Document:

Exhibit
4.8

 

EXECUTION
COPY

 

 

AGREEMENT IN PRINCIPLE

 

between

 

 

KERZNER INTERNATIONAL LIMITED,

 

and

 

NAKHEEL, LLC

 

Dated: September 22, 2003

 

 

AGREEMENT IN PRINCIPLE

 

AGREEMENT IN PRINCIPLE
dated as of September 22, 2003 (this “Agreement”), between Kerzner
International Limited, a Bahamian corporation (“KZL”), and Nakheel, LLC
(“Nakheel”).

 

RECITALS

 

KZL is an internationally recognized resort and hotel
developer and operator with extensive experience in developing and operating
hotel and resort properties in various jurisdictions throughout the world.

 

Nakheel is a corporation incorporated in Dubai, the
UAE.

 

KZL owns and operates a 2,300 room resort in the
Bahamas which it operates under the brand “Atlantis”.

 

KZL and Nakheel believe that the development of an
Atlantis branded resort complex on Palm Island will assist in creating the
dynamic attractions necessary for the success of Palm Island, Jumeirah as a
tourist destination.

 

KZL and Nakheel desire to form a joint venture (the
“JV Entity”) to develop and own Atlantis, Palm Island.

 

AGREEMENT

 

NOW THEREFORE, in
consideration of the respective covenants and promises contained herein and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

1.1                               Definitions.                                As
used in this Agreement, the following terms shall have the following meanings:

 

“Affiliate” means,
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.

 

“Board of Directors”
means the Board of Directors of the JV Entity which shall consist of two
members appointed by KZL (or one of its Affiliates) and two members appointed
by Nakheel.

 

2

 

“Cash Contributions”
means the cash contributions of $60 million to be made to the JV Entity by each
of  KZL and Nakheel at the Closing.

 

“Closing” means
the closing of the transactions contemplated by this Agreement.

 

“Debt Financing”
means the Debt Financing with commercial banks with substantially the terms set
forth on Exhibit A.

 

“Developable Condition”
means that the Site shall be in such condition, including the supply of all
standard utilities and other infrastructure, such that it can support the
development and operation of the Project.

 

“Development Services
Agreement” means the Development Services Agreement to be dated as of the
Closing Date between KZL (or one of its Affiliates) and the JV Entity, pursuant
to which KZL (or one of its Affiliates) shall perform certain development
services for the JV Entity, such Development Services Agreement to have
substantially the commercial terms set forth on Exhibit B.

 

“Dollars” or “$”
means United States Dollars.

 

“Equity/Mez Financing”
means the private placement of Equity and Mezzanine Financing with
substantially the terms set forth on Exhibit C.

 

“Ground Lease”
means the Ground Lease Agreement pursuant to which the JV Entity shall lease
the Site from Nakheel, such Ground Lease to have the substantive terms set
forth on Exhibit D.

 

“JV Entity” means
the entity to be formed by KZL Member and Nakheel, which will own the Project
and all facilities located on the Site, such entity to be a limited liability
corporation or such other form as the parties may agree.

 

“JV Formation
Documents” means the certificate of incorporation, by-laws and
Shareholders’ Agreement or such other documents as may be agreed by the parties
pursuant to which KZL and Nakheel form the JV Entity, such JV Formation
Documents to include the provisions set forth on Exhibit E.

 

“KIML Palm Island
Account” means the bank account of KIML into which each of Nakheel and KZL
have deposited $500,000, and which will be used to pay for development costs
pending the formation of the JV Entity.

 

“License Agreement”
means the License Agreement pursuant to which the JV Entity will license from
KZL the name “Atlantis” for use with respect to the Project, which License
Agreement shall contain the provision set forth on Exhibit F.

 

3

 

“Management Agreement”
means the Management Agreement to be dated as of the Closing Date between KZL
(or one of its Affiliates) and the JV Entity, pursuant to which KZL (or one of
its Affiliates) shall provide certain management services to include the
substantive terms set forth on Exhibit G.

 

“Operative Documents”
means the Development Services Agreement, JV Formation Documents, Ground Lease,
License Agreement and Management Agreement.

 

“Project” means
the Atlantis, Palm Island facilities to be developed on the Site as set forth
on Exhibit H.

 

“Site” means the
property listed on Exhibit I attached hereto on which the Project will be
developed.

 

“Special Site Services”
means any power, infrastructure, utility or services that the Site needs to
support the Project, which are in addition to the power, infrastructure,
utilities or services provided to the Site for a typical 1000-room hotel
project.

 

ARTICLE II

 

Joint Development

 

2.1                               Joint
Development of the Properties.   The
parties through the JV Entity agree to jointly own the Project and the
facilities to be developed on the Site in connection therewith.

 

2.2                               Project
Development.  As soon as possible after the occurrence of
the Closing, the JV Entity will begin the development of the Project on the
Site.

 

2.3                               Formation
of JV Entity.  As soon as
practicable after the execution of this Agreement, the parties shall cause the
JV Entity to be formed, and the equity interests of the JV Entity will be owned
50% by KZL and 50% by Nakheel. The JV Entity shall initially be capitalized
with an aggregate of $5 million of shareholders’ capital and shall have
governance and other provisions consistent with the JV Formation Documents.

 

2.4                               Nature
of Investor.  Each of the
parties may form a wholly owned subsidiary for the purpose of holding its
interest in the JV Entity.

 

4

 

ARTICLE III

 

Closing

 

3.1                               Closing.  At the Closing, subject to the satisfaction
(or waiver by the applicable party) of the conditions set forth in Article IV
hereof, KZL and Nakheel shall execute and/or deliver, or cause its respective
Affiliates to execute and deliver, the following documents, and/or shall
undertake or cause its Affiliates to undertake, the following actions as
applicable:

 

(a)                                  each
of the Operative Documents shall be executed and delivered by the appropriate
parties thereto;

 

(b)                                 the
JV Entity shall be formed (if it has not previously been formed);

 

(c)                                  the
Cash Contributions shall be made to the JV Entity; and

 

(d)                                 the
definitive documents evidencing binding commitments with respect to the Debt
Financing and Equity/Mez Financing shall be executed.

 

3.2                               Time
and Place of Closing.  The
Closing shall be at 10:00 am within five business days from the date that the
conditions set forth in Article IV hereof are satisfied or waived or such other
date and time as agreed by the parties (the “Closing Date”) and shall
take place in Dubai (or such other place as the parties shall agree).

 

ARTICLE IV

 

Conditions
to Closing

 

4.1                               Closing
Conditions.  The obligations of
each party hereto to consummate the transactions contemplated hereby, unless
specifically waived in writing by such party, is subject to fulfillment of the
following conditions on or prior to the Closing Date:

 

(a)                                  Governmental
Consents.  All governmental
actions, consents or approvals required to be taken or obtained that are
necessary in connection with the transactions contemplated by this Agreement
shall (a) have been taken, given or obtained and (b) be in full force and
effect at the Closing.

 

(b)                                  Representations
and Warranties.  The
representations and warranties of each party contained in Article VI shall be
true and correct as of the date of this Agreement, and at the Closing with the
same effect as if made at and as of the Closing.

 

(c)                                  Status
of the Site.  The Site shall be
free and clear of all liens, claims and encumbrances. The Site shall be in
Developable Condition and no condition shall exist on or about the Site that would
make it unsuitable for development for its intended purposes.

 

5

 

(d)                                  Debt
Financing and Equity/Mez.  The
JV Entity shall have arranged binding commitments for the Debt Financing and
Equity/Mez Financing.

 

(e)                                Exclusivity.  The
JV Entity shall have received adequate assurances that (i) for five years from
opening that there shall be no additional dolphin swims or encounter
experiences or aquariums on Palm Island, Jebel Ali and (ii) during the term of
the Management Agreement there will be no additional dolphin swims or encounter
experiences or aquariums on Palm Island, Jumeriah. In addition, during the term
of the Management Agreement, KZL shall have a right of first refusal to develop
and operate any dolphin swims or encounter experiences or aquariums on Palm
Island, Jebel Ali.

 

(f)                                    Legal
Opinions.  KZL shall have received legal opinions to
the effect that the Operative Documents are valid and such other legal opinions
as may be reasonably requested and are customary for commercial transactions in
Dubai.

 

The parties agree that, without prejudicing a party’s right to
terminate this Agreement in accordance with its terms, in the event that any
condition is not satisfied they will work in good faith to attempt to agree
terms pursuant to which Closing will occur.

 

4.2                               Financing
Condition Covenant.  The parties agree that in the event the
condition contained in Section 4.1 (d) cannot be satisfied, they shall
negotiate in good faith for 90 days to agree an alternative financing structure
mutually acceptable to the parties; provided, however, nothing
contained in this Section 4.2 shall prejudice a party’s right to terminate this
Agreement in accordance with its terms if an agreement is not reached after
such 90-day period.

 

ARTICLE V

 

Exclusive Relationship

 

5.1                               Exclusive
Relationship.  The parties agree
that while this Agreement is in effect the JV Entity will be the exclusive
vehicle through which any of them will be involved, directly or indirectly, in
any water-based theme parks or any aquaria on Palm Islands, Jumeira.

 

ARTICLE VI

 

Representations and Warranties

 

6.1                               Organization.                    KZL represents
that it is a duly formed Bahamian corporation, and is validly existing and in
good standing under the laws of the Commonwealth of The Bahamas. Nakheel
represents that it is a duly formed Dubai company.

 

6

 

6.2                               Authority.  Each of KZL and Nakheel with respect to
itself  represents to the other that (a)
it has full power and authority to enter into this Agreement and the Operative
Documents to which it is a party, (b) the execution, delivery and performance
of this Agreement and the Operative Documents (when executed by it) and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action and (c) this Agreement is, and each other Operative
Document when executed and delivered will be, a legal, valid, binding and
enforceable agreement of and against parties signing such document.

 

6.3                               Conflicts.  Each of KZL and Nakheel with respect to
itself represents to the other that except for consents that are required and
will be obtained prior to Closing, neither the execution and delivery of this
Agreement or any other Operative Document (when executed) nor the consummation
of the transactions contemplated hereby or thereby will (a) conflict with,
result in a breach of the terms, conditions or provisions of, or constitute a
default or an event of default under, its organizational documents, (b)
conflict with, result in a material breach of any of the material terms,
conditions or provisions of, or constitute a default or an event of default
under, any instrument, agreement, contract, mortgage, indenture, deed of trust,
franchise, license, judgment, order, award or decree to which it or one of its
Affiliates, or any of their property, is bound or (c) require the approval,
consent or authorization of, or the making of any declaration, filing or
registration with, any federal, state or local court, governmental authority or
regulatory body.

 

6.4                               Litigation.  Each of KZL and Nakheel with respect to
itself represents to the other that there are no actions, suits, proceedings,
judgments or court orders or decrees pending or, to its knowledge, threatened,
which would reasonably be expected to prevent or hinder the consummation of the
transactions contemplated by this Agreement or any Operative Document (when
executed by it).

 

6.5                               No
Governmental Action.  Each of
KZL and Nakheel with respect to itself represents to the other that, to the
best of its knowledge, it is not subject to any pending or threatened action,
suit, proceeding, hearing, investigation of, in or before any governmental or
regulatory office or authority which, if adversely decided, would have a
material adverse effect on such party or its business reputation, the formation
of the JV Entity, or the ownership, development, operation, management of the
Project.

 

ARTICLE VII

 

Covenants

 

7.1                               Further
Assurances.  Following the
execution and delivery of this Agreement, each party shall take all reasonable
actions necessary or appropriate to ensure that the conditions to the Closing
are timely satisfied.  From and after
the Closing, each party shall do, execute and perform all such other acts,
deeds and documents as may be from time to time reasonably required in order to
carry out fully the intent and purposes of this Agreement.

 

7

 

7.2                               Assignment.   Each party may assign its rights and
obligations hereunder to a wholly-owned Affiliate; provided, however, such
assigning party shall not be released from its obligation hereunder.  Except as provided above, neither this
Agreement nor any Operative Documents, may be assigned by any party without the
prior written consent of the other party, which consent may be withheld at its
sole discretion.  Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, and no
other person or entity shall have any right, benefit or obligation under this
agreement as a third party beneficiary or otherwise.

 

7.3                               Confidential
Information.  Each party hereby
agrees that any information provided at any time to such party by the other
party in connection with the negotiation, performance or enforcement of this
Agreement which has not been generally disclosed to the public or which the
other party did not already have knowledge of independent of the disclosure as
part of this transaction (the “Confidential Information”), including,
without limitation, any information contained in proprietary software systems,
any management techniques and any customer and database information provided to
the JV Entity (except as expressly permitted hereunder), shall be kept in
confidence; provided, however, that any of such information may be disclosed to
a party’s employees, agents, attorneys, auditors, accountants, financial
advisors, banks or other financial sources that need to know such Confidential
Information (it being agreed that such representatives or persons will be
informed by such party of the confidential nature of such Confidential
Information and directed to treat such Confidential Information confidentially,
and that such party will be responsible for any disclosures of Confidential
Information by its representatives).  In
the event that a party becomes legally compelled to disclose any Confidential
Information, such party shall provide the other party with prompt prior written
notice of such requirement so that the other party may seek a protective order
or other appropriate remedy unless such notice is prohibited by law.  In the event such protective order or other
remedy is not obtained, the party legally compelled to disclose such
Confidential Information agrees to disclose only that portion of the
Confidential Information which, in the opinion of such party’s counsel, is
legally required to be disclosed.  The
parties acknowledge and agree that, notwithstanding the provisions of this
Section 7.3, the parties shall be entitled to disclose and use the Agreed
Description (as defined in Section 7.4 hereof) of the relationship of the
parties.

 

7.4                               Publicity.  Neither party shall issue or make, or allow
any Affiliate to issue or make, any press release or public announcement
relating to the subject matter of this Agreement without the prior approval of
the other party; provided, however, that any party or an Affiliate of any party
may make any public disclosure it believes in good faith is required by
applicable law, any listing or trading agreement concerning its
publicity-traded securities or in connection with any governmental filings (in
which case the party which intends to issue such press release or make such
public announcement will advise the other party prior to making the disclosure
and provide the other party opportunity to comment upon the release or
announcement).  The parties shall, as
soon as practicable after the date hereof, use their reasonable best efforts to
agree on one or more descriptions of the relationship of the parties hereunder
(an “Agreed Description”).  At
any time prior to the termination of this Agreement, the parties shall be
entitled to use the Agreed

 

8

 

Description in all
communications, advertising, announcements and other materials used in
connection with the conduct of their respective business.

 

7.5                               Activities
Pending Closing.  The parties
agree to work together on a development plan for the Project and agree that all
out-of-pocket costs associated with the development plan pending the formation
of the JV Entity shall be paid from the KIML Palm Island Account. After the
formation and capitalization of the JV Entity in accordance with Section 2.3,
all development costs shall be paid by the JV Entity.  The budget for such development plan shall be agreed between KZL
and Nakheel.

 

ARTICLE VIII

 

Termination and Remedies

 

8.1                               General
Termination.  Each party shall
have the right to terminate this Agreement by delivery of thirty (30) days
written notice thereof to the other party in the event the Closing has not
occurred by March 31, 2004 or such later date as the parties may agree.

 

8.2                               KZL
Termination.  Prior to the
Closing, either party shall have the right to terminate this Agreement without
liability if it reasonably believes, based on advice from the financial advisor
appointed by the parties, that the Debt Financing or Equity/Mez Financing would
not be available on terms reasonably acceptable, provided that this termination
right is only exercised following a consultation meeting between the parties.

 

8.3                               Effect of
Termination. 
Notwithstanding the termination of this Agreement as provided in Section
8.1 hereof, the provisions of Section 7.3 (Confidential Information) shall
continue in full force and effect.  In
the event of the transactions contemplated herein do not close  (i) each party shall be responsible for all
of its costs and expenses associated with the preparation and negotiation of
this Agreement and the Operative Documents, (ii) the parties will share equally
all costs and expenses associated with the development plan (provided that such
costs and expenses were agreed by the parties) and (iii) to the extent that the
JV Entity had already been formed, it shall be dissolved and all unused cash in
the JV Entity or the KIML Palm Island account, after satisfaction of items
included in item (ii) above, will be returned to the parties in equal shares.

 

8.4                               Remedies.  Any termination in accordance with the  terms of this Agreement shall be without
liability; provided however, in the event either party fails to perform
its obligations hereunder, the other party shall have all rights and remedies
available at law or in equity, including, where appropriate, injunctive relief
without bond or surety.

 

9

 

ARTICLE IX

 

Miscellaneous

 

9.1                               Notices.  All notices and other communications under
this Agreement shall be in writing and shall be deemed given when delivered
personally or by courier service at a party at the following address (or to
such other address as such party may have specified by notice given to the
other parties pursuant to this provision):

 

	
  If
  to KZL:

  	
   

  	
  Kerzner International
  Limited

  
	
   

  	
   

  	
  2-4 Packhorse Road

  
	
   

  	
   

  	
  Gerrards Cross

  
	
   

  	
   

  	
  Buckinghamshire

  
	
   

  	
   

  	
  England, United Kingdom

  
	
   

  	
   

  	
  SL9 7QE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:  Charles D. Adamo

  
	
   

  	
   

  	
  Executive Vice
  President

  
	
   

  	
   

  	
  Corporate Development
  & General Counsel

  
	
   

  	
   

  	
  Facsimile No. +44
  (0)1753 899808

  
	
   

  	
   

  	
   

  
	
  If
  to Nakheel:

  	
   

  	
  Nakheel, LLC

  
	
   

  	
   

  	
  P.O. Box 1700

  
	
   

  	
   

  	
  Dubai, United Arab
  Emirates

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Hamid Kazim

  

 

9.2                               Governing
Law; Arbitration.  This
Agreement, and the application or interpretation thereof, shall be exclusively
governed by its terms and by the internal laws of England.  In the event of any dispute between the
parties arising out of or relating to this Agreement, representatives of the
parties shall, within 21 days service of written notice from either party to
the other (a “Dispute Notice”), hold a meeting (a “Dispute Meeting”) in an
effort to resolve the dispute.  Each
party shall use all endeavours to send a representative who has authority to
settle the dispute to attend the Dispute Meeting.  Following the expiry of 30 days after the service of a Dispute
Notice, any dispute which is not resolved, whether or not a Dispute Meeting has
been held, shall at the request of either party, be referred to arbitration for
final settlement under the Rules of the London Court of International
Arbitration (the “Rules”) by one arbitrator who shall be appointed in
accordance with the Rules.  The place of
arbitration shall be London, and the language of the arbitration shall be
English.

 

9.3                               Entire
Agreement; Amendments; Waivers.  This Agreement contains the
entire understanding of the parties hereto with regard to the subject matter
contained herein.  The parties hereto,
by mutual agreement in writing, may amend, modify and supplement this
Agreement.  The failure of any party
hereto to enforce at any time any provision of this Agreement shall not be 

 

10

 

construed to be a waiver
of such provision, nor in any way to affect the validity of this Agreement or
any part hereof or the right of such party thereafter to enforce each and every
such provision.  No waiver of any breach
of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.

 

9.4                               Execution
in Counterparts. This Agreement may be executed by facsimile and in one
or more counterparts, each of which shall be considered an original
counterpart, and shall become a binding agreement when KZL and Nakheel each
shall have executed one counterpart.

 

9.5                               Partial
Invalidity.  In case any one or
more of the provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement but
the parties hereto shall use their reasonable good faith efforts to modify or
reformulate other provisions contained herein as necessary or appropriate to
implement fully the provisions contained in this Agreement.

 

9.6                               No
Third Party Beneficiaries. 
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any person other than the parties hereto and permitted
successors and assigns any right, remedy or claim under or by reason of this
Agreement.

 

9.7                               Currency.  Unless otherwise specified in any of the
Operative Documents, all transactions between the JV Entity and the parties or
any of their respective Affiliates shall be denominated in U.S. dollars.

 

9.8                               Titles
and Headings.  Titles and
headings to Sections herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this agreement to be duly executed on their respective behalf by
their respective officers thereunto duly authorized, as of the day and year
first above written.

 

	
   

  	
  KERZNER INTERNATIONAL
  LIMITED,

  	
   

  
	
   

  	
  a Bahamas corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles D. Adamo

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Charles D. Adamo

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President

  
	
   

  	
   

  	
  Corporate
  Development &

  General Counsel

  
						

 

11

 

	
   

  	
  NAKHEEL, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Sultan Ahmed Bin
  Sulayem

  	
   

  
	
   

  	
   

  	
  Sultan Ahmed Bin
  Sulayem

  	
   

  
	
   

  	
   

  	
   

  

 

12Exhibit
4.21

 

KERZNER INTERNATIONAL LIMITED

2003 STOCK
INCENTIVE PLAN

 

SECTION 1.  Adoption and
Purpose.  The Company hereby adopts
this Plan providing for the granting of Incentive Stock Options, Nonqualified
Stock Options, Restricted Shares and other Awards to directors, officers,
employees and consultants of the Company and its Subsidiaries.  The general purpose of the Plan is to
promote the interests of the Company and its Subsidiaries by providing to their
directors, officers, employees and consultants incentives to continue and
increase their efforts with respect to, and remain in the employ of, the
Company and its Subsidiaries.

 

SECTION 2.  Administration.  (a) 
The Plan will be administered by the Committee, which shall be composed
of two or more persons.  The Committee
shall hold meetings at such times and places as it may determine.  Acts approved at a meeting by a majority of
the members of the Committee or acts approved in writing by the unanimous
consent of the members of the Committee shall be the valid acts of the
Committee.  To the extent required for
any transactions under the Plan to qualify for any available exemptions under
Rule 16b-3 promulgated under the Exchange Act, all actions relating to Awards
to persons subject to Section 16 of the Exchange Act may be taken by the
Board or a committee or subcommittee of the Board composed of two or more
persons, each of whom shall qualify as a “non-employee director” within the
meaning of Rule 16b-3.

 

(b)  Subject to the express provisions of the
Plan, the Committee shall have plenary authority, in its discretion, to
administer the Plan and to exercise all powers and authority either
specifically granted to it under the Plan or necessary and advisable in the
administration of the Plan, including, without limitation, the authority to (i)
interpret, and reconcile any inconsistency and/or correct any default and/or
supply any omission in, the Plan, (ii) prescribe, amend, suspend, waive and
rescind rules and regulations relating to the Plan, (iii) appoint such agents
as it shall deem desirable for the proper administration of the Plan, (iv)
determine the terms and conditions of all Awards granted under the Plan (which
need not be identical), the purchase price of the shares covered by each Option,
the individuals to whom and the time or times at which Awards shall be granted,
when an Option can be exercised and whether in whole or in installments, (v)
determine the number of shares to be covered by, or with respect to which
payments, rights or other matters are to be calculated in connection with, each
Award, (vi) determine whether, to what extent and under what circumstances each
Award may be settled or exercised in cash, shares, other securities, other
Awards or other property, or canceled, forfeited or suspended and the method or
methods by which Awards may be settled, exercised, canceled, forfeited or
suspended, (vii) determine whether, to what extent and under what circumstances
cash, shares, other securities, other Awards, other property and other amounts
payable with respect to an Award shall be deferred either automatically or at
the election of the holder thereof or the Committee and (viii) make all other
determinations and take all other actions that the Committee deems necessary or
desirable with respect to the Plan.

 

 

(c)  Unless otherwise expressly provided in the
Plan, all designations, determinations, interpretations and other decisions
under or with respect to the Plan or any Award shall be in the sole discretion
of the Committee, may be made at any time and shall be final, conclusive and
binding upon all Persons, including the Company, any of its Affiliates, any
participant, any holder or beneficiary of any Award and any shareholder.

 

(d)  No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Option hereunder.

 

(e)  The Committee may delegate, on such terms
and conditions as it determines in its sole discretion, to one or more senior
officers of the Company the authority to make grants of Awards to officers,
employees and consultants of the Company and its Subsidiaries (including any
prospective officer, employee or consultant).

 

(f)  Determinations under the Plan made by the
Board or the Committee, including, without limitation, determinations as to the
persons to receive Awards, the terms and provisions of such Awards and the
agreements evidencing the same, need not be uniform and may be made by it
selectively among persons who receive or are eligible to receive Awards under
the Plan, whether or not such persons are similarly situated.

 

SECTION 3.  Participants.  The Committee shall from time to time select
the directors, officers, employees and consultants of the Company and its
Subsidiaries (including any prospective director, officer, employee or
consultant) to whom Awards are to be granted, and who will, upon such grant,
become participants in the Plan.  The
term “participant” as used in this Plan shall refer to those directors,
officers, employees and consultants granted Awards by the Committee and to any
person or entity to which such Awards are transferred or assigned pursuant to
Section 16 hereof.

 

SECTION 4.  Shares Subject to Plan.  3,000,000 shares of Common Stock, subject to
any adjustment as provided in Section 14 hereof, are reserved for issuance
or delivery in respect of all Awards granted under the Plan.  Shares to be awarded may be made available
from either authorized but unissued Common Stock or Common Stock held by the
Company in its treasury.  Subject to any
adjustment as provided in Section 14 hereof, no more than 3,000,000 shares
of Common Stock may be delivered upon the exercise of Incentive Stock Options
granted pursuant to the Plan.  If any
Award is forfeited or otherwise terminated or is canceled without the delivery
of shares of Common Stock, shares of Common Stock are surrendered or withheld
from any Award to satisfy a participant’s income tax or other withholding
obligations, or shares of Common Stock owned by a participant are tendered to
pay the exercise price of any Award granted under the Plan, then the shares
covered by such forfeited, terminated or canceled Award or which are equal to
the number of shares surrendered, withheld or tendered shall again become
available for issuance or delivery pursuant to Awards granted or to be granted
under the Plan.

 

SECTION 5.  Grant of Options.  All Options under the Plan shall be granted
by the Committee.  The Committee shall
determine the number of shares of Common Stock to be offered from time to time
by grant of Options to participants of the Plan.  More than one Option may be granted to the same participant.  The grant of an Option to a participant
shall not be

 

2

 

deemed either to entitle the
participant to, or to disqualify the participant from, participation in any
other grant of Options or other Awards under the Plan.  The grant of Options shall be evidenced by
stock option agreements as may be prescribed by the Committee from time to time,
containing such terms, provisions and rules, including, without limitation, the
number of shares of Common Stock underlying such Options and the exercise price
thereof, as are approved by the Board, but not inconsistent with the Plan.  The Company shall execute stock option
agreements upon instructions from the Committee.

 

SECTION 6.  Option Price.  Unless otherwise specifically provided by
the Committee in a stock option agreement, the purchase price of the Common
Stock under each Option shall be equal to 100% of the Fair Market Value of the
Common Stock on the date the Option is granted.

 

SECTION 7.  Exercisability
of Options.  Unless otherwise
specifically provided by the Committee in a stock option agreement, an Option
may not be exercised later than the earlier of (a) the day prior to the seventh
anniversary of the Date of Grant and (b) the expiration of the time period set
forth in Section 11 with respect to a participant that ceases to be a
director, officer, employee or consultant of the Company and its
Subsidiaries.  The Committee may provide
for the vesting and exercise of Options in installments and upon such terms,
conditions and restrictions as it may determine.  Unless otherwise provided in the applicable stock option
agreement, Options shall become vested and exercisable in accordance with the
following schedule:

 

	
  Vesting Dates

  (Anniversaries of Grant Date)

  	
   

  	
  Aggregate
  Percentage of

  Shares Vested and Exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Second

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Third

  	
   

  	
  75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Fourth

  	
   

  	
  100

  	
  %

  

 

SECTION 8.  Payment; Method of Exercise.  (a) 
Payment upon the exercise of Options shall be made in cash or by such
other method as the Committee may from time to time prescribe, including
without limitation by payment of shares of Common Stock already owned for a
period of at least six months and one day by the holder of the Option or a note
issued to the Company by such participant or pursuant to a “cashless exercise,”
in each case if permitted by the Committee and applicable law.  No shares of Common Stock may be issued upon
exercise of an Option until payment of the purchase price therefore has been
made, and a participant will have none of the rights of a stockholder until
such shares are issued to such participant. 
Except as otherwise provided in the Plan or in a stock option agreement,
no Option may be exercised at any time unless the holder thereof is then a
director, officer, employee or consultant of the Company or a Subsidiary.

 

3

 

(b)  An Option shall be exercised by written
notice to the Company.  Such notice
shall state that the holder of the Option elects to exercise the Option, the
number of shares of Common Stock in respect of which it is being exercised, the
per share exercise price thereof and the manner of payment for such shares and
shall either (i) be accompanied by payment of the full purchase price of
such shares or (ii) fix a date (not more than 10 business days from
the date of exercise) for the payment of the full purchase price of such
shares.  Cash payments shall be made by
cash or check payable to the order of the Company.  Common Stock payments (valued at Fair Market Value on the date of
exercise) shall be made by delivery of stock certificates in negotiable form,
free from all liens, claims and encumbrances. 
Any Common Stock payments shall be made using shares that have been held
by the Optionee for a period of at least six months and one day.  If certificates representing Common Stock
are used to pay all or part of the purchase price of an Option, a separate
certificate shall be delivered by the Company representing the same number of
shares as each certificate so used, and an additional certificate shall be
delivered representing the additional shares to which the holder of the Option
is entitled as a result of the exercise of the option.  Common Stock certificates shall be issued as
soon as practicable following the date of exercise of an Option.

 

SECTION 9.  Restricted
Shares.  (a)  The Committee shall determine any
restrictions, terms and conditions applicable to the Restricted Shares,
including, without
limitation, the applicable vesting schedule, provided that the Committee
shall determine the price, if any, to be paid by the participant for the
Restricted Shares, provided further that the issuance of Restricted Shares
shall be made for at least the minimum consideration necessary to permit such
Restricted Shares to be deemed fully paid and nonassessable.  Each Award shall be evidenced by a
restricted stock agreement which may contain such terms as the Committee from
time to time shall approve provided that such terms are not inconsistent with
the provisions of the Plan.  All
determinations made by the Committee pursuant to this Section 9 shall be
specified in the restricted stock agreement. 
Each grantee of Restricted Shares shall be notified promptly of such
grant and a written restricted stock agreement shall be promptly executed and
delivered by the Company and the grantee, provided that such grant of
Restricted Shares shall terminate if such written restricted stock agreement is
not signed by such grantee (or his or her attorney or representative) and
delivered to the Company within 60 days after the effective date of such grant.

 

(b)  Unless otherwise determined
by the Committee, Restricted Shares subject to Awards shall be issued at the
beginning of the period during which the restrictions are in effect (the
“Restriction Period”).  Restricted
Shares issued at the beginning of the Restriction Period shall constitute
issued and outstanding shares of Common Stock for all corporate purposes.  The participant will have the right to
exercise all other rights, powers and privileges of a holder of Common Stock
with respect to such Restricted Shares, except that, unless otherwise provided
by the Committee, (i) the participant will not be entitled to delivery of the
certificate or certificates representing such Restricted Shares until the end
of the Restriction Period and unless all other vesting requirements with
respect thereto shall have been fulfilled or waived; (ii) other than regular
cash dividends and such other distributions as the Board may in its sole
discretion designate, the Company will retain custody of all distributions
(“Retained Distributions”) made or declared with respect to the Restricted
Shares, if any (and such Retained Distributions will be subject to the same
restrictions, terms and vesting and other conditions as are applicable to the

 

4

 

Restricted
Shares), until such time, if ever, as the Restricted Shares with respect to
which such Retained Distributions shall have been made, paid or declared shall
have become vested, and such Retained Distributions shall not bear interest or
be segregated in a separate account; (iii) the participant may not sell,
assign, transfer, pledge, exchange, encumber or dispose of the Restricted
Shares or any Retained Distributions or his or her interest in any of them
during the Restriction Period; and (iv) a breach of any restrictions, terms or
conditions provided in the Plan or established by the Committee with respect to
any Restricted Shares or Retained Distributions will cause a forfeiture to the
Company of such Restricted Shares and Retained Distributions.

 

(c)  The certificate or certificates
representing such Restricted Shares shall be registered in the name of the
participant to whom such Restricted Shares shall have been awarded.  During the Restriction Period, certificates
representing the Restricted Shares and any securities constituting Retained
Distributions shall bear a restrictive legend to the effect that ownership of
the Restricted Shares (and such Retained Distributions), and the enjoyment of
all rights appurtenant thereto, are subject to the restrictions, terms and
conditions provided in the Plan and the applicable restricted stock
agreement.  Such certificates shall
remain in the custody of the Company and the participant shall, as a condition
to receiving an Award of Restricted Shares, deposit with the Company stock
powers or other instrument of assignment, endorsed in blank, so as to permit
retransfer to the Company of all or any portion of such Restricted Shares and
any Retained Distributions that shall not become vested in accordance with the
Plan and the applicable Agreement.

 

(d)  If and to the extent that
shares of Common Stock are to be issued at the end of the Restriction Period,
then, unless otherwise determined by the Committee, the participant shall be
entitled to receive an amount equal to the cash dividends payable (“Dividend
Equivalents”) with respect to the shares of Common Stock covered thereby,
either (i) during the Restriction Period or (ii) in accordance with the rules
applicable to Retained Distributions, as the Committee may specify in the
restricted stock agreement.  Any such
Restricted Shares shall not constitute issued and outstanding shares of Common
Stock and the participant shall not have any of the rights of a stockholder
with respect to the shares of Common Stock covered by such an Award of Restricted
Shares until such shares shall have been transferred to the participant at the
end of the Restriction Period.

 

(e)  At the end of the
Restriction Period, (i) the Restricted Shares shall become vested and (ii) any
Retained Distributions and any unpaid Dividend Equivalents with respect to such
Restricted Shares shall become vested to the extent that the Restricted Shares
related thereto shall have become vested, each in accordance with the terms of
the applicable Agreement.  Any such
Restricted Shares, Retained Distributions and any unpaid Dividend Equivalents
that do not become vested shall be forfeited to the Company and the participant
shall not thereafter have any rights with respect to such Restricted Shares,
Retained Distributions and any unpaid Dividend Equivalents that shall have been
so forfeited.

 

5

 

(f)  Unless otherwise provided
in the applicable restricted stock agreement, Restricted Shares shall become
vested in accordance with the following schedule:

 

	
  Vesting Dates

  (Anniversaries of Grant Date)

  	
   

  	
  Aggregate
  Percentage of

  Restricted Shares Vested

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Second

  	
   

  	
  33

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Third

  	
   

  	
  66

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Fourth

  	
   

  	
  100

  	
  %

  

 

SECTION 10.  Other Stock-Based Awards.  The Committee may grant other types of
equity-based or equity-related Awards (including, without limitation, the grant
or offer for sale of unrestricted shares of Common Stock) as deemed by the
Committee to be consistent with the purposes of the Plan.  Each Other Stock-Based Award shall be
evidenced by a written Award agreement which may contain such terms as the
Committee from time to time shall approve provided that such terms are not
inconsistent with the provisions of the Plan. 
Such Awards may include,
without limitation, the transfer of actual shares of Common Stock to
participants or payment in cash or otherwise of amounts based on the value of
shares of Common Stock, and Awards designed to comply with or take advantage of
the applicable local laws of jurisdictions other than the United States.

 

SECTION 11.  Termination of Employment or Service.  (a) 
Unless otherwise provided by the Committee, if the participant’s
employment, or service as a director or consultant, shall terminate prior to
the complete exercise of an Option, then the vested portion of such Option
shall thereafter be exercisable solely to the extent provided herein, and any
unvested portion of the Option (to the extent the vesting is not accelerated
under Section 12) shall immediately terminate.

 

(b)  Unless otherwise provided
by the Committee, if the participant’s employment, or service as a director or consultant, terminates
by reason of death, all Options shall accelerate and vest.  An Option shall remain exercisable for a
period of one year following such termination, but in no event later than the
originally scheduled expiration of such Option.

 

(c)  Unless otherwise provided
by the Committee, if the participant’s employment or service as a director or consultant is terminated by reason
of Disability, the vested portion of the Option shall remain exercisable for a
period of one year following such termination, but in no event later than the
originally scheduled expiration of such Option.

 

(d)  Unless otherwise provided
by the Committee, if the participant’s employment, or service as a director or consultant, is terminated (other
than by reason of death, Disability or Cause) (i) at or after age 60 or (ii) at
or after age 55 with ten years of service with the Company (“Retirement”), the
vested portion of the Option shall remain exercisable for a period of two years
following such termination, but in no event later than the originally scheduled
expiration of

 

6

 

such Option; provided,
however, that the vested portion of the Option shall remain exercisable
for a period of only 90 days following termination of employment (or, if such
90-day period has expired, shall be deemed to have immediately terminated at
the end of such 90-day period) if, during the two year period following the
participant’s Retirement, the participant, directly or indirectly: (A) engages
in or has any interest in any sole proprietorship, partnership, corporation or
business or any other person or entity (whether as an employee, officer,
director, partner, agent, security holder, creditor, consultant or otherwise)
that directly or indirectly (or through any affiliated entity) engages in
competition with the Company; provided, however, that such
provision shall not apply to the participant’s ownership of common stock of the
Company or the acquisition by the participant, solely as an investment, of
securities of any issuer that is registered under Section 12(b) or 12(g)
of the Exchange Act, and that are listed or admitted for trading on any United
States national securities exchange or that are quoted on the National
Association of Securities Dealers Automated Quotations System, or any similar
system or automated dissemination of quotations of securities prices in common
use, so long as the participant does not control, acquire a controlling
interest in or become a member of a group which exercises direct or indirect
control of, more than five percent of any class of capital stock of such
corporation; or (B) for himself or for any other person, firm, corporation,
partnership, association or other entity: (1) employs or attempts to
employ or enters into any contractual arrangement with any employee or former
employee of the Company, unless such employee or former employee has not been
employed by the Company for a period in excess of six months; (2) calls on
or solicits any of the actual or targeted prospective clients of the Company on
behalf of any person or entity in connection with any business competitive with
the business of the Company; or (3) makes known the names and addresses of such
clients or any information relating in any manner to the Company’s trade or
business relationships with such customers.

 

(e)  If the participant’s
employment or
service as a director or
consultant is terminated by the Company for Cause, then all Options held by such participant shall
immediately terminate.

 

(f)  Unless otherwise provided
by the Committee, if the participant’s employment or service as a director or consultant is terminated for any
reason other than death, Disability, Retirement or Cause, the vested portion of
the Option shall remain exercisable for a period of 90 days following such
termination, but in no event later than the originally scheduled expiration of
such Option.

 

(g)  Unless otherwise provided
by the Committee, if any participant whose employment or service as a director or consultant has terminated for a
reason other than death shall die within the period during which his or her
Option remains exercisable but prior to the complete exercise of the Option,
such Option may be exercised at any time within the greater of one year after
such date of death or the remainder of the period in which the participant
could have exercised the Option had he or she not died but in no event later
than the originally scheduled expiration of such Option.

 

(h)  Unless otherwise provided
by the Committee, if the participant’s employment or service as a director or consultant is
terminated for any reason during the Restriction Period

 

7

 

with respect
to any Restricted Shares, such participant’s rights to all Restricted Shares,
Retained Distributions and any unpaid Dividend Equivalents shall be forfeited
immediately.

 

(i)  Unless otherwise provided
by the Committee, if the participant’s employment or service as a director or consultant is
terminated for any reason, any outstanding Other Stock-Based Award shall
immediately terminate.

 

(j)  The Committee may determine
whether any given leave of absence constitutes a termination of employment or service.  Unless otherwise provided by the Committee, Awards made under the
Plan shall not be affected by any change of employment so long as the
participant continues to be a director, employee or consultant of the Company
or a Subsidiary.

 

SECTION 12.  Acceleration of an Award.  Notwithstanding any provision
contained herein, the Committee shall have the discretion at any time to
accelerate the vesting and exercisability of an Award granted to a participant
pursuant to the Plan.  Unless otherwise
determined by the Committee or as set forth in an Award agreement, with respect
to all outstanding Awards held by any participant who is an employee, director
or consultant of the Company or its Subsidiaries immediately prior to a Change
of Control, such Awards shall become fully vested (and, in the case of Options,
immediately exercisable), all restrictions on such Awards shall lapse and all
performance criteria applicable to such Awards shall be deemed satisfied at the
maximum level, in each case upon the earlier to occur of (a) the expiration of
the 18-month period immediately following such Change of Control and (b) a
Qualifying Termination, provided that such Awards are still outstanding at (and
have not terminated prior to) the relevant time.

 

SECTION 13.  Withholding Taxes.  In connection with the transfer of shares of
Common Stock as a result of the vesting of an Award or upon any other event
that would subject the holder of an Award to taxation, the Company shall have
the right to require the holder to pay an amount in cash or to retain or sell
without notice, or to demand surrender of, shares of Common Stock in value
sufficient to cover any tax, including, without limitation, any Federal, state or local income tax,
required by any governmental entity to be withheld or otherwise deducted and
paid with respect to such transfer (“Withholding Tax”), and to make payment (or
to reimburse itself for payment made) to the appropriate taxing authority of an
amount in cash equal to the amount of such Withholding Tax, remitting any
balance to such holder.  Notwithstanding the foregoing, the holder of
an Award shall be entitled to satisfy the obligation to pay any Withholding
Tax, in whole or in part, by providing the Company with funds sufficient to
enable the Company to pay such Withholding Tax or by having the Company retain
shares of Common Stock otherwise deliverable in respect of such Award, or
accept upon delivery thereof shares of Common Stock (other than unvested
Restricted Shares) held by the holder for at least six months and one day,
sufficient in value to cover the amount of such Withholding Tax.  Each election by such holder to have shares
of Common Stock retained or to deliver shares of Common Stock for this purpose
shall be subject to the following restrictions:  (a) the election must be in writing and made on or prior to the
date that the amount of the Withholding Tax is to be determined; and (b) the
election shall be subject to the disapproval of the Committee.  The obligations of the Company under the
Plan shall be conditional on such payment or arrangements being made to the
satisfaction of the Committee. 

 

8

 

SECTION 14.  Effect of Certain Changes.  (a) 
In the event that the Committee determines that any dividend or other
distribution (whether in the form of cash, shares of Common Stock, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of shares of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase shares of Common
Stock or other securities of the Company, other similar corporate transaction
or event (including, without limitation, a Change of Control), change in
applicable rule, ruling, regulation or other requirement of any governmental
body or securities exchange, accounting principles or law, or other unusual or
non-recurring event affects the Company, any of its Subsidiaries, the financial
statements of the Company or any of its Subsidiaries, or shares of Common Stock
such that an adjustment is determined by the Committee in its discretion to be
appropriate or desirable, then the Committee may make any such adjustment,
which may include, without limitation (i) adjusting any or all of (A) the
number of shares of Common Stock or other securities of the Company (or number
and kind of other securities or property) with respect to which Awards may be
granted, (B) the number of shares of Common Stock or other securities of
the Company (or number and kind of other securities or property) subject to
outstanding Awards and (C) the exercise price with respect to any Option; provided,
however, that any fractional shares resulting from any such adjustment
may be eliminated, and/or (ii) canceling outstanding Awards in exchange for a
cash payment in an amount equal to the excess, if any, of the Fair Market Value
of the number of shares of Common Stock subject to or underlying such Awards
over the aggregate exercise price (or applicable base price), if any, of such
Awards (it being understood that, if there is no such excess, then such Awards
may be canceled without any payment or consideration therefore).

 

(b)  Awards may, in the discretion of the Committee,
be granted under the Plan in assumption of, or in substitution for, outstanding
awards previously granted by the Company or its Subsidiaries or a company
acquired by the Company or with which the Company combines (or a subsidiary or
parent corporation of such company) in connection with a corporate merger,
consolidation, acquisition of assets or stock, reorganization, liquidation or
otherwise (“Substitute Awards”).  The
number of shares of Common Stock underlying any Substitute Awards shall be counted
against the aggregate number of shares of Common Stock available for Awards
under the Plan.  In the event that a
written agreement pursuant to which such a corporate transaction is completed
is approved by the Board and such agreement sets forth the terms and conditions
of the substitution for or assumption of outstanding equity or equity-based
awards of the acquired corporation, such terms and conditions shall be deemed
to be the action of the Committee hereunder without any further action by the
Committee and the Persons holding such awards shall be deemed to be
participants in the Plan; provided, however, that the Committee
may, to the extent applicable, take any further action with respect to such
awards as may be necessary in connection with Rule 16b-3 under the Exchange Act
to qualify such Substitute Options (or the awards assumed or substituted for)
for the favorable treatment intended to be afforded by Rule 16b-3 under the
Exchange Act.

 

(c)  Nothing in the Plan or any Award agreement
shall be construed as limiting or preventing the Company or any of its
Affiliates from taking any action with respect to the operation and conduct of
their business that they deem appropriate or in their best interests,
including, without limitation, any or all adjustments, recapitalizations,
reorganizations,

 

9

 

exchanges or other changes
in the capital structure of the Company or any of its Affiliates, any merger or
consolidation of the Company or any of its Affiliates, any issuance of shares
of Common Stock or other securities or subscription rights thereto, any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the shares of Common Stock or other securities or the rights thereof,
any dissolution or liquidation of the Company or any of its Affiliates, any
sale or transfer of all or any part of the assets or business of the Company or
any of its Affiliates, or any other corporate act or proceeding, whether of a
similar character or otherwise.

 

(d)  In the event of a change in the Common Stock
of the Company as presently constituted, the shares resulting from any such
change shall be deemed to be the Common Stock within the meaning of the Plan.

 

(e)  To the extent that the foregoing adjustments
relate to stock or securities of the Company, such adjustment shall be made by
the Committee, whose determination in that respect shall be final, binding and
conclusive.

 

SECTION 15.  Nonexclusive Plan.  Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.

 

SECTION 16.  Restrictions
on Transfers.  Awards may not be
transferred other than by will or by the laws of descent and distribution; provided,
however, that Nonqualified Stock Options may be transferred or assigned
by a participant to (a) a trust with respect to which such participant or
a member of his or her family is a beneficiary or (b) a corporation or
other entity with respect to which the participant holds directly or indirectly
more than 50% of the outstanding common stock or other equity interests.  During a participant’s lifetime, Options
granted to a participant may be exercised only by the participant, by his or
her guardian or legal representative or by a transferee specified in the
preceding paragraph.  Any purported
transfer or assignment of an Award inconsistent with the foregoing restrictions
shall cause the Award
to terminate.  Each Award
agreement shall provide for the foregoing restrictions.

 

SECTION 17.  Securities Laws; Other Laws.  The obligation of the Company to offer, sell
and deliver shares with respect to Awards granted hereunder and the
exercisability of Options shall be subject to all applicable laws, rules and
regulations, including, without limitation, all applicable Federal and state
securities laws, the availability of exemptions from the registration
requirements of such Federal and state securities laws, and the obtaining of
all approvals by governmental authorities as may be deemed necessary or
appropriate by the Committee.  In no
event shall the Company be obligated to register shares under state or Federal
securities laws, to comply with the requirements of any exemption from
registration requirements or to take any other action that may be required in
order to permit, or to remove any prohibition or limitation on, the issuance of
shares pursuant to Awards granted hereunder which may be imposed by any
applicable law, rule or regulation. 
Notwithstanding anything to the contrary in

 

10

 

the Plan or any Award
agreement, the Committee may revoke any Award if it is contrary to law or
modify any Award to bring it into compliance with any valid and mandatory
government laws or regulations. 
The Committee may impose such other terms, conditions, and restrictions
upon any Award, including any Award theretofore granted, that the Committee
concludes, in its absolute discretion, are necessary or desirable to ensure
compliance with any applicable law, regulation or rule.  Certificates for shares of Common Stock
issued under the Plan may be legended as the Committee shall deem appropriate.

 

SECTION 18.  No Employment Rights.  The adoption of this Plan and the grant of
Options shall not confer upon any participant any right to continued employment
in any capacity with the Company or any of its Subsidiaries.

 

SECTION 19.  No Impact on Benefits.  Awards granted under the Plan shall not be
treated as compensation for purposes of calculating an employee’s rights under
any employee benefit plan, except to the extent expressly provided in any such
plan.

 

SECTION 20.  Severability.  If any provision of the Plan or any Award
granted hereunder is, becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any Award under any law, rule, ruling, regulation or
other requirement deemed applicable by the Committee, (a) in the case of a
provision that is held to be void or to constitute an unreasonable restriction
against the participant, such provision shall not be rendered void but shall be
deemed to be modified to the minimum extent necessary to make such provision
enforceable for the longest duration and the greatest scope as such court may
determine constitutes a reasonable restriction under the circumstances and (b)
in the case of any other provision, such provision shall be construed or deemed
amended to conform to the applicable law, rule, ruling, regulation or other
requirement or, if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person or
Award and, in any event, the remainder of the Plan and any such Award shall
remain in full force and effect.

 

SECTION 21.  Indemnification.  Each Person that is or shall have been a
member of the Committee shall be indemnified and held harmless by the Company
to the fullest extent permitted by law against and from any loss, cost,
liability or expense (including any related attorney’s fees and advances
thereof) in connection with, based upon or arising or resulting from any claim,
action, suit or proceeding to which such Person may be made a party or in which
such Person may be involved by reason of any action taken or failure to act
under or in connection with the Plan or any Award, and from and against any and
all amounts paid by such Person in settlement thereof with the Company’s
approval, or paid by such Person in satisfaction of any judgment in any such
action, suit or proceeding against such Person, provided that he or she shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he or she undertakes to handle and defend it on his or her own
behalf.  The foregoing right of
indemnification shall not be exclusive and shall be independent of any other rights
of indemnification to which such Persons may be entitled by contract, as a
matter of law or otherwise.

 

11

 

SECTION 22.  GOVERNING LAW.  THE PLAN AND ANY AWARDS GRANTED HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF THE BAHAMAS, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF
LAW.

 

SECTION 23.  Amendment or Discontinuance.  Subject to any government regulation and to
the rules of the New York Stock Exchange or any successor exchange on which the
Common Stock may be listed, the Plan may be amended, modified or terminated by
the Board without the approval of the stockholders of the Company except that
stockholder approval shall be required for any amendment that would
(a) increase (except as provided in Section 14) the maximum number of
shares of Common Stock for which Awards may be granted under the Plan or
(b) change the class of employees or other individuals eligible to
participate in the Plan.  No
modification, amendment or termination of the Plan may, without the consent of
the participant to whom any Award shall theretofore have been granted,
adversely affect the rights of such participant (or his or her transferee)
under such Award.

 

SECTION 24.  Notices.  All notices, claims,
certificates, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given and delivered if personally
delivered or if sent by nationally recognized overnight courier, by telecopy or
by registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:

 

(a)   if to the Company:

 

Kerzner International Limited

Stock Award Administration

1000 South Pine Island Road

Plantation, FL 33024

Telecopy: (954) 809-2310

Attention: Human Resources

 

(b)   if to the participant, to
such participant’s address as most recently supplied to the Company and set
forth in the Company’s records;

 

or to such
other address as the party to whom notice is to be given may have furnished to
the other party in writing in accordance herewith.  Any such notice or communication shall be deemed to have been
received (i) in the case of personal delivery, on the date of such delivery (or
if such date is not a business day, on the next business day after the date
sent), (ii) in the case of nationally-recognized overnight courier, on the next
business day after the date sent, (iii) in the case of telecopy transmission,
when received (or if not sent on a business day, on the next business day after
the date sent), and (iv) in the case of mailing, on the third business day
following the date on which the piece of mail containing such communication is
posted.

 

SECTION 25.  Headings.  The headings contained in this Plan are for reference purposes
only and shall not affect the meaning or interpretation of this Plan.

 

12

 

SECTION 26.  Successors and Assigns.  This Plan shall inure to the benefit of and
be bind upon each successor and assign of the Company.  All obligations imposed upon a participant,
and all rights granted to the Company hereunder, shall be binding upon the
participant’s heirs, legal representatives and successors.

 

SECTION 27.  Effect of Plan.  Neither the adoption of the Plan nor any
action of the Board or Committee shall be deemed to give any director, officer,
employee or consultant any right to be granted any Awards hereunder except as
may be evidenced by an Award agreement, or any amendment thereto, duly
authorized by the Committee and executed on behalf of the Company, and then
only to the extent and on the terms and conditions expressly set forth therein.

 

SECTION 28.  Term.  Unless sooner terminated by action of the Board, the right to
grant Awards under this Plan shall terminate ten years from the date of adoption
of the Plan.  The Committee may not
grant Awards under the Plan after that date, but Awards granted before that
date will continue to be effective in accordance with their terms and the terms
of the Plan.

 

SECTION 29.  Effectiveness.  The Plan shall take effect upon its adoption
by the Board.

 

SECTION 30.  Definitions.  For the purposes of this Plan, unless the
context requires otherwise, the following terms shall have the meanings
indicated:

 

“Affiliate”
of a Person means any other Person which, directly or indirectly, controls, is
controlled by or is under common control with such Person (excluding any
trustee under, or any committee with responsibility for administering, any
plan).

 

“Award”
means, collectively, Options, Restricted Shares and Other Stock-Based Awards
granted under the Plan.

 

“Board”
means the board of directors of the Company.

 

“Cause”
shall have the meaning provided in the applicable Award agreement.

 

“Change of Control”
means the
occurrence of any one of the following events:

 

(a)  any “person” (as such term
is defined in Section 3(a)(9) of the Exchange Act, and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 50% or more of the combined voting power of the
Company’s then outstanding securities eligible to vote for the election of the
Board (the “Company Voting Securities”); provided, however, that
the event described in this paragraph (a) shall not be deemed to be a
Change of Control if such event results from any of the following:  (i) the acquisition of Company Voting
Securities by the Company or any of its subsidiaries, (ii) the acquisition
of Company Voting Securities by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries,
(iii) the acquisition of Company Voting Securities by any underwriter
temporarily holding securities pursuant to an offering of such securities, or
(iv) the acquisition of Company Voting Securities pursuant to a
Non-Qualifying Transaction (as defined in paragraph (c) below); provided,
further, that a Change of

 

13

 

Control shall be deemed not to have occurred solely as a result of two
or more persons who as of the date hereof are beneficial owners of Company
Voting Securities, being treated as a single person (under
Section 3(a)(9), 13(d)(3) or 14(d)(2) of the Exchange Act) for purposes of
this paragraph (a) unless such persons consummate a “going private” transaction
(as determined by the Incumbent Directors (as defined in paragraph (b) below)
in their sole discretion) or an event described in paragraph (b) or (c) below
otherwise occurs;

 

(b)  individuals who, as of the
date on which the Plan is adopted by the Board, constitute the Board (the
“Incumbent Directors”) cease for any reason to constitute at least a majority
of the Board without the approval of the Incumbent Directors; provided, however,
that any individual becoming a director subsequent to the date on which the
Plan is adopted by the Board, whose election or nomination for election was
approved (either by a specific vote or by approval of the proxy statement of
the Company in which such individual is named as a nominee for director,
without written objection to such nomination) by a vote of at least a majority
of the directors who were, as of the date of such approval, Incumbent
Directors, shall be an Incumbent Director; provided, however, that
no individual initially appointed, elected or nominated as a director of the
Company as a result of an actual or threatened election contest with respect to
the election or removal of directors or as a result of any other actual or
threatened solicitation of proxies or consents by or on behalf of any person
other than the Board shall be an Incumbent Director;

 

(c)  the consummation of a
merger, consolidation, statutory share exchange or similar form of corporate
transaction involving (i) the Company or (ii) any of its wholly owned
subsidiaries pursuant to which, in the case of this clause (ii), Company Voting
Securities are issued or issuable (any event described in the immediately
preceding clause (i) or (ii), a “Reorganization”) or (iii) the sale
or other disposition of all or substantially all of the assets of the Company
to an entity that is not an affiliate of the Company (a “Sale”), unless
immediately following such Reorganization or Sale:  (A) more than 50% of the total voting power (in respect of the
election of directors, or similar officials in the case of an entity other than
a corporation) of (1) the entity resulting from such Reorganization, or the
entity which has acquired all or substantially all of the assets of the Company
(in either case, the “Surviving Entity”), or (2) if applicable, the ultimate
parent entity that directly or indirectly has beneficial ownership of more than
50% of the total voting power (in respect of the election of directors, or
similar officials in the case of an entity other than a corporation) of the
Surviving Entity (the “Parent Entity”), is represented by Company Voting
Securities that were outstanding immediately prior to such Reorganization or
Sale (or, if applicable, is represented by shares into which such Company
Voting Securities were converted pursuant to such Reorganization or Sale), (B)
no person (other than any employee benefit plan (or related trust) sponsored or
maintained by the Surviving Entity or the Parent Entity) is or becomes the
beneficial owner, directly or indirectly, of 50% or more of the total voting
power (in respect of the election of directors, or similar officials in the
case of an entity other than a corporation) of the outstanding voting
securities of the Parent Entity (or, if there is no Parent Entity, the
Surviving Entity) and (C) at least a majority of the members of the board of
directors

 

14

 

(or similar officials in the case of an entity other than a
corporation) of the Parent Entity (or, if there is no Parent Entity, the
Surviving Entity) following the consummation of the Reorganization or Sale
were, at the time of the approval by the Board of the execution of the initial
agreement providing for such Reorganization or Sale, Incumbent Directors (any
Reorganization or Sale which satisfies all of the criteria specified in (A),
(B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”); or

 

(d)  the stockholders of the
Company approve a plan of complete liquidation or dissolution of the Company.

 

Notwithstanding
the foregoing, if any person becomes the beneficial owner of 50% or more of the
combined voting power of Company Voting Securities solely as a result of the
acquisition of Company Voting Securities by the Company which reduces the
number of Company Voting Securities outstanding, such increased amount shall be
deemed not to result in a Change of Control; provided, however,
that if such person subsequently becomes the beneficial owner of additional
Company Voting Securities that increases the percentage of outstanding Company
Voting Securities beneficially owned by such person, a Change of Control shall
then be deemed to occur.

 

“Code”
means the Internal Revenue Code of 1986, as amended, and all rules and
regulations promulgated thereunder.

 

“Committee”
means the committee of two or more directors designated by the Board to operate
and administer the Plan (or, in the absence of any such designation, means the
Board).  To the extent the Committee has
delegated authority pursuant to Section 2(e) of the Plan, references to
the Committee shall be deemed to refer to the person to whom such authority has
been delegated, as the context may require.

 

“Common
Stock” means the common stock, par value U.S.$ 0.001 per share, of the
Company which the Company is currently authorized to issue or may in the future
be authorized to issue, provided that any such future authorized common stock
of the Company either does not vary from the currently authorized common stock
of the Company or varies only in amount of par value.

 

“Company”
means Kerzner International Limited, a corporation organized under the laws of
the Commonwealth of the Bahamas.

 

“Date
of Grant” means the date on which the Committee authorizes the granting of
an Award, unless the Committee specifies a later date.

 

“Disability”
means a mental or physical illness that entitles the participant to receive
benefits under the long-term disability plan of the Company or an Affiliate
provided the participant remains totally disabled for six (6) consecutive
months.  If the participant is not
covered by such a plan, Disability shall be defined by reference to the
Company’s long-term disability plan as if such plan applied to the participant.

 

“Dividend
Equivalent” has the meaning given such term in Section 9(d) of the
Plan.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and all

 

15

 

rules
and regulations promulgated thereunder.

 

“Fair
Market Value” means, as of any date, the closing price of a share of Common
Stock on the New York Stock Exchange on such date (or, if such date is not a
trading day on the New York Stock Exchange, on the next preceding trading day)
or, if the Common Stock is not listed on the New York Stock Exchange, the
closing price of a share of Common Stock on the principal national securities
exchange on which the Common Stock is listed (or, if such date is not a trading
day on such exchange, on the next preceding trading day) or, in all other
cases, such value as determined by the Committee in good faith.

 

“Incentive
Stock Option” means an option to acquire shares of Common Stock granted
pursuant to the Plan, which option is intended to qualify as an “incentive
stock option” within the meaning of Section 422(b) of the Code.

 

“Nonqualified
Stock Option” means any option to acquire shares of Common Stock granted
pursuant to the Plan, other than an Incentive Stock Option.

 

“Option”
means an Incentive Stock Option, a Nonqualified Stock Option or both, as the context
requires.

 

“Other
Stock-Based Awards” means the awards granted under Section 10 of the
Plan.

 

“Plan”
means this Kerzner International Limited 2003 Stock Incentive Plan, as amended
from time to time.

 

“Person”
means any individual, corporation, partnership, association, joint-stock
company, trust, unincorporated organization, government or political
subdivision thereof or other entity.

 

“Qualifying
Termination” means:

 

(a)  the termination by the
Company of the participant’s employment (within 18 months following a Change of
Control) other than for Cause and other than due to the participant’s death or
Disability; or

 

(b)  the termination by the
participant of the participant’s employment (within 18 months following a
Change of Control) following the occurrence, without the participant’s express
consent, of any of the following acts by the Company, or failures by the
Company to act, unless, in the case of any act or failure to act described in
paragraph (iii) below, such act or failure to act is corrected within 10
days following the notice of termination given by the participant in respect
thereof:

 

(i) a material reduction by the Company in the participant’s annual
base salary and/or the level of the participant’s entitlement under the
Company’s annual bonus plan;

 

(ii) the Company’s requiring the participant to be based at any
location beyond 50 miles of the location of such participant’s then current
principal place of employment, except for required travel on the Company’s
business to an extent substantially consistent with the participant’s duties
and responsibilities;

 

16

 

(iii) (A) the failure by the Company to continue to provide the
participant with benefits not materially less favorable in the aggregate than
those then currently enjoyed by the participant under any of the Company’s
compensation, pension, savings, life insurance, medical, health and accident,
or disability plans, (B) the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or deprive the
participant of any material fringe benefit then currently enjoyed by the
participant (without otherwise providing the participant with a substantially
equivalent replacement benefit or cash equivalent), or (C) the failure by the
Company to provide the participant with the number of paid vacation days to
which the participant is entitled on the basis of years of service with the
Company in accordance with the Company’s vacation policy.

 

The participant’s right
to terminate the participant’s employment under the preceding clause (b)
shall not be affected by the participant’s incapacity due to physical or mental
illness.  The participant will be deemed
to have waived his rights to claim a Qualifying Termination relating to
circumstances described in the preceding clause (b) if he or she has not
provided to the Company a written notice of termination within ninety (90) days
following his or her knowledge of such circumstances.

 

“Restricted
Share” means shares of Common Stock subject to such restrictions as the
Committee may determine from time to time.

 

“Restricted
Period” has the meaning given such term in Section 9(b) of the Plan.

 

“Retained
Distribution” has the meaning given such term in Section 9(b) of the
Plan.

 

“Retirement”
has the meaning given such term in Section 11(d) of the Plan.

 

“Subsidiary”
of any Person means another Person, an amount of the voting securities, other
voting ownership or voting partnership interests of which is sufficient to
elect at least a majority of its Board of Directors or other governing body
(or, if there are no such voting interests, 50% or more of the equity interests
of which) is owned directly or indirectly by such first Person or by another
Subsidiary of such first Person.  The
term “Subsidiaries” means more than one of any such Persons.

 

“Substitute
Awards” has the meaning given such term in Section 14(b) of the Plan.

 

“Withholding
Tax” has the meaning given such term in Section 13 of the Plan.

 

17

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