**Exhibit 4.8(c)**

 

**EXECUTION COPY**

 

**DEVELOPMENT AGREEMENT**

 

FOR THE

 

**ATLANTIS, PALM ISLAND**

 

BY AND BETWEEN

 

**KERZNER INTERNATIONAL DEVELOPMENT FZ LLC**

 

AS DEVELOPER

 

AND

 

**KERZNER NAKHEEL LIMITED**

 

AS OWNER

 

**5th May, 2004**

 

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**DEVELOPMENT AGREEMENT**

 

ThisDevelopment Agreement (as the same may be amended, modified or supplemented fromtime to time, this “*Agreement*”)**is made and entered into this day of May, 2004 (the “*EffectiveDate*”)*,*by andbetween KERZNER NAKHEEL LIMITED, a British Virgin Island company with officesat Trident Trust Company, Trident Chambers, Wickhams Cay, P.O. Box 146,Road Town, Tortola, BVI (the “*Owner*”)**and (ii) KERZNER INTERNATIONAL DEVELOPMENT FZ LLC, aUnited Arab Emirates Free Zone Limited Liability Company having its registeredoffice at Boutique Office No. 19, Dubai Media City, Dubai, United ArabEmirates (the “*Developer*”).**The Owner and the Developer are sometimeshereinafter referred to as the “*Parties*.”

 

WITNESSETH:

 

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

 

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

 

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

 

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

 

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

 

NOW,THEREFORE, in consideration of the mutual covenants and agreements hereinafterset forth, and for other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, the parties covenant and agree asfollows:

 

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ARTICLE 1

 

THE PROJECT

 

Section 1.01  TheProject.  The subject matter of thisAgreement is the development of the Project in one or more Phases as may bedetermined by the Owner from time to time during the Term hereof.

 

ARTICLE 2

 

TERM

 

Section 2.01  Term.  The term of this Agreement shall commence onthe Effective Date and continue through the completion date of all Phases ofthe Project (the “*Term*”)**(unlesssooner terminated in accordance with the provisions of this Agreement, or uponmutual agreement of the parties). For the purposes hereof, the Term of thisAgreement shall continue through the term of the Management Agreement, definedin Section 9.02 below.

 

ARTICLE 3

 

APPOINTMENT OF DEVELOPER AND DEVELOPER’S SERVICES

 

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

 

Section 3.02  Developer’sObligations.  Subject to Owner’sapproval of Developer’s actions with respect to the Project, Developer shall beprimarily responsible for the following: scheduling, coordinating and directingthe Project, including, without limitation, (a) managing Projectdevelopment and construction until the issuance of the necessary governmentalpermits which allow the lawful use and occupancy of all portions of theProject, (b) supervision of the completion of any “punch-list” orincomplete items involving any component of the Project, (c) providingreports to Owner periodically as to the status of the development of theProject, and (d) coordinating all construction and other services relatedto construction typically provided in connection with the development ofprojects similar to such Project and customary or necessary to prosecute theProject to a successful completion. The scope of the services to be performedby Developer under this Agreement (“the Developer’s Services”) are moreparticularly described in Exhibit ”C” attached hereto and made a parthereof. Developer shall perform its obligations subject to the following:

 

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

 

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

 

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

 

(iii)        Affiliates. Developer may perform certain of its obligations hereunder andotherwise act by and through or in concert with one or more Affiliates (asdefined below) provided that the foregoing shall not diminish any of Developer’sobligations or responsibilities hereunder. Owner recognizes that personnel ofDeveloper or its Affiliates shall not be precluded from working upon otherprojects of Developer or its Affiliates, provided that such work does notinterfere with the performance of Developer’s obligations hereunder. An “*Affiliate*”**is defined herein to include anyentity which is owned or controlled by Developer, or any of its direct orindirect principal shareholders, members, or partners, or which directly orindirectly owns a majority interest in or controls Developer, or is undercommon control with or by Developer’s principal shareholders, members, orpartners.

 

ARTICLE 4

 

CONTROL OF PROJECT

 

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

 

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

 

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

 

(i)          Engagement of Architect Project Manager andConsultants. Owner shallengage an Architect(s), Project Manager and/or Consultants, based on therecommendations of Developer, familiar with the design of hotel facilities andfor the purpose of performing certain services in connection with theconstruction of each Project Phase, including site development. All agreementswith the Architect(s), Project Manager and the Consultants shall be in a formof contracts prepared by Developer for execution by Owner.

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.03  BidProcedures and Awards.  With theDeveloper’s review and approval, and subject to theprovisions hereof, the Contractor(s) shall be responsible for the method to beused in selecting subcontractors and in awarding subcontracts in accordancewith subcontract forms approved by Developer.

 

Section 4.04  StatusReports.  To the extent requested byOwner, during the pre-development phase of each Project Phase, Developer shallprovide a monthly status report to reflect the Project status. Following thestart of construction, Developer shall report on a monthly basis to Owner, ormore frequently as reasonably requested by Owner, regarding the progress ofconstruction activities.

 

Section 4.05  Developerto Nominate Key Personnel.  Duringthe construction of each phase of the Project, Developer shall nominate atleast two (2) key persons to supervise on a full-time basis the Developer’sServices provided under this Agreement.

 

Section 4.06  Relationshipof Developer to Owner.  In carryingout its duties and obligations hereunder, Developer’s relationship to Ownershall be that of an independent contractor. Developer’s project manager, keypersonnel, executive personnel and support staff that are employed inconnection with Developer’s services hereunder in connection with the

 

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Projectshall be and shall remain employees, agents or representatives, as the case maybe, of Developer and shall not by virtue of their employment with Developer inconnection with Developer’s services hereunder, be deemed employees of Owner.Developer agrees to handle the payroll for its employees, withhold from theirwages and salaries and make all tax filings and payments with respect to suchemployees as is required by law, provided, however, that these wage and salaryexpenses shall be reimbursable to Developer pursuant to Section 6.02 below.In its capacity as aforesaid, Developer shall act for and on behalf of Owner asits representative, and all contracts, permits, licenses, variances and othersuch documents shall be for and in the name of Owner. Developer shall not berequired to make any payments on behalf of Owner or the Project except to theextent that funds are made available by Owner; and, should Developer expend anyof Developer’s funds in conjunction with the Project, such funds shall bereimbursed by Owner in accordance with the provisions of Section 6.02 ofthis Agreement.

 

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

 

ARTICLE 5

 

OWNER’S OBLIGATIONS

 

Section 5.01  Obligationsof Owner.  During the Term, Ownershall have the obligations set forth below:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 6

 

DEVELOPER’S FEE

 

Section 6.01  Developer’sFee.  Owner and Developer shallengage in good faith negotiations to determine Developer’s fee (the “Developer’sFee”) for each respective Phase of the Project. For Phase I of the Project,Owner shall pay to Developer a fixed Developer’s Fee in the amount of TwentyMillion dollars (US$20,000,000.00). Three Million dollars (US$3,000,000.00) ofthe Developer’s Fee for Phase I shall be paid on the Effective Date. Additionaladvances against the remainder of the total Developer’s Fee shall be paid on amonthly basis, without set-off, deduction or counterclaim, during theapplicable development period of Phase I of the Project based upon Developer’sgood faith estimate of the total fee payable and the duration of thedevelopment period for Phase I. The amount of the monthly installments shall bemodified from time to time to reflect changes to the Budget and/or constructionschedule. Costs and expenses to be reimbursed to Developer shall be paid withinthirty (30) days after Developer’s requisition therefore.

 

Section 6.02  Reimbursementsto Developer.  Owner shall reimburseDeveloper for any and all of the following costs and expenses incurred byDeveloper in conjunction with the Project:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6.03  Creditsto Owner.  Developer shall credit toOwner all discounts, commissions, rebates or similar cost savings obtained inconnection with Developer’s development of the Project.

 

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

 

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ARTICLE 7

 

CLAIMS AND LIABILITY

 

Section 7.01  Claimsand Liability.  Owner and Developermutually agree for the benefit of each other to look only to the appropriateinsurance coverages in effect pursuant to this Agreement in the event anydemand, claim, action, damage, loss, liability or expense occurs as a result ofinjury to person or damage to property, regardless of whether any such demand,claim, action, damage, loss, liability or expense is caused or contributed toby, or results from, the negligence of Owner or Developer 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, as to Developer, in the event theinsurance proceeds are insufficient or there is no insurance coverage tosatisfy the demand, claim, action, loss, liability or expense, and the same didnot arise out of the gross negligence or willful misconduct of Developer, Owneragrees, at its expense, to indemnify and hold Developer and its subsidiaries,Affiliates, and each of their respective officers, directors, employees, agentsand independent contractors harmless to the extent of the liability or excessliability, as the case may be.

 

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

 

ARTICLE 8 

 

CLOSURE, EMERGENCIES AND DELAYS

 

Section 8.01  Eventsof Force Majeure.  Developer shallhave the authority after consultation with Owner if circumstances allow, butotherwise in Developer’s sole discretion, to cease work on the Project in orderto protect the Resort and/or the health, safety and welfare of the guestsand/or employees of the Resort for reasons beyond the reasonable control ofDeveloper, such as, but not limited to, acts of war, insurrection, civil strifeand commotion, labor unrest, weather conditions (including, without limitation,hurricanes, typhoons, tornadoes, cyclones, other severe storms, winds andlightning), earthquakes, volcanic eruptions, disease, contagious illness,epidemics, governmental regulations and orders, shortage or lack of adequatesupplies or lack of skilled or unskilled employees, failure of infrastructureservices or structural integrity of the Project, fundamental access to Resort, environmentalimpact on the Project, erosion, tidal waves, settlement of dredged areas, othercatastrophic events and other acts of God. In any such event or similar events(each, an “*Event of Force Majeure*”)*,*Developer may cease work on all or any part of the Projectthen in progress, postpone or cancel work on the Project then contemplated, andprovide immediate notice thereof to Owner specifying the circumstances of theEvent of Force Majeure, providing any supporting documentation as may beavailable to evidence such circumstances, and shall periodically update theOwner on the progress of the Event of Force Majeure during the course of theresulting interruption of work on the Project. Developer may restart andcommence the Project when Developer deems that the Project may be

 

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

 

Developerand Owner agree, except monetary obligations and except as otherwise providedherein, that the time within which a party is required to perform an obligationand Developer’s right to develop the Project under this Agreement shall beextended for a period of time equivalent to the period of delay caused by anyEvent of Force Majeure.

 

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

 

ARTICLE 9

 

TERMINATION RIGHTS

 

Section 9.01  Bankruptcyand Dissolution.  If either party isvoluntarily or involuntarily dissolved or declared bankrupt or insolvent by acourt of competent jurisdiction, or commits an act of bankruptcy, or if acompany enters into liquidation, whether compulsory or voluntary, otherwise thanfor the purpose of amalgamation or reconstruction, or compounds with itscreditors, or has a receiver appointed over all or any part of its assets, orpasses title in lieu of foreclosure, the other party may terminate thisAgreement immediately upon serving notice to the other party, without liabilityon the part of the terminating party.

 

Section 9.02  Terminationof Management Agreement.  Eitherparty may terminate this Agreement if that Management Agreement, to be enteredinto by and among Kerzner International Management FZ-LLC (the “*Manager*”)**and Owner (the “*ManagementAgreement*”)**expiresor is terminated upon default in accordance with its terms, provided however,only the party not in default under the Management Agreement may terminate thisAgreement pursuant to this Section 9.02. This Agreement shall alsoterminate in the event of a casualty or condemnation which results in thetermination of the Management Agreement.

 

Section 9.03  (a) Owner’sDefault.  The following shall, at theelection of Developer, constitute an event of default by Owner under thisAgreement (each such event being referred to herein as an “*Owner’sDefault*”)*:*

 

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

 

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

 

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

 

On the occurrence of anyOwner’s Default, Developer shall have the right to terminate this Agreement bywritten notice to Owner.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 9.06  Indemnificationre Future Business.  Owner shallindemnify and hold Developer and its Affiliates harmless from and against allcosts, expenses, claims and liabilities, including reasonable attorneys’ fees,arising or resulting from the failure of Owner, following the expiration orearlier termination (for whatever cause) of this Agreement, (i) to performits obligations pursuant to any contracts assigned to Owner or Owner’s designeepursuant to Section 9.05 above, or (ii) to honor and fulfill allobligations of Owner under any contracts or leases entered into in the ordinarycourse of business by Developer as agent of Owner within the scope and terms ofthis Agreement prior to such expiration or termination, or (iii) to honorall purchase orders and to pay all payables arising out of the operation byDeveloper of the Resort in the ordinary course of business in accordance withthe provisions of this Agreement prior to such expiration or termination.

 

ARTICLE 10

 

APPLICABLE LAW AND ARBITRATION

 

Section 10.01  ApplicableLaw.  The interpretation, validityand performance of this Agreement shall be governed by the procedural andsubstantive laws of England, and any and all disputes, except thosespecifically referred to below, shall be brought and maintained within thatjurisdiction. If any judicial authority holds or declares that the law ofanother jurisdiction is applicable, this Agreement shall remain enforceableunder the laws of that jurisdiction.

 

Section 10.02  Arbitration. Except asotherwise specified in this Agreement, any dispute, controversy or claimarising out of or relating to this Agreement shall be settled by arbitration inaccordance with the Rules of the London Court of International Arbitration(or any similar successor rules thereto) as are in force on the date whena notice of arbitration is received. The number of arbitrators shall be oneunless either party to the arbitration requests otherwise, in which case thereshall be three. The language to be used in the proceedings shall be English.The place of arbitration shall be London or such other place as the parties mayagree. The decision of the arbitration board shall be final and binding uponthe parties, and such decision shall be enforceable through any courts havingjurisdiction and particularly the Dubai courts. The costs and expenses ofarbitration shall be allocated and paid by the parties as determined by thearbitrators.

 

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Section 10.03Performance During Disputes. It is mutuallyagreed that during any kind of controversy, claim, disagreement or dispute,including a dispute as to the validity of this Agreement or the validity of anotice to terminate this Agreement, Developer and Owner shall continue theirperformance of the provisions of this Agreement. Developer shall be entitled toinjunctive relief from a civil court or other competent authority to maintainpossession in the event of a threatened eviction during any dispute,controversy, claim or disagreement arising out of this Agreement.

 

ARTICLE 11

 

GENERAL PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

Developer’sconsent shall not be required for Owner to assign its rights, interests, orobligations as Owner to any affiliate or successor in interest which may resultfrom any merger, consolidation or reorganization with, or any sale orassignment to, any corporation, individual, partnership or other entity whichshall acquire all or substantially all of Owner’s business or the Resort, orany affiliate or successor thereof.

 

Section 11.06 Disclosure of Related Party Transactions. Developer shall disclose to Owner alltransactions and agreements with any of its Affiliates related to thisAgreement, which shall be subject to Owner’s prior written consent, which shallnot be unreasonably conditioned, withheld, or delayed, except that no Ownerconsent shall be required for transactions or agreements that are (i) inthe aggregate in any year, in the amount of Fifty Thousand and No/100 Dollars($50,000.00) or less and (ii) have a term of twelve (12) months or less(or can be cancelled without penalty upon sixty (60) days notice or less).

 

Section 11.07Notices. All notices or other communications provided for in thisAgreement shall be in writing and shall be either hand delivered, delivered bycertified mail, postage prepaid, return receipt requested, delivered by anovernight delivery service, or delivered by facsimile machine (with an executedoriginal sent the same day by an overnight delivery service), addressed as setforth on Exhibit ”E” hereto. Notices shall be deemeddelivered on the date that is four (4) calendar days after the notice isdeposited in the mail (not counting the mailing date) if sent by certifiedmail, or if hand delivered, on the date the hand delivery is made, or ifdelivered by facsimile machine during business hours, on the date thetransmission is made (or the next business day if not transmitted duringbusiness hours). If given by an overnight delivery service, the notice shall bedeemed delivered on the fourth business day following the date that the noticeis deposited with the overnight delivery service. The addresses given above maybe changed by any party by notice given in the manner provided herein.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 11.21 Preparation of Agreement. This Agreement shall not be construed morestrongly against either party regardless of who is responsible for itspreparation.

 

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

 

Section 11.23Projections. Owner acknowledges that any written or oral budgets,construction and development schedules, or other similar information that hasbeen (prior to execution of this Agreement) or will be (during the Term)provided by Developer, or any affiliate of Developer, to Owner is forinformation purposes only, and that Developer, and any such affiliate, do notguarantee that the Resort will achieve the construction and development resultsset forth in any such budgets, construction or development schedules, or othersimilar information. Owner further acknowledges that (i) any such budgets,construction or development schedules, or other similar information are basedon assumptions and estimates; (ii) unanticipated events may occursubsequent to the date of preparation of such budgets, construction ordevelopment schedules, or other similar information which impact the Resort;and (iii) the actual construction and development results achieved by theResort are likely to vary from the estimates contained in any such budgets,construction or development schedules, or other similar information, and suchvariations might be material.

 

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

 

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

 

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

 

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**Section 11.27 Counterparts. This Agreementmay be executed in two (2) or more counterparts, each of which shall bedeemed an original.**

 

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

 
|       | OWNER:                          |
|------------|---------------------------------|
|       |                            |
|       | **KERZNER  NAKHEEL LIMITED**    |
|       |                            |
|       |                            |
|       | By:                             | /s/ Sultan Ahmed Bin  Sulayem |   |
|       | Name: Sultan Ahmed Bin  Sulayem |
|       | Title: Director                 |
|       |                            |
|       | In witness:                     | /s/ Sahia Ahmad |   |
|       |                            |
|       | By:                             | /s/ Howard B. Kerzner |   |
|       | Name: Howard B. Kerzner         |
|       | Title: Director                 |
|       |                            |
|       | In witness:                     | /s/ Giselle Pyfrom |   |
|       |                            |
|       |                            |
|       | DEVELOPER:                      |
|       |                            |
| ** ** | **KERZNER  INTERNATIONAL**      |
| ** ** | **DEVELOPMENT  FZ-LLC**         |
|       |                            |
|       |                            |
|       | By:                             | /s/ Richard Lindsay |   |
|       | Name: Richard Lindsay           |
|       | Title: Authorized  Signatory    |
|       |                            |
|       | In witness:                     | /s/ Sahia Ahmad |   |
|            |                                 |  |  |  |  |

 

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