**Exhibit 4.8(b)**

 

**EXECUTIONCOPY:**

 

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* Indicates where text has been omitted pursuant to a request forconfidential treatment.  The omitted texthas been filed separately with the Securities and Exchange Commission.

 

RESORT MANAGEMENT AGREEMENTATLANTIS, PALM ISLANDbetweenKERZNER NAKHEEL LIMITEDandKERZNER INTERNATIONAL MANAGEMENT FZ-LLCDated as of 5th May, 2004

 

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TABLE OF CONTENTS

 
| Article |                                                    |
|---------|---------------------------------------------------------|
|    |                                                    |   |   |
| 1.      | Interpretation; Definitions                             | 6 |
|    |                                                    |   |   |
| 2.      | Appointment; Delegation of Authority,  Standard of Care | 10 |
|    |                                                    |   |   |
|    | 2.1                                                     | Appointment | 10 |
|    |                                                    |   |   |
|    | 2.2                                                     | Delegation of Authority | 10 |
|    |                                                    |   |   |
|    | 2.3                                                     | Standard of Care | 11 |
|    |                                                    |   |   |
| 3.      | Term; Renewals                                          | 11 |
|    |                                                    |   |   |
|    | 3.1                                                     | Term | 11 |
|    |                                                    |   |   |
|    | 3.2                                                     | Renewal | 11 |
|    |                                                    |   |   |
| 4.      | Preopening Activities                                   | 11 |
|    |                                                    |   |   |
|    | 4.1                                                     | Preopening Services | 11 |
|    |                                                    |   |   |
|    | 4.2                                                     | Costs and Expenses | 12 |
|    |                                                    |   |   |
|    | 4.3                                                     | Funding of Preopening Expenses | 13 |
|    |                                                    |   |   |
| 5.      | Management of the Resort                                | 13 |
|    |                                                    |   |   |
|    | 5.1                                                     | Manager’s Obligations | 13 |
|    |                                                    |   |   |
|    | 5.2                                                     | Owner’s Obligations | 16 |
|    |                                                    |   |   |
|    | 5.3                                                     | Annual Operating Budget | 18 |
|    |                                                    |   |   |
|    | 5.4                                                     | Capital Budgets | 20 |
|    |                                                    |   |   |
|    | 5.5                                                     | Special Provisions Regarding Finance and  Accounting | 22 |
|    |                                                    |   |   |
| 6.      | Entrenchment Provisions                                 | 24 |
|    |                                                    |   |   |
| 7.      | Management Fees and Reimbursables                       | 25 |
|    |                                                    |   |   |
|    | 7.1                                                     | Management Fees | 25 |
|    |                                                    |   |   |
|    | 7.2                                                     | Payment of Fees | 25 |
|    |                                                    |   |   |
|    | 7.3                                                     | Reimbursement of Expenses | 26 |
|    |                                                    |   |   |
| 8.      | Insurance                                               | 27 |
|    |                                                    |   |   |
|    | 8.1                                                     | Procurement of Insurance | 27 |
|    |                                                    |   |   |
|    | 8.2                                                     | Insurance Policy Endorsements | 28 |
|    |                                                    |   |   |
|    | 8.3                                                     | Insurance Certificates | 28 |
|    |                                                    |   |   |
| 9.      | Resort Employees                                        | 28 |

 

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|   | 9.1                                                       | Resort Employees                      | 28     |
|--------|-----------------------------------------------------------|---------------------------------------|--------|
|   |                                                      |                                  |   |
|   | 9.2                                                       | Hiring; Retention                     | 28     |
|   |                                                      |                                  |   |
|   | 9.3                                                       | Resort Employee Costs                 | 29     |
|   |                                                      |                                  |   |
|   | 9.4                                                       | Work Visas; Permits                   | 29     |
|   |                                                      |                                  |   |
|   | 9.5                                                       | Employee Perks                        | 29     |
|   |                                                      |                                  |   |
|   | 9.6                                                       | Termination of Employees              | 29     |
|   |                                                      |                                  |   |
| 10.    | Right to Inspect                                          | 30                                    |
|   |                                                      |                                  |   |
| 11.    | Damage and  Destruction                                   | 30                                    |
|   |                                                      |                                  |   |
|   | 11.1                                                      | Damage                                | 30     |
|   |                                                      |                                  |   |
|   | 11.2                                                      | Manager’s Right to  Reconstruct  | 30     |
|   |                                                      |                                  |   |
|   | 11.3                                                      | Retention of  Construction Manager    | 30     |
|   |                                                      |                                  |   |
|   | 11.4                                                      | Destruction                           | 30     |
|   |                                                      |                                  |   |
| 12.    | Alterations  and Improvements                             | 31                                    |
|   |                                                      |                                  |   |
| 13.    | Intellectual  Property                                    | 31                                    |
|   |                                                      |                                  |   |
|   | 13.1                                                      | Trade Name                            | 31     |
|   |                                                      |                                  |   |
|   | 13.2                                                      | Management  and Marketing Information | 32     |
|   |                                                      |                                  |   |
| 14.    | Assignment                                                | 32                                    |
|   |                                                      |                                  |   |
|   | 14.1                                                      | Manager’s Assignment             | 32     |
|   |                                                      |                                  |   |
|   | 14.2                                                      | Owner’s Consent Rights           | 32     |
|   |                                                      |                                  |   |
|   | 14.3                                                      | Owner’s Assignment               | 33     |
|   |                                                      |                                  |   |
|   | 14.4                                                      | Successors and Assigns                | 33     |
|   |                                                      |                                  |   |
| 15.    | Claims and  Liability                                     | 33                                    |
|   |                                                      |                                  |   |
|   | 15.1                                                      | Claims and Liability                  | 33     |
|   |                                                      |                                  |   |
|   | 15.2                                                      | No Representation or  Warranty        | 33     |
|   |                                                      |                                  |   |
|   | 15.3                                                      | Insurance Coverage                    | 33     |
|   |                                                      |                                  |   |
|   | 15.4                                                      | Survival                              | 34     |
|   |                                                      |                                  |   |
| 16.    | Applicable  Law; Arbitration; Performance During Disputes | 34                                    |
|   |                                                      |                                  |   |
|   | 16.1                                                      | Governing Law;  Jurisdiction          | 34     |
|   |                                                      |                                  |   |
|   | 16.2                                                      | Arbitration                           | 34     |
|   |                                                      |                                  |   |
|   | 16.3                                                      | Performance During  Disputes          | 35     |

 

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| 17.    | Termination   | 35                                           |
|--------|---------------|----------------------------------------------|
|   |          |                                         |   |
|   | 17.1          | Owner’s Termination Rights              | 35 |
|   |          |                                         |   |
|   | 17.2          | Manager’s Termination Rights            | 35 |
|   |          |                                         |   |
| 18.    | Force Majeure | 36                                           |
|   |          |                                         |   |
| 19.    | Notices       |                                         | 37 |
|   |          |                                         |   |
| 20.    | Miscellaneous | 38                                           |
|   |          |                                         |   |
|   | 20.1          | Entire Agreement; Authorization              | 38 |
|   |          |                                         |   |
|   | 20.2          | Interest                                     | 38 |
|   |          |                                         |   |
|   | 20.3          | No Waivers; Amendments                       | 38 |
|   |          |                                         |   |
|   | 20.4          | Funding of Owner Accounts                    | 39 |
|   |          |                                         |   |
|   | 20.5          | Manager’s Right to Request Instructions | 39 |
|   |          |                                         |   |
|   | 20.6          | Independent Contractors                      | 39 |
|   |          |                                         |   |
|   | 20.7          | Conflicts                                    | 39 |
|   |          |                                         |   |
|   | 20.8          | Severability                                 | 39 |
|   |          |                                         |   |
|   | 20.9          | Confidentiality                              | 39 |
|   |          |                                         |   |
|   | 20.10         | Counterparts                                 | 40 |
|   |          |                                         |   |
|   | 20.11         | No Third Party Beneficiaries                 | 40 |
|   |          |                                         |   |
|   | 20.12         | Expenses                                     | 40 |
|   |          |                                         |   |
|   | 20.13         | Agent for Service                            | 40 |

 

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**RESORTMANAGEMENT AGREEMENT**

 

**THIS MANAGEMENT AGREEMENT**(this“Agreement”) is made as of the day of May, 2004 (the “Effective Date”).

 

BETWEEN:

 

**KERZNER NAKHEEL LIMITED**,****acompany incorporated in the British Virgin Islands and having its registeredoffice at Trident Trust Company, Trident Chambers, Wickhams Cay, P.O. Box 146,Road Town, Tortola, British Virgin Islands (hereinafter referred to as the “Owner”),and

 

**KERZNER INTERNATIONAL****MANAGEMENT FZ LLC**,a Free Zone Limited Liability Company incorporated in Dubai Technology andMedia Free Zone and having its registered office at Boutique No. 14, DubaiTechnology and Media Free Zone, Dubai, United Arab Emirates (hereinafterreferred to as the “Manager”).

 

**RECITALS:**

 

WHEREAS:

 

A.    Manageris knowledgeable and experienced in managing and promoting hotels and resorts,and has (and/or its Affiliates have) performed such services throughout theworld;

 

B.    TheOwner is developing an international luxury resort hotel expected to compriseof approximately 2,000 rooms and related facilities including an extensivewater-theme park located on The Palm Jumeirah, Dubai, United Arab Emirates andto be named *Atlantis, The Palm*(the“Resort,” as further defined in Section 1.2); and

 

C.    TheResort is located on certain parcels of land more particularly described inExhibit A, attached hereto and made a part hereof (the “Resort Site,” asfurther defined in Section 1.2).

 

D.    TheOwner and Manager wish to enter into this Agreement pursuant to which the Ownerappoints the Manager to manage and conduct the business of the Resort, andManager accepts such appointment on the terms and conditions herein contained.

 

**AGREEMENTS**

 

In consideration of the mutual promises, covenants and agreementscontained herein, the receipt and adequacy of which are hereby acknowledged,the parties agree as follows:

 

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**ARTICLE 1INTERPRETATION AND DEFINITIONS**

 

Interpretation.

 

1.1           In this Agreement:

 

(a)           thewords “include,” “includes” and “including” shall be deemed to be followed bythe words “without limitation,” whether or not they are in fact followed bysuch words;

 

(b)           Article headingsand any Table of Contents are for convenience and shall not be used in itsinterpretation;

 

(c)           unlessthe context clearly indicates a contrary intention, any expression whichdenotes –

 

(i)            anygender includes the other genders;

 

(ii)           anatural “Person” includes an artificial person and vice versa;

 

(iii)          thesingular includes the plural and vice versa;

 

Definitions

 

1.2           Capitalizedterms in this Agreement shall have the meanings set forth below:

 

**“Adjusted Profits”**shallmean the earnings of the Business calculated in accordance with GAAP plus anyinterest or amortization payments.

 

**“Affiliate”**shallmean, as to a party, any corporation or other entity or person controlled by,under common control with, or which controls, directly or indirectly, suchparty.  For the purposes hereof, “control”means the possession, directly or indirectly, or the power to direct or causethe direction of the management or policies of the person in question.

 

**“Annual OperatingBudget”**shall mean the annual operating budget of theBusiness for each Fiscal Year finally adopted by the parties in accordance withSection 5.3 of this Agreement.

 

**“Base Management Fee”**has the meaning set forth in Section 7.1.

 

**“Business”**shallmean the business of the Resort, including the operation of any and all hotelrooms, restaurants, bars, convention and meeting facilities, entertainmentvenues, golf courses and other sporting facilities, parking facilities, retailoutlets and any other ancillary amenities and facilities conducted at theResort or located on the Resort Site during the Term.

 

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**“Capital Budget”**shall mean the annual capital budget of theBusiness for each Fiscal Year finally adopted by the parties in accordance withSection 5.4 of this Agreement.

 

**“CPI Index”**shall mean the consumer prices index aspublished by the Dubai Chamber of Commerce and Industry or, if the foregoingindex shall no longer be published, any index of the value of the United Statesof American dollar or its purchasing power in the United States of America asshall be published by the Department of Labor of the United States of America,or any other independent third party, as shall be selected by the parties.

 

**“Emergency Situation”**shall have the meaning set forth in Section 5.4(b).

 

**“Environmental Laws”**shall have the meaning set forth in Section 5.2(g).

 

**“FF&E”**shall have the meaning set forth in Section 4.1(d).

 

**“Fiscal Year”**shall mean each of the Business’s financialyears, which shall commence on January 1st and end on December 31st.

 

**“Funds Request”**shall have the meaning set forth in Section 5.5.

 

**“Gross Revenues”**shall mean any and all revenues directly orindirectly received by, accrued to or derived from the operation of theBusiness including all income and proceeds of sales of every kind (whether incash or on credit) including hotel revenue, room service, catering, food andbeverage sales, parking revenues, retail sales, ticket revenues or other feesor receipts from the convention/event center, rental or other receipts,including retail rental receipts, spa, health club, beauty salon and fitnesscenter revenues, golf membership dues, greens fees, cart fees and related golfclub revenues received from tenants, transient guests, lessees, licensees andconcessionaires and other persons occupying space at or otherwise utilizing theResort facilities and/or rendering services to the Resort guests (but notincluding the gross receipts of such lessees, licensees, concessionaires orother persons), all income from catering operations conducted outside theResort, all subsidy payments, government allowances and awards, any other formof incentive payments or awards from any source whatsoever which areattributable to the operation of the Resort and the proceeds of businessinterruption and use and occupancy insurance actually received by the Manageror the Owner with respect to the operation of the Resort (after deduction fromthe proceeds of all necessary expenses incurred in the adjustment or collectionthereof), but excluding value added tax, similar turnover taxes and levies andany other direct room or room sales related taxes, fees or levies, any baddebts, any proceeds from the sale of furnishings, equipment or other capitalassets of the Resort and the proceeds from any contents insurance, as reflectedin the audited accounts of the

 

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Owner relating to the Business for the year inquestion and as calculated in accordance with GAAP.

 

**“GAAP”**shall mean those conventions, rules,procedures and practices, consistently applied, comprising the GenerallyAccepted Accounting Principles of the United States.  If Owner and Manager cannot in any instanceagree on what constitutes GAAP, then the accounting firm then or most recentlyengaged to prepare the audited financial statements of the Owner in respect ofthe Resort shall make the determination on the request of either party.  Any financial or accounting terms nototherwise defined herein shall be construed and applied according to GAAP.

 

**“Hazardous Materials”**shall have the meaning set forth in Section 5.2(g).

 

**“Incentive Management Fee”**has the meaning set forth in Section 7.1.

 

**“Independent Expert”**shall have the meaning set forth in Section 5.3(c).

 

**“Initial Term”**shall have the meaning set forth in Section 3.

 

**“LIBOR”** shallmean:

 

(a)   the interest rate for US Dollar deposits fora 1 month period which appears on Reuters screen page LIBOR 01 (or such otherscreen display or service as may replace it for the purpose of displayingBritish Bankers’ Association LIBOR Rates for US Dollar deposits in the Londoninterbank market) at or about 11.00 a.m. (London time) on the day that apayment is due to be made under this Agreement; and

 

(b)   if no such interest rate appears on Reutersscreen page LIBOR 01 (or such replacement) then LIBOR shall be as reported byany publicly available source of similar market date selected by Manager that,in Manager’s reasonable judgment, accurately reflects such rate).

 

**“Management Accounts”**shall mean the quarterly, un-audited accountsprepared in respect of the Business to include a balance sheet, cash-flowstatement and income statement.

 

**“Management Fees”**shall mean, collectively, the Base ManagementFees and the Incentive Management Fees set forth in Section 7.1.

 

**“Quarterly Management Reports”**shall mean reports prepared by Manager on aquarterly basis providing general commentary on the state of the Business, andthe quarterly financial results, which might include references to factors thatare having, or could in the immediate future have, a material effect on theBusiness,

 

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forecasts and projections for the Businessgoing forward and guest survey information.

 

**“the Territory”**shallmean, collectively, Morocco, Egypt, Afghanistan, Bahrain, Cyprus, Iran, Iraq,Israel, Palestine, Jordan, Kuwait, Kyrgyzstan, Lebanon, Oman, Pakistan, Qatar,Saudi Arabia, Syria, Tajikistan, Turkey, Turkmenistan, UAE, Uzbekistan andYemen.

 

**“OS&E”**shallhave the meaning set forth in section 4.1(d).

 

**“Opening Date”**shallmean the date upon which the Resort first opens for guests

 

**“Operating Account”**shallhave the meaning set forth in Section 5.5.

 

**“Operating Expenses”**shallmean all those ordinary and necessary expenses of the Business, incurred in theoperation of the Resort in accordance with this Agreement, including ResortEmployee personnel costs, the cost of maintenance and utilities, the costs ofadvertising, marketing, and business promotion, and administrative expenses,all as reflected in the audited accounts relating to the Business for the yearin question and as determined in accordance with GAAP.  Notwithstanding the foregoing description, thefollowing shall not constitute Operating Expenses: (i) property taxes; (ii)interest and principal repayment of loans; (iii) capital expenses; (iv) rentalsof real and personal property; (v) depreciation and amortization of capitalizedassets; (vi) costs and expenses of Owner or Owner’s personnel, includingentertainment expenses, salaries, wages and employee benefits of Owner’semployees, directors’ fees and the expenses of directors or Owner’s employeesto attend board meetings; and (vii) professional fees and costs, including thefees and disbursements of attorneys, accountants and appraisers, incurreddirectly or indirectly in connection with any category of expense that is notitself an Operating Expense.

 

**“Operating Income”**shallmean, for the year in question, the Gross Revenues for that year minus theOperating Expenses for that year.

 

**“Owner’sRepresentatives”**shall have the meaning set forth in Section 5.2(f).

 

**“Pre-opening Expenses”**shall have the meaning set forth in Section 4.2.

 

**“Pre-opening ExpensesEstimate”**shall have the meaning set forth in Section 4.2.

 

**“Proceedings”**shallhave the meaning set forth in Section 16.1.

 

**“Required Standard”**shallmean the standards consistent with the standards of quality of internationalluxury resorts from time to time and to a standard not less than thosegenerally prevailing from time to time in other resorts managed by the

 

9

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Manager or its Affiliates, or as otherwiseagreed to by the parties, taking into consideration the quality of thefacilities and amenities of the Resort.

 

**“Renewal Term”**shallhave the meaning set forth in Section 3.

 

**“Reserve Fund”**shallhave the meaning set forth in Section 5.2(c).

 

**“Reserve Fund Account”**shall have the meaning set forth in Section 5.5.

 

**“Resort”**hasthe meaning given in Recital B, together with and including any expansions ormodifications of the Resort and/or the Resort Site made during the Term.

 

**“Resort Employee”**shallmean any individual employed at the Resort or elsewhere in connection with theBusiness including, without limitation, any key executives who may be employedby an entity other than Owner pursuant to Section 9.1.

 

**“Resort****Site”** has the meaning given in Recital C together with anyand all real property acquired, leased or otherwise occupied by Owner or Owner’sAffiliate on which Business is conducted during the Term.

 

**“Term”**shallhave the meaning set forth in Section 3.

 

**“Trade Marks andTrade Name Licence Agreement”**shall mean the agreementof even date entered into between Kerzner International Limited and KerznerNakheel Limited.

 

**“US$”** shall mean thecurrency of the United States of America.

 

**ARTICLE 2APPOINTMENT; DELEGATION OF AUTHORITY; STANDARD OF CARE**

 

2.1           Appointment. During the Term, the Owner appoints andengages the Manager to manage the Resort and to direct, control and generallyconduct the Business of the Resort on the terms contained in this Agreement,and the Manager accepts such appointment.

 

2.2           Delegationof Authority.  Except asotherwise specified in this Agreement, the management and operation of theResort shall be under the exclusive supervision and control of Manager, andManager shall be responsible for the proper and efficient management andoperation of the Resort, in accordance with the Annual Operating Budget and theapproved Capital Budget. Except as otherwise specified in this Agreement,Manager shall have discretion and control — free

 

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from interference, interruption, or disturbance — inall matters relating to the management and operation of the Resort, including,without limitation: charges for rooms and commercial space; credit policies;food and beverage services; employment policies; granting of concessions orleasing of shops and agencies within the Resort; receipt, holding, anddisbursement of funds; maintenance of bank accounts; procurement ofinventories, supplies, furniture, fixtures, equipment and services; promotionand publicity; retention of professional consultants to assist Manager,including lawyers, accountants, auditors and other professionals, delegatepowers and rights and such other activities as are specifically provided forelsewhere in this Agreement or are otherwise reasonably necessary for theproper and efficient management and operation of the Resort.

 

2.3           Standard of Care.  Infulfilling its obligations hereunder, Manager, or as the case may be, Manager’sAffiliates shall (i) act as a reasonable and prudent operator of the Resort,having regard to the status of the Resort, and (ii) at all times act in amanner which preserves the character, standards, and reputation of the Resortconsistent with the Required Standard.

 

**ARTICLE 3TERM; RENEWALS**

 

3.1           Term.  The term of this Agreementshall commence on the Effective Date and shall continue for a period oftwenty-five (25) years from the later of (i) the Effective Date, or (ii) theOpening Date (the “Initial Term”), subject to termination in accordance with the provisions of Article 17of this Agreement, and renewal in accordance with Subsection 3.2, below.

 

3.2           Renewal. Provided Manager is not in default of this Agreement, Manager shall havethe right to renew this Agreement for two (2) additional ten (10) year periods(each, a “Renewal Term”), exercisable by Manager upon not less than one year’swritten notice to Owner prior to the expiration of the then current Term.  The Initial Term and each Renewal Term arecollectively referred to herein as the “Term”.

 

**ARTICLE 4PRE-OPENING ACTIVITIES**

 

4.1           Pre-opening Services.  Theparties agree that certain activities must be undertaken so the Resort canfunction properly on the opening date of the Resort, or with respect to Resortexpansions, on the opening of such expansions.  Accordingly, prior to the opening of the Resortor a Resort expansion, as applicable, Manager shall, at Owner’s expense,provide or shall arrange and supervise through consultants, Affiliates or otherpersons, the following pre-opening services:

 

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(a)           hiring and training of Resort Employees asmore fully described in Article 9;

 

(b)           pre-marketing and marketing programs,including pre-opening promotion and opening celebrations;

 

(c)           administering and coordinating with Ownerapplications for or transfers of licenses, permits, approvals, and otherinstruments necessary for the management and operation of the Resort ascontemplated by this Agreement;

 

(d)           causing the purchase of operating suppliesand equipment (“OS&E”); and furniture, fixtures and equipment (“FF&E”)to the extent not purchased and installed by Owner during the development ofthe Resort;

 

(e)           preparing necessary budgets;

 

(f)            negotiating concession contracts and/orleases for retail outlets, office space, and lobby space in the Resort, as applicable;

 

(g)           coordinating the testing of Resortoperations;

 

(h)           providing a task force of experts andpersonnel to supervise and assist with certain pre-opening and openingoperations; and

 

(i)            rendering such other services incidental tothe preparation and organization of the Resort’s management and operation asmay be required.

 

4.2           Costs and Expenses.  Thecosts and expenses relating to the activities described in Section 4.1 forthe initial development of the Resort and each subsequent expansion, (each, “Pre-openingExpenses”) shall include, without limitation: salaries, wages, and benefits(including those of personnel of Manager and its Affiliates); interim officespace costs; legal, accounting, and other professional fees; telecommunicationsexpenses; staff hiring and training costs; travel and moving expenses; openingcelebration costs; utilities, including, without limitation, heat, airconditioning, light, power, water, and any sewage treatment and disposal costs;costs not chargeable to the cost of constructing the Resort; advertising andpromotion expenses; the reasonable travel, living, and other out-of-pocketexpenses of personnel from the corporate and regional offices of Manager andits Affiliates; miscellaneous expenses; and a reasonable charge foradministrative time and overhead expenses of Manager and its Affiliates.  Manager shall prepare and submit to Owner anestimate of Pre-opening Expenses for each phase of development, including cashflow requirements (each, a “Pre-opening Expenses Estimate”). Manager shall usereasonable efforts to adhere to

 

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the Pre-opening Expenses Estimates; provided,however, it is understood and agreed that changes in development plans,business plans, market conditions, currency fluctuations, general economicconditions and other unforeseen circumstances may make adherence to thePre-opening Expense Estimate impractical or impossible, and Manager shall beentitled to depart from the Pre-opening Expenses Estimates and incurPre-opening Expenses in excess of the Pre-opening Expenses Estimate as may berequired in the performance of Manager’s pre-opening services.  Manager shall notify Owner promptly of anysubstantial change from the Pre-opening Expenses Estimates and shall provideall information in relation to such change as Owner may reasonably request.  Furthermore, if the opening date of the Resortor the completion of a subsequent expansion is delayed from the originallyprojected dates, the Pre-opening Expenses Estimate shall be revised to reflectany increases in Pre-opening Expenses caused by such delay.  To the extent such a delay causes an increasein Pre-opening Expenses, Owner shall promptly pay such increased Pre-openingExpenses in accordance with Section 4.3. Increased Pre-opening Expensesshall include all out-of-pocket cancellation penalties if Manager cancelsreservations made for guestrooms, meeting rooms, and other Resort facilities asa result of such delay.  Within onehundred twenty (120) days after the opening date of the Resort or the openingof a subsequent expansion, Manager shall provide to Owner an accountingdescribing and showing in reasonable detail the total amount of incurredPre-opening Expenses.

 

4.3           Funding of Pre-opening Expenses.  Pre-openingExpenses incurred in accordance with this Article 4 shall be borne solelyby Owner as a capital expense and shall not be classified as an OperatingExpense.  Owner shall fund Pre-openingExpenses into a pre-opening bank account controlled by Manager, requiring thejoint signatures of a designee from each of Owner and Manager, in advanceinstallments in the currency designated by Manager and in accordance with thecash flow requirements determined by Manager for the activities described in thisArticle 4, or as otherwise reasonably requested by Manager.  Pre-opening Expenses incurred or paid byManager shall be promptly reimbursed to Manager from such account, and Managershall provide a statement of account to Owner for such Pre-opening Expenses.  If following the opening date of the Resort orthe opening of subsequent expansions there are outstanding Pre-opening Expenseswhich have not been paid, Manager shall be entitled to deduct such amounts(plus interest thereon if such Pre-opening Expenses were paid by Manager) fromthe amounts otherwise to be distributed to Owner pursuant to Article 7.

 

**ARTICLE ****5MANAGEMENT OF THE RESORT**

 

5.1           Manager’s Obligations.  Managershall, in accordance with the Annual Operating Budget approved by Owner in accordancewith Section 5.2, and subject to the

 

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terms of this Agreement, establish, define, alterand vary from time to time the policies and procedures to be observed in theconduct of the Business, including all administrative, accounting, budgeting,marketing, personnel, operational and other practices and procedures to beobserved and applied in relation to the operation of the Business.  Subject only to the express limitations setforth in Article 6, Manager shall, as exclusive agent for Owner for suchpurposes, procure the management, administration, control and conduct of theBusiness.  To that end, Manager shallutilize its resources and skills to supervise, monitor, approve or otherwiseoversee, or procure the supervision, monitoring or approval, as the case maybe, of the following:

 

(a)           the selection and appointment of all ResortEmployees including without limitation a general manager for the Resort, othersenior executives, department heads of the Resort as may be considered byManager to be necessary from time to time, provided that the Manager shallconsult with Owner with respect to the selection and appointment of the generalmanager and financial controller;

 

(b)           the determination of the number of andselection and employment of Resort Employees and the terms of service and theremuneration payable to all Resort Employees, including all prerequisites ofemployment;

 

(c)           the conduct of negotiations with trade unionsas applicable with any part of the Business which may have an association, andthe entering into of agreements with such trade unions;

 

(d)           the procurement and sale of FF&E andOS&E, and of such services and other merchandise as may be required for theproper operation and maintenance of the Business, including the conduct of thecentralized purchasing of such FF&E and OS&E;

 

(e)           the retention and periodic renewal, asapplicable, of permits, licenses and approvals required in connection with theconduct of the Business or assisting Owner with same;

 

(f)            the administration of such functions as areusually carried out by managers, secretaries and accountants of a businessenterprise similar to that which is conducted at the Resort;

 

(g)           the improvement, extension and development ofthe Business;

 

(h)           the completion and submission of returns andthe compliance with other formalities required by any value added taxes, realproperty taxes, business license fees, business income tax municipal or othergovernment fees

 

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applicable to the Resort (but not any of Owner’spersonal tax requirements);

 

(i)            the procurement of all Resort insurancepolicies pursuant to the terms of Article 8, and processing of insuranceclaims under such insurance policies;

 

(j)            the planning and execution of all majoradvertising and promotional campaigns for the Business;

 

(k)           the determination and establishment of alltariffs, prices and rates for all of the facilities offered at the Resort inrespect of the Business;

 

(1)           the establishment and maintenance of Resortaccounting systems and internal controls;

 

(m)          the establishment and maintenance of bankaccounts related to the operation of the Business in accordance with Section 5.5(a)of this Agreement;

 

(n)           the establishment of standard planning,budgeting, accounting and reporting systems for the Business, and maintenanceof proper and efficient operation of all such systems, in order that:

 

(i)            proper Business books of account and recordsare kept as required by law and GAAP;

 

(ii)           an Annual Operating Budget and Capital Budgetfor each fiscal year is prepared and submitted to Owner in accordance with theprovisions of Section 5.2 and 5.4(a) respectively;

 

(iii)          quarterly unaudited financial statements inrespect of the Business, together with Quarterly Management Reports areprepared and circulated to Owner not later than six weeks after the end of thequarter to which they related;

 

(iv)          the Resort’s annual audited financialstatements are prepared in accordance with GAAP and submitted Owner not laterthan one hundred twenty (120) days after the end of its financial years; and

 

(v)           all Resort books of account and other Resortrecords are available for inspection by Owner in accordance with Article 10.

 

(o)           generally, the doing or procurement ofwhatever else may be necessary to carry out Manager’s mandate as described inthis Agreement.

 

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5.2           Owner’sObligations.  During the Term,Owner shall have the obligations set forth below:

 

(a)           Licensesand Permits.  Owner shall obtain andmaintain, with Manager’s assistance and cooperation, all governmentalpermissions, licenses and permits required to be held in Owner’s name (or atthe request of Owner, the name of an individual on its behalf or a combinationthereof) that are necessary to enable Manager to operate the Resort inaccordance with the terms of this Agreement, and shall cooperate with Manager’sefforts to obtain and maintain such permits and licenses.  Such business shall include, but not belimited to, business licenses, marine permits, event and entertainmentoperation licenses, fishing licenses and alcoholic beverage licenses permittingthe Resort to sell and serve unlimited quantities and qualities of alcohol to Resortguests.

 

(b)           OperatingFunds.  The performance by Manager ofits responsibilities under this Agreement are conditioned upon Owner providingsufficient funds to Manager on a timely basis to enable Manager to perform itsobligations hereunder.  Owner shallprovide all funds necessary to enable Manager to manage and operate the Resortin accordance with the terms of this Agreement and the applicable AnnualOperating Budget and, without limiting Owner’s obligation in this regard, it isunderstood that these funds shall be paid for from Gross Revenues, to theextent available.

 

(c)           CapitalFunds.  Subject to funds availabilityand the limitations of the approved Capital Budget, Owner shall expend suchamounts for renovation programs, furnishings, equipment and ordinary Resortcapital replacement items as are required from time to time to (a) maintain theResort in good order and repair, (b) comply with the Required Standards, and(c) comply with governmental regulations and orders.  Owner and Manager shall cooperate fully witheach other in establishing appropriate procedures and timetables for Owner toundertake capital replacement projects.

 

(d)           ReserveFund.  It is recognized thatexpenditures for capital replacements are incapable of precise calculation in advance.  Therefore, each calendar month after theeffective date of this Agreement, the following amounts shall be deposited incash into a reserve fund (the “Reserve Fund”) to pay for capital replacements:

 

(i)    Twopercent (2%) of Gross Revenues for any partial year of the Resort’s operationafter the Resort openings;

 

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(ii)   Threepercent (3%) of Gross Revenues for first full year of the Resort’s operation;and

 

(iii)  Fourpercent (4%) of Gross Revenues for the second and each successive full year ofthe Resort’s operation.

 

Any expenditures for capital replacementsduring any calendar year which have been included in an approved Capital Budgetmay be made without Owner’s additional approval.  Any amounts remaining in the Reserve Fund atthe close of each calendar year shall be carried forward and retained in theReserve Fund until fully used in accordance with an approved Capital Budgetitem.  To the extent the Reserve Fund isinsufficient at a particular time to meet the spending requirements set forthin the approved Capital Budget or to the extent the Reserve Fund plusanticipated contributions for the ensuing calendar year is less than thebudgeted expenditures set forth in the approved Capital Budget for the ensuingcalendar year, then, in either such event, Manager shall give Owner writtennotice thereof at least thirty (30) days before the anticipated date such fundswill be needed.  Owner shall supply thenecessary funds by deposit to the Reserve Fund at least fifteen (15) daysbefore the anticipated date such funds will be needed.  All proceeds from the sale of capital items nolonger needed for the operation of the Resort shall be deposited to the ReserveFund.  Sale of such items shall be at thereasonable discretion of Manager, and conducted in a commercially reasonablemanner.  Upon termination of thisAgreement for whatever reason, or upon sale of the Resort, Manager’s right toexpend any unused portion of the Reserve Fund shall terminate and the balanceof the fund shall be paid over to Owner, less any undisputed sums then due toManager.

 

(e)           Paymentsto Manager.  Owner shall promptly payto Manager all amounts due Manager under this Agreement in the manner and atthe times described in this Agreement.

 

(f)            Owner’sRepresentative.  Manager shall havethe right to deal solely with the Owner’s Representative on all mattersrelating to this Agreement and/or the Resort.  Manager may rely upon statements andrepresentations of Owner’s Representatives as being from and binding uponOwner.  Owner shall designate the Owner’sRepresentatives prior to the commencement of Manager’s duties hereunder.  Owner may change its Owner’s Representativesfrom time to time by providing written notice to Manager in the manner providedfor herein.

 

(g)           EnvironmentalMatters.  If any Hazardous Material(hereinafter defined) is discovered at any time on any portion of the Resort inviolation of or as would reasonably be expected to result in liability underany Environmental Law, or if any Environmental Law (hereinafter defined) isviolated at any time, Owner at its expense shall promptly remove, remediate orabate such Hazardous Material (and all contaminated soil and

 

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containers), take all other necessary stepsto remedy the problem in accordance with all Environmental Laws and comply withall Environmental Laws.  Owner, at itsexpense, shall also indemnify, defend and hold harmless Manager from andagainst any and all claims, losses, liabilities, damages (includingconsequential, punitive and exemplary damages), penalties or other liabilitiesarising out of such presence or required removal of Hazardous Materials on orat the Resort or any portion thereof, or the violation of any EnvironmentalLaws, unless such claims, losses, liabilities, damages, penalties or otherliabilities are caused by the gross negligence of Manager or any of itsemployees, agents, representatives or affiliates.  For the purposes of this provision (i) *“Environmental Law”*shall mean any currentor future governmental rule, regulation, law, regional or international treatyand/or other enactment now or hereafter in effect and applicable to the Resortor any portion thereof or to activities carried on thereat or with respectthereto (whether of a national, regional, state, international or localgovernment, agency or instrumentality), regulating, relating to, or imposingliability or standards of conduct concerning the use, generation, treatment,storage, disposal or abatement of Hazardous Materials; and (ii) *“Hazardous Materials”*shall mean anysubstance or material containing one or more of the following: hazardousmaterial, hazardous waste, hazardous substance, regulated substance, petroleum,pollutant, contaminant or asbestos, as such terms are defined in any applicableEnvironmental Law, in such concentration(s) or amount(s) as may requireclean-up or removal, or which could reasonably be expected to present a risk ofharm to guests, invitees or Resort employees.

 

(h)           WorkPermits.  Upon the request ofManager, Owner ,shall use all reasonable efforts to obtain, extend and renewvisas, permits to stay and work permits for Resort Employees and theirdependents for the purposes of this Agreement, provided that the prinicipleadministrative burden of so doing shall be borne by the Manager, and the coststhereof shall be an Operating Expense.  Infurtherance thereof, Owner shall, without limitation (i) make any requiredapplications for visas, permits to stay, and work permits for Resort Employeesand their dependents; (ii) provide all supporting documents in respect thereofas Manager may reasonably request (other than documentation required to beprovided by the Resort employee); and (iii) assist and cooperate with Managerin all reasonable respects.

 

5.3           AnnualOperating Budget.

 

(a)           Preparationof Annual Operating Budget.  Managershall provide to Owner its pro forma Annual Operating Budget for pre-openingexpenses and the first partial Fiscal Year no later than sixty (60) days priorto the scheduled

 

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commencement of operations.  Thereafter, Manager shall provide to Owner adraft Annual Operating Budget on or before 31st October of each Fiscal Year for the following Fiscal Year.  The parties will use their respectivereasonable endeavours to finalise the Annual Operating Budget by 31st December of each Fiscal Year for such following Fiscal Year.  Manager shall ensure that the Annual OperatingBudget is prepared in accordance with GAAP.  Manager shall, as part of the Annual OperatingBudget, provide Owner sufficient details with respect to proposed capitalexpenditures and major building expenditures, an estimate of costs andexpenses, revenue and profit, a marketing budget and a schedule ofreplacement of furniture, in each case, for the following Fiscal Year.

 

(b)           Approval of Annual Operating Budget.  Ownershall indicate its approval or disapproval of the Annual Operating Budget inwriting no later than 1 December of each Fiscal Year.  If Owner does not indicate its approval ordisapproval in writing by 1 December of each Fiscal Year, then the AnnualOperating Budget proposed by Manager shall be deemed to be approved by Ownerand effective as of 31 December.

 

(c)           Dispute Regarding Annual Operating Budget.  Ifthe Owner and Manager are unable to agree on the Annual Operating Budget or anypart thereof, then:

 

(i)            after the parties have met in an effort toresolve any issues in dispute, either of the parties is entitled to requestthat the Independent Expert be appointed to settle the issue in dispute. (Theparty which makes such request shall be the “Disputing Party”, and the otherparty the “Non-Disputing Party” for the purposes of this Article 5.3). TheIndependent Expert shall act as expert and not as arbitrator and the costs ofthe Independent Expert shall be paid by the unsuccessful party or, if theIndependent Expert does not agree entirely with either party, otherwise as theIndependent Expert shall determine.

 

(ii)           The Independent Expert shall be suchchartered accountant or firm of chartered accountants or consultant withrecognized expertise in hotel management and feasibility studies in relation tothe matter to be determined as shall be selected by the Non-Disputing Partyfrom three nominations put forward by the Disputing Party; provided that if theNon-Disputing Party does not wish to select any of the three persons nominatedby the Disputing Party, then the matter will be referred to a chartered accountantto be appointed by the President or the acting President of the Institute ofChartered Accountants in England and Wales (or any successors of thatinstitute); and

 

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(iii)          If the issues in dispute have not beenresolved prior to commencement of the Fiscal Year in question, then Managermust proceed to implement that part of the Annual Operating Budget as is not indispute and the balance will be suspended until resolved and until resolvedwill be replaced by the amount included in the approved Annual Operating Budgetfor the previous fiscal year adjusted per item by the percentage (%) increasein the CPI Index over the previous Fiscal Year.

 

(d)           Adherence to Annual Operating Budget.  Managershall use all reasonable efforts to act in accordance with the Annual OperatingBudget (as modified by any subsequent changes agreed between Owner andManager). However, it is understood that the Annual Operating Budget is anestimate only and that inflation, currency fluctuation, general marketconditions, changes in business plans and strategies and unforeseencircumstances may make adherence to the Annual Operating Budget impracticable,and Manager shall be entitled to depart from it due to any such circumstances.  Manager shall promptly notify and consult withOwner regarding any substantial change from the Annual Operating Budget, and tomake any necessary adjustments to the Annual Operating Budget as Owner andManager shall agree in light of unforeseen circumstances.

 

5.4           (a)           Capital Budgets.  Managershall, not less than sixty (60) days prior to the commencement of each fiscalyear, submit to Owner for approval a recommended capital budget for the ensuingfull or partial fiscal year, for furnishings, equipment and ordinary Resortcapital replacement items as shall be required to operate the Resort inaccordance with the Required Standard (each, a *“CapitalBudget”*)*.*Manager shall take intoconsideration, among other factors, the amount of funds available to pay forthe proposed capital expenditures.  Owner’sapproval of the Capital Budget shall not be unreasonably withheld, conditionedor delayed.  Owner and Manager shall meetto discuss the proposed Capital Budget and Owner shall be required to makespecific written objections to a proposed Capital Budget in the manner andwithin the same time periods specified in Section 5.3 with respect to theAnnual Operating Budget.  If Owner doesnot approve the Capital Budget, Manager will only spend such amounts as areapproved by Owner, which approval shall not be unreasonably withheld,conditioned, or delayed; provided, however, that until any disputed CapitalBudget item(s) have been resolved, Manager shall be entitled to spend forcapital expenditures funds then in the reserve account but only for items forwhich such expenditures were allocated in the Capital Budget or as otherwiseapproved by Owner.  Manager shall notincur any expenses for Capital Improvements in excess of the Capital Budgetwithout the prior approval of Owner.

 

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After a Capital Budget has been adopted, itshall be subject to review and modification in the event unpredicted orunanticipated capital expenditures are required during any calendar year, or inthe event of unexpected occurrences having a material effect on the Business.  Manager and Owner each agree not tounreasonably withhold, condition or delay its consent to a proposedmodification of a Capital Budget.  Anyamendment that is mutually agreed upon shall be set forth in writing and signedby both parties.  It is acknowledged byOwner that capital expenditures required as a result of an Emergency Situationshall not reduce amounts available pursuant to the Capital Budget or otherwisehereunder, other than to the extent a Capital Budget item is subsumed withinthe capital expenditures required as a result of the occurrence of theemergency.

 

(b)           GeneralMaintenance Non-Capital Replacements; Emergency Expenditures.

 

(i)            Subjectto funds availability (and the limitations of the approved Operating Budget),Manager shall cause the Resort to be maintained in good repair and condition,including FF&E, and in conformity with the Required Standard and applicablelaws, rules and regulations, and shall authorize routine maintenance, repairsand alterations as Manager from time to time reasonably deems necessary.

 

(ii)           Notwithstandingthe foregoing, maintenance (or other) expenditures in excess of budgetedamounts may be made if reasonably deemed necessary by Manager in the event ofan emergency situation which creates a risk to life, safety or significantdamage to the Resort property (each an *“Emergency Situation**”*)*,*providedManager makes good faith, reasonable efforts to notify Owner as soon as Managerbecomes aware of the Emergency Situation giving rise to the expenditures (butin all events within twenty-four (24) hours following the Emergency Situation)and the amount of such expenditures is reasonable in the circumstances (but inno event shall non-budgeted Emergency Situation expenditures exceed Two HundredThousand and no/100 Dollars ($200,000.00) per year without Owner’s consent); itbeing understood that Manager shall have no liability or responsibility for anyfailure to take any action in connection with an Emergency Situation, if suchaction is not taken as a result of this Two Hundred Thousand and No/100 Dollars($200,000.00) limitation.

 

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5.5           SpecialProvisions Regarding Finance and Accounting.

 

(a)           BankAccounts.

 

(i)            Ownerexpressly authorizes Manager to establish the following bank accounts onOwner’s behalf at a bank or banks selected by Manager and approved by Owner:

 

(a)           anaccount or accounts, bearing the name of the Resort, at a bank or banks havinga branch reasonably convenient to the Resort for the purposes of depositing allfunds received in the operation of the Resort and paying all Operating Expensesof the Business, including any Management Fees payable under this Agreement andall other charges and amounts due to Manager under this Agreement(collectively, the “OperatingAccount”); and

 

(b)           theseparate interest-bearing account for the Capital and Reserve Funds (the “Reserve Fund Account”).

 

(ii)           Manager’sdesignees shall be the only Persons authorized to draw from the OperatingAccount, and the Reserve Fund Account, and Manager shall be entitled to makedeposits in and withdrawals from all of such accounts, in accordance with theterms of this Agreement and Manager’s standard accounting policies andpractices.  As regards the Reserve Fund Account,the Manager shall inform the Owner of its intention to make any withdrawals onthat account.  Manager shall establishcontrols to ensure accurate reporting of all transactions involving suchaccounts and take prudent and reasonable measures to prevent fraud orembezzlement of the Business’ funds.

 

(iii)          TheOperating Account and the Reserve Fund Account shall be accounts of the Owner,and any funds therein shall be the property of the Owner.  Unless due to the negligence, bad faith or anywillful act of the Manager, any loss suffered in an Operating Account or theReserve Fund Account or any other bank account established pursuant to thisAgreement, or in any investment of funds into any such account, shall be borneby Owner, and Manager shall have no liability or responsibility therefore.

 

(b)           Disbursementof Funds to Owner; Owner’s Provision of Funds.

 

(i)            Unlessthe parties agree otherwise, on or about the last day of each calendar month,Manager shall disburse to Owner, as directed by

 

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Owner, any funds remaining in the OperatingAccount after payment of all Operating Expenses and other amounts payable inaccordance with the terms of this Agreement, the deposit of the amount due forsuch month in the Reserve Fund Account and the retention by Manager of anamount (the “MinimumBalance”) sufficientto cover (a) all accrued but unpaid Management Fees and Reimbursable Expensesplus (b) the monthly payroll expense for all Resort Personnel, plus (c) an additionalamount of working capital to be established by the parties in the AnnualOperating Budget for each Fiscal Year; provided, however, that Manager shallonly be obligated to disburse funds to Owner from the Operating Account if andto the extent that the Operating Account contains funds in excess of theMinimum Balance.  Any amounts remainingin the Operating Account on the termination of this Agreement shall bedisbursed to Owner; provided, however, that Manager may deduct and retain priorto such disbursement any and all amounts due and payable by Owner to Managerunder this Agreement and which have not been paid.

 

(ii)           Ownershall commit the financial and other resources necessary to permit the Resortto be operated and maintained in accordance with the Required Standard andOwner shall establish and maintain, at its sole expense, a financing programfor the Resort to ensure that sufficient funds exist at all times to meet allfinancial requirements of the Resort.  Pursuantto the foregoing obligation, Owner shall deposit into the Operating Account onor before the commencement of the operating term, in addition to any amountsrequired to be provided by Owner in the first Annual Operating Budget, theamount of initial working capital as agreed between the parties.  In addition, if at any time Manager reasonablydetermines that the available funds in the Operating Account are insufficientto allow for the uninterrupted and efficient operation of the Resort inaccordance with the Annual Operating Budget for the relevant Fiscal Year andthe terms of this Agreement, Manager shall notify Owner of the existence andamount of the shortfall, giving all reasonable details thereof, including thereasons therefore (a “FundsRequest”) and, withinfifteen (15) days following the delivery of the Funds Request, Owner shalldeposit into the Operating Account the funds requested by Manager in the FundsRequest.  If the Owner fails to make suchdeposit, Manager may elect, without obligation, to make on Owner’s behalf paymentof any such due and unpaid obligations of Owner and Owner shall pay interest toManager on any such advances from the date falling 15 days after the deliveryof the Funds Request to the date of payment by Owner at a rate equal to LIBOR +500bps and Manager shall be

 

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entitled toreimburse itself therefore, with interest as aforesaid, out of any availablefunds from the operation of the Resort.

 

(c)                                  AnnualAudits. Each Fiscal Year the books of account and records of the Businessshall be audited by a qualified and experienced independent charteredaccountant selected by the Owner from an internationally recognized firm withoffices in reasonable proximity to the Resort, with such audit services beingprovided from such location. At all reasonable times such auditor shall baveunfettered access to all books of account and records relating to the Businessand the Manager shall be obliged to furnish whatever information such auditorwill reasonably call for. Copies of the audited balance sheet and incomestatement and all other information relating to the operation of the Resortshall be made available to each of the parties hereto.

 

(d)                                 Pledgeof Credit. Other than in the normal course of business, the Manager shall notbe entitled to pledge the credit of the Owner nor to borrow funds in its name.At no time shall it be entitled to alienate, hypothecate or otherwise encumberany of the moneys or assets which are the property of the Owner or of theResort, nor shall it be entitled to lend any such moneys or assets, whetherwith or without security.

 

**ARTICLE 6**

 

**ENTRENCHMENT PROVISIONS**

 

6.1                                 EntrenchedProvisions. Notwithstanding anything to the contrary contained in thisAgreement, the Manager nor any of its Affiliates shall engage in any of thefollowing acts, procedures or matters except with the prior written approval ofthe Owner:

 

(a)                                  Theestablishment and opening of new lines of business as agent for the Ownerexcept those directly related to the operation of the Resort.

 

(b)                                 Thepurchase or sale of assets not provided for in any budget approved by theOwner.

 

(c)                                  Borrowing,providing of guarantees or indemnities otherwise than in the ordinary course ofthe Business.

 

(d)                                 Theappointing of the Owner’s lawyers or accountants.

 

(e)                                  Demolishing,removing, scrapping, selling or disposing of any item forming part of theResort and the related facilities and amenities, their furnishings, fixtures,furniture, equipment or motor vehicles other than in the ordinary and usualcourse of business or as provided in the Annual Operating Budget or CapitalBudget.

 

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(f)            For a period of ten (10) years from theOpening Date, not directly or indirectly develop or manage within theTerritory:any other *“**Atlantis**”***property,any property including a dolphin interactive facility or property includingwater features costing more than fifty percent (50%) of the amount invested bythe Owner in constructing the Resort.

 

**ARTICLE ****7MANAGEMENT****FEES AND REIMBURSABLEEXPENSES**

 

7.1           Management Fees.  Asremuneration for the Manager’s services in managing and conducting the Businessduring the Term, the Owner shall pay to the Manager in respect of each of theFiscal Years following the commencement of operations, or, in respect of thepartial period from the commencement of operations to the 31st of December next, or the Fiscal Year in which this Agreementterminates, from the commencement of that Fiscal Year to the date of suchtermination (a “Partial Fiscal Year”):

 

(a)           Amanagement fee in the amount equal to * of Gross Revenues for each Fiscal Yearor Partial Fiscal Year, as the case may be during the first five (5) years ofthe Term, and thereafter in the amount equal to * of Gross Revenues during theremainder of the Term (the “BaseManagement Fee”); and

 

(b)           An incentive management fee for a Fiscal Yearor a Partial Fiscal Year, as the case may be, in an amount equal to * ofOperating Income during the first five (5) years of the Term, and thereafter inthe amount equal to * of Operating Income during the remainder of the Term (the“Incentive Management Fee”).

 

7.2           Payment of Fees.

 

(a)           The Base Management Fee and the IncentiveManagement Fee referred to in Section 7.1 (collectively, the “Management Fees”) shall be paid by the Owner to the Managerin United States Dollars, free of bank commission and any other deductions atsuch place(s) as the Manager may designate from time to time, monthly inarrears, within ten days of the date of the end of the month in respect of themonth in question, provided that, should any adjustment be required at the endof the Fiscal Year (or Partial Fiscal Year) in question in view of the GrossRevenues or Operating Income for that Fiscal Year (or Partial Fiscal Year), thenecessary adjustment shall be made by the parties in accordance with Section 7.2(d).

 

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(b)           Within thirty (30) days after Owner receivesthe audited financial statements for any Fiscal Year signed by Owner’sauditors, Manager shall cause to be prepared and delivered to Owner astatement, certified by the Manager’s auditors, showing the calculation andpayment of the Management Fees to be paid to Manager pursuant to 7.1 above forthat Fiscal Year, and appropriate adjustments shall be made for any overpaymentor underpayment of the fees to be paid to Manager pursuant to 7.1 above duringsuch Fiscal Year.  The party owing moneyas a result of any overpayment or underpayment during such Fiscal Year shall paysuch amount to the other party within thirty (30) days after such statement hasbeen delivered by Manager to Owner.

 

(c)           If for any reason the appointment of theManager is terminated at a date other than at the end of a Fiscal Year, auditedaccounts shall be prepared by the Owner as at the date of such termination inorder to give effect to the provisions of Section 7.2.(a).

 

(d)           The Incentive Management Fee shall becalculated by reference to the annual audited financial statements of Owner,but shall be paid at quarterly intervals, within fourteen (14) days after thecompletion of Owner’s quarterly Management Accounts for the first threequarters, and after the signature and certification of the said annualfinancial statements in respect of each of Owner’s Fiscal Years.  Each such payment at the end of the firstthree quarters shall be computed on a cumulative basis by reference to thequarterly Management Accounts for the preceding quarter, and on completion,signature and certification of Owner’s annual financial statements for thatFiscal Year the Incentive Management Fee for the whole of that year shall becomputed and certified by the Manager’s auditors.

 

(e)           All Management Fees shall be paid from theOperating Account.

 

7.3           Reimbursement of Expenses.  Thefollowing shall be reimbursable by the Owner:

 

(a)           Marketing Costs; Reservation Services.  TheOwner acknowledges that the Manager and its Affiliates operate an internationalmarketing and sales organization with offices in Europe, Africa and the U.S.A.and have representation through general sales agents in other territories.  Owner shall reimburse Manager and Manager’sAffiliates for all costs and expenses related to marketing and promoting theResort.  In addition, a proportionateshare of the overhead marketing office costs of Manager and Manager’sAffiliates will be recharged to the Owner, including a proportional share ofcosts and expenses related to brand advertising, marketing, promotion, retailservices, information technology and internet applications.  Budget for the above will be submittedannually in the marketing budget included as part of the Annual OperatingBudget.  The

 

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above costs and expenses are exclusive of anyreservation services provided to the Resort by Manager or Manager’s Affiliates,which costs shall be charged to the Resort at rates comparable to those chargedto other properties managed by Manager’s Affiliates.

 

(b)           ManagerTechnical Staff

 

(i)            Ownershall bear and accordingly reimburse Manager, for all travel and out-of-pocketexpenses directly attributable to the carrying out by Manager of its managementservices in terms of this Agreement and incurred by, among others, Manager’smanagement executives, food and beverage executives, marketing and salesexecutives, gaming executives, design and construction executives, accountingand computer systems executives, and other specialist executive personnel shallbe regarded as reimbursable Operating Expenses, without any profit or premium.  Such expenses shall be generally included inthe Annual Operating Budget.

 

(ii)           Thesalaries and wages and other payroll costs and moving and related expenses,without any profit or premium, of employees of Manager attributable to any extendedperiods where they are seconded to the employment of the Owner and the Resort.

 

(iii)          Managershall be entitled to charge a commercially reasonable reservation fee agreedwith Owner in respect of any reservation services which Owner and Manager may agreeto be rendered by Manager to Owner in respect of the Resort, which services,for the avoidance of doubt, are not included in the marketing services providedhereunder.

 

(c)           Mannerof Payment.  Payment to the Managerof reimbursable expenses, traveling and out of pocket expenses shall be made inUnited States Dollars, free of bank commissions and other deductions, at suchplace(s) as may be designated by the Manager from time to time, and this withinthirty (30) days of Manager’s invoice and relevant support documentation beingsubmitted to the Resort accounts receivable department, and shall be paid outof the Operating Account.

 

**ARTICLE 8INSURANCE**

 

8.1           Procurementof Insurance.  The Managershall take out and shall maintain on behalf of and in agreement with the Owner(as an Operating Expense), at all times from the Effective Date, and throughoutthe continuance of this Agreement, under

 

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such insurance policies issued by such insurers asthe Owner and the Manager shall agree, adequate insurance coverage in relationto the Resort and the related facilities (with Manager’s interest notedthereon, save with respect to the general public liability policy, in respectof which the Manager shall be named as an additional insured) and theiroperation against risks mutually agreed by the Manager and the Owner.  Such insurances shall be reviewed by Managerannually and may include, without limitation, property (including windstorm andflooding insurance), commercial general liability, umbrella and excessliability, general public, automobile, appropriate workers’ compensation,business interruption, terrorism, employment practice liability and such otherinsurance (including fidelity/crime coverage and employment practicesliability) against other insurable risks which, at the time, are commonlyinsured against by owners of similar resort premises in the Resort’s marketarea, with due regard being or to be given to the then existing circumstancesand to the type, construction, design, use and occupancy of the Resort.  The Manager and the Owner shall agree thelevel and the adequacy of all insurance and the insurance companies by whichall insurance policies shall be written

 

8.2           Insurance Policy Endorsements.  Eachinsurance policy obtained under this Article 8 shall provide, and includean endorsement to the effect, that its cover shall not lapse or be terminated,suspended or altered until thirty (30) days after the relevant insurer hasgiven notice to that effect to the Manager at the Resort and to the Owner atits address as stated in this Agreement (or such other address as it may fromtime to time notify to the relevant insurer for such purpose).

 

8.3           Insurance Certificates.  TheManager shall supply copies of each of the insurance policies obtained underthis Article 8 to the Owner forthwith upon effecting the same and of eachinsurance certificate and premium receipt forthwith upon receiving same.  The Owner and its representatives shall beentitled to have access to the originals of all insurance policies and to haveproduced to the Owner any other evidence it may from time to time reasonablyrequire that all the said policies are in full force and effect.

 

**ARTICLE 9RESORT EMPLOYEES**

 

9.1           Resort Employees.  Exceptfor certain key Resort Employees who at Manager’s election may be employees ofManager or any of its Affiliates, all Resort Employees shall at all times bethe employees of Owner.

 

9.2           Hiring; Retention.  Withrespect to all Resort Employees, Manager shall have full discretion to hire,promote, supervise, direct, train, fix compensation, and generally establishand maintain all employment policies and practices, subject to the following:

 

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(a)           Manager’semployment policies and practices shall comply with all applicable laws,regulations, and orders of any competent government authority.

 

9.3           ResortEmployee Costs.  The payrolland related costs for all Resort Employees including, without limitation, salaries,wages, payroll taxes, social security, employer contributions to retirement plans,contributions to worker’s compensation funds, provident fund contributions, andother taxes and charges, and employee benefits (including, without limitation,tax equalization benefits, overseas premiums, stock incentive plans, cost ofliving allowances, mobilization and relocation costs, fees and costs related tovisas, permits to stay, and work permits for Resort Employees and theirdependents, vacations, automobiles, housing for Resort Employees and theirdependents, and schooling for dependents) shall be Operating Expenses.

 

9.4           WorkVisas; Permits.  Upon therequest of Manager, Owner shall use best efforts to obtain visas, permits tostay, and work permits for Resort Employees and their dependents and for otherindividuals designated by Manager in connection with the development, openingor operation of the Resort, provided that the principle administrative burdenof so doing shall be borne by Manager, and the costs thereof shall be anOperating Expense.  Owner shall, withoutlimitation, (i) make any required applications for visas, permits to stay, andwork permits for Resort Employees and their dependents, (ii) provide allsupporting documents requested by Manager, and (iii) assist and cooperate withManager in all respects.

 

9.5           EmployeePerks.  Manager shalldetermine which, if any, Resort Employees shall reside in the Resort, andManager shall be permitted to provide complimentary accommodations andamenities to its Affiliates’ employees and representatives living at orvisiting the Resort for the purpose and duration of their business related tothe management or operation of the Resort. No Person shall otherwise be given gratuitous accommodations or serviceswithout prior approval of Owner and Manager except in accordance with usualpractices of the hotel and travel industry.

 

9.6           Terminationof Employees.  UponTermination, an escrow fund shall be established from Gross Revenues (or withfunds provided by Owner if Gross Revenues are insufficient) to reimburseManager for all Resort Employee liability costs and expenses incurred byManager arising out of either the transfer or termination of employment ofResort Employees, including, without limitation, severance and senioritypayments, reasonable transfer costs, and unemployment compensation. Owner shallindemnify, defend, and hold Manager harmless from and against all claims,losses, liabilities, penalties, costs, and expenses (including, withoutlimitation, attorneys’ fees and expenses and litigation costs and expenses),

 

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damages (including, without limitation,consequential, punitive, and exemplary damages), and third party claims basedon or arising from any claim made by any Resort Employee or any liability toany Resort Employee arising out of or connected with the foregoing.  This section 9.6 shall survivetermination of this Agreement.

 

**ARTICLE 10RIGHT TO INSPECT**

 

10.1         Owner’s Right to Inspect.  TheOwner and/or its duly authorized representatives shall have the right to enterthe Resort at all reasonable times for the purpose of inspecting the same andduring standard business hours for inspecting the books and records of theBusiness.

 

**ARTICLE 11DAMAGE AND DESTRUCTION**

 

11.1         Damage.  Ifthe Resort or any portion thereof shall be damaged or destroyed at any time ortimes during the Term by fire or any casualty risk or otherwise, Owner shall,at Owner’s cost and expense and with due diligence, repair, rebuild or replacethe same so that after such repairing, rebuilding or replacing, the facilitiesin question shall be substantially the same as prior to such damage ordestruction.

 

11.2         Manager’s Right to Reconstruct.  IfOwner fails to undertake such work or to commence and seriously pursue suchwork within ninety (90) days after the fire or other casualty, or shall fail tocomplete the same diligently within a reasonable time, Manager may, but shallnot be obligated to, undertake or complete such work or procure that such workis undertaken or completed for the account of Owner, and the proceeds ofinsurance, if any, shall be made available to Manager.  Manager shall further have the right toprocure that the proceeds from the insurance (if any) be applied to suchrepairing, rebuilding or replacing, and in the event of any shortfall in claimmonies due to inadequate insurance, Owner will be responsible for thedifference.

 

11.3         Retention of Construction Manager. During the course of repairs, rebuilding or replacement pursuant to section 11.1or section 11.2, Manager may elect to procure the performance of necessaryor desirable construction management services in regard thereto on the samebasis as set out in Article 4, in which event Owner shall pay Manager afee and reimburse its expenses on the same basis as set out in Article 4.

 

11.4         Destruction.  IfOwner determines not to rebuild, repair or replace any affected facility as setforth in section 11.1 by reason of it not being economically feasible

 

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to do so, Owner shall compensate Manager for itsloss of income under this Agreement in respect of the cessation of ManagementFees being generated by the Business, and failing agreement between Owner andManager as to the amount of such compensation, either party may refer thematter to arbitration in terms of Article 16 for the determination of suchamount.

 

**ARTICLE 12ALTERATIONS AND IMPROVEMENTS**

 

12.1         Alterations and Improvements.  Managershall have the right to procure that, from time to time, such renewals,replacements, alterations, additions or improvements are effected to theResort, which are customarily made in the operation of first class Resortfacilities subject always to the Annual Operating Budget and Capital Budget.  The costs of such customary renewals,replacements, alterations, additions or improvements shall be charged directlyto the Reserve Fund in accordance with Section 5.2.

 

**ARTICLE 13INTELLECTUAL PROPERTY**

 

13.1         Trade Name.  Thename of the Resort shall be *Atlantis, ThePalm,*or such other name as agreed between the Owner and theManager, which name shall include the brand “*Atlantis*”*.*The name of the Resort shall be used in allreferences to the Resort.  All rights inand to the name *Atlantis*(or anyversion thereof), and any logo, mark, design, style used in connection withsuch name from time to time shall be exclusively vested in the Manager’sAffiliate, Kerzner International Limited (“KZL”), and the Owner shall not have any rights thereto; provided however,that during the Term Owner shall have a non-exclusive, royalty free, revocableand limited license to use the *Atlantis*markin conjunction with the name of the Resort and merchandise and servicesprovided at the Resort in accordance with the terms and conditions of theTradename and Trademark Licensing Agreement.  If the name of the Resort includes the name “*Kerzner*”**or “*Kerzner International*”**or any other or additional brand, logo, mark,design, style or trade name in use by Manager from time to time, including themark “*The Dig*”*,*the Owner shall not have the rights to suchname.  The Manager may refer to theResort by such name in publications of its own activities not specificallyconnected with the Resort.  The Managershall also be entitled to promote the Resort as an *Atlantis*or a *KerznerInternational*hotel and display *Atlantis*and *Kerzner International*literatureand literature from other Kerzner affiliated brands in the Resort, as theManager may determine in accordance with its group brand strategy from time totime during the Term.  Owner representsand warrants to Manager that Owner has obtained intellectual property rights tothe trade name “*The Palm.*”**Duringthe Term, Manager shall have a nonexclusive royalty free,

 

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revocable and limited license to use *The Palm*mark in conjunction with theoperations and marketing of the Resort.

 

13.2         Management and Marketing Information.  Owneracknowledges that Manager or one of its Affiliates is or will become the owneror licensee of certain intellectual property, including (i) software in use atone or more resorts managed by Manager or Manager’s Affiliates and all sourceand object code versions thereof and all related documentation, flow charts,user manuals, listing and service/operator manuals and any enhancements,modifications or substitutions thereof; (ii) trade secrets, know-how and otherproprietary information relating to the operating methods, procedures andpolicies distinctive to other resorts managed by Manager or Manager’sAffiliates; (iii) customer information, customer lists, personal guestprofiles, information and data regarding guest preferences from other resortsmanaged by Manager or Manager’s Affiliates; and (iv) trade names, trademarksand service marks, including those referenced in Section 13.1 above(herein collectively called “*Intellectual Property*”*).*Manager may utilize the Intellectual Propertyin connection with the operation of the Resort to the extent Manager deemsappropriate for the purpose of carrying out its agreements and obligationshereunder, but such use shall be strictly on a non-exclusive basis, and neithersuch use nor anything contained in this Agreement shall confer any proprietarylicense or other rights in the Intellectual Property upon Owner (other than asset forth in Section 13.1) or any third parties.

 

**ARTICLE 14ASSIGNMENT**

 

14.1         Manager’s Assignment. Manager shall be entitled at any time, without the consent of Owner (orif such consent is an inalienable right under any provision of applicable law,then Owner shall grant such consent) to:

 

(a)           cede, assign and delegate itsrights and obligations under this Agreement to any company which controls, iscontrolled by or is under common control with Manager and which will agree inwriting to be bound to the provisions of this Agreement; and/or

 

(b)           assign its right, conditionally or otherwise,to receive payments hereunder.

 

14.2         Owner’s Consent Rights.  Except as set forth in Section 14.1above, Manager shall not cede, assign or delegate its rights or obligationsunder this Agreement without the prior written consent of Owner, which consentshall not unreasonably be withheld.

 

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14.3         Owner’s Assignment.  Owner shall not cede, assign or delegate itsrights or obligations under this Agreement without the prior written consent ofManager, which consent shall not unreasonably be withheld.

 

14.4         Successors and Assigns.  Theterms and conditions of this Agreement shall be binding upon and ensure to thebenefit of the third parties to which either Manager or Owner may validly cede,assign and delegate their respective rights and obligations in terms ofArticles 14.1, 14.2 and 14.3.

 

**ARTICLE 15CLAIMS AND LIABILITY**

 

15.1         Claims and Liability.  Ownerand Manager mutually agree for the benefit of each other to look only to theappropriate insurance coverages in effect pursuant to this Agreement in theevent any demand, claim, action, damage, loss, liability or expense occurs as aresult of injury to person or damage to property, regardless of whether anysuch demand, claim, action, damage, loss, liability or expense is caused orcontributed to, by or results from the negligence of Owner or Manager or theirsubsidiaries, affiliates, employees, directors, officers, agents or independentcontractors, and regardless of whether the injury to person or damage toproperty occurs in and about the Resort or elsewhere as a result of theperformance of this Agreement. Nevertheless, in the event the insuranceproceeds are insufficient or there is no insurance coverage to satisfy thedemand, claim, action, loss, liability or expense, Owner agrees, at itsexpense, to indemnify and hold Manager and its subsidiaries, affiliates,officers, directors, employees, agents and independent contractors harmless tothe extent of the liability or excess liability, as the case may be, unlesssuch liability or excess liability arises by reason of any act or omission ofManager or any of its agents, officers, employees or representatives, which actor omission is grossly negligent, willful misconduct or outside the scope ofManager’s authority as provided herein.

 

15.2         No Representation or Warranty.  Exceptas expressly provided in this Agreement, neither party makes any warranties orguarantees to the other, either express or implied, with respect to the subjectmatter of this Agreement, and both parties disclaim and waive any impliedwarranties or warranties imposed by law.

 

15.3         Insurance Coverage.  Nothingin this Agreement shall entitle either the Owner on the one hand or the Manageron the other hand to make any claim against each other to the extent that it isable to obtain compensation or reimbursement from any of the insurancesprovided for in Article 8. Except as otherwise provided in this Agreement,to the extent of insurance coverage, Manager and Owner each waives, releasesand discharges the other from all claims or demands which each may have oracquire against the other, or against each other’s subsidiaries,

 

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affiliates, directors, officers, agents, employees,independent contractors or partners, with respect to any claims for any losses,damages, liabilities or expenses (including attorneys’ fees) incurred orsustained by either of them on account of injury to persons or damage toproperty or business arising out of the ownership, management, development,operation and maintenance of the Resort, regardless of whether any such claimor demand may arise because of the fault of negligence of the other party orits subsidiaries, affiliates, officers, employees, directors, agents orindependent contractors.  Each policy ofinsurance shall contain a specific waiver of subrogation reflecting the abovewith respect to insured claims.

 

15.4         Survival.  Theparties agree that the waivers and disclaimers of liability, indemnities,releases from liability, and limitations on liability expressed in this Article 15shall survive the expiry or earlier termination for any reason of thisAgreement and shall apply whether in contract, equity, tort or otherwise, evenin the event of the fault, negligence, including sole negligence, strictliability, or breach of Manager or Owner.

 

**ARTICLE 16APPLICABLE LAW; ARBITRATION**

 

16.1         Governing Law; Jurisdiction.  ThisAgreement shall be governed by and construed in accordance with the laws ofEngland without regard to the conflicts of laws rules thereof.  Each party agrees that any proceeding, suit oraction arising out of or in connection with this Agreement (“Proceedings”) may only be brought subject to theArbitration provisions of Section 16.2, below, in the courts of England.  Each party also agrees that a judgment againstit in Proceedings brought in any jurisdiction in accordance with this section 16.1shall be conclusive and binding upon it and may be enforced in any otherjurisdiction.  Each party irrevocablysubmits and agrees to submit to the jurisdiction of the English courts and ofany other court in which Proceedings may be brought in accordance with this section 16.1.Each party waives, to the fullest extent permitted by applicable law, thedefense of an inconvenient forum to the maintenance of such action orproceeding in such court.  Nothing inthis Agreement shall affect the right of any party to the Agreement to serveprocess in any manner permitted by law.

 

16.2         Arbitration. Except as otherwise specified in this Agreement, any dispute,controversy or claim arising out of or relating to this Agreement shall besettled by arbitration in accordance with the Rules of the London Court ofInternational Arbitration (or any similar successor rules thereto) as are inforce on the date when a notice of arbitration is received.  The number of arbitrators shall be one unlesseither party to the arbitration requests otherwise, in which case there shallbe three arbitrators, one selected by each party and the third selected by thearbitrators selected by Owner and Manager. The language to be used in the proceedings shall be English.  The place of arbitration shall be London orsuch

 

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other place as the parties may agree.  The decision of the arbitration board shall befinal and binding upon the parties, and such decision shall be enforceablethrough any courts having jurisdiction and particularly the Dubai courts.  The costs and expenses of arbitration shall beallocated and paid by the parties as determined by the arbitrators.

 

16.3         Performance During Disputes.  Itis mutually agreed that during any kind of controversy, claim, disagreement ordispute, including a dispute as to the validity of this Agreement, Manager andOwner shall continue their performance of the provisions of this Agreement.  Manager shall be entitled to injunctive relieffrom a civil court or other competent authority to maintain possession in theevent of a threatened eviction during any dispute, controversy, claim ordisagreement arising out of this Agreement.

 

**ARTICLE 17TERMINATION**

 

17.1         Owner’s Termination Rights. Notwithstanding anything to the contrary herein contained, Owner mayterminate this Agreement if:

 

(a)           Manager is placed in bankruptcy orinsolvency, voluntarily or otherwise (except for the purpose of amalgamation orreconstruction) or shall have a receiver or judicial manager appointed for allor a substantial portion of Manager’s property; or

 

(b)           for a period of sixty (60) days (or suchlonger period as may be reasonable, having regard to the nature of the default andthe prevailing circumstances) after written notice has been served on it andwithout reasonable cause, Manager neglects, omits, refuses or fails todischarge or diligently take action to discharge any of its materialobligations hereunder, whether through the operation of law or otherwise; or

 

(c)           if, during the period of the first two (2)complete fiscal years of the Business following the Opening Date, KerznerInternational Limited ceases to be the ultimate owner of at least seventy-fivepercent (75%) of its initial investment in the Owner, whether directly orthrough a parent company of Owner.

 

17.2         Manager’s Termination Rights.  Notwithstandinganything to the contrary herein contained, Manager may terminate this Agreementif:

 

(a)           Owner is placed in bankruptcy or insolvency,voluntarily or otherwise (except for the purpose of amalgamation orreconstruction) or shall have a

 

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receiver or judicial manager appointed forall or a substantial portion of Owner’s property;

 

(b)           for a period of sixty (60) days (or suchlonger period as may be reasonable, having regard to the nature of the defaultand the prevailing circumstances) after written notice has been served on itand without reasonable cause, Owner neglects, omits, refuses or fails todischarge or diligently take action to discharge any of its materialobligations hereunder, whether through the operation of law or otherwise; or

 

(c)           Manager determines in its discretion that itsability to participate in other gaming jurisdictions is jeopardized as a resultof matters relating to Owner, shareholders of Owner or any of their Affiliates,or Owner’s Businesses and arising outside of Manager’s control in respect ofthis Agreement.

 

(d)           The rights granted in Articles 17.1 and 17.2shall be in addition to any and all rights and remedies for breach of contractgranted by the laws as designated by Section 16.1.

 

(e)           In the event Manager terminates thisAgreement pursuant to Article 17.2(c), Manager shall give owner thirty(30) days notice and shall cooperate with owner in Owner’s search for asubstitute manager and will co-operate in the hand-over of the Business,provided that Owner shall reimburse Manager for all reasonable and proper costsof so doing.

 

**ARTICLE 18FORCE MAJEURE**

 

18.1         Force Majeure.  Ifby reason of war, terrorism, explosion, bombing, revolution, riots, civilcommotion, strikes, lockout, inability to obtain labour or materials, fire,flood, storm, earthquake, hurricanes, tornado, drought, failure ofinfrastructure or utility services or the structural integrity of the Project,fundamental access to Resort, environmental impact on the Project, erosion,tidal waves, settlement of dredged areas or other acts or elements, accident,government restrictions or appropriation or other causes, whether like orunlike the foregoing, beyond its reasonable control of, the Manager is unableto perform in whole or in part its obligations under this Agreement, then theManager shall be relieved of those obligations to the extent it is so unable toperform and such inability to perform so caused shall not make such partyliable to the other.

 

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**ARTICLE 19NOTICES**

 

19.1         Notices. The parties choose the following addressesfor the delivery of all notices and other communications hereunder:

 

To the Owner:

 

c/o Istithmar(PJSC)Emirates Towers, Level 47Sheikh Zayed RoadP. O. Box 17000Dubai, UAE

Attn:    AhmedButti, Chief Executive Officer

Tel:      971-4-390-2100

Fax:      971-4-390-3818

 

and:

 

c/o KerznerInternational Palm Island LimitedCoral TowersExecutive OfficesP. O. Box N- 4777Paradise Island, Bahamas

Attn:    GiselleM. Pyfrom

Tel:      242-363-6019

Fax:      242-363-2767

 

To the Manager:

KerznerInternational Management FZ LLCBoutique Office No. 14,Dubai Media City,Dubai, UAEAttention: George Markantonis

Tel:      971-4-391-1139

Fax:      971-4-366-4699

 

With copies to:

 

KerznerInternational LimitedCoral TowersExecutive OfficesP. O. Box N-4777Paradise Island, Bahamas

Attn:    GiselleM. Pyfrom, General Counsel

 

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Tel:      242-363-6019

Fax:      242-363-2767

 

provided that any party shall be entitled tochange its address to any other address which is not a post office box or posterestante by giving the other party notice to that effect.

 

19.2         Allnotices in terms of this Agreement:

 

(a)           shallbe in writing;

 

(b)           shalleither be delivered by hand or sent by fax, courier or by prepaid registeredpost to the address determined in accordance with the provisions of this Article 19;

 

(c)           bedeemed to have been received on the date of delivery if delivered by hand orsent by fax, courier or on the tenth day after posting if sent by prepaidregistered post.

 

**ARTICLE 20MISCELLANEOUS**

 

20.1         EntireAgreement; Authorization. This document and the documents referred to herein constitutes the solerecord of the agreement between the parties in respect of the management of theResort.  No party shall be bound by anyrepresentation, warranty, promise or the like not recorded herein.  Owner and Manager represent and warrant toeach other that their respective legal entities have full power and authorityto execute this Agreement and be bound by and perform the terms hereof.

 

20.2         Interest.  Owner shall be liable for and shall payinterest to Manager on all overdue payments to Manager in terms of thisAgreement.  Such interest shall becalculated at LIBOR + 500 bps.  Ownershall furthermore be liable for and shall pay all legal costs, includingcollection costs and commissions, incurred by Manager in enforcing its rightshereunder.

 

20.3         NoWaivers; Amendments.  Nofailure or delay by Manager or Owner to insist upon the strict performance ofany covenant, agreement, term or condition of this Agreement, or to exerciseany right or remedy consequent upon the breach thereof, shall constitute awaiver 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 bewaived, altered or modified except by written instrument, signed by the partyagainst whom the same is sought to be enforced. No waiver of any breach shall affect or alter this Agreement, but eachand every covenant, agreement, term and condition of this

 

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Agreement shall continue in full force and effectwith respect to any other then existing or subsequent breach.

 

20.4         Funding of Owner Accounts.  Notwithstandinganything to the contrary set out in this Agreement, Manager shall not beobligated to perform its duties and shall be excused from its obligations andresponsibilities hereunder to the extent that funds to be provided by Owner arenot available to allow Manager to perform such duties pursuant to theprovisions of this Agreement.

 

20.5         Manager’s Right to Request Instructions.  Atany time, Manager may, if it reasonably deems it to be necessary orappropriate, request written instructions from Owner within a reasonable periodprior to the necessity for taking action with respect to any mattercontemplated by this Agreement where the approval of the Owner is required, andmay defer action thereon pending receipt of such written instructions.  Owner shall promptly respond to any such requestfor written instructions.  Actions takenby Manager, its officers, employees and representatives in accordance with thewritten instructions of Owner, or failures to act by such persons pending thereceipt of such written instructions, shall be deemed to be proper conductwithin the scope of Manager’s authority under this Agreement.

 

20.6         Independent Contractors. Manager shall be an independent contractor with respect to theperformance of its duties hereunder.  NeitherManager nor its employees or other agents employed in the performance of suchduties shall be deemed to be agents, partners, joint venturers, representativesor employees of Owner, except to the extent of the agency expressly createdunder this Agreement.

 

20.7         Conflicts. Other than as set forth in Article 6.1(f), nothing contained inthis Agreement shall be construed so as to restrict or prevent, in any manner,Manager from engaging in any other businesses or investments during the Term,including, without limitation, any similar or competitive operations to thoseof Owner, anywhere in the world.  Owneracknowledges that Manager and/or its Affiliates operate and/or manage otherhotels, casinos and resorts presently and may in the future operate and/ormanage additional hotels, casinos and resorts in different areas of the world,and that marketing efforts may cross over into the same markets and withrespect to the same potential customer base.

 

20.8         Severability.  Anyprovision of this Agreement which may for any reason be held to be unlawful orinvalid shall be severable from the remaining provisions of this Agreement,which shall remain in full force and effect.

 

20.9         Confidentiality.  Theparties agree that the matters set forth in this Agreement are strictlyconfidential.  In addition, the partiesagree to keep strictly confidential all information of a proprietary orconfidential nature about or belonging to the other party or to any Affiliateof such party to which the other party gains or has access

 

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by virtue of the relationship between theparties.  Except as disclosure may berequired to obtain the advice of professionals or consultants, or financing forthe Resort and/or the Business from an institutional lender, or in furtheranceof a permitted assignment of this Agreement, or as may be required by law or bythe order of any government, regulatory authority, or tribunal or otherwise tocomply with legal requirements (including reporting requirements applicable tocompanies the shares or stock of which are traded on any stock exchangeanywhere in the world) whether or not having the force of law, each party shallmake every effort to ensure that such information is not disclosed to the pressor to any other third Person without the prior consent of the other party.  The obligations set forth in this Section 20.9shall survive any termination or expiration of this agreement.  The parties shall cooperate with one anotheron all public statements, whether written or oral and no matter howdisseminated, regarding their contractual relationship as set forth in thisAgreement or the performance of their respective obligations under thisAgreement.

 

20.10       Counterparts. This Agreement may be executed in one ormore counterparts, each of which shall be deemed an original and all of whichshall, taken together, be considered one and the same agreement, it beingunderstood that each of the parties hereto need not sign the same counterpart; *provided*,*however*,**that this Agreement shall not be effectiveuntil each party has signed at least one counterpart.

 

20.11       NoThird Party Beneficiaries.  Theparties do not intend to confer upon any Person other than the parties heretoany rights or remedies hereunder or that any term hereof should be enforceableby virtue of the Contracts (Rights of Third Parties) Act 1999 by any suchPerson.

 

20.12       Expenses. All costs and expenses incurred inconnection with this Agreement and the transactions contemplated hereby shallbe borne by the party incurring such expense.

 

20.13       Agentfor Service.

 

(a)           TheManager irrevocably appoints Christopher Pearson of Norton Rose, Kempson House,P. O. Box 570, Camomile Street, London, EC3A 7AN, United Kingdom to be itsagent for the receipt of any claim form, application notice, order or judgmentor other document relating to any Proceedings (each a “Service Document”) and agrees that any Service Documentmay be effectively served on it in connection with Proceedings in England andWales by service on its agent.  If theagent at any time ceases for any reason to act as such, the Manager shallappoint a replacement agent having an address for service in England or Walesand shall notify the other parties of the name and address of the replacementagent.  Failing such appointment andnotification, the Owner shall be

 

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entitled by notice to the manager to appoint areplacement agent to act on behalf of the Manager.  The provisions of this Section 16(a)applying to service on an agent apply equally to service on a replacementagent.  A copy of any Service Documentserved on an agent shall be sent by post to the Manager.  Failure or delay in so doing shall notprejudice the effectiveness of service of the Service Document.

 

(b)           The Owner irrevocably appoints SimonRoderickof Allen & Overy LLP, One New Change, London, EC4M 9QQ, UnitedKingdom to be its agent for the receipt of any Service Document and agrees thatany Service Document may be effectively served on it in connection with Proceedingsin England and Wales by service on its agent.  If the agent at any time ceases for any reasonto act as such, the Owner shall appoint a replacement agent having an addressfor service in England or Wales and shall notify the other parties of the nameand address of the replacement agent.  Failingsuch appointment and notification, the Manager shall be entitled by notice tothe Owner to appoint a replacement agent to act on behalf of the Owner.  The provisions of this Section 16(b)applying to service on an agent apply equally to service on a replacementagent.  A copy of any Service Documentserved on an agent shall be sent by post to the Owner.  Failure or delay in so doing shall notprejudice the effectiveness of service of the Service Document.

 

**[SIGNATUREPAGE TO FOLLOW]**

 

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**Exhibit A – Resort Site**

 

Lots 18 to 27 on the Crescent of the Palm – Jumeirah, Dubai, UAE

 

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Made in two originals this 5th dayof May, 2004.

 

 
| **SIGNED**for and on  behalf of **KERZNER NAKHEEL LIMITED:**                 |
|------------------------------------------------------------------------------|
|                                                                         |   |   |
| By:                                                                          | /s/ Sultan Ahmed Bin Sulayem |   |   | /s/ Howard B. Kerzner |   |
|                                                                         | Name: Sultan Ahmed Bin Sulayem |   | Name: Howard B. Kerzner |
|                                                                         | Title:  Director |   | Title:  Director |
|                                                                         |   |   |
|                                                                         |   |   |
| /s/ Sahia Ahmad                                                              |   |   | /s/ Giselle Pyfrom |   |
|                                                                         | Witness: |   | Witness: |
|                                                                         |   |   |
| **SIGNED**for and on  behalf of **KERZNER INTERNATIONAL MANAGEMENT FZ-LLC**: |
|                                                                         |   |   |
| By:                                                                          | /s/ Richard Lindsay |   |   | /s/ Sahia Ahmad |   |
|                                                                         | Name: Richard Lindsay |   | Witness: |
|                                                                         | Title:  Authorized Signatory |   |   |
|                                                                              |  |  |  |  |  |  |  |

 

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