Document:

Exhibit 4.8(b)

 

EXECUTION
COPY:

 

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

 

RESORT MANAGEMENT AGREEMENT

ATLANTIS, PALM ISLAND

between

KERZNER NAKHEEL LIMITED

and

KERZNER INTERNATIONAL MANAGEMENT FZ-LLC

Dated as of 5th May, 2004

 

 

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

  

 

2

 

	
   

  	
  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

  

 

3

 

	
  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

  

 

4

 

RESORT
MANAGEMENT AGREEMENT

 

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

 

BETWEEN:

 

KERZNER NAKHEEL LIMITED, a
company incorporated in the British Virgin Islands and having its registered
office 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 and
Media Free Zone and having its registered office at Boutique No. 14, Dubai
Technology and Media Free Zone, Dubai, United Arab Emirates (hereinafter
referred to as the “Manager”).

 

RECITALS:

 

WHEREAS:

 

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

 

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

 

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

 

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

 

AGREEMENTS

 

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

 

5

 

ARTICLE 1

INTERPRETATION AND DEFINITIONS

 

Interpretation.

 

1.1           In this Agreement:

 

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

 

(b)           Article headings
and any Table of Contents are for convenience and shall not be used in its
interpretation;

 

(c)           unless
the context clearly indicates a contrary intention, any expression which
denotes –

 

(i)            any
gender includes the other genders;

 

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

 

(iii)          the
singular includes the plural and vice versa;

 

Definitions

 

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

 

“Adjusted Profits” shall
mean the earnings of the Business calculated in accordance with GAAP plus any
interest or amortization payments.

 

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

 

“Annual Operating
Budget” shall mean the annual operating budget of the
Business for each Fiscal Year finally adopted by the parties in accordance with
Section 5.3 of this Agreement.

 

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

 

“Business” shall
mean the business of the Resort, including the operation of any and all hotel
rooms, restaurants, bars, convention and meeting facilities, entertainment
venues, golf courses and other sporting facilities, parking facilities, retail
outlets and any other ancillary amenities and facilities conducted at the
Resort or located on the Resort Site during the Term.

 

6

 

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

 

“CPI Index” shall mean the consumer prices index as
published by the Dubai Chamber of Commerce and Industry or, if the foregoing
index shall no longer be published, any index of the value of the United States
of American dollar or its purchasing power in the United States of America as
shall 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 financial
years, 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 or
indirectly received by, accrued to or derived from the operation of the
Business including all income and proceeds of sales of every kind (whether in
cash or on credit) including hotel revenue, room service, catering, food and
beverage sales, parking revenues, retail sales, ticket revenues or other fees
or receipts from the convention/event center, rental or other receipts,
including retail rental receipts, spa, health club, beauty salon and fitness
center revenues, golf membership dues, greens fees, cart fees and related golf
club revenues received from tenants, transient guests, lessees, licensees and
concessionaires and other persons occupying space at or otherwise utilizing the
Resort facilities and/or rendering services to the Resort guests (but not
including the gross receipts of such lessees, licensees, concessionaires or
other persons), all income from catering operations conducted outside the
Resort, all subsidy payments, government allowances and awards, any other form
of incentive payments or awards from any source whatsoever which are
attributable to the operation of the Resort and the proceeds of business
interruption and use and occupancy insurance actually received by the Manager
or the Owner with respect to the operation of the Resort (after deduction from
the proceeds of all necessary expenses incurred in the adjustment or collection
thereof), but excluding value added tax, similar turnover taxes and levies and
any other direct room or room sales related taxes, fees or levies, any bad
debts, any proceeds from the sale of furnishings, equipment or other capital
assets of the Resort and the proceeds from any contents insurance, as reflected
in the audited accounts of the

 

7

 

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

 

“GAAP” shall mean those conventions, rules,
procedures and practices, consistently applied, comprising the Generally
Accepted Accounting Principles of the United States.  If Owner and Manager cannot in any instance
agree on what constitutes GAAP, then the accounting firm then or most recently
engaged to prepare the audited financial statements of the Owner in respect of
the Resort shall make the determination on the request of either party.  Any financial or accounting terms not
otherwise 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” shall
mean:

 

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

 

(b)   if no such interest rate appears on Reuters
screen page LIBOR 01 (or such replacement) then LIBOR shall be as reported by
any 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 accounts
prepared in respect of the Business to include a balance sheet, cash-flow
statement and income statement.

 

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

 

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

 

8

 

forecasts and projections for the Business
going forward and guest survey information.

 

“the Territory” shall
mean, 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 and
Yemen.

 

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

 

“Opening Date” shall
mean the date upon which the Resort first opens for guests

 

“Operating Account” shall
have the meaning set forth in Section 5.5.

 

“Operating Expenses” shall
mean all those ordinary and necessary expenses of the Business, incurred in the
operation of the Resort in accordance with this Agreement, including Resort
Employee personnel costs, the cost of maintenance and utilities, the costs of
advertising, marketing, and business promotion, and administrative expenses,
all as reflected in the audited accounts relating to the Business for the year
in question and as determined in accordance with GAAP.  Notwithstanding the foregoing description, the
following shall not constitute Operating Expenses: (i) property taxes; (ii)
interest and principal repayment of loans; (iii) capital expenses; (iv) rentals
of real and personal property; (v) depreciation and amortization of capitalized
assets; (vi) costs and expenses of Owner or Owner’s personnel, including
entertainment expenses, salaries, wages and employee benefits of Owner’s
employees, directors’ fees and the expenses of directors or Owner’s employees
to attend board meetings; and (vii) professional fees and costs, including the
fees and disbursements of attorneys, accountants and appraisers, incurred
directly or indirectly in connection with any category of expense that is not
itself an Operating Expense.

 

“Operating Income” shall
mean, for the year in question, the Gross Revenues for that year minus the
Operating Expenses for that year.

 

“Owner’s
Representatives” 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 Expenses
Estimate” shall have the meaning set forth in Section 4.2.

 

“Proceedings” shall
have the meaning set forth in Section 16.1.

 

“Required Standard” shall
mean the standards consistent with the standards of quality of international
luxury resorts from time to time and to a standard not less than those
generally prevailing from time to time in other resorts managed by the

 

9

 

Manager or its Affiliates, or as otherwise
agreed to by the parties, taking into consideration the quality of the
facilities and amenities of the Resort.

 

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

 

“Reserve Fund” shall
have the meaning set forth in Section 5.2(c).

 

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

 

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

 

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

 

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

 

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

 

“Trade Marks and
Trade Name Licence Agreement” shall mean the agreement
of even date entered into between Kerzner International Limited and Kerzner
Nakheel Limited.

 

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

 

ARTICLE 2

APPOINTMENT; DELEGATION OF AUTHORITY; STANDARD OF CARE

 

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

 

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

 

10

 

from interference, interruption, or disturbance — in
all 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 or
leasing of shops and agencies within the Resort; receipt, holding, and
disbursement of funds; maintenance of bank accounts; procurement of
inventories, supplies, furniture, fixtures, equipment and services; promotion
and publicity; retention of professional consultants to assist Manager,
including lawyers, accountants, auditors and other professionals, delegate
powers and rights and such other activities as are specifically provided for
elsewhere in this Agreement or are otherwise reasonably necessary for the
proper and efficient management and operation of the Resort.

 

2.3           Standard of Care.  In
fulfilling its obligations hereunder, Manager, or as the case may be, Manager’s
Affiliates 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 a
manner which preserves the character, standards, and reputation of the Resort
consistent with the Required Standard.

 

ARTICLE 3

TERM; RENEWALS

 

3.1           Term.  The term of this Agreement
shall commence on the Effective Date and shall continue for a period of
twenty-five (25) years from the later of (i) the Effective Date, or (ii) the
Opening Date (the “Initial Term”), 
subject to termination in accordance with the provisions of Article 17
of 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 have
the 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’s
written notice to Owner prior to the expiration of the then current Term.  The Initial Term and each Renewal Term are
collectively referred to herein as the “Term”.

 

ARTICLE 4

PRE-OPENING ACTIVITIES

 

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

 

11

 

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

 

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

 

(c)           administering and coordinating with Owner
applications for or transfers of licenses, permits, approvals, and other
instruments necessary for the management and operation of the Resort as
contemplated by this Agreement;

 

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

 

(e)           preparing necessary budgets;

 

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

 

(g)           coordinating the testing of Resort
operations;

 

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

 

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

 

4.2           Costs and Expenses.  The
costs and expenses relating to the activities described in Section 4.1 for
the initial development of the Resort and each subsequent expansion, (each, “Pre-opening
Expenses”) shall include, without limitation: salaries, wages, and benefits
(including those of personnel of Manager and its Affiliates); interim office
space costs; legal, accounting, and other professional fees; telecommunications
expenses; staff hiring and training costs; travel and moving expenses; opening
celebration costs; utilities, including, without limitation, heat, air
conditioning, light, power, water, and any sewage treatment and disposal costs;
costs not chargeable to the cost of constructing the Resort; advertising and
promotion expenses; the reasonable travel, living, and other out-of-pocket
expenses of personnel from the corporate and regional offices of Manager and
its Affiliates; miscellaneous expenses; and a reasonable charge for
administrative time and overhead expenses of Manager and its Affiliates.  Manager shall prepare and submit to Owner an
estimate of Pre-opening Expenses for each phase of development, including cash
flow requirements (each, a “Pre-opening Expenses Estimate”). Manager shall use
reasonable efforts to adhere to

 

12

 

the Pre-opening Expenses Estimates; provided,
however, it is understood and agreed that changes in development plans,
business plans, market conditions, currency fluctuations, general economic
conditions and other unforeseen circumstances may make adherence to the
Pre-opening Expense Estimate impractical or impossible, and Manager shall be
entitled to depart from the Pre-opening Expenses Estimates and incur
Pre-opening Expenses in excess of the Pre-opening Expenses Estimate as may be
required in the performance of Manager’s pre-opening services.  Manager shall notify Owner promptly of any
substantial change from the Pre-opening Expenses Estimates and shall provide
all information in relation to such change as Owner may reasonably request.  Furthermore, if the opening date of the Resort
or the completion of a subsequent expansion is delayed from the originally
projected dates, the Pre-opening Expenses Estimate shall be revised to reflect
any increases in Pre-opening Expenses caused by such delay.  To the extent such a delay causes an increase
in Pre-opening Expenses, Owner shall promptly pay such increased Pre-opening
Expenses in accordance with Section 4.3. Increased Pre-opening Expenses
shall include all out-of-pocket cancellation penalties if Manager cancels
reservations made for guestrooms, meeting rooms, and other Resort facilities as
a result of such delay.  Within one
hundred twenty (120) days after the opening date of the Resort or the opening
of a subsequent expansion, Manager shall provide to Owner an accounting
describing and showing in reasonable detail the total amount of incurred
Pre-opening Expenses.

 

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

 

ARTICLE 5

MANAGEMENT OF THE RESORT

 

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

 

13

 

terms of this Agreement, establish, define, alter
and vary from time to time the policies and procedures to be observed in the
conduct of the Business, including all administrative, accounting, budgeting,
marketing, personnel, operational and other practices and procedures to be
observed and applied in relation to the operation of the Business.  Subject only to the express limitations set
forth in Article 6, Manager shall, as exclusive agent for Owner for such
purposes, procure the management, administration, control and conduct of the
Business.  To that end, Manager shall
utilize its resources and skills to supervise, monitor, approve or otherwise
oversee, or procure the supervision, monitoring or approval, as the case may
be, of the following:

 

(a)           the selection and appointment of all Resort
Employees including without limitation a general manager for the Resort, other
senior executives, department heads of the Resort as may be considered by
Manager to be necessary from time to time, provided that the Manager shall
consult with Owner with respect to the selection and appointment of the general
manager and financial controller;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

(k)           the determination and establishment of all
tariffs, prices and rates for all of the facilities offered at the Resort in
respect of the Business;

 

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

 

(m)          the establishment and maintenance of bank
accounts 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 maintenance
of proper and efficient operation of all such systems, in order that:

 

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

 

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

 

(iii)          quarterly unaudited financial statements in
respect of the Business, together with Quarterly Management Reports are
prepared and circulated to Owner not later than six weeks after the end of the
quarter to which they related;

 

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

 

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

 

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

 

15

 

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

 

(a)           Licenses
and Permits.  Owner shall obtain and
maintain, with Manager’s assistance and cooperation, all governmental
permissions, licenses and permits required to be held in Owner’s name (or at
the request of Owner, the name of an individual on its behalf or a combination
thereof) that are necessary to enable Manager to operate the Resort in
accordance with the terms of this Agreement, and shall cooperate with Manager’s
efforts to obtain and maintain such permits and licenses.  Such business shall include, but not be
limited to, business licenses, marine permits, event and entertainment
operation licenses, fishing licenses and alcoholic beverage licenses permitting
the Resort to sell and serve unlimited quantities and qualities of alcohol to Resort
guests.

 

(b)           Operating
Funds.  The performance by Manager of
its responsibilities under this Agreement are conditioned upon Owner providing
sufficient funds to Manager on a timely basis to enable Manager to perform its
obligations hereunder.  Owner shall
provide all funds necessary to enable Manager to manage and operate the Resort
in accordance with the terms of this Agreement and the applicable Annual
Operating Budget and, without limiting Owner’s obligation in this regard, it is
understood that these funds shall be paid for from Gross Revenues, to the
extent available.

 

(c)           Capital
Funds.  Subject to funds availability
and the limitations of the approved Capital Budget, Owner shall expend such
amounts for renovation programs, furnishings, equipment and ordinary Resort
capital replacement items as are required from time to time to (a) maintain the
Resort 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 with
each other in establishing appropriate procedures and timetables for Owner to
undertake capital replacement projects.

 

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

 

(i)    Two
percent (2%) of Gross Revenues for any partial year of the Resort’s operation
after the Resort openings;

 

16

 

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

 

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

 

Any expenditures for capital replacements
during any calendar year which have been included in an approved Capital Budget
may be made without Owner’s additional approval.  Any amounts remaining in the Reserve Fund at
the close of each calendar year shall be carried forward and retained in the
Reserve Fund until fully used in accordance with an approved Capital Budget
item.  To the extent the Reserve Fund is
insufficient at a particular time to meet the spending requirements set forth
in the approved Capital Budget or to the extent the Reserve Fund plus
anticipated contributions for the ensuing calendar year is less than the
budgeted expenditures set forth in the approved Capital Budget for the ensuing
calendar year, then, in either such event, Manager shall give Owner written
notice thereof at least thirty (30) days before the anticipated date such funds
will be needed.  Owner shall supply the
necessary funds by deposit to the Reserve Fund at least fifteen (15) days
before the anticipated date such funds will be needed.  All proceeds from the sale of capital items no
longer needed for the operation of the Resort shall be deposited to the Reserve
Fund.  Sale of such items shall be at the
reasonable discretion of Manager, and conducted in a commercially reasonable
manner.  Upon termination of this
Agreement for whatever reason, or upon sale of the Resort, Manager’s right to
expend any unused portion of the Reserve Fund shall terminate and the balance
of the fund shall be paid over to Owner, less any undisputed sums then due to
Manager.

 

(e)           Payments
to Manager.  Owner shall promptly pay
to Manager all amounts due Manager under this Agreement in the manner and at
the times described in this Agreement.

 

(f)            Owner’s
Representative.  Manager shall have
the right to deal solely with the Owner’s Representative on all matters
relating to this Agreement and/or the Resort.  Manager may rely upon statements and
representations of Owner’s Representatives as being from and binding upon
Owner.  Owner shall designate the Owner’s
Representatives prior to the commencement of Manager’s duties hereunder.  Owner may change its Owner’s Representatives
from time to time by providing written notice to Manager in the manner provided
for herein.

 

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

 

17

 

containers), take all other necessary steps
to remedy the problem in accordance with all Environmental Laws and comply with
all Environmental Laws.  Owner, at its
expense, shall also indemnify, defend and hold harmless Manager from and
against any and all claims, losses, liabilities, damages (including
consequential, punitive and exemplary damages), penalties or other liabilities
arising out of such presence or required removal of Hazardous Materials on or
at the Resort or any portion thereof, or the violation of any Environmental
Laws, unless such claims, losses, liabilities, damages, penalties or other
liabilities are caused by the gross negligence of Manager or any of its
employees, agents, representatives or affiliates.  For the purposes of this provision (i) “Environmental Law” shall mean any current
or future governmental rule, regulation, law, regional or international treaty
and/or other enactment now or hereafter in effect and applicable to the Resort
or any portion thereof or to activities carried on thereat or with respect
thereto (whether of a national, regional, state, international or local
government, agency or instrumentality), regulating, relating to, or imposing
liability or standards of conduct concerning the use, generation, treatment,
storage, disposal or abatement of Hazardous Materials; and (ii) “Hazardous Materials” shall mean any
substance or material containing one or more of the following: hazardous
material, hazardous waste, hazardous substance, regulated substance, petroleum,
pollutant, contaminant or asbestos, as such terms are defined in any applicable
Environmental Law, in such concentration(s) or amount(s) as may require
clean-up or removal, or which could reasonably be expected to present a risk of
harm to guests, invitees or Resort employees.

 

(h)           Work
Permits.  Upon the request of
Manager, Owner ,shall use all reasonable efforts to obtain, extend and renew
visas, permits to stay and work permits for Resort Employees and their
dependents for the purposes of this Agreement, provided that the priniciple
administrative burden of so doing shall be borne by the Manager, and the costs
thereof shall be an Operating Expense.  In
furtherance thereof, Owner shall, without limitation (i) make any required
applications for visas, permits to stay, and work permits for Resort Employees
and their dependents; (ii) provide all supporting documents in respect thereof
as Manager may reasonably request (other than documentation required to be
provided by the Resort employee); and (iii) assist and cooperate with Manager
in all reasonable respects.

 

5.3           Annual
Operating Budget.

 

(a)           Preparation
of Annual Operating Budget.  Manager
shall provide to Owner its pro forma Annual Operating Budget for pre-opening
expenses and the first partial Fiscal Year no later than sixty (60) days prior
to the scheduled

 

18

 

commencement of operations.  Thereafter, Manager shall provide to Owner a
draft Annual Operating Budget on or before 31st October of each Fiscal Year for the following Fiscal Year.  The parties will use their respective
reasonable 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 Operating
Budget is prepared in accordance with GAAP.  Manager shall, as part of the Annual Operating
Budget, provide Owner sufficient details with respect to proposed capital
expenditures and major building expenditures, an estimate of costs and
expenses, revenue and profit, a marketing budget and a schedule of
replacement of furniture, in each case, for the following Fiscal Year.

 

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

 

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

 

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

 

(ii)           The Independent Expert shall be such
chartered accountant or firm of chartered accountants or consultant with
recognized expertise in hotel management and feasibility studies in relation to
the matter to be determined as shall be selected by the Non-Disputing Party
from three nominations put forward by the Disputing Party; provided that if the
Non-Disputing Party does not wish to select any of the three persons nominated
by the Disputing Party, then the matter will be referred to a chartered accountant
to be appointed by the President or the acting President of the Institute of
Chartered Accountants in England and Wales (or any successors of that
institute); and

 

19

 

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

 

(d)           Adherence to Annual Operating Budget.  Manager
shall use all reasonable efforts to act in accordance with the Annual Operating
Budget (as modified by any subsequent changes agreed between Owner and
Manager). However, it is understood that the Annual Operating Budget is an
estimate only and that inflation, currency fluctuation, general market
conditions, changes in business plans and strategies and unforeseen
circumstances 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 with
Owner regarding any substantial change from the Annual Operating Budget, and to
make any necessary adjustments to the Annual Operating Budget as Owner and
Manager shall agree in light of unforeseen circumstances.

 

5.4           (a)           Capital Budgets.  Manager
shall, not less than sixty (60) days prior to the commencement of each fiscal
year, submit to Owner for approval a recommended capital budget for the ensuing
full or partial fiscal year, for furnishings, equipment and ordinary Resort
capital replacement items as shall be required to operate the Resort in
accordance with the Required Standard (each, a “Capital
Budget”). Manager shall take into
consideration, among other factors, the amount of funds available to pay for
the proposed capital expenditures.  Owner’s
approval of the Capital Budget shall not be unreasonably withheld, conditioned
or delayed.  Owner and Manager shall meet
to discuss the proposed Capital Budget and Owner shall be required to make
specific written objections to a proposed Capital Budget in the manner and
within the same time periods specified in Section 5.3 with respect to the
Annual Operating Budget.  If Owner does
not approve the Capital Budget, Manager will only spend such amounts as are
approved by Owner, which approval shall not be unreasonably withheld,
conditioned, or delayed; provided, however, that until any disputed Capital
Budget item(s) have been resolved, Manager shall be entitled to spend for
capital expenditures funds then in the reserve account but only for items for
which such expenditures were allocated in the Capital Budget or as otherwise
approved by Owner.  Manager shall not
incur any expenses for Capital Improvements in excess of the Capital Budget
without the prior approval of Owner.

 

20

 

After a Capital Budget has been adopted, it
shall be subject to review and modification in the event unpredicted or
unanticipated capital expenditures are required during any calendar year, or in
the event of unexpected occurrences having a material effect on the Business.  Manager and Owner each agree not to
unreasonably withhold, condition or delay its consent to a proposed
modification of a Capital Budget.  Any
amendment that is mutually agreed upon shall be set forth in writing and signed
by both parties.  It is acknowledged by
Owner that capital expenditures required as a result of an Emergency Situation
shall not reduce amounts available pursuant to the Capital Budget or otherwise
hereunder, other than to the extent a Capital Budget item is subsumed within
the capital expenditures required as a result of the occurrence of the
emergency.

 

(b)           General
Maintenance Non-Capital Replacements; Emergency Expenditures.

 

(i)            Subject
to 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 applicable
laws, rules and regulations, and shall authorize routine maintenance, repairs
and alterations as Manager from time to time reasonably deems necessary.

 

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

 

21

 

5.5           Special
Provisions Regarding Finance and Accounting.

 

(a)           Bank
Accounts.

 

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

 

(a)           an
account or accounts, bearing the name of the Resort, at a bank or banks having
a branch reasonably convenient to the Resort for the purposes of depositing all
funds received in the operation of the Resort and paying all Operating Expenses
of the Business, including any Management Fees payable under this Agreement and
all other charges and amounts due to Manager under this Agreement
(collectively, the “Operating
Account”); and

 

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

 

(ii)           Manager’s
designees shall be the only Persons authorized to draw from the Operating
Account, and the Reserve Fund Account, and Manager shall be entitled to make
deposits in and withdrawals from all of such accounts, in accordance with the
terms of this Agreement and Manager’s standard accounting policies and
practices.  As regards the Reserve Fund Account,
the Manager shall inform the Owner of its intention to make any withdrawals on
that account.  Manager shall establish
controls to ensure accurate reporting of all transactions involving such
accounts and take prudent and reasonable measures to prevent fraud or
embezzlement of the Business’ funds.

 

(iii)          The
Operating 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 any
willful act of the Manager, any loss suffered in an Operating Account or the
Reserve Fund Account or any other bank account established pursuant to this
Agreement, or in any investment of funds into any such account, shall be borne
by Owner, and Manager shall have no liability or responsibility therefore.

 

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

 

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

 

22

 

Owner, any funds remaining in the Operating
Account after payment of all Operating Expenses and other amounts payable in
accordance with the terms of this Agreement, the deposit of the amount due for
such month in the Reserve Fund Account and the retention by Manager of an
amount (the “Minimum
Balance”) sufficient
to cover (a) all accrued but unpaid Management Fees and Reimbursable Expenses
plus (b) the monthly payroll expense for all Resort Personnel, plus (c) an additional
amount of working capital to be established by the parties in the Annual
Operating Budget for each Fiscal Year; provided, however, that Manager shall
only be obligated to disburse funds to Owner from the Operating Account if and
to the extent that the Operating Account contains funds in excess of the
Minimum Balance.  Any amounts remaining
in the Operating Account on the termination of this Agreement shall be
disbursed to Owner; provided, however, that Manager may deduct and retain prior
to such disbursement any and all amounts due and payable by Owner to Manager
under this Agreement and which have not been paid.

 

(ii)           Owner
shall commit the financial and other resources necessary to permit the Resort
to be operated and maintained in accordance with the Required Standard and
Owner shall establish and maintain, at its sole expense, a financing program
for the Resort to ensure that sufficient funds exist at all times to meet all
financial requirements of the Resort.  Pursuant
to the foregoing obligation, Owner shall deposit into the Operating Account on
or before the commencement of the operating term, in addition to any amounts
required to be provided by Owner in the first Annual Operating Budget, the
amount of initial working capital as agreed between the parties.  In addition, if at any time Manager reasonably
determines that the available funds in the Operating Account are insufficient
to allow for the uninterrupted and efficient operation of the Resort in
accordance with the Annual Operating Budget for the relevant Fiscal Year and
the terms of this Agreement, Manager shall notify Owner of the existence and
amount of the shortfall, giving all reasonable details thereof, including the
reasons therefore (a “Funds
Request”) and, within
fifteen (15) days following the delivery of the Funds Request, Owner shall
deposit into the Operating Account the funds requested by Manager in the Funds
Request.  If the Owner fails to make such
deposit, Manager may elect, without obligation, to make on Owner’s behalf payment
of any such due and unpaid obligations of Owner and Owner shall pay interest to
Manager on any such advances from the date falling 15 days after the delivery
of the Funds Request to the date of payment by Owner at a rate equal to LIBOR +
500bps and Manager shall be

 

23

 

 

entitled to
reimburse itself therefore, with interest as aforesaid, out of any available
funds from the operation of the Resort.

 

(c)                                  Annual
Audits. Each Fiscal Year the books of account and records of the Business
shall be audited by a qualified and experienced independent chartered
accountant selected by the Owner from an internationally recognized firm with
offices in reasonable proximity to the Resort, with such audit services being
provided from such location. At all reasonable times such auditor shall bave
unfettered access to all books of account and records relating to the Business
and the Manager shall be obliged to furnish whatever information such auditor
will reasonably call for. Copies of the audited balance sheet and income
statement and all other information relating to the operation of the Resort
shall be made available to each of the parties hereto.

 

(d)                                 Pledge
of Credit. Other than in the normal course of business, the Manager shall not
be 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 encumber
any of the moneys or assets which are the property of the Owner or of the
Resort, nor shall it be entitled to lend any such moneys or assets, whether
with or without security.

 

ARTICLE 6

 

ENTRENCHMENT PROVISIONS

 

6.1                                 Entrenched
Provisions. Notwithstanding anything to the contrary contained in this
Agreement, the Manager nor any of its Affiliates shall engage in any of the
following acts, procedures or matters except with the prior written approval of
the Owner:

 

(a)                                  The
establishment and opening of new lines of business as agent for the Owner
except those directly related to the operation of the Resort.

 

(b)                                 The
purchase or sale of assets not provided for in any budget approved by the
Owner.

 

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

 

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

 

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

 

24

 

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

 

ARTICLE 7

MANAGEMENT FEES AND REIMBURSABLE
EXPENSES

 

7.1           Management Fees.  As
remuneration for the Manager’s services in managing and conducting the Business
during the Term, the Owner shall pay to the Manager in respect of each of the
Fiscal Years following the commencement of operations, or, in respect of the
partial period from the commencement of operations to the 31st of December next, or the Fiscal Year in which this Agreement
terminates, from the commencement of that Fiscal Year to the date of such
termination (a “Partial Fiscal Year”):

 

(a)           A
management fee in the amount equal to * of Gross Revenues for each Fiscal Year
or Partial Fiscal Year, as the case may be during the first five (5) years of
the Term, and thereafter in the amount equal to * of Gross Revenues during the
remainder of the Term (the “Base
Management Fee”); and

 

(b)           An incentive management fee for a Fiscal Year
or a Partial Fiscal Year, as the case may be, in an amount equal to * of
Operating Income during the first five (5) years of the Term, and thereafter in
the 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 Incentive
Management Fee referred to in Section 7.1 (collectively, the “Management Fees”) shall be paid by the Owner to the Manager
in United States Dollars, free of bank commission and any other deductions at
such place(s) as the Manager may designate from time to time, monthly in
arrears, within ten days of the date of the end of the month in respect of the
month in question, provided that, should any adjustment be required at the end
of the Fiscal Year (or Partial Fiscal Year) in question in view of the Gross
Revenues or Operating Income for that Fiscal Year (or Partial Fiscal Year), the
necessary adjustment shall be made by the parties in accordance with Section 7.2(d).

 

25

 

(b)           Within thirty (30) days after Owner receives
the audited financial statements for any Fiscal Year signed by Owner’s
auditors, Manager shall cause to be prepared and delivered to Owner a
statement, certified by the Manager’s auditors, showing the calculation and
payment of the Management Fees to be paid to Manager pursuant to 7.1 above for
that Fiscal Year, and appropriate adjustments shall be made for any overpayment
or underpayment of the fees to be paid to Manager pursuant to 7.1 above during
such Fiscal Year.  The party owing money
as a result of any overpayment or underpayment during such Fiscal Year shall pay
such amount to the other party within thirty (30) days after such statement has
been delivered by Manager to Owner.

 

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

 

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

 

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

 

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

 

(a)           Marketing Costs; Reservation Services.  The
Owner acknowledges that the Manager and its Affiliates operate an international
marketing 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’s
Affiliates for all costs and expenses related to marketing and promoting the
Resort.  In addition, a proportionate
share of the overhead marketing office costs of Manager and Manager’s
Affiliates will be recharged to the Owner, including a proportional share of
costs and expenses related to brand advertising, marketing, promotion, retail
services, information technology and internet applications.  Budget for the above will be submitted
annually in the marketing budget included as part of the Annual Operating
Budget.  The

 

26

 

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

 

(b)           Manager
Technical Staff

 

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

 

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

 

(iii)          Manager
shall be entitled to charge a commercially reasonable reservation fee agreed
with Owner in respect of any reservation services which Owner and Manager may agree
to 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 provided
hereunder.

 

(c)           Manner
of Payment.  Payment to the Manager
of reimbursable expenses, traveling and out of pocket expenses shall be made in
United States Dollars, free of bank commissions and other deductions, at such
place(s) as may be designated by the Manager from time to time, and this within
thirty (30) days of Manager’s invoice and relevant support documentation being
submitted to the Resort accounts receivable department, and shall be paid out
of the Operating Account.

 

ARTICLE 8

INSURANCE

 

8.1           Procurement
of Insurance.  The Manager
shall 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 throughout
the continuance of this Agreement, under

 

27

 

such insurance policies issued by such insurers as
the Owner and the Manager shall agree, adequate insurance coverage in relation
to the Resort and the related facilities (with Manager’s interest noted
thereon, save with respect to the general public liability policy, in respect
of which the Manager shall be named as an additional insured) and their
operation against risks mutually agreed by the Manager and the Owner.  Such insurances shall be reviewed by Manager
annually and may include, without limitation, property (including windstorm and
flooding insurance), commercial general liability, umbrella and excess
liability, general public, automobile, appropriate workers’ compensation,
business interruption, terrorism, employment practice liability and such other
insurance (including fidelity/crime coverage and employment practices
liability) against other insurable risks which, at the time, are commonly
insured against by owners of similar resort premises in the Resort’s market
area, with due regard being or to be given to the then existing circumstances
and to the type, construction, design, use and occupancy of the Resort.  The Manager and the Owner shall agree the
level and the adequacy of all insurance and the insurance companies by which
all insurance policies shall be written

 

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

 

8.3           Insurance Certificates.  The
Manager shall supply copies of each of the insurance policies obtained under
this Article 8 to the Owner forthwith upon effecting the same and of each
insurance certificate and premium receipt forthwith upon receiving same.  The Owner and its representatives shall be
entitled to have access to the originals of all insurance policies and to have
produced to the Owner any other evidence it may from time to time reasonably
require that all the said policies are in full force and effect.

 

ARTICLE 9

RESORT EMPLOYEES

 

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

 

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

 

28

 

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

 

9.3           Resort
Employee Costs.  The payroll
and 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, and
other taxes and charges, and employee benefits (including, without limitation,
tax equalization benefits, overseas premiums, stock incentive plans, cost of
living allowances, mobilization and relocation costs, fees and costs related to
visas, permits to stay, and work permits for Resort Employees and their
dependents, vacations, automobiles, housing for Resort Employees and their
dependents, and schooling for dependents) shall be Operating Expenses.

 

9.4           Work
Visas; Permits.  Upon the
request of Manager, Owner shall use best efforts to obtain visas, permits to
stay, and work permits for Resort Employees and their dependents and for other
individuals designated by Manager in connection with the development, opening
or operation of the Resort, provided that the principle administrative burden
of so doing shall be borne by Manager, and the costs thereof shall be an
Operating Expense.  Owner shall, without
limitation, (i) make any required applications for visas, permits to stay, and
work permits for Resort Employees and their dependents, (ii) provide all
supporting documents requested by Manager, and (iii) assist and cooperate with
Manager in all respects.

 

9.5           Employee
Perks.  Manager shall
determine which, if any, Resort Employees shall reside in the Resort, and
Manager shall be permitted to provide complimentary accommodations and
amenities to its Affiliates’ employees and representatives living at or
visiting the Resort for the purpose and duration of their business related to
the management or operation of the Resort. 
No Person shall otherwise be given gratuitous accommodations or services
without prior approval of Owner and Manager except in accordance with usual
practices of the hotel and travel industry.

 

9.6           Termination
of Employees.  Upon
Termination, an escrow fund shall be established from Gross Revenues (or with
funds provided by Owner if Gross Revenues are insufficient) to reimburse
Manager for all Resort Employee liability costs and expenses incurred by
Manager arising out of either the transfer or termination of employment of
Resort Employees, including, without limitation, severance and seniority
payments, reasonable transfer costs, and unemployment compensation. Owner shall
indemnify, defend, and hold Manager harmless from and against all claims,
losses, liabilities, penalties, costs, and expenses (including, without
limitation, attorneys’ fees and expenses and litigation costs and expenses),

 

29

 

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

 

ARTICLE 10

RIGHT TO INSPECT

 

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

 

ARTICLE 11

DAMAGE AND DESTRUCTION

 

11.1         Damage.  If
the Resort or any portion thereof shall be damaged or destroyed at any time or
times 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 replace
the same so that after such repairing, rebuilding or replacing, the facilities
in question shall be substantially the same as prior to such damage or
destruction.

 

11.2         Manager’s Right to Reconstruct.  If
Owner fails to undertake such work or to commence and seriously pursue such
work within ninety (90) days after the fire or other casualty, or shall fail to
complete the same diligently within a reasonable time, Manager may, but shall
not be obligated to, undertake or complete such work or procure that such work
is undertaken or completed for the account of Owner, and the proceeds of
insurance, if any, shall be made available to Manager.  Manager shall further have the right to
procure that the proceeds from the insurance (if any) be applied to such
repairing, rebuilding or replacing, and in the event of any shortfall in claim
monies due to inadequate insurance, Owner will be responsible for the
difference.

 

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

 

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

 

30

 

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

 

ARTICLE 12

ALTERATIONS AND IMPROVEMENTS

 

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

 

ARTICLE 13

INTELLECTUAL PROPERTY

 

13.1         Trade Name.  The
name of the Resort shall be Atlantis, The
Palm, or such other name as agreed between the Owner and the
Manager, which name shall include the brand “Atlantis” . The name of the Resort shall be used in all
references to the Resort.  All rights in
and to the name Atlantis (or any
version thereof), and any logo, mark, design, style used in connection with
such name from time to time shall be exclusively vested in the Manager’s
Affiliate, 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, revocable
and limited license to use the Atlantis mark
in conjunction with the name of the Resort and merchandise and services
provided at the Resort in accordance with the terms and conditions of the
Tradename 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 the
mark “The Dig”, the Owner shall not have the rights to such
name.  The Manager may refer to the
Resort by such name in publications of its own activities not specifically
connected with the Resort.  The Manager
shall also be entitled to promote the Resort as an Atlantis or a Kerzner
International hotel and display Atlantis
and Kerzner International literature
and literature from other Kerzner affiliated brands in the Resort, as the
Manager may determine in accordance with its group brand strategy from time to
time during the Term.  Owner represents
and warrants to Manager that Owner has obtained intellectual property rights to
the trade name “The Palm.” During
the Term, Manager shall have a nonexclusive royalty free,

 

31

 

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

 

13.2         Management and Marketing Information.  Owner
acknowledges that Manager or one of its Affiliates is or will become the owner
or licensee of certain intellectual property, including (i) software in use at
one or more resorts managed by Manager or Manager’s Affiliates and all source
and 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 other
proprietary information relating to the operating methods, procedures and
policies distinctive to other resorts managed by Manager or Manager’s
Affiliates; (iii) customer information, customer lists, personal guest
profiles, information and data regarding guest preferences from other resorts
managed by Manager or Manager’s Affiliates; and (iv) trade names, trademarks
and service marks, including those referenced in Section 13.1 above
(herein collectively called “Intellectual Property”). Manager may utilize the Intellectual Property
in connection with the operation of the Resort to the extent Manager deems
appropriate for the purpose of carrying out its agreements and obligations
hereunder, but such use shall be strictly on a non-exclusive basis, and neither
such use nor anything contained in this Agreement shall confer any proprietary
license or other rights in the Intellectual Property upon Owner (other than as
set forth in Section 13.1) or any third parties.

 

ARTICLE 14

ASSIGNMENT

 

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

 

(a)           cede, assign and delegate its
rights and obligations under this Agreement to any company which controls, is
controlled by or is under common control with Manager and which will agree in
writing 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 14.1
above, Manager shall not cede, assign or delegate its rights or obligations
under this Agreement without the prior written consent of Owner, which consent
shall not unreasonably be withheld.

 

32

 

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

 

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

 

ARTICLE 15

CLAIMS AND LIABILITY

 

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

 

15.2         No Representation or Warranty.  Except
as expressly provided in this Agreement, neither party makes any warranties or
guarantees to the other, either express or implied, with respect to the subject
matter of this Agreement, and both parties disclaim and waive any implied
warranties or warranties imposed by law.

 

15.3         Insurance Coverage.  Nothing
in this Agreement shall entitle either the Owner on the one hand or the Manager
on the other hand to make any claim against each other to the extent that it is
able to obtain compensation or reimbursement from any of the insurances
provided for in Article 8. Except as otherwise provided in this Agreement,
to the extent of insurance coverage, Manager and Owner each waives, releases
and discharges the other from all claims or demands which each may have or
acquire against the other, or against each other’s subsidiaries,

 

33

 

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 or
sustained by either of them on account of injury to persons or damage to
property or business arising out of the ownership, management, development,
operation and maintenance of the Resort, regardless of whether any such claim
or demand may arise because of the fault of negligence of the other party or
its subsidiaries, affiliates, officers, employees, directors, agents or
independent contractors.  Each policy of
insurance shall contain a specific waiver of subrogation reflecting the above
with respect to insured claims.

 

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

 

ARTICLE 16

APPLICABLE LAW; ARBITRATION

 

16.1         Governing Law; Jurisdiction.  This
Agreement shall be governed by and construed in accordance with the laws of
England without regard to the conflicts of laws rules thereof.  Each party agrees that any proceeding, suit or
action arising out of or in connection with this Agreement (“Proceedings”) may only be brought subject to the
Arbitration provisions of Section 16.2, below, in the courts of England.  Each party also agrees that a judgment against
it in Proceedings brought in any jurisdiction in accordance with this section 16.1
shall be conclusive and binding upon it and may be enforced in any other
jurisdiction.  Each party irrevocably
submits and agrees to submit to the jurisdiction of the English courts and of
any 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, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in such court.  Nothing in
this Agreement shall affect the right of any party to the Agreement to serve
process 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 be
settled by arbitration in accordance with the Rules of the London Court of
International Arbitration (or any similar successor rules thereto) as are in
force on the date when a notice of arbitration is received.  The number of arbitrators shall be one unless
either party to the arbitration requests otherwise, in which case there shall
be three arbitrators, one selected by each party and the third selected by the
arbitrators selected by Owner and Manager. 
The language to be used in the proceedings shall be English.  The place of arbitration shall be London or
such

 

34

 

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

 

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

 

ARTICLE 17

TERMINATION

 

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

 

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

 

(b)           for a period of sixty (60) days (or such
longer period as may be reasonable, having regard to the nature of the default and
the prevailing circumstances) after written notice has been served on it and
without reasonable cause, Manager neglects, omits, refuses or fails to
discharge or diligently take action to discharge any of its material
obligations 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, Kerzner
International Limited ceases to be the ultimate owner of at least seventy-five
percent (75%) of its initial investment in the Owner, whether directly or
through a parent company of Owner.

 

17.2         Manager’s Termination Rights.  Notwithstanding
anything to the contrary herein contained, Manager may terminate this Agreement
if:

 

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

 

35

 

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

 

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

 

(c)           Manager determines in its discretion that its
ability to participate in other gaming jurisdictions is jeopardized as a result
of 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 of
this Agreement.

 

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

 

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

 

ARTICLE 18

FORCE MAJEURE

 

18.1         Force Majeure.  If
by reason of war, terrorism, explosion, bombing, revolution, riots, civil
commotion, strikes, lockout, inability to obtain labour or materials, fire,
flood, storm, earthquake, hurricanes, tornado, drought, failure of
infrastructure 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 or
unlike the foregoing, beyond its reasonable control of, the Manager is unable
to perform in whole or in part its obligations under this Agreement, then the
Manager shall be relieved of those obligations to the extent it is so unable to
perform and such inability to perform so caused shall not make such party
liable to the other.

 

36

 

ARTICLE 19

NOTICES

 

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

 

To the Owner:

 

c/o Istithmar
(PJSC)

Emirates Towers, Level 47

Sheikh Zayed Road

P. O. Box 17000

Dubai, UAE

Attn:    Ahmed
Butti, Chief Executive Officer

Tel:      971-4-390-2100

Fax:      971-4-390-3818

 

and:

 

c/o Kerzner
International Palm Island Limited

Coral Towers

Executive Offices

P. O. Box N- 4777

Paradise Island, Bahamas

Attn:    Giselle
M. Pyfrom

Tel:      242-363-6019

Fax:      242-363-2767

 

To the Manager:

Kerzner
International Management FZ LLC

Boutique Office No. 14,

Dubai Media City,

Dubai, UAE

Attention: George Markantonis

Tel:      971-4-391-1139

Fax:      971-4-366-4699

 

With copies to:

 

Kerzner
International Limited

Coral Towers

Executive Offices

P. O. Box N-4777

Paradise Island, Bahamas

Attn:    Giselle
M. Pyfrom, General Counsel

 

37

 

Tel:      242-363-6019

Fax:      242-363-2767

 

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

 

19.2         All
notices in terms of this Agreement:

 

(a)           shall
be in writing;

 

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

 

(c)           be
deemed to have been received on the date of delivery if delivered by hand or
sent by fax, courier or on the tenth day after posting if sent by prepaid
registered post.

 

ARTICLE 20

MISCELLANEOUS

 

20.1         Entire
Agreement; Authorization. 
This document and the documents referred to herein constitutes the sole
record of the agreement between the parties in respect of the management of the
Resort.  No party shall be bound by any
representation, warranty, promise or the like not recorded herein.  Owner and Manager represent and warrant to
each other that their respective legal entities have full power and authority
to execute this Agreement and be bound by and perform the terms hereof.

 

20.2         Interest.  Owner shall be liable for and shall pay
interest to Manager on all overdue payments to Manager in terms of this
Agreement.  Such interest shall be
calculated at LIBOR + 500 bps.  Owner
shall furthermore be liable for and shall pay all legal costs, including
collection costs and commissions, incurred by Manager in enforcing its rights
hereunder.

 

20.3         No
Waivers; Amendments.  No
failure or delay by Manager or Owner to insist upon the strict performance of
any covenant, agreement, term or condition of this Agreement, or to exercise
any right or remedy consequent upon the breach thereof, shall constitute a
waiver of any such breach or any subsequent breach of such covenant, agreement,
term or condition.  No covenant,
agreement, term, or condition of this Agreement and no breach thereof shall be
waived, altered or modified except by written instrument, signed by the party
against whom the same is sought to be enforced. 
No waiver of any breach shall affect or alter this Agreement, but each
and every covenant, agreement, term and condition of this

 

38

 

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

 

20.4         Funding of Owner Accounts.  Notwithstanding
anything to the contrary set out in this Agreement, Manager shall not be
obligated to perform its duties and shall be excused from its obligations and
responsibilities hereunder to the extent that funds to be provided by Owner are
not available to allow Manager to perform such duties pursuant to the
provisions of this Agreement.

 

20.5         Manager’s Right to Request Instructions.  At
any time, Manager may, if it reasonably deems it to be necessary or
appropriate, request written instructions from Owner within a reasonable period
prior to the necessity for taking action with respect to any matter
contemplated by this Agreement where the approval of the Owner is required, and
may defer action thereon pending receipt of such written instructions.  Owner shall promptly respond to any such request
for written instructions.  Actions taken
by Manager, its officers, employees and representatives in accordance with the
written instructions of Owner, or failures to act by such persons pending the
receipt of such written instructions, shall be deemed to be proper conduct
within the scope of Manager’s authority under this Agreement.

 

20.6         Independent Contractors. 
Manager shall be an independent contractor with respect to the
performance of its duties hereunder.  Neither
Manager nor its employees or other agents employed in the performance of such
duties shall be deemed to be agents, partners, joint venturers, representatives
or employees of Owner, except to the extent of the agency expressly created
under this Agreement.

 

20.7         Conflicts. 
Other than as set forth in Article 6.1(f), nothing contained in
this 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 those
of Owner, anywhere in the world.  Owner
acknowledges that Manager and/or its Affiliates operate and/or manage other
hotels, casinos and resorts presently and may in the future operate and/or
manage additional hotels, casinos and resorts in different areas of the world,
and that marketing efforts may cross over into the same markets and with
respect to the same potential customer base.

 

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

 

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

 

39

 

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

 

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

 

20.11       No
Third Party Beneficiaries.  The
parties do not intend to confer upon any Person other than the parties hereto
any rights or remedies hereunder or that any term hereof should be enforceable
by virtue of the Contracts (Rights of Third Parties) Act 1999 by any such
Person.

 

20.12       Expenses.
 All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be borne by the party incurring such expense.

 

20.13       Agent
for Service.

 

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

 

40

 

entitled by notice to the manager to appoint a
replacement 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 replacement
agent.  A copy of any Service Document
served on an agent shall be sent by post to the Manager.  Failure or delay in so doing shall not
prejudice the effectiveness of service of the Service Document.

 

(b)           The Owner irrevocably appoints Simon
Roderickof Allen & Overy LLP, One New Change, London, EC4M 9QQ, United
Kingdom to be its agent for the receipt of any Service Document and agrees that
any Service Document may be effectively served on it in connection with Proceedings
in England and Wales by service on its agent.  If the agent at any time ceases for any reason
to act as such, the Owner shall appoint a replacement agent having an address
for service in England or Wales and shall notify the other parties of the name
and address of the replacement agent.  Failing
such appointment and notification, the Manager shall be entitled by notice to
the 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 replacement
agent.  A copy of any Service Document
served on an agent shall be sent by post to the Owner.  Failure or delay in so doing shall not
prejudice the effectiveness of service of the Service Document.

 

[SIGNATURE
PAGE TO FOLLOW]

 

41

 

Exhibit A – Resort Site

 

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

 

42

 

Made in two originals this 5th day
of 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

  	
   

  	
   

  
								

 

43Exhibit 4.8(c)

 

EXECUTION COPY

 

DEVELOPMENT AGREEMENT

 

FOR THE

 

ATLANTIS, PALM ISLAND

 

BY AND BETWEEN

 

KERZNER INTERNATIONAL DEVELOPMENT FZ LLC

 

AS DEVELOPER

 

AND

 

KERZNER NAKHEEL LIMITED

 

AS OWNER

 

5th May, 2004

 

 

DEVELOPMENT AGREEMENT

 

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

 

W I  T
N  E  S  S  E  T  H:

 

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

 

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

 

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

 

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

 

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

 

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

 

 

ARTICLE 1

 

THE PROJECT

 

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

 

ARTICLE 2

 

TERM

 

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

 

ARTICLE 3

 

APPOINTMENT OF DEVELOPER AND DEVELOPER’S SERVICES

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

ARTICLE 4

 

CONTROL OF PROJECT

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

ARTICLE 5

 

OWNER’S OBLIGATIONS

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

ARTICLE 6

 

DEVELOPER’S FEE

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

ARTICLE 7

 

CLAIMS AND LIABILITY

 

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

 

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

 

ARTICLE 8 

 

CLOSURE, EMERGENCIES AND DELAYS

 

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

 

9

 

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

 

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

 

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

 

ARTICLE 9

 

TERMINATION RIGHTS

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

ARTICLE 10

 

APPLICABLE LAW AND ARBITRATION

 

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

 

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

 

12

 

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

 

ARTICLE 11

 

GENERAL PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

17

 

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

 

	
   

  	
  OWNER:

  
	
   

  	
   

  
	
   

  	
  KERZNER
  NAKHEEL LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sultan Ahmed Bin
  Sulayem

  	
   

  
	
   

  	
  Name: Sultan Ahmed Bin
  Sulayem

  
	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
  In witness:

  	
  /s/ Sahia Ahmad

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Howard B. Kerzner

  	
   

  
	
   

  	
  Name: Howard B. Kerzner

  
	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
  In witness:

  	
  /s/ Giselle Pyfrom

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEVELOPER:

  
	
   

  	
   

  
	
   

  	
  KERZNER
  INTERNATIONAL

  
	
   

  	
  DEVELOPMENT
  FZ-LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Lindsay

  	
   

  
	
   

  	
  Name: Richard Lindsay

  
	
   

  	
  Title: Authorized
  Signatory

  
	
   

  	
   

  
	
   

  	
  In witness:

  	
  /s/ Sahia Ahmad

  	
   

  
						

 

18

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