MANAGEMENT AGREEMENT

by and between

and

for the

Operation and Management of the

Dated this the _____ day of ____________1999

 SAMPLE

Table of Contents
Item Page

SECTION A: PRELIMINARY

Article 1: Definitions……………………………………………………………………… 4

Article 2: Incorporations of Schedules and Appendixes…………………………………… 5

Article 3: Miscellaneous Interpretation……………………………………………………. 5

SECTION B: CONTRACT SUMMARY

Article 4: Agreement Summary…………………………………………………………….. 6

Article 5: Term……………………………………………………………………………… 6

Article 6: Parties Relationship………………………………………………………………. 6

SECTION C: PRE-OPERATIONAL SERVICES

Article 7: Start-Up Cost……………………………………………..………………………. 7

Article 8: Marketing and Promotion………………………………………………………… 7

SECTION D: OPERATIONAL SERVICES

Article 9: Employee Matters………………………………………………………………… 8

Article 10: Resort Operations………………………………………………………………... 8

Article11: Resort Property Matters………………………………………………………….. 8

SECTION E: ACCOUNTS

Article 12: Accounting System………………………………………………………………. 8

Article 13: Accounting Operation……………………………………………………………. 9

Article 14: Audit……………………………………………………………………………… 10

Article 15: The Sinking Fund………………………………………………………………… 11

Article 16: Payment to the Operator………………………………………………………….. 11

SECTION F: ADDITIONAL OBLIGATIONS

Article 17: Insurance………………………………………………………………………….. 12

Article 18: Indemnification……………………………………………………………………. 12

SECTION G: ASSIGNMENT

Article 19: Assignment by the Owner…………………………………………………………. 12

Article 20: Assignment by the Operator……………………………………………………….. 13

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SECTION H: INTERRUPTION

Article 21: Damage to the Resort, Closing or Condemnation of the Resort…………………… 13

Article 22: Force Majeure……………………………………………………………………….. 14

SECTION I: TERMINATION

Article 23: ‘With Cause’ and ‘Without Cause’………………………………………………….. 14

Article 24: Termination ‘with cause’……………………………………………………………. 15

SECTION J: MISCELLANEOUS

Article 25: Time…………………………………………………………………………………. 16

Article 26: Variations and Additions……………………………………………………………. 16

Article 28: Naming of the Resort………………………………………………………………… 16

Article 29: Goodwill ……………………………………………………………………………. 17

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THE MANAGEMENT AGREEMENT is made and entered into BETWEEN: -

1. THE OWNER, ………. (LCDA) (hereinafter referred to as the ‘Owner’) as described

in Schedule 2 and

2. THE OPERATOR, ………. (RIH) or it’s nominated subsidiary (hereinafter referred

to as the ‘Operator’) as described in Schedule 2,

IN THE CIRCUMSTANCES that: -

A. The Owner owns the site either absolutely or for a term of years long enough for the
purposes of this Agreement, the particulars of which are set out in Schedule 1 below.
This would include any extensions or renewals to which the Operator is entitled.

B. The Building as described in Schedule 1 below is erected on the Site and the Owner
intends the same to be operated as the Resort as defined in Schedule 1.

C. The Owner is desirous of hiring an experienced operator to take over the operation of
the Resort.

D. The Operator is experienced in the management and operation of resorts.

E. The Operator shares the same objective as the Owner, that is to help the Sarawak
Tourism Board to encourage more support for tourism in Sarawak,

AND THE TERMS OF THE AGREEMENT are as follows: -

SECTION A: PRELIMINARY

Article 1: Definitions

“Accounting Period” shall mean a period of one (1) calendar month commencing on the first
day of each calendar month.

“Accounting Quarter” shall mean four (4) separate periods, each of three (3) consecutive
Accounting Periods, which commence on the first day of the first, fourth, seventh and tenth
Accounting Periods respectively in each Year of Operation.

“Agreement” shall mean the Management Agreement referred to on the front cover of this
copy of this document.

“Building”, see schedule 1.

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“Date of Possession” means the date agreed upon by the parties where the Owner will hand
over vacant possession to the Operator.

“Expenses of Operations (EO)” shall mean the amount of all general expenses listed in the
Accounting System under the classification headings.

“Furnishing and Equipment” shall consist of, but not be limited to, all the furniture, fixtures,
telephone and call accounting systems, cleaning and engineering equipment, tools, vehicles,
recreational and sports equipment, and any others specified in the Agreement.

“Gross Operating Profit (GOP)” shall mean the amount remaining after deducting all
Expenses of Operation from all Gross Operating Revenue.

“Gross Operating Revenue (GOR)” shall consist of all revenue, proceeds of sales, or income
of any kind, all determined on the accrual basis in accordance with generally accepted
accounting principles consistently applied, after deducting all allowances for rebates and
adjustments, whether cash or credit derived directly or indirectly from any source over which
the Operator has direct or indirect responsibility under the Agreement.

“Resort” shall mean the Regency Pelagus Resort in Sarawak, Malaysia.

“Site”, see Schedule 1.

“Territory” shall mean the country or territory in which the Resort is situated.

Article 2: Incorporation of Schedules and Appendixes

2.1 The Schedules to this Agreement shall be treated as forming part of this Agreement.

2.2 The Appendixes to this Agreement shall be treated as forming part of this Agreement.

2.3 Articles of this Agreement may refer to Schedules on the basis of their application if
relevant but if a particular Schedule is not relevant, it’s content will be deleted or it
will be included with no content so as to avoid the need for amendment of the
contexts of the Articles hereof.

Article 3: Miscellaneous Interpretation

3.1 Words in this Agreement importing the singular shall be deemed to include the plural
and vice versa, words importing one gender shall be deemed to include any or every
gender and references to persons shall be deemed to include references to bodies
corporate or unicorporate except in each case if the context does not permit such
interpretation.

3.2 The Headings to Articles and Schedules are for convenience only and have no legal
effect.

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 SECTION B: CONTRACT SUMMARY

Article 4: Agreement Summary

4.1 The Owner agrees to employ the Operator to serve the Owner as the sole and
exclusive manager and operator of the ……. (hereinafter referred to as the ‘Resort’)
for a term of 5 years which is renewable, as stated in Article 5 below.

4.2 The Operator need not pay any form of rent nor is it entitled to get any form of fees.
The operator’s payment is stated in Article 16.

4.3 The Operator agrees that it shall at all times conduct the business of the Resort in a
lawful manner and in full compliance with all applicable governmental laws,
ordinances, rules and regulations. The Owner warrants that it is and will at all times
remain in compliance with all laws and ordinances relevant to this agreement and the
Resort.

4.4 The Parties will perform their respective obligations under this agreement in good
faith towards one another.

4.5 It is hereby declared that the Operator is not operating under the capacity of an agent
of the Owner, in carrying out the duties and obligations under this agreement.

Article 5: Term

5.1 The first term commences on the date of this agreement and ends on the fifth
anniversary of the date of possession as specified in Article 6.4.

5.2 The term is renewable after each 5 year period, the option to renew vesting in the
Operator without any change of existing terms. The Operator is given a minimum of 3
consecutive 5 year terms.

5.3 If the Operator wishes to renew the Agreement for another term of 5 years, he can
exercise his option to renew by giving notice in writing to the Owner, at least three (3)
months prior to the expiration of the earlier term of 5 years.

Article 6: Parties Relationship

6.1 The Owner acknowledges that the Operator shall have uninterrupted control and
operation over the Resort.

6.2 The relinquishment of control is not on the basis of a rental / leasing arrangement, but
rather on a profit sharing arrangement as set out in Article 16.

6.3 The Operator will be deemed to have taken over the Resort on the Date of Possession.

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6.4 The Date of Possession will be a date decided by the parties as the date of handing
over of vacant possession and control of the Resort from the Owner to the Operator.
This date will be one that will take place after the commencement of this Agreement.

6.5 The Parties also hereby confirm that there has been a prior inspection by the parties of
the Resort. After the execution of this Agreement, but before the handing over of
vacant possession over to the Operator, there is to be another joint inspection by the
parties, at which juncture the Operator is to confirm that the state and condition of the
Resort is in satisfactory condition, in terms of inter alia, the machinery, the furniture
and equipment, the building, and the grounds. If the Operator is not satisfied with the
condition of the Resort, the Operator shall give notice to the Owner of any further
recommendation it might have and the Owner shall do all that is necessary to comply
with the recommendations before the handing over of vacant possession over to the
Operator.

SECTION C: PRE-OPERATIONAL SERVICES

Article 7: Start-Up Cost

7.1 The Operator and Owner hereby agree that the resort requires improvements to be
made on the Building and Site and needs to be actively and effectively marketed as a
holiday and tourist destination.

7.2 In the furtherance of the same, the Operator will be setting aside monies for this
purpose which will be referred to as Start-Up Cost. This cost shall also include the
injection of working capital by the Operator. This Start-Up cost will be distributed
evenly over a period of 5 years through amortization. The parties envisage that the
Operator will be investing an estimate of RM…….for these Start-Up Costs.

7.3 In event of termination ‘with cause’ or ‘without cause’, by the Owner, the
unamortized balance of the Operator’s initial investment shall be construed as a debt
due by the Owner to the Operator.

Article 8: Marketing and Promotion

8.1 The Operator shall plan, prepare and arrange for all advertising and promotion of the
Resort in the Territory as the Operator deems necessary.

8.2 The Owner is to assist the Operator in procuring the support of the Sarawak Tourism
Board to include the resort in its tourism promotions, for example it’s road shows and
events in Sarawak.

SECTION D: OPERATIONAL SERVICES

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Article 9: Employee Matters

9.1 The Operator is free to hire its own staff and independent contractors.

9.2 As for the existing staff, their current employment contracts will be terminated and
settled by the Owner, after which they will sign new employment contracts which the
Operator.

Article 10: Resort Operations

10.1 The Operator shall establish and adjust as it considers appropriate all room rates and
rate schedules, food and beverage prices and prices of other services, facilities and
goods provided at the Resort.

10.2 The Owner shall assist the Operator in getting permission from the authorities in order
to carry out certain operations of the resort, specifically the usage of the helicopter
service in which the Owner shall obtain the required air rights.

Article 11: Resort Property Matters

11.1 The Operator, subject to availability of Working Capital or monies in the Sinking
Fund (as the case may be) and as considered by the Operator to be necessary or
appropriate, shall be assisted by the Owner, when called upon by the Operator, in all
licensing matters relating to the conditions and terms in this Agreement, in the
operation of the Resort.

11.2 The Owner shall allow the Operator to make full use of all the available land as stated
in the Agreement to be the Site, for the purposes of enhancing the said Resort and
overall beauty of its grounds.

11.3 The Owner shall assist the Operator in all dealings with the local authorities relating
to any land matters or matters relating to the infrastructure of the Resort.

SECTION E: ACCOUNTS

Article 12: Accounting System

12.1 The Operator is to engage, subject to the unique circumstances that would exist, a
recommended accounting system in the Resort.

12.2 This accounting system will be generally in accordance with accepted international
accounting principles and as best as possible, follow the standardized form as
developed and for the time being, is in use by Resorts.

12.3 The accounting systems referred to in Article 12.1 will include: -

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 i) an Annual Operating Budget to be submitted one (1) month before the
beginning of each operating fiscal year, incorporating the capital expenditure
Budget to the Owner;

ii) an audited profit and loss statement to be submitted on or before the end of the
1st quarter of the succeeding year, to the Owner;

12.4 The Operator shall have full control and management of the financial affairs of the
Resort and shall inter alia have: -

i) an Operating Account in the name of and maintained solely by the Operator;

ii) a reserve account referred to in Article 15 below, in the joint names of the
Owner and Operator.

Article 13: Accounting Operation

13.1 On the handing over of vacant possession, the Operator shall takeover the Resort from
the Owner on a clean basis without any absorption of liabilities. Any liabilities
sustained by the Owner up to that point will be solely the responsibility of the Owner
and the Operator shall not be liable for any of those liabilities.

13.2 However, for the period subsequent to the handing over of vacant possession, the
Operator shall take full responsibility for all liabilities incurred by themselves in the
course of operating the Resort.

13.3 A basic outline of the accounts is as follows. As mentioned in Article 16, the net
profits from this venture are to be distributed between the two parties. First of all, the
‘Expenses of Operations’ (EO) is deducted from the ‘Gross Operating Revenue’
(GOR), to get the ‘Gross Operating Profit’ (GOP).

13.3 The ‘Expenses of Operation’ shall consist of, but will not be limited to: -

i) Raw materials and operating supplies;

ii) Wages and expenses for employing, training and retaining staff for operations;

iii) Expenses for general management;

iv) Advertising and promotion;

v) Insurance premiums;

vi) Fuel and other utility charges and rates;

vii) License fees and statutory taxes excluding corporation tax, quit rent and
assessments payable by the Owner;

viii) Property and operating equipment running and maintenance cost;

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 ix) Interest payable on working capital and on any loan taken by the Operator for
the operation of the Resort;

x) The Operator’s Head Office supervision costs which would include

transportation and communication costs; and

xi) Any other expenses that are considered necessary for the operation of the
Resort.

13.4 Once the ‘Gross Operating Profit’ has been calculated, it has to be deducted with the
amount of amortization of Start-Up Cost, as defined in Article 15 below.

13.5 After that, 10% of the resulting sum / remainder will have to be allocated to the
Sinking Fund as stated in Article 15. The final sum will be the Net Profits.

13.6 In the event the ‘Expenses of Operations’ (EO) is higher than the ‘Gross Operating
Revenue’ (GOR), then there will be a ‘Gross Operating Loss’ (GOL). This GOL will
be brought forward to the next year to become ‘Gross Operating Loss Brought
Forward’ (GOLBF).

13.7 If there happens to be losses at the ‘Gross Operating Profit’ stage, that event shall
make it redundant to allocate the sum made out for the Amortization of the Operator’s
Start-Up Costs and sharing of profit for that accounting year.

13.8 If there happens to be insufficient Net Profits (after deducting the amount for
amortization for that year) to satisfy the Sinking Fund, then the sum allocated to the
Sinking Fund will not be allocated for that accounting year.

13.9 However, in the event of either Art 13.7 or 13.8, adjustments will be made to the
following year in which, if there is a net profit, the sums not paid the previous year
will be allocated in the next year, on top of that year’s amounts as well. This will be
done before the distribution of the sharing of profits is made.

13.10 If the Operator in carrying out it’s functions, sustains or envisages to sustain losses,
either real or estimated which will not render the further operation of the Resort as
economically viable, the Operator may give forty five (45) days notice of terms of
termination of this Agreement, to the Owner which shall be considered to be ‘with
cause’, but such right to termination can only be exercisable by the Operator, after
fifteen (15) calendar months from the date of execution of this Agreement.

Article 14: Audit

14.1 At the end of every accounting period, a licensed audit company shall audit the
accounts as prepared by the operator and the said duly audited accounts shall be
considered final and conclusive.

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Article 15: The Sinking Fund

15.1 The Operator is to keep the Resort in good repair and condition, ordinary wear and
tear excepted. For this purpose, a ‘Sinking Fund’ will be started. It has been agreed
that the sinking sum percentage will be at 10% of the resulting sum after any Gross
Operating Loss brought forward and Amortization is deducted from the Gross
Operating Profit.

15.2 The objective of the fund is for, but not limited to: -
i) the restoration of buildings structures and operating equipment;

ii) the purchase of operating equipment which is fixed or movable in nature;

iii) the replacement of operating assets damaged in the course of operation by an

act of God or any other unforeseen event; and

iv) the upgrading and capital expenditure as proposed in the annual operating
budget mentioned above.

15.3 The Owner shall not unreasonably withhold consent to the Operator’s proposals on
the usage of the Sinking Fund for the purpose of improving and the enhancing the
marketability of the Resort.

15.4 In the event that the Sinking Fund is insufficient to finance expenditure as defined in
Article 15.2, any excess of the aggregate of expenditure over the available Sinking
Fund shall be funded by the Operator and the sum shall be amortized over the
remaining Amortization period.

15.5 The fund shall be set aside and accumulated in a separate reserve account to be
operated jointly by both parties.

15.6 If the Operator is terminated, the sinking fund shall be distributed on an 20 : 80 basis,
similar to the profit sharing arrangement, as stated in Article 16 below.

15.7 However, if the Operator terminates the Agreement, the monies in the sinking fund
shall belong solely to the Owner.

Article 16: Payment to the Operator

16.1 In consideration of the Operator’s agreement to operate the Resort, the Operator will
receive payment in the form of a profit sharing basis.

16.2 The sharing of profit arrangement is where the net profit is divided between the
Owner and the Operator by a ratio of 20% to the Owner and 80% to the Operator.

16.3 The sharing of profits shall be done on a yearly basis after an approved audit company
has audited the accounts as provided in Article 14.

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 SECTION F: ADDITIONAL OBLIGATIONS

Article 17: Insurance

17.1 The Operator shall be responsible for getting insurance, necessary to cover general
public claims to ensure the protection of both the Operator as well as the Owner, as
well as insurance, if considered appropriate, for inter alia: -

i) mechanical and electrical machinery and equipment;

ii) innkeeper’s legal liability;

iii) worker’s compensation and employee’s liability insurance; and

iv) third party liability in respect of vehicles and recreational equipment.

17.2 The Operator shall procure that the Owner be named as a joint beneficiary on all the
policies of insurance referred to in Article 17.1.

17.3 The Operator is to maintain the insurance by keeping up with the expected premium
to be paid. The premium is to be listed down as one of the Expenses of Operations.

17.4 Both parties shall in any case keep each other fully informed as to all insurance
matters including in particular the receipt, notification to insurers and conduct of
claims.

Article 18: Indemnification

18.1 The Operator shall indemnify the Owner against any claim, loss or expense that arises
directly as a result of the management of the Operator. This would include situations
where there has been willful neglect, or negligence on the part of the Operator in its
duties and obligations.

SECTION G: ASSIGNMENT

Article 19: Assignment by the Owner

19.1 The Owner can only assign it’s interest to another (hereinafter referred to as the
‘Assignee’) if the Operator were to give the Owner consent in writing to such an
assignment and a written acknowledgement from the Assignee that he will honor the
obligations of the Owner under this Agreement and accedes to this Agreement in
place of the Owner.

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19.2 If the owner wishes to assign his rights over to the Assignee, and the Operator
receives notice from the Assignee that he is willing to step into the shoes of the
Owner, the Operator on receiving such a notice may either agree to the assignment, or
choose to terminate the Agreement ‘with cause’. For example, the Operator can
exercise such an option if it were to feel that the circumstances surrounding the
signing of this agreement has materially changed.

19.3 Such a termination will follow the procedure laid down in Article 24 and follow
Appendix 1.

Article 20: Assignment by the Operator

20.1 The Operator shall have the right to assigning it’s interest in the Agreement to another
new operator of the Resort subject to the Owner being reasonably satisfied that the
new operator will be able to and will honor the obligations of the Operator under this
Agreement and subject to the new operator acceding to this Agreement in place of the
Operator. The Owner has to give his written consent to such an assignment.

SECTION H: INTERRUPTION

Article 21 Damage to the Resort or Closing of the Resort

21.1 If the Resort is damaged by a situation / event beyond the control of the parties during
the term of the Agreement: -

i) If the damage is not substantial, but only to part of the Resort, the Owner shall
undertake to repair the same, the cost of repair to be borne by the Owner.

ii) If the damage is substantial and would require major reconstruction and the
closing of important parts of the Resort, the Operator may elect to terminate
the Agreement ‘with cause’, as stated in Article 24.

21.2 In the event that the Resort or part of the same has to be closed during the process of
repair, the operation loss for the loss of operating the Resort of that part of the same,
will be put down, as one of the Expenses of Operations for that accounting year.

21.3 If such an event were to arise, the repair of the Resort is to be done by the Owner as
soon as reasonably possible, using a reputable contractor and material that is
consented to by the Operator.

21.4 If at any time, the Operator feels it is necessary to close down the Resort for the sake
of Protection, Health and Safety, then the Operator may do so and reopen and
recommence operations on a new date as agreed by the parties.

21.5 If at any time, the whole or any part of the Resort is inoperable and / or needs to be
closed by the authorities that are empowered to do so, or it appears that the Resort
will not be able to run lawfully, then the Operator may terminate the Agreement as of
the effective date of such cessation of operations.

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21.6 It has been agreed by the parties that should any of the three events as listed in this
Article arise and the operation of the resort is ‘substantially’ affected (meaning it
affects 50% or more of the operations of the Resort), then the 5 year term in which the
said event occurred shall be extended for the same length of time that the Resort was
closed or partially operational.

Article 22: Force Majeure

22.1 If any party is prevented from performing it’s obligations by natural disasters, civil or
political disturbances or other causes that are beyond the control of the Owner or
Operator, and not being circumstances specifically dealt with in these Terms and
Conditions, the performance of the Agreement is suspended in whole or in part as
may be appropriate until normal conditions are restored.

22.2 This would have effect, if it were to happen within the Territory or a part of it in
which the Resort is situated, depending on the type of cause.

SECTION I: TERMINATION

Article 23: ‘With Cause’ and ‘Without Cause’

23.1 In this Agreement, termination ‘with cause’ shall mean any termination by either
party, which is effected due to either: -

i) the other party’s failure to perform any obligation after the date of it’s agreed
execution and after reasonable notice of that failure has been given to the other
party, and such failure or default has not been rectified or remedied; or

ii) the happening of a frustrating event that was not contemplated by the parties.

23.2 In this Agreement, termination ‘without cause’ shall mean any termination by either
party, which is effected after the pre-requisite notice in writing is given, where the
other party has done nothing to warrant such a termination.

23.3 In essence, if the Owner wants to terminate the agreement ‘without cause’, then the
Owner will have to pay the Operator compensation as provided in Appendix 1.
Alternatively, if the Operator were to do the same, the same procedure applies and
compensation shall be payable as set out in Appendix 2.

Article 24: Termination ‘with cause’

24.1 Upon reasonable notice in writing, the Agreement may be terminated immediately
‘with cause’ by either party, upon the occurrence of any one of the following events: -

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 i) the filing by such other party of a voluntary petition in bankruptcy or
insolvency, or a petition for reorganization or protection under any bankruptcy
or insolvency law;

ii) the consent by such other party to any involuntary petition in bankruptcy or
insolvency;

iii) the making of an order or judgment by any competent court, on the application
of a creditor, adjudicating such other party bankrupt or insolvent, or approving
a petition seeking reorganization, or appointing a receiver, for all or a
substantial part of such party’s assets which order or judgment shall continue
unstayed and in effect for sixty (60) days; and

iv) the occurrence of any situations as specifically laid down in this Agreement.

24.2 In Addition to the rights in Article 24.1 above, the Owner shall have the right to
terminate the Agreement ‘with cause’ by reason of breach, default, or non-compliance
by the Operator with regard to any obligations contained in the Agreement, upon the
failure by the Operator to remedy such a breach, default or non-compliance within
thirty (30) days of receipt of notice thereof from the Operator, unless the Operator has
given a reasonable explanation as to his delay, after which the Owner shall extend the
time period to a period agreed to by both parties. The Owner will be allowed to
receive compensation as stated in Appendix 2.

24.3 In addition to the right to terminate in Article 24.1 above, the Operator shall have the
right to terminate the Agreement ‘with cause’ by reason of breach, default or non-
compliance by the Owner with regard to any obligations contained in the Agreement
upon the failure of the Owner to remedy such breach, default or non-compliance
within thirty (30) days after the receipt of notice thereof from the Operator, unless the
Owner has given a reasonable explanation as to his delay, after which the Operator
shall extend the time period to a period agreed to by both parties. The Operator has be
compensated according to Appendix 1.

24.4 Further in addition to the right to terminate the Agreement as given above, should the
Operator determine, at any time during the term that any plans or specifications of the
Resort or repair works carried out thereto or therein vary materially from those
approved by the Operator, the Owner materially fails to make changes recommended
or required by the Operator pursuant to this Agreement; then the Operator may
terminate the Agreement ‘with cause’ after reasonable notice in writing has been sent
to the Owner and there has been a lapse of thirty (30) days of receipt of such notice,
the Owner failing to act within that time. Here the Operator is to be compensated
according to Appendix 1.

24.5 The failure of either party to insist upon the strict performance of any obligation
hereunder shall not be a waiver of such party’s right to demand strict compliance in
the future, nor shall the waiver of any one event of default be construed as a waiver of
all or any other event of default.

24.6 In the event the Owner fails to perform of any obligation under the Agreement, the
Operator may fulfill the relevant obligation on behalf of the Owner and the Owner

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 shall be liable to reimburse to the Operator forthwith all sums so expended by the
Operator plus interest at one (1) percent per month. Such expenditure shall not be
treated as Expenses of Operation.

SECTION H: MISCELLANEOUS

Article 25: Time

25.1 Time whenever mentioned is of the essence of this Agreement.

Article 26: Variations and Additions

26.1 This Agreement may only be further varied or added to by written agreement signed
by each of the parties hereto and expressly stated therein to be or intended to be a
variation of or addition to this Agreement.

Article 27: Notices

27.1 Any notice required or permitted to be given hereunder shall be in writing and shall
be: -

i) personally delivered;

ii) transmitted by postage prepaid registered mail; or

iii) transmitted by facsimile,

as elected by the party giving such notice to the other party at its address stated in
Schedule 2, or such other address as either party may specify from time to time,
provided such change of address is notified by written notice to the other party as
specified herein. Notices may be also served on the representative of the parties.

27.2 Except as otherwise specified herein, all notices and other communications shall be
deemed to have been duly given on: -

i) the date of receipt if delivered personally;

ii) the date seven days after the date of posting if transmitted by mail; or

iii) the date of transmission with confirmed answerback if transmitted by

facsimile, whichever first occurs.

27.3 Each part may appoint a representative, who shall be treated as authorised to represent
and commit that party in respect of any matter arising hereunder.

Article 28: Naming of the Resort

28.1 The Operator is at full liberty to change the name of the Resort to suit their needs.

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28.2 The Operator does not need the approval of the Owner in the choosing of the new
name.

28.3 The Operator has currently decided to name the Resort, ‘The Regency Pelagus
Resort’.

Article 29: Goodwill

29.1 The Operator shall do all things within it’s power and all that may be reasonably
necessary to enhance the goodwill attached to the Resort.

29.2 The Owner in turn will advise and help in the best way it can as to all that is necessary
to familiarize the Operator with the working of the Resort. This would include
notification and advise as to any ordinances, by-laws, rules, regulations, orders or
requirements of the local authorities.

Article 30: Arbitration

30.1 If in the process of interpreting or carrying out this agreement, there arise any disputes
between the parties, the parties shall make every effort to resolve them though mutual
friendly consultation. If the disputes cannot be resolved through consultation, the
matter shall be submitted for arbitration which will be conducted in the Arbitration
Center in Kuala Lumpur.

30.2 Arbitration shall be conducted in the English Language. The parties shall abide by the
award.

30.3 During the course of such consultation or arbitration, the parties shall continue to
perform their respective obligations prescribed under the Agreement.

30.4 The party desiring arbitration shall give notice of twenty (20) days to the other party,
of it’s intention to go for arbitration. If an arbitrator cannot be agreed between the
parties, a single arbitrator shall be appointed by the Arbitration Center in Kuala
Lumpur. The Arbitration shall be conducted in accordance with the rules of
arbitration established by or adopted by or accepted as applicable by the Arbitration
Center.

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 SCHEDULE 1
THE SITE, THE BUILDING AND THE OPERATING EQUIPMENT

SCHEDULE 2
THE PARTIES

THE OWNER:
Address:

THE OPERATOR:
Address:

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 APPENDIX 1
COMPENSATION ENTITLEMENT

This appendix is only to be used in the event that the owner were to terminate the Agreement
‘without cause’ or the Owner were to breach his obligations under this Agreement.

1. If the Relevant Termination is before the Opening Date: RM 1,000,000

2. If the relevant Termination is: -

- during the 1st year after the Date of Possession RM 600,000

- during the 2nd year after the Date of Possession RM 500,000

- during the 3rd year after the Date of Possession RM 400,000

- during the 4th year after the Date of Possession RM 300,000

- during the 5th year after the date of Possession RM 200,000

The subsequent year’s compensation is to be agreed to by the parties.

APPENDIX 2
COMPENSATION ENTITLEMENT

This appendix is to be used in the event the Operator were to breach his obligations under this
agreement, or to terminate the Agreement without cause.

The Compensation will be the equivalent of 80% of the figures as stated in Appendix 1.

(NOTE: THE ABOVE FIGURES ARE MERELY SUGGESTIONS AND ARE SUBJECT
TO AGREEMENT BY THE PARTIES.)

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