10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly period ended June 30, 2009
	OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-9032

SONESTA INTERNATIONAL HOTELS CORPORATION

(Exact name of registrant as specified in its charter)

NEW YORK	13-5648107
(State or other jurisdiction or incorporation or organization)	(I.R.S. Employer Identification No.)

116 Huntington Avenue, Boston, MA 02116

(Address of principal executive offices)

(Zip Code)

617-421-5400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Exchange Act Rule 12b-02)

Large Accelerated Filer o  Accelerated Filer o  Non-Accelerated Filer o

Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Number of Shares of Common Stock Outstanding

As of August 10, 2009 -- $.80 par value,

Class A – 3,698,230

INDEX

SONESTA INTERNATIONAL HOTELS CORPORATION

Part I.  Financial Information		Page
Item 1.	Financial Statements (unaudited)
	Condensed consolidated balance sheets — June 30, 2009 (unaudited) and December 31, 2008	1
	Condensed consolidated statements of operations — Three and six-month periods ended June 30, 2009 and 2008 (unaudited)	3
	Condensed consolidated statements of cash flows — Six-month periods ended June 30, 2009 and 2008 (unaudited)	4
	Notes to condensed consolidated financial statements — June 30, 2009 and 2008	5
Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition — June 30, 2009	11
Item 3.	Quantitative and Qualitative Disclosure of Market Risk	17
Item 4.	Internal Controls and Procedures	18
Part II.  Other Information
Item 4.	Submission of Matters to a vote of Security Holders	19
	Signature page	20
Exhibit 3.1	Certificate of Incorporation, as amended to date
Exhibit 3.2	Certificate of Incorporation, changes to Paragraph Third, Section F, Subparagraph 5, marked copy
Exhibit 10.26	Amendment to partnership agreement of SBR-Fortune Associates, LLLP, dated as of June 18, 2009 (portions of this exhibit have been omitted pursuant to a request for confidential treatment).
Exhibits 31.a, 31.b, 31.c	Certifications by the Company’s Chief Executive Officers and Vice President and Treasurer, as required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended
Exhibit 32	Certification by Company Officers required by 18 U.S.C Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

Part I  -  Item 1.  Financial Information

SONESTA INTERNATIONAL HOTELS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2009 (unaudited) and December 31, 2008

	(in thousands)
	June 30, 2009		December 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	28,027	$	37,463
Restricted cash		124		175
Accounts and notes receivable:
Trade, less allowance of $67 ($59 at December 31, 2008) fordoubtful accounts		5,071		5,407
Other, including current portion of long-term receivables andadvances		688		1,001
Total accounts and notes receivable		5,759		6,408
Inventories		587		628
Current deferred tax assets		471		462
Prepaid expenses and other current assets		2,435		2,163
Total current assets		37,403		47,299
Long-term receivables and advances		900		992
Deferred tax assets		10,177		9,049
Investment in development partnership		35,500		33,666
Property and equipment, at cost:
Land and land improvements		2,102		2,102
Buildings		25,925		25,610
Furniture and equipment		32,907		30,150
Leasehold improvements		8,827		8,785
Projects in progress		--		472
		69,761		67,119
Less accumulated depreciation and amortization		34,696		32,088
Net property and equipment		35,065		35,031
Other long-term assets		958		1,003
	$	120,003	$	127,040

See accompanying notes to condensed consolidated financial statements.

1

SONESTA INTERNATIONAL HOTELS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2009 (unaudited) and December 31, 2008

	(in thousands)
	June 30, 2009			December 31, 2008
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	1,215		$	1,163
Accounts payable		2,516			3,747
Advance deposits		1,281			1,281
Accrued income taxes		180			402
Accrued liabilities:
Salaries and wages		1,086			1,772
Rentals		2,670			4,787
Interest		232			244
Pension and other employee benefits		1,562			1,612
Other		1,338			862
		6,888			9,277
Total current liabilities		12,080			15,870
Long-term debt		31,215			31,839
Deferred gain		64,481			64,481
Pension liability, non-current		9,226			9,338
Other non-current liabilities		1,196			1,386
Commitments and contingencies
Stockholders’ equity:
Common stock:
Class A,  $.80 par value
Authorized--10,000 shares
Issued – 6,102 shares at stated value		4,882			4,882
Retained earnings		11,834			14,155
Treasury shares – 2,404, at cost		(12,053	)		(12,053	)
Accumulated other comprehensive loss		(2,858	)		(2,858	)
Total stockholders’ equity		1,805			4,126
	$	120,003		$	127,040

See accompanying notes to condensed consolidated financial statements.

2

SONESTA INTERNATIONAL HOTELS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (unaudited)

(in thousands except for per share data)

	Three Months Ended June 30						Six Months Ended June 30
	2009			2008			2009			2008
Revenues:
Rooms	$	9,718		$	12,304		$	17,137		$	21,507
Food and beverage		4,455			5,059			7,932			9,427
Management, license and service fees		1,007			1,708			2,133			4,768
Parking, telephone and other		1,317			1,351			2,398			2,518
		16,497			20,422			29,600			38,220
Other revenues from managed and affiliated properties		1,082			1,346			2,303			6,463
Total revenues		17,579			21,768			31,903			44,683
Costs and expenses:
Costs and operating expenses		7,119			8,250			13,704			15,807
Advertising and promotion		1,448			1,464			2,824			2,800
Administrative and general		3,368			3,291			6,579			6,590
Human resources		209			337			460			609
Maintenance		777			907			1,623			1,834
Rentals		1,510			1,756			3,035			3,775
Property taxes		349			375			703			745
Depreciation and amortization		1,354			1,312			2,709			3,250
		16,134			17,692			31,637			35,410
Other expenses from managed and affiliated properties		1,082			1,346			2,303			6,463
Total costs and expenses		17,216			19,038			33,940			41,873
Operating income (loss)		363			2,730			(2,037	)		2,810
Other income (deductions):
Interest expense		(718	)		(742	)		(1,434	)		(1,489	)
Interest income		85			242			208			613
Foreign exchange gain (loss)		(7	)		4			(18	)		11
Gain (loss) on sales of assets		(4	)		21			(2	)		443
		(644	)		(475	)		(1,246	)		(422	)
Income (loss) before income tax provision		(281	)		2,255			(3,283	)		2,388
Income tax provision (benefit)		(172	)		749			(962	)		792
Net income (loss)		(109	)		1,506			(2,321	)		1,596
Retained earnings at beginning of period		11,943			11,460			14,155			15,068
Cash dividends		--			(370	)		--			(4,068	)
Retained earnings at end of period	$	11,834		$	12,596		$	11,834		$	12,596
Net income (loss) per share	$	(0.03	)	$	0.41		$	(0.63	)	$	0.43
Weighted average number of shares outstanding		3,698			3,698			3,698			3,698

See accompanying notes to condensed consolidated financial statements.

3

SONESTA INTERNATIONAL HOTELS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Increase (Decrease) in Cash

	(in thousands)
	Six Months Ended June 30
	2009			2008
Cash provided (used) by operating activities
Net income (loss)	$	(2,321	)	$	1,596
Adjustments to reconcile net income (loss) to net cash used
by operating activities
Depreciation and amortization of property and equipment		2,709			3,250
Other amortization		46			21
Deferred federal and state income tax provision (benefit)		(1,137	)		192
Loss (gain) on sales of assets		2			(443	)
Changes in assets and liabilities
Restricted cash		51			1,083
Accounts and notes receivable		646			(1,046	)
Inventories		41			18
Prepaid expenses and other		(211	)		(428	)
Accounts payable		(307	)		(1,197	)
Advance deposits		--			(1,188	)
Accrued income taxes		(285	)		57
Accrued liabilities		(2,690	)		(1,999	)
Cash used by operating activities		(3,456	)		(84	)
Cash provided (used) by investing activities
Proceeds from sales of assets		38			766
Payments received from development partnership		--			125
Expenditures for property and equipment		(2,766	)		(1,481	)
Payments received on long-term receivables and advances		140			669
Investment in development partnership		(1,834	)		--
New loans and advances		(60	)		(62	)
Cash provided (used) by investing activities		(4,482	)		17
Cash used by financing activities
Repayments of long term debt		(573	)		(518	)
Cash dividends paid		(925	)		(4,438	)
Cash used by financing activities		(1,498	)		(4,956	)
Net decrease in cash		(9,436	)		(5,023	)
Cash and cash equivalents at beginning of period		37,463			32,620
Cash and cash equivalents at end of period	$	28,027		$	27,597

Supplemental Schedule of Interest and Income Taxes Paid

Cash paid for interest in the 2009 six-month period and the 2008 six-month period was approximately $1,425,000 and $1,480,000, respectively  (see Note 4, Borrowing Arrangements).  Cash paid for income taxes during the first six months of 2009 and 2008 was approximately $457,000 and $552,000, respectively.

See accompanying notes to condensed consolidated financial statements.

4

SONESTA INTERNATIONAL HOTELS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the six-month period ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ended December 31, 2009.

The balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

Recently Issued Pronouncements

In May 2009, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 165, Subsequent Events, (SFAS No. 165), effective for interim and annual reporting periods ending after June 15, 2009.  SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  The Company adopted SFAS No. 165 and it did not have an impact on the Company’s Consolidated Financial Statements.  The Company evaluated all events or transactions that occurred after June 30, 2009 up through August 11, 2009.  During this period no material subsequent events came to our attention.

2. Long-Term Receivables and Advances

	(in thousands)
	June 30,2009		December 31,2008
Sharm El Sheikh, Egypt (a)	$	1,080	$	1,215
Other		240		187
Total long-term receivables		1,320		1,402
Less:  current portion		420		410
Net long-term receivables	$	900	$	992

(a) This loan was made in January 2008 to the owners of Sonesta Beach Hotel Sharm El Sheikh and Sonesta Club Sharm El Sheikh by converting receivables for fees and expenses into a five-year loan, payable in monthly installments, starting in January 2008.  The Company is accounting for this loan using an effective interest rate of 6.5%.  Monthly payments of $28,820 on this loan are paid directly from the hotels and deducted from distributions of profits to the owner of these managed hotels.  

Management continually monitors the collectability of its receivables and advances and believes they are fully realizable.

5

SONESTA INTERNATIONAL HOTELS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Investment in Development Partnership

The Company owns a 50% limited partnership interest in a development project in Key Biscayne, Florida, which is recorded on its balance sheet at June 30, 2009 at a value of $35,500,000.  The partnership’s condensed balance sheet at June 30, 2009 is as follows (unaudited, in thousands):

	at June 30, 2009
Total assets, primarily land	$	110,236
Less debt and other liabilities		(64,707	)
Partnership equity	$	45,529

The debt of the partnership is non-recourse to the Company.  The development partnership has not commenced operations.

As part of an agreement with its partner entered into in June 2009, the Company agreed to fund up to $3 million for project related costs.  Of this commitment, $1,834,000 was funded during the first half of 2009, and this amount was added to the Company’s investment account balance reflected on its balance sheet at June 30, 2009.  Subject to certain circumstances, including a minimum price, the partners agreed to sell the property, and also reached agreement regarding distribution of proceeds should a sale of the land materialize within a certain period of time.  For full details on this agreement, we refer to our report filed on Form 8-K on June 24, 2009.

The Company continues to monitor the carrying value of its investment in this development project.

4. Borrowing Arrangements

Long-Term Debt

The Company’s long-term debt consists of a first mortgage note held by Charterhouse of Cambridge Trust and Sonesta of Massachusetts, Inc., which are the Company’s subsidiaries that own and operate the Royal Sonesta Hotel Boston.  The principal balance outstanding at June 30, 2009 and December 31, 2008 was $32,430,000 and $33,002,000, respectively.  The debt is secured by a first mortgage on the Royal Sonesta Hotel Boston property, which is included in fixed assets at a net book value of $20,275,000 at June 30, 2009.

The interest rate is 8.6% for the term of the loan, and the loan matures in July 2010.  Monthly payments of interest and principal are $332,911.  The current portion of the principal balance at June 30, 2009 equals $1,215,000.  Management has started evaluating refinancing options available to replace this loan on or before July 2010.

6

SONESTA INTERNATIONAL HOTELS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Hotel Costs and Operating Expenses

Hotel costs and operating expenses in the accompanying condensed Consolidated Statements of Operations are summarized below:

	(in thousands)
	Three Months Ended June 30				Six Months Ended June 30
	2009		2008		2009		2008
Direct departmental costs
Rooms	$	2,548	$	2,916	$	4,704	$	5,379
Food and beverage		3,416		3,869		6,568		7,473
Heat, light and power		577		731		1,239		1,460
Other		578		734		1,193		1,495
	$	7,119	$	8,250	$	13,704	$	15,807

Direct departmental costs include payroll expenses and related payroll burden, the cost of food and beverage consumed and other departmental costs.

6. Segment Information

Segment information for the Company’s two reportable segments, Owned & Leased Hotels and Management Activities, for the three-month and six-month periods ending June 30, 2009 and 2008 follows:

Three-month period ended June 30, 2009

	(in thousands)
	Owned & Leased Hotels			Management Activities			Consolidated
Revenues	$	15,486		$	1,011		$	16,497
Other revenues from managed and
affiliated properties		--			1,082			1,082
Total revenues		15,486			2,093			17,579
Operating income (loss) before depreciation and amortization expense		2,856			(1,139	)		1,717
Depreciation and amortization		(1,290	)		(64	)		(1,354	)
Interest income (expense), net		(714	)		81			(633	)
Other deductions		(4	)		(7	)		(11	)
Segment pre-tax income (loss)		848			(1,129	)		(281	)
Segment assets		76,847			43,156			120,003
Segment capital additions		911			8			919

7

SONESTA INTERNATIONAL HOTELS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six-month period ended June 30, 2009

	(in thousands)
	Owned & Leased Hotels			Management Activities			Consolidated
Revenues	$	27,456		$	2,144		$	29,600
Other revenues from managed and
affiliated properties		--			2,303			2,303
Total revenues		27,456			4,447			31,903
Operating income (loss) before depreciation and amortization expense		2,832			(2,160	)		672
Depreciation and amortization		(2,580	)		(129	)		(2,709	)
Interest income (expense), net		(1,427	)		201			(1,226	)
Other deductions		(4	)		(16	)		(20	)
Segment pre-tax loss		(1,179	)		(2,104	)		(3,283	)
Segment assets		76,847			43,156			120,003
Segment capital additions		2,710			56			2,766

Three-month period ended June 30, 2008

	(in thousands)
	Owned & Leased Hotels			Management Activities			Consolidated
Revenues	$	18,712		$	1,710		$	20,422
Other revenues from managed and
affiliated properties		--			1,346			1,346
Total revenues		18,712			3,056			21,768
Operating income (loss) before depreciation and amortization expense		4,342			(300	)		4,042
Depreciation and amortization		(1,242	)		(70	)		(1,312	)
Interest income (expense), net		(741	)		241			(500	)
Other income (deductions)		(4	)		29			25
Segment pre-tax income (loss)		2,355			(100	)		2,255
Segment assets		75,959			45,822			121,781
Segment capital additions		862			63			925

8

SONESTA INTERNATIONAL HOTELS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six-month period ended June 30, 2008

	(in thousands)
	Owned & Leased Hotels			Management Activities			Consolidated
Revenues	$	33,437		$	4,783		$	38,220
Other revenues from managed and
affiliated properties		--			6,463			6,463
Total revenues		33,437			11,246			44,683
Operating income before depreciation and amortization expense		5,429			631			6,060
Depreciation and amortization		(2,484	)		(766	)		(3,250	)
Interest income (expense), net		(1,487	)		611			(876	)
Other income (deductions)		(4	)		458			454
Segment pre-tax income		1,454			934			2,388
Segment assets		75,959			45,822			121,781
Segment capital additions		1,404			77			1,481

7. Earnings per Share

As the Company has no dilutive securities, there is no difference between basic and diluted earnings per share.   The following table sets forth the computation of basic income and loss per share (in thousands, except for per share data):

	Three months ended June 30					Six months ended June 30
	2009			2008		2009			2008
Numerator:
Income (loss) from operations	$	(109	)	$	1,506	$	(2,321	)	$	1,596
Denominator:
Weighted average number of
shares outstanding		3,698			3,698		3,698			3,698
Net income (loss) per share of common stock	$	(0.03	)	$	0.41	$	(0.63	)	$	0.43

8. Pension Plan

The components of the net periodic pension expense (credit) for the Company’s Pension Plan were as follows:

	(in thousands)
	Six Months ended June 30
	2009			2008
Service cost	$	41		$	--
Interest cost		798			840
Expected return on assets		(858	)		(918	)
Recognized actuarial (gain) loss		101			(8	)
Net expense (credit) included in the consolidated statements of operations	$	82		$	(86	)

9

SONESTA INTERNATIONAL HOTELS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company froze its Pension Plan effective December 31, 2006.  Additional service and/or compensation increases after January 1, 2007 will not increase participants’ benefits and, in addition, newly hired employees will not receive benefits under the Plan.  For additional information on the Pension Plan changes, and information on a matching benefit under the Company’s 401(k) savings plan, we refer to footnote 8 of the Company’s 2008 Annual Report filed on Form 10-K.

The Company expects to make contributions of $934,000 to the Plan during the period April 2009 through January 2010.

The Company does not have any other post-retirement benefit plans.

10

Part I – Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

FIRST SIX MONTHS 2009 COMPARED TO 2008

During the first six months of 2009 the Company recorded a net loss of $2,321,000, or $(0.63) per share, compared to net income of $1,596,000, or $0.43 per share, during the first six months of 2008.  The economic recession continued to affect the Company’s business during the first six months of 2009.  Royal Sonesta Hotel Boston reported a pre-tax loss of $1,695,000 during the first six months of 2009, compared to pre-tax income of $367,000 during the first six months of 2008.  Pre-tax income from management activities decreased from $934,000 during the 2008 period to a pre-tax loss of $2,105,000 during the 2009 period, mainly due to lower income from Sonesta Bayfront Hotel Coconut Grove, lower fee income from the Company’s operations in Egypt and lower income from Trump International Sonesta Beach Resort Sunny Isles.  The management agreement for this property was terminated effective April 1, 2008.  Interest income decreased by $405,000 to $208,000 during the first six months of 2009 compared to last year, primarily due to the lower rates of return on the Company’s cash balances.  A detailed analysis of the revenue and income by location follows.

REVENUES

The Company records costs incurred on behalf of owners of managed and affiliated properties, and expenses reimbursed from managed and affiliated properties, on a gross basis.  The revenues included and discussed in this Management’s Discussion and Analysis exclude the “other revenues and expenses from managed and affiliated properties.”

	TOTAL REVENUES (in thousands)
	NO. OF ROOMS		2009		2008
Royal Sonesta Hotel Boston		400	$	10,501	$	14,329
Royal Sonesta Hotel New Orleans		500		16,955		19,108
Management and service fees and other revenues				2,144		4,783
Total revenues, excluding revenues from managed and affiliated properties			$	29,600	$	38,220

Total revenues during the six-month period ended June 30, 2009 were $29,600,000 compared to $38,220,000 in the same period in 2008, a decrease of approximately $8,620,000.

Royal Sonesta Hotel Boston recorded revenues of $10,501,000 during the first six months of 2009 compared to $14,329,000 during the first six months of 2008, representing a $3,828,000, or 27%, decrease.  Room revenues during the 2009 period decreased by $2,601,000 due to a 28% decrease in room revenue per available room (“REVPAR”).  Both lower occupancy levels as well as a reduction in the average daily room rates contributed to this decrease.  The decrease in room revenues was almost entirely due to a decrease in room nights from the group and convention market segment.  Business from this market segment is heavily dependent on high levels of corporate spending, which has been impacted by the ongoing economic recession.  The decrease in available group business causes in turn more competition for available transient business amongst Boston area hotels, which resulted in discounted rates.  Revenue from other sources, which are primarily from food and beverage sales and parking revenues, decreased by $1,227,000 in the first half of 2009 compared to the previous year.  This was mainly due a decrease in banquet revenues, which depends heavily on group and convention activity at the hotel.

11

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

Revenues at Royal Sonesta Hotel New Orleans decreased by $2,153,000 to $16,955,000 during the first half of 2009 compared to last year, representing an 11% decrease.  Room revenues decreased by $1,769,000 due to a 14% decrease in REVPAR.  The hotel was able to limit the decrease in average daily room rates to a slight 2%, but occupancy declined substantially in 2009 compared to 2008.  Similar to the decline in business at Royal Sonesta Boston, the decrease in demand was primarily from the group and convention market, due to lower corporate spending.  Rooms sold in the transient segment slightly increased in 2009 compared to last year.  Revenues from other sources decreased by $384,000 in 2009 compared to 2008.  Decreases in banqueting revenues due to reduced group and convention business was partially offset by increased beverage sales.  This increase was due to the transformation of the hotel’s main lounge into the Irvin Mayfield’s Jazz Playhouse, which boosted beverage sales in this outlet.

Revenues from management activities decreased from $4,783,000 during the first six months of 2008 to $2,144,000 during the first six months of 2009, a $2,639,000 decrease.  The 2008 period included $840,000 of management income from Trump International Sonesta Beach Resort Sunny Isles.  The management agreement for this hotel was terminated by the Company effective April 1, 2008.  Management income from Sonesta Bayfront Hotel Coconut Grove decreased by $554,000 compared to 2008.  The Company is committed to an annual minimum return payment to the hotel’s owner, and the Company’s policy is to eliminate fees from its income if it does not expect to earn the annual minimum return.  As a result, the Company did not record any fee income from the Coconut Grove operations during the first six months of 2009.  Demand in Egypt has declined moderately, but did result in decreases in fee income from the Company’s managed hotels in this country by $563,000.  The decrease was mainly from lower fees earned from the Company’s resort hotels.  The remaining decrease in management income was due to lower income from the Company’s licensed hotels in St. Maarten and from lower income from the Company’s purchasing subsidiary, which provides services to Sonesta hotels and third party clients.

OPERATING INCOME

	OPERATING INCOME (LOSS) (in thousands)
	2009			2008
Royal Sonesta Hotel Boston	$	(258	)	$	1,858
Royal Sonesta Hotel New Orleans		510			1,087
Operating income from hotels after management and service fees		252			2,945
Management activities and other		(2,289	)		(135	)
Operating income (loss)	$	(2,037	)	$	2,810

Operating loss for the six-month period ended June 30, 2009 was $2,037,000, compared to operating income of $2,810,000 in the six-month period ended June 30, 2008, a decrease of approximately $4,847,000.

Royal Sonesta Hotel Boston reported an operating loss of $258,000 during the six-month period ended June 30, 2009 compared to operating income of $1,858,000 during the same period in 2008, a decrease of $2,116,000.  Revenues decreased by $3,828,000, and this decrease was partially offset by a decrease of $1,712,000, or 14%, in overall expenses.  Costs and operating expenses decreased by $1,257,000, or 18%, mainly due to lower payroll costs.  Helped by lower occupancies, the hotel has reduced staffing levels in all operating departments.  Employee benefit costs also decreased due to the elimination of the matching contributions to the Company’s 401(k) plan, and the elimination of any bonus payments for 2009.  The remaining decrease in expenses was due to decreases in the hotel’s overhead costs, including administrative and general expense, maintenance costs and advertising and human resources expenses.

12

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

Operating income at Royal Sonesta Hotel New Orleans decreased by $577,000 to $510,000 in the six-month period ended June 30, 2009 compared to last year.  Decreases in revenues of $2,153,000 were for a large part offset by a $1,576,000 decrease in expenses.  This decrease was mainly due to a $562,000 decrease in costs and operating expenses, resulting mainly from lower payroll and benefit costs, and due to a decrease in rent expense of $793,000.  The Company operates the Royal Sonesta Hotel New Orleans under a lease, which includes a rent payable to the landlord equal to 75% of net cash flow.  The rent savings was due to the lower operating profits.

The Company reported an operating loss of $2,289,000 from management activities in the first half of 2009 compared to an operating loss of $135,000 in the same period in 2008, a decrease of $2,154,000.  The Company’s loss from management activities is computed after giving effect to management and marketing fees from owned and leased hotels.  Revenues from management activities decreased by $2,639,000.  The decrease in revenues was partially offset by a decrease in expenses of $485,000, which was mainly due to lower depreciation expense.  The 2008 first quarter included accelerated depreciation of an investment the Company made in Trump International Sonesta Beach Resort Sunny Isles, following the Company’s termination of the management agreement for this hotel effective April 1, 2008.

OTHER INCOME (DEDUCTIONS)

Interest income decreased from $613,000 during the first six months of 2008 to $208,000 during the first six months of 2009, a $405,000 decrease.  The decrease was due to lower income from a loan to the owner of Sonesta Bayfront Hotel Coconut Grove, which was repaid in October 2008, and from lower income earned on the Company’s cash balances, due to the lower rates of return.

The gain on sale of assets during the first six months of 2008 was primarily from the sale of a co-op unit the Company owned in New York City.

SECOND QUARTER 2009 COMPARED TO 2008

During the second quarter of 2009, the Company recorded a net loss of $109,000, or $(0.03) per share, compared to net income of $1,506,000, or $0.41 per share, during the second quarter of 2008.  The pre-tax income during the second quarter of 2009 at Royal Sonesta Hotel Boston was $534,000 compared to $1,838,000 during the 2008 second quarter.  Demand in the Boston area during the 2009 second quarter continued to be very soft.  Income from management activities decreased by $1,031,000 on a pre-tax basis, primarily from lower fee income from Sonesta Bayfront Hotel Coconut Grove and the Company’s managed properties in Egypt.  A detailed analysis of the revenues and income by location follows.

REVENUES

	TOTAL REVENUES (in thousands)
	NO. OF ROOMS		2009		2008
Royal Sonesta Hotel Boston		400	$	7,151	$	9,491
Royal Sonesta Hotel New Orleans		500		8,335		9,221
Management and service fees and other revenues				1,011		1,710
Total revenues, excluding revenues from
managed and affiliated properties			$	16,497	$	20,422

Total revenues for the three-month period ended June 30, 2009 were $16,497,000 compared to $20,422,000 in 2008, a decrease of approximately $3,925,000.

13

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

Second quarter 2009 revenues at Royal Sonesta Hotel Boston were $7,151,000 compared to $9,491,000 during the second quarter of 2008, a decrease of $2,340,000.  Room revenues declined by $1,699,000 due to a 27% decrease in room revenue per available room (“REVPAR”).  Both lower occupancy levels as well as average daily room rates achieved contributed to the REVPAR decrease.  The occupancy decrease was entirely due to lower sales from the group and convention market segment.  Transient room sales increased slightly.  Reductions in corporate spending contributed to the decrease in group and convention business.  Revenues other than rooms declined by $641,000 during the 2009 second quarter, representing a  20% decrease.  This was primarily due to lower banqueting revenues, resulting from the decline in group and convention business.

Revenues at Royal Sonesta Hotel New Orleans were $8,335,000 during the 2009 second quarter compared to $9,221,000 during the 2008 second quarter, a decrease of $886,000, or 10%.  The decrease in revenues was entirely due to a decrease in room revenues of $887,000, resulting from lower occupancies during the 2009 second quarter.  The average daily room rate during the second quarter of 2009 was virtually the same as in the 2008 quarter.  The decrease in occupancy was mainly due to lower demand from the group and convention market.  The hotel managed to maintain its average room rate during the second quarter of 2009 despite the increased competition among hotels in New Orleans.

Revenues from management activities decreased by $699,000, from $1,710,000 during the 2008 second quarter to $1,011,000 during the 2009 second quarter.  This decrease was primarily due to a decrease in management income from the Company’s operations in Egypt, which experienced a decline in business, particularly in the resort hotels. The Company also eliminated fee income from Sonesta Bayfront Hotel Coconut Grove from its 2009 second quarter revenues.  The Company is committed to a minimum annual return to the owner of the hotel, and forecasts indicate that the hotel will not produce sufficient income to provide this minimum annual return.  Income from corporate support activities decreased by $169,000 in the 2009 quarter compared to previous year, primarily due to lower income from the Company’s purchasing activities, which provides services to Sonesta and third party hotels.

OPERATING INCOME

	OPERATING INCOME (LOSS)  (in thousands)
	2009			2008
Royal Sonesta Hotel Boston	$	1,255		$	2,584
Royal Sonesta Hotel New Orleans		311			516
Operating income from hotels after management and service fees		1,566			3,100
Management activities and other		(1,203	)		(370	)
Operating income	$	363		$	2,730

Operating income for the quarter ended June 30, 2009 was $363,000, compared to operating income of $2,730,000 in the quarter ended June 30, 2008, a decrease of approximately $2,367,000.

Royal Sonesta Hotel Boston reported operating income of $1,255,000 during the 2009 second quarter, a $1,329,000 decrease compared to operating income of $2,584,000 in the 2008 second quarter.  Revenue declined by $2,340,000, and this decrease was partially offset by decreases in expenses totaling $1,011,000, representing a 15% decrease in overall expenses.  The bulk of the savings came from a $741,000, or 19%, decrease in costs and operating expenses.  This resulted primarily from lower payroll and employee benefit costs, due to the lower occupancies and the Company’s decisions to eliminate contributions to 401(k) plans and bonuses for the 2009 year.

14

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

Operating income during the second quarter of 2009 at Royal Sonesta Hotel New Orleans totaled $311,000 compared to $516,000 in the 2008 second quarter, a $205,000 decrease.  Revenues declined by $886,000 in the 2009 quarter compared to last year.  This decrease in revenues was for a large part offset by a $681,000 decrease in expenses.  This decrease was primarily from lower costs and operating expenses, resulting from lower staffing costs due to the reduced occupancy levels, as well as a decrease in rent expense under the lease under which the Company operates the hotel.  Rent is based on a percentage of cash flow, and therefore rent decreased due to the lower operating profits.

The operating loss from management activities, which is computed after giving effect to management and marketing fees from owned and leased hotels, rose from $370,000 in the 2008 second quarter to $1,203,000 during the 2009 second quarter.  Revenues declined by $699,000 in the second quarter of 2009 compared to last year, and expenses related to these activities increased by $134,000.  The increase in expenses was primarily due to costs incurred in connection with a management opportunity the Company pursued for a hotel in South Florida.  The Company decided in February 2009 not to pursue this management opportunity any further, but incurred additional costs during the 2009 second quarter.

OTHER INCOME (DEDUCTIONS)

Interest income decreased from $242,000 in the 2008 second quarter to $85,000 in the 2009 second quarter due to lower income from a loan to the owner of Sonesta Bayfront Hotel Coconut Grove, which loan was repaid in October 2008, and from lower income earned on the Company’s cash balances due to the lower rates of return.

FEDERAL, FOREIGN AND STATE INCOME TAXES

In the first half of 2009 the Company recorded a tax benefit of $962,000 on its pre-tax loss of $3,283,000.  The tax benefit is lower than the statutory rate, due to state taxes payable on the Company’s income from Royal Sonesta Hotel New Orleans and due to foreign taxes payable on the Company’s income from its hotels in Egypt and Peru.  In the first six months of 2008, the Company recorded a tax expense of $792,000 on pre-tax income of $2,388,000.  The expense in the first half of 2008 was lower than the statutory rate because the Company benefitted from credits for foreign taxes paid in previous years which had been carrying forward.  Those credits more than offset the state income taxes payable primarily on the Company’s income from Royal Sonesta Hotel New Orleans.

The Company recorded a long-term deferred tax asset in the first half of 2009 for the future federal income tax benefit of the losses incurred.  The Company will monitor this tax asset, and provide for valuation allowances if going forward it becomes uncertain as to whether it will actually receive a federal tax benefit for the losses.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and cash equivalents of approximately $28 million at June 30, 2009.  Company management believes these cash resources will be adequate to meet its cash requirements for 2009 and beyond.

On January 2, 2009 the Company paid a dividend on its common stock of $0.25 per share, for a total of $925,000.

The Company owns a 50% limited partnership interest in a development project in Key Biscayne, Florida (see Note 3).  During the 2009 second quarter, the Company agreed to fund up to $3 million for project related costs.  Of this commitment, $1,834,000 was funded during the first six months of 2009, and the Company expects to fund the remainder before the end of the year.

The Company will make contributions to its Pension Plan totaling $934,000 during the period April 2009 through January 2010.

15

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

Royal Sonesta Hotel Boston undertook a significant improvements project during the winter of 2008/2009, upgrading meeting facilities and public spaces.  Capital expenditures during the first six months of 2009 were approximately $1,651,000 at this location.

During the 2009 first quarter, the Company agreed to loan an additional $500,000 to the owner of Sonesta Beach Resort Sharm El Sheikh, to help finance the completion of 179 additional rooms.  The owner subsequently elected not to draw down on this commitment.

The Company has a mortgage loan secured by Royal Sonesta Hotel Boston in the amount of $32.4 million at June 30, 2009 (see Note 4).  The loan matures in July 2010.  The Company has started evaluating the refinancing options available to replace this loan on or before July 2010.

16

PART I – Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

The Company is exposed to market risk from changes in interest rates.   The Company uses fixed rate debt to finance the ownership of one of its properties.  The table that follows summarizes the Company’s fixed rate debt obligations outstanding at June 30, 2009.  This information should be read in conjunction with Note 4—Borrowing Arrangements.

Short and Long Term Debt (in thousands) maturing in:

	YEAR
	2009			2010			Total		Fair Value
Fixed rate	$	590		$	31,840		$	32,430	$	32,430
Average interest rate		8.6	%		8.6	%

17

PART I – Item 4

INTERNAL CONTROLS AND PROCEDURES

As of June 30, 2009, the Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer and President, Chief Executive Officer and Vice Chairman, and Vice President and Treasurer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934.   Based on that evaluation, the Company’s Chief Executive Officer and President, Chief Executive Officer and Vice Chairman, and Vice President and Treasurer concluded that the Company’s disclosure controls and procedures are effective, as of June 30, 2009.

There have been no significant changes in the Company’s internal controls regarding financial reporting during the quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control regarding financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses.

18

PART II – Item 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Shareholders of Sonesta International Hotels Corporation was held on May 13, 2009.    All nominees for directors were elected.  The results of the votes to the election of directors were as follows.

ELECTION OF COMMON STOCK DIRECTORS

DIRECTOR	VOTES RECEIVED	VOTES WITHHELD
George S. Abrams	3,256,202	283,438
Joseph L. Bower	3,358,905	180,735
Charles J. Clark	3,423,640	116,000
Clarence A. Davis	2,888,042	651,598
Irma F. Mann	3,328,127	211,513
Jacqueline Sonnabend	3,380,701	158,939
Peter J. Sonnabend	3,315,966	223,674
Stephanie Sonnabend	3,380,701	158,939
Stephen Sonnabend	3,315,966	223,674
Jean C. Tempel	3,358,905	180,735

Our stockholders also approved a proposal to amend our Certificate of Incorporation that was described in the proxy statement we distributed to our Shareholders in connection with the meeting.  As more fully described in our proxy statement, the purpose of the amendment was to substitute a “one vote per share” procedure for the cumulative voting procedure in the election of directors.  The amendment was approved by our Shareholders with 1,873,067 votes in favor (with 850,376 shares against, 2,904 abstentions and 813,293 broker non-votes).

PART II – Other Information

Item Numbers 1, 2, 3, 5 and 6

Not applicable during the quarter ended June 30, 2009.

19

SIGNATURE

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 thereunto duly authorized.

SONESTA INTERNATIONAL HOTELS CORPORATION
By:	/s/ Boy van Riel
	Boy van Riel
	Vice President and Treasurer
	(Authorized to sign on behalf of the Registrant as Principal Financial Officer)
Date: August 13 2009

20

EX-3.1

Exhibit 3.1

RESTATED CERTIFICATE OF INCORPORATION

OF

SONESTA INTERNATIONAL HOTELS CORPORATION

Pursuant to Section 40 of the Stock Corporation Law

We, the undersigned Peter J. Sonnabend and David Rakouskas, being respectively the chief executive officer & vice chairman and the secretary of Sonesta International Hotels Corporation, hereby certify

1.The name of the corporation is Sonesta International Hotels Corporation.  The name under which the corporation was originally incorporated is Childs Company.

2.The certificate of consolidation forming said corporation was filed in the office of the Secretary of State on the sixth day of December 1923.

3.The entire certificate of consolidation as now in force and effect, is hereby restated, without change in the effect, meaning or substance thereof, to read as herein set forth in full as follows:

Childs Company and Childs Service, Incorporated, both being corporations duly organized and existing under and by virtue of the laws of the State of New York for the purpose of carrying on kinds of business which a corporation organized under Article Two of Chapter 787 of the Laws of 1923 might carry on, having determined to consolidate, do for that purpose make and file this certificate of consolidation as follows:

First:  The name of the new corporation is

SONESTA INTERNATIONAL HOTELS CORPORATION

Second:  The purposes and powers of the new corporation are:

1.To purchase, lease and otherwise acquire, erect, construct, own, hold, use, maintain, improve, rebuild, enlarge, alter, equip, furnish, conduct, operate, manage, control, sell, lease, mortgage and otherwise dispose of restaurants, cafes, cafeterias, hotels, and eating and drinking establishments of every kind and description whatsoever, and to engage in each and every aspect of the restaurant, food and liquor businesses; to conduct and operate the businesses of bakers, confectioners, eaterers, grocers, dairy operators, food processors and dealers in and producers of meat and meat products, poultry and poultry products, dairy products, fish, vegetables, baking goods, confections, fruits, liquors, wines and other foods and beverages; to conduct farms and farming operations; to manufacture, buy, sell, deal in and with foods and beverages of every kind and description; and to engage in any business incidental to or connected therewith without limitation as to type or amount;

2.To take, buy, purchase, exchange, hire, take on lease and sublease, and otherwise acquire real estate, real property and leaseholds, either improved or unimproved, and any and all interests and rights therein and thereto, located in any part of the world, and to own, hold, possess, occupy, use operate, improve, mortgage and otherwise encumber, sell, assign, transfer, convey, lease, sublease, and otherwise dispose of, control, maintain, manage, develop, and generally deal in and with the same;

3.To purchase, lease, and otherwise acquire, erect, construct, make, maintain, improve, rebuild, enlarge, alter, equip, furnish, operate, manage, control, sell, mortgage, lease, and otherwise dispose of and turn to account and aid in or subscribe toward, the erection, construction, making, improvement, maintenance and operation of, any and all kinds of buildings, houses, dwellings, apartments, hotels, farms, dairies, bakeries, confectionery factories, canneries, packing plants, food processing plants, refrigeration plants, bottling plants, stores, shops, offices, warehouses, commissaries, garages, mills, laboratories, factories, plants, roads, docks, piers, rolling stock, vehicles, vessels, works and structures of every kind and description;

4.To make, manufacture, compound, construct, extract, produce, prepare, refine, acquire, experiment with, hold, use, equip, repair, remodel, develop, improve, operate, buy, sell, lease, hire, pledge, mortgage, install, import, export, speculate in and generally deal in and with any and all kinds and descriptions of machines, machinery, engines, motors, dynamos, apparatus, instruments, fixtures, appliances, devices, contrivances, and other articles and any accessories and improvements thereof of every kind and description, and any and all kinds of commodities, produce, natural resources, goods, wares, merchandise, grants, options, licenses, royalties, concessions, franchises, contracts and all kinds of personal property and any and all interests and rights therein and thereto without limitation as to type or amount;

2

5.To such extent as a corporation organized under the New York Stock Corporation Law may then lawfully do, but not otherwise, to purchase, subscribe for and otherwise acquire, underwrite, obtain an interest in, own, hold, mortgage, pledge, hypothecate, assign, deposit, create trusts with respect to, sell, exchange, trade and otherwise dispose of, and in all ways deal in and with, all forms of securities, including (without limiting the generality of the foregoing) stocks, shares, voting trust certificates, bonds, mortgages, debentures, notes, evidences of indebtedness, certificates of indebtedness, certificates of interest, part-paid receipts and allotment certificates, land trust certificates, warrants, rights, scrip commercial paper (except bills of exchange), choses in action and other obligations and securities of any nature howsoever evidenced, issued or created by any government, state, territory, district, municipality or other political or governmental division or subdivision, body politic, corporation, association, partnership, firm, trustee, syndicate, individual, combination, organization or entity whatsoever, located in and organized under the laws of any part of the world; to acquire and become interested in any such securities by original subscription, underwriting, participation in syndicates and otherwise, conditionally or otherwise, and either with a view to investment or for resale or for any other lawful purpose, and irrespective of whether fully-paid or subject to further payments or assessments; to exercise in respect of any such securities any and all rights, powers and privileges of individual ownership and interest therein, including the right to vote thereon and to consent and to otherwise act with respect thereto; to pay any assessments that may be levied upon any such securities; to receive, collect and dispose of interest, dividends, rights, profits, income and emoluments of any kind whatsoever from any such securities and transactions; to do any and all acts and things for the preservation, protection, improvement and enhancement in value of any such securities, or designed to accomplish any such purpose, and to aid by loan, subsidy, guaranty or in any other manner those issuing, creating or responsible for any of such securities;

6.To purchase, hold, cancel, reissue, sell, resell, pledge, transfer, and otherwise dispose of shares of its own capital stock (so far as may be permitted by law or its certificate of incorporation, as amended) and its own bonds, debentures, notes, warrants, rights, scrip or other obligations or securities of any nature, howsoever evidenced;

7.To promote, finance, aid, assist, financially and otherwise, any body politic, corporation, association, partnership, firm, trustee, syndicate, individual, combination, organization or other entity located in or organized under the laws of any part of the world, any stock or security of which is held directly or indirectly by or for the corporation, or in the business, financing or welfare of which the corporation shall have any interest; and in connection therewith to guarantee or become surety for the performance of any undertaking or obligation of any such entity, and to guarantee by endorsement or otherwise the payment of the principal of or interest or dividends on or sinking fund payments with respect to any such security of any such entity or any other payments whatsoever to be made by it; and to join in any reorganization with respect to any such entity; all to the extent that the same may be permitted by the laws pursuant to which the corporation is formed or by any other law or hereafter applicable to the corporation;

3

8.To promote, institute, enter into, conduct, perform, assist or participate in every kind of commercial, mercantile, manufacturing, mining, natural resources extracting, industrial or any other enterprise, business, work, contract, undertaking, venture and operation in any part of the world; and for any such purpose to purchase, lease, and otherwise acquire, take over, hold, sell, liquidate and otherwise dispose of real estate, plants, equipment, inventory, merchandise, services, materials, stock, good will, franchises, patents, trademarks, and trade-names, and other properties and assets of corporations, associations, partnerships, firms, trustees, syndicates, individuals, combinations, organizations and other entities located in or organized under the laws of any part of the world; to continue, alter, extend and develop their business, assume their liabilities, guarantee or become surety for the performance of their obligations, reorganize their capital and participate in any way in their affairs, and to take over as a going concern and to continue in its own name any business so acquired the operation of which would be permitted under any provision of this certificate; all to the extent that the same lawfully may be permitted by the laws pursuant to which the corporation is formed or by any other law now or hereafter applicable to the corporation;

9.To adopt, apply for obtain, register, purchase, lease, take licenses with respect to and otherwise acquire, maintain, protect, hold, own, use, operate, introduce, exercise, exploit, develop, control, pledge, sell, assign, grant, grant licenses and other rights with respect to and otherwise dispose of and generally deal in and with any inventions, improvements, processes, copyrights, patents, applications for patents, trademarks, formulae, licenses, trade-names, designs, labels, picturizations, distinctive marks and similar rights of any and all kinds, whether or not granted, registered or established by or under the laws of the United States or of any state, country or place;

10.For any purpose, upon any terms and without limit (so far as may be permitted by its certificate of incorporation, as amended), to borrow or raise money and to issue, draw, make, accept, sell and dispose of bonds, debentures, notes, drafts, warrants, certificates of indebtedness, certificates of interest and other obligations and securities of the corporation, secured or unsecured and howsoever evidenced, and as security therefor to mortgage, pledge, convey, assign in trust or grant any charge or impose any lien upon all or any part of the real or personal property, rights, interests or franchises of the corporation, whether owned by it at the time or thereafter acquired, or to give other security therefor;

11.To pay for any property, securities, right or interests acquired by or services performed for the corporation in cash or other property, rights or interests held by the corporation, or by issuing and delivering in exchange therefor its own stock, bonds, debentures, notes, warrants for stock, certificates of indebtedness or other obligations or securities howsoever evidenced;

12.In connection with any sale, conveyance, issue or exchange, permitted by law, of its own securities or of all, or any interest in or part of, the property, rights, privileges and franchises of the corporation, including its good will, to accept payment therefor in whole or in part in property consisting of or including stock, bonds, debentures, notes, warrants for stock, certificates of indebtedness or other obligations or securities, howsoever evidenced, of any corporation, joint stock company, trust, firm or association;

4

13.To carry on all or any part of its business, objects or purposes as principal, factor, agent, broker, dealer, commission merchant, selling agent, contractor or otherwise, either alone or associated with any corporation, association, partnership, firm, trustee, syndicate, individual, combination, organization or entity whatsoever, located in or organized under the laws of any part of the world;

14.In carrying on its business and for the purpose of furthering its objects and purposes, to enter into and perform agreements and contracts of any nature with any government, state, territory, district, municipality, political or governmental division or subdivision, body politic, corporation, association, partnership, firm, trustee, syndicate, individual, combination, organization or entity whatsoever, located in or organized under the laws of any part of the world;

15.To conduct its business in any and all branches thereof, so far as permitted by law, in the State of New York and in any other part of the world, and to maintain one or more offices and agencies wither within the State of New York or in any other part of the world;

16.To do any or all things herein set forth to the same extent and as fully as natural persons might or could do, and to do any and all other acts and things necessary, appropriate or convenient for the furtherance of or incidental  to the business, objects and purposes herein enumerated and, for the exercise of the powers herein conferred, and to do all such acts and things, either directly or through subsidiaries, agents, or others;

17.To do each and every necessary, suitable, convenient or proper thing for the accomplishment of any of the purposes and the attainment of any and all of the objects hereinbefore enumerated or incidental to the powers herein named, or which shall at any time appear conducive thereto or expedient for the protection or benefit of the corporation, either as holder of or as interested in any property or otherwise;

18.The foregoing clauses shall be construed as purposes, objects and powers, and the matters expressed in each clause shall not be limited in any way, except as otherwise expressly provided, by reference to or inference from the terms of any other clause (or any other matter within the same clause), but shall be regarded as independent purposes, objects and powers.  The enumeration of specified purposes, objects and powers shall not be considered to exclude, limit or restrict in any manner any power, right or privilege given to the corporation by law, or to limit or restrict the meaning of the general terms of the general powers of the corporation, not shall the expression of one thing be deemed to exclude another, although it be of like nature, not expressed;

19.Nothing herein contained shall be construed as giving the corporation any rights, powers or privileges not permitted to it by law, but the occurrence within any of the foregoing clauses of any purpose, power or object prohibited by the laws of the State of New York or of any other State, or any territory, dependency or foreign country, in which the corporation may carry on business, shall not invalidate any other purpose, power or object not so prohibited, by reason of its contiguity or apparent association therewith.

5

Third:  A.  The amount of capital stock of this Corporation is Thirteen Million Five Hundred Thousand Dollars ($13,500,000.00) consisting of Three Hundred Ninety Five Thousand Five Hundred Thirty Five (395,535) shares of Preferred Stock, with a par value of $25.00 each, and Ten Million (10,000,000) shares of Class A Common Stock, with a par value of $.80 each, and Two Hundred Thousand (200,000) shares of Class B Common Stock, with a par value of $.80 each.

The designations, preferences, privileges and voting powers and the restrictions or qualifications thereof are as follows:

B.Subject to the provisions of Section 11 of the Stock Corporation Law, the Preferred Stock may be issued in one or more series.  Except in so far as the designations, preferences, privileges and voting powers and restrictions or qualifications thereof of the shares and series of shares of each class or any series of shares shall in this certificate be otherwise provided for, the Board of Directors is authorized, in the manner provided by law, to fix from time to time, before the issuance of any one or more series of shares of Preferred Stock (other than the initial series, the provisions for which are stated in this certificate), the designations, preferences and privileges, and the restrictions or qualifications thereof, including, without limiting the generality thereof, lawful provisions relating to the distinctive serial designations thereof:  the rate or rates of dividends thereon, not exceeding 6% per annum; the  times of payment of and the dates from which dividends shall be cumulative; the price or prices at which the same may be redeemed, not exceeding $27.50 per share and accrued dividends thereon; the amount or amounts which shall be paid to the holders thereof in case of voluntary or involuntary dissolution, liquidation or winding up, not exceeding $27.50 per share, if the same be voluntary, and not exceeding $25 per share, if involuntary, in either case plus accrued dividends thereon; the amount and terms of any sinking, redemption, or purchase fund, if any, for the purchase or redemption thereof, and the terms, conditions, and provisions, if any, respecting the conversion of shares of Preferred Stock of any one or more series into Common Stock

All shares of Preferred Stock shall be of equal rank, and all shares of each series shall be identical in all respects except as to the dates from which dividends thereon shall be cumulative.

Each share of Preferred Stock shall rank on a parity with each share of Preferred Stock, regardless of series, with respect to preferential dividends at the respective rates fixed for such series, and when the stated dividends are not paid in full the shares of all series of Preferred Stock shall share ratably in the payment of dividends including accumulations, if any, in accordance with the sums which would be payable on said shares if all dividends were declared and paid in full.

C.   As used in this certificate

(1)The term “Preferred Stock” shall mean the Preferred Stock of the par value of $25 each, authorized by this certificate.

(2)The term “Certificate of Designation” shall mean the certificate filed as required by law with respect to any series of Preferred Stock (other than the initial series thereof) setting forth, with respect to such series, the designations, preferences and privileges and the restrictions of qualifications thereof.

6

(3)The term “Preferred Stock – Initial Series” shall mean the series of Preferred Stock hereinbelow designated as the “5% Cumulative Preferred Stock.”

(4)The term “junior stock” shall mean stock (as the same may exist from time to time) not entitled to receive cash dividends until all dividends have been paid on or declared and set apart for the Preferred Stock and/or not entitled to receive any assets upon liquidation, dissolution or winding up until the entire amount to which the holders of Preferred Stock shall be entitled upon liquidation, dissolution or winding up shall be paid or deposited in trust for such payment.

(5)The term “accrued dividends” shall mean an amount with respect to each share of Preferred Stock, computed at the annual dividend rate for such share from the date when dividends became cumulative on such share to the date to which dividends are stated to be accrued, less the aggregate of all dividends theretofore paid thereon.

D.1. Upon any liquidation, dissolution or winding up of the Corporation, the holders of the Preferred Stock of each series shall be entitled, before any distribution or payment is made or set apart for any junior stock, to receive (a) in the case of Preferred Stock – Initial Series, the sum hereinbelow provided in such event and (b) in the case of any other series of Preferred Stock, the sum provided in such event in the Certificate of Designation with respect to such other series, subject to the limitation provided for in Section B hereof; and the holders of the Preferred Stock shall not be entitled  to any further payment after making of such payments in full to each holder of Preferred Stock, or after an amount sufficient to make such payments in full (or the portion of such amount not already paid out for such purpose) has been deposited in trust for the purpose in any bank or trust company in the City of New York, N.Y., having a capital and surplus of not less than $5,000,000.00

2.  The remaining assets and funds of the Corporation shall be distributed among the holders of any junior stock according to their respective priorities, if any, and according to their respective shares.

3.  If upon any liquidation, dissolution or winding up of the Corporation the amounts payable to the holders of the Preferred Stock of all series, as provided herein and in any Certificate of Designation hereafter filed, are not paid in full, the holders of the Preferred Stock of all series shall share ratably in any distribution of assets in such liquidation, dissolution or winding up, in accordance with the sums which would be payable on such distribution if all sums so payable were paid in full.

4.  A consolidation or merger of the Corporation with or into another corporation or corporations or the consolidation or merger of another corporation or corporations into the Corporation, or the sale, lease, conveyance of exchange, whether for cash, shares of stock, securities or property, of all or substantially all of the assets of the Corporation, shall not be deemed or construed to be a liquidation, dissolution or winding up of the Corporation within the meaning of the provisions hereof.

7

E.1. The Preferred Stock of any one or more series may be redeemed in whole or from time to time, in part, at the option of the Board of Directors or by the operation of any sinking fund or redemption or purchase fund, if any, provided for the Preferred Stock or any series thereof (a) in the case of Preferred Stock – Initial Series, at the redemption prices hereinbelow fixed for such series, or (b) in the case of any other series, at the redemption price or prices fixed for such series in the Certificate of Designation with respect to such series subject to the limitation provided for in Section B hereof.  If less than all of the shares of Preferred Stock, or less than all of the shares constituting any series thereof, are to redeemed, the shares to be redeemed shall be selected by lot or as nearly as practicable pro rata without obligation to redeem any fraction of the shares in such manner as the Board of Directors may determine to be fair and proper.  In case less than all the shares represented by any certificate for Preferred Stock are redeemed, upon surrender thereof a new certificate shall be issued representing the unredeemed shares.

2.  Notice of the intention of the Corporation to redeem shares of Preferred Stock and of the date and place of redemption shall be mailed, not less than 30 days before the date fixed for redemption, to each holder of record of the shares to be redeemed at his address as the same shall appear upon the books of the Corporation.  If any of the shares to be redeemed are convertible into Common Stock, said notice shall also include a statement to the effect that the right of each holder of said shares to convert the same, according to their terms, will terminate by reason of such proposed redemption and shall specify the date of such termination.

3.  Not later than the date of redemption specified in such notice, the Corporation may deposit with any bank or trust company in the City of New York, N.Y., named in such notice, having a capital and surplus of not less than $5,000,000.00, the aggregate redemption price of the shares called for redemption and not theretofore duly surrendered for conversion in accordance with the conversion rights, if any, thereof, for payment at or before the date fixed for redemption of the redemption price for the shares called for redemption.

4.  If the aforesaid notice shall have been duly mailed, or if irrevocable authority for the mailing thereof shall have been given, and if on or before the redemption date specified in such notice the funds necessary for such redemption shall have been deposited as aforesaid so as to be and continue to be available for the purpose of such redemption then, notwithstanding that any certificate for such Preferred Stock so called for redemption shall not have been surrendered, dividends thereon shall cease to accrue from and after the date of redemption so specified, and on and after the date of such deposit, the holders of the shares of Preferred Stock so called for redemption shall cease to be stockholders with respect to such shares and such holders shall have no interest or claim against the Corporation with respect to such shares, but shall be entitled only (a) to receive payment of the redemption price, and no more, upon surrender of their certificates, or (b) in the case of shares convertible into Common Stock, to convert their shares into Common Stock of the Corporation at any time on or before the date fixed for the termination of such conversion right.

Any funds deposited for the purpose of redemption and not required for such purpose as a result of the conversion of any Preferred Stock prior to redemption shall subsequent to the redemption date be forthwith repaid to the Corporation.

8

5.  The Corporation shall be entitled to receive from any such bank or trust company the interest, if any, allowed by such bank or trust company on any money deposited as in the preceding paragraph provided, and the holders of any shares so redeemed shall have no claim to any such interest.  All moneys so deposited and remaining unpaid at the end of six years from the date fixed for redemption shall, if thereafter requested by resolution of the Board of Directors, be repaid to the Corporation and, in the event of such repayment to the Corporation, each holder of record of any shares so redeemed who shall not have made claim against such moneys prior to such repayment to the Corporation shall look only to the Corporation for the payment thereof, but shall in no event be entitled to any interest.

F.1.  At each election of Directors by stockholders, the holders of the Preferred Stock voting separately as a class, shall have the right to elect two members of the Board of Directors of the Corporation and the holders of the Common Stock, voting separately as a class, shall be solely entitled to elect the remaining Directors.

2.  Any directors so elected by the holders of the Preferred Stock shall continue to serve as such directors for the full term for which they shall have been elected and if, prior to the end of said term, a vacancy in the office of any such director shall occur by reason of death, resignation, removal, or disability or for any other cause, such vacancy shall be filled until the next succeeding annual meeting of stockholders for the election of directors in the manner provided in the by-laws of the Corporation.

3.  As long as any Preferred Stock is outstanding, the Corporation shall not, without the consent of the holders of at least two-thirds in number of shares of the outstanding Preferred Stock, irrespective of series except as otherwise in this subparagraph 3 provided, given in person or by proxy at a meeting of stockholders called for that purpose, or given in writing:

     (a) Amend or repeal any provision of, or add any provision to, the Certificate of Incorporation of the Corporation, if such action would alter or change the designations, preferences, privileges or powers of the Preferred Stock so as to affect such Preferred Stock adversely; provided, however, that if any action described in this cause (a) would affect adversely Preferred Stock of less than all series then outstanding, such action shall require the consent of the holders of at least two-thirds in number of shares of outstanding Preferred Stock of such series only as may be so affected, acting as a class, given as aforesaid; or

     (b)  Authorize or create, or increase the authorized amount of any other class of stock having preferential rights as to dividends, or upon liquidation, dissolution or winding up of the Corporation, which are prior to those of the Preferred Stock.

 As long as any shares of Preferred Stock are outstanding, the Corporation shall not , without the consent of the holders of a majority in number of shares of the outstanding Preferred Stock, given in person or by proxy at a meeting of stockholders called for that purpose, or given in writing, increase the authorized amount of Preferred Stock or create any other capital stock having preferential rights  as to dividends, or upon liquidation, dissolution or winding up of the Corporation which are on a parity with those of the Preferred Stock.

9

The Provisions of this subparagraph 3 shall not be applicable, except as otherwise required by law, if the issuance of such other prior or parity stock above referred to is expressly conditioned upon the prior or contemporaneous redemption or requisition by the Corporation of all shares of Preferred Stock then outstanding, irrespective of series.

4.Except (i) as hereinabove provided and (ii) except as otherwise expressly provided by statute, the holders of the Preferred Stock shall not be entitled to vote and all rights to vote and all voting power shall be vested solely in the Common Stock, each holder of such stock being entitled at every meeting of stockholders to one vote for each share of such stock standing in his name on the books of the Corporation, subject to cumulative voting for Directors as hereinbelow provided, and this provision shall prevail in all elections and in all proceedings over the provisions of any statute which authorizes any action by vote or consent of the holders of all or any class of the shares or a specific proportion of all or any class of shares of the Corporation, and the holders of the Preferred Stock, except as otherwise provided in any Certificate of Designation hereafter filed with respect to any series or Preferred Stock, are specifically excluded from the right to vote in any proceeding (i) for mortgaging the property and franchises of the Corporation pursuant to Section 16 of the New York Stock Corporation Law; (ii) for authorizing any guaranty pursuant to Section 19 of said laws; (iii) for the sale of the franchises and property of the Corporation pursuant to Section 20 of said law; (iv) for consolidation pursuant to Section 16 of Section 91 of said law; (v) for voluntary dissolution pursuant to Section 105 of said law; or (vi) for change of name pursuant to the New York General Corporation Law or pursuant to Section 35 of the New York Stock Corporation Law.

5.At all elections of directors of the Corporation, (i) each stockholder entitled to vote at such election shall be entitled to one vote per share and stockholders shall not be entitled to cumulate their votes in the election of directors of the Corporation, and (ii) at all such elections the presence in person or by proxy of the holders of record of stock of the Corporation entitled to cast one-third of the votes which the holders of all outstanding stock in the aggregate are entitled to cast for the election of directors shall be necessary to constitute a quorum.

6.Whenever the holders of Preferred Stock, or any series thereof, shall have the right to vote, each holder of such Preferred Stock, or such series thereof, as the case may be, shall be entitled to one vote for each share of such stock standing in his name on the books of the Corporation subject to cumulative voting for Directors as hereinabove provided.

G.1. Notwithstanding the provisions of subdivision (8) of Paragraph 11, and Paragraph 12 of the “Certificate of (a) Authorization of New Shares of Stock, (b) Change of Previously Authorized Shares, (c) Classification and Reclassification of said Shares, (d) Change of Statements Respecting Capital and (e) Reduction of Capital” of the Corporation, filed pursuant o Section 36 of the New York Stock Corporation Law in the Department of State of New York on March 31, 1948, no holder of any shares of Preferred Stock shall be entitled as of right to purchase or subscribe for any issued or unissued stock of any class or any additional shares of any class to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or any stock, bonds, certificates of indebtedness, debentures or other securities convertible into stock of the Corporation or carrying any right to purchase stock of any class.

10

2.  In lieu of any pre-emptive rights existing at law and by virtue of any provision affecting any such rights contained in the Certificate of Incorporation of the Corporation, the holders of Common Stock shall be entitled to pre-emptive rights to subscribe for and purchase any new issue or issues of securities of the Corporation which shall have voting rights or which shall be convertible into or have an option to purchase securities having such rights.  However, shares or other securities shall not be subject to the aforesaid pre-emptive rights if they (a) are issued or optioned by the Board of Directors to effect a merger or consolidation or for consideration other than cash; (b) are issued to satisfy conversion or option rights theretofore granted by the Corporation; (c) are issued pursuant to a plan of reorganization approved under and in accordance with the provisions of the act of Congress of July first, eighteen hundred and ninety-eight, entitled “An act to establish a uniform system of bankruptcy through out the United States”, and acts emendatory thereof.

The above mentioned pre-emptive rights herein granted to the holders of the Common Stock may be waived with respect to any specific proposal or proposals for the sale or issue of securities or options for securities set forth in the notice of any annual or special meeting of Common Stockholders of the Corporation, if at such meeting said waiver shall be approved by three-fourths of the votes cast by Common Stockholders present in person or by proxy at said meeting.  Any waiver so approved shall be binding upon all Common Stockholders.  Any such waiver so approved by the Common Stockholders of the Corporation shall apply only, and be limited to, the specific proposal or proposals of which notice shall have been given for consideration thereof by the Common Stockholders at such meeting; provided, however, that said pre-emptive rights may be waived from time to time with respect to any subsequent proposal or proposals upon notice similarly given and similarly approved by the Common Stockholders.  Any notice of such annual or special meeting of the Common Stockholders of the Corporation at which the aforesaid waiver or waivers shall be voted upon, shall contain adequate information so as to enable the Common Stockholders to vote upon any such proposal.  In the event that any such waiver shall have been approved by a three-fourths vote of said Common Stockholders as above set forth, no Common Stockholder or Common Stockholders who shall have failed to vote or shall have voted against such waiver shall be entitled to any right of appraisal or payment for his stock.

To the extent permitted by law, the above provisions relative to pre-emptive rights of Common Stockholders constitute and are intended to be a full and complete statement of their pre-emptive rights and of any limitations and exceptions thereto.

H.1.  The Corporation shall not be required upon any conversion of any convertible Preferred Stock to issue certificates representing any fraction or fractions of a share of Common Stock, but may issue in lieu thereof one or more non-dividend bearing and non-voting scrip certificates, in the denomination of one one-hundredths of a share or multiples thereof, in such form or forms as shall be approved by the Board of Directors, each representing a fractional right to receive a certificate representing one share of Common Stock when presented with other like scrip certificates representing other fractional rights in the aggregate equaling the right to at least one share of Common Stock ..  Such scrip certificates may contain such terms and conditions as shall be fixed by the Board of Directors and may become void and of no effect after a reasonable period (but in no event less than two years after the issuance thereof) to be determined by the Board of Directors and specified in such scrip certificates.

11

2.  If and so long as any shares of Preferred Stock of the Corporation which are convertible into Common Stock remain outstanding, there shall be reserved unissued out of the authorized but unissued Common Stock of the Corporation a number of shares of Common Stock sufficient to provide for the conversion of the shares of such convertible Preferred Stock outstanding.

3.  Shares of convertible Preferred Stock of any Series which have been converted shall forthwith revert to the status of unissued shares and shall not be reissued

I.  While any dividends on the Preferred Stock of any series are in arrears, the Corporation shall not purchase any shares if its Preferred Stock, except (a) by redemption; (b) through the operation of any sinking fund or purchase fund provided for herein or in any Certificate of Designation hereafter filed; or (c) in accordance with an offer to purchase or call for tenders made to all holders of Preferred Stock, upon the same terms for the shares of any one series, and if shares of more than one series are outstanding, then upon terms which in the judgment of the Board of Directors are equitable as between the respective series.

Subject to the forgoing provisions of this Section I and subject to the provisions of subparagraph 6 of Section J, the Corporation shall have the power at any time and from time to time and at either public of private sale, out of any assets of the Corporation legally available therefor, to purchase the whole or any part of the Preferred Stock then outstanding upon the best terms then reasonably obtainable, but in no event at a price in respect of any shares of said stock purchased which shall be higher than the redemption price thereof.

J.1. The initial series of Preferred Stock shall consist of 91,212 shares of Preferred Stock, which shares are hereby designated as “5% Cumulative Preferred Stock.”  Said shares of 5% Cumulative Preferred Stock are herein referred to as “Preferred Stock – Initial Series.”

2.  The holders of Preferred Stock – Initial Series shall be entitled, in preference to the holders of any junior stock, to receive, as and when declared by the Board of Directors, but only out of funds legally available for the payment of dividends, cash dividends at the rate of $1.25 per share per annum, and no more, payable quarterly on the last days of March, June, September and December in each year (such quarterly periods being herein referred to as “dividend periods”).  Such dividends on each share of Preferred Stock – Initial Series shall be cumulative from April 1, 1951.  In no event shall the Corporation be required to pay a fraction of a cent to any stockholder.

3.  So long as any Preferred Stock – Initial Series shall remain outstanding, no dividends shall be declared or paid upon, nor shall any distribution be ordered or made to any class of junior stock, nor shall any shares of any junior stock be purchased or redeemed by the Corporation, unless (A) all dividends on the Preferred Stock – Initial Series for all past dividend periods shall have been paid and the full dividend for the then current dividend period shall have been paid or declared and a sum sufficient for the payment thereof set apart; and (B) all amounts required to be set aside for the Preferred Stock – Initial Series sinking fund, hereinafter described, have been so set aside.

12

Subject to the foregoing provisions and subject to the preferential dividend rights as provided in any Certificate of Designation hereafter filed with respect to any series of Preferred Stock, and not otherwise, such dividends (payable either in cash, stock or otherwise) as may be determined by the Board of Directors , may be declared and paid on any junior stock from time to time out of funds of the Corporation legally available for the payment of dividends, and the Preferred Stock – Initial Series shall not be entitled to participate in any such dividends whether payable in cash, stock or otherwise.

For the purposes of this subparagraph 3, neither (i) a purchase, redemption or other acquisition of junior stock by the Corporation which is made substantially simultaneously with the issuance of other junior stock and by the application of a sum not greater than the net proceeds received from such issuance of other junior stock, nor (ii) an acquisition of junior stock through the issuance of other junior stock therefor, shall be deemed a purchase of junior stock by the Corporation.

4.  Upon any liquidation, dissolution or winding up of the Corporation, the holders of the Preferred Stock – Initial Series shall be entitled to be paid the sum of $25.00 for each such share of Preferred Stock – Initial Series, plus an amount equivalent to all unpaid accrued dividends thereon, accrued to the date of such payment; provided, however, that if such liquidation, dissolution or winding up be voluntary, the amount to which the holders of the Preferred Stock  Initial Series shall be entitled shall be the amount to which such holders would then have been entitled had such Preferred Stock – Initial Series been redeemed on the date of such payment.

5.  The redemption price of the Preferred Stock – Initial Series shall be $25.00 for each share redeemed if redeemed on or before April 1, 1953, or $27.50 if redeemed thereafter, plus in each case unpaid accrued dividends thereon to the date of redemption.

6.  (a) On or before April 30th, in each calendar year, commencing with the year 1952, so long as any Preferred Stock – Initial Series shall remain outstanding, the Corporation shall, as and for a sinking fund for the purchase or redemption of Preferred Stock – Initial Series (hereinafter called the sinking fund), set aside on its books an amount equal to ten percent (10%) of the consolidated net earnings, as hereinafter defined, of the Corporation and its wholly-owned subsidiaries for such preceding calendar year.  For the purpose of the sinking fund, the net earnings for any calendar year shall be determined in accordance with generally accepted accounting practice.  There shall be deducted for this purpose from the gross earnings and other income credits for such calendar year, an amount equal to all proper expenses and charges to earnings or income for such calendar year, including, but without limitation, provision for income and other taxes, depreciation, obsolescence, interest charges, fixed amortization payments required to be made on any debt with maturity or maturities in excess of one year (excluding amortization payments on debt secured by mortgages upon real estate owned) and the dividend requirements for such calendar year on the Preferred Stock – Initial Series and the Preferred Stock of all other series and any other stock other than junior stock.  Gains or losses from the sale, abandonment or other disposition of capital assets shall not be included in computing net earnings for this purpose.

13

(b)  The Corporation may, in lieu of setting aside the amount required to be set aside for any sinking fund installment or any part thereof apply to such sinking fund installment shares of Preferred Stock – Initial Series theretofore acquired by it by purchase or redemption otherwise than through the operation of the sinking fund (and not theretofore credited against any sinking fund installment) and the Corporation shall be entitled to treat any shares so applied to a sinking fund installment at the par value thereof.  Any amount set aside for the sinking fund shall, to the extent legally available for the purpose, be applied as promptly as practicable in the judgment of the Board of Directors to the purchase of Preferred Stock – Initial Series in the open market or at public or private sale, with or without advertisement, or through invitation to holders of Preferred Stock – Initial Series to tender the same, at such price or priced as may be determined by the Board of Directors but not exceeding the redemption price thereof.  If and to the extent that said amount is not so applied within six months (or such earlier time as the Board of Directors may determine) after the date on which it shall have been so set aside, it shall forthwith be applied to redeem such number of shares of Preferred Stock – Initial Series as shall substantially exhaust the amounts then in the sinking fund (provided, however, that if such amounts do not exceed $5,000 the Corporation may, but shall not be required to, make such redemption) at the redemption price set forth in subparagraph 5 of this Section J.  Any balance remaining in the sinking fund after such redemption and any balance remaining because of the conversion of Preferred Stock – Initial Series called for redemption, shall be retained in the sinking fund and shall be used for the purchase or redemption of Preferred Stock – Initial Series as above provided; but shall not reduce the Corporation’s obligation with respect to any future additions to the sinking fund.   If at any time there shall no longer be any shares of Preferred Stock – Initial Series outstanding, any balance remaining in the sinking fund shall revert to the general funds of the Corporation.

(c)  While any dividends on the Preferred Stock of any series are in arrears, the Corporation shall not be required to set aside any installments for the sinking fund; provided, however, that any sum or sums which would be required to be so set aside but for the existence of such dividend arrears, shall be cumulative and shall be set aside, as and when ordered by the Board of Directors, after such dividend arrearages shall have been paid or declared and set apart for payment.  Until all cumulative sinking fund installments shall have been set aside as above provided, no dividends shall be declared or paid upon, nor shall any distribution be ordered or made to, any class of junior stock nor shall any shares of junior stock be purchased or redeemed by the Corporation.  While the Corporation is in arrears in setting aside any sinking fund installment, the Corporation shall not purchase shares of its Preferred Stock – Initial Series except (a) through the operation of the sinking fund or (b) by redemption or (c) in accordance with an offer to purchase or call for tenders made to all holders of Preferred Stock – Initial Series upon the same terms.

(d)  Shares of Preferred Stock – Initial Series purchased or redeemed through the operation of the sinking fund or credited thereto, shall be retired and not re-issued.  Failure to set aside the amounts provided for in this subparagraph 6 shall have no consequence other than as set forth above under subparagraph 3 of this Section J.

14

7.  (a)  On or before April 1, 1961, the Preferred Stock – Initial Series shall, at the option of the respective holders thereof, be convertible at any time or times (but in the case of any share called for redemption, not after the tenth day prior to the date fixed for such redemption, unless default shall be made in the payment of the redemption price) into full paid and non-asssessable shares of Common Stock, at the rate of one share of Preferred Stock – Initial Series for three shares of Common Stock, if surrendered for conversion on or before April 1, 1954; or for 2 ½ shares of Common Stock, if surrendered for conversion thereafter and on or before April 1, 1958; or for two shares of Common Stock, if surrendered for conversion thereafter and on or before April 1, 1961, at which time the right to convert shares of Preferred Stock – Initial Series shall expire and terminate; upon surrender to the transfer agent for the Preferred Stock – Initial Series of the certificates of the Preferred Stock – Initial Series so to be converted, which if the Corporation shall so require, shall be properly endorsed; and, thereupon, the Corporation shall cause to be issued to such holders in exchange therefor, certificates for the number of shares of Common Stock issuable upon such conversion as herein provided.  No adjustment shall be made with respect to dividends upon Preferred Stock – Initial Series or the Common Stock in connection with any conversion.

   (b)  Anything herein contained to the contrary notwithstanding, if, at any time, the Corporation shall issue any Common Stock, either as a stock dividend or in subdivision of any previously outstanding shares of Common Stock, the number of shares of Common Stock, thereafter issuable upon the surrender of any Preferred Stock – Initial Series for conversion as herein provided, shall be increased in the same proportion as the number of shares of Common Stock which were outstanding immediately prior to such issue of Common Stock as a stock dividend or in subdivision of previously outstanding shares (as the case may be), was increased by such issue; and, in like manner, in case of any combination of outstanding Common Stock, by reclassification or otherwise, into a smaller number of outstanding shares than would otherwise be outstanding but for such combination, the number of shares of Common Stock thereafter issuable upon the surrender of any Preferred Stock – Initial Series for conversion, as herein provided, shall be reduced in the same proportion as the number of shares of Common Stock which were outstanding immediately prior to such combination of shares was reduced by such combination.

(c)  The number of shares of Common Stock issuable upon conversion of Preferred Stock – Initial Series from time to time, shall not be adjusted unless and until by reason of the happening of one or more of the events hereinabove specified such number shall be changed by five one-hundredths of a share or more; but in the event that such change shall not amount to five one-hundredths of a share or more, any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, together with any adjustment or adjustments carried forward, shall amount to five one-hundredths of a share or more.  All adjustments hereunder shall be made in multiples of one-hundredths of a whole share of Common Stock.

(d) In case of the happening of any one or more of the events hereinabove specified requiring an adjustment of the number of shares of Common Stock issuable upon conversion of any share of Preferred Stock – Initial Series, a statement signed by the President or Vice President and by the Treasurer or an Assistant Treasurer of the Corporation shall be filed by the Corporation with its transfer agent or agents of the Preferred Stock – Initial Series, showing in detail the facts giving rise to such adjustment and the number of shares of Common Stock thereafter issuable upon conversion of each share of Preferred Stock – Initial Series.

15

(e)  In case of any capital reorganization or any reclassification of the shares of Common Stock of the Corporation, or in case of a consolidation or merger of the Corporation into another corporation, or in case of any sale, lease or conveyance to another corporation of all or substantially all of the assets of the Corporation as an entirety, then as part of such reorganization, reclassification, consolidation, merger, sale, lease or conveyance, as the case may be, lawful provision shall be made for the remaining period of duration of the conversion rights of the Preferred Stock – Initial Series then outstanding so that the holders thereof shall have the right to convert each such share into the kind and amount of shares of stock or other securities or property to which a holder of the largest number of shares of Common Stock of the Corporation into which such share of Preferred Stock – Initial Series might have been converted if such share had been surrendered for conversion immediately prior to such reorganization, reclassification, consolidation, merger, sale, lease, or conveyance is entitled upon such reorganization, reclassification, consolidation, merger, sale, lease  or conveyance.  The rights of such holders with respect to the adjustment of the number of shares of Common Stock issuable upon conversion shall be appropriately continued and preserved, so as to afford as nearly as possible protection of the conversion privilege comparable to that provided herein.  The above provisions of this subparagraph shall similarly apply to successive capital reorganizations or reclassifications of the Corporation and to successive reorganizations of reclassification, consolidations, mergers, sales, leases or conveyances of or by any such successor or purchasing corporation or corporations.  Such capital reorganization, reclassification, consolidation, merger, sale, lease or conveyance shall not be deemed a liquidation, dissolution or winding up of the Corporation within the meaning of the next succeeding subparagraph hereof.

(f)  In case of any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, all conversion rights of any holders of shares of Preferred Stock – Initial Series shall terminate on a date to be fixed by the Board of Directors of the Corporation, such date so fixed to be not later than 10 days or earlier than 30 days prior to the date such liquidation, dissolution or winding up is to become effective.

16

(g)  In case (i) the Corporation shall pay any dividend upon its shares of Common Stock (other than in cash), or make any other distribution to the holders of its shares of Common Stock, or (ii) the Corporation shall offer for subscription to the holders of its shares of Common Stock any additional shares of stock of any class of the Corporation or grant to such holders any other rights or options, or (iii) of any capital reorganization or reclassification of shares of Common Stock of the Corporation, consolidation or merger of the Corporation with or into any corporation, or the sale, lease or conveyance to another corporation of all or substantially all of the property of the Corporation as an entirety, then the Corporation shall give at least 20 days prior notice thereof to each holder of record of shares of Preferred Stock – Initial Series, provided, however, that such notice shall not be required in the case of any consolidation or merger if the resultant corporation shall be the Corporation and shall involve no change in the capital structure of the Corporation nor any issuance of stock, cash or property to the stockholders of the Corporation.  In the case of the liquidation, dissolution or winding up of the Corporation, notice thereof shall be given at least 30 days prior to the date fixed by the Board of Directors for the termination of the conversion rights of the Preferred Stock – Initial Series, as above provided.  Such notice shall state the date (x) on which a record shall be taken for such dividend, distribution, subscription or grant, or if no such record be taken, the date on which such dividend is to be paid, distribution is to be made or subscription rights or grants are to become exercisable, or (y) on which such capital reorganization, reclassification, consolidation, merger, sale, lease, or conveyance is proposed to be effected, or (z) on which all conversion rights of the holders of shares of Preferred Stock – Initial Series shall terminate prior to liquidation, dissolution or winding up of the Corporation, as hereinabove provided, and the date on which such liquidation, dissolution or winding up shall take place, as the case may be.

Fourth:  The office of the Corporation is to be located in the County of New York in the City of New York, State of New York.  CT Corporation System is hereby designated as agent upon whom process in any action or proceeding against the Corporation may be served within the State of New York.  The address to which the Secretary of State shall mail a copy of any process against the Corporation which may be served upon him pursuant to law is:

CT Corporation System

277 Park Avenue

New York, NY  10017

Fifth:  The number of directors previously authorized is nine and the number hereafter shall be not less than five nor more than eleven.  The number of directors to be chosen within such limits shall be determined as prescribed by the By-Laws of the corporation.

Sixth:  No director need be a stockholder.

Seventh:  The Corporation shall make and submit to its stockholders, at least once annually, a report which shall include a profit and loss statement and a balance sheet prepared in accordance with sound business and accounting policies.

17

Eighth:  In case the Corporation enters into contracts or transacts business with one or more of its directors, or with any firm or association of which one or more of its directors are members or employees, or with any other corporation or association of which one ore more of its directors are stockholders, directors, officers or employees, such contracts or transactions shall not be invalidated or in anywise affected by the fact that such director or directors have or may have interests therein, provided, however, that in any such case the fact of such interest shall be disclosed or known to the other directors or stockholders acting upon or in reference to such contract or transaction.  The provisions of this paragraph shall not be construed to invalidate or in any way affect any contract or other transaction which otherwise would be valid under the common or statutory law applicable thereto.

Ninth:  The names and post office addresses of the person who are to be the directors of the corporation until the first annual meeting of its stockholders are as follows:

Name                                                      Post Office Address

Samuel S. Childs                                                      200 Fifth Ave., New York, N.Y.

William Childs                                           200 Fifth Ave., New York, N.Y.

Charles L. Roberts                                                      Basking Ridge, New Jersey

Lewis A. Thompson                                                      Somerville, New Jersey

O. H. McMurtrie                                                      Belvedere, New Jersey

S. Tydeman                                                      32 Broadway, New York, N.Y., Room 1308

Mathew Dean                                                      1180 Dean Street, Brooklyn, N.Y.

S. Willard Smith                                                      200 Fifth Ave., New York, N.Y.

Luther Childs                                                      Basking Ridge, New Jersey

Tenth:  Unless or until new by-laws shall be adopted by the new corporation or until amended as therein provided, the by-laws of said Childs Service, Incorporated, shall be the by-laws of the new corporation, except that unless and until a new seal shall be adopted the corporate seal of said constituent Childs Company shall be the corporate seal of the new corporation.

Eleventh:  Until officers of the new corporation shall be elected as provided by the by-laws, the officers of said constituent Childs Company shall continue to discharge for the new corporation the duties of their respective offices.

Twelfth:  The duration of the Corporation shall be perpetual.

18

IN WITNESS WHEREOF, this certificate of consolidation is subscribed and acknowledged by the Presidents and Secretaries of said constituent corporations and the affidavits of said Presidents and Secretaries are annexed hereto as required by Law, this 5th day of December 1923

Samuel S. Childs

President of Childs Company

Charles L. Roberts

Secretary of Childs Company

Thomas R. Hart, Jr.

President of Childs Service, Incorporated

Alexander T. Douglas

Secretary of Childs Service, Incorporated

19

EX-3.2

Exhibit 3.2

SET FORTH BELOW ARE THE CHANGES TO PARAGRAPH THIRD, SECTION F, SUBPARAGRAPH 5 OF THE COMPANY’S CERTIFICATE OF INCORPORATION. WORDS THAT ARE IN BOLD AND DOUBLE UNDERLINED WILL BE ADDED AND WORDS THAT ARE CROSSED OUT WILL BE DELETED

AMENDMENT

OF THE

CERTIFICATE OF INCORPORATION

OF

SONESTA INTERNATIONAL HOTELS CORPORATION

Paragraph Third, Section F, Subparagraph 5:

“5.  At all elections of directors of the Corporation, (i) each stockholder entitled to vote at such election shall be entitled to one vote per share and stockholders shall not be entitled to cumulate their votes in the election of directors of the Corporation, as many votes as shall equal the number of shares which (except for this provision as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected for whom he has the right to vote and each such stockholder may cast all of such votes for a single director or may distribute them among the number so to be voted for, or for any two or more of them, as he may see fit; and (ii) at all such elections the presence in person or by proxy of the holders of record of stock of the Corporation entitled to cast one-third of the votes to which the holders of all outstanding stock in the aggregate are entitled to cast for the election of directors shall be necessary to constitute a quorum.”

EX-10.26

Exhibit 10.26

EXECUTION COPY

June 18, 2009

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corporation

116 Huntington Avenue

Boston, MA 02116

Dear Peter:

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

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

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

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 2 -

2.All New Monies funded by Sonesta shall bear simple interest at the rate of fifteen percent (15%) per annum.  All New Monies caused to be funded by the Fortune Partners from any person or party not controlled by Edgardo Defortuna ("Defortuna") shall bear simple interest at the rate of thirteen and one-half percent (13.5%) per annum.  All New Monies caused to be funded by Defortuna or any person or party controlled by Defortuna (which shall include any funding as to which any of the Fortune Partners, Defortuna and/or any person or party controlled by Defortuna bear the ultimate financial risk) shall not bear interest.  All New Monies shall be funded in the form of a loan and, in the case of New Monies which are not funded by Sonesta or any of its affiliates, will be evidenced by a promissory note in the form attached hereto as Exhibit "A", or in the case of New Monies funded by Sonesta or any of its affiliates, in the form attached hereto as Exhibit "A-1" (each of the promissory notes evidencing New Monies are referred to as a "New Monies Promissory Note"), which in each case shall provide (i) a waiver by the applicable lender of any rights it may have at law or in equity to initiate insolvency or Bankruptcy proceedings against the Partnership in connection with the loans evidenced by each such New Monies Promissory Note, and (ii) for a "maturity date" as provided in said New Monies Promissory Note.

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

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 3 -

4.

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

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

[**] THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 4 -

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

(d)

(i)In the event the Partnership receives a Bona Fide Offer on or after [**] to sell the Property or to have all of the Partners sell all of the Partnership Interests which the Fortune Partners desire to accept, the Fortune Partners shall notify Sonesta in writing of such Bona Fide Offer and their desire to accept such offer (such notice, an "Acceptable Sale Notice", which shall include a copy of the Bona Fide Offer in question [the "Fortune Approved Bona Fide Offer"]); provided, however, that in order for a Bona Fide Offer to be capable of constituting a Fortune Approved Bona Fide Offer under this Paragraph 4(d), in addition to qualifying as a Bona Fide Offer pursuant to Paragraph 4(a) above, such offer must also (A) provide no financing contingency and (B) provide a due diligence period of no greater than fifteen (15) days if no funds are at risk or a due diligence period of up to forty-five (45) days if an "at risk" deposit of no less than [**] is placed in escrow. In addition, the Partners have agreed that the first Five Hundred Thousand Dollars ($500,000.00) of any forfeited due diligence deposit contained in a Fortune Approved Bona Fide Offer shall be distributed to Sonesta and treated as a reduction in its Unreturned Capital (provided that any other forfeited deposit shall be distributed to the Partnership and not Sonesta exclusively).  Sonesta, within ten (10) Business Days of receipt of the Acceptable Sale Notice, must notify the Fortune Partners in writing whether Sonesta accepts or rejects the Fortune Approved Bona Fide Offer.  In the event Sonesta fails to notify the Fortune Partners in writing within the above described ten (10) Business Day period, then Sonesta shall be deemed to have accepted the Fortune Approved Bona Fide Offer and the Partners shall pursue a closing thereunder.  In the event Sonesta indicates in writing within the above described ten (10) Business Day period that it rejects the Fortune Approved Bona Fide Offer, then Sonesta shall be deemed to have elected to purchase the Partnership Interests of the Fortune Partners (the "Buy-Out Option").  In the event Sonesta elects the Buy-Out Option, (i) the Partnership shall not accept the Fortune Approved Bona Fide Offer, and (ii) the provisions of Paragraph 7.2 shall apply.

[**] THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 5 -

(ii)Notwithstanding anything to the contrary contained in Paragraph 4(c) or Paragraph 4(d)(i) above, Sonesta must accept (and shall be deemed to accept) any Fortune Approved Bona Fide Offer otherwise described in Paragraph 4(d)(i) which provides for either:  (A) a purchase price that after deducting for reasonably anticipated closing costs would result in sales proceeds [**], or (B) a purchase price that after deducting for reasonably anticipated closing costs would result in sales proceeds [**].  In the event Fortune proffers a Fortune Approved Bona Fide Offer which provides for a purchase price that after deducting for reasonably anticipated closing costs would result in sales proceeds [**], but less than [**], then, in such event, Sonesta may reject such Fortune Approved Bona Fide Offer, in which event, it shall be deemed to have elected the Buy-Out Option, provided that, as a condition to doing so, Sonesta must provide an indemnity to Defortuna from Sonesta International Hotels Corporation, a New York corporation, in an amount equal to the lesser of (i) [**], or (ii) [**].  Such indemnity shall be provided in a written agreement containing operative indemnity provisions identical to those contained in Section 5 of the Release and Indemnity Agreement referred to in Paragraph 7.1 below.

(iii)In the event of a sale under Paragraph 4(d)(ii)(A) above, Defortuna must either (x)  pay to Sonesta upon the closing of such sale an amount equal to [**], in which event the guaranty provided by Defortuna described in Paragraph 8 below shall be extinguished in its entirety upon such payment, or (y) not make any payment to Sonesta in which event  the guaranty provided by Defortuna described in Paragraph 8 below shall remain in full force and effect.

5.

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

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

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

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

[**] THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 6 -

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

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

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

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

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

Gross Sales Price	Additional Amount
less than [**]	$0
[**] up to but less than [**]	$250,000
[**]or more	$500,000

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

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

[**] THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 7 -

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

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

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

6.

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

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

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

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 8 -

7.1           Effect of Forced Sale Option

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

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

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

(ii)Assignments of Partnership Interest;

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

(iv)Escrow Agreement.

7.2           Effect of Buy-Out Option.

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

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 9 -

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

7.3           Third Fork Option.

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

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 10 -

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

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

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

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

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

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

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 11 -

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

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

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

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

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

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

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 12 -

18.From and after the date on which any monetary or material, non-monetary default arises under the HSBC Indebtedness and the holder of the HSBC Indebtedness either provides a notice of default or commences or threatens to commence enforcement actions, and in all events from and after the date which is thirty (30) days prior to the maturity date of the HSBC Indebtedness, as extended, in recognition of the personal guaranty of the HSBC Indebtedness executed by Defortuna, the Partners have agreed that, if such personal guaranty then remains in effect, Defortuna shall be permitted to participate in unilateral conversations with HSBC in respect of said indebtedness.  In addition, in the event that, as of twenty (20) days prior to the maturity date of the HSBC Indebtedness, as extended, (a) such personal guaranty then remains in effect, (b) the Partnership is not then a party to a binding agreement to sell the Property for a purchase price equal to or greater than the principal balance due under the HSBC Indebtedness or an amount less than the HSBC Indebtedness if such binding sales agreement was the subject of a Fortune Approved Bona Fide Offer, then the Partners agree that the Partnership shall enter into a transaction whereby Defortuna (y) obtains exclusive control of the Property (whether by the Partnership's execution of a deed in his favor or otherwise) at least ten (10) days prior to the maturity date of the HSBC Indebtedness, as extended, and (z) agrees that the proceeds of any sale of the Property thereafter shall be distributed in accordance with Paragraphs 5(a)(i) through (vi) hereof.

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

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

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

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 13 -

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

23.each of sonesta and the fortune parties acknowledge that the funding of new monies contributions by the other in the amount of Nine Hundred Thousand Dollars ($900,000.00) on or before June 25, 2009 is essential to each party’s willingness to enter into this letter agreement.  Accordingly, notwithstanding anything to the contrary contained herein, in the event that either the fortune partners or sonesta breaches its obligation to fund or cause to be funded New Monies in an amount not less than Nine Hundred Thousand Dollars ($900,000.00) on or before June 25, 2009 in accordance with the provisions of Paragraph 3 hereof, then the non-defaulting party shall have the right to terminate this letter agreement upon written notice delivered to the defaulting party within ten (10) business days following the date of such default.  If such termination occurs, then the Partnership Agreement shall be operative as if this letter Agreement had never been executed.

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

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

[EXECUTIONS COMMENCE ON FOLLOWING PAGE]

Peter J. Sonnabend, Executive Chairman

Sonesta International Hotels Corp.

June 18, 2009

Page - - 14 -

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

Fortune KB GP, LLC,

a Florida limited liability company

By:           Fortune International Management, Inc.,

Manager

By:           /s/ Edgardo Defortuna          

Edgardo Defortuna, President

Fortune KB, LLC,

a Florida limited liability company

By:           Fortune International Management, Inc.,

Manager

By:            /s/ Edgardo Defortuna           

Edgardo Defortuna, President

Agreed and accepted this       18th      day of

June, 2009.

Sonesta Beach Resort Limited Partnership,

a Delaware limited partnership

By:           Florida Sonesta Corporation,

a Florida corporation

By:            /s/ Peter J. Sonnabend          

Peter J. Sonnabend,

Vice President

Exhibit "A"

Form of New Monies Promissory Note

Exhibit "A-1"

Form of Sonesta New Monies Promissory Note

Exhibit "B"

Form of Sales Incentive Amount Promissory Note

Exhibit "C"

Release and Indemnity Agreement

Exhibit “D”

List of HSBC Indebtedness Material Agreements and Instruments

Exhibit "E"

Sonesta Form of Confidentiality Agreement

EXHIBIT "8"

Release and Indemnity Agreement (Section 8 of Letter Agreement)

EX-31.A

Exhibit 31(a)

CERTIFICATION REQUIRED BY RULE

13a-14(a)/15d-14(a)

Under the Securities Exchange Act of 1934 as Amended

I, Boy van Riel, certify that:

1. I have reviewed this Report on Form 10-Q for the quarter ended June 30, 2009 of Sonesta International Hotels Corporation;

2. Based on my knowledge, this  report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the  end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of registrant’s Board Directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 12, 2009 /s/ Boy van Riel                                      Name:   Boy van Riel Title:     Vice President and Treasurer

EX-31.B

Exhibit 31(b)

CERTIFICATION REQUIRED BY RULE

13a-14(a)/15d-14(a)

Under the Securities Exchange Act of 1934 as Amended

I, Peter J. Sonnabend, certify that:

1. I have reviewed this Report on Form 10-Q for the quarter ended June 30, 2009 of Sonesta International Hotels Corporation;

2. Based on my knowledge, this  report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the  end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of registrant’s Board Directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 12, 2009 /s/ Peter J. Sonnabend                                  Name:   Peter J. Sonnabend Title:     Executive Chairman of the Board

EX-31.C

Exhibit 31(c)

CERTIFICATION REQUIRED BY RULE

13a-14(a)/15d-

Under the Securities Exchange Act of 1934 as Amended 14(a)

I, Stephanie Sonnabend, certify that:

1. I have reviewed this Report on Form 10-Q for the quarter ended June 30, 2009 of Sonesta International Hotels Corporation;

2. Based on my knowledge, this  report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the  end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of registrant’s Board Directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 12, 2009 /s/ Stephanie Sonnabend                                    Name:   Stephanie Sonnabend Title:     Chief Executive Officer and President

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

In connection with the filing of the Annual Report on Form 10-Q for the quarter ended June 30, 2009 (the “Report”) by Sonesta International Hotels Corporation (the “Company”), we, Peter J. Sonnabend, Stephanie Sonnabend and Boy van Riel, in our respective positions of Executive Chairman of the Board, CEO & President and Treasurer, hereby certify pursuant to 18 U.S.C. ss. 1350, that, to the best of our knowledge:

1. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Boston, August 12, 2009

By:  /s/ Peter J. Sonnabend                               

Name:  Peter J. Sonnabend

Title:  Executive Chairman of the Board

By:  /s/ Stephanie Sonnabend                         

Name:  Stephanie Sonnabend

Title:   Chief Executive Officer and President

By:  /s/ Boy van Riel                                          

Name:   Boy van Riel

Title:   Vice President and Treasurer