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S T. T H O M A S, V I R G I N      ISLANDS



Mrs. Nugent-Stern

Thank you for your recent correspondence to the Secret Harbour Board of Directors. We have attempted
to address your questions and comments below.

“1. A review of the current structure of the two governing entities. It was voted on and agreed to by the
board that independent counsel would be engaged to review and advise board and the shareholders on
the current structure v s. and LLC. To the best of my knowledge nothing has been done on this. The
directive was immediate execution as of August 27th.”

As per the Board’s 90 day update letter that went out to all owners :
The board was to determine which organizational structure would best insure that the interest of the
owners of SHBRA was fairly represented by the elected board of directors by potentially moving from the
current LLP structure with the replacement of B&R Inc. with an LLC structure, or if an LLC structure was
disadvantageous from a tax and liability standpoint, can the by-laws of the current LLP structure be
modified to accomplish the wishes of SHBRA ownership. Also the owners were clear that the board of the
hotel should be the same seven people who have been elected to the Condo Board. Our first meeting
with a tax attorney, Marjorie Rawls is scheduled for this week with a report to be made at the November
BOD meeting. Status – Open / continuing. For the record there was no formal vote taken on this at the
annual owner’s meeting, however the intentions of the owners was for the Board to explore the potential
tax and liability consequences to the change of governance structure and report back to the ownership.
That remains our intention and we are working to that end albeit slower than any of us had anticipated.


2. An immediate review of the need for an Owner Liaison. I understand that the Board has voted to
eliminate the position as of March 31, but the contract that was discussed at the shareholders terminates
December 31, 2011. That date was cited more than once during that meeting. So, I am asking you to let
all of the shareholders know why such an extension was voted, particularly given the perilous financial
condition of the condominium and the decision that the job was unnecessary.

You are correct in that the position has been eliminated and is being phased out effective Feb 28th of
2012. The feedback that we received from owners was mixed. Some owners are extremely supportive of
the position and others are not. The phased approach to the position’s eventual elimination was deemed
appropriate to allow for a transition period during which time the current board members would assign or
assume the various oversight roles and for an orderly wind down of current activities.

3.      I believe that the official record of the meeting was to be sent to the shareholders. I’ve not
received one. Was that an oversight?

[ Janet / Mike I think she is correct here … I do not think that the “stenographers notes “ or Meeting
minutes have been distributed]
Since the shareholders meeting, it’s become apparent, at least to me, that Crescent has been unreliable
for financial projections and hasn’t make SHBR a priority either in Crescent’s effectiveness in bookings or
management. Further, I think the board might have a serious conversation with them about our lack of
confidence in Crescent and a point-by-point review with a timeline for remedy the objective. Crescent
made a lot of promises and representations at the meeting; there hasn’t been evidence I’ve seen of follow
up. Could you bring the shareholders up to date, please?

[ Janet / Mike any comments here?]

I understand that Nima has put his apartment on the market; and knowing that, asked you all a few weeks
ago if there was a provision in the by-laws that required resignation from the board for any member doing
such, a fairly normal practice, to avoid conflict of interest. May I have the courtesy of a response, please?

Nima has indeed put his unit up for sale. A review of the by-laws indicates that one must be an owner to
be a board member. Nima continues to be an owner as long as his unit remains unsold and as such
remains a board member in good standing. Nima has been open and the board is fully aware of the status
of Nima’s unit. Should something change the board is prepared to act appropriately.

There’s a bit of a mystery surrounding Janet’s resignation and re-instatement. Could the board please
report on these events clearly to the shareholders? We’re entitled to information.

Janet submitted her resignation to the Board citing personal reasons. The board, well as many owners,
asked Janet if she would reconsider her decision. Janet, upon reflection and the quicker than expected
resolution of her personal reasons, decided she would like to remain on the Board and continue to
contribute to the success of Secret Harbour. The board voted 6:1 to reinstate Janet to her Board roles as
Vice President and Treasurer.

Hopefully, this provides you with the information that you were seeking.




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