PROMISSORY NOTE

$32,021,172.00                                             San Juan, Puerto Rico
                                                                  August 3, 1998

         ON DEMAND for value received, the undersigned (the "Borrower") promises
to pay to Posadas de Puerto Rico Associates, Inc., a Delaware corporation (the
"Lender"), the aggregate sum of THIRTY TWO MILLION TWENTY ONE THOUSAND ONE
HUNDRED AND SEVENTY TWO DOLLARS ($32,021,172.00), or such lesser amount as shall
then remain unpaid, under this Note, with interest. The principal amount of this
Note represents funds to be used by the Borrower to satisfy a portion of its
payment obligation to The Bank of Tokyo-Mitsubishi, Ltd. and to pay costs and
expenses associated therewith and to the refinancing thereof.

         This Note shall bear interest on the unpaid principal amount of this
Note from time to time from the date hereof to the date of its repayment at the
prime rate announced in New York City by The Chase Manhattan Bank, N.A., from
time to time (the "Prime Rate"). Except as otherwise provided herein, such
interest accrued during any quarter shall be payable on the first day of the
following quarter and shall be computed on the outstanding principal amount on
the basis of a year of three hundred sixty (360) days and for the number of
actual days elapsed.

         The principal and interest payable by the Borrower to the Lender
hereunder shall be paid only in accordance with Section 6.4 of the El
Conquistador Partnership L.P. Joint Venture Agreement dated January 12, 1990, as
amended, and shall be deemed an Additional Loan (as such term is defined in such
agreement).

         The Borrower's obligations under this Note shall be junior, subject and
subordinate in all respects to the Borrower's obligations owed to Citicorp Real
Estate, Inc. ("CRE") under the Assignment and Modification Agreement dated as of
August 3, 1998 among Borrower, CRE, and certain other parties and the Lender
shall not, without the prior written consent of CRE in each instance until the
Borrower's obligations under the Assignment and Modification Agreement have been
satisfied in full, exercise any rights or remedies as a result of a default
hereunder of the Borrower.

         This Note may be prepaid in whole or in part at any time and from time
to time prior to the maturity hereof without premium or penalty, but with
accrued interest on the principal amount prepaid to the date of prepayment.

         All payments received in respect of this Note shall be applied first to
interest and then to principal.

         Anything herein to the contrary notwithstanding, if the rate of
interest required to be paid hereunder exceeds the rate lawfully chargeable, the
rate of interest to be paid shall be automatically reduced to the maximum rate
lawfully chargeable so that no amounts in excess thereof shall be





 



charged, and, in the event it should be determined that any excess over such
highest lawful rate has been charged or received, the Lender shall promptly
refund such excess to the Borrower; provided, however, that, if lawful, any such
excess shall be paid by the Borrower on behalf of the Lender as additional
interest (accruing at a rate equal to the maximum legal rate minus the rate
provided for hereunder) during any subsequent period when regular interest is
accruing hereunder at less than the maximum legal rate.

         If this Note is not paid in full when due, the undersigned Borrower
hereby agrees to pay all costs and expenses of collection including reasonable
attorneys' fees and thereafter the unpaid balance hereunder shall bear interest
at the Prime Rate plus 2%.

         This Note shall become immediately due and payable at the option of the
Lender, without notice or demand, in the event that the Borrower is the subject
of a voluntary or involuntary application for the appointment of a receiver or a
petition filed under the Federal or local Bankruptcy Laws or the Borrower fails
to make a payment when due and such failure shall continue for a period of ten
(10) days.

         The undersigned Borrower and all endorsers hereof, jointly and
severally waive presentment, demand for payment, notice of dishonor, notice of
protest, and all other notices or demands in connection herewith and assent to
any extension or postponement of the time of payment or other indulgence or
release of any party, whether by operation of law or otherwise.

         No delay by the holder of this Note in exercising any power or right
hereunder shall operate as a waiver of any power or right, nor shall any single
or partial exercise of any power or right preclude other or further exercise
thereof, or the exercise of any other power or right hereunder or otherwise; and
no waiver whatever or modification of the terms hereof shall be valid unless set
forth in writing and signed by the holder of this Note. No waiver shall be
deemed a continuing waiver or waiver of any subsequent breach or default,
whether of the same or similar or different nature, unless expressly so stated
writing.

         This Note shall be governed by and construed in accordance with the
substantive law of the Commonwealth of Puerto Rico.


                                      EL CONQUISTADOR PARTNERSHIP L.P.

                                      By:      CONQUISTADOR HOLDING, INC.,
                                               A General Partner

                                      By:      /s/ Larry Vitale
                                             -----------------------------------
                                             Name:    Larry Vitale
                                             Title:   Vice President


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