GUARANTY

December 1, 2006

Mamdouh Philippe, President

Mamdouh & Basem Philipco

Nefertari Street

Luxor, Egypt

RE: Loan Agreement: U.S. $300,000.00

Dear Mr. Philippe:

This letter agreement shall be deemed a Loan Agreement under which Sonesta International Hotels Limited (“Sonesta”) will advance the sum of U.S. $300,000.00 to Mamdouh & Basem Philipco, “Owner” of Sonesta St. George Hotel, Luxor (“Hotel”), by assumption of obligations, dated as of October 15, 2004, regarding that certain Management Agreement, dated May 11, 1995, originally between Philippe Co. for Hotels, as Owner, and Sonesta, as Operator (the “Management Agreement”).

Amount of Loan: U.S. $300,000.00, which amount has been advanced to date by way of unpaid fees and other amounts due to Sonesta under the Management Agreement.

Purpose: To provide for payment of the amount due Sonesta for unpaid fees and other amounts, together with interest.

Repayment of Loan: The Loan shall be repaid to Sonesta International Hotels Limited (“Lender”), in currency of the United States, in nine (9) monthly installments, each of which shall be due and payable on the first day of each calendar month. The first monthly payment shall be due and payable April 1, 2007. (The attached “Repayment Schedule” reflects the monthly repayment of the Loan, together with interest at the Interest Rate.)

Interest Rate: The Loan shall be repaid, together with interest at the “Interest Rate”, which shall be equal to 8.25% per annum (the current Prime Rate).

Default Rate/Charges: In the event that the Loan is not repaid in accordance with this letter agreement, or if any portion of the Loan, or Loan interest, remains unpaid as of December 1, 2007, interest shall accrue on the amount of the Loan, and interest, then outstanding at the rate of twelve percent (12%) per annum. Borrower shall also be responsible for reimbursing Lender for any costs Lender incurs in enforcing this letter agreement, including reasonable attorney’s fees.

 

Authority of Lender, as Operator, to Make Payments: Borrower, as Owner of the Hotel under the Management Agreement, hereby authorizes and instructs Lender, as Operator of the Hotel under said Management Agreement, to repay the Loan, in accordance with this letter agreement, from the income of the Hotel, and to charge any such amounts used to repay the Loan, or to pay interest thereon, to the Owner’s account.

Prepayment: Borrower may prepay the Loan, and interest thereon, at any time without charge or penalty.

In Witness Whereof, the parties have set their hands and seals as of this December 31, 2006.

Borrower			Lender:  Sonesta International Hotels Corporation
/s/ Mamdouh & Basem Philipco			/s/ Boy A.J. van Riel
Name:  Mamdouh Philippe Title:  President			Name:  Boy A,J, van Riel Title:  Vice President & Treasurer

The undersigned, Mamdouh Philippe Megalaa, individually, agrees, jointly and severally, to guaranty the obligations of the Borrower, Mamdouh & Basem Philipco, under the above loan letter agreement. The Creditor shall have the right to demand payment from me, on a several basis, without need for first demanding payment from the Debtor.

By: /s/    Mamdouh Philippe Megalaa

Mamdouh Philippe Megalaa

Date: December 31, 2006