FIRST AMENDMENT
TO
SHAREHOLDERS AGREEMENT OF
C.R. RESORT ASSOCIATES LIMITED
Reference is made to that certain "Shareholders Agreement of C.R. Resort
Associates Limited", dated December 8, 1994, by and between El Cacique de Calzon
de Pobre S.A. and Sonesta International Hotels Limited ("Shareholders
Agreement"). This Agreement shall constitute the "First Amendment" to the
Shareholders Agreement.
For consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Defined Terms. Terms defined in the Shareholders Agreement which are used in
this Agreement shall have the same meaning as under the Shareholders Agreement
unless specifically indicated otherwise.
2. Cash Advances. The following paragraphs are hereby added to Section 4.01:
Notwithstanding the foregoing, the parties acknowledge and agree that
neither of them anticipates advancing more than $2,000,000 (U.S.) (in cash,
as opposed to value of services rendered), in the aggregate (a total of
$4,000,000), in connection with (A) subsections (i) and (ii) of the
preceding paragraph in this Section 4.01, (B) establishing and
administering the Venture, (C) performing and completing the action steps
described in subsections (a) - (o) of Section 3.01, and (D) otherwise
developing, constructing, and opening the Hotel Facilities. From and after
January 1, 1996, the balance of any and all such advances shall be pursuant
to a budget, in form, detail and amount satisfactory to each of the parties
in its sole and absolute discretion (i.e. not subject to Article XVI),
which budget shall be prepared by El Cacique and submitted to Sonesta for
approval on or before _____________, 199_.
Provided, further, and notwithstanding any other provision of this
Shareholders Agreement or any other agreement to the contrary, Sonesta
shall not be required to advance $1,000,000 (U.S.) of its (anticipated)
$2,000,000 cash funding (as referenced above) until Sonesta is satisfied in
its sole and absolute discretion (not subject to Article XVI) that the
Hotel will be completed and available for full business operation with at
least 39 Villa units in the Rental Pool (156 keys).
On or before the first funding of construction financing, but in no event
prior to El Cacique's sale of 39 Villas, Sonesta shall provide to El
Cacique a commercial letter of credit from United States Trust Company,
Boston, Massachusetts, or
another bank reasonably acceptable to El Cacique, which letter of credit
("Letter of Credit") shall
(i) be in the face amount of $1,000,000.00;
(ii) be maintained in effect for successive terms of one year each, but
shall by its terms expire and terminate no later than the earlier to
occur of (A) completion of the Hotel Facilities (completion of the
Hotel Facilities for these purposes being defined as the completion of
construction and availability for full business operation of the core
facility and 39 Villas (156 keys)), and (B) April 1, 1999;
(iii)be reduced, dollar for dollar, to the extent of funding provided by
Sonesta for Pre-Opening Expenses (as defined in Section 1.18 of the
Management Agreement), and/or Working Capital (as defined in Section
1.23 of the Management Agreement); provided, however, that Sonesta
shall not be required to advance any such funding until the later of
(A) six (6) months prior to the Commencement Date (as defined in the
Management Agreement), and (B) when Sonesta is reasonably assured that
the Hotel Facilities will be completed according to (1) the Plans and
the Supplemental Plans, and (2) the agreed upon Budget (referenced in
Section 4 below); and
(iv) subject to subsections (i), (ii), and (iii), above, the Letter of
Credit will be in such form as the Bank (as defined in Section 6
below) may reasonably require as a condition to providing construction
and/or permanent financing to the Venture.
Any and all costs and expenses incurred in obtaining and maintaining the
Letter of Credit shall be borne by the Venture.
Should the parties agree to develop Hotel Facilities not contemplated in
the agreed upon Budget (referenced in Section 4 below), and as a
consequence additional cash is required of the Venturers--in excess of the
$4,000,000.00 referenced above--in order to complete the Hotel Facilities,
the parties shall discuss how such additional Hotel Facilities shall be
paid for, it being understood that in no event shall Sonesta be required to
advance more than $2,000,000 of cash to the Venture in developing the Hotel
Facilities, or otherwise.
3. FF&E Budget. Sonesta and Sonesta International Hotels Corporation shall
jointly and severally, guaranty that the budget agreed upon by El Cacique and
Sonesta for furnishings, fixtures and equipment ("FF&E") to be purchased for and
installed in the core facility of the Hotel Facilities will be substantially
complete and will not be exceeded. Any costs and expenses of purchasing said
FF&E, transporting it to the Site, and installing it in the Hotel Facilities,
that exceed the agreed upon budget shall be the responsibility of Sonesta and/or
Sonesta International Hotels Corporation. The parties agree that the FF&E budget
shall include an appropriate contingency. The guaranty obligations of Sonesta
and Sonesta International
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Hotels Corporation under this Section are subject to the force majeure
provisions of Section 18.13 of the Shareholders Agreement, which provisions
shall be deemed to include a party's failure to perform its obligations that
results directly from the other party's (or its Affiliates') acts or omissions.
4. Construction Budget. The Venturers hereby reaffirm that construction of the
Hotel Facilities shall not commence unless and until they have together agreed
upon a "Budget" (as said term is used in that certain "Development and
Construction Management Agreement", dated December 8, 1994, by and between Costa
Rica Resort Associates S.A., as "Owner", and El Cacique. El Cacique, Xxxx Xxxx
and Xxxxxxx Xxxx shall jointly and severally, guaranty that the Budget agreed
upon by Sonesta (acting on behalf of Costa Rica Resort Associates S.A.) and El
Cacique will not be exceeded. Any costs and expenses of developing the Hotel
Facilities that exceed the Budget shall be the responsibility of El Cacique,
Xxxx Xxxx and Xxxxxxx Xxxx. The guaranty obligations of El Cacique, Xxxx Xxxx
and Xxxxxxx Xxxx under this Section are subject to the force majeure provisions
of Section 18.13 of the Shareholders Agreement, which provisions shall be deemed
to include a party's failure to perform its obligations that results directly
from the other party's (or its Affiliates') acts or omissions.
5. Number of Villas. Notwithstanding the references to "eighty (80)" or "80"
Villas in the Recitals and in Section 13.03, the parties intend to create no
more than seventy-two (72) Villas; provided, however, that if El Cacique
establishes to Sonesta's reasonable satisfaction that the Site has been enlarged
by an additional three (3) acres, references in the Shareholders Agreement to
eighty (80) Villas shall remain unchanged.
6. Condominium Association. The condominium association referenced in subsection
3.01 (e) of the Shareholders Agreement shall be administed by Sonesta or one of
its Affiliates after the Rental Pool has been established and the Hotel is in
operation. Consistent with its administrative responsibilities, Sonesta shall
(i) seek to collect mortgage payments from Villa owners who financed the
purchase of their Villas directly or indirectly through El Cacique (or one of
its Affiliates) as a result of Villa end loan financing provided by Bank of Nova
Scotia (or its Costa Rican affiliate) (the "Bank"); (ii) transmit the mortgage
payments it collects to the Bank, as appropriate; and (iii) manage the Rental
Pool.
7. Rental Pool Revenue. Reference is made to "Annex 1" to the form of "Villa
Rental Pool Agreement" attached to the Shareholders Agreement as Exhibit 3.01
(g), and to Section 1.19 ("Rental Pool") of the Management Agreement. The
percentages of "Rental Pool Revenues" distributable to Villa owners is five (5)
percentage points higher under the Management Agreement than under "Annex 1", it
being the intention of the parties that a corporation owned and controlled
jointly by Sonesta International Hotels Corporation, or one of its Affiliates,
on the one hand, and the individual guarantors referenced in the definition of
"Guarantors" in the Shareholder Agreement, on the other hand, (the "Jointly
Owned Corporation") would receive said five percent (5%) of Rental Pool Revenues
as an administrative fee. If, however, El Cacique determines that all or any
portion of said five percent (5%) of Rental Pool Revenues should be
distributable to the Rental Pool in order to facilitate Villa sales, then only
the portion of said five percent (5%) remaining, if any, shall be payable to the
Jointly Owned Corporation.
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8. Confirmation of Sonesta Expenses. Neither Sonesta nor its Affliates shall be
required to advance any additional funds in connection with the Venture until El
Cacique has verified that the expenses incurred by Sonesta to date in connection
with the Venture, which are set forth on the attached "Schedule A", are
appropriate Venture expenses; if El Cacique disputes that any of such expenses
are appropriate Venture expenses, the parties shall discuss and resolve the
issue and Sonesta shall have no further obligation until such resolution is
received.
9. Option to Terminate/Additional Sonesta Right.
A. Section 12.01 is hereby deleted and replaced with the following:
Section 12.01. Option to Terminate. If for any reason the Hotel has
not commenced full business operation by October 1, 1999, and subject
to Sonesta's rights under Section 12.02, then (a) Sonesta or El
Cacique may terminate this Agreement, (b) if so terminated, Sonesta or
El Cacique may cause the Venture to terminate the Management
Agreement, the Development and Construction Management Agreement and
the Development Services Agreement, and (c) upon such termination,
neither party shall have further obligations to the other under this
Agreement or under any of said Agreements (except any sums theretofore
owing to Sonesta's Affiliate under the Development Services Agreement
and to El Cacique under the Development and Construction Management
Agreement, or owing to either of the parties as of the date of
termination).
B. Section 12.02 is hereby amended as follows:
(w) the date in subsection (i) is changed to March 1 1997, from April
1, 1995;
(x) the date in subsection (ii) is changed to December 1 , 1997, from
September 1, 1995;
(y) the date in subsection (iii) is changed to October 1 1999, from
December 31, 1996; and
(z) the following shall be added to the sixth line of subsection
12.02, after the words "Purchase and Sale (Exhibit F),": the
"First Amendment to Shareholders Agreement of C. R. Associates
Limited (including without limitation for the Letter of Credit
and Bank fees,".
The exercise of Sonesta's termination rights under Section 12.02 is
subject to its not being the cause that the actions described in
subsections (i) - (iii) of Section 12.02 were not achieved by the
stipulated dates; said dates shall be deemed to be extended to the
extent of any delay caused by Sonesta.
10. EDSA. The following is hereby added to the Shareholders Agreement as Section
3.06:
The parties agree that Xxxxxx X. Xxxxx, Xx. and Associates, Planners
and Landscape Architects ("EDSA"), or another landscape architect
approved by
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Sonesta, shall be retained by the Venture to prepare concept drawings
for Hotel landscaping and for the swimming pool. Further, the parties
shall together discuss whether EDSA, or such other landscape
architect, shall also be retained to prepare concept drawings for
Villa landscaping.
11. Sonesta Mortgage/Security. It is the intention of the parties that the first
mortgage in favor of Sonesta, referenced in Section 4.01 of the Shareholder
Agreement, shall remain in place until the first mortgage in favor of the Bank
is ready for filing; and that the Bank shall not file its first mortgage until
just prior to the time it will make its first advance of construction loan
proceeds. The parties shall from time to time, at Sonesta's request, increase
the face amount of Sonesta's mortgage, or file additional mortgages, to secure
cash advances made by Sonesta in excess of the initial $450,000.00. In the event
that Sonesta is compelled to discharge its mortgage(s) for any reason, prior to
the Bank's initial funding of construction loans proceeds, the further
performance of Sonesta's obligations under the Shareholders Agreement, any
agreement referenced as an Exhibit to the Shareholders Agreement, or any
amendment (including this "First Amendment") to the Shareholders Agreement shall
be deemed suspended until Sonesta has received and perfected such other security
for its aggregate cash advances as it deems satisfactory.
12. Controlling Document. To the extent of any conflict between this "First
Amendment", the Shareholders Agreement, or any other agreement between the
parties, this First Amendment shall be deemed to control.
In all other respects the Shareholders Agreement shall remain unchanged and
in full force and effect.
IN WITNESS WHEREOF, the undersigned set their hands and seals as of this
___ day of September, 1996.
El Cacique de Calzon de Pobre, S.A. Sonesta International Hotels Limited
By: /S/ By: /S/
----------------------------------- ----------------------------------
its duly authorized: its duly authorized:
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The undersigned Guarantors hereby enter into this Agreement in order to
acknowledge their continuing guaranties under the Shareholders Agreement and
this "First Amendment".
Extency Internacional S.A. Sonesta International Hotels Corporation
By: /S/ By: /S/
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its duly authorized: its duly authorized:
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/S/
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Xxxx Xxxx
/S/
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Xxxxxxx Xxxx
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