exhibit10_26.htm


     

    
 

    
      

      

    

    
 

    EXHIBIT
10.26

    


    EXECUTION
COPY

    June 18,
2009

    


    


    Peter J. Sonnabend, Executive Chairman

    Sonesta
International Hotels Corporation

    116
Huntington Avenue

    Boston,
MA 02116

    


    Dear
Peter:

    


    As you know, we have had many
conversations over the past several months regarding SBR-Fortune Associates,
LLLP, a Florida limited liability limited partnership (the "Partnership").  This
letter agreement is intended to supersede all such discussions and
conversations, none of which shall have any force or effect.  All
terms appearing in initial capitalized letters below shall have the meanings
ascribed thereto in the Agreement of Limited Liability Limited Partnership of
the Partnership, dated as of January 17, 2005, as amended by that certain First
Amendment to Agreement of Limited Liability Limited Partnership of SBR-Fortune
Associates, LLLP dated as of February 25, 2005, by that certain Second Amendment
to Agreement of Limited Liability Limited Partnership of SBR-Fortune Associates,
LLLP dated as of March 2, 2005, and by that certain Third Amendment to
Agreement of Limited Liability Limited Partnership of SBR-Fortune Associates,
LLLP dated as of April 15, 2005, as so amended, the ("Partnership
Agreement").

    


    This letter will constitute the
agreement of the Partners and is intended to modify and amend the Partnership
Agreement as follows:

    


    1. All funds
advanced by or on behalf of any of the Partners or from third parties from and
after January 20, 2009 shall be referred to below as "New
Monies."  The repayment of all New Monies and the payment to
HSBC Realty Credit Corporation (USA) ("HSBC") of all sums
due to HSBC pursuant to that certain Loan Agreement, dated as of April 19, 2005,
entered into by HSBC and the Partnership, as amended to the date hereof (the
"HSBC
Indebtedness") shall be governed by the provisions of Paragraph 5(a)
below or as otherwise provided herein.  By their execution below, the
parties have agreed that the sum of the principal amount of the New Monies and
the principal amount of the HSBC Indebtedness shall not exceed Sixty-Eight
Million Dollars ($68,000,000.00) (the "Debt Cap"), unless
Sonesta, in its sole and absolute discretion, elects to permit the funding of
indebtedness in excess of such amount by or on behalf of either the Fortune
Partners or Sonesta. All New Monies funded which, when added to the principal
amount of the HSBC Indebtedness, do not exceed the Debt Cap are referred to as
the "First Tier New
Monies." All New Monies funded which, when added to the principal amount
of the HSBC Indebtedness, exceed the Debt Cap are referred to as the "Second Tier New
Monies."

     

    2. All New
Monies funded by Sonesta shall bear simple interest at the rate of fifteen
percent (15%) per annum.  All New Monies caused to be funded by the
Fortune Partners from any person or party not controlled by Edgardo Defortuna
("Defortuna")
shall bear simple interest at the rate of thirteen and one-half percent (13.5%)
per annum.  All New Monies caused to be funded by Defortuna or any
person or party controlled by Defortuna (which shall include any funding as to
which any of the Fortune Partners, Defortuna and/or any person or party
controlled by Defortuna bear the ultimate financial risk) shall not bear
interest.  All New Monies

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 2
-

    


     

    shall be
funded in the form of a loan and, in the case of New Monies which are not funded
by Sonesta or any of its affiliates, will be evidenced by a promissory note in
the form attached hereto as Exhibit "A", or in the case of New Monies funded by
Sonesta or any of its affiliates, in the form attached hereto as Exhibit "A-1"
(each of the promissory notes evidencing New Monies are referred to as a "New Monies Promissory
Note"), which in each case shall provide (i) a waiver by the applicable
lender of any rights it may have at law or in equity to initiate insolvency or
Bankruptcy proceedings against the Partnership in connection with the loans
evidenced by each such New Monies Promissory Note, and (ii) for a "maturity
date" as provided in said New Monies Promissory Note.

     

    3. The first
Six Million Dollars ($6,000,000.00) of New Monies to be funded from and after
January 20, 2009, shall be funded (i) fifty percent (50%) by or through Sonesta
and (ii) fifty percent (50%) by or through loans arranged by the Fortune
Partners; it being agreed that New Monies funds shall be contributed from time
to time in a manner that results in the New Monies contributions made on behalf
of Sonesta and the Fortune Partners to remain approximately equal until each has
reached the Three Million Dollar ($3,000,000.00) threshold.  Sonesta
shall not be required to provide any New Monies funds pursuant to this Paragraph
3 until Sonesta has received confirmation that the Fortune Partners or third
parties have satisfied their equivalent New Monies funding
obligation.  From and after the date on which Sonesta and the Fortune
Partners have funded or caused to be funded their respective Three Million
Dollar ($3,000,000.00) New Monies obligations, and except as otherwise provided
herein, such as, for example, upon the election by Sonesta of the Forced Sale
Option, the Fortune Partners shall be solely responsible for causing all further
New Monies to be funded through the borrowing of additional funds from third
parties or Defortuna under additional New Monies Promissory Notes.  As
of the date of execution of this letter agreement, each of Sonesta and the
Fortune Partners have funded or caused to be funded Nine Hundred Thirty-Three
Thousand Nine Hundred Forty Dollars and 04/100 ($933,940.04) of New
Monies.  One hundred percent (100%) of the New Monies funded by the
Fortune Partners to date has been funded by Defortuna.  Each such
funding has been made in accordance with the terms of a New Monies Promissory
Note, dated as of the date hereof (provided that interest shall be retroactive
to the date of actual funding).

     

    4. 

     

    (a) The
Partners have agreed to sell the Property (and/or all of the Partnership
Interests). During the period commencing on the date hereof and ending on
October 31, 2009, the Partnership will accept any Bona Fide Offer (defined
below) received by it for an all-cash purchase price of Eighty Million Dollars
($80,000,000.00) or more. Any Bona Fide Offer that includes a proposal for
purchase money financing shall be subject to the mutual agreement of the
Partners acting reasonably.  As used herein, the term "Bona Fide Offer"
means a binding written offer to purchase the Property (or all of the
Partnership Interests) from a person or entity reasonably likely to have the
financial resources and/or access to financing necessary to close the offered
transaction, containing terms and conditions that are generally typical in the
then current market for properties similar to the Property, provided that in all
events such Bona Fide Offer must (a) provide for a cash security deposit in an
amount not less than Three Million Dollars ($3,000,000.00), (b) a due diligence
period of no more than thirty (30) days, and (c) at the end of the due diligence
period no less than Three Million Dollars ($3,000,000.00) must be 'hard" (i.e.,
at risk).

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 3
-

    


     

    (b) If the
Partnership is not then party to a binding agreement to sell the Property (and
the Partners are not then party to a binding agreement to sell all of the
Partnership Interests), then during the period commencing on November 1, 2009
and ending on January 31, 2010, Sonesta shall have the sole right to cause the
Partnership to enter into an agreement (a "Sonesta Approved
Agreement") to sell the Property (or all of the Partnership Interests)
pursuant to a Bona Fide Offer (provided that the purchase price thereunder may
be less than Eighty Million Dollars ($80,000,000.00), if such purchase price is
acceptable to Sonesta; provided, however, that the consent of the Fortune
Partners shall be required for any above described proposed transaction whereby
Sonesta retains, directly or indirectly, any non de minimis interest in the Property (or
Partnership Interests) unless (i) as a result of the transaction, including any
funds advanced by Sonesta or third parties, the Fortune Partners, Defortuna and
third parties funding New Monies on behalf of the Fortune Partners receive at
the closing of said transaction the greater of (A) the amount said parties would
have received pursuant to the provisions of Paragraph 5(a) below if the Property
was sold for an all cash purchase price of Seventy-Two Million Five Hundred
Thousand Dollars ($72,500,000.00) or (B) the amount said parties would receive
pursuant to the provisions of Paragraph 5(a) below if the Property is sold for
the consideration set forth in the Sonesta Approved Agreement, and (ii) the
closing date of said transaction is no greater than ninety (90) days after the
date of execution of the Sonesta Approved Agreement.

     

    (c) If the
Partnership is not then party to a binding agreement to sell the Property (and
the Partners are not then party to a binding agreement to sell all of the
Partnership Interests), then during the period commencing on February 1, 2010
and continuing thereafter, if either the Fortune Partners or Sonesta notifies
the other that it elects to accept the then current all-cash Bona Fide Offer
having the highest proposed purchase price of all then current all-cash Bona
Fide Offers, then the Partnership shall accept such highest all-cash Bona Fide
Offer; provided, however, that if Sonesta notifies the Fortune Partners that
Sonesta rejects such proposed sale (which it may do only if it is not a Fortune
Approved Bona Fide Offer which Sonesta must accept pursuant to Paragraph
4(d)(ii) below), then (i) the provisions of Paragraph 4(d) below shall apply and
from and after the date of a closing under the Buy Out Option described below,
Sonesta shall have the sole right to cause the Partnership to sell the Property
(or all of the Partnership Interests) on terms and conditions acceptable to
Sonesta and (ii) from and after the date on which Sonesta rejects the proposed
Bona Fide Offer, and notwithstanding anything to the contrary contained in
Paragraph 3 above, the Fortune Partners shall have no obligation to provide any
additional funding to the Partnership.

     

    (d) 

     

    (i) In the
event the Partnership receives a Bona Fide Offer on or after February 1, 2010 to
sell the Property or to have all of the Partners sell all of the Partnership
Interests which the Fortune Partners desire to accept, the Fortune Partners
shall notify Sonesta in writing of such Bona Fide Offer and their desire to
accept such offer (such notice, an "Acceptable Sale
Notice", which shall include a copy of the Bona Fide Offer in question
[the "Fortune Approved
Bona Fide Offer"]); provided, however, that in order for a Bona Fide
Offer to be capable of constituting a Fortune Approved Bona Fide Offer under
this Paragraph 4(d), in addition to qualifying as a Bona Fide Offer pursuant to
Paragraph 4(a) above, such offer must also (A) provide no financing contingency
and (B) provide a due diligence period of no greater

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 4
-

    


     

    than
fifteen (15) days if no funds are at risk or a due diligence period of up to
forty-five (45) days if an "at risk" deposit of no less than Five Hundred
Thousand Dollars ($500,000.00) is placed in escrow. In addition, the Partners
have agreed that the first Five Hundred Thousand Dollars ($500,000.00) of any
forfeited due diligence deposit contained in a Fortune Approved Bona Fide Offer
shall be distributed to Sonesta and treated as a reduction in its Unreturned
Capital (provided that any other forfeited deposit shall be distributed to the
Partnership and not Sonesta exclusively).  Sonesta, within ten (10)
Business Days of receipt of the Acceptable Sale Notice, must notify the Fortune
Partners in writing whether Sonesta accepts or rejects the Fortune Approved Bona
Fide Offer.  In the event Sonesta fails to notify the Fortune Partners
in writing within the above described ten (10) Business Day period, then Sonesta
shall be deemed to have accepted the Fortune Approved Bona Fide Offer and the
Partners shall pursue a closing thereunder.  In the event Sonesta
indicates in writing within the above described ten (10) Business Day period
that it rejects the Fortune Approved Bona Fide Offer, then Sonesta shall be
deemed to have elected to purchase the Partnership Interests of the Fortune
Partners (the "Buy-Out
Option").  In the event Sonesta elects the Buy-Out Option, (i)
the Partnership shall not accept the Fortune Approved Bona Fide Offer, and (ii)
the provisions of Paragraph 7.2 shall apply.

     

    (ii) Notwithstanding
anything to the contrary contained in Paragraph 4(c) or Paragraph 4(d)(i) above,
Sonesta must accept (and shall be deemed to accept) any Fortune Approved Bona
Fide Offer otherwise described in Paragraph 4(d)(i) which provides for
either:  (A) a purchase price that after deducting for reasonably
anticipated closing costs would result in sales proceeds equal to or less than
the then outstanding HSBC Indebtedness, or (B) a purchase price that after
deducting for reasonably anticipated closing costs would result in sales
proceeds equal to or greater than the sum of (y) the then outstanding HSBC
Indebtedness and (z) all amounts outstanding under the New Monies Promissory
Notes.  In the event Fortune proffers a Fortune Approved Bona Fide
Offer which provides for a purchase price that after deducting for reasonably
anticipated closing costs would result in sales proceeds greater than the then
outstanding HSBC Indebtedness, but less than the sum of (y) the then outstanding
HSBC Indebtedness and (z) all amounts outstanding under the New Monies
Promissory Notes, then, in such event, Sonesta may reject such Fortune Approved
Bona Fide Offer, in which event, it shall be deemed to have elected the Buy-Out
Option, provided that, as a condition to doing so, Sonesta must provide an
indemnity to Defortuna from Sonesta International Hotels Corporation, a New York
corporation, in an amount equal to the lesser of (i) One Million Dollars
($1,000,000.00), or (ii) fifty percent (50%) of any and all losses, damages,
expenses, costs or other amounts paid by Defortuna to HSBC pursuant to or
otherwise attributable to Defortuna's guaranty of the HSBC
Indebtedness.  Such indemnity shall be provided in a written agreement
containing operative indemnity provisions identical to those contained in
Section 5 of the Release and Indemnity Agreement referred to in Paragraph 7.1
below.

     

    (iii) In the
event of a sale under Paragraph 4(d)(ii)(A) above, Defortuna must either
(x)  pay to Sonesta upon the closing of such sale an amount equal to the
unpaid principal and interest due under all New Monies Promissory Notes then
held by Sonesta, in which event the guaranty provided by Defortuna described in
Paragraph 8 below shall be extinguished in its entirety upon such payment, or
(y) not make any payment to Sonesta in which event  the guaranty provided
by Defortuna described in Paragraph 8 below shall remain in full force and
effect.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 5
-

    


     

    5. 

     

    (a) Assuming
the Fortune Partners have not defaulted in funding New Monies (as described in
and required by Paragraph 3 above) beyond the applicable Cure Period (as defined
in Paragraph 6(a)) (or for such additional cure period of time provided in the
Partnership Agreement in the event Sonesta elects the Partnership Agreement
Default Option) or if the Fortune Partners default in their New Monies funding
obligations and Sonesta elects the "Third Fork Option"
described in Paragraph 7.3 below, the net proceeds derived from any sale of the
Property or all of the Partnership Interests will be distributed as
follows:

     

    (i) first, to
the payment of the HSBC Indebtedness;

     

    (ii) next, to
the payment of all Partnership liabilities, excluding (x) any amounts payable to
any of the Partners (which exclusion includes amounts payable in respect of
project administration fees or other fees or compensation payable to the Fortune
Partners and Hotel Shutdown Payments payable to Sonesta (which Hotel Shutdown
Payments shall be added to the Unreturned Capital of Sonesta)) and (y) all New
Monies;

     

    (iii) next, to
the principal and interest on all New Monies Promissory Notes issued in respect
of First Tier New Monies (with all accrued interest being payable to all First
Tier New Monies lenders pari passu (in proportion to which the accrued interest
payable to each such lender in respect of the First Tier New Monies bears to the
total outstanding interest payable to all such lenders in respect of the First
Tier New Monies)) prior to the pari passu repayment of outstanding principal in
respect of the First Tier New Monies;

     

    (iv) next, to
the payment of the Sales Incentive Amount (as such term in defined in Paragraph
5(b) below) to Fortune International Management, Inc.;

     

    (v) next, to
the principal and interest on all New Monies Promissory Notes issued in respect
of Second Tier New Monies (with all accrued interest being payable to all Second
Tier New Monies lenders pari passu (in proportion to which the accrued interest
payable to each such lender in respect of the Second Tier New Monies bears to
the total outstanding interest payable to all such lenders in respect of the
Second Tier New Monies)) prior to the pari passu repayment of outstanding
principal in respect of the Second Tier New Monies; and

     

    (vi) then, the
remaining proceeds shall be distributed pari passu to the Fortune Partners in an
amount equal to the Fortune Residual Distribution (as such term is defined in
Paragraph 5(b) below) and to Sonesta in an amount equal to the Sonesta Residual
Distribution (as such term is defined in Paragraph 5(b) below).

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 6
-

    


     

    (b) For
purposes of Paragraph 5(a) above, the following terms shall be defined as
follows:

     

    (i) The
"Sales Incentive
Amount" shall be $1.5 million plus the Additional Amount as determined by
reference to the "gross sales price" of the Property or Partnership Interests,
as the case may be, as follows:

     

    
      	
              Gross Sales Price

            	
              Additional Amount

            
	
              less
      than $87.5 million

            	
              $0

            
	
              $87.5
      million up to but less than $95 million

            	
              $250,000

            
	
              $95
      million or more

            	
              $500,000

            


    

    


     

    For purposes of this letter agreement,
the "gross sales price" shall equal the cash and fair market value of any
property received in the sale transaction, any portion of the purchase price to
be paid subsequent to the closing of the sale transaction, including the face
amount of any promissory notes received in the sale transaction and the face
amount of any and all liabilities of the Partnership assumed by the purchaser
upon the closing of the sale transaction.  In calculating the “gross
sales price,” closing costs shall be allocated in conformity with the standard
of practice for similar commercial transactions in Miami-Dade County,
Florida.

     

    (ii) The
"Fortune Residual Distribution" shall mean that portion of the aggregate
proceeds distributable to the Partners pursuant to Paragraph 5(a)(vi) above
determined by the product of (A) fifty percent (50%), and (B) a fraction the
numerator of which shall be the Capital Contributions of the Fortune Partners
and the denominator of which is the Capital Contributions of all of the
Partners.  For example, if, on or before October 31, 2009, the
aggregate proceeds distributable to the Partners pursuant to Paragraph 5(a)(vi)
above is Twenty Million Dollars ($20,000,000.00) and the Capital Contributions
of the Fortune Partners is Thirty-Eight Million Dollars ($38,000,000.00) and the
aggregate Capital Contributions of Sonesta is Fifty-Eight Million Dollars
($58,000,000.00), the Fortune Residual Distribution would be

     

    [$20,000.000
x 50% x (38 / 38+58) = $3,958,333]

     

    


    (iii) The
"Sonesta Residual Distributions" shall mean the excess of (A) the aggregate
proceeds distributable to the Partners pursuant to Paragraph 5(a)(vi) above,
over (B) the Fortune Residual Distributions.  Accordingly, under the
example set forth in Paragraph 5(b)(ii) above, the Sonesta Residual
Distributions shall be

     

    [$20,000,000
- $3,958,333 = $16,041,667]

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 7
-

    


     

    6. 

     

    (a) If the
Fortune Partners default in funding New Monies as provided in Paragraph 3 above,
then (i) the Fortune Partners shall promptly deliver written notice of the facts
and circumstances of such non-payment to Sonesta and (ii) the Fortune Partners
shall be in default hereunder.  Upon being notified of such default by
Fortune or becoming aware of such default independently, Sonesta shall promptly
provide the Fortune Partners a written default notice related thereto and the
Fortune Partners shall be permitted a period of thirty (30) days from the date
of receipt of the written notice from Sonesta to cure such default (the "Cure
Period").  If the Fortune Partners do not cure such default
within the Cure Period, then within fifteen (15) Business Days following the
expiration of the Cure Period, Sonesta shall provide written notice (the "Election Notice") to
the Fortune Partners in which Sonesta must affirmatively elect to either (x)
pursue its rights under Section 5.3 of the Partnership Agreement (the "Partnership Agreement
Default Option"), (y) pursue the "Third Fork Option"
provided in Paragraph 7.3 below, or (z) elect to cause the assignment of the
Partnership Interests of the Fortune Partners in accordance with Paragraph 7.1
hereof (the "Forced
Sale Option"); provided that as a condition precedent to exercising the
Forced Sale Option or the Partnership Agreement Default Option, Sonesta must,
simultaneous to its exercise of the Forced Sale Option or Partnership Agreement
Default Option, as the case may be, fund the amount of the Fortune Partners’
default.  Immediately upon the delivery of the Election Notice to the
Fortune Partners by Sonesta under this Paragraph 6(a) to exercise the Forced
Sale Option, all rights to exercise control over the day-to-day management of
the Partnership shall automatically vest in Sonesta (or its designee), and such
rights to control the day-to-day operations of the Partnership shall remain
vested in Sonesta (or its designee), unless and until the provisions of the last
sentence of Paragraph 18 are applicable.

     

    (b) In the
event that Sonesta elects the Partnership Agreement Default Option, the terms of
Section 5.3 of the Partnership Agreement shall apply, the amount advanced by
Sonesta to cure defaults shall be treated as a Default Financing and the Cure
Period provided in Paragraph 6(a) above shall be considered to be and shall
satisfy the thirty (30) day cure period required to be provided pursuant to
Section 5.3(a) of the Partnership Agreement.

     

    (c) In the
event that Sonesta elects the Forced Sale Option, the provisions of Paragraph
7.1 below shall apply.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 8
-

    


     

    7.1           Effect of Forced Sale
Option

     

    (a)           In
the event Sonesta elects the Forced Sale Option either (i) within the time
period provided in Paragraph 6(a) above or (ii) after Sonesta has elected the
Third Fork Option as provided and in accordance with Paragraph 7.3 below (and
after the expiration of the applicable cure period provided therein without a
cure by the Fortune Partners), Sonesta shall direct the Escrow Agent (as such
term is defined in Paragraph 7.1(b) below) to insert the "Effective Date" in
each of the Escrowed Documents (as such term is defined in Paragraph 7.1(b)
below) and deliver the original Escrowed Documents from escrow to the party in
whose favor the particular Escrow Document has been executed, with copies of
each of the Escrow Documents provided to both Sonesta and the Fortune
Partners.  As used herein, the term “Effective Date” means
the date the Escrow Agent receives the Election Notice electing the Forced Sale
Option.

     

    (b)           In
order to effectuate the provisions of this Paragraph 7.1 and in order to assure
an expedited closing in the event Sonesta elects to exercise the Forced Sale
Option, the following documents (the "Escrowed Documents")
shall be executed, in the forms attached hereto, contemporaneously with the
execution of this letter agreement, and deposited with Bilzin Sumberg Baena
Price & Axelrod LLP (the "Escrow Agent") to be
held in escrow in accordance with the terms of this letter agreement and the
Escrow Agreement referred to below:

     

    
      	
              (i)  

            	
              Sales
      Incentive Amount Promissory Note in the form attached hereto as Exhibit
      "B";

            


    

     

    (ii) Assignments
of Partnership Interest;

     

    
      	
              (iii)  

            	
              Release
      and Indemnity Agreement in the form attached hereto as Exhibit "C";
      and

            


    

     

    (iv) Escrow
Agreement.

     

    7.2           Effect of Buy-Out
Option.

     

    (a) In the
event Sonesta elects the Buy-Out Option pursuant to Paragraph 4(d) above,
Sonesta shall direct the Escrow Agent to insert the "Effective Date" in each of
the Escrowed Documents and deliver the original Escrowed Documents from escrow
to the party in whose favor the particular Escrow Document has been executed,
with copies of each of the Escrow Documents provided to both Sonesta and the
Fortune Partners.  As used in this Paragraph 7.2, the term “Effective Date” means
the date on which date the Escrow Agent receives a copy of a written notice from
Sonesta notifying the Fortune Partners of Sonesta’s election of the Buy-Out
Option in accordance with Paragraph 4(d)(i) above.

     

    (b) In
addition to the release of the Escrowed Documents, as a condition to a closing
under the Buy-Out Option, Sonesta shall pay to the holders of the New Monies
Promissory Notes the sum of all principal and interest due under the New Monies
Promissory Notes held by them to the extent proceeds would have been available
for such payments under the transaction contemplated by the Fortune Approved
Bona Fide Offer, which payments shall

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 9
-

    


     

    be made
on or before the earliest to occur of (i) ninety (90) days following the
Effective Date (as such term is defined in Paragraph 7.2(a) above), (ii) the
closing date of a sale of the Property (or all or substantially all of the
Partnership Interests) or (iii) the date of admission of a new partner into the
Partnership. In addition, the following amounts shall be paid to the extent
proceeds would have been available for such payments under the transaction
contemplated by the Fortune Approved Bona Fide Offer on the earliest to occur of
(x) twelve (12) months after the Effective Date (as such term is defined in
Paragraph 7.2(a) above), (y) the date of admission of a new partner into the
Partnership, or (z) the closing date of a sale of the Property (or all or
substantially all of the Partnership Interests):  (A) to Fortune
International Management, Inc., the Sales Incentive Amount and (B) to the
Fortune Partners an amount equal to fifty percent (50%) of the Fortune Residual
Distributions to which Fortune would have been entitled if the Property or
Partnership Interests, as the case may be, were sold for the sales price
provided in the Fortune Approved Bona Fide Offer.

     

    7.3           Third Fork
Option.

     

    In the event Sonesta elects
the Third Fork Option pursuant to Paragraph 6(a) above, then in
such event, all of the provisions of this letter agreement other than Paragraphs
7.1, 7.2, 11 and 14 shall remain operative.   Notwithstanding the
election by Sonesta of the Third Fork Option, Sonesta may thereafter either (i)
fund the amount of the Fortune Partners' default and invoke the Forced Sale
Option described in Paragraph 7.1 above; provided, however that as a condition
to electing the Forced Sale Option pursuant to this Paragraph 7.3, Sonesta must
first provide the Fortune Partners with written notice that it has funded the
Fortune Partners' default amount and provide the Fortune Partners with a period
of thirty (30) days from receipt of said notice to cure the default, and in the
event the Fortune Partners do not cure said default, the provisions of Paragraph
7.1 shall apply or in the event the Fortune Partners do cure said default within
said thirty (30) day period, the default shall be deemed cured for all purposes
of this letter agreement or (ii) fund the amount of the Fortune Partners'
default and invoke the Partnership Agreement Default Option.

    


     

    8. Except as
provided in Paragraph 4(d)(iii) hereof, upon the occurrence of a (i) sale
of the Property (whether effected directly or via merger or consolidation of the
Partnership), (ii) sale of all or substantially all of the Partnership Interests
(whether effected directly or via merger or consolidation of the Partnership or
via the sale of all or substantially all of the equity interests in Sonesta or
Florida Sonesta Corporation), (iii) admission of one (1) or more persons or
entities as partners in the Partnership (or the Partnership closing on a loan
which contains either a conversion feature allowing the holder to acquire equity
in the Partnership or provides for some level of participation by the lender in
the Partnership's revenues, profits or cash flow), or (iv) the entering into by
the Partnership of a joint venture or similar arrangement pursuant to which a
third party or parties obtain(s) more than a de minimis direct or indirect
interest in the Property, Defortuna shall be deemed released from any and all of
his individually guaranteed obligations under the Partnership Agreement,
including but not limited to those obligations set forth in Sections 4.4(a)(4),
4.4(c)(3), 7.2 and 8.6(e) of the Partnership Agreement.  As a condition to
a closing of any of the transactions described in this Section 8, the Release
and Indemnity Agreement in the form attached hereto as Exhibit "8" shall be
executed and delivered by all of the parties thereto.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 10
-

    


     

    9. As of the
Effective Date of the Release and Indemnity Agreement attached hereto in the
form of Exhibit "C" or the Release or Indemnity Agreement attached hereto in the
form of Exhibit "8" and continuing for so long as Sonesta has an interest in the
Property, Defortuna agrees not to make any public statements which disparage
Sonesta or the Property or which are materially likely to impair the value or
marketability of the Property (which agreement shall not prohibit the Fortune
Partners and/or Defortuna from maximizing the value of projects that are
competitive to the Property).

     

    10. Notwithstanding
anything to the contrary contained in the Partnership Agreement, as amended
hereby, under no circumstances shall a Bankruptcy or the dissolution of one or
both of the Fortune Partners result in the automatic dissolution of the
Partnership without the written consent of Sonesta.

     

    11. If
Sonesta exercises the Partnership Agreement Default Option or the Forced Sale
Option, then, notwithstanding any other prior agreement to the contrary, Sonesta
shall have the right to engage the consulting services of Joseph Herndon ("Herndon") through the
Fortune Partners (or their respective affiliates) for consulting services to the
Property at a rate based upon Herndon’s current actual pay rate plus a
twenty-five percent (25%) overhead fee.  In such event, Herndon shall
be permitted by the Fortune Partners (or their affiliates) to perform services
for the benefit of the Property substantially similar to those he has performed
prior to the date hereof (unless otherwise directed by Sonesta).

     

    12. This
letter agreement shall be governed by Florida law.  Except to the
extent specifically amended or modified by the terms of this letter agreement,
the terms of the Partnership Agreement shall remain in full force and
effect.

     

    13. Each
party hereto hereby represents and warrants that the individual executing this
letter agreement on behalf of such party is duly authorized to execute, deliver
and perform this letter agreement on behalf of such party and to bind such party
to its agreements herein and that this letter agreement is enforceable against
such party in accordance with its terms.

     

    14. In the
event that under the terms of this letter agreement Sonesta acquires the
Partnership Interests of the Fortune Partners, whether as a result of the
exercise of the Forced Sale Option or the Buy-Out Option, then the Fortune
Partners agree that as of the effective date of such acquisition, they shall
facilitate an orderly transition of the day-to-day operation of the Property and
of the books and records of the Partnership to Sonesta.

     

    15. In
addition to the foregoing, by their execution below, the Partners have agreed
that:

     

    (a) from and
after the date of execution of this letter agreement, each of the Partners shall
be authorized and permitted to speak with Holliday Fenoglio & Fowler, L.P.
and one or more third parties concerning a possible sale of the Property or the
Partnership Interests (and shall advise the other Partners of such meetings in
advance thereof, to the extent practicable); and

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 11
-

    


     

    (b) from and
after the date of execution of this letter agreement, Sonesta shall be
authorized and permitted to meet and/or have discussions with HSBC provided that
Sonesta shall endeavor to notify Fortune GP at least two (2) days in advance of
any such meeting/discussion so that the Fortune GP may participate
therein.

     

    16. Notwithstanding
anything to the contrary contained in this letter agreement, when the term
"admission of new partners" or words of similar import are used herein, such
term shall include the closing of any financing or loan transaction which
contains either a conversion feature allowing the holder to acquire equity in
the Partnership or provides for some level of participation by the lender in the
Partnership's revenues, profits or cash flow (excluding agreements, such as an
assignment of leases and rents, that are typically a part of a mortgage
financing transaction).

     

    17. The Partners
agree and understand that confidentiality of the existence and the terms of
this letter agreement are material and essential elements of this letter
agreement.  Accordingly, the Partners agree that each will keep the
terms of this letter agreement confidential at all times, except in the event
disclosure shall be required by a subpoena, an order of a court of competent
jurisdiction or a governmental agency empowered to compel or require such
disclosure, or, if necessary to enforce any provision of this letter agreement,
or such disclosure is required by law. Each  Partner acknowledges
that no remedy of law may be adequate to compensate the injured party for a
violation of this Paragraph 17 and each of them hereby agrees that, in addition
to any legal or other rights that may be available in the event of a breach
hereunder, the injured party may seek equitable relief to enforce this Paragraph
17 in any court of competent jurisdiction.   In any such action
brought by any of the Partners, the prevailing party shall be entitled
to recover reasonable attorneys’ fees, court costs and expenses through and
including all appeals. The Fortune Parties hereby acknowledge that Sonesta is
directly or indirectly controlled by entities that are publicly traded
companies.  Sonesta shall be permitted to rely on the advice of its
outside legal counsel in determining the extent to which disclosure of this
letter agreement or portions thereof may be legally required.  Any
third party providing New Monies on behalf of the Fortune Partners hereunder
shall be required to execute a Confidentiality Agreement in the form attached
hereto as Exhibit "E".

     

    18. From and
after the date on which any monetary or material, non-monetary default arises
under the HSBC Indebtedness and the holder of the HSBC Indebtedness either
provides a notice of default or commences or threatens to commence enforcement
actions, and in all events from and after the date which is thirty (30) days
prior to the maturity date of the HSBC Indebtedness, as extended, in recognition
of the personal guaranty of the HSBC Indebtedness executed by Defortuna, the
Partners have agreed that, if such personal guaranty then remains in effect,
Defortuna shall be permitted to participate in unilateral conversations
with HSBC in respect of said indebtedness.  In addition, in the event
that, as of twenty (20) days prior to the maturity date of the HSBC
Indebtedness, as extended, (a) such personal guaranty then remains in effect,
(b) the Partnership is not then a party to a binding agreement to sell the
Property for a purchase price equal to or greater than the principal balance due
under the HSBC Indebtedness or an amount less than the HSBC Indebtedness if such
binding sales agreement was the subject of a Fortune Approved Bona Fide Offer,
then the Partners agree that the Partnership shall enter into a transaction
whereby Defortuna (y) obtains exclusive control of the Property (whether by the
Partnership's execution of a deed in his favor or otherwise) at least
ten

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 12
-

    


     

    (10) days
prior to the maturity date of the HSBC Indebtedness, as extended, and (z) agrees
that the proceeds of any sale of the Property thereafter shall be distributed in
accordance with Paragraphs 5(a)(i) through (vi) hereof.

     

    19. In no
event and under no circumstance may any of the Partners initiate or consent to
any Bankruptcy (as defined in Section 10.1(b) of the Partnership Agreement) or
transaction having similar force or effect without the prior written consent of
all Partners; provided that the Fortune Partners may initiate or consent to any
Bankruptcy without the prior consent of Sonesta from and after the date, if any,
on which exclusive control of the Property is transferred to Defortuna as
provided in Paragraph 18 above; provided that as a condition precedent to such
Bankruptcy filing, the Fortune Partners must first take an assignment of the
Sonesta Partnership Interest or otherwise obtain the consent of
Sonesta.  In furtherance of the forgoing, Sonesta agrees that upon
issuance of a written notice from the Fortune GP which written notice can only
be issued under the circumstances and within the time frame set forth in
Paragraph 18 above, Sonesta shall be deemed to have transferred and assigned its
Partnership Interest to the Fortune LP effective as of three (3) Business Days
prior to the actual Bankruptcy filing; it being agreed that Sonesta shall have
the right to cause Fortune LP to reassign Sonesta its Partnership Interest in
the event such Bankruptcy filing does not occur.

     

    20. This
letter agreement, together with the Partnership Agreement, contains the entire
understanding among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this letter
agreement.  The Partnership Agreement, as modified hereby, remains in
full force and effect.

     

    21. The
Fortune Partners hereby represent and warrant to Sonesta that the schedule set
forth on Exhibit “D” attached hereto is a true and compete list of all material
agreements and instruments underlying the HSBC Indebtedness and any other
obligations of the Partners or Defortuna with respect thereto.

     

    22. Notwithstanding
anything to the contrary contained herein, under no circumstances shall (i) any
transfer of the Partnership Interests of the Fortune Partners to Sonesta in
accordance with Paragraphs 7.1 or 7.2 hereof, (ii) any foreclosure action by any
lender or (iii) any transfers or conveyances effectuated between the Partners or
to any lender in accordance with clause (y) of Paragraph 18 hereof be deemed to
be a transfer of Partnership Interests or a sale of the Property for the
purposes of Paragraphs 5 and 8 hereof; provided that nothing contained in this
Paragraph 22 shall in any way invalidate or limit the effectiveness of the
Release and Indemnity Agreement to be executed and delivered in the event of a
transfer of the Partnership Interests of the Fortune Partners to Sonesta in
accordance with Paragraphs 7.1 or 7.2 hereof.

     

    23. each
of sonesta and the fortune parties acknowledge that the funding of new monies
contributions by the other in the amount of Nine Hundred Thousand Dollars
($900,000.00) on or before June 25, 2009 is essential to each party’s
willingness to enter into this letter agreement.  Accordingly,
notwithstanding anything to the contrary contained herein, in the event that
either the fortune partners or sonesta breaches its obligation to fund or cause
to be funded New Monies in an amount not less than Nine Hundred Thousand Dollars
($900,000.00) on or before

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 13
-

    


     

    June
25, 2009 in accordance with the provisions of Paragraph 3 hereof, then the
non-defaulting party shall have the right to terminate this letter agreement
upon written notice delivered to the defaulting party within ten (10) business
days following the date of such default.  If such termination occurs,
then the Partnership Agreement shall be operative as if this letter Agreement
had never been executed.

     

    24.           This
letter agreement may be executed in several counterparts and all so executed
shall constitute one agreement binding on all of the parties, notwithstanding
that all of the parties are not signatory to the original or the same
counterpart.  In addition, any counterpart signature page may be
executed  and delivered by facsimile or portable document format
("PDF") and any such faxed or PDF signature pages may be attached to one or more
counterparts of this letter agreement, and such faxed or PDF signature(s) shall
have the same force and effect as if original signatures had been executed and
delivered in person.

     

    25.           The
parties acknowledge that this is a negotiated agreement, and that in no event
shall the terms of this letter agreement be construed against any party on the
basis that such party, or its counsel, drafted this letter
agreement

     

    


     

    


     

    


     

    [EXECUTIONS
COMMENCE ON FOLLOWING PAGE]

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Peter J.
Sonnabend, Executive Chairman

    Sonesta
International Hotels Corp.

    June 18,
2009

    Page - 14
-

    


     

    Please
indicate your consent to the terms of this letter agreement by signing and
dating a duplicate copy of this letter and returning it to the
undersigned.

     

    


     

    Fortune KB GP, LLC,

    a Florida limited liability
company

    


    By:           Fortune
International Management, Inc.,

    Manager

    


    By:            /s/ Edgardo
Defortuna                                                      

    Edgardo Defortuna,
President

    


    


    Fortune KB, LLC,

    a Florida
limited liability company

    


    By:           Fortune
International Management, Inc.,

    Manager

    


    By:            /s/ Edgardo
Defortuna                                                      

    Edgardo Defortuna,
President

    


    Agreed
and accepted this      18th      
day of

    June,
2009.

    


    Sonesta
Beach Resort Limited Partnership,

    a
Delaware limited partnership

    


    By:           Florida
Sonesta Corporation,

    a Florida corporation

    


    By:             /s/ Peter J.
Sonnabend                                                      

    Peter J. Sonnabend,

    Vice President