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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 28, 1995 Commission File No.: 0-9032
SONESTA INTERNATIONAL HOTELS CORPORATION
______________________________________________________
(Exact Name of Registrant as Specified in its Charter)
New York
_____________________________
(State or Other Jurisdiction)
13-5648107
___________________________________
(I.R.S. Employer Identification Number)
200 Clarendon Street, Boston, Massachusetts 02116
___________________________________________________
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (617) 421-5400
Not Applicable
___________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 28, 1995, the Registrant, through its wholly-owned
subsidiary (the "Purchaser"), purchased from Casablanca Resorts Development
of Anguilla Limited ("Seller") its rights, title and interests in and to the
leasehold, improvements and personal property constituting the 100-room
property known as Casablanca Resort, in Anguilla, B. W. I. (the "Resort").
The Resort is situated on 49 acres of land leased from the Government of
Anguilla; there are approximately 95 years remaining in the lease term.
The Resort had been operated as "Casablanca Resort" under a contract
between the Seller and a third party hotel operator. In early September 1995,
the Resort was damaged during Hurricane Luis and has been closed since that
time. The Purchaser intends to reopen the Resort in January 1996 and,
thereafter, operate it itself as "Sonesta Beach Resort Anguilla".
The purchase price for the Seller's interest in the Resort was
approximately $10,000,000, including the Registrant's share of transfer tax
and stamp duty ($400,000) and after deducting the estimated amount of certain
credits (estimated to be $450,000) the Registrant will be entitled to as of
March 1, 1996 under the Purchase and Sale Agreement with the Seller. The
purchase price was financed, in part, by the Purchaser's assumption of an
existing $4,990,000 mortgage loan on the Resort property held by Scotiabank
Anguilla Limited ("Scotiabank"). That mortgage loan provides for monthly
interest at 2.25% over LIBOR, and eight semi-annual payments of principal
beginning in March 1996. The loan matures on March 1, 2000. The purchase was
also financed by $1,500,000 of Seller financing, of which $500,000 is due
March 1, 1996, without interest, and $1,000,000 is due in November, 1998.
Simple interest of 8% is due annually on the $1,000,000 of Seller financing.
The balance of the purchase price-approximately $3,500,000-was funded from
the Registrant's cash resources.
In addition to the Purchaser's assumption of the existing $4,990,000
Scotiabank mortgage loan, the Purchaser has arranged a $500,000 line of
credit with Scotiabank. The Registrant is initially guaranteeing $1,000,000 of
the Purchaser's outstanding indebtedness to Scotiabank; the guarantee reduces
to $500,000 when the Resort's cash flow reaches certain levels with respect
to debt service requirements.
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ITEM 7. FINANCIAL STATEMENTS OF THE ACQUIRED BUSINESS AND EXHIBITS
(a) Financial Statements of the Acquired Business:
Historical financial statements or records are not available to the
Registrant to submit with this Form 8-K report.
The hotel property purchased by the Registrant was operated by a third party
operator under a contract with the Seller until September 1995 when it was
terminated by the Seller due to the operator's breach. The hotel has been
closed since Hurricane Luis on September 5, 1995. Because of certain disputes
between the Seller and the former operator, and because certain records were
either lost in the Hurricane, were removed by the former operator, or never
existed, no financial statements or records have been made available to the
Registrant.
(b) Exhibits: See Index to Exhibits on Page 4
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EXHIBITS TO FORM 8-K
NUMBER DESCRIPTION
10.1 "Purchase and Sale Agreement", dated November 10, 1995,
between Casablanca Resorts Development of Anguilla Limited
("Seller") and Sonesta Hotels of Anguilla Ltd. ("Purchaser").
(Filed without Exhibits.)
10.2 Agreement" dated November 28, 1995, between Seller and
Purchaser.
10.3 "Third Schedule, Registered Land Ordinance, 1974, Transfer of
Lease", between Seller and Purchaser.
10.4 "Lease", dated September 21, 1991, between "the Crown" and
Seller.
10.5 Letter, dated November 27, 1995, from Office of the Chief
Minister and Minister of Home Affairs RE: "Application for
Issue of License under the Aliens Land Holding Regulations
Ordinance 1976 - Sonesta Hotels of Anguilla Ltd."
10.6 "Debenture", dated November 28, 1995, between Purchaser
and Scotiabank Anguilla Limited.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SONESTA INTERNATIONAL HOTELS CORPORATION
By: ________________________________________
Peter J. Sonnabend
Vice President and Secretary
December 13, 1995
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EXHIBIT 10.1
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PURCHASE AND SALE AGREEMENT (HOTEL)
SELLER:
CASABLANCA RESORTS DEVELOPMENT OF ANGUILLA LIMITED
Anguilla, B. W. I.
PURCHASER:
SONESTA HOTELS OF ANGUILLA, LTD.
John Hancock Tower, 200 Clarendon Street
Floor 41
Boston, Massachusetts 02116
PROPERTY:
SALE OF CROWN LEASE REGISTRATION SECTION: WEST CENTRAL BLOCK
28110B PARCEL 38/1 AND WEST CENTRAL SECTION: BLOCK: 28009B
PARCEL 2 AND PERSONALTY,
KNOWN AS:
CASABLANCA RESORT
Anguilla, B. W. I.
November 10, 1995
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TERM SHEET
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PURCHASER: SONESTA HOTELS OF ANGUILLA, LTD.
NOTICE ADDRESS: John Hancock Tower, 200 Clarendon Street
Floor 41
Boston, Massachusetts 02116
ATTENTION: Mr. Peter J. Sonnabend
Phone No.: (617) 421-5400
Fax No.: (617) 421-5402
SELLER: CASABLANCA RESORTS DEVELOPMENT
OF ANGUILLA LIMITED
NOTICE ADDRESS: c/o CASABLANCA RESORT
Anguilla, B. W. I.
ATTENTION: Kamal Alsultany
Phone No.: (809) 497-6741
Fax No.: (809) 497-6987
PROPERTY: CASABLANCA RESORT-CROWN LEASE
REGISTRATION SECTION: WEST CENTRAL
BLOCK: 28110B PARCEL 38/1 AND WEST CENTRAL SECTION:
BLOCK: 28009B PARCEL 2/2 AND PERSONALTY,
KNOWN AS CASABLANCA RESORT
Anguilla, B.W.I.
PURCHASE
PRICE: LEASE: U.S. $3,200,000.00
PERSONAL PROPERTY (Furniture, Fixtures,
Fittings, etc.) AND INTANGIBLE PROPERTY:
U.S. $6,800,000.00
DATE OF CLOSING: On or before December 1, 1995, unless
extended pursuant to Section 2.3
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INDEX OF EXHIBITS TO PURCHASE AND SALE AGREEMENT
These Exhibits are not submitted with Registrant's 8-K. However, Registrant
agrees to submit copies of any and all Exhibits to the Purchase and Sale
Agreement upon request for same by the Securities and Exchange Commission.
A. EXHIBIT 1.1.1 (Description of "Land" and "Land Lease")
B. EXHIBIT 1.1.3 (Description of "Personal Property")
C. EXHIBIT 1.1.6 (Schedule of Leases) - None
D. EXHIBIT 1.1.17 (Form of Assignment of BI Claims and Proceeds)
E. EXHIBIT 2.2(B) (List of Items to be Replaced)
F. EXHIBIT A (Side Agreement re: Alsultany Homesite and other Matters)
G. EXHIBIT 3.3 (List of Contracts to be Assumed by Purchaser) - None
H. EXHIBIT 5.1.6 (List of Claims, Actions, Demands and/or Liabilities
Against Seller)
I. EXHIBIT 9.1.1 (Form of "Conveyance")
J. EXHIBIT 9.1.3 (Form of Assignment and Assumption Agreement)
K. EXHIBIT 9.1.4 (Form of Assignment and Assumption Agreement)
L. EXHIBIT 9.1.5 (Form of Assignment)
M. EXHIBIT 9.1.8 (Form of Corporate Authorization)
N. EXHIBIT 9.1.9 (Form of Incumbency Certificate)
O. EXHIBIT 9.2(ii) (N/A - No Accounts Receivable Assumed by Purchaser)
R. EXHIBIT 9.6(i),(ii),(iii) (Form of Notification Letters)
S. Accounting of Employee Vacation and Other Benefits (per Section 6.11 of
Purchase and Sale Agreement)
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PURCHASE AND SALE AGREEMENT (HOTEL)
THIS PURCHASE AND SALE AGREEMENT (HOTEL) (the "Agreement"), dated as of
the ____ day of November, 1995 (the "Date of this Agreement"), is made by
and between CASABLANCA RESORTS DEVELOPMENT OF ANGUILLA LIMITED, an
ANGUILLIAN corporation ("Seller"), with an office at RENDEZVOUS BAY and
SONESTA HOTELS OF ANGUILLA, LTD., an Anguilla, B.W.I. corporation
("Purchaser"), with an office at c/o Sonesta International Hotels
Corporation, John Hancock Tower, 200 Clarendon Street, Floor 41, Boston,
Massachusetts 02116.
RECITALS:
Seller desires to sell and transfer certain improved real property
known as Casablanca Resort located at Rendezvous Bay, Anguilla, B.W.I.,
along with certain related personal and intangible property, and Purchaser
desires to purchase and acquire such real, personal and intangible
property.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller and Purchaser agree as
follows:
1. THE PROPERTY.
1.1 DESCRIPTION. Subject to the terms and conditions of this Agreement,
and for the consideration herein set forth, Seller agrees to sell and
transfer, and Purchaser agrees to purchase and acquire, all of Seller's
right, title, and interest in and to the following (collectively, the
"Property"):
1.1.1 The Lease of certain land ("Land") located on the Island of
Anguilla, B. W. I., and more specifically described in EXHIBIT 1.1.1 attached
hereto, which Land is presently leased from The Government of Anguilla
pursuant to the lease attached hereto as part of EXHIBIT 1.1.1 ("Land
Lease"), and which is registered in the Registry of Lands in Anguilla as
Registration Section: West Central Block: 28110B Parcel: 38/1; and West
Central Section: Block: 28009B Parcel: 2/2;
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1.1.2 The buildings, parking area(s), improvements and fixtures
now situated on the Land, including, without limitation, a hotel facility
having approximately 100 guest rooms, outdoor swimming pool, two outdoor
(lighted) tennis courts, a fitness center, ______ square feet of meeting
space, _____ square feet of retail space, and other related facilities (the
"Improvements");
1.1.3 All furniture, personal property, machinery, apparatus and
equipment, telephones, televisions, bedding, bed linens, towels, china,
glassware, silverware, window treatments, safety equipment and other tangible
items of personalty currently used in the operation, repair and maintenance
of the Land and Improvements described and situated thereon (collectively,
the "Personal Property"), generally described on EXHIBIT 1.1.3 attached
hereto. The Personal Property to be conveyed hereunder does not, however,
include the personal property in the villa presently used by Kamal and Maggie
Alsultany as a personal residence. The Personal Property to be conveyed is
subject to depletions, replacements and additions in the ordinary course of
Seller's business (the Land, Improvements and Personal Property hereinafter
sometimes shall be referred to collectively as the "Hotel");
1.1.4 All easements, hereditaments and appurtenances belonging to or
inuring to the benefit of Seller and pertaining to the Land, if any;
1.1.5 Any rights of Seller in or to any street or road abutting the
Land to the center lines thereof;
1.1.6 The leases or occupancy agreements, including those in effect
on the Date of this Agreement which are identified on the Schedule of Leases
attached hereto as EXHIBIT 1.1.6, and any new leases entered into pursuant to
Section 4.1.3, which as of the "Closing" (as hereinafter defined) effect all
or any portion of the Land or Improvements (collectively, the "Leases"), and
any security deposits actually held by Seller with respect to any such
Leases;
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1.1.7 The Contracts (as hereinafter defined);
1.1.8 All transferable consents, authorizations, variances or waivers,
licenses, permits and approvals from any governmental or quasi-governmental
agency, department, board, commission, bureau or other entity or
instrumentality in respect of the Hotel, including, without limitation, those
with respect to the foundation, parking, use, utilities, building, fire, life
safety, traffic and zoning (collectively, the "Approvals") heretofore or
hereafter held by or granted with respect to the Hotel;
1.1.9 All supplies used in connection with the operation of the Hotel,
including, without limitation, paper goods, brochures, office supplies,
unopened food and beverage inventory (to the extent the transfer of same is
permissible under applicable law), soap, gasoline, fuel oil, gift shop items,
and other operational and guest supplies currently located at the Hotel,
subject to depletions, replacements and additions in the ordinary course of
operating the Hotel;
1.1.10 The books, records, files, guest registers, employment records,
maintenance records, rental and reservation records, and any customer or
frequent guest lists of Seller in connection with the operation and
maintenance of the Hotel (collectively, the "Books"), exclusive of (i)
original Books which Seller desires to retain, provided that Seller shall
permit Purchaser, at its expense, to examine and make copies thereof, and
(ii) Seller's income tax and accounting records;
1.1.11 The advance reservations and bookings, as the same may be
amended, canceled and renewed (the "Reservations") and advance deposits
made in respect thereof (the "Reservation Deposits");
1.1.12 All development, contractual or other rights and, to the extent
available, all documents, technical matter and work product relating to the
Land, the Improvements or the Personal Property, including, without
limitation, any and all construction, engineering,
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architectural, landscaping or other plans or drawings, and compaction
reports, related to the development and/or operation of the Land, the
Improvements or the Personal Property, to the fullest extent such rights may
be transferred;
1.1.13 All surveys, maps, site plans, plats or other graphics related
to the Land, the Improvements or the Personal Property, if any, to the
fullest extent such items may be transferred;
1.1.14 The business of operating a resort upon the Land;
1.1.15 All trademarks, service marks and tradenames used or useable
in connection with the Land, the Improvements or the Personal Property;
1.1.16 All vehicles and watercraft used or useable in connection with
the Land, the Improvements or the Personal Property; and
1.1.17 Any and all business interruption claims (whether asserted or
unasserted), or business interruption proceeds for any period(s) after the
Date of Closing, pertaining to any casualty, event or loss suffered prior to
the Date of Closing. (Seller shall execute and deliver to Purchaser at
Closing an assignment of such claims and proceeds in the form attached hereto
as EXHIBIT 1.1.17.)
1.2 CONVEYANCE OF TITLE. Seller agrees to convey, and Purchaser agrees
to accept, title to the Land and Improvements by conveyance in the form
attached hereto as EXHIBIT 9.1.1 (the "Conveyance"), and title to the
Personal Property, by this Agreement, including warranty, express and
implied, as to the title, condition, merchantability, and fitness for a
particular purpose of such Personal Property.
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2. PRICE AND PAYMENT
2.1 THE PURCHASE PRICE. The purchase price for the Property (the
"Purchase Price") is TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) U. S.,
as apportioned as set out in Section 2.4 below.
2.2 PAYMENT. Payment of the Purchase Price is to be made in cash in the
following amounts and on the following dates:
(A) At Closing, Purchaser shall (i) pay Seller THREE MILLION, FIVE HUNDRED
TEN THOUSAND AND NO/100 DOLLARS($3,510,000.00) cash, plus the net amount
of any apportionments as provided in Section 6 in favor of Seller, or
less the net amount of any apportionments as provided in Section 6 in
favor of Purchaser, to a bank account designated by Seller via wire
transfer in immediately available U. S. funds, and (ii) assume Seller's
first mortgage loan obligation to The Bank of Nova Scotia ("BNS") in the
amount of FOUR MILLION, NINE HUNDRED AND NINETY THOUSAND AND NO/100
DOLLARS ($4,990,000.00);
(B) On or before March 1, 1996 Purchaser shall pay Seller FIVE HUNDRED
THOUSAND DOLLARS ($500,000.00), less any and all amounts expended by
Purchaser to replace the items listed on EXHIBIT 2.2 (B); and
(C) On or before the third anniversary of the Closing, Purchaser shall pay
Seller ONE MILLION DOLLARS ($1,000,000.00), less any amounts advanced to
Seller under the agreement attached hereto as EXHIBIT A. Such amount
shall accrue interest at the rate of 8% per annum, which interest
shall be paid annually in arrears (i.e. U.S.$80,000.00 per annum,
subject to reduction per EXHIBIT A).
Notwithstanding the foregoing, including without limitation the
provisions of subsection 1.1.17, (i) the amounts referenced in subsections
(B) and (C) above shall be reduced, dollar for dollar, by any amounts of
business interruption proceeds Seller recovers pertaining to any
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period(s) following the Date of Closing; (ii) a credit for landscaping
replacement/enhancement the amount of which shall be discussed and agreed to
by the parties prior to Closing; and (iii) the amount referenced in
subsection (A) shall be reduced by the costs, expenses interest and charges
payable by Purchaser with respect to the mortgage loan referenced in
subsection (ii) of said subsection (A) for the period from the Date of
Closing through March 1, 1996. with respect to the following: (w) utilities,
taxes and insurance premiums; (x) interest payable with respect to the
mortgage loan referenced in subsection (ii) of said subsection (A); (y)
payroll and benefits to Hotel employees; and (z) such other costs, expenses
and charges payable by Purchaser as a direct result of closing on the Date of
Closing instead of January 5, 1996. To the extent such costs, expenses and
charges cannot be determined as of the Date of Closing they shall be
determined following the Date of Closing and deducted from the payment
described in subsection (B) above.
2.3 CLOSING. Subject to the provisions of this Agreement, the Closing will
take place pursuant to an escrow closing on or before December 1, 1995 ("Date
of Closing") at the offices of Purchaser's local counsel, Moore, Astaphan &
Kelsick, 10:00 A.M. local time on the Date of Closing, or at such other time
and place as may be mutually agreed upon in writing by both Seller and
Purchaser. Purchaser shall have the right to extend the Date of Closing to a
date no later than January 31, 1996, by providing Seller with prior written
notice thereof at least two (2) business days prior to the originally
scheduled Date of Closing. Notwithstanding the foregoing, the Closing shall
not take place until all repairs and restorations described in Section 4.5
have been completed to Purchaser's satisfaction.
2.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price is paid by the
Purchaser as to the following:-
(a) U.S.$3,200,000.00 for the Land Lease
(b) U.S.$6,800,000.00 for those items referenced in subsections 1.13
to 1.16 inclusive of this Agreement and Seller's goodwill.
3. INSPECTIONS AND APPROVALS.
3.1 INSPECTIONS.
3.1.1 Intentionally omitted.
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3.1.2 Seller agrees to allow Purchaser or Purchaser's agents or
representatives reasonable access to the Property (during business hours)
from and after the Date of this Agreement for purposes of conducting
inspections, including physical and environmental inspection of the Property
and review of the Leases, expenses and other matters.
3.1.3 Intentionally omitted.
3.1.4 Seller hereby represents and warrants the truth, accuracy and
completeness of any materials, data or other information supplied to
Purchaser in connection with Purchaser's inspection of the Property (e.g.,
that such materials are complete, accurate or the final version thereof, or
that all such materials are in Seller's possession).
3.2 TITLE AND SURVEY. Purchaser's obligations under this Agreement are
subject to Seller delivering to Purchaser at Closing good, clear record and
marketable title to the Property. Additionally, Seller shall upon signing
this Agreement either provide Purchaser with a copy of an accurate and
updated survey of the Property or, if no such update is available, share with
Purchaser the cost of a new survey of the Property.
3.3 CONTRACTS. It is Purchaser's and Seller's intention that Purchaser
assume and, subject to the terms of this Section 3.3, Purchaser shall
assume, all service, maintenance, supply or other contracts or equipment
leases relating to the operation of the Property which are identified on
EXHIBIT 3.3 attached hereto (the "Contracts"). Seller shall use all
reasonable efforts to obtain the consent of each vendor under the Contracts
to the assignment thereof by Seller to Purchaser. If in connection with the
assignment of the Contracts by Seller to Purchaser, Seller fails to obtain
the applicable vendors' consents, or any vendor thereunder refuses to give
its consent to the assignments, Purchaser and Seller shall arrange to have
the same terminated at Closing and Seller shall pay all fees, compensation
and accelerated rentals due thereunder as a result of such termination. If,
in connection with the assignment of the Contracts by Seller to Purchaser,
any vendor thereunder
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refuses to release Seller completely from its obligations thereunder (except
obligations that arose prior to the Date of Closing), Purchaser shall
indemnify Seller from and against all costs, expenses, liability, damages and
otherwise that Seller may incur by reason thereof, and in the event that
Purchaser assigns this Agreement to an affiliate of Purchaser, Seller shall
be entitled to receive such indemnification from the original Purchaser
hereunder or other credit-worthy affiliate of Purchaser.
3.4 PERMITTED ENCUMBRANCES. Purchaser shall purchase the Property on the
terms and conditions set forth in this Agreement and subject to the following:
3.4.1 all title and survey exceptions and matters which Purchaser
failed to bring to Seller's attention at or prior to Closing;
3.4.2 all Contracts and Leases that Purchaser has approved or is
deemed to have approved pursuant to Section 4.1.3;
3.4.3 the lien of non-delinquent real and personal property taxes and
assessments;
3.4.4 rights of parties in possession under the Leases;
3.4.5 any service, installation, connection, maintenance or
construction charges due after Closing and subject to the proration
provisions hereof, for sewer, water, electricity, telephone, cable television
or gas or otherwise;
3.4.6 unrecorded leaseholds, rights of vendors and holders of
security interests on personal property installed upon the Property by
tenants and rights of tenants to remove trade fixtures at the expiration of
the term of the leases of tenants;
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3.4.7 rights of hotel guests who occupy the Hotel or any portion
thereof as of the Date of Closing and guests having reservations relating to
periods subsequent to the Date of Closing;
3.4.8 governmental laws, codes, ordinances and restrictions now or
hereafter in effect so far as these affect the Property or any party
thereof, including, without limitation, zoning ordinances (and amendments
and additions relating thereto) provided same do not materially interfere
with the operation of the Property as a first-class resort; and
3.4.9 any additional encumbrances to which Purchaser, or its counsel,
has not objected in writing on or prior to the Date of Closing, or as to
which Purchaser has elected, at or before Closing, to take the Property
subject.
The items referenced in 3.4.1-3.4.9 are referred to herein collectively
as the "Permitted Encumbrances."
4. PRIOR TO CLOSING.
4.1 SELLER'S COVENANTS. Until Closing, Seller or Seller's agent shall:
4.1.1 Keep the Property insured against fire and other hazards
covered by extended coverage endorsement and comprehensive public liability
insurance against claims for bodily injury, death and property damage
occurring in, on or about the Property;
4.1.2 Operate and maintain the Property in a businesslike manner and
substantially in accordance with Seller's past practices with respect to the
Property; maintain normal inventory levels substantially in accordance with
Seller's past practices; and make any and all repairs and replacements to the
Property reasonably required to deliver the Property to Purchaser at Closing
in its pre-hurricane Luis condition, normal wear and tear excepted, provided
that in
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the event of any loss or damage to the Property as described in Section 7, any
obligation of Seller to repair the Property shall be governed by Section 7;
4.1.3 Continue its present rental program at the Property to rent
vacant space, provided that after the Date of this Agreement, Seller will not
execute any new leases or amend, terminate or accept the surrender of any
existing tenancies or approve any subleases without the prior written consent
of Purchaser.
4.2 ALCOHOLIC BEVERAGE LICENSE(S). In the event that a new Liquor
License sufficient to permit the continued service of alcoholic beverages at
the Hotel has not been issued as of the Date of Closing, or the existing
Liquor License has not been transferred effective as of such date, the
Closing shall be delayed, up to a total of 30 days, by Purchaser's written
notice to Seller.
4.3 MANAGEMENT AGREEMENT. Purchaser and Seller each acknowledge that
prior to and as of the Date of this Agreement, the Property has been operated
by Franklyn D. Resorts Ltd., a Jamaican corporation (the "Manager") pursuant
to that certain Management Agreement dated as of September 1, 1993 (the
"Management Agreement"). Seller has informed Purchaser that the Management
Agreement has been terminated effective September 9, 1995, and Seller shall
be liable or responsible for any fees, costs, or liabilities arising from
such termination of the Management Agreement. Purchaser's obligation to
purchase the Property pursuant to this Agreement is conditioned upon the
termination of the Management Agreement, and Seller agrees that it will not
enter into any new management agreement with respect to the Property that
will extend beyond the Date of Closing without first obtaining the express
written consent of Purchaser. Seller hereby indemnifiesd and holds
harmless Purchaser (and its affiliates) from and against any liability, costs
and expenses Purchaser (or its affiliates) incurs prior to and following the
Closing in connection with the Management Agreement and Seller's termination
of its agreement(s) with Manager.
4.4 GOVERNMENTAL AND OTHER APPROVALS.
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4.4.1 HOTEL LICENSE. The parties acknowledge that the following
licenses, permits and authorizations are required for Purchaser to operate
the Property:
- Alien Land-Holding License
- Business License
- Restaurant and Liquor License
- Residency/Work Permits for management staff
All such licenses, permits and authorizations must be issued in Purchaser's
name at or prior to Closing. Purchaser shall promptly make application for
the issuance of a hotel license in its name or in the name of its affiliate
designee sufficient in time and substance to permit the lawful operation of
the Property as a hotel from and after the Date of Closing. Purchaser shall
be responsible for all fees, costs and expenses incurred in connection with
obtaining the hotel license for the operation of the Hotel. Seller shall
cooperate with Purchaser in Purchaser's obtaining said hotel license.
Purchaser's obligation to purchase the Property from Seller is conditioned on
Purchaser's obtaining the above licenses, permits and authorizations in the
name of Purchaser or Purchaser's affiliate designee.
4.4.2 GOVERNMENT AUTHORIZATION. The parties acknowledge that
obtaining the approval of the Anguilla Government to the sale of the
Property to Purchaser by Seller is a condition to Closing as set forth
herein. From and after the Date of this Agreement, Purchaser shall take all
reasonable actions to obtain the approval of the Anguilla Government to the
sale of the Property to Purchaser, which approval shall take the form of an
Alien Landholding Licence authorizing the sale of the Property to Purchaser.
Purchaser shall be responsible for all fees, costs and expenses Purchaser
incurs in connection with obtaining the foregoing approval. Purchaser's
obligation to purchase the Property from Seller, and Seller's obligation to
convey the Property to Purchaser shall be conditioned on Purchaser's
obtaining the approval of the Anguilla Government described in this
paragraph. Seller shall exercise all reasonable efforts to cooperate with
Purchaser in Purchaser's obtaining said approval of the Anguilla Government.
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4.4.3 PERMIT FROM THE MINISTER OF FINANCE. Purchaser acknowledges
that foreign entities are precluded from doing business in Anguilla without
the approval of the Anguilla Finance Ministry. Accordingly, from and after
the Date of this Agreement, Purchaser shall take all reasonable actions to
obtain any necessary permit from the Finance Minister of Anguilla, the Chief
Minister and any other applicable Ministers or officials, to do business in
Anguilla. Purchaser shall be responsible for all fees, costs and expenses
Purchaser incurs in connection with obtaining the foregoing approval.
Seller's obligation to convey the Property to Purchaser, and Purchaser's
obligation to take conveyance from Seller, shall be conditioned on
Purchaser's obtaining any necessary permit(s) from the Finance Minister, the
Chief Minister and any other applicable Ministers or officials described in
this paragraph. Seller shall exercise all reasonable efforts to cooperate
with Purchaser in Purchaser's obtaining said permit(s).
4.4.4 The parties acknowledge that by "Agreement" dated August 21,
1991 the Government of Anguilla agreed with Kamal Alsultany to enter into a
lease of the land presently leased by Seller pursuant to the Crown Lease and
granted to Kamal Alsultany certain concessions and incentives regarding the
development of the Property (the "Development Agreement"). The parties
further acknowledge that Purchaser is seeking to assume the interest of the
"Developer" under the Development Agreement and/or enter into a separate
agreement with the Government of Anguilla substantially similar to the
Development Agreement. The consummation of such agreement between
Purchaser and the Government of Anguilla is a condition precedent to
Purchaser's obligations under this Agreement.
4.4.5 The approvals described in Sections 4.4.2, 4.4.3 and 4.4.4 are
sometimes collectively referred to herein as the "Government Approvals".
4.5 HURRICANE REPAIRS. The parties acknowledge that the Property was
severely damaged in two hurricanes that struck Anguilla in September 1995.
The Land, Improvements and Personal Property were damaged or destroyed,
including without limitation: numerous guestrooms, building roofs, and
landscaping. Seller shall, prior to Closing, fully restore and repair all
such damage so that the Property is substantially in the same condition it
was in just
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prior to Hurricane Luis on September 5, 1995. Without in any way limiting the
generality of the foregoing, Seller shall apply all insurance proceeds
recovered in connection with the hurricane damage to the restoration and
improvement of the Property, and shall, upon written request from
Purchaser, verify to Purchaser's satisfaction that it has done so.
5. REPRESENTATIONS AND WARRANTIES
5.1 BY SELLER. Seller represents and warrants to Purchaser that:
5.1.1 Seller is a corporation duly organized, validly existing and in
good standing under the laws of Anguilla, B. W. I., is authorized to do
business in Anguilla, has duly authorized the execution and performance of
this Agreement, and such execution and performance will not violate any
material term of its certificate of incorporation or by-laws.
5.1.2 Seller is not a party to any written contract, document or
agreement (other than the Land Lease(s), the Contracts, the Leases, the
Permitted Encumbrances and the insurance policies that Seller carries on the
Property) to which Purchaser (or any affiliate of Purchaser) is not also a
party and that would have an adverse impact on the operation of the Property
by Purchaser (or any affiliate assignee of Purchaser pursuant to Section
11.4) following Date of Closing.
5.1.3 No petition in bankruptcy (voluntary or otherwise), assignment
for the benefit of creditors, or petition seeking reorganization or
arrangement or other action under any applicable bankruptcy laws is pending
against or contemplated by Seller or its general partner(s) or controlling
shareholders.
5.1.4 To the best of Seller's knowledge and belief there are no
structural, mechanical, environmental, or title issues or defects which would
(or may reasonably be expected to have) an adverse impact on the Property or
Purchaser's (or its designee's) operation of the Property as of the Closing
or at any time thereafter.
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5.1.5 Seller warrants and represents that all mechanical, plumbing
and electrical systems, including without limitation the sewage plant, sewage
system, water desalination plant, water system, air-conditioning system,
laundry and kitchen systems, are fully operational and performing up to 90%
of design specifications.
5.1.6 Seller is subject to no claims, action, demands, or liabilities
that are not expressly set forth on EXHIBIT 5.1.6, attached hereto.
5.2 BY PURCHASER. Purchaser represents and warrants to Seller that:
5.2.1 Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of Anguilla , is (or shall be) authorized to
do business in Anguilla, has duly authorized the execution and performance of
this Agreement, and such execution and performance will not violate any
material term of its articles of incorporation, by-laws or other
incorporation materials.
5.2.2 Purchaser is acting as principal in this transaction with
authority to close the transaction.
5.2.3 No petition in bankruptcy (voluntary or otherwise), assignment
for the benefit of creditors, or petition seeking reorganization or
arrangement or other action under any applicable bankruptcy laws is pending
against or contemplated by Purchaser or its general partner(s) or
controlling shareholders.
5.3 MUTUAL. Each of Seller and Purchaser represents to the other that it
has had no dealings, negotiations, or consultations with any broker,
representative, employee, agent or other intermediary in connection with this
Agreement or the sale of the Property. Seller and Purchaser agree that each
shall indemnify, defend and hold the other free and harmless from the
claims of any broker(s), representative(s), employee(s), agent(s) or other
intermediary(ies)
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claiming to have represented Seller or Purchaser, respectively, or
otherwise to be entitled to compensation in connection with this Agreement or
in connection with the sale of the Property. The indemnities set forth in
this Section 5.3 shall survive the Closing.
6. COSTS, ADJUSTMENTS AND APPORTIONMENTS.
6.1 PURCHASER'S CLOSING COSTS. Purchaser will pay the following costs of
Closing:
6.1.1 The fees and disbursements of its counsel, its local Anguilla
counsel, inspecting architect and engineer, if any;
6.1.2 All real estate and/or personal property transfer, stamp duty,
stamp or documentary tax(es) up to an aggregate of $400,000.00; including
without limitation all costs, expenses, and fees (including professional
and/or attorney's fees) incurred in connection therewith;
6.1.3 Intentionally omitted.
6.1.4 The full cost of the title search and review conducted by
Purchaser's Conveyancing Attorney, including the cost of obtaining copies of
all instruments affecting or evidencing title to the Property and the cost of
Purchaser's Conveyancing Attorney's preparing the conveyance instrument to
transfer title to the Property from Seller to Purchaser;
6.1.5 The conveyancing fee ("Conveyancing Fee") payable to the
Conveyancing Attorney;
6.1.6 Intentionally omitted.
6.1.7 Any recording fees;
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6.1.8 All costs associated with obtaining the licenses, permits and
authorizations described in Section 4.4. and the transfer of any other
licenses or permits (except costs associated with any default or delinquency
by Seller with respect to the licenses or permits or Seller's legal costs);
and
6.1.9 All other expense(s) incurred by Purchaser or its
representative(s) in inspecting or evaluating the Property or closing this
transaction.
6.2 SELLER'S CLOSING COSTS. Seller will pay the following costs of
Closing:
6.2.1 The fees and disbursements of Seller's counsel and Seller's
local counsel;
6.2.2 All real estate and personal property transfer, stamp duty,
stamp or documentary tax(es) in connection with the transfer of the Land and
Improvements (including without limitation Personal Property) to Purchaser in
excess of $400,000.00 in the aggregate; including without limitation all
costs, expenses, and fees (including professional and attorneys' fees)
incurred in connection therewith and all such amounts shall be payable at
Closing, without discount, (by deduction from the amount described in
subsection 2.2 (A) , or otherwise) regardless of the payment schedule
applicable to the actual payments to Government;
6.3 OTHER CLOSING COSTS. Any other costs or charges of closing the
purchase and sale of the Property not specifically mentioned in this
Agreement shall be paid and adjusted in accordance with local custom of
Anguilla, unless otherwise agreed by Purchaser and Seller.
6.4 ASSESSMENTS. Currently due installment payments of certified,
confirmed and ratified special assessment liens, as of the Date of this
Agreement, shall be paid by Seller; all other special assessment liens and
installment payments of special assessment liens shall be assumed and paid
by Purchaser.
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6.5 APPORTIONMENTS. The parties acknowledge that apportionments
generally made as part of the purchase and sale of an operating hotel may not
apply to this Agreement because the Property is not expected to be in
operation at Closing. Therefore, the following apportionments shall only be
made to the extent they are applicable. If they are applicable, the parties
acknowledge that apportionments generally made as part of the purchase and
sale of an operating hotel may not apply to this Agreement because the
Property is not expected to be in operation at Closing. Therefore, the
following apportionments shall only be made to the extent they are
applicable. If they are applicable, the following apportionments shall be
made between Seller and Purchaser as of 11:59 P. M. local Anguilla time, on
the day immediately preceding the Date of Closing (the "Apportionment Date"):
6.5.1 Amounts paid or payable under the Leases, under any new leases
executed after the Date of this Agreement pursuant to Section 4.1.3, and
under those Contracts assumed by Purchaser pursuant to Section 3.3.
6.5.2 Tour agents' and travel agents' commissions.
6.5.3 General real estate taxes, water or sewer rates and charges (if
not metered), personal property taxes, or any other governmental tax or
charge levied or assessed against the Property, other than special assessment
liens described in Section 6.4 (collectively, the "Taxes"), relating to the
Property and payable during the year in which Closing occurs (if the Closing
shall occur before the actual Taxes payable during the year of Closing are
known, the apportionment of Taxes shall be upon the basis of the latest
available tax rates and assessed value of the Property, provided that, if the
Taxes for the year of Closing are thereafter determined to be more or less
than the Taxes for the preceding year (after any appeal of the assessed
valuation thereof is concluded), Seller and Purchaser promptly (but no later
than December 31 of the year of Closing, except in the case of an ongoing tax
protest) shall adjust the proration of such Taxes, and Seller or Purchaser,
as the case may be, shall pay to the other any amount required as a result of
such adjustment. Further, if Seller is conducting a tax protest with respect
to all or any portion of the Taxes for the year in which Closing occurs or
any previous year, any refund relating to any previous year shall be the
property of Seller, and any refund relating to the year in which Closing
occurs shall be prorated as of the Apportionment Date. The covenants of the
preceding sentences shall survive the Closing. All Taxes assessed after the
Date of Closing shall be paid by Purchaser.
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6.5.4 With respect to electricity, telephone, television, cable
television, steam, gas, water and sewer services that are metered at the
Hotel and other utilities (collectively, the "Utilities"), Seller shall
endeavor to have the respective companies providing the Utilities read the
meters for the Utilities on or immediately prior to the Apportionment Date.
Seller shall be responsible for all charges based on such final meter
reading, and Purchaser shall be responsible for all charges thereafter. If
such readings are not obtainable, then, until such time as readings are
obtained, charges for all Utilities for which readings were not obtained
shall be pro rated as of the Apportionment Date based upon the per diem rate
obtained by using the last period and bills for such Utilities that are
available. Upon the taking of a subsequent actual reading, such apportionment
shall be adjusted to reflect the actual per diem rate for the billing period
in which the Date of Closing falls, and Seller or Purchaser, as the case may
be, shall promptly deliver to the other the amount determined to be due upon
such adjustment.
6.5.5 Room charges for the night commencing on the Apportionment Date
and ending on the morning of the Date of Closing shall be the property of
Seller. Dinner charges for the evening of the Apportionment Date shall be the
property of the Seller. Breakfast charges for the morning of the Date of
Closing shall be the property of Purchaser.
6.5.6 Seller shall receive full reimbursement from Purchaser at
Closing for each of the following items:
a) prepaid fees or other charges for transferable
licenses, permits, telephone equipment,
telephone rental, or other items, if any, to the
extent the rights to such prepaid fees or other
charges are assigned by Seller to Purchaser at
Closing; and
(b) transferable deposits with companies providing
Utilities, if any, to the extent the rights to
such transferable deposits are assigned by
Seller to Purchaser at Closing.
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6.5.7 Except as otherwise provided herein, Seller and Purchaser
acknowledge that the apportionments in this Section 6.5 shall be prepared, to
the extent applicable, in accordance with the current edition of the Uniform
System of Accounts for Hotels of the Hotel Association of New York City,
Inc., as adopted by the American Hotel Association of the United States and
Canada.
6.5.8 The provisions of this Section 6.5 shall survive the Closing
and shall not merge with the Conveyance of the Property to be delivered at
Closing.
6.6 UNOPENED FOOD AND BEVERAGE INVENTORY. Purchaser shall separately pay
Seller at Closing, at Seller's cost, the full amount of all unopened food and
beverage inventory, at Seller's cost, located on or used in connection with
Property as of the Apportionment Date. During the night of the Apportionment
Date, and prior to the time scheduled for the commencement of Closing on the
Date of Closing, representatives of both Seller and Purchaser shall prepare
an inventory of all such unopened food and beverage items, together with a
schedule identifying the unit cost of such items, as actually paid by Seller
as supported by the Books for the Property. Purchaser shall purchase all such
unopened food and beverage inventory by paying Seller an amount equal to
Seller's cost therefor, as shown on the aforesaid inventory and schedule,
such amount to be added to and as part of the Purchase Price.
6.7 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE.
6.7.1 As a part of the Purchase Price, and subject to Section 9.7,
Purchaser shall separately pay Seller at Closing the full amount of all
accounts receivable outstanding as of the Date of Closing, including any
accounts receivables owing from any present guests of the Hotel incurred
during that guest's present stay, after deducting applicable travel agent and
credit card commissions and a reserve for bad debts, except that room charges
for all guests of the Hotel for the night of the Apportionment Date shall be
the property of Seller as provided in
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Section 6.5.5. The accounts receivable that Purchaser is obligated to
purchase pursuant to this Section 6.7 are hereinafter referred to as the
"Included Accounts Receivables".
6.7.2 Purchaser shall be credited, at Closing, for any accounts
payable outstanding on the Date of Closing, with respect to the operation of
the Property prior to Closing, except those accounts payable that are
disputed by Seller. Seller shall identify all such disputed accounts payable
as provided in Section 6.7.3 and shall indemnify, defend and hold Purchaser
harmless against any liability arising out of any accounts payable dispute(s)
so identified by Seller. The accounts payable for which Purchaser is
entitled to a credit against the Purchase Price at Closing are hereinafter
referred to as the "Assumed Accounts Payable". In consideration of the credit
against the Purchase Price, Purchaser agrees to pay all Assumed Accounts
Payable as and when due and further agrees to indemnify, defend and hold
Seller harmless against any cost or liability resulting from nonpayment or
late payment of any of such Assumed Amounts Payable as provided in Section
9.2.
6.7.3 During the night of the Apportionment Date, and prior to the
time scheduled for the commencement of the Closing on the Date of the
Closing, Seller's representatives shall prepare and deliver to Purchaser or
its representatives a schedule detailing all Assumed Accounts Payable
incurred prior to the Apportionment Date.
6.7.4 The provisions of this Section 6.7 shall survive the Closing
and shall not merge with the Conveyance of the Property to be delivered at
Closing.
6.8 HOUSE BANKS. Seller and Purchaser shall apportion, as of the
Apportionment Date, the cash, checks and other funds, including till money,
house banks, and notes, securities and other evidence of indebtedness held at
the Hotel as of the Apportionment Date. Seller shall retain and shall not
transfer to Purchaser balances on deposit to the credit of Seller or the
Manager, as Seller's agent, with banking institutions. The provisions of
this Section 6.8 shall survive the Closing and shall not merge with the
Conveyance of the Property to be delivered at Closing.
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6.9 RESERVATION DEPOSITS.
6.9.1 On the Date of Closing, the aggregate amount of any Reservation
Deposits received by Seller shall be credited against the Purchase Price as
set forth in Section 2.2.2;
6.9.2 Purchaser shall execute a receipt for any Reservation Deposits
paid over to it or for which Purchaser receives a credit against the Purchase
Price, and shall indemnify and hold Seller harmless from and against all
claims by, and liabilities to, future guests pertaining to the application or
return of the Reservation Deposits paid over to Purchaser or for which
Purchaser receives a credit against the Purchase Price, in accordance with
this Section 6.9; and
6.9.3 The provisions of this Section 6.9 shall survive the Closing
and shall not merge with the Conveyance of the Property to be delivered at
Closing.
6.10 SAFE AND BAGGAGE.
6.10.1 On the Date of Closing, Seller shall cause the delivery to
Purchaser of all of Seller's keys to the safe in the Hotel. On the Date of
Closing, all contents that are in the safe shall be recorded under the
supervision of Seller's and Purchase's respective representatives. All
contents so verified and recorded and thereafter remaining in the safe from
and after the Date of Closing shall be the responsibility of Purchaser and
Purchaser hereby agrees to indemnify, defend and hold Seller harmless from
any liability therefor. Seller hereby agrees to indemnify and hold Purchaser
harmless from any liability arising from claims by guests for any loss of
contents in the safe not recorded on the Date of Closing.
6.10.2 On the Date of Closing, representatives of Purchaser and Seller
shall take an inventory of all baggage, valises and trucks checked or left in
the care of Seller. From and after the Date of Closing, Purchaser shall be
responsible for all baggage listed in said inventory,
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and Purchaser hereby agrees to indemnify, defend and hold Seller harmless
from any liability therefor. Seller shall remain liable for any negligence
or misfeasance with respect to such baggage which occurred prior to the Date
of Closing as well as for claimed omissions from said inventory, and Seller
hereby agrees to indemnify and hold Purchaser harmless from any liability
therefor.
6.10.3 The provisions of this Section 6.10 shall survive the Closing
and shall not merge with the Conveyance of the Property to be delivered at
Closing.
6.11 EMPLOYEES. The parties acknowledge that all on-site personnel
employed at the Hotel are employees of the Seller and that none of such
personnel are employees of Purchaser. Seller shall, at Closing, cause to be
prepared and delivered to Purchaser an accounting for vacation and other
benefits to which any of such employees are entitled as of the Date of
Closing, which accounting will be the basis for a proration and apportionment
of such benefits and entitlements between the period prior to and
following Closing, respectively. Seller shall represent and warrant the
accuracy of such accounting to Purchaser. Seller shall be responsible for the
cost of such employees relating to the period prior to Closing, and shall
indemnify and hold harmless Purchaser against, the cost of such employees
relating to the period prior to Closing. The provisions of this Section 6.11
shall survive the Closing and shall not merge with the Conveyance of the
Property to be delivered at Closing. Purchaser shall not be obligated to
employ any of Seller's employees.
6.12 PROPERTY NOT INCLUDED IN SALE. The following shall not be included
in the Property to be sold hereunder:
6.12.1 Tax deposits, utility deposits and other deposits, except for
transferable utility deposits, which are to be apportioned as herein
provided, and except for Reservation Deposits which are to be paid over to
Purchaser in accordance with Section 6.9.
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6.12.2 The provisions of this Section 6.12 shall survive the Closing
and shall not merge with the Conveyance of the Property to be delivered at
Closing.
6.13 BENEFIT AND LIABILITY. The purpose and intent of the provisions as
to prorations, adjustments and apportionments set forth in this Section 6 and
elsewhere in this Agreement are that Seller shall bear all expenses of
ownership and operation of the Property and shall receive all income
therefrom accruing through the Apportionment Date, and Purchaser shall bear
all such expenses and receive all such income accruing thereafter.
Accordingly, effective upon Closing, Seller agrees to indemnify and hold
Purchaser harmless from and against any and all such costs and expenses
relating to the operation of the Hotel during the period preceding Closing,
and Purchaser agrees to indemnify, defend and hold Seller harmless from and
against any and all such costs and expenses relating to the operation of the
Hotel from and after Closing. If the computation of the apportionments and
adjustments described in this Section 6 shows that a net amount is owed by
Seller to Purchaser, such amounts shall be credited against the Purchase
Price as set forth in Section 2.2. If such computation shows that a net
amount is owed by Purchaser to Seller, such amount shall be paid by wire
transfer to Seller by Purchaser on the Date of Closing in addition to the
payment of the cash portion of the Purchase Price to be made by Purchaser
under Section 2.2. The provisions of this Section shall survive the Closing
and shall not merge with the Conveyance of the Property to be delivered at
Closing.
6.14 RIGHT OF OFFSET. In addition to any other rights it may have,
Purchaser may offset against its payment obligations under Section 2.2 any
costs, expenses or liabilities (contingent or actual) resulting from any
claim, action, demand or liability against Seller ("Seller Liability"),
whether or not such Seller Liability is included on EXHIBIT 5.1.6.
7. DAMAGE, DESTRUCTION OR CONDEMNATION.
7.1 MATERIAL EVENT. If, prior to Closing, fifteen percent (15%) or more
of the guest rooms, or such portion of the common areas (lobbies, restaurant,
etc.) of the building(s) as will render the Hotel inoperable for in excess of
thirty (30) days, or fifteen percent (15%) or
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more of the parking spaces on the Property or all access to the Property is
rendered completely unusable or is destroyed or taken under power of eminent
domain, or Seller has received written notice from a governmental authority
that such property will be taken under power of eminent domain, Purchaser may
elect to terminate this Agreement by giving written notice of its election to
Seller within fourteen (14) days after the earlier of actual knowledge of, or
receiving written notice of, such destruction or taking. If Purchaser does
not give such written notice within such fourteen (14) days period, the
Closing shall occur on the Date of Closing and at the Purchase Price provided
for in Section 2, and Seller will assign to Purchaser the physical damage
proceeds of any insurance policy(ies) payable to Seller, or Seller's portion
of any condemnation award, in both cases, up to the amount of the Purchase
Price less the amounts payable under Sections 6.6 and 6.7, and if an insured
casualty, pay to Purchaser the amount of any insurance policy(ies)
deductible(s) but not to exceed the amount of the loss.
7.2 IMMATERIAL EVENT. If, prior to Closing, less than fifteen percent
(15%) of the guest rooms, or such portion of the common areas (lobbies,
restaurants, etc.) of the building(s) as shall render the Hotel inoperable
for in excess of thirty (30) days, or less than fifteen percent (15%) of the
parking spaces on the Property is rendered completely untenantable or is
destroyed or is taken under power of eminent domain, Purchaser shall close
this transaction on the Date of Closing and at the Purchase Price agreed upon
in Section 2, and Seller will assign to Purchaser the physical damage
proceeds of any insurance policy(ies) payable to Seller, or Seller's portion
of any condemnation award, in both cases, up to the amount of the Purchase
Price less the amounts payable under Sections 6.6 and 6.7, and if an insured
casualty, pay to Purchaser the amount of any insurance policy(ies)
deductible(s) but not to exceed the amount of the loss.
7.3 PAYMENT OF PROCEEDS. For purposes of this Section 7, Purchaser shall
be deemed to have no equitable or beneficial interest in the Property.
7.4 TERMINATION. If Purchaser elects to terminate this Agreement pursuant
to this Section 7, neither Seller nor Purchaser shall have any obligation or
liability hereunder, and Purchaser shall have no interest in the Property.
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8. NOTICES.
Any notice required or permitted to be given hereunder shall be deemed to
be given when hand delivered or when delivered by Emery Air Freight,
Airborne, Federal Express, or similar overnight express service, in either
case addressed to the parties at their respective address referenced below:
If to Seller:
Attention: Mr. Kamal Alsultany
Phone No.: (809) 497-6741
Facsimile No: (809) 497-6987
With a copy to:
If to Purchaser: c/o Sonesta International Hotels Corporation
John Hancock Tower, 200 Clarendon Street
Floor 41
Boston, Massachusetts 02116
Attention: Peter J. Sonnabend
Phone No.: (617) 421-5410
Facsimile No.: (617) 421-5402
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With a copy to: Thomas W. R. Astaphan
Moore, Astaphan, Kelsick
Caribbean Commercial Centre
P. O. Box 350
The Valley
Anguilla, B. W. I.
Phone No.: (809) 497-5554/5/6
Facsimile No.: (809) 497-5310
or in each case to such address as either party may from time to time
designate by giving notice in writing to the other party. Telephone and
facsimile numbers are given for reference purpose only. Effective notice may
only be given as stated above.
9. CLOSING.
9.1 SELLER'S DELIVERIES: Seller shall deliver at the Closing or by
making available at the Property, as appropriate, the following original
documents, each executed and, if required, acknowledged:
9.1.1 A Conveyance in the form attached hereto as EXHIBIT 9.1.1,
subject to the Permitted Encumbrances and other matters subsequently approved
by Purchaser or Purchaser's counsel.
9.1.2 Intentionally omitted.
9.1.3 (i) The Leases described in Section 1.1.6
which are still in effect as of Closing and any new leases
entered into pursuant to Section 4.1.3; (ii) a current listing
of any tenant security deposits and prepaid rents held by
Seller with respect to the Property; and (iii) an
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assignment of such leases, deposits and prepaid rents by way of an assignment
and assumption agreement in the form attached hereto as EXHIBIT 9.1.3.
9.1.4 (i) A schedule of all Contracts; and (ii) an assignment of such
Contracts by way of an assignment and assumption agreement in the form
attached hereto as EXHIBIT 9.1.4.
9.1.5 An assignment of all transferable warranties and guarantees
then in effect, if any, with respect to the Improvements and Personal
Property or any repairs or renovations to the Improvements and Personal
Property, which assignment is in the form attached hereto as EXHIBIT 9.1.5.
9.1.6 All Books at the Property held by or for the account of Seller,
including without limitation, plans and specifications and lease
applications, as available, subject to the limitations of Section 1.1.10.
9.1.7 Intentionally omitted.
9.1.8 A corporate authorization in the form attached hereto as
EXHIBIT 9.1.8.
9.1.9 An incumbency affidavit in the form attached hereto as EXHIBIT
9.1.9.
9.1.10 Any consents necessary, if any, to effect the assignment of
prepaid fees and deposits for the transferable items described in Section
6.5.6.
9.2 PURCHASER'S DELIVERIES: At Closing, Purchaser shall (i) pay Seller
the cash Purchase Price subject to the apportionments as provided in Section
6; (ii) execute and deliver to Seller the agreements referred to in Section
9.1.3 (iii) and 9.1.4 (ii); (iii) executive and deliver to Seller an
indemnity agreement with respect to the Assumed Accounts Payable in the form
attached hereto as EXHIBIT 9.2. (ii).
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9.3 POSSESSION. Purchaser shall be entitled to ownership of the
Property and possession of the Property upon conclusion of the Closing in
accordance with the terms of this Agreement.
9.4 INSURANCE. At Purchaser's request Seller shall terminate its (or
Manager's) policies of insurance as of noon on the Date of Closing, and
Purchaser shall be responsible for obtaining its own insurance thereafter.
Notwithstanding the foregoing, at Purchaser's request Seller shall assign and
transfer to Purchaser any insurance regarding the Property that is in effect
at Closing, including the right(s) (if any) to recover under such policies
for the hurricane-related damage described in Section 4.5. Seller shall not
cancel any such insurance prior to Closing without Purchaser's prior written
consent.
9.5 UTILITY SERVICES AND DEPOSITS. Seller shall be entitled to the
return of any deposit(s) posted by it with any utility company not assigned
to Purchaser pursuant to Section 6.5.6(b), and Purchaser shall notify each
utility company serving the Property to terminate Seller's account, effective
at noon on the Date of Closing. Seller hereby indemnifies and holds harmless
Purchaser regarding any claim made by Manager (as defined in Section 4.3)
regarding such deposits. These provisions shall survive Closing.
9.6 NOTICE LETTERS. Subsequent to Closing, Seller shall provide to
Purchaser copies of letter to (i) tenants, (ii) contractors and (iii) utility
companies serving the Property in the forms attached hereto as EXHIBIT
9.6(i), EXHIBIT 9.6(ii) and EXHIBIT 9.6(iii), respectively, advising them of
the sale of the Property to Purchaser and directing to Purchaser all bills
for the services provided to the Property on and after the Date of Closing.
9.7 POST-CLOSING COLLECTIONS. Concurrently with the Closing,
representatives of Seller and Purchaser shall cause a preliminary closing
statement to be prepared reflecting their respective closing costs, the
apportionments, the payment of the Purchase Price and all other terms of this
Agreement affecting or relating to the amount of and adjustments to the
consideration to be paid for the Property. In the event either Purchaser or
Seller becomes aware of any item in the closing statement which requires
adjustment as a result of new information or
28
<PAGE>
the ascertainment of actual amounts for items which are the subject of
estimates at Closing, it shall promptly advise the other in writing and
provide such supporting documentation as shall reasonably be required. Upon
the ninetieth (90th) day following the Date of Closing, or earlier upon
mutual agreement of the parties, Purchaser or Seller, as the case may be,
shall make such additional payment or refund as shall be required by the
aggregate of any such post-Closing adjustments, including, without
limitation, the adjustments resulting from collection of accounts receivable
that are not Included Accounts Receivable, appropriate adjustments for
uncollected Accounts Receivable, and retention of hotel employees as set
forth in Section 6.9.2 and 6.11, respectively, and a final closing statement
shall be prepared to reflect such revisions, subject only to subsequent
adjustments provided for in Section 6.5.3. This provision shall survive
Closing and shall not merge with the Conveyance of the Property to be
delivered at Closing.
10. FAILURE OF CONDITION.
10.1 FAILURE OF CONDITION. If, prior to Closing, Seller discloses to
Purchaser or Purchaser discovers that title to the Property is subject to
title defects other than the Permitted Encumbrances, then Purchaser may elect
to give Seller written notice of its objection thereto. In such event, the
parties shall postpone the Closing for up to thirty (30) days and Seller
shall attempt to cure such objection, provided that Purchaser may not object
to Permitted Encumbrances. In the event Seller cures the objection and
Closing occurs on an extended date by reason thereof, all apportionments and
prorations hereunder shall be calculated as of the extended Date of Closing
UNLESS the title or survey defect (other than the Permitted Encumbrances)
giving rise to the extension exists by reason of the intentional misconduct
or negligence of Seller, in which event the apportionments and prorations
hereunder shall be calculated as of the originally scheduled Date of Closing.
11. MISCELLANEOUS.
11.1 ENTIRE AGREEMENT. This Agreement, together with the
Exhibits attached hereto, all of which are incorporated herein
by reference, is the entire agreement between the
29
<PAGE>
parties with respect to the subject matter hereof, and no alternation,
modification or interpretation hereof shall be binding unless in writing and
signed by both parties.
11.2 SEVERABILITY. If any provision of this Agreement or application to
any party or circumstances shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall
be valid and shall be enforced to the fullest extent permitted by law.
11.3 APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of Anguilla, B.W.I.
11.4 ASSIGNABILITY. Except for an assignment by Purchaser to an entity
which is a wholly-owned subsidiary of Sonesta International Hotels
Corporation, a New York corporation, Purchaser may not assign this Agreement
without first obtaining Seller's prior written consent, which consent shall
not be unreasonably withheld or delayed. Any assignment in contravention
of this provision shall be void. No assignment shall release Purchaser from
any obligation or liability under this Agreement. Any permitted assignee
shall be deemed to have made any and all representations and warranties made
by Purchaser hereunder, as if the assignee were the original signatory hereto.
11.5 SUCCESSORS BOUND. This Agreement shall be binding upon and inure to
the benefit of Purchaser and Seller and their respective successors and
permitted assigns.
11.6 BREACH. Should either party be in breach of or default under or
otherwise fail to comply with any of the terms of this Agreement within any
prescribed period, the non-defaulting party shall have the option to cancel
this Agreement upon ten (10) days written notice to the defaulting party of
the alleged breach and failure by the defaulting party to cure such breach
within such ten (10) day period. The non-defaulting party shall promptly
notify the defaulting
30
<PAGE>
party in writing of any alleged default upon obtaining knowledge thereof.
The Date of Closing shall be extended to the extent necessary to afford the
defaulting party the full ten (10) days period within which to cure such
default. In the event the Date of Closing is extended hereunder by reason of
a default by Seller, all apportionments and prorations hereunder shall be
calculated as of the originally scheduled Date of Closing if the default
giving rise to the extension exists by reason of the intentional misconduct
or negligence of Seller. The failure or refusal by a party to perform on the
scheduled Date of Closing (except in respect of a Pending Default by the
other party) shall be deemed to be an immediate default without the necessity
of notice and if the Date of Closing shall have been once extended as a
result of default by a party, such party shall not be entitled to any further
notice or cure rights with respect to that or any other default. For purposes
of this Section 11.6, a "Pending Default" shall be a default for which (i)
written notice was given by the non-defaulting party, and (ii) the cure
period extends beyond the Date of Closing.
11.7 NO PUBLIC DISCLOSURE. Except as provided in the immediately
following sentence, Purchaser and Seller shall make no public disclosure of
the terms of this transaction without the prior written consent of the other
party, except that each party may discuss the transaction in confidence with
counsel, managers, and consultants and with proposed joint venturers,
assignees or prospective mortgagees. Purchaser shall be entitled to make
public disclosure of the terms of this transaction if so advised by legal
counsel (including without limitation in-house legal counsel).
11.8 CAPTIONS. The captions in this Agreement are inserted only as a
matter of convenience and for reference and in no way define, limit or
describe the scope of this Agreement or the scope or content of any of its
provisions.
11.9 ATTORNEY'S FEES. In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to reasonable attorney's
fees and costs.
31
<PAGE>
11.10 NO PARTNERSHIP. Nothing contained in this Agreement shall be
construed to create a partnership or joint venture between the parties or
their successors in interest.
11.11 TIME. Time is of the essence in this Agreement.
11.12 COUNTERPARTS. This Agreement may be executed and delivered in any
number of counterparts, each of which so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.
11.13 RECORDATION. Intentionally omitted.
11.14 PROPER EXECUTION. The submission by Seller to Purchaser of this
Agreement in unsigned form shall be deemed to be a submission solely for
Purchaser's consideration and not for acceptance and execution. Such
submission shall have no binding force or effect, shall not constitute an
option, and shall not confer any rights upon Purchaser or impose any
obligations upon Seller, irrespective of any reliance thereon, change of
position or partial performance. The submission by Seller of this Agreement
for execution by Purchaser and the actual execution and delivery thereof by
Purchaser to Seller shall similarly have no binding force and effect on
Seller unless and until Seller shall have executed this Agreement and a
counterpart of this Agreement, as executed by Seller, shall have been
delivered to Purchaser.
11.15 SURVIVAL. The provisions of this Agreement expressively stating
that they survive Closing, and any other provisions if the context or subject
matter indicates the intent of the parties that they survive Closing, shall
survive Closing. Without limiting the generality of the foregoing, all
warranties and representations shall survive Closing.
11.16 PURCHASER MARKETING. Upon the execution of this Agreement,
Purchaser shall have the right to market the Property generally, as a
"Sonesta" or otherwise, in anticipation of Closing.
32
<PAGE>
11.17 TIME EXECUTE AND DELIVER. This Agreement shall be void if one
fully executed copy is not received by Purchaser on or before 5:00 P. M.
Eastern Time on November 10 1995.
11.18 NET LOSS ADJUSTMENT. In the event that the insurer of record
(Ennia) does not recognize the assignment by Seller to Purchaser of Seller's
claim for business interruption proceeds (pursuant to subsection 1.1.17) for
the period from and after the Date of Closing, the payment referenced in
subsection 2.2(C) shall be reduced by one half (1/2) of any "net loss"
realized by Purchaser (or its affiliate) during the first year of operation
following Purchaser's reopening of the Property up to a maximum of
U.S.$200,000. For purposes of the preceding sentence the term "net loss"
shall mean and be equal to the amount by which the sum of the Property's
total operating expenses and fixed expenses (including without limitation:
insurance premiums, management fee (3% of gross revenues), real estate tax
(is any), and reserve for replacements (4% of gross revenues) exceeds the
Property's gross revenues for said first year of operation. Seller shall be
entitled to conduct, at Seller's expense, an audit of Purchaser's operating
results for said first year and if such audit reveals that Purchaser incurred
no net loss, Purchaser shall pay for such audit. Any such audit shall be
performed by a reputable accounting firm mutually acceptable to Purchaser and
Seller.
11.19 STOCK TRANSFER. Prior to Closing, subject to the written
agreement to both parties, this transaction shall be structured as a sale of
the shares of Seller, all of which are owned by Kamal and Maggie Alsultany
(jointly and severally "Alsultany") in lieu of the transaction otherwise
described herein. In such event, both Purchaser and Alsultany shall
cooperate fully in completing said transaction, including without limitation
Alsultany executing and delivering to Purchaser share transfer forms and
personal indemnities acceptable to Purchaser.
11.20 SHARING OF BUSINESS INTERRUPTION PROCEEDS. The
Purchase Price applicable to this purchase and sale transaction
is based on the pre-Hurricane Luis condition of the Property.
33
<PAGE>
In the event that the Property's profits are negatively affected as a result
of the Hurricane and business interruption proceeds are paid to Purchaser as
the assignee of the business interruption claim, Seller shall be entitled to
50% of such business interruption proceeds in excess of U.S.$3,000,000 or
such other amount as the parties shall agree in writing in the aggregate.
IN WITNESS WHEREOF, Purchaser and Seller have executed this Agreement on
the date set forth below, effective as of the date set forth above.
PURCHASER:
November 10, 1995 SONESTA HOTELS OF ANGUILLA, LIMITED
Before Me: /S/ By: /S/
-------------------------------
Printed name: Peter J. Sonnabend
Its: Director
SELLER:
November 10, 1995 CASABLANCA RESORTS DEVELOPMENT OF
ANGUILLA LIMITED
Before Me: /S/
By: /S/
-------------------------------
Printed name: Kamal Alsultany
Its: Director
THE UNDERSIGNED HEREBY EXECUTE THIS AGREEMENT IN ORDER TO ACKNOWLEDGE THEIR
CONTINUING JOINT AND SEVERAL PERSONAL GUARANTY(IES) OF SELLER'S OBLIGATIONS
UNDER THIS AGREEMENT AND THEIR OBLIGATIONS UNDER SECTION 11.19.
/S/
----------------------------------
Kamal Alsultany
/S/
----------------------------------
Maggie Alsultany
34
<PAGE>
EXHIBIT 10.2
<PAGE>
AGREEMENT
Reference is made to the Purchase and Sales Agreement ("P & S"), dated as of
November 10, 1995, by and between Casablanca Resorts Development of Anguilla
Ltd. (Seller) and Sonesta Hotels of Anguilla, Ltd. (Purchaser).
This agreement shall modify the P & S and terms defined in the P & S which
are used herein shall be the same meaning as under the P & S.
(1) The parties agree and acknowledge that Seller has agreed to reduce
the Purchase Price by the amount (s) of the expenses described in subsections
(i), (ii), and (iii) of Section 2.2 of the P & S (and further agree and
acknowledge that said provisions are clear on their face and do not conflict
with any other Sections of the P & S, including without limitation Sections
6.11 and 6.13 which address other matters). Notwithstanding said provisions
of Section 2.2, the parties agree that the amounts described in said
subsection (iii) shall not be offset against the amounts described in
subsections (A) and (B), as provided in the P & S, but shall instead be
payable by Seller as follows: From the first business interruption and/or
rental value proceeds received by Seller with respect to the period from
Hurricane Luis on September 5, 1995 through March 1, 1996. In the event that
said amounts described in Section 2.2 (iii) of the P & S have not been fully
reimbursed to Purchaser on or before the third anniversary of the Date of
Closing, Purchaser shall be entitled to offset any such unpaid amounts
against the payment to be made to Seller pursuant to subsection (C) of
Section 2.2 of the P & S.
Interest shall only accrue and be payable by Purchaser on the amount
described in subsection 2.2 (C) to the extent that the U. S. $1,000,000
referenced in said subsection (C) (as same may be reduced by advances under
EXHIBIT A to the P & S) exceeds the amount(s) owed and unpaid by Seller under
this Section (1) from time to time.
(2) Following the Closing, Seller shall supervise the repair and
restoration of the Property, as contemplated in Section 4.5 of the P & S.
Seller shall employ its own employees and outside contractors for this
purpose. Purchaser shall provide three (3) guestrooms at the Property until
January 12, 1996 to house Seller's, employees, and Seller hereby indemnifies
and holds harmless Purchaser from and against any costs, expenses or
liabilities Purchaser may incur as a result of providing rooms for Seller's
employees. The parties agree to set aside $50,000 of the purchase money
otherwise payable to Seller at Closing under the P & S and such funds shall
be available to satisfy any unpaid and outstanding costs and expenses
incurred by Seller under this Section and/or to pay for work which Seller did
not complete. (Such funds are not intended to
<PAGE>
represent the unpaid or anticipated charges referenced in the last paragraph
of Section 2.2 of the P & S.)
(3) Although title to the Property is expected to pass to Purchaser on
about November 28, 1995, Seller shall be responsible for maintaining the
condition of the Property, including without limitation the physical
condition of the Property and Property systems (such as plumbing, sanitation,
desalinization, electrical, grounds and the like) in good working order and
condition.
(4) On January 5, 1996, the Parties shall conduct a full inspection of
the Property and shall note such "Punch-list" and other items which have not
been fully repaired or restored or which are not otherwise in the condition
provided in the P & S. Seller shall promptly undertake to complete all such
items in an expedited manner but in any event no later than January 12, 1996.
The performance of Seller's obligation under this agreement shall not be
excused or delayed due to force majeure or acts of God, the parties agreeing
that time is of the essence; and Seller further acknowledges that its failure
to complete the restoration of the Property on a timely basis will cause
Purchaser to suffer substantial monetary damages.
(5) On or before December 1, 1995, Seller shall furnish to Purchaser
"work letters" executed by each and every employee of Seller and of
independent contractors who are supplying service in connection with the work
described in the preceding sections, which work letters shall contain an
acknowledgment of the workers that he or they have been paid fully for all
work performed to the date of the work letter, that said workers understands
he (or they) was not an employee of the Purchaser, and shall look only to the
Seller for compensation and work-related benefits.
(6) Seller agrees to continue to replace and refurbish landscaping at
the Property in order to bring the Property to its pre-Hurricane Luis
condition. The Parties agree to set aside $25,000 of the purchase money
otherwise payable to Seller at Closing under the P & S and such funds shall
be available to supplement said landscaping subsequent to January 5, 1996.
The parties further agree that they will use their best efforts in good faith
to determine how much of said $25,000 shall be required to augment such
landscaping expenditure so as to put the Property in pre-Hurricane Luis
condition. In the event the parties cannot agree on the need and/or amount
for application of said proceeds, they shall together discuss and agree upon
a procedure for resolving their dispute.
(7) Nothing in this agreement shall change in any way the
responsibility of Seller for items listed in Section 2.2 of the P & S which
responsibility shall continue until March 1, 1996.
2
<PAGE>
(8) At Closing Purchaser shall obtain ownership of the personal
property listed on Exhibit 2.2 (B) of the P & S. Notwithstanding the
foregoing Purchaser agrees that if Seller is required to reconvey any of such
personal property to the "Manager" (as defined in Section 4.3 of the P & S)
as part of a settlement with such Manager, Purchaser shall convey the same to
Seller, and Seller agrees to provide reasonable compensation to Purchaser for
such items.
In Witness whereof the parties have hereto set their hands and seals as
of this day of November, 1995.
SONESTA HOTELS OF ANGUILLA, LTD.
Witness By: /S/
BY: /S/..............................................
CASABLANCA RESORTS DEVELOPMENT OF ANGUILLA LIMITED
BY: /S/.............................................. Witness By: /S/
.... /S/..............................................
KAMAL ALSULTANY
.... /S/..............................................
MAGGIE ALSULTANY
3
<PAGE>
EXHIBIT 10-3
<PAGE>
FORM R.L.2
THIRD SCHEDULE
REGISTERED LAND ORDINANCE, 1974
TRANSFER OF LEASE
REGISTRATION SECTION BLOCK PARCEL
WEST CENTRAL 28110 B 38/1
WEST CENTRAL 280009 B 2/2
WE CASABLANCA RESORTS DEVELOPMENT OF ANGUILLA LIMITED
in consideration of U.S. $3,200,000.00 (the receipt whereof is hereby
acknowledged) HEREBY
TRANSFER
to SONESTA HOTELS OF ANGUILLA LIMITED
of THE VALLEY, ANGUILLA, B. W. I.
the leasehold interest comprised in the above-mentioned title.
SEE SCHEDULE ATTACHED HERETO
Dated this day of 19
The Common Seal of the Transferor ) /S/_________________
was hereto affixed by its Secretary in the presence ) MAGGIE ALSULTANY
of its Director both of whom signed their names ) SECRETARY
hereto in the presence of: ) /S/_________________
/S/ /S/ KAMAL ALSULTANY
The Common Seal of the Transferee was hereto ) DIRECTOR
affixed by its Secretary in the Presence of its )
Director both of whom signed their names ) /S/_________________
hereto in the presence of : ) PETER J. SONNABEND
* Delete if not applicable SECRETARY
/S/_________________
BOY A. J. VAN RIEL
DIRECTOR
SEAL
<PAGE>
EXHIBIT 10-4
<PAGE>
1
LEASE
This Lease is made the 23rd day of September 1991 BETWEEN Her Majesty
Elizabeth the Second, by the Grace of God, of the United Kingdom of Great
Britain and Northern Ireland and of Anguilla and of all Her other
Territories, Queen, acting by Brian George John Canty, OBE, Governor of
Anguilla, under and by virtue of section 75 of the Constitution of Anguilla
(hereinafter in this Lease referred to as "the Crown") of the ONE PART and
Casablanca Resorts Development of Anguilla Limited a company incorporated
under the laws of Anguilla having its registered office at Merrywing,
Anguilla (hereinafter in this Lease called "the Lessee") of the OTHER
PART.________________________________________
WHEREAS The Government is desirous of having all that property commonly
referred to as Merrywing developed into a luxury tourist resort in accordance
with its established developmental policies_________
AND WHEREAS The Lessee has indicated to the Government its willingness to
lease and develop Merrywing into a luxury tourist resort in accordance with
the Government's developmental policies and the Government has resolved to
advise the Governor of Anguilla in right of the Crown to grant a lease of the
said land to the Lessee, subject to the terms, covenants and conditions
hereinafter set forth__________
NOW THEREFORE THIS LEASE WITNESSETH:
Demise 1. (a) In consideration of the expenses to be incurred by the
Lessee in the erection of the buildings and the carrying
out of the works hereinafter mentioned and of the rents and
covenants on the part of the Lessee hereinafter reserved
and contained the Crown hereby demises unto the Lessee ALL
THAT land situate at Merrywing, Anguilla as is more
particularly described in the First Part of the Schedule
hereto and as shown for the purposes of identification
edged in red on the plan marked `A' attached hereto having
an area of thirty seven (37) acres or thereabouts and also
the partly constructed buildings now thereon (hereinafter
called the demised premises) together with all rights of
way or easements appurtenant thereto excepting and
reserving unto the Crown, its servants and
<PAGE>
2
licensees and the public in general the right to pass
and repass with or without vehicles or animals for all
purposes and at all times over and along the roads marked
in green on the said plan marked `A' and reserving unto the
Crown all mines and minerals including sand and gravel and
all timber and other trees under or upon the demised
premises TO HOLD the same unto the Lessee from the Date
Hereof for a term of ninety
Habendum nine years Paying Therefor the rents reserved and described
in the Second Part of the Schedule Hereto:
Proviso Provided that no estate or interest in the road or roads or
footpaths on or adjacent to the demised premises is or
shall be deemed to be included in this demise.______________
(b) The Lessee shall pay at the execution of this Lease hereof
the sum of US$350,000 for the purchase of the buildings (as
is) on the demised premises receipt whereof of the said sum
the Crown hereby acknowledges:_______________________________
Lessee's 2. The Lessee hereby covenants with the Crown as follows:
Covenants (1) To pay the said reserved rents on the days and in the
manner set forth in the Second Part of the Schedule.
(2) To pay all existing and future rates, taxes, assessments
and outgoings now or hereafter imposed upon the demised
premises, or any part thereof._______________________________
(3) Not less than one month before commencement of the works
described as "Phase I" of the development works in the
Third Part of the Schedule hereto to submit for approval by
the Crown the plans drawings and specifications in respect
of Phase I and thereafter to submit plans, drawings and
specifications in respect of each successive Phase of the
development works described as aforesaid.____________________
(4) At its own expense to erect the buildings and carry out the
works (hereafter referred to as the development works) on
the demised premises described in the Third Part of the
Schedule hereto and to comply at all times during the term
of this demise with all the requirements as to the time,
<PAGE>
3
manner and nature of the development works set out in the
said part of the Schedule, and in accordance with plans
designs and drawings submitted to the Crown for
approval.____________
(5) Upon completion of the part of the development works
comprised in "Phase I", "Phase II" and "Phase III"
respectively, individually and as the case may be jointly
of the development as described in the Third Part of the
Schedule hereto and at all times thereafter during the term
of this demise to operate on the demised premises a luxury
resort complex comprising a hotel of not less than 114
rooms, private homes for permanent residence and villas,
providing tourist accommodation of a type and nature
commensurate with internationally accepted standards
required of luxury tourist accommodation provided that the
Lessee shall not construct and operate any private homes
for permanent residence or villas until at least 114 hotel
rooms shall have been completed and are
operational.__________________________________________
(6) Not to use or permit or suffer the demised premises or any
part thereof, or any building or part thereof for the time
being thereon to be used otherwise than as a luxury resort
complex, and for purposes ancillary thereto (as defined in
sub clause (20)(c)(i) of this clause) and not to do, permit
or suffer anything to be done upon any part of the demised
premises which may be or may become a nuisance or annoyance
or cause damage or inconvenience to the tenants or
occupiers of adjoining premises;
Provided that the Lessee shall not be in breach of this
covenant by reason only of building or construction works
properly carried out in accordance with the Lessee's
covenants contained in sub-clause (4) of this
clause.________________________________________________
(7) Not to use or suffer or permit the use of any part of the
demised premises or any building for the time being thereon
for any illegal or immoral purpose.__________________________
(8) Not to install in or erect on or attach to the demised
premises or any part thereof or building thereon any
television satellite reception device or any television
broadcast or cable transmission
<PAGE>
4
equipment without the prior written consent of the Crown
which consent if granted may be granted subject to such
conditions as to the Crown may seem fit.____________________
(9) To permit the duly authorized agents of the Crown with or
without workmen and others to enter upon the demised
premises or any part thereof or any building for the time
being erected thereon at any reasonable time to examine the
condition thereof and to ascertain that there has been or
has not been any breach or non-compliance by the Lessee of
or with the several covenants herein
contained._____________________________________________
(10) At all times during the said term to keep all buildings or
erections which may be upon the demised premises insured
from loss or damage by fire, flood, hurricane and all other
usual insurable risks in some insurance office approved by
the Crown to the full value thereof from time to time
together with two years minimum rent as reserved in the
Second Part of the Schedule hereto and to notify the
insurance off ice of the Crown's interest in the policy as
a beneficiary and to make all payment's necessary for the
above purposes immediately the same shall become payable
and to produce to the Crown on demand the several policies
of such insurance and the receipts for every such
payment._____________________________________
(11) As often as the buildings or erections on the demised
premises shall be destroyed or damaged as aforesaid
forthwith to rebuild and reinstate the same to the
satisfaction of the Crown it being hereby agreed that all
monies to be received by virtue of any such insurance as
aforesaid (save monies received in respect of loss or rent)
shall be applied in rebuilding and reinstating the said
buildings or erections and in case the said monies shall be
insufficient for that purpose the Lessee shall make up any
deficiency out of its own money: PROVIDED that if the
rebuilding or reinstatement of the buildings or any part
thereof shall be frustrated all the insurance monies
relating thereto shall be shared as may be agreed between
the Crown and the Lessee in proportion with their
respective loss: PROVIDED FURTHER that where by reason of
damage or destruction to the demised premises by hurricane
or flood or other similar natural phenomena it
<PAGE>
5
is impracticable to rebuild or reinstate any building or
erection on its former site the Lessee may choose a new
site or make such modifications for any such building or
erection as may be requisite subject to planning permits
and building permits being granted by the appropriate
authorities.___________________________________________
(12) Not to erect on the demised premises any building within
one hundred feet of the seaward boundary of the demised
premises and not to prevent, hinder or obstruct the access
of all persons at all times over and along the land between
the seaward boundary of the demised premises and the sea,
on the said plan marked `A' to allow such access as
aforesaid over a space of land not less than six feet in
width from the seaward boundary of the demised
premises._______________
(13) To keep and maintain the demised premises and any buildings
for the time being erected thereon and all sanitary and
water apparatus in or under the premises and appertaining
thereto in good and substantial repair and
condition._____________________________________________
(14) Not to cut down, lop, fell or up-root any timber or other
trees without the prior written consent of the
Crown._________________________________________________
(15) To keep the demised premises clean tidy and in proper
condition and not to suffer or permit the accumulation
of any rubbish or filth thereupon;
Provided always that the Lessee shall not be in breach of
this covenant by reason only of the proper carrying out on
the demised premises of the development works described in
subclause (4) of this clause.__ ___________________________
(16) Not to discharge or suffer or permit the discharge of any
sewage, waste or noxious or polluting matter in to the sea
or the ponds on the demised premises or adjacent to the
demised premises._____
(17) In the execution of the development works to conform at all
times at its own expense to all provisions of any written
law for the time being which is applicable thereto and in
particular to
<PAGE>
6
obtain the permissions required under the Building
Ordinance (Cap. 284) and Building Regulations made
thereunder, The Land Development Control Ordinance and
Regulations made thereunder or any statutory modification
or reenactment thereof prior to commencement of any of the
development works on the demised premises.___________________
(18) To remove any building, erection or works made otherwise
than under and in accordance with the provisions of this
Lease or without prior written consent of the Crown and to
make good all damage caused by such removal and to restore
all parts of the demised premises affected thereby to a
good and tenantable condition._______________________________
(19) Not to do or suffer or permit to be done on or in
connection with the demised premises anything which may be
in contravention of any provision of any written law
relating to planning or to the development of
land.__________________________________________________
(20) (a) Not to transfer or assign this Lease without the prior
written consent of the Crown, which consent shall not
be unreasonably withheld.______________________________
(b) Not to encumber the demised premises by way of charge,
mortgage, debenture or otherwise without the prior
written consent of the Crown._________________________
(c) Not to underlet or part with possession of the demised
premised or any part thereof save to the extent of -
(i) a sublease or license of a building or part thereof
to a person or company not requiring an Aliens Land
Holding License or (with the prior written consent
of the Crown) to a person requiring an Aliens Land
Holding License, for a term or terms (including any
option for renewal) which does not exceed in the
aggregate twenty one years for use for a purpose
ancillary to the operation on the demised premises
of a luxury resort complex: and for the avoidance
of doubt it is hereby declared and agreed that
retail shops (other than food and
<PAGE>
7
liquor) sporting facilities and restaurant or
catering facilities intended for use by persons who
are guests or visitors of or to the demised
premises are purposes ancillary to the use of the
demised premises as aforesaid: PROVIDED always
that no such sublease or license shall be granted
in respect of any building or a part thereof which
is used or intended to be used for the
accommodation of guests: or
(ii) a sublease or license in relation to a completed
building or a part thereof as it relates to villas
(except any part of Phase I which will be used and
managed solely as a hotel and an integral part of
the luxury resort complex) which are used or
intended to be used for the accommodation of guests
provided that any such subletting or license shall
be subject to an agreement or arrangement
enforceable in law by the Lessee against the
sublessee or licensee that the part of the demised
premises concerned shall be available as
commercially let holiday or vacation accommodation
to persons other than the sublessee or licensee for
not less than ten months in each period of twelve
months following the commencement of the sublease
or license and that the parts of the demised
premises concerned shall be used and managed as an
integral part of the luxury resort complex and
provided further that the two months in which the
part of the demised premises is not available as
commercially let holiday or vacation accommodation
under this paragraph shall comprise one month in
the period May to November and one month in the
period December to April in each year: and provided
further that this sub-clause shall not apply to any
units constructed as private homes for permanent
residence as provided for in Phase 4 of the Third
Part of the Schedule._______________________________
<PAGE>
8
(21) On the expiration or earlier determination of the said term
peaceably to yield up to the Crown the demised premises
together with the buildings and erections thereon in
tenantable repair and condition in accordance with the
Lessee's covenants herein contained.______________________
(22) To charge all guests staying at the demised premises a full
and proper rate for their accommodation and to keep proper
accounts thereof and otherwise to act in accordance with
the provisions of the Accommodation Tax Ordinance 1973 or
any statutory modification or re-enactment of the
same.__________________________________________________
Crown's 3. The Crown hereby covenants with the Lessee as follows -
Covenants (1) That the Lessee paying the rents reserved and performing
and observing the covenants on the part of the Lessee and
the conditions herein contained shall peacefully hold and
enjoy the demised premises during the term hereby granted
without any interruption or disturbance by the Crown or any
person rightfully claiming under or in trust for the
Crown.____________________
(2) If the Lessee by reason of any act or omission shall cease
to be such then any assignee or sublessee of the Lessee may
remain in possession upon compliance with the terms of its
assignment or sublease including payment of rents provided
therein directly to the Crown:
Provided always that any assignee or sublessee agrees to
attorn to the Crown.________________
(3) That the Lessee paying the rents reserved and performing
and observing the covenants on the part of the Lessee and
the conditions herein contained the Crown will not
willfully do anything whereby the trade or goodwill of the
luxury resort complex shall be materially injured._________
(4) The Government shall indemnify, defend and hold the Lessee
harmless from and against any and all costs, expenses
(including, without limitation, attorney's fees and
disbursements) and damages arising out of any claims that
may be brought of any person or company in relation to the
existing buildings or otherwise on the demised premises and
in relation to any interest such
<PAGE>
9
person may have had or has up to the moment of execution of
this Lease Agreement in relation to any project previously
associated with demised premises.
Provisos 4. Provided always and it is hereby agreed and declared as follows:
Crown's (1) IF:
right to (a) the rents hereby reserved or any part of them shall
remain unpaid for sixty days after the
re-enter same shall have become due (whether formally demanded
or not): or
(b) the Lessee shall fail to perform and observe or
diligently pursue any of the covenants herein contained
and on the Lessee's part to be performed and observed
or fail to remedy the breach of any of the said
covenants within two months after receipt of notice in
writing to that effect: or
(c) the Lessee, being a company shall enter into
liquidation whether compulsory or not (except for the
purpose of amalgamation or reconstruction) or being an
individual shall become bankrupt: or
(d) the Lessee shall enter into an arrangement or
composition with its creditors or suffer any distress
or execution to be levied on its goods on the demised
premises:
then and in any such case it shall be lawful for the Crown
at any time thereafter (but subject always to the
provisions of sections 56 and 57 of the Registered Land
Ordinance) to enter upon the demised premises or any part
thereof in the name of the whole and take possession of the
demised premises and all buildings works or erections on
the demised premises and all chattels building materials
plant and other equipment thereon (other than the property
of any independent contractor engage in works of
construction) with power to hold and dispose of the same as
absolute owners and thereupon this demise shall absolutely
determine but without prejudice to
<PAGE>
10
the right of action of the Crown in respect of any arrears
of rent or any breach of covenant.__________________________
(2) Any notice of determination or any other notice required to
be given by the Crown shall (so long as the reversion
immediately expectant on the term hereby created shall
remain vested in the Crown) be given either under the hand
of the Governor of Anguilla or the Attorney General of the
Government of Anguilla for the time being and shall be
sufficiently served if sent by registered post addressed to
the Lessee at its registered office and any notice required
to be given by the Lessee shall be sufficiently served if
handed to the Attorney General or if sent by registered
post to the Attorney General at his last known office
address._____________________
(3) If the Lessee shall be in breach of the covenant on its
part to be performed and observed as set out in clause 2(4)
hereof there shall be payable to the Crown as liquidated
damages and in respect each breach of the covenant as
aforesaid the sum of one hundred dollars United States
currency for each day upon which any such breach of
covenant as aforesaid shall continue provided however that
any action taken by the crown pursuant to the provisions
hereto shall be without prejudice to the Crown's rights in
relations to any conditions imposed under an Aliens Land
Holding License granted to the Lessee in connection
herewith and the rights of the Crown thereunder with
respect to any breaches of conditions and the Crown's
remedies thereunder in accordance with the provisions of
the Alien Landholding Regulation Ordinance.______________
Arbi- 6. Any dispute or difference between the parties hereto arising
under or in connection with this Lease shall
tration be arising under or in connection with this Lease shall be
referred to arbitration in accordance with the law for the time
being of England, but any such arbitration shall be heard and
determined in Anguilla.___
<PAGE>
11
Nation- 7. In the event that any part or the whole of the demised premises
or any buildings thereon or any property of
alisation the Lessee shall be compulsorily acquired or in any other
manner expropriated or acquired by the Crown the Crown shall
make prompt payment of adequate compensation therefore in
United States Currency or in such other form as may be agreed
between the parties._______________________________________
Execut- 8. This Lease shall be executed with two counterparts.______________
ion
Margin 9. The marginal notes hereto and the headings in the Schedule
hereto shall not affect the construction of this
Agreement.__________________________________________________
IN WITNESS whereof the said Brian George John Canty has set his
hand and seal on behalf of the Crown and the common seal of
Casablanca Resorts Development of Anguilla Limited has been
affixed as authorized in manner requisite by law the day and
year first before written.
Signed Sealed and Delivered
by BRIAN GEORGE JOHN CANTY /S/____________________ Signature
Governor
In the Presence of: /S/____________________
(name of witness)
SEAL
<PAGE>
12
Signed Sealed and Delivered
by Casablanca Resorts Development
of Anguilla Limited /S/______________________
Signature of Director
/S/______________________
Signature of Secretary
SEAL
<PAGE>
13
THE SCHEDULE
FIRST PART
(Demised Premises)
SECTION: BLOCK NO: PARCEL NOS. AREA
West Central 28110 B Part of 21 37 acres
SECOND PART
(Rents)
1. The rents payable for the demised premises shall be: US$1,000 per acre
per annum for the first five (5) years; US$1,500 per acre per annum for
years 6-15 and thereafter the rent shall increase by US$500 per acre per
annum in the next ten year period and in each successive ten year period
thereafter up to a maximum of US$3,500 per acre, and the rental for the
first five years shall be paid in advance being the sum of US$185,000;
the sum of $55,000 ($185,000 - 130,000) being paid at the execution
hereof (and receipt of the total sum of $185,000 whereof is hereby
acknowledged) and thereafter the rent shall be paid yearly in advance at
the rate set out above on or before the anniversary date in each and
every year.
2. For the purpose of this Part of this Schedule the expression re-claimed
includes the carrying out of any works which render any land useable for
a commercial purpose and includes but shall not be limited to dredging
landfilling or the construction of any building or other erection in on
or above any land.
<PAGE>
14
THIRD PART
(Development Works)
PART A PRELIMINARY
1. The Lessee shall carry out the building construction or development
works described in this Schedule in accordance with the Scheme herein
described.
2. The development shall be carried out in four separate Phases.
3. Phases I to IV (inclusive) are referred to in this Schedule as "the
Merrywing development" and shall be carried out in accordance in all
respects with the provisions of this Schedule.
4. Subject to the exercise of his option under Phase IV of Part B of this
Part the Lessee shall not be obliged to construct more than an aggregate
of one hundred and fourteen guest rooms on the demised premises.
5. The Lessee shall notify the Crown in writing of the date of the actual
commencement of work on each Phase of the development and the date of
completion of the work on each Phase.
PART B THE MERRYWING DEVELOPMENT
6. The Lessee shall commence the building and development on the demised
premises and shall continue until the same is completed and ready for
use and occupation in all respects in accordance with the plans drawings
and site layouts previously approved by the Crown, and further in all
respects in accordance with the provisions of this Part of this Schedule
and at the times and manner herein provided and development shall be in
accordance with the following Phases:
<PAGE>
15
PHASE I
COMMENCEMENT: within three months of the date of this Lease.
COMPLETION: within 15 months from the date of signing of this
Lease.
DEVELOPMENT WORKS: - 42 Hotel Rooms
- Restaurant
- Hotel Lobby
- Beauty Salon
- Boutique
- Laundry & Storage Facility
- Management Offices
PHASE II
COMMENCEMENT: within six months of completion of Phase I
COMPLETION: within eighteen (18) months of commencement of
this phase.
DEVELOPMENT - Swimming Pool
- Tennis Courts (2)
- 42 Hotel Rooms
- Meeting Rooms
- Ancillary Works
- Second Restaurant (if circumstances justify)
- Bar
<PAGE>
16
PHASE III
COMMENCEMENT: within six months of completion of Phase II.
COMPLETION: within two years after commencement of this phase.
DEVELOPMENT: - 30 Hotel Rooms
PHASE IV
COMMENCEMENT: This Phase shall be optional at the instance of
the Lessee, provided that such option is exercised
by the Lessee within (18) eighteen months of the
completion of Phase III.
COMPLETION: Within two years after commencement of this Phase
if said option is exercised.
DEVELOPMENT: - Villas
- Private homes for permanent Residence - Number
of Units - as determined by the Lessee and
approved by the Government provided that all
necessary building and planning permission is
obtained from the relevant authorities.
<PAGE>
EXHIBIT 10.5
<PAGE>
GOVERNMENT OF ANGUILLA
OFFICE OF THE CHIEF MINISTER AND MINISTER OF HOME AFFAIRS
Telephone: (809) 497-2518/3518/2451
Telegram: ANGGOVT The Secretariat,
Telex: 9313 ANGGOVT The Valley, Anguilla,
Fax: (809) 497-3389 British West Indies.
Our Ref: LAN/25/627/SON
Your Ref:
27 November 1995
Mr. Thomas WR Astaphan
Moore, Astaphan & Kelsick
Solicitors
Chambers
P. O. Box 350
Caribbean Commercial Centre
The Valley
Anguilla
Dear Mr. Astaphan,
APPLICATION FOR ISSUE OF LICENCE UNDER THE ALIENS LAND HOLDING REGULATIONS
ORDINANCE 1976 - SONESTA HOTELS OF ANGUILLA LTD
1. I refer to your letters dated 23 October, 1995 and 13 November
1995 and to the Chief Minister's Memorandum to Mr. Peter Sonnabend dated
22 November, 1995, in relation to the grant of an Aliens Land Holding
Licence to Sonesta Hotels of Anguilla Limited to own the leasehold
interest in Block No. 28110B, and Block No. 28009B, Parcel numbers 38/1
and 2/2, being a total of 49 acres, for tourism development purposes.
2. Further to the Chief Minister's Memorandum under reference, I
advise that Executive Council has agreed as follows:
(a) permission should be granted to Casablanca to transfer or
assign the lease;
(b) Sonesta should be granted an Aliens Land Holding Licence to
own the leasehold interest in the land for the remaining
years of the lease (approximately 95 years);
(c) Sonesta may use the land as collateral for mortgage
financing to further develop the hotel in accordance with
clause 20 of the lease;
(d) On the transfer or assignment to Sonesta of the Lease dated
23 September 1991 between the Crown (1) and Casablanca
Resorts Development of Anguilla Limited (2) the following
shall apply:
(i) With regard to the covenants at sub-clauses 2(1) and
2(2) of the Lease, Sonesta shall not be held liable for
any breaches prior to the date of transfer or
assignment.
<PAGE>
(ii) With regard to any of the other covenants in the Lease,
Sonesta shall not be held liable for any damages
resulting from breaches of covenants prior to the date
of transfer or assignment, but Sonesta shall be
required to make good any breaches of covenants
discovered following the transfer or assignment, unless
the said requirement is expressly waived by the Lessor;
(iii) Sonesta shall be required to bring immediately to
the Lessor's attention any prior breaches of covenant
discovered after the transfer or assignment.
(iv) Any waiver granted shall be personal to Sonesta and
shall not be capable of being transferred or assigned.
(e) Sonesta should complete Phase III of the development under
the lease by December 31, 1998;
(f) negotiation in respect of Phase IV of the development under
the lease should be completed by January 1997;
(g) Government will grant permission to Sonesta to sublet an
acre of land to Mr. and Mrs. Alsultany for the construction
of their residence subject to Council approving the site;
(h) the 10% stamp duly under the Aliens Land Holding Regulations
Ordinance should be paid at the time of issue of the
licence;
(i) duty free concessions will be allowed for Phase III up to
December 31, 1998. Any further requests for duty free
exemption will be considered in the context of Government's
normal policy;
(j) Lands and Surveys is requested to advise Council on how
adequate access to the beach, including signs and parking
facilities can be secured.
3. The Stamp duties to be paid at the time of issue of the Licence
are as follows:
(a) Under the Stamp Act 0.05%
of EC$9,855,000.00 x 95 years = EC$ 468,112.50
(b) Under the Aliens Land Holding
Regulations Ordinance 10% of
EC$9,855,000 = EC$ 985,500.00
Total = EC$1,453,612.50
4. You will be notified as soon as your client's licence is ready
for issue.
Sincerely,
/S/
Allister Richardson
Permanent Secretary, Chief Minister's Office
cc: Accountant General
Director Lands and Surveys
<PAGE>
EXHIBIT 10.6
<PAGE>
1
SONESTA HOTELS OF ANGUILLA, LIMITED
Incorporated under the Companies Act 1994
No 1 USD4,990,000.00
Date: .................................
DEBENTURE
Issued under the authority of the Company's Articles of
Association and the By-Laws of the Company and pursuant to a
Resolution of the Directors dated the .................. day of
..................... 1995.
1. BORROWER & PRINCIPAL AMOUNT
SONESTA HOTELS OF ANGUILLA, LIMITED, having its Registered
Office at P.O. Box 350, The Valley, in the island of
Anguilla in the British West Indies (hereinafter called "the
Company") for value received acknowledges itself indebted
and covenants to pay to SCOTIABANK ANGUILLA LIMITED, The
Valley, in the Island of Anguilla (hereinafter called "the
Debenture Holder", whose expression shall where the context
so admits include its assigns), in the manner hereinafter
set out, the sum of FOUR MILLION NINE HUNDRED NINETY
THOUSAND Dollars United States Currency (USD4,990,000.00)
(hereinafter referred to as the ("principal") and or such
other sums including overdraft and or demand note as shall
then be outstanding on that date. The loans will be broken
down as follows:-
(a) USD500,000.00 Operating Overdraft Loan Facility
(b) USD4,990,000.00 Non-Revolving Loan
(c) Such sums advanced to the borrower by way of overdraft
or demand note from time to time that are due and owing
within 60 days of demand.
<PAGE>
2
2. INTEREST RATE
The Borrower hereby covenants with the Bank to pay interest
on the principal amount of the non-revolving loan or on so
much thereof as shall from time to time remain outstanding
hereunder at the rate which is 2.25% percentum per annum
over the 30, 60, or 90 day (Borrower's option) London Inter-
Bank Offer Rate (LIBOR). Interest is payable monthly, net
of any withholding tax.
The Borrower hereby covenants with the Bank to pay interest
on the fluctuating operating facility or on so much thereof
as shall from time to time remain outstanding hereunder at
the rate which is 1% over the Bank of Nova Scotia's Base
Rate for loans in US dollars. Interest is payable monthly
on the 22nd day of each month, unless otherwise stipulated
by the Bank, and calculated on a daily basis, net of any
withholding tax.
Interest on overdue interest shall be calculated at the same
rate as interest on the loans/advances in respect of which
interest is overdue, but shall be compounded monthly and be
payable on demand, both before and after demand and
judgment.
3. REPAYMENT
There is no fixed repayment arrangement on the Operating
facility rather the facility will fluctuate from deposits
made to the account with the facility subject to periodic
and/or annual review.
The Non-revolving loan will be repaid by 8 semi-annual
installments with a balloon payment as follows:
DATE AMOUNT
---- ------
March 1, 1996 $ 150,000.00
September 1, 1996 $ 150,000.00
March 1, 1997 $ 200,000.00
September 1, 1997 $ 225,000.00
March 1, 1998 $ 275,000.00
<PAGE>
3
September 1, 1998 $ 275,000.00
March 1, 1999 $ 275,000.00
September 1, 1999 $ 275,000.00
March 1, 2000 $3,165,000.00
The foregoing principal payments are to be supplemented
annually by application of 25% of Excess Cash Flow after
debt service as evidenced by audited year end financial
statements, with such payment to be made within 120 days of
each fiscal year end and applied to the loan in inverse
order of maturity. Excess Cash Flow is defined as net
income plus depreciation and amortization, plus
disbursements of any kind to officers, affiliates or non-
arms length parties, less interest paid on all Bank loans,
less principal paid on Bank term loans, less furniture,
fixtures and equipment ("FF&E") reserve to a maximum 5% of
gross revenues, and Management Fees, and all other amounts
payable under the Management Contract (to affiliates and
other related companies), all calculated on an annual basis.
Permission from the Bank to increase the maximum allowable
FF&E reserve will not be unreasonably withheld.
4. SECURITY
As security for the payment of the principal and interest and for
the due and timely performance of the obligations of the Borrower
hereunder and as security for the payment by the Borrower of all
legal costs and other expenses without limitation incurred by the
Bank, including without limiting the generality all
client/solicitor costs in connection with a default of the
Borrower herein, this Debenture and or Legal Mortgage, shall be
security for the obligations of the borrower owed to the Bank
hereunder or under any other agreement entered into between the
Borrower and the Bank and in addition to any other security now
or hereafter held by the Bank, the Borrower:
a) hereby grants and conveys to the Bank by way of a floating
and fixed Charge against all the assets of the Borrower
comprising that certain property commonly known as Sonesta
Beach Resort of Anguilla (hereinafter called "the Property")
including any buildings now or hereafter erected by the
Borrower and
<PAGE>
4
all fixtures, plans and machinery now or hereafter affixed
hereto in relation to the property or the
charged property as the case may be;
b) hereby assigns unto the Bank all the plant machinery,
equipment furniture and furnishings personal property and
chattels situate upon the Property including without
limitation leases of personal property to the value of
USD10,000.00 per annum approved by the Bank as shall from
time to time during the continuance of this security be
brought onto the sale and appropriated to the use thereof
either in addition to or in substitution for the existing
plant machinery, equipment furnishings and fittings and the
benefit of all licenses held by the Borrower in connection
therewith TO HOLD the same unto and to the use of the Bank
absolutely SUBJECT to the Debenture and also SUBJECT to the
proviso for redemption hereinafter contained;
c) charges with the moneys secured hereby by way of fixed
charge its undertaking and all of its remaining real and or
leasehold property Inventory if any and equipment whatsoever
and wheresoever both present and future including but
without limiting the generality of the foregoing, its
goodwill, trade marks excluding the trade mark "Sonesta",
materials, supplies, inventories, revenues, incomes and
sources of money, money rights, powers, privileges,
franchises, benefits, Immunities, contracts, rights to and
under insurance policies, agreements, bookdebts, accounts
receivable, negotiable and non-negotiable instruments,
judgments, securities, choses in action and possession and
all other property and things of every nature and kind,
tangible or intangible, legal or equitable, which the
Borrower may be possessed of, entitled to, or which may
hereafter constitute the Property or any part thereof and by
way of floating charge hereby charges all other assets of
the Borrower of whatsoever kind the same might be and
wheresoever situate.
d) A guarantee of Sonesta International Hotels
Corporation("SIHC") for US$1,000,000.00 supported by all
necessary resolutions. The guarantee will reduce to
US$500,000.00 upon the Borrower achieving an excess cash
flow to provide a debt service ratio of not less than 1.25
to 1 in a year in which payments of principal are made.
<PAGE>
5
e) A registered caution over land detailed in Schedule "A"
together with a letter from the company not to encumber this
asset.
All of the above mentioned assets whether mortgaged or charged by
way of specific or floating charge, are hereinafter sometimes
referred to as the "charged property".
5. PROVISO FOR REDEMPTION
PROVIDED ALWAYS AND IT IS HEREBY EXPRESSLY AGREED AND
DECLARED that if the Borrower shall repay to the Bank the
total principal sum advanced hereunder and all other moneys
which shall become payable hereunder together with all
interest due thereon and all other costs and fees then and
in such case the Bank shall at the expense of the Borrower
execute and do all such acts and deeds as may be necessary
to reconvey the Property to the Borrower and release the
fixed and floating charges hereby created.
6. BORROWER'S COVENANTS
a) The Borrower covenants to and with the Bank that the
Borrower will:-
i.) pay the principal and interest owed by the
Borrower to the Bank and observe the terms set out
herein to be observed by the Borrower;
ii) execute a contract to manage the hotel, in form
and substance acceptable to the Bank, with a
management entity acceptable to the Bank;
iii) provide its written acknowledgment that the
management contract may be terminated by the Bank
at its sole option, without penalty in the event
of default by the Borrower under the terms of the
loan documents and the Bank having instituted
proceedings to realize on its security. The Bank
would consider any default to be cured by the
Borrower or
<PAGE>
6
Guarantor if the same is remedied
within 30 days of notice to the Borrower and
Guarantor;
iv) ensure that all approvals from the Government of
Anguilla to won land and operate the hotel are in
place;
v) insure that the buildings and other assets hereof
with coverage to include windstorm and loss of
business to the amount of their full replacement
value in lawful money of the United States of
America and will make all losses payable under
such policy in favor of the Bank as more
particularly set forth herein and provide proof to
the bank that the insurance premium has been paid;
vi) at all times during the continuance of the
Debenture, Legal Mortgage charge and security
interest keep up, maintain and preserve all of the
assets and property of the Borrower in good,
substantial and merchantable condition, subject to
ordinary wear and tear, and without delay and in a
good and workmanlike manner to the Bank's
satisfaction complete any buildings in the course
of erection on the property hereby charged;
vii) maintain a FF&E replacement reserve requirement
equal to a minimum 3%;
viii) not to part with or remove any property of
the Borrower where the same is generally kept
except in the ordinary course of business and as
provided for herein;
ix) not to transfer, lease let or hire or part with
possession or create or suffer to be created any
Debenture, Legal Mortgage, charge, security
interest or lien or make any assignment on the
Charged Property without the consent in writing of
the Bank;
<PAGE>
7
x) not to sell or otherwise dispose of the whole or
any substantial part of its undertaking without
consent of the Bank in writing, and such consent
may not specifically be unreasonably withheld;
xi) comply with each and every one of its obligations,
warranties, representations, covenants, terms and
agreements to be complied with herein;
xii) to carry on and continue to conduct its business
in an efficient manner and to maintain and repair
and keep in repair and in good working order and
condition its building, plant, machinery,
equipment, goods and chattels which in any way
form part of the charged property (ordinary wear
and tear excepted);
xiii) to permit the Bank by its officers or
authorized agents at any time and from time to
time to enter the Borrower's premises and to
inspect its building, plant, machinery and
equipment and the operation thereof;
xiv) to keep proper books of account and records
covering all its business and affairs and to
permit the Bank by its officer or authorized
agents from time to time during normal business
hours to inspect the Borrower's books of accounts
and records and to make extracts therefrom;
xv) at all times during the existence of this
Debenture conduct all its banking accounts
including those for credit card sales (wherever
possible) with Scotiabank Anguilla Limited subject
to the pricing being competitive;
xvi) Provide the bank with audited financial statements
of the Borrower and SIHC no later than 120 days
following each fiscal year end;
xvii) Provide the bank with Quarterly in house
financial statements of the Borrower and
subsidiaries within 45 days of the period end;
<PAGE>
8
xviii) Provide the bank with Profit and Loss
projections for the then current year within 45
days after they year end of the preceding year:
xix) Provide the bank with evidence satisfactory to the
Bank annually, concurrently with the Borrower's
financial statements or at such other time as may
be agreed with the Bank, that all property taxes
and other taxes, including gross receipts taxes
due and payable have been paid or arrangements
made for their payment, and that all employee
deductions have been remitted to the Government as
required.
xx) if the introduction of, or any change in, or in
the interpretation of, or any change in its
application to the Borrower of, any law or
regulation, or compliance with any guideline from
any central Bank or other governmental authority
(whether or not having the force of law) has the
effect of increasing the cost to the Bank of
performing its obligations hereinbefore or
hereunder or otherwise reducing its effective
return or on its capital allocated in support of
the credit(s), then upon demand from time to time
the Borrower shall compensate the bank for such
cost or reduction pursuant to a certificate
reasonably prepared by the Bank.
a) In the event of the Borrower becoming liable
for such costs, the Borrower shall have the
right to cancel without fee all or any
unutilized portion of the affected credit
(other than any portion in respect of which
the Borrower has requested utilization of the
credit in which case cancellation may be
effected upon indemnification of the Bank for
any costs incurred by the Bank thereby), and
to prepay, without fee the outstanding
principal balance thereunder other than the
face amount of any document or instrument
issued or accepted by the Bank for the
account of the Borrower, such as a Letter of
Credit, a Guarantee or a Banker's Acceptance.
<PAGE>
9
b) If any prepayment is made, for any reason, of
an advance bearing a fixed rate of interest,
including without limitation a LIBOR advance,
the Borrower shall compensate the Bank for
the cost of any early termination of its
funding arrangements in accordance with its
normal practices, such costs to be notified
too the Borrower in a certificate reasonably
prepared by the Bank.
a) The Borrower covenants to and with the Bank that:-
i) on default the Bank shall have quiet possession of
the real Property hereof free from all
Encumbrances except those Encumbrances which the
Borrower has disclosed to the Bank in writing and
the Bank has approved of in writing:
ii) the Borrower shall not encumber the Property
referred to in Schedule "A" hereof which has not
been disclosed to the Bank in writing and shall
not encumber the Property if any, without the
prior consent in writing of the Bank first being
had and which consent may not be unreasonably
withheld;
iii) the Borrower does hereby release to the Bank all
of its claims upon all its Property, now or in the
future subject to the said proviso;
iv) the provisos and covenants contained in this
subparagraph shall apply with the necessary
changes to all the real property and or leasehold
Interests present or future of the Borrower
included in the charged property;
v) the Bank may at any time register this Agreement,
notice of this Agreement, or such other documents
as it deems appropriate including debentures,
collateral legal mortgages or charges and legal
mortgages against the title to any Property
present or future of the Company and premises now
owned or which may be hereafter acquired by
<PAGE>
10
the Borrower in connection with any charged property
in the proper registry office and Public Records
Office without further written consent of the
Borrower. All collateral Legal Mortgages or
charges shall be deemed to contain the terms and
provisions of this Debenture, Legal Mortgage,
charge and security agreement;
vi) the Debenture, Legal Mortgage, security agreement
and charge hereby created shall have the effect of
and act as security whether or not the monies
hereby secured or any part thereof shall be
advanced before or after or upon the date of this
Agreement;
vii) Any waiver by either party of a breach of any part
of this Agreement caused by the other party will
not operate as or be interpreted as a waiver of
any other breach. The failure of a party to
insist on strict adherence to any term of the
Agreement on one or more occasions is not to be
considered to be a waiver of any of their rights
under this agreement or to deprive that party of
the right to insist upon strict adherence to that
term or any other term in the future. No waiver
shall be of any effect unless it is in writing and
authenticated by the waiving party.
7. SALE, RELEASE & PLEDGING OF SECURED PROPERTY
a) Without the written consent of the Bank, the Borrower shall not:
i) sell, transfer, convey, lease or otherwise dispose
of any secured property or any part thereof except
in the normal course of business;
ii) release, surrender or abandon possession of any
secured property or nay part thereof or grant any
leases, easements, rights of way or register or
permit registration of any restrictions on title
or other agreements on title except in the normal
course of business;
iii) move or transfer secured property from the
Property;
<PAGE>
11
iv) create, permit, assume, have outstanding, or
suffer to exist, any mortgage, charge, pledge,
assignment, lien, encumbrance, debenture, security
agreement or other security to rank in priority to
or pari passu with this Debenture, whether fixed
or floating on its undertaking property or assets
(excluding equipment leases for the leased
property) or any part thereof used in connection
with the Property now owned or hereinafter
acquired described in Schedule "A" hereof, or
pledge, assign or transfer any such assets as
security for leaseback. For the purposes of this
Agreement, the Agreement, the term "Encumbrance"
means any mortgage, pledge, lien, charge,
assignment, hypothecation, security interest,
title, retention agreement or other security
arrangement.
b) If the Borrower fails to perform any covenant,
undertaking, warranty, representation or agreement on
its part herein contained, then the Bank may in its
absolute discretion but without being bound to do so
perform any such covenant capable of being performed by
it and if any such covenant requires the payment or
expenditure of money or if any charged property shall
become subject to any lien, Encumbrances or charge
ranking in whole or in part in priority to this
Debenture, Legal Mortgage or any charge hereof, the
Bank may make such payment and/or pay or discharge the
said prior lien or such charge from its own funds, and
all sums so paid or expended by the Bank shall
immediately be payable by the Borrower to the Bank,
shall bear interest at the rate set forth in this
Agreement until paid and shall be secured hereby,
having the benefit of any charge hereby created in
priority to the principal and interest owing under this
Debenture, Legal Mortgage, charge and security
interest. No such performance or payment shall relieve
the Borrower from any default under this Debenture,
Legal Mortgage, charge or security interest or any
consequences of such default.
<PAGE>
12
8. EVENTS OF DEFAULT
The security hereby constituted shall be enforceable and be due:-
a) immediately on written demand by the Bank if the
Borrower fails to make when due, whether on demand or
at a fixed payment date, by acceleration or otherwise,
any payment of interest, principal, fee, commission or
any other monies payable to the Bank whether hereunder
or in any other agreement unless the failure results
only from the technical difficulties in the transfer of
funds and such failure is remedied within five (5)
business days of written notice;
b) immediately on written demand by the Bank if any order
in any jurisdiction is made or a resolution passed for
the winding-up, dissolution or liquidation of the
Borrower, or there is an order for reorganization under
any insolvency legislation affecting the Borrower in
any jurisdiction whatever and such order, resolution
etc. is not dismissed or stayed within 60 days of its
institution;
c) 30 days after written notice has been delivered to the
Borrower to remedy the defect, and which defect has not
been remedied within the said 30 days, in any of the
following events or upon the occurrence of a Demand
Event as provided for herein;
i) If the Borrower makes default in any covenant,
representation, warranty, undertaking or
obligation of the Borrower herein;
ii) If the Borrower makes default in any condition
contained herein, or in the event of the happening
or occurrence of a Demand Event (as herein
provided);
iii) If the Borrower becomes insolvent or makes an
authorized assignment in bankruptcy or bulk sale
of its assets or if bankruptcy petition is filed
or presented against the Borrower in any
jurisdiction;
<PAGE>
13
iv) If the Borrower takes any proceedings in respect
to liquidation of the assets of the Borrower;
v) If any execution, sequestration, extent or any
other process of any court becomes enforceable
against the Borrower or if a distress or analogous
process is levied against the property of the
Borrower or any part thereof;
vi) If the Borrower permits any debt which has been
admitted as due by the Borrower or is not disputed
to be due by it and which forms or is capable of
being made by security or charge upon any of the
property subject to a charge or charges created by
this Debenture, Legal Mortgage, charge or security
agreement in priority to a charge or charges
created by this Debenture, Legal Mortgage, charge
or security agreement to remain unpaid;
vii) If the Borrower commits or threatens to commit any
act of bankruptcy or is unable to pay its debts;
viii) If the Borrower makes a proposal under any
relevant bankruptcy or insolvency legislation or
takes any action in respect of the settlement of
any claims of its creditors under the provisions
of any bankruptcy or insolvency legislation;
ix) If the Borrower passes or purports to pass, or
takes or purports to take any proceedings to
enable it to take proceedings for its dissolution
or liquidation, or amalgamation, or if the
Borrower purports to sell, or sells all of its
undertaking or a substantial part or parts thereof
or sells any part thereof specifically prohibited
by this Agreement;
x) If a Receiver and/or Manager for all or any part
of the assets of the Borrower or any other person
with like powers as either a Receiver of Manager
is appointed;
xi) If the Borrower makes a default under the
provisions of any material instrument creating a
charge on assets of the Borrower relating to any
material secured property;
<PAGE>
14
xii) If the Borrower fails to pay taxes, rates, rentals
or other charges of a like nature whether
governmental or otherwise assessed or payable by
or against the Borrower in respect of any of the
secured property;
xiii) If the Borrower stops making payments in its
usual course of business or suspends or ceases to
carry on its operations or the construction of the
Project as herein provided, or any substantial
part thereof or threatens to cease to carry on the
same;
xiv) If there is a cancellation, non-renewal, or
suspension of any franchises, licenses or
trademarks or permits required by the Borrower for
the purpose of carrying on its business, or a
substantial part thereof;
xv) If the Borrower creates any Encumbrance upon any
present or future assets or revenues of the
Borrower or permits any liens or other charges,
mortgages, debentures or other encumbrances to be
registered on title to the Property;
xvi) If the Borrower fails to complete the Project in
accordance with the plans and specifications
approved in writing by the Government of Anguilla
and or the Bank;
xvii) A) If any guarantor for the Borrower in
respect of the loans secured herein becomes
insolvent or makes and unauthorized assignment in
bankruptcy or sale of its assets or if a
bankruptcy petition is filed or presented in any
jurisdiction against any such guarantor for the
Borrower:
a) If a Receiver and/or Manager for all or any
part of the assets of any guarantor for the
Borrower in respect of the loans secured
herein, or any other person with the like
powers as either a Receiver or Manager is
appointed.
<PAGE>
15
9. ENFORCEMENT
a) In the event of a default in the payment of principal
or interest owed by the Borrower to the Bank or upon
default of any of the representation, warranties,
covenants, conditions, undertakings or terms and
provisions herein made by the Borrower to the Bank,
then the balance of the principal and interest due by
the Borrower to the Bank shall immediately become due
and payable on demand by the bank at the option of the
Bank.
b) Without prejudice and in addition to the statutory
powers of the Bank as Mortgagee, at any time after the
happening of any event by which the security hereby
constituted becomes enforceable, the Bank shall have
the following rights and power:
i) to take possession of all or any part or parts of
the property and assets hereby charged with power
to exclude the Borrower, its agents and servants
therefrom;
ii) to preserve and maintain the property charged and
make such replacements thereof and additions
thereto as to the Bank shall deem judicious;
iii) to enjoy and exercise all powers necessary to the
performance of all functions provided for in this
Debenture, Legal Mortgage, charge and security
agreement, including but not limiting the
generality of the foregoing, the power to purchase
on credit, the power to borrow money in its own
name and to advance its own money to the Borrower
at such rates of interest as it may deem
reasonable;
iv) to sell, lease or concur in selling or leasing all
or any part of the secured property whether by
public auction or by private or lease in such
manners to it; may seem right, provided always
that it shall not be incumbent on the Borrower to
sell, lease or dispose of the said property but
that it shall and may be lawful for the Bank to
peaceably and quietly take, hold, use, occupy,
possess and enjoy the said property without
molestation,
<PAGE>
16
eviction, hindrance or interruption
by the Borrower or any other person or persons
whosoever, and to convey, transfer and assign to a
purchaser or purchasers the title any undertaking,
property and assets so sold;
v) to appoint by instrument any person or persons to
be a receiver or manager or receivers and managers
(hereinafter called the :Receiver:) of the
property and assets hereby charged and to remove
any receiver so appointed and appoint another or
others in his stead.
vi) for the purposes of enforcement of this Debenture,
security, charge and Legal Mortgage and for the
purposes of calculation of interest due hereunder,
all advances made by the Bank to the Borrower may
be combined and consolidated by the Bank in
accordance with its internal practice, whether
under this instrument or any other instrument or
loan.
10 POWERS OF RECEIVER
a) A Receiver and Manager so appointed shall be the agent
of the Borrower and shall have power:
i) to take possession of, collect and get in all or
any part of the property hereby charged and for
that purpose to take any proceedings in the name
of the Borrower or otherwise as may seem
expedient;
ii) to carry on or concur in carrying on the business
of the Borrower and with the consent of the Bank
to raise money from the Bank or others on the
security of any property hereby charged;
iii) to sell, call in, collect and convert into money
or let and to accept surrenders of leases or
tenancies of the property hereby charged or any of
it either by public auction or by tender or by
private contract with power to buy in at such
sale, by auction or to rescind or vary any
contract for sale and to resell without being
answerable for any loss or
<PAGE>
17
diminution in price and
to carry out such sale, calling in, collection and
conversion and such letting on such terms and
conditions and for such consideration as the Bank
shall thing fit and with liberty also to give
effectual receipts for the purchase money or the
proceeds thereof and to do all other acts and
things for completing any sale, calling in,
collection and conversion which the receiver may
think fit and without thereby becoming liable as a
mortgagee in possession;
iv) to make any arrangements or compromise which the
Bank or any receiver shall think expedient;
v) to make and effect all repairs, improvements and
insurances;
vi) to appoint Managers, Officers, Accountants,
Attorneys and Agents for the aforesaid purposes at
such salaries as the receiver may determine;
vii) to call up all or any portion of the uncalled
capital of the Borrower;
viii) to do all such other acts and things as may
be considered to be incidental or conducive to any
of the matters or powers aforesaid and which the
Receiver lawfully may or can do as Agent for the
Borrower AND the Borrower will do all acts and
things and will execute all such assurances,
assignments and instruments as the Receiver and
manager shall require the Borrower to do or
execute for the purpose of exercising or giving
effect to the exercise of the powers conferred on
the Receiver and Manager hereunder or any of them
and the Borrower hereby irrevocably appoints the
Bank to be the lawful Attorney of the Borrower to
do any act or thing and to execute and to exercise
all the powers of the Borrower in carrying out or
effecting any of the powers hereby conferred upon
the Receiver and Manager.
b) The powers hereinbefore contained are in addition to
and without prejudice to and not in substitution for
any other powers and remedies vested in the Bank as a
Debenture holder by
<PAGE>
18
statute or common law or equity for
recovering or enforcing payment of the moneys and
liabilities hereby secured and interest thereon.
11. APPLICATION OF MONEYS
a) The net profits of carrying on the said business and
the net proceeds of realization of the Borrower's
property shall be applied by the Bank or by the
Receiver subject to the claims, if any, of all secured
creditors of the Borrower including any claim of the
Receiver pursuant to this Agreement above, ranking in
priority to this Debenture, Legal Mortgage, charge and
security agreement:
i) Firstly, in payment of all reasonable costs,
charges and expenses of and incidental to the
appointment of the Receiver.
ii) Secondly, in payment of all reasonable costs,
charges and expenses of and incidental to the
exercise by the Receiver or the Bank of all or any
of the powers granted to them under this
Debenture, Legal Mortgage, charge and security
agreement including reasonable remuneration of the
Receiver or any agent or employee of the Receiver
and including reasonable remuneration of the Bank
or any agents or employees of the Bank and all
outgoings properly paid by the Receiver or the
Bank in exercising their powers as aforesaid;
iii) Thirdly, in or towards the payment to the Bank of
all monies due to it by the Borrower;
iv) Fourthly, any surplus shall be paid to the
Borrower.
b) The Bank shall not, nor shall the Receiver appointed by
it by reason of the Bank or such Receiver entering into
possession of the charged property or any part thereof,
be liable to account as mortgagee or chargee in
possession for anything except actual receipts or be
liable for any loss
<PAGE>
19
upon realization or for any default
or omission for which a mortgagee or chargee in
possession might be liable.
c) No purchaser, charger chargee or other person or
company dealing with the Bank or with the Receiver
appointed by it or with his, its, or their attorneys or
agents shall be concerned to inquire whether the powers
exercised or purported to be exercised have become
exercisable or whether any money remains due actually
or contingently on the security of this Agreement or as
to the necessity or expediency of the stipulations and
conditions subject to which any sale shall have been
made or otherwise as to the propriety or regularity of
such sale calling in collection or conversion or to see
to the application of any money paid to the Bank and in
the absence of mala fides on the part of such
purchaser, mortgagor, mortgagee or other person or
company such dealing shall be deemed so far as regards
the safety and protection of such purchaser, mortgagor,
mortgagee, person or company to be within the powers
hereby conferred and to be valid and effectual
accordingly.
12. PREPAYMENT
Prepayment is permitted in multiples of USD100,000.00 on
interest funding rollover dates. Any charges normally
applied by the Bank to cover losses incurred when
prepayments are made on other than rollover dates are for
the account of the Borrower.
13. RESPONSIBILITY FOR RECEIVER
Any Receiver appointed pursuant to the provisions of this
Agreement shall so far as it concerns responsibility for his
acts be deemed to be an agent of the Borrower and the Bank
shall not in any way be responsible for any misconduct or
negligence on the part of such Receiver, and the Borrower
hereby forever Irrevocably releases the Bank from such
claims whatsoever and howsoever arising.
<PAGE>
20
14. RESTRICTION ON BORROWER
Subject to the Borrowers rights under existing law, upon the
Borrower receiving notice from the Bank of the taking of
possession of the charged property, all the powers,
functions, rights and privileges of the Borrower with
respect to the business of the Borrower in relation to the
charged property shall ceases unless specifically continued
by the written consent of the Bank.
15. BANK APPOINTED ATTORNEY
In the event of an uncured Default, the Borrower hereby
irrevocably appoints the Bank to be the attorney of the
Borrower for and in the name and on behalf of the Borrower
to execute and do any deeds, documents, transfers, demands,
orders, assignments, conveyances, assurances, consents and
things which the Borrower ought to sign, execute and do
hereunder and generally to sue in the name of the Borrower
in the exercise of all or any of the powers hereby conferred
on the Bank and any receiver appointed with full powers of
substitution and revocation.
16. WAIVER BY BANK
The Bank may waive any breach by the Borrower of any of the
provisions contained in this Agreement or any default by the
Borrower in the observance or performance of any covenant or
condition required to be observed or performed by the
Borrower under the terms of this Agreement; provided always
that no act or omission by the Bank shall extend to or be
taken in any manner whatsoever to effect any subsequent
breach or default or the rights resulting therefrom.
17. SET-OFF EXPENSES AND ARREARS
a) Except in the event of an uncured Default after written
notice to the Borrower, in connection with any matter
relating to this Loan by the Bank to the Borrower, the
secured property or this Agreement, the Bank may obtain
the opinion or advice of or information and assistance
from any
<PAGE>
21
lawyer, accountant, surveyor, architect,
engineer, or other professional or expert personnel as
it may reasonably deem necessary both before and after
any money is advanced. The Bank may pay proper and
reasonable compensation for all such legal and other
advice or assistance obtained as aforesaid. The
Borrower shall repay to the Bank all such reasonable
expenses incurred.
b) The Borrower shall pay all reasonable costs, charges
and expenses of and incidental to the exercise by the
Receiver and/or the Bank of all or any of the powers
granted to them under this Agreement and shall also pay
the remuneration, accounts and fees of the receiver or
the Bank in exercising their powers.
c) All amounts referred to in the preceding sub-paragraphs
shall be payable on demand in lawful currency of the
United States of America together with interest at the
rate set forth in this Agreement from the date of
demand to the date of payment in priority to the amount
of the principal and Interest owing under this
Debenture, Legal Mortgage, charge and security
agreement.
d) If for the purposes of obtaining judgment in any court
it becomes necessary to convert into any currency any
amount in dollars of the United States of America due
hereunder, then the conversion shall be made at the
rate of exchange prevailing on the day before the day
on which the judgment is given. For this purpose "rate
of exchange" means the rate at which the creditor is
able on the relevant date to purchase dollars in
Anguilla for such currency. In the event there is a
change in the rate of exchange prevailing between the
day before the day in which the judgment is given and
the date of payment of the amount due, the Borrower
shall pay such additional amounts as may be necessary
to ensure that the amount paid on such date is the
amount in such other currency which, when converted at
the rate of exchange prevailing on the date of payment,
is the amount then due under this Debenture and Legal
Mortgage in Dollars in the said currency. Any Amount
due from the Borrower under this subclause will be due
as a separate debt and shall not be effected by
judgment being obtained for other sums due hereunder.
<PAGE>
22
e) The taking of a Judgment or Judgments on any covenant
or covenants herein contained shall not operate as a
merger on the said covenant or covenants or affect the
Bank's right to interest at the rate and time set forth
herein.
f) The Borrower shall pay all cost and expenses as between
solicitor and client incurred by the Bank of and
incidental to the preparation, stamping, registration
and completion of this security on the perfection of
the title of the Bank or in relation to any default
hereunder or protection, foreclosure, realization and
enforcement thereof or otherwise in relation thereto
and for the discharging of these presence.
18. INSURANCE
a) The Borrower shall insure and keep insured the charged
property against loss or damage by fire and other usual
perils, including the obligations set out hereunder to
the amount of not less than the full replacement value
of the charged property in lawful money of the United
States of America with companies reasonably acceptable
to the Bank, on an All Risks basis policy.
b) The Borrower shall insure itself and keep insured
against public liability for a reasonable amount
considering the nature of the business carried on by
the Borrower.
The insurance is to cover business interruption and
windstorm damage, in such amounts as are acceptable to the
Bank at all times. The insurers are to be acceptable to the
Bank and the policies together with all renewals thereof are
to be deposited with the Bank;
c) Subject to the terms of this Agreement and regarding
only insured losses after the date of this agreement,
the loss under all policies of insurance other than
public liability, if any, shall be payable to the Bank;
copies of all policies of insurance including renewals
shall be lodged with the Bank and the Borrower shall
pay all premiums as the same become due and payable in
respect of such insurance. The Borrower shall receive
no proceeds of insurance unless and until
<PAGE>
23
all loans from the Bank are repaid in full, or the Bank
otherwise consents, or this Debenture, Legal Mortgage,
charge, and security agreement or any instrument of variation
is discharged, not withstanding the foregoing the Bank
shall be deemed to have consented to insurance proceeds
up to USD100,000.00 being paid to the Borrower, for
application to any insured loss. The production of
this Agreement shall be sufficient authority for, and
the insurer is hereby irrevocably directed thereupon to
pay the loss, if any, to the Bank, provided that if the
Insurance is not effected or kept renewed, the Bank may
effect or renew such insurance and if default be made
in payment of the premiums or sums of money by the
Borrower, the Bank may pay the same and such sums of
money shall be added to the debt hereby secured and
shall bear interest at the same rate from the date of
such payment and shall be repayable with the moneys
next falling due under these presents.
19. DISCHARGE ON PAYMENT
If the Borrower shall pay or cause to be paid to the Bank
the money secured by this Agreement, then this Agreement and
the estate and the rights thereby granted shall cease and be
void and thereupon the Bank shall, at the request and at the
expense of the Borrower cancel and discharge this Debenture,
Legal Mortgage, charge and security agreement and execute
and deliver the Borrower such deeds or other instruments as
shall be requisite to release the Debenture, Legal Mortgage,
charge and security agreement hereby constituted.
This Debenture, Legal Mortgage, charge and security
agreement shall at the Borrower's expense be impressed in
the first instance with the stamp duty to cover a maximum
principal sum of USD4,990,000.00.
<PAGE>
24
20. RIGHTS CUMULATIVE
All rights and remedies of the Bank prescribed in this
Agreement shall be cumulative and nor remedy herein
conferred or reserved is intended to be exclusive but shall
be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute.
21. SECURITY ADDITIONAL AND CONTINUING
a) The security hereby constituted is in addition to and
not in substitution for any other security agreements
or obligations owed by the Borrower to the Bank now or
hereafter held by the Bank and this security shall not
merge in any other security now or hereafter held by
the Bank, and the security shall be deemed to be a
continuing security for the amount herein set out,
until all indebtedness due or obligations owed to the
Bank by the Borrower from time to time is paid in full.
b) To further secure the said lending to the Borrower, and
in addition to the security to be provided to the
Borrower, the Bank will take such collateral or
additional charges or securities hereto as may from
time to time be agreed to with the Borrower, such
collateral or security to be supplemental hereto and
upon such terms as the Bank shall require. All of the
provisions of this Debenture, Legal Mortgage, charge,
security agreement shall be and form part and be deemed
to form part of any such collateral charge, or
mortgage. The Banks hall have the right to tack and/or
consolidate this Debenture and all collateral mortgages
and charges at is will one behind the other.
c) This Agreement is additional security for loans by the
Bank to the Borrower.
<PAGE>
25
22. ADDITIONAL DOCUMENTS
a) The Borrower hereby covenants and agrees with the Bank
that it will at all times do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged or
delivered, all and every such further act, deeds, trust
indentures, Legal Mortgages, Debentures, transfers,
collateral charges and security agreements and
assurances in law as the Bank shall reasonably require
for the better assuring, mortgaging, assigning and
conferring unto the Bank all and singular the charge
property or intended so to be or which the Borrower may
hereafter become bound to mortgage and charge in favor
of the Bank for the better accomplishing and effecting
the intention of this Agreement;
b) The Borrower hereby declares and agrees that it
will henceforth hold the secured property as
Trustee for executing such Debenture as aforesaid
in favor of the Bank and the statutory power of
appointing a new Trustee in its place shall be
exercisable by the Bank which shall have full
power to make such appointment and to remove the
borrower from such Trusteeship at is sole and
unfettered will and pleasure notwithstanding that
none of the events referred to in the said
statutory power as conditions precedent to it
exercise shall have occurred and further that on
any such exercise of said statutory power the
party exercising the same may appoint itself to be
such new Trustee and that the Bank in
consideration of the premises and any Receiver
appointed by the Bank shall be and are hereby
irrevocably appointed by the Attorneys of the
Borrower in its name and on its behalf to vest the
legal estate in the secured property in any
purchaser or other person in exercise of the
statutory powers conferred on mortgagees freed and
discharged from all rights of redemption hereunder
and in the Borrower's name or in its own name and
on the Borrower's behalf and as the borrower's act
and deed or otherwise to sign, seal and deliver
and otherwise perfect any deed,
<PAGE>
26
assurance, agreement, instrument or act which may be
required or may be deemed proper for any of the purposes
aforesaid.
23. NOTICE
a) All notices, requests, demands or other communications
to or upon the respective parties hereto shall be give
in writing but in the manner (including telex,
telegram, cable or fax) which is the most practicable
in the circumstances having due regard to the
requirement that they be delivered as expeditiously as
possible;
b) All such notices, request, demands or other
communications:
i) to or upon the Bank shall be effective delivered
to the Bank at the following address:
Scotiabank Anguilla Limited
P.O. Box 250
The Valley, Anguilla
Attention: Managing Director
ii) to or upon the Borrower, shall be effective when
delivered to the Borrower at the following
address:
Sonesta Hotels of Anguilla, Limited
c/o Sonesta International Hotels Corporation
200 Clarendon Street
Boston, Massachusetts 02116
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27
U.S.A.
Fax: 1 617 421 5402
Attention: Office of the Treasurer
with copy to:
Mr. T W R Astaphan
P.O. Box 350
The Valley
Anguilla, West Indies
or to such other address as the relevant addressee
may hereafter specify for such purpose to the
other by notice in writing.
A notice, request, demand or other communication sent
by fax, shall only be regarded as received if
confirmation of receipt is requested and such
confirmation received.
24. GOVERNING LAW
This Debenture, Legal Mortgage, charge and security
agreement and any collateral or additional charges or
securities hereto shall be governed and construed solely
according to the Laws of Anguilla and the parties hereto
hereby submit themselves to the jurisdiction of the Eastern
Caribbean Supreme Court (Anguilla Circuit).
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28
The Bank expressly reserves the right to consolidate this
Debenture, Legal Mortgage, charge and security agreement
with any collateral or additional charges or securities
hereto notwithstanding any statutory provision to the
contrary.
25. BINDING EFFECT
This Agreement and all its provisions shall enure to the
benefit of the Bank, its successors and assigns and shall be
binding upon the Borrower, its successors and assigns.
26. The Borrower acknowledges having received a true copy of
this Debenture.
IN WITNESS WHEREOF the Borrower has caused its Common Seal to be
hereunto affixed.
SONESTA HOTELS OF ANGUILLA LIMITED
Per:
/s/ Seal
------------------------
The Common seal of Sonesta Hotels of Anguilla, Limited was
affixed hereto by the Director of the said company and the
said affixed his signature hereto on the day of
1995 in the presence:-
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29
SONESTA HOTELS OF ANGUILLA, LIMITED
Incorporated under the Companies Act, 1994
<PAGE>
30
Debenture No. 1
SCHEDULE A
Land to be registered as First Demand Mortgage Debenture:
WEST CENTRAL SECTION, BLOCK 28110 B, PARCEL 38/1
Land to be Cautioned:
WEST CENTRAL SECTION, BLOCK 28009 B, PARCEL 2/2
MEMORANDUM OF TRANSFER FOR INDORSEMENT ON DEBENTURE
The within written Debenture was on the day
1995, transferred in the Register of Debenture Holders from the
name of Casablanca Resorts Development of Anguilla Limited into
the name of Sonesta Hotels of Anguilla, Limited.
/s/
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Signature of Duly Authorized Officer of Scotiabank Anguilla Limited
