Exhibit 4.8(c)
EXECUTION COPY
DEVELOPMENT
AGREEMENT
FOR THE
ATLANTIS, PALM
ISLAND
BY AND BETWEEN
KERZNER INTERNATIONAL DEVELOPMENT
FZ LLC
AS DEVELOPER
AND
KERZNER NAKHEEL
LIMITED
AS OWNER
5th May, 2004
DEVELOPMENT
AGREEMENT
This Development Agreement (as the
same may be amended, modified or supplemented from time to time,
this “ Agreement ”) is made and entered into
this day of May, 2004 (the “ Effective Date ”)
, by and between KERZNER NAKHEEL LIMITED, a British Virgin
Island company with offices at Trident Trust Company, Trident
Chambers, Wickhams Cay, P.O. Box 146, Road Town, Tortola, BVI
(the “ Owner ”) and (ii) KERZNER
INTERNATIONAL DEVELOPMENT FZ LLC, a United Arab Emirates Free Zone
Limited Liability Company having its registered office at Boutique
Office No. 19, Dubai Media City, Dubai, United Arab Emirates
(the “ Developer ”). The Owner and the Developer
are sometimes hereinafter referred to as the “ Parties
.”
W I T N E S
S E T H :
WHEREAS, Owner is the lessee of
those certain parcels of real property located on The Palm
Jumeirah, Dubai, United Arab Emirates consisting of approximately
125 acres of land, more particularly described in
Exhibit ”A” attached hereto and made a part
hereof, together with any property subsequently acquired or
controlled by Owner for the purposes of developing or expanding a
destination resort to be known as Atlantis, The Palm (collectively,
the “ Real Property ”) , together with
any and all infrastructure and improvements currently existing or
developed in the future (collectively, the “
Improvements ” and together with the Real Property,
“ Atlantis, Palm Island ” or the “
Resort ”) ; and
WHEREAS, Owner desires to develop
the Resort in one or more phases (each a “ Phase
” and collectively, the “ Project ”)
through the development of, among other components, Phase I of the
Project to include the following: an approximate US$1.1
billion development project consisting of an approximate 2,000-room
luxury hotel and an extensive water-theme park as more particularly
described in the Phase I development plan attached hereto and made
a part hereof as Exhibit ”B”; and
WHEREAS, Developer (together with
its Affiliates, as hereinafter defined) has experience and
expertise related to development and construction oversight
services involving luxury resort hotels and ancillary facilities;
and
WHEREAS, Developer is prepared to
provide certain development services to the Owner with respect to
the development of the Project to be undertaken with respect to the
Resort during the Term of this Agreement (as hereinafter defined);
and
WHEREAS, Owner desires to retain
Developer to provide such services on an exclusive basis, and
Developer is willing to provide such services to Owner, subject to
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements hereinafter set forth, and for
other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties covenant and agree as
follows:
ARTICLE 1
THE PROJECT
Section 1.01 The
Project . The subject matter of this Agreement is the
development of the Project in one or more Phases as may be
determined by the Owner from time to time during the Term
hereof.
ARTICLE 2
TERM
Section 2.01 Term
. The term of this Agreement shall commence on the Effective
Date and continue through the completion date of all Phases of the
Project (the “ Term ”) (unless sooner terminated
in accordance with the provisions of this Agreement, or upon mutual
agreement of the parties). For the purposes hereof, the Term of
this Agreement shall continue through the term of the Management
Agreement, defined in Section 9.02 below.
ARTICLE 3
APPOINTMENT OF DEVELOPER AND
DEVELOPER’S SERVICES
Section 3.01
Appointment . Owner hereby retains Developer as its
exclusive Developer for the Project and in connection therewith, to
perform or provide the services described in this Agreement
relating to the development of the Project. Developer hereby agrees
to provide the services set forth herein, and such additional
services as may from time to time be mutually agreed.
Section 3.02
Developer’s Obligations . Subject to
Owner’s approval of Developer’s actions with respect to
the Project, Developer shall be primarily responsible for the
following: scheduling, coordinating and directing the Project,
including, without limitation, (a) managing Project
development and construction until the issuance of the necessary
governmental permits which allow the lawful use and occupancy of
all portions of the Project, (b) supervision of the completion
of any “punch-list” or incomplete items involving any
component of the Project, (c) providing reports to Owner
periodically as to the status of the development of the Project,
and (d) coordinating all construction and other services
related to construction typically provided in connection with the
development of projects similar to such Project and customary or
necessary to prosecute the Project to a successful completion. The
scope of the services to be performed by Developer under this
Agreement (“the Developer’s Services”) are more
particularly described in Exhibit ”C” attached
hereto and made a part hereof. Developer shall perform its
obligations subject to the following:
(i)
Budget . Although Developer will use commercially
reasonable efforts to complete each Phase of the Project within the
construction schedule and development budget established and
approved by Owner (each such budget being herein referred to as a
“ Budget ”) , it is understood that
agreement as to any construction schedule or Budget shall not
constitute or be deemed to
2
constitute a guaranty or warranty of
such schedule or Budget by Developer nor shall any
construction schedule or Budget serve as a measure of
Developer’s performance. Notwithstanding the foregoing, it is
understood and agreed that Developer shall not make expenditures in
excess of the amounts provided in the applicable Budget without the
consent of Owner (which consent shall not be unreasonably withheld,
conditioned or delayed), except for those expenditures undertaken
pursuant to Section 8.02 of this Agreement, and provided
further that Developer shall have the right to make line item
variances and adjustments to Budget line items in an amount not to
exceed ten percent (10%). All of the foregoing services are to be
performed in conjunction with the contractors, project manager,
architects, attorneys and other consultants recommended by
Developer and retained by Owner pursuant to contracts negotiated
and recommended by Developer. Notwithstanding the foregoing,
Developer will not be responsible for day-to-day onsite supervision
of the Project; such onsite supervision being the sole
responsibility of a project manager (whether as a third party
contractor or through direct employment of a project management
team) (“Project Manager”) and general contractor to be
selected by Owner with the assistance and recommendations of
Developer.
(ii)
Disclaimer
: Developer is not responsible for,
and gives no warranty or representation as to structural integrity
of the Real Property, the development of the site, its fitness for
purpose or any environmental impact on the Real
Property.
(iii)
Affiliates
. Developer may perform certain of
its obligations hereunder and otherwise act by and through or in
concert with one or more Affiliates (as defined below) provided
that the foregoing shall not diminish any of Developer’s
obligations or responsibilities hereunder. Owner recognizes that
personnel of Developer or its Affiliates shall not be precluded
from working upon other projects of Developer or its Affiliates,
provided that such work does not interfere with the performance of
Developer’s obligations hereunder. An “
Affiliate ” is defined herein to include any entity
which is owned or controlled by Developer, or any of its direct or
indirect principal shareholders, members, or partners, or which
directly or indirectly owns a majority interest in or controls
Developer, or is under common control with or by Developer’s
principal shareholders, members, or partners.
ARTICLE 4
CONTROL OF PROJECT
Section 4.01
Development Objectives . Developer shall develop in
consultation with Owner, and the Consultants (as defined in
Section 4.02 below) to the extent necessary, the various
themes, goals and objectives for each Phase of the Project which
shall result in a development plan for that Phase of the Project
and which shall be approved by Owner. The development plan shall
(i) identify the major requirements of each Project Phase,
(ii) formulate
3
the budget estimates and timetables
and construction schedules for each Project Phase, and
(iii) be approved by Owner. The Developer may use as the basis
for hard construction costs and scheduling estimates the
information provided by construction contractors and other
Consultants for various aspects of the Project, which information
shall be reviewed and verified by Developer. A preliminary
development plan for the Project, approved by Owner, is attached
hereto as Exhibit ”B.”
Section 4.02
Selection of the Contractors, Architect and Consultants .
Developer shall review, select and facilitate Owner’s
retention of, as more particularly described below (i) a
contractor, contractors, or construction manager for each Phase of
the Project (the “ Contractor(s) ”) ,
(ii) the design and production architect or architects for
each Phase of the Project (the “ Architect(s) ”)
, and (iii) civil, structural, mechanical, electrical,
plumbing and other engineers, interior decorating consultants and
space planners, scheduling consultants, construction consultants
and other consultants as Developer recommends be engaged by Owner,
or which may otherwise be necessary or appropriate for each Phase
of the Project (collectively referred to herein as the “
Consultants ”). All fees paid to the Contractor, the
Architect and the Consultants shall be at the sole cost and expense
of, and be paid by, Owner on a timely basis in accordance with the
requisition and payment procedures established by Developer and
shall be in addition to the fees and reimbursements paid to the
Developer as set forth herein.
(i)
Engagement of Architect Project
Manager and Consultants .
Owner shall engage an Architect(s), Project Manager and/or
Consultants, based on the recommendations of Developer, familiar
with the design of hotel facilities and for the purpose of
performing certain services in connection with the construction of
each Project Phase, including site development. All agreements with
the Architect(s), Project Manager and the Consultants shall be in a
form of contracts prepared by Developer for execution by
Owner.
(ii)
Plan Development
. Developer shall maintain a liaison
with and coordinate the activities of the Architects and
Consultants to produce schematic design documents, design
development documents, and final plans and specifications for each
Project Phase in accordance with the recommendations of Developer
and as approved by Owner. Owner shall implement alternative
solutions whenever design details adversely affect construction
cost, feasibility, project quality, or the construction
timetable.
(iii)
Proposal Review and Bid
Process . Developer shall
conduct a review of proposals for the construction of each Phase of
the Project, and Developer shall negotiate any construction
contract, on behalf of Owner, prior to the award of such
construction contract or contracts to a qualified Contractor or
Contractors and/or Construction Manager.
(iv)
Contracts . Developer shall recommend Contractors and/or a
Construction Manager and the Owner shall enter into a construction
management agreement and related contracts, or a general contract
for the construction of the Project. Developer shall prepare for
review and approval by Owner, such approval not to be unreasonably
withheld, conditioned, or delayed, and
4
execution by Owner of, all required
contract documents and agreements necessary for construction of the
Project. All contracts shall be in a form negotiated, prepared by
Developer and recommended to Owner for execution.
(v)
Contract Documents
. Any contract relating to the
construction of the Project (the “ Contract Documents
”) shall require the Contractors to be responsible for
providing, or causing to be provided, as applicable, all materials,
equipment and labor necessary to construct and equip the Project as
necessary, including site development, and shall be consistent with
subparagraph (vi) below. The scope of the Contract Documents
shall require the Contractors to construct the Project, or cause
the construction of the Project, as applicable, in accordance with
the plans and specifications prepared by the Architect, including
any changes or modifications thereto, which plans and
specifications are to be recommended to Owner by Developer and
approved by Owner, such approval not to be unreasonably withheld or
delayed.
(vi)
Construction
Administration . During
the construction of each Phase of the Project, the Developer shall
act as the Owner’s representative for all of Owner’s
construction administration duties and responsibilities. Developer
shall be solely responsible for all construction contract and
construction management administration during the construction
phase of each Project Phase. Developer shall interpret and decide
on matters concerning the performance of any Contractor, and the
requirements of the Contract Documents. Developer shall have the
authority to reject work that does not conform to the Contract
Documents. Developer shall conduct inspections to determine the
date or dates of substantial completion and the date of final
completion of the Project facilities.
Section 4.03 Bid
Procedures and Awards . With the Developer’s review
and approval, and subject to the provisions hereof, the
Contractor(s) shall be responsible for the method to be used in
selecting subcontractors and in awarding subcontracts in accordance
with subcontract forms approved by Developer.
Section 4.04 Status
Reports . To the extent requested by Owner, during the
pre-development phase of each Project Phase, Developer shall
provide a monthly status report to reflect the Project status.
Following the start of construction, Developer shall report on a
monthly basis to Owner, or more frequently as reasonably requested
by Owner, regarding the progress of construction
activities.
Section 4.05
Developer to Nominate Key Personnel . During the
construction of each phase of the Project, Developer shall nominate
at least two (2) key persons to supervise on a full-time basis
the Developer’s Services provided under this
Agreement.
Section 4.06
Relationship of Developer to Owner . In carrying out
its duties and obligations hereunder, Developer’s
relationship to Owner shall be that of an independent contractor.
Developer’s project manager, key personnel, executive
personnel and support staff that are employed in connection with
Developer’s services hereunder in connection with
the
5
Project shall be and shall remain
employees, agents or representatives, as the case may be, of
Developer and shall not by virtue of their employment with
Developer in connection with Developer’s services hereunder,
be deemed employees of Owner. Developer agrees to handle the
payroll for its employees, withhold from their wages and salaries
and make all tax filings and payments with respect to such
employees as is required by law, provided, however, that these wage
and salary expenses shall be reimbursable to Developer pursuant to
Section 6.02 below. In its capacity as aforesaid, Developer
shall act for and on behalf of Owner as its representative, and all
contracts, permits, licenses, variances and other such documents
shall be for and in the name of Owner. Developer shall not be
required to make any payments on behalf of Owner or the Project
except to the extent that funds are made available by Owner; and,
should Developer expend any of Developer’s funds in
conjunction with the Project, such funds shall be reimbursed by
Owner in accordance with the provisions of Section 6.02 of
this Agreement.
Section 4.07
Relationship of Developer to Contractor(s) and Consultants .
Developer shall not have control or charge of and shall not
be responsible for the design of the Project or portion thereof,
construction means, methods, techniques, sequences or procedures,
for the acts or omissions of the Contractor(s), subcontractors, the
Architect and Consultants (except those on the staff of Developer
or its Affiliates), or any other persons performing any such work
on the Project, or for the failure of any of them to carry out
their work in accordance with their respective contract documents.
Owner shall contract directly with all Contractors, Architects, and
Consultants.
ARTICLE 5
OWNER’S OBLIGATIONS
Section 5.01
Obligations of Owner . During the Term, Owner shall
have the obligations set forth below:
(i)
Approvals . Owner shall grant approval or deny approval,
within fifteen (15) days of request, for actions of Developer with
respect to the Project;
(ii)
Payments to Developer
. Owner shall promptly pay, or make
sufficient funds available to Developer to pay, the fees and
reimbursements provided for herein, and all Project costs and
expenses whether or not set forth in the applicable Budget (which
shall include, without limitation, all fees and expenses of the
Project’s construction managers, contractors, architects,
attorneys and other consultants);
(iii)
Insurance . Owner shall procure and maintain (or cause to
be procured and maintained by the Architects, Consultants and
Contractors) throughout the Term, and at Owner’s expense,
insurance coverage as set forth on Exhibit ”D”
hereto;
(iv)
Financing . Owner shall arrange and negotiate any
necessary financing for the development of the Project;
6
(v)
Authorizations and
Permits . Owner and
Developer shall cooperate with each other to obtain and maintain
all necessary zoning, design and other permits and approvals
required for development of the Project;
(vi)
Access . Provide Developer and Contractors with access
to the Project site at all times; and
(vii)
Cooperation
. Owner shall do all things and
provide all such assistance and cooperation to the Developer as may
be necessary and reasonable to assist Developer in the performance
of its obligations.
ARTICLE 6
DEVELOPER’S FEE
Section 6.01
Developer’s Fee . Owner and Developer shall
engage in good faith negotiations to determine Developer’s
fee (the “Developer’s Fee”) for each respective
Phase of the Project. For Phase I of the Project, Owner shall pay
to Developer a fixed Developer’s Fee in the amount of Twenty
Million dollars (US$20,000,000.00). Three Million dollars
(US$3,000,000.00) of the Developer’s Fee for Phase I shall be
paid on the Effective Date. Additional advances against the
remainder of the total Developer’s Fee shall be paid on a
monthly basis, without set-off, deduction or counterclaim, during
the applicable development period of Phase I of the Project based
upon Developer’s good faith estimate of the total fee payable
and the duration of the development period for Phase I. The amount
of the monthly installments shall be modified from time to time to
reflect changes to the Budget and/or construction schedule. Costs
and expenses to be reimbursed to Developer shall be paid within
thirty (30) days after Developer’s requisition
therefore.
Section 6.02
Reimbursements to Developer . Owner shall reimburse
Developer for any and all of the following costs and expenses
incurred by Developer in conjunction with the Project:
(i)
the third party costs of obtaining
all necessary inspections, tests, approvals, permits and
governmental fees, licenses and bonds legally necessary or required
by Owner for the proper execution and completion of
Developer’s Services;
(ii)
the third party costs of all
materials and supplies necessary for the proper execution and
completion of Developer’s Services including ordinary and
necessary third party out-of-pocket costs and expenses
