Exhibit 4.8(c)


 


EXECUTION COPY


 


DEVELOPMENT AGREEMENT


 


FOR THE


 


ATLANTIS, PALM ISLAND


 


BY AND BETWEEN


 


KERZNER INTERNATIONAL DEVELOPMENT FZ LLC


 


AS DEVELOPER


 


AND


 


KERZNER NAKHEEL LIMITED


 


AS OWNER


 


5th May, 2004


 





















 


DEVELOPMENT AGREEMENT


 


This
Development Agreement (as the same may be amended, modified or supplemented from
time to time, this “Agreement”) is made and entered into this day of May, 2004 (the “Effective
Date”), by and
between KERZNER NAKHEEL LIMITED, a British Virgin Island company with offices
at Trident Trust Company, Trident Chambers, Wickhams Cay, P.O. Box 146,
Road Town, Tortola, BVI (the “Owner”) and (ii) KERZNER INTERNATIONAL DEVELOPMENT FZ LLC, a
United Arab Emirates Free Zone Limited Liability Company having its registered
office at Boutique Office No. 19, Dubai Media City, Dubai, United Arab
Emirates (the “Developer”). The Owner and the Developer are sometimes
hereinafter referred to as the “Parties.”


 


W I  T
N  E  S  S  E  T  H:


 


WHEREAS,
Owner is the lessee of those certain parcels of real property located on The
Palm Jumeirah, Dubai, United Arab Emirates consisting of approximately 125
acres of land, more particularly described in Exhibit ”A” attached hereto
and made a part hereof, together with any property subsequently acquired or
controlled by Owner for the purposes of developing or expanding a destination
resort to be known as Atlantis, The Palm (collectively, the “Real
Property”), together
with any and all infrastructure and improvements currently existing or
developed in the future (collectively, the “Improvements” and together with the Real
Property, “Atlantis, Palm Island” or
the “Resort”); and


 


WHEREAS,
Owner desires to develop the Resort in one or more phases (each a “Phase” and collectively, the “Project”) through the development of, among
other components, Phase I of the Project to include the following:   an approximate US$1.1 billion development
project consisting of an approximate 2,000-room luxury hotel and an
extensive water-theme park as more particularly described in the Phase I
development plan attached hereto and made a part hereof as Exhibit ”B”;
and


 


WHEREAS,
Developer (together with its Affiliates, as hereinafter defined) has experience
and expertise related to development and construction oversight services
involving luxury resort hotels and ancillary facilities; and


 


WHEREAS,
Developer is prepared to provide certain development services to the Owner with
respect to the development of the Project to be undertaken with respect to the
Resort during the Term of this Agreement (as hereinafter defined); and


 


WHEREAS,
Owner desires to retain Developer to provide such services on an exclusive
basis, and Developer is willing to provide such services to Owner, subject to
the terms and conditions set forth in this Agreement.


 


NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties covenant and agree as
follows:


 





















 


ARTICLE 1


 


THE PROJECT


 


Section 1.01  The
Project.  The subject matter of this
Agreement is the development of the Project in one or more Phases as may be
determined by the Owner from time to time during the Term hereof.


 


ARTICLE 2


 


TERM


 


Section 2.01  Term.  The term of this Agreement shall commence on
the Effective Date and continue through the completion date of all Phases of
the Project (the “Term”) (unless
sooner terminated in accordance with the provisions of this Agreement, or upon
mutual agreement of the parties). For the purposes hereof, the Term of this
Agreement shall continue through the term of the Management Agreement, defined
in Section 9.02 below.


 


ARTICLE 3


 


APPOINTMENT OF DEVELOPER AND DEVELOPER’S SERVICES


 


Section 3.01  Appointment.
 Owner hereby retains Developer as its
exclusive Developer for the Project and in connection therewith, to perform or
provide the services described in this Agreement relating to the development of
the Project. Developer hereby agrees to provide the services set forth herein,
and such additional services as may from time to time be mutually agreed.


 


Section 3.02  Developer’s
Obligations.  Subject to Owner’s
approval of Developer’s actions with respect to the Project, Developer shall be
primarily responsible for the following: scheduling, coordinating and directing
the Project, including, without limitation, (a) managing Project
development and construction until the issuance of the necessary governmental
permits which allow the lawful use and occupancy of all portions of the
Project, (b) supervision of the completion of any “punch-list” or
incomplete items involving any component of the Project, (c) providing
reports to Owner periodically as to the status of the development of the
Project, and (d) coordinating all construction and other services related
to construction typically provided in connection with the development of
projects similar to such Project and customary or necessary to prosecute the
Project to a successful completion. The scope of the services to be performed
by Developer under this Agreement (“the Developer’s Services”) are more
particularly described in Exhibit ”C” attached hereto and made a part
hereof. Developer shall perform its obligations subject to the following:


 


(i)         Budget. Although Developer will use commercially reasonable efforts to
complete each Phase of the Project within the construction schedule and
development budget established and approved by Owner (each such budget being
herein referred to as a “Budget”),
it is understood that agreement as to any construction schedule or
Budget shall not constitute or be deemed to


 


2





















 


constitute a guaranty or warranty of such schedule or
Budget by Developer nor shall any construction schedule or Budget serve as
a measure of Developer’s performance. Notwithstanding the foregoing, it is
understood and agreed that Developer shall not make expenditures in excess of
the amounts provided in the applicable Budget without the consent of Owner
(which consent shall not be unreasonably withheld, conditioned or delayed),
except for those expenditures undertaken pursuant to Section 8.02 of this
Agreement, and provided further that Developer shall have the right to make
line item variances and adjustments to Budget line items in an amount not to
exceed ten percent (10%). All of the foregoing services are to be performed in
conjunction with the contractors, project manager, architects, attorneys and
other consultants recommended by Developer and retained by Owner pursuant to contracts
negotiated and recommended by Developer. Notwithstanding the foregoing,
Developer will not be responsible for day-to-day onsite supervision of the
Project; such onsite supervision being the sole responsibility of a project
manager (whether as a third party contractor or through direct employment of a
project management team) (“Project Manager”) and general contractor to be
selected by Owner with the assistance and recommendations of Developer.


 


(ii)         Disclaimer: Developer is not responsible for, and gives no warranty or
representation as to structural integrity of the Real Property, the development
of the site, its fitness for purpose or any environmental impact on the Real
Property.


 


(iii)        Affiliates. Developer may perform certain of its obligations hereunder and
otherwise act by and through or in concert with one or more Affiliates (as
defined below) provided that the foregoing shall not diminish any of Developer’s
obligations or responsibilities hereunder. Owner recognizes that personnel of
Developer or its Affiliates shall not be precluded from working upon other
projects of Developer or its Affiliates, provided that such work does not
interfere with the performance of Developer’s obligations hereunder. An “Affiliate” is defined herein to include any
entity which is owned or controlled by Developer, or any of its direct or
indirect principal shareholders, members, or partners, or which directly or
indirectly owns a majority interest in or controls Developer, or is under
common control with or by Developer’s principal shareholders, members, or
partners.


 


ARTICLE 4


 


CONTROL OF PROJECT


 


Section 4.01  Development
Objectives.  Developer shall develop
in consultation with Owner, and the Consultants (as defined in Section 4.02
below) to the extent necessary, the various themes, goals and objectives for
each Phase of the Project which shall result in a development plan for that
Phase of the Project and which shall be approved by Owner. The development plan
shall (i) identify the major requirements of each Project Phase, (ii) formulate


 


3





















 


the budget estimates and timetables and
construction schedules for each Project Phase, and (iii) be approved by
Owner. The Developer may use as the basis for hard construction costs and
scheduling estimates the information provided by construction contractors and
other Consultants for various aspects of the Project, which information shall
be reviewed and verified by Developer. A preliminary development plan for the
Project, approved by Owner, is attached hereto as Exhibit ”B.”


 


Section 4.02  Selection
of the Contractors, Architect and Consultants.  Developer shall review, select and facilitate
Owner’s retention of, as more particularly described below (i) a
contractor, contractors, or construction manager for each Phase of the Project
(the “Contractor(s)”), (ii) the design and
production architect or architects for each Phase of the Project (the “Architect(s)”), and (iii) civil, structural,
mechanical, electrical, plumbing and other engineers, interior decorating
consultants and space planners, scheduling consultants, construction
consultants and other consultants as Developer recommends be engaged by Owner,
or which may otherwise be necessary or appropriate for each Phase of the Project
(collectively referred to herein as the “Consultants”). All fees paid to the Contractor, the Architect and
the Consultants shall be at the sole cost and expense of, and be paid by, Owner
on a timely basis in accordance with the requisition and payment procedures
established by Developer and shall be in addition to the fees and
reimbursements paid to the Developer as set forth herein.


 


(i)          Engagement of Architect Project Manager and
Consultants. Owner shall
engage an Architect(s), Project Manager and/or Consultants, based on the
recommendations of Developer, familiar with the design of hotel facilities and
for the purpose of performing certain services in connection with the
construction of each Project Phase, including site development. All agreements
with the Architect(s), Project Manager and the Consultants shall be in a form
of contracts prepared by Developer for execution by Owner.


 


(ii)         Plan Development. Developer shall maintain a liaison with and
coordinate the activities of the Architects and Consultants to produce
schematic design documents, design development documents, and final plans and
specifications for each Project Phase in accordance with the recommendations of
Developer and as approved by Owner. Owner shall implement alternative solutions
whenever design details adversely affect construction cost, feasibility,
project quality, or the construction timetable.


 


(iii)        Proposal Review and Bid Process. Developer shall conduct a review of
proposals for the construction of each Phase of the Project, and Developer
shall negotiate any construction contract, on behalf of Owner, prior to the
award of such construction contract or contracts to a qualified Contractor or
Contractors and/or Construction Manager.


 


(iv)        Contracts. Developer shall recommend Contractors
and/or a Construction Manager and the Owner shall enter into a construction
management agreement and related contracts, or a general contract for the
construction of the Project. Developer shall prepare for review and approval by
Owner, such approval not to be unreasonably withheld, conditioned, or delayed,
and


 


4





















 


execution by Owner of, all required contract documents
and agreements necessary for construction of the Project. All contracts shall be
in a form negotiated, prepared by Developer and recommended to Owner for
execution.


 


(v)         Contract Documents. Any contract relating to the construction
of the Project (the “Contract Documents”) shall require the Contractors to
be responsible for providing, or causing to be provided, as applicable, all
materials, equipment and labor necessary to construct and equip the Project as
necessary, including site development, and shall be consistent with
subparagraph (vi) below. The scope of the Contract Documents shall require
the Contractors to construct the Project, or cause the construction of the
Project, as applicable, in accordance with the plans and specifications
prepared by the Architect, including any changes or modifications thereto,
which plans and specifications are to be recommended to Owner by Developer and
approved by Owner, such approval not to be unreasonably withheld or delayed.


 


(vi)        Construction Administration. During the construction of each Phase of
the Project, the Developer shall act as the Owner’s representative for all of
Owner’s construction administration duties and responsibilities. Developer
shall be solely responsible for all construction contract and construction
management administration during the construction phase of each Project Phase.
Developer shall interpret and decide on matters concerning the performance of
any Contractor, and the requirements of the Contract Documents. Developer shall
have the authority to reject work that does not conform to the Contract
Documents. Developer shall conduct inspections to determine the date or dates
of substantial completion and the date of final completion of the Project
facilities.


 


Section 4.03  Bid
Procedures and Awards.  With the
Developer’s review and approval, and subject to the
provisions hereof, the Contractor(s) shall be responsible for the method to be
used in selecting subcontractors and in awarding subcontracts in accordance
with subcontract forms approved by Developer.


 


Section 4.04  Status
Reports.  To the extent requested by
Owner, during the pre-development phase of each Project Phase, Developer shall
provide a monthly status report to reflect the Project status. Following the
start of construction, Developer shall report on a monthly basis to Owner, or
more frequently as reasonably requested by Owner, regarding the progress of
construction activities.


 


Section 4.05  Developer
to Nominate Key Personnel.  During
the construction of each phase of the Project, Developer shall nominate at
least two (2) key persons to supervise on a full-time basis the Developer’s
Services provided under this Agreement.


 


Section 4.06  Relationship
of Developer to Owner.  In carrying
out its duties and obligations hereunder, Developer’s relationship to Owner
shall be that of an independent contractor. Developer’s project manager, key
personnel, executive personnel and support staff that are employed in
connection with Developer’s services hereunder in connection with the


 


5





















 


Project
shall be and shall remain employees, agents or representatives, as the case may
be, of Developer and shall not by virtue of their employment with Developer in
connection with Developer’s services hereunder, be deemed employees of Owner.
Developer agrees to handle the payroll for its employees, withhold from their
wages and salaries and make all tax filings and payments with respect to such
employees as is required by law, provided, however, that these wage and salary
expenses shall be reimbursable to Developer pursuant to Section 6.02 below.
In its capacity as aforesaid, Developer shall act for and on behalf of Owner as
its representative, and all contracts, permits, licenses, variances and other
such documents shall be for and in the name of Owner. Developer shall not be
required to make any payments on behalf of Owner or the Project except to the
extent that funds are made available by Owner; and, should Developer expend any
of Developer’s funds in conjunction with the Project, such funds shall be
reimbursed by Owner in accordance with the provisions of Section 6.02 of
this Agreement.


 


Section 4.07  Relationship
of Developer to Contractor(s) and Consultants.  Developer shall not have control or charge of
and shall not be responsible for the design of the Project or portion thereof,
construction means, methods, techniques, sequences or procedures, for the acts
or omissions of the Contractor(s), subcontractors, the Architect and
Consultants (except those on the staff of Developer or its Affiliates), or any
other persons performing any such work on the Project, or for the failure of
any of them to carry out their work in accordance with their respective
contract documents. Owner shall contract directly with all Contractors,
Architects, and Consultants.


 


ARTICLE 5


 


OWNER’S OBLIGATIONS


 


Section 5.01  Obligations
of Owner.  During the Term, Owner
shall have the obligations set forth below:


 


(i)          Approvals. Owner shall grant approval or deny approval, within fifteen (15) days
of request, for actions of Developer with respect to the Project;


 


(ii)         Payments to Developer. Owner shall promptly pay, or make
sufficient funds available to Developer to pay, the fees and reimbursements
provided for herein, and all Project costs and expenses whether or not set
forth in the applicable Budget (which shall include, without limitation, all
fees and expenses of the Project’s construction managers, contractors,
architects, attorneys and other consultants);


 


(iii)        Insurance. Owner shall procure and maintain (or cause to be procured and
maintained by the Architects, Consultants and Contractors) throughout the Term,
and at Owner’s expense, insurance coverage as set forth on Exhibit ”D”
hereto;


 


(iv)        Financing. Owner shall arrange and negotiate any
necessary financing for the development of the Project;


 


6





















 


(v)         Authorizations and Permits. Owner and Developer shall cooperate with
each other to obtain and maintain all necessary zoning, design and other
permits and approvals required for development of the Project;


 


(vi)        Access. Provide Developer and Contractors with
access to the Project site at all times; and


 


(vii)       Cooperation. Owner shall do all things and provide all such assistance and
cooperation to the Developer as may be necessary and reasonable to assist
Developer in the performance of its obligations.


 


ARTICLE 6


 


DEVELOPER’S FEE


 


Section 6.01  Developer’s
Fee.  Owner and Developer shall
engage in good faith negotiations to determine Developer’s fee (the “Developer’s
Fee”) for each respective Phase of the Project. For Phase I of the Project,
Owner shall pay to Developer a fixed Developer’s Fee in the amount of Twenty
Million dollars (US$20,000,000.00). Three Million dollars (US$3,000,000.00) of
the Developer’s Fee for Phase I shall be paid on the Effective Date. Additional
advances against the remainder of the total Developer’s Fee shall be paid on a
monthly basis, without set-off, deduction or counterclaim, during the
applicable development period of Phase I of the Project based upon Developer’s
good faith estimate of the total fee payable and the duration of the
development period for Phase I. The amount of the monthly installments shall be
modified from time to time to reflect changes to the Budget and/or construction
schedule. Costs and expenses to be reimbursed to Developer shall be paid within
thirty (30) days after Developer’s requisition therefore.


 


Section 6.02  Reimbursements
to Developer.  Owner shall reimburse
Developer for any and all of the following costs and expenses incurred by
Developer in conjunction with the Project:


 


(i)          the third party costs of obtaining all
necessary inspections, tests, approvals, permits and governmental fees,
licenses and bonds legally necessary or required by Owner for the proper
execution and completion of Developer’s Services;


 


(ii)         the third party costs of all materials and
supplies necessary for the proper execution and completion of Developer’s
Services including ordinary and necessary third party out-of-pocket costs and
expenses for airfare, hotels, meals, couriers, photocopying, postage,
entertainment expenses and other similar corporate overheads incurred by the
Developer in connection with the day-to-day execution of Developer’s Services
(and budgeted on an ongoing basis for approval by Owner);


 


(iii)        payments made by Developer on behalf of Owner or the
Project;


 


7





















 


(iv)        all costs associated with the inspection of
the Project and the status thereof by representatives of Developer, as
Developer shall, in its sole discretion, deem necessary from time to time,
including, but not limited to, all travel, meals, entertainment and other
out-of-pocket expenses of Developer’s employees incurred in the performance of
this Agreement, in accordance with reasonable protocols to be established
between Owner and Developer;


 


(v)         any costs incurred pursuant to and in accordance
with the terms of Section 8.02;


 


(vi)        all Project related costs, expenses and
overheads in connection with the presence of and activities of Developer’s
staff servicing the Project site, including but not limited to, salaries, wages
and benefits of Developer’s staff (including those key personnel referred to in
Section 4.05), provision of fully fitted-out office space with power
back-up, air conditioning, UPS, furniture, fixtures and equipment, utilities,
telephone, postage, courier services, photocopying, stationery and related
office expenses provided that any head-office, corporate-allocated, or other
off-site costs of Developer shall not be eligible for reimbursement; and


 


(vii)       any other costs reasonably associated with
Developer’s Services.


 


Developer
shall submit statements covering such items to Owner, and Owner shall pay to
Developer or its Affiliate(s), as applicable, the amount indicated thereon
promptly upon the receipt of such statements. Developer shall keep appropriate
records to document all reimbursable expenses paid by Developer, which records
will be made available for inspection by Owner or its agents upon request.


 


Section 6.03  Credits
to Owner.  Developer shall credit to
Owner all discounts, commissions, rebates or similar cost savings obtained in
connection with Developer’s development of the Project.


 


Section 6.04  Taxes.  Owner shall be responsible for payment of all
value added, goods and services, sales, withholding or similar taxes (but not
income or gross receipts taxes payable by Developer by virtue of the receipt of
the Developer’s Fee) and any other governmental fees, if any, levied on or
deducted from any amounts payable to Developer or any of its Affiliates
pursuant to this Agreement. The amount of such value added, goods and services,
sales, withholding or similar taxes (but not income or gross receipts taxes
payable by Developer by virtue of the receipt of the Developer’s Fee) shall be
payable by Owner to Developer or such Affiliate together with the payment to
which it relates, or as otherwise required by applicable law, so that the
amount actually received by Developer or such Affiliate in respect of such
payment (after payment of such taxes) equals the full amount stated to be
payable in respect of such payment. To the extent applicable law requires any
such taxes to be paid by Owner directly to a governmental authority, Owner
shall pay such taxes promptly, and receipts or other proof of such payment
shall be provided to Developer or such affiliate promptly upon receipt.


 


8





















 


ARTICLE 7


 


CLAIMS AND LIABILITY


 


Section 7.01  Claims
and Liability.  Owner and Developer
mutually agree for the benefit of each other to look only to the appropriate
insurance coverages in effect pursuant to this Agreement in the event any
demand, claim, action, damage, loss, liability or expense occurs as a result of
injury to person or damage to property, regardless of whether any such demand,
claim, action, damage, loss, liability or expense is caused or contributed to
by, or results from, the negligence of Owner or Developer or their
subsidiaries, Affiliates, employees, directors, officers, agents or independent
contractors, and regardless of whether the injury to person or damage to
property occurs in and about the Resort or elsewhere as a result of the
performance of this Agreement. Nevertheless, as to Developer, in the event the
insurance proceeds are insufficient or there is no insurance coverage to
satisfy the demand, claim, action, loss, liability or expense, and the same did
not arise out of the gross negligence or willful misconduct of Developer, Owner
agrees, at its expense, to indemnify and hold Developer and its subsidiaries,
Affiliates, and each of their respective officers, directors, employees, agents
and independent contractors harmless to the extent of the liability or excess
liability, as the case may be.


 


Section 7.02  Survival.
 The provisions of this Article 7
shall survive any cancellation, termination or expiration of this Agreement and
shall remain in full force and effect until such time as the applicable statute
of limitation shall cut off all demands, claims, actions, damages, losses,
liabilities and expenses which are the subject of the provisions of this Article 7.


 


ARTICLE 8 


 


CLOSURE, EMERGENCIES AND DELAYS


 


Section 8.01  Events
of Force Majeure.  Developer shall
have the authority after consultation with Owner if circumstances allow, but
otherwise in Developer’s sole discretion, to cease work on the Project in order
to protect the Resort and/or the health, safety and welfare of the guests
and/or employees of the Resort for reasons beyond the reasonable control of
Developer, such as, but not limited to, acts of war, insurrection, civil strife
and commotion, labor unrest, weather conditions (including, without limitation,
hurricanes, typhoons, tornadoes, cyclones, other severe storms, winds and
lightning), earthquakes, volcanic eruptions, disease, contagious illness,
epidemics, governmental regulations and orders, shortage or lack of adequate
supplies or lack of skilled or unskilled employees, failure of infrastructure
services or structural integrity of the Project, fundamental access to Resort, environmental
impact on the Project, erosion, tidal waves, settlement of dredged areas, other
catastrophic events and other acts of God. In any such event or similar events
(each, an “Event of Force Majeure”),
Developer may cease work on all or any part of the Project
then in progress, postpone or cancel work on the Project then contemplated, and
provide immediate notice thereof to Owner specifying the circumstances of the
Event of Force Majeure, providing any supporting documentation as may be
available to evidence such circumstances, and shall periodically update the
Owner on the progress of the Event of Force Majeure during the course of the
resulting interruption of work on the Project. Developer may restart and
commence the Project when Developer deems that the Project may be


 


9





















 


undertaken
without jeopardy to the Resort, its guests and employees; provided, however,
that if such stoppage is for a continuous period of more than ninety (90)
consecutive days, Developer shall not restart the Project without Owner’s
consent, which shall not be unreasonably withheld, conditioned or delayed.


 


Developer
and Owner agree, except monetary obligations and except as otherwise provided
herein, that the time within which a party is required to perform an obligation
and Developer’s right to develop the Project under this Agreement shall be
extended for a period of time equivalent to the period of delay caused by any
Event of Force Majeure.


 


Section 8.02  Emergencies.
 In the event of an emergency situation
which creates a risk to life, safety or significant damage to the Resort (each
an “Emergency
Situation”), Developer
shall make good faith, reasonable efforts to notify Owner as soon as Developer
becomes aware of the Emergency Situation (but in all events within twenty-four
(24) hours following the Emergency Situation) and Developer may make such
non-budgeted expenditures as are reasonable in the circumstances (but in no
event shall non-budgeted Emergency Situation expenditures exceed One Million
and No/100 Dollars ($1,000,000.00) without Owner’s consent); it being
understood that Developer shall have no liability or responsibility for any
failure to take any action in connection with an Emergency Situation, if the
action is not taken as a result of this One Million and No/100 Dollars
($1,000,000.00) limitation or because the other requirements for Emergency
Situation expenditures are otherwise not satisfied.


 


ARTICLE 9


 


TERMINATION RIGHTS


 


Section 9.01  Bankruptcy
and Dissolution.  If either party is
voluntarily or involuntarily dissolved or declared bankrupt or insolvent by a
court of competent jurisdiction, or commits an act of bankruptcy, or if a
company enters into liquidation, whether compulsory or voluntary, otherwise than
for the purpose of amalgamation or reconstruction, or compounds with its
creditors, or has a receiver appointed over all or any part of its assets, or
passes title in lieu of foreclosure, the other party may terminate this
Agreement immediately upon serving notice to the other party, without liability
on the part of the terminating party.


 


Section 9.02  Termination
of Management Agreement.  Either
party may terminate this Agreement if that Management Agreement, to be entered
into by and among Kerzner International Management FZ-LLC (the “Manager”) and Owner (the “Management
Agreement”) expires
or is terminated upon default in accordance with its terms, provided however,
only the party not in default under the Management Agreement may terminate this
Agreement pursuant to this Section 9.02. This Agreement shall also
terminate in the event of a casualty or condemnation which results in the
termination of the Management Agreement.


 


Section 9.03  (a) Owner’s
Default.  The following shall, at the
election of Developer, constitute an event of default by Owner under this
Agreement (each such event being referred to herein as an “Owner’s
Default”):


 


10





















 


(i)          Owner fails to pay any fees to Developer for
a period of thirty (30) days after the due date (or, for amounts that are due
upon demand or presentation of an invoice, thirty (30) days after the receipt
of such written demand or presentation of such invoice) ; provided however that
if Developer makes a good faith effort to cure such default within the thirty
day cure period but such default by its nature cannot reasonably be cured
within such period, the cure period shall be extended by a reasonable period
not to exceed one hundred and twenty (120) days.


 


(ii)         Owner fails to keep or perform any material
duty, obligation, covenant or agreement of Owner under this Agreement (other
than a payment obligation referenced in subsection (i) above), and
the continuation of such failure for a period of thirty (30) days after the receipt
of written notice of such failure from Developer.


 


(iii)        Any material license or permit required for
Developer’s performance under the Agreement is suspended for a period in excess
of thirty (30) days (through no fault of Developer).


 


On the occurrence of any
Owner’s Default, Developer shall have the right to terminate this Agreement by
written notice to Owner.


 


(b)            Developer Default.  The
following shall, at the election of Owner, constitute an event of default by
Developer under this Agreement (such event being referred to herein as the “Developer
Default”):


 


(i)          Developer fails to keep or perform any
material duty, obligation, covenant or agreement of Developer under the
agreement, and the continuation of such failure for a period of thirty (30) days
after the receipt of written notice from Owner; provided however that if
Developer makes a good faith effort to cure such default within the thirty day
cure period but such default by its nature cannot reasonably be cured within
such period, the cure period shall be extended by a reasonable period not to
exceed one hundred and twenty (120) days.


 


On
the occurrence of any Developer’s Default, Owner shall have the right to
terminate this Agreement by written notice to Developer.


 


(c)            Failure of Financing.  In
the event that the Owner fails to obtain the necessary financing for the
Project by the 31st December, 2004, either party may serve thirty (30) days written
notice to the other, at the expiration of which this Agreement shall terminate,
subject to any fees or reimbursable expenses up to that date owed to Developer
shall be payable and paid by Owner.


 


Section 9.04  Delays.   Notwithstanding any other provision of this
Agreement, if any event of the type described in Article 8 occurs after
the Effective Date and Developer is unable


 


11





















 


to continue development of the Resort for a period of ninety (90) days,
Developer shall have the option to terminate this Agreement upon thirty (30)
days’ prior written notice to Owner, without liability on the part of the
Developer, its parent or their subsidiaries or Affiliates.


 


Section 9.05  Transition
Upon Termination.  Upon any
termination of this Agreement, all fees and payments due to Developer as of the
effective date of termination, including all accrued and unpaid fees and
reimbursable charges and expenses, shall be paid to Developer within ten (10) days
after delivery to Owner of an itemized statement of such fees and payments.
Developer shall be entitled to exercise the right of set off provided in Section 11.14
hereof with respect to such fees, charges and expenses. In addition, Developer
will provide reasonable cooperation to Owner in order to effect an orderly
transition of the Project to Owner or as Owner’s nominee, subject to Developer
being reimbursed any costs or expenses of so doing.


 


Section 9.06  Indemnification
re Future Business.  Owner shall
indemnify and hold Developer and its Affiliates harmless from and against all
costs, expenses, claims and liabilities, including reasonable attorneys’ fees,
arising or resulting from the failure of Owner, following the expiration or
earlier termination (for whatever cause) of this Agreement, (i) to perform
its obligations pursuant to any contracts assigned to Owner or Owner’s designee
pursuant to Section 9.05 above, or (ii) to honor and fulfill all
obligations of Owner under any contracts or leases entered into in the ordinary
course of business by Developer as agent of Owner within the scope and terms of
this Agreement prior to such expiration or termination, or (iii) to honor
all purchase orders and to pay all payables arising out of the operation by
Developer of the Resort in the ordinary course of business in accordance with
the provisions of this Agreement prior to such expiration or termination.


 


ARTICLE 10


 


APPLICABLE LAW AND ARBITRATION


 


Section 10.01  Applicable
Law.  The interpretation, validity
and performance of this Agreement shall be governed by the procedural and
substantive laws of England, and any and all disputes, except those
specifically referred to below, shall be brought and maintained within that
jurisdiction. If any judicial authority holds or declares that the law of
another jurisdiction is applicable, this Agreement shall remain enforceable
under the laws of that jurisdiction.


 


Section 10.02  Arbitration. Except as
otherwise specified in this Agreement, any dispute, controversy or claim
arising out of or relating to this Agreement shall be settled by arbitration in
accordance with the Rules of the London Court of International Arbitration
(or any similar successor rules thereto) as are in force on the date when
a notice of arbitration is received. The number of arbitrators shall be one
unless either party to the arbitration requests otherwise, in which case there
shall be three. The language to be used in the proceedings shall be English.
The place of arbitration shall be London or such other place as the parties may
agree. The decision of the arbitration board shall be final and binding upon
the parties, and such decision shall be enforceable through any courts having
jurisdiction and particularly the Dubai courts. The costs and expenses of
arbitration shall be allocated and paid by the parties as determined by the
arbitrators.


 


12





















 


Section 10.03
Performance During Disputes. It is mutually
agreed that during any kind of controversy, claim, disagreement or dispute,
including a dispute as to the validity of this Agreement or the validity of a
notice to terminate this Agreement, Developer and Owner shall continue their
performance of the provisions of this Agreement. Developer shall be entitled to
injunctive relief from a civil court or other competent authority to maintain
possession in the event of a threatened eviction during any dispute,
controversy, claim or disagreement arising out of this Agreement.


 


ARTICLE 11


 


GENERAL PROVISIONS


 


Section 11.01 Authorization. Owner and Developer represent and warrant to
each other that their respective legal entities have full power and authority to execute this Agreement and to be bound by and perform
the terms hereof. On request, each party shall furnish the other evidence of
such authority.


 


Section 11.02
Relationship. Owner
and Developer shall not be construed as joint venturers or partners of each
other by reason of this Agreement and neither shall have the power to bind or
obligate the other except as set forth in this Agreement.


 


Section 11.03 Developer’s Contractual
Authority in the Performance of this Agreement. Notwithstanding any
provision hereof to the contrary, Developer is authorized to make, enter into
and perform in the name of, as agent for, and for the account of Owner any
contracts reasonably deemed necessary by Developer to perform its obligations
under this Agreement and otherwise in conformity with the provisions hereof .
In exercising its authority hereunder, Developer shall be entitled to execute
and enter into contracts without the specific approval of Owner so long as each
such contract (i) requires annual expenditures or otherwise establishes
annual liability of Fifty Thousand and No/100 Dollars ($50,000.00) or less and (ii) has
a term (excluding options in favor of Developer or Owner to renew) of one (1) year
or less or (iii) can be cancelled without penalty upon sixty (60) days’
notice or less. Any contract that does not satisfy the conditions set forth in
the preceding sentence shall require the prior approval in each instance of
Owner, unless the particular expenditure is authorized in an applicable budget.
Owner agrees to promptly respond to any request for approval and further agrees
that its consent shall not be unreasonably withheld, conditioned, or delayed.
Subject to Section 11.06, Developer shall be authorized to enter into
contracts with Affiliates of Developer, but only so long as the terms and
provisions thereof are on competitive terms and conditions available from
unrelated and unaffiliated third parties.


 


Section 11.04
Further Actions. Owner and Developer agree to execute all contracts,
agreements and documents and to take all actions reasonably necessary to comply with the provisions of this Agreement and the
intent hereof.


 


Section 11.05
Successors and Assigns. Owner’s consent shall not be required for
Developer to assign its rights, interests or obligations as Developer hereunder
to an entity (each, a “KZL Permitted Assignee”) in which Kerzner International
Limited, a Bahamian corporation (“KZL”) owns, directly or indirectly, at least
fifty and one-tenth percent (50.1%) of the


 


13





















 


ownership interests, and in which KZL or a KZL
Permitted Assignee has the sole power to direct management. Developer shall
have the right to pledge or assign its right to receive the Developer’s Fees
hereunder without the prior written consent of Owner.


 


Developer’s
consent shall not be required for Owner to assign its rights, interests, or
obligations as Owner to any affiliate or successor in interest which may result
from any merger, consolidation or reorganization with, or any sale or
assignment to, any corporation, individual, partnership or other entity which
shall acquire all or substantially all of Owner’s business or the Resort, or
any affiliate or successor thereof.


 


Section 11.06 Disclosure of Related Party Transactions. Developer shall disclose to Owner all
transactions and agreements with any of its Affiliates related to this
Agreement, which shall be subject to Owner’s prior written consent, which shall
not be unreasonably conditioned, withheld, or delayed, except that no Owner
consent shall be required for transactions or agreements that are (i) in
the aggregate in any year, in the amount of Fifty Thousand and No/100 Dollars
($50,000.00) or less and (ii) have a term of twelve (12) months or less
(or can be cancelled without penalty upon sixty (60) days notice or less).


 


Section 11.07
Notices. All notices or other communications provided for in this
Agreement shall be in writing and shall be either hand delivered, delivered by
certified mail, postage prepaid, return receipt requested, delivered by an
overnight delivery service, or delivered by facsimile machine (with an executed
original sent the same day by an overnight delivery service), addressed as set
forth on Exhibit ”E” hereto. Notices shall be deemed
delivered on the date that is four (4) calendar days after the notice is
deposited in the mail (not counting the mailing date) if sent by certified
mail, or if hand delivered, on the date the hand delivery is made, or if
delivered by facsimile machine during business hours, on the date the
transmission is made (or the next business day if not transmitted during
business hours). If given by an overnight delivery service, the notice shall be
deemed delivered on the fourth business day following the date that the notice
is deposited with the overnight delivery service. The addresses given above may
be changed by any party by notice given in the manner provided herein.


 


Section 11.08
Documents. Owner shall furnish Developer copies of all leases, title documents,
property tax receipts and bills, insurance statements, all financing documents
(including notes and mortgages) relating to the Resort and such other documents
pertaining to the Resort as Developer shall request.


 


Section 11.09
Waivers. No failure or delay by Developer or Owner to insist upon the
strict performance of any covenant, agreement, term or condition of this
Agreement, or to exercise any right or remedy consequent upon the breach
thereof, shall constitute a waiver of any such breach or any subsequent breach
of such covenant, agreement, term or condition. No covenant, agreement, term,
or condition of this Agreement and no breach thereof shall be waived, altered
or modified except by written instrument signed by the party against whom the
same is sought. No waiver of any breach shall affect or alter this Agreement,
but each and every covenant, agreement, term and condition of this Agreement
shall continue in full force and effect with respect to any other then existing
or subsequent breach thereof.


 


Section 11.10
Changes. Any change to or modification of this Agreement must be
evidenced by a written document signed by the Parties.


 


14





















 


Section 11.11
Captions. The captions for each Article and Section are
intended for convenience only.


 


Section 11.12 Severability. If any of the terms and provisions hereof
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any of the other terms or provisions hereof. If, however, any
material part of a party’s rights under this Agreement shall be declared
invalid or unenforceable (specifically including Developer’s right to receive
its Developer’s Fees), the party whose rights have been declared invalid or
unenforceable shall have the option to terminate this Agreement upon thirty (30)
days’ written notice to the other party, without liability on the part of the
terminating party.


 


Section 11.13 Interest. Any amount payable to Developer or Owner by
the other which has not been paid when due shall accrue interest beginning on
the date due at the lesser of: (a) the highest legal limit permitted under
the laws of England or (b) LIBOR (as such term is defined in the Operating
Agreement) plus five percent (5%).


 


Section 11.14 Set off. Without prejudice to Developer’s right to
terminate this Agreement pursuant to the provisions of this Agreement,
Developer may at any time and without notice to Owner set off or transfer any
sum or sums held by Developer or any of its Affiliates to the order or on
behalf of Owner in respect of all sums due to Developer under the terms of this
Agreement.


 


Section 11.15 Third Party Beneficiary. This Agreement is exclusively for the
benefit of the parties hereto and it may not be enforced by any party other than
the Parties, and shall not give rise to liability to any third party other than
the authorized successors and assigns of the parties hereto.


 


Section 11.16 Brokerage. Owner and Developer represent and warrant to
each other that neither has sought the services of a broker, finder or agent in
this transaction, and neither has employed, nor authorized, any other person to
act in such capacity. Owner and Developer each hereby agrees to indemnify and
hold the other harmless from and against any and all claims, loss, liability,
damage or expense (including reasonable attorneys’ fees) suffered or incurred
by the other party as a result of a claim brought by a person or entity engaged
or claiming to be engaged as a finder, broker or agent by the indemnifying party.


 


Section 11.17 Survival of Covenants. Any covenant, term or provision of this
Agreement which, in order to be effective, must
survive the termination of this Agreement, shall survive any such termination.


 


Section 11.18 Estoppel Certificate. Owner and Developer agree to furnish to the
other party, from time to time upon request, an estoppel certificate in such
reasonable form as the requesting party may request, stating whether there have
been any defaults under this Agreement known to the party furnishing the
estoppel certificate, and such other information relating to the Resort as may
be reasonably requested.


 


Section 11.19
Other Agreements. Except to the extent as may now or hereafter be
specifically provided, nothing contained in this Agreement shall be deemed to
modify any other agreement between Owner and Developer with respect to the
Resort or any other property. This


 


15





















 


Agreement contains the entire agreement between Owner and Developer
regarding the development of the Resort.


 


Section 11.20
Periods of Time. Whenever any determination is to be made or action is
to be taken on a date specified in this Agreement, if such date shall fall on a
Thursday or a Friday or legal holiday under the laws of United Arab Emirates,
then in such event, said date shall be extended to the next day which is not a
weekend or legal holiday in such location.


 


Section 11.21 Preparation of Agreement. This Agreement shall not be construed more
strongly against either party regardless of who is responsible for its
preparation.


 


Section 11.22
Exhibits. All exhibits attached hereto are incorporated herein by
reference and made a part hereof as if fully rewritten or reproduced herein.


 


Section 11.23
Projections. Owner acknowledges that any written or oral budgets,
construction and development schedules, or other similar information that has
been (prior to execution of this Agreement) or will be (during the Term)
provided by Developer, or any affiliate of Developer, to Owner is for
information purposes only, and that Developer, and any such affiliate, do not
guarantee that the Resort will achieve the construction and development results
set forth in any such budgets, construction or development schedules, or other
similar information. Owner further acknowledges that (i) any such budgets,
construction or development schedules, or other similar information are based
on assumptions and estimates; (ii) unanticipated events may occur
subsequent to the date of preparation of such budgets, construction or
development schedules, or other similar information which impact the Resort;
and (iii) the actual construction and development results achieved by the
Resort are likely to vary from the estimates contained in any such budgets,
construction or development schedules, or other similar information, and such
variations might be material.


 


Section 11.24 U.S. Currency. Unless otherwise expressly stated herein,
all dollar amounts stated in this Agreement shall refer to United States
Dollars.


 


Section 11.25
Attorneys’ Fees and Other Costs. The parties to this Agreement shall
bear their own attorneys’ fees in relation to negotiating and drafting this
Agreement. Should Owner or Developer engage in litigation pursuant to Section 10.01
to enforce their respective rights pursuant to this Agreement, the prevailing
party shall have the right to indemnity by the non-prevailing party for an
amount equal to the prevailing party’s reasonable attorneys’ fees, court costs
and expenses arising therefrom.


 


Section 11.26 Indemnification of Developer. Owner shall indemnify, defend, and hold
Developer harmless from and against any and all actions, suits, claims,
penalties, losses, damages and expenses, including reasonable attorneys’ fees,
based upon or arising out of Developer’s performance of its services hereunder,
or out of any occurrence or event happening in or about the Resort or in
connection with the Project or occurring in connection with the operation or
development of the Project, or with respect to any preopening activities
contemplated hereunder, including any alleged breach, or investigation relating
to a possible breach, of any legal requirement (collectively “Claims”), except to the extent such Claims
are based upon Developer’s gross negligence or willful misconduct. This
provision shall survive the expiration or termination of this Agreement.


 


16





















 


Section 11.27 Counterparts. This Agreement
may be executed in two (2) or more counterparts, each of which shall be
deemed an original.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 


17





















 


The
parties hereto have executed this Agreement as of the date first written above.


 


	
   

  	
  OWNER:

  
	
   

  	
   

  
	
   

  	
  KERZNER
  NAKHEEL LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sultan Ahmed Bin
  Sulayem

  	
   

  
	
   

  	
  Name: Sultan Ahmed Bin
  Sulayem

  
	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
  In witness:

  	
  /s/ Sahia Ahmad

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Howard B. Kerzner

  	
   

  
	
   

  	
  Name: Howard B. Kerzner

  
	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
  In witness:

  	
  /s/ Giselle Pyfrom

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEVELOPER:

  
	
   

  	
   

  
	
   

  	
  KERZNER
  INTERNATIONAL

  
	
   

  	
  DEVELOPMENT
  FZ-LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Lindsay

  	
   

  
	
   

  	
  Name: Richard Lindsay

  
	
   

  	
  Title: Authorized
  Signatory

  
	
   

  	
   

  
	
   

  	
  In witness:

  	
  /s/ Sahia Ahmad

  	
   

  
						



 


18