case of any claim under paragraph 13 of Schedule 8 (tax warranties) or under the Tax Deed of Covenant, within 7 years of the date of Completion; and
11.1.2	in the case of any other claim, within 15 months following Completion,

except that there shall be no time limitation for giving notice of any claim under paragraphs 1.1, 4.1.2 and 14 of Schedule 8.

Any claim notified by the Principal Purchaser to the Principal Seller pursuant to this Clause shall specify the matters set out in Clause 12.2.

11.2 Minimum Claims

11.2.1	The Sellers shall not be liable for breach of any Sellers’ Warranty or claim under the Tax Deed of Covenant 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 11.2) in respect of any such claim or series of claims does not exceed €150,000.
11.2.2	Where the liability agreed or determined in respect of any such claim or series of claims exceeds €150,000, 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.

11.3 Aggregate Minimum Claims

11.3.1	The Sellers shall not be liable for breach of any Sellers’ Warranty or claim under the Tax Deed of Covenant 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 11.3) exceeds €2,500,000.
11.3.2	Where the liability agreed or determined in respect of all claims referred to in Clause 11.3.1 exceeds €2,500,000, 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.

11.4 Maximum Liability

The aggregate liability of the Sellers in respect of: (i) breaches of Sellers’ Warranties 1.1, 4.1.2 and 14 and under the Tax Deed of Covenant shall not exceed an amount equal to €340,000,000; and (ii) in the case of any other claims under this Agreement €70,000,000 in aggregate, provided that the aggregate liability of the Sellers in respect of all claims under this Agreement and under the Tax Deed of Covenant shall not exceed the amount referred to in (i).

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11.5 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 European Business Net Asset Statement or noted in the Audited Accounts for the matter giving rise to the claim.

11.6 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:

11.6.1 Agreed matters

any matter or thing done or omitted to be done pursuant to and in compliance with this Agreement or the Tax Deed of Covenant or otherwise at the request in writing or with the approval in writing of the Principal Purchaser;

11.6.2 Acts of the Purchasers

any act or omission of the Purchasers or any member of the Purchasers’ Group or any of the Group Companies, or their respective directors, officers, employees or agents or successors in title, after Completion:

(i)	outside the ordinary course of business as now carried on or any negligent act or omission; or any default (in respect of a known obligation, which for these purposes includes any obligation disclosed in the Data Room) 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;

11.6.3 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); or

(ii)

any change after the date of this Agreement of any generally accepted interpretation or application of any legislation; or

11.6.4 Accounting and Taxation Policies

any change in accounting or Taxation policy, bases or practice of the Purchasers or any of the Group Companies introduced or having effect after Completion.

11.7 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 covered by a policy of

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insurance or would have been covered if such policy of insurance had been maintained beyond Completion.

11.8	Net Financial Benefit
	The Sellers shall not be liable under this Agreement in respect of any Losses suffered by the Purchasers or any Group Company to the extent of any corresponding savings by or net quantifiable financial benefit to the Purchasers 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 Purchasers 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 avoidance of doubt, this Clause shall operate on a claims by claims basis.
11.9	Mitigation of Losses
	The Purchasers shall procure that all reasonable steps are taken and all reasonable assistance is given to avoid or mitigate any Losses which in the absence of mitigation might give rise to a liability in respect of any claim under this Agreement and without prejudice to the foregoing, to the extent any such claim relates to a matter which is capable of remedy, the Purchasers shall allow the Sellers a reasonable opportunity to remedy such matter at their cost.
11.10	Purchasers’ Right to Recover

11.10.1 Recovery for actual liabilities

The Sellers shall not be liable under this Agreement unless and until the liability in respect of which the claim is made has become due and payable.

11.10.2 Prior to recovery from the Sellers etc.

If, before any Seller pays an amount in discharge of any claim under this Agreement any 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 Purchasers or Group Company (in whole or in part) in respect of the loss or liability which is the subject matter of the claim, the Purchasers shall procure that, before steps are taken to enforce a claim against the relevant Seller following notification under Clause 12 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.

11.10.3 Following recovery from the Sellers.

If any Seller has paid an amount in discharge of any claim under this Agreement and any 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 Purchasers or Group Company (in whole or in part) in respect of the loss or liability which is the subject matter of the claim, the Purchasers 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

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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 Purchasers less any Taxation attributable to it.

11.11 Double Claims

The Purchasers shall not be entitled to recover from the Sellers under this Agreement more than once in respect of the same Losses suffered.

11.12 Fraud

None of the limitations contained in this Clause 11 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.

11.13 Interpretation

11.13.1	In this Clause 11, “this Agreement” includes the Local Transfer Documents.
11.13.2	In Clauses 11.8, 11.9 and 11.11, “this Agreement” includes the Tax Deed of Covenant.

12	Claims
12.1	Notification of Potential Claims

If any of the Purchasers or any Group Company becomes aware of any fact, matter or circumstance that may give rise to a claim against the Sellers under this Agreement the Principal Purchaser shall as soon as reasonably practicable and in any event within 30 Business Days give a notice in writing to the Principal Seller setting out such information and supplying copies of any relevant correspondence as is available to the Purchasers or Group Company as is reasonably necessary to enable the Sellers to assess the merits of the claim. Failure to give notice within such period shall not affect the rights of the Purchasers except to the extent that any Seller is prejudiced by the failure.

12.2 Notification of Claims under this Agreement

Notices of claims against the Sellers under this Agreement shall be given by the Principal Purchaser to the Principal Seller within the time limits specified in Clause 11.1, specifying in reasonable detail the legal and factual basis of the claim and the evidence on which the Purchasers rely 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).

12.3 Commencement of Proceedings

Any claim notified pursuant to Clause 12.2 shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn six months after the notice is

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given pursuant to Clause 12.2 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 (having regard to the obligations of the Purchasers in Clause 11.10.2).

12.4 Investigation by the Sellers

In connection with any matter or circumstance that may give rise to a claim against the Sellers under this Agreement:

12.4.1

the Purchasers shall allow, and shall procure that the relevant Group Company allows, the Sellers and their financial, accounting or legal advisers 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

12.4.2

the Purchasers shall disclose to the Sellers all material of which the Purchasers are aware which relates to the claim and shall, and shall procure that any other relevant members of the Purchasers’ Group shall, give, subject to their being paid all reasonable costs and expenses, all such information and assistance, including access to premises and personnel during normal business hours, 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 provided such assistance shall not unduly disrupt the business of any Group Company and/or Hotel. 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.

12.5 Conduct of Third Party Claims

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 then, without prejudice to the rights of the insurers of the Purchasers’ Group:

12.5.1

subject to the Sellers indemnifying the Purchasers or other member of the Purchasers’ Group concerned against all Losses, the Purchasers shall, or the Purchasers shall procure that any other members of the Purchasers’ Group shall, take such action as the Principal Seller may reasonably (in the context of an ongoing business) request to avoid, dispute, deny, defend, resist, appeal, compromise or contest such claim;

12.5.2

the Sellers shall be entitled at their own expense and in their absolute discretion, by notice in writing to the Principal Purchaser, to take such action as may be reasonable (in the context of an on-going business) 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 Purchasers or other member of the Purchasers’ Group concerned and to have the conduct of any related proceedings, negotiations or appeals provided that the Sellers shall keep the Purchasers fully informed at all material stages of such proceedings, negotiations or appeals;

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12.5.3

the Purchasers or other member of the Purchasers’ Group concerned may not admit, compromise, dispose of or settle such claim without the written consent of the Principal Seller on behalf of the Sellers; and

12.5.4

if the Sellers make any request pursuant to Clause 12.5.1, the Purchasers shall, and the Purchasers shall procure that any other members of the Purchasers’ 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.

12.6 Application to Tax Deed

Clauses 11.5, 11.6, 11.7, 11.10 and 12 of this Agreement shall not apply to Tax Warranties.

13	Guarantee
13.1	Purchasers’ Guarantee

13.1.1	The Purchasers’ Guarantor unconditionally and irrevocably guarantees to the Sellers the due and punctual performance and observance by the Purchasers of all its obligations, commitments, undertakings, warranties and indemnities under or pursuant to this Agreement or the Tax Deed of Covenant as appropriate (the “Purchasers’ Guaranteed Obligations”) to the extent of any limit on the liability of the Purchasers in this Agreement or the Tax Deed of Covenant as appropriate.
13.1.2	If and whenever the Purchasers defaults for any reason whatsoever in the performance of any of the Purchasers’ Guaranteed Obligations, the Purchasers’ Guarantor shall forthwith upon demand unconditionally perform (or procure performance of) and satisfy (or procure the satisfaction of) the Purchasers’ Guaranteed Obligations in regard to which such default has been made in the manner prescribed by this Agreement and so that the same benefits shall be conferred on the Sellers as they would have received if the Purchasers’ Guaranteed Obligations had been duly performed and satisfied by the Purchasers.
13.1.3	This guarantee is to be a continuing guarantee and accordingly is to remain in force until all the Purchasers’ Guaranteed Obligations shall have been performed or satisfied. This guarantee is in addition to and without prejudice to and not in substitution for any rights or security which any Seller may now or hereafter have or hold for the performance and observance of the Purchasers’ Guaranteed Obligations.
13.1.4	As a separate and independent obligation the Purchasers’ Guarantor agrees that any of the Purchasers’ Guaranteed Obligations (including, without limitation, any moneys payable) which may not be enforceable against or recoverable from the Purchasers by reason of any legal limitation, disability or incapacity on or of the Purchasers or any other fact or circumstances (other than any limitation imposed by this Agreement) shall nevertheless be enforceable against and recoverable from the Purchasers’ Guarantor as though the same had been incurred by the Purchasers’ Guarantor and the Purchasers’ Guarantor were the sole or principal

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     obligor in respect thereof and shall be performed or paid by the Purchasers’ Guarantor on demand.

13.1.5 The Liability of the Purchasers’ Guarantor under this Clause 13:

(i)	shall not be released or diminished by any variation of the Purchasers’ Guaranteed Obligations or any forbearance, neglect or delay in seeking performance of the Purchasers’ Guaranteed Obligations or any granting of time for such performance; and
(ii)	shall not be affected or impaired by reason of any other fact or event which in the absence of this provision would or might constitute or afford a legal or equitable discharge or release or a defence to a guarantor.

14	Confidentiality
14.1	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 any of the Sellers, the Purchasers or the Purchasers’ Guarantor without the prior written approval of the Principal Seller (on behalf of each of the Sellers) and the Principal Purchaser (on behalf of each of the Purchasers and the Purchasers’ Guarantor). 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 Purchasers’ 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.

14.2 Confidentiality

14.2.1	This Clause 14 shall be without prejudice to the Confidentiality Agreement, which Agreement shall continue notwithstanding Completion.
14.2.2	Subject to Clause 14.1 and Clause 14.2.3:

(i) each of the Sellers, the Purchasers and the Purchasers’ Guarantor 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 or the European Business following Completion and any other information relating to the business, financial or other affairs (including future plans and targets) of the Purchasers’ Group; and

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(iii) the Purchasers 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 or the European Business.

14.2.3 Clause 14.2 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 Purchasers are listed or any member of the Sellers’ Group or the Purchasers’ Group respectively;
(ii)	the disclosure or use is required to vest the full benefit of this Agreement in any of the Sellers or the Purchasers;
(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;
(iv)	the disclosure is made to professional advisers of the Sellers, the Purchasers or the Purchasers’ Guarantor on terms that such professional advisers undertake to comply with the provisions of Clause 14.2 in respect of such information as if they were a party to this Agreement;
(v)	the disclosure is made on a confidential basis to members of the Sellers’ Group or the Purchasers’ Group and such members agree to treat the information as confidential and adhere to the terms of this Clause 14 as if they were 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 14.2.3(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 such other parties with the opportunity to contest such disclosure or use or otherwise to agree the timing and content of such disclosure or use.

14.3 Tax Deed of Covenant

For the avoidance of doubt, in this Clause 14, “Agreement” includes the Local Transfer Documents and the Tax Deed of Covenant.

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15	Other Provisions
15.1	Further Assurances

15.1.1	Each of the Sellers and the Purchasers 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 Purchasers may reasonably require to transfer the Shares, and the European Business to the Purchasers and to give each of them the full benefit of this Agreement and, at the Sellers’ cost, such acts and things as may reasonably be required to complete the Pre-Sale Reorganisation.
15.1.2	Pending registration of the relevant Purchasers as owner of the Shares, the Sellers shall exercise all voting and other rights in relation to such Shares in accordance with the Purchasers’ instructions.
15.1.3	The Purchasers shall, and shall procure that the relevant Group Companies shall, retain for a reasonable period from Completion, such reasonable period to include (for the avoidance of doubt and without limitation) such period as is required under any applicable Tax Statute, 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.
15.1.4	The Purchasers 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, Staybridge Suites, Candlewood Suites, Indigo, Crowne Plaza, Express by Holiday Inn 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.
15.1.5	The Purchasers shall not, and shall procure that no member of the Purchasers’ 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, Staybridge Suites, Candlewood Suites, Indigo, Crowne Plaza, Express by Holiday Inn and Spirit) other than as permitted under the Portfolio Franchise Agreement and Hotel Franchise Agreements.

15.2 Release of Guarantees

15.2.1 The Purchasers shall use reasonable endeavours to procure by Completion or, to the extent not done by Completion, within 60 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 (including for the avoidance of doubt the release of Six Continents International Holdings B.V. from any statement of joint liability issued in respect of Holiday Inns B.V. filed with the Dutch trade register). Pending such release the Purchasers shall indemnify the members of the Sellers’ Group

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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.

15.2.2

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.

15.2.3

Clauses 15.2.1 and 15.2.2 shall not apply to any indemnities given by or to any Group Company to or by any member of the Sellers’ Group pursuant to the Pre-sale Reorganisation Documents.

15.3 Contracts and European Business Contracts

15.3.1	In relation to any Split Contract or European Business Contract which 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 Purchasers 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 Purchasers, 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.
15.3.2	In connection with the obtaining of any Third Party Consent referred to in Clause 15.3.1, the Purchasers or the relevant Seller, as the case may be, shall supply to the other such information and references regarding the financial position of the Purchasers 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 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 Purchasers or the relevant Seller, as the case may be, will become subject or which the Purchasers or the relevant Seller, as the case may be, will incur on assignment.
15.3.3	In relation to the Split Contracts, the parties agree that:

(i) the Purchasers shall, or shall procure that the relevant member of the Purchasers’ 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;

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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 Purchasers’ 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 Purchasers’ Group provided that such subcontracting 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 Purchasers or the other member of the Purchasers’ Group as appropriate in accordance with its terms and conditions and in each case to indemnify the Purchasers against any Losses incurred by any member of the Purchasers’ Group in respect of any failure on the part of a member of the Sellers’ Group to perform the obligations contained in this Clause 15.3.3(ii); and

(iii)

if the Sellers so request, the Purchasers 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 Purchasers 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 Purchasers or other member of the Purchasers’ 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 Purchasers.

15.3.4	In relation to the Sellers’ Group Contracts, the parties agree that following Completion, the Sellers’ Group shall not be required to maintain any Sellers’ Group Contracts in relation to any one or more of the Hotels or any Group Company and neither the Purchasers nor any Group Company shall have any rights arising under the Sellers’ Group Contracts.
15.3.5	In relation to the European Business Contracts, the parties agree that:

(i) from Completion until the relevant Third Party Consent has been obtained (as contemplated by Clause 15.3.1), or where the Third Party Consent has been refused, the Business Sellers shall, to the extent they are lawfully

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able to do so, hold the benefits of the European Business Contracts on trust for the relevant Purchaser and receive any payment made, goods delivered or other benefit received by the relevant Business Seller pursuant to such contracts as trustee and as soon as reasonably practicable following receipt of the same shall forward and transfer to the relevant Purchaser such payment, goods or other benefit or, where it is not lawfully able to do so, make such other arrangements with the relevant Purchaser to provide to the relevant Purchaser the benefits of the European Business Contracts, including the enforcement (at the cost and for the account of the relevant Purchaser) of all rights of the relevant Business Seller against any other party thereto;

(ii)	until the relevant Third Party Consent is obtained, the Purchasers shall carry out, perform and discharge the Business Sellers obligations under each European Business Contracts other than any obligations of the Business Sellers pursuant to Clause 15.3.5(iii) and (so far as it lawfully may) do all such things as the Business Sellers may reasonably require to enable due performance of the European Business Contracts and shall indemnify and keep indemnified the relevant Business Sellers against any Losses incurred arising from the failure by any Purchaser to carry out, perform or discharge such obligations or do such things as the Business Sellers may reasonably require to enable due performance of the European Business Contracts and against any Losses which the Business Sellers may suffer by reason of its taking any reasonable action to avoid, resist or defend any Loss referred to in this Clause 15.3.5;
(iii)	the Business Sellers undertake to perform, or to procure the performance (unless prohibited by law from doing so), of all European Business Contracts in accordance with their terms and conditions as sub-contractor of the relevant Purchaser provided that such sub-contracting is permitted under the terms of the relevant European Business Contract, and where sub-contracting is not permissible, the Business Sellers undertake to perform, or procure the performance (unless prohibited by law from doing so), of the relevant European Business Contract as agent of the relevant Purchaser or in accordance with its terms and conditions and in each case to indemnify the relevant Purchaser against any Losses incurred in respect of any failure on the part of the Business Sellers to perform the obligations contained in this Clause 15.3.5(iii); and
(iv)	if the Purchasers are not lawfully able to perform or procure the performance of any European Business Contract in accordance with Clause 15.3.5(i) and (ii), or to receive the benefits of any European Business Contact in accordance with Clause 15.3.5(iii), or if a Third Party Consent is refused within 12 months of Completion the relevant Purchaser shall be entitled to require the Business Seller to terminate the relevant European Business Contract and the obligations of the parties under this Agreement in relation to such European Business Contract shall cease forthwith.

15.3.6 Insurance

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The Purchasers agree 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 or the European Business. The Purchasers will put in place such insurances as they shall require in relation thereto. The Sellers’ agree to provide extended reporting under claims made insurance policies maintained prior to Completion by or on behalf of the Sellers’ Group in relation to any Group Company until the date which is 3 months after the Completion Date in respect of insured events which take place prior to Completion.

15.4 Sellers’ and Purchasers’ Liability

15.4.1	The rights and obligations of each of the Sellers and each of the Purchasers (other than the Principal Seller and the Principal Purchaser) under this Agreement shall only relate to the Assets which they are selling or buying under this Agreement.
15.4.2	Each Seller acknowledges that the Principal Seller shall receive or pay any sums receivable or payable by it under this Agreement and the Tax Deed of Covenant on behalf of each relevant Seller to the extent that such sum relates to the Shares or European Business being sold by any such Seller.
15.4.3	The Principal Seller and Holiday Inns (Germany) LLC acknowledge that although Holiday Inns (Germany) LLC are directly or indirectly interested in 90% of the shares of Holiday Inns von Deutschland GmbH and Hochstrasse 3 Hotelgesellschaft mbH, any warranty claims made against the Principal Seller and/or Holiday Inns (Germany) LLC under this Agreement in respect of such Group Companies shall be treated as if Holiday Inns (Germany) LLC was directly or indirectly interested in 100% of such Group Companies.
15.4.4	The Principal Seller shall be jointly and severally liable with each other Seller for any breach of this Agreement by any other such Seller and the Principal Purchaser shall be jointly and severally liable with each other Purchaser for any breach of this Agreement by any other such Purchaser.
15.4.5	The Principal Seller and each of the other Sellers agrees that where any right is given to the Principal Seller under this Agreement, such right shall be exercisable exclusively by the Principal Seller and any such exercise shall be binding on each of the Sellers.
15.4.6	Any liability to the Purchasers under this Agreement may in whole or in part be released, compounded or compromised or time or indulgence may be given by the Purchasers in their 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.
15.4.7	The Principal Purchaser and each of the other Purchasers agrees that where any right is given to the Principal Purchaser under this Agreement, such right shall be exercisable exclusively by the Principal Purchaser and any such exercise shall be binding on each of the Purchasers.
15.4.8	Any liability to the Sellers under this Agreement may in whole or in part be released, compounded or compromised or time or indulgence may be given by the

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Sellers in their absolute discretion as regards any of the Purchasers under such liability without in any way prejudicing or affecting its rights against any other or others of the Purchasers under the same or a like liability whether joint and several or otherwise.

15.4.9 If at any time within 7 years of the date of Completion the Principal Seller becomes aware that its net assets have fallen below €500 million, the Principal Seller shall procure that another entity within the Sellers’ Group with net assets in excess of €500 million provides to the Sellers a guarantee of the obligations of the Principal Seller under this Agreement, on terms substantially similar to the guarantee given by the Purchasers’ Guarantor hereunder.

15.5 Whole Agreement

15.5.1	This Agreement contains the whole agreement between the Sellers, the Purchasers and the Purchasers’ Guarantor 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, the Purchasers and the Purchasers’ Guarantor in relation to the matters dealt with in this Agreement.
15.5.2	Each of the Purchasers 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 to the accuracy of the forecasts, estimates, projections, statements of intent or statements of opinion provided to the Purchasers or their 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.
15.5.3	So far as is permitted by law and except in the case of fraud, each of the Sellers and each of the Purchasers 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).
15.5.4	In Clauses 15.5.1 to 15.5.3, “this Agreement” includes the Disclosure Letter, the Confidentiality Agreement, the Local Transfer Documents, the Debt Assignment Agreement and all documents entered into pursuant to this Agreement.

15.6 Reasonableness

Each of the Sellers, the Purchasers and the Purchasers’ Guarantor confirms it has received independent legal advice relating to all the matters provided for in this Agreement, including the terms of Clause 15.5 (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.

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15.7 Assignment

15.7.1	Except as otherwise expressly provided in this Agreement, none of the Sellers, nor the Purchasers may without the prior written consent of the others, assign, grant any security interest over, hold on trust or otherwise transfer the benefit of the whole or any part of this Agreement, the Local Transfer Documents or any other documents entered into pursuant to this Agreement.
15.7.2	Except as otherwise expressly provided in this Agreement, the Sellers, or the Purchasers may, without the consent of the other, assign to a connected company the benefit 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 Purchasers or the Sellers, as appropriate would have been entitled; and
(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.

15.7.3 The Purchasers 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 in part) by the Purchasers 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.

15.8 Substitution

15.8.1 Ability to substitute

Each of the parties hereby agrees that at any time after the date hereof but in any event no later than five Business Days prior to Completion (the “Substitution Date”) the Principal Purchaser may substitute up to 5 direct or indirect subsidiaries of the Purchasers (each a “Substitute Purchaser”) as the Purchasers of some or all of the Assets (the “Substituted Assets”) in place of the Principal Purchaser as if the Substitute Purchaser(s) had been a party to this Agreement ab initio, provided that:

(i) such substitution shall not cause or allow any burden, delay or cost to be incurred by the Sellers as a result of such substitution; and

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(ii) each Substitute Purchaser is incorporated in the jurisdiction of the Assets to be acquired by such Substitute Purchaser or in another jurisdiction reasonably acceptable to the Sellers.

15.8.2 Notification

The Principal Purchaser shall give the Principal Seller at least five Business Days notice of the proposed Substitution Date and shall notify the Principal Seller in writing and in a timely manner prior to the Substitution Date of the designated Substitute Purchaser(s) together with such reasonable details of the Substitute Purchaser(s), including, evidence that the Substitute Purchaser is authorised to execute the Deed of Substitution and the relevant documents listed in paragraph 1.2 of Schedule 5, details of its place of incorporation, registered office/number, direct and indirect shareholders, share capital and directors and, in a timely manner, all such other information as may reasonably be requested by the Principal Seller (including notification details for the purposes of Clause 15.17 hereof).

15.8.3 Deed of Substitution and assumption of Purchasers’ Obligations

(i) The Principal Purchaser shall procure that on the Substitution Date, the Substitute Purchaser(s) shall execute and deliver the Deed of Substitution in the Agreed Terms to the Sellers (which Deed of Substitution shall be executed by the Sellers on such date, dated and delivered to the Principal Purchaser) pursuant to which the Substitute Purchaser(s) shall undertake to the Sellers to accept, observe and perform and discharge all the liabilities and obligations of the Purchasers under this Agreement (howsoever arising and whether arising on, before or after the relevant Substitution Date) in substitution of the Principal Purchaser in respect of the relevant Substituted Assets as if the Substitute Purchaser(s) had been party to this Agreement ab initio provided that:

(a)	the Principal Purchaser shall remain jointly and severally liable with each Substitute Purchaser in respect of the obligations of such Substitute Purchaser; and
(b)	the guarantee given by the Purchasers’ Guarantor pursuant to Clause 13 of this Agreement shall also be given in respect of the Substitute Purchasers.

(ii) For the avoidance of doubt any substitution pursuant to this Clause 15.8 shall only occur on the basis that:

(c)	each Substitute Purchaser is deemed to have all knowledge attributable to the Principal Purchaser including in relation to all disclosures made pursuant to the Disclosure Letter and otherwise as contemplated by this Agreement; and
(d)	the Sellers shall not be liable in respect of any claim arising against them under this Agreement (including all documents entered into pursuant to this Agreement) in excess of any amount in respect of which the Sellers’ would have been liable had the claim been made

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by the Principal Purchaser in circumstances where no substitution had taken place.

15.8.4	Assumption of Purchasers’ rights
	On and with effect from the Substitution Date, and subject to the execution of the Deed of Substitution by the parties thereto and to Clause 15.8.3(ii) above, the parties agree that the Substitute Purchaser(s) may exercise all the rights of the Purchasers arising under this Agreement (howsoever arising and whether arising on, before or after the relevant Substitution Date) in substitution of the Principal Purchaser as if the Substitute Purchaser(s) had at all times been a party to this Agreement ab initio in respect of the relevant Substituted Assets provided that where any right is specified to be for the benefit of the Principal Purchaser, Clause 15.4.7 shall prevail.
15.8.5	One substitution
	The Substitute Purchasers shall not be entitled to further substitute under the terms of this Clause 15.8.

15.9 Third Party Rights

15.9.1	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 this Clause 15.9.
15.9.2	Any member of the Sellers’ Group may enforce Clauses 15.1.4, 15.1.5, 15.2, 15.3 and 15.14 to the same extent as if they were a party to this Agreement.
15.9.3	This Agreement may be terminated and any term may be amended or waived without the consent of any of the persons mentioned in this Clause 15.9.

15.10	Variation
	No variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the Sellers, the Purchasers and the Purchasers’ Guarantor.
15.11	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 Purchasers.
15.12	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.

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15.13 Costs

15.13.1	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.
15.13.2	The Purchasers and the Purchasers’ Guarantor shall bear all such costs incurred by them in connection with the preparation, negotiation and entry into of this Agreement and the purchase of the Assets.

15.14 Stamp Duty, Fees and Taxes

15.14.1

The Purchasers shall bear the cost of all notarial fees and all registration, stamp and transfer taxes and duties or their equivalents in all jurisdictions where such fees, taxes and duties are payable as a result of the transactions contemplated by this Agreement. The Purchasers shall be responsible for arranging the payment of all such fees, taxes and duties, including fulfilling any administrative or reporting obligation imposed by the jurisdiction in question in connection with the payment of such taxes and duties. The Purchasers shall indemnify the Sellers or any member of the Sellers’ Group against any Losses suffered by the Sellers or any member of the Sellers’ Group as a result of the Purchasers failing to comply with its obligations under this Clause 15.14.1.

15.14.2

Austrian Stamp Duty

(i)	None of the parties shall: (a) bring an original or certified copy of this Agreement or any other document that contains any written confirmation or written reference to this Agreement (“Ersatzbeurkundung” or “rechtsbezeugende Urkunde”) into the Republic of Austria; or (b) produce a document that contains any written confirmation or written reference to this Agreement within the Republic of Austria.
(ii)	The parties acknowledge that the bringing of this Agreement or any other document containing any written confirmation or any written reference to this Agreement (“Ersatzbeurkundung” or “rechtsbezeugende Urkunde”) into the Republic of Austria or the production of any other document containing written confirmation or any written reference to this Agreement within the Republic of Austria may cause the imposition of Austrian stamp duty (“Rechtsgeschäftsgebühren”).
(iii)	Any Party intentionally or negligently bringing or causing any other person (other than a Party) to bring this Agreement, either as an original or a certified copy, or any other written confirmation or written reference to this Agreement in another document, into the Republic of Austria or producing any other document containing any written confirmation or written reference to this Agreement within the Republic of Austria shall be solely liable for any stamp duty resulting therefrom. In any case, the parties agree not to contest the validity of an uncertified copy of this Agreement in any court in Austria.
(iv)	Without prejudice to the provisions of clause 15.14.2 (i) to (iii) of the Agreement and clause 8.3 of the Local Transfer Document for the Austrian Business Transfer, any Austrian stamp duty that arises as a direct result of actions by the Seller or member of the Sellers’ Group during the process of

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obtaining the consent of the landlord under Clause 4.4 shall be the sole responsibility of the Sellers. For the avoidance of doubt the Sellers shall not be liable for such stamp duty where the liability arises as a result of any action or inaction by (i) any Group Company post Completion (ii) any Purchaser or (iii) any member of a Purchaser’s group, including in particular the bringing into Austria / printing out in Austria of any relevant documents, faxes or emails. The Purchasers shall be satisfied with simple copies of any consents given in writing (if any).

(v)

The parties agree that, without prejudice to the above and to the equivalent provisions on the Local Transfer Document for the Austrian Business Transfer, should the situation arise where either party is required by law or in order to prove title to any relevant asset to take action which triggers Austrian stamp duty and has used all possible endeavours to exhaust all possible alternatives, then the first €75,000 of any Austrian stamp duty liability shall be split equally between the parties. Any further liability shall be payable solely by the Purchasers.

15.15 Interest

Save as expressly provided herein, if the Sellers or the Purchasers default 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 EONIA plus 2 per cent (calculated on basis of the rate published on the date such payment was due (or if not published on such date, the next date on which it is published)). Such interest shall accrue from day to day.

15.16 Grossing-up of Indemnity Payments, VAT

15.16.1	Where any payment is made under this Agreement pursuant to an indemnity, compensation or reimbursement provision and 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 Purchasers for the Group) the sum payable shall be increased to such sum as will ensure that after payment of such Taxation (and after giving credit for any tax relief available to the recipient in respect of the matter giving rise to the payment) 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.
15.16.2	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).
15.16.3	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 include an amount equal to any VAT thereon not otherwise recoverable by the

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	other party, subject to that party using all reasonable endeavours to recover such amount of VAT as may be practicable.
15.16.4	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 any VAT due.
15.16.5	For the purposes of this Clause 15.16, references to “the recipient” in Clause 15.16.1; “the Party” in Clause 15.16.2, and “another party” or “the other party” in Clause 15.16.3, shall include the relevant Seller or Sellers where a payment is being made to the Principal Seller on behalf of any such Seller or Sellers.

15.17 Notices

15.17.1 Any notice or other communication in connection with this Agreement (each, a “Notice”) shall be:

(i)	in writing; and
(ii)	delivered by hand, fax, pre-paid first class post or courier.

15.17.2 A Notice to any Seller shall be sent to the following address, or such other person or address as Intercontinental Hotels Group PLC (or the Principal Seller) on behalf of the Sellers may notify to the Principal Purchaser from time to time:

BHR Luxembourg S.à r.l.

L-1219 Luxembourg,

13, Rue Beaumont — 2^nd Floor

Fax: +352 262608-41

Attention: Jörg Schmittem

with a copy to:

Intercontinental Hotels Group PLC

67 Alma Road, Windsor, Berkshire, SL4 3HD

Fax: 08701 971 463

Attention: SVP Legal and General Counsel

15.17.3 A Notice to the Purchasers shall be sent to the following address, or such other person or address as the Purchasers may notify to the Seller from time to time:

Cooperatie Westbridge Europe 1 U.A.

Naritaweg 165

1043 BW Amsterdam

The Netherlands

Fax: +31 20 572 2653

Attention: Maurice Selhorst

with a copy to:

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Westmont Management Limited

Trac House

34 Francis Grove

SW194DT

Fax: 0208 971 6600

Attention: The Directors

15.17.4 A Notice to the Purchasers’ Guarantor shall be sent to the following address, or such other person or address as the Purchasers’ Guarantor may notify to the Seller from time to time:

Westbridge Hospitality Fund, L.P.

Washington Mall West

7 Reid Street

Hamilton HM11

Bermuda

Fax: +1 (441) 295-0992

Attention: General Partner, Westbridge Hospitality Management Limited

15.17.5 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; or
(iii)	at the time of transmission in legible form, if delivered by fax.

15.18 Invalidity

15.18.1

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.

15.18.2

To the extent it is not possible to delete or modify the provision, in whole or in part, under Clause 15.18.1, 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 15.18.1, not be affected.

15.19	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, the Purchasers and the Purchasers’ Guarantor may enter into this Agreement by signing any such counterpart.

49

15.20	Tax Deed of Covenant
	For the purposes of Clauses 15.9 (unless expressly provided for in the Tax Deed of Covenant), 15.4, 15.11, 15.12, 15.13, 15.16, 15.17, 15.19, 15.22 and, for the avoidance of doubt 15.5, “Agreement” shall include the Tax Deed of Covenant.

15.21 Governing Law and Submission to Jurisdiction

15.21.1

This Agreement shall be governed by and construed in accordance with English law.

15.21.2

Each of the Sellers, the Purchasers and the Purchasers’ Guarantor 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, the Purchasers and the Purchasers’ Guarantor 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.

15.22 Appointment of Process Agent

15.22.1	The Sellers each hereby irrevocably appoint InterContinental Hotels Group PLC of 67 Alma Road, Windsor, Berkshire, SL4 3HD as their agent to accept service of process in England in any legal action or proceedings arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by the Sellers.
15.22.2	The Sellers agree to inform the Purchasers in writing of any change of address of such process agent within 28 days of such change.
15.22.3	If such process agent ceases to be able to act as such or to have an address in England, the Sellers irrevocably agree to appoint a new process agent in England acceptable to the Principal Purchaser and to deliver to the Purchasers within 14 days a copy of a written acceptance of appointment by the process agent.
15.22.4	The Purchasers hereby irrevocably appoint Westmont Management Limited of Trac House, 34 Francis Grove, Wimbledon, London SW19 4DT as its agent to accept service of process in England in any legal action or proceedings arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by the Purchasers.
15.22.5	The Purchasers agree to inform the Seller in writing of any change of address of such process agent within 28 days of such change.
15.22.6	If such process agent ceases to be able to act as such or to have an address in England, the Purchasers irrevocably agree to appoint a new process agent in England acceptable to the Principal Seller and to deliver to the Principal Seller within 14 days a copy of a written acceptance of appointment by the process agent.
15.22.7	The Purchasers’ Guarantor hereby irrevocably appoints Westmont Management Limited of Trac House, 34 Francis Grove, Wimbledon, London SW19 4DT as its agent to accept service of process in England in any legal action or proceedings

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	arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by the Purchasers’ Guarantor.
15.22.8	The Purchasers’ Guarantor agrees to inform the Principal Seller in writing of any change of address of such process agent within 28 days of such change.
15.22.9	If such process agent ceases to be able to act as such or to have an address in England, the Purchasers’ Guarantor irrevocably agrees to appoint a new process agent in England acceptable to the Principal Seller and to deliver to the Principal Seller within 14 days a copy of a written acceptance of appointment by the process agent.
15.22.10	Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law or the right to bring proceedings in any other jurisdiction for the purposes of the enforcement or execution of any judgment or other settlement in any other courts.

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In witness whereof this Agreement has been duly executed.
SIGNED by	/s/ Jörg Schmittem
on behalf of BHR Holdings BV:
SIGNED by	/s/ Jörg Schmittem
on behalf of Six Continents International Holdings BV:
SIGNED by	/s/ Jörg Schmittem
on behalf of BHR Luxembourg S.à r.l.:
SIGNED by	/s/ Jörg Schmittem
on behalf of HH Hotels (EMEA) BV:
SIGNED by	/s/ Nigel Stocks
on behalf of Intercontinental Hotels Group (España) SA:
SIGNED by	/s/ Arnd Stahl
on behalf of Holiday Inns (Germany) LLC:
SIGNED by	/s/ Jörg Schmittem
on behalf of BHR Overseas (Finance) BV:

SIGNED by	/s/
on behalf of Cooperatie Westbridge Europe I U.A.:
SIGNED by	/s/ Kingsley Seevaratnam
on behalf of Westbridge Hospitality Fund L.P.:
SIGNED by	/s/
on behalf of W.E. I Germany Holding GmbH:
SIGNED by	/s/
on behalf of W.E. I BVH GmbH:
SIGNED by	/s/
on behalf of W.E. I HOB GmbH:
SIGNED by	/s/
on behalf of W.E. I LIMNA GmbH:
SIGNED by	/s/
on behalf of W.E. I Object Hamburg Kieler Straße GmbH:

Schedule 1
(Clauses 2.1 and 2.2)
Part 1
Details of Shares to be sold

			(3)
			Consideration
			(Initial Share
			Consideration
			(“ISC”) and
			Estimated Net
		(2)	Current Assets
	(1)	Number of Shares/Name of	(“ENCA”))	(4)
Name of Seller		Company	€ 000s	Name of Purchaser
1	Six Continents International Holdings BV whose registered office is at Strawinskylaan 3105 7e etage, 1077ZX Amsterdam	4,999 shares of € 248 each in the capital of Holiday Inns NV	27,099 (ISC) plus (2, 192) (ENCA)	To be notified to the Principal Seller pursuant to Clause 15.8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution
		299 shares of € 48,316.67 each in the capital of Airport Garden Hotel NV	(1,101) (ISC) plus 1,815 (ENCA)	To be notified to the Principal Seller pursuant to Clause 15.8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution
		10 shares of € 16 each in the capital of Holiday Inns France et CIE SAS	10 (ISC) plus 0 (ENCA)	To be notified to the Principal Seller pursuant to Clause 15.8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution
		15,000 ordinary shares of €52 each in the capital of Holiday Inns SpA	14,025 (ISC) plus 0 (ENCA)	To be notified to the Principal Seller pursuant to Clause 15.8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution

54

		(3)
		Consideration
		(Initial Share
		Consideration
		(“ISC”) and
		Estimated Net
	(2)	Current Assets
(1)	Number of Shares/Name of	(“ENCA”))	(4)
Name of Seller	Company	€ 000s	Name of Purchaser
	Liable capital of DEM 13,000.00	2,162 (ISC)	W.E. I BVH GmbH
	in BVH Hotelbesitzgesellschaft mbH & Co. Verwaltungs-KG	plus (191) (ENCA)	whose registered office is at c/o Nörr Stiefenhofer Lutz Partnerschaft, Brienner Strabe 28, 80333 München, Germany
	Liable capital of DEM 2,001,200.00 in HOB Hotelbesitz und Verwaltungs GmbH & Co. Objekt Graumannsweg KG	5,063 (ISC) plus 10 (ENCA)	W.E. I HOB GmbH whose registered office is at c/o Nörr Stiefenhofer Lutz Partnerschaft, Brienner Strabe 28, 80333 Müunchen, Germany
	1 share of DEM 16,300.00 in the capital of BVH Hotelbesitzgesellschaft mbH	0 (ISC) plus 0 (ENCA)	W.E. I Germany Holding GmbH whose registered office is at c/o Nörr Stiefenhofer Lutz Partnerschaft, Brienner Strabe 28, 80333 Müunchen, Germany
	1 share of DEM25,500.00 in the capital of HOB Hotelbesitz und Verwaltungs GmbH	0 (ISC) plus 0 (ENCA)	W.E. I Germany Holding GmbH whose registered office is at c/o Nörr Stiefenhofer Lutz Partnerschaft, Brienner Strabe 28, 80333 Müunchen, Germany
	1 share of DEM 16,300.00 in the capital of LIMNÄ Hotelbetriebs GmbH	0 (ISC) plus 0 (ENCA)	W.E. I Germany Holding GmbH whose registered office is at c/o Nörr Stiefenhofer Lutz Partnerschaft, Brienner Strabe 28, 80333 Müunchen, Germany

55

		(3)
		Consideration
		(Initial Share
		Consideration
		(“ISC”) and
		Estimated Net
	(2)	Current Assets
(1)	Number of Shares/Name of	(“ENCA”))	(4)
Name of Seller	Company	€ 000s	Name of Purchaser
	Liable capital of DEM 3,250.00	4,615 (ISC)	W.E. I LIMNA GmbH
	in LIMNÄ Hotelbetriebsgesellschaft mbH & Co. Verwaltungs-KG	plus (13) (ENCA)	whose registered office is at c/o Nörr Stiefenhofer Lutz Partnerschaft, Brienner Straße 28, 80333 München, Germany
2 BHR Luxembourg S.àr.l. whose registered office is at L-1219 Luxembourg, 13, Rue Beaumont 2nd Floor	79,990 shares of €16 each in the capital of Holiday Inns France et CIE SAS	15,790 (ISC) plus 391 (ENCA)	To be notified to the Principal Seller pursuant to Clause 15.8. 2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution
3 BHR Holdings BV whose registered office is at Strawinskylaan 3105 7e etage, 1077ZX Amsterdam	119,843 shares of €100 nominal value each in the capital of Holiday Inns BV	38,800 (ISC) plus 7,619 (ENCA)	To be notified to the Principal Seller pursuant to Clause 15.8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution
	1 share in the capital of Airport Garden Hotel NV	1 (ISC) plus 0 (ENCA)	To be notified to the Principal Seller pursuant to Clause 15.8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution
4 HH Hotels (EMEA) BV whose registered office is at Strawinskylaan 3105 7e etage, 1077ZX Amsterdam	1 share of €248 each in the capital of Holiday Inns NV	1 (ISC) plus 0 (ENCA)	To be notified to the Principal Seller pursuant to Clause 15.8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution

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		(3)
		Consideration
		(Initial Share
		Consideration
		(“ISC”) and
		Estimated Net
	(2)	Current Assets
(1)	Number of Shares/Name of	(“ENCA”))	(4)
Name of Seller	Company	€ 000s	Name of Purchaser
5 Holiday Inns (Germany) LLC whose registered office is at 3 Ravina Drive, Atlanta, Georgia, U.S.	1 share of DEM 6,100,000.00 in the capital of Holiday Inns von Deutschland GmbH1	73,713 (ISC) plus 1,228 (ENCA)	W.E I Germany Holding GmbH whose registered office is at c/o Nörr Stiefenhofer Lutz Partnerschaft, Brienner Strabe 28, 80333 München, Germany
	1 share of DEM 45,000.00 in the capital of Holiday Inn Hotelgesellschaft mbH	46,821 (ISC) plus 427 (ENCA)	W.E I Germany Holding GmbH whose registered office is at c/o Nörr
			Stiefenhofer Lutz Partnerschaft, Brienner Strabe 28, 80333 München, Germany

¹ Denomination of share may vary pursuant to share buy-backs pursuant to Schedule 14 but the consideration will remain the same

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Part 2
Details of Spanish Business to be sold

Part A
Spanish Business

		(3)
		Consideration
		(Initial European
		Business Consideration
		(“IEBC”) and Estimated	(4)
(1)		European Business Net	Name of
Name of Business	(2)	Assets (“EEBNA”))	Business
Seller	Business	(€ 000s)	Purchaser
Intercontinental Hotels Group (Espâna) SA whose registered office is at Plaza Carlos Trîas Bertrán 4 28020 Madrid, Spain	(i) The business of operating a hotel under the name of Express by Holiday Inn Valencia — San Louis carried on at the date hereof and (ii) the hotel building the details of which are set out at number 24 of Schedule 3 of this Agreement and (iii) the liabilities contained in the European Business Net Asset Statement in respect of the Spanish Business	5,928 (IEBC) (including 4,676 in respect of the property to be transferred pursuant to the Valencia Real Estate Transfer) plus 304(EEBNA)	To be notified to the Principal Seller pursuant to Clause 15.8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution
Intercontinental Hotels Group (Espâna) SA whose registered office is at Plaza Carlos Trîas Bertrán 4 28020 Madrid, Spain	(i) The business of operating a hotel under the name of Express by Holiday Inn Alicante carried on at the date hereof and (ii) the hotel building the details of which are set out at number 23 of Schedule 3 of this Agreement and (iii) the liabilities contained in the European Business Net Asset Statement in respect of the Spanish Business	5,942 (IEBC) (including 4,724 in respect of the property to be transferred pursuant to the Alicante Real Estate Transfer) plus 307 (EEBNA)	To be notified to the Principal Seller pursuant to Clause 15.8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution

The tangible and intangible assets (including contracts) pertaining to the businesses of operating the Express by Holiday Inn Valencia — San Luis hotel and the Express by Holiday Inn Alicante hotel, excluding any owned real estate, are described in more detail in the transfer agreement for the Spanish Business in the Agreed Terms.

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Part B
Spanish Excluded Assets

The bank accounts of the Spanish Business (including all cash in such bank accounts other than the cash held at the relevant Hotels) and any receivables in relation to the Spanish Business not included in the European Business Net Asset Statement.

The tangible and intangible assets and liabilities of Intercontinental Hotels Group (Espâna) SA that are excluded from the sale include all assets and liabilities pertaining to the business of operating and managing the hotels; Holiday Inn Express Barcelona-Molins de Rei, Intercontinental El Vale Golf Resort, Crowne Plaza Estepona, Holiday Inn Express Gerona, Crowne Plaza La Torre Golf Resort, Holiday Inn Express Madrid-Airport, Holiday Inn Express Madrid-Alcorcon, Holiday Inn Express Madrid-Alcobendas, Holiday Inn Express Madrid-Leganes, Holiday Inn Express Madrid-Rivas, Holiday Inn Express Madrid-San Sebastian de los Reyes, Holiday Inn Express Malaga-Airport, Intercontinental Mar Menor Golf Resort, Holiday Inn Express Montmelo, Holiday Inn Fasano, Holiday Inn Express Valencia-Bonaire and Holiday Inn Express Zaragossa.

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Part 3
Details of Austrian Business to be sold

Part A
Austrian Business

		(3)
		Consideration
		(Initial European
		Business
		Consideration
		(“IEBC”) and
(1)		Estimated European	(4)
Name of Business	(2)	Net Business Assets	Name of Business
Seller	Business	(“EEBNA”)) (€ 000s)	Purchaser
BHR Overseas (Finance) BV whose registered office is at Strawinskylaan 3105 7e etage, 1077ZX Amsterdam	The business of operating a hotel under the name of Holiday Inn Vienna South carried on at the date hereof and the liabilities contained in the European Business Net Asset Statement in respect of the Austrian Business	(1,800) (IEBC) plus (150) (EEBNA)	To be notified to the Principal Seller pursuant to Clause 15. 8.2 and details of the registered office and place of incorporation to be set out in Schedule 2 of the Deed of Substitution

The tangible and intangible assets (including contracts) pertaining to the business of operating the Holiday Inn Vienna South hotel excluding any owned real estate, are described in more detail in the transfer agreement for the Austrian Business in the Agreed Terms.

Part B
Austrian Excluded Assets

The bank accounts of the Austrian Business (including all cash in such bank accounts other than the cash held at the Hotel) and any receivables in relation to the Austrian Business not included in the European Business Net Asset Statement.

The tangible and intangible assets and liabilities of BHR Overseas (Finance) BV that are excluded from the sale are all assets and liabilities pertaining to the business of operating and managing the hotels CP Salzburg and CP Vienna.

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Part 4
Details of German Business to be sold

Part A
German Business

		(3)
		Consideration
		(Initial European
		Business
		Consideration
		(“IEBC”) and	(4)
(1)		Estimated European	Name of
Name of Business	(2)	Net Business Assets	Business
Seller	Business	(“EEBNA”)) (€ 000s)	Purchaser
Holiday Inns (Germany) LLC whose registered office is at 3 Ravina Drive, Atlanta, Georgia, U.S.	The business of operating a hotel under the name of Holiday Inn Hamburg Kieler Strasse carried on at the date hereof, including for the avoidance of doubt, the title to the Hamburg Real Estate and the liabilities contained in the European Business Net Asset Statement in respect of the German Business	2,729 (IEBC) (comprising land 800, building 1,275, plants & machinery 259, fixtures & fittings 396)plus 608 (EEBNA)	W.E. I Object Hamburg Kieler Strabe GmbH whose registered office is at c/o Nörr Stiefenhofer Lutz Partnerschaft, Brienner Strabe 28, 80333 München,Germany

The tangible and intangible assets (including contracts) pertaining to the business of operating the Holiday Inn Kielerstrasse hotel with the exception of the Hamburg Real Estate, are described in more detail in the transfer agreement for the German Business in the Agreed Terms.

“Hamburg Real Estate” means the real estate registered in the land register of Stellingen at the local court (Amtsgericht) Hamburg under volume (Band) 68, page (Blatt) 2725, parish (Germarkung) Stellingen:

Parcel (Flurstück)	Use and Location (Wirtschaftsartund Large)	Size (Grösse)
2166	building and vacant space for trade and commerce (Gebäude- und Freifläche Handel und Wirlschaft)	4263 m2
4024	recreation space, park (Erholungsfläche Grünfläöche) Kieler Strasse, Southern House Number (südl. Hausnr.) 333

including all buildings, constructions and facilities (Auf- und Einbauten) existing thereon and all components and fittings (Zubehör) as well as all associated rights.

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Part B
German Excluded Assets

The bank accounts of the German Business (including all cash in such bank accounts other than the cash held at the Hotel) and any receivables in relation to the German Business not included in the European Business Net Asset Statement.

The tangible and intangible assets and liabilities of Holiday Inns (Germany) LLC that are excluded from the sale include all assets and liabilities pertaining to the business of operating and managing the hotels Holiday Inn Passau, Holiday Inn Wilhelmshaven, Holiday Inn Express Dusseldorf and the Development Agreement with European Property Invest GmbH and any other assets and liabilities transferred to Holiday Inns (Germany) LLC as part of the Pre-Sale Reorganisation.

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Schedule 2
The Companies and the Subsidiaries

Part 1
Particulars of the Companies

Name of Company:	Holiday Inns France et CIE SAS
Registered number:	702010703
Registered office:	10 Place de la République, Paris, 75011, France
Date of incorporation:	4 March 1970
Issued share capital:	Nominal capital of €1,280,000 comprising
	80,000 ordinary shares of €16 each
Registered shareholders and shares held:	1. Six Continents International Holdings BV
	- 10 shares
	2. BHR Luxembourg S.à r.l. - 79,990 shares
Directors:	Hans Hohener (President)
	Denis Jean Charles
	Gisele Ford
Accounting reference date:	31 December
Auditors:	Ernst & Young
Name of Company:	Airport Garden Hotel NV
Registered number:	0474.417.201
Registered office:	Leonardo da Vincilaan 4, Diegem
	(Machelen) 1831, Brussels
Date and place of incorporation:	23 March 2001 Brussels
Issued share capital:	€ 14,495,000,00 (300 shares)
Registered shareholders and shares held:	1.Six Continents International Holdings BV - 299 shares
	2. BHR Holdings BV - 1 share
Directors:	Anthony Nibbelink
	Michel Checoury
Secretary:	Michel Checoury
Accounting reference date:	31 December

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Auditors:	Ernst & Young Bedrijfsrevisoren B.C.V,
	represented by Mr. Patrick Rottiers
Name of Company:	Holiday Inns NV
Registered number:	0421.732.937
Registered office:	Gerard Le Grellelaan 10, Antwerpen 2020,
	Belgium
Date and place of incorporation:	31 July 1981, Antwerp
Issued share capital:	€ 1,240,000,00 (5,000 shares)
Registered shareholders and shares held:	1. HH Hotels (Emea) BV -1 share
	2. Six Continents International Holdings BV -
	4,999 shares
Directors:	Andrew Gill
	Anne-Caroline Liebaert
	Anthony Nibbelink
	Patricia van Eeckhout
Accounting reference date:	31 December
Auditors:	Ernst & Young Bedrijfsrevisoren B.C.V.
	represented by Mr. Patrick Rottiers
Name of Company:	Holiday Inns SpA
Registered number:	00431300581 (REA 1399990) (as at 19 February
	1996)
Registered office:	Via Lorenteggio 278, 1-20100 Milan, Italy
Date and place of incorporation:	25 November 1968, Milan
Issued share capital:	€ 780,000,00
Authorised share capital:	€ 780,000,00
Registered shareholders and shares held:	Six Continents International Holdings BV -1
	5,000 shares
Directors:	Luciano Lusardi
	Antonio Cacioppo
	Luigi de Rosa
Accounting reference date:	31 December
Auditors:	Sandro Malevolti
	Gabriele Giovannardi
	Andrea Ferlito

64

Name of Company:	Holiday Inns BV
Registered number:	33122533
Registered office:	De Boelelaan 2, 1083HJ Amsterdam
Date and place of incorporation:	13 March 1968
Issued share capital:	€ 20,486,000,00
Authorised share capital:	€ 90,756,100,00
Registered shareholders and shares held:	BHR Holdings B.V. - 119,843 shares
Directors:	Jean Christian Beek
	Paul-Didier Bergé
	Jozias Cornelis Jumelet2
Accounting reference date:	31 December
Name of Company	Holiday Inn Hotelgesellschaft mbH
Court of registration:	AG Wiesbaden
Registration number:	HRB 7162
Date of establishment:	24 September 1985
Date of incorporation:	30 September 1985
Share capital:	DEM 50,000.00
Shareholders and shares held:	1. Holiday Inns (Germany) LLC - 1 share
	(DEM 45,000.00)
	2. SC Hotels UK Pensions S.a.r.l. - 1 share
	(DEM 5,000.00)
Managing Directors:	Arnd Stahl
	Joseph Charles Gerardus Peeters
	Arno Peter Oppolzer
Accounting reference date:	31 December

² Pursuant to Schedule 14 of this Agreement, Jozias Jumelet may be removed from the board of Holiday Inns BV before Completion.

65

Name of Company	LIMNÄ Hotelbetriebs GmbH
Court of registration:	AG Wiesbaden
Registration number:	HRB 7537
Date of establishment:	22 July 1986
Date of incorporation:	1 December 1986
Share capital:	DEM 50,000.00
Shareholders and shares held:	1. Holiday Inn Hotelgesellschaft mbH — 1 share (DEM 17,400.00)
	2. Six Continents International Holdings B.V. — 1 share (DEM 16,300.00)
	3. Frank Patriarca — 1 share (DEM 16,300.00)
Managing Directors:	Arnd Stahl
	Joseph Charles Gerardus Peeters
	Arno Peter Oppolzer
Accounting reference date:	31 December

	LIMNÄ Hotelbetriebsgesellschaflt mbH &
Name of Company (Partnership)	Co. Verwaltungs KG
Court of registration:	AG Wiesbaden
Registration number:	HRA 3714
Date of establishment:	19 December 1986
Liable capital (“Haftsumme”):	DEM 10,000.00
Registered shareholders and shares held:
- General Partner:	Limnä Hotelbetriebs GmbH, capital interest DEM 0.00
- Limited Partners:	1. Six Continents International Holdings B.V. — liable capital DEM 3,250.00
	2. Holiday Inn Hotelgesellschaft mbH — liable capital DEM 3,500.00
	3. Frank J. Patriarca — liable capital DEM 3,250.00
Managing Shareholder:	Limnä Hotelbetriebsgesellschaft mbH
Accounting reference date:	31 December

66

	BVH Hotelbesitzgesellschaft mbH & Co.
Name of Company (Partnership)	Verwaltungs KG
Court of registration:	AG Wiesbaden
Registration number:	HRA 3176
Date of establishment:	8 October 1986
Liable capital (“Haftsumme”):	DEM 40,000.00
Registered shareholders and shares held:
- General Partner:	BVH Hotelbetriebsgesellschaft mbH, capital interest DEM 0.00
- Limited Partners:	1. Six Continents International Holdings B.V. — liable capital DEM 13,000.00
	2. Holiday Inns von Deutschland GmbH — liable capital DEM 14,000.00
	3. Frank J. Patriarca — liable capital DEM 1,200.00
	4. Maria Patriarca — liable capital DEM 11,800.0
Managing Shareholder:	BVH Hotelbesitzgesellschaft mbH
Accounting reference date:	31 December

Name of Company	BVH Hotelbesitzgesellschaft mbH
Court of registration:	AG Wiesbaden
Registration number:	HRB 7549
Date of establishment:	6 December 1985
Date of incorporation:	13 June 1986
Share capital:	DEM 50,000.00
Shareholders and shares held:	1. Holiday Inns von Deutschland GmbH — 1 share (DEM 17,400.00)
	2. Six Continents International Holdings B.V. — 1 share (DEM 16,300.00)
	3. Maria Patriarca — 1 share (DEM 16,300.00)
Managing Directors:	Arnd Stahl
	Joseph Charles Gerardus Peeters
	Arno Peter Oppolzer
Accounting reference date:	31 December

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	HOB Hotelbesitz-und Verwaltungs GmbH
Name of Company (Partnership)	& Co. Objekt Graumannsweg KG
Court of registration:	AG Wiesbaden
Registration number:	HRA 3726
Date of establishment:	6 September 1985
Liable capital (“Haftsumme”)	DEM 3,961,200 (following removal of Gelin KG from the register)
Registered shareholders and shares held:
- General Partner:	HOB Hotelbesitz und Verwaltungs GmbH — capital interest DEM 0.00
- Limited Partners:	1. Six Continents International Holdings B.V.— liable capital DEM 2,001,200.00
	2. Holiday Inns von Deutschland GmbH — liable capital DEM 1,960,000.00
Managing Shareholder:	HOB Hotelbesitz und Verwaltungs GmbH
Accounting reference date:	31 December

Name of Company	HOB Hotelbesitz-und Verwaltungs GmbH
Court of registration:	AG Wiesbaden
Registration number:	HRB 7146
Date of establishment:	3 September 1985
Date of incorporation:	6 September 1985
Share capital:	DEM 50,000.00
Shareholders and shares held:	1. Holiday Inns von Deutschland GmbH — 1 share (DEM 24,500.00)
	2. Six Continents International Holdings B.V. — 1 share (DEM 25,500.00)
Managing Directors:	Arnd Stahl
	Joseph Charles Gerardus Peeters
	Arno Peter Oppolzer
Accounting reference date:	31 December

68

Name of Company:	Holiday Inns von Deutschland GmbH
Court of registration:	AG Wiesbaden
Registration number:	HRB 7099
Date of establishment:	14 July 1969
Date of incorporation:	29 August 1969
Share capital:	DEM 6,100,000.00
Shareholders and shares held:	Holiday Inns (Germany) LLC — 1 share (DEM 6,100,000.00)
Managing Directors:	Arnd Stahl
	Joseph Charles Gerardus Peeters
	Arno Peter Oppolzer
Accounting reference date:	31 December
Court of registration:	AG Wiesbaden

Part 2
Particulars of Subsidiaries

Name of Company	Hochstrasse 3 Hotelgesellschaft mbH
Court of registration:	AG Munich (München)
Registration number:	HRB 139051
Date of establishment:	9 August 2001
Date of incorporation:	12 September 2001
Share capital:	EUR 5,000,000.00
Shareholders and shares held:	1. Holiday Inns von Deutschland GmbH — 2 shares (EUR 3,099,750.00 and EUR 1,400,000.00)
	2. SC Hotels UK Pensions S.à.r.l. — 1 share (EUR 500,000.00)
	3. HOB Hotelbesitz und Verwaltungs GmbH — 1 share (EUR 250.00)
Managing Directors:	Arnd Stahl
	Joseph Charles Gerardus Peeters
	Arno Peter Oppolzer
Accounting reference date:	31 December

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Name of Company	CP Hilton Head Corp
Registered Office	1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801, USA
Date of incorporation:	25 July 2001
Authorised Share capital:	100 shares of common stock of $0.01 par value each
Issued Share capital	100 shares of common stock of $0.01 par value each
Shareholders and shares held:	Holiday Inns BV — 1 share
Directors:	Robert J. Chitty
	Alexi S. Hakim
	David A. Hom
Accounting reference date:	31 December

CP Hilton Head Corp will cease to be a Subsidiary if sold prior to Completion as permitted by Schedule 14.

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Schedule 3
The Properties
(Clause 1.1)

			(3) Tenure
			Freehold/		(5) Lessee	(6) Expiry of the term of the lease
	(1) Hotel Name	(2) Address and land references	Leasehold	(4) Freehold Owner	(if applicable)	(if applicable)
Austria
1.	HI Vienna South	Hertha-Finberg StraBe 5, 1100 Vienna, Cadastral No EZ 3534, land register 01102 Inzersdorf-Stadt, District Court Favoriten, surface approx. 4,300 sqm	L	Bauteile A + B Errichtungsges.m.b.H.3	BHR Overseas (Finance) B.V.	Indefinite term + Landlord’s waiver to terminate until 31 March 2025
Belgium
2.	CP Antwerp	Gerard Le Grellelaan 10, 2020 Antwerpen, according to title registered under:	L (Long Term Lease)	- City of Antwerp (Land A)	Holiday Inns NV	28 May 2042
		- numbers 2170-H-5 (parts) and 2246-G (parts) section I, surface 14,881.16 sqm (Land A)		- Belgian State (Land B)
		- numbers 2170-H-5 (parts), section I, surface 6,117.48 sqm (Land B)
3.	CP Brussels Airport	Da Vincilaan 4, 1831 Diegem, according to title registered under:	F (Owned Parking Land)	- Owned Parking Land: Airport Garden Hotel NV	- Leased Hotel Land: Airport Garden Hotel NV	- Leased Hotel Land: 31 December 2098
		- second division, section B, without number, as Machelen (Diegem), Vuurberg, respective		- Leased Hotel Land: Foxaco SA
		surfaces 25a 11ca and 1a 69ca (Owned Parking Land)	L (Leased
		- (i) part of the parcel number 86/L, section D,	Hotel Land):
		located in front of the Grensstraat, Zaventem	Long Term

³ Subject to lease and lease-back entered into with Wilmington Trust Company

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			(3) Tenure
			Freehold/		(5) Lessee	(6) Expiry of the term of the lease
	(1) Hotel Name	(2) Address and land references	Leasehold	(4) Freehold Owner	(if applicable)	(if applicable)
		(surface 1ha 6a 47ca) and (ii) part of the parcel number 291/T/5 section B, located at “Vlieger”, Machelen (Diegem) (surface 45a 32ca), total surface 1ha 10a 91ca and 92dma (Leased Hotel Land)	Lease
4.	HI Brussels Airport	Holidaystraat 7, 1831 Diegem, according to title number 113H, Section B, Machelen (Diegem), surface of 2ha 95a 66ca	F	Holiday Inns NV
France
5.	HI Paris- République	10 Place de la République, Rue de Malte et Rue du Faubourg du Temple, Paris, erected on a plot of land registered with the Paris Land Registry under reference Section AA no. 61 with a land surface area of 5,587 sqm	L	Westinvest Gesellschaft fur Investment Fond MBH	Holiday Inns France et CIE S.N.C.	30 June 2010
Germany
6.	CP Hamburg	Graumannsweg 10, 22087 Hamburg	F and L	HOB Hotelbesitz-und Verwaltungs GmbH &	Holiday Inn Hotelgesellschaft mbH	20 years as from the hand-over
		Real estate registered with the local court of Hamburg in the Land Register of Hohenfelde, under volume 93, folio 3178, parish Hohenfelde, plot no. 1358 with a size of 5,244 sqm		Co. Objekt Graumannsweg KG
7.	CP Heidelberg	Kurfürstenanlage 1, 69115 Heidelberg	F and L	BVH Hotelbesitzgesellschaft	Limnä Hotelbetriebsgesellscha	20 years, start date unknown
		Real estate registered with the local court of Heidelberg in theLand Register for part-ownerships of Heidelberg on folio 17868 as follows: 8,541/10,000 share of the co-ownership of lot no. 4, plot no. 1890, with a		mbH & Co. Verwaltungs-KG	ft mbH Verwaltungs-KG

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			(3) Tenure
			Freehold/		(5) Lessee	(6) Expiry of the term of the lease
	(1) Hotel Name	(2) Address and land references	Leasehold	(4) Freehold Owner	(if applicable)	(if applicable)
		size of 4,276 sqm, aligned with separate ownership of the hotel unit marked with no. 18 in the partition plan and separate usufructuary rights concerning parking lots nos. 1 —85, 90— 131 and 180 —183.
8.	HI Kieler Straße, Hamburg	Kieler Straße 333, 22525 Hamburg,	F	Holiday Inns (Germany) LLC,
		Real estate registered with the local court of Hamburg in the Land Register of Stellingen under volume 68, folio 2725, parish Stellingen, plot no. 2166 and no.4024 with an aggregate size of 4,263 sqm		Zweigniederlassung Wiesbaden (as legal successor of the registered owner Holiday Inns (Germany), Inc.)
9.	HI Munich City Centre	HochStraße 3, 81669 Munich,	L (Building Right)	Grundstücksverwaltung sgesellschaft HochStraße mbH	HochStraße 3 Hotelgesellschaft mbH	31 December 2069
		Heritable building right registered with the local court of Munich in the Land Register for heritable building rights of Au undervolume 112, folio 2275, 47, 566/100,000 share of the heritable building right on the real estate registered with the local court of Munich in the Land Register of Au under volume 107, folio 2110, plot no. 15460 with a size of 17,190 sqm			(owner of the heritable building right)
10.	EX Cologne Troisdorf	Echternacher Straße 4, 53842 Troisdorf	F	Holiday Inn Hotelgesellschaft mbH
		Real estate registered with the local court of Siegburg in the Land Register for part- ownerships of Spich on folio 3671, 888/1,000 share of co-ownership of lot no. 015, plot nos. 611 and 592 with a size of 5,356 sqm, aligned

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			(3) Tenure
			Freehold/		(5) Lessee	(6) Expiry of the term of the lease
	(1) Hotel Name	(2) Address and land references	Leasehold	(4) Freehold Owner	(if applicable)	(if applicable)
		with separate ownership of the part of the building marked with Nr. 1 in the partition plan and several usufructuary rights.
11.	EX Frankfurt Messe	GutleutStraße 296, 60327 Frankfurt	F	Holiday Inn Hotelgesellschaft mbH
		Real estate registered with the local court of Frankfurt am Main in the Land Register of Frankfurt Bezirk 15 on folio 2595, parish Frankfurt Bezirk 15, lot no. 189, plot no. 4/5. with a size of 3,793 sqm
12.	EX Dortmund	Moskauer Straße 1, 44269 Dortmund	F	Holiday Inn Hotelgesellschaft mbH
		Real estate registered with the Local court of Dortmund in the Land Register of Dortmund B onfolio 30952, parish Schüren, lot no. 1, plot no. 761, with a size of 4,242 sqm
13.	EX Berlin City Center	StresemanStraße 49, 10963 Berlin	F	Holiday Inn Hotelgesellschaft mbH
		Real estate registered with the local court of Tempelhof-Kreuzberg in theLand Register of Potsdamer Torbezirk on folio 5239, parish Kreuzberg, lot no. 5, plot no. 2317with a size of 1,645 sqm
14.	EX Frankfurt Airport	Langener Straße 200, 64546 Morfelden,	F	Holiday Inn Hotelgesellschaft mbH
		Real estate registered with the local court of Gross-Gerau in the Land Register of Mörfelden on folio 11092, parish Mörfelden, lot no. 17, plot nos. 74/2 with a surface of 2,507 sqm and 74/3 with a size of 18 sqm.

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			(3) Tenure
			Freehold/		(5) Lessee	(6) Expiry of the term of the lease
	(1) Hotel Name	(2) Address and land references	Leasehold	(4) Freehold Owner	(if applicable)	(if applicable)
15.	EX Cologne Mülheim	TiefentalStraße 72, 51063 Muelheim	F	Holiday Inn Hotelgesellschaft mbH
		Real estate registered with the local court of Köln in the Land Register of Mülheim on folio 15818, parish Mülheim, lot no. 4, plot no. 1186 with a size of 1 sqm, no. 1188 with a size of 1,999 sqm and No 1190 with a size of 32,418 sqm.
16.	EX Munich Messe	Otto-Lilienthal-Ring 6, 85622 Feldkirchen	L (Building Right)	Renate Urlinger, Winfried Urlinger and	Holiday Inn Hotelgesellschaft mbH	16 December 2101
		Heritable building right registered with the local court of Munich in the Land Register for heritable building rights of Feldkirchen on folio 4185, relating to the real estate registered with the local court of Munich in the Land Register of Feldkirchen on folio 4157, plot no. 669/15, with a size of 3,154 sqm.		Julia Urlinger (co- owners)
17.	EX Düsseldorf- North	MercedesStraße 14, 40470 Düsseldorf	F	Holiday Inn Hotelgesellschaft mbH
		Real estate registered with the local court of Dusseldorf in the Land Register of Derendorf on folio 21543, parish Derendorf, lot no. 9, plot no. 356 with a size of 2,964 sqm
Italy
18.	HI Florence	Viale Europa 205, Florence, Land Register of Florence, folio 140, plot no 1769 and 2350, surface 6,630 sqm.	F	Holiday Inns S. p. A.
19.	HI Bologna City	Piazza della Contituzione n. 1, Bologna, Land Register of Bologna, folio 121, plot no 16-29,	F	Holiday Inns S. p. A.

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			(3) Tenure
			Freehold/		(5) Lessee	(6) Expiry of the term of the lease
	(1) Hotel Name	(2) Address and land references	Leasehold	(4) Freehold Owner	(if applicable)	(if applicable)
		surface 6,402 sqm.
20.	HI Milan	Via Lorenteggio 278 Milan, Land Register of Milan, folio 505, plot no. 33 and 159	L	Ente Holding S.r.l.	Holiday Inns S.p.A.	14 January 2010
Netherlands
21.	CP Amsterdam- Schipol	Planeetbaan 2, 2132 HZ Hoofddorp, Land Register of the Municipality of Haarlemmermeer, Section AL, Number 1055, surface 1 ha 48 a 38 ca		Onroerend Goed
			L	Maatschappij Beukvoorde I BV	Holiday Inns BV	24 January 2013
22.	HI Amsterdam	De Boelelaan 2, 1083 HJ Amsterdam, Land registry of the Municipality of Amsterdam, Section AK, Number 2498, surface of 37a and 11ca	L (Long Term Lease)	City of Amsterdam	Holiday Inns BV	1st January 2016
Spain
23.	EX Alicante	Elche 112, Alicante, Land Registry of Alicante number 7, under number 48,140, Page 89, Volume 1,849, Book 819, cadastral reference 703971 1YH1473G0001BS, surface 6,519 sqm	F	InterContinental Hotels Group España SA
24.	Ex Valencia	Ausías March 99, Valencia, Land Registry of Valencia number 4, under number 63, 116, Page 161, Volume 1,754, Book 795, cadastral reference 6698032YJ2669, surface 2,411.35 sqm	F	InterContinental Hotels Group España SA

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Schedule 4
Documents in the Agreed Terms
(Clause 1.1)

Pro Forma Hotel Franchise Agreements

Pro Forma Hotel Master Technology Agreements

Portfolio Franchise Agreement

Purchasers’ Group Master Guarantee (re franchise agreements and master technology agreements)

Local Transfer Documents for:

• Spanish Business Transfer

• Valencia Real Estate Transfer

• Alicante Real Estate Transfer

• Austrian Business transfer

Local Transfer Document (Framework Deed) to include:

• German Share Transfers German Limited Partners’ Interest Transfers

• German Business Transfer

• Hamburg Real Estate Transfer

Dutch Share Transfer

Pre-Sale Reorganisation Paper

Tax Deed of Covenant

Form of written resignations of the directors and officers of the Group Companies notified to the Principal Seller in accordance with paragraph 3.2 of Schedule 5

Letter to employees re: HI Hamburg Kielerstrasse (for purposes of Clause 7.2)

Deed of Termination (for services (cost allocation) agreements)

Deed of Termination (for licence, Holidex and master technology agreements)

Debt Assignment Agreement

Transitional Services Agreement

Deed of Substitution

Letters of reliance in relation to the Material Issues Reports on Title

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Schedule 5
Completion Obligations
(Clause 6.2)

1 General Obligations

1.1	Sellers’ Obligations
	On Completion, the Sellers shall deliver or make available to the Purchasers 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 this Agreement and the documents listed in paragraphs 1.1.2 to 1.1.15 below;
1.1.2	the Portfolio Franchise Agreement, duly executed by Six Continents Hotels, Inc.;
1.1.3	individual Hotel Franchise Agreements in respect of each of the 24 Hotels listed in Schedule 1 of the Portfolio Franchise Agreement duly executed by Six Continents Hotels, Inc;
1.1.4	individual Hotel Master Technology Agreements in respect of each of the 24 Hotels listed in Schedule 1 of the Portfolio Franchise Agreement duly executed by Six Continents Hotels, Inc;
1.1.5	the Local Transfer Document (Framework Deed) for the German Business Transfer, the Hamburg Real Estate Transfer, the German Share Transfers, and the German Limited Partners’ Interest Transfers, duly executed by the relevant Sellers;
1.1.6	the Local Transfer Document for the Spanish Business Transfer, duly executed by the relevant Seller;
1.1.7	the Local Transfer Document for the Valencia Real Estate Transfer, duly executed by the relevant Seller;
1.1.8	the Local Transfer Document for the Alicante Real Estate Transfer, duly executed by the relevant Seller;
1.1.9	the Local Transfer Document for the Austrian Business Transfer duly executed by the relevant Seller;
1.1.10	the Dutch Share Transfer duly executed by the relevant Group Company and the relevant Seller;
1.1.11	the Tax Deed of Covenant, duly executed by the Sellers;
1.1.12	the Deed of Termination (for services (cost allocation) agreements) duly executed by Six Continents Limited and the relevant Group Companies;
1.1.13	the Deed of Termination (for licence, Holidex and master technology agreements) duly executed by Six Continents Hotels, Inc. and the relevant Group Companies;
1.1.14	the Debt Assignment Agreement, duly executed by Holiday Inns (Germany) LLC; and
1.1.15	a letter from each of the Sellers’ Property Lawyers addressed to the relevant Purchasers and the providers of debt finance to the Purchasers’ Group in the

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Agreed Terms confirming that each of them may rely on the relevant Material Issues Reports on Title as if they were an original addressee (provided that, for the avoidance of doubt, there shall be no obligation to update the Material Issues Reports on Title);

1.2	The Purchasers’ Obligations
	On Completion, the Purchasers shall deliver or make available to the Sellers:

1.2.1	evidence of the due fulfilment of the condition set out in Clause 4;
1.2.2	evidence that the Purchasers and the Purchasers’ Guarantor are authorised to execute this Agreement and the documents listed in paragraphs 1.2.3 to 1.2.15 below;
1.2.3	the Portfolio Franchise Agreement, duly executed by the Purchasers;
1.2.4	the Purchasers’ Group Guarantee, duly executed by the Purchasers’ Guarantor;
1.2.5	individual Hotel Franchise Agreements in respect of each of the 24 Hotels listed in Schedule 1 of the Portfolio Franchise Agreement duly executed by the Purchasers;
1.2.6	individual Hotel Master Technology Agreements in respect of each of the 24 Hotels listed in Schedule 1 of the Portfolio Franchise Agreement duly executed by the Purchasers;
1.2.7	the Local Transfer Document (Framework Deed) for the German Business Transfer, the Hamburg Real Estate Transfer, the German Share Transfers, and the German Limited Partners’ Interest Transfers, duly executed by the relevant Purchaser;
1.2.8	the Local Transfer Document for the Spanish Business Transfer, duly executed by the relevant Purchaser;
1.2.9	the Local Transfer Document for the Valencia Real Estate Transfer, duly executed by the relevant Purchaser;
1.2.10	the Local Transfer Document for the Alicante Real Estate Transfer, duly executed by the relevant Purchaser;
1.2.11	the Local Transfer Document for the Austrian Business Transfer duly executed by the relevant Purchaser;
1.2.12	the Dutch Share Transfer duly executed by the relevant Purchaser,
1.2.13	the Tax Deed of Covenant, duly executed by the Purchasers;
1.2.14	the Debt Assignment Agreement, duly executed by the Principal Purchaser; and
1.2.15	evidence of the payment of €35,000,000 plus accrued interest in consideration of the assignment of the German Debt in accordance with the terms of the Debt Assignment Agreement.

2	Transfer of the Shares and the European Business
2.1	General Transfer Obligations
	On Completion the Sellers and the Purchasers shall execute and/or deliver and/or make available the Local Transfer Documents set out in Schedule 4 of this Agreement and take

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	such steps as are required to transfer the Shares, the European Business and the German Debt to the Purchasers.
2.2	Specific Transfer Obligations
	On Completion:
2.3	Austria
	In respect of the Austrian Business, BHR Overseas (Finance) BV and the relevant Purchaser shall sign a transfer agreement in the Agreed Terms through which BHR Overseas (Finance) BV transfers the Austrian Business to the relevant Purchaser.
2.4	Belgium

2.4.1	Each Seller shall procure that each relevant Group Company shall record the transfer of Shares owned by such Sellers to the Purchasers in the share register of the relevant Group Company, and shall sign the share register to that effect.
2.4.2	The Purchasers shall sign the share register of the relevant Group Company to accept the transfer of the Shares from the relevant Seller.

2.5	The Netherlands
	The relevant Seller shall transfer the relevant Shares in the relevant Group Company to the relevant Purchaser, the Purchaser shall accept the transfer and the Seller shall procure that the relevant Group Company acknowledges the transfer before the civil law notary. The relevant Seller will nominate the Dutch civil law notary who will effect the transfer.
2.6	Germany

2.6.1	The Sellers and the Purchasers shall enter into a Framework Deed pursuant to which the transfer agreements in the Agreed Terms set out at paragraphs 2.6.2 to 2.6.4, 2.6.6 and 2.6.7 below shall be notarised.
2.6.2	In respect of the transfer of Shares in GmbH Group Companies, the Sellers and the Purchasers shall notarise a transfer agreement in the Agreed Terms through which the Sellers transfer title to the Shares to the Purchasers, and the Purchasers accept such transfer.
2.6.3	In respect of the transfer of Shares in KG Group Companies, the Sellers and the Purchasers shall sign a transfer agreement in the Agreed Terms through which the Sellers transfer title to the Shares to the Purchasers, and the Purchasers accept such transfer.
2.6.4	In respect of GmbH Group Companies, the Purchasers shall immediately after Completion inform the management of the relevant Group Company with respect to the transfer of the Shares.
2.6.5	In respect of KG Group Companies, the Sellers and the Purchasers shall immediately after Completion file for the de-registration of the Sellers and the registration of the Purchasers as partner in the commercial register (Handelsregister) competent for the relevant Group Company.
2.6.6	In respect of the Hamburg Real Estate, Holiday Inns (Germany) LLC and the relevant Purchaser shall notarise a transfer agreement in the Agreed Terms

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	through which Holiday Inns (Germany) LLC conveys (erklärt die Auflassung) the Hamburg Real Estate to the relevant Purchaser.
2.6.7	In respect of the German Business, Holiday Inns (Germany) LLC and the relevant Purchaser shall sign a transfer agreement in the Agreed Terms through which Holiday Inns (Germany) LLC transfers the German Business to the relevant Purchaser.

2.7

Italy

The relevant Seller shall transfer in favour of the relevant Purchaser by notarised endorsement all the share certificates owned by the Seller and shall deliver such share certificates to the Purchaser and procure that the name of the Purchaser is registered in the shareholders’ ledger as the owner of such Shares. The Notary who will notarise the signatures on the endorsements will be selected by the relevant Seller.

2.8 France

2.8.1	In relation to any Shares having the form of actions in any Group Company incorporated in France, the Sellers shall deliver to the relevant Purchaser: (i) duly completed, executed and dated share transfer forms (ordres de mouvements) in favour of the Purchaser; (ii) the share transfer registers (registres des mouvements de titres); and (iii) the shareholders’ account (comptes d’actionnaires).
2.8.2	The Sellers and the relevant Purchaser shall execute a Form 2759 (Cerfa) in respect of the Shares to be transferred to the relevant Purchaser.

2.9 Spain

2.9.1	The Business Seller and the relevant Purchaser shall ensure that a sale agreement of the Spanish Business in the Agreed Terms, is executed before the Notary selected by the relevant Seller.
2.9.2	The Business Seller and the relevant Purchaser shall execute sale property agreements in relation to the Properties located in Spain in the Agreed Terms, before the Notary. The Purchaser shall procure that this public deed is registered at the relevant Land Registries where the Properties are located.

3	Further obligations in addition to transfer
3.1	General Obligations
	The Sellers shall deliver or make available to the Purchasers the following:

3.1.1	evidence that all persons referred to in 3.2 below holding share(s) in any Group Company under a nominee-type arrangement or any arrangement having a similar effect have transferred such share(s) to such other persons as the Purchasers may specify, to take effect on Completion;
3.1.2	if the Principal Purchasers reasonably requires (and gives at least 10 Business Days’ notice to the Principal Seller prior to Completion), irrevocable powers of attorney or such other appropriate document (in such form and terms as the

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	Purchasers may reasonably require) executed by each of the holders of the Shares in favour of the Purchasers or as it may direct to enable the Purchasers (pending registration of the relevant transfers) to exercise post Completion all voting and other rights attaching to the Shares and to appoint proxies for this purpose;
3.1.3	any releases which the parties have obtained under Clause 15.2;
3.1.4	in each case where the said information is not in the possession of the relevant Group Company, the corporate books and records, duly written up to, but not including the Completion Date), including the shareholders’ register and share certificates in respect of the Subsidiaries, and all other books and records, all to the extent required to be kept by each Group Company under the law of its jurisdiction of incorporation;
3.1.5	in each case where the said information is not in the possession of the relevant Group Company or provided with the relevant Local Transfer Document, the title deeds which relate to the Properties;
3.1.6	evidence as to:

(i)	the acceptance by shareholders or the directors of each of the relevant Group Companies of the resignations referred to in paragraph 3.2 and of the appointment of such persons to take effect on Completion (within the maximum number permitted by the constitutional documents of the Group Company concerned) as the Purchasers may nominate;
(ii)	the approval by the shareholders or the directors of the transfer of the Shares to the Purchasers,

where such acceptance or approval is required by law or under the constitutional documents of the Group Company concerned; and

3.1.7 evidence reasonably satisfactory to the Purchasers of the revocation of existing authorities given by the Group Company to banks (in respect of the operation of its bank accounts) and giving authority in favour of such persons as the Purchasers may nominate to operate such accounts.

3.2	Resignation of Directors
	The Sellers’ shall use reasonable endeavours to obtain the written resignations in the Agreed Terms (and legalised by a notary where required) of Michel Checoury (Airport Garden Hotel NV), Paul Berge (Holiday Inns BV) Christian Beek (Holiday Inns BV), Joseph Peeters (Holiday Inn Hotelgesellschaft mbH, LIMNA Hotelbetriebs GmbH, BVH Hotelbesitzgesllschaft mbH, HOB Hotelbesitz-und Verwaltungs GmbH, Holiday Inns von Deutschland and Hochstrasse 3 Hotelgesellschaft mbH and such directors, or officers of the Group Companies as are notified to the Principal Seller by the Principal Purchaser not less than 15 Business Days prior to Completion.
3.3	Transitional Services Agreement

3.3.1 The Sellers’ shall use reasonable endeavours to procure the consent of Oracle for the use of the Peoplesoft software licence and the JD Edwards software licence by the Purchasers’ Group prior to Completion.

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3.3.2 Subject to such consent being obtained, the Sellers’ and the Purchasers’ shall procure that the Transitional Services Agreement in the Agreed Terms is duly executed by the Principal Purchaser on Completion.

3.4

Paris Republique Lease

The Sellers shall procure that on or before Completion, HI France et CIE SAS and Société des Hôtels Intercontinental France shall agree in writing (on terms acceptable to the Purchaser acting reasonably) upon the bilateral termination without any indemnity payment to the tenant, as at 30 September 2006, of the lease agreement entered into amongst them on 22 March 2004 in respect of the satellite offices in the HI Paris République Hotel. Such termination shall be carried out by way of an amendment to the lease pursuant to which Société des Hôtels Intercontinental France would hand-over the demised premises to HI France et CIE SAS in their current state and condition as of the date of such termination. After Completion, the Purchaser shall procure that HI France et CIE SAS complies with its obligations in such termination documentation and, in addition, that it will not terminate the lease agreement before 30 September 2006.

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Schedule 6
Share Sale Adjustments
Net Current Asset Statement
(Clause 9.1)

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 2400 hours (CET) at the end of the Completion Date including interest owed by the Group Companies in respect of any Inter-Group Debt Balance, any wages, salaries, severance pay arising on terminations notified by the Group Companies prior to the Completion Date, deductions from employees salaries on account of tax, VAT, accrued Tax and rates and employer’s and employees social security payment and pension contribution accruals for the calendar month in which the Completion Date falls, and any amounts in respect of bonuses for 2005 and prior years and for the period up to Completion together with social security and any deductions on account of Tax in respect thereof in respect of Relevant Employees (other than Business 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 2400 hours (GET) at the end of the Completion Date including interest due to the Group Companies in respect of the Inter-Group Debt Balance;

“Agreed Reduction” means €280,000;

“Appointment Notice” means a notice given by the Principal Seller or the Principal 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 (to the extent not included as cash at the Hotels);

“Corporate Income Tax” means liabilities for Taxation arising on income and profits generated during the current tax year up to the Completion Date;

“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 2400 hours (CET) at the end of the Completion Date including Accrued Income, Employee Loans, Prepayments and the right to receive payment for services rendered before Completion but not invoiced before such date which shall include that portion of Current

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Guest Accounts relating to the period prior to Completion but, for the avoidance of doubt, not including deferred tax, any amount included in the Inter-Group Debt Balance or any Inter-Group Receivables or the German Debt 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;

“Deferred Tax” means the amount of any liabilities for income taxes payable in future periods in respect of taxable temporary differences together with the amount of any assets for income taxes recoverable in future periods in respect of deductible temporary differences, the carryforward of unused tax losses and the carryforward of unused tax credits as defined in International Accounting Standard 12, or the equivalent amount of any liability or asset as calculated in accordance with the applicable GAAP;

“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 Group Company, full details of which are contained in the Disclosure Letter;

“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 or the German 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 or the German 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 Third Party Debt” means all indebtedness due at Completion from the Group Companies to third parties (other than the Sellers’ Group) which is classified as long-term liabilities including any amounts owed pursuant to long term obligations to banks (including mortgages) but excluding any Deferred Tax, contingent liabilities or provisions;

“Prepayments” means all prepayments made by the Group Companies before or on the Completion Date which relate to a supply to any such company of goods and/or services the benefit of which is to be received after the Completion Date;

“Purchasers’ Disagreement Notice” means a notice given by the Principal Purchaser pursuant to paragraph 4.1 of Part 2 of this Schedule 6 stating that the draft Net Current Asset Statement does not comply with the provisions of this Schedule 6;

“Reporting Accountants” means PricewaterhouseCoopers 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 Principal Seller and the Principal 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;

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“Seller Retained Costs” means any outstanding costs to be paid by the Group Companies as at 2400 hours (CET) at the end of the Completion Date in respect of: (i) the schedule of remedial action identified at the date of this Agreement in respect of drinking water contamination at the Hotels at Munich City Centre, Cologne-Mulheim and Heidelberg; and (ii) the cost of re-testing of the drinking water following completion of such works; (iii) the schedule of works listed in Part 1 of Schedule 16 in respect of regulatory fire and life safety at the Hotels in Milan and Bologna; and (iv) the schedule of works listed in Part 2 of Schedule 16 in respect of brand standard fire and life safety at each of the hotels;

“Sellers’ Disagreement Notice” means a notice given by the Principal Seller pursuant to paragraph 4.2 of Part 2 of this Schedule 6 stating its reasons for disagreement with the Purchasers’ Disagreement Notice;

“Stock” means all items which have prior to the date hereof, in accordance with the provisions of paragraph 1.2 of Part 3 of this Schedule 6, been regarded as stock which are unused, owned beneficially by any Group Company and held at any Property at Completion;

“Stock Statement” means the statements of stock to be prepared by the Principal Seller in accordance with Clause 9.1 and this Schedule; and

“Trade Creditors” means all indebtedness of the Group Companies as at 2400 hours (CET) at the end of the Completion Date including, without limitation, creditors, overdrafts, monies held on account, bills of exchange, specific provisions booked in accordance with paragraph 1.2 of Part 3 of this Schedule 6, irrevocable capital commitments (excluding Seller Retained Costs and the items referred to in paragraphs 2.4.2 and 2.4.3 of Part 3 of this Schedule 6 and the items referred to in Clause 5.3 of this Agreement), Tax (other than Tax taken into account in the Accruals), Accruals and Deferred Income but excluding, for the avoidance of doubt, Deferred Tax, any amounts included in Corporate Income Tax, Inter-Group Payables, the Inter-Group Debt Balance and any indebtedness owed by a Group Company to another Group Company, Long-Term Third Party Debt and German Debt.

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Part 2
Determination and Confirmation of Net Current Assets

1	Stock Statement
	The Principal Seller shall on the Completion Date produce the Stock Statement as at 2400 (CET) at the end of the Completion Date as agreed with the Principal Purchaser.
2	Submission of the Net Current Asset Statement
2.1	Net Current Asset Statement
	The Principal Seller shall use its reasonable endeavours to procure that, as soon as practicable following the Completion Date (and in any event on or before the day that is 90 days following the Completion Date), it prepares and delivers to the Principal Purchaser the Net Current Asset Statement for each Company and in aggregate as at the Completion Date:

2.1.1	including the Stock value determined in accordance with paragraph 1 of this Part 2 of this Schedule 6;
2.1.2	in accordance with the principles and methodology set out in Part 3 of this Schedule 6; and
2.1.3	in the format of the pro forma Net Current Asset Statement set out in Part 4 of this Schedule 6.

3	Access to Information
	In order to allow the Principal Seller to prepare, and the Principal Purchaser to review, the Net Current Asset Statement:
3.1	the Principal Purchaser shall:

3.1.1	keep up-to-date and make available to the Principal Seller and its representatives its books and records relating to the Group Companies (with the right to take copies at the Principal Seller’s cost) 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 the Principal Seller 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 the Principal Seller.

3.2 The Principal Seller shall procure that after the preparation of the draft Net Current Asset Statement, it shall give the Principal Purchaser and its representatives access to the working papers and files (with the right to take copies at the Principal Purchaser’s expense) and personnel which or who are relevant to the review of the draft Net Current Asset Statement by the Principal Purchaser or its representatives subject to the

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	Purchasers providing or procuring the provision of any hold harmless undertaking that the Principal Seller’s accountants may require.
4	Preparation
4.1	Within 30 Business Days of receipt by the Principal Purchaser of the draft Net Current Asset Statement, the Principal Purchaser may serve a Purchasers’ 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 shall become the Net Current Asset Statement and shall be final and binding on the parties for all purposes.
4.2	If the Principal Purchaser gives a valid Purchasers’ Disagreement Notice, the Principal Seller may serve a Sellers’ Disagreement Notice stating its reasons for disagreement (in reasonable detail) with the Purchasers’ Disagreement Notice within 10 Business Days of receipt by the Principal Seller of the Purchasers’ Disagreement Notice. If the Principal Seller does not serve such a valid Sellers’ Disagreement Notice, the draft Net Current Asset Statement as amended to reflect the matters specified in the Purchasers’ 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 from the date of the Purchasers’ Disagreement Notice, the Principal Seller and the Principal Purchaser shall attempt in good faith to reach agreement in respect thereof and if they are unable to do so then either the Principal Seller or the Principal Purchaser may, by notice to the other, give an Appointment Notice. The Principal Purchaser shall procure that after the service of a Purchasers’ Disagreement Notice, it shall give the Principal Seller and its accountants access to the Purchasers’ accountants’ working papers and files (with the right to take copies at the Principal Seller’s expense) and personnel which or who are relevant to the review of the Purchasers’ Disagreement Notice by the Principal Seller or its accountants.
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 Purchasers’ 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:

(i) give the parties a reasonable opportunity to make written and oral representations to them;

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(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; and
(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 draft Net Current Asset Statement and no objection should be made to any matter raised by the Purchasers’ 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, which, as adjusted, shall then be final and binding on the Sellers and the Purchasers 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 Purchasers shall keep up to date and, subject to reasonable notice, make available to the Principal Seller, the Principal Seller’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 the Principal Seller shall and shall procure that its representatives shall subject to the Purchasers providing or procuring the provision of any hold harmless undertaking that the Principal Seller’s accountants may reasonably require and subject to reasonable notice make available to the Principal Purchaser, the Purchasers’ 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.
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.

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4.9	Each party shall, and shall procure that its accountants and other advisers shall, and 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.
5	Interest
	If the Principal Purchaser serves a Purchasers’ Disagreement Notice on the Principal Seller, in accordance with paragraph 4.1 of this Part 2 of this Schedule 6, any payments to be made in accordance with Clause 9.2 (Adjustment to Consideration) to the extent not paid on or before the Purchasers’ Disagreement Notice shall include interest thereon calculated from the date of receipt by the Principal Seller of the Purchasers’ Disagreement Notice to the date of payment at a rate per annum of 2 per cent above the base rate from time to time of EONIA (calculated on basis of the rate published on the date such payment was due (or if not published on such date, the next date on which it is published)). Such interest shall accrue from day to day.

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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 jurisdiction of incorporation of the relevant Group Company; and
1.3	save to the extent inconsistent with or contradictory to paragraphs 1.1 and 1.2, in accordance with GAAP as at the Completion Date.
2	Specific Accounting Policies
2.1	The Net Current Asset Statement shall be drawn up on a going concern basis as at 2400 hours (CET) at the end of the Completion Date on a basis consistent with the Management Accounts (save to the extent inconsistent with the policies set out below) or, if completed in time, in respect of the relevant Group Companies, the audited accounts prepared in accordance with Part 5 of this Schedule 6. No account shall be taken of events taking place or information becoming available after the date the Seller delivers the Draft Net Current Asset Statement to the Purchasers pursuant to paragraph 2.1 of Part 2 of this Schedule 6. Events taking place and information available before that date will only be reflected in the Draft Net Current Asset Statement if they provide additional evidence of conditions existing at the date of the Net Current Asset Statement.
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 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 Purchasers after that date.
2.3	The Net Current Asset Statement will be prepared on the basis of an aggregation of net current asset statements drawn up for each Group Company in each case as at 2400 hour (CET) at the end of the Completion Date and in accordance with the policies set out in this Part 3 of Schedule 6. For the avoidance of doubt, the Seller Retained Costs and the Agreed Reduction shall only be included once in such aggregation.
2.4	The Net Current Asset Statement will exclude any amount estimated to be due (or any provision) in respect of:

2.4.1	any losses referred to in Clause 10.4;
2.4.2	the re-commissioning of the health club and fitness centre (including swimming pool) at the Hotel at Munich City Centre; and
2.4.3	the installation of fire resistant doors for an elevator in the Hotel at Florence.

2.5 No amounts shall be included as Current Assets in respect of:

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2.5.1 the refurbishment works listed in:

(i)	the definition of Seller Retained Costs;
(ii)	Clause 5.3 of this Agreement; and
(iii)	paragraphs 2.4.2 and 2.4.3 above;

2.5.2	the proceeds of sale of any fixed assets sold since 1 January 2006 and the process (other than in respect of the Pre-Sale Reorganisation and transaction set out in paragraph 2.5.3 below but including the sum of €327,751 in respect of payment by the purchaser to the vendor in respect of working capital to the sale of HI Gent); and
2.5.3	the €500,000 receivable from a building contractor as compensation for the business interruption and loss of 18 parking spaces at the Hotel at HI Amsterdam pursuant to an agreement dated 22 December 2003, provided that if such €500,000 receivable is received prior to Completion, then €500,000 shall be included in the Current Assets.

2.6	The values attributable to each element of the Net Current Asset Statement in respect of: (i) Holiday Inn Hotelgesellschaft mbH; and (ii) Hochstrasse 3 Hotelgesellschaft MbH shall be calculated as if the Sellers’ direct and indirect shareholdings in such companies were 100% (and not 90%).
2.7	The values attributable to each element of the Net Current Asset Statement in respect of: (i) LIMNA Hotelbetriebsgesellschaft mbH & Co. Verwaltungs KG; (ii) LIMNA Hotelbetriebs GmbH; (iii) BVH Hotelbesitzgesellschaft mbH; and (iv) BVH Hotelbesitzgesellschaft mbH & Co. Verwaltungs KG shall be in proportion to the direct or indirect shareholdings and interests of the Sellers in such entities.
2.8	The Net Current Asset Statement will take into account any amount estimated to be due to or by a Group Company to or by a member of the Sellers’ Group pursuant to the Profit and Loss Transfer Agreements for the period ending on the Accounting Reference Period End Date (as defined in Part 5 of this Schedule 6).
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 Management Accounts.
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.

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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 2400 hours CET at the end of 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 to the extent not included in the cash book balances.
4	Current Liabilities
4.1	Corporate Income Tax
	The recognition of the liability for Taxation (if any) will include all unpaid Tax liabilities for prior Tax years adjusted to reflect liability for Taxation (if any) arising on profits generated during the current tax year up to the Completion Date (but in all cases excluding any Tax taken into account in Accruals or Trade Creditors). Such liability and adjustment will be calculated on the basis of GAAP and tax rules and practices applied to each Group Company, in the case of GAAP and save for those Group Companies which were members of a fiscal unity immediately prior to Completion as if each Group Company were not a member of a group of companies. Where a Group Company does not terminate its accounting period on Completion, liabilities to Tax and Reliefs shall be computed as if the period commencing on the date after the end of the last accounting period before Completion in relation to which Tax has been computed for the relevant Group Company and ending on Completion, was a period by reference to which a Tax return fell to be made to the relevant Tax Authority.
4.2	Inter-Company Trading Amounts
	Inter-Company trading amounts so far as they are solely between Group Companies shall be deemed to be reconciled to zero at the Completion Date.
4.3	Trade Creditors
	All Trade Creditors of the Group Companies as at the Completion Date shall be included.
4.4	Deferred Tax
	Deferred Tax shall not be treated as a current liability.

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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		•
Stock		•
Inter-Group Receivables		•
Cash		•
					•
Less
Current Liabilities
Trade Creditors		(•	)
Inter-Group Payables		(•	)
Corporate Income Tax		(•	)
					(•	)
Less
Seller Retained Costs		(•	)
Agreed Reduction		(280,000	)
Net Current Assets/(Liabilities) Amount					•/(•	)

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Part 5
Profit and Loss Transfer Agreements Adjustment

1	The actual amounts due to or by any Group Company to or by a member of the Sellers’ Group pursuant to the Profit and Loss Transfer Agreements for the period ending on the Accounting Reference Period End Date shall be determined by the Principal Seller on the basis of the audited accounts of the relevant Group Companies (“Short Accounting Year Audited Accounts”) for the period ending on the Accounting Reference Period End Date.
2	The Principal Seller shall produce or procure the production of the Short Accounting Year Audited Accounts 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 Germany.
3	In order to allow the Principal Seller to prepare the Short Accounting Year Audited Accounts the Principal Purchaser shall:
3.1	keep up-to-date and make available to the Principal Seller and its representatives its books and records relating to the Group Companies (with the right to take copies at the Principal Seller’s cost) during normal office hours and co-operate with it with regard to the calculation and review of the draft of the Short Accounting Year Audited Accounts;
3.2	insofar as it is reasonable to do so, make available the services of the employees of the relevant Group Companies to assist the Principal Seller and its representatives to undertake the matters contemplated by paragraph 2; and
3.3	provide or ensure the provision of all other information and assistance which may reasonably be requested by the Principal Seller.
4	The parties agree that the Group Companies’ auditors (being Ernst & Young LLP (“EY”)) shall be instructed by the Group Companies to carry out a statutory audit of such accounts of the relevant Group Companies for the short accounting period and both parties agree to provide EY with (or procure the provision to EY of) all such papers, records and other documentation and assistance that EY requires in order that it may complete the audit of the Group Companies. The parties agree that the cost of production of the Short Accounting Year Audited Accounts and of the audit thereof is to be shared equally between the Principal Seller and the Principal Purchaser.
5	To the extent that the amounts due to or by any Group Company to or by any member of the Sellers’ Group pursuant to the Profit and Loss Transfer Agreements, as determined in accordance with this Part 5 of Schedule 6, differ from the aggregate of: (i) any amounts already paid; and (ii) any amounts taken into account in the preparation of the Net Current Asset Statement, in each case pursuant to the Profit and Loss Transfer Agreements in respect of the period ending at Completion, an appropriate adjustment shall be made to the consideration payable for the Shares under this Agreement and a payment shall be made by the Principal Purchaser to the Principal Seller or by the Principal Seller to the Principal Purchaser accordingly.
6	“Accounting Reference Period End Date” means the date between the date hereof and the Completion Date on which an accounting period for the Group Companies who are party to the Profit and Loss Transfer Agreements, ends.

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Schedule 7
European Business Sale Adjustments
(Clause 9.1)

Part 1
Definitions

For the purposes of this Schedule 7:

“Appointment Notice” means a notice given by the Principal Seller or the Principal Purchaser, as the case may be, to the other pursuant to paragraph 4.2 of Part 2 of this Schedule 7, requiring that the draft European Business Net Asset Statement be referred to the Reporting Accountants;

“European Business Accruals” means the monetary value of all goods and services received by the European Business before the Completion Date which have not been paid for by the relevant Business Seller as at 2400 hours (CET) at the end of the Completion Date;

“European Business Accrued Income” means the monetary value of all goods and services provided by the European Business before the Completion Date for which revenue has not been received by the relevant Business Seller as at 2400 hours (CET) at the end of the Completion Date;

“European Business Cash” means the aggregate amount of cash at the Hotels of the relevant European Business;

“European Business Deferred Income” means all payments received by the relevant Business Seller before the Completion Date relating to a service to be provided by the relevant Business Seller on or after the Completion Date including any Health Club Membership Fees, but excluding any Business Guest Deposits;

“European Business Employees Accruals” means any wages, salaries, deductions from employees salaries on account of tax, VAT, accrued income tax and rates and employer’s and employees social security payment and pension contribution accruals for the calendar month in which the Completion Date falls, and any amounts in respect of bonuses for 2005 and prior years and for the period up to Completion in respect of Business Employees which will be apportioned on a pro-rata basis;

“European Business Guest Accounts” means uninvoiced accounts of guests staying at any Property of the relevant Business 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 of the Business prior to Completion;

“European Business Guest Deposits” means advance deposits and receipts of guests who will be staying at or using the services provided at any Property of the Business 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 of the Business following the Completion Date;

“European Business Prepayments” means all prepayments made by the relevant Business Seller on or before the Completion Date which relate to a supply to the relevant Business Seller of goods and/or services to be provided after the Completion Date including, in relation to the Spanish Business, any Spanish Business Advanced Taxes;

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“European Business Stock” means all items which have prior to the date hereof, in accordance with the provisions of paragraph 1.2 of Part 3 of this Schedule 7, been regarded as stock which are unused, owned beneficially by the relevant Business Seller and held at any Property at Completion;

“Health Club Membership Fees” means all membership fees paid to the relevant Business Seller by members of the health club located at any Property and run by the relevant Business Seller which relate to the period of membership following the Completion Date;

“Purchasers’ Disagreement Notice” means a notice given by the Purchasers pursuant to paragraph 4.1 of Part 2 of this Schedule 7 stating that the draft European Business Net Asset Statement does not comply with the provisions of this Schedule 7;

“Reporting Accountants” means PricewaterhouseCoopers 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 Principal Seller and the Purchasers 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;

“Seller’s Disagreement Notice” means a notice given by the Principal Seller pursuant to paragraph 4.2 of Part 2 of this Schedule 7 stating its reasons for disagreement with the Purchasers’ Disagreement Notice; and

“Spanish Business Advanced Taxes” means real estate tax for the year 2006 in relation to the Properties located in Spain, as well as any other Taxes related to the Properties located in Spain paid by the Business Seller for the whole year 2006, accrued for the period between Completion up to 31 December 2006.

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Part 2
Determination and Confirmation of European Business Net Assets

1	Stock Statement
	The Principal Seller shall on the Completion Date produce the Stock Statement as at 2400 (CET) at the end of the Completion Date as agreed with the Principal Purchaser.
2	Submission of the European Business Net Asset Statement
2.1	European Business Net Asset Statement
	The Principal Seller shall use its reasonable endeavours to procure that, as soon as practicable following the Completion Date (and in any event on or before the day that is 30 Business Days following the Completion Date), it prepares and delivers to the Principal Purchaser the European Business Net Asset Statement for the each of Spanish Business, Austrian Business and German Business, and in aggregate as at the Completion Date provided that if pursuant to Clause 4.4, the Austrian Business is not to be transferred, the European Business Net Asset Statement shall exclude the Austrian Business:

2.1.1	including the aggregate of the Spanish Business Stock, Austrian Business Stock and German Business Stock values determined in accordance with paragraph 1 of this Part 2 of this Schedule 7;
2.1.2	in accordance with the principles and methodology set out in Part 3 of this Schedule 7; and
2.1.3	in the format of the pro forma European Business Net Asset Statement set out in Part 4 of this Schedule 7.

3	Access to Information
	In order to allow the Principal Seller to prepare, and the Principal Purchaser to review, the European Business Net Asset Statement:
3.1	the Principal Purchaser shall:

3.1.1	keep up-to-date and make available to the Principal Seller and its representatives its books and records relating to the European Business (with the right to take copies) during normal office hours and co-operate with it with regard to the calculation and review of the draft European Business Net Asset Statement;
3.1.2	insofar as it is reasonable to do so, make available the services of the employees of the European Business to assist the Principal Seller 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 the Principal Seller.

3.2 The Principal Seller shall procure that after the preparation of the draft European Business Net Asset Statement, it shall give the Principal Purchaser and its representatives access to the working papers and files (with the right to take copies at the Principal Purchaser’s

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	expense) and personnel which or who are relevant to the review of the draft European Business Net Asset Statement by the Principal Purchaser or its representatives subject to the Purchasers providing or procuring the provision of any hold harmless undertaking that the Principal Seller’s accountants may require.
4	Preparation
4.1	Within 30 Business Days of receipt by the Principal Purchaser of the draft European Business Net Asset Statement, the Principal Purchaser may serve a Purchasers’ Disagreement Notice and attach a schedule of those items in respect of which it disagrees with the draft European Business Net Asset Statement together with reasons for the disagreement in reasonable detail. In the absence of such notice, the draft European Business Net Asset Statement shall become the European Business Net Asset Statement and shall be final and binding on the parties for all purposes.
4.2	If the Principal Purchaser gives a valid Purchasers’ Disagreement Notice, the Principal Seller may serve a Sellers’ Disagreement Notice stating its reasons for disagreement (in reasonable detail) with the Purchasers’ Disagreement Notice within 10 Business Days of receipt by the Principal Seller of the Purchasers’ Disagreement Notice. If the Principal Seller does not serve such a valid Sellers’ Disagreement Notice, the draft European Business Net Asset Statement as amended to reflect the matters specified in the Purchasers’ Disagreement Notice shall be the European Business Net Asset Statement and shall be final and binding on the parties for all purposes. Within a further 10 Business Days from the date of the Purchasers’ Disagreement Notice, the Principal Seller and the Principal Purchaser shall attempt in good faith to reach agreement in respect thereof and if they are unable to do so then either the Principal Seller or the Purchasers may, by notice to the other, give an Appointment Notice. The Principal Purchaser shall procure that after the service of a Purchasers’ Disagreement Notice, it shall give the Principal Seller and its accountants access to the Purchasers’ accountants’ working papers and files (with the right to take copies at the Principal Seller’s expense) and personnel which or who are relevant to the review of the Purchasers’ Disagreement Notice by the Principal Seller or its accountants.
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 European Business Net Asset Statement put forward in the Principal Sellers’ Disagreement Notice or the Purchasers’ Disagreement Notice is correct in whole or in part; and
(ii)	if so, what alterations should be made to the draft European Business Net 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 7;
4.3.3	shall make their determination pursuant to paragraph 4.3.1 above as soon as is reasonably practicable;

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4.3.4 the procedure of the Reporting Accountants shall:

(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; and
(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 draft European Business Net Asset Statement and no objection should be made to any matter raised by the Purchasers’ 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 European Business Net Asset Statement, which, as adjusted, shall then be final and binding on the Sellers and the Purchasers 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 Purchasers shall keep up to date and, subject to reasonable notice, make available to the Principal Seller, the Principal Seller’s representatives and the Reporting Accountants its books and records relating to the European Business 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 the Principal Seller shall and shall procure that its representatives shall subject to the Purchasers providing or procuring the provision of any hold harmless undertaking that the Principal Seller’s accountants may reasonably require and subject to reasonable notice make available to the Principal Purchaser, the Purchasers’ representatives and the Reporting Accountants the working papers and files relating to the preparation of the draft European Business Net 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.

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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, and 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 European Business Net 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.
5	Interest
	If the Principal Purchaser serves a Purchasers’ Disagreement Notice on the Principal Seller, in accordance with paragraph 4.1 of this Part 2 of this Schedule 7, any payments to be made in accordance with Clause 9.2 (Adjustment to Consideration) to the extent not paid on or before the Purchasers’ Disagreement Notice shall include interest thereon calculated from the date of receipt by the Principal Seller of the Purchasers’ Disagreement Notice to the date of payment at a rate per annum of 2 per cent above the base rate from time to time of EONIA (calculated on basis of the rate published on the date such payment was due (or if not published on such date, the next date on which it is published)). Such interest shall accrue from day to day.

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Part 3
Accounting policies to be adopted in the European Business Net Asset
Statement

1	Preparation of Valuation
	The European Business Net 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 7;
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 Spain, Germany and Austria (as applicable); and
1.3	save to the extent inconsistent with or contradictory to paragraphs 1.1 and 1.2, in accordance with Spanish, German or Austrian GAAP (as applicable) as at the Completion Date.
2	Specific Accounting Policies
2.1	The European Business Net Asset Statement shall be drawn up on a going concern basis as at 2400 hours (CET) at the end of business on the Completion Date on a basis consistent with the Management Accounts (save to the extent inconsistent with the policies set out below). No account shall be taken of events taking place or information becoming available after the date the Principal Seller delivers the draft European Business Statement to the Purchasers pursuant to paragraph 2.1 of Part 2 of this Schedule 7. Events taking place and information available before that date will only be reflected in the draft European Business Net Asset Statement if they provide additional evidence of conditions existing at the European Business Net Asset Statement Date.
2.2	The European Business Net Asset Statement will exclude any effects of the change of control or ownership of the European Business contemplated by this Agreement. Where judgement is required in determining the value of assets and liabilities, the European Business Net Asset Statement will reflect the decisions of the Business Seller and the management of the European Business up to and including the Completion Date and not those of the management of the European Business or the Purchasers after that date.
2.3	The European Business Net Asset Statement will be prepared on the basis of aggregated net current asset statements for each of the Spanish Business, the Austrian Business and the German Business in each case drawn up as at 2400 (CET) at the end of the Completion Date and in accordance with the policies set out in this Part 3 of Schedule 7.
3	European Business Cash, Stock, Deferred Income and Prepayments
3.1	Stock not included
	Any items of European Business Stock which are unsaleable, unusable, spoilt or out of date shall be excluded from the European Business Stock.

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3.2	Deferred Income and Prepayments
	European Business Deferred Income and European Business Prepayments will be apportioned on a time basis in relation to the period to which the European Business Deferred Income or the European Business Prepayment relates, as at 2400 hours CET at the end of the Completion Date.

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Part 4
Pro forma European Business Net Asset Statement

Pro forma European Business Net Asset Statement in respect of the European Business Net Assets Amount

Asset/Liability	Amount (€)			Amount (€)
Current Assets
European Business Cash		•
European Business Stock		•
European Business Guest Accounts		•
European Business Prepayments		•
European Business Accrued Income		•
					•
Less
Current Liabilities
European Business Guest Deposits		(•	)
European Business Employees Accruals		(•)/•
European Business Accruals		(•	)
European Business Deferred Income		(•	)
					(•	)
European Business Net Assets/(Liabilities) Amount					•/(•	)

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Schedule 8
Warranties given by the Sellers
(Clause 10)

1	Corporate Information
1.1	The Shares and the Group Companies

1.1.1	Each Share Seller is entitled to sell and transfer to the Purchasers 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 set opposite the Share Sellers’ names in column 2 to Schedule 1 have been properly and validly issued and allotted and are each fully paid.
1.1.3	Each Group Company is the sole legal and beneficial owner of all the issued and allotted shares in the Group Companies set out against their names in Part 1 of Schedule 2 and in the Subsidiaries in Part 2 of Schedule 2 free from all Encumbrances.
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 any other company (wherever incorporated), association or partnership, other than: (a) the Group Companies and 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	The particulars contained in Schedule 2 are true and accurate.
1.1.9	No Group Company has, outside its country of incorporation, any branch or permanent establishment.

1.2 Insolvency etc.

1.2.1 No Group Company is insolvent under the laws of its jurisdiction of incorporation or otherwise unable to pay its debts as they fall due, nor is it the subject of a provisional stay of actions nor of voluntary settlement proceedings; and, so far as

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	the Sellers are aware, there is no reason why any Group Company should become the subject of such measures or proceedings.
1.2.2	There are no proceedings in relation to any compromise or arrangement with creditors or any winding up, bankruptcy or other insolvency proceedings concerning any Group Company or the European Business and so far as the Sellers are aware, no events have occurred which, under applicable laws, would justify such proceedings.
1.2.3	So far as the Sellers are aware, no steps have been taken to enforce any security over any assets of any Group Company or the European Business and no event has occurred to give the right to enforce such security.

1.3 Constitutional Documents, Corporate registers and minute books

1.3.1	The constitutional documents in the Data Room are true and accurate copies of the constitutional documents of the Group Companies 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 law of the jurisdiction of its incorporation:

(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.

1.3.3	All registers and books referred to in paragraph 1.3.2 are in the possession (or under the control) of the relevant Group Company.
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 each relevant jurisdiction have been duly delivered or made on a timely basis.
1.3.5	Each Group Company has full capacity and corporate powers to hold or rent its property and carry on its activity as it is carried on at the date of this Agreement.
1.3.6	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 have been prepared:

2.1.1 in accordance with applicable law and with the accounting principles, standards and practices generally accepted at the Accounts Date; and

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2.1.2 subject to paragraph 2.1.1, 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,

	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 Aggregated Financial Summary
	The Management Accounts and the Aggregated Financial Summary have been prepared with due care in accordance with USALI applied on a consistent basis, 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 Aggregated Financial Summary is extracted from the management 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	Off-balance Sheet Commitments
	Except as disclosed in the Accounts, no Group Company has outstanding any loan capital, nor has it factored, discounted or securitised any of its debts, nor has it engaged in any financing of a type which would not be required to be shown or reflected in its audited accounts.
2.4	Since the Accounts Date
	Since the Accounts Date and up to the date hereof:

2.4.1	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;
2.4.2	no material capital commitments (other than in relation to the ongoing construction work at Holiday Inns Munich City Centre) have been entered into by any Group Company or any Business Seller (in relation to the European Business) other than is contemplated by such Group Company’s or Business Seller’s (in relation to the European Business) capital budget. For these purposes a material capital commitment is one involving capital expenditure of over €500,000 exclusive of VAT for any Hotel or €5,000,000 exclusive of VAT for all the Hotels;
2.4.3	no Group Company has declared, made or paid any dividend or other distribution of profits or assets to the Sellers;
2.4.4	no Group Company has issued or agreed to issue any share capital or any other security giving rise to a right over its capital; and
2.4.5	no Group Company has redeemed or purchased or agreed to redeem or purchase any of its share capital;
2.4.6	no Group Company has incurred any outstanding any loan capital, nor has it factored, discounted or securitised any of its debts, nor has it engaged in any

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	financing of a type which would not be required to be shown or reflected in its audited accounts;
2.4.7	no Group Company has modified or agreed to modify, in any manner whatsoever, the remuneration or benefits granted to its employees (other than in the ordinary course of business);
2.4.8	no Group Company has settled any dispute for an amount greater than €100,000; and
2.4.9	no Group Company has transferred, pledged, leased or granted a permit over its assets to third parties in each case for an individual amount greater than €50,000 or for an aggregate amount greater than €1,000,000.

3	Guarantees
3.1	Summary details of all outstanding guarantees, indemnities, suretyship, mortgages, pledges, assignments, liens or security given other than in the ordinary course of business:

3.1.1	by any Group Company or any Business Seller (in relation to the European Business); or
3.1.2	for the benefit of any Group Company or the European Business, in excess of €100,000 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 occupational leases and 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.
4	Properties
4.1	General

4.1.1	The Properties comprise all the land and buildings owned, leased or occupied by a member of the Group.
4.1.2	The Group Company and the relevant Business Seller named in Schedule 3 as owner of a Property is the legal owner of and beneficially entitled to the whole of the proceeds of sale of that Property.
4.1.3	The information contained in Schedule 3 as to the tenure of the Properties and the details set out therein are true and accurate.
4.1.4	No Group Company has any actual or contingent liability in respect of any estate or interest in real property whether arising as original tenant, assignee, guarantor or otherwise, other than in respect of the Properties or any properties forming part of the Pre-Sale Reorganisation.

4.2	Material Issues Reports on Title
	So far as the Sellers are aware, the deeds, documents and information supplied to the Sellers’ Property Lawyers for the purpose of preparation of the Material Issues Reports on Title were when supplied and remain now complete and correct in all material respects and

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	so far as the Sellers are aware the information contained in the Material Issues Reports on Title is complete and accurate in all material respects.
4.3	Properties
	Possession and occupation

4.3.1 A member of the Group or a Business Seller is in actual occupation and possession of the whole of each of the 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 Properties.

Title

4.3.2	There is no financial charge, mortgage or other security interest in or over or affecting any of the Properties.
4.3.3	No Properties are affected by a subsisting contract for sale.
4.3.4	Each Group Company or Business Seller has in its possession or unconditionally held to its order all the original documents of title and other documents and papers relating to the Property owned or leased by it.

Notice of breach of encumbrances

4.3.5 No member of the Group and no Business Seller has received written notice of any breach of any covenants, obligations, title conditions, restrictions, stipulations or other matters set out or referred to in the deeds and documents relating to the Properties which notice remains outstanding.

Notices

4.3.6 No notices materially affecting any property matter in respect of the Properties have been given by any Seller or any Group Company and no such notices have been received by any Seller or any Group Company the subject matter of which would have a material adverse effect on the continued use of the Property as a hotel.

Leasehold Properties

4.3.7 In relation to such of the Properties as are leasehold:

(i)	no written notice alleging any breach of the covenants or obligations contained in the Lease, whether on the part of the landlord or the tenant, remains outstanding;
(ii)	the Sellers have not received any notice with respect to any revision of rent, and so far as the Sellers are aware, no revision of rent is to take place except as provided for in the Leases;
(iii)	no collateral assurances, undertakings or concessions have been made in writing, so as to be legally enforceable, by any party to the Leases;
(iv)	so far as the Sellers are aware, no undocumented collateral assurances, undertakings or concessions have been made by any party to the Leases;

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(v)	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;
(vi)	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 the Courts; and
(vii)	no notice of forfeiture under applicable law has been served on any Group Company.

Material Letting Documents  

4.3.8 In relation to any Material Letting Documents:

(i)	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;
(ii)	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;
(iii)	all rent, additional rent, service charge 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;
(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 the Courts;
(v)	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; and
(vi)	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 Properties under the Material Letting Documents.

Disputes  

4.3.9	There are no current material disputes relating to or in respect of any of the Properties and so far as the Sellers are aware, none are anticipated.
4.3.10	No Group Company and Seller has, in relation to any Property, made any claim or complaint in relation to any neighbouring property or its use or occupation which claim or complaint continues to subsist, and so far as the Sellers are aware, none are anticipated.

Planning and zoning matters  

4.3.11 So far as the Sellers are aware, during the period of three years immediately prior to the date of this Agreement no development at the Properties has been

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undertaken in breach of the relevant planning and zoning legislation or regulations and no notice has been received by the Sellers of any such breach.

Title documents  

4.3.12 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 Sellers’ Group or any Business Seller to any of the Properties.

4.4 Construction

4.4.1	As at the date of this Agreement, in respect of the Properties (other than Holiday Inns Munich City Centre) there are no building, construction, refurbishment, repair or engineering works in progress nor are there any individual contracts in respect of which a Group Company 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 other than those set out in the Disclosure Letter.
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 in the last three 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 was issued in the last three years immediately prior to the date of this Agreement; and/or (ii) relating to works in progress and “Relevant Claim” shall mean a written claim the value of which is in excess of €250,000.
	In respect of the Construction Documentation there are no outstanding:

(i)	Relevant Claims for financial compensation, extension of time or variation;
(ii)	Relevant Claims against any member of the Sellers’ Group or any Group Company by any counterparty to the Construction Documentation alleging failure by the relevant member of the Sellers’ Group or Group Company 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.

4.5	Interpretation
	If any term used in this paragraph 4 is specific to laws within a particular jurisdiction, it shall be taken to refer to the equivalent (or nearest equivalent) provision or legislation in the jurisdictions for each of the remaining Properties.
5	Ownership of Assets
5.1	Ownership
	All assets included in the Audited Accounts or acquired by any of the Group Companies or any Business Seller 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

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retention of title arrangements arising by operation of law in the ordinary course of business:

5.1.1	are owned by the Group Companies and the Business Sellers;
5.1.2	are, where capable of possession, in the possession or under the control of the relevant Group Company or Business Seller; 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.

5.2	Leased Assets
	The Disclosure Letter contains the list of Group Company and European Business leased assets (excluding Properties) with a lease cost of at least €50,000 per annum.
6	Information Technology, Data Protection and Intellectual Property
6.1	Definitions
	For the purposes of this paragraph 6:
	“Group IT” means all Information Technology which is owned by any Group Company or any Business Seller or which has in the last two years been used in connection with the business of any Group Company or the European Business 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 or any Business Seller in Intellectual Property (whether as owner, licensee or otherwise) which at or immediately before Completion is used exclusively 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	Ownership
	Each of the Group IT is owned by or licensed to the relevant Group Company or Business Seller.
6.3	Status
	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,

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and no disputes have arisen or are foreseeable in respect of those arrangements and licences.

6.4	Failure etc.
	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 or the European Business and the Sellers are not aware of any fact or matter which may give rise to such a material adverse effect.
6.5	Protection
	The Group have in place procedures which are in accordance with current good industry practice:

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 and the European Business 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	Compliance
	In the last two years each Group Company and each Business Seller (in respect of the European Business) has complied in all material respects with all applicable requirements of any data protection legislation in the jurisdiction of its incorporation.
6.7	Regulators
	In the last two years no notice alleging non-compliance with any applicable data protection legislation (including any enforcement notice, deregistration notice or transfer prohibition notice) has been received by any of the Group Companies or any Business Seller (in respect of the European Business) from any relevant regulator.
6.8	Undertakings
	In the last two years no undertaking has been made in relation to data protection legislation by any Group Company or any Business Seller (in respect of the European Business) to any relevant regulator.
6.9	Notices etc.
	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 or the European Business.
	Intellectual Property
6.10	Ownership

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6.10.1	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 or the Business Sellers.
6.10.2	No Material Intellectual Property infringes on any third party’s right and the Sellers have not received any claim with respect to such infringement.

7	Contracts
7.1	Contracts
	Other than as disclosed in the Data Room, no Group Company or Business Seller is a party to or subject to any contract, transaction, arrangement, understanding or obligation (other than in relation to any 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 services, the aggregate sales value of which (exclusive of VAT) will be more than €75,000 for each Hotel.

7.2 Compliance with Contracts

7.2.1	So far as the Sellers are aware, 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 the relevant Business Seller;
7.2.2	so far as the Sellers are aware, 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 rescission, avoidance or repudiation of any such contract; and
7.2.3	summary 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 or any Business Seller (in respect of the European Business) 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 Data Room.

7.3	Joint Ventures etc.
	No Group Company or Business Seller is (in connection with the European Business), or has agreed to become, a member of any joint venture, consortium, partnership or other

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	unincorporated association (other than a recognised trade association in relation to which the Group Company or the Business Seller 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 or Business Seller 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 or Business Seller (in connection with the European Business) is party to any contract 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 Business Seller or any person connected 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 details, in relation to each Hotel at the date of this Agreement, of:

(i)	the total number and grades of Relevant Employees;
(ii)	the salary and other material contractual benefits, period of continuous employment, location, grade and age of each Senior Employee; and
(iii)	specimen terms and conditions of each grade or category of Relevant Employee.

8.1.2	Other than the Business Employees, each Relevant Employee is employed by a Group Company.
8.1.3	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 (iii) of this Schedule 8) of any of the Relevant Employees.
8.1.4	No Relevant Employee is on sick leave which has lasted for eight weeks or more.
8.1.5	No Senior Employee is absent on ordinary or additional maternity leave.
8.1.6	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 Senior Employee, save in the ordinary course of business to replace staff.
8.1.7	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.

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8.1.8

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 Senior 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.

8.1.9

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 January 2006 and the date two Business Days prior to the date of this Agreement, no Senior Employee has given or received notice terminating his or her employment.
8.2.2	Between 1 January 2006 and the date two Business Days prior to 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.
	Other than national collective bargaining agreements or industry-wide collective agreements, the union recognition agreements, collective agreements and European Works Council agreements listed in the Disclosure Letter are all the agreements between the Group Companies and trade unions or representative bodies.
8.6	Bonus or other Profit-related Schemes
	There are attached to the Disclosure Letter the rules and other documentation relating to all share incentive, share option, profit sharing, bonus or other incentive arrangements for or affecting any Relevant Employees or other workers or former employees or other former workers of the Group Companies in the last 12 months.

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8.7 Group Retirement Benefit Arrangements

8.7.1

The Retirement Benefit Arrangements are the only arrangements under which the Group Companies or the European Business make payments for providing retirement, death, disability or life assurance benefits except for state or mandatory social security arrangements or mandatory collective bargaining arrangements to which any of the Group Companies or the European Business contribute in compliance with any law or regulation.

8.7.2

The Retirement Benefit Arrangements comply and have been managed at all times in all material respects with all legal and regulatory requirements.

9	Legal Compliance
9.1	Licences and Consents

9.1.1	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 Companies and the European Business as now carried on have been obtained, are in force and are being complied with in all material respects as at the date hereof.
9.1.2	None of the Sellers have received any claim notice with respect to those and so far as the Sellers are aware there is no reason why any of them should be suspended, modified or revoked (including as a result of the change of control of the Group Companies or the European Business).

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 Business Seller or any person for whose acts or defaults it may be vicariously liable which will have a material adverse effect upon the business of the Group.
9.2.2	No Group Company or Business Seller 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 the Group.
9.2.3	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 applicable laws.
9.2.4	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 laws of its jurisdiction of incorporation.

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10	Environment
10.1	Definitions
	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 but excluding water in drains or sewers); soil and land; and any ecological systems and living organisms supported by these media, including man and his property;
	“Environmental Law” means all applicable laws (including, for the avoidance of doubt, common law), statutes, regulations, statutory guidance notes and final and binding court and other tribunal decisions of any relevant jurisdiction (including without limitation the laws of the European Union) in force in the relevant jurisdiction at the date hereof whose purpose is to protect, or prevent pollution of, the Environment or to regulate emissions, discharges, or releases of Hazardous Substances into the Environment or to regulate the use, treatment, storage, burial, disposal, transport or handling of Hazardous Substances, or health and safety laws and all bye-laws, codes, regulations, decrees or orders issued or promulgated or approved thereunder or in connection therewith to the extent that the same have force of law at the date hereof but excluding zoning and planning laws;
	“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 on or before the date hereof;
	“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 capable of causing harm or damage to the Environment or a nuisance to any person; and
	“Relevant Period” means the period commencing two years prior to the date hereof and ending on the date hereof.
10.2	Compliance
	So far as the Sellers are aware, each Group Company and each Business Seller is conducting, and during the Relevant Period has conducted, the business of the Group in material compliance with Environmental Law.
10.3	Permits
	So far as the Sellers are aware, all Environmental Permits required under Environmental Law:

10.3.1	have been obtained;
10.3.2	are in force; and
10.3.3	have been complied with in all material respects during the Relevant Period.

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10.4	Claims
	No Group Company or Business Seller has received any written notice during the Relevant Period of any civil, criminal or regulatory claim or suit relating to Environmental Law or Environmental Permits which is likely to give rise to a material liability.
11	Litigation
11.1	Current Proceedings
	No Group Company or Business Seller is involved whether as claimant or defendant or other party in any claim, legal action, proceeding, suit, litigation, prosecution, investigation, enquiry or arbitration (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 the Group.
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 or any Business Seller.
11.3	No court orders etc
	No Business Seller nor any Group Company is 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 business of Group.
12	Insurance
12.1	Particulars of Insurances

12.1.1	Summary particulars of the insurances of the Group Companies and the Business Sellers material to the business of the Group are contained in the Disclosure Letter to which summaries of the policies are attached. These summary particulars are accurate and complete.
12.1.2	The Sellers warrant that except for the following coverage sections within its public liability insurances: Financial Loss, Advertising Liability, Libel and Slander and Professional Indemnity, which coverage sections provide cover on a claims made and notified basis, the Sellers’ public liability insurances are arranged on a claims occurring basis.

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	none of the Sellers has received any notification that such insurances are not valid or enforceable; and

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12.2.3 all statutory requirements to purchase insurance have been complied with by the Group Companies and the Business Sellers including any statutory requirements to keep evidence of such insurance.

12.3 Claims

12.3.1	Details of all claims made under the insurances referred to in paragraph 12.1 are set out in the Disclosure Letter.
12.3.2	So far as the Sellers are aware, no Group Company has suffered any damages during the three last financial years that has given or is reasonably likely to give rise to a material increase in any insurance premium or deductible for such Group Company.

13	Tax
13.1	Tax Returns and Compliance

13.1.1	All material registrations, returns, computations, notices and information which are or have been required to be made or given by each Group Company for any Taxation purpose have been made or given within the requisite periods and on a proper basis and are up-to-date and correct and all records required by law to be maintained for Tax purposes have been so maintained.
13.1.2	Each Group Company has properly made all material deductions, withholdings and retentions required to be made in respect of any actual or deemed payment made or benefit provided on or before the date of this Agreement and has to the extent required by law accounted for all such deductions, withholdings and retentions.
13.1.3	Each Group Company has paid all material Tax which it has become liable to pay and is not, and has not in the four years ending on the date of this Agreement been, liable to pay a penalty, surcharge, fine or interest in connection with Tax and, so far as the Sellers are aware, there are no circumstances by reason of which any Group Company may become liable to pay any penalty, fine or interest (other than interest under section 233a German General Tax Act) in connection with Tax.
13.1.4	In the last four years ending on the date of this Agreement no Group Company has been subject to any investigation or non-routine audit or visit by any Tax Authority.

13.2

Consents, clearances

Within the last four years ending on the date of this Agreement, no transaction in respect of which any consent or clearance was required or obtained from any Tax Authority has been entered into or carried out by any Group Company without such consent or clearance having been properly obtained and all information supplied to any Tax Authority in connection with any such consent or clearance fully and accurately disclosed all facts and circumstances material to the giving of such consent or clearance. Any transaction for which such consent or clearance was obtained has been carried out only in accordance with the terms of such consent or clearance and the application on which the consent or clearance was based including any variations or amendments thereto. No facts or

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	circumstances have arisen since any such consent or clearance was obtained which would cause the consent or clearance to become invalid or ineffective.
13.3	Special arrangements
	No Tax Authority has operated or agreed to operate any special arrangement (being an arrangement which is not based on relevant legislation or any published practice) in relation to any Group Company’s affairs and which subsists at the date of this Agreement.
13.4	Value Added Tax
	In relation to the each Group Company:

13.4.1	it is registered for the purposes of VAT, has been so registered at all times that it has been required to be registered by VAT legislation in the last four years ending on the date of this Agreement, and such registration is not subject to any non-statutory conditions imposed by or agreed with the relevant Tax Authority;
13.4.2	it has maintained and obtained at all times complete, correct and up-to-date records, invoices and other documents (as the case may be) required by the relevant VAT legislation and has preserved such records, invoices and other documents in such form and for such periods as are required by VAT legislation; and
13.4.3	it is not and has not been treated as a member of a group for the purposes of VAT legislation, and has not applied for such treatment.

13.5 Stamp Duty/ Capital Duty

13.5.1

All documents in the possession or under the control of each Group Company or to the production of which any Group Company is entitled which establish or are necessary to establish the title of any Group Company to any asset, or by virtue of which any Group Company has any right, have been duly stamped and any applicable stamp duties or similar duties or charges in respect of such documents have been duly accounted for and paid.

13.5.2

All duties, fees and penalties payable in respect of the capital of each Group Company (including any premium over nominal value at which any share was issued) have been duly accounted for and paid, and there are no circumstances under which any relief obtained against payment of any such amount could be withdrawn.

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 full 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 and to fulfil its obligations pursuant hereto.

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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.
14.1.4	The Sellers have not been and are not insolvent nor are they the subject of any provisional stay of actions (or similar proceedings), no winding up petition has been issued against any of the Sellers and so far as the Sellers are aware there is no reason why the Sellers should be the subject of any such proceedings or decision.
14.1.5	Each of the Sellers has taken or will have taken by Completion ail 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.

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Schedule 9

Warranties given by the Purchasers and the Purchasers’ Guarantor

(Clause 10.4)

1	Authority and Capacity
1.1	Incorporation
	Each of the Purchasers and the Purchasers’ Guarantor is validly existing and a company duly incorporated under the laws of the jurisdiction of its registered office referred to in Schedule 1.
1.2	Authority to Enter into Agreement

1.2.1	Each of the Purchasers and the Purchasers’ Guarantor has the legal right and full 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.
1.2.2	The documents referred to in paragraph 1.2.1 will, when executed, constitute valid and binding obligations on the Purchasers and the Purchasers’ Guarantor respectively in accordance with their respective terms.

1.3	Authorisation
	Each of the Purchasers and the Purchasers’ Guarantor 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.
2	Financing
	The Purchasers have adequate financial resources and irrevocably committed facilities in place to satisfy its obligations on Completion to the Sellers under this Agreement.

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Schedule 10
Sellers’ Knowledge
(Clause 10.1. 5)

(1)	(2)	(3)
Person	Area of Business	Sellers’ Warranties
Marten Foxon	Senior Vice President Transactions EMEA	All other than Tax
Mike Goodson	Senior Vice President Capital and Asset Management	All other than Tax
David Coles	Vice President — UK Pensions	Pensions (Sellers’ Warranty 8.7)
Colin Garwood	Vice President — Tax	Tax (Sellers’ Warranty 13)
Samantha Ward	Director, Transactions and Asset Management	All other than Tax
Catherine Springett	Head of Company Secretariat	Insolvency (Sellers’ Warranty 1 .2) Constitutional Documents (Sellers’ Warranty 1.3)
Nigel Stocks	Senior Vice President and General Counsel EMEA	All other than Tax
Marleen Van Nijverseel	Director, HR Policy and Legal Compliance Director	Employment (Sellers’ Warranties 8.1 to 8.6)
Robin Wicks	Chief Operating Officer (Europe Holiday Inn brands)	Contracts (Sellers’ Warranty 7) Employment (Sellers’ Warranties 8.1 to 8.6) Legal Compliance (Seller’s Warranty 9)
Andrew Gill	Vice President — Finance & Business Support Europe	Audited Accounts (Sellers’ Warranties 2.1 , 2.2, 2.3 and 2.4)
		Guarantees (Sellers’ Warranty 3)
		Ownership of Assets (Sellers’ Warranties 5.1 and 5.2)
Simon Ford	Vice President — Technical Services	Property (Sellers’ Warranty 4.4)
Jackie Harding	Vice President Business Service Centre (EMEA)	Audited Accounts (Sellers’ Warranty 2)
Jürg Schmittem	Director BSC Satellite Office	Audited Accounts (Sellers’ Warranty 2)
Annie Brown	Vice President Commercial Development	Leased Assets (Sellers’ Warranty 5.2)
		Contracts and Compliance with Agreements (Sellers’ Warranties 7.1 and 7.2)
Larry Callaghan	Senior Vice President IT (EMEA)	Leased Assets (Sellers’ Warranty 5.2)
		Information Technology (Sellers’ Warranties 6.2, 6.3, 6.4 and 6.5)

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(1)	(2)	(3)
Person	Area of Business	Sellers’ Warranties
Hans Hoehener	Director of Operations CP, HI, EXHI Hotels France and Switzerland and GM HI Paris République	In respect of France only: Insolvency (Sellers’ Warranty 1 .2) Changes since the Accounts Date (Sellers’ Warranty 2.4) Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9)
		Contracts (Sellers’ Warranty 7)
		Employment (Sellers’ Warranties 8.1 to 8.6)
		Legal Compliance (Sellers’ Warranty 9)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Luciano Lusardi	Director of Operations CP, HI, EXHI Hotels South and GM HI Madrid	In respect of Italy and Spain only: Insolvency (Sellers’ Warranty 1.2) Changes since the Accounts Date (Sellers’ Warranty 2.4)
		Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9)
		Contracts (Sellers’ Warranty 7)
		Employment (Sellers’ Warranties 8.1 to 8.6)
		Legal Compliance (Sellers’ Warranty 9)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Rob Spiekerman	Director of Operations CP, HI, EXHI Hotels Austria, Eastern Europe and Benelux and GM HI Vienna South	In respect of Benelux only: Insolvency (Sellers’ Warranty 1.2) Changes since the Accounts Date (Sellers’ Warranty 2.4) Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9) Contracts (Sellers’ Warranty 7)
		Employment (Sellers’ Warranties 8.1 to 8.6)
		Legal Compliance (Sellers’ Warranty 9)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Joep Peeters	Director of Operations CP, HI, EXHI Hotels Germany and GM HI Munich City Centre	In respect of Germany only: Insolvency (Sellers’ Warranty 1.2)

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(1)	(2)	(3)
Person	Area of Business	Sellers’ Warranties
		Changes since the Accounts Date (Sellers’ Warranty 2.4)
		Data Protection (Sellers’ Warranties 6,6, 6.7, 6. 8 and 6.9)
		Contracts (Sellers’ Warranty 7)
		Employment (Sellers’ Warranties 8.1 to 8.6)
		Legal Compliance (Seller’s Warranty 9)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Jean Charles Denis	Area Director, Finance and Business Support	In respect of France, Italy and Spain only: Insolvency (Sellers’ Warranty 1 .2) Audited Accounts (Sellers’ Warranties 2.3, 2.4)
		Guarantees (Sellers’ Warranty 3)
		Leased Assets (Sellers’ Warranty 5.2)
		Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9)
		Contracts (Sellers’ Warranty 7)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Matthias Putz	Area Manager, Finance and Business Support	In respect of Austria only: Insolvency (Sellers’ Warranty 1 .2) Audited Accounts (Sellers’ Warranties 2.3, 2.4)
		Guarantees (Sellers’ Warranty 3)
		Leased Assets (Sellers’ Warranty 5.2)
		Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9)
		Contracts (Sellers’ Warranty 7)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Arno Oppolzer	Area Director, Finance and Business Support	In respect of Germany only: Insolvency (Sellers’ Warranty 1 .2) Audited Accounts (Sellers’ Warranties 2.3, 2.4)
		Guarantees (Sellers’ Warranty 3)
		Leased Assets (Sellers’ Warranty 5.2)

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(1)	(2)	(3)
Person	Area of Business	Sellers’ Warranties
		Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9)
		Contracts (Sellers’ Warranty 7)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Gisele Ford	Area Director Satellite Office France	In respect of France only:
		Insolvency (Sellers’ Warranty 1 .2)
		Audited Accounts (Sellers’ Warranty 2)
		Changes since the Accounts Date (Sellers’ Warranty 2.4)
		Guarantees (Sellers’ Warranty 3)
		Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Paul Berge	Finance	In respect of Benelux only:
		Insolvency (Sellers’ Warranty 1 .2)
		Changes since the Accounts Date (Sellers’ Warranty 2.4)
		Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9)
		Contracts (Sellers’ Warranty 7)
		Legal Compliance (Sellers’ Warranty 9)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Enrique Sanchez	Hotel Financial Controller	In respect of Spain only:
		Insolvency (Sellers’ Warranty 1 .2)
		Changes since the Accounts Date (Sellers’ Warranty 2.4)
		Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9)
		Contracts (Sellers’ Warranty 7)
		Legal Compliance (Sellers Warranty 9)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)

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(1)	(2)	(3)
Person	Area of Business	Sellers’ Warranties
Laura Bianchi	Financial Controller and HI SPA Coordinator	In respect of Italy only: Insolvency (Sellers’ Warranty 1,2)
		Changes since the Accounts Date (Sellers’ Warranty 2.4)
		Data Protection (Sellers’ Warranties 6.6, 6.7, 6.8 and 6.9)
		Contracts (Sellers’ Warranty 7)
		Legal Compliance (Sellers’ Warranty 9)
		Environment (Sellers’ Warranty 10)
		Litigation (Sellers’ Warranty 11)
Arnd Stahl	Area Director Satellite Office Germany	In respect of Germany only: Audited Accounts (Sellers’ Warranty 2)
Patricica Van Eekhout	Area Director Benelux Satellite Office	In respect of Benelux only:
		Audited Accounts (Sellers’ Warranty 2)

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Schedule 11

Split Contracts
(Clause 15.3.3)

1	Service Agreement between Intercontinental Hotels Management mbH, Intercontinental Hotels Betriebsgesellschaft mbH, Holiday Inn Hotelgesellschaft mbH and progros, pro GroBverbraucher Einkaufsgesellschaft mbH.
2	Arrangements relating to the supply of electricity between Holiday Inns BV, International Hotels BV, Holiday Inns (Eindhoven) BV, Amstel Hotel Maatschappij BV and Rendo energielevering BV.
3	Arrangements relating to the supply of gas between Holiday Inns BV, International Hotels BV, Holiday Inns (Eindhoven) BV and RWE.

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Schedule 12
Inter-Group Debt
(Clause 6.4)

Part 1
Inter-Group Debt owed from the Group Companies to the Sellers’ Group

Lender	Borrower	Amount €
BHR Luxembourg S.à r.l.	Airport Garden Hotel NV		39,000,000
Six Continents Limited	Holiday Inn SpA		7,775,000
	TOTAL		46,775,000

Part 2
Inter-Group Debt owed from the Sellers’ Group to the Group Companies

N/A

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Schedule 13
Retirement Benefit Arrangements

Belgium

Winterthur defined benefit pension plan
Fortis AG defined contribution pension plan
Winterthur Life Insurance Plan

Germany

Winterthur direct commitment pension scheme
Generali reinsured support fund
HOGA Rente

Italy

FON.TE supplementary pension fund
Q.u.A.S supplementary health insurance fund (only for managers)

The Netherlands

Winterthur defined benefit plan
IHG Delta Lloyd Nederland defined contribution Personal Pension Scheme
Hotel Industry Pension Fund (HORECAFOND)
Delta Lloyd Defined Benefit Pension Plan

General:

IHG International Savings and Retirement Plan

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Schedule 14
Permitted Pre-Completion Actions
(Clause 5.1)

Between the date of this Agreement and Completion, the Sellers shall be entitled to take (or procure that the relevant European Business or Group Company takes) any and all necessary actions in connection with:

(i)	the declaration and payment of a dividend of up to €6m by Holiday Inns France et CIE SAS;
(ii)	the buy back of shares by Holiday Inns von Deutschland GmbH for a purchase price of up to €100m at a market value price based on the purchase price set out in Schedule 1 for an amount approximately equal to the surplus monetary assets of HIVD at the date of the repurchase;
(iii)	the amendment to the accounting reference periods for:

(a)	Holiday Inn Hotelgesellschaft mbH;
(b)	Holiday Inns von Deutschland GmbH;
(c)	Hochstrasse 3 Hotelgesellschaft mbH;
(d)	Limnä Hotelbetriebsgesellschaft mbH & Co. Verwaltungs-KG;
(e)	Limnä Hotelbetriebs GmbH;
(f)	HOB Hotelbesitz- und Verwaltungs GmbH & Co. Objekt Graumannsweg KG;
(g)	HOB Hotelbesitz- und Verwaltungs GmbH;
(h)	BVH Hotelbesitzgesellschaft mbH & Co. Verwaltungs-KG; and
(i)	BVH Hotelbesitzgesellschaft mbH;

(iv)	the termination of the Profit and Loss Transfer Agreements (such termination to take effect on or before Completion);
(v)	the entering into of arrangements to allow for the payment of the guaranteed dividends for 2005 and 2006 to SC Hotels UK Pensions S.à r.l. prior to Completion;
(vi)	the possible sale by Holiday Inns BV of CP Hilton Head Corp to BHR Holdings BV or another member of the Sellers’ Group;
(vii)	any other steps in connection with the Pre-Sale Reorganisation Documents which have not been completed prior to the date of this Agreement;
(viii)	the charging and invoicing of inter-company costs by the Sellers’ Group to the Group Companies;
(ix)	the issue and cancellation prior to Completion of discount notes by Six Continents Limited to Holiday Inns France et CIE SAS and/or Holiday Inns BV and/or Holiday Inns von Deutschland gmbH;
(x)	the removal of Gelin KG from register of members of HOB Hotelbesitz und Verwaltungs GmbH & Co. Objekt Graumannsweg KG;

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(xi)	the entry into formal lease arrangements in respect of certain offices at HI Amsterdam hotel currently occupied by Sellers’ Group sales and Holidex training staff;
(xii)	the loan of €35million from Holiday Inns (Germany) LLC to Holiday Inns Hotelgesellschaft mbH — i.e. the German Debt to be assigned pursuant to the Debt Assignment Agreement on Completion;
(xiii)	any outstanding settlement and refinancing transactions resulting from the actions as described in this Schedule 14, or as set out in the Disclosure Letter;
(xiv)	termination of the Sellers’ Group cash pooling arrangements in respect of Holiday Inns Vienna South;
(xv)	completion of the assignment of the trademarks registered by Holiday Inns France et Cie SAS (Registration Number 330655 “HOLIDAY INN AND GREAT SIGN”) and Holiday Inns von Deutschland GmbH (Registration Number 1041259 “HOLIDAY INNS VON DEUTSCHLAND”) to Six Continents Hotels, Inc;
(xvi)	the transfer of the employees listed in Schedule 15 (Arno Oppolzer and Matthias Putz) from Group Companies to Sellers’ Group;
(xvii)	the variation of the Sellers’ Group Contracts to provide that the Hotels no longer benefit from the Sellers’ Group Contracts; and
(xviii)	the removal from the board of directors of Holiday Inns BV of Jozias Jumelet.

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Schedule 15
Transferring Employees
(Clause 10.4.3)

Employees transferred from Group Companies to Sellers’ Group prior to the
date of this Agreement

Employee	Job Title
Michael Kooitje	Area Director of Sales (Benelux)
Michael Hoffman	Training Manager
Benedict Schwerm	Financial Controller
Pascal Sanglier	IT Manager
Rob Spiekerman	Director of Operations/General Manager of HI Vienna South
Francesco Schiavoni	Area General Manager ExHI Spain/General Manager ExHI Valencia

Employees to be transferred between the date of this Agreement and
Completion

Employee	Job Title
Arno Oppolzer	Area Director of Finance and Business Support Germany
Matthias Putz	Area Manager Finance and Business Support

134

Schedule 16
Seller Retained Costs
(Part 1 of Schedule 6)

Part 1
Regulatory standard Fire and Life Safety Works at Milan and Bologna

Milan

Item
No.	Property/Detail
	HI Milan
	1st Basement Cloakroom
1	Demolition works
2	Fire damper aeration grills
	1st Basement Water Treatment Facilities
3	Fire damper aeration grills
	1st Basement Storage Areas
4	Demolition works
5	Fire walls
6	Fire doors and related accessories
	Other
7	Electrical works
8	Air filters
9	Fire extinguishers

Bologna

Item
No.	Property/Detail
	HI Bologna City
	Storage Areas (Basement / All Floors)

135

Item
No.	Property/Detail
10	Replacement of doors
11	Improvements to walls
12	Improvements to ventilation
	Guest Rooms (All Floors)
13	Replacement of all doors
	Lifts
14	Replacement of guest doors at ground floor level, and replacement of service lift
	Fire Stairs
15	Replacement of existing fire staircase for the west wing of the bedroom block and installation of a new fire staircase for the first floor east wing meeting rooms
	Power Generators
16	Installation of new power generator outside building
	Boilers (Kitchen and General)
17	Improvements to existing boiler and installation of new boiler
	Fire Safety Equipment
18	Upgrading of fire extinguishers
19	New fire detection equipment
20	Upgrading of smoke filters
	Other
21	Improvements to passageways lighting
22	Replacement of all non-regulation compliant materials in building
23	Improvements to safety instructions and procedures, particularly regarding disabled guest evacuation
24	Improvements to signs relating to fire escapes, fire extinguishers etc

Part 2
Brand standard Fire and Life Safety Works

136

Item				Cost
No.	Property/Detail			€
	CP Antwerp
	Dead End
25	Extra fire doors (24 sets @ 2500)?	24	2500			60,000
26	Control Systems	1	13000			13,000
27	Extra Smoke Detectors	24	250			6,000
	Other
28	Basement fire doors	26	750			19,500
29	Interconnecting doors					10,000
30	Disabled items	2	1500			3,000	Cord pulls
31	Roof rails (URS)				—
	CP Brussels Airport
32	Life buoys	2	400			800
33	Disabled items					2,000
34	Emergency Phone in Leisure					400
	S/T
	CP Hamburg
35	Repairs to basement sprinklers						Maintenance
36	Roof protection system (anchor points)					10,000	Based on Quotations at Bologna
	S/T
	CP Heidelberg
37	4 No maids rooms doors	4	1500			6,000
38	Car Park lighting					5,000
39	Fire damper	10	1000			10,000
40	Disabled items				—		Room sold — not inspected
41	Sprinklers/Lifts/lighting/smoke extract				—
	(URS)
	S/T
	HI Amsterdam
42	Escape door to meeting room					25,000
43	Db increase in fire alarm under review (local regs)	120	150			18,000	8 sounders per floor

137

Item				Cost
No.	Property/Detail			€
44	Fire separation works						Maintenance
	S/T
	HI Florence
45	Emergency Lighting to stairs					6,000	As quotes by hotel
46	Fire Stopping				—		Maintenance
	S/T
	HI Munich City Centre
47	Banquet Kitchen floor	150	150			22,500
	S/T
	ExHI Cologne Mulheim
48	Push pads to GF escape doors	4	600			2,400
49	Additional self closers	3	500			1,500
50	Db increase in fire alarm	1	15000			15,000
51	Kitchen cut out switch	1	1000			1,000
52	Lift lights	1	1000			1,000
53	Disabled items	1	1500			1,500	Shaver skt, scald guard, robe hook
	S/T
	ExHI Dortmund
54	Push pads to GF escape doors	5	600			3,000
55	Increase in fire alarm Db	1	1500			15,000
	S/T
	ExHI Frankfurt Airport
56	Push pads to GF escape doors	5	600			3,000
57	Fire damper to linen chute	1	1000			1,000
58	Window restrictions	18	200			3,600
59	Disabled Items	2	2200			4,400	Pull cord, emergency Itg, scald guard, 2 rooms
	Fire Dampers (URS)
	S/T
	ExHI Munich Messe
60	Additional emergency light fittings	10	300			3,000

138

Item				Cost
No.	Property/Detail			€
	S/T
	ExHI Cologne Troisdorf
61	Push pads to GF escape doors	5	600		3,000
62	Smoke detectors	8	250		2,000
63	Window restrictors	110	200		22,000
	Disabled items	1	2000		2,000	Emerg Ltg, scald guard, door closer
	S/T
	ExHI Berlin Anhalter Bahnhof
64	Self closing linen chute doors	6	500		3,000
	S/T
	ExHI Dusseldorf North
65	Push pads to GF escape doors	5	600		3,000
66	Doors swing to be changed on meeting room	1			500
67	Additional emergency light fittings	10	300		3,000
68	Self closing linen chute doors	5	500		2,500
	S/T
	ExHI Frankfurt Messe
69	Push pads to GF escape doors	5	600		3,000
70	Fire escape path to GL	1	2000		2,000
71	Fire damper to linen chute	1	1000		1,000
72	Disabled items	2	1000		2,000	Pull cord, emergency Itg, 2 rooms
	S/T
	ExHI Alicante
73	Additional fire doors	2	750		1,500
74	Extra fuel take for generator	1	1500		1,500
75	Lift control systems	1	1000		1,000
	S/T
	ExHI Valencia
	Dead End
76	Extra fire doors (10 sets @ 2500)	10	2500		25,000

139

Item				Cost
No.	Property/Detail			€
77	Control systems	1	8000			8,000
78	Extra Smoke Detectors	10	250			2,500
	Other				—
79	Window Restrictors	123	200			24,600
80	Lift control systems	1	1000			1,000
81	CCTV	1	5000			5,000
	S/T
	CP Schipol Airport
82	Disabled items	2	8000			16,000	Rooms exist therefore minor adjustments
	S/T
	HI Vienna South
83	Push pads to GF escape doors	9	600			5,400
84	Additional Smoke detectors	10	250			2,500
85	Exit signs	4	400			1,600	Staff lockers
		1	400			400	WC
86	Disabled items					5,600	Alarm — 3600, closer 2 x 500, alarm kit 1000
87	Safety rails (URS)
	S/T
	HI Milan Lorenteggio
88	Kitchen fire suppression					10,000
89	Disabled items					4,200	CCA raised and work in progress
90	Other works (tenant share overall work to get fire certificate)					130,000	CCA raised and work in progress
	Fire detection (URS)
	S/T
	HI Paris Republique
91	Fire alarm system changes					230,000	Whole new system
92	Smoke extract & fire compartmentation	20	5000			100,000	Doors
						100,000	Burro Happold
						100,000	Builders Work — allowance

140

Item				Cost
No.	Property/Detail			€
93	CCTV				2,000
94	Disabled items	5	1000		5,000	Alarm kits
95	Back-up power (URS)	5	1000		5,000	Alarms
	S/T
					1,109,400

141

Schedule 17
Litigation

1.	The claim against Holiday Inns BV by the administrator of Enerco Global for an amount of €162,631 as described in more detail at paragraph 11.1 of the Disclosure Letter;
2.	Belgium, Mayfair Hotel litigation with a claim of approximately €830,000 as described in more detail at paragraph 11.1 and 10.4 of the Disclosure Letter;
3.	The claim by the owner of the hotel for mismanagement for an amount of €5,000,000 in respect of HI Avignon as described in more detail at paragraph 11.1 of the Disclosure Letter; and
4.	The claim by IZD for wrongful termination of an Operating Management Agreement in respect of CP Vienna as described in more detail at paragraphs 3.1.2. and 11.1 of the Disclosure Letter.

142

EX-4.C.II

Exhibit 4(c)(ii)

New InterContinental Hotels Group PLC
Registered Office: 67 Alma Road, Windsor, Berkshire, SL4 3HD
Registered Number: 5134420

April 2005

Mr Richard Hartman
Lavenham House
Lady Margaret Road
Sunningdale
Berkshire
SL5 9QH

Dear Mr Hartman,

New InterContinental Hotels Group PLC (the “Company”)

We are writing in relation to the proposed terms of your appointment as Managing Director, EMEA and as a director of the Company, the proposed new parent company of the IHG Group.

As you know, InterContinental Hotels Group PLC (“IHG”) has announced its intention to return capital to shareholders. This return of capital involves the introduction of the Company as new listed parent company of IHG by way of a scheme of arrangement. Admission is expected to take place on 27 June 2005.

It is intended that, subject to the scheme of arrangement becoming effective, the Company will, with effect from Admission, adopt the name “InterContinental Hotels Group PLC” to reflect the fact that the introduction of the Company as new parent company is purely a structural change to facilitate the return of capital and that management and business of the IHG Group will not change.

Accordingly, it is proposed that your appointment as Managing Director, EMEA and as a director of the Company will be subject to the terms of this letter with effect from Admission. This is subject to your appointment as Managing Director, EMEA and as a director of IHG not having otherwise terminated between the date of this letter and Admission.

The terms of your appointment as Managing Director, EMEA and as a director of IHG, set out in your Service Agreement, will apply to your appointment as Managing Director, EMEA and as a director of the Company, save that, with effect from Admission, all references to IHG in your Service Agreement will be deemed to be references to the Company.

If Admission does not take place prior to 31 December 2005, this letter shall terminate without liability on either party and your appointment as Managing Director, EMEA and as a director of IHG will continue in accordance with the terms of your Service Agreement.

In this letter:

“Admission” means the date of admission of the entire share capital of the Company, issued and to be issued to the Official List of the UK Listing Authority and to trading on the London Stock Exchange;

A05009991/0.2/15 Apr 2005

1

“IHG Group” means before the date on which the scheme of arrangement becomes effective, IHG and its subsidiaries and subsidiary undertakings and following the date on which the scheme of arrangement becomes effective, the Company and those entities which will become its subsidiaries and subsidiary undertakings (including, for the avoidance of doubt, IHG); and

“Service Agreement” means the service agreement between Six Continents PLC and you dated 12 February 2003, (and any subsequent amendments thereto).

We trust that these terms are acceptable to you. If so, we should be grateful if you would sign and date the enclosed duplicate copy of this letter confirming your acceptance. Please then return it to us as soon as possible.

Signed as a Deed by
New InterContinental Hotels Group PLC	)
acting by	)
	)
Director	)	/s/ R. T. Winter
	)
Secretary	)	/s/ R. T. Winter
Signed as a Deed by
Richard Hartman	)	/s/ Richard Hartman
	)
	)
In the presence of:	)
Witness’s signature	)	/s/ Alison Coleman
Witness’s name:		Alison Coleman
Witness’s address:		59 Fountain Gardens, Windsor, 5L4354
Witness’s occupation:		Personal Assistant

A05009991/0.2/15 Apr 2005

2

EX-4.C.IV

Exhibit 4(c)(iv)

New InterContinental Hotels Group PLC
Registered Office: 67 Alma Road, Windsor, Berkshire, SL4 3HD
Registered Number: 5134420

April 2005

Mr Stevan D. Porter
143 Blackland Road
Atlanta
GA 30342
USA

Dear Mr Porter,

New InterContinental Hotels Group PLC (the “Company”)

We are writing in relation to the proposed terms of your appointment as President, The Americas and as a director of the Company, the proposed new parent company of the IHG Group.

As you know, Intercontinental Hotels Group PLC (“IHG”) has announced its intention to return capital to shareholders. This return of capital involves the introduction of the Company as new listed parent company of IHG by way of a scheme of arrangement. Admission is expected to take place on 27 June 2005.

It is intended that, subject to the scheme of arrangement becoming effective, the Company will, with effect from Admission, adopt the name “InterContinental Hotels Group PLC” to reflect the fact that the introduction of the Company as new parent company is purely a structural change to facilitate the return of capital and that management and business of the IHG Group will not change.

Accordingly, it is proposed that your appointment as President, The Americas and as a director of the Company will be subject to the terms of this letter with effect from Admission. This is subject to your appointment as President, The Americas and as a director of IHG not having otherwise terminated between the date of this letter and Admission.

The terms of your appointment as President, The Americas and as a director of IHG, set out in your Service Agreement, will apply to your appointment as President, The Americas and as a director of the Company, save that, with effect from Admission, all references to IHG in your Service Agreement will be deemed to be references to the Company.

If Admission does not take place prior to 31 December 2005, this letter shall terminate without liability on either party and your appointment as President, The Americas and as a director of IHG will continue in accordance with the terms of your Service Agreement.

In this letter:

“Admission” means the date of admission of the entire share capital of the Company, issued and to be issued to the Official List of the UK Listing Authority and to trading on the London Stock Exchange;

A05009991/0.2/15 Apr 2005

1

“IHG Group” means before the date on which the scheme of arrangement becomes effective, IHG and its subsidiaries and subsidiary undertakings and following the date on which the scheme of arrangement becomes effective, the Company and those entities which will become its subsidiaries and subsidiary undertakings (including, for the avoidance of doubt, IHG); and

“Service Agreement” means the service agreement between Six Continents Hotels, Inc. and you dated 12 February 2003 (and any subsequent amendments thereto).

We trust that these terms are acceptable to you. If so, we should be grateful if you would sign and date the enclosed duplicate copy of this letter confirming your acceptance. Please then return it to us as soon as possible.

Signed as a Deed by
New InterContinental Hotels Group PLC	)
acting by	)
Director	)
Secretary	)	/s/ R. T. Winter
Signed as a Deed by	)
Stevan D. Porter	)	/s/ Stevan D. Porter
In the presence of:	)
Witness’s signature	)	/s/ Susan Aimèe Walker
Witness’s name:	)	Susan Aimèe Walker
Witness’s address:	)	Flat B
		373 Sandycombe Road
		Kew
		Survey TW9 3PR
Witness’s occupation:	)	Secretary

A05009991/0.2/15Apr2005

2

EX-4.C.VI

Exhibit 4(c) (vi) 

New InterContinental Hotels Group PLC

Registered Office: 67 Alma Road, Windsor, Berkshire, SL4 3HD
Registered Number: 5134420

April 2005

Mr Richard Solomons
8 Abbey View
Radlett
Hertfordshire
WD7 8LT

Dear Mr Solomons,

New InterContinental Hotels Group PLC (the “Company”)

We are writing in relation to the proposed terms of your appointment as Finance Director of the Company, the proposed new parent company of the IHG Group.

As you know, InterContinental Hotels Group PLC (“IHG”) has announced its intention to return capital to shareholders. This return of capital involves the introduction of the Company as new listed parent company of IHG by way of a scheme of arrangement. Admission is expected to take place on 27 June 2005.

It is intended that, subject to the scheme of arrangement becoming effective, the Company will, with effect from Admission, adopt the name “InterContinental Hotels Group PLC” to reflect the fact that the introduction of the Company as new parent company is purely a structural change to facilitate the return of capital and that management and business of the IHG Group will not change.

Accordingly, it is proposed that your appointment as Finance Director of the Company will be subject to the terms of this letter with effect from Admission. This is subject to your appointment as Finance Director of IHG not having otherwise terminated between the date of this letter and Admission.

The terms of your appointment as Finance Director of IHG, set out in your Service Agreement, will apply to your appointment as Finance Director of the Company, save that, with effect from Admission, all references to IHG in your Service Agreement will be deemed to be references to the Company.

If Admission does not take place prior to 31 December 2005, this letter shall terminate without liability on either party and your appointment as Finance Director of IHG will continue in accordance with the terms of your Service Agreement.

In this letter:

“Admission” means the date of admission of the entire share capital of the Company, issued and to be issued to the Official List of the UK Listing Authority and to trading on the London Stock Exchange;

A05009991/0.2/15 Apr 2005

1

“IHG Group” means before the date on which the scheme of arrangement becomes effective, IHG and its subsidiaries and subsidiary undertakings and following the date on which the scheme of arrangement becomes effective, the Company and those entities which will become its subsidiaries and subsidiary undertakings (including, for the avoidance of doubt, IHG); and

“Service Agreement” means the service agreement between Six Continents PLC and you dated 12 February 2003 (and any subsequent amendments thereto).

We trust that these terms are acceptable to you. If so, we should be grateful if you would sign and date the enclosed duplicate copy of this letter confirming your acceptance. Please then return it to us as soon as possible.

Signed as a Deed by
New InterContinental Hotels Group PLC		)
acting by		)
		)
Director		)
		)
Secretary		)	/s/ R.T. Winter
Signed as a Deed by		)	/s/ Richard Solomons
Richard Solomons		)
		)
In the presence of:		)
Witness’s signature		)
	/s/ Renèe Sassoon
Witness’s name:
	RENÈE SASSOON
Witness’s address:
	4 Newbury Road
	Newbury Park
	Ilford, Essex, IG27HB
Witness’s occupation:
	Personal Assistant

A05009991/0.2/15 Apr 2005

2

EX-4.C.VIII

Exhibit 4(c)(viii)

New InterContinental Hotels Group PLC

Registered Office: 67 Alma Road, Windsor, Berkshire, SL4 3HD
Registered Number: 5134420

April 2005

Mr Andrew Cosslett
Gate House
Pollards Park
Nightingale Lane
Chalfont St Giles
HP8 4SN

Dear Mr Cosslett,

New InterContinental Hotels Group PLC (the “Company”)

We are writing in relation to the proposed terms of your appointment as Chief Executive of the Company, the proposed new parent company of the IHG Group.

As you know, Intercontinental Hotels Group PLC (“IHG”) has announced its intention to return capital to shareholders. This return of capital involves the introduction of the Company as new listed parent company of IHG by way of a scheme of arrangement. Admission is expected to take place on 27 June 2005.

It is intended that, subject to the scheme of arrangement becoming effective, the Company will, with effect from Admission, adopt the name “InterContinental Hotels Group PLC” to reflect the fact that the introduction of the Company as new parent company is purely a structural change to facilitate the return of capital and that management and business of the IHG Group will not change.

Accordingly, it is proposed that your appointment as Chief Executive of the Company will be subject to the terms of this letter with effect from Admission. This is subject to your appointment as Chief Executive of IHG not having otherwise terminated between the date of this letter and Admission.

The terms of your appointment as Chief Executive of IHG, set out in your Service Agreement, will apply to your appointment as Chief Executive of the Company, save that, with effect from Admission, all references to IHG in your Service Agreement will be deemed to be references to the Company.

If Admission does not take place prior to 31 December 2005, this letter shall terminate without liability on either party and your appointment as Chief Executive of IHG will continue in accordance with the terms of your Service Agreement.

In this letter:

“Admission” means the date of admission of the entire share capital of the Company, issued and to be issued to the Official List of the UK Listing Authority and to trading on the London Stock Exchange;

A05009991/0.2/15 Apr 2005

1

“IHG Group” means before the date on which the scheme of arrangement becomes effective, IHG and its subsidiaries and subsidiary undertakings and following the date on which the scheme of arrangement becomes effective, the Company and those entities which will become its subsidiaries and subsidiary undertakings (including, for the avoidance of doubt, IHG); and

“Service Agreement” means the service agreement between Six Continents PLC and you dated 13 December 2004 (and any subsequent amendments thereto).

We trust that these terms are acceptable to you. If so, we should be grateful if you would sign and date the enclosed duplicate copy of this letter confirming your acceptance. Please then return it to us as soon as possible.

Signed as a Deed by

New Intercontinental Hotels Group PLC		)
acting by		)
		)
Director		)
		)
Secretary		)	/s/ R. T. Winter
Signed as a Deed by		)	/s/ Andrew Cosslett
		)
Andrew Cosslett		)
		)
In the presence of:		)
Witness’s signature	/s/ Tracy Moore	)
Witness’s name:	Tracy Moore
Witness’s address:
7 ADMIRAL KEPPLE COURT
FERNBANK ROAD
NORTH ASCOT, BERSHIRE-5158LU
Witness’s occupation:
Personal Assistant

A05009991/0.2/15 Apr 2005

2

EX-8

Exhibit 8

List of Subsidiaries

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
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
Barclay Operating Corp. — Argentina Branch	Argentina
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
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 Oakbrook Tenant Company	Delaware, USA
Bristol Plano Club	Texas, USA
Bristol Solo’s Club, Inc.	Delaware, USA
Bristol Texas Beverage Company	Texas, USA
BVH Hotelbesitzgesellschaft mbH & Co. Verwaltungs KG(67.5%)	Germany
BVH Hotelbesitzgesellschaft mbH (67.4%)	Germany
C.A. Hotel Guayana	Venezuela
Café Barritz	Texas, USA
Canobolas Caravan Motel Pty Ltd.	Australia
Carlton InterContinental (Cannes) SNC	France
Cayo Largo Hotel Assoc. SNC por ASE	Georgia, USA
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 Amsterdam (Management) BV	The Netherlands
Crowne Plaza Hilton Head Holding Co.	Delaware, USA
Crowne Plaza LAX, LLC	Georgia, USA
Crowne Plaza LLC	North Carolina, 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 IC Limited	England
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
H.I (Burswood) Pty Ltd.	Australia
H.I (Burswood) Trust	Australia
H.I. (Newcastle) Pty Ltd.	Australia
H.I. (Newcastle) 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	Texas, USA
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 (Birmingham Airport) Ltd.	England
Holiday Inn (Dijon) SARL	France
Holiday Inn Cairns Pty Ltd.	Australia
Holiday Inn Hotelgesellschaft mbH	Germany
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 (Andina) Inc.	Tennessee, USA
Holiday Inns (Beijing) Inc.	Tennessee, USA
Holiday Inns (Beijing) Ltd.	Hong Kong
Holiday Inns (Casablanca) Ltd	Hong Kong
Holiday Inns (China) Ltd.	Hong Kong
Holiday Inns (Chongging), 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
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 (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 (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 (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 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 Holdings (Australia) Pty Ltd.	Australia
Holiday Inns Inc.	Delaware, USA
Holiday Inns International BV	The Netherlands
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
Hospitality Network Corporation 16.9%	Japan
Hotel del Lago C.A. (0.4%)	Venezuela
Hotel Equities Fiji Ltd.	Fiji
Hotel Forum Ltd.	England
Hotel Inter-Continental London (Holdings) SAS	France
Hotel Inter-Continental London Ltd.	England
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 US (Holdings) LP	Delaware, USA
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
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 (Victoria Park) Pty Ltd	Australia
IHG Customer Service Ltd	England
IHG Cyprus Limited	Cyprus
IHG ECS (Barbados) SRL	Barbados
IHG Franchising LLC	Delaware, USA
IHG Holdings (Australia) Pty Limited	Australia
IHG Hotels (New Zealand) Limited	New Zealand
IHG IT Enabled Services (India) Private Limited	India

IHG Management (Maryland) LLC	Delaware, USA
IHG Operations (NZ) Limited	New Zealand
IHG Queenstown Limited	New Zealand
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
Inter-Continental Holding (Germany) GmbH	Germany
InterContinental Hong Kong Ltd.	Hong Kong
Inter-Continental Hospitality Corp.	Delaware, USA
InterContinental Hospitality Corporation	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	Egypt
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
InetrContinental Hotels Group (New Zealand) Limited	New Zealand
InterContinental Hotels Group (Shanghai) Ltd	China
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	England
InterContinental Hotels Group Management Services Ltd	England
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 Limited	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
InterContinental Overseas Holding Corporation — Bermuda Branch	Bermuda
InterContinental Overseas Holding Corporation — Egyptian Branch	Egypt
InterContinental Overseas Holding Corporation — Jamaican Branch	Jamaica
InterContinental Overseas Holding Corporation — Slovakia Branch	Slovakia
Inter-Continental Szalloda Budapest Rt.	Hungary
Intercora Limited (65%)	Bermuda
International Airport Hotel Ltd.	Ireland
Inthotel SA (92%)	Spain
Kenya Hotel Properties Ltd. (33.8%)	Kenya
Kumul Hotels Ltd. (18%)	Papua New Guinea
Laper S.A.	Switzerland
LIMNA Hotelbetriebsgesellschaft mbH (67.4%)	Germany
LIMNA Hotelbetriebsgesellschaft mbH Verwaltungs KG(67.5%)	Germany
Louisiana Acquisitions Corp.	Delaware, USA
Maya Baiduri Sdn Bhd (50%)	Malaysia
Mifala Holdings (Vanuatu) Ltd.	Vanuatu
Netherlands International Hotels BV (17%)	The Netherlands
Nuevas Fronteras S.A. (23.66%)	Argentina
Omega Hotels Limited	Eire
Openworld Ltd (5.97%)	England
Orbis Travel Bureau (12%)	New York, USA
OSPR Pty Ltd.	Australia
Panacon	Louisiana, USA
Parkroyal Motor Hotels Pty Ltd.	Australia
Pegasus Systems Inc.	Delaware, USA
Penrod Club Texas (Non Profit)	Texas, USA
Pershing Associates (7.5%)	District of Columbia
Pins & Pockets Club, Inc.	Texas, USA
Pollstrong Limited	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
RDP Royal Palm Hotel Ltd.	Delaware, USA
Rednor Inc.	Utah, USA
Resort Services International (Cayo Largo) LP SE	Delaware, USA
RH Resort Staff Co. Pty Ltd	Australia
Santa Fe	Mexico
SC (Andina) Inc. (formerly Holiday Inns (Andina) Inc.	Tennessee, USA
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 Leisure Group Ltd.	England
SC Luxembourg Investments SARL	Luxembourg
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 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 de Colombia SA	Colombia
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 Limited (formerly PLC)	England
Six Continents Overseas Holdings Ltd.	England
Six Continents Profit Share Scheme Trustee Ltd.	England
Six Continents Restaurants Ltd.	England
SixCo Financing 1	England
SixCo Financing 2	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	Texas, USA
Southern Pacific Hotel Corp. (BVI) Ltd.	British Virgin Islands
Southern Pacific Hotel Corp. Holdings Pty Ltd.	Australia
Southern Pacific Hotels (Indonesia) Ltd.	British Virgin Islands
Southern Pacific Hotels Operations Ltd.	British Virgin Islands
Southern Pacific Hotels Properties Limited	British Virgin Islands
Southern Pacific Hotels Ltd.	Australia
Southwick Ltd.	Cayman
SPH International Pty Ltd.	Australia
SPHC (Asia) Limited	Hong Kong
SPHC (IP) Pty Ltd.	Australia
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
SSABCO Ltd. (liquidation candidate)	England
St Lucia Management Services LLC	Delaware, USA
Staybridge Markham Inc	Ontario, Canada
Tahiti Bachcomber SA (15.8%)	Tahiti
TAK How Investment Limited (10%)	Hong Kong
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
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 GmbH (in liquidation)	Austria
Yokohama Grand Intercontinental Hotel Co. Ltd. (5%)	Japan

EX-12.A

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: March 31, 2006	By:	/s/ Andrew Cosslett
		Name:	Andrew Cosslett
		Title:	Director and Chief Executive Officer

EX-12.B

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: March 31, 2006	By:	/s/ Richard Solomons
		Name:	Richard Solomons
		Title:	Finance Director

EX-13.A

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 31,2005 (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: March 31, 2006

/s/ Andrew Cosslett
Name:	Andrew Cosslett
Title:	Chief Executive Officer
/s/ Richard Solomons
Name:	Richard Solomons
Title:	Finance Director