Boulevard Holdings, Inc.

October 8, 1998 PSE CIRCULAR FOR BROKERS NO. 2327-98 SUBJECT : Boulevard Holdings, Inc . Further to Circular No. 2132-98 dated September 15, 1998 pertaining to the Settlement Agreement entered into by Boulevard Holdings, Inc. ("BHI") and AAPC (Philippines), Inc. ("AAPC"), whereby BHI sold to AAPC all its rights and interests in AAPC (Philippines) Hotels and Resort Management, Inc. ("AHRMI"), please find below additional information on the aforesaid transaction: LexLib 1. Rationale behind the execution of a Settlement Agreement : There were some disagreements on the interpretation of the Joint Venture Agreement (JVA) and the mutual economic benefits expected from the JV fell short of expectations. Thus, both parties consensually agreed that it was to their mutual benefit/advantage to preterminate the JVA. 2. Discussion of the Settlement Agreement : a. BHI sells/transfers 63,700 shares with an aggregate par value of P6,370,000 in AHRMI constituting 49% of the total outstanding Common Stock of the company at the agreed purchase price of US$500,000. b. BHI receives US$500,000 for and in exchange of the complete waiver and quitclaim by BHI of all past, pending and present claims or causes of action against AAPC, its subsidiaries and affiliates arising out of, or in relation to, the JVA and related documents. 3. Details of the termination of the Joint Venture Agreement : a. Specific provisions on the JVA which were the subject of disagreement between BHI and AAPC: Specific provisions relate to Articles 2.2, 2.3 and 2.4 of the JVA, hereunder quoted: "2.2 The Shareholders hereto shall use all their reasonable endeavors to ensure that the Business shall be conducted by the Company on sound commercial profit-making principles and shall achieve such other objectives as may from time to time be agreed by the Shareholders in writing and, in particular, the objectives as to the minimum numbers of hotels and hotel rooms under management prescribed by the Franchise Agreement. 2.3 Subject to the provisions of the Franchise Agreement and Articles 17.4 and 2.5, the Shareholders hereby undertake to act in good faith in the best interests of the Company and not to enter into any business in the Territory which competes with the Business of the Company while this Agreement subsists. 2.4 Subject to the provisions of the Franchise Agreement and Articles 2.5 and 17.4, the Shareholders hereby undertake to use all reasonable endeavors to procure that all business opportunities which are offered or made available to them which are compatible with the business of the Company are offered to and conducted through the Company." b. Disagreements on the interpretation of the JVA and the mutual economic benefits which fell short of expectations for BHI and AAPC: The disagreements focused mainly on the granting to AHRMI of an "exclusive" license to operate/manage franchised hotels to ensure that all business opportunities were made available to AHRMI and the objectives as to the minimum numbers of hotels and hotel rooms to be managed. 4. Reason for the rescission/termination of the JVA : The termination of the JVA is a logical consequence of the Settlement Agreement because the main purpose of the JVA was the incorporation and joint management of the proportional profit sharing in a joint venture company, AHRMI. Since BHI is divesting itself of its shareholdings in AHRMI, there is no reason for the JVA to continue. prLL 5. Effects of the termination of the JVA on the operations/financial activities of BHI : The prospective effect of the JVA's termination in terms of its operational/financial impact to BHI may hardly be felt within the next couple of years as the general economic situation remains uncertain and prospective hotel owners/investors become wary/hesitant to invest and/or tie-up with hotel management chains. The only immediate financial impact is the loss of equity in net income of AHRMI, which averaged P4,471,882.07 annually for the last three years. 6. Timetable/schedule for the effectivity of the Settlement Agreement and/or termination of the JVA : The Settlement Agreement was made effective upon execution on September 11, 1998 while the termination of the JVA was deemed effective April 30, 1998. For your information. (SGD.) JOSE LUIS U. YULO, JR. President and Chief Executive Officer