Debt Restructuring Letter Agreement

NATIONAL LODGING CORP.
605 THIRD AVENUE
NEW YORK, NEW YORK 10171


August 15, 1996


Scotia Mortgage Corporation Bank of Montreal c/o The Bank of Nova Scotia Corporate & Institutional Financial 3820, 700-2nd Street S.W. Services P.O. Box 2540 First Canadian Place - 24th Floor Calgary, Alberta Toronto, Ontario M5X 1A1 AB T2P 2N7 Attention: Cahal B. Carmody Attention: R.A. Gray Director Unit Head


Alberta Treasury Branches Canadian Imperial Bank of Commerce Calgary North Hill Commerce Court West - 6th Floor P.O. Box 30079, Stn B Toronto, Ontario M5L 1A2 3rd Floor, 217 16 Avenue N.W. Attention: A.C. Becker Calgary, Alberta T2M 4N7 General Manager Attention: K.S. Tunnicliffe
Senior Accounts Manager


RE: Capital Properties Limited Partnership - Restructuring


Dear Sirs:


Pursuant to certain loan agreements (the "Loan Agreements") entered into between each of Alberta Treasury Branches ("ATB"), Bank of Montreal ("BofM"), Scotia Mortgage Corporation ("BNS") and Canadian Imperial Bank of Commerce ("CIBC") (collectively, the "Lenders") with Capital Properties Limited Partnership ("CPLP"), Syndicated Capital Properties Inc. ("Syndicated"), and Syncap Properties Inc. ("Syncap"), the Lenders each agreed to lend certain funds to CPLP, Syndicated and Syncap (collectively, the "Borrowers"), based on certain security provided to the Lenders or a trustee for a Lender by the Borrowers, Tegrad Properties (Winnipeg) Inc., Tegrad Montreal I Inc. and 1002370 Ontario Inc. (collectively, the "Debtors") including and in respect of each of the properties


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(the "Properties") listed in Schedule "A" attached hereto (it being understood that only ATB has a charge on the Calgary Airport Hotel Property and that such charge is in regards to the renovation loan).


As a result of certain ongoing defaults by the Borrowers under the Loan Agreements and a request by the Lenders that CPLP attempt to restructure its affairs, National Lodging Corp. ("NLC") or an affiliate of NLC intends to enter into a contract of sale (the "NLC Agreement") pursuant to which an affiliate of NLC will purchase the Properties. NLC will purchase the Debt (as defined in paragraph 1) and the Security from the Lenders, which transaction is separate from the NLC Agreement but conditional upon certain approvals required for the implementation of the NLC Agreement. NLC confirms that the Lenders have not taken part in the negotiation of the NLC Agreement which will require the Debt and Security to be amended and restated following the purchase from the Lenders nor have the Lenders participated in settling or are aware of the terms of the proposed amendment and restatement of Debt.


Accordingly, NLC agrees with each of the Lenders as follows:


1. Each of the Lenders severally agrees to assign to NLC or to such other person as NLC may direct, all obligations and indebtedness of the Borrowers to such Lender under the applicable Loan Agreement (collectively, the "Debt"), and to assign or transfer to NLC or as it may otherwise direct, all security held by such Lender or a trustee for such Lender pursuant to the applicable Loan Agreement with respect to the Debt (collectively, the "Security"), including all guarantees thereof, forthwith upon payment to the Lenders of the sum of Eighty Seven Million Five Hundred Thousand ($87,500,000) Dollars (the "Purchase Price").


2. The Purchase Price shall be allocated and paid to each of the Lenders in accordance with a separate agreement among the Lenders.


3. NLC shall pay the Purchase Price for the Debt as follows:


(a) A deposit of $5,000,000.00 will be paid by NLC upon
acceptance of this offer, to be held by Fraser & Beatty,
Barristers & Solicitors, as agent for all the Lenders. This
deposit will be forfeited to the Lenders pro rata, in
accordance with a separate agreement among the Lenders, if
NLC fails to close the acquisition of the Debt in accordance
with the terms of this agreement but will be refunded to NLC
within three (3) business days after the closing date if the
conditions referred to in paragraph 7 have not been satisfied
or if any of the Lenders fails to close in accordance with
the terms hereof. If the deposit is forfeited, the Lenders
will have no other claims against NLC arising from its
failure to close. The deposit will be deposited by Fraser &
Beatty in an interest bearing trust account with Bank of
Montreal. If any dispute


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arises with respect to the deposit, the deposit and all
interest thereon shall be paid into court by Fraser & Beatty.


(b) The balance of the Purchase Price (i.e. $82,500,000 less
interest earned pursuant to paragraph 3(a) above) by way of
bank draft of an institution reasonably acceptable to the
Lenders, certified cheque drawn on an institution reasonably
acceptable to the Lenders or wire transfer of immediately
available funds, shall be payable severally to each Lender at
closing.


4. The Lenders expect the Borrowers to continue to make monthly
payments to each of the Lenders in the amounts currently being paid to
each of the Lenders; for the avoidance of doubt, the payments are the
amounts paid by the Borrowers to each of the Lenders for the month of
March, 1996, as set out in Schedule "G" hereto. If the Borrowers do
not make any such payment to a Lender when such payment is due as
provided by the applicable Loan Agreement, such Lender may notify NLC
of such default. If NLC does not pay to such Lender, within ten (10)
days after the delivery of such notice to NLC by fax at (212) 867-5475
Attn: Martin L. Edelman, with a copy faxed at (212) 856-7808 Attn:
Robert J. Wertheimer, the payments listed in Schedule G which were not
paid by the Borrowers and all interest accrued thereon to the date of
payment in full, such Lender shall be entitled to terminate this
letter agreement by notice to NLC and the other Lenders unless NLC
agrees in writing prior to the expiry of such ten (10) day period to
close the acquisition of the Debt as provided herein within five (5)
days following the expiry of the said ten (10) day period and does
complete the acquisition within such five (5) day period. NLC shall,
on such closing, pay in addition to the Purchase Price all such
monthly payments then in arrears and such interest accrued to the date
of closing. Upon such termination, the deposit and all interest
thereon shall be refunded to NLC within three (3) business days.


5. At closing, each Lender shall, at its own expense, prepare, execute,
and deliver complete assignments of all Debt and the Security held by
such Lender, including, without limiting the generality of the
foregoing, all mortgages, debentures and security agreements
comprising the Security with respect to the applicable Properties, all
Personal Property Security Act and other registrations in all
Provinces and Territories of Canada where such registrations have been
effected, and shall deliver to NLC all notes and guarantees in respect
of the Debt.


6. In connection with the sale by the Lenders of the Debt and Security,
each of the Lenders severally makes to NLC the representations and
warranties set forth in the Schedule "B" and the Schedule "C" which
are applicable to such Lender but not in any other Schedule "B" or
Schedule "C" hereto. The Lenders make no other representations or
warranties to NLC or any other person. Neither NLC nor the purchaser
of the Debt and Security shall have any recourse to any Lender in
respect


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of any Debt or Security or otherwise (except for a breach by a Lender
of its representations or warranties contained herein) and the
assignments by the Lenders shall so state.


7. Subject to paragraph 9 herein, this purchase of Debt and Security
will close not later than the tenth (10th) business day following the
date on which 66.6% or more (or such lesser percentage as may be
satisfactory to NLC in its sole opinion) of the votes cast at a
meeting of CPLP's limited partners have approved the terms of the NLC
Agreement and such other resolutions as may by referred to them by NLC
at such meeting, provided all the representations and warranties set
forth in Schedules "B" and "C" remain true and correct on and as of
the closing (to be confirmed by certificates of the Lenders delivered
at closing). The closing (the "closing") shall occur at the offices of
Fraser & Beatty, Barristers & Solicitors, whose address is 1 First
Canadian Place, Toronto. NLC shall give the Lenders at least nine (9)
business days' prior notice of the closing date. If the closing has
not occurred on or before October 15, 1996 on account of the failure
by NLC to close and each Lender is ready, willing and able to close,
this letter agreement shall terminate and, if all conditions precedent
to NLC's obligation to close were satisfied on or before October 15,
1996, the deposit and all interest accrued thereon shall be paid to
the Lenders pro rata, in accordance with a separate agreement among
the Lenders. If all such conditions precedent were not satisfied on or
before October 15, 1996, this letter agreement shall terminate and the
deposit and all interest accrued thereon shall be paid to NLC within
three (3) business days. If the closing has not occurred on or before
the date set as the closing date pursuant to this paragraph 7, solely
on account of a failure to close on the part of one or more of the
Lenders when NLC is ready, willing and able to close, NLC shall be
entitled to pursue all legal and equitable remedies (including
specific performance) against such Lender or Lenders which was or were
unwilling to close, and the said closing date hereinabove referenced
may by written notice by NLC to each of the Lenders on or before a
date ten (10) business days after the date set for closing be extended
to October 15, 1996 at NLC's option in order to permit NLC to close
the acquisition of the Debt and the Security from all of the Lenders
simultaneously on or before October 15, 1996. However, this letter
agreement shall be terminated if the closing has not been completed on
or before October 15, 1996. Upon such termination of this agreement,
other than as provided in the last sentence in this paragraph 7, the
deposit plus all interest thereon shall be refunded to NLC within
three (3) business days. NLC agrees that any damage claim arising from
a breach of a Lender's obligations hereunder, however, may be asserted
only against such of the Lenders who are unwilling to close when NLC
is otherwise ready, willing and able to do so, and not against any of
the other Lenders. If, on October 15, 1996, all of the Lenders are
ready, willing and able to close, all conditions precedent to NLC's
obligation to close have been satisfied and NLC does not itself close
for any reason, this letter agreement shall be terminated, and the
deposit plus all interest thereon shall be paid to the Lenders pro
rata, in accordance with a separate agreement among the Lenders.


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8. From the date hereof until the earlier of closing or the termination
of this Agreement, each of the Lenders agrees not to commence any
realization procedures relating to the Security (other than giving
notices of default, demands for payment and notices of intention to
enforce security) unless:


(a) an event occurs which, in the sole discretion of any
Lender, would or could, in the reasonable opinion of any
Lender, result in the loss by such Lender of priority over
any of the Borrower's assets to another creditor (including a
loss of priority to any governmental liens, statutorily
created liens or existing liens but excluding a lien for real
property taxes and utility charges), provided that the
Lenders shall notify NLC of such priority claim event by
giving notice in the manner and to the addresses referred to
in paragraph 4 above and NLC shall have had an opportunity
(but no obligation) to cure such event within ten (10) days
after the delivery of such notice and NLC shall have failed
to cure such event within such ten (10) day period, having
not elected to close the acquisition of the Debt by not later
than the tenth (10th) day following receipt of such notice
hereinbefore provided (or having so timely elected, having
failed to close when the Lenders were ready, willing and able
to do so by not later than five (5) days after the expiry of
said ten (10) day period); or


(b) any Lender has not received the monthly payments referred
to in paragraph 4 above, the ten (10) day period provided to
NLC therein has expired absent the required payment or
payments by NLC, this letter agreement has been terminated
and NLC has had the deposit plus all interest thereon
refunded.


Subject to this paragraph 8, the Lenders shall be entitled to realize
on their Security despite any provision of the NLC Agreement or any
other agreement.


9. In the event of an appointment of a receiver and manager of all or
substantially all of the assets of the Borrowers, or if a voluntary
assignment or involuntary petition in bankruptcy is filed against any
Borrower, NLC may within five (5) days of such event terminate this
agreement, whereupon the Lenders shall refund the deposit plus all
interest thereon to NLC within three (3) business days after such
termination, provided that neither NLC nor any affiliate thereof shall
have initiated such event.


10. On closing, each of the Lenders will execute and deliver a covenant
not to sue in favour of the Borrowers and the other Debtors in the
form of Schedule "D" attached hereto and each of the Borrowers and the
other Debtors will execute and deliver a covenant not to sue in favor
of each Lender in the form of Schedule "E" attached hereto.


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11. Each of the Lenders and their assigns shall execute and deliver such
other instruments and perform or cause to be performed such further
acts in respect of the foregoing as they and their respective legal
counsel reasonably deem appropriate.


12. Upon full execution and delivery of this letter agreement by the
parties hereto, this offer shall constitute a legal and binding
agreement between NLC and each of the Lenders.


13. All dollar amounts referred to herein are in Canadian Dollars.


14. Time shall be of the essence with respect to the dates specified
in this letter agreement.


15. Nothing in this letter agreement shall be construed as a waiver of the
notices of default or demands for payment previously issued by any of
the Lenders with respect to any Debt, and if NLC does not complete the
purchase contemplated under the terms of this letter agreement by
October 15, 1996, the Lenders shall be entitled to exercise all rights
and remedies available to them at law, or otherwise against the
Debtors.


16. Each of the parties hereto shall pay its own counsel and
professional fees, provided the foregoing shall not affect any
arrangements among the Lenders.


17. NLC shall be permitted to assign its rights and obligations hereunder
to a wholly owned and controlled subsidiary provided such assignment
in no way relieves NLC of its obligations to the Lenders.


18. Each of the obligations of each of the Lenders hereunder is
several and not joint or joint and several. No Lender shall have any
liability in respect of any obligation or default by any other Lender.


19. This agreement may be executed in counterparts and all
counterparts shall constitute one and the same agreement.


20. This agreement shall be governed by and construed in accordance
with the laws of Ontario. The parties hereto attorn to the
jurisdiction of Ontario courts to resolve any dispute hereunder.


21. The obligation of NLC to complete the purchase of the Debt and
Security is conditional upon:


(a) the delivery to NLC on closing of executed documents in
the forms of Schedules F hereto upon the payment of the
additional amount of $325,000 to


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ATB on such closing (and NLC shall cause to be paid or pay
such additional sum of $325,000 to ATB on closing); and


(b) there being an absence of a Court Order in effect on
closing which prohibits the completion of the NLC Purchase.
For the purpose of this paragraph and paragraph 26, the "NLC
Purchase" shall mean the purchase by an affiliate of NLC of
the Properties, the purchase by an affiliate of NLC of the
Debt and Security and the exercise by the purchaser of the
Debt and Security of its remedies subsequent to closing in
respect of the Security, should that be necessary in the
opinion of NLC. For the purposes of this paragraph, "Court
Order" shall mean any action or application (resulting from
an action or application by a person other than NLC,
Chartwell Canada Corp., a Delaware corporation ("Chartwell"),
any affiliate of either of them or any of their respective
successors or assigns) before any court or governmental
authority or agency instituted or decided adversely against
CPLP, Syndicated, NLC, Chartwell, any of the Lenders or their
affiliates:


(i) that challenges the NLC Purchase or the means by which
same may be accomplished;


(ii) that seeks to prohibit or impose limitations on the NLC
Purchase or to compel NLC, Chartwell or its affiliates to
unwind the NLC Purchase, including any subsequent business
transactions; or


(iii) that seeks to impose any material condition to the NLC
Purchase which is unacceptable to NLC, Chartwell or its
affiliates.


This condition is inserted for the sole benefit of NLC and may be
waived by it on or before closing in writing but such waiver shall not
affect NLC's obligation pursuant to subparagraph 21(a).


22. The obligations of the Lenders to complete the sale of the Debt
and Security are conditional upon the receipt by the Lenders of the
amounts referred to in paragraph 4 (in the case of partial months,
prorated to the date of closing) and upon the execution and delivery
to the Lenders on or before closing of each of the following in form
and substance satisfactory to each Lender: (a) written consent by
Relax Development Corporation Ltd., the Borrowers, the other Debtors
and 1002370 Ontario Inc. to this transaction; (b) written consent by
NL Hotels, Inc. (formerly known as Forte Hotels, Inc.) to this
transaction; (c) written confirmation by the Borrowers of the amount
of the Debt owing to each Lender as the date of closing; and (d) a
covenant by each of the Borrowers and the other Debtors to each of
the Lenders not to sue. These conditions are for the sole benefit of
the Lenders and may be waived by the Lenders on or before closing in
writing.


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23. NLC shall indemnify each of the Lenders against any claims or
damages suffered by the Lenders (and any one or more of them) from
conditions, actions or events (not resulting from Lender conduct,
directly or indirectly) occurring after the closing resulting from
any action of NLC, the purchaser of the Debt and Security, any
affiliate of either or their respective successors and assigns,
including any claims or damages arising from the NLC Agreement, any
amendment or restatement of the Debt or any realization of the
Security, but excluding any claims otherwise made in connection with
the acquisition of the Debt from the Lenders or acts, failures to act
or circumstances occurring prior to closing.


24. NLC agrees that it will register, as soon as possible after the
closing, all appropriate documents in all registries where the
Security is registered to show that NLC has become the registered
holder of the Security. NLC shall not hold out or represent to any
person that it acts as agent for any of the Lenders with respect to
any of the Debt or Security or otherwise.


25. For the avoidance of doubt, NLC shall be under no obligation to
close if and to the extent one or more of the Lenders is not ready,
willing or able to close.


26. NLC shall not disclose to any person any matter relating to this
Transaction including, without limitation, the name of any Lender,
the amount of the Debt owing to any Lender, or the purchase price or
the part thereof paid or payable to any Lender, except to the extent
such disclosure is required by law, in connection with any necessary
consent to the purchase of Debt and Security, or as may be disclosed
to NLC's bankers in connection with NLC's corporate borrowing, or to
the extent required by applicable laws mandating the disclosure of
material information concerning issuers of publicly offered or traded
securities. Despite the foregoing, (i) NLC shall be permitted to
disclose to the partners of CPLP the total amount of the Debt being
purchased by NLC and (ii) the Borrowers may be required to disclose
to the partners of CPLP information regarding this letter agreement
in connection with obtaining any necessary consent to the NLC
Purchase.


27. NLC shall cause Forte Hotels Management, Inc., Forte Hotels, Inc.
and Royco Hotels & Resorts Ltd. to deliver to the Lenders on or
before closing a release of all obligations and liabilities of the
Lenders pursuant to the non-disturbance agreement dated as of
September 30, 1992.


28. If any Court Order referenced to in subparagraph 21(b) is in
effect on closing, any party hereto shall be entitled, on notice to,
the other parties hereto, to extend the closing date until October
15, 1996.


29. If and to the extent any of the Lenders receives a payment of
principal on its Debt or fee other than, in respect of BNS or BofM
only, the payments pursuant to paragraph 4 hereof, then and in that
event, the Purchase Price shall be reduced by the amount of


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principal or fee received (excluding the principal received by BNS or
the fee received by BofM). All payments and collections received by
the Lender on or in respect of the Debt after the completion of
closing shall be for NLC's account, held in trust by Lenders and
remitted to NLC or its designee upon receipt.


30. Nothing in this agreement shall constitute a waiver by any Lender
of any default by any of the Borrowers or any of the other Debtors.


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Dated at New York, New York this 15th day of August, 1996.


NATIONAL LODGING CORP.


Per: /s/ Martin L. Edelman
Name: MARTIN L. EDELMAN
Title:


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THIS OFFER IS ACCEPTED BY EACH OF THE LENDERS ON THE DATES INDICATED BELOW.


BANK OF MONTREAL


Per: /s/ Cahal B. Carmody


Per:


Date: August 15, 1996


SCOTIA MORTGAGE CORPORATION


Per:


Per:


Date: August 15, 1996


CANADIAN IMPERIAL BANK OF COMMERCE


Per: /s/ A.C. Becker
Title: General Manager


Per:


Date: August 15, 1996


PROVINCE OF ALBERTA TREASURY BRANCHES, by its authorized agent


Per: /s/ Witness: /s/


Date: August , 1996


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SCHEDULE "G"


Monthly Payments Being Received by Each Lender


Lender Amount ...