20-F

As filed with the Securities and Exchange Commission on June 30, 2002

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

|_|   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

OR
|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to _____

Commission file number 001-04226

KERZNER INTERNATIONAL LIMITED
(Exact name of Registrant as specified in its charter)

Commonwealth of The Bahamas
(Jurisdiction of incorporation or organization)

Executive Offices
Coral Towers
Paradise Island, The Bahamas
(242)363-6000
(Address and telephone number of principal executive offices)

Securities registered or to be registered pursuant of Section 12(b) of the Act:

	Name of each exchange
Title of each class	on which registered
Ordinary Shares, $.001 par value per share	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.   None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.   None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. Ordinary Shares, net of treasury shares:   28,125,198

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes       X             No          

Indicate by check mark which financial statement item the Registrant has elected to follow.      Item 17                   Item 18       X   

KERZNER INTERNATIONAL LIMITED

FORM 20-F
ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

TABLE OF CONTENTS

Presentation of Financial and Other Information		4
Forward-Looking Statements		5
PART I
Item 1	Identity of Directors, Senior Management and Advisers	6
Item 2	Offer Statistics and Expected Timetable	6
Item 3	Key Information	6
Item 4	Information on the Company	17
Item 5	Operating and Financial Review and Prospects	47
Item 6	Directors, Senior Management and Employees	65
Item 7	Major Shareholders and Related Party Transactions	71
Item 8	Financial Information	78
Item 9	The Offer and Listing	80
Item 10	Additional Information	81
Item 11	Quantitative and Qualitative Disclosures About Market Risk	90
Item 12	Description of Securities Other than Equity Securities	91
PART II
Item 13	Defaults, Dividend Arrearages and Delinquencies	91
Item 14	Material Modifications to the Rights of Security Holders and Use of Proceeds	91
Item 15	Controls and Procedures	91
Item 16	Reserved	91
PART III
Item 17	Financial Statements	92
Item 18	Financial Statements	92
Item 19	Exhibits	93

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this Annual Report, “Kerzner,” “KZL” or “the Company” refers to Kerzner International Limited (formerly known as Sun International Hotels Limited), and the terms “we,” “us,” “our” and similar terms refer to Kerzner and any or all of its subsidiaries and joint ventures as the context requires.

Our fiscal year ends on December 31. Unless otherwise specified, all references in this Annual Report to our fiscal year refer to a twelve-month period ending December 31. For example, the year 2002 represents the fiscal year beginning on January 1, 2002 and ending on December 31, 2002.

The financial statements contained in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We have historically compiled our financial statements in U.S. dollars.

FORWARD-LOOKING STATEMENTS

This Annual Report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, plans for future expansion and other business development activities as well as other capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition, markets for Kerzner’s Ordinary Shares and other matters. Statements in this Annual Report that are not historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). Forward-looking statements, including, without limitation, those relating to our future business prospects, revenues and income, wherever they occur in this Annual Report, are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by forward-looking statements. You should consider forward-looking statements, therefore, in light of various important factors, including those set forth in this Annual Report. These risks and uncertainties include, but are not limited to, those relating to development and construction activities, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), availability of financing, democratic or global economic conditions, pending litigation, the impact of actual or threatened terrorist activity or war on the economy in general and the travel and hotel industries in particular, acts of God, including hurricanes and other natural disasters (which may result in uninsured losses), changes in tax laws or the administration of such laws and changes in gaming laws or regulations (including the legalization of gaming in certain jurisdictions) and the risk factors discussed under the heading “Risk Factors” in this Annual Report and our other filings with the SEC.

Words such as “estimate,” “project,” “plan,” “intend,” “expect,” “believe” and similar expressions are intended to identify forward-looking statements. You will find these forward-looking statements at various places throughout this Annual Report. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.

In compiling the information in this Annual Report, we have also used industry data and projections obtained from industry surveys, market research, publicly available information and industry publications. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed and that the projections they contain are based on a number of significant assumptions. We have not independently verified this data or determined the reasonableness of such assumptions. We have also indicated where information has come from internal sources. Such information reflects our management’s best estimates based upon information obtained from our customers and from trade and business organizations and other contacts within the businesses in which we compete.

PART I

ITEM 1. .........IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. .........OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. .........KEY INFORMATION

^{(A) Selected Financial Data}

The following table sets forth certain historical consolidated financial information of the Company for each of the five years ended December 31, 2002. The historical financial information as of December 31, 2002 and 2001 and for each of the three years in the period ended December 31, 2002, as set forth below, has been derived from our audited consolidated financial statements, prepared in accordance with U.S. GAAP, included in this Annual Report. For all other periods, the historical financial information, as set forth below, has been derived from our audited consolidated financial statements, prepared in accordance with U.S. GAAP, which are not included in this Annual Report. The information set forth below is not necessarily indicative of future operations and should be read in conjunction with “Item 5. Operating and Financial Review and Prospects” and the consolidated financial statements, related notes and other financial information included elsewhere in this Annual Report. Amounts are reported in U.S. dollars and have been prepared in accordance with U.S. GAAP.

(In thousands of U.S. dollars, except per share data)

                                                              For the Year Ended December 31,
                                       ------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS                     2002            2001            2000            1999            1998
OF OPERATIONS DATA:
                                            (a)             (b)              (c)             (d)             (e)
                                       -------------   -------------   --------------  --------------  --------------

Gross revenues                         $    595,908    $    555,819    $     936,474   $     789,207   $     591,670
Net revenues                                573,698         533,041          884,695         738,967         550,878
Income (loss) from operations                87,272          75,678          (74,844 )       114,432          52,206
Net income (loss)                            40,154          31,656         (119,104 )        69,822          57,746

Basic earnings (loss) per share:
    Income (loss) before
       extraordinary item              $       2.18    $       1.18    $       (3.86 ) $        2.09   $        1.74
    Extraordinary item, net                   (0.74 )             -                -               -               -
                                       -------------   -------------   --------------  --------------  --------------
    Net income (loss) per share        $       1.44    $       1.18    $       (3.86 ) $        2.09   $        1.74
                                       =============   =============   ==============  ==============  ==============

Diluted earnings (loss) per share:
    Income (loss) before
        Extraordinary item             $       2.13    $       1.14    $       (3.86 ) $        2.05   $        1.70
    Extraordinary item, net                   (0.72 )             -                -               -               -
                                       -------------   -------------   --------------  --------------  --------------
    Net income (loss) per share        $       1.41    $       1.14    $       (3.86 ) $        2.05   $        1.70
                                       =============   =============   ==============  ==============  ==============

CONSOLIDATED BALANCE                                                As of December 31,
SHEETS DATA:
                                       ------------------------------------------------------------------------------
                                            2002            2001            2000            1999            1998
                                       -------------   -------------   --------------  --------------  --------------

Total assets                           $  1,409,778    $  1,357,031    $   1,460,791   $   1,671,471   $   1,625,733
Long-term debt, net
    of current maturities                   497,756         518,231          668,908         578,033         565,752
Shareholders' equity                        733,313         678,403          641,827         899,831         850,621
Number of shares outstanding                 28,125          27,317           26,786          32,681          33,577

    (a)   The results of  operations  for the year ended  December 31, 2002 include an  extraordinary  loss on the early
          extinguishment  of  debt  of  $20.5  million  related  to the  redemption  and  repurchase  of  our 9%  Senior
          Subordinated Notes and our 8-5/8% Senior  Subordinated  Notes. In 2002 we also recognized a $14.5 million gain
          on the settlement of territorial  and other disputes with a major  shareholder.  In 2002 we also reversed $1.0
          million of restructuring  costs related to the termination of certain employees  following September 11, 2001,
          due to the release of fewer  employees and the fact that these  amounts were settled for less than  originally
          planned.
    (b)   The results of  operations  for the year ended  December  31, 2001 include  pre-opening  costs of $6.9 million
          related to our Internet  gaming  operations  and the Ocean Club Golf Course.  In  addition,  we incurred  $5.7
          million of restructuring  costs primarily  related to severance  payments made to employees  terminated due to
          lower occupancy levels at Atlantis subsequent to September 11, 2001.
    (c)   The results of operations  for the year ended 2000 include a $229.2  million  write-down of the carrying value
          of Resorts  Atlantic City and a related option to purchase certain real estate from us to their net realizable
          value.  Other items in 2000 included $11.2 million of purchase  termination  costs related to the cancellation
          of our agreement to acquire the Desert Inn Hotel  located in Las Vegas,  Nevada,  $7.0 million of  transaction
          costs incurred in connection  with our  self-tender  offer in June 2000 and the termination of the proposal by
          Sun International  Investments Limited ("SIIL") to acquire,  in a merger  transaction,  all of the outstanding
          Ordinary Shares that it did not already own and $7.6 million of pre-opening  costs related to the expansion of
          One&Only Ocean Club and the new Ocean Club Golf Course.
    (d)   The results of  operations  for the year ended  December  31, 1999 include  pre-opening  costs of $5.4 million
          related to a renovation completed at Resorts Atlantic City in July 1999.
    (e)   The results of  operations  for the year ended  December 31, 1998 include only two weeks of  operations of the
          Royal Towers on Paradise  Island  following its grand opening in  mid-December.  In connection  with the grand
          opening of the Royal  Towers our  results of  operations  for the year  ended 1998  include  $26.0  million in
          pre-opening costs.

^{(B) Capitalization and Indebtedness}

Not applicable.

^{(C)     Reasons for the Offer and Use of Proceeds}

Not applicable.

^{(D) Risk Factors}

The resort and casino industries are highly competitive and increases in competition could adversely affect our financial performance.

The resort and casino industries are highly competitive. Our properties compete with other resorts, hotels and casinos, including land-based casinos, riverboat, dockside and cruise ship casinos and other forms of gaming, as well as other forms of entertainment. If other properties operate more successfully, if existing properties are enhanced or expanded, or if additional hotels or casinos are established in and around the markets where we conduct business, we may lose market share. In particular, the expansion, upgrading or construction of competing resort or casino properties in or near any market from which we attract or expect to attract a significant number of customers could have a significant adverse effect on our business, financial condition and results of operations.

A number of our competitors are larger and have greater financial and other resources than we do. In addition, a number of jurisdictions have legalized gaming and other jurisdictions are considering the legalization and/or expansion of gaming. This could open markets in which we currently compete to new entrants and could create new markets that may compete as tourist destinations. Our gaming operations compete, and will in the future compete, with all forms of existing legalized gaming and with new forms of gaming that may be legalized in the future. Our competitive position could be materially adversely affected by larger competing companies, new entrants, new markets and new forms of gaming, and our revenues could decline, harming our financial condition.

A further discussion of competition at our operations by geographic location is included in “Item 4. Information on the Company, (B) Business Overview—Competition.”

New projects and expansion and renovation efforts are inherently subject to significant development and construction risks.

We regularly evaluate potential development opportunities and engage in expansion, development and renovation projects at properties that we develop or operate, including expansions, developments and upgrades of our Paradise Island and other luxury resort properties. Each of these projects, including the recently announced Phase III Expansion discussed below in “Item 4. Information on the Company, (A) History and Development of the Company—Recent Developments—Atlantis Phase III Expansion,” will be subject to the many risks in expanding or renovating an existing enterprise or developing new projects, including unanticipated design, construction, regulatory, environmental and operating problems, and the significant risks commonly associated with implementing an expansion strategy in new markets. In particular, any such projects are subject to the risks associated with the following:

• the availability of financing and the terms and covenants in our revolving credit facility and other debt;

• shortages in materials;

• insufficient public infrastructure improvements or maintenance;

• shortages of skilled labor or work stoppages;

• unforeseen construction, scheduling, engineering, environmental or geological problems;

• weather interference, floods, fires or other casualty losses;

• the failure to obtain required licenses, permits or approvals;

• regulatory or private litigation arising out of projects; and

• unanticipated cost increases.

For example, many of our projects are subject to regulation at the national, state and local levels in their respective jurisdictions, which could adversely affect the progress of our projects. In order to proceed with projects, we may need to, among other things, notify authorities of our proposals or submit environmental statements. We could be sanctioned for any failure to follow any of these procedures, including fines or even temporary closure of our work sites. We cannot guarantee that we will be successful in obtaining required permits and approvals. Delays and compliance costs associated with our projects as a result of regulatory obstacles could have a material adverse effect on our business, financial condition or results of operations.

The anticipated costs and construction period for projects are based upon budgets, conceptual design documents and construction schedule estimates prepared by us in consultation with architects and contractors. The cost of any project may vary from initial expectations, and we, or the owners of the property, may have a limited amount of capital resources to fund cost overruns on any project. If cost overruns cannot be financed on a timely basis, the completion of one or more projects may be delayed until adequate funding is available. The completion dates of development projects could also differ significantly from expectations for construction-related or other reasons. We cannot ensure that any project will be completed, if at all, on time or within established budgets. Significant delays or cost overruns on projects could have a material adverse effect on our business, financial condition or results of operations.

Litigation may also impede or delay our ability to complete construction or expansion projects. We have on occasion been named as a defendant in lawsuits brought to delay, alter or enjoin projects in which we have been involved. If litigation is successfully brought against us as a result of our expansion or renovation projects around the world, it could have a material adverse effect on our business, financial condition or results of operations.

In addition, although we design our projects for existing facilities to minimize disruption of business operations, expansion and renovation projects require, from time to time, portions of the existing operations to be closed or disrupted. Any extended disruptions in our operations could have a material adverse effect on our business, financial condition or results of operations.

If we are unable to finance our expansion, development and renovation projects as well as capital expenditures through cash flow and borrowings, our expansion, development and renovation efforts could be jeopardized.

If we are unable to finance existing or future projects with cash flow from operations or borrowings, we will have to adopt one or more alternatives, such as reducing or delaying planned expansion, development and renovation projects and other capital expenditures, selling assets, restructuring indebtedness, obtaining equity financing or joint venture partners, or modifying our revolving credit facility. These sources of funds may not be sufficient to finance existing or future projects, and other financing may not be available on acceptable terms, in a timely manner or at all. In addition, our existing indebtedness contains certain restrictions on our ability to incur additional indebtedness. Effective January 1, 2003, the lenders have agreed that borrowings under our amended revolving credit facility will be based on a borrowing base calculation, such that we can draw the lesser of a borrowing base or the commitment amount. If we are unable to secure additional financing, we could be forced to limit or cancel expansion, development or renovation projects, which may adversely affect our business, financial condition and results of operations.

We are subject to extensive governmental gaming regulations, which may harm our business.

Our operation of gaming facilities is subject to extensive governmental regulations. Regulatory authorities typically require various registrations, licenses, findings of suitability and approvals to be held by operators of gaming facilities. The regulatory authorities in these jurisdictions generally have broad discretion in the granting, renewal, suspension and revocation of licenses and require that such registrations, licenses, findings and approvals be renewed or updated periodically. Our necessary key personnel and we are currently qualified to do business in all the jurisdictions in which we operate gaming facilities. We cannot assure you that any new or permanent licenses, permits or approvals that may be required by us, our key employees and our partners, if applicable, in the future will be granted or that our existing licenses, permits and approvals will be renewed or will not be suspended or revoked in the future. The failure to receive or renew licenses or the suspension or revocation of licenses could harm our reputation and result in a loss of revenue, which could materially adversely affect our financial condition and results of operations.

Our gaming operations are subject to significant taxation and fees that increase our costs.

Our gaming operations are subject to significant taxation and fees. Such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to our gaming operations in The Bahamas and will likely incur significant taxes and fees in any other jurisdictions in which we conduct gaming operations in the future. Any material increase in existing taxes and fees, the adoption of new taxes or fees, or the loss or reduction of any existing or future tax incentives, could have a material adverse effect on our profitability.

Our business is seasonal and severe weather conditions can adversely affect our business, results of operations or financial condition, or further increase our insurance premiums and deductibles.

Historically, our revenues and operating profits in The Bahamas have been higher during the first quarter, the prime tourist season, than in successive quarters. Higher revenues and earnings are typically realized from the Mauritius properties during the fourth quarter of the year and from Mohegan Sun during the second and third quarters of the year. If any of these properties were unable to accommodate guests during such periods for any reason, including disruptions caused by weather, our revenues and profits could be adversely affected.

The Bahamas and Mauritius are subject to tropical weather and storms, which, if severe, could adversely affect our operations and tourism. Similarly, inclement weather can adversely affect the revenues that we derive from Mohegan Sun, as the principal means of transportation to this property is by automobile or bus. In September 1999, Hurricane Floyd, a hurricane rated by the United States National Weather Service as a category five, its highest rating, passed within 60 miles of Paradise Island. Our Paradise Island properties suffered approximately $45.0 million of property damage that took three months to repair. This property damage was covered by our insurance policies in place at that time. In November 2001, Hurricane Michelle impacted our Paradise Island properties. Although minimal disruption in our operations was caused by the storm, our properties (other than Harborside at Atlantis (“Harborside”), which was closed from August 2002 through December 2002 due to water damage resulting primarily from Hurricane Michelle - see “Item 4. Information on the Company, (B) Business Overview”) suffered approximately $28.3 million in damage that was substantially covered by our insurance policies. The approximate $28.3 million in property damage at our Paradise Island properties excludes our $6.9 million share of construction remediation costs at Harborside. This loss has not been reduced by any potential insurance recovery, but Harborside has filed a claim with its insurers, which is presently under negotiations. Should Harborside receive a related insurance recovery in the future, we would partially offset this loss.

We cannot assure you that our business and, consequently, our results of operations or financial condition, will not be adversely affected by severe weather conditions in the future, which could cause significant damage and suspension in service provided to our patrons, further increases in our insurance premiums and per occurrence deductibles or cancellations of, or decreases in, our coverage, and harm to our business.

Work stoppages and other labor disputes could harm our financial condition and results of operations.

In The Bahamas, a union represents approximately 3,600 of our approximately 5,800 employees. We participate in an employer association whose existing contract with the union expired on January 7, 2003. A new contract is being negotiated with the union, and a failure to agree upon new terms of this agreement could result in labor disputes or work stoppages at our Paradise Island properties. Labor relations in The Bahamas have been unstable at times over the last few years and there have been occasional work stoppages. As the country’s largest private employer, we are sometimes the target of labor disputes. Any protracted labor disputes or work stoppages affecting any of the properties that we own or operate could reduce our revenues. In addition, many of the public sector industries in The Bahamas, such as electricity, telecommunication and airport facilities, are unionized. The Bahamian government’s labor relations with these unions have been unstable at times and there have been work stoppages on occasion that have been disruptive to our business.

Lack of sufficient air service could adversely affect our revenues and profits.

Most patrons of our Paradise Island and our One&Only and other hotel operations arrive by air. Although we consider the current level of air service to our properties in The Bahamas, Mauritius, Mexico, Dubai and the Maldives to be adequate, any interruption or reduction of air service to any such locations could restrict the growth of our businesses, negatively affect our competitive position and adversely affect our revenues and profits.

We are subject to environmental, health and safety laws and regulations and our noncompliance or a significant regulatory change could adversely affect our business, results of operations or financial condition.

Our operations are regulated under a number of federal, provincial, state and local laws and regulations that govern, among other things, the handling of waste materials, some of which are classified as hazardous materials, and the discharge of hazardous materials into the environment. Our operations are subject to stringent regulations relating to protection of the environment and waste handling. In addition to liability for our own noncompliance, these laws and regulations may expose us to liability for the noncompliance of other parties, without regard to whether we were negligent. Sanctions for noncompliance with applicable environmental laws and regulations may include administrative, civil and criminal penalties, revocation of permits and corrective action orders. Furthermore, we may be liable for costs for environmental cleanup at currently or previously owned or operated properties or off-site locations. Our failure to comply with existing laws or regulations, the adoption of new laws or regulations with additional or more rigorous compliance standards, or the more vigorous enforcement of environmental laws or regulations could significantly harm our business by increasing our expenses and limiting our future opportunities.

A small number of our shareholders control a significant percentage of our Ordinary Shares and are able to control decisions affecting our company.

On July 3, 2001, we announced the restructuring of our majority shareholder, Sun International Investments Limited (“SIIL”), which was beneficially owned by World Leisure Group Limited (“WLG”), Caledonia Investments PLC (“Caledonia”) and Kersaf Investments Limited (“Kersaf”). As a result of certain proxy arrangements granted in the restructuring, WLG and Caledonia currently have the right to vote approximately 20.6% and 24.7%, respectively, of our issued and outstanding Ordinary Shares. In addition, Cement Merchants SA (“CMS”) and Baron Capital Group, Inc. (“Baron”) currently beneficially own approximately 13.5% and 20.5%, respectively, of our issued and outstanding Ordinary Shares. See “Item 7. Major Shareholders and Related Party Transactions, (A) Major Shareholders” for more information as to how the foregoing ownership percentages were determined.

If any combination of these principal shareholders act together they may be able to effectively control the outcome of substantially all matters requiring shareholder approval, including the election of our directors, thereby controlling our management, policies and business operations. For example, WLG, Caledonia, CMS and Baron, or combinations thereof, could combine to use this voting power to block our ability to obtain certain types of financing for development plans, renovations or expansions, which could materially adversely affect our ability to develop our business and pursue our strategies. See “Item 7. Major Shareholders and Related Party Transactions, (A) Major Shareholders.”

You may have difficulty enforcing judgments against us or our directors or management outside the U.S.

Kerzner is a Bahamian international business company incorporated under the laws of the Commonwealth of The Bahamas. Certain of our directors and executive officers reside outside the U.S. In addition, a substantial portion of the assets of our directors and officers and of our assets are located outside the U.S. As a result, it may be difficult or impossible to:

o effect service of process within the U.S. upon us or these persons; or o enforce, against us or these persons, in the U.S., court judgments obtained in the U.S. courts, including judgments relating to U.S. federal securities laws.

It is unlikely that Bahamian courts would entertain original actions against Bahamian companies, their directors or officers predicated solely upon U.S. federal securities laws. Furthermore, judgments based upon any civil liability provisions of the U.S. federal securities laws are not directly enforceable in The Bahamas. Rather, a lawsuit must be brought in The Bahamas on any such judgment. Subject to consideration of private international law, in general, a judgment obtained after due trial by a court of competent jurisdiction, which is final and conclusive as to the issues in connection, is actionable in Bahamian courts and is impeachable only upon the grounds of fraud, public policy and natural justice.

We may have difficulty enforcing gaming debts in certain foreign jurisdictions or in certain jurisdictions within the U.S., which could negatively affect our operating results.

Gaming debts may not be legally enforced in certain foreign jurisdictions or in certain jurisdictions within the U.S. A substantial portion of the customers at Atlantis reside in the U.S. As a result, we may be unable to collect gaming debts from our patrons who reside in such jurisdictions, which could negatively affect our operating results.

Reassessments of and changes to our business plans could hinder our development and result in charges or fees that could harm our financial condition and results of operations.

We are regularly reviewing our development plans in light of a variety of factors, including the availability of financing, regulatory and political considerations, competition and other business and strategic concerns. As a result of such assessments, our management may choose to change such plans, which could result in failure to expand and could also cause us to incur fees or charges. We cannot assure you that we will carry forward and complete any proposed business plans.

Energy price increases may adversely affect our cost of operations and our revenues.

Our destination casino resorts use significant amounts of electricity, natural gas and other forms of energy. Although we have not experienced shortages of energy, substantial increases in the cost of electricity or natural gas may negatively affect our operating results. The extent of any impact is subject to the magnitude and duration of the energy price increases and could be material. In addition, energy price increases in locations that constitute a significant source of customers for our properties could result in a decline in disposable income of potential customers and a decrease in visitation and spending at our properties, which could negatively impact revenues.

Our insurance premiums and deductibles have increased.

Due to changes in the insurance market arising prior to the September 11, 2001 terrorist attacks and the effects of such attacks, it has become more difficult and more expensive to obtain insurance. We may encounter difficulty in obtaining or renewing property or casualty insurance on our properties primarily due to the fact that we have a concentration of assets in one market which is subject to the potential negative impact of hurricanes. In addition, such insurance may be more limited and may not cover catastrophic risks or terrorist acts at current levels or at all. Even if we are able to renew our policies or to obtain new policies at levels and with limitations consistent with our current policies, we cannot be sure that we will be able to obtain such insurance at premium rates that are commercially reasonable. In addition to the “all risks” coverage described below, we have insured Atlantis for up to $300.0 million per occurrence (and in an annual aggregate amount) from damages directly resulting from certain terrorist acts to cover property damage and related business interruption losses. If any such event were to affect all or part of one or more of our properties, it is possible that we would suffer a substantial loss beyond what is covered by our insurance policies.

In 2002, with regard to our Paradise Island property insurance, our “all risk” premiums increased from approximately $4.6 million in the 2001 Policy Year (June 1, 2001 through May 31, 2002) to a total of approximately $14.1 million in the 2002 Policy Year (June 1, 2002 through May 31, 2003) and our deductibles also increased from $4.0 million per occurrence in 2001 to $15.0 million per occurrence with an annual aggregate deductible of $30.0 million. In 2003, our premiums for Paradise Island property insurance have decreased to $13.6 million for the 2003 Policy Year (June 1, 2003 through May 31, 2004) with the deductibles remaining the same as the 2002 Policy Year. Our total insurance expense in 2003 will be approximately $5.0 million greater than in 2002 because insurance costs incurred during the first half of 2002 reflected premium rates negotiated prior to the post-September 11, 2001 increases and other types of insurance have increased including terrorism and general liability. The amount of our “all risk” property and business interruption insurance (inclusive of our per occurrence deductible) in the 2003 Policy Year commencing June 1, 2003 is $175.0 million, as compared to $150.0 million in the 2002 Policy Year and $1.0 billion in the 2001 Policy Year. In addition, our “all risk” insurance policies now exclude from coverage certain losses and damages that were covered under our prior insurance policies. If we are forced to reduce, or prevented from obtaining or renewing, insurance coverage with respect to the occurrence of certain casualties, we could be exposed to heavy losses in the event that severe damage results from any such occurrence.

Acts of terrorism and war.

The terrorist attacks of September 11, 2001 had a significant impact on the travel and tourism industries in which we operate. The significant reduction in both business and leisure air travel following that date significantly reduced visitation to all our properties, including our Paradise Island properties, during the fourth quarter of 2001 and early 2002, resulting in a significant decline in our operating results during those periods.

On March 19, 2003, the U.S. and coalition forces commenced a war with Iraq. Although the official combat in the war with Iraq ceased in May 2003, the U.S. and coalition forces still maintain a presence in Iraq and terrorist activities still remain a threat. These events, the potential for future terrorist attacks, the national and international responses to terrorist attacks and other acts of war or hostility have created many economic and political uncertainties, which could adversely affect our business and results of operations. Future acts of terror in the U.S. or in other countries or an outbreak of hostilities involving the U.S. or other jurisdictions may again reduce our guests’ willingness to travel, which could have a negative impact on our future operating results.

Deterioration in general economic and market conditions could adversely affect our business.

Our business is affected by general economic and market conditions, particularly in the U.S. and Europe. A large portion of our business at Atlantis is generated by group convention sales and individual tour and travel. A recession or economic slowdown could cause a reduction in group sales bookings or the willingness or ability of tourists to book vacations at Atlantis, which could adversely affect our operating results.

Trading Cove Associates, a partnership in which we have a 50% interest, recently restated certain historical financial statements, and these restatements could have an impact on us.

On May 21, 2003, Kerzner and Waterford Gaming, L.L.C. (“Waterford”), the 50% general partners of TCA, announced changes in TCA’s accounting related to the timing of recognition of certain liabilities owed to Kerzner and Waterford and their affiliates. The changes are described in the Form 6-K filed by Kerzner on May 21, 2003 (the “Kerzner Form 6-K”), and resulted in the restatement by TCA and Waterford of historically reported financial results. Waterford’s restated financials are included in Form 10-K/A and Form 10-Q/A filed on June 5, 2003.

As stated in the Kerzner Form 6-K, based on its analysis to date of currently available information, the Company has determined that the restatement of TCA’s financial statements will not have a material impact on the Company’s financial statements for any prior year or in the aggregate and, accordingly, the Company does not anticipate restating any of its historical financial statements. However we intend to restate the 2000, 2001 and 2002 financial results of our wholly-owned subsidiary, KINA, as TCA represents a significant portion of the income of this subsidiary. See “Item 4. Information on the Company, (A) History and Development of the Company—Recent Developments—TCA Restatement.” Although we currently do not anticipate restating any of the Company’s historical financial statements, such restatements could be required should there be new information or developments arising out of the KINA restatement or otherwise, and in such a scenario our ability to access the capital markets may be affected.

We currently anticipate that the KINA restatements for 2000, 2001 and 2002 will be completed during the third quarter. Our current independent auditors, Deloitte & Touche LLP, were appointed in 2002 to replace our prior independent auditors, Arthur Andersen LLP, and have not audited any period prior to 2002. Accordingly, the re-audits of prior years could be particularly time consuming and result in our considering accounting matters not directly related to TCA.

Our former use of Arthur Andersen LLP as our independent auditor may pose risks to us and will limit our investors’ ability to seek potential recoveries from them related to their work.

On June 15, 2002, Arthur Andersen LLP (“Andersen”), our former independent auditor, was convicted on a federal obstruction of justice charge. Some investors, including institutional investors, may choose not to invest in or hold securities of a company whose financial statements were audited by Andersen. On June 24, 2002, we appointed Deloitte & Touche LLP to succeed Arthur Andersen LLP as our independent auditors.

Certain of our audited consolidated financial statements that are included in this Annual Report were audited by Andersen. Andersen has not consented to the inclusion of its audit report for such periods in this Annual Report. Certain of our audited consolidated financial statements that were audited by Andersen may in the future be required to be included in filings that we make with the SEC in order to access the capital markets or to ensure our compliance with SEC rules and regulations. The SEC has provided certain regulatory relief designed to allow companies that file reports with the SEC to dispense with the requirement of filing a consent of Andersen in certain circumstances. Notwithstanding the SEC’s regulatory relief, the inability of Andersen to provide its consent to inclusion or incorporation by reference of its audit reports in our SEC filings, and its failure to be able to provide us with certain assurance services, such as comfort letters customarily issued to underwriters of our securities offerings, could negatively affect our ability to access the capital markets in the future. Also, an investor’s ability to seek potential recoveries from Andersen related to any claims that an investor may assert as a result of the work performed by Andersen may be limited significantly by the lack of such consent and the diminished amount of assets of Andersen that are or may be available to satisfy any such claims.

ITEM 4. .........INFORMATION ON THE COMPANY

^{(A) History and Development of the Company}

Kerzner was incorporated in The Bahamas in 1993 under the name “Sun International Hotels Limited,” and is an international business company under the International Business Companies Act, 2000 of the Commonwealth of The Bahamas. The Company is registered under number 46,600B at the Companies Registry of The Bahamas. Our executive offices are located at Executive Offices, Coral Towers, Paradise Island, The Bahamas, and the telephone number is 242-363-3000. Our agent for service of process in the U.S. is Corporation Services Company, 1013 Centre Road, Wilmington, Delaware 19805. On March 1, 1996, we listed our Ordinary Shares for trading on The New York Stock Exchange (“NYSE”), and such shares trade under the symbol “KZL.” On July 1, 2002, we changed our name to Kerzner International Limited. The name change was implemented in accordance with agreements related to the restructuring of our former major shareholder, SIIL, which was announced in July 2001. See “Item 7. Major Shareholder and Related Party Transactions.” There was no change in our management or worldwide operations as a result of the name change.

The Company was established in order to acquire the Paradise Island Resort and Casino and related operations from Resorts International, Inc. The acquisition was completed in May 1994.

In June 1994, we established Kerzner Investments Connecticut, Inc., formerly known as Sun Cove Limited (“Kerzner Connecticut”). Kerzner Connecticut has a 50% interest in, and is a managing partner of, Trading Cove Associates (“TCA”), a Connecticut general partnership. In September 1995, TCA entered into a Gaming Facility and Construction Agreement with the Mohegan Tribal Gaming Authority (“MTGA”), an instrumentality of the Mohegan Tribe of Indians of Connecticut (the “Mohegan Tribe”) pursuant to which TCA assisted the Mohegan Tribe with the design, development and financing of the Mohegan Sun resort and entertainment complex situated in the town of Uncasville, Connecticut (“Mohegan Sun”). In addition, in August 1995, TCA entered into a gaming management agreement (the “Management Agreement”) with the Mohegan Tribe pursuant to which TCA provided certain management, marketing and administrative services to the Mohegan Tribe upon the opening of Mohegan Sun in October 1996. In February 1998, TCA and the Mohegan Tribe entered into an agreement (the “Relinquishment Agreement”) pursuant to which the Management Agreement was terminated effective January 1, 2000 and the Mohegan Tribe assumed full management responsibility for Mohegan Sun. In addition to the Relinquishment Agreement, in February 1998 the Mohegan Tribe appointed TCA to develop its $1.0 billion expansion of Mohegan Sun. See below “(B) Business Overview-The Properties-Mohegan Sun” for a further description of the Relinquishment Agreement, the $1.0 billion expansion and “Recent Developments-TCA Restatement” for additional information relating to TCA.

In December 1996, we acquired Sun International North America, Inc. (formerly Griffin Gaming & Entertainment, Inc.), which is now known as Kerzner International North America, Inc. (“KINA”). KINA is a holding company, which, through an indirect wholly owned subsidiary, owned and operated a 644-room casino hotel property in Atlantic City, New Jersey (“Resorts Atlantic City”).

On April 25, 2001, we completed the sale of Resorts Atlantic City to an affiliate of Colony Capital LLC (“Colony”) for a purchase price of approximately $144.0 million, including accrued interest (the “Resorts Atlantic City Sale”). The proceeds received from Colony consisted of approximately $127.0 million in cash and an unsecured $17.5 million note which was paid in full in March 2002. The net cash proceeds received from this transaction were used to reduce the amount of borrowings outstanding on our revolving credit facility.

Pursuant to the terms of the Resorts Atlantic City Sale, we granted Colony a two-year option (the “Atlantic City Option”) to acquire certain undeveloped real estate which we own, adjacent to Resorts Atlantic City, for a purchase price of $40.0 million, which option can be extended by Colony for two additional one-year periods upon notice to us prior to the expiration of the then-current option period and payment to us of a $2.5 million extension payment for each renewal period. We and Colony have agreed to extend the current option period through July 3, 2003. Effective April 25, 2001, Colony leases from us certain of the property included in the Atlantic City Option for $100,000 per month. If Colony does not exercise the Atlantic City Option, upon its expiration, the land lease will continue on a month-to-month basis. At that time the lease can be terminated by either Colony or us with thirty days notice, subject to certain conditions.

In 1999, we formed a joint venture with Starwood Vacation Ownership, Inc. (“SVO”) (formerly Vistana, Inc.) a subsidiary of Starwood Hotels and Resorts Worldwide, Inc. (“Starwood”), to develop Harborside at Atlantis (“Harborside”), a time-share project on Paradise Island. We and SVO each hold a 50% interest in Harborside. As part of the joint venture, we contributed land and SVO contributed cash based on the number of timeshare units to be developed.

In January 2000, we received a proposal from SIIL, at that time the majority shareholder of Kerzner, to acquire in a merger transaction all of our Ordinary Shares not already owned by SIIL or its shareholders for $24 per share in cash. To consider the proposal, we formed a committee of independent members of the Board of Directors (the “Special Committee”), which retained its own financial and legal advisers. The proposed transaction was subject to various conditions, including approval by the Special Committee. On June 16, 2000, we announced that SIIL was not able to negotiate a mutually satisfactory transaction with the Special Committee and that SIIL advised us that its proposal had been withdrawn.

In order to allow our shareholders to sell at least a portion of their Ordinary Shares at the price formerly proposed by SIIL, our Board of Directors approved a self-tender offer for up to 5,000,000 Ordinary Shares at a $24 per share cash price. In August 2000, we announced the completion of the self-tender, pursuant to which we purchased 5,000,000 Ordinary Shares at $24 per share. The self-tender offer was financed with borrowings under our Revolving Bank Credit Agreement (the “Revolving Credit Facility”).

In August 2000, we established SunOnline Limited, now known as Kerzner Interactive Limited, our Internet gaming subsidiary. In September 2001, we received a license to operate in the Isle of Man and commenced live gaming operations in January 2002. The Company discontinued the operations of Kerzner Interactive Limited during the first quarter of 2003. See below “(B) Business Overview—Internet Gaming” for more information.

On July 3, 2001, we announced the restructuring of our former majority shareholder, SIIL. In connection with this restructuring, among other things, the shareholders agreement governing SIIL was terminated and SIIL was dissolved. In November 2002 we reached a further settlement with Kersaf related to the restructuring agreement and certain other matters. See “Item 7. Major Shareholders and Related Party Transactions.”

Effective August 2001, we acquired a 25% interest in the Kanuhura Sun Resort & Spa Limited (“One&Only Kanuhura”) for approximately $3.8 million. As of December 31, 2002, we had provided debt financing to One&Only Kanuhura of $4.5 million, excluding accrued interest. One&Only Kanuhura is a 100-room luxury resort located on Kanuhura Island in the Maldives, which is located approximately 600 miles southwest of the southern tip of India. Our management contract with One&Only Kanuhura expires in 2026. Our recent agreement with Sun Resorts Limited (see below) also included the sale of 20% of our debt and equity interests in One&Only Kanuhura to Sun Resorts Limited. As of January 1, 2003, the effective date of the sale, we have a 20% equity interest in One&Only Kanuhura.

On June 26, 2002, we entered into management and development agreements for a 100-room luxury resort in the Maldives that we expect to open at the end of 2004. This new five-star resort will occupy the site where a small resort, Reethi Rah, was located. The management and development agreements related to this property are co-terminus with the owner’s lease, which expires in 2020. As part of this development, we have committed to provide certain financing arrangements to the current owner of Reethi Rah in an aggregate principal amount of up to $47.0 million to ensure completion of the new resort and provide for working capital on a standby basis.

On July 1, 2002, we changed our corporate name from Sun International Hotels Limited to Kerzner International Limited and our stock, which was trading on the New York Stock Exchange under the symbol “SIH,” was listed under the new ticker symbol “KZL.” The name change was implemented in accordance with agreements related to the restructuring to SIIL. There was no change in our management or worldwide operations as a result of the name change.

On September 12, 2002, we purchased a 50% ownership interest in the 115-room Palmilla Resort (“One&Only Palmilla Resort”), a deluxe five-star property located near Cabo San Lucas in Baja, Mexico for approximately $40.8 million, including transaction costs. In connection with the purchase, we entered into long-term management and development agreements related to the property that will expire in 2022. The acquisition was funded through a combination of cash on hand and drawings under our revolving credit facility. Beginning in April 2003, One&Only Palmilla Resort commenced an approximate $80.0 million expansion project that will increase the room count to 172 rooms and significantly upgrade the amenities and public areas offered by the resort. The expansion is expected to be completed by early 2004 (subject to obtaining all necessary local permits and approvals) and will be financed by One&Only Palmilla Resort through local project financing, which is supported by a $38.0 million guarantee from Kerzner.

In December 2002, we began to operate and market certain of our luxury resort hotels under the “One&Only” brand in connection with our corporate name change. One&Only emphasizes the uniqueness of each of the respective properties in the luxury resort market. We are now marketing five of our properties under our One&Only brand.

We currently have a 20.4% ownership interest in Sun Resorts Limited (“SRL”) a publicly traded company on the Mauritian Stock Exchange, which owns One&Only Le Saint Géran, One&Only Le Touessrok, Sugar Beach Resort, La Pirogue Hotel & Casino and Le Coco Beach Hotel, which are all located in Mauritius. As part of this agreement, we extended the existing management agreement for them from 2008 to 2023 through the use of a newly-formed management company. Effective January 1, 2003, SRL owns 20% of this new management company, known as One&Only (Indian Ocean) Management Limited, and we own the remaining 80%. Subject to certain conditions, SRL’s ownership interest will increase incrementally through 2009, at which time it will own 50% of this new company. The purpose of the new company is to be a joint venture growth vehicle for expansion in the islands of the Indian Ocean.

^{Reorganization of Capital Structure}

Issuances of 8-7/8% Senior Subordinated Notes

In August 2001, Kerzner along with KINA (together, the “Companies”) issued $200.0 million principal amount of 8-7/8% senior subordinated notes due 2011 (the “8-7/8% Senior Subordinated Notes”), which, after costs, resulted in net proceeds of approximately $194.0 million. All of the proceeds received from the issuance of the 8-7/8% Senior Subordinated Notes were advanced to Kerzner International Bahamas Limited (“KIB”) to repay amounts outstanding under the Revolving Credit Facility.

In May 2002, the Companies issued an additional $200.0 million of 8-7/8% Senior Subordinated Notes and used the proceeds to repay the Companies’ outstanding 9% Senior Subordinated Notes pursuant to the Tender Offer, Consent Solicitation and Redemption of such notes described below.

The 8-7/8% Senior Subordinated Notes, which are unsecured obligations, are unconditionally guaranteed by substantially all of the wholly-owned subsidiaries of Kerzner and KINA. Interest on the 8-7/8% Senior Subordinated Notes is payable semi-annually and commenced on February 15, 2002. The indenture for the 8-7/8% Senior Subordinated Notes contains various restrictive covenants, including limitations on the ability of the issuers and the guarantors to, among other things: (a) incur additional indebtedness, (b) incur certain liens, (c) engage in certain transactions with affiliates and (d) pay dividends and make certain other payments. We believe we are in compliance with all such covenants as of December 31, 2002. All of our outstanding 8-7/8% Senior Subordinated Notes are all subordinated to the Fourth Amended and Restated Revolving Credit Facility (the “Amended Revolving Credit Facility”).

Derivative Financial Instruments

In August and December 2001, we entered into fixed-to-variable rate interest rate swap agreements (the “Swap Agreements”) designated as fair value hedges of $200 million principal amount of our 8-7/8% Senior Subordinated Notes. The Swap Agreements have rates of 6-month LIBOR plus 291 to 302 basis points.

Amended Revolving Credit Facility

On November 13, 2001, Kerzner, KINA and KIB, as co-borrowers, entered into the Amended Revolving Credit Facility with a syndicate of banks (the “Lenders”), with Canadian Imperial Bank of Commerce (“CIBC”) acting as administrative agent. The borrowings then outstanding under the previous Revolving Credit Facility, all of which were reflected on the balance sheet of KIB, were paid in full. Under the Amended Revolving Credit Facility, the maximum amount of borrowings that may be outstanding is $300.0 million, subject to the borrowing base discussed below and certain other conditions. The Lenders have agreed that up to an additional $50.0 million of borrowings may be available under the facility if we are able to arrange additional commitments in that amount. Effective January 1, 2003, the lenders have agreed that borrowings under our amended revolving credit facility will be based on a borrowing base calculation, such that we can draw the lesser of a borrowing base or the commitment amount. See “Item 10. Additional Information, (C) Material Contracts-Third Amendment dated May 15, 2003 to the Amended Revolving Credit Facility” for a description of the borrowing base. Under the borrowing base calculation as of March 31, 2003, our borrowing limit would have been $300.0 million, as the anticipated borrowing base calculation exceeded the commitment amount.

Loans under the Amended Revolving Credit Facility bear interest at (i) the higher of (a) CIBC’s base rate or (b) the Federal Funds rate plus one-half of one percent, in either case plus an additional 0.25% to 1.75% based on a debt to EBITDA ratio during the period, as defined (the “Leverage Ratio”) or (ii) the London Interbank Offered Rate (“LIBOR”) rate plus 1.25% to 2.75% based on the Leverage Ratio. For loans based on the LIBOR rate, interest is payable on the last day of each applicable interest period, or the date of any payment or prepayment of such loans. For loans based on the Alternate Base Rate (as defined), interest is payable quarterly. At December 31, 2002, the weighted average interest rate on amounts outstanding under the Amended Revolving Credit Facility was 3.40%. Loans under the Amended Revolving Credit Facility may be prepaid and re-borrowed at any time and are due in full in November 2006. Commitment fees are calculated at per annum rates ranging from 0.25% to 0.50% based on the Leverage Ratio, applied to the undrawn amount of the Amended Revolving Credit Facility and are payable quarterly.

The Amended Revolving Credit Facility contains restrictive covenants that Kerzner must comply with, which among other things: (a) require periodic financial reporting, (b) require meeting certain financial amounts and ratio tests, (c) restrict the payment of dividends, (d) limit the incurrence of indebtedness and (e) limit asset expenditures and dispositions outside the ordinary course of business. As of December 31, 2002, Kerzner believes that it is in compliance with all of such covenants.

The amount of borrowings outstanding as of December 31, 2002 on the Amended Revolving Credit Facility was $72.0 million, all of which was drawn by KIB and is reflected on KIB’s balance sheet. This amount is unconditionally guaranteed by all significant subsidiaries that are a party to the Amended Revolving Credit Facility.

Tender Offer, Consent Solicitation and Redemption

On May 8, 2002, we commenced a cash tender offer to purchase any and all of our outstanding 9% Senior Subordinated Notes. In conjunction with the tender offer, we solicited consents to proposed amendments to the indenture governing the 9% Senior Subordinated Notes. The tender offer expired on June 5, 2002. At the expiration, a total of $177.5 million of the outstanding $200.0 million aggregate principal amount of the notes were tendered and accepted for purchase in the tender offer. On June 21, 2002, we redeemed, in accordance with the terms of the indenture governing the notes, all of the 9% Senior Subordinated Notes that remained outstanding at the time, at the applicable redemption price of $1,045 per $1,000 of principal amount thereof, plus interest accrued to the redemption date. We used the net proceeds from the issuance of $200.0 million of our 8-7/8% Senior Subordinated Notes on May 20, 2002, to retire our outstanding 9% Senior Subordinated Notes pursuant to the tender offer and redemption.

Shelf Registration

In May 2002, Kerzner and KINA filed a universal shelf registration statement on Form F-3 (the “Universal Shelf”) with the SEC relating to the sale of up to $500.0 million in securities. The Universal Shelf allows us the flexibility as to the type of security we could choose to sell in the future, including various types of debt securities, Ordinary Shares, preference shares and warrants, and replaces the 1997 Shelf Registration. We may also utilize the Universal Shelf to register secondary sales of Ordinary Shares by selling shareholders. In connection with a settlement agreement with Kersaf, a major shareholder of Kerzner, on December 18, 2002, an indirect subsidiary of Kersaf sold 2.3 million Ordinary Shares of Kerzner (“Kersaf Offering”) in a registered public offering, using securities registered under the Universal Shelf. Securities registered under the Universal Shelf may be offered from time to time directly by us or through underwriters at amounts, prices, interest rates and other terms to be determined at the time of the offering.

Redemption of 8-5/8% Senior Subordinated Notes

On November 27, 2002, we called for the redemption of the entire outstanding principal amount of our 8-5/8% Senior Subordinated Notes due 2007 pursuant to the terms of the indenture governing these Notes. We purchased $25.8 million of the 8-5/8% Senior Subordinated Notes through transactions on the open market. On December 27, 2002, we redeemed the remaining $74.2 million aggregate principal amount outstanding at the redemption price of 104.313%, or $1,043.13 for each $1,000.00 of principal amount outstanding, plus accrued interest.

Kersaf Offering

On December 18, 2002, Royale Resorts International Limited, an indirect subsidiary of Kersaf, completed the Kersaf Offering. We received approximately $32.1 million of the proceeds from the sale of these Ordinary Shares pursuant to the terms of the settlement agreement entered into by Kerzner, Kersaf and certain of its affiliates and certain other parties. See “Item 7. Major Shareholders and Related Party Transactions, (B) Related Party Transactions—Global Settlement.”

Recent Developments

Northampton, England Gaming License

On April 9, 2003 we announced that we had agreed to acquire from London Clubs International (“LCI”) for $2.0 million a gaming license, including property located in the town center of Northampton, England. The transfer of the license is subject to the approval by the British Gaming Board and the Northampton Borough Council. We are in the process of seeking those approvals and intend to develop a new 30,000 square foot gaming facility. See “Item 5. Operating and Financial Review and Prospects, (D) Trend Information” for more information regarding LCI.

TCA Restatement

On May 21, 2003, Kerzner and Waterford Gaming, L.L.C. (“Waterford”), the 50% general partners of TCA, announced changes in TCA’s accounting related to the timing of recognition of certain liabilities owed to Kerzner and Waterford and their affiliates. The changes are described in the Form 10-K/A and the Form 10-Q/A filed by Waterford on June 5, 2003, and resulted in the restatement by TCA and Waterford of historically reported financial results. As disclosed in our Form 6-K dated May 21, 2003, and Waterford’s filings dated June 5, 2003, the primary effect of the restatement to TCA’s financial results is to change the timing of the recognition of certain liabilities owed to its partners, Kerzner and Waterford, and their affiliates and not to change the aggregate amounts of such liabilities or the amounts actually paid to its partners and their affiliates.

Based on our analysis to date of currently available information, we have determined that the restatement of TCA’s financial statements will not have a material impact on our financial statements for any prior year or in the aggregate and, accordingly, we do not anticipate restating any of our historical financial statements. However, our wholly-owned subsidiary, KINA, will restate certain of its historically reported financial results, as TCA represents a significant portion of the income of this subsidiary. See “Item 3. Key Information, (D) Risk Factors—Trading Cove Associates, a partnership in which we have a 50% interest, recently restated certain historical financial statements, and these restatements could have an impact on us.”

Atlantis Phase III Expansion

On May 27, 2003 we announced that we had entered into an agreement with the Bahamian Government with respect to the “Phase III” expansion on Paradise Island. Our new Heads of Agreement with the Bahamian Government relates to the following projects, which collectively constitute the “Phase III Expansion”:

o        a new hotel with a minimum  of 1,000  rooms to be  located  on the site of the  former  Pirates'  Cove and
         Paradise  Paradise hotel sites and expand  existing  convention  facilities by at least 50,000 square feet
         (the "New Hotel and Facilities");

o        three luxury villas at One&Only Ocean Club (the "Ocean Club Villas");

o        four new  restaurants  and additional  retail space on a seven-acre  site adjacent to the Atlantis  Marina
         (the "Marina Village");

o        expansion of the  water-based  attractions of Atlantis,  including a proposed new dolphin swim  attraction
         (the "Expanded Attractions");

o        the  construction  and  initial  equipping  of a fire and  ambulance  station  on land  owned by us, to be
         operated  and  maintained  by the Bahamian  Government  under a long-term  lease (the "Fire and  Ambulance
         Station");

o        the right to develop,  upon environmental  approval, a new 18-hole golf course on Athol Island, which lies
         just east of Paradise  Island,  in partnership  with an agency to be nominated by the Bahamian  Government
         (the "Athol Golf Course");

o        expansion of the existing  water  production  and  treatment  plant and any other  private  infrastructure
         upgrades or  expansions  necessary to  accommodate  the other  elements of Phase III (the  "Utilities  and
         Infrastructure Expansion"); and

o        an expansion of Harborside by the addition of approximately 120 two-bedroom units on adjacent land ("Harborside Phase II").

The Phase III Expansion is divided into two parts. Phase III-A, as to which the Company is committed to commence initial construction on certain aspects by December 31, 2003, is comprised of the Ocean Club Villas, Marina Village, the Fire and Ambulance Station and Harborside Phase II. Phase III-B, as to which the Company has the option to commence initial construction by December 31, 2004 or determine not to proceed with this part of the expansion, is comprised of the New Hotel and Facilities, the Athol Golf Course, the Expanded Attractions and the Utilities and Infrastructure Expansion. The Company is permitted to move any elements of the expansion from Phase III-B to Phase III-A at its discretion, without prejudice to any eventual decision not to proceed with the remaining elements of Phase III-B.

The Company intends to commence construction of Marina Village and Ocean Club Villas by the end of 2003, with an expected completion by the end of 2004. Harborside Phase II is expected to commence by early 2004 and is expected to be completed by 2005 and is still subject to approval by the board of directors of Starwood. These projects are expected to cost approximately $100 million. If we elect to proceed with Phase III-B, construction of Phase III-B, which constitutes the largest portion of the Phase III Expansion and includes the New Hotel and Facilities, the Athol Golf Course, the Expanded Attractions and the Utilities and Instrastructure Expansion, is expected to commence in late 2004 and be completed by Christmas 2006. Phase III-B is expected to cost approximately $500 million.

A complete description of the Heads of Agreement can be found in “Item 4. Information on the Company, (B) Business Overview—Certain Matters Affecting Our Bahamian Operations—Heads of Agreement.”

New Havana Project

We are currently finalizing discussions to manage Hotel Saratoga, a 100-room hotel currently under renovation in Havana, Cuba, which we expect will open during the first quarter of 2004. Pursuant to a non-binding memorandum of understanding, we would assist in the design and renovation of the hotel. In addition, we would manage the completed hotel for a term of 15 years and we would have the option for two five-year extensions.  The memorandum of understanding currently contemplates our providing to the owners of Hotel Saratoga loans or other credit support of up to $10.5 million. This transaction is subject to a number of conditions, including the execution of definitive documentation and obtaining governmental concessions and approvals, and may not be completed. If we do reach final agreement, the final terms of each transaction may materially differ from the descriptions provided herein.

(B) Business Overview

We are the developer, owner and operator of Atlantis, Paradise Island, a 2,317-room island destination resort complex in The Bahamas, and a leading developer and operator of luxury resort hotels and gaming entertainment properties worldwide. Atlantis, our flagship property, is a premier destination resort property.

Our gaming business is focused on owning, developing or managing casino properties in attractive markets where we can capitalize on our development and operating expertise. We developed Mohegan Sun in Uncasville, Connecticut, which is currently operated by and owned by MTGA. Following the completion of a major expansion in June 2002, Mohegan Sun is among the largest and most profitable casinos in the world.

Our luxury resort hotel business consists of a collection of premier properties that primarily operate in the five-star, deluxe end of the resort market in The Bahamas, Mauritius, Dubai, the Maldives and Mexico under the One&Only brand.

^{The Properties}

Atlantis, Paradise Island

Our flagship property is Atlantis, a 2,317-room ocean-themed resort and casino located on Paradise Island, The Bahamas. Since acquiring the property in 1994, we have invested approximately $1.0 billion to create a unique destination casino resort that caters to multiple segments of the resort and casino gaming markets. The property features a 100,000 square foot entertainment complex that includes the largest casino in the Caribbean market, an 88,000 square-foot convention facility and 30,000 square feet of retail space. Atlantis celebrates the wonders of the sea and is inspired by the myth of the lost continent of Atlantis. The ocean-themed environment of Atlantis includes:

    o    three interconnected hotel towers, the Beach, Coral and Royal Towers, built around a 7-acre lagoon;

    o    a 34-acre  waterscape  which features the world's  largest open air marine  habitat,  showcasing  over 200
         species of marine life, waterfalls, lagoons and adventure walks;

    o    "The Dig," an area through  which  visitors can walk  surrounded by sharks,  numerous  species of tropical
         fish, sea turtles, stingrays and other marine life;

    o    several  thrill  waterslides,  including the Mayan Temple slide,  which propels  guests through an acrylic
         tube in a shark-infested tank;

    o    the largest casino in the Caribbean market;

    o    a 63-slip,  full-service  Marina at  Atlantis,  which  enjoys  some of the  highest  docking  rates in the
         Caribbean market and can accommodate yachts up to 200 feet in length; and

    o    Harborside  at Atlantis,  a timeshare  project  located  adjacent to Atlantis,  developed  through a joint
         venture with a subsidiary of Starwood.

We acquired the property in May 1994 for $125.0 million and redeveloped the property into an ocean-themed destination resort through an initial $140.0 million capital expenditure program. The property achieved an average occupancy and average daily room rate of 85% and $122, respectively, in 1995, a substantial increase from the 62% and $95, respectively, achieved in 1993 under previous management. Seeking to capitalize on the early success of Atlantis, we began construction of an approximate $640.0 million expansion of the property in 1997. This major expansion was completed in December 1998 and effectively doubled the size of Atlantis. The 1998 expansion included a 1,200-room hotel, a new 100,000 square foot entertainment complex that includes a casino containing approximately 1,000 slot machines and 80 table games, a new marina, and an expansion of the ocean-themed environment. During 1999, we completed several additional development projects at Atlantis, including the addition of 30,000 square feet of new retail and restaurant space, the conversion of a previously existing 30,000 square foot casino space into a convention center and the construction of a sports center, including an 18-hole Tom Fazio-designed putting course and a tennis center.

During the second half of 2000, we completed an extensive capital expenditure program of approximately $20.0 million at Atlantis’ Beach Tower. This program included the renovation of all of the Beach Tower’s 425 rooms and improvements to certain public spaces. During 2001, we completed a major capital expenditure program of approximately $20.0 million to complete renovations at the Ocean Wing of Atlantis’ Coral Towers. This included the renovation of approximately 400 rooms, including improvements to certain public spaces.

In June 2003 we announced plans to expand the Atlantis resort to capitalize on the demand for rooms and the strength of Atlantis’ brand. We currently own approximately 514 acres on Paradise Island, including approximately 95 acres of undeveloped land. The Phase III Expansion includes plans for a new hotel with a minimum of 1,000 rooms to be located on the site of the former Pirates’ Cove and Paradise Paradise hotel sites and an expansion of existing convention facilities by at least 50,000 square feet. The Phase III Expansion also include plans for an expansion of the existing undeveloped land that surrounds the Marina at Atlantis, which will include additional retail shops and food and beverage facilities that will add to the overall attractiveness of Atlantis, as well as an expansion of our water-based attractions at Atlantis. See “Item 4. Information on the Company, (A) History and Development of the Company—Recent Developments-Atlantis Phase III Expansion” for more details regarding the Phase III Expansion.

To add to our product mix at Atlantis, we developed Harborside, a timeshare project adjacent to Atlantis, through a joint venture with a subsidiary of Starwood. As part of the joint venture agreement, Starwood contributed cash and we contributed land, based on the number of units to be developed. The first phase of the project was completed in February 2001 and consisted of 82 two-bedroom units. We began selling the units in May 2000 and have sold approximately 70% of the units through March 31, 2003. In August 2002, Harborside was closed to repair water damage primarily resulting from 2001‘s Hurricane Michelle. During the fourth quarter of 2002, these repairs were completed and the resort reopened in December 2002. During the temporary closure, Harborside’s guests were moved to Atlantis. Our share of construction remediation costs was $6.9 million. This loss has not been reduced by any potential insurance recovery, but Harborside has filed a claim with its insurers, which is presently under negotiation. Should Harborside receive a related insurance recovery in the future, we would partially offset this loss. As discussed above in “(A) History and Development of the Company-Recent Developments-Atlantis Phase III Expansion,” we intend to commence our second phase of timeshare development by early 2004 with an expected completion by 2005. This expansion is still subject to approval by the board of directors of Starwood.

Through certain Bahamian subsidiaries (the “Bahamian Operations”), we own approximately 514 acres or almost 70% of Paradise Island, on some of which we own and operate Atlantis. We also own and operate One&Only Ocean Club, a high-end luxury resort hotel, as well as the Ocean Club Golf Course. Through our Bahamian Operations, we also own and operate shops, restaurants, bars and lounges, tennis courts and other resort facilities on Paradise Island, as well as roads and other land improvements on Paradise Island and a water and sewage system which serves, at stated charges, substantially all facilities on Paradise Island, including non-affiliated customers.

Paradise Island is easily accessible by air from the eastern U.S. and has an extensive infrastructure. The majority of patrons at our resorts on Paradise Island arrive through Nassau International Airport located on New Providence Island. This airport is served by several carriers offering scheduled jet service from New York, Atlanta, Charlotte, Toronto, Miami, Washington D.C. and other cities. Ground transportation is facilitated by two bridges linking Paradise Island and New Providence Island.

Mohegan Sun

Our gaming business is focused on owning, developing or managing casino properties in attractive markets where we believe we can capitalize on our development and operating expertise. We own a 50% interest in, and are a managing partner of, Trading Cove Associates, a Connecticut general partnership that developed and initially managed Mohegan Sun, a casino and entertainment complex in Uncasville, Connecticut. TCA managed Mohegan Sun from its opening in October 1996 to December 31, 1999 pursuant to a Management Agreement from which TCA earned management fees based on a percentage of Mohegan Sun’s earnings after depreciation and interest.

In 1998, the MTGA, an instrumentality of the Mohegan Tribe, appointed TCA to develop the $1.0 billion “Project Sunburst” expansion of Mohegan Sun discussed below for a development fee of $14.0 million. In addition, TCA and the Mohegan Tribe entered into the Relinquishment Agreement whereby it was agreed that effective January 1, 2000, TCA would turn over management of Mohegan Sun to the Mohegan Tribe. Pursuant to the Relinquishment Agreement, the Management Agreement was terminated and, commencing January 1, 2000, TCA receives annual payments of five percent of the gross revenues of Mohegan Sun for a 15-year period. The relinquishment fees pursuant to the Relinquishment Agreement (“Relinquishment Fees”) are divided into senior and junior relinquishment payments, which equal 5.0% of “Revenues.” Revenues are generally defined as gross gaming revenues (other than Class II gaming revenue, i.e. bingo) and all other facility revenues, including hotel revenues, food and beverage sales, parking, ticket revenues and other fees or receipts from the convention/events center generated by Mohegan Sun, including the Project Sunburst expansion described below. Revenues will exclude any revenues generated by any other future expansion of the Mohegan Sun. TCA’s right to receive the Relinquishment Fees is junior to certain payments by the MTGA to the Mohegan Tribe and holders of its indebtedness. The senior and junior Relinquishment Fees from the MTGA to TCA rank behind all of the MTGA’s obligations to pay certain minimum priority distributions to the Mohegan Tribe and all of the MTGA’s existing and future senior secured indebtedness. The junior fees also rank behind all unsecured indebtedness.

For seven years beginning January 1, 2000, TCA pays us the first $5.0 million of the Relinquishment Fees it receives each year (after the return of certain expenses and capital contributions) pursuant to the Relinquishment Agreement as a priority payment prior to making pro rata distributions to its partners. The payments received by TCA in 2001 and 2000 under the Relinquishment Agreement contributed less income than was previously earned under the Management Agreement. However, the Relinquishment Agreement will expire at the end of 2014, whereas the Management Agreement was to expire at the end of 2003. In addition, fees received pursuant to the Relinquishment Agreement have increased since 2000 as a result of increasing gross revenues of Mohegan Sun.

We are one of two managing partners of TCA. All decisions of the managing partners require the concurrence of us and Waterford, the other managing partner. In the event of deadlock there are mutual buy-out provisions. TCA’s partnership agreement will terminate on December 31, 2040, or earlier in certain circumstances, in accordance with its terms. See “Item 4. Information on the Company, (A) History and Development of the Company—Recent Developments—TCA Restatement” for additional information relating to TCA.

Mohegan Sun incorporates its historical Native American theme through unique architectural features and the use of natural design elements such as timber, stone and water. Mohegan Sun is located on 240 acres and currently features the 176,500 square foot Casino of the Earth and the 119,000 square foot Casino of the Sky, which combined have approximately 6,200 slot machines, 260 table games, 36 poker tables and various other amenities, and a recently opened 34-story, 1,200-room luxury hotel.

Mohegan Sun is located approximately one-mile from the interchange of Interstate 395 and Connecticut Route 2A in Uncasville, Connecticut and is within 150 miles of approximately 22 million adults. Mohegan Sun spent $40.0 million for infrastructure improvements providing direct highway access to the property from Boston, Providence and New York.

We oversaw the recently completed $1.0 billion “Project Sunburst” expansion of Mohegan Sun through TCA. This expansion included the Casino of the Sky, a 10,000-seat arena, a 300-seat cabaret, and specialty retail areas and restaurants that opened in September 2001. The expansion also included a 100,000 square foot convention center and a 34-story, 1,200-room luxury hotel that opened with 734 rooms in April 2002. Mohegan Sun opened the remaining rooms in phases through June 2002 and also added an additional 2,700 parking spaces in June 2002.

We believe the Connecticut gaming market has been extremely strong and that Mohegan Sun’s unique design and superior location have helped it to become one of the most profitable casinos in the U.S. Since opening, gross revenues at the property have grown to $1.2 billion for calendar 2002, exceeding the gross revenues of each casino in Atlantic City.

One&Only Resorts

Our luxury resort hotel business consists of a collection of premier resort properties that primarily operate in the five-star, deluxe end of the market. In December 2002, we introduced our One&Only brand for certain of our luxury resort properties. We are now marketing five of our properties under our One&Only brand. The completion of the expansion of Palmilla Resort, which is expected by early 2004, will add a sixth One&Only property to our portfolio. We expect that Reethi Rah, a 100-room luxury resort in the Maldives that we expect to open by the end of 2004, together with other similar luxury resorts we develop or acquire in the future, also will operate under our One&Only brand. We do not currently plan on using the brand for Sugar Beach Resort, La Pirogue Hotel & Casino or Le Coco Beach Hotel. We value outstanding design, unusual locations and genuine hospitality at our resorts and do not believe in applying simple “formulas.” We believe that all of our properties, most of which have been constructed or renovated within the last three years, offer guests a singularly distinctive experience.

Located on what we believe to be some of the leading beach locations in the world, these resorts are architecturally unique and have been developed to blend into their natural environment. Our luxury resort business currently consists of five properties in Mauritius (two of which, Le Saint Géran and Le Touessrok, are One&Only properties), One&Only Royal Mirage in Dubai, One&Only Kanuhura in the Maldives and One&Only Ocean Club on Paradise Island, The Bahamas. Upon completion, Palmilla Resort near Cabo San Lucas, Mexico will be a One&Only resort. We expect to leverage our existing management expertise and business infrastructure and continue to grow this segment of our business in the Caribbean, the Indian Ocean, The Bahamas, the Middle East, Africa and Southeast Asia to obtain additional management contracts, which may also include strategic equity investments and debt financing.

By the end of 2002, we were managing approximately 2,000 rooms. As part of our strategy, we sometimes take ownership positions in the properties that we operate. As of May 31, 2003 the properties we operate are as follows:

                                                                             Percentage        Number of
                          Property                         Location           Ownership          Rooms
         One&Only Ocean Club                             The Bahamas            100.0%             106
         One&Only Le Saint Geran(1)                       Mauritius             20.4%              163
         One&Only Le Touessrok(1)                         Mauritius             20.4%              200
         One&Only Royal Mirage                              Dubai                --                466
         One&Only Kanuhura                                 Maldives             20.0%              100
         One&Only Palmilla Resort(2)                        Mexico              50.0%              115
         Reethi Rah(2)                                     Maldives              --                100
         Sugar Beach Resort(1)                            Mauritius             20.4%              238
         La Pirogue Hotel & Casino(1)                     Mauritius             20.4%              248
         Le Coco Beach Hotel(1)                           Mauritius             20.4%              333

__________

(1)      Interest owned through Sun Resorts Limited.

(2)      Under redevelopment (Palmilla Resort) or development (Reethi Rah) and to be marketed under the One&Only
brand.

One&Only Ocean Club

We own and operate One&Only Ocean Club, a high-end luxury resort hotel with 106 rooms and suites located on Paradise Island, The Bahamas. In October 2000, we completed an addition to One&Only Ocean Club that comprised 50 rooms, including 10 deluxe suites, a gourmet beachfront restaurant, Dune, operated by Jean-Georges Vongerichten and significant enhancements to the existing pool and garden areas. One&Only Ocean Club also features a 7,159 yard championship golf course designed by Tom Weiskopf and a clubhouse with 121 luxury oceanfront home sites situated around the golf course. During May 2003, One&Only Ocean Club was named best luxury resort in the Atlantic/Caribbean region by Departures, the luxury lifestyle magazine published exclusively for American Express Platinum and Centurion card members.

As of December 31, 2002, we have closed on 111 of the 121 available home sites and realized approximately $118.4 million in gross proceeds from such sales. In addition, we are developing four homes for resale on lots owned by the Company. The property achieved an average occupancy of 68% and an average daily room rate of $695 for the twelve months ended December 31, 2002, compared to 64% and $610 for the same period in 2001.

We intend to develop three high-end luxury rental villas adjacent to One&Only Ocean Club, with construction expected to commence by the end of 2003. This project is expected to be completed by the end of 2004.

Indian Ocean

In Mauritius, we manage and own interests in five beach resorts:

      • the 163-room One&Only Le Saint Geran (renovated in 2000);

      • the 200-room One&Only Le Touessrok (renovated in 2002);

      • the 238-room Sugar Beach Resort;

      • the 248-room La Pirogue; and

      • the 333-room Le Coco Beach.

The Mauritius properties cater primarily to luxury and middle-market tourists from Europe and southern Africa. One&Only Le Saint Géran and One&Only Le Touessrok offer deluxe five-star accommodations and we believe that such properties are among the finest beach resorts in the world. One&Only Le Saint Géran and One&Only Le Touessrok have been rated among the world’s finest leisure hotels by Condé Nast Traveler magazine. One&Only Le Saint Géran, which is classical in style, also was voted “Hotel of the Year 2002” by Tatler magazine in the United Kingdom. In December 2002, we completed a major redevelopment of One&Only Le Touessrok. The architecture of the new resort is a blend of a natural island-style and contemporary design. The resort includes new restaurants, a new spa, a new golf course (expected to open by the end of 2003) and other amenities to enhance its position in the luxury resort market.

Mauritius’ tourist industry is mainly comprised of visitors from Great Britain, Germany, France, Italy and South Africa. Scheduled air service to and from Mauritius is provided through scheduled flights on numerous airlines including Air France, British Airways, Cathay Pacific, Singapore Airlines, Air India, Air Mauritius, Condor and South African Airlines.

In the Maldives, located 600 miles southwest of the southern tip of India, we manage and own an interest in One&Only Kanuhura, a 100-room luxury resort located on Kanuhura Island. In August 2001, we acquired 25% of the equity of One&Only Kanuhura for approximately $3.8 million. As of December 31, 2002, we had provided debt financing to One&Only Kanuhura of $4.5 million, excluding accrued interest. One&Only Kanuhura was selected as “Hideaway of the Year 2001” by readers of Hideaway magazine. See Note 15 “Related Party Transactions-Extension of Mauritius Management Contracts” to the consolidated financial statements.

We have also entered into management and development agreements for a 100-room luxury resort in the Maldives that we expect to open in 2004. The management and development agreements related to this property are co-terminus with the owner’s lease, which expires in 2020. This new five-star resort will occupy the site where a small resort known as the Reethi Rah is currently located. As part of this development, we have committed to provide certain financing arrangements to the current owner of Reethi Rah in an aggregate principal amount of up to $47.0 million to ensure completion of the new resort and provide for working capital on a standby basis.

We manage these resorts under long-term management contracts and receive management fees based upon a percentage of the revenues and gross operating profits of these properties. In December 2002, we entered into an agreement with SRL to form a new management company for the purpose of, among other things, managing the five properties owned by SRL in Mauritius and One&Only Kanuhura in the Maldives and securing an extension to our management contracts in Mauritius from 2008 until 2023. Effective January 1, 2003, SRL owns 20% of the new management company, known as One&Only (Indian Ocean) Management Limited, and we own the remaining 80%. Subject to certain conditions, SRL’s ownership interest will increase incrementally through 2009, at which time it will own 50% of the new management company. Subject to certain conditions, SRL has a right of first refusal to participate equally with us in any development project in specified Indian Ocean territories. In connection with this transaction, we transferred to the newly formed management company all of our Mauritius management agreements and the Kanuhura management agreement and SRL purchased 20% of our debt and equity interests in One&Only Kanuhura. At SRL’s option, subject to certain conditions, the Reethi Rah management agreement may also be contributed to the new management company.

Middle East

In the Middle East, we currently manage One&Only Royal Mirage in Dubai, a luxury 466-room hotel that opened in August 1999. Under the terms of the management agreement, which expires in 2019, we receive management fees based on a percentage of the revenues and gross operating profits of the property. We assisted in the expansion of One&Only Royal Mirage, which opened at the end of 2002. The expansion of the property features 225 new luxury rooms, including a new 50-room ultra high-end boutique hotel.

Mexico

On September 12, 2002, we purchased a 50% ownership interest in the 115-room One&Only Palmilla Resort, a deluxe five-star property located near Cabo San Lucas in Baja, Mexico for approximately $40.8 million, including transaction costs. One&Only Palmilla Resort is located on an outstanding site with the most extensive beach coverage of any of the leading hotels in the destination. In connection with the purchase, we entered into long-term management and development agreements related to the property that will expire in 2022. The acquisition was funded through a combination of cash on hand and drawings under our revolving credit facility. In April 2003, One&Only Palmilla Resort commenced an approximate $80.0 million expansion project that will increase the room count to 172 rooms and significantly upgrade the amenities and public areas offered by the resort. The expansion is expected to be completed by early 2004 (subject to obtaining all necessary local permits and approvals) and will be financed by One&Only Palmilla Resort through local project financing, which is supported by a $38.0 million guarantee from Kerzner.

Internet Gaming

During 2001, we developed an Internet gaming site through our subsidiary, Kerzner Interactive Limited (formerly SunOnline Limited). Costs incurred during 2001 in connection with Internet gaming are included in pre-opening expenses in the accompanying consolidated statements of operations. Since January 1, 2002, revenues and cost and expenses related to the operations of Kerzner Interactive Limited are included in the accompanying consolidated statements of operations.

In February 2002, we agreed to sell 50% of Kerzner Interactive Limited to Station Casinos, Inc. (“Station”), who paid us a non-refundable deposit of $4.5 million in July 2002. Subsequently, this agreement was restructured and Station received an option through early January 2003 to purchase 50% of the operation in consideration for the $4.5 million previously received. The option payment is accounted for as a deposit and at December 31, 2002 is included in accounts payable (and hence accrued liabilities) in the accompanying consolidated financial statements. During 2002, several countries made it increasingly difficult for their citizens to gamble on-line. Further, as a licensed operator in the Isle of Man, we imposed numerous restrictions and controls on how we operated this business, which had the effect of making it difficult for us to compete against companies operating in a less rigorous manner. As a result, we concluded that this business would not be economically viable in the short to medium term. We discontinued the operations of Kerzner Interactive Limited during the first quarter of 2003 and the Company and Station mutually agreed to terminate this transaction. Losses and closure costs in 2003 will largely be offset by the recognition of income of the $4.5 million option consideration and accounted for as discontinued operations in the Company’s 2003 Consolidated Statement of Operations.

Trading Cove New York

Through a wholly owned subsidiary, we own a 50% interest in, and are a managing member of, Trading Cove New York, LLC (“TCNY”), a Delaware limited liability company. In March 2001, TCNY entered into a development services agreement (the “Development Agreement”) with the Stockbridge-Munsee Band of Mohican Indians (the “Stockbridge-Munsee Tribe”) for the development of a casino project (the “Project”) in the Catskill region of the State of New York (for purposes of this section, the “State”). The Development Agreement was amended and restated in February 2002. The Stockbridge-Munsee Tribe does not currently have reservation land in the State but is federally recognized and operates a casino on its reservation in Wisconsin. The Stockbridge-Munsee Tribe has land claim litigation pending in the U.S. District Court for the Northern District of New York (the “Court”) against the State to recover lands within the state that it alleges were wrongfully taken from the tribe. The Court has stayed the litigation but in February 2003 the Stockbridge-Munsee Tribe filed a motion with the Court to partially lift the stay in an effort to advance the litigation. This motion is pending.

Pursuant to the Development Agreement, as amended, TCNY would provide preliminary funding, certain financing and exclusive development services to the Stockbridge-Munsee Tribe in conjunction with the Project. If the Project is approved, TCNY will earn a development fee in an amount equal to five percent of gross revenues as compensation for these services (subject to certain priorities), as defined in the Development Agreement, beginning with the opening of the Project and continuing for a period of 20 years. TCNY has secured land and/or options on approximately 400 acres of property in the Town of Thompson, Sullivan County (the “County”), of which approximately 333 acres are currently designated for the Project. In February 2002, the Stockbridge-Munsee Tribe filed a Land to Trust Application with the U.S. Department of the Interior, Bureau of Indian Affairs (the “BIA”), for the Project site properties. Should the BIA approve the Land to Trust Application and the Stockbridge-Munsee Tribe obtain other required approvals, the land could be taken into trust by the Federal Government on behalf of the Stockbridge-Munsee Tribe for the purpose of conducting Class III Gaming.

In October 2001, the State enacted legislation authorizing up to three Class III Native American casinos in Sullivan and Ulster counties and three Native American casinos in western New York pursuant to Tribal State Gaming Compacts to be entered into by the State and applicable Native American tribes.

In January 2002, the Stockbridge-Munsee Tribe entered into an agreement with the County pursuant to which the Stockbridge-Munsee Tribe will make certain payments to the County to mitigate any potential impacts the Project may have on the County and other local government subdivisions within the County. The payments will not commence until after the opening of the Project.

The Project is contingent upon the receipt of numerous federal, state and local approvals to be obtained by the Stockbridge-Munsee Tribe, including the execution of a Class III Gaming Compact with the State, which approvals are beyond the control of TCNY. As of January 31, 2003, the State has yet to enter into negotiations with the Stockbridge-Munsee Tribe to settle the tribe’s land claim nor has the State engaged in compact negotiations with the tribe to establish a casino in the State. We can make no representation as to whether any of the required approvals will be obtained by the Stockbridge-Munsee Tribe or whether the Project will be completed.

We are one of two managing members of TCNY. All decisions of the managing members require the concurrence of us and Waterford Development New York, LLC, the other managing member. In the event of deadlock there are mutual buy-out provisions.

The Company’s investment in TCNY is reflected within investment in associated company in the accompanying consolidated balance sheets. As of December 31, 2002, we have funded $3.8 million to TCNY.

Florida

Our indirect wholly-owned subsidiary, Kerzner International Resorts, Inc., a Florida corporation, together with its subsidiaries based in Florida, provides general and administrative support services, marketing services, travel reservations and wholesale tour services for our Atlantis and One&Only operations. To a much lesser extent, they also provide travel reservation services for Harborside and other unaffiliated resort properties in The Bahamas.

France

Through an indirect wholly owned subsidiary, we own a tour operator company in France, Solea Vacances SA. Solea Vacances SA primarily services patrons in France, and, among other things, offers reservations services for travel to the five resorts in Mauritius, One&Only Royal Mirage Hotel in Dubai and One&Only Kanuhura in the Maldives.

England

We have agreed to acquire from LCI for $2.0 million a gaming license, including property located in the town center of Northampton, England. The town of Northampton is north of London and approximately 1.3 million people live within 25 miles of the town center. The transfer of the license is subject to approval by the British Gaming Board and the Northampton Borough Council. We are in the process of seeking these approvals and intend to develop a new 30,000 square foot gaming facility.

^{Seasonality and Weather}

Our business has historically been seasonal, with the largest number of patrons visiting The Bahamas during late December and the first three months of the calendar year. Accordingly, our revenues and operating profits have historically been higher during the first quarter than in successive quarters. In addition, The Bahamas, Mauritius and Mexico are subject to tropical weather and storms, which, if severe, can interrupt the normal operations and affect tourism. Similarly, inclement weather can adversely affect the revenues that we derive from Mohegan Sun as the principal means of transportation to this property is by automobile or bus. Higher revenues and earnings are typically realized from the Connecticut operations during the second and third quarters of the year.

In September 1999, Paradise Island was affected by Hurricane Floyd, a hurricane rated by the United States National Weather Service as a category five, its highest rating. The Paradise Island properties suffered approximately $45.0 million of property damage, for which remedial work was completed by year-end 1999, and we received a number of customer cancellations. At Atlantis, 230 rooms were taken out of service for three months and One&Only Ocean Club was closed for approximately three and one half months. We were fully insured for property loss and business interruption. Hurricane Floyd was the first significant hurricane to negatively impact Paradise Island in over thirty years.

In November 2001, Hurricane Michelle moved through The Bahamas. Although minimal disruption in our operations was caused by the storm, our properties (other than Harborside, which was closed from August 2002 through December 2002 due to water damage resulting primarily from Hurricane Michelle, see “Item 4. Information on the Company, (B) Business Overview”) suffered approximately $28.3 million in damage that was substantially covered by our insurance policies. See “Item 3. Key Information, (D) Risk Factors—Our business is seasonal and severe weather conditions can adversely affect our business, results of operations or financial condition, or further increase our insurance premiums.”

As a result of a more difficult insurance market, the fact that we have a concentration of assets in one location and that our properties are subject to the impact of hurricanes, we have experienced substantial increases in our insurance premiums. See “Item 3. Key Information, (D) Risk Factors - Our insurance premiums and deductibles have increased.”

^{Insurance Arrangements}

In May 2002 we formed Aberdeen Insurance (Bermuda) Ltd. (“Aberdeen”), a wholly owned captive insurance company located in Bermuda. Aberdeen has been registered by the Bermuda Monetary Authority under The Insurance Act of 1978 as a Class 1 Insurer, and will be utilized by the Company as a vehicle through which the Company will place its “all risk” property and business interruption insurance policy, including windstorm, for the Atlantis and Ocean Club properties for the 2003 Policy Year, commencing June 1, 2003. Aberdeen is expected to provide the Company with access to the reinsurance market at reduced administrative costs, however all risks in excess of the Company’s $15.0 million per occurrence/$30.0 million annual aggregate (which is in turn in excess of an underlying operating company deductible of $50,000 for each and every loss) for the 2003 Policy Year will continue to be 100% reinsured through the reinsurance market, thereby leaving Aberdeen with zero retained risk.

We believe our current insurance coverage represents optimum market availability at commercially available pricing.

Competition

General

The resort and casino industries are highly competitive. Our destination casino resorts compete with other resorts, hotels and casinos, including land-based casinos, riverboat, dockside and cruise ship on-board casinos and other forms of gaming as well as with other forms of entertainment. Our luxury resort hotels compete with other resorts and hotels in markets in which we conduct business. We believe the ability to compete effectively in these industries is based on a number of factors, including the scope, quality, location and accessibility of facilities, the effectiveness of marketing efforts, customer service, the relative convenience of available transportation, service and the quality and price of rooms, food and beverages, convention facilities and entertainment.

Paradise Island

Our Paradise Island operations primarily compete with warm weather resort destinations, including Walt Disney World and other Orlando area attractions, as well as cruise ships and other hotels and resorts on Paradise Island, New Providence, Grand Bahama Island and the neighboring Caribbean islands. We estimate that there are approximately 8,500 hotel rooms on Paradise Island and New Providence combined, of which approximately 3,500 are located on Paradise Island, including 2,423 in hotels owned and operated by us. The Wyndham Nassau Resort, our primary competitor in The Bahamas, is an 850-room resort and casino. One&Only Ocean Club will compete with a new Four Seasons property opening in The Bahamas.

We also compete with The Resort and Casino at Bahamia (formerly the Princess Casino and Hotel) and Our Lucaya, both located on Grand Bahama Island, approximately 40 minutes by air from Paradise Island. The Resort and Casino at Bahamia includes a 20,000 square foot casino, a 965-room hotel, restaurants and other leisure facilities. Our Lucaya has 1,260 rooms and a new 30,000 square foot casino, which is expected to open in the second half of 2003.

Mohegan Sun

The Connecticut market is the fourth largest gaming market in the U.S., with approximately 22 million adults within 150 miles of Mohegan Sun. Mohegan Sun and Foxwoods Resort and Casino at present are the only two casinos in the Connecticut market. Foxwoods now has approximately 6,700 slot machines and, for the twelve months ended December 31, 2002, reported gross revenues of approximately $1.2 billion. The Oneida Nation operates a casino near Syracuse, New York and other Native American tribes in the states of New York, Rhode Island, Massachusetts and Connecticut are seeking approvals to establish gaming operations which would further increase competition, particularly for day-trip patrons. Mohegan Sun also competes with Atlantic City and several small Native American gaming facilities throughout the northeastern U.S.

In Connecticut, under the tribal-state compacts between the State of Connecticut (for purposes of this section, the “State”) and the Mohegan Tribe and Foxwoods Resort and Casino. Mohegan Sun is subject to a 25% gaming fee on slot revenues payable to the State so long as the State does not issue any further licenses for gaming operations with slot machines or other commercial casino games (other than to a Native American tribe on Native American land). In June 2002, the Federal Bureau of Indian Affairs (“BIA”) issued a determination concerning the applications of two Connecticut bands of Eastern Pequot Indians, approving the federal recognition of the two bands as one federally recognized tribe known as the “Historic Eastern Pequot Tribe.” The State and a number of Connecticut municipalities have filed an appeal of the BIA determination to the Department of the Interior, Board of Indian Appeals, which appeal is pending. The ultimate decision of the Department of the Interior may be appealed to the Federal courts. In addition, three other Indian groups in the Connecticut gaming market have filed applications with the BIA for federal recognition as Indian tribes: the Golden Hill Paugussetts of Trumbull, the Schaghticoke tribe of Kent and a Massachusetts tribe known as the Nipmucs. Each of these groups as well as the Historic Eastern Pequot Tribe has expressed interest in obtaining trust lands for the purpose of conducting gaming in Connecticut.

In March 2003, legislation was introduced in Massachusetts to authorize commercialized slot machine operations at three locations within the State to be determined.

Indian Ocean

In the Indian Ocean market, we primarily compete with other resorts on the islands in which we operate as well as other locations offering vacations to tourists from Europe, southern Africa and parts of Asia. SRL owns five major hotels in Mauritius. In the luxury end of the Mauritian hotels market, SRL owns two of the seven luxury hotels and offers a total of 363 of the approximately 1,000 luxury rooms in Mauritius. SRL faces more competition with the middle-market La Pirogue, Sugar Beach and Le Coco Beach hotels. We believe that the redevelopment of One&Only Le Touessrok has enhanced its position in the luxury resort market.

Maldives

One&Only Kanuhura, a five-star resort, competes with other resorts in the Maldives as well as other locations offering vacations to tourists from Europe, Southern Africa, and parts of Asia. One&Only Kanuhura primarily competes with the four other five-star resorts in the Maldives. In this high-end market, One&Only Kanuhura offers about 21% of the 469 available rooms.

Dubai

The premium leisure market in Dubai is mainly centered on the exclusive Jumeira Beach “golden mile,” which currently is host to seven competing five-star hotels. Each hotel has its own theme and particular leisure market niche. For example, One&Only Royal Mirage, which has a distinctive local Arabian architecture and theme, focuses on the higher spending leisure traveler, the 600-room Jumeira Beach Hotel focuses on the family and group incentive market, and the 500-room Royal Meridien focuses on the middle spending leisure holiday market. One&Only Royal Mirage’s existing 466 rooms account for over 15% of the beach rooms in Dubai. In addition, the first phase of a new property called Medinat Resort is expected to open in September 2003. The first phase will consist of 300 rooms at the five star level and will compete directly with One&Only Royal Mirage. The Medinat Resort is expected to increase to 900 rooms.

Mexico

In Mexico, we recently entered the luxury end of the market with our ownership and management interests in One&Only Palmilla Resort, a deluxe five-star resort located near Cabo San Lucas in Baja, Mexico. The upscale four- and five-star resorts in Los Cabos, the tourism corridor between San Jose Del Cabo and Cabo San Lucas, account for approximately 2,500 rooms out of the total inventory of approximately 8,500 rooms. The market is mainly composed of incentive group travelers, golfers, romance, family and high-end vacationers. Three resorts cater to the five-star market, One&Only Palmilla Resort, Las Ventanas al Paraiso and Esperanza. Of these, only One&Only Palmilla Resort offers its own golf course, which we believe gives us a potential competitive advantage. In April 2003, One&Only Palmilla Resort commenced an approximate $80.0 million expansion project that will increase the room count to 172 rooms and significantly upgrade the amenities and public areas offered by the resort. The expansion is expected to be completed by early 2004 (subject to obtaining all necessary local permits and approvals). Currently, Las Ventanas al Paraiso leads the market in average occupancy (in the 85% range) and average daily room rates (in excess of $700). The recently opened Esperanza, an Auberge Resorts property, has positioned itself to compete in the luxury end as well.

Outside of Los Cabos, domestic competition comes from the Four Seasons Punta Mita Resort in the Puerto Vallarta area of Mexico, which offers a similar resort and golf experience. Internationally, the Los Cabos resort area competes with Hawaii, California and Arizona.

^{Certain Matters Affecting Our Bahamian Operations}

Airline Arrangements

The majority of patrons at our resorts on Paradise Island arrive through Nassau International Airport located on New Providence Island. This airport is served by several carriers offering scheduled jet service from New York, Atlanta, Charlotte, Toronto, Miami, Washington D.C. and other cities. Ground transportation is facilitated by two bridges linking Paradise Island and New Providence Island.

Union Contract Arrangements

In The Bahamas, as of December 31, 2002, approximately 3,600 of our employees were represented by The Bahamas Hotel, Catering and Allied Workers Union. Kerzner International Bahamas Limited participates in The Bahamas Hotel Employers Association, which represents resort operators in the Paradise Island-New Providence Island area. The association’s existing contract with the union expired January 7, 2003, and a new contract is currently being negotiated. Labor relations in The Bahamas have been unstable at times with occasional work stoppages occurring, not only at Atlantis, but also at publicly run entities such as The Bahamas Electricity Corporation and Bahamas Telecommunications Corporation. As the country’s largest private employer, we are sometimes the target of labor disputes. See “Item 3. Key Information, (D) Risk Factors—Work stoppages and other labor disputes could harm our financial condition and results of operations.”

Casino License

Paradise Enterprises Limited (“PEL”), a subsidiary that is part of our Bahamian operations, is currently licensed to operate the Atlantis Casino under the Bahamian Gaming Act (the “Gaming Act”). In accordance with Bahamian casino licensing requirements, PEL is obligated to have its casino license renewed annually by the Gaming Board. In addition, other than an existing contingent obligation to grant two casino licenses, the Bahamian Government has agreed that it will grant no new casino licenses with respect to gaming operations on Paradise Island or New Providence Island for a period expiring 20 years after the earlier of the date of the substantial completion of the Phase III Expansion or December 31, 2007. See “Item 4. Information on the Company, (A) History and Development of the Company-Recent Developments-Atlantis Phase III Expansion.”

Basic License Fee

Currently, the Gaming Act provides for taxes on casino revenues consisting of an annual basic license fee of $200,000.

Taxes and Fees

The following table summarizes for the periods shown the taxes and fees paid or accrued by our Bahamian operations under the Gaming Act and certain agreements with the Bahamian Government, as described below under “Heads of Agreement” (in thousands of U.S. dollars):

                                                            Year Ended December 31,
                                                          2002       2001       2000
     Casino license fees and win taxes                  $12,040    $10,749    $10,719
     Basic license fees                                     200        200        200
     Total                                              $12,240    $10,949    $10,919

Heads of Agreement

We have an agreement with the Bahamian Government, which is titled Heads of Agreement. This agreement provides us with certain tax incentives in exchange for the Company investing in the expansion of Atlantis. The most significant of these incentives is the casino fee and tax incentives.

We restated our agreement with the Bahamian Government on May 26, 2003, in anticipation of the Atlantis Phase III Expansion. The restated Heads of Agreement maintains the current basic casino tax and fee structure which calls for an annual license fee of $100,000 per thousand square feet of casino space, a minimum annual casino tax of $4.3 million on all gaming win up to $20.0 million, a 12.5% win tax on gaming win between $20.0 million and $120 million and a 10% win tax on gaming win in excess of $120.0 million. Against this, the Company is entitled to a credit of $5.0 million in relation to the annual license fee and a 45% credit against all win tax on gaming win between $20.0 million and $120.0 million. Upon commencement of construction of Phase III-A described in “Item 4. Information on the Company, (A) History and Development of the Company—Recent Developments—Atlantis Phase III Expansion,” the basic tax and fee structure will be amended so that all gaming win in excess of $20.0 million will be subject to a win tax of 10%, and will be effective for a period of 20 years after the earlier of the date of the substantial completion of the Phase III Expansion and December 31, 2007 (such date, the “Relevant Date”). In addition, the $5.0 million credit against the annual license fee shall remain, and the credit against win tax shall become 50% against all win tax on gaming win over $20.0 million. However, the 50% credit will not apply to gaming win in excess of $175 million in any year through 2010 and $200 million in each succeeding year. These credits shall also apply from the commencement of construction of Phase III-A, and shall extend for a period of 11 years from the Relevant Date.

In order to secure the tax incentives described in the preceding paragraph, we are obligated to commence construction on aspects of Phase III-A by December 31, 2003 and commence construction on the balance of Phase III-A by June 30, 2004. In the event that we do not proceed with Phase III-B, there will be a proportionate scaling back of the casino fee and tax incentives.

The Company has agreed to create a minimum of 2,000 new permanent jobs for Bahamians assuming completion of all elements of the Phase III Expansion. The Bahamian Government has also agreed to extend the expiration of the Company’s casino license to the date that is 20 years after the Relevant Date. In addition, other than an existing contingent obligation to grant two casino licenses, the Bahamian Government has agreed that it will grant no new casino licenses with respect to gaming operations on Paradise Island or New Providence Island until 20 years after the Relevant Date. Finally, the Company has also provided certain undertakings that include skills training, community development programs, and to the extent possible, a local stock ownership program for Bahamians.

The Heads of Agreement also provides for an extension of the Company’s joint marketing agreement with the Bahamian Government pursuant to which the Bahamian Government will match the Company’s contribution, up to $4.0 million annually, toward the direct costs related to staging certain marketing events, public relations activities and the production and placement of advertisements in all media to promote the destination and the Company’s Paradise Island properties, including the Phase III Expansion. This joint marketing agreement will expire on December 31, 2007.

This summary is qualified in its entirety by reference to the particular provisions of the Heads of Agreement, which can be found as Exhibit 99(2) to our Form 6-K filed on May 28, 2003.

The Commonwealth of The Bahamas

The Commonwealth of The Bahamas had a population of approximately 300,000 in 2002. The Bahamas includes approximately 700 islands, 29 of which are inhabited, and extends from east of the Florida coast to just north of Cuba and Hispa&ntidle;ola. Over 60% of the population lives on New Providence Island, where Nassau, the capital of The Bahamas, is located. The Bahamas first obtained internal self-government in 1964 and became an independent nation within the British Commonwealth in 1973. The first elections under universal adult suffrage were held in November 1962. The former government was first elected in 1992 and re-elected in March 1997, having succeeded a government that was in power for over 20 years. Most recently, on May 2, 2002, general elections were held and a new government elected, including a new Prime Minister and Deputy Prime Minister. The official language is English.

The currency of The Bahamas has been tied to the U.S. dollar since 1970 with an official exchange rate of U.S. $1.00 equal to 1.00 Bahamian dollar.

The Ministry of Tourism has historically spent over $60.0 million annually to promote The Bahamas.

Sales and Marketing

Our marketing goal is to drive demand direct from the consumer through high profile public relations, publications and special events promotions and advertising. To support our operations in The Bahamas, we maintain an inventory of rooms for distribution through our tour operator, PIV, Inc., an indirect wholly owned subsidiary. For the year ended December 31, 2002, PIV, Inc. generated tour operations revenues of approximately $29.0 million as compared to $26.1 million in 2001. Similarly, our operations in Mauritius, the Maldives and Dubai are supported primarily through our own European marketing offices. In addition, we channel distribution for all of our operations through primary wholesalers in the travel agent community with a favorable commission structure.

We spent approximately $22.9 million in 2002 on sales and marketing for our operations in The Bahamas. Pursuant to the Heads of Agreement described above under “Certain Matters Affecting Our Bahamian Operations—Heads of Agreement,” we receive $4.0 million per year from the Bahamian Government toward the direct costs related to certain marketing events, public relations activities and the production and placement of advertisement in media through December 2007.

Certain Matters Affecting Our Connecticut Operations

Regulation

The Mohegan Tribe is a federally recognized Native American tribe whose federal authorities recognition became effective May 15, 1994. In May 1994, the Mohegan Tribe and the State of Connecticut entered into a gaming compact to authorize and regulate Class III gaming operations (slot machines and table games). Under this tribal-state compact, Mohegan Sun is subject to a 25% gaming fee on slot revenues payable to the State of Connecticut so long as the State does not issue any further licenses for gaming operations with slot machines or other commercial casino games (other than to a Native American tribe on Native American land).

Each of the partners of TCA must be licensed by relevant tribal and state authorities. Each of the partners of TCA has received a gaming registration from the Commissioner of Revenue Services of the State of Connecticut that is renewed annually.

Priority Payments

Pursuant to subcontracts for management services, organization and administrative services and marketing services provided to TCA, prior to January 1, 2000 we received certain priority payments from TCA. Each of these priority payments was paid from TCA’s management fees prior to the pro rata distribution to TCA’s partners of TCA’s profits. For seven years beginning January 1, 2000, TCA pays us the first $5.0 million of the Relinquishment Fees it receives each year (after the return of certain expenses and capital contributions) pursuant to the Relinquishment Agreement as a priority payment prior to making pro rata distributions to its partners.

Waiver of Sovereign Immunity

Pursuant to the Relinquishment Agreement, the Mohegan Tribe has waived sovereign immunity for the purpose of permitting, compelling or enforcing arbitration and has agreed to be sued by TCA in any court of competent jurisdiction for the purpose of compelling arbitration or enforcing any arbitration or judicial award arising out of TCA’s agreement with the Mohegan Tribe. The parties have agreed that all disputes and claims arising out of TCA’s agreement with the Mohegan Tribe or the Mohegan Tribe’s gaming ordinance will be submitted to binding arbitration, which shall be the sole remedy of the parties, and that punitive damages may not be awarded to either party by any arbitrator. The Mohegan Tribe’s waiver of sovereign immunity is limited to enforcement of monetary damages from undistributed or future net revenues of Mohegan Sun (or, under certain conditions, net revenues of other gaming operations of the Mohegan Tribe). Funds earned and paid to the Mohegan Tribe as the Mohegan Tribe’s share of net revenues prior to any judgment or award are not subject to the waiver and would not be available for levy pursuant to any judgment or award.

^{New Jersey Gaming Regulation}

As a result of the Resorts Atlantic City Sale, effective April 25, 2001, we no longer operate a casino in Atlantic City. However, as the lessor of real estate in Atlantic City to Colony, KINA is required to maintain a casino service industry license.

^{Environmental Matters}

We are subject to federal, state and local laws and regulations that:

• govern activities or operations that may have adverse environmental effects, such as discharges to air and water as well as handling and disposal practices for solid and hazardous wastes, and

• impose liability for the costs of cleaning up, and certain damages resulting from, past spills, disposals or other releases of hazardous substances.

From time to time, our operations have resulted or may result in noncompliance with applicable environmental laws. However, past noncompliance has not had, and we believe that future noncompliance, if any, would not have, a material adverse effect on our financial conditions or results of operations.

The Mohegan Sun site was formerly occupied by UNC, a naval products manufacturer of, among other things, nuclear reactor fuel components. UNC’s facility was officially decommissioned on June 8, 1994, when the Nuclear Regulatory Commission confirmed that all licensable quantities of special nuclear material had been removed from the Mohegan Sun site and that any residual special nuclear material contamination was remediated in accordance with the Nuclear Regulatory Commission-approved decommissioning plan.

From 1991 through 1993, UNC commissioned an environmental consultant to perform a series of environmental assessments on the Mohegan Sun site, including extensive soil investigations and groundwater monitoring. The environmental assessments detected, among other things, volatile organic chemicals, heavy metals and fuel hydrocarbons in the soil and groundwater. Extensive remediation of contaminated soils and additional investigations were then completed. Although the Mohegan Sun site currently meets applicable remediation requirements, no assurance can be given that the various environmental assessments with respect to the Mohegan Sun site revealed all existing environmental conditions, that any prior owners or tenants of the Mohegan Sun site did not create any material environmental condition not known to the MTGA, that future laws, ordinances or regulations will not impose any material environmental liability or that a material environmental condition does not otherwise exist on Mohegan Sun. Future remediation may be necessary if excavation and construction exposes contaminated soil, which has otherwise been deemed isolated and not subject to cleanup requirements. Such remediation could adversely impact the results of operations of Mohegan Sun and therefore our results of operations and financial conditions.

In addition, the Environmental Protection Agency has named a predecessor to KINA as a potentially responsible party, or a PRP, under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, for the cleanup of contamination resulting from past disposals of hazardous waste at the Bay Drum site in Florida, to which the predecessor, among others, sent waste in the past. CERCLA requires PRPs to pay for cleanup of sites at which there has been a release or threatened release of hazardous substances. Courts have interpreted CERCLA to impose strict, joint and several liability upon all persons liable for cleanup costs. As a practical matter, however, at sites where there are multiple PRPs, the costs of cleanup typically are allocated among the parties according to a volumetric or other standard. Because we have only limited information at this time regarding this site and the wastes sent to it by the predecessor, we are unable to determine the extent of our potential liability, if any, at this site.

^{(C) Organizational Structure}

In July 2001, we announced the restructuring of our former majority shareholder, SIIL, and the resolution of certain matters with SIIL and certain of its shareholders. See “Item 7. Major Shareholders and Related Party Transactions.”

Set forth below is a table listing our significant subsidiaries:

                                                                      Country
Name of Company                                                       of Incorporation
Aberdeen Management Limited (1)                                       Channel Islands
Kerzner Hotels International (Bermuda), Limited (1)                   Bermuda
Kerzner International Bahamas Limited (2)                             The Bahamas
Kerzner International Management Limited (3)                          British Virgin Islands
Kerzner International North America, Inc. (4)                         United States
Kerzner International Timeshare Limited (5)                           The Bahamas
Kerzner Investments Palmilla, Inc. (6)                                The Bahamas
One&Only (Indian Ocean) Management Limited (7)                        British Virgin Islands
__________

      All of the above  subsidiaries  are wholly owned by Kerzner,  with the exception of One&Only  (Indian  Ocean)
      Management Limited, which is 80% owned by Kerzner and 20% owned by SRL.

(1)   The Company owns a 20.4% interest in SRL, of which 8.7% is held through Aberdeen  Management  Limited and the
      remaining 11.7% is held through  Kerzner Hotels International (Bermuda), Limited.

(2)   Owner  of  substantially  all  of the  Bahamian  subsidiaries.  Directly  or  indirectly  wholly  owns  eight
      subsidiaries, all of which are organized in the Commonwealth of The Bahamas.

(3)   Owner of the  management  agreement  for the Royal Mirage in Dubai.  Also receives  administrative  fees from
      One&Only (Indian Ocean) Management Limited related to Mauritius and Kanuhura management agreements.

(4)   Owner of  substantially  all of the U.S.  subsidiaries.  Directly or indirectly  wholly owns 22 subsidiaries,
      18 of which  are  organized  in the U.S.  and four of  which  are  organized  in  Mexico  and  relate  to the
      management and development of One&Only Palmilla Resort.

(5)   Owner of the 50% interest in Harborside.

(6)   Owner of the 50% interest in One&Only Palmilla Resort.

(7)   Owner of the five Mauritius management agreements and the Kanuhura management agreement.

^{(D) Property, Plant and Equipment}

Our headquarters and registered office are located at Executive Offices, Coral Towers, Paradise Island, The Bahamas.

We own or lease properties in The Bahamas, the United States, the United Kingdom and France. Set forth below is a table listing our principal properties as of December 31, 2002:

                                    Owned or       Principal Use       Size            Capacity
                                    Leased
  Name and Location
  Atlantis                          Owned          Hotel/Casino        123 acres       2,317 Rooms
    Paradise Island,
    The Bahamas (1)

  One&Only Ocean Club               Owned          Hotel               35 acres        106 Rooms
  Paradise Island,
  The Bahamas (1)

  Ocean Club Golf Course            Owned          Golf Course         209 acres       N/A
  and Clubhouse
  Paradise Island,
  The Bahamas

  Roads and Utility                 Owned          Infrastructure      52 acres        N/A
  Sites
  Paradise Island,
  The Bahamas (1)
  Undeveloped Land                  Owned          Future Development  95 acres        N/A
  Paradise Island,
  The Bahamas (1)

  Undeveloped Land                  Owned          (2)                 23 acres        N/A
  Atlantic City,
  New Jersey

  Kerzner International             Leased         Administrative      58,000  square  N/A
  Resorts, Inc.                                    and Marketing       feet
  Ft. Lauderdale,                                  Office and Travel
  Florida (3)                                      Agency
  Kerzner International             Leased         Administrative      65,000 square   450 Employees
  North America, Inc.                              and Marketing       feet
  Plantation, Florida (3)                          Office and Travel
                                                   Agency


(1)   Please  see  "Item  4.  Information  on the  Company,  (A)  History  and  Development  of the  Company--Recent
      Developments--Atlantis  Phase III Expansion,"  which  describes in detail our plans to construct,  expand upon
      and improve these properties.

(2)   Approximately  13 acres are included in the two-year  option we granted to Colony in April 2001 in connection
      with the sale of Resorts  Atlantic  City,  and we  currently  lease this  property to Colony for $100,000 per
      month.  All other land that we own in Atlantic City is available for sale.  See "Item 4.  Information  on the
      Company,  (A) History and Development of the Company" for more  information on the property that is leased to
      Colony.

(3)   Kerzner  International  North America,  Inc.'s  Plantation,  Florida office has replaced its Fort Lauderdale,
      Florida office, which closed in November 2002.

In addition to the properties listed above, we lease several small administrative offices in various locations throughout the U.S. that we use for marketing purposes. The number of employees at each of these offices is less than ten. We lease a small administrative office in Buckinghamshire, United Kingdom, as well as two offices in Paris, France, one of which Solea Vacances SA, our wholly owned European tour operator subsidiary, uses as a travel agency, while the other is a marketing office. We also lease an office outside of Frankfurt, Germany, which we use as a marketing office.

The majority of the property we own serves as collateral for our Revolving Credit Facility.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

^{(A) Operating Results}

^{Consolidated Results}

2002 vs. 2001. 2002 was a good year for us despite the general downturn in the worldwide travel market. Income and diluted earnings per share before extraordinary items in 2002 were $60.7 million and $2.13, as compared to $31.7 million and $1.14 in 2001, respectively. (See “Other Factors Affecting Earnings” for a comparison and explanation of certain items affecting 2002 and 2001 results.) This resulted primarily from the strong results of Atlantis and One&Only Ocean Club, which together achieved their highest gross revenues ever of $507.3 million. We also refinanced our debt structure, thereby lowering our effective interest rate and reduced our interest-bearing debt by $51.8 million during 2002, both of which helped to reduce interest expense by $13.6 million in 2002 as compared with 2001. Due to the effects of the events of September 11, 2001 on most travel and gaming related businesses, we have provided additional comparisons of 2002 results with those of 2000 where we believe these are relevant.

2001 vs. 2000. Income and diluted earnings per share in 2001 were $31.7 million and $1.14, respectively, as compared to a net loss of $119.1 million and $3.86 in 2000. Results for 2000 included a $229.2 million write-down of our assets in Atlantic City (“Resorts Atlantic City”) to their net realizable value prior to the completion of the sale in April 2001. (See “Other Factors Affecting Earnings” for a comparison and explanation of certain items affecting 2001 and 2000 results.)

^{Atlantis and One&Only Ocean Club—Paradise Island, The Bahamas}

2002 vs. 2001. Income from operations from our Paradise Island businesses (which includes Atlantis, One&Only Ocean Club and tour operations) was $87.1 million, as compared to $68.2 million in 2001 and $85.7 million in 2000. This increase was due to improved business levels combined with prudent cost-saving measures. As much of the industry continued to suffer from a decline in travel following September 11 and responded by decreasing room rates, our guiding strategy was not to embark on a discounting policy to drive business but rather to expand our marketing. This approach proved successful and our Paradise Island businesses demonstrated their strength and resilience even during such difficult times.

Net revenues for our Paradise Island businesses of $515.2 million exceeded 2001 by $42.9 million (9.1%) and 2002 was the first year in which net revenues exceeded $500.0 million. These revenues were composed of 25.2% from gaming, 35.9% from room, 25.5% from food and beverage and 13.4% from other sources.

The $13.4 million increase in gaming revenues over 2001 mainly resulted from a more favorable table hold percentage (ratio of table game win to dollar amount of chips purchased), which was a 2.5% increase over 2001. During 2002, there was a 6.3% decrease in table game drop (the dollar amount of chips purchased) from $522.9 million to $490.2 million and an increase in table hold percentage (from 13.1% to 15.6%) as compared to 2001, resulting in table game win of $76.6 million in 2002 compared to $68.5 million in 2001. In addition, slot win of $53.3 million in 2002 increased by $4.8 million over 2001.

The $8.2 million increase in room revenue over 2001 resulted from the recovery of business levels that had been adversely affected by September 11. Atlantis achieved RevPAR (revenue per available room) of $198 for the year, which was a 2.1% increase over 2001 and marginally below that of 2000. The average daily room rate at Atlantis in 2002 was $245 and occupancy was 81%. One&Only Ocean Club achieved RevPAR of $473, which was a 21.3% increase over 2001 and 31.0% above 2000.

The $10.0 million increase in food and beverage revenue was also due to the business recovery achieved.

Selling, general and administrative expenses were higher by $3.4 million compared to 2001. This resulted from a $3.4 million increase in our windstorm insurance premiums as well as a $2.7 million increase in advertising costs. Additionally, incentive bonuses to management and employees, which are based on operating results, increased by $2.9 million, and we incurred $1.2 million of lease termination costs related to the relocation of one of our offices from Fort Lauderdale, Florida to Plantation, Florida. These increases were offset by a $3.2 million decrease in provision for doubtful receivables and by the cost reduction program we implemented following September 11.

Harborside, our 50% owned timeshare joint venture on Paradise Island, was temporarily closed from August through December 2002 to repair water damage primarily resulting from 2001‘s Hurricane Michelle, which resulted in a $6.9 million charge against our share of earnings. This charge excludes any recovery of costs, which may result from a current insurance claim in respect of the remediation costs. During 2002, we recorded equity losses of $5.2 million from Harborside, as the $6.9 million charge was partially offset by $1.7 million of our share of earnings from Harborside’s operations. Equity in earnings from Harborside were $0.5 million in 2001. See “Other Items Affecting Earnings” below for further discussion.

Despite this closure, sales at Harborside are on pace with original projections with approximately 64% of the unit weeks sold to date in this first phase of the planned development.

2001 vs. 2000. Our Paradise Island businesses generated income from operations of $68.2 million in 2001, as compared to $85.7 million in 2000. The decline in operating earnings of $17.5 million (or 20.4%) was largely due to the effects of September 11, which resulted in reductions in earnings generated by the casino and rooms operations, compared to 2000, of $9.8 million and $3.2 million, respectively. In addition, operating earnings in 2001 were negatively impacted by an increase in depreciation costs of $7.6 million and an increase in selling, general and administrative expense of $3.6 million, which were partially offset by $2.0 million of business insurance proceeds received in 2001 in connection with Hurricane Michelle. Additionally, there was an increase in earnings from other casino/hotel related items, none of which was individually significant. Although Atlantis achieved a 4.1% increase in its average daily room rate to $252, occupancy in 2001 declined to 77% compared to 83% in 2000 due primarily to the effects of September 11. For the first eight months of 2001, occupancy and average daily room rate at Atlantis were 91% and $262, respectively, compared to 89% and $251, respectively, in the same period of 2000. After September 11, significantly reduced discretionary spending, disruptions in airline travel and the cancellation of business conventions had a material adverse impact on Atlantis for the remainder of the year. As a result, earnings over the twelve-month period were negatively impacted.

The Atlantis casino generated gaming win of $116.5 million in 2001 as compared to $132.1 million in 2000. The decrease in revenues for the twelve-month period, partially offset by a decrease of $5.8 million in gaming expenses, resulted in a net decline of $9.8 million (or 15%) in casino operating earnings.

In 2001, table game win of $68.5 million reflected a decrease of $12.9 million (or 15.8%) as a result of a decrease in hold percentage in table games as well as a decrease in table game drop. The table hold percentage decreased from 14.2% in 2000 to 13.1% in 2001. Table game drop was lower by $48.8 million (or 8.5%) as compared to 2000. Slot win of $48.5 million in 2001 reflected a $2.9 million decrease (or 5.6%) as compared to 2000 and was primarily due to a decrease in slot hold percentage from 9.7% in 2000 to 9.2% in 2001. The decrease in gaming expenses was mainly due to reduced promotional expenses, particularly after September 11.

The increase in depreciation expense in 2001 was mainly a result of the renovation of the Ocean Club Golf Course and Clubhouse and the addition of 50 luxury rooms and suites at One&Only Ocean Club, both of which opened in early 2001.

Selling, general and administrative expense increased in 2001 due to higher marketing costs of $4.4 million for increases in national advertising, the majority of which occurred after September 11, higher insurance costs of $3.4 million and higher information technology costs of $2.8 million. These increases were partially offset by decreases in payroll and miscellaneous costs in the amount of $7.0 million. We eliminated approximately 250 employee positions as part of our cost containment program during the fourth quarter of 2001.

^{Uncasville, Connecticut—Mohegan Sun}

2002 vs. 2001. Mohegan Sun generated gross revenues of $1.2 billion during calendar 2002, compared to $914.3 million in calendar 2001. We recorded income from TCA under the Relinquishment Agreement and the Development Agreement of $30.9 million for 2002 compared to $27.4 million in 2001, which had been favorably impacted by certain priority payments earned by us from TCA. In addition, during 2002, TCA incurred costs of approximately $1.8 million related to the grand opening of the Mohegan Sun expansion, which reduced TCA’s income and our share of such income during this period.

2001 vs. 2000. During calendar 2001, Mohegan Sun generated gross revenues of $914.3 million as compared to $819.9 million in calendar 2000, an increase of 11.5%. We recorded income from TCA of $27.4 million and $23.6 million in 2001 and 2000, respectively.

^{Mauritius, Maldives, Dubai and Mexico (collectively the “Management Properties”) —Luxury Resorts}

2002 vs. 2001. In 2002, we earned management fees from the Management Properties of $7.3 million as compared to $8.0 million in 2001, a decrease of 8.8%, mainly due to the closure of One&Only Le Touessrok, in Mauritius, for major renovation from January 2002 through early December 2002. The resort reopened as One&Only Le Touessrok in December 2002. During the fourth quarter of 2002, we recognized $1.5 million in development fees related to this renovation, which is included in management fees and other.

In 2002, the Management Properties generated revenues of $124.1 million as compared to $124.8 million in 2001 and had net income of $11.9 million compared to $22.3 million in 2001. Although revenues remained relatively constant, there was a $17.2 million decrease in revenue from the closure of One&Only Le Touessrok, which was offset by an increase of $6.8 million of revenues from One&Only Kanuhura (due to our acquisition of a 25% equity interest in One&Only Kanuhura on August 1, 2001), $5.5 million of revenues from One&Only Palmilla Resort, and increases from One&Only Le Saint Géran and Sugar Beach. The decrease in net income of the Management Properties was almost entirely attributable to the closure of One&Only Le Touessrok for renovations.

In 2002, excluding One&Only Le Touessrok, the occupancy and average daily room rate for the Mauritius properties were 77% and $159 as compared to 77% and $162 in 2001. At One&Only Royal Mirage, the occupancy and average daily room rate in 2002 were 72% and $232, as compared to 72% and $226 in 2001. At One&Only Kanuhura, the occupancy and average daily room rate was 54% and $296 compared to the five months ended December 31, 2001 of 44.2% and $224. At One&Only Palmilla Resort, the occupancy and average daily room rate were 60% and $373 for the fourth quarter of 2002.

As a result of the equity investments we hold in certain of our Management Properties, we recorded equity earnings of $0.9 million in 2002 compared to $2.6 million in 2001.

2001 vs. 2000. In 2001, we earned management fees from the Management Properties of $8.0 million as compared to $8.7 million in 2000, a decrease of 8.0%. In 2001, the Management Properties generated revenues of $124.8 million as compared to $133.7 million in 2000 and had net income of $22.3 million compared to $23.8 million in 2000. The 6.6% decrease in revenues was a result of reduced revenues from the Mauritius Management Properties primarily due to the devaluation of the Mauritian Rupee to the U.S. dollar and due to the effects of September 11. In addition, in 2000, SRL earned revenues from its property in the Comoro Islands, which was sold in November of that year. The decrease experienced at SRL was partially offset by revenues earned at One&Only Kanuhura for the five months during the year ended December 31, 2001 following our acquisition of a 25% equity interest in the property. The decrease in net income of the Management Properties was a result of a net loss incurred at One&Only Kanuhura, partially offset by slight increases in earnings at SRL and at One&Only Royal Mirage. For SRL, net income was higher than in 2000 primarily due to a reduction in interest expense that more than offset the effect of the devaluation of the Mauritius Rupee.

In 2001, the occupancy and average daily room rate for the Mauritius Management Properties were 77% and $162, as compared to 83% and $160 in 2000. At One&Only Royal Mirage, the occupancy and average daily room rate in 2001 were 72% and $226, as compared to 82% and $202 in 2000. At One&Only Kanuhura, the occupancy and average daily room rate for the five months ended December 31, 2001 were 44% and $224.

As a result of the equity investments we hold in all of our Management Properties (other than One&Only Royal Mirage) we recorded equity earnings of $2.6 million in 2001 compared to $3.4 million in 2000.

^{Other Revenues}

2002 vs. 2001. During 2002, other revenues increased by $9.2 million due primarily to the opening of two additional retail outlets at Atlantis, an increase in telephone revenues and various other items.

2001 vs. 2000. During 2001, other revenues increased by $7.2 million due primarily to the revenues generated from the renovated Ocean Club Golf Course, which reopened in January 2001.

^{Corporate Expense}

2002 vs. 2001. We continuously explore new business opportunities, and all associated costs are written off to corporate expenses as incurred. Corporate expenses increased by $7.9 million for 2002 as compared to 2001. This increase was primarily due to increased costs incurred for new projects, in particular relating to our strategy to expand the number of luxury resorts we manage, retaining senior development personnel in anticipation of future new projects, litigation expenses relating to the settlement with a major shareholder and increased management and employee bonuses paid as a result of our strong results.

2001 vs. 2000. General corporate expenses were virtually flat for the year 2001 compared to 2000. We incurred higher new project development costs of approximately $2.0 million in 2001 as compared to 2000. The increase in new project development costs was offset by reduced payroll and related costs, as well as a reduction in information technology costs allocated to corporate in 2001.

^{Depreciation and Amortization}

2002 vs. 2001. Depreciation and amortization in 2002 was $56.3 million, as compared to $51.5 million in 2001. This increase was due primarily from the renovation of approximately 400 rooms in the Coral Towers and the completion of various other projects at Atlantis.

2001 vs. 2000. Depreciation and amortization in 2001 was $51.5 million, $8.7 million lower than in 2000 due to the sale of Resorts Atlantic City.

^{Interest Income}

2002 vs. 2001. Interest income in 2002 was $3.5 million, as compared to $7.5 million in 2001, due primarily to interest earned during the first four months of 2001 on the proceeds of the Resorts Atlantic City sale. In addition, in 2001, we earned interest on a $17.5 million note issued to us in connection with the Resorts Atlantic City sale. The promissory note and accrued interest was repaid in full in March 2002 and the proceeds were used to repay debt.

2001 vs. 2000. In 2001, interest income was $7.5 million as compared to $4.2 million in 2000. This increase was primarily due to interest earned during the first four months of 2001 on the proceeds of the Resorts Atlantic City sale. In addition, as noted above, in 2001, we earned interest on a $17.5 million note issued to us on April 25, 2001, in connection with the Resorts Atlantic City sale.

^{Interest Expense}

2002 vs. 2001. During 2002, interest expense decreased by $13.6 million or 25.8%, as compared to 2001, as a result of the reduction of interest-bearing debt totaling $51.8 million during 2002 and lower effective interest rates. The lower effective interest rates were achieved by swapping fixed rate debt at 8-7/8% for variable debt at LIBOR plus approximately 300 basis points and due to a larger portion of our debt being financed with borrowings under our revolving credit facility bearing interest at LIBOR plus 200 basis points. Also, in 2001 interest expense included $3.4 million in refinancing costs, which were written off when we cancelled our old interest rate swap agreements. The average cost of debt, including the effect of interest rate swaps, during 2002 was 7.4% compared to 8.8% in 2001.

2001 vs. 2000. Interest expense in 2001 was higher than the previous year by $7.0 million (or 15.4%). The high level of capitalized interest in 2000 was mainly related to project capital expenditures that were financed with debt in 2000 which resulted in $11.1 million of capitalized interest in 2000, compared to $1.1 million in 2001. During construction, related interest costs were capitalized to these projects, which included an additional 50 luxury rooms and suites at One&Only Ocean Club and the renovation of the Ocean Club Golf Course. The increase due to project completion was partially offset by a reduction in cash interest due to a reduction in the weighted average amount of borrowings outstanding.

Other Factors Affecting Earnings

2002 vs. 2001

Kerzner Interactive Limited

On January 1, 2002, Kerzner Interactive Limited, our Internet gaming subsidiary, commenced operations. In February 2002, we agreed to sell 50% of Kerzner Interactive Limited to Station, who paid us at that time a non-refundable deposit of $4.5 million. Subsequently, this agreement was restructured and Station received an option through early January 2003 to purchase 50% of the operation in consideration for the $4.5 million previously received. During 2002, several countries made it increasingly difficult for their citizens to gamble on-line. Further, as a licensed operator in the Isle of Man, we imposed numerous restrictions and controls on how we operated this business, which had the effect of making it difficult for us to compete against companies operating in a less rigorous manner. As a result, we concluded that this business would not be economically viable in the short to medium term. We discontinued the operations of Kerzner Interactive Limited during the first quarter of 2003 and the Company and Station mutually agreed to terminate this transaction. Losses and closure costs in 2003 will largely be offset by the recognition of income of the $4.5 million option consideration.

During 2002, included in our consolidated results is a net loss from Kerzner Interactive Limited of $8.1 million. During 2001, we incurred $4.6 million in pre-opening expenses in connection with Kerzner Interactive Limited.

Debt Retirement

During 2002, we incurred a $20.5 million extraordinary loss, net of income tax, on the early retirement of debt, in connection with the refinancing of our debt structure. Of this amount $14.6 million related to our 9% Senior Subordinated Notes and $5.9 million related to our 8-5/8% Senior Subordinated Notes. The extraordinary loss included premiums paid on the repurchases and redemption of the notes, the write-off of related discounts and unamortized debt issuance costs.

Settlement of Territorial and Other Disputes

During 2002, we recognized a $14.5 million gain on the settlement of territorial and other disputes with a major shareholder. Of the $32.1 million received, $21.3 million, which related to certain contractual obligations that the major shareholder had to us, has been classified as deferred revenue as of the end of the year and will be recognized as other revenues over the term of the original underlying agreements or approximately $3.5 million of income each year for the next 6 years. The remaining amount of $9.4 million, net of direct legal expenses was recognized as income during 2002. During the second quarter of 2002, we recognized a $5.1 million net gain on the settlement of a previous territorial dispute with a major shareholder.

Construction Remediation Costs at Harborside

Harborside was closed at the end of August 2002 in order to repair water damage resulting primarily from Hurricane Michelle. During the fourth quarter of 2002, these repairs were completed and the resort reopened in December 2002. Our share of construction remediation costs was $6.9 million. This loss has not been reduced by any potential insurance recovery, but Harborside has filed a claim with its insurers, which is presently under negotiation. Should Harborside receive a related insurance recovery in the future, we would partially offset this loss.

Restructuring Costs

In 2001, we provided $5.7 million related to the termination of certain employees following September 11. In 2002, we reversed $1.0 million of this provision as it remained unused due to the release of fewer employees and the amounts were settled for less than originally planned.

Other

Other items during 2001 were a $6.9 million gain from the sale of luxury home sites at Ocean Club Estates and $2.3 million of pre-opening expenses related to the opening of the Ocean Club Golf Course.

^{2001 vs. 2000}

Resorts Atlantic City

As of December 31, 2000, we accounted for Resorts Atlantic City as an investment held for sale and during 2000 recognized a loss of $229.2 million to write-down the related assets to their net realizable value. Accordingly, as of January 1, 2001, the operations of Resorts Atlantic City (which we sold on April 25, 2001) were no longer included in our consolidated financial statements.

Transaction Costs

In 2000, we incurred transaction costs of $7.0 million in connection with a self-tender offer to repurchase 5.0 million Ordinary Shares at $24 per share and the termination of a proposed acquisition by our then majority shareholder to acquire all of our outstanding Ordinary Shares that it did not already own.

Purchase Termination Costs

In 2000, we incurred $11.2 million of purchase termination costs related to the abandoned acquisition of the Desert Inn, Las Vegas.

Other

In 2000, we incurred $7.6 million of pre-opening expenses related to the expansion of Ocean Club Estates and the opening of the golf course at Ocean Club Estates. Also, in 2000, we recorded a net gain of $76.4 million from the sale of luxury home sites at Ocean Club Estates.

^{Other Matters}

^{Foreign Currencies}

We prepare our financial statements in U.S. dollars. Our most significant non-U.S. operations are in The Bahamas. Due to current governmental policies in The Bahamas that equate one Bahamian dollar to one U.S. dollar, we believe that we do not have material market risk exposures in this jurisdiction relative to changes in foreign exchange rates. Due to the stability of the other markets in which we operate, we also believe that we do not have material market risk exposures in these jurisdictions relative to changes in foreign exchange rates.

^{(B) Liquidity and Capital Resources}

During 2002, cash generated from operations allowed us to reduce our interest bearing debt by $51.8 million. We have no significant short-term debt and our long-term debt is comprised of an Amended Revolving Credit Facility balance due in 2006 and $400 million in 8-7/8% Senior Subordinated Notes due 2011. Our Amended Revolving Credit Facility is $300 million, of which $226.9 million was available at December 31, 2002. In addition, at December 31, 2002, we held $38.9 million in cash and cash equivalents, including $4.8 million in restricted cash.

We believe our operating cash flows, as a percentage of operating income, were higher than many of our competitors due primarily to the management fee nature of a portion of our income (which requires minimal investment), the lack of any corporate income tax in The Bahamas and net operating loss carryforwards that offset our U.S.-sourced income. We believe that available cash on hand, combined with funds generated from operations and availability under our bank credit facility will be sufficient to finance our cash requirements over the next twelve months.

Effective January 1, 2003, the lenders have agreed that borrowings under our amended revolving credit facility will be based on a borrowing base calculation, such that we can draw the lesser of a borrowing base or the commitment amount. Under the borrowing base calculation as of December 31, 2002, our borrowing limit would have been $300.0 million, as the anticipated borrowing base calculation would have exceeded the commitment amount. See “Item 10. Additional Information, (C) Material Contracts-Third Amendment dated May 15, 2003 to the Amended Revolving Credit Facility” for a description of the borrowing base.

^{Operating Activities}

During 2002, we generated $125.6 million of cash flow from operating activities compared to $99.3 million during 2001. This increase was primarily due to Atlantis’ improved operating performance, decreased interest payments on debt and $32.1 million received from the settlement of a territorial dispute partially offset by an increase in working capital as net gaming and hotel receivables were greater at December 31, 2002 than at December 31, 2001.

^{Investing Activities}

During 2002, net cash outflows used in investing activities were $72.0 million compared to cash inflows provided from investing activities of $57.6 million last year. The 2001 net inflow was primarily due to the sale of Resorts Atlantic City in 2001, from which we received $120.9 million in cash.

On September 12, 2002, we completed the acquisition of a 50% equity interest in the 115-room luxury One&Only Palmilla Resort, near Cabo San Lucas in Baja, Mexico, for $40.8 million, including transaction costs. This was funded through a combination of cash on hand and borrowings under our revolving credit facility. In April 2003, One&Only Palmilla Resort commenced a $80.0 million expansion project that will increase the room count to 172 rooms and significantly upgrade the amenities and public areas offered by the resort. The expansion is expected to be completed by early 2004 (subject to obtaining all necessary local permits and approvals) and will be financed by One&Only Palmilla Resort through local project financing, which is supported by a $38.0 million guarantee from Kerzner. (See Note 22 in the Consolidated Financial Statements.)

Our business requires capital to both develop and maintain our properties. During 2002, we used $39.5 million for capital expenditures, net of insurance proceeds received, which includes $15.7 million on several development and renovation projects on Paradise Island with the balance primarily used for ongoing capital expenditures on Paradise Island. During 2002, these expenditures were funded through internally generated funds. During 2003, we anticipate our capital expenditures to be approximately $55.0 million, including the costs of a new state-of-the-art computerized reservation system and customer database.

During 2003, we anticipate making approximately $25.0 million in advances related to new One&Only projects.

^{Financing Activities}

During the year, we used $49.7 million in net financing activities. Cash received during the year included $206.0 million from the issuance of our 8-7/8% Senior Subordinated Notes and $47.7 million of net borrowings from our revolving credit facility. We used these proceeds together with cash on hand to redeem our 9% Senior Notes for $209.0 million and our 8-5/8% Senior Notes for $104.1 million. This refinancing resulted in the extension of the average maturity of our public debt by more than four years and decreased our average borrowing rate. (See Note 12 in the Consolidated Financial Statements.)

As shown in Future Commitments and Funding Sources, as of December 31, 2002, we do not have any significant debt repayments due until November 2006, when our revolving credit facility matures. The principal of our 8-7/8% Senior Subordinated Notes is not due until August 2011. We anticipate that prior to maturity, interest payments will be provided from cash flows from operations. At December 31, 2002, we had approximately $226.9 million available under our revolving credit facility for use in 2003. During 2002, our average cost of debt was approximately 7.4%.

^{Market Risks}

Our major market risk exposure is interest rate risk directly related to our bank debt and interest rate swaps on $200 million of our fixed rate debt. We attempt to limit our exposure to interest rate risk by managing the mix of fixed and floating rate debt, and by entering into variable interest rate swap agreements to hedge a portion of our fixed rate debt. These interest rate swap agreements are entered into with a group of financial institutions with investment grade credit ratings, thereby minimizing counterparty credit risk.

In August and December 2001, we entered into fixed-to-variable rate swap agreements with respect to our 8-7/8% Senior Subordinated Notes due 2011, which were issued in August 2001. As of December 31, 2002, the aggregate notional amount of the swap agreements was $200.0 million and they mature in August 2011 concurrent with our 8-7/8% Senior Subordinated Notes. Under the terms of the swap agreements, we make payments based on specific spreads over six-month LIBOR and receive payments equal to the interest payments due on the notes. The spreads in excess of six-month LIBOR are 3.02% for $150.0 million, 2.95% for $25.0 million and 2.91% for the remaining $25 million. As of December 31, 2002 and 2001, the weighted average variable rate on the swap agreements was 5.00% and 6.12%, respectively. Giving effect to these swap agreements, our fixed and floating rate debt represented approximately 42% and 58% as of December 31, 2002 and 57% and 43% as of December 31, 2001, respectively.

In connection with our interest rate swap agreements, for every 100 basis points that LIBOR increases or decreases, correspondingly, interest expense changes by $2.0 million per annum.

^{Other Matters}

Critical Accounting Policies

Our critical accounting policies include those which require our most subjective or complex judgments as a result of the need to make estimates when there is uncertainty as to their financial effects. We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. We provide allowances for doubtful accounts arising from casino, hotel and other services, which are based upon a specific review of certain outstanding receivables. In determining the amounts of the allowances, we are required to make certain estimates and assumptions. Accruals for potential liabilities related to any lawsuits or claims brought against us, calculation of inventory reserves, calculation of income tax liabilities, valuation allowance on deferred tax assets and other liabilities require that we apply significant judgment in determining the appropriate assumptions for use in the calculation of financial estimates. Actual results may differ from these estimates and assumptions. We periodically assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically very difficult to determine the timing and ultimate outcome of these actions, we use our best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss, if any, can be made. There can be no assurance that actual results will not differ from our estimates. To provide an understanding of the methodology we apply, our significant accounting policies are discussed where appropriate and in the notes to our consolidated financial statements.

Although all of the policies identified in the notes to the consolidated financial statements are important in understanding the consolidated financial statements, the policies discussed below are considered by management to be central to understanding the consolidated financial statements because of the higher level of measurement uncertainties involved in their application.

Long-Lived Assets. We review our long-lived assets and certain identifiable intangibles for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If changes in circumstances indicate that the carrying amount of an asset that we expect to hold and use may not be recoverable, future cash flows expected to result from the use of the asset and its disposition are estimated. If the undiscounted value of the future cash flows is less than the carrying value of the asset, the carrying value of the long-lived asset will be reduced by the amount which the carrying value exceeds fair value. We do not believe that any such changes have occurred except as a result of the Resorts Atlantic City Sale and the Atlantic City Option, as discussed in the notes to the consolidated financial statements.

Income Taxes. We are subject to income taxes in certain jurisdictions. Accordingly, the accompanying consolidated statements of operations include a provision for income taxes based on the prevailing tax laws of those jurisdictions.

We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Realization of future tax benefits related to deferred tax assets is dependent on many factors, including our ability to generate future taxable income. The valuation allowance is adjusted in the period in which we determine it is more likely than not that deferred tax assets will or will not be realized. We considered these factors in reaching our conclusion to reduce the valuation allowance during 2002, which resulted in a reduction to our provision for income taxes.

Recent Accounting Pronouncements

Classification of Extraordinary Items. In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”). SFAS 145 rescinds FASB Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt” (“Statement 4”), and an amendment of Statement 4, FASB Statement No. 64, “Extinguishments of Debt Made to Satisfy Sinking Fund Requirements” (“Statement 64”). SFAS 145 also rescinds FASB Statement No. 44, and amends FASB Statement No. 13. SFAS 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions. The provisions of SFAS 145 related to the rescission of Statement 4 shall be applied in fiscal years beginning after May 15, 2002. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet the criteria in APB Opinion 30 for classification as an extraordinary item shall be reclassified.

Under Statement 4, all gains and losses from extinguishment of debt were required to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. SFAS 145 eliminates Statement 4 and, thus, the exception to applying APB Opinion 30 to all gains and losses related to extinguishments of debt (other than extinguishments of debt to satisfy sinking fund requirements—the exception to application of Statement 4 noted in Statement 64). As a result, gains and losses from extinguishment of debt should be classified as extraordinary items only if they meet the criteria in APB Opinion 30. Applying the provisions of APB Opinion 30 will distinguish transactions that are part of an entity’s recurring operations from those that are unusual or infrequent or that meet the criteria for classification as an extraordinary item.

We believe the adoption of SFAS 145 will require the $20.5 million extraordinary loss on extinguishment of our 8-5/8% Senior Subordinated Notes and our 9% Senior Subordinated Notes recognized during the year ended December 31, 2002 to be reclassified upon adoption of SFAS 145 in 2003.

Exit or Disposal Activities. In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”) effective for exit or disposal activities initiated after December 31, 2002. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. Adoption of SFAS 146 is not expected to have a significant impact on our financial position or results of operations.

Guarantees. In November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation clarifies that a guarantor is required to disclose (a) the nature of the guarantee, including the approximate term of the guarantee, how the guarantee arose and the events or circumstances that would require the guarantor to perform under the guarantee; (b) the maximum potential amount of future payments under the guarantee; (c) the carrying amount of the liability, if any, for the guarantor’s obligations under the guarantee; and (d) the nature and extent of any recourse provisions or available collateral that would enable the guarantor to recover the amounts paid under the guarantee. This interpretation also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the obligations it has undertaken in issuing the guarantee, including its ongoing obligation to stand ready to perform over the term of the guarantee in the event that the specified triggering events or conditions occur.

The initial recognition and initial measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The disclosure requirements in this interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002 and have been included in the notes to the consolidated financial statements.

We currently guarantee certain amounts related to certain of our equity method investments. We have not recognized a liability for any guarantee issued prior to December 31, 2002, the effective date of this interpretation. If in the future we modify the current guarantees or issue new guarantees, we will be obligated to recognize a liability at an estimate of the guarantee’s fair value.

Consolidation of Variable Interest Entities. In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”). This interpretation of Accounting Research Bulletin 51, “Consolidated Financial Statements,” addresses consolidation by business enterprises of variable interest entities which have one or both of the following characteristics: (i) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, which is provided through other interests that will absorb some or all of the expected losses of the entity, or (ii) the equity investors lack one or more of the following characteristics of a controlling financial interest: (a) the direct or indirect ability to make decisions about the entity’s activities through voting rights or similar rights, (b) the obligation to absorb the expected losses of the entity if they occur, which makes it possible for the entity to finance its activities, or (c) the right to receive the expected residual returns of the entity if they occur, which is the compensation of the risk of absorbing the expected losses.

FIN 46 applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003 to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. We have not yet assessed the impact that FIN 46 will have on our financial position or results of operations.

Fair Value of Stock Options. We have elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related Interpretations in accounting for our employee stock options as allowed pursuant to FASB Statement No. 123, as amended. Accordingly, no compensation expense has been recognized for the years ended December 31, 2002, 2001 and 2000.

Our accounting for our employee stock options complies with accounting practices generally accepted in the U.S. However, from time to time, proposals have been put forth to change the method of accounting for employee stock options that, if adopted, would require us to include the fair value of employee stock options in our compensation expense. As a result of recent events in the business and financial community of the U.S., Congress, the SEC and the accounting profession have been engaged in reevaluating employee compensation and its accounting, and several new proposals concerning the proper accounting for employee stock options have recently been put forth. It is not possible to predict whether any such proposal will ultimately be adopted, or, if such a policy is adopted, what its requirements may be. However, it is possible that we may in the future be required under accounting principles generally accepted in the U.S. to include the fair value of our employee stock options in our compensation expense.

Had compensation cost for our stock option plans been determined on the basis of the fair value at the grant date for awards under those plans, consistent with FASB Statement No. 123, and as amended by FASB Statement No. 148, and our existing valuation method for our employee stock options, the Black-Scholes option-pricing model, we estimate that our net income for the years ended December 31, 2002 and 2001 would have been reduced by 16% and 29%, respectively. For the year ended December 31, 2000, we estimate that our net loss would have increased by 6%. However, FASB Statement No. 123 requires the use of option valuation models that require the input of highly subjective assumptions, including expected stock price volatility, and to date, a uniform standard for calculating the fair value of employee stock options in accordance with FASB Statement No. 123 has not been adopted. Because our stock options have characteristics significantly different from traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable measure of the fair value of our employee stock options. In addition, the effect of applying the fair value method of accounting for stock options on reported net income (loss) for 2002, 2001 and 2000 may not be representative of the effects for future years because outstanding options vest over a period of several years and additional awards are generally made each year.

Change in Independent Public Accountants

On June 24, 2002, we removed Arthur Andersen LLP (“Andersen”) as our independent public accountants and on June 24, 2002 retained Deloitte & Touche LLP (“D&T”) as the Company’s new independent public accountants for the fiscal year 2002. This change was made upon the recommendation of the audit committee of the Company’s Board of Directors and with the approval of the Company’s Board of Directors. The decision to change independent public accountants was based on the continuing uncertainty regarding Andersen’s future and is not a reflection of Andersen’s commitment or the quality of the services it provided to the Company.

Andersen’s reports on the Company’s consolidated financial statements for the years ended December 31, 2001 and December 31, 2000 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During the years ended December 31, 2001 and December 31, 2000 and through the date of their dismissal, there were no disagreements with Andersen on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to Andersen’s satisfaction, would have caused them to make reference to the subject matter in connection with their report on the Company’s consolidated financial statements for such years; and there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

The Company provided Andersen with a copy of the foregoing disclosures and Andersen stated its agreement with such statements.

During the years ended December 31, 2001 and December 31, 2000 and up to the date of their engagement, the Company did not consult D&T with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, or any other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.

There were no disagreements with Andersen or D&T on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure during 2002.

^{(C) Research and Development, Patents and Licenses}

Not applicable.

^{(D) Trend Information}

During the first quarter of 2003, Atlantis’ results were affected during the last two weeks of the quarter by travel concerns arising from the war in Iraq, as Atlantis’ occupancy for the month of March was 90% as compared to 93% in the same period last year. Atlantis had been on pace to achieve similar occupancy levels to those achieved in the same period last year prior to the beginning of the war.

Despite the decrease in occupancy in the second half of March, Atlantis’ RevPAR of approximately $239 was relatively flat compared to the same period last year. Atlantis achieved an average occupancy of 83% at an average daily room rate (“ADR”) of $289, which compares to average occupancy of 85% and ADR of $284 in 2002. Bookings trends have improved and Atlantis has benefited from strong demand in April as RevPAR for this month finished ahead of the same period last year. However, May 2003 occupancy decreased by 3.3% as bookings decreased due in part to a delay in a major advertising campaign that was scheduled to be launched during the war in Iraq. Early indications of our current marketing efforts is that phone volume is building daily and room nights in June are projected to equal those of the same period last year.

In the Atlantis Casino, slot win for the quarter ended March 31, 2003 increased by 4%. Table game drop was 5% lower in the quarter than during the same period last year as the current quarter faced a difficult comparison due primarily to the shift in the Easter holiday from March to April in 2003. In April 2003, table game drop increased by 45% while slot win held steady compared to April 2002, due to the shift in the Easter holiday and the effects of September 11 still being felt in 2002.

Management fees earned by us related to the operations at Sun Resorts Limited for the year ended December 31, 2002 amounted to $7.1 million. We anticipate that such fees will be approximately $5.7 million in 2003, due to our 80% ownership interest in One&Only (Indian Ocean) Management Limited. Effective January 1, 2003, the management contracts for SRL and Kanuhura are now held in this company. See “Item 4. Information on the Company, (B) Business Overview—One&Only Resorts—Indian Ocean.”

Relinquishment and Development Fees earned by us from TCA was $30.9 million for the year ended December 31, 2002. We anticipate that such fees will be increased for the year ended December 31, 2003 due to the increase in Mohegan Sun revenues due to the expansion completed in mid-2002.

We expect our insurance costs to increase by approximately $6.5 million during 2003 as compared to 2002, as the Paradise Island operations will now bear a full year’s charge at higher rates for “all risks” insurance.

In connection with $200 million of our 8-7/8% Senior Notes, we have entered into interest rate swap agreements to hedge this portion of our fixed rate debt, in which the rates paid by us are at six-month LIBOR plus 291 to 302 basis points. In connection with our interest rate swap agreements, for every 100 basis points that LIBOR increases or decreases, correspondingly, interest expense changes by $2.0 million per annum.

In July 2002, we acquired $15.0 million of 7.74% senior notes due 2004 of LCI for approximately $13.2 million. LCI is a British-based casino operator with casinos in Britain, Egypt, and South Africa. LCI currently has a high level of outstanding debt and the demands of its debt holders could affect its business operations and its ability to service its indebtedness. The possible liberalization of the regulation of the gaming industry in the United Kingdom may have a positive impact on LCI’s operations. We anticipate that there may be future gaming opportunities in the United Kingdom, as discussed in “Item 4. Information on the Company, (A) History and Development of the Company—Recent Developments.”

^{(E) Off-Balance Sheet Arrangements}

At December 31, 2002, our off-balance sheet arrangements and other commitments were as follows (in thousands):

                                                                Total Amount of
                         Other Commitments                        Commitment

              Reethi Rah - Financings (a)                          $ 47,000
              Guarantee - One&Only Kanuhura (b)                      10,712
              One&Only Palmilla Resort Completion Guarantee (c)      38,000
                                                                    -------
              Total other commitments                               $95,712

(a) On December 4, 2002, we entered into a senior subordinated credit agreement with Reethi Rah Resort Pvt Ltd and various other financial institutions (the “Senior Lenders”). The agreement, as amended in 2003, obligates Kerzner to make completion loans (in an amount not to exceed $35.0 million) and operating loans (in an amount not to exceed $3.0 million per year, for a four-year period). The purpose of the completion loans is to provide subordinated financing for the building and developing of a new resort on Medhufinolhu, Kaafu Atoll, Republic of Maldives. The purpose of the operating loans is to provide working capital on a standby basis to the new resort once it has opened. Among other conditions, Kerzner is not obligated to make any completion loan after the resort has opened or until Reethi Rah Resort Pvt Ltd has borrowed a minimum of $20.0 million from the Senior Lenders. Kerzner is not obligated to make any operating loans unless, among other conditions, the resort has opened for business to the general public. Once made, both the completion loans and the operating loans will be subordinated to all other loans made to the borrower by the Senior Lenders and will become immediately due and payable upon termination or cancellation of our management agreement related to the property.

As a condition to entering the senior subordinated credit agreement, we obtained a personal guarantee from Mohamed Adil, an indirect holder of the majority outstanding shares in Reethi Rah Resort Pvt Ltd, pursuant to which Mr. Adil unconditionally guaranteed all of the payment and performance obligations of Reethi Rah Resort Pvt Ltd to Kerzner under the senior subordinated credit agreement and certain other agreements relating to the resort. Reethi Rah Resort Pvt Ltd also granted us a security interest in substantially all of the assets that will comprise the new resort, including a long-term lease that Reethi Rah Resort Pvt Ltd has obtained from the government of the Maldives.

Subject to certain conditions, SRL has a right of first refusal to participate equally with us in any development project in specified Indian Ocean territories. SRL’s board of directors has approved the exercise of its right to participate on a proportionate basis (currently 20%) with us in connection with the Reethi Rah project. Upon signing of definitive agreements, it will assume its proportionate share (currently 20%) of the above mentioned commitment amount. See “Item 4. Information on the Company, (B) Business Overview—The Properties—One&Only Resorts—Indian Ocean.”

(b) In connection with our purchase of a 25% equity interest in One&Only Kanuhura, we were required to guarantee certain of its obligations to its other shareholders. We are not obligated under these guarantees unless the property’s senior bank debt agreement prevents available cash flow from being distributed to the shareholders, nor until One&Only Kanuhura repays certain senior debt owed to us. As of December 31, 2002, the amount of senior debt owed to us was $4.5 million, excluding accrued interest. Our obligations under these guarantees expire when the underlying obligations are repaid.

(c) We have agreed to guarantee up to $38.0 million of debt-financing that One&Only Palmilla Resort obtains from third-parties. We have agreed to provide these guarantees for a period ending no later than the later of (i) the date of repayment at maturity of the underlying obligations or (ii) three years from the date of the guarantee. The purpose of these guarantees is to assist One&Only Palmilla Resort in obtaining financing for its planned redevelopment on commercially reasonable terms. In addition, to the extent that One&Only Palmilla Resort incurs expenditures that we approve in excess of budgeted amounts and for which it is otherwise unable to obtain third-party financing, we have agreed to make unsecured subordinated loans to One&Only Palmilla Resort in the amount of such expenditures. Any amounts loaned to cover such expenditures must be prepaid no later than December 31, 2008. As of June 30, 2003, One&Only Palmilla Resort has borrowed $30.0 million under an interim credit agreement dated as of March 14, 2003, and as amended on June 20, 2003, and we and certain of our subsidiaries have guaranteed in full the repayment of such amounts. We expect One&Only Palmilla Resort to refinance the interim credit agreement by the time it becomes due on August 29, 2003. The planned redevelopment will require the resort to be closed from April 2003 to early 2004. It is expected to cost $80.0 million at the property level and will increase the room count to 172 rooms and significantly upgrade the amenities and public areas offered by the resort.

(F) Tabular Disclosure of Contractual Obligations

At December  31, 2002,  our  material  contractual  obligations,  with initial or remaining  terms in excess of one
year, were as follows (in thousands):

                                                                    Payments Due by Year
                                      ---------------------------------------------------------------------------------
   Contractual Cash Obligations        2003     2004         2005       2006       2007      There-        Total(a)
                                                                                            after
  Senior Subordinated Notes (a)       $     -  $      -     $      -   $      -   $      -   $ 400,000    $  400,000
  Revolving Credit Facility (b)             -         -            -     72,000          -           -          72,000
  Operating leases                      5,014     2,413        1,912      2,324      1,819      19,806        33,288
  Capital leases                          275       326          130          -          -                      731
  Total contractual cash
      obligations                     $ 5,289  $  2,739     $  2,042   $74,324    $  1,819   $ 419,806    $  506,019

(a)   See  Note  12 - "Long-Term  Debt"  of  the  Notes  to  our  consolidated  financial  statements  for a  further
      description of our debt commitments.

(b)   As of December 31, 2002, we had $226.9 million  available under the revolving credit  facility,  after giving
      effect to the $72.0 million of borrowings  outstanding and the $1.1 million in letters of credit  outstanding
      on that date.

ITEM 1.           DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

 (A)  Directors and Senior Management

The current directors of the Company are:

                                            Country of                                Director
Name                                        Citizenship                               Since
- ------------------------------------------- ----------------------------------------- --------------
Solomon Kerzner                             South Africa                              1993
Peter Buckley                               United Kingdom                            1994
Howard Marks                                United States                             1994
Eric Siegel                                 United States                             1994
Heinrich von Rantzau                        Germany                                   2001


The current executive officers of the Company are:

                                                                                                  Executive
                                                                                                  Officer
Name                             Title                                                Age         Since
- ----------------------------     -------------------------------------------------    --------    --------------
Solomon Kerzner                  Chairman and Chief Executive Officer                 67          1993
Howard B. Kerzner                President                                            39          1995
Charles D. Adamo                 Executive Vice  President - Corporate  Development     42          1995
                                 & General Counsel
John R. Allison                  Executive Vice President - Chief Financial Officer     57          1994

The executive officers serve indefinitely at the pleasure of the Board of Directors.

Solomon Kerzner, Chairman and Chief Executive Officer: Mr. Kerzner has been our Chairman and Chief Executive Officer since October 1993 and from October 1993 to June 1996 he served as our President. Mr. Kerzner is the Chairman of WLG, which, together with its affiliates, owns approximately 16.5% of our shares and has the right to vote an additional 4.1% of our shares. Mr. Kerzner is one of the visionary leaders of the resort and gaming industries. Prior to founding Kerzner, Mr. Kerzner pioneered the concept of an entertainment and gaming destination resort designed and managed to appeal to multiple market segments by developing Sun City, located near Johannesburg, South Africa. Sun City features four hotels with approximately 1,300 rooms, an entertainment center that includes a 6,000-seat indoor superbowl, a 46-acre man-made lake for water sports and approximately 55,000 square feet of gaming space. In 1992, Sun City was expanded to include The Lost City, a themed resort that features a 350-room luxury hotel and a man-made jungle in which over one million trees were transplanted. Mr. Kerzner has been responsible for the development of 21 hotels and founded both of southern Africa’s largest hotel groups, Southern Sun Hotels and Sun International South Africa. We do not have any interest in any of the southern African properties developed by Mr. Kerzner. Mr. Kerzner is the father of Mr. Howard B. Kerzner.

Howard B. Kerzner, President: Mr. Kerzner joined Kerzner in May 1995 as Executive Vice President—Corporate Development and has been President since June 1996. Prior to that time, he was Director—Corporate Development of SIIL from September 1992. Previously, Mr. Kerzner was an Associate of Lazard Frères & Co. LLC from September 1991. Prior to that Mr. Kerzner worked for the First Boston Corporation. Mr. Kerzner is the son of Mr. Solomon Kerzner.

Charles D. Adamo, Executive Vice President—Corporate Development & General Counsel: Mr. Adamo joined Kerzner in May 1995 as General Counsel and has been responsible for corporate development since January 1997. Prior to that time, he was Group Legal Advisor of SIIL from September 1994. Previously, Mr. Adamo was engaged in the practice of law at the firm of Cravath, Swaine & Moore LLP in New York from 1986. Mr. Adamo is admitted to the bar in the State of New York.

John R. Allison, Executive Vice President--Chief Financial Officer: Mr. Allison joined Kerzner in May 1995 as Chief Financial Officer. Mr. Allison joined SIIL in March 1994 as Group Financial Director. From December 1987 until February 1994, Mr. Allison was Financial Director of Sun International Inc., a resort and management holding company with interests in approximately 27 hotels in southern Africa. Prior to that time, he was the Group Financial Director of Kimberly-Clark (South Africa) Limited for four years. He is a fellow of the Institute of Chartered Accountants in England and Wales and a member of the South African Institute of Chartered Accountants.

Peter N. Buckley, Director: Mr. Buckley has been a Director since April 1994. Mr. Buckley is Chairman of Caledonia, which currently owns approximately 20.7% of our Ordinary Shares and has the right to vote an additional 4.1% of our Ordinary Shares. In 1994 he was appointed Chairman of Caledonia having been Deputy Chairman and Chief Executive since 1987. He is also Chairman of Bristow Helicopter Group Limited. He is a non-executive Director of Close Brothers Group PLC and Offshore Logistics, Inc. (a NYSE listed company).

Howard S. Marks, Director: Mr. Marks has been a Director since April 1994. Mr. Marks is Chairman of Oaktree Capital Management, LLC, which manages funds in excess of $20.0 billion for institutional investors. Previously, Mr. Marks was employed by The TCW Group, Inc. where he became Chief Investment Officer for Domestic Fixed Income and President of its largest affiliate, TCW Asset Management Company.

Eric B. Siegel, Director: Mr. Siegel has been a Director since April 1994. Mr. Siegel is a retired limited partner of Apollo Advisors, L.P. Mr. Siegel is also a Director and Chairman of the Executive Committee of El Paso Electric Company, a publicly traded utility company.

Heinrich von Rantzau, Director: Mr. von Rantzau has been a Director since July 2001. Mr. von Rantzau is a principal of Cement Merchants SA, which currently beneficially owns approximately 13.5% of our Ordinary Shares, and an executive of Deutsche Afrika-Linien GmbH, Reederei John T. Essberger and VORA Schiffahrts-und Beteiligungsgesellschaft GmbH. Mr. von Rantzau is a board member of The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited and a member of the Trade Advisory Board of Germanischer Lloyd, Lloyd’s Register of Shipping and German National Committee.

We agreed to include in the slate of directors submitted by us to our shareholders for election one individual designated by each of WLG, Caledonia and CMS, subject to their retaining a minimum beneficial ownership of our Ordinary Shares. See “Item 7. Major Shareholders and Related Party Transactions, (B) Related Party Transactions—Registration Rights and Governance Agreement.”

^{(B) Compensation}

The aggregate cash compensation for our directors and officers, including salaries, bonuses and benefits in kind granted, for the year ended December 31, 2002 was $5.6 million. None of the directors or officers participates in our pension plan. We do not set aside any amounts for pension or retirement benefits for any of our directors or officers.

Effective from January 1, 2001, we have a bonus plan whereby our employees, including officers, will qualify for bonuses if we attain either certain levels of earnings or EPS, and such bonuses will be calculated as a percentage of each individual’s salary. Such percentage will be based on, among other things, each employee’s level of responsibility. Bonuses paid to our officers under this bonus plan could reach a maximum of 60% of the respective employee’s base salary.

We have adopted stock option plans for our employees, officers and directors in 1995 (the “1995 Plan”), in 1997 (the “1997 Plan”), in 2000 (the “2000 Plan”) and collectively the “Plans” that provide for the issuance of options to acquire an aggregate of 7,500,000 Ordinary Shares. As of May 31, 2003 a total of 7,587 Ordinary Shares remained available for grant. The 1995 Plan provides for the options to become exercisable, unless otherwise specified by the Board of Directors and subject to certain acceleration and termination provisions, after two years from the date of grant in respect of 20% of such options and thereafter in installments of 20% per year over a four-year period. Options issued under the 1997 Plan become exercisable one year from the date of grant with respect to 20% of such options and thereafter in installments of 20% per year over a four-year period. The 2000 Plan provides for the vesting period to begin one year after the grant date in respect of one third of such options, and thereafter in installments of one third per year over a two-year period. Options granted under the Plans have a term of 10 years from the date of grant. Our employees, officers and directors may be granted options under the Plans. Such options may be transferred to trusts with respect to which any such participants are beneficiaries and corporations or to other entities controlled by such participants.

On May 7, 2002, our Board of Directors resolved, under certain conditions, to make available to employees and directors holding options with an exercise price higher than $32.00 per share, an offer to surrender all or some of the options granted to them under the Plans. In exchange, such employees and directors would have the possibility, under certain conditions, to be granted new options giving the right to subscribe for 75% of the number of shares as the surrendered options. The exercise price for the new options would be the fair market value of the Ordinary Shares on the new grant date, which would be no sooner than six months and one day after the cancellation date of the old options, subject to the conditions set forth in the Schedule TO (Tender Offer) documents filed with the SEC on May 27, 2002, the commencement date of the offer period. The offer to option holders under the exchange program expired on June 25, 2002. The 1,227,600 eligible options that were properly submitted for exchange were accepted and cancelled effective June 26, 2002. Such options represent substantially all those that were eligible for exchange. We granted 920,700 new options, which have similar terms to the cancelled options, in exchange for the cancelled options on December 26, 2002 at a price of $20.07.

During the year 2002, options to purchase an aggregate of 403,000 Ordinary Shares, pursuant to the Plans described above, were granted to our directors and officers. Of these shares, 302,000 were issued as part of the stock option tender offer discussed above. As of December 31, 2002, total options to acquire 5,347,000 Ordinary Shares were outstanding, of which 3,160,000 were exercisable as of that date. As of December 31, 2002, our officers and directors, as a group, held options to acquire approximately 2,727,000 Ordinary Shares, of which approximately 1,941,000 are currently exercisable. The options outstanding related to the officers and directors as of December 31, 2002 were granted at exercise prices ranging from $11.69 to $41.63. The expiration dates for these options range from 2005 to 2012.

As of May 31, 2003, total options to acquire 5,287,000 Ordinary Shares were outstanding, of which 3,316,000 were exercisable as of that date. As of May 31, 2003 our officers and directors, as a group, hold options to acquire approximately 2,727,000 Ordinary Shares, of which approximately 2,008,000 are currently exercisable. The options outstanding related to the officers and directors as of May 31, 2003 were granted at exercise prices ranging from $11.69 to $41.63. The expiration dates for these options range from 2005 to 2013.

^{(C) Board Practices}

Pursuant to our Articles of Association, as amended, our maximum number of directors is fixed at five. At our September 24, 2001, annual meeting of shareholders, our existing directors, consisting of Mr. S. Kerzner, Mr. Buckley, Mr. Marks, Mr. Siegel and Mr. von Rantzau were elected to terms set to expire at our annual general meeting to be held in 2004.

Our Board of Directors has appointed an audit committee of the board consisting of Mr. Buckley, Mr. Marks and Mr. Siegel. To ensure complete independence, Deloitte & Touche LLP has (and their predecessors, Arthur Andersen LLP, historically had) full and free access to meet with the audit committee, without management representatives present, to discuss the results of the audit, the adequacy of internal controls and the quality of financial reporting. The primary function of the audit committee is to assist our Board of Directors in fulfilling its oversight responsibilities by reviewing the financial information that will be provided to the stockholders and others, the systems of internal controls that our management and Board of Directors have established and the audit process. The audit committee of our Board of Directors reviews the selection of our independent certified public accountants each year. The audit committee convenes at least eight times per year.

We also have a remuneration committee consisting of Mr. S. Kerzner, Mr. Buckley, Mr. Marks and Mr. Siegel. The remuneration committee is mandated to review and adopt our executive compensation plans and policies, including the adoption of stock option plans and the granting of options to senior executives thereunder.

Our stock option committee, consisting of Mr. S. Kerzner, Mr. H. Kerzner and Mr. Adamo, administer the grant of options under our stock option plans, subject to board approval.

We do not have a service contract with any of our directors.

^{Recent Rulemaking Initiatives on Corporate Governance Standards}

The Sarbanes-Oxley Act of 2002

The Public Company Accounting Reform and Investor Protection Act of 2002, also known as Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), was enacted on July 30, 2002 and contains significant new rules on corporate governance for U.S. and non-U.S. companies reporting in the U.S., especially in the area of audit committee composition and authority. We are closely monitoring SEC rulemaking pursuant to the Sarbanes-Oxley Act to ensure our compliance with any rules as they become applicable to us as a foreign private issuer.

The Proposals of the NYSE on Corporate Governance Listing Standards

On April 4, 2003, the NYSE amended a set of proposed rules on corporate governance listing standards that have been submitted to the SEC for approval. These proposals follow a report on corporate governance listing standards issued on June 6, 2002 by the Corporate Accountability and Listing Standards Committee of the NYSE. In contrast to the Sarbanes-Oxley Act, the rules proposed by the NYSE for the most part would apply only to U.S. companies listed on the NYSE. Non-U.S. companies listed on the NYSE would, however, be required to disclose significant differences between their respective local laws and practices and the standards applicable to U.S. companies. The proposals of the NYSE are subject to public comment and SEC approval and may be adopted in their current form or may be amended.

We are continuously reviewing our corporate governance standards and procedures in light of the relevant discussion and rulemaking in the U.S.

^{(D) Employees}

Set forth below is a table showing the approximate total number of employees at our properties worldwide by geographic location for the periods indicated.

                                                                          At December 31,

                                                                   2002          2001         2000
                    The Bahamas                                   5,800         5,650        5,800
                    Atlantic City(1) .                                -             -        3,300
                    Other                                           450           400          500
                                                                -----------    ---------    --------
                    Total:                                        6,250         6,050        9,600
                                                                ===========    =========    ========
__________

(1)   Reflects the sale of Resorts Atlantic City on April 25, 2001.

We do not employ a significant number of temporary workers.

Union Contract Arrangements - The Bahamas

In The Bahamas,  as of December 31, 2002,  approximately  3,600 of our employees  were  represented  by The Bahamas
Hotel,  Catering and Allied Workers Union. Kerzner  International Bahamas Limited participates in The Bahamas Hotel
Employers  Association,  which represents resort operators in the Paradise  Island-New  Providence Island area. The
association's  existing  contract with the union  expired  January 7, 2003,  and a new contract is currently  being
negotiated.  Labor relations in The Bahamas have been unstable at times with  occasional work stoppages  occurring,
not only at Atlantis,  but also at publicly run entities  such as the  Bahamian  Electric  Corporation  and Bahamas
Telephone Company.  As the country's largest private employer,  we are sometimes the target of labor disputes.  See
"Item 3. Key  Information,  (D) Risk  Factors-Work  stoppages  and other labor  disputes  could harm our  financial
condition and results of operations."

(E) Share Ownership

Through his  affiliation  with WLG and its  affiliates,  as of May 31, 2003,  Mr. S.  Kerzner has sole  dispositive
power over  approximately  4.6 million Ordinary Shares,  which  represents  approximately  16.4% of the outstanding
Ordinary Shares.  In addition,  as is described under "Item 7. Major  Shareholders and Related Party  Transactions,
(A) Major  Shareholders-Restructuring  of Relationship with Majority Shareholder," WLG, a company controlled by Mr.
S. Kerzner,  has the right to vote an additional 1.15 million  Ordinary  Shares,  which  represents one half of the
Ordinary Shares owned by Kersaf.  Familienstiftung  Von  Rantzau-Essberger,  a family trust of Heinrich von Rantzau
(and also the sole  shareholder of CMS),  owns 74,550  Ordinary  Shares.  Each of our other  directors and officers
owns beneficially less than 1% of the Ordinary Shares.

For a  description  of options  granted to our  directors,  executive  officers and other key  employees,  see "(B)
Compensation" above.

ITEM 1.           MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

(A) Major Shareholders

As of March 31, 2003,  we had  28,115,247  Ordinary  Shares  outstanding.  The  following  table sets forth certain
information  as of March  31,  2003 (or  certain  other  dates,  to the  extent  indicated  below),  regarding  the
beneficial  ownership  of our  Ordinary  Shares  by: (i) any person who is known to us to be the owner of more than
five percent of any class of our voting  securities  and (ii) our  directors  and  officers as a group.  Due to the
arrangements described below, certain of our Ordinary Shares are beneficially owned by several parties.

  Beneficial Owner                                               Number of Shares         Percent of Shares
  Caledonia Investments PLC ("Caledonia")                                 6,955,083 (1)                24.7%
  World Leisure Group Limited ("WLG")                                     5,792,585 (1)                20.6%
  Kersaf Investments Limited ("Kersaf")                                   2,293,580 (1), (2)            8.2%
  Baron Capital Group, Inc. ("Baron")                                     5,763,617 (3)                20.5%
  Cement Merchants SA ("CMS")                                             3,792,843 (2), (4)           13.5%
  Directors and officers as a group (excluding shares                           --              less than 1%
  deemed owned by WLG, and hence also beneficially owned
  by Solomon Kerzner) (5)
__________

(1)   Kersaf does not have any voting  rights with  respect to its  Ordinary  Shares of Kerzner  International.  In
      connection  with the  July  2001  restructuring  of our  majority  shareholder,  Kersaf  and  certain  of its
      affiliates  granted  irrevocable  proxies,  in  varying  amounts,  to  vote  all of its  Ordinary  Shares  to
      Caledonia,  WLG and CMS.  The amounts  presented  in this table for  Caledonia  and WLG each include half (or
      1,146,790) of the Ordinary  Shares  currently  owned by Royale  Resorts  International  Limited  ("RRIL") and
      Royale  Resorts  Holdings  Limited  ("RRHL"),  each of which  companies  are jointly  owned by Kersaf and CMS
      (73.3% by Kersaf  and  26.7% by CMS).  The  ownership  amounts  for  Caledonia  are  based  upon  information
      contained in the Schedule 13D filed on January 21, 2003 by  Caledonia  and certain of its  affiliates,  which
      states that Caledonia has the right to vote 2,002,180 of Kersaf's  Ordinary  Shares (which  represented  half
      of  Kersaf's  Ordinary  Shares at that  time) by proxy,  which  amount is  adjusted  to  reflect  information
      reported in the Schedule 13D/A filed by Kersaf on June 3, 2003,  which states Kersaf's most current  holdings
      of our  Ordinary  Shares  (the  "Kersaf  13D").  The  ownership  amounts  for WLG are based upon  information
      contained in the Schedule 13D filed on July 11, 2001,  together with  information  reported in the Kersaf 13D
      which states its most current holdings of our Ordinary Shares.

(2)   Amounts  presented  in this table  reflect the  beneficial  ownership by each of Kersaf and CMS of all of the
      1,392,872  Ordinary  Shares held by RRIL and all of the 400,707  Ordinary Shares held by RRHL, for a total of
      1,793,579  Ordinary Shares over which they share  dispositive  power due to their joint ownership of RRIL and
      RRHL.  According to the CMS 13D referred to below,  also  included  within the amounts  shown for both Kersaf
      and CMS are 588,231  Ordinary  Shares which CMS believes it has the right to vote  pursuant to the proxy from
      Kersaf discussed in note (1) above.

      In  addition,  pursuant  to an  agreement  entered  in July 2001,  RRHL and RRIL  granted to CMS an option to
      purchase all or a portion of 1,150,000 of our Ordinary  Shares then held by RRHL and RRIL.  The  transfers of
      Ordinary  Shares to CMS  described in note (4) below had the effect of  decreasing  the  remaining  number of
      option shares to 588,231  Ordinary  Shares.  This option expires on July 2, 2006.  Amounts  presented in this
      table treat all of the  Ordinary  Shares  subject to this option as being  beneficially  owned by both Kersaf
      and CMS, both due to the shared rights of  disposition  described in the preceding  paragraph and the option.
      The  amounts  stated in this note (2) and in the table  above are based  upon  information  contained  in the
      Schedule 13D filed on April 3, 2003 by CMS (the "CMS 13D").

(3)   Based upon  information  contained in the Schedule  13G/A filed by Baron on February 13, 2003,  as updated by
      Form 4's filed by Ronald Baron since such date.

(4)   In addition to the  Ordinary  Shares over which CMS shares  dispositive  power with Kersaf  discussed in note
      (2) above, CMS acquired  1,815,421  Ordinary Shares in November and December 2002 in a series of transactions
      with RRIL, RRHL and another  affiliate of Kersaf.  These amounts are based upon information  contained in the
      CMS 13D.  CMS also  received a dividend  of 109,293  Ordinary  Shares on May 31,  2003,  as  reported  in the
      Schedule  13D/A  filed on June 13,  2003 by CMS.  Amounts  presented  for CMS also  include  74,550  Ordinary
      Shares held directly by Familienstiftung Von Rantzau-Essberger, the sole shareholder of CMS.

(5)   If the  directors  and  officers  as a group  were to  exercise  their  options,  they  would own 3.7% of the
      Ordinary  Shares  outstanding  as of  March  31,  2003  (excluding  shares  deemed  owned  by  WLG  and  also
      beneficially owned by Solomon Kerzner).

As of March 31, 2003, we had approximately 713 holders of record of approximately 28,115,247 Ordinary Shares, excluding 7,072,049 Ordinary Shares held as treasury stock. As of March 31, 2003, there were an estimated 700 U.S. holders of record holding approximately 41% of our issued and outstanding Ordinary Shares.

All of our Ordinary Shares have the same voting rights.

^{(B) Related Party Transactions}

Set forth below is a summary of certain agreements that have been entered into or transactions that have occurred since the beginning of the last fiscal year involving us and any of our subsidiaries, affiliates or key management.

Restructuring of Relationship with Majority Shareholder

On July 3, 2001, we announced the restructuring of our majority shareholder, SIIL, and the resolution of certain matters with SIIL and certain of its shareholders. Pursuant to the restructuring, SIIL was dissolved and its shareholders received interests in us directly proportionate to their interests in SIIL. The former shareholders of SIIL currently beneficially own approximately 45.3% of our issued and outstanding shares. SIIL was owned in equal thirds by Kersaf, Caledonia and WLG, a company controlled by a Kerzner family trust. SIIL previously was governed by a shareholders agreement pursuant to which all major decisions of SIIL required the unanimous consent of its shareholders. Kersaf operates a number of hotel, casino and resort properties in southern Africa under the “Sun International” name and there had been some confusion regarding the use of the “Sun International” name by both Kersaf and us. In October 2001, we commenced a lawsuit against Kersaf and certain of its subsidiaries. See “Item 8. Financial Information, (A) Consolidated Statements and Other Financial Information—Legal Proceedings—Kersaf Litigation.” In November 2002, we reached a further settlement with SIIL’s former shareholders to resolve certain outstanding issues. See below “Global Settlement.” As part of the July 2001 restructuring:

    o    The SIIL  shareholders  agreement was  terminated  effective  July 3, 2001,  and SIIL was dissolved in May
         2002. SIIL’s former shareholders now hold their shares in us directly.

    o    CMS, a partner in Kersaf’s hotel,  casino and resort  management  activities in southern Africa,  obtained
         options to  purchase a portion  of our  Ordinary  Shares  owned by  Kersaf.  As part of the  restructuring
         agreements, Heinrich von Rantzau, a principal of CMS, joined our Board of Directors.

    o    Kersaf,  Caledonia  and WLG agreed to certain  standstill  provisions  through June 2006 pursuant to which
         each of them would refrain from proposing or consummating  certain  extraordinary  corporate  transactions
         involving  us,  including  any  merger  or  the  sale  of  substantially  all  of our  assets.  See  below
         "Registration Rights and Governance Agreement."

    o    Pursuant to a registration  rights and governance  agreement,  we granted certain  registration  rights to
         Kersaf,  Caledonia,  WLG, CMS and certain of their  respective  affiliates,  and Kersaf agreed to sell not
         less than 2.0 million of our Ordinary  Shares in a registered  public offering before June 30, 2002 (which
         date was  subsequently  extended to February 28, 2003),  subject to certain  extensions.  Kersaf satisfied
         this obligation by completing the Kersaf Offering on December 18, 2002. See below "Global Settlement."

    o    The duration of appointment of our directors,  consisting of Mr. S. Kerzner,  Mr. Buckley, Mr. Siegel, Mr.
         Marks and Mr. von Rantzau, have been extended until our annual general shareholders meeting in 2004.

    o    We agreed that,  after a transition  period not to exceed one year from July 3, 2001, we would cease using
         the names "Sun" and "Sun  International"  and, as between the parties,  Kersaf would have exclusive rights
         to use such names.  In July 2002, we changed our corporate name to Kerzner  International  Limited.  We do
         not believe  that we have  experienced  any change in our business or  operations  as a result of the name
         change.

    o    Kersaf was granted the right to pursue a potential resort development  project in Port Ghalib,  Egypt, and
         we would have  received  between 25% and 50% of Kersaf’s  gross  receipts from this project when and if it
         was consummated.  However,  as part of the November 2002 settlement,  we relinquished all of our rights to
         an interest in this project. See below "Global Settlement."

    o    In July 2001,  Kersaf made a one-time  payment of $3.5  million to us and issued a secured note to us with
         a principal  amount of $12.0  million and a maturity  date of June 30,  2003.  In  December  2001,  Kersaf
         repaid in full the principal amount of the note and accrued interest.

    o    Kersaf  agreed to  continue  to make an annual  payment to us  pursuant  to a  long-term  contract,  which
         payment was  approximately  $3.3 million in 2002.  See below  "--Long-Term  Contract  Fees." As part of the
         November 2002 settlement,  Kersaf’s  obligation to make this payment was terminated  effective December 2,
         2002.

Global Settlement

In  November  2002,  we  entered  into a  settlement  agreement  with  Kersaf and  certain  of our other  principal
shareholders  that,  among other things,  settled  certain  outstanding  claims that we had with Kersaf and amended
certain  provisions  of the  July  2001  restructuring  agreements  relating  to our  former  majority  shareholder
described  in  "Restructuring  of  Relationship  with  Majority  Shareholder"  above.  As  part  of the  July  2001
restructuring  agreements,  Kersaf agreed to, among other things,  sell at least 2.0 million of our Ordinary Shares
in a registered public offering,  adhere to a certain non-compete agreement,  continue to make an annual payment to
us  pursuant  to a long-term  contract,  which  payment was  approximately  $3.3  million in 2002,  and grant us an
interest in a proposed  project in Port  Ghalib,  Egypt.  In October  2001,  we filed a lawsuit in New York against
Kersaf and certain of its  affiliates  alleging,  among other  things,  that Kersaf had  breached  its  non-compete
obligation under the July 2001 restructuring agreements. As part of the November 2002 settlement agreement:

    o    We agreed to terminate the outstanding  lawsuit related to Kersaf and certain of its affiliates,  and each
         of the parties to the settlement  agreement  released all other parties to the  settlement  agreement from
         any and all claims, subject to certain limited exceptions;

    o    Certain contractual  arrangements were terminated,  including Kersaf’s non-compete agreement and Kerzner’s
         rights in Kersaf’s project in Port Ghalib, Egypt;

    o    Kersaf agreed to pay us $32.0  million,  plus interest  accruing at a rate of 7.0% per annum from December
         2, 2002,  out of the proceeds of the Kersaf  Offering in full  satisfaction  of a note  delivered to us in
         connection with the settlement agreement;

    o    The  date by which  Kersaf  was  obligated  to sell at least  2.0  million  of our  Ordinary  Shares  in a
         registered  public offering was extended from October 31, 2002 to February 28, 2003,  which obligation was
         satisfied by Kersaf by completing the Kersaf Offering on December 18, 2002; and

    o    Kersaf’s  obligation to make the annual  payment  referred to above was terminated  effective  December 2,
         2002.

Registration Rights and Governance Agreement

As part of the SIIL  reorganization,  we entered into a registration  rights and governance  agreement with Kersaf,
WLG,  Caledonia,  CMS and certain of their  respective  affiliates,  which was amended as part of the November 2002
settlement.  This agreement,  and a related proxy,  governs the voting of Kersaf’s Ordinary Shares that are subject
to a proxy discussed above in "(A) Major Shareholders." Among other things, under this agreement, as amended:

    o    Kersaf,  Caledonia,  WLG and CMS agreed to certain transfer  restrictions that generally limit the ability
         of each party to purchase or sell our Ordinary  Shares.  As part of the  November  2002  settlement,  this
         agreement  was  modified  so that  Kersaf  will no  longer  have  the  right  to  enforce  these  transfer
         restrictions.

    o    Each of Kersaf,  Caledonia,  CMS, WLG and certain of their  respective  affiliates  were  granted  certain
         demand  registration  rights  that may  require us to  register  all or part of their  Ordinary  Shares of
         Kerzner in one or more  registered  public  offerings  from time to time as follows:  (i) Kersaf agreed to
         sell not less than 2.0 million of our shares in a registered  public  offering before June 30, 2002 (which
         date was  subsequently  extended to February 28, 2003),  subject to certain  extensions (the "Minimum Year
         One Sale"),  (ii) following such  offering,  Kersaf and certain of its affiliates  have one or more demand
         registration  rights each covering no less than 1.0 million  Ordinary  Shares,  (iii)  following March 31,
         2002,  Caledonia and certain of its affiliates have one or more demand  registration  rights each covering
         no less  than  1.0  million  Ordinary  Shares,  (iv)  following  June 30,  2003,  WLG and  certain  of its
         affiliates  have one demand  registration  right  covering no less than 0.5 million  Ordinary  Shares and,
         following  the  earlier of June 30,  2004,  and the date  Caledonia  and  certain of its  affiliates  have
         disposed of 2.5 million of their Ordinary  Shares,  one or more demand  registration  rights each covering
         no less than 1.0  million  Ordinary  Shares,  and (v)  following  March 31,  2002,  CMS and certain of its
         affiliates  have one or more demand  registration  rights each covering no less than 1.0 million  Ordinary
         Shares.  Kersaf  satisfied the Minimum Year One Sale by completing a secondary  offering of 2.3 million of
         our Ordinary Shares on December 18, 2002.

    o    Each of Kersaf,  Caledonia,  CMS and WLG were granted the right to sell certain of their  Ordinary  Shares
         through our brokers in open market transactions.

    o    If Kersaf sells more than 4.0 million shares pursuant to one or more  underwritten  public  offerings,  we
         will  receive a portion of the net proceeds  (less  certain  commissions,  fees and  expenses)  from those
         shares sold by Kersaf in excess of four million shares in the following amounts:

         o        if the  price  per share is less than or equal to $27.00  per  share,  five  percent  of such net
                  proceeds;

         o        if the  price  per  share is  greater  than  $27.00  but  less  than  $30.375,  five  percent  of
                  such net proceeds plus 50% of the amount by which the price per share exceeds $27.00; and

         o        if the price per share is greater than $30.375, ten percent of such proceeds.

    o    We  submitted  to our  shareholders  an  amendment  to our  articles  of  association  that was adopted in
         September  2001 and set the term of our  existing  directors  to expire at our annual  general  meeting in
         2004.

    o    We agreed to include in the slate of  directors  submitted  by us to our  shareholders  for  election  one
         individual  designated by each of WLG,  Caledonia and CMS, subject to their retaining a minimum beneficial
         ownership of our Ordinary Shares.

    o    Kersaf has agreed until June 30, 2006 not to acquire any of our shares.  In  addition,  subject to certain
         rights of first refusal as between  themselves,  each of Caledonia,  WLG and CMS has agreed not to acquire
         any  additional  shares of Kerzner in excess of 0.9  million,  in the case of  Caledonia  and WLG, and 4.0
         million, in the case of CMS, prior to June 30, 2006, in each case subject to certain exceptions.

    o    Kersaf,  Caledonia,  CMS and WLG agreed to refrain from proposing or  consummating  certain  extraordinary
         corporate  transactions  involving  us,  including  any  merger  or the sale of  substantially  all of our
         assets,  unless an independent  third party proposes such an extraordinary  corporate  transaction and our
         Board of Directors determines to enter into discussions or negotiations with that third party.

This summary is qualified in its entirety by reference to the  particular  provisions  of the  registration  rights
and governance  agreement,  which can be found as Exhibit 10.8 to our  registration  statement on Form F-4 filed on
September  21,  2001,  and the  settlement  agreement,  which can be found as Exhibit 99.2 to our Form 6-K filed on
November 8, 2002, both of which you should review carefully.

Harborside

We  entered  into a  series  of  promissory  notes  with  Harborside  to fund 50% of the  construction  cost of the
timeshare  units on Paradise  Island in The Bahamas.  These notes  amounted to $19.5  million at December 31, 2002.
We earn interest on these  advances at a rate equal to one-month  LIBOR plus 250 basis  points,  which was 3.88% at
December 31, 2002. The loans were made  simultaneously  with loans from Starwood,  which mirror the amounts,  terms
and  conditions  of our  loans.  Our loans and the  Starwood  loans are pari  passu with  respect  to  payments  of
principal  and  accrued  interest  and such  payments  will be made in cash,  as it is  available  from the sale of
timeshare  units. Of the amount advanced to Harborside,  the Company does not anticipate  repayment within the next
twelve months.

Repairs at  Harborside  were  completed  during the fourth  quarter,  with the resort  reopening in December  2002.
Harborside  was closed at the end of August  2002 in order to repair  significant  damage  resulting  from  adverse
weather  primarily  due to  Hurricane  Michelle.  Included  within  equity in earnings  from  Harborside  is a $6.9
million charge,  which represents our share of construction  remediation  costs.  This loss has not been reduced by
any anticipated  insurance recovery,  but Harborside has filed a claim with its insurers,  which is presently under
negotiation.  Amounts due from Harborside  include $2.9 million  representing  the fair value of services  provided
by Atlantis to the timeshare  owners of Harborside while  Harborside was undergoing  construction  remediation work
and is included  within 2002 rooms and food and  beverage  revenue in the  accompanying  consolidated  statement of
operations.

We provide  marketing,  administrative  and  development  services to Harborside  from which we earned fees of $1.6
million, $1.4 million and $3.4 million for the years ended December 31, 2002, 2001 and 2000 respectively.

Management Services and Fees

We provide  management and marketing  services to SRL, a Mauritius company in which we currently own a 20.4% equity
interest.  Pursuant to the management  agreement with SRL,  One&Only (Indian Ocean) Management  Limited  ("One&Only
Management"),  a company in which we currently have an 80% interest,  provides  comprehensive  management  services
under  individual  management  agreements  relating to each of One&Only Le Saint Geran,  One&Only Le Touessrok,  La
Pirogue,  Sugar Beach and Le Coco Beach resort hotels,  which SRL owns. We recently  entered into an agreement with
SRL to, among other things,  extend the Mauritian  management  agreements to 2023. See "Item 4.  Information on the
Company, (B) Business Overview--The Properties--One&Only Resorts--Indian Ocean."

One&Only Management  provides  management  services to One&Only Kanuhura,  a Maldives company in which we currently
own a 20% equity interest.  The terms of the management  agreement run concurrent with the terms of a lease between
One&Only  Kanuhura and the  government of the Maldives to lease One&Only  Kanuhura.  That lease expires in 2026 and
is subject to extension.

We provide management services to Harborside, a joint venture in which we own a 50% equity interest.

We provide  management  services to One&Only  Palmilla Resort, a deluxe,  five-star  property located near Cabo San
Lucas. In connection with the purchase,  we entered into long-term  management and development  agreements  related
to the property that will expire in 2022.

We also have a management  agreement to manage  One&Only Royal Mirage Hotel in Dubai,  which opened in August 1999,
including the expansion of the hotel completed in December 2002.  This management agreement expires in 2019.

Office Lease

Effective  February  2002,  we entered  into a lease  agreement at arm’s length  pricing with  Tennyson  Properties
Limited  whereby we are leasing  office space in  Buckinghamshire  in the United  Kingdom for a period of 15 years.
The annual rent is  approximately(pound)205,000  (which is the  equivalent  of  approximately  $330,000 at December 31,
2002) and is subject to increase  every five years to the current fair market value.  Tennyson  Properties  Limited
is owned by a family trust established by Solomon Kerzner.

Long-Term Contract Fees

In 2002, we received  approximately  $3.3 million from Kersaf  pursuant to a long-term  contract.  This payment was
established  at $2.4  million  in 1994 and  increased  at a rate of 3.3% per year and has been  paid  annually.  We
received  our last payment on December 2, 2002,  and pursuant to the  settlement  agreement  with Kersaf  described
above in "Global Settlement," Kersaf’s obligation to make payments was terminated effective as of that date.

(C) Interests of Experts and Counsel

Not applicable.

ITEM 1.           FINANCIAL INFORMATION

(A) Consolidated Statements and Other Financial Information

Please refer to Item 18 for our  consolidated  financial  statements and the independent  auditors’ report prepared
by Deloitte & Touche LLP.

Legal Proceedings

Kersaf Litigation

On October 17, 2001 we  commenced  a lawsuit in the  Supreme  Court of the state of New York (Index No.  604963/01)
against Kersaf,  Royale Resorts Holdings Limited  ("RRHL"),  a subsidiary of Kersaf;  and certain of Kersaf’s other
subsidiaries  (collectively,  the "Kersaf Group"),  for damages and other relief for breach of contract,  breach of
confidentiality,  tortious  interference  with prospective  business  relations and unjust  enrichment.  The Kersaf
Group  engages in the resort,  hotel and gaming  business in southern  Africa.  The gravamen of the  complaint  was
that, in settlement of prior disputes,  the defendants  entered into a series of related  agreements in July, 2001,
that,  inter alia,  barred the defendants  from engaging in the hotel,  resort and gaming  business  outside of the
mainland  of the  continent  of  Africa  for an  agreed  period  of time;  that  shortly  after  entering  into the
agreements,  the  defendants  breached  them by  engaging  in  business  in areas of the world from which they were
contractually barred from doing business;  and that defendants misused  confidential  information to which they had
access to interfere  with and attempt to usurp  business  opportunities  that  belonged  rightly to us. In November
2002,  we entered into a settlement  agreement  and agreed to terminate the  outstanding  lawsuit,  and each of the
parties to the  settlement  agreement  released  all other  parties to the  settlement  agreement  from any and all
claims,  subject to certain limited  exceptions.  See "Item 7. Major  Shareholders and Related Party  Transactions,
(B) Related Party Transactions--Global Settlement."

Other Litigation

We previously  reported  that a suit was brought  against  Kerzner and Kerzner  International  Bahamas  Limited for
wrongful  death  arising  from an August 8, 2000  snorkeling  accident  which  occurred in the  Paradise  Lagoon at
Atlantis.  That litigation was settled in 2002.

The Company is  involved  in certain  litigation  and claims  incidental  to its  business.  The  Company  does not
believe,  based on currently available  information,  that these matters will have a material adverse effect on the
accompanying consolidated financial statements.

Enforceability Of Civil Liabilities

We are a Bahamian  international  business company  incorporated  under the International  Business  Companies Act,
2000 of the  Commonwealth  of The Bahamas.  Certain of our  directors  and executive  officers  reside  outside the
U.S. A  substantial  portion  of the  assets of such  persons  and a certain  portion  of our  assets  are  located
outside the U.S. As a result,  in the  opinion of Harry B.  Sands and  Company,  our  Bahamian  counsel,  it may be
difficult or impossible to effect service of process  within the U.S. upon such persons,  to bring suit in the U.S.
or to enforce,  in the U.S.  courts,  any judgment  obtained there against such persons  predicated  upon any civil
liability  provisions of the U.S.  federal  securities  laws. It is unlikely that Bahamian  courts would  entertain
original  actions against  Bahamian  companies,  their directors or officers  predicated  solely upon U.S.  federal
securities  laws.  Furthermore,  judgments  predicated  upon any civil  liability  provisions  of the U.S.  federal
securities laws are not directly  enforceable in The Bahamas.  Rather,  a lawsuit must be brought in The Bahamas on
any such judgment.  Subject to consideration of private  international  law, in general,  a judgment obtained after
due trial by a court of competent  jurisdiction,  which is final and conclusive as to the issues in connection,  is
actionable in Bahamian courts and is impeachable  only upon the grounds of (i) fraud,  (ii) public policy and (iii)
natural justice.

Gaming debts may not be legally enforced in certain foreign  jurisdictions or in certain  jurisdictions  within the
U.S.  As a result,  we may be unable to  collect  gaming  debts  from  patrons  of our  casinos  who reside in such
jurisdictions.

Dividend Policy

Pursuant to our  Articles of  Association,  the Board of  Directors  may from time to time  declare  dividends.  We
historically have not paid dividends and there are currently no plans to declare any dividends.

(B)  Significant Changes

Except as  otherwise  disclosed  in this  Annual  Report,  there has been no  significant  change in our  financial
position since December 31, 2002.

ITEM 2.           THE OFFER AND LISTING

(A)  Offer and Listing Details

The Ordinary  Shares do not trade on any foreign  exchange.  The Ordinary Shares have been listed and traded on the
NYSE since March 1, 1996.  On May 30, 2003, the closing price of our Ordinary Shares on the NYSE was $29.97

The  following  tables set forth the range of high and low closing sale prices of the  Ordinary  Shares as reported
on the NYSE during the periods shown.

For the year:

                                    High             Low
                                  ----------      ----------
2002                                 $31.20          $18.80
2001                                  28.50           17.13
2000                                  23.75           15.88
1999                                  47.49           17.31
1998                                  50.38           31.00
For the quarter:

                                    High             Low
                                  ----------      ----------
2003: 1st quarter                    $23.45          $19.37
2002: 4th quarter                     24.74           18.80
          3rd quarter                 25.13           22.25
          2nd quarter                 31.20           24.24
          1st quarter                 27.21           22.95
2001: 4th quarter                     25.35           17.13
          3rd quarter                 28.31           17.23
          2nd quarter                 28.50           22.15
          1st quarter                 23.11           19.23
For the month:

                                    High             Low
                                  ----------      ----------
2003 May                             $29.97          $23.14
2003 April                            24.12           22.25
2003 March                            23.20           21.05
2003 February                         23.45           20.95
2003 January                          23.35           19.37
2002 December                         21.11           19.30


(B)  Plan of Distribution

Not applicable.

(C)  Markets

Since March 1, 1996,  our  Ordinary  Shares have been listed and traded on the NYSE.  Our  Ordinary  Shares are not
listed on and do not trade on any other exchange.

(D)  Selling Shareholders

Not applicable.

(E)  Dilution

Not applicable.

(F)  Expenses of the Issue

Not applicable.

ITEM 3.           ADDITIONAL INFORMATION

(A)  Share Capital

Not applicable.

(B)  Memorandum and Articles of Association

The Restated  Articles of Association of Kerzner,  dated as of June 26, 2001, were filed with the SEC as an exhibit
to our  Form  20-F  Annual  Report  for the  year  ended  December  31,  2000 in file  number  1-04226.  Subsequent
amendments,  dated as of September  24, 2001, to these  Restated  Articles of  Association  were filed with the SEC
with our proxy statement for the annual general meeting held on September 24, 2001.

The  Amended  and  Restated  Memorandum  of  Association  of  Kerzner  was filed  with the SEC as an exhibit to our
Registration  Statement on Form F-4, filed on November 1, 1996 in file number  333-15409.  A subsequent  amendment,
dated as of May 17, 2002,  to this  Amended and Restated  Memorandum  of  Association  was filed with the SEC as an
exhibit to our Registration Statement on Form F-4/A, filed on August 12, 2002 in file number 333-96705.

A description of certain  provisions of the Company’s  Amended and Restated  Memorandum of Association and Restated
Articles of  Association  is  incorporated  by  reference  to the  "Description  of Capital  Stock"  section of the
Company’s Form F-3 filed with the SEC on May 23, 2002 in file number 333-88854.

Kerzner is  registered  under number  46,600B at the  Companies  Registry of The  Bahamas.  Kerzner’s  purpose,  as
stated in the  Memorandum,  is "to engage in any act or activity that is not prohibited  under any law for the time
being in force in the Commonwealth of The Bahamas."

(C)  Material Contracts

The following is a summary of each material  contract in which we or any of our  subsidiaries  have been a party to
for the past two years.

Heads of Agreement

On May 26, 2003,  Kerzner  entered into a new Heads of Agreement  with the  Government  of The Bahamas.  A complete
description  of the Heads of Agreement  and the Phase III  Expansion  can be found at "Item 4.  Information  on the
Company, (B) Business  Overview-Certain Matters Affecting Our Bahamian  Operations--Heads of Agreement" and "Item 4.
Information on the Company,  (A) History and  Development  of the  Company-Recent  Developments-Atlantis  Phase III
Expansion."

Indenture

On August 14, 2001, Kerzner and KINA (together,  the "Companies")  issued $200.0 million principal amount of 8-7/8%
senior subordinated notes due 2011 (the "8-7/8% Senior Subordinated  Notes"),  which, after costs,  resulted in net
proceeds  of  approximately  $194.0  million.  All of proceeds  received  from the  issuance  of the 8-7/8%  Senior
Subordinated  Notes were advanced to Kerzner  International  Bahamas Limited  ("KIB") to repay amounts  outstanding
under the Revolving Credit Facility.  Therefore,  interest expense related to the 8-7/8% Senior  Subordinated Notes
is offset by affiliated interest income from KIB.

In May 2002, the Companies  issued an additional  $200.0 million of 8-7/8% Senior  Subordinated  Notes and used the
proceeds to repay the Companies  outstanding 9% Senior  Subordinated  Notes  pursuant to the Tender Offer,  Consent
Solicitation and Redemption of such notes described below.

The  8-7/8%  Senior  Subordinated  Notes,  which are  unsecured  obligations,  are  unconditionally  guaranteed  by
substantially  all  of  the  wholly-owned  subsidiaries  of  Kerzner  and  KINA.  Interest  on  the  8-7/8%  Senior
Subordinated  Notes is payable  semi-annually  and  commenced on February 15, 2002.  The  indenture  for the 8-7/8%
Senior  Subordinated  Notes contains certain covenants,  including  limitations on the ability of the Companies to,
among other things:  (i) incur  additional  indebtedness,  (ii) incur certain  liens,  and (iii) make certain other
restricted payments.

Fourth Amended and Restated Revolving Credit Facility

On November 13,  2001,  Kerzner,  KINA and KIB, as  co-borrowers,  entered  into an amended and restated  revolving
credit  facility with a syndicate of lenders.  This facility is described in "Item 4.  Information  on the Company,
(A) History and Development of the  Company-Reorganization  of Debt Structure-Fourth Amended and Restated Revolving
Credit Facility (the "Amended Revolving Credit Facility")."

Letter Agreement dated December 14, 2001 to the Amended Revolving Credit Facility

On December 14, 2001, we entered into a letter  agreement  relating to the Amended  Revolving Credit Facility which
increased the amount of foreign currency  letters of credit  available to us from an aggregate  principal amount of
$3,000,000 to an aggregate principal amount of $30,000,000.

First Amendment dated May 8, 2002 to the Amended Revolving Credit Facility

On May 8, 2002, we entered into an amendment to the Amended  Revolving  Credit  Facility  (the "First  Amendment").
The First  Amendment  was entered  into in order to permit us to purchase or redeem all of the  outstanding  $200.0
million  aggregate  principal  amount of our 9% Senior  Subordinated  Notes.  On May 8, 2002, we commenced a tender
offer and consent  solicitation  related to the 9% Senior  Subordinated  Notes and purchased  substantially  all of
such notes on June 5, 2002.  All 9% Senior  Subordinated  Notes that  remained  outstanding  after the tender offer
was  completed  were  redeemed  on June 21,  2002.  See  "Item 4.  Information  on the  Company,  (A)  History  and
Development of the Company--Reorganization of Debt Structure."

Letter Agreement dated May 22, 2002 to the Amended Revolving Credit Facility

On May 22, 2002, we entered into a letter agreement  relating to the Amended  Revolving Credit Facility pursuant to
which we requested and were granted a $100.0 million  increase in the aggregate  amount of borrowings that could be
outstanding  at any one time under the  revolving  credit  facility.  After  giving  effect to such  increase,  the
aggregate  amount of borrowings  that could be outstanding at any one time was $300.0  million.  We and the lenders
have since  agreed,  effective  January 1, 2003,  to calculate  borrowings  available  under our amended  revolving
credit  facility  using a borrowing  base,  such that we can draw the lesser of a borrowing  base or the commitment
amount.  See below "-Third Amendment dated May 15, 2003 to the Amended Revolving Credit Facility."

Letter Agreement dated August 30, 2002 to the Amended Revolving Credit Facility

On August 30, 2002,  we entered into a letter  agreement  relating to the Amended  Revolving  Credit  Facility that
amended the amount of per occurrence  "all risks"  insurance  that we were required to maintain on our  properties.
Prior to the execution of the letter  agreement,  we were  required to maintain  insurance in amounts not less than
the replacement  value of our  properties.  The letter  agreement  provided that (a) from July 1, 2002, to June 30,
2003, the required level of per  occurrence  "all risks"  insurance on our properties be equal to the lesser of the
full  replacement  value  of  such  property  or  the  amount  of  such  insurance  reasonably  available  to us on
commercially  reasonable  terms  and (b) after  July 1,  2003,  the  amount of any  deductible  related  to our per
occurrence  "all risks"  insurance  will not be  permitted  to exceed  $15.0  million and the sum of the  aggregate
principal  amount of all of our outstanding  borrowings  under the revolving  credit facility will not be permitted
to exceed the amount of per  occurrence  "all risks"  insurance  we maintain  from time to time on our  properties.
The  limitation  on the  aggregate  principal  amount of all of our  outstanding  borrowings  was  replaced  with a
borrowing  base  calculation  pursuant to the Third  Amendment  dated May 15,  2003  discussed  below.  See "-Third
Amendment dated May 15, 2003 to the Amended Revolving Credit Facility."

Second Amendment dated November 20, 2002 to the Amended Revolving Credit Facility

On November 20, 2002,  we entered into a second  amendment to the Amended  Revolving  Credit  Facility (the "Second
Amendment").  The  Second  Amendment  was  entered  into in order to permit  us to  purchase  or redeem  all of our
outstanding  8-5/8%  Senior  Subordinated  Notes.  On  November  27,  2002,  we called  for  redemption  the entire
outstanding  principal  amount of such notes and on December 27, 2002,  we redeemed  them at a redemption  price of
$1,043.13  per $1,000 of principal  amount  outstanding  plus accrued  interest.  See "Item 4.  Information  on the
Company, (B) History and Development of the Company--Reorganization of Debt Structure."

Third Amendment dated May 15, 2003 to the Amended Revolving Credit Facility

On May 15,  2003,  we  entered  into a Third  Amendment  to the  Amended  Revolving  Credit  Facility  (the  "Third
Amendment").  The  Third  Amendment  was  entered  into in order  to,  among  other  things,  calculate  borrowings
available under the Amended  Revolving  Credit Facility using a borrowing base  calculation,  such that we can draw
the lesser of the borrowing  base or the  commitment  amount.  The borrowing  base is generally the sum of: (i) the
amount of "all risks"  insurance  maintained  from time to time on the  Bahamas  Property,  as defined,  and on the
buildings  situated  thereon;  (ii) the value of undeveloped land owned by the Company under the Amended  Revolving
Credit  Facility on Paradise  Island,  which for purposes  thereof is deemed to be $150.0  million;  (iii) the cost
basis of the  Company’s  investment  in luxury resort  hotels  (defined to include  Palmilla  Resort and any luxury
resort  properties  in which the Company make an  investment  in after  January 1, 2003 that enables the Company to
control  management  of such  properties);  (iv) the  product of six times the  consolidated  EBITDA  ,as  defined,
attributable  to the  management  contracts  of the Company  and those under  One&Only  (Indian  Ocean)  Management
Limited and their  significant  subsidiaries;  and (v) the  estimated  net present value of the payments due to the
Company pursuant to the Relinquishment Agreement for purposes thereof is deemed to be $185.0 million.

Mohegan Sun Agreements

In February  1998,  TCA and the Mohegan  Tribe  entered  into the  Relinquishment  Agreement  pursuant to which TCA
receives the Relinquishment  Fees and a development  services agreement pursuant to which TCA agreed to develop the
Project  Sunburst  expansion  for a $14.0  million  development  fee.  These  agreements  are described in "Item 4.
Information on the Company, (A) History and Development of the Company."

Management Agreements

In September  2002, we purchased a 50%  ownership  interest in the 115-room  One&Only  Palmilla  Resort,  a deluxe,
five-star  property  located  near  Cabo San Lucas in Baja,  Mexico  for  approximately  $40.8  million,  including
transaction  costs.  In  connection  with the  purchase,  we entered  into  long-term  management  and  development
agreements  related to the property that will expire in 2022. In connection  with the presently  ongoing  expansion
of the resort,  we have agreed to guarantee up to $38.0 million of  debt-financing  that One&Only  Palmilla  Resort
obtains  from  third-parties.   See  "Item  5.  Operating  and  Financial  Review  and  Prospects,   (C)  Operating
Results-Off-Balance Sheet Arrangements and Other Commitments."

In June 2002, we entered into  management and  development  agreements for a 100-room luxury resort in the Maldives
that we  expect  to  open in  2004.  The  management  and  development  agreements  related  to this  property  are
co-terminus  with the owner’s lease,  which expires in 2020.  This new five-star  resort will occupy the site where
a small resort known as the Reethi Rah is currently  located.  As part of this  development,  we have  committed to
provide certain  financing  arrangements to the current owner of Reethi Rah in an aggregate  principal amount of up
to $47.0 million to ensure  completion of the new resort and provide for working  capital on a standby  basis.  See
"Item 5.  Operating and Financial  Review and  Prospects,  (B)  Liquidity and Capital  Resources-Off-Balance  Sheet
Arrangements and Other Commitments."

In July 2001,  we entered into a  management  agreement to provide  comprehensive  management  services to One&Only
Kanuhura Sun Resort and Spa in the Maldives.  Pursuant to this  agreement,  we receive a management  fee calculated
as a percentage  of revenue and a percentage  of gross  profits and a marketing  fee  calculated as a percentage of
revenue.  This management agreement expires in 2026.

We have  long-term  management  contracts  with each of five hotels in Mauritius  that are owned by SRL,  including
One&Only Le Saint  Geran,  One&Only Le  Touessrok,  La Pirogue,  Le Coco Beach and Sugar  Beach.  Pursuant to these
management agreements,  One&Only (Indian Ocean) Management Limited provides  comprehensive  management services for
which it receives a management  fee  calculated as a percentage  of revenues and adjusted  EBITDA,  as defined.  It
also  receives a marketing  fee  calculated  as a  percentage  of  revenues.  The term of each of these  management
agreements  was extended from 2008 until 2023 in December  2002 when we entered into an agreement  with SRL to form
a new  management  company for the purpose of, among other  things,  managing the five  properties  owned by SRL in
Mauritius and One&Only  Kanuhura in the Maldives.  Effective  January 1, 2003,  SRL owns 20% of the new  management
company,  known as One&Only  (Indian Ocean)  Management  Limited,  and we own the remaining 80%. Subject to certain
conditions,  SRL’s ownership  interest will increase  incrementally  through 2009, at which time it will own 50% of
the new management company.  Subject to certain  conditions,  SRL will have a right of first refusal to participate
equally  with us in any  development  project in  specified  Indian  Ocean  territories.  In  connection  with this
transaction,  we transferred to the newly formed management company all of our Mauritius management  agreements and
the Kanuhura management  agreement and SRL purchased 20% of our debt and equity interests in One&Only Kanuhura.  At
SRL’s option,  subject to certain  conditions,  the Reethi Rah management  agreement may also be contributed to the
new management company.

We have a  management  agreement  to manage  One&Only  Royal  Mirage  Hotel in Dubai,  which opened in August 1999.
Pursuant  to this  agreement,  we receive a  management  fee  calculated  as a  percentage  of  revenues  and gross
operating  profits,  as defined.  The management fee schedule may be renegotiated  after 10 years.  This management
agreement  expires in 2019.  We have entered into an agreement to manage the 225  additional  hotel rooms under the
same terms as the existing agreement.

Harborside Joint Venture

In 1999, we formed a joint venture with Starwood  Vacation  Ownership,  Inc.  ("SVO")  (formerly  Vistana,  Inc.) a
subsidiary of Starwood,  to develop a timeshare project on Paradise Island adjacent to Atlantis called  Harborside.
We and SVO each hold a 50% interest in Harborside.  As part of the joint venture,  we contributed  land and Vistana
contributed cash based on the number of timeshare units to be developed.

Purchase Agreement between the Company and Colony

The  Purchase  Agreement  among  KINA,  as  parent,  GGRI,  Inc.,  as Seller  and  Colony as Buyer  (the  "Purchase
Agreement")  was dated  October 30,  2000.  The contract was entered into between the parties to effect the Resorts
Atlantic  City  Sale  described  in "Item 4.  Information  on the  Company,  (A)  History  and  Development  of the
Company." The Resorts  Atlantic City Sale closed on April 25, 2001,  for a purchase price of  approximately  $144.0
million,  including  accrued  interest  (the  "Resorts  Atlantic  City Sale").  The proceeds  received  from Colony
consisted of  approximately  $127.0  million in cash and an unsecured  $17.5 million note which was paid in full in
March  2002.  Pursuant  to the  Purchase  Agreement,  the sale was  conditioned  on the  approval by the New Jersey
Casino Control Commission and on Colony receiving financing.

Pursuant to the terms of the Resorts  Atlantic City Sale, we granted  Colony a two-year  option (the "Atlantic City
Option")  to acquire  certain  undeveloped  real estate  which we own,  adjacent to Resorts  Atlantic  City,  for a
purchase price of $40.0 million,  which option can be extended by Colony for two additional  one-year periods prior
to the  expiration  of the then current  option  period and payment to us of a $2.5 million  extension  payment for
each renewal  period.  The current  option period and extension  notice periods have been extended to July 3, 2003.
Effective  April 25, 2001,  the closing date of the Resorts  Atlantic  City Sale,  Colony leases from us certain of
the property included in the Atlantic City Option for $100,000 per month.

NY Project Development Services Agreement

In March 2001,  TCNY  entered into a  Development  Services  Agreement  with the  Stockbridge-Munsee  Tribe for the
development of a casino  project in the Catskill  region of the State of New York.  The  Development  Agreement was
amended and  restated in February  2002.  Pursuant to the  Development  Agreement,  as amended,  TCNY will  provide
preliminary  funding,  certain  financing and exclusive  development  services to the  Stockbridge-Munsee  Tribe in
conjunction with the Project.  If the development  takes place,  TCNY will earn a fee of 5% of revenues (as defined
in the Development  Agreement) as compensation  for its services  (subject to certain  priorities),  beginning with
the opening of the Project and continuing for a period of twenty years.

Internet Gaming Agreement

In February 2002, we agreed to sell 50% of Kerzner  Interactive  Limited to Station,  who paid us a  non-refundable
deposit of $4.5  million in July 2002.  Subsequently,  this  agreement  was  restructured  and Station  received an
option  through  early  January  2003 to  purchase  50% of the  operation  in  consideration  for the $4.5  million
previously  received.  Since that time, we concluded  that this business  would not be  economically  viable in the
short to medium term. We  discontinued  the operations of Kerzner  Interactive  Limited during the first quarter of
2003 and the Company and Station  mutually agreed to terminate this  transaction.  See "Item 4.  Information on the
Company, (B) Business Overview--Internet Gaming" for more information.

Northampton, England Gaming License

On April 9, 2003 we announced that we had agreed to acquire from LCI for $2.0 million a gaming  license,  including
property  located in the town center of  Northampton,  England.  The transfer of the license is subject to approval
by the  British  Gaming  Board  and the  Northampton  Borough  Council.  We are in the  process  of  seeking  those
approvals and intend to develop a new 30,000 square foot gaming facility.

Bahamas Union Contract Arrangements

In the Bahamas,  as of December 31, 2002,  approximately  3,600 of our employees  were  represented  by The Bahamas
Hotel,  Catering and Allied  Workers Union.  Kerzner  International  Bahamas  Limited  participates  in The Bahamas
Hotel Employers  Association,  which  represents  resort  operators in the Paradise  Island-New  Providence  Island
area.  The  association’s  existing  contract  with the union  expired  January  7,  2003,  and a new  contract  is
currently being negotiated.

(D) Exchange Controls

The Central Bank of The Bahamas (the "Central  Bank") must approve any payments  made to  companies,  including us,
which are non-resident  companies for exchange control purposes.  The Central Bank has granted approved  investment
status in respect of our holding of the capital  stock of our  Bahamian  subsidiaries.  The granting of such status
will mean that all payments of a current nature,  including the  repatriation  of dividends or other  distributions
to us out of the revenues of our Bahamian  subsidiaries and any proceeds  received on the sale of such subsidiaries
will be routinely  approved by the Central  Bank  following  proper  application.  Any other  payments to us by our
Bahamian subsidiaries will require standard approval by the Central Bank.

There  currently are no  limitations  on the right of  nonresident  or foreign  owners to hold or vote the Ordinary
Shares imposed by foreign law or by our Articles of Association.

(E) Taxation

Certain U.S. Federal Income Tax Considerations

The  following  is a general  discussion  of certain  U.S.  federal  income tax  consequences  to the  acquisition,
ownership  and  disposition  of  Ordinary  Shares.  For  purposes  of this  discussion,  a "U.S.  Holder"  means an
individual  citizen or resident of the U.S., a corporation  organized under the laws of the U.S. or of any state or
political  subdivision  thereof,  or an estate or trust the income of which is  includible in gross income for U.S.
federal income tax purposes regardless of its source.

Rules regarding  partnerships  are complex.  Partners in partnerships  should consult their tax advisers  regarding
the implications of owning Ordinary Shares.

This  discussion  is not  intended to be  exhaustive  and is based on statutes,  regulations,  rulings and judicial
decisions  currently in effect.  This  discussion  does not consider any specific  circumstances  of any particular
U.S. Holder and applies only to U.S.  Holders that hold Ordinary Shares as a capital asset.  Investors are urged to
consult  their tax advisers  regarding the U.S.  federal tax  consequences  of acquiring,  holding and disposing of
Ordinary Shares,  as well as any tax  consequences  that may arise under the laws of any foreign,  state,  local or
other taxing jurisdiction.

Ownership of Ordinary Shares

Dividends on Ordinary Shares paid to U.S.  Holders will be treated as dividend  income for U.S.  federal income tax
purposes to the extent of our  undistributed  current or  accumulated  earnings and profits as computed for federal
income tax purposes.  In the case of an  individual  U.S.  Holder,  under  recently  enacted tax  legislation  such
dividend will be eligible for a maximum tax rate of 15% for dividends  received  before  January 1, 2009,  provided
that such  holder  holds the  Ordinary  Shares for at least 60 days and certain  other  conditions  are  satisfied.
Furthermore,  such  dividends  will  generally not be eligible for the dividends  received  deduction  available to
certain U.S. corporations under Section 243 of the Internal Revenue Code of 1986, as amended.

We are not a "passive foreign  investment  company" (a "PFIC"), a "foreign personal holding company" (an "FPHC") or
a "controlled  foreign  corporation"  (a "CFC") for U.S.  federal income tax purposes.  We are not a CFC or an FPHC
as more than 53% of our voting  interest  and stock  value is owned by non-U.S.  entities.  If more than 50% of the
voting power or value of our stock were owned  (directly,  indirectly or by attribution)  by U.S.  persons who each
owned (directly,  indirectly or by attribution) 10% or more of the voting power of our stock ("10%  Shareholders"),
we would  become a CFC and each such 10%  Shareholder  would be  required  to  include in its  taxable  income as a
constructive  dividend an amount equal to its share of a portion of our  undistributed  income. If more than 50% of
the  voting  power or value of our stock were  owned  (directly,  indirectly  or by  attribution)  by five or fewer
individuals  who are  citizens or  residents  of the U.S.  and if at least 60% of our income  consisted  of certain
interest,  dividend  or other  enumerated  types of  income,  we would be an FPHC.  If we were an FPHC,  each  U.S.
Holder  (regardless  of the amount of stock owned by such U.S.  Holder) would be required to include in its taxable
income as a  constructive  dividend  its share of our  undistributed  income of  specified  types.  If our  foreign
ownership  interests  were to  decrease,  or if U.S.  persons were to acquire a greater  ownership  interest in our
foreign stock holders,  then it is possible that we could become a CFC or FPHC if we otherwise  satisfied the tests
set forth above.

We are not a PFIC  because we do not  anticipate  that more than 75% of our annual  gross  income  will  consist of
certain  "passive"  income or more than 50% of the average  value of our assets in any year will  consist of assets
that produce,  or are held for the production of, such passive income.  If such income and asset tests were not met
and we were to become a PFIC,  all U.S.  Holders  would be  required  to include in their  taxable  income  certain
undistributed  amounts of our income,  or in certain  circumstances,  to pay an interest  charge  together with tax
calculated at maximum rates on certain "excess distributions" (defined to include any gain on the sale of stock).

If we were a FPHC or a PFIC,  an  individual  U.S.  Holder  would not be eligible for the 15% tax rate on dividends
discussed in the first paragraph of this section.

Any gain or loss on the sale or exchange of Ordinary  Shares by a U.S.  Holder will be a capital  gain or loss.  If
the U.S.  Holder  has held such  Ordinary  Shares  for more than one  year,  such gain or loss will be a  long-term
capital gain or loss.

Annual filings of Form 5471 may be required from certain U.S. persons owning 10% or more of our stock.

Certain Bahamian Tax Considerations

The  following  is a brief and general  summary of certain  Bahamian  tax matters as they may relate to the Company
and the holders of the Ordinary  Shares of the Company.  The  discussion is not exhaustive and is based on Bahamian
law currently in effect.

The Bahamas does not impose any income,  capital gains or  withholding  taxes.  Therefore,  the Company will not be
subject to income tax in The Bahamas on an ongoing basis and dividends paid on Ordinary  Shares to holders  thereof
will not be subject to a Bahamian  withholding  tax.  The  Company,  however,  is subject to gaming taxes and other
governmental fees and charges.  There are no reciprocal tax treaties with The Bahamas.

(F) Dividends and Paying Agents

Not applicable.

(G) Statement by Experts

Not applicable.

(H) Documents on Display

Kerzner is subject to the  informational  requirements of the Exchange Act and files reports and other  information
with the SEC.  You may read and copy all or any  portion  of the  Annual  Report  and its  exhibits  at the  public
reference facilities  maintained by the SEC, 450 Fifth Street, N.W., Judiciary Plaza, Room 1024,  Washington,  D.C.
20549,  and at its regional office at Citicorp  Center,  500 West Madison  Street,  Suite 1400,  Chicago,  Illinois
60661-2511.  You may request copies of all or any portion of these  documents,  upon payment of a duplication  fee,
by writing to the public reference section of the SEC at 450 Fifth Street,  N.W.,  Washington,  D.C. 20549. You may
obtain more  information  about the public  reference  room by calling the SEC at  1-800-SEC-0330.  Our reports and
other information filed with the SEC are also available to the public from commercial  document  retrieval services
and the website maintained by the SEC at www.sec.gov.

(I) Subsidiary Information

Please refer to "Item 4. Information on the Company,  (C)  Organizational  Structure" for a list of our significant
subsidiaries.  A listing  of our  significant  subsidiaries  is filed  with this  Annual  Report as  Exhibit 8. See
"Item 19. Exhibits."

ITEM 4.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our major market risk exposure is interest  rate risk directly  related to our bank debt and interest rate swaps on
$200.0  million of our fixed rate debt.  We attempt to limit our exposure to interest rate risk by managing the mix
of fixed and floating rate debt,  and by entering into  variable  interest rate swap  agreements to hedge a portion
of our fixed rate debt.  See "Item 5.  Operating  and  Financial  Review and  Prospects,  (B) Liquidity and Capital
Resources-Market  Risks"  for  information  on  our  interest  rate  swap  agreements.  These  interest  rate  swap
agreements are entered into with a number of financial  institutions with investment grade credit ratings,  thereby
minimizing the risk of credit loss.

We  prepare  our  financial  statements  in U.S.  dollars.  Our most  significant  non-U.S.  operations  are in The
Bahamas.  Due to current  governmental  policies in The Bahamas that equate one Bahamian dollar to one U.S. dollar,
we believe that we do not have material market risk exposures in this  jurisdiction  relative to changes in foreign
exchange  rates.  Due to the  stability  of the other  markets in which we operate,  we also believe that we do not
have material market risk exposures in these jurisdictions relative to changes in foreign exchange rates.

Fair  value  estimates  are made at a  specific  point in time,  based on  relevant  market  information  about the
financial  instrument.  These  estimates  are  subjective  in nature  and  involve  uncertainties  and  matters  of
significant  judgment.  The fair value of variable rate debt  approximates  the carrying value since interest rates
are  variable  and,  thus,  approximate  current  market  rates.  The fair value of fixed rate date is based on the
market  value on the balance  sheet date,  and in the case of the fair value of interest  rate swaps is  determined
from  representations  of financial  institutions and represents the discounted  future cash flows through maturity
or  expiration  using  current  rates,  and is  effectively  the amount we would pay or receive  to  terminate  the
agreements.

December 31, 2002                                                                                          Fair Value
(In Thousands of Dollars)                 Expected Maturity Date                                          December
                               ---------------------------------------------
Asset (Liability)               2003     2004     2005     2006      2007     Thereafter       Total        31, 2002
- ------------------------------ -------- -------- ------- ---------- -------- -------------- ------------- --------------

Fixed rate debt:
   8-7/8% Notes                    $ -      $ -     $ -        $ -      $ -     $(400,000)    $(400,000)     $(421,846)

Variable rate debt                   -        -       -   (72,000)        -              -      (72,000)       (72,000)

Interest rate swaps:                 -        -       -          -        -              -             -        $19,574
  Average interest rates
  Average pay rate (a)                                                                                           5.488%
  Average receive rate                                                                                           8.875%
(a)  Based on average spreads ranging from 2.95-3.02% plus six-month LIBOR.


ITEM 5.           DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II


______________________________________________________________________________

ITEM 6.           DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

There is nothing to disclose with respect to this item.

ITEM 7.           MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

There is nothing to disclose with respect to this item.

ITEM 8.           CONTROLS AND PROCEDURES


Within 90 days prior to the filing of this report,  management,  including  our Chief  Executive  Officer and Chief
Financial Officer,  evaluated the effectiveness of the Company’s disclosure controls and procedures.  Based on this
evaluation,  our Chief Executive  Officer and Chief Financial  Officer  concluded that our disclosure  controls and
procedures  are  effective  to provide  reasonable  assurance  that  material  information  regarding  the Company,
including its  subsidiaries,  required to be disclosed by the Company in the reports that it files or submits under
the Exchange Act is made known to them in a timely manner.  Subsequent to the date of this  evaluation,  there have
not been any  significant  changes in our  internal  controls  or, to our  knowledge,  in other  factors that could
significantly affect our internal controls.

ITEM 9.           RESERVED


PART III


______________________________________________________________________________

ITEM 10.          FINANCIAL STATEMENTS

Not applicable.

ITEM 11.          FINANCIAL STATEMENTS

(A)  List of Financial Statements and Financial Statement Schedules

Report of Independent Public Accountants.........................................................F-2
Consolidated Balance Sheets......................................................................F-3
Consolidated Statements of Income................................................................F-4
Consolidated Statements of Changes in Shareholder Equity.........................................F-5
Consolidated Statements of Cash Flows............................................................F-6
Notes to Consolidated Financial Statements.......................................................F-7
ITEM 12.



EXHIBITS

EXHIBITS

Exhibit Numbers
                 Description                                                      Incorporation by Reference to
- ---------------- ---------------------------------------------------------------- -----------------------------------------
1.1              Restated  Articles of  Association  of Kerzner dated as of June  Exhibit 1 to Form 20-F Annual  Report of
                 26, 2001                                                         Kerzner for the year ended  December 31,
                                                                                  2000,  filed on July 2,  2001,  File No.
                                                                                  001-04226
1.2              Amendment to Restated  Articles of Association of Kerzner dated  Exhibit  3.3 to  Registration  Statement
                 as of September 24, 2001                                         on Form  F-4,  filed on July  18,  2002,
                                                                                  File No. 333-96705-36
1.3              Amended and Restated Memorandum of Association of Kerzner        Exhibit  3.1 to  Registration  Statement
                                                                                  on Form F-4,  filed on November 7, 1996,
                                                                                  File No. 333-15409
1.4              Amendment to Memorandum of Association of Kerzner                Exhibit  3.6 to  Registration  Statement
                                                                                  on  Form  F-4/A,  filed  on  August  12,
                                                                                  2002, File No. 333-96705-36
1.5              Restated  Certificate of Incorporation,  as amended, of Kerzner  Exhibit  3.3 to  Registration  Statement
                 International North America, Inc.                                on Form F-4,  filed on March  20,  1997,
                                                                                  File No. 333-23665-01
1.6              Certificate   of   Amendment   of   Restated   Certificate   of  Exhibit  3(a)(2) to Form 10-K405  Annual
                 Incorporation of Kerzner International North America, Inc.       Report  of  KINA  for  the  fiscal  year
                                                                                  ended December 31, 1996,  filed on March
                                                                                  20, 1997, File No. 001-04748
1.7              Certificate   of   Amendment   of   Restated   Certificate   of  Exhibit  3.7 to  Registration  Statement
                 Incorporation of Kerzner International North America, Inc.       on Form F-4/A dated August 12, 2002,  in
                                                                                  File No. 333-96705-36
1.8              Amended and  Restated  By-Laws of Kerzner  International  North  Exhibit  3(b)  to  Form  10-Q  Quarterly
                 America, Inc.                                                    Report  of KINA  for the  quarter  ended
                                                                                  June 30, 1996,  filed on August 7, 1996,
                                                                                  File No. 001-04748
2.1              Form of  Inter-Borrower  Agreement  dated as of March 10, 1997,  Exhibit  4(e)(4) to Form 10-K405  Annual
                 between Kerzner and KINA                                         Report  of  KINA  for  the  fiscal  year
                                                                                  ended December 31, 1996,  filed on March
                                                                                  20, 1997, File No. 001-04748
2.2(a)           Purchase  Agreement  dated  August 9, 2001,  among  Kerzner and  Exhibit   2.3(a)  to  Form  20-F  Annual
                 KINA, as issuers, the subsidiary  guarantors party thereto, and  Report  of  Kerzner  for the year  ended
                 Deutsche Banc Alex.  Brown Inc.,  Bear Stearns & Co. Inc., CIBC  December  31,  2001,  filed  on May  30,
                 World Markets  Corp.,  Banc of America  Securities  LLC,  Wells  2002, File No. 001-04226
                 Fargo Brokerage Services, LLC, Fleet Securities,  Inc., and The
                 Royal Bank of Scotland PLC, as purchasers
2.2(b)           Purchase  Agreement dated May 9, 2002,  among Kerzner and KINA,  Exhibit   2.3(b)  to  Form  20-F  Annual
                 as issuers,  the subsidiary  guarantors party thereto, and Bear  Report  of  Kerzner  for the year  ended
                 Stearns & Co. Inc.,  Deutsche Bank Securities  Inc., CIBC World  December  31,  2001,  filed  on May  30,
                 Markets  Corp.,  Banc of America  Securities  LLC,  Wells Fargo  2002, File No. 001-04226
                 Brokerage  Services,  LLC,  J.P.  Morgan  Securities  Inc.,  as
                 initial purchasers
2.2(c)           Indenture dated as of August 14, 2001,  among Kerzner and KINA,  Exhibit  2(c)  to Form  6-K of  Kerzner,
                 as issuers,  the Guarantors party thereto,  and The Bank of New  filed  on  August  24,  2001,  File  No.
                 York, as trustee                                                 001-04226
2.2(d)           Supplemental  Indenture  dated  as of  September  19,  2001  to  Exhibit  99(a) to Form  6-K of  Kerzner,
                 Indenture dated as of August 14, 2001                            filed on September  20,  2001,  File No.
                                                                                  001-04226
2.2(e)           Second  Supplemental  Indenture  dated  as of May  20,  2002 to  Exhibit  4.3 to  Registration  Statement
                 Indenture dated as of August 14, 2001                            on Form  F-4,  filed on July  18,  2002,
                                                                                  File No. 333-96705-36
2.2(f)           Third  Supplemental  Indenture dated as of November 18, 2002 to  Exhibit  99.2  to Form  6-K of  Kerzner,
                 Indenture dated as of August 14, 2001                            filed on  November  21,  2002,  File No.
                                                                                  001-04226
2.2(g)           Fourth  Supplemental  Indenture  dated  as of  May 7,  2003  to  Exhibit  99(1) to Form  6-K of  Kerzner,
                 Indenture dated as of August 14, 2001                            filed   on  June  6,   2003,   File  No.
                                                                                  001-04226
2.2(h)           Form of 8-7/8% Senior Subordinated Note due 2011                 Exhibit  2(c)  to Form  6-K of  Kerzner,
                                                                                  filed  on  August  24,  2001,  File  No.
                                                                                  001-04226
2.2(i)           Form of Guarantee  with respect to 8-7/8%  Senior  Subordinated  Exhibit  2(c)  to Form  6-K of  Kerzner,
                 Note due 2011                                                    filed  on  August  24,  2001,  File  No.
                                                                                  001-04226
2.2(j)           Registration  Rights  Agreement  dated as of August  14,  2001,  Exhibit  2(b)  to Form  6-K of  Kerzner,
                 among  Kerzner  and KINA,  as  issuers,  the  Guarantors  party  filed  on  August  24,  2001,  File  No.
                 thereto,  and Deutsche  Banc Alex.  Brown Inc.,  Bear Stearns &  001-04226
                 Co. Inc., CIBC World Markets Corp., Banc of America  Securities
                 LLC, Wells Fargo  Brokerage  Services,  LLC, Fleet  Securities,
                 Inc., and The Royal Bank of Scotland PLC, as initial purchasers
2.2(k)           Registration  Rights  Agreement dated as of May 20, 2002, among  Exhibit   2.3(f)  to  Form  20-F  Annual
                 Kerzner and KINA, as issuers,  the  Guarantors  party  thereto,  Report  of  Kerzner  for the year  ended
                 and Bear Stearns & Co. Inc.,  Deutsche  Bank  Securities  Inc.,  December  31,  2001,  filed  on May  30,
                 CIBC  World  Markets  Corp.,  Banc of America  Securities  LLC,  2002, File No. 001-04226
                 Wells Fargo Brokerage  Services,  LLC, J.P.  Morgan  Securities
                 Inc., as initial purchasers
4.1              Purchase  Agreement among KINA, as Parent,  GGRI, as Seller and  Exhibit   10  to  Form  10-Q   Quarterly
                 Colony as Buyer dated as of October 30, 2000                     Report  of KINA  for the  quarter  ended
                                                                                  September  30,  2000,  filed on November
                                                                                  14, 2000, File No. 001-04748
4.2              Promissory  Note between  Colony and KINA dated as of April 25,  Exhibit 2 to Form 6-K of Kerzner,  filed
                 2001                                                             on May 8, 2001, File No. 001-04226
4.3(a)           Fourth Amended and Restated  Revolving Credit Facility dated as  Exhibit   10  to  Form  10-Q   Quarterly
                 of  November   13,  2001  among   Kerzner,   KINA  and  Kerzner  Report  of KINA  for the  quarter  ended
                 International Bahamas Limited,  various financial  institutions  September  30,  2001,  filed on November
                 as  Lenders,  and  Canadian  Imperial  Bank  of  Commerce,   as  14, 2001, File No. 001-04748
                 administrative agent
4.3(b)           Letter  Amendment to the Fourth Amended and Restated  Revolving  Filed herewith as Exhibit 4.3(b)
                 Credit Agreement dated as of December 14, 2001
4.3(c)           First  Amendment to the Fourth  Amended and Restated  Revolving  Exhibit 4.21 to  Registration  Statement
                 Credit Agreement dated as of May 8, 2002                         on Form  F-4,  filed on July  18,  2002,
                                                                                  File No. 333-96705-36
4.3(d)           Letter  Amendment to the Fourth Amended and Restated  Revolving  Filed herewith as Exhibit 4.3(d)
                 Credit Agreement dated as of May 22, 2002
4.3(e)           Letter  Amendment to the Fourth Amended and Restated  Revolving  Exhibit  99.1  to Form  6-K of  Kerzner,
                 Credit Agreement dated as of August 30, 2002                     filed  on  December  6,  2002,  File No.
                                                                                  001-04226
4.3(f)           Second  Amendment to the Fourth Amended and Restated  Revolving  Exhibit  99.2  to Form  6-K of  Kerzner,
                 Credit Agreement dated as of November 20, 2002                   filed  on  December  6,  2002,  File No.
                                                                                  001-04226
4.3(g)           Third  Amendment to the Fourth  Amended and Restated  Revolving  Filed herewith as Exhibit 4.3(g)
                 Credit Agreement dated as of May 15, 2003
4.4              Heads of Agreement dated May 26, 2003,  between Kerzner and the  Exhibit  99(2) to Form  6-K of  Kerzner,
                 Government of the Commonwealth of The Bahamas                    filed   on  May  28,   2003,   File  No.
                                                                                  001-04226
4.5              Second  Amended and  Restated  Development  Services  Agreement  Exhibit   10  to  Form  10-Q   Quarterly
                 dated as of  February  6,  2002  among  the  Stockbridge-Munsee  Report  of KINA  for the  quarter  ended
                 Tribe, the Stockbridge-Munsee Tribal Gaming Authority,  Trading  March 31,  2002,  filed on May 15, 2002,
                 Cove New York, LLC, KINA and Waterford Gaming Group, LLC         File No. 001-04748
4.6              Development  Services  Agreement dated February 7, 1998 between  Exhibit  2.1 to Form  20-F/A of  Kerzner
                 the Mohegan Tribal Gaming Authority and Trading Cove Associates  for the year ended  December  31,  1997,
                                                                                  filed on  September  3,  1998,  File No.
                                                                                  001-04226
4.7              Relinquishment  Agreement  dated February 7, 1998,  between the  Exhibit  2.2 to Form  20-F/A of  Kerzner
                 Mohegan Tribal Gaming Authority and Trading Cove Associates      for the year ended  December  31,  1997,
                                                                                  filed on  September  3,  1998,  File No.
                                                                                  001-04226
4.8              Stock Purchase  Agreement dated as of February 14, 2002, by and  Exhibit 4.8 to Form 20-F  Annual  Report
                 among Station Casinos,  Inc., Station Online, Inc., Kerzner and  of Kerzner  for the year ended  December
                 Kerzner Interactive Limited                                      31, 2001,  filed on May 30,  2002,  File
                                                                                  No. 001-04226
4.9              Registration  Rights and Governance  Agreement dated as of July  Exhibit   C   to   Schedule    13-D   of
                 3, 2001, by and among Kerzner,  Sun  International  Investments  Mangalitsa   Limited   with  respect  to
                 Limited,  World  Leisure  Group  Limited,   Kersaf  Investments  Kerzner,  filed on July 13,  2001,  File
                 Limited,  Caledonia Investments PLC, Mangalitsa Limited, Cement  No. 005-48645
                 Merchants  SA,  Rosegrove  Limited,   Royale  Resorts  Holdings
                 Limited and Sun International Inc.
4.10             Omnibus  Agreement  dated  as of July  3,  2001,  by and  among  Exhibit 10.9 to  Registration  Statement
                 Kerzner, Sun International  Investments Limited,  World Leisure  on Form  F-4,  filed  on  September  21,
                 Group   Limited,   Kersaf   Investments   Limited,    Caledonia  2001, File No. 333-69780
                 Investments  PLC,  Rosegrove  Limited,  Royale Resorts Holdings
                 Limited,    Royale   Resorts    International    Limited,   Sun
                 International  Inc.,  Sun  Hotels  International,   Sun  Hotels
                 Limited,  World Leisure Investments  Limited,  Solomon Kerzner,
                 Peter   Buckley,   Derek  Aubrey  Hawton,   Sun   International
                 Management  Limited (a British Virgin Islands company),  Cement
                 Merchants  SA, Sun  International  Management  Limited (a Swiss
                 company),  Sun  International   Management  (UK)  Limited,  Hog
                 Island Holdings Limited and Mangalitsa Limited
4.11             Supplemental Agreement to the Original Shareholders’  Agreement  Exhibit   A   to   Schedule    13-D   of
                 and to the Rosegrove  Shareholders  Agreement  dated as of July  Mangalitsa   Limited   with  respect  to
                 3,  2001,  by  and  among  Kersaf  Investments   Limited,   Sun  Kerzner,  filed on July 13,  2001,  File
                 International Inc.,  Kerzner,  Royale Resorts Holdings Limited,  No. 005-48645
                 World Leisure Investments  Limited,  Sun Hotels Limited,  World
                 Leisure Group Limited,  Royale Resorts  International  Limited,
                 Caledonia  Investments PLC, Solomon Kerzner,  Sun International
                 Management   Limited  (a  British  Virgin   Islands   company),
                 Rosegrove  Limited,  Sun  International  Management  Limited (a
                 Swiss  company),  Mangalitsa  Limited  and Hog Island  Holdings
                 Limited
4.12             Irrevocable  Proxy  Agreement  dated as of July 3, 2001, by and  Exhibit   B   to   Schedule    13-D   of
                 among Kerzner,  Sun International  Investments  Limited,  World  Mangalitsa   Limited   with  respect  to
                 Leisure Group Limited,  Kersaf Investments  Limited,  Caledonia  Kerzner,  filed on July 13,  2001,  File
                 Investments  PLC,  Mangalitsa  Limited,  Cement  Merchants  SA,  No. 005-48645
                 Rosegrove  Limited,  Royale  Resorts  Holdings  Limited and Sun
                 International Inc.
4.13             Trade Name and  Trademark  Agreement  dated as of July 3, 2001,  Exhibit 10.12 to Registration  Statement
                 by and among Kerzner,  Sun  International  Investments  Limited  on Form  F-4,  filed  on  September  21,
                 and  World  Leisure  Group  Limited,  as  Assignors,   and  Sun  2001, File No. 333-69780
                 International Management Limited, as Assignee
4.14             Promissory  Note  dated  July 3, 2001  between  Royale  Resorts  Exhibit 10.13 to Registration  Statement
                 Holdings Limited, as Maker, and Kerzner, as Payee                on Form  F-4,  filed  on  September  21,
                                                                                  2001, File No. 333-69780
4.15             Stock  Pledge  Agreement  dated  as of  July 3,  2001,  between  Exhibit 10.14 to Registration  Statement
                 Royale Resorts Holdings Limited, as Pledgor, and Kerzner         on Form  F-4,  filed  on  September  21,
                                                                                  2001, File No. 333-69780
4.16             Settlement  Agreement  dated as of  November  1,  2002,  by and  Exhibit  99.2  to Form  6-K of  Kerzner,
                 among  Kerzner,  Kersaf  Investments  Limited,  Royale  Resorts  filed  on  November  8,  2002,  File No.
                 Holdings Limited, Sun International  Management Limited,  World  001-04226
                 Leisure Group Limited,  Caledonia  Investments PLC,  Mangalitsa
                 Limited and Cement Merchants SA
4.17             Kerzner Deferred Compensation Plan                               Exhibit 99.1 to  Registration  Statement
                                                                                  on Form S-8,  filed on October 11, 2002,
                                                                                  File No. 333-100522
4.18             KINA Retirement Savings Plan, dated January 1, 2000              Exhibit   10(c)  to  Form  10-K   Annual
                                                                                  Report  of  KINA  for  the  year   ended
                                                                                  December  31,  2000,  filed on April 17,
                                                                                  2001, File No. 001-04748
4.19             Plantation, Florida Lease Agreement                              Filed herewith as Exhibit 4.19
6                Computation of earnings per share                                Incorporated  by  reference to Note 2 of
                                                                                  the Notes to the Consolidated  Financial
                                                                                  Statements
8                Subsidiaries of Kerzner                                          Filed herewith as Exhibit 8
12.1             Kerzner Audit Committee Charter                                  Exhibit 3.4 to Form 20-F  Annual  Report
                                                                                  of Kerzner  for the year ended  December
                                                                                  31, 1999,  filed on June 30, 2000,  File
                                                                                  No.001-04226
12.2             Letter from Kerzner to the SEC regarding  representations  made  Filed herewith as Exhibit 12.2
                 by Arthur Andersen LLP
12.3             Consent of Deloitte & Touche LLP                                 Filed herewith as Exhibit 12.3
99.1             Certification  Pursuant to 18 U.S.C.  Section  1350, as adopted  Filed herewith as Exhibit 99.1
                 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2             Certification  of Chief Executive  Officer  pursuant to Section  Filed herewith as Exhibit 99.2
                 302 of the Sarbanes-Oxley Act of 2002
99.3             Certification  of Chief Financial  Officer  pursuant to Section  Filed herewith as Exhibit 99.3
                 302 of the Sarbanes-Oxley Act of 2002







SIGNATURES






The registrant  hereby  certifies that it meets all of the requirements for filing on Form 20-F and has duly caused
and authorized the undersigned to sign this Annual Report on its behalf.


                                                            KERZNER INTERNATIONAL LIMITED


Date:  June 30, 2003                                        By:         /s/John R. Allison
                                                                        ------------------------------------------------
                                                            Name:       John R. Allison
                                                            Title:      Executive Vice President
                                                                        Chief Financial Officer

        

KERZNER INTERNATIONAL LIMITED

Consolidated Financial Statements as of December 31, 2002 and 2001
and for the Three Years Ended December 31, 2002

Independent Auditors’ Report

To the Board of Directors and Shareholders of Kerzner International Limited:

We have audited the accompanying consolidated balance sheet of Kerzner International Limited and subsidiaries (the “Company”), as of December 31, 2002 and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated financial statements of the Company as of December 31, 2001 and for the two years then ended were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those financial statements in their report dated January 25, 2002.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Kerzner International Limited and subsidiaries, as of December 31, 2002 and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for goodwill and intangible assets effective January 1, 2002, to conform with Statement of Financial Accounting Standards No. 142, “Goodwill and Intangible Assets.”

As discussed above, the consolidated financial statements of Kerzner International Limited as of December 31, 2001, and for the two years then ended were audited by other auditors who have ceased operations. As described in Note 2, these consolidated financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards (“Statement”) No. 142, “Goodwill and Other Intangible Assets,” which was adopted by the Company as of January 1, 2002. Our audit procedures with respect to the disclosures in Note 2 with respect to 2001 and 2000 included (i) comparing the previously reported net income to the previously issued consolidated financial statements and the adjustments to reported net income representing amortization expense recognized in those periods related to goodwill as a result of initially applying Statement No. 142 to the Company’s underlying analysis obtained from management, and (ii) testing the mathematical accuracy of the reconciliation of adjusted net income to reported net income, and the related earnings-per-share amounts. In our opinion, the disclosures for 2001 and 2000 in Note 2 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2001 and 2000 consolidated financial statements of the Company other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2001 and 2000 consolidated financial statements taken as a whole.

Deloitte & Touche LLP

Parsippany, New Jersey

January 31, 2003, except with respect to the matter discussed in the third paragraph of Note 12, as to which the date is February 7, 2003.

Report of Independent Public Accountants

To the Shareholders of Sun International Hotels Limited:

We have audited the accompanying consolidated balance sheets of Sun International Hotels Limited and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sun International Hotels Limited and subsidiaries as of December 31, 2001 and 2000 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Roseland, New JerseyJanuary
25, 2002

In accordance with SEC Release 33-8070, this report is a copy of a previously issued Arthur Andersen LLP report and has not been reissued by Arthur Andersen LLP in connection with this Annual Report.

KERZNER INTERNATIONAL LIMITED
CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars, except per share data)

	December 31,
	2002			2001
ASSETS
Current assets:
Cash and cash equivalents	$	34,012		$	30,471
Restricted cash		4,842			4,518
Trade receivables, net		44,971			37,454
Due from affiliates		28,042			28,364
Inventories		8,969			8,807
Prepaid expenses and other assets		14,312			5,226
Total current assets		135,148			114,840
Property and equipment, net		1,128,375			1,155,192
Notes receivable		13,720			18,018
Due from affiliates - non-current		24,379			15,888
Deferred tax asset, net		6,119			3,874
Deferred charges and other assets, net		35,098			18,692
Investments in associated companies		66,939			30,527
Total assets	$	1,409,778		$	1,357,031
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	275		$	261
Accounts payable and accrued liabilities		156,171			148,063
Capital creditors		1,538			6,570
Total current liabilities		157,984			154,894
Deferred revenue		18,028			-
Other long-term liabilities		2,697			5,503
Long-term debt, net of current maturities		497,756			518,231
Total liabilities		676,465			678,628
Commitments and contingencies (Notes 12 and 22)
Shareholders' equity:
Ordinary shares, $.001 par value		35			34
Capital in excess of par		703,050			688,714
Retained earnings		201,131			160,977
Accumulated other comprehensive loss		(8,134	)		(8,553	)
		896,082			841,172
Treasury stock		(162,769	)		(162,769	)
Total shareholders' equity		733,313			678,403
Total liabilities and shareholders' equity	$	1,409,778		$	1,357,031
The accompanying notes are an integral part of these financial statements.

KERZNER INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US dollars, except per share data)

	For the Year Ended December 31,
	2002			2001			2000
Revenues:
Gaming	$	130,669		$	116,490		$	367,935
Rooms		184,776			176,573			194,008
Food and beverage		131,377			121,415			147,718
Tour operations		41,063			36,348			33,192
Real estate related		-			9,771			108,650
Management and other fees		41,305			36,806			35,763
Other revenues		65,618			56,416			49,208
Insurance recovery		1,100			2,000			-
Gross revenues		595,908			555,819			936,474
Less: promotional allowances		(22,210	)		(22,778	)		(51,779	)
Net revenues		573,698			533,041			884,695
Cost and expenses:
Gaming		65,644			60,444			224,765
Rooms		33,381			29,625			33,915
Food and beverage		88,560			82,856			98,288
Tour operations		36,767			32,041			29,626
Other operating expenses		80,888			80,094			96,605
Real estate related		-			2,865			32,272
Selling, general and administrative		92,916			80,206			103,465
Corporate expenses		32,964			25,106			25,340
Depreciation and amortization		56,306			51,490			60,223
Purchase termination costs		-			-			11,202
Transaction costs		-			-			7,014
Restructuring costs (reversal)		(1,000	)		5,732			-
Pre-opening expenses		-			6,904			7,616
Write-down of net assets held for sale		-			-			229,208
Cost and expenses		486,426			457,363			959,539
Income (loss) from operations		87,272			75,678			(74,844	)
Other income (expense):
Interest income		3,525			7,471			4,194
Interest expense, net of capitalization		(39,104	)		(52,702	)		(45,678	)
Equity in earnings (losses) of associated companies		(5,209	)		3,059			4,225
Gain on settlement of territorial and other disputes		14,459			-			-
Other, net		(168	)		(760	)		(688	)
Other expense, net		(26,497	)		(42,932	)		(37,947	)
Income (loss) before provision for income taxes
and extraordinary items		60,775			32,746			(112,791	)
Provision for income taxes		(96	)		(1,090	)		(6,313	)
Income (loss) before extraordinary items		60,679			31,656			(119,104	)
Extraordinary loss on early extinguishment of debt,
net of income tax effect		(20,525	)		-			-
Net income (loss)	$	40,154		$	31,656		$	(119,104	)

KERZNER INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US dollars, except per share data)
(Continued)

	For the Year Ended December 31,
	2002			2001		2000
Basic earnings (loss) per share:
Income (loss) before extraordinary item	$	2.18		$	1.18	$	(3.86	)
Extraordinary loss on early extinguishment of debt		(0.74	)		-		-
Earnings (loss) per share - basic	$	1.44		$	1.18		(3.86	)
Weighted average number of shares outstanding-basic		27,891			26,885		30,849
Diluted earnings (loss) per share:
Income (loss) before extraordinary item	$	2.13		$	1.14	$	(3.86	)
Extraordinary loss on early extinguishment of debt		(0.72	)		-		-
Earnings (loss) per share - diluted	$	1.41		$	1.14	$	(3.86	)
Weighted average number of shares outstanding-diluted		28,544			27,826		30,849
The accompanying notes are an integral part of these financial statements

KERZNER INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Years Ended December 31, 2002, 2001 and 2000
(In thousands of US dollars)

	Ordinary Shares			Ordinary Shares Amount		Capital in Excess of Par			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity			Comprehensive Income(Loss) for the Period
Balance at December 31, 1999		33,682			34		667,918			248,425			(5,569	)		(20,977	)		>899,831		$	67,864
Translation reserves		-			-		-			-			26			-			26			26
Repurchase of 6.1 million of
ordinary shares		-			-		-			-			-			(141,792	)		(141,792	)		-
Exercise of share options		192			-		2,866			-			-			-			2,866			-
Net loss		-			-		-			(119,104	)		-			-			(119,104	)		(119,104	)
Balance at December 31, 2000		33,874			34		680,784			129,321			(5,543	)		(162,769	)		641,827		$	(119,078	)
Translation reserves		-			-		-			-			(3,010	)		-			(3,010	)	$	(3,010	)
Exercise of share options		531			-		7,930			-			-			-			7,930			-
Net income		-			-		-			31,656			-			-			31,656			31,656
Balance at December 31, 2001		34,405			34		688,714			160,977			(8,553	)		(162,769	)		678,403			28,646
Translation reserves		-			-		-			-			419			-			419		$	419
Exercise of share options		808			1		14,701			-			-			-			14,702			-
Cancellation of ordinary shares		(16	)		-		(365	)		-			-			-			(365	)		-
Net income		-			-		-			40,154			-			-			40,154			40,154
Balance at December 31, 2002		35,197		$	35	$	703,050		$	201,131		$	(8,134	)	$	(162,769	)	$	733,313		$	40,573
The accompanying notes are an integral part of these financial statements.

KERZNER INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)

	For the Year Ended December 31,
	2002			2001			2000
Cash flows from operating activities:
Net income (loss)	$	40,154		$	31,656		$	(119,104	)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Extraordinary loss on early extinguishment of debt,
net of income tax effect		20,525			-			-
Depreciation and amortization		58,174			55,692			64,340
Write-down of net assets held for sale		-			-			229,208
Purchase termination costs		-			-			11,202
Loss on disposition of assets		227			760			688
Equity in (earnings) losses of associated companies,
net of dividends received		7,533			(187	)		(1,377	)
Provision for doubtful receivables		3,205			6,355			6,492
Provision for discount on CRDA obligations, net		-			-			799
Deferred income tax benefit		(6,119	)		(3,874	)		-
Deferred revenue		18,028			-			-
Net change in deferred tax liability		-			-			205
Net change in working capital accounts:
Receivables		(5,881	)		(3,722	)		(9,179	)
Due from affiliates		(9,011	)		1,377			(4,658	)
Inventories and prepaid expenses		(9,259	)		5,098			(2,052	)
Accounts payable and accrued liabilities		7,587			1,676			26,490
Net change in deferred charges and other assets		270			(1,398	)		(1,668	)
Other		158			5,900			23,912
Net cash provided by operating activities		125,591			99,333			225,298
Cash flows from investing activities:
Payments for property and equipment, net of insurance
proceeds received		(39,524	)		(67,590	)		(155,892	)
Net proceeds from the sale of other assets		126			2,547			501
Purchase of notes receivable		(13,704	)		-			-
Proceeds received from sale of Resorts Atlantic City, net		-			120,850			-
Proceeds received for repayment of notes receivable		18,018			12,000			-
Deposit received		4,500			-			-
Deposit refunded for proposed Desert Inn acquisition		-			-			7,750
Advances to associated companies, net		(306	)		(6,420	)		(18,663	)
Acquisition of equity interest in associated company		(40,812	)		(3,768	)		-
Reclassification of cash to net assets held for sale		-			-			(21,453	)
CRDA deposits and other		(278	)		-			(2,695	)
Net cash provided by (used in) investing activities		(71,980	)		57,619			(190,452	)

KERZNER INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
(Continued)

	For the Year Ended December 31,
	2002			2001			2000
Cash flows from financing activities:
Proceeds from exercise of share options		14,702			7,930			2,866
Proceeds from issuance of debt and borrowings		317,000			274,500			202,000
Repurchase of ordinary shares		(365	)		-			(141,792	)
Debt issuance and modification costs		(4,665	)		(8,805	)		(919	)
Early redemption of debt		(313,135	)		-			-
Repayment of borrowings		(63,283	)		(419,736	)		(113,063	)
Net cash used in financing activities		(49,746	)		(146,111	)		(50,908	)
Increase (decrease) in cash, cash equivalents and
restricted cash		3,865			10,841			(16,062	)
Cash, cash equivalents and restricted cash at beginning
of period		34,989			24,148			40,210
Cash, cash equivalents and restricted cash at end of period	$	38,854		$	34,989		$	24,148
Supplemental disclosure of cash flow and non-cash
investing and financing activities:

	For the Year Ended December 31,
	2002		2001		2000
Interest paid, net of capitalization	$	37,586	$	43,644	$	42,538
Income taxes paid		1,871		5,166		5,012
Promissory Note issued to Colony in connection with the
Resorts Atlantic City Sale		-		17,500		-
Change in fair value of interest rate swap agreements		25,077		5,503		-
Property and equipment acquired under capital lease obligations		438		16		1,574
The accompanying notes are an integral part of these financial statements

Notes to Consolidated Financial Statements

(Amounts in tables in thousands of US dollars except per share data)

Note 1 — Organization and Basis of Presentation

Organization and Name Change

Kerzner International Limited (“Kerzner”), an international resort and gaming company, was incorporated in 1993 under the laws of the Commonwealth of The Bahamas. In these notes to consolidated financial statements, the words “Company,” “we,” “our” and “us” refer to Kerzner together with its subsidiaries as the context may require.

On July 1, 2002, we changed our corporate name from Sun International Hotels Limited to Kerzner International Limited and our stock, which was trading on the New York Stock Exchange under the symbol “SIH,” was listed under the new ticker symbol “KZL.” The name change was implemented in accordance with agreements related to the restructuring of our former majority shareholder, Sun International Investments Limited (“SIIL”). There was no change in our management or worldwide operations as a result of the name change. Any references to “Sun” or “SINA” herein relate to the entities currently known as “Kerzner” and “KINA,” respectively.

We are a leading developer and operator of premier destination casino resorts, luxury resort hotels and gaming properties worldwide. In our destination casino resort business, we own and operate the Atlantis Paradise Island resort and casino complex (“Atlantis”) located in The Bahamas. In our luxury resort hotel business, we operate nine beach resorts at locations in Mauritius, the Maldives, Dubai, Mexico, and The Bahamas. In our gaming business, we developed and earn revenue from the Mohegan Sun Casino located in Uncasville, Connecticut.

Prior to 2001, we owned and operated a resort and casino property in Atlantic City, New Jersey (“Resorts Atlantic City”), which we sold to an unaffiliated entity in April 2001. During 2002, we operated an Internet gaming venture through a subsidiary, Kerzner Interactive Limited (“Kerzner Interactive”). We have announced our intention to discontinue the operations of Kerzner Interactive during 2003.

The Bahamas

Through certain of our Bahamian subsidiaries, we own and operate Atlantis, our flagship property. Atlantis is a 2,317-room, ocean-themed destination casino resort located on Paradise Island, The Bahamas. Atlantis features three interconnected hotel towers, the Royal Tower, the Coral Tower and the Beach Tower, all built around a 7-acre lagoon and a 34-acre marine environment that includes the world’s largest open-air aquarium. Atlantis also features a 100,000 square foot entertainment complex containing approximately 1,000 slot machines and 80 table games, 17 restaurants, approximately 100,000 square feet of convention space, a sports center, over 30,000 square feet of high-end retail space and a 63-slip, full service marina. We also own and operate the One&Only Ocean Club, a high-end luxury resort hotel with 106 rooms and suites located on Paradise Island, as well as the Ocean Club Golf Course, a water plant, and other improvements on Paradise Island. We own approximately 100 acres of undeveloped land on Paradise Island, which may be sold or developed.

In 2000, we completed construction of an addition to the Ocean Club comprising 40 luxurious rooms and ten deluxe suites, as well as a new beachfront restaurant operated by well-known restaurateur Jean-Georges Vongerichten. In addition, we completed the Tom Weiskopf-designed championship Ocean Club Golf Course and Clubhouse, which opened to the public in January 2001. Also in 2000, we completed the infrastructure of the Ocean Club Estates, with 121 luxury home sites set around the golf course. Of the home sites available for sale, 102 were sold during 2000, nine were sold during 2001 and as of December 31, 2002, there were no remaining home sites available for sale, although seven sites are pending final closing and we plan to retain ownership of two sites.

In 1999, through one of our Bahamian subsidiaries, we formed a joint venture with Vistana, Inc., now known as Starwood Vacation Ownership (“Starwood Vacation”), a subsidiary of Starwood Hotels and Resorts Worldwide Inc. (“Starwood”), to develop a timeshare project on Paradise Island adjacent to Atlantis (“Harborside at Atlantis”). Starwood Vacation and the Company each own a 50% interest in the joint venture. Construction of 82 two-bedroom units was completed by February 2001 and sales of the timeshare units began in May 2000. Our share of earnings (losses) from Harborside at Atlantis is included in equity in earnings (losses) of associated companies in the accompanying consolidated statements of operations. In addition, we earn fees for marketing, administrative and development services provided to Harborside at Atlantis, which are included in management and other fees in the accompanying consolidated statements of operations.

Connecticut 

We have a 50% interest in, and are a managing partner of, Trading Cove Associates (“TCA”), a Connecticut general partnership that developed and until December 31, 1999, had a management agreement (the “Management Agreement”) with the Mohegan Tribal Gaming Authority, an instrumentality of the Mohegan Tribe of Indians of Connecticut (the “Mohegan Tribe”) to operate a casino resort and entertainment complex situated in the town of Uncasville, Connecticut (the “Mohegan Sun Casino”). In 1998, the Mohegan Tribe retained TCA to develop its $1.0 billion expansion of the Mohegan Sun Casino for a fee of $14.0 million. In addition, TCA and the Mohegan Tribe entered into an agreement (the “Relinquishment Agreement”) pursuant to which, effective January 1, 2000, the Management Agreement was terminated and TCA receives payments of five percent of the gross revenues of the Mohegan Sun Casino for a 15-year period. TCA is obligated to pay certain amounts to its partners and certain of their affiliates, as priority payments. These amounts are paid as TCA receives sufficient cash to meet those priority payments.

One&Only Luxury Resorts

In December 2002, we began to operate and market certain of our luxury resort hotels under the “One&Only” brand in connection with our corporate name change. One&Only emphasizes the uniqueness of each of the respective properties in the luxury resort market. By mid-2003, we expect to be marketing five of our nine luxury resorts under the One&Only brand.

Mauritius, Maldives, Dubai and Mexico

In Mauritius, we manage and own interests in five beach resorts (“Mauritius Resorts”) including the 175-room One&Only Le Saint Géran Hotel, the 200-room One&Only Le Touessrok Hotel, the 248-room La Pirogue Hotel, the 333-room Le CoCo Beach and the 238-room Sugar Beach Resort Hotel. Through June 16, 2000, we owned a 22.8% interest in Sun Resorts Limited (“SRL”), the company that owns the Mauritius Resorts. Effective June 16, 2000, SRL issued additional shares of stock under a rights issue in which we did not exercise our rights, effectively reducing our ownership interest to 20.4%. Additionally, during 2002, One&Only Le Touessrok went through a major redevelopment.

In the Maldives, located approximately 600 miles southwest of the southern tip of India, we manage the One&Only Kanuhura Resort & Spa (“One&Only Kanuhura”), a 120-room luxury resort located on Kanuhura Island. Effective August 1, 2001, we acquired a 25% ownership interest in Kanuhura for approximately $3.8 million. During 2002, we entered into management and development agreements for a 100-room luxury resort hotel to be constructed in The Maldives, on Medhufinolhu Island in the North Malé Atoll, that we expect to open in the first half of 2004. This new five-star resort will occupy the site where a small resort known as Reethi Rah was located.

See Note 15—Related Party Transactions—Extension of Mauritius Management Contracts, for discussion of an agreement with SRL in connection with the management of resorts in the Indian Ocean region.

In Dubai, we manage the One&Only Royal Mirage Hotel. In December 2002, we completed a major expansion of the One&Only Royal Mirage, increasing its capacity to 466 rooms.

In Mexico, we manage and own a 50% interest in Palmilla Resort, a 115-room luxury resort located in Baja, near Cabo San Lucas. During 2002, we acquired our interest in the resort and entered into long-term management and development agreements for the property. Beginning in April 2003, Palmilla Resort will undertake a $75 million expansion project that will increase the room count to 174 rooms and significantly upgrade the amenities and public areas offered by the resort. The expansion is expected to be completed by the end of 2003 and will be financed by Palmilla Resort through local project financing, which is supported by a $38.0 million guarantee from Kerzner. See Note 22—Commitments and Contingencies.

We manage these resorts under long-term management contracts and receive management fees based upon a percentage of the revenues and adjusted gross operating profits of these properties. Such amounts are included in management and other fees in the accompanying consolidated statements of operations. Our share of earnings from the properties resulting from our ownership interests in Mauritius, the Maldives, and Mexico are included in equity in earnings (losses) of associated companies in the accompanying consolidated statements of operations.

Internet Gaming

During 2001, we developed an Internet gaming site through our subsidiary, Kerzner Interactive Limited (formerly SunOnline Limited). Costs incurred during 2001 in connection with Internet gaming are included in pre-opening expenses in the accompanying consolidated statements of operations. Since January 1, 2002, revenues and cost and expenses related to the operations of Kerzner Interactive are included in the accompanying consolidated statements of operations.

On February 15, 2002, we entered into an agreement with Station Casinos, Inc. (“Station”), pursuant to which Station agreed to purchase a 50% interest in Kerzner Interactive. The companies later restructured the original agreement such that Station purchased an option from us in July 2002 for $4.5 million to buy a 50% interest in Kerzner Interactive. The option payment is accounted for as a deposit and is included in accounts payable and accrued liabilities in the accompanying consolidated financial statements. The Company and Station have mutually agreed to terminate this transaction. As a result, the $4.5 million non-refundable deposit will be recognized as income of Kerzner Interactive during 2003.

On January 29, 2003, the Company announced plans to discontinue Kerzner Interactive. Kerzner Interactive allowed play only in jurisdictions that permitted online gaming and, as these jurisdictions have become more restrictive in their acceptance of play, the market size has been reduced and competition has intensified. Without the potential for expansion into other markets, including the United States, the outlook for new business has substantially decreased. We intend to discontinue operations of Kerzner Interactive during 2003.

New York

Through a wholly owned subsidiary, we own 50% of Trading Cove New York, LLC (“TCNY”), a Delaware limited liability company, which is managed by the Stockbridge-Munsee Band of Mohican Indians (the “Stockbridge-Munsee Tribe”). In March 2001, TCNY entered into a development services agreement (the “Development Agreement”) with the Stockbridge-Munsee Tribe for the development of a casino project (the “Project”) in the Catskill region of the State of New York (the “State”). The Development Agreement was amended and restated in February 2002. The Stockbridge-Munsee Tribe does not currently have reservation land in the State but is federally recognized and operates a casino on its reservation in Wisconsin. The Stockbridge-Munsee Tribe has land claim litigation pending in the US District Court for the Northern District of New York (the “Court”) against the State to recover lands within the state that it alleges were wrongfully taken from the tribe. The Court has stayed the litigation, but the Stockbridge-Munsee Tribe has requested that the Court lift the stay in an effort to advance the litigation.

Pursuant to the Development Agreement, as amended, TCNY will provide preliminary funding, certain financing and exclusive development services to the Stockbridge-Munsee Tribe in conjunction with the Project. If the Project is approved, TCNY will earn a fee of 5% of revenues as compensation for these services, as defined in the Development Agreement, beginning with the opening of the Project and continuing for a period of twenty years. TCNY has secured land and/or options on approximately 400 acres of property in the Town of Thompson, County of Sullivan (the “County”), of which approximately 333 acres are currently designated for the Project. In February 2002, the Tribe filed a Land to Trust Application with the US Department of the Interior, Bureau of Indian Affairs (the “BIA”), for the Project site properties. Should the BIA approve the Land to Trust Application and the Stockbridge-Munsee Tribe obtain other required approvals, the land could be taken into trust by the Federal Government on behalf of the Stockbridge-Munsee Tribe for the purpose of conducting Class III Gaming.

In October 2001, the State enacted legislation authorizing up to three Class III Native American casinos in the counties of Sullivan and Ulster and three Native American casinos in western New York pursuant to Tribal State Gaming Compacts to be entered into by the State and applicable Native American tribes.

In January 2002, the Stockbridge-Munsee Tribe entered into an agreement with the County pursuant to which the Stockbridge-Munsee Tribe will make certain payments to the County to mitigate any potential impacts the Project may have on the County and other local government subdivisions within the County. The payments will not commence until after the opening of the Project.

The Project is contingent upon the receipt of numerous federal, state and local approvals by the Stockbridge-Munsee Tribe, including the execution of a Class III Gaming Compact with the State, which approvals are beyond the control of TCNY. As of January 31, 2003, the State has yet to enter into negotiations with the Stockbridge-Munsee Tribe to settle the tribe’s land claim nor has the State engaged in compact negotiations with the tribe to establish a casino in the State. We can make no representation as to whether any of the required approvals will be obtained by the Stockbridge-Munsee Tribe.

The Company’s investment in TCNY is reflected within investments in associated companies in the accompanying consolidated balance sheets.

Note 2 — Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Kerzner and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and costs and expenses during the reporting period. Actual results could differ from those estimates.

We provide allowances for doubtful accounts arising from casino, hotel and other services, which are based upon a specific review of certain outstanding receivables. In determining the amounts of the allowances, we are required to make certain estimates and assumptions. Accruals for potential liabilities related to any lawsuits or claims brought against us, calculation of inventory reserves, calculation of income tax liabilities, valuation allowance on deferred tax assets and other liabilities require that we apply significant judgment in determining the appropriate assumptions for use in the calculation of financial estimates. We also must estimate the useful lives assigned to our assets. Actual results may differ from these estimates and assumptions.

Revenue Recognition

We recognize the net win from casino gaming activities (the difference between gaming wins and losses) as gaming revenues. Revenues from hotel and related services are recognized at the time the related service is performed. Revenues from tour operations include the sale of travel and leisure package reservations and are recognized at the time of departure. Real estate related revenues and profits on residential lot sales are recognized upon delivery of the completed lots to the purchasers at closing. Deposits collected in advance of closing are deferred and are included in current liabilities. Management and other fees and other operating revenues include fees charged to unconsolidated affiliates for casino and hotel management, executive management and project consulting and are recorded when earned.

For discussion of deferred revenue, see Note 19—Gain on Settlement of Territorial and Other Disputes.

Insurance Recovery

Insurance recovery represents proceeds received for business interruption amounts relating to Hurricane Michelle, which are recorded when realized.

Promotional Allowances

The retail value of accommodations, food, beverage and other services provided to customers without charge is included in gross revenues and deducted as promotional allowances. The estimated departmental costs of providing such promotional allowances are included in gaming costs and expenses as follows:

	For the Year Ended December 31,
	2002		2001		2000
Rooms	$	2,373	$	2,449	$	11,441
Food and beverage		6,428		6,243		23,587
Other		426		410		3,727
	$	9,227	$	9,102	$	38,755

The total costs of providing promotional allowances in 2000 included $27.1 million at Resorts Atlantic City.

Advertising Expense

We expense advertising costs as incurred. Advertising expense was $13.9 million, $11.2 million, and $7.6 million for the years ended December 31, 2002, 2001 and 2000, respectively, and is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. Prepaid advertising for each of the periods presented was not material.

Pre-Opening Expenses

Pre-opening costs are charged to expense as incurred. In 2000, pre-opening expenses were related to the expansion of the Ocean Club Golf Course on Paradise Island. In 2001, pre-opening expenses related to our Internet gaming operations and the Ocean Club Golf Course were $4.6 million and $2.3 million, respectively. During 2002, we had no pre-opening expenses.

Foreign Currency

Transactions denominated in foreign currencies are recorded in local currency at actual exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet dates are reported at the rates of exchange prevailing at those dates. Any gains or losses arising on monetary assets and liabilities from a change in exchange rates subsequent to the date of the transaction have been included in corporate expenses in the accompanying consolidated financial statements. These amounts were not significant for the years ended December 31, 2002, 2001 and 2000.

The financial statements of our equity method investees and certain subsidiaries are translated from their local currencies into US dollars using current and historical exchange rates. Translation adjustments resulting from this process are reported separately and accumulated as a component of accumulated other comprehensive loss in shareholders’ equity in the accompanying consolidated balance sheets. Upon sale or liquidation of our investments, the translation adjustment would be reported as part of the gain or loss on sale or liquidation.

Derivative Financial Instruments

The Company’s derivatives consist of interest rate swap agreements used to manage the impact of interest rate changes on our long-term debt obligations and have been accounted for as fair value hedges in accordance with SFAS 133.

See Note 12—Long-Term Debt for a description of our derivative financial instruments.

Cash Equivalents

We consider all of our short-term money market securities purchased with original maturities of three months or less to be cash equivalents.

Inventories

Inventories are carried at the lower of cost (on a first-in, first-out basis) or market value. Inventories consist primarily of food and beverages, operating supplies, and other items. Provisions have been made to reduce excess or obsolete inventories to their estimated net realizable value.

Property and Equipment and Depreciation

Property and equipment are stated at cost and are depreciated over the estimated useful lives reported below using the straight-line method.

Land improvements and utilities	14 - 40 years
Hotels and other buildings	15 - 40 years
Furniture, machinery and equipment	2 - 15 years

Deferred Charges and Other Assets

Deferred charges and other assets primarily consist of the fair value of our interest rate swaps, as discussed in Note 24, and debt issuance costs, which are being amortized to interest expense over the terms of the related indebtedness. Deferred charges related to the Mohegan Sun Casino are being amortized over a seven-year period through the end of 2003. See Note 9—Deferred Charges and Other Assets.

Goodwill

Effective January 1, 2002, the Company adopted SFAS 142 “Goodwill and Other Intangible Assets” which resulted in the cessation of the amortization of goodwill. Prior to this date, our goodwill was amortized on a straight-line basis over 40 years. Amortization expense relating to Resorts Atlantic City included in the accompanying consolidated statements of operations related to goodwill was $0 and $2.6 million for the years ended December 31, 2001 and 2000, respectively. Goodwill related to the investment in associated companies is included in the accompanying consolidated balance sheets and was $7.9 million as of December 31, 2002. Equity in earnings of associated companies for the years ended December 31, 2001 and 2000 is net of $0.3 million and $0.3 million of amortization expense related to such goodwill. The table below illustrates what the impact to the consolidated statement of operations would have been if the provisions of SFAS 142 were applied to all periods presented.

	For the Year Ended December 31,
	2002		2001		2000
Net income (loss), as reported	$	40,154	$	31,656	$	(119,104	)
Amortization of goodwill relating to Resorts Atlantic City		-		-		2,600
Amortization of goodwill relating to investments in
associated companies		-		300		300
	$	40,154	$	31,956	$	(116,204	)

Basic earnings (loss) per share:
Net income (loss), as reported	$	1.44	$	1.18	$	(3.86	)
Amortization of goodwill relating to Resorts Atlantic City		-		-		0.08
Amortization of goodwill relating to investments in
associated companies		-		0.01		0.01
Adjusted net income (loss)	$	1.44	$	1.19	$	(3.77	)
Diluted earnings (loss) per share:
Net income (loss), as reported	$	1.41	$	1.14	$	(3.86	)
Amortization of goodwill relating to Resorts Atlantic City		-		-		0.08
Amortization of goodwill relating to investments in
associated companies		-		0.01		0.01
Adjusted net income (loss)	$	1.41	$	1.15	$	(3.77	)

Investments in Associated Companies

Investments in associated companies represent investments in which the Company maintains an interest in excess of 20% but less than or equal to 50% and has significant influence over the investees. These investments are accounted for in accordance with the equity method of accounting, under which each such investment is reported at cost plus the Company’s proportionate share of the income or loss, less dividends received, of such investee since its acquisition. Equity in earnings (losses) of associated companies include such proportionate share of income or loss.

Capital Creditors

Capital creditors represents amounts due to vendors for capital improvement related projects.

Capitalized Interest

Interest is capitalized on construction expenditures and land under development at the weighted average interest rate of our long-term debt. Interest costs of $0.2 million, $1.1 million, and $11.1 million were capitalized in the years ended December 31, 2002, 2001 and 2000, respectively.

Stock-Based Compensation

We have elected to apply Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” as interpreted in FASB Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation” in accounting for compensation under our stock option plans in lieu of the alternative fair value accounting provided for under SFAS No. 123, “Accounting for Stock-Based Compensation” as amended by SFAS No. 148 (“SFAS 123”).

Accordingly, we have not recognized any compensation expense for those stock options granted at option prices equal to the fair market value of the common stock at the date of grant. The fair value of options granted during 2002, 2001 and 2000 was estimated as of the respective dates of grant using the Black-Scholes option-pricing model with the following weighted average assumptions. The weighted average fair value of options granted in 2002 was $7.53.

	For the Year Ended December 31,
	2002			2001			2000
Risk-free interest rate		2.7	%		4.7	%		6.0	%
Expected volatility		37.2	%		52.0	%		43.0	%
Expected life of options in years		4-5			4-5			6-7
Expected dividend yield		-			-			-

The following table illustrates the effect on net income and earnings (loss) per share if Kerzner had applied the fair value recognition provisions of SFAS 123 to stock-based compensation.

	For the Year Ended December 31,
	2002		2001		2000
Net income (loss), as reported	$	40,154	$	31,656	$	(119,104	)
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects		6,448		9,252		7,307
Pro forma net income (loss)	$	33,706	$	22,404	$	(126,411	)
Earnings (loss) per share:
Basic - as reported	$	1.44	$	1.18	$	(3.86	)
Basic - pro forma	$	1.21	$	0.83	$	(4.10	)
Diluted - as reported	$	1.41	$	1.14	$	(3.86	)
Diluted - pro forma	$	1.18	$	0.81	$	(4.10	)

Long-Lived Assets

We review our long-lived assets and certain identifiable intangibles for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If changes in circumstances indicate that the carrying amount of an asset that we expect to hold and use may not be recoverable, future cash flows expected to result from the use of the asset and its disposition are estimated. If the undiscounted value of the future cash flows is less than the carrying value of the asset, the carrying value of the long-lived asset will be reduced by the amount which the carrying value exceeds fair value. We do not believe that any such changes have occurred except as a result of the Resorts Atlantic City Sale and the Atlantic City Option, as discussed in Note 3.

Income Taxes

We are subject to income taxes in certain jurisdictions. Accordingly, the accompanying consolidated statements of operations include a provision for income taxes based on prevailing tax laws of those jurisdictions.

We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Realization of future tax benefits related to deferred tax assets is dependent on many factors, including our ability to generate future taxable income. The valuation allowance is adjusted in the period we determine it is more likely than not that deferred tax assets will or will not be realized. We considered these factors in reaching our conclusion to reduce the valuation allowance during 2002, which resulted in a reduction to our provision for income taxes.

Accumulated Other Comprehensive Loss

Financial statements of foreign entities in which the Company maintains an investment are prepared in their respective local currencies and translated into US dollars at the current exchange rates for assets and liabilities and an average rate for the year for revenues and expenses. Net gains or losses resulting from the translation of foreign financial statements are charged or credited to the currency translation adjustment component of accumulated other comprehensive loss. Other comprehensive income (loss) have no tax impact as they relate to translation reserves on investments owned by foreign entities that are not subject to taxation.

Treasury Stock

Ordinary shares, which were repurchased and held in treasury, are stated at cost in the accompanying consolidated balance sheet. See Note 13 for further discussion.

Recent Accounting Pronouncements

Classification of Extraordinary Items

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”). SFAS 145 rescinds FASB Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt” (“Statement 4”), and an amendment of Statement 4, FASB Statement No. 64, “Extinguishments of Debt Made to Satisfy Sinking Fund Requirements” (“Statement 64”). SFAS 145 also rescinds FASB Statement No. 44, and amends FASB Statement No. 13. SFAS 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions. The provisions of SFAS 145 related to the rescission of Statement 4 are to be applied in fiscal years beginning after May 15, 2002. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet the criteria in APB Opinion 30 for classification as an extraordinary item will be reclassified.

Under Statement 4, all gains and losses from extinguishment of debt were required to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. SFAS 145 eliminates Statement 4 and, thus, the exception to applying APB Opinion 30 to all gains and losses related to extinguishments of debt (other than extinguishments of debt to satisfy sinking fund requirements—the exception to application of Statement 4 noted in Statement 64). As a result, gains and losses from extinguishment of debt should be classified as extraordinary items only if they meet the criteria in APB Opinion 30. Applying the provisions of APB Opinion 30 will distinguish transactions that are part of an entity’s recurring operations from those that are unusual or infrequent or that meet the criteria for classification as an extraordinary item.

We believe the adoption of SFAS 145 will require the $20.5 million extraordinary loss on extinguishment of our 8 5/8% Senior Subordinated Notes and our 9% Senior Subordinated Notes recognized during the year ended December 31, 2002 to be reclassified upon adoption of SFAS 145 in the first quarter of 2003.

Exit or Disposal Activities

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”) effective for exit or disposal activities initiated after December 31, 2002. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. Adoption of SFAS 146 is not expected to have a significant impact on our financial position or results of operations.

Guarantees

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). This interpretation clarifies that a guarantor is required to disclose (a) the nature of the guarantee, including the approximate term of the guarantee, how the guarantee arose and the events or circumstances that would require the guarantor to perform under the guarantee; (b) the maximum potential amount of future payments under the guarantee; (c) the carrying amount of the liability, if any, for the guarantor’s obligations under the guarantee; and (d) the nature and extent of any recourse provisions or available collateral that would enable the guarantor to recover the amounts paid under the guarantee. This interpretation also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability at an estimate of the guarantee’s fair value for the obligations it has undertaken in issuing the guarantee, including its ongoing obligation to stand ready to perform over the term of the guarantee in the event that the specified triggering events or conditions occur.

The initial recognition and initial measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The disclosure requirements in this interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002 and have been included in Note 22—Commitments and Contingencies.

We currently guarantee certain amounts related to certain of our equity method investments. See Note 22—Commitments and Contingencies. We have not recognized a liability for any guarantee issued prior to December 31, 2002. If in the future we modify the current guarantees or issue new guarantees, we will be obligated to recognize a liability at an estimate of the guarantee’s fair value.

Consolidation of Variable Interest Entities

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”). This interpretation of Accounting Research Bulletin 51, “Consolidated Financial Statements,” addresses consolidation by business enterprises of variable interest entities which have one or both of the following characteristics: (i) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, which is provided through other interests that will absorb some or all of the expected losses of the entity, or (ii) the equity investors lack one or more of the following characteristics of a controlling financial interest: (a) the direct or indirect ability to make decisions about the entity’s activities through voting rights or similar rights, (b) the obligation to absorb the expected losses of the entity if they occur, which makes it possible for the entity to finance its activities, or (c) the right to receive the expected residual returns of the entity if they occur, which is the compensation of the risk of absorbing the expected losses.

FIN 46 applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003 to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. We have not yet assessed the impact that adopting FIN 46 will have on our financial position or results of operations.

Stock-Based Compensation

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure—An Amendment to FASB Statement No. 123” (“SFAS 148”). SFAS 148 amends SFAS 123 to provide alternative methods of transition for a voluntary change to the fair valued based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. We have not yet determined to change the accounting for option grants to SFAS 123 accounting.

See Notes 2 and 14 for additional disclosures.

Note 3 — Business Acquisitions and Dispositions

Palmilla Acquisition

On September 12, 2002, we acquired a 50% ownership interest in the 115-room Palmilla Resort, a deluxe, five-star property located near Cabo San Lucas in Baja, Mexico, for approximately $40.8 million, including direct acquisition costs. This acquisition was funded through a combination of cash on hand and borrowings under our revolving credit facility as part of our strategy to expand our luxury resort business. In connection with the purchase, we entered into long-term management and development contracts related to the property that will expire in 2022. As part of the purchase agreement, we have an option to acquire the remaining 50% interest from the owner for a price of $40.0 million, plus 50% of Palmilla’s working capital. This option expires on March 12, 2003. As part of the purchase agreement, the owner has the right to require us to acquire the remaining 50% interest from the owner for a price of $36.3 million, plus 50% of Palmilla’s working capital, with the price subject to adjustment, as defined in the purchase agreement, during the first year of the option period. The purchase price during the second year of the option period is based on a formula, as defined. This option period begins on September 12, 2005 and expires on September 12, 2007.

On January 29, 2003, the Company announced that Palmilla Resort would be undertaking a $75.0 million expansion project, which will commence in April 2003 and will increase the room count to 174 rooms and significantly upgrade the amenities and public areas offered by the resort. The expansion is expected to be completed by the end of 2003 and will be financed primarily through local project financing, which is to be supported by a Kerzner guarantee.

Kanuhura Acquisition

On August 1, 2001, we acquired a 25% ownership interest in the Kanuhura Resort & Spa, a 120-room luxury resort located on Kanuhura Island in the Maldives, which is approximately 600 miles southwest of the southern tip of India, for $3.8 million. In connection with the purchase, we entered into a long-term management contract related to the property that will now expire in 2023.

See Extension of Mauritius Management Contracts discussion within Note 15—Related Party Transactions.

Sale of Resorts Atlantic City

Through a wholly owned subsidiary, we previously owned and operated Resorts Atlantic City, a 644-room casino and hotel property. On April 25, 2001, we completed the sale of Resorts Atlantic City to an affiliate of Colony Capital LLC (“Colony”) for a purchase price of approximately $144 million, including accrued interest (the “Resorts Atlantic City Sale”). The proceeds received from Colony consisted of approximately $127 million in cash and an unsecured $17.5 million note (the “Promissory Note”). The cash proceeds received from Colony were partially offset by approximately $6 million in costs paid by us after closing, which included employee termination costs and legal fees. The Promissory Note, which was repaid in 2002, accrued interest at a rate of 12.5% per annum. The net cash proceeds were used to permanently reduce borrowings outstanding by us under a bank credit facility (the “Revolving Credit Facility”).

We entered into a definitive agreement to sell Resorts Atlantic City in the fourth quarter of 2000, at which time we recorded a loss of $229.2 million resulting from the write-down of net assets held for sale to their realizable value. Therefore, the net proceeds received at closing equaled the carrying value of the net assets disposed of, and accordingly, except for interest income earned during 2001 on the proceeds, there was no further gain or loss recorded as a result of the closing. As of January 1, 2001, the operations of Resorts Atlantic City are no longer included in our consolidated financial statements.

Summary operating results of Resorts Atlantic City for the year ended December 31, 2000 were as follows (in thousands of US dollars):

Revenues	$	257,963
Net loss	$	(22,406	)

Pursuant to the terms of the Resorts Atlantic City Sale, we granted Colony a two-year option (the “Atlantic City Option”) to acquire certain undeveloped real estate which we own, adjacent to Resorts Atlantic City, for a purchase price of $40 million, which option can be extended by Colony for two additional one-year periods upon 45 days notice to us prior to the expiration of the then current option period and payment to us of a $2.5 million extension payment for each renewal period. The current option period expires on April 24, 2003 and Colony has not yet exercised its right to extend the option period. The net carrying value of the land included in the Atlantic City Option is included in property and equipment in the accompanying consolidated balance sheets. Effective April 25, 2001, the closing date of the Resorts Atlantic City Sale, Colony leases from us certain of the property included in the Atlantic City Option for $100,000 per month.

Termination of Desert Inn Acquisition Agreement

In March 2000, Starwood and the Company agreed to terminate our agreement (the “Termination Agreement”) under which we were to acquire the Desert Inn Hotel and Casino in Las Vegas (the “Desert Inn”) for $275 million. In connection with the proposed acquisition of the Desert Inn, we had previously placed a $15 million deposit with Starwood (the “Deposit”). Pursuant to the Termination Agreement, the amount, if any, that the Company would be required to pay from the Deposit was based on the ultimate sales price of the Desert Inn to another party.

In June 2000, Starwood closed on the sale of the Desert Inn for approximately $270 million to an unrelated party, subject to certain post-closing adjustments. As a result, we were required to pay to Starwood $7.2 million from the Deposit. The remaining $7.8 million of the Deposit was refunded to us in August 2000. Purchase termination costs in the accompanying consolidated statements of operations included the $7.2 million paid to Starwood and $4.0 million of further costs related to the Desert Inn transaction.

Note 4 — Cash, Cash Equivalents and Restricted Cash

Cash equivalents at December 31, 2002 and 2001 included reverse repurchase agreements (federal government securities purchased under agreements to resell those securities) under which we had not taken delivery of the underlying securities and investments in a money market fund that invests exclusively in US Treasury obligations. At December 31, 2002, we held reverse repurchase agreements of $6.9 million, all of which matured in the first week of January 2003.

At December 31, 2002, restricted cash included a $3.3 million on deposit in the Isle of Man related to our Internet gaming operation, which we believe will become unrestricted during 2003 in connection with the discontinued operations of Kerzner Interactive. At December 31, 2001, restricted cash also included a $1.0 million certificate of deposit as security on a bank credit facility, with the balance relating to customer deposits related to the sale of home sites at Ocean Club Estates.

Note 5 — Trade Receivables

Components of trade receivables were as follows:

	December 31,
	2002			2001
Gaming	$	18,857		$	21,832
Less: allowance for doubtful accounts		(6,751	)		(11,141	)
		12,106			10,691
Non-gaming:
Hotel and related		21,217			16,372
Other		13,965			12,729
		35,182			29,101
Less: allowance for doubtful accounts		(2,317	)		(2,338	)
		32,865			26,763
	$	44,971		$	37,454

Note 6 — Prepaid and Other Assets

Components of prepaid and other assets as of December 31, 2002 included $8.0 million of windstorm and other insurance and $6.3 million of other prepaid amounts and other assets.

Note 7 — Property and Equipment

Components of property and equipment were as follows:

	December 31,
	2002			2001
Land	$	237,693		$	237,817
Land improvements and utilities		225,005			227,635
Hotels and other buildings		631,855			638,232
Furniture, machinery and equipment		217,827			212,029
Construction in progress		40,031			18,119
		1,352,411			1,333,832
Less: accumulated depreciation		(224,036	)		(178,640	)
	$	1,128,375		$	1,155,192

Note 8 — Notes Receivable

As of December 31, 2002, notes receivable consisted primarily of $15.0 million principal amount of London Clubs International’s (“LCI”) senior notes that were purchased at 87.75% of the principal amount. LCI’s senior notes bear interest at 7.74% per annum and are due in 2004. As of December 31, 2001, notes receivable consisted of $17.5 million principal amount, plus accrued interest, of the promissory note from Colony in connection with the Resorts Atlantic City sale. See Note 3 for further discussion.

Note 9 — Deferred Charges and Other Assets

Components of deferred charges and other assets were as follows:

	December 31,
	2002		2001
Interest rate swap asset	$	19,574	$	-
Debt issuance costs		11,113		14,887
Mohegan Sun Casino deferred charges		709		1,739
Trading Cove New York		-		1,523
Other		3,702		543
	$	35,098	$	18,692

Note 10 — Accounts Payable and Accrued Liabilities

Components of accounts payable and accrued liabilities were as follows:

	December 31,
	2002		2001
Customer deposits and unearned revenues	$	41,035	$	34,891
Accrued payroll and related benefits		29,756		15,532
Accrued interest		10,686		11,796
Trade payables		19,240		11,535
Other accrued liabilities		55,454		74,309
	$	156,171	$	148,063

Note 11 — Other Long-Term Liabilities

As of December 31, 2002, other long-term liabilities primarily consisted of deferred rent credits related to a building lease entered into during 2002 for our office in Plantation, Florida. Other long-term liabilities at December 31, 2001 represent the fair value of our derivative instruments. See “Derivative Financial Instruments” described in Note 12.

Note 12 — Long-Term Debt

Long-term debt consisted of the following:

	December 31,
	2002			2001
Amended Revolving Credit Facility (a)	$	72,000		$	24,000
$200 million 9% Senior Subordinated Notes
due 2007 ("9% Senior Subordinated Notes")(b)		-			199,419
$100 million 8-5/8% Senior Subordinated Notes
due 2007 ("8-5/8% Senior Subordinated Notes")(c)		-			100,000
$400 million ($200 million at December 31, 2001)
8-7/8% Senior Subordinated Notes due 2011 ("8-7/8% Senior
Subordinated Notes")(d)		425,300			194,497
Other		731			576
		498,031			518,492
Less: amounts due within one year		(275	)		(261	)
	$	497,756		$	518,231

(a) Amended Revolving Credit Facility

Effective as of May 31, 2002, we reached agreement with the lenders under our Revolving Credit Facility (the “Amended Revolving Credit Facility”) to increase the amount available under that facility to $300.0 million, subject to the borrowing base discussed below. An additional $50.0 million of borrowings may be available under certain conditions.

Loans under the Amended Revolving Credit Facility bear interest at (i) the higher of (a) Canadian Imperial Bank of Commerce’s base rate or (b) the Federal Funds rate plus 1/2 of one percent, in either case plus an additional 0.25% to 1.75% based on a debt to earnings ratio during the period, as defined (the “Leverage Ratio”) or (ii) London Interbank Offered Rate (“LIBOR”) rate plus 1.25% to 2.75% based on the Leverage Ratio. After each drawdown on the Amended Revolving Credit Facility, interest is due every three months for the first six months and is due monthly thereafter. At December 31, 2002, the weighted average interest rate on amounts outstanding under the Amended Revolving Credit Facility was 3.40%. Loans under the Amended Revolving Credit Facility may be prepaid and reborrowed at any time and are due in full in November 2006. Commitment fees are calculated at per annum rates ranging from 0.25% to 0.50%, based on the Leverage Ratio, applied to the undrawn amount of the Amended Revolving Credit Facility and are payable quarterly.

Effective February 7, 2003, we obtained approval from the required lenders under our amended revolving credit facility to, among other things, calculate borrowings available using a borrowing base calculation, such that we can draw the lesser of the borrowing base or the commitment amount. This approval is subject to certain conditions that we expect to satisfy by June 30, 2003. If for any reason we are unable to meet those conditions or negotiate new conditions for effectiveness of the borrowing base, our borrowings as of July 1, 2003 will be limited by the total amount of per occurrence “all risks” insurance that we maintain on our properties on Paradise Island of $150.0 million per occurrence. Under the borrowing base calculation as of the year ended December 31, 2002, our borrowing limit would have been $300.0 million, as the anticipated borrowing base calculation would have exceeded the commitment amount.

The Amended Revolving Credit Facility contains restrictive covenants which, among other things: (a) require periodic financial reporting, (b) require meeting certain financial amounts and ratio tests, (c) restrict the payment of dividends, (d) limit the incurrence of indebtedness and (e) limit asset expenditures and dispositions outside the ordinary course of business. As of December 31, 2002, we believe we are in compliance with all of such covenants.

(b) Tender Offer ,Consent Solicitation and Redemption

On May 8, 2002, we commenced a cash tender offer to purchase any and all of our outstanding 9% Senior Subordinated Notes. In conjunction with the tender offer, we solicited consents to proposed amendments to the indenture governing the 9% Senior Subordinated Notes. The tender offer expired on June 5, 2002. At the expiration, a total of $177.5 million of the outstanding $200.0 million aggregate principal amount of the notes were tendered and accepted for purchase in the tender offer. On June 21, 2002, we redeemed, in accordance with the terms of the indenture governing the notes, all of the 9% Senior Subordinated Notes that remained outstanding at the time, at the applicable redemption price of $1,045 per $1,000 of principal amount thereof, plus interest accrued to the redemption date. We used the proceeds from the issuance of $200.0 million of our 8 7/8% Senior Subordinated Notes on May 20, 2002, to retire our outstanding 9% Senior Subordinated Notes pursuant to the tender offer and redemption.

(c) Redemption of 8 5/8% Senior Subordinated Notes

On November 27, 2002, we called for the redemption of the entire outstanding principal amount of our 8 5/8% Senior Subordinated Notes due 2007 pursuant to the terms of the indenture governing these Notes. We had purchased $25.8 million of the 8 5/8% Senior Subordinated Notes through transactions on the open market. On December 27, 2002, we redeemed the remaining $74.2 million aggregate principal amount outstanding at the redemption price of 104.313%, or $1,043.13 for each $1,000.00 of principal amount outstanding, plus accrued interest.

(d) Private Offering and Exchange Offer of $200.0 Million of 8 7/8% Senior Subordinated Notes

On May 20, 2002, we completed a private placement of $200.0 million of our 8 7/8% Senior Subordinated Notes issued at 103%. The proceeds from these Senior Subordinated Notes were used to repay the 9% Senior Subordinated Notes pursuant to the tender offer. The 8 7/8% Senior Subordinated Notes were not initially registered under the Securities Act or under state securities laws. We have completed a required exchange offer under a registration rights agreement with respect to these notes.

The 8 7/8% Senior Subordinated Notes are all unconditionally guaranteed by substantially all of our wholly owned subsidiaries. Interest on each series of the notes is paid semi-annually on February 15 and August 15. The indenture for the 8 7/8% Senior Subordinated Notes contains various restrictive covenants, including limitations on the ability of the issuers and the guarantors to, among other things: (a) incur additional indebtedness, (b) incur certain liens, (c) engage in certain transactions with affiliates and (d) pay dividends and make certain other payments. We believe we are in compliance with all such covenants as of December 31, 2002.

All of our outstanding 8 7/8% Senior Subordinated Notes rank pari passu with each other and are all subordinated to the Amended Revolving Credit Facility.

Derivative Financial Instruments

Interest Rate Risk Management

We attempt to limit our exposure to interest rate risk by managing our long-term fixed and variable rate borrowings. In August and December 2001, we entered into fixed-to-variable rate interest rate swap agreements (the “Swap Agreements”) designated as fair value hedges of $200 million principal amount of our 8 7/8% Senior Subordinated Notes. These Swap Agreements qualify for the “shortcut” method of accounting provided under SFAS 133, which allows the assumption of no ineffectiveness in our hedging relationship. Accordingly, there is no income statement impact from changes in the fair value of the Swap Agreements. Instead, the changes in the fair value of the Swap Agreements are recorded as an asset or liability on the accompanying consolidated balance sheet, with an offsetting adjustment to the carrying value of the related debt.

Other long-term liabilities of $5.5 million on the accompanying consolidated balance sheet at December 31, 2001 primarily represent the fair value of the Swap Agreements as of that date, with a corresponding decrease in the carrying value of our 8 7/8% Senior Subordinated Notes. This represents the principal amount we would have been required to pay had the Swap Agreements been terminated on that date. Included in deferred charges and other assets on the accompanying consolidated balance sheet at December 31, 2002 is $19.6 million representing the fair value of the Swap Agreements as of that date. This represents the principal amount we would have received had the Swap Agreements been terminated on that date. This resulted in a corresponding increase to the carrying value of our 8 7/8% Senior Subordinated Notes. As of December 31, 2002 and 2001, the aggregate notional principal amount of the Swap Agreements was $200.0 million and they mature in August 2011 concurrent with the 8 7/8% Senior Subordinated Notes. As of December 31, 2002 and 2001, the weighted average variable rate on the Swap Agreements was 5.00% and 6.12%, respectively.

As of December 31, 2002 and 2001, after giving effect to the Swap Agreements, our fixed rate borrowings represent approximately 42% and 57% and our floating rate borrowings represent 58% and 43%, respectively, of total borrowings.

During the first seven months of 2001 and during the year 2000, we were a party to variable-to-fixed rate interest rate swap agreements (the “Prior Swap Agreements”) designated as cash flow hedges of our Revolving Credit Facility. In July 2001, we terminated the Prior Swap Agreements, which were scheduled to mature at the end of 2001. The costs of terminating these agreements early was $2.1 million and is included in interest expense in the accompanying 2001 consolidated statements of operations. As of December 31, 2000, the weighted average fixed rate payment on the Prior Swap Agreements was 6.89%.

Credit Exposure

We are exposed to credit-related losses in the event of non-performance by counterparties to our Swap Agreements. We monitor the creditworthiness of the counterparties and presently do not expect default by any of the counterparties. We do not obtain collateral in connection with our derivative financial instruments.

Guarantees

For a description of the Company’s guarantees of certain debt of affiliated entities, see Note 22.

Consent Solicitation of Noteholders

In 2001, we completed a consent solicitation pursuant to which we obtained the consent of the requisite holders of the 9% Senior Subordinated Notes and the 8 5/8% Senior Subordinated Notes. The consent solicitation sought to amend certain provisions of the indentures pursuant to which the 9% Senior Subordinated Notes and the 8 5/8% Senior Subordinated Notes were issued.

The amendments effectively eliminate (as of December 31, 2000, the date the charge was recorded) the impact of $199.2 million of the total $229.2 million loss recorded in connection with the Resorts Atlantic City Sale, for purposes of determining our ability to make certain investments, such as certain minority investments in joint ventures under the indentures. In addition, the amendments increased the Consolidated Coverage Ratio (consolidated EBITDA to fixed payments, as defined in the indentures) required in order for us to incur additional indebtedness.

Pursuant to the consent solicitation, we paid a total of $1.5 million in consent payments to the consenting noteholders. The consent payments were recorded as deferred debt modification costs, and, before the extinguishment of the related debt, were being amortized over the remaining life of the debt. All other costs associated with the consent solicitation were expensed as incurred.

Overdraft Loan Facility

Pursuant to a letter of commitment dated September 30, 1994, as amended, between us and The Bank of Nova Scotia, we have a revolving overdraft loan facility (the “Overdraft Facility”) in the amount of Bahamian $5.0 million which was equal to US $5.0 million as of December 31, 2002 and 2001. The Overdraft Facility, if utilized, would bear interest at The Bank of Nova Scotia’s base rate for Bahamian dollar loans plus 1.5% with repayment subject to annual review. The Overdraft Facility is secured by substantially all of our Bahamian assets and ranks pari passu with the Amended Revolving Credit Facility. This facility has never been utilized.

Debt Maturity

Aggregate annual maturities of long-term debt as of December 31, 2002 for each of the next five years and thereafter are as follows:

Year Ending December 31,
2003	$	275
2004		326
2005		130
2006		72,000
2007		-
Thereafter		400,000
		472,731
Debt premium		5,726
Interest rate swap fair value adjustment		19,574
	$	498,031

For further discussion of the fair value adjustment, see “Derivative Financial Instruments” above.

Note 13 — Shareholders’ Equity

Our authorized, issued and outstanding shares were as follows:

	December 31,
	2002		2001
Ordinary Shares
Par value per share	$	0.001	$	0.001
Authorized		250,000		250,000
Issued and outstanding (1)		35,197		34,405
Treasury shares		7,072		7,087
Preference Shares
Par value per share	$	0.001	$	0.001
Authorized		100,000		100,000
Issued and outstanding		-		-
(1) Included treasury shares

Proposed Acquisition of KZL Ordinary Shares and Self-Tender Offer

In January 2000, we received a proposal from SIIL, at that time the majority shareholder of Kerzner, to acquire in a merger transaction all of the ordinary shares not already owned by SIIL or its shareholders for $24 per share in cash. To consider the proposal, we formed a committee of independent members of the Board of Directors (the “Special Committee”) that retained its own financial and legal advisers. The proposed transaction was subject to various conditions, including approval by the Special Committee. On June 16, 2000, we announced that SIIL was not able to negotiate a mutually satisfactory transaction with the Special Committee and that SIIL had advised us that its proposal had been withdrawn.

In order to allow our shareholders to elect to sell at least a portion of their ordinary shares at the price formerly proposed by SIIL, in June 2000, our Board of Directors approved a self-tender offer for up to 5,000,000 ordinary shares at a $24 per share cash price. The self-tender offer commenced on June 25, 2000 and on August 2, 2000, we announced that 13,554,651 of the then outstanding 32,682,350 ordinary shares were tendered. Because the self-tender offer was oversubscribed, a pro-ration factor of 36.89% was applied, and pursuant to the self-tender offer, we purchased 5,000,000 ordinary shares at $24 per share. In 2000, amounts related to SIIL’s proposed acquisition of ordinary shares as well as the completion of the self-tender offer are reflected as transaction costs in the accompanying consolidated statements of operations.

Earnings Per Share Data

The following is a reconciliation of the shares used in our earnings per share computations (shares in thousands):

	For the Year Ended December 31,
	2002		2001		2000
Weighted average shares
used in basic computations		27,891		26,885		30,849
Dilutive stock options, warrants and
restricted shares outstanding		653		941		-
Weighted average shares
used in diluted computations		28,544		27,826		30,849

The net income (loss) amount used as the numerator in calculating basic and diluted earnings per share is the net income (loss) in the accompanying consolidated statements of operations. The effect of certain options, warrants and restricted shares was not included in the computation of diluted earnings per share in 2002 and 2001 because the effect would have been anti-dilutive. In the year 2000, we incurred a net loss, and therefore, the effect of all options, warrants and restricted shares was excluded from the computation. The number of options not included in the computation for the years 2002, 2001 and 2000 were 1.3 million, 2.0 million and 2.2 million, respectively.

Note 14 — Stock-Based Compensation

Stock Options

Our shareholders approved stock option plans in 1995 (“1995 Plan”), 1997 (the “1997 Plan”) and in 2000 (the “2000 Plan,” and collectively the “Plans”) that provide for the issuance of options to acquire an aggregate of 7,500,000 ordinary shares. Pursuant to the Plans, the option prices are equal to the market value per share of the ordinary shares on the date of the grant. The 1995 Plan provided for the options to become exercisable, unless otherwise specified by the Board of Directors and subject to certain acceleration and termination provisions, after two years from the date of grant in respect of 20% of such options, and thereafter in installments of 20% per year over a four-year period. The 1997 Plan provides for the same vesting schedule except that the vesting period begins one year after the grant date. The 2000 Plan provides for the vesting period to begin one year after the grant date in respect of one third of such options, and thereafter in installments of one third per year over the remaining two-year period. Options granted under the Plans have a term of 10 years from the date of grant. The Plans provide for options with respect to Ordinary Shares to be granted to our directors, officers and employees.

A summary of our stock option activity for 2002, 2001 and 2000 is as follows (options in thousands, except per share data):

	December 31,
	2002					2001					2000
	Shares			Weighted Average Exercise Price Per Share		Shares			Weighted Average Exercise Price Per Share		Shares			Weighted Average Exercise Price Per Share
Outstanding at beginning of year		5,742		$	25.14		6,017		$	24.59		3,918		$	29.60
Granted		1,659			21.17		665			25.19		2,660			18.05
Exercised		(776	)		17.95		(531	)		14.93		(192	)		15.82
Terminated and other		(1,278	)		38.14		(409	)		29.35		(369	)		35.55
Outstanding at end of year		5,347			21.54		5,742			25.14		6,017			24.59
Exercisable at end of year		3,160			21.49		2,965			26.35		3,459			25.69
Available for grant		35					239					340

The weighted average exercise price and weighted average contractual life of exercisable at December 31, 2002 is as follows (options in thousands except per share data):

Range of Exercise Prices	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life
$11.69 - $19.99		1,634	$	18.07		7.0
$20.00 - $25.01		971		20.33		9.5
$25.02 - $35.01		429		32.04		5.0
$35.02 - $41.63		126		38.58		5.2
		3,160	$	21.54		7.4

The weighted average exercise price and weighted average contractual life of outstanding options at December 31, 2002 is as follows (options in thousands except per share data):

Range of Exercise Prices	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life
$11.69 - $19.99		2,416	$	18.09		7.2
$20.00 - $25.01		1,707		20.64		9.6
$25.02 - $35.01		1,083		28.44		7.2
$35.02 - $41.63		141		38.69		5.3
		5,347	$	21.49		7.9

Stock Option Tender Offer

As previously described, we adopted stock option plans for our directors, officers and employees in 1995, in 1997, and in 2000 that provide for the issuance of options to acquire an aggregate of 7,500,000 of our ordinary shares. As of December 31, 2002, nearly all of these options had been granted at exercise prices ranging from $11.69 to $41.63 As of December 31, 2002, options to acquire 5,347,000 ordinary shares were outstanding, of which 3,160,000 were exercisable as of that date.

On May 7, 2002, our board of directors resolved, under certain conditions, to make available to employees and directors holding options with an exercise price higher than $32.00 per share, an offer to surrender all or some of the options granted to them under the Plans. In exchange, such employees and directors would have the possibility, under certain conditions, to be granted new options giving the right to subscribe for 75% of the number of shares as the surrendered options. The exercise price for the new options would be the fair market value of the ordinary shares on the new grant date, which would be no sooner than six months and one day after the cancellation date of the old options, subject to the conditions set forth in the Schedule TO (Tender Offer) documents filed with the Securities and Exchange Commission on May 27, 2002, the commencement date of the offer period. The offer to option holders under the exchange program expired on June 25, 2002. The 1,227,600 eligible options that were properly submitted for exchange were accepted and cancelled effective June 26, 2002. Such options represent substantially all those that were eligible for exchange. We granted 920,700 new options, which have similar terms to the cancelled options, in exchange for the cancelled options on December 26, 2002 at a price of $20.07.

Note 15 — Related Party Transactions

In the normal course of business, we undertake transactions with a number of unconsolidated affiliated companies. Certain of our subsidiaries provide construction funding, project consulting and management services to such affiliates. Due from affiliates consisted of the following:

	December 31,
	2002			2001
Harborside at Atlantis	$	26,270		$	22,921
Trading Cove Associates		14,901			11,957
One&Only Kanuhura		5,209			3,425
Mauritius Resorts		5,164			5,438
One&Only Royal Mirage		389			511
Reethi Rah		313			-
Palmilla Resort		175			-
		52,421			44,252
Less: amounts due within one year		(28,042	)		(28,364	)
	$	24,379		$	15,888

Harborside at Atlantis

We entered into a series of promissory notes with Harborside at Atlantis (“Harborside”) to fund 50% of the construction cost of the timeshare units on Paradise Island in The Bahamas. These notes amounted to $19.5 million at December 31, 2002. We earn interest on these advances at a rate equal to one-month LIBOR plus 250 basis points, which was 3.88% at December 31, 2002. The loans were made simultaneously with loans from Starwood, which mirror the amounts, terms and conditions of our loans. Our loans and the Starwood loans are pari passu with respect to payments of principal and accrued interest and such payments will be made in cash, as it is available from the sale of timeshare units. Of the amount advanced to Harborside at Atlantis, the Company does not anticipate repayment within the next twelve months.

Repairs at Harborside were completed during the fourth quarter, with the resort reopening in December 2002. Harborside was closed at the end of August 2002 in order to repair significant damage resulting from adverse weather primarily due to Hurricane Michelle. Included within equity in earnings from Harborside is a $6.9 million charge, which represents our share of construction remediation costs. This loss has not been reduced by any anticipated insurance recovery, but Harborside has filed a claim with its insurers, which is presently under negotiation. Amounts due from Harborside include $2.9 million representing the fair value of services provided by Atlantis to the timeshare owners of Harborside while Harborside was undergoing construction remediation work and is included within 2002 rooms and food and beverage revenue in the accompanying consolidated statements of operations.

We provide marketing, administrative and development services to Harborside from which we earned fees of $1.6 million, $1.4 million and $3.4 million for the years ended December 31, 2002, 2001 and 2000, respectively.

Trading Cove Associates

Amounts due from TCA relate to amounts due the Company under the Relinquishment Agreement and the Development Agreement with the Mohegan Tribe and are expected to be collected during 2003. For the years 2002, 2001 and 2000, we recorded payments received from TCA pursuant to the Relinquishment Agreement and the Development Agreement of $30.9 million, $27.4 million and $23.6 million, respectively. Relinquishment and development fees are recorded in management and other fees in the accompanying consolidated statements of operations.

One&Only Kanuhura

We provide management services to One&Only Kanuhura, a Maldives company in which we currently own a 25% equity interest. The terms of the management agreement run concurrent with the terms of a lease between One&Only Kanuhura and the government of the Republic of Maldives. That lease expires in 2026 and is subject to extension. For both the year ended December 31, 2002 and for the period from August 1, 2001 (the date of acquisition) through December 31, 2001, we have recognized $0.7 million in equity losses from associated companies in the accompanying consolidated statement of operations.

Funds advanced to One&Only Kanuhura of $4.5 million, excluding accrued interest, which represented our share of funding for operations, are not anticipated to be repaid during the next twelve months. These loans accrue interest at a rate of LIBOR plus 600 basis points.

Fees for management services during the year ended December 31, 2002 and for the period from August 1, 2001 through December 31, 2001 were $383,000 and $38,000, respectively.

Mauritius Resorts

We provide management services to Sun Resorts Limited, a Mauritius company in which we currently own a 20.4% equity interest. Pursuant to the management agreement with Sun Resorts Limited, we provide comprehensive management services under individual management agreements relating to each of One&Only Le Saint Géran, One&Only Le Touessrok, La Pirogue, Sugar Beach and Le Coco Beach resort hotels, which Sun Resorts Limited owns. The term of each of these management agreements were due to expire in December 2008, but have been extended to 2023 as explained further below. For the year ended December 31, 2002, 2001, and 2000, we have recognized $5.6 million, $6.8 million and $7.5 million, respectively, related to these contracts. Additionally, during 2002, we completed a major redevelopment of One&Only Le Touessrok for which the Company earned a project fee of $1.5 million.

Extension of Mauritius Management Contracts

In December 2002, we entered into an agreement with Sun Resorts Limited (“SRL”) to form a new company for the purpose of, among other things, managing the five properties owned by SRL in Mauritius and One&Only Kanuhura in the Maldives. SRL initially will own 20% of the new entity, to be known as One&Only (Indian Ocean) Management Limited, and we will own the remaining 80%. Subject to certain conditions, SRL’s ownership interest will increase incrementally through 2009, at which time it will own 50% of the new entity. As consideration for this, SRL has agreed to extend the management contracts from 2008 through 2023. Subject to certain conditions, SRL will have a right of first refusal to participate equally with us in any development project in specified Indian Ocean territories. We recently signed an agreement with SRL that provides for, among other things, the sale of 20% of our debt and equity interests in Kanuhura to SRL. Following this sale, which is effective as of January 1, 2003, we will have a 20% equity interest in Kanuhura.

One&Only Royal Mirage

Fees for management services to One&Only Royal Mirage during the year ended December 31, 2002, 2001 and 2000 were $1.2 million, $1.1 million and $1.2 million, respectively.

Palmilla Resort

Fees for management services to Palmilla Resort during the period from September 12, 2002 through December 31, 2002 were $128,000.

Loans to Management

As of December 31, 2002, there is one loan outstanding for $0.8 million, including accrued interest, and another for $0.5 million, including accrued interest. Both loans accrue interest at 7.0% per annum.

Note 16 — Retirement Plans

Certain of our subsidiaries participate in a defined contribution plan covering substantially all of their full-time employees. We make contributions to this plan based on a percentage of eligible employee contributions. Total expenses for this plan were $185,000, $237,000 and $887,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

In addition to the plan described above, union and certain other employees of our subsidiaries in The Bahamas, and formerly Resorts Atlantic City, are covered by multi-employer defined benefit pension plans to which employers make contributions. In connection with these plans, we expensed $6.7 million, $5.9 million and $7.4 million for the years ended December 31, 2002, 2001 and 2000 respectively.

Note 17 — Restructuring Expense

Restructuring costs in 2001 were comprised of severance payments made to employees who were terminated due to lower occupancy levels at Atlantis subsequent to the terrorist attacks on September 11, 2001.

There were a total of 278 employees terminated pursuant to the restructuring which included 57 administrative positions, 198 hotel employees and 23 employees on our development staff. Of the total $5.7 million expense recorded in 2001, 17 employees were not released and, accordingly, the remaining $4.7 million had been paid out to a total of 261 employees by the end of 2002. The remaining balance of $1.0 million was reversed in 2002 as fewer employees were released and the amounts were settled for less than originally planned.

Note 18 — Investments in and Equity in Earnings (Losses) of Associated Companies

Components of investments in associated companies were as follows:

	December 31,
	2002			2001
Palmilla Resort	$	40,668			-
Sun Resorts Limited (Mauritius Resorts)		22,818			22,891
One&Only Kanuhura		2,393			3,053
Harborside at Atlantis		(632	)		4,583
Trading Cove New York		1,692			-
	$	66,939		$	30,527

The accompanying consolidated financial statements include equity in earnings (losses) of associated companies as a result of our equity method investments, including our 50% interest in Palmilla Resort, our 20.4% interest in Sun Resorts Limited, our 50% interest in Harborside at Atlantis, our 25% interest in One&Only Kanuhura and our 50% interest in TCNY.

Palmilla Resort

Effective September 12, 2002, we acquired our 50% interest in Palmilla Resort. The following unaudited summarized information of Palmilla Resort has been prepared under accounting principles generally accepted in the United States of America as of December 31, 2002 and for the period from September 12, 2002 through December 31, 2002.

	For the period from September 12, 2002 through December 31, 2002 (Unaudited)
Revenues		$5,467
Loss from operations		(449	)
Loss before income taxes		(443	)
Net Loss		(287	)

	As of December 31, 2002 (Unaudited)
Current assets		$ 6,324
Non-current assets		79,171
Total assets		85,495
Current liabilities		4,587
Non-current liabilities		-
Shareholders' equity		80,908

Mauritius Resorts

Through June 16, 2000, we owned a 22.8% interest in Sun Resorts Limited, or Mauritius Resorts. Effective June 16, 2000, SRL issued additional shares of stock under a rights issue in which we did not participate, effectively reducing our ownership interest to 20.4%. The following unaudited summarized financial information of SRL has been prepared under accounting principles generally accepted in the United States of America as of and for the years ended December 31, 2002, 2001 and 2000 (converted to US dollars at the appropriate exchange rate).

	For the Year Ended December 31, (Unaudited)
	2002		2001		2000
Revenues	$	78,058	$	93,398	$	106,151
Income from operations		19,448		25,277		28,310
Income before income taxes		14,331		20,136		20,480
Net income		8,510		17,482		17,208

	As of December 31, (Unaudited)
	2002		2001
Current assets	$	23,971	$	27,413
Non-current assets		269,411		198,422
Total assets		293,382		225,835
Current liabilities		52,186		32,950
Non-current liabilities		99,739		73,216
Shareholder's equity		141,457		119,635

One&Only Kanuhura Resort

Effective August 1, 2001, we acquired our 25% interest in One&Only Kanuhura. The following unaudited summarized financial information of One&Only Kanuhura has been prepared under accounting principles generally accepted in the United States as of and for the years ended December 31, 2002 and 2001.

	For the Year Ended December 31, (Unaudited)
	2002			2001
Revenues	$	10,595		$	3,809
Loss from operations		(421	)		(1,261	)
Loss before income taxes		(2,633	)		(2,564	)
Net Loss		(2,633	)		(2,564	)

	As of December 31, (Unaudited)
	2002			2001
Current assets	$	3,372		$	3,215
Non-current assets		28,249			29,517
Total assets		31,621			32,732
Current liabilities		6,165			4,724
Non-current liabilities		28,596			26,233
Shareholders' (deficiency) equity		(3,140	)		1,775

Harborside at Atlantis

Harborside at Atlantis constructs, sells and manages timeshare units on Paradise Island, The Bahamas. Construction of 82 units was completed in February 2001 and sales of timeshare units began in May 2000. As of December 31, 2002, 64% of the timeshare units were sold. The following unaudited summarized financial information of Harborside at Atlantis has been prepared under accounting principles generally accepted in the United States of America as of and for the years ended December 31, 2002 and 2001.

	For the Year Ended December 31, (Unaudited)
	2002			2001
Revenues	$	37,411		$	35,371
Income (loss) from operations		(11,023	)		1,372
Income (loss) before income taxes		(10,428	)		1,372
Net income (loss)		(10,428	)		1,372

	As of December 31, (Unaudited)
	2002		2001
Current assets	$	97,469	$	99,832
Non-current assets		9,255		9,525
Total assets		106,724		109,357
Current liabilities		99,356		88,700
Non-current liabilities		1,364		-
Shareholders' equity		6,004		20,657

Note 19 — Gain on Settlement of Territorial and Other Disputes

Majority Shareholder Reorganization

In July 2001, we announced the restructuring of our then majority shareholder, SIIL, and the resolution of certain matters, including a territorial dispute, with SIIL and certain of its shareholders (collectively the “Reorganization”). At the time of the Reorganization, SIIL and its shareholders beneficially owned approximately 67% of our issued and outstanding ordinary shares (the “Ordinary Shares”). SIIL was itself owned in equal thirds by Kersaf Investments Limited (“Kersaf”), Caledonia Investments PLC and World Leisure Group Limited, a company controlled by a Kerzner family trust. SIIL previously was governed by a shareholders’ agreement pursuant to which all major decisions of SIIL required the unanimous consent of its shareholders. In connection with the Reorganization, among other things, SIIL was dissolved and the shareholders’ agreement governing SIIL was terminated. Accordingly, SIIL’s shareholders obtained direct ownership of their Ordinary Shares. In addition, SIIL’s shareholders agreed to certain standstill provisions in effect through June 2006, pursuant to which each of them would refrain from proposing or consummating certain extraordinary corporate transactions involving the Company, including any merger or the sale of substantially all of our assets.

Pursuant to a registration rights and governance agreement executed in connection with the Reorganization, we granted certain registration rights to SIIL’s shareholders in respect of the ordinary shares held by them, in part in order to facilitate the required sale of at least 2,000,000 of Kersaf’s Ordinary Shares in a registered public offering, which requirement was satisfied on December 12, 2002. We agreed that, after a transition period not to exceed one year from June 30, 2001, we would cease, and we have ceased, using the names “Sun” and “Sun International.” In connection with the Reorganization, Kersaf agreed to pay us $15.5 million. This was settled by a one-time cash payment of $3.5 million and the issuance of a 5-year, $12 million note, bearing interest at 9% per annum. In December 2001, the principal amount of the note and accrued interest thereon was repaid in full. Of this amount, we recognized a $5.1 million net gain on the settlement of this territorial dispute during 2002.

Subsequent Disputes and Settlement with Kersaf Investments Limited

As part of the Reorganization, the Company and Kersaf Investments Limited (“Kersaf”) agreed to restructure certain agreements which included, among other things, an obligation for Kersaf to sell at least 2,000,000 shares of the Company’s shares in a registered public offering, certain non-compete agreements, the continuation of an obligation of Kersaf to pay Kerzner an annual payment of approximately $3.3 million (the “Contribution Payment”), and an agreement pursuant to which Kerzner was granted an interest in a proposed project in Port Ghalib, Egypt (the “Egypt Project”). In October 2001, the Company filed a lawsuit against Kersaf and certain related entities in New York alleging, among other things, that Kersaf had breached its non-compete obligation. Kersaf and the Company executed a settlement agreement that resolved all of these outstanding matters on November 1, 2002.

According to the settlement agreement, among other things, (i) Kersaf was obligated, and on December 18, 2002 satisfied this obligation, to sell at least 2,000,000 shares in a registered public offering; (ii) Kersaf’s obligation to make the Contribution Payment was terminated effective December 1, 2002 and; (iii) Kersaf paid us $32.1 million in December 2002. Of this amount, $21.3 million (which represents the future payments that were to be received over the term of the underlying agreements) is classified as deferred revenue, $18.0 million of which is included within deferred revenue and $3.3 million included in accounts payable and accrued liabilities in the accompanying consolidated financial statements. These amounts will be recognized as other revenues over the term of the original underlying agreements. The remaining amount of $9.4 million, net of direct legal expenses, was recognized in the fourth quarter of 2002 as an additional gain on settlement of territorial and other disputes. In exchange for this settlement, we agreed to terminate all existing lawsuits related to Kersaf and have released all parties from any related claims and we shall no longer have any interest in the Egypt Project.

Note 20 — Income Taxes

A significant portion of our operations are located in The Bahamas where there are no income taxes. In 2002, 2001 and 2000, the income tax provisions relating to our US operations were as follows:

	For the Year Ended December 31,
	2002			2001			2000
Current:
Federal	$	3,874		$	3,502		$	4,930
State		2,341			1,462			1,178
		6,215			4,964			6,108
Deferred:
Federal		(6,119	)		(3,874	)		205
	$	96		$	1,090		$	6,313

The effective tax rate on income varies from the statutory US federal tax rate as a result of the following factors:

	For the Year Ended December 31,
	2002			2001			2000
Statutory US federal income tax rate		35.0	%		35.0	%		(35.0	)%
Non-US-source income		(37.0	)		(29.2	)		(40.7	)
State tax cost		5.8			-			-
NOLs, extraordinary item and temporary    differences for which a valuation allowance    has been provided		12.8			-			76.7
Reduction of valuation allowance relating
to prior years' operating loss utilized		(20.4	)		(14.5	)		-
Branch profit taxes and other taxes
on US services		-			8.8			1.7
Other		4.0			3.2			2.9
Effective tax rate		0.2	%		3.3	%		5.6	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The components of the deferred tax assets and liabilities were as follows:

	December 31,
	2002			2001
Non-current deferred tax liabilities:
Basis differences on property and equipment	$	(561	)	$	(640	)
Total deferred tax liabilities		(561	)		(640	)
Non-current deferred tax assets:
NOL carryforwards		223,709			224,220
Basis differences on land held for investment,
development or resale		4,104			4,291
Book reserves not yet deductible for tax return purposes		1,898			3,104
Tax credit carryforwards		2,677			2,676
Other		3,786			2,349
Total deferred tax assets		236,174			236,640
Valuation allowance for deferred tax assets		(229,494	)		(232,126	)
Deferred tax assets, net of valuation allowance		6,680			4,514
Non-current net deferred tax assets	$	6,119		$	3,874

Realization of future tax benefits related to deferred tax assets is dependent on many factors, including our ability to generate future taxable income. The valuation allowance is adjusted in the period we determine it is more likely than not that deferred tax assets will or will not be realized. We considered these factors in reaching our conclusion to reduce the valuation allowance during 2002, which resulted in a reduction to our provision for income taxes.

For federal income tax purposes, KINA had net operating loss (“NOL”) carryforwards of approximately $640.0 million at December 31, 2002, of which $263.6 million are unrestricted as to use. However, due to the change of ownership of KINA in 1996, $376.4 million of these NOL carryforwards (the “Pre-Change NOLs”) are limited in their availability to offset our future taxable income. As a result of these limitations, approximately $11.3 million of Pre-Change NOLs will become available for use each year through the year 2008, an additional $8.5 million will be available in 2009. The remaining Pre-Change NOLs are expected to expire unutilized.

Our restricted NOL carryforwards expire as follows: $57.0 million in 2005, $18.3 million in 2006, and $1.0 million in 2009. Our unrestricted NOLs expire as follows: $12.3 million in 2005, $30.5 million in 2007, $56.5 million in 2008, $8.0 million in 2011, $57.0 million in 2012, $32.6 million in 2019, $17.7 million in 2020 and $49.0 million in 2021.

Note 21 — Extraordinary Loss on Early Extinguishment of Debt, Net of Income Tax Effect

During 2002, we recognized a $20.5 million extraordinary loss on early extinguishment of debt, net of income tax effect, in connection with the Company’s refinancing of its long-term debt. Of this amount, $14.6 million related to our repurchase and redemption of the entire outstanding balance of $200 million principal amount of our 9% Senior Subordinated Notes. The remaining $5.9 million related to the repurchase and redemption of our 8 5/8% Senior Subordinated Notes. The extraordinary loss consists of the premium paid on the repurchase and redemption of the notes, the non-cash charge to write-off the balance of the related debt issuance costs, the remaining unamortized discount on the notes and other direct costs. The applicable net income tax effect was insignificant.

Note 22 — Commitments and Contingencies

Lease Obligations

We lease office space in numerous locations throughout the United States for sales and marketing, public relations, tour operations and travel reservation services and other administrative services. These offices support our operations in The Bahamas. In addition, we have obligations under certain operating leases related to equipment acquired for our operations in The Bahamas.

Future minimum lease obligations under various non-cancelable operating leases with terms in excess of one year at December 31, 2002 are as follows (in thousands of US dollars):

Year Ending December 31,
2003	$	5,014
2004		2,413
2005		1,912
2006		2,324
2007		1,819
Thereafter		19,806
	$	33,288

Casino License

The operations of casinos in The Bahamas are subject to regulatory controls. The operator must obtain a casino license and the license must be periodically renewed and is subject to revocation at any time. In the event that we are not able to maintain our license, we believe that we would still realize the carrying value of our related assets.

Heads of Agreement

We have an agreement with the Bahamian government, which we refer to as the Heads of Agreement, that governs our gaming taxes and fees in The Bahamas and provides us with certain tax incentives to encourage us to further expand Atlantis. Under this agreement, we currently pay an annual license fee of $100,000 per thousand square feet of casino space, a minimum annual casino win tax of $4.3 million on all gaming win up to $20.0 million and a 10% gaming tax on all gaming win over $20.0 million. Subject to the condition described below, the agreement also provides for tax incentives consisting of a $5.0 million reduction of annual casino license fees and a 50% credit against all win tax on win over $20.0 million until 2009. This tax structure became effective January 1, 1998.

In order to secure the tax incentives, we were obligated to begin construction of at least 562 rooms on Paradise Island in place of Pirate’s Cove Beach Resort, a 562-room hotel on Paradise Island that we demolished during the fourth quarter of 1998. We had plans for an additional 700-room Phase III hotel project at Atlantis that would have satisfied this condition, but we postponed this project. As a result, in June 2000, we were notified by the Bahamian government that the approximately $3.0 million in annual tax incentives would be suspended. Effective July 1, 2000, the casino win tax reverted back to the structure in place prior to January 1, 1998 as follows: there is no change in win tax on gaming win up to $20.0 million, however, we incur 12.5% win tax on gaming win between $20.0 million and $120.0 million, and a 10% win tax on gaming win in excess of $120.0 million. The $5.0 million annual reduction of fees still applies, however, in lieu of the 50% credit on win tax to be paid on gaming win over $20.0 million, we receive a 45% credit on win tax to be paid on gaming win between $20.0 million and $120.0 million. The suspended tax incentives will be prospectively reinstated if and when we meet certain expansion milestones. We estimate that the effect of these additional incentives when we had them in place was an approximate $3.0 million decrease per year in gaming win tax.

The agreement also provides for a five-year joint marketing agreement that expires in January 2003 pursuant to which the Bahamian government agreed to match our contribution, up to $4.0 million annually, toward the direct costs related to staging certain marketing events, public relations activities and the production and placement of advertisements in all media.

The Heads of Agreement also required that SIIL control a majority of our board of directors until June 30, 2004. As part of the restructuring of SIIL, we entered into a governance agreement with the shareholders of SIIL that, among other things, required us to submit to our shareholders an amendment to our articles of association that would set the term of our existing directors to expire at our annual general meeting in 2004. At our annual shareholders meeting in September 2001, the amendment to our articles of association was adopted and our existing directors were elected to terms expiring in 2004. We believe that this amendment to our articles of association satisfies the terms of the Heads of Agreement.

Guarantees

As of December 31, 2002, the Company had executed various guarantees. As discussed in Note 2—Summary of Significant Accounting Policies, the Company has adopted the disclosure provisions of FIN 45 and will adopt recognition and measurement provisions on any guarantees entered into or modifications to existing guarantees after December 31, 2002. With respect to the Company’s existing guarantees, no carrying value is estimated or recorded as of December 31, 2002.

On September 12, 2002, we agreed with the various owners of Palmilla Resort that in the event that Palmilla Resort obtains third-party debt financing for its planned redevelopment, we have agreed to guarantee up to $38.0 million of such financing. We have agreed to provide these guarantees for a period ending no later than the later of (i) the date of repayment at maturity of the underlying obligations or (ii) three years from the date of the guarantee. The purpose of these guarantees is to assist the Palmilla Resort in obtaining financing for its planned redevelopment on commercially reasonable terms. In addition, to the extent that the Palmilla Resort incurs expenditures that we approve in excess of budgeted amounts and for which it is otherwise unable to obtain third-party financing, we have agreed to make unsecured subordinated loans to the Palmilla Resort in the amount of such expenditures. Any amounts loaned to cover such expenditures must be prepaid no later than December 31, 2008. The planned redevelopment will require the resort to be closed from April 2003 to early 2004. It is expected to cost $75.0 million at the property level and will increase the room count to 174 rooms and significantly upgrade the amenities and public areas offered by the resort.

In connection with our purchase of a 25% equity interest in One&Only Kanuhura, we were required to guarantee certain of its obligations to its other shareholders. We are not obligated under these guarantees unless the property’s senior bank debt agreement prevents available cash flow from being distributed to the shareholders, nor until Kanuhura repays certain senior debt owed to us. As of December 31, 2002, the amount of senior debt owed to us was $4.5 million, excluding accrued interest. Our obligations under these guarantees expire when the underlying obligations are repaid. Upon us having to satisfy these guarantees, we shall be deemed to have made a loan to One&Only Kanuhura on the same terms of the underlying note that was satisfied.

Commitment with Reethi Rah

On December 4, 2002, we entered into a senior subordinated credit agreement with Reethi Rah Resort Pvt Ltd and various other financial institutions (the “Senior Lenders”). The agreement obligates Kerzner to make completion loans (in an amount not to exceed $20.0 million) and operating loans (in an amount not to exceed $3.0 million per year, for a four-year period). The purpose of the completion loans is to provide subordinated financing for the building and developing of a new resort on Medhufinolhu, Kaafu Atoll, Republic of Maldives. The purpose of the operating loans is to provide working capital on a standby basis to the new resort once it has opened. Among other conditions, Kerzner is not obligated to make any completion loan after the resort has opened or until Reethi Rah Resort Pvt Ltd has borrowed a minimum of $20.0 million from the Senior Lenders. Kerzner is not obligated to make any operating loans unless, among other conditions, the resort has opened for business to the general public. Once made, both the completion loans and the operating loans will be subordinated to all other loans made to the borrower by the Senior Lenders and will become immediately due and payable upon termination or cancellation of our management agreement related to the property.

As a condition to entering the senior subordinated credit agreement, we obtained a personal guarantee from Mohamed Adil, an indirect holder of the majority outstanding shares in Reethi Rah Resort Pvt Ltd, pursuant to which Mr. Adil unconditionally guaranteed all of the payment and performance obligations of Reethi Rah Resort Pvt Ltd to Kerzner under the senior subordinated credit agreement and certain other agreements relating to resort. Reethi Rah Resort Pvt Ltd also granted us a security interest in substantially all of the assets that will comprise the new resort, including a long-term lease that Reethi Rah Resort Pvt Ltd has obtained from the government of the Maldives.

Executive and Employee Bonus Plans

In 1998, we created a bonus plan for certain of our executives that was payable based upon the attainment of specified earnings per share. A portion of the bonus was payable in Ordinary Shares that vested over a three-year period. The compensation expense related to the 1998 bonus plan amounted to $0, $0.6 million and $0.8 million for the years ended December 31, 2002, 2001 and 2000, respectively. During the year ended December 31, 2002, 32,000 shares of restricted stock were exercised. The bonus plan in effect for the years 2000 through 2002 does not provide for the issuance of Ordinary Shares.

Effective for the year 2002 and 2001, we have a bonus plan whereby our employees, including officers, will qualify for bonuses if we attain either certain levels of earnings or earnings per share, and such bonuses are calculated as a percentage of each individual’s salary. Such percentage is based on, among other things, each employee’s level of responsibility. Bonuses paid to our officers under this bonus plan could reach a maximum of 60% of the respective employee’s base salary. The compensation expense related to this bonus plan amounted to $17.0 million for the year ended December 31, 2002.

Litigation, Claims and Assessments

The Company is involved in certain litigation and claims incidental to its business. The Company does not believe, based on currently available information, that these matters will have a material adverse effect on the accompanying consolidated financial statements.

Note 23 — Segment Information

SFAS No. 131 “Disclosures about Segments of an Enterprise and Related Information” requires the disclosure of information regarding our operations based upon how management makes operating decisions and assesses performance of such segments. We operate in five geographical regions in one industry, the development, operation and management of premier resort and casino properties. We evaluate the performance of our segments based primarily on operating profit before corporate expenses, interest expense, interest income, income taxes and non-recurring items. The following is an analysis of net revenues, contribution to consolidated income (loss) before provision for income taxes and total assets, depreciation and amortization of goodwill and capital additions by geographical location:

Net Revenues

	For The Year Ended December 31,
	2002			2001			2000
Casino/hotel:
Atlantic City, New Jersey (a)
Gaming	$	-			-		$	235,827
Rooms		-			-			16,412
Food and beverage		-			-			26,039
Other		-			-			4,973
Less: promotional allowances		-			-			(25,288	)
		-			-			257,963
Paradise Island, The Bahamas:
Gaming		129,916			116,490			132,108
Rooms		184,776			176,573			177,596
Food and beverage		131,377			121,415			121,679
Other (b)		90,201			78,552			66,280
Insurance recovery		1,110			2,000			-
Less: promotional allowances		(22,210	)		(22,778	)		(26,491	)
		515,170			472,252			471,172
Total casino/hotel		515,170			472,252			729,135
Real estate related - Ocean Club Estates		-			9,771			108,650
Management and other fees:
Connecticut		30,909			27,396			23,575
Mauritius		7,074			6,841			7,539
Dubai		1,232			1,123			1,221
Harborside at Atlantis		1,579			1,408			3,428
Maldives (c)		383			38			-
Mexico (d)		128			-			-
Other segments		17,223			14,212			11,147
Net revenues	$	573,698		$	533,041		$	884,695

Contribution to Consolidated Income (Loss) before Provision for Income Taxes and Extraordinary Items

	For The Year Ended December 31,
	2002			2001			2000
Casino/hotel:
Atlantic City, New Jersey (a)	$	-		$	-		$	7,593
Paradise Island, The Bahamas (b)		87,117			68,183			85,666
		87,117			68,183			93,259
Real estate related - Ocean Club Estates		-			6,906			76,378
Management and other fees, net of amortization
Connecticut		30,429			26,916			23,096
Mauritius		6,924			6,841			7,539
Dubai		1,232			1,123			1,221
Harborside at Atlantis		1,579			1,408			3,428
Maldives (c)		383			38			-
Mexico (d)		128			-			-
General corporate		(32,815	)		(23,896	)		(23,330	)
Kerzner Interactive		(8,167	)		-			-
Pre-opening expenses		-			(6,904	)		(7,616	)
Restructuring (costs) reversal		1,000			(5,732	)		-
Purchase termination costs		-			-			(11,202	)
Transaction costs		-			-			(7,014	)
Write-down of net assets held for sale		-			-			(229,208	)
Other segments		1,570			3,154			1,694
Corporate marketing, retail and public relations		(2,108	)		(2,359	)		(3,089	)
Income (loss) from operations		87,272			75,678			(74,844	)
Other income (expense):
Interest income		3,525			7,471			4,194
Interest expense, net of capitalization		(39,104	)		(52,702	)		(45,678	)
Equity in earnings of associated companies:
Mauritius		1,736			3,302			3,445
Harborside at Atlantis		(5,214	)		472			780
Maldives (c)		(658	)		(715	)		-
Mexico (d)		(143	)		-			-
Trading Cove New York		(930	)		-			-
Gain on settlement of territorial dispute		14,459			-			-
Other, net		(168	)		(760	)		(688	)
Income (loss) before provision for income taxes
and extraordinary items	$	60,775		$	32,746		$	(112,791	)

Total Assets, Depreciation and Amortization of Goodwill and Capital Additions

	As of December 31, 2002				Year Ended December 31, 2002
		Total Assets		Depreciation and Amortization of Goodwill		Capital Additions
Casino/hotel:
Paradise Island, The Bahamas		$	1,160,033	$	54,622	$	38,325
Real estate related:
Atlantic City, New Jersey			53,605		-		-
Paradise Island, The Bahamas			13,792		-		-
			67,397		-		-
Equity investment in Mauritius			22,818		-		-
Equity investment in Maldives (c)			2,393		-		-
Equity investment in Mexico (d)			40,668		-		-
Equity investment in Trading Cove New York			1,692		-		-
General corporate			111,760		1,073		1,199
Corporate marketing, retail and public relations			1,066		245		-
Other segments			1,951		366		-
		$	1,409,778	$	56,306	$	39,524

	As of December 31, 2001				Year Ended December 31, 2001
		Total Assets		Depreciation and Amortization of Goodwill		Capital Additions
Casino/hotel:
Paradise Island, The Bahamas		$	1,165,711	$	50,035	$	65,882
Real estate related:
Atlantic City, New Jersey			53,575		-		-
Paradise Island, The Bahamas			13,946		-		-
			67,521		-		-
Equity investment in Mauritius			22,891		-		-
Equity investment in Maldives (c)			3,053		-		-
General corporate			93,417		1,161		1,708
Trading Cove New York			1,523		-		-
Corporate marketing, retail and public relations			1,311		287		-
Other segments			1,604		7		-
		$	1,357,031	$	51,490	$	67,590

Total Assets, Depreciation and Amortization of Goodwill and Capital Additions(Continued)

	As of December 31, 2000				Year Ended December 31, 2000
		Total Assets		Depreciation and Amortization of Goodwill		Capital Additions
Casino/hotel:
Atlantic City, New Jersey			-	$	16,236	$	11,316
Paradise Island, The Bahamas (e)			1,162,060		42,422		137,987
			1,162,060		58,658		149,303
Real estate related:
Atlantic City, New Jersey			56,176		-		-
Paradise Island, The Bahamas			17,538		-		-
			73,714		-		-
Net assets held for sale (a)			138,350		-		-
Equity investment in Mauritius			25,467		-		-
General corporate			58,632		1,257		6,589
Corporate marketing, retail and public relations			1,404		304		-
Other segments			1,164		4		-
		$	1,460,791	$	60,223	$	155,892

_________________

(a)	See discussion of the Resorts Atlantic City Sale in Note 3 herein.
(b)	Includes tour operations.
(c)	We acquired a 25% interest in Kanuhura effective August 1, 2001.
(d)	We acquired a 50% interest in Palmilla Resort effective September 12, 2002.
(e)	In 2000, capital additions on Paradise Island, The Bahamas included $113.8 million of costs for the Ocean Club addition and renovated golf course, including a new clubhouse

Note 24—Fair Value of Financial Instruments

The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. The assumptions used have a significant effect on the estimated amounts reported.

We used the following methods and assumptions in estimating fair value disclosures for financial instruments: (a) cash and cash equivalents, receivables, other current assets, accounts payable, accrued liabilities and variable rate debt: the amounts reported in the accompanying consolidated balance sheets approximate fair value due to the nature and short-term maturities of such assets and liabilities; (b) fixed-rate debt: fixed rate debt is valued based upon published market quotations, as applicable (the fair value of our fixed rate debt at December 31, 2002 was approximately $425.3 million as compared to its carrying value of $405.7 million); (c) swap agreements: the fair value of our swap agreements was determined from the representations of financial institutions. The fair value of our swap agreements at December 31, 2002 equal their carrying value of $19.6 million and are included in deferred charges and other assets in the accompanying consolidated balance sheets. The fair value of our swap agreements at December 31, 2001 totaled $5.5 million and is included in other long-term liabilities in the accompanying consolidated balance sheets.

Note 25 – Quarterly Financial Information (Unaudited)

	Net Revenues		Income from Operations		Income Before Provision for Income Taxes and Extraordinary Item		Net Income (Loss)			Diluted Earnings (Loss) per Share
For the Quarter Ended
March 31, 2002	$	156,970	$	38,454	$	29,902	$	29,610		$	1.04
June 30, 2002		151,314		29,380		25,276		9,772			0.34
September 30, 2002		129,305		10,113		832		(437	)		(0.02	)
December 31,2002		136,109		9,325		4,765		1,209			0.04

Note 26 - Supplemental Condensed Consolidating Financial Information

Our 8 7/8% Senior Subordinated Notes were co-issued by Kerzner and KINA. The 8 7/8% Senior Subordinated Notes are guaranteed by substantially all of our wholly owned subsidiaries (the “Subsidiary Guarantors”) and are jointly and severally irrevocably and unconditionally guaranteed. Separate financial statements of the Subsidiary Guarantors are not presented because we have determined that they would not be material to investors. The following supplemental financial information sets forth balance sheets, statements of operations and statements of cash flows for each of the co-issuers of the 8 7/8% Senior Subordinated Notes, Kerzner and KINA, and, on a combined basis, for the Subsidiary Guarantors. Kerzner’s non-guarantor subsidiaries are minor and, therefore, are not separately presented.

Kerzner International Limited
Condensed Consolidated Financial Statements
(In thousands of US dollars)

Condensed Consolidating Balance Sheet at December 31, 2002

	Kerzner		KINA			Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	1,398	$	2,996		$	26,475		$	3,143		$	34,012
Restricted cash		-		-			4,842			-			4,842
Trade receivables, net		61		1,186			43,881			(157	)		44,971
Due from affiliates		239,102		239,222			(450,282	)		-			28,042
Inventories		-		-			8,969			-			8,969
Prepaid expenses and other assets		57		73			14,182			-			14,312
Total current assets		240,618		243,477			(351,933	)		2,986			135,148
Property and equipment, net		-		53,925			1,050,539			23,911			1,128,375
Notes receivable		13,600		-			120			-			13,720
Due from affiliates - non-current		4,925		-			19,454			-			24,379
Deferred tax asset, net		-		6,119			-			-			6,119
Deferred charges and other assets, net		19,985		8,614			6,499			-			35,098
Investment in subsidiaries		365,088		10			280,049			(645,147	)		-
Investment in associated companies		2,393		-			71,571			(7,025	)		66,939
Total assets	$	646,609	$	312,145		$	1,076,299		$	(625,275	)	$	1,409,778
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	-	$	19		$	256		$	-		$	275
Accounts payable and accrued liabilities		27,682		20,246			105,257			2,986			156,171
Capital creditors		-		-			1,538			-			1,538
Total current liabilities		27,682		20,265			107,051			2,986			157,984
Deferred revenue - non-current		-		-			18,028			-			18,028
Other long-term liabilities		-		148			2,549			-			2,697
Long-term debt, net of current maturities		19,574		405,726			72,456			-			497,756
Total liabilities		47,256		426,139			200,084			2,986			676,465
Shareholders' equity		599,353		(113,994	)		876,215			(628,261	)		733,313
Total liabilities and shareholders' equity	$	646,609	$	312,145		$	1,076,299		$	(625,275	)	$	1,409,778

Kerzner International Limited
Condensed Consolidated Financial Statements
(In thousands of US dollars)

Condensed Consolidating Balance Sheet at December 31, 2001

	Kerzner		KINA			Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	4,065	$	1,242		$	18,003		$	7,161		$	30,471
Restricted cash		-		-			4,518			-			4,518
Trade receivables, net		82		1,102			36,270			-			37,454
Due from affiliates		336,351		237,801			(547,185	)		1,397			28,364
Inventories		-		91			8,716			-			8,807
Prepaid expenses and other assets		5		188			5,033			-			5,226
Total current assets		340,503		240,424			(474,645	)		8,558			114,840
Property and equipment, net		-		54,221			1,077,060			23,911			1,155,192
Note receivable		-		18,018			-			-			18,018
Due from affiliates - non-current		3,250		-			12,638			-			15,888
Deferred tax asset, net		-		3,874			-			-			3,874
Deferred charges and other assets, net		2,477		9,898			6,317			-			18,692
Investment in subsidiaries		356,567		10			280,049			(636,626	)		-
Investment in associated companies		3,053		-			34,425			(6,951	)		30,527
Total assets	$	705,850	$	326,445		$	935,844		$	(611,108	)	$	1,357,031
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	-	$	70		$	191		$	-		$	261
Accounts payable and accrued liabilities		23,054		18,629			97,718			8,662			148,063
Due to affiliates - current		-		-			(1,397	)		1,397			-
Capital creditors		-		-			6,570			-			6,570
Total current liabilities		23,054		18,699			103,082			10,059			154,894
Other long-term liabilities		5,503		-			-			-			5,503
Long-term debt, net of current maturities		94,497		399,438			24,296			-			518,231
Total liabilities		123,054		418,137			127,378			10,059			678,628
Shareholders' equity		582,796		(91,692	)		808,466			(621,167	)		678,403
Total liabilities and shareholders' equity	$	705,850	$	326,445		$	935,844		$	(611,108	)	$	1,357,031

Kerzner International Limited
Condensed Consolidated Financial Statements
(In thousands of US dollars)

Condensed Consolidating Statement of Operations for the Year Ended December 31, 2002

	Kerzner			KINA			Guarantor Subsidiaries			Eliminations			Consolidated
Revenues:
Casino and resort revenues		-		$	-		$	512,778		$	(4,781	)	$	507,997
Less: promotional allowances		-			-			(22,210	)		-			(22,210	)
		-			-			490,568			(4,781	)		485,787
Tour operations		-			-			41,063			-			41,063
Management and other fees		-			16,801			24,504			-			41,305
Insurance recovery		-			-			1,100			-			1,100
Other		-			1,280			3,163			-			4,443
Affiliated sales		-			-			10,339			(10,339	)		-
		-			18,081			570,737			(15,120	)		573,698
Expenses:
Casino and resort expenses		-			-			281,316			(12,843	)		268,473
Tour operations		-			-			36,772			(5	)		36,767
Selling, general and administrative		2,361			-			92,827			(2,272	)		92,916
Management fee		1,100			-			(1,100	)		-			-
Corporate expenses		6,188			10,079			17,114			(417	)		32,964
Depreciation and amortization		-			75			56,231			-			56,306
Restructuring costs (reversal)		-			-			(1,000	)		-			(1,000	)
		9,649			10,154			482,160			(15,537	)		486,426
Income (loss) from operations		(9,649	)		7,927			88,577			417			87,272
Other income and expenses:
Interest income		1,474			704			1,347			-			3,525
Interest expense, net of capitalization		(846	)		(36,638	)		(1,620	)		-			(39,104	)
Affiliated interest income		1,046			18,249			-			(19,295	)		-
Affiliated interest expense		-			-			(19,295	)		19,295			-
Equity in earnings (losses) of associated companies		(658	)		-			(6,288	)		1,737			(5,209	)
Gain on settlement of territorial and
other disputes		14,459			-			-			-			14,459
Dividend income		2,296			-			2,325			(4,621	)		-
Other, net		-			(158	)		(10	)		-			(168	)
Income (loss) before provision for income
taxes and extraordinary items		8,122			(9,916	)		65,036			(2,467	)		60,775
Benefit (provision) for income taxes		(1	)		2,238			(2,333	)		-			(96	)
Income (loss) before extraordinary item		8,121			(7,678	)		62,703			(2,467	)		60,679
Extraordinary loss on early
extinguishment of debt, net of
income tax effect		(5,901	)		(14,624	)		-			-			(20,525	)
Net income (loss)	$	2,220		$	(22,302	)	$	62,703		$	(2,467	)	$	40,154

Kerzner International Limited
Condensed Consolidated Financial Statements
(In thousands of US dollars)

Condensed Consolidating Statement of Operations for the Year Ended December 31, 2001

	Kerzner			KINA			Guarantor Subsidiaries			Eliminations			Consolidated
Revenues:
Casino and resort revenues		-		$	-		$	477,183		$	(6,289	)	$	470,894
Less: promotional allowances		-			-			(22,778	)		-			(22,778	)
		-			-			454,405			(6,289	)		448,116
Tour operations		-			-			36,348			-			36,348
Management and other fees		-			15,087			36,806			(15,087	)		36,806
Real estate related		-			-			9,771			-			9,771
Insurance recovery		-			-			2,000			-			2,000
Other		-			893			(893	)		-			-
Affiliated sales		-			-			9,742			(9,742	)		-
		-			15,980			548,179			(31,118	)		533,041
Expenses:
Casino and resort expenses		-			-			267,396			(14,377	)		253,019
Tour operations		-			-			32,061			(20	)		32,041
Selling, general and administrative		-			-			81,840			(1,634	)		80,206
Management fee		634			14,453			(15,087	)		-
Real estate related		-			-			3,044			(179	)		2,865
Corporate expenses		1,506			8,802			13,456			1,342			25,106
Depreciation and amortization		-			124			51,366			-			51,490
Restructuring costs		-			-			5,732			-			5,732
Pre-opening expenses		-			-			6,904			-			6,904
		2,140			8,926			476,252			(29,955	)		457,363
Income (loss) from operations		(2,140	)		7,054			71,927			(1,163	)		75,678
Other income and expenses:
Interest income		742			4,296			2,433			-			7,471
Interest expense, net of capitalization		(10,938	)		(27,736	)		(14,028	)		-			(52,702	)
Affiliated interest income		7,575			6,931			(1	)		(14,505	)		-
Affiliated interest expense		-			-			(14,505	)		14,505			-
Equity in earnings (loss) of associated
companies		(714	)		-			471			3,302			3,059
Dividend income		2,836			-			2,872			(5,708	)		-
Other, net		-			(664	)		(96	)		-			(760	)
Income (loss) before income taxes		(2,639	)		(10,119	)		49,073			(3,569	)		32,746
Benefit (provision) for income taxes		-			4,597			(4,065	)		(1,622	)		(1,090	)
Net income (loss)	$	(2,639	)	$	(5,522	)	$	45,008		$	(5,191	)	$	31,656

Kerzner International Limited
Condensed Consolidated Financial Statements
(In thousands of US dollars)

Condensed Consolidating Statement of Operations for the Year Ended December 31, 2000

                                                                           Guarantor
                                               Kerzner         KINA       Subsidiaries    Eliminations     Consolidated
                                             ------------  -------------  -------------  ---------------  ---------------
Revenues:
  Casino and resort revenues                   $       -    $         -    $   762,496    $      (6,630)   $     755,866
  Less: promotional allowances                         -              -        (51,779)               -          (51,779)
                                             ------------  -------------  -------------  ---------------  ---------------
                                                       -              -        710,717           (6,630)         704,087
  Tour operations                                      -              -         33,192                -           33,192
  Management and other fees                        2,070         21,846         33,693          (21,846)          35,763
  Real estate related                                  -              -        108,650                -          108,650
  Other                                                -             38          2,965                -            3,003
  Affiliated sales                                     -            244          8,692           (8,936)               -
                                             ------------  -------------  -------------  ---------------  ---------------
                                                   2,070         22,128        897,909          (37,412)         884,695
                                             ------------  -------------  -------------  ---------------  ---------------
Expenses:
  Casino and resort expenses                           -              -        471,780          (18,207)         453,573
  Tour operations                                      -              -         29,637              (11)          29,626
  Selling, general and administrative                  -              -        100,396            3,069          103,465
  Management fee                                     634                        21,212          (21,846)               -
  Real estate related                                  -              -         32,272                -           32,272
  Corporate expenses                               1,684         11,694         12,379             (417)          25,340
  Depreciation and amortization                        -            258         59,965                -           60,223
  Write-off of Desert Inn costs                        -         11,202              -                -           11,202
  Transaction costs                                7,014              -              -                -            7,014
  Pre-opening expenses                                 -              -          7,616                -            7,616
  Write-down of assets to be sold                      -        233,085              -           (3,877)         229,208
                                             ------------  -------------  -------------  ---------------  ---------------
                                                   9,332        256,239        735,257          (41,289)         959,539
                                             ------------  -------------  -------------  ---------------  ---------------


Income (loss) from operations                     (7,262)      (234,111)       162,652            3,877          (74,844)

Other income and expenses:
  Interest income                                    144            234          3,816                -            4,194
  Affiliated interest income                       8,810        (18,076)        36,152          (26,886)               -
  Affiliated interest expense                          -              -        (26,886)          26,886                -
  Interest expense, net of capitalization        (13,163)        18,075        (50,590)               -          (45,678)
  Equity in earnings of associated
    companies                                          -              -            780            3,445            4,225
  Dividend income                                  2,839              -          2,848           (5,687)               -
  Other, net                                           -             11           (699)               -             (688)
                                             ------------  -------------  -------------  ---------------  ---------------
Income (loss) before income taxes                 (8,632)      (233,867)       128,073            1,635         (112,791)
Benefit (provision) for income taxes                  27             (4)        (6,336)               -           (6,313)
                                             ------------  -------------  -------------  ---------------  ---------------
    Net income (loss)                          $  (8,605)   $  (233,871)   $   121,737    $       1,635    $    (119,104)
                                             ============  =============  =============  ===============  ===============

Kerzner International Limited
Condensed Consolidated Financial Statements
(In thousands of US dollars)

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2002

                                                                                           Guarantor
                                                             Kerzner          KINA       Subsidiaries    Eliminations Consolidated
                                                          --------------  -------------  --------------  -----------  --------------
Cash flows from operating activities:
                                                                                                62,703
Net income (loss)                                          $      2,220    $   (22,302)    $         3    $  (2,467)    $    40,154
Adjustments to reconcile net income (loss)
  to net cash provided by (used in) operating
activities:
    Extraordinary loss on early extinguishment of debt,
        net of income tax effect                                  5,901         14,624               -            -          20,525
    Depreciation and amortization                                   304            987          56,883            -          58,174
    Loss on disposition of assets                                     -              -             227            -             227
    Equity in earnings of associated companies,
      net of dividends received                                     658              -           6,288          587           7,533
    Provision for doubtful receivables                                -              -           3,205            -           3,205
    Deferred income tax benefit                                       -         (6,119)              -            -          (6,119)
    Deferred revenue                                                  -              -          18,028            -          18,028
    Net change in deferred charges and other assets                   -              8             262            -             270
    Dividends to parent                                               -              -          (2,296)       2,296               -
    Net change in working capital accounts:
      Receivables                                                    21            (84)         (5,818)           -          (5,881)
      Due from affiliates                                        96,824         (1,170)       (104,665)           -          (9,011)
      Inventories and prepaid expenses                              (52)           195          (9,402)           -          (9,259)
      Accounts payable and accrued liabilities                      230          4,982           6,809       (4,434)          7,587
    Other                                                             -            158               -            -             158
                                                          --------------  -------------  --------------  -----------  --------------
      Net cash provided by (used in) operating
        activities                                              106,106         (8,721)         32,224       (4,018)        125,591
                                                          --------------  -------------  --------------  -----------  --------------

Cash flows from investing activities:
    Payments for property and equipment, net of
      insurance proceeds received                                     -            (14)        (39,510)           -         (39,524)
    Net proceeds from sale of other assets                            -              -             126            -             126
    Purchase of notes receivable                                (13,704)             -               -            -         (13,704)
    Proceeds received for repayment of notes receivable               -         18,018               -            -          18,018
    Deposit received                                              4,500              -               -            -           4,500
    Advances to/Repayments from associated companies             (9,771)             -           9,465            -            (306)
    Acquisition of equity interest in associated company              -              -         (40,812)           -         (40,812)
   CRDA deposits and other                                            -           (158)           (120)           -            (278)

                                                          --------------  -------------  --------------  -----------  --------------
        Net cash provided by (used in) investing                (18,975)        17,846         (70,851)           -         (71,980)
activities
                                                          --------------  -------------  --------------  -----------  --------------

Cash flows from financing activities:
    Proceeds from issuance of debt                                    -        206,000               -            -         206,000
    Borrowings                                                        -              -         111,000            -         111,000
    Repayment of borrowings                                           -            (70)        (63,213)           -         (63,283)
    Early redemption of debt                                   (104,135)      (209,000)              -            -        (313,135)
    Debt issuance and modification costs                              -         (4,301)           (364)           -          (4,665)
    Proceeds from the exercise of share options                  14,702              -               -            -          14,702
    Repurchase of ordinary shares                                  (365)             -               -            -            (365)
                                                          --------------  -------------  --------------  -----------  --------------
        Net cash provided by (used in) financing
activities                                                      (89,798)        (7,371)         47,423            -         (49,746)
                                                          --------------  -------------  --------------  -----------  --------------

    Increase (decrease) in cash, cash equivalents and
        restricted cash                                          (2,667)         1,754           8,796       (4,018)          3,865
    Cash, cash equivalents and restricted cash at
        beginning of period                                       4,065          1,242          22,521        7,161          34,989
                                                          --------------  -------------  --------------  -----------  --------------
     Cash, cash equivalents and restricted cash at end     $      1,398    $     2,996     $    31,317    $   3,143     $    38,854
        of period                                         ==============  =============  ==============  ===========  ==============

Kerzner International Limited
Condensed Consolidated Financial Statements
(In thousands of US dollars)

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2001

                                                                                         Guarantor
                                                            Kerzner         KINA        Subsidiaries   Eliminations  Consolidated
                                                          ------------  --------------  -------------  ------------  -------------
Cash flows from operating activities:
Net income (loss)                                          $   (2,639)   $     (5,522)   $    45,008    $   (5,191)   $    31,656
Adjustments to reconcile net income (loss)
  to net cash provided by (used in) operating
activities:
    Depreciation and amortization                                 263           1,160         54,269             -         55,692
    Deferred income tax benefit                                     -          (3,874)             -             -         (3,874)
    Provision for doubtful receivables                              -               -          6,355             -          6,355
    (Gain) loss on disposition of other assets                      -             664             96             -            760
    Equity in earnings of associated companies,
      net of dividends received                                   714               -           (471)         (430)          (187)
    Dividends to parent                                             -               -         (2,836)        2,836              -
    Net change in deferred charges and other assets                 -             108         (1,506)            -         (1,398)
    Net change in working capital accounts:
      Receivables                                                   8          (6,289)         2,559             -         (3,722)
      Due from affiliates                                       1,100               -            277             -          1,377
      Inventories and prepaid expenses                            256             (53)         4,895             -          5,098
      Accounts payable and accrued liabilities                  3,445           5,143         (9,697)        2,785          1,676
    Other                                                           -               -          5,900             -          5,900
                                                          ------------  --------------  -------------  ------------  -------------
      Net cash provided by (used in) operating
        activities                                              3,147          (8,663)       104,849             -         99,333
                                                          ------------  --------------  -------------  ------------  -------------

Cash flows from investing activities:
    Payments for property and equipment, net of
      insurance proceeds received                                   -            (399)       (67,191)            -        (67,590)
    Proceeds received from the sale of
      Resorts Atlantic City, net                                    -         120,850              -             -        120,850
    Proceeds received from repayment of note receivable        12,000               -              -             -         12,000
    Proceeds from the sale of assets                                -           2,196            351             -          2,547
    Acquisition of equity interest in associated
companies                                                      (3,768)              -              -             -         (3,768)
    Advances to associated companies                           (3,250)              -         (3,170)            -         (6,420)
                                                          ------------  --------------  -------------  ------------  -------------
        Net cash provided by (used in) investing                4,982         122,647        (70,010)            -         57,619
activities
                                                          ------------  --------------  -------------  ------------  -------------

Cash flows from financing activities:
    Proceeds from the exercise of share options                 7,930               -              -             -          7,930
    Borrowings                                                      -         200,000         74,500             -        274,500
    Repayment of borrowings                                   (68,270)        (79,063)      (272,403)            -       (419,736)
    Debt issuance and modification costs                         (500)         (6,250)        (2,055)            -         (8,805)
    Advances from (repayments to) affiliates                   56,670        (226,704)       170,034             -              -
                                                          ------------  --------------  -------------  ------------  -------------
        Net cash used in financing activities                  (4,170)       (112,017)       (29,924)            -       (146,111)
                                                          ------------  --------------  -------------  ------------  -------------

    Increase in cash and cash equivalents                       3,959           1,967          4,915             -         10,841
    Cash and cash equivalents at beginning of period              106            (725)        24,767             -         24,148
                                                          ------------  --------------  -------------  ------------  -------------
    Cash and cash equivalents at end of period             $    4,065    $      1,242    $    29,682    $        -    $    34,989
                                                          ============  ==============  =============  ============  =============

Kerzner International Limited
Condensed Consolidated Financial Statements
(In thousands of US dollars)

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2000

                                                                                    Guarantor
                                                       Kerzner          KINA       Subsidiaries   Eliminations     Consolidated
                                                     -------------  -------------  -------------  --------------  ---------------
Cash flows from operating activities:
Net income (loss)                                      $   (8,605)    $ (233,871)   $   121,737    $      1,635    $    (119,104)
Adjustments to reconcile net income (loss)
  to net cash provided by (used in) operating
  activities:
    Depreciation and amortization                             185            333         63,822               -           64,340
    Write-down of net assets held for sale                      -        233,085              -          (3,877)         229,208
    Purchase termination costs                                  -         11,202              -               -           11,202
    (Gain) loss on disposition of other assets                  -            (24)           712               -              688
    Equity in earnings of associated companies,
      net of dividends received                                 -              -           (780)           (597)          (1,377)
    Dividends to parent                                         -              -         (2,839)          2,839                -
    Provision for doubtful receivables                          -              -          6,492               -            6,492
    Provision for discount on CRDA obligations, net             -              -            799               -              799
    Net change in deferred tax liability                        -            205              -               -              205
    Net change in deferred charges and other assets             -           (899)          (769)              -           (1,668)
    Net change in working capital accounts:
      Receivables                                              10            603         (9,792)              -           (9,179)
      Due from affiliates                                       -              -         (4,658)              -           (4,658)
      Inventories and prepaid expenses                        289           (171)        (2,170)              -           (2,052)
      Accounts payable and accrued liabilities              1,463           (114)        25,141               -           26,490
    Other                                                       -              -         23,912               -           23,912
                                                     -------------  -------------  -------------  --------------  ---------------
      Net cash provided by (used in) operating
        activities                                         (6,658)        10,349        221,607               -          225,298
                                                     -------------  -------------  -------------  --------------  ---------------

Cash flows from investing activities:
    Payments for property and equipment, net of
      insurance proceeds received                               -         (6,099)      (149,793)              -         (155,892)
    Net proceeds from the sale of other assets                  -            170            331               -              501
    Deposit refunded for proposed Desert Inn
      acquisition                                               -          7,750              -               -            7,750
    Advances to associated companies                            -              -        (18,663)              -          (18,663)
    Reclassification of cash to net assets held for
sale                                                            -              -        (21,453)              -          (21,453)
    CRDA deposits and other                                     -           (361)        (2,334)              -           (2,695)
                                                     -------------  -------------  -------------  --------------  ---------------
        Net cash provided by (used in) investing
          activities                                            -          1,460       (191,912)              -         (190,452)
                                                     -------------  -------------  -------------  --------------  ---------------

Cash flows from financing activities:
    Proceeds from the exercise of share options             2,866              -              -               -            2,866
    Borrowings                                            125,000              -         77,000               -          202,000
    Repayment of borrowings                                     -            (16)      (113,047)              -         (113,063)
    Repurchase of Ordinary Shares                        (141,792)             -              -               -         (141,792)
    Debt issuance and modification costs                        -              -           (919)              -             (919)
    Advances from (repayments to) affiliates               20,536        (18,958)        (1,578)              -                -
                                                     -------------  -------------  -------------  --------------  ---------------
        Net cash provided by (used in) financing
          activities                                        6,610        (18,974)       (38,544)              -          (50,908)
                                                     -------------  -------------  -------------  --------------  ---------------

    Decrease in cash and cash equivalents                     (48)        (7,165)        (8,849)              -          (16,062)
    Cash and cash equivalents at beginning of period          154          6,440         33,616               -           40,210
                                                     -------------  -------------  -------------  --------------  ---------------
    Cash and cash equivalents at end of period         $      106     $     (725)   $    24,767    $          -    $      24,148
                                                     =============  =============  =============  ==============  ===============

EX-4

                                                                                                  Exhibit 4.3(b)
                                         SUN INTERNATIONAL HOTELS LIMITED
                                       SUN INTERNATIONAL NORTH AMERICA, INC.
                                         SUN INTERNATIONAL BAHAMAS LIMITED



                                                                                                  December 14, 2001


Canadian Imperial Bank of Commerce
  as Administrative Agent
425 Lexington Avenue
New York, NY 10017

Each of the Lenders party to the
  Credit Agreement referred to below

                                                 LETTER AMENDMENT

Gentlemen and Ladies:

         We refer to the Fourth Amended and Restated Revolving Credit Agreement,  dated as of November 9,  2001 (as
amended,  supplemented,  amended and restated or otherwise  modified  from time to time,  the "Credit  Agreement"),
among Sun International  Hotels Limited, a corporation  organized under the laws of The Commonwealth of the Bahamas
("SIHL"),  Sun International North America,  Inc., a corporation  organized under the laws of the State of Delaware
("SINA"),  Sun  International  Bahamas Limited,  a corporation  organized under the laws of The Commonwealth of the
Bahamas ("SIBL";  SIHL, SINA and SIBL are each individually  referred to as a "Borrower" and collectively  referred
to as the "Borrowers"),  the financial  institutions as are or may become parties thereto (collectively referred to
as the  "Lenders"),  Canadian  Imperial Bank of Commerce,  acting through one or more of its agencies,  branches or
affiliates ("CIBC"),  as the administrative  agent (in such capacity,  the "Administrative  Agent"),  Deutsche Bank
Alex.Brown  Inc.  and  Bear  Stearns  Corporate  Lending  Inc.,  as  co-syndication  agents  (collectively  in such
capacities,   the   "Co-Syndication   Agents")  and  Bank  of  America,   N.A.  and  Wells  Fargo  Bank,  N.A.,  as
co-documentation  agents  (collectively  in such  capacities,  the  "Co-Documentation  Agents").  Unless  otherwise
defined in this letter  (this  "Letter")  or the  context  otherwise  requires,  terms used in this Letter have the
meanings provided in the Credit Agreement.

         By this Letter,  the  Borrowers  hereby  request  that the Foreign  Currency  Letter of Credit  Commitment
Amount be increased  from  $3,000,000 to  $30,000,000.  Upon the receipt of approval of the Required  Lenders,  the
figure  "$3,000,000"  in the definition of the term "Foreign  Currency Letter of Credit  Commitment  Amount" in the
Credit Agreement shall be deleted and replaced with the figure "$30,000,000".

         In order to induce the Lenders to agree to the foregoing  amendment,  the Borrowers hereby (a) confirm and
restate all  representations  and  warranties  contained in the Credit  Agreement and the Loan  Documents as of the
date hereof and (b) confirm  that,  after giving effect  hereto,  no Default has occurred and is  continuing.  This
Letter shall  become  effective as of the date first above  written  upon  receipt by the  Administrative  Agent of
counterparts  of this  Letter  duly  executed  by each of the  Borrowers,  the  Required  Lenders  and  each of the
Guarantors.

         This  Letter may be  executed by the  parties  hereto in several  counterparts,  each of which shall be an
original  and all of which  shall  constitute  together  but one and the same  agreement.  Delivery  of an executed
counterpart of a signature page to this Letter by facsimile  shall be effective as delivery of a manually  executed
counterpart of this Letter.

         THIS LETTER SHALL BE GOVERNED BY, AND  CONSTRUED IN  ACCORDANCE  WITH,  THE INTERNAL  LAWS OF THE STATE OF
NEW YORK.  Except as expressly  stated  herein,  all of the terms and  provisions  of the Credit  Agreement and the
other Loan Documents  shall remain in full force and effect.  This Letter is a Loan Document  executed  pursuant to
the Credit  Agreement and shall be construed and  administered  in accordance  with all of the terms and provisions
of  the  Credit   Agreement.   No  modification  by  any  Lender   hereunder  shall  be  applicable  to  subsequent
transactions.  No  modification  hereunder  shall  require any similar or dissimilar  modification  hereafter to be
granted.

[Signature pages omitted]

EX-4

                                                                                                     Exhibit 4.3(d)



                                                                                                      May  22, 2002




Canadian Imperial Bank of Commerce,
as Administrative Agent
10880 Wilshire Boulevard
Suite 1700
Los Angeles, California 90024

         Re:      Fourth Amended and Restated Revolving Credit Agreement

Ladies and Gentlemen:

         Please  refer  to that  certain  Fourth  Amended  and  Restated  Revolving  Credit  Agreement  dated as of
November 9,  2001 among Sun International Hotels Limited, Sun International North America,  Inc., Sun International
Bahamas Limited,  various  financial  institutions and Canadian  Imperial Bank of Commerce,  as the  administrative
agent  for such  financial  institutions  (as the same has been  amended  or  modified,  the  "Credit  Agreement").
Capitalized  terms used in this letter and not otherwise  defined shall have the meanings  ascribed  thereto in the
Credit Agreement.

         Section 2.2.3  of the Credit  Agreement  permits the  Borrowers  to request an optional  increase of up to
$150,000,000  in the Commitment  Amount.  This letter will evidence the formal request of the Borrowers to increase
the Commitment  Amount by  $100,000,000,  effective as of May 31, 2002.  After giving effect to such increase,  the
Commitment  Amount under the Credit  Agreement will be  $300,000,000.  The  Administrative  Agent and the Borrowers
have agreed that the  $100,000,000  in new Commitments  will be allocated among such financial  institutions as may
be  mutually  agreed by the  Administrative  Agent and the  Borrowers.  This  letter  will also  confirm  that each
Increasing  Lender will receive a fee of 25 basis points on the amount of the increase in its  Commitment  and that
each Additional Increasing Lender will receive a fee of 25 basis points on the amount of its new Commitment.

         Upon the  effectiveness  of the proposed  increase to the  Commitment  Amount,  the Borrowers  shall issue
replacement  Notes to each Increasing  Lender and new Notes to each  Additional  Increasing  Lender.  To the extent
that such  increase  results in any loss or expense to any Lender as the result of the  prepayment of any LIBO Rate
Loan on a date other than the scheduled last day of the interest  period  applicable  thereto,  the Borrowers shall
be responsible for such loss or expenses pursuant to Section 4.4.






         If this  letter  accurately  reflects  your  understanding  please so  indicate  by  signing  in the space
provided below and returning a copy of this letter to us.

                                                     Very truly yours,

                                                     SUN INTERNATIONAL HOTELS LIMITED


                                                     By: ____________________________________
                                                     Its:____________________________________


                                                     SUN INTERNATIONAL NORTH AMERICA, INC.


                                                     By: ____________________________________
                                                     Its:____________________________________


                                                     SUN INTERNATIONAL BAHAMAS LIMITED


                                                     By: ____________________________________
                                                     Its:____________________________________

Accepted and Agreed
as of June 4, 2002:

CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent


By:______________________________________
Title:  Managing Director,
           CIBC World Markets Corp., AS AGENT

EX-4

                                                                                                     Exhibit 4.3(g)


                                         THIRD AMENDMENT TO FOURTH AMENDED
                                           AND RESTATED CREDIT AGREEMENT


         THIS THIRD  AMENDMENT TO FOURTH  AMENDED AND RESTATED  CREDIT  AGREEMENT,  dated as of May 15,  2003 (this
"Amendment"),  is among KERZNER  INTERNATIONAL  LIMITED, a corporation organized under the laws of The Commonwealth
of the Bahamas and  formerly  known as Sun  International  Hotels  Limited  ("KIL"),  KERZNER  INTERNATIONAL  NORTH
AMERICA,  INC.,  a  corporation  organized  under  the laws of the  State of  Delaware  and  formerly  known as Sun
International North America,  Inc. ("KINA"),  KERZNER  INTERNATIONAL BAHAMAS LIMITED, a corporation organized under
the laws of The Commonwealth of the Bahamas and formerly known as Sun International  Bahamas Limited ("KIBL";  KIL,
KINA and KIBL are each individually  referred to as a "Borrower" and collectively  referred to as the "Borrowers"),
the financial  institutions  as are or may become  parties hereto  (collectively  referred to as the "Lenders") and
CANADIAN IMPERIAL BANK OF COMMERCE,  acting through one or more of its agencies,  branches or affiliates  ("CIBC"),
as the administrative agent (in such capacity, the "Administrative Agent").

                                               W I T N E S S E T H:

         WHEREAS,  the  Borrowers,  Lenders  and the  Administrative  Agent are  parties to the Fourth  Amended and
Restated  Credit  Agreement,  dated as of  November 9,  2001, as amended by those certain letter  agreements  dated
December 14,  2001 and August 30,  2002,  that  certain  First  Amendment  to Fourth  Amended and  Restated  Credit
Agreement  dated as of May 8,  2002 and that  certain  Second  Amendment  to Fourth  Amended  and  Restated  Credit
Agreement  dated as of  November 20,  2002 (as amended,  supplemented,  amended and restated or otherwise  modified
through the date hereof, the "Existing Credit Agreement");

         WHEREAS,  the Borrowers have requested that the Required  Lenders amend the Existing  Credit  Agreement as
set forth below; and

         WHEREAS, the Required Lenders have agreed,  subject to the terms and conditions  hereinafter set forth, to
amend the  Existing  Credit  Agreement  in  certain  respects  (the  Existing  Credit  Agreement,  as so amended or
otherwise modified by this Amendment, being referred to as the "Credit Agreement");

         NOW,  THEREFORE,  in  consideration  of the premises and for other good and  valuable  consideration  (the
receipt and sufficiency of which is hereby acknowledged), the parties hereto agree as follows.


                                           PART I
                                                    DEFINITIONS

SUBPART 1.1. Certain  Definitions.  The following terms (whether or not underscored)  when used in this Amendment shall have the
following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

         "Amendment" is defined in the preamble.

         "Borrowers" is defined in the preamble.

         "Credit Agreement" is defined in the third recital.

         "Existing Credit Agreement" is defined in the first recital.

         "Amendment Effective Date" is defined in Subpart 3.1.

         "Lenders" is defined in the first recital.

SUBPART 1.2. Other  Definitions.  Terms for which meanings are provided in the Existing Credit  Agreement are, unless  otherwise
defined herein or the context otherwise requires, used in this Amendment with such meanings.


                                           PART II
                                                    AMENDMENTS

         Effective on (and  subject to the  occurrence  of) the  Amendment  Effective  Date,  the  Existing  Credit
Agreement  is hereby  amended in  accordance  with this Part;  except as so amended or  otherwise  modified by this
Amendment,  the  Existing  Credit  Agreement  and the Loan  Documents  shall  continue  in full force and effect in
accordance with their terms.

SUBPART 2.1. Amendments to Section 1.1.

(a) The  definition  of the term "Total  Leverage  Ratio" in  Section 1.1  of the Existing  Credit  Agreement is hereby
amended and restated in its entirety as follows:

                  "Total Leverage  Ratio" means,  as of the last day of any Fiscal  Quarter,  the ratio of (a) Debt
         outstanding  on the last day of such Fiscal  Quarter  (exclusive of up to $38,000,000 of Debt arising from
         the guaranty by Kerzner  International  Limited of a senior  secured  term loan to finance the  renovation
         and expansion of the Palmilla) to  (b) Consolidated  EBITDA for the four Fiscal Quarter period then ended;
         provided,  that in calculating  Consolidated  EBITDA for such period,  any  acquisitions  or  Dispositions
         during such period shall have been deemed to have occurred on the first day of such period.

(b) The definition of the term  "Significant  Subsidiary" in  Section 1.1  of the Existing  Credit  Agreement is hereby
amended  by  adding  the  following  immediately  prior to the end  thereof:  "and any other  Subsidiary  of KIL so
designated by KIL that has delivered (or caused to be  delivered)  to the  Administrative  Agent all  documentation
that  would  be  required  to be  delivered  pursuant  to  Section 7.1.7  if  such  Subsidiary  were a  Significant
Subsidiary;  provided,  however,  that  notwithstanding the foregoing,  in no event shall One & Only (Indian Ocean)
Management Limited be deemed a Significant Subsidiary hereunder."

(c) There  shall  be  added  to the  definitions  in  Section 1.1  of the  Existing  Credit  Agreement  in  appropriate
alphabetical sequence two new definitions reading in their entirety as follows:

                  "Borrowing Base" is defined in Section 2.10.

                  "Luxury  Resort  Hotels"  means  the  Palmilla  and any  luxury  resort  properties  in which the
         Borrowers make an Investment  after  January 1,  2003 that enables the Borrowers to control the management
         of such properties.

                  "Palmilla"  means the luxury  hotel and golf course in Los Cabos,  Mexico  known as the  Palmilla
         Resort.

(d) To accurately  reflect the change of names of the  Borrowers,  all references in the Existing  Credit  Agreement to
Sun  International  Hotels Limited and SIHL shall be deemed  references to Kerzner  International  Limited and KIL,
respectively;  all  references to Sun  International  North  America,  Inc. and SINA shall be deemed  references to
Kerzner  International  North America,  Inc. and KINA,  respectively;  all references to Sun International  Bahamas
Limited and SIBL shall be deemed  references to Kerzner  International  Bahamas Limited and KIBL; all references to
the  Borrowers  shall refer to KIL, KINA and KIBL  collectively;  and all  references to a Borrower  shall refer to
KIL, KINA and KIBL, individually.

SUBPART 2.2. Amendments to Section 2.1.3.

(a) Section  2.1.3(a) of the Credit  Agreement is hereby  amended and restated in its entirety as follows:  "(a) of all
Lenders  would exceed the lesser of (i) the  Borrowing  Base then in effect or (ii) the  Commitment  Amount then in
effect; or".

(b) Section  2.1.3 of the Existing  Credit  Agreement is further  amended by replacing  ";or" at the end of  clause (b)
thereof with a period and by deleting clause (c) thereof.

SUBPART 2.3. Amendment to Section 2.1.4.  Section 2.1.4(b)  of the Existing  Credit  Agreement is hereby amended and restated in
its entirety as follows:

                  "(b)     the  sum of  the  aggregate  amount  of all  Letter  of  Credit  Outstandings  plus  the
         aggregate  principal  amount of all Loans then  outstanding  would exceed the lesser of (i) the  Borrowing
         Base then in effect or (ii) the Commitment Amount then in effect; or"

SUBPART 2.4. Amendment to  Section 3.1.  There shall be added to Section 3.1 of the Existing  Credit  Agreement a new clause (e)
reading in its entirety as follows:

                  "(e)     The Borrowers shall from time to time make a mandatory  prepayment of the Loans,  and if
         required deliver cash collateral for Letter of Credit  Outstandings,  equal to the excess,  if any, of the
         aggregate  outstanding  principal amount of all Loans and Letter of Credit Outstandings over the Borrowing
         Base on each date  that the  aggregate  amount of  outstanding  Loans  and  Letter of Credit  Outstandings
         exceeds the Borrowing Base."

SUBPART 2.5. Amendment to  Section 2.10.  There shall be added to the Existing Credit  Agreement a new  Section 2.10  reading in
its entirety as follows:

                  "SECTION  2.10.  Borrowing  Base.  During  the  period  from  January 1,  2003 to the date of the
         first  determination of the Borrowing Base pursuant to the further  provisions of this  Section 2.10,  the
         amount of the  Borrowing  Base  shall be as set forth on  Schedule III.  Thereafter,  the  Borrowing  Base
         shall be equal to the sum of the following, as determined from time to time:

                  (i)      the  amount  of "all  risks"  insurance  maintained  from  time  to time on the  Bahamas
                           Property and on the buildings situated thereon;

                  (ii)     the value of the  undeveloped  land owned by the  Borrowers  on  Paradise  Island in the
                           Bahamas, which for purposes hereof shall be deemed to be $150,000,000;

                  (iii)    the cost basis of the Borrowers' Investments in Luxury Resort Hotels;

                  (iv)     the product of six (6) times the  Consolidated  EBITDA  attributable  to the  management
                           contracts of the Borrowers and their Significant Subsidiaries; and

                  (v)      the estimated  net present  value of the payments due to the  Borrowers  pursuant to the
                           Omnibus  Termination  Agreement,  which  for  purposes  hereof  shall  be  deemed  to be
                           $185,000,000.

                  Together  with each  certification  of the Total  Leverage  Ratio  delivered  by KIL  pursuant to
         Section 7.1.1(c)(B),  the chief  financial  officer  of KIL shall  furnish to the  Administrative  Agent a
         computation  of  the  then-current  Borrowing  Base  in  substantially  the  form  of  Schedule III.   The
         Administrative  Agent  shall  forward  such  calculation  to all  Lenders at the time of  delivery  to the
         Lenders of the periodic reporting  information  required under  Section 7.1.1(c)(B).  The determination of
         the Borrowing Base shall be made in accordance with the terms of this  Section 2.10.  Notwithstanding  the
         foregoing,  if the  Administrative  Agent  shall  determine  that the  value of the  assets  described  in
         clauses (ii)  and (v) above shall have materially  decreased from their  valuation as of January 1,  2003,
         upon  notice  to, and after  consultation  with the  Borrowers,  the  Required  Lenders  shall  adjust the
         valuations set forth in clauses (ii) and (v) to reflect such decrease."

SUBPART 2.6. Amendment to Section 7.1.4.  Section 7.1.4(b)(i) shall be amended and restated in its entirety to read as follows:

                  (i)      From and after July 1,  2002, "all risks"  insurance on the Bahamas  Property and on the
         buildings  situated  thereon in an amount not less than the lesser of (a) the  replacement  building value
         and (b) such amount of insurance as the  Administrative  Agent may reasonably  determine is then available
         to the Borrowers at a price which is commercially  reasonable  (which amounts shall be re-evaluated by the
         Borrowers,  their insurance  brokers and the  Administrative  Agent within thirty days of the commencement
         of each calendar quarter,  during which time the Borrowers shall obtain any additional  insurance required
         by the  terms  hereof),  but in no event  less  than  $150,000,000  with a  deductible  of not  more  than
         $15,000,000  per  occurrence  for the  first  two  occurrences  and  total  coverage  for each  occurrence
         thereafter;

SUBPART 2.7. Amendment  to  Section 7.2.11.  The last  sentence of  Section 7.2.11  of the Existing  Credit  Agreement is hereby
amended and restated in its entirety to read as follows:

                  "So long as no Event of Default shall then be  continuing,  upon a Disposition  permitted by this
         Section,  (i) the Lien in favor of the  Secured  Parties  upon the  assets so sold,  transferred,  leased,
         contributed or conveyed  shall  automatically  terminate and be released,  and (ii) if the assets so sold,
         transferred,  leased,  contributed  or  conveyed  are shares of capital  stock of a  Subsidiary,  then the
         Guaranty and Security  Agreement,  if any, executed by such Subsidiary shall  automatically  terminate and
         the  obligations  of, and the Lien in favor of the Secured  Parties  upon the assets of,  such  Subsidiary
         shall  automatically  terminate  and be  released  and the  Subsidiary  shall have no further  obligations
         thereunder,  and in each case the  Administrative  Agent and the Lenders shall execute,  acknowledge,  and
         deliver  such  acts,  assurances,  amendments  to the  Guaranty  and  Security  Agreement,  and such other
         instruments and documents necessary to give effect to the foregoing."

SUBPART 2.8. Amendment  to  Schedules.  There shall be added to the Existing  Credit  Agreement a new  Schedule III  in the form
attached hereto.


                                          PART III
                                            CONDITIONS TO EFFECTIVENESS

SUBPART 3.1. Effectiveness.  This  Amendment  and the  amendments  contained  herein  shall  become  effective  on the date (the
"Amendment  Effective  Date") when each of the  conditions  set forth in this Part shall have been fulfilled to the
satisfaction of the Administrative Agent.

SUBPART 3.1.1. Execution of Counterparts.  The Administrative  Agent shall have received  counterparts of this Amendment,
duly executed and delivered on behalf of each Borrower and the Required Lenders.

SUBPART 3.1.2. Affirmation and Consent.  The  Administrative  Agent shall have received,  with  counterparts for each Lender,
an  Affirmation  and  Consent  to this  Amendment  substantially  in the form  attached  hereto as  Exhibit A, duly
executed and delivered by each of the Obligors other than the Borrowers.

SUBPART 3.1.3. Legal Details,  etc. All documents  executed or submitted  pursuant  hereto shall be  satisfactory in form and
substance  to the  Administrative  Agent and its  counsel.  The  Administrative  Agent and its  counsel  shall have
received all  information  and such  counterpart  originals or such  certified or other copies or such materials as
the  Administrative  Agent  or  its  counsel  may  reasonably  request,  and  all  legal  matters  incident  to the
transactions contemplated by this Amendment shall be satisfactory to the Administrative Agent and its counsel.

SUBPART 3.1.4. Required  Lenders.  The Agent  shall  have  received  an  executed  consent to this  Amendment  in the form of
Exhibit B from the Required Lenders.

SUBPART 3.1.5. Collateral  Documentation.  Pursuant to a Pledge  Agreement  the Agent shall have  received a pledge of all of
the capital stock,  equity or other  ownership  interests  owned by the Borrowers and their  Subsidiaries  in One &
Only (Indian  Ocean)  Management  Limited  (which  Pledge  Agreement  shall provide for the release of such capital
stock to the extent that such shares are  transferred  to the joint venture  partners in One & Only (Indian  Ocean)
Management  Limited)  and in Kerzner  Investments  Palmilla,  Inc.,  together  with  undated  stock powers for such
certificates,  executed in blank (or,  if such  shares of capital  stock or equity  interests  are  uncertificated,
confirmation and evidence  satisfactory to the Agent that the security interests in such uncertificated  securities
or equity  interests  has been  transferred  to and  perfected  by the  Agent for the  benefit  of the  Lenders  in
accordance  with  applicable  law).  Finally,  the Agent shall have received one or more legal opinions in form and
substance satisfactory to it from counsel reasonably satisfactory to it in respect of such Pledge Agreements.


                                           PART IV

                                    MISCELLANEOUS; REPRESENTATIONS AND COVENANT

SUBPART 4.1. Continuing  Effectiveness,  etc. As amended hereby,  the Credit Agreement shall remain in full force and effect and
is hereby  ratified and  confirmed in all respects.  After the  Amendment  Effective  Date,  all  references in the
Credit  Agreement  and each other Loan  Document  to the "Credit  Agreement"  shall  refer to the  Existing  Credit
Agreement, after giving effect to this Amendment.

SUBPART 4.2. Counterparts.  This  Amendment  may be  executed  in any number of  counterparts  and by the  different  parties on
separate  counterparts,  and each such  counterpart  shall be deemed to be an  original  but all such  counterparts
shall together constitute one and the same Amendment.

SUBPART 4.3. Governing  Law.  THIS  AMENDMENT  SHALL BE A CONTRACT  MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK.

SUBPART 4.4. Successors and Assigns.  This Amendment  shall be binding upon the Borrowers,  the Lenders and the Agents and their
respective successors and assigns, and shall inure to their successors and assigns.

SUBPART 4.5. Representations  and  Warranties.  In order to induce the Required  Lenders to execute and deliver this  Amendment,
the  Borrowers  represent and warrant to the Agents,  the Lenders and the Issuers that,  after giving effect to the
terms of this Amendment,  the following  statements are true and correct:  (a) the  representations  and warranties
set forth in Article VI of the Existing  Credit  Agreement and in the other Loan  Documents are true and correct on
the  Amendment  Effective  Date  (unless  stated  to  relate  solely  to  an  earlier  date,  in  which  case  such
representations  and warranties  were true and correct in all material  respects as of such earlier date);  and (b)
no Default has occurred and be continuing,  and neither KIL nor any Subsidiary is in material  violation of any law
or governmental regulation or court order or decree.






         IN WITNESS  WHEREOF,  the parties  hereto have caused this Amendment to be executed and delivered by their
respective authorized officers as of the day and year first above written.

                                                     KERZNER INTERNATIONAL BAHAMAS LIMITED


                                                     By:_____________________________________
                                                     Title:


                                                     Address:             Executive Offices
                                                                          Coral Towers
                                                                          Paradise Island,
                                                                          The Bahamas

                                                     Facsimile No.:       (242) 363-3703

                                                     Attention:           John R. Allison and
                                                                          Charles D. Adamo


                                                     KERZNER INTERNATIONAL LIMITED


                                                     By:_____________________________________
                                                     Title:


                                                     Address:             Executive Offices
                                                                          Coral Towers
                                                                          Paradise Island,
                                                                          The Bahamas

                                                     Facsimile No.:       (242) 363-3703

                                                     Attention:           John R. Allison and
                                                                          Charles D. Adamo






                                                     KERZNER INTERNATIONAL NORTH AMERICA, INC.


                                                     By:_____________________________________
                                                     Title:


                                                     Address:             1415 East Sunrise Blvd.
                                                                          Ft. Lauderdale, FL 33304

                                                     Facsimile No.:       (954) 713-2091

                                                     Attention:           John R. Allison and
                                                                          Charles D. Adamo






                                                     CANADIAN IMPERIAL BANK OF COMMERCE, as Administrative Agent


                                                     By:____________________________________
                                                     Title:  Managing Director,
                                                                CIBC World Markets Corp., AS AGENT


                                                     Address:             10880 Wilshire Boulevard
                                                                          Suite 1700
                                                                          Los Angeles, California 90024

                                                     Facsimile No.:       (310) 446-3610

                                                     Attention:           Leonardo R. Fernandez, Jr.









                                                     EXHIBIT A to Third Amendment to
                                                     Fourth Amended and Restated Credit Agreement


                                                   May 15, 2003



To the Parties Listed on the
Signature Pages Hereof
c/o Kerzner International Bahamas Limited
Executive Offices
Coral Towers
Paradise Island,
The Bahamas

Attention:  Chief Financial Officer

         Re:      Kerzner International Limited, Kerzner International North America, Inc. and Kerzner
                  International Bahamas Limited

Gentlemen:

         Please refer to (1) the Fourth Amended and Restated  Credit  Agreement,  dated as of November 9,  2001, as
amended by that certain First  Amendment to Fourth Amended and Restated Credit  Agreement  dated as of May 8,  2002
and that certain Second  Amendment to Fourth Amended and Restated Credit  Agreement  dated as of November 20,  2002
(as so amended,  the "Credit  Agreement"),  by and among KERZNER  INTERNATIONAL  LIMITED,  a corporation  organized
under  the  laws of The  Commonwealth  of the  Bahamas  ("KIL"),  KERZNER  INTERNATIONAL  NORTH  AMERICA,  INC.,  a
corporation  organized under the laws of the State of Delaware ("KINA"),  KERZNER  INTERNATIONAL BAHAMAS LIMITED, a
corporation  organized  under the laws of The  Commonwealth  of the Bahamas  ("KIBL";  KIL,  KINA and KIBL are each
individually  referred  to as a  "Borrower"  and  collectively  referred  to as  the  "Borrowers"),  the  financial
institutions as are or may become parties hereto  (collectively  referred to as the "Lenders"),  CANADIAN  IMPERIAL
BANK  OF  COMMERCE,  acting  through  one  or  more  of its  agencies,  branches  or  affiliates  ("CIBC"),  as the
administrative  agent (in such capacity,  the  "Administrative  Agent") and (2) the Amended and Restated Subsidiary
Guaranty,  dated as of November 9,  2001 (the  "Guaranty"),  made by each Guarantor (as such term is defined in the
Credit  Agreement) a signatory hereto in favor of the Agent for the  Beneficiaries.  Pursuant to an amendment dated
of even date  herewith,  certain  terms of the  Credit  Agreement  were  amended.  We hereby  request  that you (i)
acknowledge  and reaffirm all of your  obligations  and  undertakings  under the Guaranty and (ii)  acknowledge and
agree that the Guaranty is and shall remain in full force and effect in accordance with the terms thereof.







         Please  indicate your  agreement to the foregoing by signing in the space  provided  below,  and returning
the executed copy to the undersigned.

                                                     CANADIAN IMPERIAL BANK OF COMMERCE, as Administrative Agent


                                                     By:____________________________________
                                                     Title:  Managing Director,
                                                                CIBC World Markets Corp., AS AGENT


                                                     Address:             10880 Wilshire Boulevard
                                                                          Suite 1700
                                                                          Los Angeles, California 90024

                                                     Facsimile No.:       (310) 446-3610

                                                     Attention:           Leonardo R. Fernandez, Jr.








                                                     Acknowledged and Agreed:


                                                     BIRBO NV


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________


                                                     KERZNER HOTELS INTERNATIONAL MANAGEMENT NV


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________


                                                     KERZNER INTERNATIONAL FINANCE LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________


                                                     KERZNER HOTELS INTERNATIONAL (BERMUDA), LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________


                                                     ABERDEEN MANAGEMENT LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________


                                                     KERZNER INTERNATIONAL MANAGEMENT LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________


                                                     PARADISE ISLAND LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL TIMESHARE LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     PARADISE SECURITY SERVICES LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     PURPOSEFUL BV


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL MARKETING (UK) LTD.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER COVE, LTD.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL DEVELOPMENT (TIMESHARE) LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     ISLAND HOTEL COMPANY LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     BAHAMAS E-TRADING LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL NETWORK DATA LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNERONLINE (IOM) LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL NETWORK SERVICES LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER COVE CALIFORNIA, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL NEVADA, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     PARADISE BEACH INN LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     PARADISE ENTERPRISES LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     PARADISE ACQUISITIONS LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL DEVELOPMENT LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     PARADISE ISLAND FUTURES LIMITED


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL RESORTS, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     PIV, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     ISS, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL MARKETING, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL NEW YORK, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL DEVELOPMENT GROUP, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER VACANCES SA


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER COVE NEW YORK, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INVESTMENTS PALMILLA, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL MANAGEMENT SERVICES, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL DEVELOPMENT SERVICES, INC.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________

                                                     KERZNER INTERNATIONAL DEVELOPMENT SERVICES MEXICO, S. DE
                                                     R.L. DE C.V.


                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________








                                                     EXHIBIT B to Third Amendment to
                                                     Fourth Amended and Restated Credit Agreement


                                                 CONSENT OF LENDER

         Reference is hereby made to the Third Amendment to Fourth Amended and Restated  Credit  Agreement dated as
of May 15, 2003 among KERZNER  INTERNATIONAL  LIMITED,  a corporation  organized under the laws of The Commonwealth
of the Bahamas ("KIL"),  KERZNER  INTERNATIONAL NORTH AMERICA,  INC., a corporation organized under the laws of the
State of Delaware ("KINA"),  KERZNER  INTERNATIONAL  BAHAMAS LIMITED, a corporation organized under the laws of The
Commonwealth  of the Bahamas  ("KIBL";  KIL, KINA and KIBL are each  individually  referred to as a "Borrower"  and
collectively  referred to as the  "Borrowers"),  the financial  institutions  as are or may become  parties  hereto
(collectively  referred to as the  "Lenders"),  CANADIAN  IMPERIAL BANK OF COMMERCE,  acting through one or more of
its agencies,  branches or affiliates ("CIBC"), as the administrative agent (in such capacity, the "Administrative
Agent").

         The  undersigned  Lender  hereby  consents to the  execution  and  delivery of the Third  Amendment to the
Fourth Amended and Restated Credit Agreement by the Administrative  Agent on its behalf,  substantially in the form
of the most recent draft thereof presented to the undersigned Lender.

Dated:  ____________, 2003




                                                     ____________________________________________
                                                     [Name of Institution]



                                                     By:_________________________________________
                                                     Name:_______________________________________
                                                     Title:______________________________________







                                                   SCHEDULE III

                                                 ATTACHMENT NO. 2
                                            BORROWING BASE CERTIFICATE
                                    [The Fiscal Year Ending December 31, 2002]


                                                  Quarter Ended   Quarter Ended     Quarter Ended       Quarter Ended    Previous Four
                                                 March 31, 2002   June 30, 2002  September 31, 2002   December 31, 2002     Fiscal
                                                                                                                            Quarters

Paradise Island "All Risks" Insured Value (A)                                                                            $
                                                                                                                         -

Paradise Island Real Estate (B)                                                                                          $
                                                                                                                         -

Mohegan Sun Contract Net Present Value at                                                                                $
Maturity of Credit Facility (C)                                                                                          -

Management Contracts:
EBITDA Derived From Management Contracts of     $                 $              $                   $                   $
Borrowers and Significant Subsidiaries          -                 -              -                   -                   -
EBITDA Multiple                                                                                                                           6.0x
     Valuation (D)                                                                                                       $
                                                                                                                         -

Cost Basis of Investments in Luxury Resorts:
(1)
Palmilla                                        $                 $              $                   $                   $
                                                -                 -              -                   -                   -
Other Investments
                                                                  -              -                   -                   -
Other Investments
                                                -                 -              -                   -                   -
     Valuation (E)                              $                 $              $                   $                   $
                                                -                 -              -                   -                   -

(1) Cost basis of investment in Palmilla and other future investments made after the effective date of the Third Amendment.

Maximum Borrowing Base (A + B + C + D +E)                                                                                $                      -

Credit Facility Outstandings Plus Letters of Credit(F)                                                                   $


Borrowing Base Availability (A + B + C + D + E -F)                                                                       $                      -

EX-4

                                                                                    EXHIBIT 4.19


                                            OFFICE LEASE AGREEMENT













                                            ROYAL PALM I AT SOUTHPOINTE
                                            1000 South Pine Island Road
                                             Plantation, Florida 33324





















TENANT:           SUN INTERNATIONAL NORTH AMERICA, INC.

SUITE: 620, 700 and 800    SQUARE FEET: 65,000 Square Feet of Net Rentable Area

TERM: Fifteen (15) Years

LEASE EXECUTION DATE:

LEASE COMMENCEMENT DATE:

RENTAL COMMENCEMENT DATE:








                                                    LEASE INDEX

NUMBER            ITEM                                                                                         PAGE

1.                DEFINITIONS.....................................................................................1
2.                GRANT...........................................................................................3
3.                LEASE TERM......................................................................................3
4.                USE.............................................................................................3
5.                BASE RENTAL.....................................................................................4
6.                SERVICES TO BE FURNISHED BY LANDLORD............................................................4
7.                IMPROVEMENTS TO BE MADE BY LANDLORD.............................................................5
8.                GRAPHICS........................................................................................5
9.                CARE OF THE PREMISES BY TENANT..................................................................6
10.               REPAIRS AND ALTERATIONS BY TENANT...............................................................6
11.               USE OF ELECTRICAL SERVICES BY TENANT............................................................7
12.               ELECTRIC CURRENT AND ACCESS RIGHTS FOR CABLING COMMUNICATIONS EQUIPMENT.........................7
13.               PARKING.........................................................................................9
14.               LAWS, REGULATIONS AND RULES.....................................................................9
15.               ENTRY BY LANDLORD...............................................................................9
16.               ASSIGNMENT AND SUBLETTING......................................................................10
17.               MECHANIC'S LIENS...............................................................................11
18.               INSURANCE......................................................................................11
19.               ASSUMPTION OF RISK.............................................................................13
20.               CASUALTY DAMAGE................................................................................13
21.               CONDEMNATION...................................................................................15
22.               DAMAGES FROM CERTAIN CAUSES....................................................................15
23.               EVENTS OF DEFAULT/REMEDIES.....................................................................15
24.               OPERATING EXPENSES.............................................................................17
25.               PEACEFUL ENJOYMENT.............................................................................22
26.               RELOCATION.....................................................................................22
27.               HOLDING OVER...................................................................................22
28.               SUBORDINATION TO MORTGAGE......................................................................22
29.               LANDLORD'S LIEN................................................................................23
30.               ATTORNEYS' FEES................................................................................23
31.               NO IMPLIED WAIVER..............................................................................23
32.               PERSONAL LIABILITY.............................................................................23
33.               SECURITY DEPOSIT...............................................................................23
34.               FORCE MAJEURE..................................................................................24
35.               RELATIONSHIP OF PARTIES........................................................................24
36.               HAZARDOUS MATERIAL.............................................................................24
37.               RADON..........................................................................................25
38.               LIGHT AND VIEW.................................................................................25
39.               MISCELLANEOUS..................................................................................25
40.               WAIVER BY TENANT...............................................................................29
                  SIGNATURE PAGE.................................................................................30
                  LEGAL DESCRIPTION                                                          EXHIBIT "A"
                  FLOOR PLAN                                                                 EXHIBIT "B"
                  ANNUAL RENT ADJUSTMENT                                                     EXHIBIT "C"
                  WORK LETTER AGREEMENT FOR INITIAL PREMISES                                 EXHIBIT "D-1"
                  WORK LETTER AGREEMENT (SUBSEQUENT PREMISES)EXHIBIT "D-2"
                  RULES AND REGULATIONS                                                      EXHIBIT "E"
                  CONSTRUCTION RULES AND REGULATIONS                                         EXHIBIT "F"
                  OPTION TO RENEW                                                            EXHIBIT "G"
                  JANITORIAL SPECIFICATIONS                                                  EXHIBIT "H"
                  COMMENCEMENT DATE AGREEMENT -
                  INITIAL PREMISES                                                           RIDER #1-A
                  COMMENCEMENT DATE AGREEMENT-
                  SUBSEQUENT PREMISES                                                        RIDER #1-B
                  RIGHT OF FIRST OFFER                                                       RIDER #2
                  REIMBURSEMENT AGREEMENT EXISTING LEASE                                     RIDER #3
                  FORM OF LETTER OF CREDIT                                                   RIDER#4






                                              OFFICE LEASE AGREEMENT

         THIS  OFFICE   LEASE   AGREEMENT   (the   "Lease"),   is  made  and  entered  into  on  the  ____  day  of
__________________,  2002,  between TEACHERS  INSURANCE AND ANNUITY  ASSOCIATION OF AMERICA, a New York corporation
("Landlord"),  and SUN INTERNATIONAL NORTH AMERICA,  INC., a corporate entity organized under the laws of the State
of Delaware ("Tenant").

                                                  1. DEFINITIONS.

1.1      "Building"  means the office  building  known as the Tower at Royal Palm I and related  parking deck known
located at 1000 South Pine Island  Road,  Plantation,  Florida  33324.  The Net  Rentable  Area in the  Building is
stipulated by Landlord and Tenant to be 217,400 square feet.

1.2      "Arcade  Building"  means the  adjacent  building to the  Building.  The Net  Rentable  Area of the Arcade
Building is 22,908 square feet.

1.3      "Building  Project"  means the land  described  in Exhibit  "A" hereto  and the  improvements  constructed
thereon  including  the  Building,  the Common Areas and  Exterior  Common  Areas,  and the Arcade at Royal Palm I,
having and address of 950 South Pine Island Road,  Plantation,  Florida 33324,  and the parking  structure  serving
the Building and the Arcade Building.

1.4      "Premises"  means the suites of offices known as Suite 620,  Suite 700 (which is the entire  seventh floor
of the  Building),  and Suite 800 (which is the entire  eighth  floor of the  Building) . The Premises are depicted
and outlined on the floor plan  attached as Exhibit "B".  The Premises are  stipulated  for all purposes to contain
65,000  square  feet of "Net  Rentable  Area"  (as  defined  below).  The  Premises  consist  of both the  "Initial
Premises",  namely Suite 700 and Suite 800,  stipulated to consist of 49,677 square feet of Net Rentable  Area, and
the "Subsequent  Premises",  namely Suite 620,  stipulated to consist of 15,323 square feet of Net Rentable Area on
the sixth floor of the Building,  further depicted on Exhibit "B".  Premises also means subsequent  expansions,  if
any,  under the terms of this Lease,  including  such  expansions as may be effected  under Tenant's Right of First
Offer.

1.5      "Base  Rental" or "Base Rent"  means the sum of the  amounts  set forth in Exhibit "C" hereto,  plus sales
tax  thereon,  due without  notice or demand on the first day of each  calendar  month during the Lease Term as set
forth therein.  In the event that the first month of the Lease Term is a partial  calendar  month,  then Additional
Rent,  if any, for such month shall be due on the  Commencement  Date,  and shall be prorated to reflect the number
of days  included  in such  partial  month.  The dates on which the  amount of Base Rent set forth in  Exhibit  "C"
hereto shall be adjusted shall occur,  if the  Commencement  Date occurs on the first day of the month,  also occur
on the first day of the month;  if the  Commencement  Date  occurs on a date other than the first day of the month,
then such adjustment dates shall annually occur on the first day of the month following the Commencement Date.

1.6      "Additional  Rental" or "Additional Rent" means Tenant's  Proportionate  Share of Operating  Expenses,  as
further  defined and  described  in Section 24 hereof.  "Additional  Rent" or  "Additional  Rental"  also refers to
Tenant's other monetary  obligations under this Lease including,  without limitation,  those referred to in Section
10.2 Section 17.2, and Section 18 hereof.  Between December 1, 2002 and the October 31, 2005,  Tenant shall pay its
Proportionate  Share of  Operating  Expenses to the extent that  Landlord's  actual  expenses  exceed the amount of
$8.00 per square foot per year. From and after the  thirty-seventh  month following the Commencement  Date,  Tenant
shall pay its  Proportionate  Amount of Operating  Costs,  and the "expense stop" of $8.00 per square foot per year
shall no longer be applicable.

1.7      "Parking  Spaces"  means,  with  respect to the  Initial  Premises,  250 spaces in the  parking  structure
adjacent  to the  Building  under the terms of Section 13  hereof.  Of such  parking  spaces,  235 spaces  shall be
allocated  and  unreserved  spaces,  which shall not be subject to an  additional  charge,  and 15 spaces  shall be
parking  spaces in the reserved area of the parking  structure at no additional  charge.  "Parking  Spaces"  means,
with respect to the  Subsequent  Premises,  10 spaces  allocated  and  unreserved  spaces in the parking  structure
adjacent  to the  Building,  and 65  additional  allocated  and  unreserved  parking  spaces  either in the parking
structure  adjacent to the  Building or in another  surface  area  adjacent to the  Building  Project or within the
Building  Project,  and to be specified by Landlord prior to the  commencement  of Tenant's lease of the Subsequent
Premises  (and  subject to change by  Landlord  to another  area  adjacent  to the  Building  Project or within the
Building  Project from time to time  thereafter).  Notwithstanding  anything  herein to the contrary,  the distance
between the Building's  main entrance and any of said 65 spaces shall not exceed the maximum  distance  between the
Building's main entrance and any parking space within the Building Project.

1.8      "Tenant's  Proportionate  Share" of the  Building  and the  Arcade  Building,  which  together  are hereby
stipulated to contain  240,308 square feet of Net Rentable  Area, is 27.0486  percent,  and has been  calculated as
set forth in Section 24.1(3) hereof.  Tenant's  Proportionate  Share for the Initial  Premises is 20.6722  percent.
Tenant's Proportionate Share of the Subsequent Premises is 6.3764 percent.

1.9      "Commencement  Date" means,  with respect to Tenant's Initial  Premises,  the earlier of (i) the date that
Tenant  substantially  completes the work to be performed under Exhibit "D-1" hereto and actually occupies Tenant's
Initial  Premises for the purpose of the conduct of its  business,  or (ii) December 1, 2002.  "Commencement  Date"
means, with respect to Tenant's  Subsequent  Premises (as defined in Section 1.4), the earlier of (i) the date that
Tenant  substantially  completes  the work to be  performed  by Tenant  under  Exhibit  "D-2"  hereto and  actually
occupies the  Subsequent  Premises,  as set forth below,  for the purpose of the conduct of its  business;  or (ii)
ninety (90) days following  Landlord's  tender of delivery to Tenant of the Subsequent  Premises for the purpose of
Tenant's  construction  of the Tenant  Improvements  to be performed  under  Exhibit "D" hereto.  In the event that
Landlord  does not receive an earlier  request  from Tenant to tender  delivery of the  Subsequent  Premises,  then
Landlord  shall tender such delivery of possession to Tenant on January 1, 2004 and the  Commencement  Date for the
Subsequent  Premises  shall  occur not later than  April 1, 2004.  In the event  that  Tenant  desires to  commence
construction of the Tenant  Improvements  for the Subsequent  Premises prior to January 1, 2004, then it shall give
Landlord  irrevocable  notice at least one hundred twenty (120) days prior to the date it requires such delivery of
possession,  and in such event,  Landlord shall tender  delivery of the  Subsequent  Premises to Tenant on the date
set forth in such Tenant notice.

1.10     "Lease  Term"  means  (i) the term  commencing  on the  Commencement  Date for the  Initial  Premises  and
continuing  until the last day of the month  that is one  hundred  eighty  (180)  months  thereafter,  and (ii) any
Renewal Terms.  Landlord shall tender delivery of possession of the Initial Premises to Tenant,  for the purpose of
Tenant's  commencement  of the work to be performed  under  Exhibit D-1 hereto,  on the later of the date that this
Lease has been executed by both Landlord and Tenant,  or the date that Tenant  tenders to Landlord  evidence of the
insurance  that it is required to provide under the terms of this Lease.  Between the date that Landlord so tenders
delivery of  possession of the Initial  Premises and the  Commencement  Date,  Tenant shall be bound by each of its
covenants and obligations under this Lease, except only the obligation to pay Base Rent or Additional Rent.

1.11     "Lease Payment" and "Security Deposit"

(1)      "Lease  Payment"  means the sum of  $3,740,000.00  to be paid by Tenant to  Landlord  on or before June 1,
2002;  such  payment is in  consideration  of  Landlord's  agreement  to enter into this Lease  under the terms and
conditions  hereof.  The Lease Payment shall be deemed earned by Landlord upon Landlord's  execution of this Lease,
and is not prepaid rent or other prepaid charges under this Lease.

(2)       "Security  Deposit"  means the sum of  $260,000.00,  to be deposited by Tenant with Landlord on or before
June 1, 2002, in the form of the Letter of Credit attached hereto as Rider #4.

1.12     "Common  Areas" means those areas devoted to corridors,  elevator  foyers,  restrooms,  mechanical  rooms,
lobbies,  janitorial  closets,  electrical  and  telephone  closets,  vending  areas and other  similar  facilities
provided for the common use or benefit of tenants generally and/or the public.

1.13     "Service Areas" means those areas within the outside walls used for elevator  mechanical  rooms,  building
stairs, fire towers,  elevator shafts,  flues, vents, stacks, pipe shafts and vertical ducts and other penetrations
(but shall not include any such areas for the exclusive use of a particular tenant).

1.14     "Net  Rentable  Area" of the  Premises  shall mean the gross area  within the inside  surface of the outer
glass of the exterior  walls,  to the  mid-point of any demising  walls  separating  portions of the Premises  from
those of  adjacent  tenants  and to the  finished  side of Common  Area and  Service  Areas  walls  separating  the
premises.  Net Rentable Area shall not include any Service Areas,  but shall include  Tenant's pro rata part of the
Common Areas within the  Building.  Space in the  Building  occupied  under  agreement  with  Landlord by a Service
Provider  (as defined  hereinafter)  for the  operation  of  telecommunications  equipment  shall not alter its Net
Rentable Area of the Building.

1.15     "Exterior  Common  Areas"  means the portion of the  Building  Project  which are not  located  within the
Building or the Arcade  Building and which are provided and  maintained  for the common use and benefit of Landlord
and tenants of the  Building  and the Arcade  Building  generally  and the  employees,  invitees  and  licensees of
Landlord and such  tenants'  including  without  limitation,  all parking  areas,  enclosed or  otherwise,  and all
streets, sidewalks and landscaped areas.

1.16     "Building Standard" means the quality,  amount, level of performance or standards,  as the case may be, as
established in the Work Letter Agreement attached hereto as Exhibits "D-1" and "D-2".

1.17     "Building  Standard  Improvements"  means those improvements  (including the "Shell  Improvements" and the
"Allowance Items" as defined in Exhibits "D-1" and "D-2") to the Premises.

1.18     "Building Grade" means the type, brand and/or quality of materials  Landlord  designates from time to time
to be the minimum  quality to be used in the  Building or the  exclusive  type,  grade or quality of material to be
used in the Building.

2.       GRANT.  Subject to and upon the terms herein set forth,  Landlord  leases to Tenant and Tenant leases from
Landlord the Premises.

3.       LEASE TERM.

3.1      This Lease Term shall commence on the  Commencement  Date and continue in full force and effect during the
Lease Term,  unless this Lease is sooner  terminated  or extended to a later date under any other term or provision
of this  Lease.  Notwithstanding  the  foregoing,  however,  Landlord  and  Tenant  shall  each be  bound  by their
obligations  hereunder (except for Tenant's  obligation to pay rent, which shall occur on the Commencement Date for
such portion of the Premises) from the date of this Lease.  Landlord shall not, however,  have any obligations with
respect to the provision of janitorial  services to the Premises prior to the Commencement  Date for the applicable
portion of the Premises.

4.       USE.

4.1      Tenant and those subsidiaries  covered by Tenant's insurance  submitted to Landlord under the terms hereof
will use and occupy the  Premises  only for  general  office use  consistent  with a first class  office  building,
including sales and marketing offices, a reservation call center, finance,  information technology,  administrative
offices and any other  general  office use  provided  that  Tenant's  call center  shall be located on a floor that
Tenant occupies in full (e.g., Suite 700 or Suite 800 of the Premises.

4.2      Notwithstanding  the  provisions  of  Section  4.1,  Tenant  agrees  not to use or  permit  the use of the
Premises  (i) for any  purpose  inconsistent  with the use  specified  in Section  4.1 or (ii) for any use which is
illegal,  dangerous to life,  limb or property or which,  in  Landlord's  sole but  reasonable  opinion,  creates a
nuisance or which,  because of any special  insurance  rating tied to Tenant that is not  applicable to the balance
of the Building,  would increase the cost of insurance coverage with respect to the Building.  Notwithstanding  the
foregoing,  however,  Tenant  shall  bear the  incremental  additional  cost tied to such  insurance  rating and be
permitted to engage in the associated use so long as such use is otherwise consistent with Section 4.1 hereof.

5.       BASE RENTAL.

5.1      Tenant promises to pay and shall pay to Landlord,  during the Lease Term,  without any setoff or deduction
whatsoever,  the Base Rental and the  Additional  Rental,  all of which are sometimes  herein  collectively  called
"rent".

5.2      The annual Base  Rental,  for each lease year or portion  thereof  during the Lease Term,  then in effect,
shall be due and payable in twelve  (12) equal  installments  on the first day of each  calendar  month  during the
Lease Term and any  extensions  or renewals  hereof.  Tenant  agrees to pay all such sums in  advance,  and without
demand.

5.3      Tenant  shall pay such Base  Rental to  Landlord  at  Landlord's  address  provided  herein (or such other
address  as may be  designated  by  Landlord  in  writing  from time to time).  All rent shall be payable in lawful
money of the United  States of America,  drawn on a financial  institution  with an office in the United  States of
America.

5.4      If the Lease Term  commences on a day other than the first day of a month,  or  terminates  on a day other
than the last day of a month,  then the  installments  of Base Rental for such month or months  shall be  prorated,
based on the number of days in such month.

5.5      All  installments  of rent not paid  within  three  business  days of when due shall bear  interest at the
maximum  lawful  contract  rate in the State of  Florida  until  paid but Tenant  shall be  permitted  to make such
payments  within five business days of the due date up to two times in each  calendar  year before  interest  shall
become due.

5.6      The Base Rental shall be adjusted  upward in  accordance  with the  provisions  of Exhibit "C" annually on
the first day of the month following the third anniversary of the Commencement Date.

5.7      Tenant  shall pay all sales and use taxes  levied or  assessed  against all rent  payments  due under this
Lease simultaneously with each rent payment required.

6.       SERVICES TO BE FURNISHED BY LANDLORD.

6.1      Landlord agrees to furnish Tenant the following services (herein called "defined services"):

(1)      Cold water at those points of supply provided for general use of tenants in the Building.

(2)      Central  heat and air  conditioning  at such  temperatures  and in such  amounts are  standard for a first
class office  building in  Plantation,  Florida but not less than  required by  governmental  authority;  provided,
however,  heating and air  conditioning  service at times other than for "Normal  Business  Hours" for the Building
shall be furnished only upon the written  request of Tenant  delivered to Landlord in accordance  with the Building
Rules.  Tenant  shall bear the entire  cost of such  additional  service as such costs are  determined  by Landlord
from time to time. After hours air conditioning  shall be available,  for the first year following the Commencement
Date,  at the hourly rate of $25.00 per floor (or portion  thereof),  and such rate shall not increase by more than
the rate  increases  actually paid by Landlord for  electricity.  Normal  Business  Hours for the Building shall be
from 8:00 a.m. to 6:00 p.m.  Monday  through  Friday,  and  Saturdays  from 9:00 a.m. to 1:00 p.m.,  except for the
following  holidays and the business day on which they are celebrated:  New Year's Day, Memorial Day,  Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day.

(3)      Landlord  shall  maintain  the Common  Areas of the  Building  and the  Building  Project and the Exterior
Common Areas,  including without limitation lobbies,  stairs,  elevators,  corridors and restrooms,  the windows in
the Building,  the mechanical,  plumbing and electrical  equipment  serving the Building,  the roof, roof membrane,
exterior  walls,  parking and paved areas,  and the structure  itself in reasonably  good order and condition for a
Class A office building  located in the  Plantation,  Florida  market,  except for damage  occasioned by the act of
Tenant,  which damage shall be repaired by Landlord at Tenant's  expense,  but Tenant's  liability shall be limited
to Landlord's out of pocket costs after considering the application of insurance  proceeds,  if any,  available for
such work.

(4)      Janitor  service  including  those  services  typical to a first class office  Building in the area of the
Building,  Mondays through Fridays,  exclusive of normal business  holidays  provided,  however,  if Tenant's floor
covering  or  other  improvements  require  special  treatment,  Tenant  shall  pay the  additional  cleaning  cost
attributable  thereto as  additional  rent upon  presentation  of a statement  therefore  by  Landlord.  Landlord's
contract for janitorial  services in the Building shall include  substantially  those services set forth in Exhibit
"H" hereto.

(5)      Subject to the  provisions of Section 11,  provide all  electrical  current  required by Tenant in its use
and occupancy of the Premises.

(6)      All Building  Standard  fluorescent bulb replacement in the Premises and fluorescent and incandescent bulb
replacement in the Common Areas and Service Areas.

(7)      Controlled  access to the Building  during other than Normal Business Hours shall be provided in such form
as Landlord deems appropriate and may, at Landlord's  election,  include access only to person's holding authorized
card keys.  Landlord,  however,  shall have no liability to Tenant,  its employees,  agents,  invitees or licensees
for losses due to theft or  burglary,  or for damages  done by  unauthorized  persons on the  Premises  and neither
shall Landlord be required to insure against any such losses.  Tenant shall cooperate  fully in Landlord's  efforts
to maintain safety  measures in the building and shall follow all regulations  promulgated by Landlord with respect
thereto.  Tenant  shall have access to the  Premises,  the  Building  and the parking  structure  outside of Normal
Business  Hours seven days per week,  twenty-four  hours per day, under the terms and  requirements  established in
the Rules and Regulations.

(8)      Landlord  shall cause manned food service to be provided in the lobby of the Building  beginning not later
than nine (9) months following the Commencement Date.

6.2      The failure by  Landlord to any extent to furnish,  or the  interruption  or  termination  of, the defined
services in whole or in part,  resulting  from causes beyond the  reasonable  control of Landlord  shall not render
Landlord liable in any respect nor be construed as an eviction  (constructive or otherwise) of Tenant,  nor work an
offset or abatement of rent,  nor relieve  Tenant from the  obligation to fulfill any covenant or agreement of this
Lease.  Landlord  agrees that it shall take  commercially  reasonable and diligent steps to seek the restoration of
such defined services in the event of their interruption.

6.3      Should any of the equipment or machinery used in the provision of defined services,  for any cause,  cease
to  function  properly,  Tenant  shall  have no claim for offset or  abatement  of rent or damages on account of an
interruption  in  service  occasioned  thereby  or  resulting  therefrom.   Landlord  agrees  that  it  shall  take
commercially reasonable and diligent steps to seek the restoration to service of such equipment or machinery.

6.4       Except  as  otherwise  expressly  provided  herein,  Landlord  shall  not  be  required  to  perform  any
maintenance on or make any repairs to the Premises.

7.       IMPROVEMENTS TO BE MADE BY LANDLORD.  All  installations  and  improvements,  if any,  hereafter placed on
the Premises by the Landlord at Tenant's  request shall be for Tenant's  account and at Tenant's  cost,  which cost
shall be payable by Tenant to Landlord  as  Additional  Rent.  Tenant  shall be  required to pay ad valorem  taxes,
personal property taxes, and increased insurance thereon or attributable thereto.

8.       GRAPHICS.  Landlord  shall  provide and  install,  at Tenant's  cost (but  subject to offset by the Tenant
Improvement  Allowance,  if any, as defined in Exhibit  "D-1" and Exhibit "D-2"  hereto),  one sign adjacent to the
entry door to the  Premises.  All letters and numerals  shall be in the  standard  graphics for the Building and no
others shall be used or permitted on the Premises  without  Landlord's  prior written  consent,  which shall not be
unreasonably  withheld for interior  signs that are designed and  constructed  in a manner  appropriate  to a first
class office building and are consistent with the Building's  signage  program.  Landlord will also cause Tenant to
be listed on the lobby directory.

9.       CARE OF THE  PREMISES  BY TENANT.  Tenant  shall  maintain  the  Premises  in good  repair and in a clean,
attractive,  first-class  condition.  Tenant  shall not commit or allow any waste to be committed on any portion of
the Premises.  At the expiration or earlier  termination of this Lease,  subject to the terms of Section 20 hereof,
Tenant  shall  deliver  the  Premises to Landlord in as good  condition  as at the date of the  Commencement  Date,
ordinary wear and use excepted.

10.      REPAIRS AND ALTERATIONS BY TENANT.

10.1     Tenant  shall,  at Tenant's  own cost and  expense,  repair any damage  done to the  Premises by Tenant or
those acting by,  through or under  Tenant,  or any part  thereof,  including  replacement  of damaged  portions or
items, caused by Tenant or Tenant's agents,  employees,  invitees, or visitors,  and Tenant covenants and agrees to
make all such  repairs as may be  required to restore  the  Premises  to as good a condition  as it was in prior to
such damage by Tenant or those acting by, through or under Tenant.  In addition,  Tenant shall reimburse  Landlord,
within  ten (10)  business  days  following  Landlord's  tender of an  invoice  from time to time,  for  Landlord's
commercially  reasonable  out of pocket  expenditures  that are not  covered  by  insurance,  including  Landlord's
insurance  deductible,  in connection with any damage to the Building Project,  or any part thereof,  in connection
with Tenant's  actions under this Section 10.1, by Tenant or Tenant's agents,  employees or invitees,  but Tenant's
liability  under this  sentence  shall not  exceed the limits of the  liability  insurance  policy  required  to be
carried by Tenant under the terms of this Lease.

10.2     All such work or repairs by Tenant shall be effected in compliance  with all  applicable  laws;  provided,
however,  if  Tenant  fails  to make  such  repairs  or  replacements  promptly  within a  period  of time  that is
commercially  reasonable  for such repair or  replacement,  Landlord  may, at its  option,  and after first  giving
notice  and ten (10) days to comply  (but no such  notice  shall be  required  in  emergencies),  make  repairs  or
replacements,  and Tenant shall pay the  commercially  reasonable cost thereof to the Landlord within ten (10) days
of Landlord's demand therefor, as Additional Rent.

10.3     Tenant agrees with Landlord not to make or allow to be made any  alterations to the Premises,  install any
vending  machines on the  Premises,  or place signs on the Premises  which are visible  from outside the  Premises,
without first  obtaining the prior written  consent of Landlord in each such  instance,  which consent may be given
on such conditions as Landlord may reasonably elect.  Notwithstanding  the foregoing,  however,  Tenant may install
up to five  (5)  vending  machines,  for the use of its own  employees  and  invitees,  in an area of the  Premises
approved  in writing by  Landlord.  Landlord  shall  reasonably  grant its  consent to  Tenant's  proposed  changes
provided  that  Tenant's  proposed  alterations  are  consistent  in type and  character  with a first class office
building in the  location  of the  Building,  and do not have any adverse  impact on the  Building's  structure  or
systems.

10.4     Any and all  alterations  to the Premises  shall become the property of Landlord upon  termination of this
Lease  (except  for  movable  equipment  or  furniture  owned by Tenant  and except  for trade  fixtures  and other
furnishings  that are not in the nature of tenant  improvements).  Landlord may,  nonetheless,  by notice to Tenant
given at the time that Landlord  consents to such  alteration  under Section 10.3 hereof,  require Tenant to remove
any and all  fixtures,  equipment  and other  improvements  installed  on the  Premises and restore the Premises to
Building Standard,  but Tenant shall not be required to remove the Tenant Improvements  constructed under the terms
of Exhibits "D-1" and "D-2" hereto,  nor shall Tenant be required to remove subsequent  Alterations unless Landlord
imposed the  requirement  of such removal at the time that it consented to the subject  Alteration.  If Landlord so
requires and Tenant fails to remove such  improvements,  Landlord may remove such  improvements  at Tenant's  cost,
and Tenant shall pay Landlord  within ten (10) business  days of Landlord's  written  demand,  as Additional  Rent,
the cost of restoring the Premises to Building Standard.

10.5     Tenant shall assure that any  contractors  performing any  alterations or  improvements  to benefit Tenant
abide by the  Construction  Rules and  Regulations  attached  hereto as Exhibit "F", and Tenant shall be liable for
the  noncompliance  of all such work by  contractors  engaged  by,  through  and under  Tenant  (and not engaged by
Landlord).

10.6     It shall,  subject to  Tenant's  obligations  in this Lease for  damage  by,  through or under  Tenant and
subject to the  inclusion  of such costs in  Operating  Expenses,  be  Landlord's  responsibility  to maintain  the
Building's  Common Areas,  the Exterior Common Areas,  and the Building's  structure and systems in good repair and
working order and to make repairs,  replacements  and restorations to the Building which are required in its normal
operation and use,  including  without  limitation  the  structure,  mechanical  plumbing and  electrical  systems,
walkways,  paths,  landscaping,  exterior  walls and roof,  footings and  foundation,  equipment  and other utility
facilities that serve more than one tenant, and other exterior improvements to the Building.

11.      USE OF ELECTRICAL  SERVICES BY TENANT.  Tenant's use of electrical  services  furnished by Landlord  shall
not exceed, either in voltage,  rated capacity,  or overall load of the Building,  namely two watts per square foot
at 120 volts and 3.5 watts per square foot at 277 volts for  lighting.  If Tenant shall  request that it be allowed
to consume  electrical  services in excess of the foregoing,  Landlord may consent upon such conditions as Landlord
reasonably  elects  (including the  requirement  that  submeters be installed at Tenant's  expense or that capacity
upgrades be performed) and Tenant shall pay all costs and expenses thereby  incurred,  including but not limited to
the cost of  electricity  and the cost of  upgrading  the HVAC system to handle the heat caused by such  additional
usage.  Exhibits  "D-1" and "D-2" hereto  address the  installation  by Tenant of a back-up  generator to serve the
Premises  and the  installation  of  additional  electrical  services  sufficient  to  serve  Tenant's  information
technology, data center operation, and other permitted uses in the Premises.

12.      ELECTRIC CURRENT AND ACCESS RIGHTS FOR CABLING COMMUNICATIONS EQUIPMENT.

12.1     Landlord  hereby  grants to  Tenant  non-exclusive  access to the  Building's  pathways,  shafts,  risers,
raceways,  conduits,  available  telephone  closets,  service  areas or utility  connections  and entries  into and
through  the  Building  owned or under the control of  Landlord  (the  "Communications  Spaces and  Pathways"),  to
install such fiber optic or other wiring (the "Telecom  Cabling")  therein as may be necessary for Tenant to obtain
telecommunications  services  at the  Premises  (subject to such rules and  regulations  as may be  promulgated  by
Landlord from time to time and to the extent  specifically  approved by Landlord in the Plans and Specifications as
set  forth in  Subsection  12.4  below,  and  subject  to  Tenant's  independent  verification  of the space in the
Communications  Spaces and Pathways then available in the Building),  and under service agreements (each a "Service
Agreement")  with  telecommunications  service  providers  (each a "Service  Provider")  provided that such Telecom
Cabling (i) does not adversely  affect the structure or safety of the Building;  (ii) does not adversely affect the
electrical,  mechanical or any other system of the Building or the  functioning  thereof;  (iii) does not interfere
with the  operation of the Building or the  provision of services or utilities to Tenant or any other tenant of the
Building;  (iv) is provided  pursuant to a written  agreement  approved by Landlord  (which  approval  shall not be
unreasonably,  withheld,  conditioned  or delayed,  provided that it is  consistent  with  Landlord's  policies and
procedures for the Building);  and (v) is for Tenant's own use, and shall not be subleased,  sublicensed or sold by
Tenant  unless  under a  sublease  of the  Premises  or  assignment  of this  Lease  consented  to by  Landlord  in
accordance  with the  requirements  of  Section 16  hereof.  In no event  shall the  percentage  of the  Building's
Communications  Spaces and Pathways exceed by more than ten percent (10%) Tenant's  Proportionate Share. Tenant may
utilize up to such amount as of the  Commencement  Date and shall not be required to phase-in such use based on the
Commencement  Dates for the Initial Premises and the Subsequent  Premises.  Landlord will, within five (5) business
days following  Tenant's  submittal to Landlord of its  specifications  for copper wiring and T1 and fiber cabling,
give Tenant  notice of whether it  believes  that the  Communications  Spaces and  Pathways  can  accommodate  such
requirements.

12.2     Tenant  expressly  acknowledges  and agrees that (i) the Service  Agreement  shall contain  provisions for
mandatory  expiration/termination  of the Service  Agreement  at the end of the term of this Lease,  shall bind the
Service  Provider to abide by the contractor  rules and regulations  promulgated by Landlord from time to time (and
Landlord shall make commercially  reasonable  efforts to uniformly  enforce such rules and regulations),  and shall
require  the Service  Provider  to give  Landlord a  certificate  of  insurance  naming  Landlord as an  additional
insured,  and shall have a combined  single limit amount of not less than One Million  Dollars  ($1,000,000.00)  in
primary coverage and Three Million Dollars  ($3,000,000.00)  in excess liability  coverage for injury to one person
in one  accident,  occurrence or casualty,  or for injuries to more than one person in one accident,  occurrence or
casualty  (ii)  Landlord  is not a party to and shall not be a party to  Tenant's  Service  Agreements  and  Tenant
waives and  releases  Landlord  from any  obligation  or liability  relating  thereto,  and (iii) any  cessation or
interruption  in the  provision of Services by the Service  Provider or failure of the Service  Provider to perform
its  obligations  under the Service  Agreement does not constitute a default or  constructive  eviction by Landlord
under this Lease or entitle  Tenant to an abatement of rent.  Tenant hereby  acknowledges  that if Tenant elects to
enter  into a Service  Agreement  with a Service  Provider  that is not  providing  Services  to any other  tenant,
licensee  or  occupant  of the  Building,  the  Service  Provider  shall be  required to first enter into an access
agreement  with the  Landlord  and shall be  obligated  to contract  directly  with the utility  companies  for its
utility service.

12.3     Tenant shall  install and maintain the Telecom  Cabling in  compliance  with the  provisions of this Lease
concerning  Tenant  alterations or improvements,  all present and future rules and regulations of any local,  State
or Federal authority having jurisdiction with respect thereto,  including,  without limitation, the laws, rules and
regulations  of the FCC,  the  jurisdiction  in which  the  Building  is  located  and any other  governmental  and
quasi-governmental  authorities  having  appropriate  jurisdiction over the Building or Tenant's use of the Telecom
Cabling.
12.4     Tenant shall obtain all permits,  licenses,  variances,  authorizations and approvals that may be required
in order to install and maintain such Telecom Cabling,  Tenant shall, at its sole cost and expense,  be responsible
for the insurance and  maintenance of the Telecom Cabling and its compliance  with all applicable  laws,  rules and
regulations.  Tenant  shall  indemnify  and save  Landlord  harmless  from and  against  any and all  loss,  costs,
liabilities,  damages,  judgments,  and expenses (including  reasonable  attorneys fees) arising in connection with
the installation, operation, maintenance and removal of the Telecom Cabling.

12.5     Prior to  installation  of the Telecom  Cabling and any  modifications  or changes  thereto,  Tenant shall
submit in writing to Landlord  all plans and  specifications  for the Telecom  Cabling for  Landlord's  consent and
shall  commence  work  only  after  having  obtained  Landlord's  written  consent  (which  consent  shall  not  be
unreasonably,  withheld,  conditioned or delayed). The materials,  exact location and method of installation of the
Telecom  Cabling,  and the  location  of and method of  identifying  and marking  all cables and  equipment  in the
Communications  Spaces and Pathways are subject to the prior written  consent of Landlord  (which consent shall not
be  unreasonably,  withheld,  conditioned  or  delayed).  Tenant  or its  Service  Provider  shall  be  solely  and
exclusively  for inspecting the field  conditions in the Building in conjunction  with the preparation of the Plans
and  Specifications.  Tenant's  right of access to the  Communications  Spaces and Pathways  shall be to the extent
described in the plans and specifications approved by Landlord.

12.6     Within thirty (30) days prior to the expiration or earlier  termination of this Lease,  Landlord may elect
by written  notice to Tenant to (i) retain any or all Telecom  Cabling  from the  Building,  (ii) remove any or all
such Telecom Cabling and restore the  Communications  Spaces and Pathways affected to the condition  existing prior
to  installation  of the Telecom  Cabling  (the  "Telecom  Cabling  Restoration  Work") at  Tenant's  sole cost and
expense,  or (iii)  require  Tenant to perform  the Telecom  Cabling  Restoration  Work at  Tenant's  sole cost and
expense.

(1)      If  Landlord  elects for Tenant to perform the  Telecom  Cabling  Restoration  Work,  the Telecom  Cabling
Restoration  Work shall be  performed by a licensed  contractor  previously  approved in writing by Landlord  (such
approval not to be unreasonably  withheld,  conditioned or delayed),  in a workmanlike  manner in accordance with a
previously  approved  removal plan (such  approval not to be  unreasonably  withheld,  conditioned  or delayed) and
without causing any damage or material and continuous  interference to the structures,  equipment, or operations of
Landlord  or any of its  licensees  or tenants at the  Building.  Should any  interference,  damage or  destruction
occur,  remedy  thereof shall be immediately  commenced and diligently  pursued by Tenant at Tenant's sole cost and
expense.  If Tenant fails to eliminate  any such  interference  or to make any such repair within seven (7) days of
receiving  written or oral notice of the occurrence of interference  or damage,  Landlord may perform the necessary
work at Tenants cost and expense and such amount shall be paid by Tenant,  as  Additional  Rent  hereunder,  within
thirty (30) days of Tenant's receipt of an invoice therefor.

(2)      In the event  Landlord  elects to retain the Telecom  Cabling,  Tenant  covenants that (a) Tenant shall be
the sole owner of such Telecom Cabling,  that Tenant shall have good right to surrender such Telecom  Cabling,  and
that such Telecom  Cabling shall be free of all liens and  encumbrances,  and (b) all Telecom Cabling shall be left
in good condition,  working order,  clearly marked to show Tenant's name,  address,  telephone number,  the name of
the person to contact in case of emergency,  FCC call sign,  frequency and location;  the transmissions lines shall
be identified at the bottom and top of each line.

(3)      The provisions of this Section shall survive the expiration or earlier termination of the Lease.

12.7     Except to the extent  resulting  directly  from the gross  negligence  or willful  misconduct of Landlord,
Tenant shall indemnify and save Landlord harmless from and against any and all loss, costs,  liabilities,  damages,
judgments,  and expenses,  including those arising as a result of Landlord's  negligence,  and including reasonable
attorney's fees, in connection with claims  resulting from bodily injury or death of any person,  or from damage to
any property  sustained by any person,  including  Tenant,  arising from the installation,  operation,  removal and
maintenance  of the Telecom  Cabling.  As used in this Section 12.7,  "Landlord"  refers to Teachers  Insurance and
Annuity  Association of America and its  subsidiaries,  and its successors  and/or  assigns,  but not third parties
with whom Landlord  contracts to provide  services to the Building or the Project.  Tenant  preserves its rights of
recourse against such third parties based on their negligence,  gross negligence or willful  misconduct,  including
but not limited to third parties  contracting  with Landlord to provide building and property  management  services
and janitorial services.

13.      PARKING.

13.1     During the term of this Lease,  Tenant shall have the  non-exclusive  use in common with  Landlord,  other
tenants of the Building  (or the project in which the  Building is located,  in a  multi-building  project),  their
guests and invitees,  of the  non-reserved  common  automobile  parking areas,  driveways and footways,  subject to
rules and  regulations  for the use thereof as prescribed  from time to time by Landlord.  Tenant's  employees will
not be permitted to park in the  designated  visitor  parking  area and Tenant will use all  reasonable  efforts to
adhere to this regulation.

13.2     No specific  designated  parking  spaces shall be assigned to Tenant unless  otherwise  agreed by Landlord
and Tenant in Section 1.7  hereof,  and Tenant  shall not be allowed to park in the  reserved  parking  area unless
otherwise  agreed in Section 1.7 hereof.  Landlord  shall have the right to reserve such parking spaces or areas as
it elects and condition use thereof on such terms as it elects.

13.3     The  parking  areas may be used by  Tenant's  employees,  guests  and  invitees  only when such  person is
working in the  Building,  and the parking  areas may not be used for the storage of vehicles or for the  servicing
of vehicles  (except for emergency  road service to address  issues such as dead  batteries or keys locked within a
vehicle).

14.      LAWS, REGULATIONS AND RULES.

14.1     Tenant shall comply with all  applicable  laws,  ordinances,  rules and  regulations  of any  governmental
entity, agency, or authority having jurisdiction of the Premises or Tenant's use of the Premises.

14.2     Tenant  shall  comply with the Building  Rules and  Regulations  and  Construction  Rules and  Regulations
amended by Landlord  from time to time and will cause all of its agents,  employees,  invitees  and  visitors to do
so. All changes to such rules will be furnished by Landlord to Tenant in writing.  Landlord  will use  commercially
reasonable and good faith efforts to enforce the Building Rules and Regulations,  and any amendments  thereto, in a
uniform and  non-discriminatory  fashion. Any amendments to the Rules and Regulations will not cause Tenant to make
alterations,  additions or improvements or replacements to the Premises, nor will any such amendments  unreasonably
interfere  with the normal  business use of Class A premises in Plantation,  Florida.  In the event of any conflict
between this Lease and the Rules and Regulations, then the terms of this Lease shall prevail.

15.      ENTRY BY LANDLORD.  Tenant shall permit Landlord or its agents or  representatives  to enter into and upon
any part of the Premises at all  reasonable  hours after  notification  to Tenant (and in  emergencies at all times
and  without  the  requirement  of prior  notification)  to inspect the  condition,  occupancy  or use; to show the
Premises to prospective  purchasers,  mortgagees,  tenant or insurers, or to clean or make repairs,  alterations or
additions.  Tenant  shall not be entitled to any  abatement  or reduction of rent by reason of this right of entry.
Landlord's  right to show the Premises to  prospective  tenants  shall be after  Landlord  has provided  reasonable
prior notice to Tenant and,  provided  that Tenant is not in default  hereof  beyond any  applicable  grace or cure
period, be limited to the last nine (9) months before the expiration date.  Except for emergency  access,  Landlord
shall not materially interfere with Tenant's use or occupancy of the Premises during such access.

16.      ASSIGNMENT AND SUBLETTING.

16.1     Tenant shall not assign,  sublease,  transfer,  pledge,  or encumber  this Lease or any  interest  therein
without  Landlord's  prior  written  consent.  Landlord  shall not  unreasonably  withhold  its consent to Tenant's
proposed  subtenant or assignee provided that: (i) the financial  statement of such proposed  subtenant or assignee
is  reasonably  acceptable  to Landlord;  (ii) the proposed  office use by such  proposed  assignee or subtenant is
consistent  with the general  office use  allowed by  Landlord in the  Building,  and such  proposed  subtenant  or
assignee  and its use are not subject to any  restriction  then  applicable  to the Building as a result of a lease
between  Landlord and another  tenant;  (iii)  Landlord  reasonably  determines  that the proposed  subtenant's  or
assignee's  business  reputation  is  appropriate  for a first class office  building.  Any  attempted  assignment,
sublease or other  transfer or  encumbrance  by Tenant in violation of the terms and covenants of this Section will
be void. If Tenant is a corporation  or a partnership,  the conveyance of the corporate  stock or the assignment of
such  partnership  interest,  as the case may be, shall be deemed an  assignment  for the purposes  hereof.  In the
event that Tenant  offers or  advertises  the  Premises or any portion  thereof for  subletting,  Tenant  shall not
advertise  space for sublease at a starting  base rental rate lower than  Landlord's  then current  highest  asking
base  rental  rate for other  comparable  premises in the  Building  which is then on the market for direct  lease.
Tenant may, however,  without  advertising such rate,  sublease the Premises or assign this Lease for less than the
Base Rent payable hereunder.

16.2     If Tenant shall desire  Landlord's  consent in the  subletting or  assignment,  Tenant shall give Landlord
thirty (30) days' prior  written  notice  thereof.  Such notice  shall,  in the event that Tenant is  proposing  to
assign this Lease or to sublease  substantially  all of the Premises for all of substantially  all of the remaining
Lease Term,  give  Landlord the right to recapture the portion of the Premises  subject to the proposed  assignment
or sublease by written notice to Tenant,  and in the event that Landlord elects this option to recapture,  Tenant's
obligations  under this Lease shall be deemed to have expired as of the proposed  effective  date of the assignment
or  sublease  and  confirmed  by  Landlord  in its  notice to  Tenant of its  exercise  of the  foregoing  right to
recapture.

16.3     If  Landlord  does not give  notice to Tenant of its  election  to  recapture  within the thirty  (30) day
notice period,  then  Landlord's  right to recapture  shall be deemed to be waived,  but nothing  herein  contained
shall be deemed to be a consent by Landlord to any  subletting or  assignment  unless  Landlord  delivers to Tenant
its written consent.  In the event that Landlord  deposits checks by a payor other than Tenant,  such deposit shall
in no event and under no  circumstances  be deemed a consent by  Landlord  to any  assignment  or  sublease to such
payor or to any other party unless  Landlord has  delivered  its written  consent to an  assignment  or sublease to
such party.

16.4     Notwithstanding  Landlord's  consent on any one  occasion,  the right to  recapture  noted in Section 16.2
shall apply to any further subletting or assignment.

16.5     The  covenants in this  Section  concerning  assignment  shall bind Tenant and  Tenant's  heirs,  personal
representatives, successors and assigns.

16.6     Anything contained in the foregoing  provisions of this section to the contrary  notwithstanding,  neither
Tenant nor any other person having an interest in the  possession,  use,  occupancy or  utilization of the Premises
shall enter into any lease, sublease,  license,  concession or other agreement for use, occupancy or utilization of
space in the Premises which provides for rental or other payment for such use,  occupancy or utilization  based, in
whole or in part, on the net income or profits derived by any person from the Premises  leased,  used,  occupied or
utilized  (other than an amount based on a fixed  percentage  or  percentages  of receipts of sales),  and any such
proposed  lease,  sublease,  license,  concession or other  agreement shall be absolutely void and ineffective as a
conveyance or any right or interest in the possession, use, occupancy or utilization of any part of the Premises.

16.7     Fifty  percent  (50%) of all cash or other  consideration  received by Tenant in excess of the rent as the
proceeds of any assignment,  sale or sublease of Tenant's  interest in this Lease (after first  deducting  Tenant's
commercially  reasonable  and  customary  out of pocket costs  including  brokerage  commissions,  advertising  and
attorneys' fees in association  with such assignment or sublease),  whether  consented to by Landlord or not, shall
be paid to Landlord,  notwithstanding  the fact that such proceeds  exceed the rentals  called for  hereunder,  and
Tenant hereby assigns all rights it might have or ever acquire in any such proceeds to Landlord.

16.8     All reasonable  legal costs incurred by Landlord in approving,  reviewing and processing any assignment or
sublease  shall be paid by Tenant as a condition  of  Landlord's  consent and at the time that Tenant  executes and
submits to Landlord the consent to assignment  or consent to sublease  prepared by Landlord to evidence its consent
to the subject assignment or sublease.

16.9     Tenant shall not be relieved of its obligations  hereunder in the event of any assignment or sublease.  In
the event this Lease is rejected or deemed  rejected in any voluntary or  involuntary  bankruptcy  case in which an
assignee is the debtor,  Tenant shall remain primarily liable for the obligations on this Lease,  immediately prior
to its  rejection or deemed  rejection,  for the entire Lease Term and in no way will be released from the full and
complete performance of all the terms, conditions, covenants and agreements contained herein.

17.      MECHANIC'S LIENS.

17.1     Tenant will not permit any  mechanic's  lien or liens to be placed upon the  Premises or the Building as a
result of work  performed by,  through or under  Tenant.  Nothing in this Lease shall be deemed or construed in any
way as constituting  the consent or request of Landlord,  express or implied,  to any person for the performance of
any labor or the  furnishing  of any  materials  to all or part of the  Premises,  nor as giving  Tenant any right,
power,  or authority to contract for or permit the rendering of any services or the  furnishing  thereof that would
or might give rise to any mechanic's or other liens against the Premises.

17.2     If any such lien is claimed  against the  Premises,  then Tenant shall be required to discharge  said lien
or transfer it to bond within ten (10)  business  days of Tenant's  notice of filing,  and in addition to any other
right or remedy of Landlord,  Landlord may, but shall not be obligated to,  discharge the same.  Any amount paid by
Landlord  for such  purposes  shall be paid by  Tenant to  Landlord  as  additional  rent  within  ten (10) days of
Landlord's demand therefor.

18.      INSURANCE.

18.1     Property Insurance.  The following Property Insurance is required under this Lease:

(1)      Landlord shall maintain and pay for fire and extended  coverage  insurance on the Building in such amounts
as Landlord or Landlord's  mortgagees  shall require,  in an amount at least equal to the  replacement  cost of the
Building.  Landlord reserves the right to self-insure the Building so long as it is a financial  institution having
a net worth of at least $500  million.  Payments  for losses  thereunder  shall be made  solely to  Landlord or the
mortgagees of Landlord as their  interests shall appear.  In the event that Landlord  elects to  self-insure,  then
the  proceeds of such  self-insurance  shall be deemed paid to the same extent as if Landlord  had obtained a third
party  policy  (and  under  the  terms  of its  typical  third  party  policies  as of prior  to such  election  to
self-insure, subject to industry-wide policy changes applicable to such a policy in the interim).

(2)      Tenant shall  maintain at its  expense,  in an amount equal to full  replacement  cost,  fire and extended
coverage insurance on all of its personal  property,  including  removable trade fixtures,  located in the Premises
and in such additional amounts as are required to meet Tenant's obligations pursuant to Section 19 hereof.

(3)      Landlord  and Tenant  each  hereby  waives  any and all rights of  recovery,  claim,  action,  or cause of
action,  against Landlord or Tenant,  its respective  agents,  officers and employees,  for any loss or damage that
may occur to the Premises,  or any improvements  thereto,  or personal property located therein, or the Building of
which the Premises are a part or any  improvements  thereto,  by reason of fire,  the elements,  or any other cause
which  could be  insured  against  under the terms of  standard  fire and  extended  coverage  insurance  policies,
regardless  of cause or origin.  This mutual  waiver of  subrogation  is intended to cause  Tenant's  insurance  to
provide  the first and  primary  source of  compensation  for  damage to or  occurring  within  the  Premises,  and
Landlord's  insurance to be the first and primary source of  compensation  for damage  occurring  within the common
areas of the Building,  the parking structure,  and the Exterior Common Areas. This mutual waiver of subrogation is
notwithstanding  anything in this Lease to the contrary,  but is subject,  however,  to Tenant's  obligations under
Sections 10 and 19 of this Lease.

18.2     Liability Insurance.  The following Liability Insurance is required under this Lease:

(1)      Tenant and  Landlord  shall,  each at its own  expense,  maintain a policy or  policies  of  comprehensive
general  liability  insurance  with respect to the  respective  activities of each in the Building and the Building
Project with the premiums thereon fully paid on or before due date.  Tenant's  liability  insurance shall be issued
by and binding upon an insurance  company bearing at least the ratings required under Section 18.6 below,  shall be
effective  from the date  Tenant  enters  into  possession  and  during  the term of this  Lease,  and shall have a
combined single limit amount of not less than One Million  Dollars  ($1,000,000.00)  in primary  coverage and Three
Million Dollars  ($3,000,000.00) in excess liability coverage for injury to one person in one accident,  occurrence
or casualty, or for injuries to more than one person in one accident, occurrence or casualty.

18.3     Landlord shall not be required to maintain  insurance against thefts within the Premises,  the Building or
any project within which the Building is located.

18.4     Tenant  agrees to  maintain,  throughout  the Lease Term (and any other  period  during which Tenant is in
possession of the Premises),  at Tenant's sole cost and expense,  business  interruption  insurance with a limit of
liability representing loss of at least approximately twelve (12) months of gross rent.

18.5     Tenant  agrees to  maintain,  throughout  the Lease Term (and any other  period  during which Tenant is in
possession of the Premises),  at Tenant's sole cost and expense,  worker's  compensation  and employer's  liability
insurance in compliance with applicable legal requirements.

18.6     The property  and  liability  insurance  policies  required of Tenant  hereunder  shall be from  insurance
companies rated in Best's Insurance Guide, or any successor  thereto (or, if there be none, an organization  having
a national  reputation)  as having a general  policyholder  rating of "A-" and a financial  rating of at least "X".
The property and liability  insurance  policies  required of Tenant  hereunder shall name Landlord as an additional
insured and shall  provide  that the policies may not be modified or  terminated  without  thirty (30) days advance
notice to Landlord,  and Tenant shall provide to Landlord and maintain  throughout the Lease Term  certificates  of
insurance  adding Landlord as an additional  insured to Tenant's primary  liability,  excess liability and property
insurance policies. Such certificates shall include the Best's Insurance Guide rating of the insurance company.

18.7     Tenant  shall also  maintain  and provide  such other  required  evidence to Landlord of any other form of
insurance  which the Tenant or the  Landlord,  acting  reasonably,  requires from time to time in form, in amounts,
and for risks against which a prudent tenant would insure.

19.      ASSUMPTION OF RISK.

19.1     With respect to loss,  damage and injury  occurring  within the Premises,  Landlord shall not be liable to
Tenant or Tenant's  customers,  licensees,  agents,  guests or  employees  for any injury or damages to its, his or
their  persons or property by any cause  whatsoever,  including,  but not limited to acts or omissions of any other
tenant in the Building,  construction  defects,  water,  rain,  sleet,  fire,  storms,  Landlord's  negligence  and
accidents,  breakage,  stoppage, or leaks of gas, water heating,  sewer pipes,  boilers,  wiring or plumbing or any
other defect in, on or about the Premises.

19.2      Tenant  expressly  assumes all liability for or on account of any such injury,  loss or damage,  and will
at all times,  indemnify and save Landlord harmless from and against all liability,  fines, suits,  demands,  costs
and expenses of any kind or nature (including,  without limitation,  attorneys' fees and disbursements),  including
those arising from the Landlord's  negligence (but not Landlord's  gross  negligence,  and/or willful  misconduct),
incurred  in or caused by or  arising  out of any such  injury,  loss or damage to  persons  or  property  upon the
Premises.  The provisions of this Section shall survive the expiration or earlier termination of this Lease.

19.3     As used in this Section 19,  "Landlord"  refers to Teachers  Insurance and Annuity  Association of America
and its  subsidiaries,  and its successors  and/or assigns,  but not third parties with whom Landlord  contracts to
provide  services to the  Building or the  Project.  Tenant  preserves  its rights of recourse  against  such third
parties  based on their  negligence,  gross  negligence or willful  misconduct,  including but not limited to third
parties contracting with Landlord to provide building and property management services and janitorial services.

20.      CASUALTY DAMAGE.

20.1     If the Premises or any part thereof shall be damaged by fire or other  casualty,  Tenant shall give prompt
written notice thereof to Landlord.

20.2     If the Building shall be so damaged that substantial  alteration or  reconstruction of the Building shall,
in Landlord's  sole opinion,  be required  (whether or not the Premises  shall have been damaged by casualty) or in
the event any  mortgagee  of  Landlord's  should  require  that the  insurance  proceeds  payable  as a result of a
casualty be applied to the  payment of the  mortgage  debt or in the event of any  material  uninsured  loss to the
Building,  Landlord may, at its option,  terminate  this Lease by notifying  Tenant in writing of such  termination
within ninety (90) days after the date of such damage.  Notwithstanding  Landlord's termination,  SUN INTERNATIONAL
NORTH  AMERICA,  INC.  may elect to  reinstate  this Lease on a month to month  basis as provided  hereinafter  and
continue its  occupancy of the  Premises or portions  thereof  following  such  casualty,  and without any Landlord
obligation  to repair,  restore or maintain the Building or Premises (i) if and to the extent such  occupancy  does
not  interfere  with  Landlord's  demolition,  reconstruction,  or  other  activities  in the  Building  and on the
Premises;  (ii) if and to the extent such occupancy is permitted under  applicable law, code and ordinance.  In the
event of such continued  occupancy,  Tenant's Base Rent shall be prorated to reflect the percentage of the Premises
occupied by Tenant under such  circumstances.  Tenant shall  indemnify and hold Landlord  harmless from, and assume
all risks related to, Tenant's occupancy under such  circumstances.  The foregoing right shall not be assignable to
subtenants or assignees  unless  expressly  approved by Landlord.  Tenant shall tender  evidence of such additional
insurance  that Landlord may require under the  circumstances  as a condition to Tenant's  rights of  reinstatement
herein.  In the event that  Landlord  does not elect to so  terminate it shall,  within  ninety (90) days after the
date of such damage,  provide Tenant with an estimate ("Landlord's  Restoration Notice") of the period of time that
it estimates the  restoration  of the Building  shall  require.  In the event that  Landlord's  Restoration  Notice
estimates  that the  restoration  shall take more than two  hundred  seventy  five (275) days from the date of such
damage,  then Tenant may, within the ten (10) business days following  Landlord's  Restoration Notice, be permitted
to give notice to Landlord that it has elected to terminate this Lease,  in which event this Lease shall  terminate
as of the date set forth in such Tenant notice (and Landlord shall return  Tenant's  Security  Deposit,  subject to
any offsets  permitted  under this Lease),  but in no event earlier than the later of (i) the date of the casualty,
or (ii) thirty (30) days following the date of such Tenant notice.

20.3     If Landlord  does not thus elect to  terminate  this  Lease,  Landlord  shall  commence  and proceed  with
reasonable  diligence  to restore the Building to  substantially  the same  condition  in which it was  immediately
prior to the happening of the  casualty,  except that  Landlord's  obligation to restore shall not exceed the scope
of the work required to be done by Landlord in  originally  constructing  the Building.  In the event that Landlord
has not  substantially  completed such  restoration  and obtained a certificate of occupancy for the Building on or
before two hundred  seventy  five (275) days from the date of the  casualty,  then  Tenant may,  not later than ten
(10)  business  days  following the  expiration  of such two hundred  seventy five (275) day period,  give Landlord
notice that it has elected to terminate  this Lease,  in which event this Lease shall  terminate as of the date set
forth in such Tenant notice if, by such date,  Landlord has not substantially  completed such  restoration,  but in
no event shall such date occur less than twenty (20) days following the date of such Tenant notice.

20.4     When  Landlord has restored the Premises to Landlord's  Building  Standard  Improvements,  Tenant shall be
obligated  to pay for the  completion  of  restoration  of the  Premises,  including  the  restoration  of Tenant's
furniture and equipment.

20.5     Except for the  reconstruction  by Landlord to Landlord's  Building Standard  Improvements,  all costs and
expenses for reconstruction of the Premises shall be borne by Tenant.

20.6     Landlord  shall not be liable for any  inconvenience  or  annoyance to Tenant or injury to the business of
Tenant  resulting  in any way from such damage or the repair  thereof,  except that  Landlord  shall allow Tenant a
fair diminution of rent during the time and to the extent the Premises are unfit for occupancy.

20.7     If the Premises or any portion of the  Building be damaged by fire or other  casualty  resulting  from the
fault or negligence of Tenant or any of Tenant's agents,  employees,  or invitees,  the rent hereunder shall not be
diminished,  offsetted,  or abated  during the repair of such damage and Tenant shall be liable to Landlord for the
cost of the repair and  restoration of the Building caused  thereby,  up to the amount of Landlord's  out-of-pocket
costs  (but not to  exceed  the  limits  of the  liability  insurance  policy  required  to be  carried  by  Tenant
hereunder),  as well as any other cost and expense  thereby  incurred by Landlord,  up to the policy  limits of the
liability insurance required to be carried by Tenant under the terms hereof.

20.8      In the event that this Lease is  terminated  because of  Casualty,  as set forth in this  Article  20, or
because of  Condemnation,  as set forth in Article 21, or as a result of Landlord's  rejection of this Lease in any
bankruptcy  proceeding of Landlord,  or because the Lease is terminated because Landlord fails to hold title to the
Building,  then  Landlord  shall pay Tenant  the  following  amounts  corresponding  to the Dates set forth  below,
prorated to the actual date of  termination  and subject to offset by any amounts due from Tenant to Landlord under
the Lease.  In addition,  such payments shall be due in the event that Landlord is in breach of its  obligations to
fund the Tenant  Improvement  Allowance due under the terms and conditions of Exhibit "D-1" and "D-2" (after Tenant
has abided by each of its  obligations to receive such funds),  or if Landlord has breached its obligations to fund
the amounts due to Tenant  under Rider #3 hereto  (after  Tenant has abided by each of its  obligations  to receive
such funds).  In such event,  however,  the following amounts shall be due instead of the amounts due from Landlord
under Exhibit "D-1",  Exhibit  "D-2",  and Rider #3, and not in addition to the amounts  otherwise due  thereunder.
The following  amounts  shall not be payable in the event any of the  termination  events  referred to above occurs
after December 31, 2005, or for any other reason than those specifically enumerated herein:

Dates                                       Payment Amount
  9/1/02                            $3,785,348.00
12/1/02                             $3,645,042.00
  3/1/03                            $3,362,455.31
  6/1/03                            $3,083,267.48
  9/1/03                            $2,807,437.61
12/1/03                             $2,533,115.91
  3/1/04                            $2,258,496.62
  6/1/04                            $1,903,492.16
  9/1/04                            $1,552,757.57
12/1/04                             $1,199,138.49
  3/1/05                            $   835,652.28
  6/1/05                            $   476,537.97
  9/1/05                            $   121,742.91

21.      CONDEMNATION.

21.1     If the whole or  substantially  the whole of the Building or the  Premises  should be taken for any public
or quasi-  public use, by right of eminent  domain or otherwise,  or if it should be sold in lieu of  condemnation,
then this Lease shall  terminate as of the date when  physical  possession of the Building or the Premises is taken
by the condemning authority.

21.2     If more  than  fifty  percent  (50%) of the  Building  or the  Premises  is thus  taken or sold,  Landlord
(whether or not the Premises are affected  thereby) may terminate  this Lease by giving  written  notice thereof to
Tenant,  in which event this Lease shall  terminate as of the date when physical  possession of such portion of the
Building or Premises is taken by the  condemning  authority.  In such event,  Tenant may also terminate this Lease,
by notice to Landlord,  and  effective on the date of such taking,  in the event that more than fifty percent (50%)
of the Premises is so taken.

21.3     If this Lease is not so terminated  upon any such taking or sale,  Landlord  shall, to the extent Landlord
deems  feasible,  restore the Building  and the Premises to  substantially  their former  condition,  but such work
shall not exceed the scope of the work done by Landlord in  originally  constructing  the Building  and  installing
Building  Standard  Improvements  in the  Premises,  nor shall  Landlord in any event be required to spend for such
work an amount in excess of the amount received by Landlord as compensation for such damage.

21.4     All amounts  awarded  upon a taking of any part or all of the  Building or the  Premises  shall  belong to
Landlord,  and Tenant shall not be entitled to and expressly  waives all claim to any such  compensation  except as
otherwise provided in Section 21.5.

21.5     Tenant  shall be  entitled to claim  independently  against  condemning  authority  any damages  expressly
referable to Tenant's  business (or Tenant's  out-of-pocket  investments  in  improvements  to the Premises and the
contents  thereof) as the same may be permitted by law and to the extent of any provided  that such claim shall not
reduce any award  payable to Landlord  (but  Landlord  disclaims  the right to seek  compensation  for such damages
which are  specifically  attributable to Tenant's  business or  out-of-pocket  investments in the Premises  except,
however,  that Landlord and Tenant  specifically agree that Landlord may, for purposes of any condemnation  action,
claim as its own  damages  the amount of  $890,000  which  Tenant may have  invested  in the  Premises as an out of
pocket expense.).

22.      DAMAGES  FROM  CERTAIN  CAUSES.  Neither  party shall be liable to the other for any loss or damage to any
property or person occasioned by theft, fire, act of God, public enemy,  injunction,  riot,  strike,  insurrection,
war,  court  order,  computer  failure,  requisition,  or order of  governmental  body or authority or by any other
cause,  except for their gross  negligence or willful  misconduct and, except with respect to casualty,  subject to
the specific  exceptions  herein.  Landlord shall be not be liable for any damage or inconvenience  which may arise
through  repair or  alterations  of any part of the  Building  or  Premises,  except to the  extent  that its gross
negligence  or willful  misconduct  causes such  damage or  inconvenience  (and except to the extent of  Landlord's
obligations with respect to casualty damage set forth in Section 20 of this Lease.

23.      EVENTS OF DEFAULT/REMEDIES.

23.1     Event of Default by Tenant.  The  happening of any one or more of the following  listed events  (Events of
Default) shall constitute a breach of this Lease by Tenant:

(1)      The  failure  of Tenant to pay any rent or any other sums of money due  hereunder  within  three  business
days of the due date,  but Tenant shall have,  up to two times per calendar  year,  five (5) days to pay  following
Landlord's notice;

(2)      The failure of Tenant to comply with any provision of this Lease or any other agreement  between  Landlord
and Tenant, all of which terms, provisions, and covenants shall be deemed material;

(3)      The taking of the leasehold on execution or other process of law in any action against Tenant;

(4)      The  failure of Tenant to accept the  Premises,  to  promptly  move into,  to take  possession  of, and to
operate its  business on the  Premises  when the Premises are  substantially  complete,  or if Tenant  ceases to do
business in or abandons any substantial  portion of the Premises;  notwithstanding  the foregoing,  it shall not be
an event of  default  for  Tenant to vacate  the  Premises  or any  portion  thereof  provided  that  Tenant is not
otherwise in default of the terms hereof;

(5)      Tenant  becoming  insolvent  or unable to pay its debts as they become due,  or Tenant's  notification  to
Landlord that it anticipates either condition;

(6)      Tenant or any other entity  responsible  for the  obligations of Tenant under this Lease taking any action
to, or notifying  Landlord that Tenant or any other entity  responsible  for the  obligations  of Tenant under this
Lease  intends to, file a petition  under the United  States  Bankruptcy  Code,  as amended,  or any similar law or
statute of the United  States,  or any state;  or,  the  filing of a Petition  against  Tenant or any other  entity
responsible  for the  obligations  of Tenant under this Lease under any such statute or law, or, any other creditor
of Tenant or any other entity  responsible for the  obligations of Tenant under this Lease notifying  Landlord that
it knows such a petition  will be filed;  or the  notification  by Tenant or any other entity  responsible  for the
obligations of Tenant under this Lease, to Landlord that it expects such a Petition to be filed;

(7)      The  appointment  of a receiver  or  trustee  for the  leasehold  interest  of Tenant or any other  entity
responsible  for the  obligations of Tenant under this Lease,  in the Premises or for all or a substantial  part of
the assets of Tenant or any other entity responsible for the obligations of Tenant under this Lease; or

(8)      Tenant  defaulting  pursuant to  subsections  (1) through  (8) hereof  three (3) or more times  during any
twelve-month period under the Lease.

23.2     Landlord's  Remedies  for  Tenant  Default.  Upon the  occurrence  of any event or events  of  default  by
Tenant,  whether  enumerated in Section 23.1 or not, if Tenant fails to cure any such default  within ten (10) days
of written  notice from Landlord  (but,  except with respect to emergency  repairs or the cure of code  violations,
Tenant shall have up to sixty days to cure such defaults  that are not  reasonably  susceptible  of cure within ten
(10) days,  provided that Tenant promptly commences and diligently  pursues such cure until completion,  and except
with regard to a default  pursuant to Section  23.1(1) as to which  default  Tenant  expressly  waives any right to
notice from the  Landlord,  except as set forth  therein)  and Section  23.1(8) as to which  default  Tenant has no
right to cure, Landlord shall have the option, at Landlord's  election,  to pursue any one or more of the following
remedies:

(1)      Landlord may cancel and terminate this Lease and dispossess Tenant;

(2)      Landlord  may without  terminating  or canceling  this Lease  declare all amounts and rents due under this
Lease  for the  remainder  of the  existing  Lease  Term (or any  previous  extension  or  renewal  thereof)  to be
immediately  due and payable,  and  thereupon all rents and amounts due hereunder to the end of the initial term or
any renewal term or extension,  if applicable,  shall be accelerated (the  "Accelerated  Rent"). In such event, all
Additional  Rental due until the end of the initial term (or any previous  extension or renewal  thereof)  shall be
calculated  by adding the amount of five percent (5%) per year to the amount of  Additional  Rental last payable by
Tenant under this Lease.  An annual  discount  rate of five percent (5%) shall be used in  calculating  the present
value of the  Accelerated  Rent.  Tenant  shall  pay to  Landlord  the  Accelerated  Rent in  yearly  installments,
commencing ten (10) days after  Landlord  notifies  Tenant that Landlord has exercised the remedy  provided in this
subparagraph  (2) and on the first day of each twelve (12) month period  thereafter  until the Accelerated  Rent is
paid in full. Such annual  installments  shall be in the amount of the portion of the Accelerated  Rent due for the
twelve (12) months  following  the date on which each  installment  payment is due.  The amount of the final yearly
installment  shall be the  balance,  after the  application  of all paid  installments,  of the  Accelerated  Rent.
Landlord  agrees to use reasonable  efforts to relet the Premises in the event it exercises the remedy  provided in
this  subparagraph  (2). In no event,  however,  shall  Landlord be  obligated  in any manner to favor the Premises
over any other  premises it holds for leasing or be required to market the Premises by any means beyond  Landlord's
regular  marketing  efforts.  In the event Landlord  relets the Premises,  or any portion  thereof,  for any period
during the  remainder of the existing  Lease Term (or any previous  extension or renewal  thereof),  then  Landlord
shall tender to Tenant on an annual basis  commencing  twelve months after Landlord has relet the Premises,  or any
portion  thereof,  the "Net Reletting  Proceeds"  defined as the net amount  collected by Landlord under (ii) below
that exceeds the sums due to Landlord under (i) below.

i.       All rent and other  charges  due to Landlord  from  Tenant  under the Lease,  all of  Landlord's  costs in
                                    restoring the Premises and the Premises to the condition  required by the Lease
                                    at the end of the Term,  all costs  and  expenses  incurred  in  reletting  the
                                    Premises,  or any portion thereof,  from time to time, including customary real
                                    estate brokerage commissions,  costs incurred in preparing the Premises, or any
                                    portion thereof, for reletting,  including tenant improvement costs, Landlord's
                                    attorneys'  fees and costs incurred as a result of any  reletting,  advertising
                                    and marketing  expenses  associated  with the reletting,  all other  reasonable
                                    costs  associated with the reletting and any attorneys' fees and costs incurred
                                    in  seeking  possession  of the  Premises,  or any  portion  thereof,  after  a
                                    reletting  (if the  attorneys'  fees and costs are not  recovered and collected
                                    from the defaulting tenant).

ii.       All  cleared  funds  collected  by Landlord  for Base Rent and  Additional  Rent from a reletting  of the
                                    Premises,  or any portion  thereof,  during the remainder of the Lease term (or
                                    any previous extension or renewal thereof).

iii.     Notwithstanding  the  foregoing,  Tenant  shall not be  entitled  to  receive  and  Landlord  shall not be
                                    obligated  to tender to Tenant any Net  Reletting  Proceeds in the event Tenant
                                    has failed to pay to Landlord any of the  installments of the Accelerated  Rent
                                    as provided above.  If Tenant fails to pay to Landlord any of the  installments
                                    of Accelerated  Rent as provided  herein and Landlord  obtains a final judgment
                                    against  Tenant in the amount of the  Accelerated  Rent,  or any portion of the
                                    Accelerated  Rent then due and owing,  then Landlord shall provide to Tenant at
                                    the end of the Lease term (or any previous  extension or renewal  thereof) with
                                    a credit in the amount of the Net  Reletting  Proceeds in the form of a partial
                                    satisfaction of the final judgment;

(3)       Landlord may elect to enter and  repossess  the  Premises  and relet the  Premises for Tenant's  account,
holding Tenant liable in damages for all expenses  incurred in such  reletting and for any  difference  between the
amount of rent received from such reletting and the amount due and payable under the terms of this Lease;

(4)      Landlord  may enter upon the  Premises  and do whatever  Tenant is obligated to do under the terms of this
Lease (and Tenant  shall  reimburse  Landlord on demand for any  expenses  which  Landlord  may incur in  effecting
compliance with Tenant's  obligations  under this Lease, and Landlord shall not be liable for any damages resulting
to the Tenant from such action).

23.3     Landlord's  Remedies are  Cumulative.  All the remedies of Landlord in the event of Tenant  default  shall
be cumulative and in addition,  Landlord may pursue any other remedies  permitted by law or in equity,  forbearance
by Landlord to enforce one or more of the  remedies  upon an event of  default,  shall not  constitute  a waiver of
such default.

24.      OPERATING EXPENSES.

24.1     For the purposes of this Section, the following definitions apply:

(1)      "Utilities" means water, sewer, electricity, fuel oil, and gas.

(2)      "Operating  Expenses" means all expenses,  costs and disbursements of every kind and nature which Landlord
shall pay or become  obligated  to pay because of or in  connection  with the  ownership  and/or  operation  of the
Building  including  common areas within the Building  Project,  but shall not include the  replacement  of capital
investment  items  and  new  capital  improvements.  By way of  explanation  and  clarification,  but not by way of
limitation, these Operating Expenses will include the following:

i.       Wages and  salaries of all  employees  engaged in  operation  and  maintenance  of the Building and common
                                    areas of the Building Project;  employer's social security taxes,  unemployment
                                    taxes or  insurance,  and any other taxes which may be levied on such wages and
                                    salaries;  the cost of disability  and  hospitalization  insurance,  pension or
                                    retirement benefits, and any other fringe benefits for such employees.

ii.      All  supplies and  materials  used in operation  and  maintenance  of the Building and common areas of the
                                    Building Project.

iii.     Cost of utilities including  electricity,  fuel oil, gas, sewer and water used by the Building Project and
                                    not charged directly to another tenant.

iv.      Cost of customary Building  management and Building Project  management;  janitorial  services;  trash and
                                    garbage  removal;  service  and  maintenance  of  all  systems  and  equipment,
                                    including, but not limited to, elevators, plumbing, heating,  air-conditioning,
                                    ventilating,  lighting,  electrical,  security,  fire alarms,  fire pumps, fire
                                    extinguishers,  hose cabinets, mail chute, and lawn sprinklers;  guard service;
                                    painting;  caulking;  pressure or steam  cleaning of  Building  exterior;  roof
                                    repairs; window cleaning; landscaping and gardening.

v.       Cost of casualty and liability  insurance  applicable to the Building and Building  Project and Landlord's
                                    personal property used in connection therewith.

vi.      All taxes and assessments  and  governmental  charges whether  federal,  state,  county or municipal,  and
                                    whether  they be by taxing  districts  or  otherwise,  and any other  taxes and
                                    assessments  attributable to the Building or its operation excluding,  however,
                                    federal  and state  taxes on  income,  and  franchise,  inheritance,  transfer,
                                    capital stock, or excise taxes.

vii.     All charges  assessed  against the Building  Project under the  Declaration of Covenants and  Restrictions
                                    of Southpointe  recorded  October 19, 1990 in Official Record Book 17851,  Page
                                    706, of the Public Records of Broward County, Florida.

viii.    Expenditures for capital  improvements  required by law effective  following the date hereof, in either of
                                    which cases the cost thereof  shall be included in  Operating  Expenses for the
                                    calendar   year  in  which  the  costs  are  incurred  or   subsequent   years,
                                    appropriately  allocated to such years on a  straight-line  basis to the extent
                                    that  such  items  are  amortized  over a  useful  life or over an  appropriate
                                    period,  but in no event more than ten years, with the addition of a reasonable
                                    interest  factor to  compensate  Landlord for having  initially  incurred  said
                                    expenditure  (but not any reserves for the replacement of capital items, or any
                                    long-term  lease  payments  for  rented  equipment,  the  cost of  which  would
                                    constitute a capital expenditure if the equipment were purchased).

ix.      If Landlord  shall  purchase  any item of capital  equipment or make any capital  expenditure  designed to
                                    result in savings or reductions  in any of the elements of Operating  Expenses,
                                    then the costs for such  capital  equipment  or capital  expenditure  are to be
                                    included  within the  definition of "Operating  Expenses" for the year in which
                                    the costs are incurred or  subsequent  years,  appropriately  allocated to such
                                    years on a  straight-line  basis to the extent  that such  items are  amortized
                                    over such period of time as  reasonably  can be  estimated as the time in which
                                    such  savings  or  reductions  in  Operating  Expenses  are  expected  to equal
                                    Landlord's costs for such capital  equipment or capital  expenditure,  with the
                                    addition of a  reasonable  interest  factor to  compensate  Landlord for having
                                    initially  incurred said expenditure.  If Landlord shall lease any such item of
                                    capital  equipment  designed to result in savings or  reductions  in  Operating
                                    Expenses,  then the rentals and other costs paid pursuant to such leasing shall
                                    be included in Operating Expenses for the year in which they are incurred.

x.       Operating Expenses shall not include:

                                    (a)     Management Fees in excess of three percent (3%) of annual gross rents;

                                    (b)     Home office  expenses of Landlord or the  Building's  property  manager
                                            (but  property   management   personnel   providing  services  for  the
                                            Building,  such as accounting services,  but located in the home office
                                            of  the  Building's   property   manager,   may  be  included  for  the
                                            proportion of time spend on the Project );

                                    (c)     Building  leasing  commissions  and expenses of  maintaining  a leasing
                                            office.

                                    (d)     Any ground lease rental;

                                    (e)     Costs  incurred by Landlord  for the repair of damage to the  Building,
                                            to the extent that Landlord is reimbursed by insurance proceeds;

                                    (f)     Costs,  including permit,  license and inspection costs,  incurred with
                                            respect to the  installation  of tenant  improvements  made for tenants
                                            or other  occupants  in the  Building  or  incurred  in  renovating  or
                                            otherwise  improving,   decorating,  painting  or  redecorating  vacant
                                            tenant premises space in the Building;

                                    (g)     Marketing  costs  including  leasing  commissions,  attorneys'  fees in
                                            connection  with the  negotiation  and  preparation  of  letters,  deal
                                            memos, letters of intent, leases,  subleases and/or assignments,  space
                                            planning  costs,  and other costs and expenses  incurred in  connection
                                            with lease,  sublease and/or  assignment  negotiations and transactions
                                            with present or prospective tenants of the Building;

                                   (h)      Costs  incurred by  Landlord  due to the  violation  by Landlord or any
                                            tenant  of the  terms  and  conditions  of any  lease  of  space in the
                                            Building  and costs  chargeable  by  Landlord  directly  to a  specific
                                            tenant;

                                   (i)      Interest,  principal,  points and fees on debts or  amortization on any
                                            mortgage or  mortgages  or any other debt  instrument  encumbering  the
                                            Building or the site;

                                   (j)      Landlord's  general  corporate  overhead,  including  any  accrued  and
                                            unfunded  pension  or  other  benefits  of  any of  Landlord's  general
                                            corporate personnel;

                                   (k)      Costs arising from Landlord's charitable or political contributions;

                                   (l)      Costs for  sculpture,  paintings or other objects of art (but the costs
                                            of maintenance may be included,  as may decorative  items in the Common
                                            Areas);

                                   (m)      The cost of membership in any  professional or political  organization,
                                            other than the cost of certain  professional or trade  associations for
                                            its project  manager which relate  directly to the business and affairs
                                            of  Landlord  as  owner  of  the  Building  and  which  are   customary
                                            memberships  for owners of similar  type office  buildings  in the Fort
                                            Lauderdale metropolitan area such as, by way of example only, B.O.M.A.

                                   (n)      Notwithstanding  any  contrary  provision  of  this  Lease,   including
                                            without  limitation  any  provision  relating to capital  expenditures,
                                            costs  arising from the presence of hazardous  materials or  substances
                                            (as  defined  in  paragraph  36  hereof)  in or about the  Building  or
                                            Project  including,  without  limitation,  hazardous  substances in the
                                            ground  water  or  soil.  This  exclusion  does  not,  however,  dilute
                                            Tenant's   liability  for  those  matters  allocated  to  Tenant  under
                                            Paragraph 36 hereof;

                                   (o)      Landlord  shall not recapture  more than one hundred  percent (100%) of
                                            Operating Expenses.

                                   (p)      Notwithstanding  anything to the  contrary  herein,  the  "Controllable
                                            Portion" of  Operating  Expenses  shall not  increase by more than five
                                            percent  from  one  calendar  year  to the  next  (and  any  unutilized
                                            portion of such five  percent  limitation  shall accrue and be included
                                            in the amount of the  permitted  increase in  subsequent  years".)  For
                                            purposes  hereof,  the  "Controllable  Portion" of  Operating  Expenses
                                            does not include  taxes,  utilities,  insurance,  and wages tied to the
                                            minimum  wage.  The  calculation  of  the  permitted  increase  in  the
                                            Controllable   Portion  of  Operating  Expenses  shall  not  take  into
                                            account the Expense Stop  described  in Section 24.2 hereof,  but shall
                                            instead  be  calculated  on the full  amount of  Controllable  Expenses
                                            without reference to such Expense Stop.

(3)      "Tenant's  Proportionate  Share" means the ratio that the Net Rentable  Area of the Premises  bears to the
Net Rentable Area of the Building and the Arcade Building, and is set forth in Section 1.8 hereof.

(4)      "Expense Statement" means a statement from the Landlord setting forth the Operating Expenses.

24.2     Tenant shall pay Tenant's  Proportionate  Share of the  Operating  Expenses for each  calendar year during
the Lease Term. From the Commencement  Date until the last day of the 37th month following the  Commencement  Date,
and except as set forth in the notes to Exhibit C,  Tenant  shall pay  Tenant's  Proportionate  Share of  Operating
Expenses  to the extent  Operating  Expenses  exceed the amount of $8.00 per  rentable  square  foot per year (also
referred to herein as the "Expense Stop").  Following such date,  Tenant shall pay all of its  Proportionate  Share
of Operating  Expenses  without  subtraction  of the  foregoing  amount per square foot.  Landlord  estimates  that
Operating Costs for the 2002 calendar year are in the amount of $8.25 per rentable square foot per year.

24.3     Within  ninety  (90) days after the end of each  calendar  year,  Landlord  shall  furnish  Tenant with an
Expense  Statement  showing in  reasonable  detail the  Operating  Expenses  incurred by the Landlord for the prior
calendar year.

24.4     Within  thirty (30) days  following  receipt by Tenant of the  Expense  Statement  for the prior  calendar
year, Tenant shall pay in full,  Tenant's  Proportionate  Share of the portion of Operating  Expenses for the prior
calendar year for which Tenant is liable hereunder.

24.5     As part of the Expense  Statement,  Landlord  may include an amount  representing  Tenant's  Proportionate
Share of the estimated Operating Expense to be incurred for the then current calendar year.

24.6     Upon receipt of the estimate  showing  Tenant's  Proportionate  Share, the amount thereof shall be divided
into  twelve  (12) equal  monthly  installments,  and  Tenant  shall pay  Landlord,  at the same time that the next
regular  monthly  rental payment is due, the number of  installments  necessary to bring the Tenant current for the
calendar  year.  Credit  will be given for any  payment  of  estimated  increases  already  paid for those  months.
Subsequent  installments  shall be payable  together with the regular rent payments for the balance of the calendar
year and shall continue until payments begin under the following calendar year's Expense Statement.

24.7     If Tenant's  Proportionate  Share of Operating  Expenses for a prior calendar year as shown on the Expense
Statement is greater than the  estimated  payments  made by the Tenant for that year,  then within thirty (30) days
following  receipt by Tenant of the Expense  Statement,  Tenant  shall pay in full an amount  equal to such excess.
If Tenant's  Proportionate  Share of Operating  Expenses  actually incurred for the prior calendar year as shown on
the Expense  Statement is less than the  estimated  payments  made by the Tenant for that year,  then the amount of
such overpayment shall be credited against the next Operating Expense Payments falling due.

24.8     If this Lease expires or earlier  terminates  before the end of a calendar year,  payment will be based on
the  percentage of the year in which Tenant  occupied the  Premises.  Any Expense  Statement  presented by Landlord
shall be binding upon Tenant  unless,  within thirty (30) business  days  following its receipt of such  statement,
Tenant sends Landlord notice objecting thereto and specifying,  to the extent reasonably  practicable,  the aspects
of the Expense  Statement  disputed by Tenant  ("Dispute  Notice").  Provided that Tenant timely issues the Dispute
Notice,  Tenant  shall  have the right not more  than once in any  calendar  year  during  the Lease  Term,  during
business hours and at a location  designated by Landlord in Broward County,  Florida, to audit Landlord's books and
records  in support  of the items in the  Dispute  Notice.  Tenant  may  select  and  engage,  at its sole cost and
expense,  an  independent  certified  public  accountant or member of an  independent  firm which is engaged in the
business  of  auditing  lease  additional  assessments,  provided  that  such  accountant  is not and has not  been
affiliated  with or a shareholder  in Tenant or any affiliate of Tenant and is not  compensated in whole or in part
on a contingency fee basis (such  accountant  being referred to as a "Qualified  Auditor").  The Qualified  Auditor
may examine  Landlord's  books and records  pertaining  to the contents of Tenant's  timely  Dispute  Notice.  Such
Tenant audit must be completed,  and its results tendered to Landlord,  within ninety (90) days following  Tenant's
Dispute Notice.  The Qualified  Auditor shall be engaged by Tenant subject to the  requirement  that Tenant and the
Qualified  Auditor  shall  maintain  the  results  of  such  examination  in  strict  confidence.  If,  after  such
examination,  the Qualified  Auditor disputes  Landlord's  Expense  Statement,  and if Landlord does not agree with
such audit  results,  then the dispute  shall be referred to a  reputable,  independent  firm of  certified  public
accountants  acceptable to both Landlord and Tenant,  and the decision of such  accountants  shall be  conclusively
binding.  The fees and expenses of such  independent  accountants  in resolving  such dispute shall be borne by the
unsuccessful  party (and if both parties are partially  unsuccessful,  such accountants  shall apportion their fees
and  expenses  between  Landlord  and Tenant  based upon the degree of their  success.)  Any pending  audit and the
resolution of any subsequent  dispute  pertaining thereto shall not serve to relieve Tenant from its obligations to
pay all sums due under this Lease including,  without limitation,  Additional Assessments under the statements that
are subject to Tenant's Dispute Notice. In lieu of such audit procedures,

25.      PEACEFUL ENJOYMENT.

25.1     Tenant shall,  and may  peacefully  enjoy the Premises,  subject to the other terms hereof,  provided that
Tenant  pays the rent and other sums herein  recited to be paid by Tenant and  performs  all of Tenant's  covenants
and agreements in this Lease.

25.2     The  foregoing  covenant and any and all other  covenants of the Landlord  shall be binding upon  Landlord
and its successors only with respect to breaches occurring during its or their respective periods of ownership.

26.      RELOCATION.Intentionally Omitted.

27.      HOLDING OVER.

27.1     If Tenant holds over without  Landlord's  written  consent after  expiration or other  termination of this
Lease,  or if Tenant  continues to occupy the Premises after  termination of Tenant's right of possession  pursuant
to the provisions of Section 22.2(c),  Tenant shall,  for the first thirty (30) days of such holdover  period,  pay
one hundred  twenty-five  percent (125%), and the following sixty (60) days, one hundred fifty percent (150%), and,
thereafter,  throughout  the  remainder of the entire  holdover  period pay rent equal to twice the Base Rental and
Additional Rent which would have been  applicable had the term of this Lease  continued  through the period of such
holding over by Tenant.  Landlord  and Tenant  maintain  the right to  terminate  this month to month  tenancy with
thirty (30) days following written  notification to the other party.  Notwithstanding  the foregoing,  however,  if
Tenant gives Landlord  ninety (90) days  irrevocable  notice prior to the expiration  date (and if Tenant is not in
default under this Lease),  then Tenant may extend the  expiration  date of this Lease by ninety (90) days, and its
Base Rent and  Additional  Rent  payable for such ninety (90) day period shall be one hundred  twenty-five  percent
(125%) of the Base Rent and  Additional  Rent payable  immediately  prior to the  expiration  date (but such 90 day
period  shall be  instead  of and not in  addition  to the 30 day  period  referred  to above in which rent in such
amount is paid). In the  alternative,  if Tenant gives Landlord three hundred  sixty-five days  irrevocable  notice
prior to the  expiration  date (and if Tenant is not in  default  under  this  Lease),  then  Tenant may extend the
expiration  date of this Lease by six (6) months,  and its Base Rent and  Additional  Rent payable for such six (6)
month  period shall be one hundred five percent  (105%) of the Base Rent and  Additional  Rent payable  immediately
prior to the original expiration date.

27.2     No  possession  by Tenant after the  expiration of the term of this Lease shall be construed to extend the
term of this Lease unless Landlord has consented to such possession in writing.

28.      SUBORDINATION TO MORTGAGE.

28.1     This Lease is and shall be subject and subordinate only to a first mortgage,  whether  presently  existing
or hereafter  arising upon the Premises or upon the Building and to any renewals,  modifications,  refinancings  or
extensions  thereof,  but Tenant  agrees that any such first  mortgagee  shall have the right to  subordinate  such
first  mortgage  to this  Lease on such terms and  subject to such  conditions  as such  first  mortgagee  may deem
appropriate in its discretion provided,  however,  that such first mortgagee shall issue to Tenant a subordination,
nondisturbance and attornment agreement on its standard form.

28.2     Landlord is hereby  irrevocably  vested with full power and  authority  to  subordinate  this Lease to any
first mortgage,  now existing or hereafter  placed upon the Premises or the Building as a whole,  and Tenant agrees
upon demand to execute such further  instruments  subordinating  the Lease or attorning to holder of any such first
lien as Landlord may request.

28.3     No first mortgage is presently existing on the Building or the Project.

28.4     If Tenant should fail to execute any  subordination  or other agreement  required by this Section,  within
ten (10) business days following  Landlord's written notice as requested,  then Tenant's  subordination and consent
to such agreement shall be conclusively and irrevocably presumed.

28.5     Tenant  agrees  that it will from time to time upon  request  by  Landlord  execute  and  deliver  to such
persons as Landlord shall request a statement in recordable  form  certifying  that this Lease is unmodified and in
full  force and  effect  (or if there  have been  modifications,  that the same is in full  force and  effect as so
modified),  stating  the dates to which rent and other  charges  payable  under this Lease have been paid,  stating
that  Landlord is not in default  hereunder  (or if Tenant  alleges a default  stating  the nature of such  alleged
default) and further stating such other matters as Landlord or its mortgagee(s) shall reasonably require.

28.6     Tenant shall,  in the event of the sale or  assignment  of  Landlord's  interest in the Building or in the
event of any  proceedings  brought for the  foreclosure of, or in the event of exercise of the power of sale under,
or taking by deed in lieu of foreclosure of, any first mortgage made by Landlord  covering the Premises,  give full
and complete  attornment to the purchaser and recognize the purchaser as Landlord  under this Lease for the balance
of the term of this Lease,  including any extensions or renewals  thereof,  and such  purchaser or mortgagee  shall
recognize Tenant's rights in the form of its standard subordination, nondisturbance and attornment agreement.

29.      LANDLORD'S  LIEN.   Tenant  hereby  grants  Landlord  a  lien  and  security   interest  in  those  tenant
improvements  constructed  by  Tenant  under the  scope of  Exhibit  "D-1"  and  "D-2"  hereto,  and to  subsequent
Alterations to the Premises that are in the nature of tenant improvements.

30.      ATTORNEYS'  FEES.  If either party hereto  brings any action to enforce  rights under this Lease,  whether
judicial,  administrative,  or otherwise, the prevailing party in that action shall be entitled to recover from the
losing party all collection and court costs incurred,  including  reasonable  attorneys'  fees,  whether such costs
and fees are incurred out of court, at trial, on appeal, or in any bankruptcy proceeding.

31.      NO IMPLIED WAIVER.

31.1     The  failure  of either  Landlord  or Tenant to  insist  at any time upon the  strict  performance  of any
covenant or  agreement  or to exercise  any option,  right,  power or remedy  contained  in this Lease shall not be
construed as a waiver or a relinquishment thereof for the future.

31.2     No payment by Tenant or receipt by Landlord of a lesser  amount than the monthly  installment  of rent due
under this Lease shall be deemed to be other than on account of the earliest  rent due,  nor shall any  endorsement
or  statement  on any check or any  letter  accompanying  any  check or  payment  as rent be  deemed an accord  and
satisfaction,  and Landlord may accept such check or payment without  prejudice to Landlord's  right to recover the
balance of such rent or pursue any other remedy provided in this Lease.

32.      PERSONAL  LIABILITY.  The  liability  of Landlord  to Tenant for any default by Landlord  under this Lease
shall be limited to the  interest of  Landlord  in the  Building  and Tenant  agrees to look  solely to  Landlord's
interest in the Building for the  recovery of any judgment  from the  Landlord,  it being  intended  that  Landlord
shall not be  personally  liable for any judgment of  deficiency.  The foregoing  limitation of liability  does not
apply, however, to Landlord's obligations to make those payments that may become due under Section 20.8 hereof.

33.      SECURITY DEPOSIT.

33.1     The Security  Deposit  shall be held by Landlord  without  liability  for interest and as security for the
performance by Tenant of Tenant's  covenants and obligations  under this Lease, it being expressly  understood that
the Security  Deposit  shall not be  considered  an advance  payment of rental or a measure of Tenant's  damages in
case of default by Tenant.  Landlord may commingle the Security  Deposit with other  security  deposits,  and shall
not be required to pay interest on the Security Deposit.

33.2     Landlord may, from time to time without  prejudice to any other  remedy,  use the Security  Deposit to the
extent  necessary to make good any  arrearages  of rent or to satisfy any other  covenant or  obligation  of Tenant
hereunder.  Following any such  application of the Security  Deposit,  Tenant shall,  upon written notice to Tenant
and in accordance  with the terms and conditions of this Lease,  pay to Landlord on demand the amount so applied in
order to restore the Security  Deposit to its original  amount.  Tenant's  obligation to make the initial  Security
Deposit and to restore the Security Deposit is Additional Rent under this Lease.

33.3     If Tenant is not in default  at the  termination  of this  Lease,  the  balance  of the  Security  Deposit
remaining  after any such  application  shall be  returned  by  Landlord  to  Tenant  within  forty-five  (45) days
following the expiration date of this Lease.

33.4     If Landlord  transfers  its  interest in the Premises  during the term of this Lease,  Landlord may assign
the  Security  Deposit  to  the  transferee  and  thereafter,  provided  that  the  transferee  assumes  Landlord's
obligations  in writing,  then Landlord  shall have no further  liability for the return of such Security  Deposit.
This provision is not intended to prevent Tenant from recovering the Security  Deposit from future  landlords under
the terms of Section 33.3 hereof.

33.5      Letter  of  Credit.  Tenant's  Security  Deposit  shall be in the form of a clean  irrevocable  letter of
credit (the  "Letter of  Credit") in the amount of Two Hundred  Sixty  Thousand  and 00/100  Dollars  ($260,000.00)
issued by a bank  satisfactory  to Landlord in  substantially  the form  attached  hereto as Rider No. 4.  Landlord
hereby  confirms  that  Canadian  International  Bank of Commerce  ("CIBC")  is a bank  satisfactory  to  Landlord,
provided that CIBC allows  presentment  of the Letter of Credit in an office  located in New York City.  The Letter
of Credit shall at all times be in effect  throughout  the Term.  Any  termination  or non-renewal of the Letter of
Credit prior to such time shall  constitute an immediate  default  under this Lease and shall  entitle  Landlord to
present the Letter of Credit for  payment in full.  Any  default  under this Lease which has not been cured  within
any  applicable  grace period and/or  curative  period shall  entitle  Landlord to present the Letter of Credit for
payment in the amount  necessary to cure such default (or if such default  cannot be cured by the payment of money,
for  payment in full).  Within ten (10) days  following  any  partial  draw on the Letter of Credit,  Tenant  shall
replace  the  partially  drawn  Letter of Credit  with a  replacement  letter of credit  identical  in terms to the
original  Letter of Credit (or,  alternatively,  an addendum to the original  Letter of Credit),  but in the amount
that had been secured by the original Letter of Credit prior to such partial draw, and that  replacement  letter of
credit (or the original  Letter of Credit and such addendum)  shall then become the "Letter of Credit" for purposes
of this provision.  The Letter of Credit proceeds (other than those used to cure a monetary  default) shall be held
by Landlord as a Security Deposit under this Lease.

34.      FORCE  MAJEURE.  Whenever a period of time is herein  prescribed  for the taking of any action by Landlord
or Tenant,  such party shall not be liable or responsible  for, and there shall be excluded from the computation of
such  period of time,  any delays  due to  strikes,  riots,  acts of God,  shortages  of labor or  materials,  war,
governmental  laws,  regulations or restrictions,  or financing.  No force majeure event shall,  however,  serve to
excuse or postpone any monetary obligation hereunder (unless expressly set forth in Section 20 hereof).

35.      RELATIONSHIP  OF PARTIES.  Nothing  contained  in this Lease shall be deemed or  construed  by the parties
hereto,  nor by any third party, as creating the  relationship of principal and agent or of partnership or of joint
venture  between the parties  hereto,  it being  understood  and agreed that neither the method of  computation  of
rent, nor any other provision  contained herein, nor any acts of the parties herein,  shall be deemed to create any
relationship between the parties hereto other than the relationship of Landlord and Tenant.

36.      HAZARDOUS MATERIAL.

36.1     Tenant shall not (either with or without  negligence)  cause or permit the escape,  disposal or release of
any biologically or chemically active or other hazardous  substances,  or materials.  Tenant shall not allow by its
own actions or those acting by,  through or under  Tenant,  the storage or use of such  substances  or materials in
any manner not  sanctioned  by law or by the highest  standards  prevailing in the industry for the storage and use
of such  substances or materials,  nor allow to be brought into the Project any such materials or  substances,  and
then only after written  notice is given to Landlord of the identity of such  substances  or  materials,  except no
notice shall be required for standard office supplies for Tenant's use. Without  limitation,  hazardous  substances
and  materials  shall  include  those  described in the  Comprehensive  Environmental  Response,  Compensation  and
Liability Act of 1980, as amended, 42 U.S.C.  Section 9601 et seq., the Resource  Conservation and Recovery Act, as
amended.  42 U.S.C.  Section 6901 et seq., any  applicable  state or local laws and the  regulations  adopted under
these acts.  If any lender or  governmental  agency  shall ever require  testing to ascertain  whether or not there
has been any release of hazardous  materials by Tenant,  then the  reasonable  costs thereof shall be reimbursed by
Tenant to Landlord  upon demand as additional  charges if such  requirement  applies to the Premises.  In addition,
Tenant shall execute  affidavits,  representations  and the like from time to time at Landlord's request concerning
Tenant's  best  knowledge and belief  regarding the presence of hazardous  substances or materials on the Premises.
In all events,  Tenant shall indemnify  Landlord in the manner elsewhere provided in this Lease from any release of
hazardous  materials on the Premises  occurring while Tenant is in possession,  or elsewhere if caused by Tenant or
persons  acting under Tenant.  The within  covenants  shall survive the  expiration or earlier  termination  of the
lease term.

36.2     The Tenant  agrees to document  all  hazardous  waste  disposal,  if any, and to keep the same on file for
five (5)  years  and to  document  the same by one of the  following  types of  documentation:  A  hazardous  waste
manifest;  a bill of lading from a bonded hazardous substance  transporter showing shipment of a licensed hazardous
waste facility;  or a confirmation of receipt of materials from a recycler,  a waste exchange  operation,  or other
permitted hazardous waste management facility.

36.3     Tenant agrees not to generate hazardous effluents.

36.4     Tenant  agrees to allow  reasonable  access  to the  Premises  for  monitoring  of the above by  Landlord,
Broward  County,  DERM and the  Florida  DER to assure  compliance  with the above as well as any other  conditions
relating to the use of the subject property.

36.5     Violation  of any of the above  shall be deemed to be a default  on the part of the Tenant of the terms of
this Lease.

36.6     It is understood  that Tenant's  liability  under this Section 36 is for action or inaction by, through or
under Tenant, and Landlord retains liability for other hazardous materials matters.

37.      RADON.

         In compliance with Florida law,  Landlord is required to provide the following  notification:  "Radon Gas:
Radon is a  naturally  occurring  radioactive  gas  that,  when it has  accumulated  in a  building  in  sufficient
quantities,  may  present  health  risks to persons  who are  exposed to it over time.  Levels of radon that exceed
federal and state guidelines have been found in buildings in Florida.  Additional  information  regarding radon and
radon testing may be obtained from your county public health unit."

38.      LIGHT AND VIEW.

         If the view from the  Premises or the light  entering  the  Premises  are  interfered  with for any reason
whatsoever  including,  but not limited to Landlord's own acts,  Landlord shall not be liable for any damage Tenant
may sustain thereby and Tenant shall not be entitled to any  compensation  therefore nor abatement or diminution of
rent nor shall the same release Tenant from its obligations hereunder nor constitute an eviction.

39.      MISCELLANEOUS.

39.1     Severability.  If any term or  provision  of this  Lease,  or the  application  thereof  to any  person or
circumstances  shall, to any extent,  be invalid or  unenforceable,  the remainder of the Lease, or the application
of such  term or  provision  to  persons  or  circumstances  other  than  those as to which it is held  invalid  or
unenforceable  shall  not be  affected  thereby,  and each  term and  provision  of this  Lease  shall be valid and
enforceable to the fullest extent of the law.

39.2     Recordation.  Tenant  agrees not to record this Lease or any  memorandum  hereof but  Landlord  may record
this  Lease  or a  memorandum  thereof,  at its sole  election.  Tenant  shall  join in the  execution  of any such
memorandum of lease requested by Landlord.

39.3     Governing  Law and Venue.  This Lease and the rights and  obligations  of the parties  hereto are governed
by the laws of the State of Florida.  The  parties  hereby  consent to the  jurisdiction  of the courts  located in
Broward County, Florida, which shall be the venue for any proceedings in connection with this Lease.

39.4     Time of Performance.  Except as expressly  otherwise  herein  provided,  with respect to all required acts
of Tenant, time is of the essence of this Lease.

39.5     Transfers by Landlord.  Landlord  shall have the right to transfer  and assign,  in whole or in part,  all
its rights and obligations  hereunder and in the Building,  and the Premises referred to herein, and in such event,
provided that the  transferee  agrees in writing to be bound by the terms and  conditions of this Lease,  including
Landlord's  obligations  hereunder,  and upon such transfer Landlord shall be released from any further obligations
hereunder,  and Tenant agrees to look solely to such successor in interest of Landlord for the  performance of such
obligations  accruing  after such transfer.  Notwithstanding  the  foregoing,  however,  Landlord shall not, in the
event of any such  transfer or  assignment,  be released from the  obligations  under this Lease to fund the Tenant
Improvement  Allowance due under the terms of Exhibits  "D-1" and "D-2" hereto,  to fund the payments due under the
Reimbursement  Agreement for Existing Lease due from Landlord under the terms of Rider #3 hereto,  or to make those
payments that may become due under the provisions of Section 20.8 hereof.

39.6     Floor Load Limit.  Tenant shall not place a load upon any floor of the Premises  exceeding  the floor load
per square  foot area which such floor was  designed  to carry and which may be allowed by law.  Landlord  reserves
the right to  prescribe  the weight  limitations  and position of all heavy  equipment  and similar  items,  and to
prescribe  the  reinforcing  necessary,  if any,  which in the  opinion  of  Landlord  may be  required  under  the
circumstances, such reinforcing to be at Tenant's expense.

39.7     Brokers.  Landlord and Tenant each  warrants  that it has had no dealings  with any real estate  broker or
agents in  connection  with the  negotiation  of this Lease  excepting  only The Hogan Group,  Inc. and Cushman and
Wakefield  of  Florida,  Inc.,  which have  represented  Landlord  (together  "Landlord's  Broker"),  and Julien J.
Studley,  Inc. , which has represented Tenant ("Tenant's Broker").  Landlord will compensate Landlord's Broker who,
in turn,  will  compensate  Tenant's  Broker,  if any,  in  accordance  with the  terms of a  written  co-brokerage
agreement between  Landlord's  Broker and Tenant's Broker.  Landlord and Tenant each further warrants that it knows
of no other real estate  broker or agent,  other than those who are named  above,  who is entitled to a real estate
commission  in  connection  with this Lease and Landlord or Tenant each agrees to indemnify  the other  against any
claims for  commission  and expenses  created by such claim by any other real estate  broker or agent with whom the
indemnifying party may have dealt or communicated.

39.8     Real  Estate  Broker's  Commissions.  Landlord  and  Tenant  recognize  it is  possible  either  party may
hereafter make  additional  agreements  regarding  extension or renewal of this Lease, or a new lease or leases for
all or one or more parts of the  Premises  or other  space in the  Building  for a term or terms  commencing  after
expiration  of this Lease.  Landlord and Tenant  recognize it is also possible  either party may  hereafter  modify
this  Lease  to add  additional  space  or to  substitute  space as part of the  Premises.  If any such  additional
agreements,  new leases or modifications to this Lease are made,  Landlord shall not have any obligation to pay any
compensation  to any real estate broker or any other third party engaged by Tenant to render  services to Tenant in
connection with negotiating  such matters,  regardless of whether under the  circumstances  such party is or is not
regarded  by the law as an  agent  of  Landlord,  and  regardless  of  whether  such  third  party  was  previously
compensated  by Landlord  under this lease or any  previous  lease with  Tenant,  unless  such broker  representing
Tenant has,  prior to the  commencement  of  negotiations  for such matter from time to time,  first entered into a
written  co-brokerage  agreement with the broker then representing  Landlord.  Tenant hereby  indemnifies  Landlord
against any claim for compensation brought about by Tenant's dealings with any broker or other third party.

39.9     Effect of Delivery  of This  Lease.  Landlord  has  delivered a copy of this Lease to Tenant for  Tenant's
review only and the  delivery  hereof  does not  constitute  an offer to Tenant or and option to Lease.  This Lease
shall not be effective until a copy executed by both Landlord and Tenant is delivered to and executed by Landlord.

39.10    Section  Headings.  The section or subsection  headings are used for  convenience of reference only and do
not define limit or extend the scope or intent of the sections.

39.11    Definitions.  The definitions set forth in Section 1 are hereby made part of this Lease.

39.12    Exhibits.  "A", "B", "C",  "D-1",  "D-2",  "E".  "F",  "G",  "H", and the  following  numbered  Riders are
attached hereto and incorporated herein and incorporated herein and made a part of this Lease for all purposes:

                  Exhibits                  Description

                  Exhibit "A"               Legal Description
                  Exhibit "B"               Floor Plan
                  Exhibit "C"               Annual Rent Adjustment
                  WORK LETTER AGREEMENT FOR INITIAL PREMISES                                 EXHIBIT "D-1"
                  WORK LETTER AGREEMENT
                             FOR SUBSEQUENT PREMISES                                         EXHIBIT "D-2"
                  RULES AND REGULATIONS                                                      EXHIBIT "E"
                  CONSTRUCTION RULES AND REGULATIONS                                         EXHIBIT "F"
                  OPTION TO RENEW                                                            EXHIBIT "G"
                  JANITORIAL SPECIFICATIONS                                                  EXHIBIT "H"
                  COMMENCEMENT DATE AGREEMENT -
                  INITIAL PREMISES                                                           RIDER #1-A
                  COMMENCEMENT DATE AGREEMENT-
                  SUBSEQUENT PREMISES                                                        RIDER #1-B
                  RIGHT OF FIRST OFFER                                                       RIDER #2
                  REIMBURSEMENT AGREEMENT- EXISTING LEASE                                    RIDER #3
                  FORM OF LETTER OF CREDIT                                                   RIDER #4

39.13    NOTICES.

                  (1)      The  Tenant  shall  pay the rent and  shall  forward  all  notices  to  Landlord  at the
                           following  address  (or at such other  place as  Landlord  may  hereafter  designate  in
                           writing):

                           Teachers Insurance and Annuity Association of America
                           c/o The Hogan Group
                           1000 South Pine Island Road
                           Suite 400
                           Plantation, Florida 33324

                           With respect to notices, Tenant shall send a copy to:

                           Teachers Insurance and Annuity Association of America
                           730 Third Avenue
                           New York, N.Y. 10017
                           Attention: Joseph P. Flanagan

                  (2)      The Landlord  shall forward all notices to Tenant at the  following  address (or at such
                           other places as Tenant may hereafter designate in writing):

                           If prior to the Commencement Date:


                           Sun International North America, Inc.
                           1415 East Sunrise Boulevard
                           Fort Lauderdale, FL 33304

                           Attention: John Allison, Executive Vice President - Finance and C.F.O.

                           With a copy to:

                           Sun International North America, Inc.
                           2106 New Road, Suite C-7
                           Linwood, N.J. 08221
                           Attention: William C. Murtha, Senior Vice President and General Counsel

                           If following the Commencement Date:

                           Sun International North America, Inc.
                           1000 South Pine Island Road
                           Plantation, Florida 33324
                           Attention: John Allison, Executive Vice President - Finance and C.F.O.

                           With a copy to:

                           Sun International North America, Inc.
                           1000 South Pine Island Road
                           Plantation, Florida 33324
                           Attention: William C. Murtha, Senior Vice President and General Counsel

                  (3)      Any notice provided for in this Lease must, unless otherwise expressly provided
                           herein, be in writing, and may, unless otherwise expressly provided, be given or be
                           served by depositing the same in the United States mail, postage pre-paid and
                           certified and addressed to the party to be notified with return receipt requested, by
                           delivering the same in person to an officer of such party, or by sending the notice by
                           a nationally recognized overnight courier service, charges prepaid.

                  (4)      Notice  deposited  in the  mail in the  manner  herein  above  shall be  effective  upon
                           receipt,  unless such mail is unclaimed,  in which event notice shall be effective  five
                           (5)  days  after  the  date  of  mailing.  Notices  sent  for  overnight  delivery  by a
                           nationally  recognized  courier  service  in the  manner  herein  above  shall be deemed
                           effective on the business day of receipt or on which delivery was refused.

39.14    Tenant  Obligation.  The  obligation  of Tenant to pay any sums due under this  Lease  shall  survive  the
expiration or termination of this Lease.

39.15    Confidentiality.  Tenant  will  maintain  the  confidentiality  of this  Lease  and will not  divulge  the
economic  or other terms of this Lease,  in writing,  to any  persons,  other than  Tenant's  officers,  directors,
partners or shareholders;  Tenant's  attorneys,  accountants and other professional  consultants;  any governmental
agencies; and pursuant to subpoena or other legal process.

39.16    Survival.  The  following  provisions of the Lease shall  survive its  expiration or earlier  termination:
(i) Any action arising from or as a result of Tenant's  noncompliance with Laws,  Regulations and Rules as required
herein;  (ii)  Tenant's  obligation  to pay for any repairs  undertaken  by Landlord  pursuant to Section 10; (iii)
Landlord's  Security  Interest under Section 29; (iv) obligations  under Section 30 to pay any Legal Expenses;  (v)
Insurance  obligations under Section 18 for events occurring prior to the expiration or earlier  termination of the
Lease;  (vi) Tenant's  Indemnities  under Section 19 and otherwise under the Lease for matters arising prior to the
expiration  or earlier  termination  of the Lease and/or for events  occurring by,  through or under Tenant;  (vii)
Tenant's  responsibilities  for the condition of the Premises under Section 9; (viii) Landlord's  obligations under
Section 20.8;  (ix)  Landlord's  obligations  with respect to return of the Security  Deposit under Section 33; (x)
Landlord's and Tenant's  obligations  under Sections 20 and 21 hereof relating to condemnation  and casualty;  (xi)
Landlord's  and  Tenant's  liabilities  and  indemnity  under  Section  38.7  (Brokers);  (xii) the  limitation  on
Landlord's  liability  contained  in Section 31;  (xiii)  Section  38.15  (Confidentiality);  and (xiv)  Section 39
(Waiver by Tenant); (xv) Waiver of Jury Trial (Section 39.19), and (xvi) Governing Law (Section 39.3).

39.17    USE OF ROYAL  PALM  NAME OR  IMAGE.  Tenant  acknowledges  that  the name  Royal  Palm at  Southpointe  is
Landlord's  proprietary name for the Building  Project,  and Tenant shall not, without the prior written consent of
Landlord,  use the name or a likeness of the Building or any aspect of the Building  Project in connection  with or
in promoting or  advertising  the business of Tenant or in advertising to sublease the Premises (but Tenant may use
the address of the Building as its business  address and for  informational  purposes in connection with a proposed
sublease or  assignment).  Tenant's sole and exclusive  permitted use of the Royal Palm at  Southpointe  name shall
be as Tenant's address.

39.18    WAIVER BY TENANT.  Tenant expressly waives all of the following:  (A) The requirement  under Chapter 83.12
of the Florida  Statutes  that the  plaintiff  in his distress for rent action file a bond payable to the Tenant in
at least double the sum demanded by the plaintiff,  it being  understood that no bond shall be required in any such
action;  (B) The right of Tenant under Chapter 83.14 of the Florida Statutes to replevy  distrained  property;  (C)
The right of  noncompulsory  counterclaim  in any action  brought by  Landlord  against  Tenant for  damages or for
possession of the Premises due to nonpayment of Base Rental of other sums required of Tenant under this Lease.

39.19    WAIVER OF JURY  TRIAL In the event of suit by or  against  Landlord  or  Tenant,  then both  Landlord  and
Tenant hereby waives its right to trial by jury in connection  with the  proceedings or claims brought by either of
the parties against the other.

39.20    EXHIBITS  AND RIDERS The  Exhibits  and Riders to this Lease are made a part  hereof to the same extent as
if fully set forth herein.

                                             (signature page follows)






         IN WITNESS WHEREOF,  Landlord and Tenant have executed this Lease in multiple original  counterparts as of
the day and year first above written.

Executed in the Presence of:                                  "TENANT"

                                                              SUN INTERNATIONAL NORTH AMERICA, INC., a Delaware
__________________________________                            corporation
Witness Signature

Witness Name Typed
__________________________________                            __________________________________
Witness Signature                                             Signature:
__________________________________                            __________________________________
Witness Name Typed                                            Name printed:
                                                              __________________________________
                                                              Title:
                                                              __________________________________
                                                              Date:



                                                              Federal I.D. Number or
                                                              S.S. Number:_______________________

                                                              If Corporation Affix Corporate Seal.

                                                              __________________________________
                                                              Date
Executed in the Presence of:                                  "LANDLORD"

                                                              TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
                                                              AMERICA, a New York corporation


__________________________________                            Signature:__________________________
Witness Signature
__________________________________                            Name printed:______________________
Witness Name Typed
__________________________________                            Title:_____________________________
Witness Signature
__________________________________                            Date:______________________________
Witness Name Typed






{MI779896;8}                                             A-1
                                                    EXHIBIT "A"

                                             ROYAL PALM AT SOUTHPOINTE



                                     Legal Description of the Building Project

That portion of Parcel 4, JACARANDA  PARCEL 817,  according to the map or parcel thereof,  as recorded in Plat Book
143, Page 1, of the public records of Broward County, Florida, lying South of the following described line:

COMMENCING  at the Northwest  corner of said Parcel 4, thence South  84@05'35"  East,  along the North line of said
Parcel 4 (bearings based on the record plat) for 848.14 feet,  thence South 00(0)52'12" East,  along the East line of
said Parcel 4 for 663.26 feet to the POINT OF  BEGINNING;  thence North  73(0)16'14"  West for 786.12 feet to a point
of curvature;  thence Westerly along the arc of a curve to the right,  having a radius of 150.00 feet and a central
angle of 23(0)06'31" for 60.50 feet, to a point of tangency,  thence North  50(0)09'43"  West for 52.73 feet to a point
of curvature;  thence  Westerly along the arc of a curve to the left,  having a radius of 196.00 feet and a central
angle of 13(0)28'15" for 46.08 feet, to a point of tangency;  thence North  63(0)37'27" West for 109.17 feet to a POINT
OF TERMINATION, lying on the Westerly boundary of said Parcel 4.

Said Lands situate, lying and being in Broward County, Florida.

LESS and EXCEPT that  portion  deeded to Broward  County,  a  political  subdivision  of the State of  Florida,  by
Warranty Deed recorded in O.R. Book 31049, Page 1226, public records of Broward County, Florida.

PARCEL II:

TOGETHER WITH  easements for  ingress/egress,  drainage and utilities as recorded in O.R. Book 23173,  Page 864, as
modified in O.R. Book 27267, Page 754, public records of Broward County, Florida.

PARCEL III:

TOGETHER  WITH  easements  for ingress  and,  egress,  utilities,  and  landscaping  as created by  Declaration  of
Easements as recorded in O.R. Book 29097, Page 432, public records of Broward County, Florida.

PARCEL IV:

TOGETHER WITH Easement  rights created by Declaration of Covenants and  Restrictions  of Southpointe  dated October
12, 1990 and recorded in O.R. Book 17851, Page 706, public records of Broward County, Florida.









                                                    EXHIBIT "B"

                                            ROYAL PALM 1 AT SOUTHPOINTE

                                            Floor Plan of the Premises

                                   [This page depicts Tenant's Initial Premises]





                                   [This page depicts Tenant's Initial Premises]






                                 [This Page depicts Tenant's Subsequent Premises]








{MI779896;8}                                             C-1
                                                    EXHIBIT "C"

                                            ROYAL PALM 1 AT SOUTHPOINTE

                                              ANNUAL RENT ADJUSTMENT

- ------------------------------- ---------------------------- ---------------------------- ----------------------------
            PERIOD                   BASE RENT/S.F./YR             BASE RENT/YEAR               BASE RENT/MONTH
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/02-  11/30/03*             NA                           Abated                       Abated
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/03-  11/30/04              NA                           Abated                       Abated
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/04-  10/31/05              NA                           Abated                       Abated
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
11/1/05-  11/30/05              $17.45                       NA                           $  89,295.64
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/05-  11/30/06              $17.97                       $1,168,050.00                $  97,337.50
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/06-  11/30/07              $19.01                       $1,235,650.00                $102,970.83
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/07-  11/30/08              $19.58                       $1,272,700.00                $106,058.33
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/08-  11/30/09              $20.67                       $1,343,335.00                $111,946.25
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/09-  11/30/10              $21.29                       $1,383,850.00                $115,320.83
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/10-  11/30/11              $21.93                       $1,425,450.00                $118,787.50
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/11-  11/30/12              $22.59                       $1,468,350.00                $122,362.50
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/12-  11/30/13              $23.26                       $1,511,900.00                $125,991.66
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/13-  11/30/14              $23.96                       $1,557,400.00                $129,783.33
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/14-  11/30/15              $24.68                       $1,604,200.00                $133,683.33
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/15-  11/30/16              $25.42                       $1,652,300.00                $137,691.67
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
12/1/16-  11/30/17**            $26.18                       $1,701,700.00                $141,808.33
- ------------------------------- ---------------------------- ---------------------------- ----------------------------

*Tenant shall pay Base Rent in accordance with the following  schedule,  plus sales tax thereon.  In the event that
the  Commencement  Date occurs  prior to December 1, 2002,  then Tenant shall pay Base Rent per month in the amount
of $64,166.13,  plus sales tax, between the Commencement  Date and November 31, 2002, and its  Proportionate  Share
of  Operating  Expenses  in full for such period (and not  without  deduction  of the amount of $8.00 per  rentable
square  foot per month)  for such  period.  In the event that the  Commencement  Date for the  Subsequent  Premises
occurs  prior to April 1,  2004,  then  Tenant  shall pay Base Rent per month for the  Subsequent  Premises  in the
amount of $20,392.36  per month for the  Subsequent  Premises  between such  Commencement  Date and March 31, 2004,
together with its Proportionate  Share of Operating Expenses  allocable to the Subsequent  Premises for such period
(and without deduction of the amount of $8.00 per rentable square foot per month).

**The  Expiration  Date shall be as set forth in the Lease.  This is an estimated date based on the assumption that
the Commencement Date occurs on December 1, 2002.










                                                   EXHIBIT "D-1"

                                            ROYAL PALM 1 AT SOUTHPOINTE

                                               WORK LETTER AGREEMENT

                                               FOR INITIAL PREMISES

                                                  (tenant builds)

         This Work Letter  agreement  (this "Work  Letter")  is  attached to and made part of that  certain  Office
Lease  Agreement  (the "Lease") dated the ____ day of  ____________,  2002, by and between  TEACHERS  INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA ("Landlord") and  _________________,  ("Tenant").  The terms,  definitions and other
provisions of the Lease are hereby incorporated into this Work Letter by reference.

         In  consideration  of the execution of the Lease and the mutual  covenants and conditions  hereinafter set
forth, Landlord and Tenant agree as follows:

1.       Building Standard Improvements:

(a)      This Work Letter sets forth the  agreement  with respect to the  construction  of the  "Building  Standard
Improvements",  which is  understood to mean (i) the "Shell  Improvements"  (as  hereinafter  defined) and (ii) any
additional  improvements  constructed  or installed on the  Premises  for  Tenant's  use using  Building  Grade (as
defined in the Lease and specifically enumerated hereafter)  construction and materials.  Any other improvements to
the  Premises  that  require  construction  methods or materials  other than  Building  Grade shall be deemed to be
"Non-Standard  Improvements".  All  improvements  to the Shell  Improvements,  whether  constructed or installed by
Landlord or Tenant,  shall be hereinafter referred to as the "Tenant  Improvements",  which term shall include both
Building Grade and any Non-Standard Improvements.

(b)      "Shell  Improvements"  shall  mean the  following  improvements,  which have been or will be  provided  by
Landlord, at its expense, in connection with the construction of the Building:

(1)      Exterior  Building windows,  walls and roof structure and unfinished  concrete block finished in sheetrock
with walls surrounding Common Areas and Service Areas.

(2)      Unfinished concrete floors and ceilings.

(3)      Fully  equipped and finished  Common  Areas and Service  Areas,  including  elevators,  elevator  lobbies,
atrium entry area, restrooms, mechanical and electrical rooms.

(4)      Shell  Building  heating,  ventilation  and  air-conditioning  system  with  main  high-pressure  ductwork
distribution only to all floor areas and the VAV boxes installed as part of the base Building.

(5)      Electrical  meter rooms  equipped with panels and breakers to code and based on standard  usage (5.5 watts
per square foot).

(6)      Automatic sprinkler systems with construction heads per minimum code requirements for Building shell.

(7)      Public  corridor areas as needed to serve the Premises  (except those Building  Floors to be occupied by a
single tenant), with floors, interior walls and ceilings finished with Building Grade Materials.

(c)      Tenant shall use the following  Building  Grade  materials,  or such  alternates of at least equal quality
that Landlord may approve:

(1)      Interior  Partitions:  Taped,  finished  and  painted  (two  coats  of  flat  latex,  partitioning  to  be
constructed  with 1/2"  gypsum  wallboard  mounted on each side of 3 5/8" metal  studs at 24" on center,  extending
from the slab to the bottom of the finished ceiling height and having 4" vinyl base throughout.

(2)      Interior Demising Walls:  Separation  between tenants consisting of one layer of 5/8" of fire-rated gypsum
mounted  on each side of 3 5/8"  metal  studs,  running  from  floor  slab to  ceiling  slab,  with 3 5/8" layer of
insulation in the wall cavity;  Tenant to be  responsible  only for one-half of the cost of such interior  demising
walls. Any other unfinished  concrete surfaces (walls to columns) to be covered with 5/8" gypsum wallboard;  Tenant
to bear full cost of such gypsum  wallboard.  All demising  walls to be taped,  finished and painted (two coats) to
the ceiling tile and vinyl base installed in the same manner prescribed for the interior partitions.

(3)      Building Exterior Wall: All window openings will have Landlord  specified  horizontal  mini-blinds,  which
shall be at Tenant's expense, but subject to offset by the Tenant Improvement Allowance.

(4)      Entry Doors:  Solid core honduran  mahogany wood veneer (8'6"  height,  3' 0" width,  1 3/4" thick) set in
metal frames with matching stained honduran  mahogany  frames.  Hardware to be lever handle 32 polished  stainless,
hinges 26 polished chrome,  closer with painted bronze cover and 32 polished stainless floor stops.  Landlord shall
reasonably approve double glass entry doors if specified by Tenant.

(5)      Interior  Doors:  Solid core wood veneer (8'6" height,  3' width) set in metal  frames.  Hardware to match
Entry Doors, with closers only as required by building code.

(6)       Carpeting: Minimum 26 ounce face weight, commercial grade, glue down, throughout Premises.

(7)      Heating,  ventilation and air conditioning:  Low pressure  ductwork and flex duct air distribution  system
throughout the Premises with air diffusers, as required.

(8)      Electrical:  Wiring and conduit per code,  as required for  standard  wall-mounted  duplex power  outlets,
switches and 2' x 4' parabolic lighting fixtures with complete circuitry to electrical panels.

(9)      Lighting:  2' x 4' parabolic lay-in fixtures with three fluorescent  tubes each, with wiring,  conduit and
circuitry.

(10)     Telephone  Outlets:  Wall-mounted box with pull string or conduit to top of partition for Tenant telephone
system.

(11)      Ceiling: 2' x 2' reveal edge lay-in acoustical ceiling tile and 1" wide metal grid.

(12)     Fire Protection and Security  Equipment:  Fully-recessed  sprinkler heads,  centered in tile, exit lights,
fire  extinguishers and fire dampers as required per code. In addition to entry door locks,  Tenant shall provide a
security lock as designated by Landlord on each stairwell door that is within the Premises.

(d)      Landlord has made no  representation  or promise as to the condition of the Premises.  Landlord  shall not
perform  any  alterations,  additions,  or  improvements  in order to make the  Premises  suitable  and  ready  for
occupancy and use by Tenant.  Tenant has inspected the Premises,  is fully familiar with the physical  condition of
the  Premises,  and shall accept the Premises "as is," "where is,"  without any  warranty,  express or implied,  or
representation as to fitness or suitability.

2.       Plans.  Tenant shall perform all work  necessary or desirable for Tenant's  occupancy of the Premises (the
"Tenant  Improvements").  On or before July 15, 2002,  Tenant shall  furnish to Landlord,  for  Landlord's  written
approval,  a permit set (final  construction  drawings)  of plans and  specifications  for the Tenant  Improvements
(the "Plans").  Notwithstanding  anything to the contrary herein,  any reasonable delay by Tenant in submitting the
Plans to Landlord on or before July 15, 2002 shall not  constitute an event of default  under this Lease,  provided
that Tenant continues to diligently pursue their completion. The Plans shall include the following:

 The Tenant  Improvements  shall be completed in accordance with detailed  architectural  and  engineering  working
drawings  and  material  specifications  (the  "Plans and  Specifications")  which  shall be  prepared  at Tenant's
expense  (but  subject  to offset by the  Tenant  Improvement  Allowance)  and  shall be in a form and  content  as
necessary to allow Tenant's  contractor(s)  to obtain all required  building  permits and approvals.  The Plans and
Specifications shall include the following:

(1)      fully dimensioned architectural plan;

(2)      electric/telephone outlet diagram;

(3)      reflective ceiling plan with light switches;

(4)      mechanical plan;

(5)      electric power circuitry diagram;

(6)      schematic plumbing riser diagram (if any);

(7)      all color and finish selections; and

(8)      all special equipment and fixture specifications.

(b)      The Plans shall reflect Tenant's use of Building Grade materials  unless otherwise  approved in writing by
Landlord.

(c)      The Plans will be  prepared  by a licensed  architect  and the  electrical  and  mechanical  plans will be
prepared by a licensed  professional  engineer.  The Plans shall be produced on CAD.  The  architect  and  engineer
will be subject to Landlord's approval,  which shall not be unreasonably  withheld.  At Landlord's request,  Tenant
shall use Landlord's designated engineer for the Building,  Kamm Engineering (at Tenant's  commercially  reasonable
cost,  but subject to offset by the Tenant  Improvement  Allowance)  to prepare  items (4), (5) and, if  necessary,
item (6). The Plans shall comply with all applicable laws, ordinances,  directives,  rules, regulations,  and other
requirements  imposed by any and all governmental  authorities having or asserting  jurisdiction over the Premises.
Landlord shall review the Plans and either approve or disapprove  them within a reasonable  period of time.  Should
Landlord  disapprove  them,  Tenant shall make any  necessary  modifications  and resubmit the Plans to Landlord in
final form within ten days  following  receipt of Landlord's  disapproval  of them. The approval by Landlord of the
Plans and any  approval by  Landlord  of any similar  plans and  specifications  for any other  Alterations  or the
supervision by Landlord of any work performed on behalf of Tenant shall not: (i) imply  Landlord's  approval of the
plans and  specifications  as to quality of design or fitness of any material or device  used;  (ii) imply that the
plans and  specifications  are in compliance with any codes or other  requirements  of  governmental  authority (it
being  agreed  that  compliance  with these  requirements  is solely  Tenant's  responsibility);  (iii)  impose any
liability  on  Landlord  to Tenant or any third  party;  or (iv)  serve as a waiver or  forfeiture  of any right of
Landlord.

3.       Tenant's  General  Contractor.  The  Tenant  Improvements  shall be  constructed  by a general  contractor
selected and paid by Tenant and  approved by  Landlord.  Landlord  hereby  tenders its  approval for the  following
general contractors if selected by Tenant:  Dewhurst Construction Company,  Enterprise Construction Company; Bricar
Construction  Company and M.J.  Simpson  Construction  Company.  The general  contractor shall obtain a payment and
performance  bond in form complying with Section 713.23,  Florida  Statutes.  A copy of the bond, the  contractor's
license(s) to do business in the  jurisdiction(s)  in which the Premises are located,  the fully executed  contract
between  Tenant and the general  contractor,  the general  contractor's  work  schedule,  and all building or other
governmental  permits required for the Tenant  Improvements  shall be delivered to Landlord before  commencement of
the Tenant Improvements.

(a)      Tenant shall be  responsible  for obtaining  all necessary  permits and approvals at Tenant's sole expense
(but  subject  to  offset  by  the  Tenant  Improvement   Allowance)..   Tenant  shall  advise  its  contractor(s),
subcontractor(s)  and  material  supplier(s)  that no interest of Landlord  in the  Premises,  the  Building or the
Project  shall be subject to liens to secure  payment of any amount due for work  performed or materials  installed
in the Premises and that  Landlord  has recorded a notice to that effect in the public  records of Broward  County,
Florida.  Such Tenant  contractors must have submitted to Landlord,  prior to their entry into the Premises for the
accomplishment of any work,  certificates of insurance  evidencing  Commercial  General Liability  insurance in the
amount of at least $1 million,  excess  liability  insurance in the amount of at least $3 million,  and evidence of
workers  compensation  insurance coverage,  which, with respect to the liability insurance coverage,  name Landlord
as an additional  insured and are issued by an insurance  company rated by Best's Insurance Guide, or any successor
thereto (or, if there be none,  an  organization  having a national  reputation)  as having a general  policyholder
rating of "A-" and a financial rating of at least "X".

(b)      Tenant  shall  cooperate as  reasonably  necessary  so that its general  contractor  will cause the Tenant
Improvements  to be  completed  promptly  and with due  diligence.  The Tenant  Improvements  shall be performed in
accordance  with the Plans and shall be done in a good and workmanlike  manner using new materials.  All work shall
be done in  compliance  with  all  other  applicable  provisions  of this  Lease  and  with  all  applicable  laws,
ordinances,  directives,  rules,  regulations,  and other  requirements of any governmental  authorities  having or
asserting  jurisdiction over the Premises.  Before the commencement of any work by Tenant,  Tenant shall furnish to
Landlord certificates  evidencing the existence of builder's risk,  comprehensive  general liability,  and workers'
compensation  insurance  complying  with the  requirements  set forth in the Insurance  section of this Lease.  Any
damage to any part of the  Building or the  Project  that  occurs as a result of the Tenant  Improvements  shall be
promptly  repaired  by Tenant or, at  Landlord's  option,  shall be  repaired  by  Landlord,  and the  commercially
reasonable  cost thereof  shall be reimbursed by Tenant to Landlord  within  fourteen (14) business days  following
Landlord's tender of an invoice for such costs to Tenant.

(c)       Landlord shall have the right to reasonably  disapprove any of Tenant's  contractors or subcontractors if
Landlord has reason to believe that such  contractors  or  subcontractors  are: (i) not licensed as required by any
governmental  agency; (ii) not technically  qualified or sufficiently staffed to do the work; (iii) not financially
capable of undertaking the work;  and/or (iv)  incompatible  with any of Landlord's  contractors or  subcontractors
working on the Building (such  incompatibility  to include possible  conflicts with any union contractors  employed
by Landlord).

4.        Other  Construction  Requirements.  Tenant shall also ensure  compliance with the following  requirements
concerning construction:

(a)       Tenant and all  construction  personnel  shall abide by  Landlord's  job site rules and  regulations  and
fully cooperate with Landlord's  construction  representatives  in coordinating all construction  activities in the
Building Project,  including rules and regulations  concerning working hours,  parking, and use of the construction
elevator.

(b)       All transportation of construction materials shall be on the padded construction elevator only.

(c)       Tenant shall be responsible  for cleaning up any refuse or other  materials  left behind by  construction
personnel at the end of each work day.

(d)       Tenant shall deliver to Landlord all forms of approval  provided by the  appropriate  local  governmental
authorities to certify that the Tenant  Improvements  have been completed and the Premises are ready for occupancy,
including a final, unconditional certificate of occupancy.

(e)      At all times during  construction,  Tenant  shall allow  Landlord  access to the  Premises for  inspection
purposes.  On completion of the Tenant  Improvements,  Tenant's  general  contractor shall review the Premises with
Landlord and Tenant and secure Landlord's and Tenant's acceptance of the Tenant Improvements.

5.        Tenant  Improvement  Allowance.  If and for as long as Tenant is not in default  under this Lease  beyond
any applicable grace period,  Tenant shall be entitled to a fixed price tenant improvement  allowance in the amount
Four Hundred Eighty Thousand and 00/100  ($480,000.00) (the "Tenant Improvement  Allowance").  Tenant hereby grants
to Landlord a security  interest in all  improvements  to the Premises paid for in whole or in part with the Tenant
Improvement  Allowance or as Tenant Costs under this Work Letter.  The Tenant  Improvement  Allowance shall be paid
to Tenant in reimbursement  for the total out of pocket costs paid by Tenant for the design  professional  fees and
the "hard costs" of construction of the Tenant  Improvements.  The Tenant Improvement  Allowance may not be applied
to any other costs such as, but not limited to, the costs of Tenant's  furniture,  trade  fixtures,  and equipment,
cabling and wiring costs,  and moving expenses.  If the total amount paid by Tenant for the Tenant  Improvements is
less than the Tenant  Improvement  Allowance,  Tenant  shall not receive  cash or any credit  against  rent for the
unused  portion of the  allowance.  The Tenant  Improvement  Allowance  shall be paid  within in no more than three
installments.  With respect to Tenant's first two (2) payment requests,  Landlord shall make such  reimbursement to
Tenant  within  twenty-one  (21) days  after  each of the  following  events  has first  occurred:  (i)  Tenant has
submitted  paid  invoices  for Tenant  Improvements  to  Landlord,  in form and  content  that would  otherwise  be
acceptable  for  funding  the  Tenant  Improvement  Allowance,  demonstrating  that  Tenant has  expended  at least
$886,800.00 of its own funds for the Tenant  Improvements,  and such invoices shall not be reimbursable by Landlord
but shall instead be Tenant's obligation to pay without  reimbursement by Landlord;  (ii) Tenant has submitted paid
invoices for Tenant  Improvements  in the amount  requested;  (iii) Tenant has  provided the  certification  of its
architect that the invoices are for work  incorporated  into the Premises;  and (iv) Tenant has submitted  releases
of lien from Tenant's general  contractor and lienors as defined below. The second  disbursement  shall also not be
due until Tenant has submitted a certification  from its architect  designating the percentage of completion of the
Tenant  Improvements,  demonstrating  that they have been at least  eighty  (80%)  completed.  With  respect to the
final  installment,  Landlord's  reimbursement  shall occur within 21 days after all of the  following  events have
occurred:  (i) the Tenant  Improvements have been  substantially  completed;  (ii) Tenant has delivered to Landlord
final  releases of lien from Tenant's  general  contractor  and all lienors giving notice as defined in the Florida
Construction  Lien Law and a final  contractor's  affidavit  from the general  contractor  in  accordance  with the
Florida  Construction Lien Law, and all other receipts and supporting  information  concerning payment for the work
that  Landlord  may  reasonably  request;  (iii)  Tenant has moved into the Premises and opened for business in the
Premises;  and (iv)  Tenant  has paid the rent due for the first  month of the Lease  Term.  Tenant  shall  provide
Landlord  with true  copies of bills paid by Tenant for the  Tenant  Improvements,  and  Landlord  shall  reimburse
Tenant  for the amount set forth in the bills up to the amount of the  Tenant  Improvement  Allowance  (subject  to
Tenant's  obligation to pay for the first  $886,800.00  of the Tenant  Improvements  from its own funds and without
reimbursement by the Tenant Improvement  Allowance.  If Tenant is in default under this Lease beyond any applicable
grace period,  Landlord may, in addition to all its other available  rights and remedies,  withhold  payment of any
unpaid  portion of the Tenant  Improvement  Allowance,  even if Tenant has already paid for all or a portion of the
cost of the Tenant Improvements.

(a)       The Tenant  Improvement  Allowance  is being paid by  Landlord as an  inducement  to Tenant to enter into
this Lease and as  consideration  for the  execution  of this Lease by Tenant and the  performance  by Tenant under
this  Lease  for the  full  Lease  Term.  If after  Tenant  has  been  granted  all or any  portion  of the  Tenant
Improvement  Allowance,  the Lease  Term is  thereafter  terminated  by virtue of a default  by Tenant or  Landlord
resumes  possession  of the Premises  consequent  to a default by Tenant,  and Landlord is precluded by  applicable
law from  collecting the full amount of damages  attributable  to the default as provided in the Default section of
this Lease,  then,  in addition to all other  available  damages and remedies,  Landlord  shall also be entitled to
recover  from  Tenant the  unamortized  portion  (calculated  using an  interest  rate of 12% per annum  compounded
monthly) of the Tenant  Improvement  Allowance,  which sum shall not be deemed rent.  This  obligation of Tenant to
repay the  unamortized  balance of the Tenant  Improvement  Allowance to Landlord  shall survive the  expiration or
sooner termination of the Lease Term.

(b)       The Tenant  Improvement  Allowance  provisions  of this exhibit shall not apply to any  additional  space
added to the  original  Premises at any time after the date of this Lease unless  expressly  provided in the Lease,
whether by any options under this Lease or otherwise,  or to any portion of the original  Premises or any additions
to the Premises in the event of a renewal or extension of the initial  Lease Term,  whether under any options under
this Lease or otherwise, unless expressly so provided in this Lease or an amendment to this Lease.

6.        Commencement  Date. The  "Commencement  Date" shall mean the earlier to occur of (i) the date when Tenant
takes  possession of the Premises or any portion of the Premises for the conduct of its business  after the date of
substantial  completion of the Tenant  Improvements,  or (ii)  December 1, 2002.  Substantial  completion  shall be
deemed  to have  occurred  on the  date  that a  Certificate  of  Occupancy  or its  equivalent  is  issued  by the
appropriate  local  governmental  entity  concerning  the Tenant  Improvements,  or, if no Certificate of Occupancy
will be  issued  for the  Tenant  Improvements,  the  date on  which  the  Tenant  Improvements  are  substantially
completed so that Tenant may use them for their intended  purpose,  notwithstanding  that minor  punchlist items or
insubstantial  details  concerning to construction,  decoration,  or mechanical  adjustment remain to be performed.
The parties shall  thereafter  execute a letter  confirming the  Commencement  Date and the expiration date of this
Lease  substantially  in the form of Rider H-1 to this Lease.  The  failure of Tenant to execute  the letter  shall
not affect the validity of the Commencement Date as reasonably determined by Landlord.

7.       Low Voltage; Permits:

         Tenant shall be  responsible  for  providing  their own  telephone,  computer,  and security  cable and/or
wiring for the Premises.  This work as it relates to low voltage  wiring,  requires  permitting and  inspections by
Broward County.  Failure of Tenant's vendors or contractors to obtain required  permits and associated  inspections
will result in a Tenant-caused delay in occupying the space.

8.       Tenant's As-Built Verification.

         In no event shall Tenant or any  contractor,  subcontractor,  supplier or any party acting by,  through or
under Tenant rely on the Plans and  Specifications  or any Building plans  submitted by Landlord for the purpose of
determining  final  measurements  for any  systems,  furnishings,  cabinets,  electrical,  mechanical  or  plumbing
installations  or any other type of  installation  by Tenant  whatsoever,  it being clearly  understood that Tenant
shall obtain field as-built measurements and as-built plans for such purposes.

                                             (signature page follows)





         EXECUTED BY the parties hereto simultaneously with the Lease and attached thereto as Exhibit "D".

Executed in the Presence of:                                  "TENANT"

                                                              SUN INTERNATIONAL NORTH AMERICA, INC.
                                                              Signature:

                                                              Name printed:_______________________

__________________________________                            Title:______________________________
Witness Name printed
__________________________________                            Date:______________________________

__________________________________
Witness Name printed
Executed in the Presence of:                                  "LANDLORD"

                                                              TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA


                                                              Signature:__________________________
__________________________________                            Name:_____________________________
                                                              Title:______________________________
__________________________________                            Date:______________________________
Witness Name printed

__________________________________

__________________________________
Witness Name printed







                                                   EXHIBIT "D-2"

                                            ROYAL PALM 1 AT SOUTHPOINTE

                                               WORK LETTER AGREEMENT

                                              FOR SUBSEQUENT PREMISES

                                                  (tenant builds)

         This Work Letter  agreement  (this "Work  Letter")  is  attached to and made part of that  certain  Office
Lease  Agreement  (the "Lease") dated the ____ day of  ____________,  2002, by and between  TEACHERS  INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA ("Landlord") and  _________________,  ("Tenant").  The terms,  definitions and other
provisions of the Lease are hereby incorporated into this Work Letter by reference.

         In  consideration  of the execution of the Lease and the mutual  covenants and conditions  hereinafter set
forth, Landlord and Tenant agree as follows:

1.       Building Standard Improvements:

(a)      This Work Letter sets forth the  agreement  with respect to the  construction  of the  "Building  Standard
Improvements",  which is  understood to mean (i) the "Shell  Improvements"  (as  hereinafter  defined) and (ii) any
additional  improvements  constructed  or installed on the  Premises  for  Tenant's  use using  Building  Grade (as
defined in the Lease and specifically enumerated hereafter)  construction and materials.  Any other improvements to
the  Premises  that  require  construction  methods or materials  other than  Building  Grade shall be deemed to be
"Non-Standard  Improvements".  All  improvements  to the Shell  Improvements,  whether  constructed or installed by
Landlord or Tenant,  shall be hereinafter referred to as the "Tenant  Improvements",  which term shall include both
Building Grade and any Non-Standard Improvements.

(b)      "Shell  Improvements"  shall  mean the  following  improvements,  which have been or will be  provided  by
Landlord, at its expense, in connection with the construction of the Building:

(1)      Exterior  Building windows,  walls and roof structure and unfinished  concrete block finished in sheetrock
with walls surrounding Common Areas and Service Areas.

(2)      Unfinished concrete floors and ceilings.

(3)      Fully  equipped and finished  Common  Areas and Service  Areas,  including  elevators,  elevator  lobbies,
atrium entry area, restrooms, mechanical and electrical rooms.

(4)      Shell  Building  heating,  ventilation  and  air-conditioning  system  with  main  high-pressure  ductwork
distribution only to all floor areas and the VAV boxes installed as part of the base Building.

(5)      Electrical  meter rooms  equipped with panels and breakers to code and based on standard  usage (5.5 watts
per square foot).

(6)      Automatic sprinkler systems with construction heads per minimum code requirements for Building shell.

(7)      Public  corridor areas as needed to serve the Premises  (except those Building  Floors to be occupied by a
single tenant), with floors, interior walls and ceilings finished with Building Grade Materials.

(8)      In the event that the  Subsequent  Premises has been improved for the occupancy of another tenant prior to
the date of Landlord's  delivery of possession  thereof to Tenant for the purpose of Tenant's  construction  of the
Tenant  Improvements  therein,  then  Landlord  shall  deliver  the  Subsequent  Premises  to Tenant in broom clean
condition, free of the personal property of any other party.

(c)      Tenant shall use the following  Building  Grade  materials,  or such  alternates of at least equal quality
that Landlord may approve:

(1)      Interior  Partitions:  Taped,  finished  and  painted  (two  coats  of  flat  latex,  partitioning  to  be
constructed  with 1/2"  gypsum  wallboard  mounted on each side of 3 5/8" metal  studs at 24" on center,  extending
from the slab to the bottom of the finished ceiling height and having 4" vinyl base throughout.

(2)      Interior Demising Walls:  Separation  between tenants consisting of one layer of 5/8" of fire-rated gypsum
mounted  on each side of 3 5/8"  metal  studs,  running  from  floor  slab to  ceiling  slab,  with 3 5/8" layer of
insulation in the wall cavity;  Tenant to be  responsible  only for one-half of the cost of such interior  demising
walls. Any other unfinished  concrete surfaces (walls to columns) to be covered with 5/8" gypsum wallboard;  Tenant
to bear full cost of such gypsum  wallboard.  All demising  walls to be taped,  finished and painted (two coats) to
the ceiling tile and vinyl base installed in the same manner prescribed for the interior partitions.

(3)      Building Exterior Wall: All window openings will have Landlord  specified  horizontal  mini-blinds,  which
shall be at Tenant's expense, but subject to offset by the Tenant Improvement Allowance.

(4)      Entry Doors:  Solid core honduran  mahogany wood veneer (8'6"  height,  3' 0" width,  1 3/4" thick) set in
metal frames with matching stained honduran  mahogany  frames.  Hardware to be lever handle 32 polished  stainless,
hinges 26 polished  chrome,  closer with painted  bronze  cover and 32 polished  stainless  floor  stops.  Landlord
shall reasonably approve double glass entry doors if specified by Tenant.

(5)      Interior  Doors:  Solid core wood veneer (8'6" height,  3' width) set in metal  frames.  Hardware to match
Entry Doors, with closers only as required by building code.

(6)       Carpeting: Minimum 26 ounce face weight, commercial grade, glue down, throughout Premises.

(7)      Heating,  ventilation and air conditioning:  Low pressure  ductwork and flex duct air distribution  system
throughout the Premises with air diffusers, as required.

(8)      Electrical:  Wiring and conduit per code,  as required for  standard  wall-mounted  duplex power  outlets,
switches and 2' x 4' parabolic lighting fixtures with complete circuitry to electrical panels.

(9)      Lighting:  2' x 4' parabolic lay-in fixtures with three fluorescent  tubes each, with wiring,  conduit and
circuitry.

(10)     Telephone  Outlets:  Wall-mounted box with pull string or conduit to top of partition for Tenant telephone
system.

(11)      Ceiling: 2' x 2' reveal edge lay-in acoustical ceiling tile and 1" wide metal grid.

(12)     Fire Protection and Security  Equipment:  Fully-recessed  sprinkler heads,  centered in tile, exit lights,
fire  extinguishers and fire dampers as required per code. In addition to entry door locks,  Tenant shall provide a
security lock as designated by Landlord on each stairwell door that is within the Premises.

(d)      Landlord has made no  representation  or promise as to the condition of the Premises.  Landlord  shall not
perform  any  alterations,  additions,  or  improvements  in order to make the  Premises  suitable  and  ready  for
occupancy and use by Tenant.  Tenant has inspected the Premises,  is fully familiar with the physical  condition of
the  Premises,  and shall accept the Premises "as is," "where is,"  without any  warranty,  express or implied,  or
representation as to fitness or suitability.

2.       Plans.  Tenant shall perform all work  necessary or desirable for Tenant's  occupancy of the Premises (the
"Tenant  Improvements").  On or before February 1, 2004, Tenant shall furnish to Landlord,  for Landlord's  written
approval,  a permit set (final  construction  drawings)  of plans and  specifications  for the Tenant  Improvements
(the "Plans").  Notwithstanding  anything to the contrary herein,  any reasonable delay by Tenant in submitting the
Plans to  Landlord  on or before  February  1, 2004  shall not  constitute  an event of default  under this  Lease,
provided that Tenant continues to diligently pursue their completion. The Plans shall include the following:

 The Tenant  Improvements  shall be completed in accordance with detailed  architectural  and  engineering  working
drawings  and  material  specifications  (the  "Plans and  Specifications")  which  shall be  prepared  at Tenant's
expense  (but  subject  to offset by the  Tenant  Improvement  Allowance)  and  shall be in a form and  content  as
necessary to allow Tenant's  contractor(s)  to obtain all required  building  permits and approvals.  The Plans and
Specifications shall include the following:

(1)      fully dimensioned architectural plan;

(2)      electric/telephone outlet diagram;

(3)      reflective ceiling plan with light switches;

(4)      mechanical plan;

(5)      electric power circuitry diagram;

(6)      schematic plumbing riser diagram (if any);

(7)      all color and finish selections; and

(8)      all special equipment and fixture specifications.

(b)      The Plans shall reflect Tenant's use of Building Grade materials  unless otherwise  approved in writing by
Landlord.

(c)      The Plans will be  prepared  by a licensed  architect  and the  electrical  and  mechanical  plans will be
prepared by a licensed  professional  engineer.  The Plans shall be produced on CAD.  The  architect  and  engineer
will be subject to Landlord's approval,  which shall not be unreasonably  withheld.  At Landlord's request,  Tenant
shall use Landlord's designated engineer for the Building (Kamm Engineering) (at Tenant's  commercially  reasonable
cost,  but subject to offset by the Tenant  Improvement  Allowance)  to prepare  items (4), (5) and, if  necessary,
item (6). The Plans shall comply with all applicable laws, ordinances,  directives,  rules, regulations,  and other
requirements  imposed by any and all governmental  authorities having or asserting  jurisdiction over the Premises.
Landlord shall review the Plans and either approve or disapprove  them within a reasonable  period of time.  Should
Landlord  disapprove  them,  Tenant shall make any  necessary  modifications  and resubmit the Plans to Landlord in
final form within ten days  following  receipt of Landlord's  disapproval  of them. The approval by Landlord of the
Plans and any  approval by  Landlord  of any similar  plans and  specifications  for any other  Alterations  or the
supervision by Landlord of any work performed on behalf of Tenant shall not: (i) imply  Landlord's  approval of the
plans and  specifications  as to quality of design or fitness of any material or device  used;  (ii) imply that the
plans and  specifications  are in compliance with any codes or other  requirements  of  governmental  authority (it
being  agreed  that  compliance  with these  requirements  is solely  Tenant's  responsibility);  (iii)  impose any
liability  on  Landlord  to Tenant or any third  party;  or (iv)  serve as a waiver or  forfeiture  of any right of
Landlord.

3.       Tenant's  General  Contractor.  The  Tenant  Improvements  shall be  constructed  by a general  contractor
selected and paid by Tenant and  approved by  Landlord.  Landlord  hereby  tenders its  approval for the  following
general contractors if selected by Tenant:  Dewhurst Construction Company,  Enterprise Construction Company; Bricar
Construction  Company and M.J.  Simpson  Construction  Company.  The general  contractor shall obtain a payment and
performance  bond in form complying with Section 713.23,  Florida  Statutes.  A copy of the bond, the  contractor's
license(s) to do business in the  jurisdiction(s)  in which the Premises are located,  the fully executed  contract
between  Tenant and the general  contractor,  the general  contractor's  work  schedule,  and all building or other
governmental  permits required for the Tenant  Improvements  shall be delivered to Landlord before  commencement of
the Tenant Improvements.

(a)      Tenant shall be  responsible  for obtaining  all necessary  permits and approvals at Tenant's sole expense
(but  subject  to  offset  by  the  Tenant  Improvement   Allowance)..   Tenant  shall  advise  its  contractor(s),
subcontractor(s)  and  material  supplier(s)  that no interest of Landlord  in the  Premises,  the  Building or the
Project  shall be subject to liens to secure  payment of any amount due for work  performed or materials  installed
in the Premises and that  Landlord  has recorded a notice to that effect in the public  records of Broward  County,
Florida.  Such Tenant  contractors must have submitted to Landlord,  prior to their entry into the Premises for the
accomplishment of any work,  certificates of insurance  evidencing  Commercial  General Liability  insurance in the
amount of at least $1 million,  excess  liability  insurance in the amount of at least $3 million,  and evidence of
workers  compensation  insurance coverage,  which, with respect to the liability insurance coverage,  name Landlord
as an additional  insured and are issued by an insurance  company rated by Best's Insurance Guide, or any successor
thereto (or, if there be none,  an  organization  having a national  reputation)  as having a general  policyholder
rating of "A-" and a financial rating of at least "X".

(b)      Tenant  shall  cooperate as  reasonably  necessary  so that its general  contractor  will cause the Tenant
Improvements  to be  completed  promptly  and with due  diligence.  The Tenant  Improvements  shall be performed in
accordance  with the Plans and shall be done in a good and workmanlike  manner using new materials.  All work shall
be done in  compliance  with  all  other  applicable  provisions  of this  Lease  and  with  all  applicable  laws,
ordinances,  directives,  rules,  regulations,  and other  requirements of any governmental  authorities  having or
asserting  jurisdiction over the Premises.  Before the commencement of any work by Tenant,  Tenant shall furnish to
Landlord certificates  evidencing the existence of builder's risk,  comprehensive  general liability,  and workers'
compensation  insurance  complying  with the  requirements  set forth in the Insurance  section of this Lease.  Any
damage to any part of the  Building or the  Project  that  occurs as a result of the Tenant  Improvements  shall be
promptly  repaired  by Tenant or, at  Landlord's  option,  shall be  repaired  by  Landlord,  and the  commercially
reasonable  cost thereof  shall be reimbursed by Tenant to Landlord  within  fourteen (14) business days  following
Landlord's tender of an invoice for such costs to Tenant.

(c)       Landlord shall have the right to reasonably  disapprove any of Tenant's  contractors or subcontractors if
Landlord has reason to believe that such  contractors  or  subcontractors  are: (i) not licensed as required by any
governmental  agency; (ii) not technically  qualified or sufficiently staffed to do the work; (iii) not financially
capable of undertaking the work;  and/or (iv)  incompatible  with any of Landlord's  contractors or  subcontractors
working on the Building (such  incompatibility  to include possible  conflicts with any union contractors  employed
by Landlord).
4.        Other  Construction  Requirements.  Tenant shall also ensure  compliance with the following  requirements
concerning construction:

(a)       Tenant and all  construction  personnel  shall abide by  Landlord's  job site rules and  regulations  and
fully cooperate with Landlord's  construction  representatives  in coordinating all construction  activities in the
Building Project,  including rules and regulations  concerning working hours,  parking, and use of the construction
elevator.

(b)       All transportation of construction materials shall be on the padded construction elevator only.

(c)       Tenant shall be responsible  for cleaning up any refuse or other  materials  left behind by  construction
personnel at the end of each work day.

(d)       Tenant shall deliver to Landlord all forms of approval  provided by the  appropriate  local  governmental
authorities to certify that the Tenant  Improvements  have been completed and the Premises are ready for occupancy,
including a final, unconditional certificate of occupancy.

(e)      At all times during  construction,  Tenant  shall allow  Landlord  access to the  Premises for  inspection
purposes.  On completion of the Tenant  Improvements,  Tenant's  general  contractor shall review the Premises with
Landlord and Tenant and secure Landlord's and Tenant's acceptance of the Tenant Improvements.

5.        Tenant  Improvement  Allowance.  If and for as long as Tenant is not in default  under this Lease  beyond
any applicable grace period,  Tenant shall be entitled to a fixed price tenant improvement  allowance in the amount
of Four  Hundred  Ten  Thousand  Two  Hundred  Fifty and 00/100  Dollars  ($410,250.00)  (the  "Tenant  Improvement
Allowance").  Tenant hereby grants to Landlord a security  interest in all improvements to the Premises paid for in
whole or in part with the Tenant  Improvement  Allowance  or as Tenant  Costs  under this Work  Letter.  The Tenant
Improvement  Allowance  shall be paid to Tenant in  reimbursement  for the total out of pocket costs paid by Tenant
for the design  professional  fees and the "hard  costs" of  construction  of the Tenant  Improvements.  The Tenant
Improvement  Allowance  may not be applied to any other  costs such as, but not  limited  to, the costs of Tenant's
furniture,  trade  fixtures,  and equipment,  cabling and wiring costs,  and moving  expenses.  If the total amount
paid by Tenant  for the  Tenant  Improvements  is less than the  Tenant  Improvement  Allowance,  Tenant  shall not
receive  cash or any  credit  against  rent  for the  unused  portion  of the  allowance.  The  Tenant  Improvement
Allowance shall be paid within in no more than three  installments.  With respect to Tenant's first two (2) payment
requests,  Landlord  shall  make such  reimbursement  to Tenant  within  twenty-one  (21)  days  after  each of the
following events has first occurred:  (i) Tenant has submitted paid invoices for Tenant  Improvements in the amount
requested;  (ii)  Tenant  has  provided  the  certification  of its  architect  that  the  invoices  are  for  work
incorporated into the Premises;  and (iii) Tenant has submitted  releases of lien from Tenant's general  contractor
and  lienors as defined  below.  The  second  disbursement  shall  also not be due until  Tenant  has  submitted  a
certification  from  its  architect   designating  the  percentage  of  completion  of  the  Tenant   Improvements,
demonstrating  that they  have  been at least  eighty  (80%)  completed.  With  respect  to the final  installment,
Landlord's  reimbursement  shall occur  within 21 days after all of the  following  events have  occurred:  (i) the
Tenant  Improvements  have been  substantially  completed;  (ii) Tenant has delivered to Landlord final releases of
lien from Tenant's  general  contractor and all lienors giving notice as defined in the Florida  Construction  Lien
Law and a final  contractor's  affidavit from the general  contractor in accordance  with the Florida  Construction
Lien Law, and all other  receipts and  supporting  information  concerning  payment for the work that  Landlord may
reasonably  request;  (iii) Tenant has moved into the Premises  and opened for business in the  Premises;  and (iv)
Tenant  has paid the rent due for the first  month of the Lease  Term.  Tenant  shall  provide  Landlord  with true
copies of bills paid by Tenant for the Tenant  Improvements,  and Landlord  shall  reimburse  Tenant for the amount
set forth in the bills up to the amount of the Tenant  Improvement  Allowance.  If Tenant is in default  under this
Lease  beyond any  applicable  grace  period,  Landlord  may,  in addition  to all its other  available  rights and
remedies,  withhold payment of any unpaid portion of the Tenant Improvement  Allowance,  even if Tenant has already
paid for all or a portion of the cost of the Tenant Improvements.

(a)       The Tenant  Improvement  Allowance  is being paid by  Landlord as an  inducement  to Tenant to enter into
this Lease and as  consideration  for the  execution  of this Lease by Tenant and the  performance  by Tenant under
this Lease for the full Lease Term.  If after Tenant has been granted all or any portion of the Tenant  Improvement
Allowance,  the  Lease  Term is  thereafter  terminated  by virtue of a  default  by  Tenant  or  Landlord  resumes
possession  of the Premises  consequent to a default by Tenant,  and Landlord is precluded by  applicable  law from
collecting  the full amount of damages  attributable  to the  default as  provided  in the Default  section of this
Lease,  then, in addition to all other available  damages and remedies,  Landlord shall also be entitled to recover
from Tenant the unamortized  portion  (calculated  using an interest rate of 12% per annum  compounded  monthly) of
the Tenant  Improvement  Allowance,  which sum shall not be deemed  rent.  This  obligation  of Tenant to repay the
unamortized  balance of the Tenant  Improvement  Allowance  to  Landlord  shall  survive the  expiration  or sooner
termination of the Lease Term.

(b)       The Tenant  Improvement  Allowance  provisions  of this exhibit shall not apply to any  additional  space
added to the  original  Premises at any time after the date of this Lease unless  expressly  provided in the Lease,
whether by any options under this Lease or otherwise,  or to any portion of the original  Premises or any additions
to the Premises in the event of a renewal or extension of the initial  Lease Term,  whether under any options under
this Lease or otherwise, unless expressly so provided in this Lease or an amendment to this Lease.

6.        Commencement  Date. The  "Commencement  Date" shall mean the earlier to occur of (i) the date when Tenant
takes  possession of the Premises or any portion of the Premises for the conduct of its business  after the date of
substantial  completion  of the Tenant  Improvements,  or (ii) ninety (90) days  following  Landlord's  delivery of
possession  of to  Tenant,  but not  later  than  April 1,  2004.  Substantial  completion  shall be deemed to have
occurred  on the date that a  Certificate  of  Occupancy  or its  equivalent  is issued  by the  appropriate  local
governmental  entity  concerning  the Tenant  Improvements,  or, if no  Certificate of Occupancy will be issued for
the Tenant  Improvements,  the date on which the Tenant  Improvements  are  substantially  completed so that Tenant
may use them for their intended  purpose,  notwithstanding  that minor  punchlist  items or  insubstantial  details
concerning to  construction,  decoration,  or mechanical  adjustment  remain to be performed.  Landlord  shall,  in
accordance  with  the  foregoing,  determine  the  Commencement  Date  and  shall  notify  Tenant  of the  date  so
determined.  Tenant shall, if Landlord so requests,  thereafter  execute a letter  confirming the Commencement Date
and the  expiration  date of this  Lease  substantially  in the form of Rider 1-B to this  Lease.  The  failure  of
Tenant to execute the letter shall not affect the validity of the  Commencement  Date as  reasonably  determined by
Landlord.

7.       Low Voltage; Permits:

         Tenant shall be  responsible  for  providing  their own  telephone,  computer,  and security  cable and/or
wiring for the Premises.  This work as it relates to low voltage  wiring,  requires  permitting and  inspections by
Broward County.  Failure of Tenant's vendors or contractors to obtain required  permits and associated  inspections
will result in a Tenant-caused delay in occupying the space.

8.       Tenant's As-Built Verification.

         In no event shall Tenant or any  contractor,  subcontractor,  supplier or any party acting by,  through or
under Tenant rely on the Plans and  Specifications  or any Building plans  submitted by Landlord for the purpose of
determining  final  measurements  for any  systems,  furnishings,  cabinets,  electrical,  mechanical  or  plumbing
installations  or any other type of  installation  by Tenant  whatsoever,  it being clearly  understood that Tenant
shall obtain field as-built measurements and as-built plans for such purposes.

                                              (signature page follows)





         EXECUTED BY the parties hereto simultaneously with the Lease and attached thereto as Exhibit "D".

Executed in the Presence of:                                  "TENANT"

                                                              SUN INTERNATIONAL NORTH AMERICA, INC.
                                                              Signature:__________________________

__________________________________                            Name printed:_______________________

__________________________________                            Title:______________________________
Witness Name printed
                                                              Date:______________________________
__________________________________

__________________________________
Witness Name printed
Executed in the Presence of:                                  "LANDLORD"

                                                              TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA


                                                              Signature:__________________________
__________________________________                            Name:_____________________________
                                                              Title:______________________________
__________________________________                            Date:______________________________
Witness Name printed

__________________________________

__________________________________
Witness Name printed














                                                    EXHIBIT "E"

                                            ROYAL PALM 1 AT SOUTHPOINTE

                                          BUILDING RULES AND REGULATIONS

Landlord has adopted the following  Building  Rules and  Regulations  for the care,  protection  and benefit of the
Premises and the Building and for the general  comfort and welfare of all Tenants.  These Rules and Regulations are
subject to amendment by the Landlord from time to time.

1.       The sidewalks,  entrances,  passages,  courts or stairways of the Building shall not be obstructed or used
for any purpose other than ingress and egress to and from the Tenant's Premises.

2.       Nothing shall be attached to the outside walls or windows of the Building.  No curtains,  blinds,  shades,
or screens  shall be used in  connection  with any  exterior  window or door of the  Premises,  except as  Landlord
designates as Building standard.

3.       No sign,  advertisement,  object,  notice or other  lettering  shall be exhibited,  inscribed,  painted or
affixed  on any part of the  outside,  or inside if visible  from the  outside,  or the  Premises  or the  Building
without the prior consent of Landlord.

4.       The restrooms and other  plumbing  fixtures  shall not be used for any purposes other than those for which
they were constructed.  No tenant shall bring or keep any inflammable,  combustible,  explosive or hazardous fluid,
material, chemical or substance in or about the Premises without Landlord's prior written consent.

5.       No tenant or occupant  shall mark,  paint,  nail,  tape or drill into any part of the Building  except the
Premises,  and then only with the prior written  consent of Landlord.  No tenant shall  install any resilient  tile
or similar floor covering in the Premises except in a manner approved by Landlord in writing.

6.       No  bicycles,  vehicles  or  animals  of any kind shall be  brought  into the  Premises  (except as may be
required by disabled  persons).  No cooking  shall be done or  permitted  in the Building by any tenant or occupant
without  the  approval  of  Landlord,  except as is  customary  for  general  office  purposes  (such as the use of
microwave  ovens and coffee  machines).  No tenant or occupant  shall cause any unusual or  objectionable  odors to
emanate from the  Premises.

7.       No tenant or occupant  shall  create,  or permit to be created,  any  nuisance,  or  interfere  with other
tenants or occupants of the Building or neighboring buildings or premises.

8.       No additional  locks or bolts of any kind shall be placed upon any of the doors or windows,  nor shall any
changes be made in locks or the  mechanism  thereof.  Each  tenant  shall,  upon the  termination  of its  tenancy,
deliver to Landlord all keys of stores, offices and restrooms obtained by such tenant.

9.       Landlord  shall have the right to prohibit any  advertising  that  includes the address of the Building or
any reference to it by any tenant which, in Landlord's opinion, impairs the reputation of the Building.

10.      If the Premises become infested with vermin,  such tenant,  at its sole cost and expense,  shall cause its
Premises  to be  exterminated,  from  time to  time,  to the  satisfaction  of  Landlord,  and  shall  employ  such
exterminators therefor as shall be approved by Landlord.

11.      Neither any  premises or any portion of the  Building  shall be used,  or permitted to be used for lodging
or sleeping, or for any illegal  or immoral purpose.

12.      The  requirements  of tenants  will be attended  to only upon  application  at the office of the  Building
Manager.  Building  employees  shall not be required to perform any work outside of their  regular  duties,  unless
under specific instructions from the office of Building Manager.

13.      Canvassing,  soliciting  and peddling in the  buildings is prohibited  and each tenant and occupant  shall
cooperate in seeking their prevention.

14.      In the delivery or receipt of  merchandise,  freight or other  matter,  only hand trucks or other means of
conveyance equipped with rubber side guards and such other safeguards as Landlord may require shall be used.

15.      With  respect to work being  performed by a tenant in its  Premises  with the  approval of  Landlord,  the
tenant shall refer all  contractors,  contractors'  representatives  and  installation  technicians to the Building
Manager for its  supervision,  approval and control prior to the performance of any work or service,  and each such
party  performing work must tender an certificate of insurance prior to the  commencement of work,  naming Landlord
and its  property  manager  as  additional  insureds.  This  provision  shall  apply to all work  performed  in the
Building including installation of telephones, electrical devices and attachments.

16.      Each  tenant and all of such  tenant's  representatives  shall  observe  and comply  with the  driving and
parking signs and markers on the land and the Project and Landlord shall not be  responsible  for any damage to any
vehicle towed because of noncompliance with parking regulations.

17.      No radio or television antenna,  loudspeaker,  music system or other device shall be installed on the roof
or exterior walls of the Building or on common walls with adjacent tenants,  without  Landlord's  written approval,
which approval may be withheld in Landlord's sole and absolute discretion.

18.      No  material  shall be placed in the trash boxes or  receptacles  in the  Building or project  unless such
material  may be disposed of in the ordinary and  customary  manner of removing and  disposing of trash and garbage
and will not result in a violation of any Laws governing such  disposal.  All garbage and refuse  disposal shall be
made only through entry ways provided for such purposes and at such times as Landlord shall designate.

19.      Landlord may designate a specific  elevator for use as a service  elevator,  and no other  elevator may be
used as a service or freight elevator.

20.      Tenant  shall pay to Landlord  on demand the costs  incurred  by  Landlord  for extra or unusual  cleaning
required because of the condition or nature of the Premises.

21.      If  Tenant  requires  climate  control  at any time  after  Normal  Business  Hours,  Landlord  shall  use
reasonable  efforts to furnish such service upon  reasonable  notice from Tenant,  and Tenant shall pay  Landlord's
charges therefore within five (5) days following Landlord's written demand, such obligation being Additional Rent.

22.      No vending  machines  of any kind  shall be  installed  in the  Premises,  except  with  Landlord's  prior
written  consent,  which  consent may be withheld in  Landlord's  sole and absolute  discretion.  Only Landlord may
install vending machines in the Building and Landlord shall receive all of the revenue derived therefrom.

23.      In moving its property to and from the  Premises,  Tenant shall only use and shall cause its agents to use
the elevator  designated  by Landlord as a service  elevator.  Tenant  shall give  Landlord  written  notice of any
moving  activity by Tenant which is  anticipated  to impede other tenants' use of such elevator at least 5 business
days in advance of the move.  Landlord  reserves  the right to  designate  certain  hours of the day for any moving
activity.

24.      Landlord reserves the right to implement  security measures in the Building,  including but not limited to
locking the entrance doors of the Building  during  weekend,  holiday and  after-hours.  In the event that Landlord
locks such doors,  Tenant shall be issued  security pass keys,  which Tenant shall be responsible  for returning to
Landlord at the expiration or earlier termination of the Lease.

25.      Tenant  acknowledges  and agrees that the Building and the Arcade  Building are  "non-smoking"  buildings.
No smoke  from  cigarettes,  cigars,  pipes,  or any other type of smoking  instrument  used by Tenant or  Tenant's
employees,  agents,  contractors,  invitees, or licensees will be permitted in any area of the Building or project,
including  without  limitation the Premises or the interior  common areas of the Building.  Tenant shall inform all
of its  employees,  agents,  contractors,  invitees,  and  licensees  that  enter the  Building,  that  smoking  is
prohibited in the Building and the Premises.








                                                    EXHIBIT "F"

                                        CONSTRUCTION RULES AND REGULATIONS

1.       Each general  contractor shall provide a full time project  supervisor,  field office and telephone during
the project construction.

2.       Employees of contractors  and  subcontractors  must park in areas  designated by the  Landlord's  property
manager.  No parking is allowed in the loading area or on the throughways.

3.       All contractors and  subcontractors  are expressly  prohibited from using the passenger  elevators or from
being in the front lobby or atrium area.  Only the designated  freight  elevator  shall be used by all  contractors
and  subcontractors.  Large material  deliveries  may be made only at a time  scheduled in advance with  Landlord's
property  manager  so that any  conflicts  can be  coordinated.  The  route of  access  into the  Building  will be
designated by Landlord's property manager.

4.       Each  general  contractor  shall submit a complete  list of suppliers  and  subcontractors  to  Landlord's
property  manager  prior  to  commencement  of   construction.   Each  contractor  shall  also  submit  a  list  of
subcontractors'  phone numbers as well as after-hours  phone numbers if contractors or  subcontractor  will perform
work after hours.

5.       Each  contractor  shall  maintain  clean and safe working  conditions at all times.  Trash removal will be
done at contractor's  cost,  including all labor and dumpsters.  Dumpster locations shall be approved by Landlord's
property  manager.  Trash on any tenant  build out  floors  shall be removed  within 24 hours of any  directive  of
Landlord's property manager.  No accumulation of trash will be tolerated anywhere in the building.

6.       Normal working hours will be 7:00 a.m.  until 5:30 p.m.  Landlord's  property  manager must be notified in
writing of all work  schedules  and the names of those who will be working in the  building  after  normal  working
hours.

7.       After  hours and  weekend  work must be  supervised  by  contractor's  superintendent  and are  subject to
additional HVAC, security and other applicable charges.

8.       Each  contractor must advise  Landlord's  property  manager before working on any fire safety  components,
and use all efforts to avoid  accidental  activation of alarms.  All fire detection  devices must be protected from
contaminates from construction activity.

9.       No contractor and/or  subcontractor  may not operate air handling units.  Arrangements for after hours air
conditioning  must be made with the office of Landlord's  property manager before 3:00 p.m. for night time requests
and before 3:00 p.m. Friday for weekend  requests.  Contractor shall provide a pre-filter for the air handler,  and
shall change it regularly.

10.      Contractor shall supply to building  management  copies of all building permits and submit a complete test
and balance report from an independent air conditioning contractor.

11.      Contractor  must protect  public area  corridors and carpet by plastic  runners and or builder's  paper as
necessary and otherwise in accordance with the requirements of Landlord's property manager.

12.      Contractor  must use  walk-off  mats at all  entrances  to the work area and  changed  as often as needed.
Contractor will be responsible for maintaining cleanliness of these areas at all times.

13.      No  utilities  are to be  interrupted  without the written  approval  Landlord's  property  manager.  Such
approval must be requested not less than 24 hours in advance and on regular working days.

14.      Work that may generate  excessive noise that may disturb or inconvenience  other occupants of the building
shall not be performed  between the hours of 8:30 a.m. and 5:30 p.m. on regular  business  days.  Such work must be
scheduled and coordinated with Landlord's property manager.

15.      Building  materials  or equipment  are to be stored only in the build out area unless  prior  arrangements
have been made with Landlord's property manager.

16.      Construction  personnel  are not to eat in the lobbies or atrium area nor are they to  congregate in these
areas at any time.  They should eat in the space in which they are working.

17.      No keys will be issued to any  subcontractors.  The general  contractor on the job will be issued a key on
a daily sign in/out basis only if necessary.

18.      Landlord's property manager will designate restrooms to be used by construction personnel.

19.      Contractor  shall take all  reasonable  precautions to protect  against the  possibility of fire including
the following mandatory measures:  no smoking,  supervision of welding and soldering,  daily inspections of the job
site, and adequate presence of fire extinguishers.

20.      Workers without shirts or  inappropriately  dressed or who conduct  themselves in an inappropriate  manner
will be required to leave the building.

21.      No music will be allowed in any construction area.

22.      Prior to  commencing  work,  the  contractor  must  conduct a walk  through  of the  common  area with the
Landlord's  property  manager to determine  existing  damage;  in the event the so the contractor  will not be held
responsible.

23.      Contractor  must submit in writing a list of all standard  owner supplied  building  material that will be
required for each  individual  job. This material  will be turned over to the  contractor as scheduled  between the
contractor and Landlord's representative.

24.      Contractor  is to maintain  and provide  proof of adequate  insurance  coverage as approved by  Landlord's
property  manager  throughout  the duration of the  project.  The Hogan Group and  Teachers  Insurance  and Annuity
Association  of America  shall be named as  additional  insureds  on the  contractors  insurance  policies  and the
evidence of insurance provided by contractor must include such additional insureds.

25.      Contractor  must supply an on site  supervisor  and  security  guard any time work is  scheduled in tenant
occupied  spaces after regular  building  hours.  The supervisor and guard must remain on duty 100% of the time the
space is open and/or work is in progress.

26.      Contractor  must assure that  entrance and  perimeter  doors of all premises are locked at all times after
hours.

27.      Landlord's  property  manager  reserves  the right to  inspect  any and all  boxes,  tool  chests or other
containers  which may be brought in to the building by the contractor  and/or his employees.  Such  inspections may
be made  randomly  and  without  prior  notice.  Any  employees  or  subcontractors  not willing to consent to such
searches will not be permitted to work in the Building.

28.      Contractor  must shield smoke detectors from  construction  dust as necessary.  Smoke detector  protection
must be removed at the end of each work day and inspected by the contractor to insure its proper operation.

29.      THIS IS A NON-SMOKING BUILDING.  Smoking is not permitted anywhere within the building.

For questions concerning these construction rules and regulations,  please contact Landlord's property manager:

         Joseph J. Leone, CPM(R), RPA Telephone(954)452-9100 x 106
         Senior Property Manager
         The Hogan Group
         1000 South Pine Island Road
         Suite 400
         Plantation, FL 33324


I, __________________________________, as ____________________________
                        (name)                                             (title)

of __________________________________ have read and received a copy
                      (company)

of the above rules and regulations and agree to abide by them at all times.

Signature:__________________________

Date:______________________________








                                                     EXHIBIT G

                                                  OPTION TO RENEW

1.       Landlord  hereby  grants to Tenant,  so long as Tenant  shall not be in  default of any terms,  covenants,
payments or  conditions  of this Lease beyond any  applicable  grace or cure period after  Tenant's  notice of such
default,  the right and option to renew the term of this Lease,  upon its then existing terms and conditions except
as set forth herein,  for one (1) additional 5 year term (the "Renewal  Term").  In addition,  Landlord agrees that
it shall,  within sixty (60) days following the date of this Lease,  proceed in good faith to attempt to obtain the
internal  approvals  required  for  Landlord  to include a second  (2nd) five year  Renewal  Term and,  if Landlord
obtains such  approvals,  Landlord and Tenant  shall enter into an  amendment to this Lease  including  such second
Renewal Term under the terms of this Rider.

2.        Tenant shall give  Landlord  written  notice (each a "Renewal  Notice") of Tenant's  election to exercise
its  Renewal  Option for each  Renewal  Term by written  notice to  Landlord  received by Landlord on or before two
hundred  seventy (270) days prior to the  expiration of the then current Term of the Lease;  provided that Tenant's
failure  to give the  Renewal  Notice by said  date,  whether  due to  tenant's  oversight  or  failure to cure any
existing defaults or otherwise, shall render this Renewal Option null and void.

3.        Tenant  shall not be  permitted  to exercise  its Renewal  Option at any time during  which  Tenant is in
default  under the Lease  beyond  any  applicable  grace or cure  period,  subject to  applicable  notice and grace
periods (if any).  In the event that Tenant  fails to cure any default  under this Lease prior to the  commencement
of any  Renewal  Term,  subject to  applicable  notice and grace  periods,  the Renewal  Term shall be  immediately
cancelled,  unless Landlord  elects to waive such default,  and Tenant shall  forthwith  deliver  possession of the
Premises to Landlord as of the expiration date or the earlier termination of the then current term of this Lease.

4.        Tenant shall be deemed to have accepted the Premises in "as is" condition as of the  commencement  of the
Renewal Term,  subject to any repair and maintenance  obligations of Landlord under this Lease, it being understood
and agreed that  Landlord  shall have no  obligation  to  renovate  or remodel  the  Premises or any portion of the
Building as a result of Tenant's renewal of this Lease.

5.        The covenants and  conditions of the Lease in force during the Term of the Lease shall  continue to be in
effect  during any Renewal  Term,  except  that the  Commencement  Date for the  purposes of the Lease shall be the
first day of each  Renewal  Term,  and the Base Rental for the first year of each  Renewal Term shall be based upon
95% of the then prevailing  market rental rate for office space  comparable to the Premises located in a comparable
office  building  properties  located in Broward County,  Florida  outside of the City of Fort  Lauderdale  central
business  district that include covered parking either in the building or an adjacent parking  structure;  provided
however  that the Base Rental  shall in no event be less than the  average  Base Rental in effect over the five (5)
year period prior to such Renewal Term (the "Market  Rate").  For purposes of this Lease,  the "Market  Rate" shall
be determined as follows:

A.        Landlord  shall  propose to Tenant the Market Rate for the  applicable  Renewal Term within  fifteen (15)
business days following  Landlord's receipt of Tenant's notice of renewal.  Tenant shall have fifteen (15) business
days  following its receipt of such  Landlord's  notice within which to advise  Landlord in writing either that (i)
Tenant  accepts  Landlord's  proposed  Market  Rate and  renews the Term at such rate;  or (ii)  Tenant  objects to
Landlord's  proposed  Market Rate.  If no objection is received by Landlord  within such fifteen (15)  business day
period,  then  Tenant  shall be deemed to have  elected to  exercise  its  renewal  option at the rate set forth in
Landlord's notice.

B.       If Tenant's  objection to Landlord's  proposed Market Rate is timely  received by Landlord,  then Landlord
and Tenant shall attempt in good faith to agreed upon the Market Rate within  fifteen (15) business days  following
the date of Tenant's  objection.  If Landlord  and Tenant  agree upon the Market  Rate  within  such  fifteen  (15)
business day period, then the Market Rate shall be the agreed upon base rental rate.

C.        If  Landlord  and Tenant are unable to agree on the Market  Rate within the  fifteen  (15)  business  day
period described in the preceding  subparagraph  (after timely notice of Tenant's objection to Landlord's  proposed
Market Rate),  then the Market Rate shall be determined by appraisal as provided  hereinafter.  Landlord and Tenant
shall  attempt  to  agree  on a  single  M.A.I.  appraiser.  Each  appraiser  (whether  one or  three)  shall  be a
disinterested  licensed  appraiser  expert in the  Plantation  submarket  of Broward  County,  Florida  who, as his
primary  livelihood,  has been active in the valuation of commercial  properties in this submarket for no less than
five (5) years and who has not  previously  represented  either party or any related  party.  If they shall fail to
agree on the choice of a single  appraiser  within ten (10) business  days after demand by either party,  then each
shall select an appraiser  within five (5) business days after the expiration of the prior ten (10) day period.  If
either  Landlord or Tenant  fails to appoint an  appraiser,  then the  appraiser  selected by the other party shall
select the second  appraiser  within five (5) business days following the expiration of the applicable five (5) day
period  referred to above.  The two  appraisers  thus selected  shall  select,  within ten (10) business days after
their appointment,  a third appraiser.  If the two appraisers so selected shall be unable to agree on the selection
of a third  appraiser,  then either  appraiser,  on behalf of both,  shall request such appointment by the American
Institute of Real Estate Appraisers.  Hereinafter  referred to as the "Institute" (or any successor  association or
body of comparable  standing if the Institute is not then in existence).  Each appraiser  shall be a member in good
standing of the Institute and hold the highest general designation of membership therein.

D.        The Market Rate shall be determined  by the  appraisers  (whether one or three) based upon  customary and
usual  appraisal  techniques  of expert  appraisers as of the scheduled  commencement  date of the subject  Renewal
Term.  The  Market  Rate shall  take into  consideration  the size of  Tenant,  Tenant's  creditworthiness,  tenant
improvement  allowances to new tenants in the market,  market based free rent and other concessions,  the length of
the lease term, the amount of brokerage  commissions  payable,  and similar factors. The appraiser (if one) or each
of the  appraisers  (if three) shall prepare a written  report of his or her  determination  of the Market Rate and
deliver a copy to Landlord and a copy to Tenant  within  thirty (30) days of the selection of the appraiser if only
one appraiser is used, or within  forty-five (45) days of the selection of the third appraiser if three  appraisers
are used.  The Market Rate for purposes of this Lease shall equal the rental rate  established by the one appraiser
if only one appraiser is used, or the average of the proposed  rental rates  established by each appraiser if three
appraisers are used.

If the  appraisal  process  described  above is used to determine  the Market Rate,  then the  reasonable  fees and
expenses of the appraisers shall be shared equally by Landlord and Tenant.









                                                     EXHIBIT H

         Landlord's contract with the provider for janitorial services for the Building shall include
specifications consistent with the following.

                                             JANITORIAL SPECIFICATIONS

                                                     ARTICLE I

                                                DEFINITION OF WORK

Section 1.1       Janitorial Services.               Janitorial   Services   shall  include  all  labor,   cleaning
products,  cleaning supplies,  equipment and paper products necessary to provide housekeeping services as described
herein as specified in Article III, Cleaning Specifications, (collectively, the "Work").


                                                    ARTICLE II

                                          JANITORIAL SERVICES AND DUTIES

Section 2.1       Hours of Work and Frequency of Service.

a)       Night Cleaning Services: Night cleaning services will be provided Monday through Friday except New
                  Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
                  ("Designated Holidays"). Work will not be performed prior to 6:00 PM Monday through Friday.
                  However, Work can be performed after 1:00 PM on Saturday and any time on Sunday.

b)       Day Cleaning Services:  Day staff shall work Monday through Friday, 7:00 AM until 3:30 PM (except
                  Designated Holidays) with a one-half hour break for lunch, one morning break, and one afternoon
                  break.


              Section 2.2  Areas to be Serviced:     The Work shall be  provided  to the  following  areas:  tenant
              suites,  elevator  lobbies,  restrooms,  stairwells,  corridor and common  areas,  first floor lobby,
              elevator cabs, janitorial closets,  multi-tenant  corridors,  the immediate exterior of the Property,
              exterior smoking areas,  janitorial storage,  breezeways and any other areas directed by the Owner or
              Manager.

                                                             ARTICLE III

                                                       CLEANING SPECIFICATIONS

                  Section 3.1       TENANT SUITES AND COMMON AREAS

a)       Nightly Services:

1.       Detail vacuum all carpet in offices and public areas.
                                            Vacuum around doorframes and behind doors.

2.       Sweep and dust mop all resilient and composition
                                            floors with treated mops.  Damp mop with  germicidal  cleaner  removing
                                            all spills and water stains.

3.       Dust all desks and office furniture with treated dust
                                            cloths including the tops of file cabinets and shelving.

4.       Empty all recyclable wastepaper baskets. Comply
                                            with current recycling program.

5.       Empty all waste paper baskets and other trash
                                            containers  and replace  plastic  trash  liners as needed and clean and
                                            sanitize as required.

6.       Remove all trash to trash compactors designated by
                                            Owner or Manager at loading dock.

7.       Remove fingerprints, dirt smudges, graffiti, etc.
                                            from all doors,  frames,  glass  partitions,  windows,  light switches,
                                            walls, elevator door jambs, call buttons and elevators.

8.       Return chairs and wastebaskets to proper positions.

9.       Clean, sanitize and polish drinking fountains.

10.      Monitor all stairwells and dust and/or damp wipe railings. Sweep landings and treads as needed.

11.      Dust and remove debris from all metal doors and elevator door thresholds.

12.      Wipe clean smudged bright work (brass, stainless).

13.      Spot clean all carpets, resilient and composition floors as required.

14.      Service all walk-off mats as required.

15.      Dust and shine all low reach areas including, but not limited to, standard and built-in furniture
                                            ledges, baseboards, windowsills, door louvers, workstation partitions
                                            and chairs.

16.      Wipe all kitchen counters and remove dirt and fingerprints from vertical cabinets.

17.      Wipe all telephones with antiseptic solution

18.      Lower and close all blinds, turn off lights.

b)       Weekly Services:

1.       Dust all high reach areas including, but not limited
                                            to,  picture  frames,  charts,  graphs,  wood  paneling,  tops  of file
                                            cabinets,  shelving,  and molding and similar wall hangings not cleaned
                                            nightly.

2.       Dust inside of all doorjambs.

3.       Clean and polish all metal door and elevator door
                                            thresholds.

4.       Wipe clean and polish all bright work.

5.       Sweep all service stairwells.

6.       Dust all wood vinyl bases.

7.       Edge all carpeted areas (use a crevice tool for inaccessible areas).

8.       Thoroughly vacuum under and around all desks and office furniture.

9.       Clean and spray buff all resilient and composition flooring.

10.      Dust and spot clean all fire extinguishers and fire extinguisher cabinets.

11.      Spot clean all vinyl covers around light switches.

12.      Clean and leave streak-free all window wall glass, glass partitions or detail.

c)       Monthly Services:

1.       Dust all high reach areas, including but not limited
                                            to,  tops  of  doorframes,   structural  and  furniture   ledges,   air
                                            conditioning diffusers and return grilles and light fixtures.

2.       Vacuum all upholstered furniture and fabric wall
                                            covering as needed.

3.       Dust window blinds.


d)       Quarterly Service:

1.       Wash all chair mats using approved cleaning
                                            material.

2.       Strip and wax kitchen, supply room and file room
                                            resilient and composition flooring.

e)       Semi-Annual Service:

1.       Clean all common area carpets including elevators.
                                            Cleaning will be done either on a high-powered
                                            extraction or bonnet mist basis.

f)       Annual Service:

1.       Damp wipe blinds.

2.       Hepa-vac all upholstery and tenant carpet.

                  Section 3.2       RESTROOMS

a)       Nightly Services:

1.       Restock all rest room including paper towels, toilet
                                            tissue,  toilet seat covers hand soap,  sanitary napkins and tampons as
                                            required.

2.       Wash, polish and sanitize all mirrors, dispensers,
                                            faucets,  flush  valves and bright work with  non-scratch  disinfectant
                                            cleaner as approved by Owner or Manager.

3.       Wash and sanitize all toilet seats, urinals and sinks
                                            with non-scratch disinfectant cleaner. Wipe dry all sinks.

4.       Remove stains, descale toilets, urinals and sinks as
                                            required.

5.       Mop all rest room floors with disinfectant,
                                            germicidal solution.

6.       Remove all restroom trash from building to
                                            designated area.

7.       Wipe down dirt spots and water stains on wall covering.

8.       Clean and sanitize floor beneath urinals to prevent urine stains.

9.       Vacuum A/C diffusers.

10.      Clean doors, light fixtures, switches, door handles, etc.

11.      Stall partitions are to be damp cleaned high and low, both sides.

12.      Dust all sink drains and pipes.

b)       Monthly Services:

1.       Dust all air conditioning diffusers and return air
                                            grilles.

2.       Spray wash and scrub wall tiles.

3.       Dust all doors, jambs and louvers.

4.       Polish floor drain cover.

c)       Quarterly Services:

1.       Machine scrub floor with mild solution, neutralize
                                            flush.

                  Section 3.3       MAIN LOBBY, PUBLIC CORRIDORS AND
                                    ELEVATOR LOBBIES

a)       Nightly Services:

                                    1.      Thoroughly clean all glass entry doors and sidelights.

2.       Spot clean all metal work including hardware, kick plates, cove base and wood baseboard, drinking
                                            fountains, planters, elevator call button plates, bronze and any
                                            visible hardware.

3.       Spot clean all columns and tenant directory board.

4.       Thoroughly clean all door thresholds of dirt and debris.

5.       Sweep and mop all granite flooring with a rayon mop. Clean dust and dirt from corners.

6.       Vacuum all carpets including garage landings and entrance mats and spot clean as necessary.

7.       Dust lobby walls top to bottom.

8.       Empty and clean all trash receptacles and ashtrays.

9.       Dust window ledges.

10.      Police exterior pavers and entrance walks.

11.      Sweep and dust railing of stairwells. Remove all debris found in stairwells.

b)       Weekly Services:

1.              Thoroughly clean all bronze metal work.

2.             Wipe down furniture, planters, baseboard and any

                                            artwork.

c)       Monthly Services:

1.             Damp mop granite & marble floor with high-speed
                                            floor machine using a white polish pad and apply granite polish.

2.             Mop all stairwells.

d)       Quarterly Services:

1.             Machine scrub to strip sealant from granite floor
                                                rinse, clean, dry and reapply granite sealant polish.

2.             High dust marble, core and perimeter air diffusers,
                                            lighting  fixtures,  metal  ceiling  coves,  curtain wall  mullions and
                                            columns.

3.             Wash all interior lobby "store front" windows.

                  Section 3.4       SERVICE AREAS

a)       Nightly Services:

1.       Remove trash from all areas, including freight vestibules.

2.       Maintain an orderly arrangement of janitorial supplies and paper products in janitorial closets and
                                            service sink areas.

3.       Maintain an orderly arrangement of all equipment stored in service areas such as mops, buckets, brooms,
                                            vacuum cleaners, and scrubbers and like materials.

4.       Clean and disinfect service sinks and floors in service areas and janitorial closets.

                  Section 3.5       PASSENGER ELEVATORS
                           a)       Nightly Services:

1.       Spot clean interior surfaces of cab walls and doors.

2.       Thoroughly clean all metal surfaces with approved products.

3.       Spot clean, vacuum and edge all elevator carpeting.

4.       Report all burned out lights or damage of cabs to cleaning supervisor who will report to Owner or
                                            Manager.

5.       Thoroughly vacuum, clean and polish all elevator thresholds.

6.       Remove all debris found in elevator cab including inside telephone boxes.

7.       Vacuum all elevator landings including garage landings.

b)       Weekly Services:

1.       Dust ceilings including incandescent cab lamps;
         wipe with a lint-free cloth to remove smudges.
                  Section 3.6       EXTERIOR SERVICE
a)       Nightly Services:

1.       Monitor perimeter of building and garage including
         smoking areas.
2.       Sweep and remove accumulated soft dirt, papers and leaves in all areas where wind tends to cause a
                                            collection of debris.

3.       Empty all trash receptacles and ashtrays.

4.       Spot clean all exterior glass and front doors at building entrance.

5.       Clean parking deck lobbies, stairs and elevators (tracks, carpet, cabs).

6.       Sweep all pedimats.

b)       Weekly Services:

1.       Hose down or pressure wash all pavers at pedestrian
         walkways and all entrance walks including loading dock area.
2.       Remove spider webs from exterior perimeter lights
         and inside garage.
3.       Replace sand in cigarette urns.

                  Section 3.7       Day Staff Daily Services:

1.       Deliver tenant newspapers.

2.       Stock paper products in restrooms, ensure soap dispenser operation and wipe clean, empty waste cans,
                                            wipe up stains and drips, flush unflushed toilets and  perform
                                            general cleaning where necessary.

3.       Sweep, wet mop, dust mop, vacuum dust, clean
                                            glass windows,  shine brass  fixtures,  empty trash,  clean  restrooms,
                                            and police exterior smoking areas.

4.       Disinfect all water fountains located on the first floor.

5.       Clean and polish all metal surfaces.

6.       Empty and clean all common area trash receptacles and ashtrays in lobby and garage landings.

7.       Dust window ledges in lobby.

8.       Monitor and sweep perimeter pavers and entrance walks.

9.       Respond to management service requests received during the course of the day.









                                                   EXHIBIT "H-1"

                                  (Commencement Date Letter for Initial Premises)

                                                  THE HOGAN GROUP
                                            1000 South Pine Island Road
                                                     Suite 170
                                             Plantation, Florida 33324

_____________, 2002



SUN INTERNATIONAL NORTH AMERICA, INC.
1000 South Pine Island Road
Plantation, Florida 33324

         Re:      Lease dated ______________,  2002 by and between Teachers Insurance and Annuity Association of
                  America, as Landlord, and SUN INTERNATIONAL NORTH AMERICA, INC., as Tenant (the "Lease")

Dear ________:

         Under  EXHIBIT  "D-1" to the Lease,  this will  confirm  that the  Commencement  Date of the Lease Term is
______________________, and the expiration date of the Lease Term is ___________________.

                                                     Sincerely,
                                                     LANDLORD:

                                                     TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

                                                     By:    The Hogan Group, Property Manager for Royal Palm I at
                                                            Southpointe




                                                            By:_________________________________
                                                                Name:____________________________
                                                                Title:_____________________________
                                                                                 Date Executed:____________________


TENANT:
ACKNOWLEDGED AND AGREED:
SUN INTERNATIONAL NORTH AMERICA, INC., a
Florida corporation


By:_____________________________
     Name:________________________
     Title:_________________________
Date Executed:____________________







                                                   EXHIBIT "H-2"

                                (Commencement Date Letter for Subsequent Premises)

                                                  THE HOGAN GROUP
                                            1000 South Pine Island Road
                                                     Suite 170
                                             Plantation, Florida 33324

_____________, 2002



SUN INTERNATIONAL NORTH AMERICA, INC.
1000 South Pine Island Road
Plantation, Florida 33324

         Re:      Lease dated ______________,  2002 by and between Teachers Insurance and Annuity Association of
                  America, as Landlord, and SUN INTERNATIONAL NORTH AMERICA, INC., as Tenant (the "Lease")

Dear ________:

         Under EXHIBIT "D-2" to the Lease,  this will confirm that the Commencement  Date of the Lease Term for the
Subsequent Premises is ______________________.

                                                     Sincerely,
                                                     LANDLORD:

                                                     TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

                                                     By:    The Hogan Group, Property Manager for Royal Palm I at
                                                            Southpointe




                                                            By:_________________________________
                                                                Name:____________________________
                                                                Title:_____________________________
                                                            Date Executed:_______________________


TENANT:
ACKNOWLEDGED AND AGREED:
SUN INTERNATIONAL NORTH AMERICA, INC., a
Florida corporation


By:_____________________________
     Name:_______________________
     Title:________________________
Date Executed:___________________







                                                              RIDER #2
                                                        RIGHT OF FIRST OFFER

1.       Provided  Tenant is not in default under the Lease beyond any applicable  notice and cure or grace period,
Tenant  shall at any time during the Term of the Lease,  or any renewal term  thereof,  have a right of first offer
to  negotiate  a lease for space  contiguous  to and on the same  floor as any  portion of the  Premises  which may
become  available  during  initial term or any renewal term of the Lease (the "First  Offer  Space").  In the event
that the First Offer Space shall become  available  for leasing (or, if the First Offer Space is not under lease as
of the date hereof,  if Landlord or Landlord's  real estate agent submits a proposal to a third party to lease such
space),  then  Landlord  shall  promptly  advise  Tenant of the size and location of such space.  Tenant shall give
Landlord written notice fourteen (14) business days following  Landlord's notice to it of its irrevocable  election
to either (i) enter into an  amendment  to this Lease  expanding  the  Premises to include the subject  First Offer
Space,  or (ii) forego its rights  under this right of first offer to lease the First Offer  Space,  in which event
the procedure set forth in Paragraph 2 below shall apply.

2.       In the event that Landlord  does not enter into a lease with the third party tenant to which  Landlord had
submitted the letter of intent  referenced in Paragraph 1 above,  then Landlord shall not be required to again give
Tenant  notice of the  availability  of such space until  ninety (90) days after the notice  given to Tenant  under
Paragraph  1 above.  If Tenant  gives  notice to  Landlord,  however,  during  such  ninety (90) day period that it
desires to expand the  Premises  to  include  any  portion of the First  Offer  Space that shall be  designated  in
Tenant's  notice to Landlord.  Landlord  shall give notice to Tenant,  within ten (10) business days  following its
receipt of Tenant's notice, if such space is available.

3.       "Available"  for  purposes  of this  Rider #2 shall mean that  Landlord  has not  entered  into a lease or
letter of intent for such space with  another  tenant.  In the event  that such space is  available,  Landlord  and
Tenant shall enter into an amendment to this Lease expanding the Premises to include such first offer space.

4.       Tenant's  obligations  under this Lease for the subject  First  Offer Space shall  commence on the date of
Landlord's  delivery of possession  thereof to Tenant,  but Tenant's  lease term for the subject first offer space,
and its  obligation  to pay rent with  respect to such  space,  shall  commence  on the  earlier of (i) one hundred
twenty (120) days  following  Landlord's  delivery of possession to Tenant,  or (ii) the date that Tenant  occupies
the subject First Offer Space for the purpose of the conduct of its business.

5.        Tenant's  rental rate for any portion of the First  Offer Space that it leases  shall be at "Fair  Market
Value".  "Fair Market Value" shall be a sum equal to one hundred  percent (100%) of the fair and reasonable  market
rental  value of the subject  First  Offer  Space,  but no less than the rate per square foot then  payable for the
Premises,  taking into account the rental  rates,  as of the  commencement  date of Tenant's  lease for the subject
expansion  space, in leases entered into during the preceding six (6) month period in a comparable  office building
properties  located in Broward County,  Florida outside of the City of Fort Lauderdale  central  business  district
that include  covered  parking  either in the  building or an adjacent  parking  structure  for premises of similar
size,  taking  into  account  the terms and  conditions  of the Lease and such  other  leases,  the size of Tenant,
Tenant's  creditworthiness,  tenant improvement allowances to new tenants in the market, market based free rent and
other  concessions,  the length of the lease  term,  the  amount of  brokerage  commissions  payable,  and  similar
factors..  The Fair Market Value shall be based upon the net benefits to Landlord  after  deducting  the  amortized
cost of tenant  improvements,  brokerage  commissions,  and rental abatements (whether tied to construction periods
or  otherwise).  The tenant  improvement  allowance  shall take into  account the then  existing  condition  of the
subject first offer space.  The size of the Premises and the first offer space,  and Tenant's credit rating,  shall
be factors in establishing  the Fair Market Value.  The initial Fair Market Value shall increase during the term of
Tenant's lease of the subject first offer space by four percent (4%) per year.

6.        Fair Market Value shall be established under the following procedures.

(a)       Within 10  business  days after  receipt of the  Tenant's  notice  exercising  its right of first  offer,
         Landlord  shall advise  Tenant of the  applicable  Base Rent for the subject  first offer  space.  Tenant,
         within ten (10) business  days after the date on which  Landlord  advises  Tenant of the  applicable  Base
         Rent,  shall either (i) give Landlord  final binding notice that it elects to accept the Fair Market Value
         proposed by  Landlord  or (ii) that Tenant  disagrees  with  Landlord's  determination  of the Fair Market
         Value.  If Tenant fails to provide  Landlord  with a notice that it  disagrees  with  Landlord's  proposed
         rate within the 10 business day period  required  herein,  the Tenant shall be irrevocably  deemed to have
         accepted  Landlord's  proposed  rate. In such event,  or if Tenant gives timely notice to Landlord that it
         accepts  Landlord's  proposed  rate,  then  Landlord and Tenant shall enter into an Amendment to the Lease
         expanding  the  Premises  to include  the  subject  first  offer  space in  accordance  with the terms and
         conditions  of this Rider,  increasing  Tenant's  Percentage  Share,  and making such other changes as are
         commercially typical and necessary to effect such expansion.

(b)       If Tenant timely gives notice to Landlord  that it rejects  Landlord's  proposed Fair Market Value,  then
         Landlord  and  Tenant  shall work  together  in good  faith to agree  upon the Fair  Market  Value for the
         subject  first  offer space  within a thirty (30) day period.  On  agreement,  Landlord  and Tenant  shall
         enter into an amendment to the Lease  expanding the Premises in accordance  with the terms and  conditions
         of this Rider.

(c)       If Landlord  and Tenant  cannot  agree on the Fair Market  Value  within  such 30 days  period,  then the
         Market Rate shall be  determined by appraisal as provided  hereinafter.  Landlord and Tenant shall attempt
         to agree on a single M.A.I.  appraiser.  Each  appraiser  (whether one or three) shall be a  disinterested
         licensed  appraiser  expert in the  Plantation  submarket of Broward  County,  Florida who, as his primary
         livelihood,  has been active in the valuation of commercial  properties in this submarket for no less than
         five (5) years and who has not previously  represented  either party or any related  party.  If they shall
         fail to agree on the choice of a single  appraiser  within ten (10)  business  days after demand by either
         party,  then each shall select an  appraiser  within five (5) business  days after the  expiration  of the
         prior  ten (10) day  period.  If either  Landlord  or  Tenant  fails to  appoint  an  appraiser,  then the
         appraiser  selected by the other party shall select the second  appraiser  within five (5)  business  days
         following the  expiration of the  applicable  five (5) day period  referred to above.  The two  appraisers
         thus selected shall select, within ten (10) business days after their appointment,  a third appraiser.  If
         the two  appraisers  so selected  shall be unable to agree on the  selection  of a third  appraiser,  then
         either  appraiser,  on behalf of both,  shall request such  appointment by the American  Institute of Real
         Estate  Appraisers.  Hereinafter  referred to as the "Institute" (or any successor  association or body of
         comparable  standing if the Institute is not then in existence).  Each appraiser shall be a member in good
         standing of the Institute and hold the highest general designation of membership therein.

(d)       The Market Rate shall be determined  by the  appraisers  (whether one or three) based upon  customary and
         usual appraisal  techniques of expert  appraisers as of the scheduled  commencement date of Tenant's lease
         of the subject  First Offer  Space,  taking into  account  the factors  included in the  consideration  of
         Market  Rate  stated  hereinabove.  The  appraiser  (if one) or each of the  appraisers  (if three)  shall
         prepare a written  report  of his or her  determination  of the Fair  Market  Value and  deliver a copy to
         Landlord  and a copy to Tenant  within  thirty (30) days of the  selection  of the  appraiser  if only one
         appraiser  is used,  or within  forty-five  (45) days of the  selection  of the third  appraiser  if three
         appraisers  are used.  The Fair  Market  Value for  purposes  of this Lease  shall  equal the rental  rate
         established  by the one  appraiser if only one  appraiser is used,  or the average of the proposed  rental
         rates established by each appraiser if three appraisers are used.

(e)      If the appraisal  process  described above is used to determine the Fair Market Value, then the reasonable
         fees and expenses of the appraisers shall be shared equally by Landlord and Tenant.

7.         Landlord and Tenant shall enter into an amendment  to the Lease (i)  increasing  Tenant's  proportionate
     share of the  Building to include the First Offer  Space;  (ii)  revising the schedule of Base Rent to include
     base Rent for the First Offer Space;  (iii) including a Work Letter to provide for the  construction of tenant
     improvements  in the First Offer Space;  (iv) including a commencement  date for Tenant's  payment of Rent and
     Additional  Rent for the First Offer  Space,  which shall be the earlier of (a) one hundred  twenty (120) days
     following  the date of  Landlord's  delivery  of  possession  of the  subject  First Offer Space for Tenant to
     complete  improvements  to the First  Offer  Space  under the terms of a work  letter to be  included  in such
     amendment,  or (b) the date that Tenant  occupies the subject First Offer Space for the purpose of the conduct
     of its  business  (v)  including  such other  provisions  that are  required to reflect the  expansion  of the
     Premises to include the First Offer Space.




                                                     RIDER #3
                                    REIMBURSEMENT AGREEMENT FOR EXISTING LEASE

         This  Reimbursement  Agreement  for Existing  Lease  ("Agreement")  is made a part of that certain  Office
Lease Agreement  between SUN  INTERNATIONAL  NORTH AMERICA,  INC., a Delaware  corporation  ("Tenant") and Teachers
Insurance and Annuity  Association of America,  a New York  corporation  ("Landlord")  for premises in the building
known as "Royal Palm I at Southpointe" located at 1000 South Pine Island Road, Plantation, Florida ("Building").

                                                     RECITALS

A.       Landlord and Tenant are parties to that certain Office Lease dated  __________________,  2002 for premises
located in the Building (the "Lease").

B.       Sun  International  Representation,  Inc.  ("Original  Sister Company") is tenant under that certain Lease
Agreement  dated August 10, 1995  ("Original  Existing  Lease") with  Sentinel  Real Estate Fund, a Delaware  trust
("Original  Existing  Landlord"),  for premises located at 1415 East Sunrise  Boulevard,  Fort Lauderdale,  Florida
33304 ("Existing Building").

C.       The Original  Existing  Lease was modified by that certain  Amendment to Lease dated June 28, 1996 ("First
Amendment to Existing  Lease") between  Original Sister Company and Original  Existing  Landlord for the purpose of
extending its term until December 31, 2002, and for the other purposes set forth therein.

D.       Original  Existing  Landlord and Original Sister Company  entered into that certain  Amendment #2 to Lease
dated  September  10, 1996 ("Second  Amendment to Existing  Lease") for the purpose of expanding  Sister  Company's
premises,  for the purpose of extending the lease term until August 31, 2003,  and for the other purposes set forth
therein.

E.       Original Sister Company changed its name to Sun International Resorts, Inc. ("Sister Company").

F.       Original  Existing  Landlord and Sister Company entered into that certain  Amendment #3 to Lease dated May
29, 1998  ("Third  Amendment  to Existing  Lease") for the purpose of  expanding  the  premises,  and for the other
purposes set forth therein.

G.       Original  Existing  Landlord and Sister  Company  entered  into that  certain  Amendment #4 to Lease dated
September 30, 1998  ("Fourth  Amendment to Existing  Lease") for the purpose of changing the effective  date of the
Third Amendment to Existing Lease, and for the other purposes set forth therein.

H.       Original  Existing  Landlord and Sister  Company  entered  into that  certain  Amendment #5 to Lease dated
March 30, 1999 ("Fifth  Amendment to Existing Lease") for the purpose of expanding Sister Company's  premises,  for
the purpose of extending  the  expiration  date to March 31, 2004,  for the purpose of  evidencing  the guaranty of
Sister Company's  obligations by Sun International Hotels, Ltd..  ("Hotels"),  and for the other purposes set forth
therein.

I.       Sentinel Real Estate  Corporation  ("Existing  Landlord")  succeeded to the interest of Original  Existing
Landlord.

J.       Existing  Landlord and Sister  Company  entered into that certain  Amendment #6 to Lease dated January 27,
2000  ("Sixth  Amendment to Existing  Lease") for the purpose of providing  for Sister  Company's  installation  of
telecommunications equipment, as defined therein, and for the other purposes set forth therein.

K.       Existing  Landlord and Sister Company entered into that certain  Amendment #7 to Lease dated July 14, 2000
("Seventh  Amendment to Existing Lease") for the purpose of again making certain  arrangements  with respect to the
installation of telecommunications equipment, and for the other purposes set forth therein.

L.       Existing  Landlord and Sister Company  entered into that certain  Amendment # 8 to Lease dated as of June,
2001(the  "Eighth  Amendment  to  Existing  Lease")  to  again  make  certain  arrangements  with  respect  to  the
installation of telecommunications  equipment,  and for the other purposes set forth therein. The Original Existing
Lease,  the First  Amendment to Existing  Lease,  the Second  Amendment to Existing  Lease,  the Third Amendment to
Existing  Lease,  the Fourth  Amendment  to  Existing  Lease,  the Fifth  Amendment  to Existing  Lease,  the Sixth
Amendment to Existing  Lease,  the Seventh  Amendment to Existing Lease and the Eighth  Amendment to Existing Lease
are together  referred to herein as the "Existing  Lease".  Under the Existing Lease,  Sister Company leases 58,511
square feet of rentable area (the "Existing Premises") in the Existing Building.

M.        In  consideration  of Tenant's  obligations  and  undertakings  under the Lease,  Landlord  has agreed to
reimburse Tenant for those  obligations  under the Existing Lease that accrue from and after the Commencement  Date
of this Lease, subject to the limitations set forth herein and on the terms and conditions set forth herein.

         NOW,  THEREFORE,  in  consideration  of the terms  and  conditions  of this  Reimbursement  Agreement  for
Existing Lease and the terms and considerations of the Lease, Landlord and Tenant agree as follows:

1.        Recitals.  The above  recitals  are true and  correct  and are agreed to by  Landlord,  Tenant and Sister
         Company as if such recitals were fully set forth herein.

2.       Terms.  All undefined capitalized terms herein shall have the same meanings as defined in the Lease.

3.       No  Assumption.  While  Landlord  agrees  herein to  reimburse  Tenant for certain  obligations  of Sister
         Company under the Existing  Lease,  this  Agreement is not an  assumption by Landlord of Sister  Company's
         obligations under the Existing Lease, but is instead an agreement to reimburse Tenant.

4.       Status of Existing Lease. Sister Company and Tenant represent that:

A.       The  Existing  Lease  provides for payments of Fixed  Minimum Rent in the amount of  $75,312.11  per month
from  September  1, 2002 until  December  31, 2002,  of  $76,610.36  per month from January 1, 2003 until March 31,
2003,  of  $77,077.11  per month from April 1, 2003 until August 31, 2003,  of  $77,905.65  from  September 1, 2003
until December 31, 2003, and of $79,203.90 from January 1, 2004 until March 31, 2004.

B.       The Existing Lease provides  that, in addition to Fixed Minimum Rent,  Tenant shall pay "Tenant's  Expense
Share",  as defined  therein,  of "Expenses"  (as defined  therein) that exceed those incurred in the 1995 calendar
year,  which were $6.00 per rentable  square foot.  Tenant's  Expense Share for the 2002 calendar year is $2.83 per
rentable square foot of the Existing Premises.

C.       The Existing Lease expires on March 31, 2004.

D.       The Existing Lease is in full force and effect as of the date of this  Agreement,  and that Sister Company
has neither given nor received any notice of default,  and no defaults on the part of either  Existing  Landlord or
Sister Company currently exist under the Existing Lease.

5.       Limitation on Landlord's  Liability.  Notwithstanding  anything to the contrary herein,  in no event shall
         Landlord's  liability  under this  Agreement  exceed  the  amount of $1.8  million  (the  "Existing  Lease
         Liability Limit") Notwithstanding the foregoing,  however,  Landlord shall, in addition, be liable for the
         Existing Lease Alterations Payment as defined in Section 11 of this Agreement.

6.       Potential  Buy-Out of Existing  Lease.  Sister  Company and Landlord  will,  within five (5) business days
         following the date hereof,  agree upon a third party  commercial  real estate broker which shall,  under a
         dual agency  agreement with Sister Company,  Tenant and Landlord (or under a comparable  arrangement  that
         does not  require  such broker to  disclose  that  Landlord is a  principal)  commence  negotiations  with
         Existing  Landlord to  determine  if Existing  Landlord  would accept a one time payment in an amount less
         than  the  Existing  Lease  Liability  Limit  and  to be  then  specified  by  Landlord  (and  subject  to
         modification  by Landlord  from time to time based on the timing of such payment) (the "Buy Out Limit") in
         consideration  of Existing  Landlord's  agreement to accelerate the expiration  date of the Existing Lease
         to a date that is on or about  December  1, 2002 (the  "Existing  Lease  Termination  Agreement").  In the
         event that Sister Company and Existing Landlord enter into the Existing Lease Termination  Agreement,  and
         provide a true and correct copy,  executed by both Sister  Company and Existing  Landlord,  to Landlord on
         or before such date,  then  Landlord  shall pay to Tenant an amount equal to the lesser of (i) the Buy Out
         Limit or (ii) the amount  actually  paid by Sister  Company to Existing  Landlord for the  Existing  Lease
         Termination  Agreement.  Landlord  shall make such payment to Tenant  within  fifteen (15)  business  days
         following  the written  agreement  with respect to such  amount.  Upon such payment by Landlord to Tenant,
         Landlord's obligations under this Agreement shall have been satisfied in full.

7.       Periodic  Payments  of  Existing  Lease  Obligations.  In the  event  that  the  procedures  set  forth in
         Paragraph 6 hereof have not been  followed and an Existing  Lease  Termination  Agreement not entered into
         between  Sister Company and Existing  Landlord  then,  provided that Tenant is not in default of the terms
         of the Lease beyond any applicable  cure period at the time that Tenant's  right to each  "Existing  Lease
         Rent  Reimbursements"  (as  hereinafter  defined)  accrues,  then  upon  Landlord's  receipt  of a copy of
         Tenant's rent payment check (but the cancelled  check shall not be required) that the Existing  Tenant has
         made a rent payment  under the Existing  Lease,  Landlord  will, on a monthly basis and within twenty (20)
         business  days of its  receipt  of such  evidence,  reimburse  Tenant in the amount of such  payment  (the
         "Existing Lease Rent  Reimbursements").  The Existing Lease Rent Reimbursements shall be applicable to the
         period  commencing  with the  Commencement  Date of the Lease and shall  continue until the Existing Lease
         expires,  it being  understood  and agreed that Landlord shall  reimburse  Tenant for all of Tenant's rent
         under the  Existing  Lease,  including  sales tax  thereon,  up the Existing  Lease  Liability  Limit (but
         Landlord shall not be  responsible  for costs such as after-hours  air  conditioning  that are not part of
         operating expenses).

8.       Existing  Landlord's  Obligation  to  Mitigate  Damages.  Tenant  agrees  that it shall  use  commercially
         reasonable  efforts to enforce Existing  Landlord's  obligations to mitigate damages as result of Existing
         Tenant's  vacating the Existing  Premises as may exist under the Existing  Lease,  and Tenant shall,  from
         time to time and at Landlord's  request,  provide Landlord with the status of Existing  Landlord's efforts
         to relet the  Existing  Premises and Sister  Company's  efforts to cause such  reletting to occur.  Tenant
         shall cause  Existing  Tenant to take such  additional  steps to mitigate  the sums due under the Existing
         Lease, but without incurring third party expenses, as Landlord may from time to time reasonably require.

9.       Confidentiality.  This Agreement is a confidential agreement between Landlord,  Sister Company and Tenant.
         Neither Sister Company nor Tenant, or their officers,  directors,  attorneys or brokers,  will divulge the
         economic or other terms of this  Agreement,  or the  existence  of this  Agreement,  whether  orally or in
         writing,  to any persons,  other than  Tenant's and Existing  Tenant's  officers,  directors,  partners or
         shareholders;   Tenant's  attorneys,   accountants,   brokers  and  other  professional  consultants;  any
         governmental agencies; and pursuant to subpoena or other legal process.

10.      No  Assumption.  This  Agreement  does not serve to cause an assumption of the Existing Lease by Landlord,
         nor  does  it  effect  a  sublease  of  the  Existing  Premises  by  Landlord.  Instead,  it  serves  as a
         reimbursement agreement in accordance with the terms and subject to the conditions set forth herein.

11.      Purchase of Alterations  and Trade Fixtures  installed in Existing  Premises.  Provided that Tenant is not
         in default of its  obligations  under the terms of the Lease beyond any  applicable  grace or cure period,
         and  provided  that Tenant has  submitted  the Plans and  Specifications  to  Landlord  as required  under
         Exhibit "D-1" to the Lease,  then Landlord  shall pay to Tenant,  within twenty (20) business days of such
         submission,  the sum of Eight Hundred Eighty Six and 00/100  Dollars  ($886,000.00)  (the "Existing  Lease
         Alterations  Payment"),  to compensate  Tenant for the cost of moving its trade fixtures from the Existing
         Premises to the Premises,  and to compensate  Tenant for the cost of alterations to the Existing  Premises
         which may not be susceptible of moving to the Premises.

12.      Agreements  to Benefit  Tenant.  The  agreements on the part of Landlord  contained in this  Agreement are
         solely  for the  benefit  of  Tenant,  and shall  not inure to the  benefit  of any  other  person,  firm,
         association, corporation, entity or third party.

13.      Brokers.  The covenants and  indemnities  with respect to Brokers set forth in the Lease is expressly made
         a part hereof  except,  however,  that  Landlord  shall have no liability to Tenant's  Broker for any work
         undertaken by Tenant's Broker in association with the Existing Lease.

14.      Default under Lease.  Any default under the Lease beyond any applicable  notice and cure period shall be a
         default under this Agreement. Any default under this Agreement shall be a default under the Lease.

15.      Ratification  of Lease.  Unless  expressly  modified  herein,  all terms and  conditions  of the Lease are
         hereby ratified and reaffirmed in their entirety.

16.      Notices.  Notices under this Agreement shall be as set forth in the Lease,  and any notice to Tenant shall
         be deemed a notice to Sister Company.

                                             (signature page follows)






         In witness  whereof,  Landlord,  Existing Tenant and Tenant have executed this Agreement as of the date of
the Lease.

Executed in the Presence of:                                  "TENANT"

                                                              SUN INTERNATIONAL NORTH AMERICA, INC.
                                                              Signature:__________________________

__________________________________                            Name printed:_______________________

_________________________________                             Title:______________________________
Witness Name printed
                                                              Date:______________________________
_________________________________

_________________________________
Witness Name printed
Executed in the Presence of:                                  "EXISTING TENANT"

                                                              SUN INTERNATIONAL RESORTS, INC.
                                                              Signature:__________________________

__________________________________                            Name printed:_______________________

__________________________________                            Title:______________________________
Witness Name printed
                                                              Date:______________________________
__________________________________

__________________________________
Witness Name printed







Executed in the Presence of:                                  "LANDLORD"

                                                              TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

___________________________________
                                                              Signature:__________________________
__________________________________                            Name:_____________________________
Witness Name printed                                          Title:______________________________
                                                              Date:______________________________

__________________________________

__________________________________
Witness Name printed









                                                     RIDER #4
                                                 Letter of Credit

                                                   NAME OF BANK
                                       IRREVOCABLE STANDBY LETTER OF CREDIT
                                                       DATE

Teachers Insurance and Annuity
         Association of America
730 3rd Avenue
New York, NY 10017

RE:      Letter of Credit No.________________

Gentlemen:

We hereby open our Irrevocable  Standby Letter of Credit in your favor, for the account of SUN INTERNATIONAL  NORTH
AMERICA,  INC. in the aggregate of: USD Two Hundred Sixty Thousand and 00/100 United States  Dollars  ($260,000.00)
available by payment of your draft(s) at sight drawn on ourselves when accompanied by the following document(s):

Statement, purportedly signed by the Landlord, reading as follows:

"Tenant,  SUN  INTERNATIONAL  NORTH AMERICA,  INC., has defaulted in one or more of its obligations under the Lease
Agreement between the Landlord and Tenant for its  Premises at Royal Palm".

Draft(s)  drawn under this credit must state on their face "Drawn  under  ___________________  Irrevocable  Standby
Letter of Credit Number ______________ dated ____________________, 2002.

It is a condition of this Letter of Credit that it shall be automatically  extended without amendment,  for one (1)
year from the  present or any future  expiration  date  hereof,  unless  ninety (90) days prior to any such date we
shall notify you in writing by certified mail return  receipt  requested or courier at the above listed address and
with a copy to: Mr. Jay Leone, The Hogan Group,  1000 South Pine Island Road, #400,  Plantation,  FL 33324, that we
elect not to consider this Letter of Credit  renewed for any such  additional  period.  Upon receipt by you of such
notice you may draw hereunder,  within the applicable  expiration date and for the then available  amount, by means
of your sight draft  drawn on us only,  accompanied  by the  original of this  Standby  Letter of Credit,  no other
document required.

We hereby agree with you that draft(s)  drawn under and in compliance  with the terms and conditions of this credit
shall be duly honored if presented  together with document(s) as specified and the original of this credit,  at our
office   located   at    __________________________________,    Attention    __________________    on   or   before
_______________________ or any automatically extended date as provided for herein.

Except as otherwise  expressly stated herein,  this Letter of Credit is subject to the Uniform Customs and Practice
for  Documentary  Credits,  established  by the  International  Chamber  of  Commerce,  as in effect on the date of
issuance of this credit.

         .........                                   Sincerely,

         .........                                   _______________________________
         .........                                   Authorized Signature


 [INFORMATION  NOTE ONLY:  LANDLORD MUST BE ABLE TO PRESENT AT NEW YORK CITY BRANCH OR NEW YORK CITY  CORRESPONDENT
OF ISSUING BANK FOR PAYMENT ON PRESENTATION]

                                                                                                         Exhibit 4.19


                                                  FIRST AMENDMENT
                                            TO OFFICE LEASE AGREEMENT

         THIS FIRST AMENDMENT TO OFFICE LEASE AGREEMENT ("First Amendment") is made as of the ___ day of ______________, 2002,
between TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA ("Landlord") and KERZNER INTERNATIONAL North
America, INC., a Delaware corporation ("Tenant").

                                               PRELIMINARY STATEMENTS

A.       Landlord and Sun International  North America,  Inc.  ("Original Tenant") entered into that certain Office
Lease  Agreement  dated May 16, 2002 (the "Lease"),  under which Original Tenant leased the Premises known as Suite
620,  Suite 700 and Suite 800 in the office  building known as the Tower at Royal Palm I, located at 950 South Pine
Island Road, Plantation,  Florida 33324. The Premises under the Lease consists of the Initial Premises,  defined in
the Lease as Suite 700 and Suite 800,  together  consisting  of 49,677  square feet of Net Rentable  Area,  and the
Subsequent Premises, defined in the Lease as Suite 620 and consisting of 15,323 square feet of Net Rentable Area.

B.       Original  Tenant  changed its name to Kerzner  International  North  America,  Inc, as evidenced by a name
change amendment filed with the Florida Secretary of State on June 18, 2002.

C.       Tenant  wishes to include a portion of Suite 620 in the  Initial  Premises  under the Lease.  Accordingly,
Landlord  and Tenant  desire to enter into this First  Amendment  for the purpose of changing  the date of Tenant's
scheduled occupancy of a portion of Suite 620, and for the other purposes set forth herein.

                                                        TERMS

         NOW,  THEREFORE,  for Ten Dollars  ($10.00) and for the covenants and  conditions of this  Agreement,  the
receipt and sufficiency of which are hereby  conclusively  acknowledged,  5201 Landlord,  Landlord and Tenant agree
as follows:

1.       Recitals.  The above  recitals  are true and correct  and are agreed to by Landlord  and Tenant as if such
recitals were fully set forth herein.

2.       Terms.  All undefined capitalized terms herein shall have the same meanings as defined in the Lease.

3.       Subsequent  Premises.  Landlord and Tenant  hereby agree that Exhibit "B" to the Lease shall be revised to
include in the Initial  Premises the premises  depicted in Exhibit "B-1" attached  hereto.  These  premises,  now a
portion of the Initial  Premises,  were a portion of the Subsequent  Premises as defined in the Lease. The premises
depicted in Exhibit "B-1" hereto are referred to herein as the "Early  Occupancy  Portion",  and are  stipulated to
consist of 6,034 square feet of Net Rentable  Area.  Furthermore,  the third page of Exhibit "B" to the Lease shall
be deleted and shall be replaced  with Exhibit "B-2" hereto,  which depicts the  Subsequent  Premises as defined in
the Lease less the Early Occupancy Portion.

4.       Commencement  Date for Early Occupancy  Portion.  As the Early Occupancy  Portion is herein made a part of
the  Initial  Premises,  the  Commencement  Date for the  Early  Occupancy  Portion  shall be the same  date as the
Commencement Date for the Initial Premises.

5.       Special  Terms  applicable  to  "Interim  Period".  The  period  between  the  Commencement  Date  and the
Commencement Date for the Subsequent Premises is referred to herein as the "Interim Period".

6.       Base Rent for Early  Occupancy  Portion.  Exhibit "C" to the Lease is hereby  supplemented to provide that
Tenant shall pay Base Rent for the Early  Occupancy  Portion for the Interim  Period in the amount of $2,517.17 per
month,  plus sales tax thereon,  prorated for any partial periods.  The foregoing  monthly amount was calculated on
the basis of $5.00 per square foot per year for the Early Occupancy Portion.

7.       Tenant's  Proportionate  Share.  Section 1.8 of the Lease is hereby  supplemented to provide that Tenant's
Proportionate  Share for the Early  Occupancy  Portion is 2.5109%.  Section 24.2 of the Lease is hereby  amended to
provide that Tenant shall pay Tenant's  Proportionate  Share of Operating  Expenses for the Early Occupancy Portion
for the Interim Period; the Expense Stop shall not be applicable to the foregoing obligation.

8.       Parking.  Section 1.7 of the Lease is hereby  amended to provide that Tenant may use the 10 allocated  and
unreserved  parking  spaces  in the  parking  structure  adjacent  to the  Building,  originally  allocated  to the
Subsequent  Premises,  on and as of the Commencement Date and for the Interim Period.  In addition,  Tenant may use
twenty (20) additional  allocated and unreserved  parking spaces in the parking structure adjacent to the Building,
which twenty (20) spaces are subject to  relocation  to another  surface area  adjacent to the Building  Project or
within the Building Project as set forth in Section 1.7 of the Lease.

9.       Tenant Improvements for Early Occupancy Portion.

A.       Paragraph  5 of  Exhibit  "D-1" to the Lease is hereby  amended to  provide  that the  Tenant  Improvement
              Allowance  for the Initial  Premises,  including  the Early  Occupancy  Portion,  shall be  $645,030.
              Paragraph 5 of Exhibit  "D-2" to the Lease is hereby  amended to provide that the Tenant  Improvement
              Allowance  for the  Subsequent  Premises,  not  including  the  Early  Occupancy  Portion,  shall  be
              $245,220.

B.       Paragraph  2 of Exhibit  "D-1" to the Lease is hereby  amended to provide  that the Plans,  and the Tenant
              Improvements,  shall  include  the  construction  of a  demising  wall for both the  Early  Occupancy
              Portion and for the Subsequent Premises.

10.      Exhibit "D-2" to the Lease is hereby amended to include the following provision as a new Paragraph 5(c):

         Tenant  acknowledges  that Landlord may wish to lease  portions of the  Subsequent  Premises (but
         not including the Early Occupancy  Portion) to third parties prior to the  Commencement  Date for
         the Subsequent  Premises.  Such third party leases shall be consistent  with the  requirements of
         Section  1.9 of the Lease with  respect to the date that  Landlord  shall be  required  to tender
         delivery of possession of the Subsequent  Premises (less the Early Occupancy  Portion) to Tenant.
         In the event that Landlord  enters into leases with such third party tenants,  Landlord may elect
         to construct  tenant  improvements  in the  Subsequent  Premises to prepare  applicable  portions
         thereof  for the use and  occupancy  of such  third  parties.  In the event that  Tenant,  in the
         course  of its  work  under  Exhibit  "D-2"  to the  Lease,  utilizes  some or all of the  tenant
         improvements  constructed  by Landlord for the use of such third  parties in the  Premises,  then
         Landlord's  commercially  reasonable cost of such reutilized  improvements  may be offset against
         the tenant  improvement  allowance  granted  to Tenant  under  Section 5 of Exhibit  "D-2" to the
         Lease.  In the  event  that  Tenant  does not  reutilize  any such  improvements  constructed  by
         Landlord and instead  causes them to be  demolished in the course of its work under Exhibit "D-2"
         to the Lease, then Landlord shall increase the tenant  improvement  allowance under Exhibit "D-2"
         to the Lease by the  commercially  reasonable  costs of such  demolition.  Tenant agrees that, if
         Landlord tenders its plans and  specifications  for any such tenant  improvements for third party
         tenants to Tenant  prior to its  construction  thereof,  that Tenant  shall review such plans and
         provide detailed,  reasonable  comments thereto,  within ten (10) business days following receipt
         from Landlord (or receipt of any  revisions  based upon such Tenant  comments),  so that Landlord
         may attempt to plan such tenant  improvements  so that they are  susceptible of being  reutilized
         by Tenant  provided,  however,  that  Tenant  shall  not be bound to  subsequently  utilize  such
         improvements  by  virtue  of the fact  that it made  such  comments.  In the  event  that  Tenant
         reutilizes  any  portion of the tenant  improvements  constructed  by  Landlord,  Landlord  shall
         provide  Tenant with an accounting of such  expenditures  within five (5) business days following
         Tenant's request  therefor or following  Landlord's  determination  that such  reutilization  has
         been affected.  In the event that Tenant intends to demolish any such  improvements in the course
         of its work  under  Exhibit  "D-2" to the  Lease,  then  Tenant  shall  tender  to  Landlord  its
         commercially  reasonable  estimate of the cost of such  demolition.  Landlord  and Tenant  shall,
         within five (5) business  days  following  its receipt of the estimate from the other of the cost
         of such  improvements  (or their  demolition),  give notice to the other if it contests that such
         estimate is for a  commercially  reasonable  amount and, in the event of such  contest,  Landlord
         and Tenant shall work with each other to agree upon the amount of such costs.

11.      Brokers.  Landlord and Tenant each  warrants  that it has had no dealings  with any real estate  broker or
agents in  connection  with the  negotiation  of this First  Amendment  excepting  only The Hogan  Group,  Inc. and
Cushman and Wakefield of Florida,  Inc.,  which have  represented  Landlord  (together  "Landlord's  Broker"),  and
Julien J. Studley,  Inc. , which has represented Tenant ("Tenant's  Broker").  Landlord will compensate  Landlord's
Broker who,  in turn,  will  compensate  Tenant's  Broker in  accordance  with the terms of a written  co-brokerage
agreement between  Landlord's  Broker and Tenant's Broker.  Landlord and Tenant each further warrants that it knows
of no other real estate  broker or agent,  other than those who are named  above,  who is entitled to a real estate
commission  in  connection  with this Lease and Landlord or Tenant each agrees to indemnify  the other  against any
claims for  commission  and expenses  created by such claim by any other real estate  broker or agent with whom the
indemnifying party may have dealt or communicated.

12.      Right of First Offer.  Tenant has elected not to exercise its Right of First Offer,  set forth in Rider #2
to the Lease,  with respect to premises  consisting of 6,048 square feet of Net Rentable Area on the sixth floor of
the Building that  Landlord is in the process of leasing to a third party for a term of sixty-four  (64) months and
with one five (5) year  renewal  option.  Landlord  hereby  confirms  that  Tenant's  Right of First Offer shall be
applicable to other available  premises on the Building's  sixth floor in accordance with the terms of the Right of
First Offer.  Furthermore,  with respect to the term of the Right of First Offer,  the first  sentence of the Rider
#2 to the Lease is hereby  amended to provide  that  Tenant's  Right of First  Offer shall be  applicable  from and
after the date of the Lease and  thereafter  at any time during the Term of the Lease,  provided that Tenant is not
in default under the Lease beyond any applicable notice and cure or grace period.

13.      Effect of Delivery.  Landlord has delivered a copy of this First  Amendment to Tenant for Tenant's  review
only and the delivery  hereof does not  constitute an offer to Tenant or an option to lease.  This First  Amendment
shall not be effective until a copy is executed by Landlord and Tenant and is returned to Tenant.

14.      Ratification  of Lease.  Unless  expressly  modified  herein,  all terms and  conditions  of the Lease are
hereby ratified and reaffirmed in their  entirety.  Any default under this First Amendment shall be a default under
the Lease, and any default under the Lease shall be a default under this First Amendment.

15.      Lease  in Full  Force  and  Effect.  Tenant  represents,  warrants  and  acknowledges  that  the  Lease is
unmodified,  other than pursuant to the terms of this First Amendment,  and is in full force and effect as modified
herein;  that to the knowledge of Tenant Landlord is not in default in the  performance of any covenant,  agreement
or condition  contained in the Lease, as modified;  and that to its knowledge  Tenant has no defense to the payment
of any amounts due under the Lease, as modified.

                                             (Execution page follows)








         IN WITNESS  WHEREOF,  the parties have executed this First  Amendment as of the day and year first written
above.

Signed, sealed and delivered                                  Tenant:

in the presence of:                                           KERZNER   INTERNATIONAL   NORTH   AMERICA,   INC.,  a
                                                              Delaware corporation


______________________________________                        By:
Print Name:                                                   Name:
                                                              Title:
_____________________________________
Print Name:



                                                              Landlord:

                                                              TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
                                                              AMERICA, a New York corporation


______________________________________                        By:
Print Name:                                                   Name:
______________________________                                                                   Title:

______________________________________
Print Name:






                                                   EXHIBIT "B-1"
                                      FLOOR PLAN FOR EARLY OCCUPANCY PORTION

EX-8

                                                                                                          Exhibit 8

                       Listing of Significant Subsidiaries of Kerzner International Limited
                                               at December 31, 2002


                                                                      Country
Name of Company                                                       of Incorporation
- ------------------------------------------------------------------    ----------------------------
Aberdeen Management Limited (1)                                       Channel Islands
Kerzner Hotels International (Bermuda), Limited (1)                   Bermuda
Kerzner International Bahamas Limited (2)                             The Bahamas
Kerzner International Management Limited (3)                          British Virgin Islands
Kerzner International North America, Inc. (4)                         United States
Kerzner International Timeshare Limited (5)                           The Bahamas
Kerzner Investments Palmilla, Inc. (6)                                The Bahamas
One&Only (Indian Ocean) Management Limited (7)                        British Virgin Islands
__________

      All of the above  subsidiaries  are wholly owned by Kerzner,  with the exception of One&Only  (Indian  Ocean)
      Management Limited, which is 80% owned by Kerzner and 20% owned by SRL.

(1)   The Company owns a 20.4% interest in SRL, of which 8.7% is held through Aberdeen  Management  Limited and the
      remaining 11.7% is held through  Kerzner Hotels International (Bermuda), Limited.

(2)   Owner  of  substantially  all  of the  Bahamian  subsidiaries.  Directly  or  indirectly  wholly  owns  eight
      subsidiaries, all of which are organized in the Commonwealth of The Bahamas.

(3)   Owner of the  management  agreement  for the Royal Mirage in Dubai.  Also receives  administrative  fees from
      One&Only (Indian Ocean) Management Limited related to Mauritius and Kanuhura management agreements.

(4)   Owner of  substantially  all of the U.S.  subsidiaries.  Directly or indirectly  wholly owns 22 subsidiaries,
      18 of which  are  organized  in the U.S.  and four of  which  are  organized  in  Mexico  and  relate  to the
      management and development of One&Only Palmilla Resort.

(5)   Owner of the 50% interest in Harborside.

(6)   Owner of the 50% interest in One&Only Palmilla Resort.

(7)   Owner of the five Mauritius management agreements and the Kanuhura management agreement.

EX-12

Exhibit 12.2

June 30, 2003

Securities and Exchange Commission

450 Fifth Street, NW.

Washington, D.C. 20549

Ladies and Gentlemen:

In connection with the audit of our consolidated financial statements as of December 31, 2001 and for the year then ended, we have received representations from Arthur Andersen LLP, our independent public accountants that (i) this audit was subject to Arthur Andersen LLP’s quality control system for the U.S. accounting and auditing practice to provide reasonable assurance that the engagement was conducted in compliance with professional standards, and (ii) that there was appropriate continuity of Arthur Andersen personnel working on the audit and national office consultation. Availability of personnel at foreign affiliates of Arthur Andersen LLP was not relevant to this audit.

Very truly yours,

KERZNER INTERNATIONAL LIMITED

 By:  /s/ John R. Allison

Name: John R. Allison

Title: Executive Vice President

          Chief Financial Officer

EX-12 10 ex12-3_auditorsconsent.htm EX12.3 CONSENT OF DELOITTE & TOUCHE LLP

Exhibit 12.3

INDEPENDENT AUDITORS’ CONSENT

We consent to the incorporation by reference in Registration Statement Nos. 333-88854, 333-100522, 333-51446, 333-15409, 333-9368 and 333-1796 of Kerzner International Limited (the “Company”) on Form F-3, S-8, S-8, F-4, S-8 and S-8, respectively, of our report dated January 31, 2003, except with respect to the matter discussed in the third paragraph of Note 12 to those financial statements, as to which the date is February 7, 2003, relating to the consolidated financial statements of the Company as of and for the year ended December 31, 2002, appearing in this Annual Report on Form 20-F of the Company for the year ended December 31, 2002. Such report expresses an unqualified opinion and includes explanatory paragraphs concerning the Company’s adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” and the application of procedures relating to certain disclosures of financial statement amounts related to the 2001 and 2000 financial statements that were audited by other auditors who have ceased operations and for which we have expressed no opinion or other form of assurance other than with respect to such disclosures.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey
June 30, 2003

EX-12

Exhibit 12.3 Consent of Deloitte & Touche LLP

EX-99

Exhibit 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies in their capacity as an officer of Kerzner International Limited (the “Company”) that the Annual Report of the Company on Form 20-F for the period ended December 31, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such report fairly presents, in all material respects, the financial condition and result of operations of the Company for such period.

Date: June 30, 2003	/s/ Solomon Kerzner
	Solomon Kerzner
	Chief Executive Officer
Date: June 30, 2003	/s/ John R. Allison
	John R. Allison
	Chief Financial Officer

EX-99

EXHIBIT 99.2

CERTIFICATION

I, Solomon Kerzner, certify that:

1.     I have reviewed this annual report on Form 20-F of Kerzner International Limited

2.     Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)     designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)     evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c)     presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)     all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 30, 2003

                                                              /s/ Solomon Kerzner
                                                              Solomon Kerzner
                                                              Chief Executive Officer

EX-99

EXHIBIT 99.3

CERTIFICATION

I, John R. Allison, certify that:

1.     I have reviewed this annual report on Form 20-F of Kerzner International Limited

2.     Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)     designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)     evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c)     presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)     all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 30, 2003

                                                              /s/ John R. Allison
                                                              John R. Allison
                                                              Chief Financial Officer