Nakheel Development 1 Prospectus

IMPORTANT NOTICE

NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE U.S.

IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the attached offering circular following this page or otherwise received as a result of such access and you are therefore advised to read this disclaimer carefully before reading, accessing or making any other use of the attached offering circular. In accessing the attached offering circular, you agree to be bound by the following terms and conditions, including any modifications to them from time to time, each time you receive any information from us as a result of such access. Confirmation of Your Representation: By accessing this offering circular you have confirmed to Barclays Bank PLC and Dubai Islamic Bank PJSC, (together, the Managers), Nakheel Development Limited, Dubai World and each of Nakheel Holdings-1 LLC, Nakheel Holdings-2 LLC and Nakheel Holdings-3 LLC that (i) you have understood and agree to the terms set out herein, (ii) you are not a U.S. person (within the meaning of Regulation S of the U.S. Securities Act 1933, as amended (the Securities Act)) or acting on behalf of any U.S. person and that the electronic mail address you have given to us is not located in the United States, its territories and possessions, and (iii) you consent to delivery by electronic transmission. This offering circular has been made available to you in electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of transmission and consequently neither the Managers nor any of their respective affiliates accepts any liability or responsibility whatsoever in respect of any difference between the offering circular distributed to you in electronic format and the hard copy version. You are reminded that the attached offering circular has been delivered to you on the basis that you are a person into whose possession this offering circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor or are you authorized to deliver this offering circular, electronically or otherwise, to any other person and in particular to any U.S. person or to any U.S. address. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions. Restrictions: NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OF AMERICA OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. Under no circumstances shall this offering circular constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these certificates in any jurisdiction in which such offer, solicitation or sale would be unlawful. Recipients of this offering circular who intend to subscribe for or purchase the certificates are reminded that any subscription or purchase may only be made on the basis of the information contained in the final offering circular. Any certificates to be issued will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold or delivered in the United States or to U.S. persons (as such terms are defined in Regulation S under the Securities Act) unless registered under the Securities Act or pursuant to an exemption from such registration. The certificates represent interests in a collective investment scheme (as defined in the Financial Services and Markets Act 2000) which has not been authorised, recognised or otherwise approved by the U.K. Financial Services Authority (FSA). Accordingly, the offering circular is not being distributed to, and must not be passed on to, the general public in the U.K. Rather, the communication of the offering circular as a financial promotion is only being made to those persons falling within Article 19(5) or Article 49 of the Financial Services and Markets Act 2000 (Financial Promotion Order 2005) and within Article 14(5) or Article 22 of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001, or any person to whom it may otherwise lawfully be made. This communication is being directed only at persons having professional experience in matters relating to investments and any investment or investment activity to which this communication relates will be engaged in only with such persons. No other person should rely on it.

Nakheel Development Limited(incorporated in the Jebel Ali Free Zone with limited liability under registration no. OF2684)

US$3,520,000,000 Trust Certificates due 2009The issue price of the US$3,520,000,000 Trust Certificates (Sukuk al-Ijara) with subscription rights due 2009 (the Certificates orthe Sukuk) of Nakheel Development Limited (the Issuer) is 100 per cent. of their principal amount.

The Certificates will be constituted by a declaration of trust (the Declaration of Trust) dated on or about 14 December 2006 (theClosing Date) made by the Issuer, Nakheel Holdings-1 LLC (Nakheel Holdings 1), Nakheel Holdings-2 LLC (Nakheel Holdings 2)and Nakheel Holdings-3 LLC (Nakheel Holdings 3) (together, the Co-Obligors). Pursuant to a guarantee (the Co-ObligorGuarantee), the Co-Obligors have guaranteed all payment, delivery and other obligations of each other under the TransactionDocuments (as defined herein). In addition, Dubai World shall grant a guarantee (the Dubai World Guarantee) on or about theClosing Date in favour of the Issuer under which Dubai World shall unconditionally and irrevocably guarantee the paymentobligations of the Co-Obligors under the Transaction Documents. Pursuant to the Declaration of Trust, the Issuer will declare thatit will hold certain assets, primarily consisting of the leasehold interest in certain land, building and other property at DubaiWaterfront (as more particularly described in Sukuk Assets on page 137) and rights under, inter alia, the Lease Agreement (asdefined herein), the purchase undertaking (the Purchase Undertaking) granted in favour of the Issuer on or about the Closing Dateby Nakheel Holdings 2, (the Purchase Undertaking Obligor) and the other Transaction Documents, upon trust absolutely for theholders of Certificates (the Certificateholders) pro rata according to the principal amount of Certificates held by eachCertificateholder. The payment obligations of the Co-Obligors under the Transaction Documents shall be secured by twomortgages granted on or about the Closing Date by Nakheel Holdings 1 over the Property (as defined herein) and a share pledgegranted by Nakheel Holdings 1 within sixty (60) days of the Closing Date over certain ordinary shares in Nakheel PJSC.Each Certificate entitles the holder to subscribe (on the terms more particularly described therein) for QPO Shares (as definedherein) issued in any Qualifying Public Offering (as defined herein) at a price equal to ninety five per cent. (95%) of the QPO SharePrice (as defined herein). The rights of the Certificateholders to subscribe for QPO Shares issued in any Qualifying Public Offeringare limited (a) to an aggregate number of QPO Shares equal to thirty per cent. (30%) of the aggregate number of QPO Shares tobe issued in that Qualifying Public Offering, and (b) so that the aggregate Value of the Subscription Rights (as defined herein) inall Qualifying Public Offerings launched after the Closing Date and prior to the Redemption Date (including the Value of theSubscription Rights in that Qualifying Public Offering) does not exceed US$880,000,000 (being twenty five per cent. (25%) of theaggregate principal amount of the Certificates). Certificateholders may, depending on the circumstances, also be entitled tosubscribe for QPO Shares in the Look Back Period (as defined herein).The return on the Certificates shall be calculated on the basis of a fixed return of 6.345 per cent. per annum (the QPO Yield). On14 June and 14 December in each year (each a Periodic Distribution Date) commencing on 14 June 2007, the Issuer will payPeriodic Distribution Amounts (as defined herein) to each Certificateholder calculated as the product of fifty per cent. (50%) of theQPO Yield and the principal amount of the Certificates on a 30/360 basis. In addition, on the Redemption Date (as defined herein)the Issuer will pay to each Certificateholder (i) the Final Distribution Amount calculated as the product of fifty per cent. (50%) ofthe QPO Yield and the principal amount of the Certificates on a 30/360 basis, and (ii) depending on the circumstances, theAdditional Distribution Amount (as defined herein). (See – Summary of the Certificates – Periodic Distribution Amounts, FinalDistribution Amount and Additional Distribution Amount).The Certificates shall be redeemed on 14 December 2009 (the Scheduled Redemption Date). The Certificates constitute limitedrecourse obligations of the Issuer.Investing in the Certificates involves certain risks as more fully described in Risk Factors on page 35.Application will be made for the listing of the Certificates on the Dubai International Financial Exchange but there can be noassurance that such listing will occur on or prior to the Closing Date or at all. The Dubai International Financial Exchange takesno responsibility for the contents of this document, makes no representation as to its accuracy or completeness and expresslydisclaims any liability whatsoever for any loss howsoever arising from or in reliance upon any part of the contents of thisdocument.The Certificates have not been, and will not be, registered under the United States Securities Act of 1933, as amended (theSecurities Act) or with any securities regulatory authority of any state or other jurisdiction of the United States and may not beoffered, sold or delivered within the United States or to U.S. Persons (as defined in Regulation S) except pursuant to an exemptionfrom, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Certificates are beingoffered, sold or delivered solely to non-U.S. Persons (as defined in Regulation S) outside the United States in reliance on RegulationS under the Securities Act (Regulation S). Each purchaser of the Certificates is hereby notified that the offer and sale of Certificatesto it is being made in reliance on the exemption from the registration requirements of the Securities Act provided by Regulation S.Delivery of the Certificates in book-entry form will be made on the Closing Date. The Certificates will be issued in registered formin minimum denominations of US$100,000 and integral multiples of US$1,000 in excess thereof. Certificates will be represented atall times by interests in a registered form global certificate (the Global Certificate), deposited on or about the Closing Date with acommon depositary for Euroclear Bank S.A/N.V. (Euroclear) and Clearstream Banking, société anonyme (Clearstream,Luxembourg). Interests in the Global Certificate will be shown on, and transfers thereof will be effected only through, recordsmaintained by Euroclear and Clearstream, Luxembourg. Definitive Certificates evidencing holdings of interests in the Certificate willbe issued in exchange for interests in the Global Certificate only in the limited circumstances described herein.

Joint Lead Managers and Joint BookrunnersBarclays Capital Dubai Islamic Bank PJSC

The date of this Offering Circular is 13 December 2006

Dubai World, having made all reasonable enquiries, confirms that (i) this Offering Circular containsall information with respect to Dubai World, its subsidiaries and the Issuer, the Certificates and theother Transaction Documents that is material to the issuance and offering of the Certificates; (ii)such information is true and accurate in every material respect and is not misleading in any materialrespect; (iii) the opinions, assumptions and intentions expressed in this Offering Circular on the partof Dubai World are honestly held or made and are not misleading in any material respect; (iv) thisOffering Circular does not contain any untrue statement of a material fact nor does it omit to statea material fact necessary to make the statements herein, in light of the circumstances under whichthey were made, not misleading; and (v) all reasonable enquiries have been made by Dubai Worldto ascertain and verify the foregoing.

Each of the Co-Obligors, having made all reasonable enquiries, confirms that (i) this OfferingCircular contains all information with respect to the Co-Obligors, their subsidiaries and the Issuer,the Certificates and the other Transaction Documents that is material to the issuance and offeringof the Certificates; (ii) such information is true and accurate in every material respect and is notmisleading in any material respect; (iii) the opinions, assumptions and intentions expressed in thisOffering Circular on the part of each Co-Obligor are honestly held or made and are not misleadingin any material respect; (iv) this Offering Circular does not contain any untrue statement of amaterial fact nor does it omit to state a material fact necessary to make the statements herein, inlight of the circumstances under which they were made, not misleading; and (v) all reasonableenquiries have been made by each Co-Obligor to ascertain and verify the foregoing.

The Issuer, having made all reasonable enquiries, confirms that (i) this Offering Circular contains allinformation with respect to the Issuer, the Certificates and the other Transaction Documents that ismaterial to the issuance and offering of the Certificates; (ii) such information is true and accurate inevery material respect and is not misleading in any material respect; (iii) the opinions, assumptionsand intentions expressed in this Offering Circular on the part of the Issuer are honestly held or madeand are not misleading in any material respect; (iv) this Offering Circular does not contain anyuntrue statement of a material fact nor does it omit to state a material fact necessary to make thestatements herein, in light of the circumstances under which they were made, not misleading; and(v) all reasonable enquiries have been made by the Issuer to ascertain and verify the foregoing.

No person has been authorised to give any information or to make any representation regarding theIssuer, Dubai World and each of the Co-Obligors respectively, or the Certificates, other than ascontained in this Offering Circular or as approved for such purpose by the Issuer, Dubai World andeach of the Co-Obligors in connection with the offering of the Certificates. Any such representationor information should not be relied upon as having been authorised by the Issuer, Dubai World, eachof the Co-Obligors or the Managers (as defined in Subscription and Sale). Neither the delivery of thisOffering Circular nor the offering, sale or delivery of any Certificate shall in any circumstances createany implication that there has not been an adverse change, or any event reasonably likely to involveany adverse change, in the condition (economic, political, financial or otherwise) of the Issuer, DubaiWorld and each of the Co-Obligors since the date of this Offering Circular.

The Managers have not verified the information contained herein. Accordingly, no representationor warranty is made or implied by any Manager or any of its respective affiliates and neither anyManager nor any of its respective affiliates makes any representation or warranty or accepts anyresponsibility as to the accuracy or completeness of the information contained in this OfferingCircular or any other information provided by the Issuer in connection with the Certificates, theirdistribution or their future performance.

This Offering Circular does not constitute an offer of, or an invitation to subscribe for or purchase,any Certificates. It is intended only to provide information to assist potential investors in decidingwhether or not to subscribe for or purchase Certificates in accordance with the terms and conditionsspecified herein. The Certificates may not be offered or sold, directly or indirectly, and this OfferingCircular may not be circulated, in any jurisdiction except in accordance with the legal requirementsapplicable to such jurisdiction.

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The distribution of this Offering Circular and the offering, sale and delivery of Certificates may berestricted by law in certain jurisdictions. Persons into whose possession this Offering Circular comesare required by the Issuer, Dubai World, each of the Co-Obligors and the Managers to informthemselves about and to observe any such restrictions. For a description of certain restrictions onoffers, sales and deliveries of Certificates and on distribution of this Offering Circular and otheroffering material relating to the Certificates, see the section entitled Subscription and Salebeginning on page 158 of this Offering Circular.

Neither this Offering Circular nor any other information supplied in connection with the Certificatesis intended to provide the basis of any credit or other evaluation or should be considered as arecommendation by the Issuer, Dubai World, each of the Co-Obligors or the Managers that anyrecipient of this Offering Circular should purchase any of the Certificates. Each investorcontemplating purchasing any Certificates should make its own independent investigation of thefinancial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer, DubaiWorld and each of the Co-Obligors.

Prospective investors should rely only on the information contained in this document or to whichreference is made herein. Neither the Issuer, Dubai World nor any of the Co-Obligors hasauthorised anyone to provide prospective investors with information that is different. Thisdocument may only be used where it is legal to sell these securities. The information in thisdocument may only be accurate on the date of this document.

Notice to UK residents

The Certificates represent interests in a collective investment scheme (as defined in the FinancialServices and Markets Act 2000 (FSMA)) which has not been authorised, recognised or otherwiseapproved by the U.K. Financial Services Authority (FSA). Each Certificate also represents an option(as defined in the FSMA (Regulated Activities) Order 2001). Accordingly, this Offering Circular is notbeing distributed to, and must not be passed on to, the general public in the United Kingdom. Thedistribution in the United Kingdom of this Offering Circular and any other marketing materialsrelating to the Certificates (A) if effected by a person who is not an authorised person under FSMAor, in relation to the options, by an authorised person, is being addressed to, or directed at, only thefollowing persons: (i) persons who are Investment Professionals as defined in Article 19(5) of theFSMA (Financial Promotion) Order 2005 (the Financial Promotion Order) and (ii) persons fallingwithin any of the categories of persons described in Article 49 (High net worth companies,unincorporated associations, etc) of the Financial Promotion Order and (B) if effected by a personwho is an authorised person under FSMA, is being addressed to, or directed at, only the followingpersons: (i) persons falling within one of the categories of Investment Professional as defined inArticle 14(5) of the FSMA (Promotion of Collective Investment Schemes) (Exemptions) Order 2001(the Promotion of CISs Order), (ii) persons falling within any of the categories of person describedin Article 22 (High net worth companies, unincorporated associations, etc.) of the Promotion of CISsOrder and (iii) any other person to whom it may otherwise lawfully be made in accordance with thePromotion of CISs Order. Persons of any other description in the United Kingdom may not receiveand should not act or rely on this Offering Circular or any other marketing materials in relation tothe Certificates.

Potential investors in the United Kingdom are advised that all, or most, of the protections affordedby the United Kingdom regulatory system will not apply to an investment in the Certificates and thatcompensation will not be available under the United Kingdom Financial Services CompensationScheme.

The contents of this Offering Circular as amended or supplemented from time to time have not beenapproved by an authorised person in accordance with the rules of the FSA.

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Individuals intending to invest in any investment described in this Offering Circular should consulttheir professional advisers and ensure they fully understand all the risks associated with making suchan investment and have sufficient financial resources to sustain any loss that may arise from it.

Certain Defined Terms and Conventions

References to Dubai herein are to the Emirate of Dubai; and references to the UAE herein are to theUnited Arab Emirates.

Totals in certain tables contained in the financial data under the heading Dubai World – BusinessDescription and Co-Obligor Group – Business Description of this Offering Circular may differ fromthe sum of the individual items in such tables due to rounding.

All references in this document to US dollars and US$ refer to United States dollars being the legalcurrency for the time being of the United States of America and all references to dirham and AEDrefer to United Arab Emirates dirham being the legal currency for the time being of the United ArabEmirates.

References to a billion are to a thousand million.

Forward looking Statements

Some statements in this Offering Circular may be deemed to be “forward-looking statements”.Forward-looking statements include statements concerning the Issuer’s, Dubai World’s and the Co-Obligors’ and each of the Co-Obligor’s direct and indirect Subsidiaries (as defined herein) (the Co-Obligors, Nakheel PJSC and each of their respective direct and indirect Subsidiaries being referredto as the Co-Obligor Group) plans, objectives, goals, strategies and future operations andperformance and the assumptions underlying these forward-looking statements. When used in thisdocument, the words “anticipates”, “estimates”, “expects”, “believes”, “intends”, “plans”, “aims”,“seeks”, “may”, “will”, “should” and any similar expressions generally identify forward-lookingstatements. These forward-looking statements are contained in Summary of the Offering, RiskFactors, Dubai World – Business Description and Co-Obligor Group – Business Description andother sections of this document. The Issuer, Dubai World and each Co-Obligor have based theseforward-looking statements on the current views of the Issuer’s, Dubai World’s or, as the case maybe, the Co-Obligor Group’s management with respect to future events and financial performance.Although the Issuer, Dubai World and each Co-Obligor believe that the expectations, estimates andprojections reflected in the Issuer’s, Dubai World’s or, as the case may be, each Co-Obligor’sforward-looking statements are reasonable, if one or more of the risks or uncertainties materialise,including those which the Issuer, Dubai World or each Co-Obligor has identified in this OfferingCircular, or if any of the Issuer’s, Dubai World’s or, as the case may be, each Co-Obligor’s underlyingassumptions prove to be incomplete or inaccurate, the Issuer’s, Dubai World’s or, as the case maybe, the Co-Obligor Group’s actual results of operation may vary from those expected, estimated orpredicted.

These forward-looking statements speak only as at the date of this Offering Circular. Withoutprejudice to any requirements under applicable laws and regulations, each of Dubai World, the Co-Obligors and the Issuer expressly disclaims any obligation or undertaking to disseminate after thedate of this Offering Circular any updates or revisions to any forward-looking statements containedherein to reflect any change in expectations thereof or any change in events, conditions orcircumstances on which any such forward-looking statement is based.

Certain Publicly Available Information

Certain statistical data and other information appearing in the Summary of the Offering andClearance and Settlement sections in this Offering Circular have been extracted from publicsources. None of the Managers, the Issuer, Dubai World or any of the Co-Obligors acceptresponsibility for the factual correctness of any such statistics or information but each of the Issuer,

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Dubai World and the Co-Obligors accepts responsibility for accurately extracting and transcribingsuch statistics and information and believe, after due inquiry, that such statistics and informationrepresent the most current publicly available statistics and information from such sources at thedates and for the periods with respect to which they have been presented.

Presentation of Financial Information

Unless otherwise indicated, the financial information set out herein has been derived from the:

• Consolidated unaudited financial statements of Nakheel Co LLC (Nakheel) for the six monthsended 30 June 2006; and

• Consolidated audited financial statements of Nakheel for the years ended 31 December 2003,31 December 2004 and 31 December 2005,

(together, the Financial Statements) and are set out on pages F-1 to F-60 of this Offering Circular.

The Financial Statements have been prepared in accordance with International Financial ReportingStandards (IFRS) issued by the International Accounting Standards Board.

The first financial year of the Issuer will end on 31 December 2007. Dubai World and the Co-Obligors are not required to, and do not, prepare or publish financial statements under UAE law.

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TABLE OF CONTENTS

TRANSACTION OVERVIEW................................................................................................................ 7

SUMMARY OF THE OFFERING .......................................................................................................... 8

PRONOUNCEMENT .............................................................................................................................. 34

RISK FACTORS ...................................................................................................................................... 35

USE OF PROCEEDS .............................................................................................................................. 52

THE ISSUER ............................................................................................................................................ 53

TERMS AND CONDITIONS OF THE CERTIFICATES .................................................................... 54

GLOBAL CERTIFICATE ........................................................................................................................ 91

DUBAI WORLD – BUSINESS DESCRIPTION .................................................................................... 93

CO-OBLIGOR GROUP – BUSINESS DESCRIPTION ........................................................................ 100

OVERVIEW OF THE UNITED ARAB EMIRATES ............................................................................ 133

SUKUK ASSETS...................................................................................................................................... 137

THE TRUST ASSETS ............................................................................................................................ 138

TAXATION ............................................................................................................................................ 153

CLEARANCE AND SETTLEMENT ...................................................................................................... 156

SUBSCRIPTION AND SALE ................................................................................................................ 158

GENERAL INFORMATION .................................................................................................................. 162

APPENDIX 1 – FINANCIAL STATEMENTS OF NAKHEEL CO LLC ............................................ 164

APPENDIX 2 – VALUATION REPORT .............................................................................................. 165

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TRANSACTION OVERVIEW

The following is an overview of the structure and cashflows relating to the Certificates. This overviewdoes not purport to be complete and is qualified in its entirety by reference to, and must be read inconjunction with, the detailed information appearing elsewhere in this Offering Circular and relateddocuments referred to herein. Potential investors should read the entire Offering Circular, especiallythe risks in relation to investing in the Certificates discussed under Risk Factors.

Nakheel Holdings 2(as QPO Obligor)

Nakheel Holdings 2(as Lessee)

Declaration of Trust

Subscription RightsSale Undertaking

Sale of longleasehold

QPO Subscriptonmoneys

QPO Shares

PurchaseUndertaking

Nakheel Holdings 2(as Purchase

Undertaking Obligor)

Nakheel DevelopmentLimited

(as Issuer)

Nakheel Holdings 1(as Seller)

Investors

DubaiWorld 1

NakheelHoldings 13

Nakheel Holdings1, NakheelHoldings 2,

Nakheel Holdings 3 2

Proceeds

Sale of long leasehold

Relevant ExercisePrice

Rental

Lease

SukukProceedsQPO

Shares

QPOSubscriptionMoneys

Co-Obligor Guarantee

Share Pledgeand Mortgages

Periodic Distribution Amounts,Final Distribution Amount,Additional Distribution Amounts,Sukuk Issue Amount

Dubai World Guarantee

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1 The Dubai World Guarantee guarantees all of the Co-Obligors' payment obligations under the Transaction Documents.2 The Co-Obligor Guarantee guarantees the obligations of each Co-Obligor under the Transaction Documents.3 Mortgages granted by Nakheel Holdings 1 over the Property and Share Pledge granted by Nakheel Holdings 1 over shares

to secure the payment obligations of the Co-Obligors under the Transaction Documents.

SUMMARY OF THE OFFERING

The following summary does not purport to be complete and is qualified in its entirety by referenceto, and must be read in conjunction with, the detailed information appearing elsewhere in thisOffering Circular and the related documents referred to herein. Potential investors should read theentire Offering Circular, especially the risks investing in the Certificates discussed under Risk Factors.

Unless the context requires otherwise, reference to a Condition is to a numbered condition of theTerms and Conditions of the Certificates.

Certificateholders should note that through a combination of the Lease Agreement, the PurchaseUndertaking, the Mortgages, the Share Pledge, the Co-Obligor Guarantee and the Dubai WorldGuarantee, the ability of the Issuer to pay the amounts due in respect of the Certificates willultimately be dependent on the Co-Obligors and Dubai World and through a combination of theSubscription Rights Sale Undertaking and the Co-Obligor Guarantee, the ability of the Issuer todeliver QPO Shares will ultimately be dependent on the Co-Obligors.

Parties

Issuer Nakheel Development Limited is a free zone companyincorporated on 9 November 2006 in accordance withthe Jebel Ali Free Zone Offshore Companies Regulations2003 issued in accordance with Dubai Laws Nos. 1 and4 of 2001.

Ownership of the Issuer The authorised share capital of the Issuer is 1 AEDconsisting of 1 share with a nominal value of 1 AED. Theshare is held on trust by Maples Finance Limited (theShare Trustee) on the terms of a declaration of trust(the Share Declaration of Trust) under which the ShareTrustee holds the share on trust for charity. It is notanticipated that any distributions from the trust will bemade prior to the end of the Look Back Period (asdefined herein). The Share Trustee may not dispose ofthe share prior to the end of the Look Back Period.

After the end of the Look Back Period, it is anticipatedthat the Issuer shall be liquidated and any remainingassets of the Issuer after payment of all outstandingcreditors of the Issuer shall be distributed to the ShareTrustee. After deduction of the Share Trustee’s fees andexpenses, any remaining funds shall be distributed tocharity pursuant to the terms of the Share Declarationof Trust.

The Share Trustee is a company incorporated in theCayman Islands and regulated as a trust companypursuant to the Bank and Trust Companies Act of theCayman Islands.

See The Issuer for further information.

Seller Nakheel Holdings 1 (in such capacity, the Seller) shallpursuant to a purchase agreement dated the ClosingDate (the Purchase Agreement) sell to the Issuer theSukuk Assets (as defined below).

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Lessee Nakheel Holdings 2 (in such capacity, the Lessee) willenter into a lease of the property comprising the SukukAssets with the Issuer (in such capacity, the Lessor),pursuant to a Lease Agreement (as defined below) for aperiod of 3 years commencing on the Closing Date andterminating on the Scheduled Redemption Date. Thelease is subject to early termination following an Eventof Default which is continuing (within the meaning ofthe Lease Agreement) or Total Loss (as defined below).

Purchase Undertaking Obligor Nakheel Holdings 2 (in such capacity, the PurchaseUndertaking Obligor) shall execute the PurchaseUndertaking (as defined below) in favour of the Issuer,pursuant to which the Purchase Undertaking Obligorwill undertake to, in certain circumstances, purchase allof the Issuer’s interest in the Sukuk Assets from the Issuer.

Co-Obligors Each of Nakheel Holdings 1, Nakheel Holdings 2 andNakheel Holdings 3 (together, the Co-Obligors) shallenter into the Co-Obligor Guarantee.

Servicing Agent Under the terms of the Servicing Agency Agreement (asdefined below), Nakheel Holdings 2 (in this capacity, theServicing Agent) will, amongst other things, beresponsible on behalf of the Lessor for the performanceof and/or payment in relation to, Major Maintenanceand Structural Repair, Proprietorship Taxes andInsurances (each as defined herein) in respect of theSukuk Assets (the Services) and as provided in theServicing Agency Agreement.

Security Agent Dubai Islamic Bank PJSC.

Guarantor Dubai World, a public corporation established underDubai Law No.3 of 2006.

Trustee and Agent The Issuer will act as trustee (the Trustee) in respect ofthe Trust Assets (as defined below) for the benefit ofCertificateholders in accordance with the Declaration ofTrust and the Conditions.

Pursuant to an Agency Declaration dated the ClosingDate made by the Issuer (the Agency Declaration), theIssuer will also act as agent for and on behalf ofCertificateholders with respect to the Trust Assets.

Transaction Administrator Deutsche Bank AG, London Branch (the TransactionAdministrator) shall be appointed by the Trustee asagent and representative of the Certificateholders. TheIssuer will act on the instructions of the TransactionAdministrator in respect of certain matters specified inthe Transaction Administration Deed (as definedbelow).

Deutsche Bank AG, London Branch.

Registrar Deutsche Bank Luxembourg S.A.

Principal Paying and Exchange Agent,Transfer Agent, Replacement Agent andCalculation Agent

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Summary of the Trust

Purchase Agreement The Issuer will use the proceeds of the issuance of theCertificates to pay the aggregate purchase price payableby the Issuer to the Seller for the Sukuk Assets pursuantto the terms of the Purchase Agreement.

Sukuk Assets The Sukuk Assets shall comprise of the leasehold rightsfor a term of 50 years over certain land, buildings andother property at Dubai Waterfront (the Property) (asmore particularly described in Sukuk Assets). The SukukAssets have been given a market value as at 31 August2006 of AED 15,500,000,000 by Jones Lang LaSalle. Acopy of the relevant summary valuation report is set outat Appendix 2.

The Managers are not responsible for the value orvaluation of the Sukuk Assets and the value and/orsufficiency of any property subject to the Mortgagesand Share Pledge. None of the Managers haveseparately verified the information contained in thevaluation, and no representation, warranty orundertaking, express or implied, is made by any ofthem with respect thereto. None of the Issuer, the Co-Obligors and Dubai World are responsible for thevaluation of the Sukuk Assets, and no representation,warranty or undertaking, express or implied, is madeby any of them with respect thereto.

Sukuk Asset Sale Undertaking The Sukuk Assets may in certain circumstances besubstituted in whole or in part by the Issuer and NakheelHoldings 1. Under the terms of the sale undertakingdated the Closing Date granted by the Issuer to NakheelHoldings 1 (the Sukuk Asset Sale Undertaking), theIssuer undertakes to sell all or the relevant part of theSukuk Assets to Nakheel Holdings 1 (such assets, theOriginal Sukuk Assets) for a specified asset (thePayment in Kind Asset) equal to the value of theOriginal Sukuk Assets at such time (as shown in thevaluation report dated no earlier than three monthsprior to the date of the proposed substitution andcarried out by an independent firm of propertysurveyors or valuers of international repute (selected byNakheel Holdings with the consent of the Issuer) and onsubstantially the same basis as the valuation report ofthe Sukuk Assets), provided always that:

(a) at such time, no Dissolution Event has occurred;

(b) the Payment in Kind Asset is clearly identified andis land or a leasehold interest in land with anunexpired term of at least fifty (50) years (each, areal estate interest) which, in either case, mustcomprise all or part of any of the PermittedProjects;

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(c) each Permitted Project shall cease to be aPermitted Project if non-nationals of the UnitedArab Emirates are not permitted (whether bycontract, law or otherwise other than through anauction) to buy a real estate interest in thatproject development;

(d) the value of the Payment in Kind Asset must notbe less than the value of the Original Sukuk Assetsat such time as shown in a valuation reportcarried out not more than three (3) months priorto the date of the transfer by an independent firmof property surveyors or valuers of internationalrepute (selected by Nakheel Holdings 1 with theconsent of the Issuer) and on substantially thesame basis as the valuation report of the SukukAssets;

(e) the sale of the Payment in Kind Asset to the Issuer(the Transfer) does not occur prior to a mortgageof the Payment in Kind Asset, (which must be freeof encumbrances, security and third partyinterests), in substantially the same form as theMortgages (as defined below), in favour of theSecurity Agent or, following a change of law, theIssuer, being created and fully perfected basedupon a legal opinion issued by a law firm ofinternational repute selected by the Issuer to thesatisfaction of the Security Agent or, following achange of law, the Issuer; and

(f) any costs and expenses, (including legal fees,notarial, property and registration fees and taxes,if any) to legally perfect such mortgage, and torelease the Mortgages over the Original SukukAsset, must be paid in full by Nakheel Holdings 1.

For the purpose of the foregoing:

Permitted Project means any project developed or to bedeveloped by Nakheel or any of its subsidiaries on anypart of the land comprising the sites of any of thedevelopment projects listed below:

(a) Jebel Ali Village;

(b) Jumeirah Islands;

(c) Dubai Promenade;

(d) Lost City;

(e) Jumeirah Park and Jumeirah Village;

(f) Dubai Waterfront;

(g) International City;

(h) Discovery Apartment Buildings; and

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(i) Ibn Battuta Phase 2.

Lease Under the terms of the lease agreement dated theClosing Date between the Lessor and the Lessee (theLease Agreement), the Lessee agrees to lease theproperty comprising the Sukuk Assets during sixconsecutive lease periods of six months (the LeasePeriods) commencing on the Closing Date and endingon the Scheduled Redemption Date (unless terminatedearlier following an Event of Default which is continuingor Total Loss).

The rental payment under the Lease for each LeasePeriod (the Rental) will comprise of (a) rental ofUS$55,836,000 (which shall equal the PeriodicDistribution Amount payable on each PeriodicDistribution Date) and (b) all amounts due and payableby the Lessor to the Servicing Agent under the ServicingAgency Agreement, in each case applicable to suchLease Period.

If payment of any amount that is due and payable inaccordance with the Lease Agreement (the OutstandingSum) is not made to the Lessor in full on its due date forpayment, the Lessee irrevocably undertakes to pay theLessor a late payment in respect of the period from, andincluding, the due date for settlement to, but excluding,the date of full settlement, calculated on a daily basis asthe product of (a) one per cent. (1%) per annum and (b)the Outstanding Sum on the basis of 12 months of 30days each. Any late payment charges received by Lessorshall be paid (on behalf of the Lessee) to The RedCrescent Society, being the charity of the Lessee'schoice. See Condition 4.3.

Servicing Agency Agreement Under the terms of the Servicing Agency Agreement,dated the Closing Date between the Lessor of the SukukAssets, and the Servicing Agent (the Servicing AgencyAgreement) the Servicing Agent will, amongst otherthings, be responsible for performing the Services onbehalf of the Lessor.

Purchase Undertaking The Purchase Undertaking Obligor shall execute apurchase undertaking (the Purchase Undertaking) infavour of the Issuer. Pursuant to the PurchaseUndertaking, the Purchase Undertaking Obligor shallundertake to purchase the Sukuk Assets at the ExercisePrice (as defined below) following the issue of a noticeunder the Purchase Undertaking from the Issuer, whichthe Issuer shall serve on the Purchase UndertakingObligor (the Exercise Notice) either (a) within theprescribed period prior to the Scheduled RedemptionDate or (b) following the occurrence of a DissolutionEvent.

If the Exercise Price is not paid on the due date specifiedin the Purchase Undertaking for payment of such

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amount following receipt of such Exercise Notice and aDissolution Event has been declared, the Issuer (failingwhom, the Transaction Administrator) shall be entitledto take any and all steps it deems appropriate to make ademand on the Co-Obligors under the terms of the Co-Obligor Guarantee and/or the Guarantor under theterms of the Dubai World Guarantee (and recover allamounts due thereunder) and/or to enforce the SharePledge and/or the Mortgages and, in each case, applythe net proceeds in satisfaction of all or part of thePurchase Undertaking Obligor’s obligations under orpursuant to the Purchase Undertaking.

The Exercise Price payable by the Purchase UndertakingObligor pursuant to the issue of an Exercise Notice shallbe an amount equal to the Sukuk Redemption Amount(as defined herein).

The obligations of the Purchase Undertaking Obligorunder the Purchase Undertaking constitutes a direct,unconditional and unsubordinated obligation of thePurchase Undertaking Obligor which will at all timesrank pari passu with all other unsecured andunsubordinated obligations of the PurchaseUndertaking Obligor, save for such obligations as maybe preferred by provisions of law that are bothmandatory and of general application.

If the Purchase Undertaking Obligor fails to settle all orpart of the Exercise Price that is due in accordance withthe Purchase Undertaking (the Outstanding ExercisePrice), the Purchase Undertaking Obligor shallirrevocably and unconditionally (without the necessityfor any notice or any other action) take on lease theSukuk Assets from the Issuer (and act as servicing agentwith respect to the Sukuk Assets) with effect from theday immediately following the due date for payment ofthe Outstanding Exercise Price on the terms andconditions, mutatis mutandis, of the Lease Agreementand the Servicing Agency Agreement, but with Rentalbeing due and payable on a daily basis and calculated asthe product of (a) the Outstanding Exercise Price and(b) the aggregate of the QPO Yield and the Short QPOYield, on the basis of a year of 12 months of 30 dayseach.

Co-Obligor Guarantee The Co-Obligors shall grant a guarantee (the Co-Obligor Guarantee) in favour of the Issuer under whichthey shall each jointly and severally, irrevocably andunconditionally guarantee the payment, delivery andother obligations of each other under the TransactionDocuments.

Under the Co-Obligor Guarantee, the Co-Obligors shallenter into various covenants (including a negativepledge, change of control provisions, limitations on

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financial indebtedness, asset sales, loans, dividends andthe granting of security and undertakings to maintaininsurance and provide financial information) which areset out in full in Trust Assets.

Mortgages In order to secure the payment obligations of the Co-Obligors under the Transaction Documents, NakheelHoldings 1 (the Mortgagor) shall grant two fullyperfected mortgages free of any security interest andencumbrance on the Closing Date in favour of theSecurity Agent (the Mortgages) over the Property.

Share Pledge In order to secure the payment obligations of the Co-Obligors under the Transaction Documents, NakheelHoldings 1 shall grant a fully perfected pledge withinsixty (60) days following the Closing Date (the SharePledge) in favour of the Issuer over not less than156,402,856 shares of Nakheel PJSC (representing notless than eighteen point eight nine per cent. (18.89%) ofall the issued shares of Nakheel PJSC at the time ofgranting the Share Pledge).

Under the terms of the Co-Obligor Guarantee, each ofthe Co-Obligors undertakes to procure that, on orbefore the day falling sixty (60) days following theClosing Date, all the issued share capital of Nakheel PJSCis fully paid up and capitalised at not less than AED82,790,729,200.

Dubai World Guarantee Dubai World (the Guarantor) shall grant a guarantee infavour of the Issuer on the Closing Date (the DubaiWorld Guarantee) under which the Guarantor shallirrevocably and unconditionally guarantee the paymentobligations of the Co-Obligors under the TransactionDocuments.

The obligations of the Guarantor under the Dubai WorldGuarantee constitute unsecured, direct, unconditionaland unsubordinated obligations of the Guarantor whichwill at all times rank pari passu with all other unsecuredand unsubordinated obligations of the Guarantor, savefor such obligations as may be preferred by provisionsof law that are both mandatory and of generalapplication.

Under the Dubai World Guarantee, the Guarantor shallenter into certain covenants (including a negativepledge and maintenance of ownership undertaking) theterms of which are set out in full in Trust Assets.

Enforcement The Issuer and/or Security Agent shall use the netproceeds it recovers as a result of the enforcement ofthe Share Pledge and/or the Mortgages and/or makinga claim on the Guarantor under the Dubai WorldGuarantee and/or making a claim on a Co-Obligorunder the Co-Obligor Guarantee to satisfy all or part of

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any of the Co-Obligors’ obligations under theTransaction Documents.

Security Agency Agreement The Issuer and the Security Agent shall enter into aSecurity Agency Agreement pursuant to which theSecurity Agent shall hold the security granted or to begranted by Nakheel Holdings 1 pursuant to theMortgages and any mortgage granted over anyPayment in Kind Asset.

Summary of the Certificates

Certificates US$3,520,000,000 Trust Certificates due 2009 (theCertificates or the Sukuk).

Closing Date 14 December 2006 (or such other date as may beagreed by the Issuer, the Managers, the Co-Obligors andDubai World).

Issue Price 100 per cent. of the aggregate principal amount of theCertificates.

Scheduled Redemption Date 14 December 2009.

Periodic Distribution Dates 14 June and 14 December of each year (each a PeriodicDistribution Date) commencing on the PeriodicDistribution Date falling on 14 June 2007.

QPO Yield 6.345 per cent. per annum.

Status Each Certificate evidences an undivided beneficialownership of the Trust Assets and ranks pari passu,without any preference, with the other Certificates.

Periodic Distribution Amounts On each Periodic Distribution Date Certificateholderswill receive their pro rata entitlement to a PeriodicDistribution Amount equal to the product of:

(a) the aggregate principal amount of theoutstanding Certificates (the Sukuk IssueAmount);

(b) QPO Yield x fifty per cent. (50%); and

(c) (n/360),

(and rounding the resultant figure to the nearestUS$0.01, US$0.005 being rounded upwards), where nmeans the number of days in the relevant period from(and including) the Closing Date for the first distributionperiod and the Periodic Distribution Date of thepreceding period for subsequent periods to (butexcluding) the next Periodic Distribution Date,calculated on the basis of a year of 360 days with twelve30-day months.

If a Periodic Distribution Amount has not been paid infull on a Periodic Distribution Date (for whatever

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reason), then an additional amount shall be due andpayable on the Redemption Date.

See Conditions 5 and 6.

Final Distribution Amount On the Redemption Date Certificateholders will receivetheir pro rata entitlement to a Final DistributionAmount calculated as follows:

FDA = SIA x (QY x fifty per cent. (50%)) x (n/360)

Where:

FDA means the Final Distribution Amount

n means the number of days for the period from(and including) the Closing Date to, but excludingthe Redemption Date, calculated on the basis of ayear of 360 days with twelve 30-day months

SIA means the Sukuk Issue Amount

QY means the QPO Yield

The resultant figure to the nearest US$0.01, US$0.005being rounded upwards.

If the payment of any Final Distribution Amount or partthereof has not been paid on the Redemption Date (forwhatever reason), then an additional amount shall bedue and payable on the date payment of the FinalDistribution Amount is made.


Additional Distribution Amount On the Redemption Date, an additional amount may bepayable in respect of the Certificates (the AdditionalDistribution Amount). Whether or not such AdditionalDistribution Amount is payable depends on theAggregate Value of Attributed Subscription Rights onthe Redemption Date.

If:

(a) no Qualifying Public Offering has initially closedseven days prior to the Redemption Date theAdditional Distribution Amount shall be payable,calculated as follows:

Sukuk Issue Amount x two per cent. (2%) x(n/360)

(b) a Qualifying Public Offering has initially closedseven days prior to the Redemption Date and theAggregate Value of Attributed SubscriptionRights on the Redemption Date is greater thanzero but less than the Maximum AttributableSubscription Rights Value then the AdditionalDistribution Amount shall be payable and shall becalculated as follows:

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Short QPO Aggregate Amount x Short QPO Yieldx (n/360)

For these purposes:

Adjusted QPO Aggregate Amount means the amountcalculated as follows:

APA = ASR / 0.25

Where:

APA means the Adjusted QPO AggregateAmount

ASR means the Aggregate Value of AttributedSubscription Rights

Aggregate Value of Attributed Subscription Rightsmeans the aggregate of the Value of the SubscriptionRights in respect of each Qualifying Public Offeringwhich has been launched and initially closed prior to theRedemption Date.

Dollar Exchange Rate means the relevant quotedforeign exchange rate as of 12pm (London time) forconversion of the currency in which the QPO Shares aredenominated into United States dollars determined bythe Calculation Agent on the relevant date.

Maximum Attributable Subscription Rights Valuemeans US$880,000,000.

n means the number of days for the period from (andincluding) the Closing Date to, but excluding thepayment date corresponding to the Redemption Date,calculated on the basis of a year of 360 days with twelve30-day months.

Short QPO Aggregate Amount means an amount equalto the Sukuk Issue Amount less the Adjusted QPOAggregate Amount.

Short QPO Yield means the rate per annum, calculatedas follows:

(a) if the Aggregate Value of Attributed SubscriptionRights on the Redemption Date is less than twelvepoint five per cent. (12.5%) of the Sukuk IssueAmount, an amount equal to two per cent. (2%)per annum;

(b) if the Aggregate Value of Attributed SubscriptionRights on the Redemption Date is equal to ormore than twelve point five per cent. (12.5%) butless than twenty five per cent. (25%) of the SukukIssue Amount, an amount equal to one point twofive per cent. (1.25%) per annum; and

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(c) if the Aggregate Value of the AttributedSubscription Rights on the Redemption Date isequal to twenty five per cent. (25%) of the SukukIssue Amount, an amount equal to zero per cent.(0%) per annum.

Value of the Subscription Rights means, in relation toany Qualifying Public Offering, twenty five per cent.(25%) of the QPO Size (converted if necessary into USdollars at the Dollar Exchange Rate on the QPO BusinessDay prior to the QPO Pricing Date).

For the avoidance of doubt, if the Aggregate Value ofAttributed Subscription Rights on the Redemption Dateis equal to the Maximum Attributable SubscriptionRights Value, no Additional Distribution Amount shallbe payable.

The Issuer shall appoint the Calculation Agent toundertake all necessary calculations and/ordeterminations for the purposes of calculating therelevant amounts due to be paid on the RedemptionDate.

If the payment of any Additional Distribution Amounthas not been paid in full on the Redemption Date (forwhatever reason), then an additional amount shall bedue and payable on the date payment of the AdditionalDistribution Amount is made.


Redemption The Certificates shall be redeemed in full by payment ofthe aggregate of the Sukuk Issue Amount, the FinalDistribution Amount (and all other amounts due andpayable by or on behalf of the Issuer under theConditions) and the Additional Distribution Amount (ifany) on the Scheduled Redemption Date or, if earlier, onthe Early Redemption Date (a Redemption Date), andthe Issuer’s agency and trust for the Certificateholdersshall thereafter be dissolved.

Priority of Distributions On each Periodic Distribution Date, or on anyRedemption Date, the Trustee shall apply the moniesstanding to the credit of the Transaction Account in thefollowing order of priority:

(a) first, to pay the Transaction Administrator anamount equal to any sum payable to it on accountof its properly incurred fees, costs, charges andexpenses and the payment or satisfaction of anyLiability incurred (or reasonably expected to beincurred) by the Transaction Administratorpursuant to the Transaction Administration Deed,if any, arising on or after the occurrence of aDissolution Event;

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(b) second, to the Principal Paying and ExchangeAgent for application in or towards payment paripassu and rateably of all Periodic DistributionAmounts due (and any other amountscontemplated by Conditions 6.1 or, as the casemay be, 6.2, if any) but unpaid;

(c) third, only if such payment is made on theRedemption Date, for application in or towardspayment pari passu and rateably of the FinalDistribution Amount and Additional DistributionAmount (if any) (and any other amountscontemplated by Conditions 6.1 or, as the casemay be, 6.2, if any) due on the Redemption Date;

(d) fourth, only if such payment is made on theRedemption Date, for application in or towardspayment pari passu and rateably of the SukukRedemption Amount (to the extent not alreadypaid under paragraphs (b) and (c) above) due onthe Redemption Date;

(e) fifth, only if such payment is made on aRedemption Date, in payment of the surplus (ifany) to the Issuer.


Liability means any loss, damage, cost, charge, claim,demand, expense, judgment, action, proceeding orother liability whatsoever (including, without limitation,in respect of taxes, duties, levies, imposts and othercharges) and including any value added tax or similartax charged or chargeable in respect thereof and legalfees and expenses properly incurred on a full indemnitybasis.

Dissolution Events The Dissolution Events are set out in Condition 13.

Role of Transaction Administrator The Transaction Administrator shall be appointed,pursuant to a transaction administration deed (theTransaction Administration Deed) to act as agent ofthe Certificateholders to provide directions to theTrustee, agree changes to the Transaction Documentsand otherwise act on their behalf subject to the terms ofthe Transaction Administration Deed. Additionally theTransaction Administrator shall, subject always to theprovisions of the Transaction Administration Deed, beentitled to, among other things:

(a) deliver exercise notices on behalf of the Issuer inaccordance with the Purchase Undertaking,Subscription Rights Sale Undertaking and LookBack Option Sale Undertaking;

(b) following any Dissolution Event, take any actionto (i) enforce or procure the enforcement of anyof the Mortgages and/or the Share Pledge,

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and/or (ii) make demand on the Guarantorand/or any Co-Obligor and take any action toenforce the terms of the Dubai World Guaranteeand/or Co-Obligor Guarantee, in each case in thename of the Issuer;

(c) following any Dissolution Event, takeenforcement action in the name of the Issueragainst the Purchase Undertaking Obligor for allamounts due to be paid under the PurchaseUndertaking;

(d) in certain circumstances, give notices andconsents on behalf of the Issuer under the LeaseAgreement, the Share Pledge, the Mortgages,the Dubai World Guarantee, the Co-ObligorGuarantee, the Purchase Undertaking, the SukukAsset Sale Undertaking and the Security AgencyAgreement.

Denominations The Certificates will be issued in minimumdenominations of US$100,000 and integral multiples ofUS$1,000, in excess thereof.

The Trust Assets The Trust is the trust constituted by the Issuer under theDeclaration of Trust.

The Trust Assets consist of the Sukuk Assets, certain ofthe Issuer’s rights, title, interest and benefit, present andfuture, in, to and under the Transaction Documents(other than in relation to any representations given tothe Issuer by any of the Guarantor or Co-Obligorspursuant to any of the Transaction Documents or anyother documents entered into in connection with theissue of the Certificates), the Insurances, all moniesstanding to the credit of the Transaction Account andall proceeds of the foregoing.

Transaction Account The Principal Paying and Exchange Agent will maintainand operate the Transaction Account on behalf of theTrust. Distributions of monies deriving from the TrustAssets will be made to holders of the Certificates fromfunds standing to the credit of the Transaction Account.

Withholding Tax All payments in respect of the Purchase Undertakingand Lease Agreement shall be made withoutwithholding or deduction for Taxes, unless thewithholding or deduction of such Taxes is required bylaw. In such event the Purchase Undertaking Obligor willbe required pursuant to the Purchase Undertaking andthe Lessor will be required pursuant to the LeaseAgreement to pay to the Issuer additional amounts(which amounts will be applied towards payment inrespect of the Certificates) so that the Issuer will receivethe full amount which would otherwise be due andpayable.

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All payments in respect of the Certificates shall be madewithout withholding or deduction for, or on account of,Taxes imposed or levied by the UAE (or any politicalsubdivision or authority thereof having the authority totax) unless the withholding or deduction of such Taxesis required by law. In such event, the PurchaseUndertaking Obligor will be required pursuant to theterms of the Purchase Undertaking and the Lessor willbe required pursuant to the terms of the LeaseAgreement to pay to the Issuer additional amounts, andthe Issuer shall be required to pay to Certificateholdersadditional amounts as may be necessary, so that the fullamount which otherwise would have been due andpayable under the Certificates is received by partiesentitled thereto. See Condition 11.

Certificateholder Meetings A summary of the provisions for convening meetings ofCertificateholders to consider matters relating to theirinterests as such are set forth under Condition 17.

Limited Recourse Each Certificate represents solely an undividedbeneficial ownership interest in the Trust Assets. Nopayment of any amount whatsoever shall be made inrespect of the Certificates by the Trustee or the Trust orany agents thereof except to the extent that funds areavailable therefor from the Trust Assets.Certificateholders by subscribing for or acquiring theCertificates acknowledge that no recourse may be hadfor the payment of any amount owing in respect of theCertificates against the Trustee, the TransactionAdministrator, the Co-Obligors, the Guarantor or theTrust to the extent the Trust Assets have beenexhausted (and to the extent that each fulfils itsobligations under the relevant Transaction Documentsto which it is a party) following which all obligations ofthe Trustee, and the Trust, shall be extinguished. Inaddition, no Certificateholder will be able to petition for,or join any other person in instituting proceedings for,the reorganisation, liquidation, winding up orreceivership of any of the Issuer, the Guarantor or theCo-Obligors (to the extent that each fulfils all of itsobligations under the relevant Transaction Documentsto which it is a party), or any of the Trustee theTransaction Administrator, the Security Agent or any oftheir affiliates as a consequence of such shortfall orotherwise. The Certificates do not represent an interestin or obligation of any of the Transaction Administrator,the Agents or any of their affiliates. Accordingly,Certificateholders will have no recourse to any assets ofthe Trustee, the Transaction Administrator, the Co-Obligors, the Guarantor or the Agents or any of theiraffiliates in respect of any such shortfall.

Right to Subscribe Each Certificate shall entitle the holder on eachQualifying Public Offering that is launched prior to

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redemption of the Certificates to the right (theSubscription Right) to subscribe for QPO Shares at theQPO Exercise Price (subject to and as provided byCondition 22). The rights of Certificateholders tosubscribe for QPO Shares issued in any Qualifying PublicOffering, however, will be limited:

(a) to an aggregate number of QPO Shares equal tothirty per cent. (30%) of the aggregate number ofQPO Shares to be issued in that Qualifying PublicOffering; and

(b) so that the aggregate Value of the SubscriptionRights in all Qualifying Public Offerings launchedafter the Closing Date and prior to theRedemption Date including the Value of theSubscription Rights in that Qualifying PublicOffering does not exceed US$880,000,000 (beingtwenty five per cent. (25%) of the Sukuk IssueAmount).

Qualifying Public Offering Qualifying Public Offering means any primary orsecondary equity offering of all or part of the authorisedor issued share capital by any member of the NakheelGroup at such time (whether or not in existence at theClosing Date) (including in the form of GlobalDepositary Receipts, American Depositary Receipts orother depositary receipts, any offering of mandatoryexchangeable or convertible bonds, warrants and rightsissues), in each case listed on any International StockExchange. For the avoidance of doubt, any option(which may be exercisable at any time after the QPOPricing Date) granted by the QPO Company in favour ofthe managers of the Qualifying Public Offering toincrease the size of such Qualifying Public Offering byfifteen per cent. (15%) or less to cover any over-allotments shall not be deemed to form part of orconstitute a separate Qualifying Public Offering.

Subscription Rights Sale Undertaking Nakheel Holdings 2 (the QPO Obligor) shall execute asale undertaking in favour of the Issuer (theSubscription Rights Sale Undertaking). Pursuant to theSubscription Rights Sale Undertaking, the QPO Obligorundertakes to procure the sale and delivery to the Issuer(or to its order) of such number of QPO Shares as theIssuer may direct. No delivery of QPO Shares shall bemade by the Issuer or any agents thereof except to theextent that the QPO Obligor performs its obligationsunder the Subscription Rights Sale Undertaking.

Exercise of Subscription Rights No later than eleven (11) QPO Business Days prior to theQPO Pricing Date the Issuer shall notify theCertificateholders of the occurrence of the QualifyingPublic Offering. Such notification shall include, interalia:

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(a) the publication of any intention to floatannouncement (howsoever described) and/orany initial, preliminary, pathfinder or otherequivalent offering document (howsoeverdescribed) for such Qualifying Public Offeringand, to the extent not prohibited by law, where,and from whom, copies of such offeringdocuments may be obtained;

(b) the identity of the QPO Company;

(c) the proposed QPO Closing Date;

(d) the proposed QPO Pricing Date and the FinalExercise Date;

(e) the currency of the QPO Shares;

(f) the Indicative QPO Size and (if available) theIndicative QPO Share Price and the IndicativeNumber of QPO Shares;

(g) the stock exchange on which the QPO Shares areto be listed and the clearing system throughwhich the QPO Shares will be cleared;

(h) the Indicative Subscription Price per US$1,000 inprincipal amount of Certificates;

(i) the Exercise Period, being the periodcommencing on the date specified by the Issuer(which shall be a date no less than five (5) QPOBusiness Days prior to the Final Exercise Date)and expiring at 5:00pm (London time) on theFinal Exercise Date (being the date falling four (4)QPO Business Days prior to the QPO Pricing Datefor that Qualifying Public Offering);

(j) the account details to which payments for theQPO Shares shall be paid by ExercisingCertificateholders; and

(k) any applicable selling restrictions relating to theissue of such QPO Shares and correspondingcertifications that will be required fromCertificateholders in order to participate in therelevant Qualifying Public Offering and any otherinformation required by law or in connection withthe relevant Qualifying Public Offering (togetherthe Required Certifications),

provided that the Issuer or the TransactionAdministrator shall be under no obligation to providecopies of any initial, preliminary or final offeringdocument in respect of the relevant Qualifying PublicOffering to any Certificateholder if to do so wouldbreach any applicable law or regulation. In addition, aCertificateholder may only obtain copies of any such

23


initial, preliminary or final offering document if it hasgiven the applicable Required Certifications to theperson from whom it requests such offering document.

A Certificateholder wishing to subscribe (an ExercisingCertificateholder) must (at its own expense) deliver aduly completed notice (the QPO Notice) to the specifiedoffice or offices of the relevant Paying and ExchangeAgent or Paying and Exchange Agents (being in everycase an office outside of the United States of America)at any time during the Exercise Period and, in any event,prior to 5:00 pm (London time) on the Final ExerciseDate which shall include, inter alia (i) the name, address,telephone and fax details of the ExercisingCertificateholder and, if relevant, the details of theCustodian through which it holds its Certificate orCertificates, (ii) the aggregate principal amount ofCertificates held by the Exercising Certificateholder, (iii)the indicative aggregate amount (denominated in thecurrency of the relevant Qualifying Public Offering) ofSubscription Rights that the Exercising Certificateholderwishes to exercise, which shall be equal to the product ifthe Indicative Subscription Price and the principalamount of Certificates (on the basis of a holding of notless than US$100,000 and integral multiples ofUS$1,000 in excess thereof) held by thatCertificateholder for which it wishes to exercise theSubscription Right, divided by 1,000 (such amount, theIndicative Exercise Amount), (iv) details of the accountto which QPO Shares are to be delivered (being anaccount in the settlement system stipulated in therelevant notice given by the Issuer that is capable ofreceiving QPO Shares), and (v) an irrevocableconfirmation from the Exercising Certificateholder as towhether it exercises its rights to subscribe for FurtherQPO Shares (in proportion to the Subscription Rightsexercised by it in the Qualifying Public Offering) if theSubscription Price is greater than the IndicativeSubscription Price, and (vi) a certification that theCertificateholder complies with the RequiredCertifications.

For so long as the Certificates are held in the ClearingSystems, the Exercising Certificateholder shall give anirrevocable instruction to the Clearing Systems (i) todebit the Indicative Exercise Amount from theExercising Certificateholder’s or its relevant custodian’saccount on the QPO Business Day immediatelypreceding the QPO Pricing Date, and (ii) to block aprincipal amount of Certificates (equal to the principalamount of Certificates in respect of which the ExercisingCertificateholder is exercising its Subscription Right)(such Certificates, the Blocked Certificates) in therelevant Clearing Systems account until the QPO PricingDate.

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Following service of a QPO Exercise Notice, anExercising Certificateholder will not be able to transferits Blocked Certificates in the Clearing Systems. SuchCertificates shall remain blocked in the relevant ClearingSystem account until the relevant QPO Pricing Date.

The Exercising Certificateholder must make payment ofthe Indicative Exercise Amount to or to the order of thePrincipal Paying and Exchange Agent on behalf of theIssuer by not later than 5:00 pm (QPO time) on orbefore the Business Day immediately preceding theQPO Pricing Date.

The Issuer shall, as soon as reasonably practical and inany event no later than the Business Day following theQPO Pricing Date notify the Transaction Administratorand each Exercising Certificateholder of:

(a) the final aggregate number of QPO Shares andthe final QPO Size;

(b) the QPO Share Price;

(c) the QPO Exercise Price;

(d) the Subscription Price per US$1,000 in principalamount of Certificates;

(e) the Additional Exercise Amount (if any); and

(f) the Excess Exercise Amount (if any).

If the Subscription Price per US$1,000 in principalamount of Certificates is greater than the IndicativeSubscription Price per US$1,000 in principal amount ofCertificates by five per cent. (5%) or more, eachExercising Certificateholder that has elected in its QPOExercise Notice to subscribe for Further QPO Sharesshall make, by not later 5:00 p.m. (London time) on orbefore the seventh QPO Business Day following the QPOPricing Date, an additional subscription payment (theAdditional Exercise Amount) corresponding to thedifference between the Exercise Amount and theIndicative Exercise Amount paid by it in accordancewith the Conditions.

Where the Indicative Subscription Price per US$1,000 inprincipal amount of Certificates is greater than theSubscription Price per US$1,000 in principal amount ofCertificates by five per cent. (5%) or more, the Issuershall as soon as possible following the QPO Pricing Date,and in any event no later than the QPO Closing Date,return to each relevant Exercising Certificateholder theexcess amount paid by such relevant ExercisingCertificateholder (the Excess Exercise Amount)corresponding to the difference between the IndicativeExercise Amount paid by it in accordance with theConditions and the Exercise Amount.

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The number of QPO Shares to be delivered to eachExercising Certificateholder (the Deliverable QPOShares, subject to the receipt by the Principal Payingand Exchange Agent of the relevant Indicative ExerciseAmount and, if any, the relevant Additional ExerciseAmount) shall be equal to the number of QPO Sharesthat may be purchased with the Indicative ExerciseAmount and, as the case may be, the Additional ExerciseAmount so received at the QPO Exercise Price.

Failure by any Exercising Certificateholder to makepayment of the Additional Exercise Amount in full on orbefore the seventh QPO Business Day following the QPOPricing Date shall result in the forfeiture of thatExercising Certificateholder’s rights to subscribe forand/or receive its corresponding proportion of FurtherQPO Shares, but shall not prejudice that ExercisingCertificateholder’s rights to subscribe for and/or receiveall Deliverable QPO Shares corresponding to theIndicative Exercise Amount paid by it.

The Issuer shall deliver to each ExercisingCertificateholder:

(a) thirty four per cent. (34%) of the Deliverable QPOShares corresponding to the Indicative ExerciseAmount on the QPO Closing Date;

(b) thirty three per cent. (33%) of the DeliverableQPO Shares corresponding to the IndicativeExercise Amount on the QPO Business Day fallingone month after the QPO Closing Date; and

(c) thirty three per cent. (33%) of the DeliverableQPO Shares corresponding to the IndicativeExercise Amount on the QPO Business Day fallingtwo months after the QPO Closing Date.

In addition, the Issuer shall deliver fifty per cent. (50%)of such Further QPO Shares to the relevant ExercisingCertificateholders on the QPO Business Day falling onemonth after the QPO Closing Date, and the remainingFurther QPO Shares on the QPO Business Day fallingtwo months after the QPO Closing Date.


Exercise Amount means an amount calculated asfollows:

EA = IEA x [SP/ISP]

Where: EA means Exercise Amount

IEA means Indicative Exercise Amount

SP means Subscription Price

ISP means Indicative Subscription Price

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Final Exercise Date means, in respect of the exercise ofSubscription Rights in respect of any Qualifying PublicOffering, the date falling four (4) QPO Business Daysprior to the QPO Pricing Date for that Qualifying PublicOffering.

Further QPO Shares means the further QPO Shares thatare available for subscription by ExercisingCertificateholders in the event that the final QPO Size isgreater than the Indicative QPO Size and/or as a resultof movements in the Dollar Exchange Rate the Value ofthe Subscription Rights increases (and hence theentitlement of each Exercising Certificateholder) in eachcase such number of QPO Shares equal to the aggregateAdditional Exercise Amount (due by all ExercisingCertificateholders) divided by the QPO Exercise Price.

Indicative Number of QPO Shares means, in respect ofany Qualifying Public Offering, either the indicativenumber of QPO Shares to be offered in the relevantQualifying Public Offering or, where a share price rangeis given, the highest number of QPO Shares in thatrange.

Indicative QPO Exercise Price means, in respect of anyQualifying Public Offering, the amount (denominated inthe currency of the QPO Shares) equal to ninety five percent. (95%) of the Indicative QPO Share Price.

Indicative QPO Share Price means, in respect of anyQualifying Public Offering, either the indicative shareprice of the relevant QPO Shares or, where a share pricerange is given, the highest share price in that range.

Indicative QPO Size means, in respect of any QualifyingPublic Offering, either the indicative size (in terms ofamount proposed to be raised) of the relevantQualifying Public Offering or, where a size range isgiven, the top end of that range.

Indicative Subscription Price means the amountcalculated as follows:

ISP = 1,000 x [A x 0.95/B]

Where:

ISP means the Indicative Subscription Price.

A means the product of thirty per cent. (30%) andthe Indicative QPO Size converted, if necessaryinto US dollars at the Dollar Exchange Rate on theQPO Business Day immediately preceding thedate of notification; provided always that if theaggregate Value of the Subscription Rights in allQualifying Public Offerings launched and initiallyclosed after the Closing Date (including the Valueof the Subscription Rights in the Qualifying Public

27


Offering being contemplated) exceeds theMaximum Attributable Subscription Rights Value,“A” shall be the amount (in US dollars) equal tothe Maximum Attributable Subscription RightsValue less the aggregate Value of the SubscriptionRights in all Qualifying Public Offerings (otherthan the Qualifying Public Offering beingcontemplated) launched and initially closed afterthe Closing Date.

B means the principal amount of the Certificates.

International Stock Exchange means anyinternationally recognised market or any recognisedmarket within any member state of the Gulf Co-operation Council (as may be determined by theTransaction Administrator), which shall, for theavoidance of doubt, include each of the DubaiInternational Financial Exchange (DIFX), the DubaiFinancial Market (DFM), the Abu Dhabi SecuritiesMarket (ADSM), the Kuwait Stock Exchange, the StockExchange of Hong Kong Limited, Singapore ExchangeLimited (SGX), and the London Stock Exchange.

Nakheel Group means Nakheel PJSC and its Subsidiariesat the relevant time.

QPO Business Day means (except where otherwisedefined) a day on which commercial banks and foreignexchange markets settle payments and are open forgeneral business (including dealings in foreignexchange and foreign currency deposits) in London,Dubai and the financial centre where the primary listingof the Qualifying Public Offering is to occur.

QPO Closing Date means for any Qualified PublicOffering, the date on which the initial settlement occursfor the relevant QPO Shares.

QPO Company means, at any time, any member of theNakheel Group.

QPO Pricing Date means the date that the QPO SharePrice is determined in the relevant Qualifying PublicOffering.

QPO Share means each share (including any GlobalDepository Receipts, American Depository Receipts orother depository receipts) and each mandatoryexchangeable or convertible bond, rights or warrantsissued in connection with a Qualifying Public Offering.

QPO Share Price means the subscription price set atpricing of the relevant Qualifying Public Offering foreach QPO Share.

QPO Size means in respect of any Qualifying PublicOffering the product of the QPO Share Price and the

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number of QPO Shares issued in that Qualifying PublicOffering.

Subscription Price means the amount calculated asfollows:

SP = 1,000 x [A x 0.95/B]

Where:

SP means the Subscription Price

A means the product of thirty per cent. (30%) andthe QPO Size converted, if necessary, into USdollars at the Dollar Exchange Rate on the QPOBusiness Day immediately preceding the QPOPricing Date; provided always that if theaggregate Value of the Subscription Rights in allQualifying Public Offerings launched and initiallyclosed after the Closing Date (including the Valueof the Subscription Rights in the Qualifying PublicOffering being contemplated) exceeds theMaximum Attributable Subscription Rights Value,“A” shall be the amount (in US dollars) equal tothe Maximum Attributable Subscription RightsValue less the aggregate Value of the SubscriptionRights in all Qualifying Public Offerings (otherthan the Qualifying Public Offering beingcontemplated) launched and initially closed afterthe Closing Date.


Value of the Subscription Rights means, in relation toany Qualifying Public Offering, twenty five percent.(25%) of the QPO Size (converted if necessary into USdollars at the Dollar Exchange Rate on the QPO BusinessDay prior to the QPO Pricing Date).

See Condition 22

Look Back Option If on the Redemption Date the Aggregate Value of theSubscription Rights is less than the MaximumAttributable Subscription Rights Value, the Issuer andthe QPO Obligor shall use their reasonable endeavoursto ensure that the Relevant Holders shall, in thecircumstances set out in the Look Back OptionDeclaration of Trust and the Look Back Option SaleUndertaking, have the option to subscribe for QPOShares if such Qualifying Public Offering is initiallysettled during the Look Back Period.

Pursuant to the terms of the Look Back Option SaleUndertaking granted on or before the Closing Date bythe QPO Obligor in favour of the Issuer, the QPOObligor shall undertake that it shall (subject to clause3.18 of the Look Back Option Declaration of Trust)procure the sale of QPO Shares to the Issuer (or to itsorder) and procure the delivery of the QPO Shares to

29


exercising Relevant Holders, in each case on the termsmore particularly described therein.

The maximum amount of QPO Shares that the RelevantHolders shall be able to subscribe for in the Look BackPeriod shall be equal to the Look Back AttributableSubscription Rights Value.

Following the occurrence of a Qualifying Public Offeringthe Issuer shall make the equivalent notifications toRelevant Holders as contemplated under the Conditionsand Relevant Holders shall exercise their right to receivesuch QPO Shares by completing a QPO Exercise Noticeand making payment of the Indicative Exercise Amountand any Additional Exercise Amount.

Throughout the Look Back Period in connection withthe exercise of its Subscription Rights, each RelevantHolder shall be required to pay an additional amount(equal to the Look Back Amount corresponding to theaggregate principal amount of Certificates for which it isexercising its Subscription Rights) to the Issuer onpayment of the corresponding Indicative Exercise Price.

Pursuant to the terms of the Look Back OptionDeclaration of Trust, the Issuer declares that it holds itsrights under the Look Back Option Sale Undertaking ontrust for each Relevant Holder. For the avoidance ofdoubt, the Look Back Option Sale Undertaking shall notconstitute part of the Trust Assets.


Look Back Amount means an amount in US dollarscalculated as follows:

[A – B] / SIA

Where:

A means the Additional Distribution Amount that wouldhave been due on the Redemption Date had all previousQualifying Public Offerings both before and after theRedemption Date (but excluding the relevant QualifyingPublic Offering) initially launched and closed prior tothe Redemption Date.

B means the Additional Distribution Amount that wouldhave been due on the Redemption Date had allQualifying Public Offerings both before and after theRedemption Date (and including the relevant QualifyingPublic Offering) initially launched and closed prior tothe Redemption Date.

SIA means the Sukuk Issue Amount.

Look Back Attributable Subscription Rights Valuemeans an amount (in US dollars) equal to the differencebetween the Maximum Attributable Subscription Rights

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Value and the Aggregate Value of AttributedSubscription Rights.

Look Back Option means the option of each RelevantHolder to subscribe for QPO Shares on the terms moreparticularly described in the Look Back OptionTransaction Documents.

Look Back Option Agency Declaration means theagency declaration granted by the Issuer on the ClosingDate in respect of the Look Back Option.

Look Back Option Declaration of Trust means thedeclaration of trust entered into by the Issuer and theQPO Obligor on the Closing Date in respect of theIssuer’s rights under the Look Back Option SaleUndertaking.

Look Back Option Sale Undertaking means the saleundertaking dated the Closing Date whereby the QPOObligor provides the Issuer with an irrevocableundertaking in respect of the sale of QPO Shares duringthe Look Back Period.

Look Back Option Transaction Documents means theLook Back Option Sale Undertaking, the Look BackOption Declaration of Trust and the Look Back OptionAgency Declaration.

Look Back Period means the period commencing on theRedemption Date and terminating on the date fallingtwelve (12) months thereafter.

Relevant Holder means each person that is aCertificateholder as at the Redemption Date asconfirmed (a) if the Certificates are, at such time,represented by a Global Certificate held on behalf of aclearing system, from records of such clearing system,or (b) otherwise by reference to the Registrar.

General

Form and Delivery of the Certificates The Certificates will be issued in registered form only.

The Certificates will be represented by interests in theGlobal Certificate deposited with a common depositaryfor Euroclear and Clearstream, Luxembourg.

Definitive Certificates (evidencing holdings ofCertificates) will only be issued in exchange for interestsin the Global Certificate in certain limitedcircumstances.

See Global Certificate and Clearance and Settlement.

Clearance and Settlement Holders of the Certificates may elect to hold theirinterest in the Global Certificate in book-entry formthrough each of Euroclear or Clearstream, Luxembourg.Transfers within Clearstream, Luxembourg or Euroclearwill be in accordance with the usual rules and operating

31


procedures of the relevant clearance system. The ISINfor the Certificates is XS0277553052. The CommonCode for the Certificates is 027755305. See Clearanceand Settlement.

Use of Proceeds The proceeds of the issue of the Certificates will be usedby the Issuer to purchase the Sukuk Assets inaccordance with the terms of the Purchase Agreement.

Listing Application will be made to list the Certificates on theDubai International Financial Exchange. See GeneralInformation.

Tax Considerations See Taxation for a description of certain UAE, UnitedKingdom and European Union tax considerationsapplicable to the Certificates.

Transfer Restrictions Certain purchase and transfer restrictions applicable tothe Certificates are set forth under Subscription andSale.

Transaction Documents The Transaction Documents are the PurchaseAgreement, the Lease Agreement, the Servicing AgencyAgreement, the Purchase Undertaking, the Sukuk AssetsSale Undertaking, the Declaration of Trust, the AgencyDeclaration, the Transaction Administration Deed, theShare Pledge, the Subscription Rights Sale Undertaking,the Mortgages, the Dubai World Guarantee, the Co-Obligor Guarantee, the Agency Agreement, the SecurityAgency Agreement, the Certificates and any otheragreements and documents delivered or executed inconnection therewith (each as defined in theConditions).

Governing Law and jurisdiction The Declaration of Trust, the TransactionAdministration Deed, the Agency Agreement, theCertificates, the Co-Obligor Guarantee and the DubaiWorld Guarantee will be governed by English law andsubject to the non-exclusive jurisdiction of the EnglishCourts.

The Purchase Agreement, the Lease Agreement, theServicing Agency Agreement, the Sukuk Assets SaleUndertaking, the Purchase Undertaking, theSubscription Rights Sale Undertaking, the AgencyDeclaration, the Security Agency Agreement, theMortgages and the Share Pledge will be governed by thelaws of the UAE as applied by the Dubai courts. Thecourts of Dubai have non-exclusive jurisdiction to hearall disputes relating to each of those documents.

Waiver of Sovereign Immunity Dubai World and each Co-Obligor acknowledges in theTransaction Documents to which it is a party that:

Private and Commercial Acts: it is subject to civil andcommercial law with respect to its obligations under theTransaction Documents, and the execution and deliveryof the Transaction Documents constitute, and theexercise of its rights and the performance of its

32


obligations hereunder and thereunder will constitute,private and commercial acts done or performed forprivate and commercial purposes rather thangovernmental or public acts;

No immunity from Suit: it can be sued in its own nameand has no right of immunity from suit or thejurisdiction of the courts under the laws of the UAE orthe Emirate of Dubai; and

Waiver of Immunity: to the extent that either of themmay in any jurisdiction claim for itself or its assets orrevenues immunity from suit, execution, attachment(whether in aid of execution, before judgment orotherwise) or other legal process and to the extent thatsuch immunity (whether or not claimed) may beattributed to it or its assets or revenues, Dubai Worldand each Co-Obligor represents and agrees that it willnot claim and irrevocably and unconditionally waives tothe fullest extent possible under applicable law suchimmunity in relation to any proceedings.

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PRONOUNCEMENT

Copies of the pronouncement dated 11 December 2006 issued on behalf of the Sharia SupervisionBoard of Dubai Islamic Bank PJSC confirming that, in their view, the proposed issue of theCertificates and the related structure and mechanism described in the Transaction Documents arein compliance with Sharia principles, shall be distributed to prospective Certificateholders uponrequest by Dubai Islamic Bank PJSC and Barclays Bank PLC.

Members of the Sharia Supervision Board of Dubai Islamic Bank PJSC

(1) Dr. Hussein Hamid Hassan

(2) Dr. Ali Mohi Eldin AlQura Daghi

(3) Dr. Mohamed Abdulahakim Zuair

(4) Mohammed Abdul Razzaq Mohd Al Sedeeq

(5) Dr. Ajeel Jasim al Nashmy

Prospective Certificateholders should not rely on the pronouncement referred to above indeciding whether to make an investment in the Certificates and should consult their own Shariaadvisers as to whether the proposed transaction described in the pronouncement referred toabove is in compliance with Sharia principles.

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Level: 13 – From: 0 – Tuesday, December 12, 2006 – 4:09 pm – mac5 – 3586 Section 03 : 3586 Section 03Level: 13 – From: 0 – Tuesday, December 12, 2006 – 4:09 pm – mac5 – 3586 Section 03 : 3586 Section 03Level: 13 – From: 0 – Tuesday, December 12, 2006 – 4:09 pm – mac5 – 3586 Section 03 : 3586 Section 03

RISK FACTORS

Prior to investing in any Certificates, potential investors should carefully consider, together with allother information contained in this Offering Circular, the considerations described below. Theseconsiderations are not exhaustive and other considerations, including some which may not bepresently known to the Issuer, Dubai World or the Co-Obligors, or which the Issuer, Dubai World orthe Co-Obligors currently deems immaterial, may impact on any investment in the Certificates. Wordsand expressions defined in the Terms and Conditions of the Certificates below or elsewhere in thisOffering Circular have the same meanings in this section.

Risks Relating to Dubai World and the Dubai World Group

General

Dubai World is a public corporation established pursuant to Law No. 3 of 2006 issued by HisHighness Sheikh Mohammed Bin Rashid Al-Maktoum as Ruler of Dubai. Investors should note,however, that the Government of Dubai does not guarantee any indebtedness or any other liabilityof Dubai World. Until the ports operating businesses currently owned by Ports, Customs and FreeZone Corporation (PCFC) are consolidated within Dubai World, the majority of the assets of DubaiWorld are located within the UAE. As a result of the majority of the assets of Dubai World beinglocated in the UAE, there may be insufficient assets of Dubai World located outside the UAE tosatisfy in whole or part any judgment obtained from an English court relating to amounts owing inconnection with the Certificates. If investors were to seek enforcement of an English judgment in theUAE or to bring proceedings in connection with the Certificates in the UAE, then certain limitationswould apply (see Enforcing foreign judgments in Dubai below).

Lack of consolidated financial information in respect of Dubai World and the Dubai World Group

Dubai World is not required to, does not and has no current intention in the future to publishconsolidated or non-consolidated audited financial statements under UAE law.

As at the date of the Offering Circular, Istithmar PJSC, Limitless LLC and the Co-Obligors and theirrespective subsidiaries constitute the material part of the Dubai World Group assets, liabilities andrevenues.

No assurance can be given that if Dubai World were to produce and publish audited financialstatements on a consolidated basis that Dubai World’s consolidated financial position, including itsconsolidated assets, liabilities, revenues and cash flows would not be significantly different from theinformation that can be drawn from the financial statements of Nakheel.

Dubai World Strategy

Dubai World is a newly established corporation and companies and businesses are being transferredto its ownership over time. The current intention is that the principal businesses that are or will betransferred to Dubai World will be those commercial enterprises that were run by The CorporateOffice (the TCO), an unincorporated arm of the Government of Dubai led by Sultan Ahmed BinSulayem. Entities that are currently run by TCO include PCFC, Dubai Ports Authority and Jebel AliFree Zone Authority. There can be no assurance as to the timing and completion of these transfers.It may not be possible to transfer over the commercial businesses within the relevant time periods,in the manner intended or at all.

In addition, in the event that the ports business becomes part of the Dubai World Group, DubaiWorld may be required to become a co-obligor (with PCFC) under a US$3.5 billion sukuk issue thatwas raised for the benefit of the ports business in January 2006. Accordingly, transfers of businessesmay increase the potential liabilities of Dubai World itself.

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Dependency on Subsidiaries

As described above, Dubai World is a holding company. As such, Dubai World is dependent on theoperations of and cash flows generated by its subsidiaries. Therefore any claim that may be madeby a creditor on Dubai World will effectively be structurally subordinate to any claims made bycreditors directly on Dubai World’s subsidiaries.

Dubai World’s subsidiaries are involved in a diverse range of businesses

Dubai World’s subsidiaries are involved in a diverse range of business and as such are diverse innature, operation and strategy. Therefore, Dubai World’s subsidiaries are subject to a range ofdiffering risks and challenges. However, those of its subsidiaries that are involved in propertydevelopment and investment are subject to similar risks that face the Co-Obligor Group.

Risks Relating to the Co-Obligors and the Co-Obligor Group

Strategy

The growth strategy of the Co-Obligor Group is based on certain assumptions relating to, inter alia,economic conditions, market for real estate and demographic conditions in Dubai. Although the Co-Obligor Group has no reason to believe that these assumptions are inappropriate, it cannot beexcluded that these assumptions may turn out to be incorrect. This could, for example, have animpact on the rental income, sales proceeds or other income (such as management fees) availableto the Co-Obligor Group and the value of its projects, which could affect its ability to makepayments under the Transaction Documents.

Dependency on Nakheel

Nakheel Holdings 1, Nakheel Holdings 2 and Nakheel Holdings 3 are dependent on Nakheel as theonly assets they each hold are the equal shares held by them in Nakheel, (apart from the Propertyowned by Nakheel 1) and certain receivables as disclosed elsewhere in this Offering Circular.Therefore Nakheel Holdings 1, Nakheel Holdings 2 and Nakheel Holdings 3 are subject to the samerisks to which Nakheel and its subsidiaries (the Nakheel Group) are subject. The periodic return dueto be paid is intended to be received from Nakheel, with the principal amount being due fromNakheel Holdings 1.

Nakheel Holdings 1, Nakheel Holdings 2 and Nakheel Holdings 3 do not publish consolidated auditedfinancial statements. However, in order to ascertain the financial position of these entities, potentialinvestors in the Certificates should consider the consolidated financial position of Nakheel set outelsewhere in this document. However there can be no assurance that if Nakheel Holdings 1, NakheelHoldings 2 and Nakheel Holdings 3 prepared such consolidated audited financial statements, theywould not be materially different from the position of Nakheel set out elsewhere in this document.

The Co-Obligor Group’s financial performance could be adversely affected if the demand forresidential or commercial property in Dubai were to decrease

Since the inception of the Co-Obligor Group, the demand for residential or commercial property inDubai has increased substantially. Part of this demand has been based on speculation that thedemand for residential property in Dubai will continue to grow which may rely on, amongst otherfactors, the continued economic growth of the UAE, continued political stability in the UAE, foreigninvestment continuing to grow in the UAE and the stability of foreign exchange rates. If this demanddoes not materialise, it could have a material adverse effect on the Co-Obligor Group’s business,financial condition and results of operations.

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The Nakheel Group’s financial performance could be adversely affected if the reputation ofDubai property developers as a whole are damaged

While the Nakheel Group believes it has a strong reputation of providing high quality residentialproperties in Dubai, the reputation of Dubai property developers as a whole could be adverselyaffected if the Co-Obligor’s Group competitors provide low quality residential properties. If this wereto materialise, it could have a material adverse effect on the revenue that the Nakheel Group couldgenerate from its business.

Competition

The Co-Obligor Group faces competition for the development and leasing of properties from otherproperty developers in Dubai. There is no assurance that existing and future competitors in thisregion may not charge lower prices for their properties or otherwise see demand for their propertiesincrease disproportionately to the demand for properties developed by the Co-Obligor Group. If thiswere to materialise, it could have a material adverse effect on the revenue that the Nakheel Groupcould generate from its business.

The Co-Obligor Group’s facilities could be exposed to catastrophic events over which the Co-Obligor Group has no control

The Co-Obligor Group’s facilities may be exposed to effects of natural disasters and other potentiallycatastrophic events, such as major accidents, armed conflicts and terrorist attacks. Althoughconstructed, operated and maintained to withstand certain of these occurrences, the Co-ObligorGroup’s facilities may not be adequately protected in all circumstances. There can be no assurancesthat any such occurrences will not adversely affect the Co-Obligor Group’s existing developmentsand thereby have a material adverse effect on its business, financial condition, operating results andfuture prospects.

The Co-Obligor Group’s business is dependent on economic and trade growth

The core business of the Co-Obligor Group’s property development and leasing business is thedevelopment of projects within the Dubai market. As a result, there is a direct correlation betweenthe growth of the regional economies and the volume developed by the Co-Obligor Group. Anydeterioration in regional economic conditions could adversely affect the Co-Obligor Group’sfinancial results and future growth.

The Co-Obligor Group may not complete its properties that are under construction or in initialstages of development

The Co-Obligor Group’s current and future development and construction activities involve anumber of risks, including:

• delays or refusals in obtaining all necessary building, occupancy and other requiredgovernmental permits and authorisations;

• requirement to make significant current capital expenditures for certain properties whilereceiving revenue from these properties over future periods, resulting in possible mismatchesbetween expenditure and income;

• inability to complete development projects on schedule or within budgeted amounts; and

• fluctuations in occupancy rates at newly developed properties due to a number of factors,including market and economic conditions that may result in certain of Co-Obligor Group’sprojects not being profitable and hence halted or re-planned for other uses.

Any of the above could have a material adverse effect on the Co-Obligor Group’s business, financialcondition and results of operations.

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The Co-Obligor Group has significant construction and capital expenditure requirements

Many of the Co-Obligor Group’s developments are under construction or in the initial stages ofdevelopment and have significant capital expenditure requirements. In addition, Nakheel does nothave committed financing for all of its projects. Construction of new properties may give rise to thefollowing risks:

• failure by the Co-Obligor Group’s construction contractors to finish projects on time or withinbudget;

• the Co-Obligor Group may have to pay penalties to purchasers for failing to meet theprovisions of its time bound contracts;

• possible shortage of available cash (or performance support) to fund construction and capitalimprovements and/or performance / construction guarantees and the related possibility thatfinancing for these capital improvements may not be available to the Co-Obligor Group onterms that are reasonable;

• uncertainties as to market demand or a loss of market demand after construction capitalimprovements have begun; and

• possible defects in construction requiring rectification that may increase budgeted costsand/or timetables and/or adversely impact on Nakheel’s reputation, thereby potentiallyprejudicing the success of future projects.

If construction costs exceed or projected sales prices or numbers fall below the Co-Obligor Group’sexpectations, they could have a material adverse effect on its business, financial condition andresults of operations.

The Co-Obligor Group’s businesses require substantial capital investment

The Co-Obligor Group will require additional financing to fund capital expenditures, to support thefuture growth of its business and/or to refinance existing debt obligations. The Co-Obligor Group’score businesses will require substantial capital investment. The Co-Obligor Group has traditionallyrelied primarily upon capital contributions from the government of Dubai and retained earnings tofund its capital expenditure requirements rather than seek internal financing. There can be noassurance that these contributions will continue. The Co-Obligor Group’s ability to arrange forexternal financing and the cost of such financing are dependent on numerous factors, includinggeneral economic and capital market conditions, interest rates, credit availability from banks orother lenders, investor confidence in the Co-Obligor Group, success of the Co-Obligor Group’sbusinesses, provisions of tax and securities laws that may be applicable to the Co-Obligor Group’sefforts to raise capital and political and economic conditions in any relevant jurisdiction. There canbe no assurance that additional financing, either on a short-term or a long-term basis, will be madeavailable or, if available, that such financing will be obtained on terms favourable to the Co-ObligorGroup.

The Co-Obligor Group is subject to construction delay and cost overrun risks

There are a number of construction, financing, operating and other risks associated with projectdevelopments in the jurisdictions in which the Co-Obligor Group operates. Projects of the typesundertaken by the Co-Obligor Group typically require substantial capital expenditures during theconstruction phase and usually take many months, sometimes years, before they becomeoperational and generate revenue. The time taken and the costs involved in completingconstruction can be adversely affected by many factors, including shortages of materials, equipmentand labour, adverse weather conditions, natural disasters, labour disputes, disputes with sub-contractors, accidents, changes in governmental priorities and other unforeseen circumstances. Anyof these could give rise to delays in the completion of construction and/or to cost overruns. In

38


relation to the Co-Obligor Group’s projects, certain government approvals, permits, licences orconsents may need to be obtained. Delays in the process of obtaining, or a failure to obtain, therequisite licences, permits or approvals from government agencies or authorities can also increasethe cost or delay or prevent the commercial operation of a business, which could have a materialadverse effect on the financial performance of the Co-Obligor Group’s business.

Construction delays can result in the loss of revenues. In relation to some of the Co-Obligor Group’sprojects, in the event of a delay beyond a specified longstop date, relevant purchasers have a rightto sell their property back to Nakheel (or its relevant subsidiary) at the original purchase price plusinterest. This would create a financial liability for Nakheel (or its relevant subsidiary) and, whilst inthe past this right has been very rarely exercised by purchasers, there can be no guarantee that thiswill remain the case in relation to current or future delays. Even where there is no contractual rightof termination and repayment, it is possible that a purchaser would still be able to claimreimbursement from Nakheel (or its relevant subsidiary) together with interest in the event of non-delivery. In the event that Nakheel or its subsidiaries was required to reimburse purchasers, it couldhave a material adverse effect on the financial performance of the Co-Obligor Group’s business.

The failure to complete construction according to its specifications may also result in liabilities,reduced efficiency and lower financial returns.

The default by one of the Co-Obligor Group’s contractors or suppliers may adversely affect theconstruction of certain construction projects and impact the Co-Obligor Group’s ability to fulfilits obligations under its contracts with its customers

There has been a significant rise in the amount of property development in the Middle East-NorthAfrica (MENA) region and the Indian subcontinent and, in particular, in Dubai. As a result, thenumber of contractors and suppliers available to meet demand is limited. Therefore, if one of theCo-Obligor Group’s contractors or suppliers defaults on its arrangements with the Co-ObligorGroup, for any reason, including the bankruptcy or insolvency of such contractor or supplier, thereis a strong likelihood that the Co-Obligor Group would not be able to find a replacement contractoror supplier promptly. Even assuming that the Co-Obligor Group was able to find a replacementcontractor or a supplier in a timely fashion or to take over the contractor’s role, it is likely that thecosts to the Co-Obligor Group will increase. Further, any new contractor or supplier may need timeto familiarise himself with the ongoing project, thus causing a delay in the completion of the project.In addition, there is no guarantee that the replacement contractor or supplier that is retained willbe one that the Co-Obligor Group has previously employed and thus there is a risk that the newcontractor or supplier may not meet the Co-Obligor Group’s high standards for qualityworkmanship and product, respectively. If any of these events were to occur, it could have a materialadverse effect on the Co-Obligor Group’s business, financial condition or results of operations.

If the Co-Obligor Group’s contractors’ relationship with its employees were to deteriorate, it maybe faced with labour shortages or stoppages which would adversely affect its ability to developand/or operate its properties

The Co-Obligor Group’s contractors’ relations with their employees could deteriorate due todisputes related to, among other things, wage or benefit levels or their response to changes ingovernment regulation of workers and the workplace. The Co-Obligor Group’s business reliesheavily on contractors providing high-quality service, and any labour shortage or stoppage causedby poor relations between a contractor and its employees, could adversely affect the Co-ObligorGroup’s ability to complete projects on time and on budget. This could impact the Co-ObligorGroup’s ability to deliver projects to customers on or before scheduled delivery dates and coulddamage its reputation and therefore may have a material adverse effect on its business, financialcondition and results of operations.

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The Co-Obligor Group’s investment properties and development projects could be exposed toevents over which it has no control

The Co-Obligor Group owns and operates several investment properties. The residual value of theseproperties may be adversely affected by risks generally incidental to interests in real property. TheCo-Obligor Group’s development properties may also be exposed to these same risks which mayadversely affect the value of these development properties. These risks include, but are not limitedto:

• changes in political and economic conditions or in specific industry segments;

• a decline in property values;

• a decline in rental or occupancy rates;

• fluctuations in interest and inflation rates;

• changes in governmental rules, regulations and fiscal and other policies;

• terrorism;

• catastrophic events; and

• other factors which are beyond the control of the Co-Obligor Group.

Any of the above could have a material adverse effect on the Co-Obligor Group’s business, financialcondition and results of operations.

Property valuation is inherently subjective and uncertain

Like every valuation of property and property-related assets, the valuation of Nakheel’s propertyand property-related assets is inherently subjective. This is because property valuations, includingthe valuation report of the Sukuk Assets, are made on the basis of assumptions which may not proveto reflect the true position. As a result, valuations are subject to uncertainty. There is no assurancethat the valuations of the properties and property-related assets will reflect actual sale prices evenwhere any such sales occur shortly after the relevant valuation date and therefore could have amaterial adverse effect on Nakheel’s business, financial condition and results of operations.

The Co-Obligor Group’s ability to generate its desired returns on its investment properties willalso depend on its ability to either lease or dispose of its properties to appropriate tenants orpurchasers on appropriate terms

The Co-Obligor Group’s ability to implement its strategy and achieve its desired returns may belimited by its ability to lease its properties to, and manage them for (together with providing relatedservices to), appropriate tenants on satisfactory terms, and to dispose to appropriate credit worthypurchasers of them on appropriate terms. Revenue earned from, and the value of, properties heldby the Co-Obligor Group may be adversely affected by a number of factors, including:

• vacancies in tenanted properties that lead to reduced occupancy rates which would reducethe Co-Obligor Group’s revenue and its ability to recover certain operating costs such as localtaxes and service charges. Accordingly, such reduced occupancy would result in a shortfall ofprojected taxes and service charges without a corresponding reduction in the Co-ObligorGroup’s obligations for operation or maintenance of common parts and infrastructure;

• vacancies in tenanted properties that lead to reduced occupancy rates which would reducethe Co-Obligor Group’s revenue may also result in it incurring additional expenses until theproperty is re-let, including legal and surveying fees and marketing costs;

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• the Co-Obligor Group’s ability to obtain adequate management, maintenance or insuranceservices on commercial terms or at all;

• the Co-Obligor Group’s ability to collect rent and service charge payments from tenants andother contractual payments under real estate outsourcing contracts on a timely basis or at all;

• tenants seeking the protection of bankruptcy laws which could result in delays in receipt ofrental and other contractual payments, inability to collect such payments at all or thetermination of a tenant’s lease, all of which could hinder or delay the sale of a property;

• the amount of rent and the terms on which lease renewals and new leases are agreed beingless favourable than current leases;

• a competitive rental market which may affect rental levels or occupancy levels at the Co-Obligor Group’s properties; and

• changes in laws and governmental regulations in relation to real estate, including thosegoverning permitted and planning usage, taxes and government charges. Such changes maylead to an increase in management expenses or unforeseen capital expenditure to ensurecompliance. Rights related to particular properties may also be restricted by legislativeactions, such as revisions to existing laws or the enactment of new laws, such as laws relatingto the right to acquire freehold title to properties.

The lack of alternative uses of commercial and/or residential properties could significantly limitthe Co-Obligor Group’s ability to respond to adverse changes in the performance of itsproperties and harm its financial condition

Certain commercial and/or residential properties may not be readily converted to alternative usesif they were to become unprofitable due to competition, age of improvements, decreased demandor other factors. The conversion of such commercial and/or residential property to alternative useswould generally require substantial capital expenditures. In particular, the Co-Obligor Group may berequired to expend funds to correct defects or to make improvements before a property can be sold.There can be no assurance that the Co-Obligor Group will have funds available to correct defects orto make improvements. These factors and any others that would impede the Co-Obligor Group’sability to respond to adverse changes in the performance of its properties could have a materialadverse effect on its business, financial condition and results of operations.

The illiquidity of real estate investments could significantly limit the Co-Obligor Group’s ability torespond to adverse changes in the performance of its properties and harm its financial condition

Because real estate investments in general are relatively illiquid, the Co-Obligor Group’s ability topromptly sell one or more of its properties in response to changing political, economic, financial andinvestment conditions is limited. The real estate market is affected by many factors, such as generaleconomic conditions, availability of financing, interest rates and other factors, including supply anddemand, that are beyond the Co-Obligor Group’s control. The management of the Co-ObligorGroup cannot predict whether the Co-Obligor Group will be able to sell any property for the priceor on the terms set by it, or whether any price or other terms offered by a prospective purchaserwould be acceptable to it. The Co-Obligor Group management also cannot predict the length oftime needed to find a willing purchaser and to close the sale of the property.

The Co-Obligor Group is reliant on access to transport infrastructure for various properties

Access to some of the Co-Obligor Group’s projects are partly dependent on the completion ofconnecting infrastructure, such as roads connecting a project with the Dubai road network, forwhich third parties, including the Government of Dubai, are responsible.

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However, Nakheel currently enjoys good relationships with the Government of Dubai and otherrelevant third parties and issues relating to connecting infrastructure have not caused any materialdelays in Nakheel’s projects to date.

Risks Relating to Co-Obligor Group’s Business

The Co-Obligor Group may not have adequate insurances

The Co-Obligor Group has obtained insurance covering contractor risks, property risks, publicliability, third party and loss of income (the Insurance Policies). The insured risks comprise,principally, typical property insurance risks for properties of the type owned by and the businessundertaken by the Co-Obligor Group. The Insurance Policies are due to expire on varying datesdepending on the policy with tacit renewal for a certain period thereafter. No assurances can begiven that the Insurance Policies will be renewed on the same terms, at an acceptable cost or will berenewed at all.

No assurances can be given that the proceeds of any such insurance will be sufficient to pay, in full,all the amounts due from the Co-Obligor Group under the Transaction Documents or amounts dueto the Certificateholders under the Certificates. If the Co-Obligor Group were to sustain anuninsured loss, this may adversely affect the Co-Obligor Group’s ability to perform their obligationsunder the Transaction Documents. Certain types of risks and losses (for example, losses resultingfrom acts of God, catastrophic events or terrorism) are not economically insurable or are notcovered by the required insurance policies. If an uninsured or uninsurable loss were to occur, the Co-Obligor Group might not have sufficient funds to repay in full all amounts owing by it under theTransaction Documents.

Environment Risks

There are provisions under UAE federal law regarding environmental protection and developmentwhich impose liability on owners/developers. In addition, there are other provisions in the UAE CivilCode pursuant to which a party may be liable for harm caused by one party to another. As a result,Nakheel has potential environmental liability as a land-owner and developer under the provisions ofUAE federal law and the Civil Code.

If an environmental liability arises in relation to any project owned or operated by the Co-ObligorGroup and it is not remedied, or it is not capable of being remedied, this may have a material adverseeffect on such project and the business, financial condition etc of the Co-Obligor Group (eitherbecause of the cost implications for the Co-Obligor Group or because of disruption to servicesprovided at the relevant project or property). It may also result in a reduction of the value of therelevant project or property or affect the ability of the Co-Obligor Group to dispose of such projector property.

Safety standards adopted by the Co-Obligor Group

The Co-Obligor Group has adopted safety standards with reference to applicable laws andregulations in the UAE. In addition, safety requirements are contractually agreed to by Nakheel’scontractors. If a member of the Co-Obligor Group and/or its contractors failed to comply with therelevant standards, the entity may be liable to penalties and the operation and/or reputation of theCo-Obligor Group might be materially and adversely affected.

In addition, any amendments to the existing laws and regulations relating to environmental andsafety standards may impose more burdensome requirements and the Co-Obligor Group’scompliance with such laws or regulations may require the Co-Obligor Group to incur significantcapital expenditure or other obligations or liabilities, which could have a material adverse effect onthe Co-Obligor Group’s business, results of operation and financial condition.

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Dependence on Key Personnel

The Co-Obligor Group’s success in growing its business will depend, in part, on its ability to continueto attract, retain and motivate qualified and skilled personnel. The Co-Obligor Group relies on itssenior management for the implementation of its strategy and its day-to-day operations. There iscompetition for skilled personnel, especially at the senior management level, due to adisproportionately low number of available qualified and/or experienced individuals compared tocurrent demand. If the Co-Obligor Group is unable to retain key members of its senior managementand cannot hire new qualified personnel in a timely manner, this could have a material adverseeffect on the business, results of operations, financial condition or prospects of the Co-ObligorGroup.

The Co-Obligor Group’s growth and expansion strategy could strain its ability to respond to theincreasing complexities derived from such strategy

The Co-Obligor Group has experienced substantial growth and development in a relatively shortperiod of time and the operating complexity of its business and the responsibility of its managementhas increased as a result of this strategy. As of the date of this Offering Circular, the Co-ObligorGroup has been able to attract international, regional and local qualified and/or experiencedindividuals to fill management roles created by such growth and development. Nakheel has alsobeen able to develop a set of control systems to respond to the increase in operating complexity ofits business resulting from the substantial growth and development of its business. However, therecan be no assurance that the Co-Obligor Group will be able to do so in the future.

In view of the Co-Obligor Group’s growth strategy, the Co-Obligor Group will need to continue toimprove its operational and financial systems and managerial controls and procedures to keep pacewith its growth. It will also have to maintain close coordination among its accounting, finance andasset management personnel.

The Co-Obligor Group’s potential inability to successfully manage the impact of rapid growth on itsoperational and managerial resources and control systems could have a material adverse effect onits business, financial condition and results of operations. Additionally, there can be no assurancethat the Co-Obligor Group will be able to achieve revenue results for its future propertiescomparable to the historical revenue results of its existing properties.

Reclamation of land risks

Some of Nakheel’s developments are being constructed on land that is being reclaimed from the sea.For this purpose, Nakheel has entered into contracts with recognised experts. These contractorsoperate in a specialist field where there are few companies capable of carrying out the reclamationwork. At the present time, Nakheel does not foresee any material issues regarding the ability ofexisting contractors to comply with their obligations under their contracts although ifcircumstances change it could have a material adverse effect on Co-Obligor Group’s business andfinancial condition.

Lifecycle Risks

The Co-Obligor Group’s business involves the provision and maintenance of certain infrastructurefor its projects such as roads, bridges, tunnels and power, water, sewerage and telecom network.The Co-Obligor Group bears the risk of repairing fair wear and tear to this infrastructure andmaintaining this infrastructure. To an extent, this risk is put on to contractors, but to the extent thatthey are not liable or are unable to comply with their obligations, the Co-Obligor Group may needto use its own resources to carry out such work. Failure to carry out such work could affect thereputation of the Co-Obligor Group and the value and marketability of its projects and it could havea material adverse effect on Co-Obligor Group’s business and financial condition. In addition, in the

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event that a member of the Co-Obligor Group had to carry out unplanned material capitalexpenditure, it could have a material adverse effect on its business and financial condition.

Risks relating to the Issuer

No operating history

The Issuer is a newly formed entity and has no operating history. The Issuer will have no materialassets other than the Trust Assets and the Look Back Option Sale Undertaking. The Issuer’s principalsource of funds will be its entitlement to receive Rentals under the Lease and amounts payable bythe Purchase Undertaking Obligor under the terms of the Purchase Undertaking. The Issuer’sprincipal recourse to QPO Shares will be its rights to require delivery of QPO Shares under the termsof the Subscription Rights Sale Undertaking or, during the Look Back Period, under the terms of theLook Back Option Sale Undertaking.

Dependency on Dubai World, Nakheel Holdings 1, Nakheel Holdings 2 and Nakheel Holdings 3

The ability of the Issuer to pay amounts due on the Certificates will ultimately be dependent uponreceipt by the Issuer from the Lessee under the Lease Agreement and the Purchase UndertakingObligor of all amounts due under the Purchase Undertaking. In the event that the Issuer is unable,on any Periodic Distribution Date, to pay the relevant part of the Periodic Distribution Amount, orfollowing a Dissolution Event, to pay the Sukuk Redemption Amount in full for failure of thePurchase Undertaking Obligor to pay the Exercise Price, the Issuer shall be entitled to enforce theMortgages and the Share Pledge, and make a claim on Dubai World under the terms of the DubaiWorld Guarantee and the Co-Obligors under the terms of the Co-Obligor Guarantee. The resultingproceeds may still not be sufficient to pay to the Certificateholders the full Sukuk RedemptionAmount. The Issuer will not have any other funds available to meet its obligations under theCertificates.

Furthermore the ability of the Issuer to deliver QPO Shares to Exercising Certificateholders inaccordance with the Conditions will ultimately be dependent upon receipt by the Issuer from theQPO Obligor of all QPO Shares under the Subscription Rights Sale Undertaking or, as the case maybe, the Look Back Option Sale Undertaking. The obligation to deliver such shares will not beguaranteed by Dubai World under the terms of the Dubai World Guarantee. In the event that theIssuer is unable to deliver QPO Shares to Exercising Certificateholders in accordance with Conditionsas a result of a default by the QPO Obligor under the Subscription Rights Sale Undertaking or LookBack Option Sale Undertaking, the Issuer shall be entitled to make a claim on the Co-Obligors underthe terms of the Co-Obligor Guarantee. The resulting proceeds may still not be sufficient topurchase the requisite QPO Shares due. The Issuer will not have any other funds available to meetits obligations under the Certificates.

The Issuer’s only material assets, which (with the exception of the Look Back Option SaleUndertaking) will be held on trust for the Certificateholders, are currently the Trust Assets.Therefore, the Issuer is subject to all the risks to which Dubai World and the Co-Obligors are subject,to the extent that such risks could limit Dubai World’s and each Co-Obligor’s ability to satisfy in fulland on a timely basis their respective obligations under the Dubai World Guarantee, the Co-ObligorGuarantee, the Share Pledge, the Mortgages, the Subscription Rights Sale Undertaking, the LookBack Option Sale Undertaking and the Purchase Undertaking.

Limited Recourse

The Certificates are not debt obligations of the Issuer. In particular, the Certificates do not representbonds or notes issued by the Issuer. The Certificates attached represent entitlements solely to theTrust Assets. Recourse to the Issuer is limited to the Trust Assets and proceeds of the Trust Assetsare the sole source of payments on the Certificates. Upon occurrence of a Dissolution Event, the onlyremedy available to Certificateholders will be to require the Issuer to serve an Exercise Notice andexercise the option under the Purchase Undertaking to require the Purchase Undertaking Obligor to

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purchase the Sukuk Assets at the Exercise Price and to take steps to enforce the Share Pledge, theMortgages, the Co-Obligor Guarantee and the Dubai World Guarantee if the Purchase UndertakingObligor fails to pay amounts due following service of an Exercise Notice. Certificateholders willotherwise have no recourse to any assets of the Issuer, the Trustee, Dubai World or the Co-ObligorGroup (in each of its respective capacities under the Transaction Documents), the TransactionAdministrator, the Managers or the Agents or any affiliate of any of the foregoing entities in respectof any shortfall in any amounts realised from the Trust Assets (to the extent that each fulfils itsobligations under the relevant Transaction Documents to which it is a party). The Co-Obligors areobliged to make payments under the Transaction Documents to which they are a party directly tothe Issuer, and the Issuer, as trustee for the benefit of the Certificateholders, will have directrecourse against the Co-Obligors to recover payment due to the Issuer from the Co-Obligorspursuant to the Transaction Documents to which each Co-Obligor is a party. Accordingly,Certificateholders have no direct recourse to the Co-Obligors and there can be no assurance that theproceeds of the realisation of, or the enforcement with respect to, the Trust Assets will be sufficientto make all payments due in respect of the Certificates.

Risks relating to the Certificates

No secondary market

There can be no assurances that a secondary market for the Certificates will develop, or if asecondary market does develop, that it will provide the Certificateholders with liquidity ofinvestment or that it will continue for the life of the Certificates. The market value of Certificatesmay fluctuate. Consequently, any sale of Certificates by Certificateholders in any secondary marketthat may develop could be at a discount from the original purchase price of such Certificates andaccordingly an investor in the Certificates must be prepared to hold the Certificates until theCertificates have been redeemed or all amounts then due have been paid in full. Application hasbeen made for the listing of the Certificates on the Dubai International Financial Exchange but therecan be no assurance that such listings will occur on or prior to the Closing Date or at all.

Accumulated return on the Certificates

Half the accumulated return due on the Certificates shall only be payable on redemption of theCertificates. Accordingly, Certificateholders will only receive half the return due on their investmentin the Certificates on each Periodic Distribution Date. Accordingly the ability to meet amounts duein respect of the Final Distribution Amount and the Additional Distribution Amount will depend onthe ongoing profitability and liquidity of the Co-Obligor Group and Dubai World.

In addition, following the occurrence of a Total Loss, the Issuer shall have recourse to the Insurancesprocured by the Servicing Agent (for an amount equal to the Sukuk Issue Amount) and to theServicing Agent (for an amount equal to the Total Loss Shortfall Amount). Failure by the ServicingAgent to pay the Total Loss Shortfall Amount when due will constitute a Dissolution Event.However, the Issuer shall have no right to serve notice on the Purchase Undertaking Obligor underthe Purchase Undertaking, and accordingly the Issuer shall have no right to claim for any due (butunpaid) Periodic Distribution Amount, Final Redemption Amount or Additional DistributionAmount (if any) from the Purchase Undertaking Obligor.

The Certificates will be structurally subordinated to indebtedness of Dubai World’s and the Co-Obligors’ subsidiaries

Certificateholders will not have any claims against any of Dubai World and the Co-Obligors’subsidiaries for payment of any amount under the Certificates. In the event of a liquidation, winding-up or dissolution or a bankruptcy, administration, reorganisation, insolvency, receivership or similarproceeding of any subsidiaries, these subsidiaries would be required to pay the holders of their owndebt, their trade creditors and any preferred shareholders before they would be able to distributeany of their assets to the Co-Obligors and/or Dubai World.

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Security enforcement and immunity of Dubai World and Co-Obligors

Under the Transaction Documents and the Look Back Option Transaction Documents, each of DubaiWorld and the Co-Obligors irrevocably and unconditionally waives to the fullest extent possible andto the extent that it may in any jurisdiction waiver from immunity suit, execution, attachment(whether in aid of execution, before judgment or otherwise) or other legal process, and to the extentthat such immunity (whether or not claimed) may be attributed to its assets or revenues, each ofDubai World and the Co-Obligors represents and agrees that it will not claim such immunity.

In addition, under the Art 5(3) of Law No. 3 of 2006, pursuant to which Dubai World wasestablished, it is expressly stated that Dubai World can itself and can cause its affiliates (which wouldinclude the Co-Obligors but not the Issuer) to provide, inter alia, any security or guarantee inconnection with financings, including Islamic financing.

However, the rights of the Trustee and the Security Agent to bring proceedings against Dubai Worldor the Co-Obligors may be delayed pursuant to Law 10 of 2005, which provides that proceedingsmay be brought against the Government of Dubai and government entities (which may includeDubai World and the Co-Obligors) before the courts of Dubai provided that the relevant claimanthas first given details of such claim to the Attorney General of Dubai and has entered into settlementnegotiations for a period of two months. If the parties are unable to reach a mutually acceptablesettlement at the end of the two months, the claimant shall be entitled to commence proceedingsagainst the Government of Dubai or the government entity.

In addition, Law No. 10 of 2005 amending Government Lawsuit Code No. (3) of 1996 (as amendedby Law No. 4 of 1997) provides that an establishment of the Government may be sued, but that nodebt or obligation of such establishment may be recovered by way of an attachment on itsproperties or assets.

There is an absence of precedent or authority as how a court would construe Law No. 3 of 2006 and,accordingly, there can be no assurance in respect of Dubai World's or the Co-Obligors' entitlementto immunity in any attachment or enforcement action, whether relating to the Mortgages, the SharePledge or otherwise.

The Dubai Lands Department (the Governmental of Dubai's property registration authority) willregister mortgages in favour of UAE licensed banks or persons. Further, the Dubai LandsDepartment will not register a mortgage, inter alia, if a bank mortgagee is not licensed to operatein the UAE The Security Agent is licensed to operate in the UAE. However, in the absence of clearjudicial or legislative guidance or clarification on the arrangement contemplated by the SecurityAgency Agreement there can be no assurance of the enforceability of the Mortgages by the SecurityAgent in the manner contemplated by the Security Agency Agreement or any enforcement processor procedure.

Risks relating to the Subscription Rights

Qualifying Public Offerings

The timing and location of any Qualifying Public Offering is uncertain. There can be no assurancethat a Qualifying Public Offering will be undertaken at any time prior to the redemption of theCertificates or prior to expiry of the Look Back Period, or that any QPO Shares issued will be shariacompliant.

Certificateholders shall bear the risk of fluctuation in the market price of the QPO Shares duringthe Lock-up Period

It is expected that any issue of QPO Shares will be pursuant to a new issue of securities for whichthere is currently no trading market. Accordingly, there can be no assurance that an active tradingmarket for the QPO Shares will develop or as to the liquidity or sustainability of any such market. If

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an active market for the QPO Shares fails to develop or be sustained, the trading price of the QPOShares could fall. If an active trading market were to develop, the QPO Shares could trade at priceslower than the subscription price of the QPO Shares set at pricing for the relevant Qualifying PublicOffering (the Subscription Price).

The Issuer shall use the QPO Exercise Price for the purposes of calculating the amount of DeliverableQPO Shares due to be delivered to each Exercising Certificateholder. One third of an ExercisingCertificateholder’s entitlement of Deliverable QPO Shares (other than Further Shares) will bedelivered to that Exercising Certificateholder on the QPO Closing Date, a further one third shall beheld on behalf of the Issuer and will be delivered to the relevant Exercising Certificateholder on theBusiness Day falling one month after the QPO Closing Date and the remaining third due to theExercising Certificateholder shall be held on behalf of the Issuer and will be delivered to theExercising Certificateholder on the Business Day falling one month thereafter. Similarly, one half ofany Further Shares due to an Exercising Certificateholder shall be held on behalf of the Issuer andwill be delivered to the relevant Exercising Certificateholder on the Business Day falling one monthafter the QPO Closing Date, and the remaining Further Shares due will be delivered to the relevantExercising Certificateholder on the Business Day falling one month thereafter. Therefore, eachExercising Certificateholder will be exposed to the risk that the trading price for the QPO Shares(once delivered to such Exercising Certificateholder) will be different to the Subscription Price. Thetrading price for the QPO Shares will be influenced by, among other things, the results of operationsand political, economic, financial and other factors (including the future issue of shares by therelevant entity or the disposal of shares in that entity by major shareholders). Other than the QPOObligor’s obligation to deliver QPO Shares to the Issuer under the Subscription Rights SaleUndertaking and Look Back Option Sale Undertaking, the Issuer has imposed no restrictions on theability of the QPO Obligor to dispose of QPO Shares.

Certificateholders may face uncertainties in their ability to receive QPO Shares

As a precondition to receiving QPO Shares following any Qualifying Public Offering, eachCertificateholder shall serve an applicable notice on a Paying and Exchange Agent specifying,among other matters, the details of the relevant settlement account to which the QPO Shares are tobe delivered and confirmation of compliance with the applicable selling restrictions relating to therelevant Qualifying Public Offering. A Certificateholder’s failure to serve (in the opinion of thePrincipal Paying and Exchange Agent) a duly completed notice prior to the relevant time in respectof a Qualifying Public Offering will result in a Certificateholder forfeiting the right to receive deliveryof such QPO Shares and the Certificateholder will receive no compensation.

QPO Shares issued in respect of each Qualifying Public Offering shall be subject to certain sellingrestrictions and certification requirements which will restrict those persons who may receive suchshares. The nature and extent of those restrictions are not currently known.

However, each Certificateholder shall be required to make certain representations in each QPOExercise Notice that such Certificateholder is permitted to receive QPO Shares in a manner thatwould not breach the selling restrictions applicable to such Qualifying Public Offering. If theCertificateholder is unable to give such representations, the Certificateholder will not be entitled tosubscribe for QPO Shares.

There are, in certain jurisdictions, restrictions on foreign ownership of entities incorporated in thatjurisdiction that limit the number of shares that may be bought by foreign investors and, in certainscenarios, require governmental approval for foreign ownership. In particular, foreign ownership ofcompanies listed on the Dubai Financial Market is limited to forty nine per cent. (49%). However,the details of any Qualifying Public Offering and the relevant stock exchange are uncertain,Certificateholders could, in certain circumstances, be subject to such restrictions limiting foreignownership and therefore may be prohibited from receiving QPO Shares.

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Certificateholders shall be required to block their Certificates following exercise of theirSubscription Right

For so long as the Certificates are held in the Clearing Systems, a Certificateholder who wishes toexercise its Subscription Right will be required to instruct the relevant Clearing System to block acorresponding amount of its Certificates. These Certificates shall be blocked for the periodcommencing when the relevant instruction is given until the QPO Pricing Date. During this period,the Certificateholder will not be able to transfer such blocked Certificates in the Clearing Systems.

There may be restrictions on the ability to sell QPO Shares

In certain jurisdictions, fluctuations in a company’s share price on any trading day are subject tolimits imposed by the relevant stock exchange. As a result, there can be no assurance regarding theability of Certificateholders to sell QPO Shares, or the price at which these may be sold, at anyparticular time.

The number of QPO Shares that Certificateholders are entitled to subscribe for in any QualifyingPublic Offering may be affected by movements in foreign exchange rates and/or an upsizingand/or downsizing of the Qualifying Public Offering

The number of QPO Shares that Certificateholders are entitled to subscribe for in each QualifyingPublic Offering is calculated prior to the QPO Pricing Date on the basis of an indicative size and(where the Qualifying Public Offering is in a currency other than US dollars) the foreign exchangerate then in effect. If the size of the Qualifying Public Offering increases or decreases and/or thereis a movement in foreign exchange rate which results in the number of QPO Shares thatCertificateholders would be entitled to receive increasing or decreasing by less than five per cent.then Certificateholders shall have no right to subscribe for such additional QPO Shares. In the eventof a decrease of five per cent. or more, then the amount by which the Certificateholders haveoverpaid shall be reimbursed to them. In the event of an increase of five per cent. or more, then eachCertificateholder shall be entitled to subscribe for its entitlement to the additional QPO Shares, butonly if it elects to do so when serving its Exercise Notice and pays the required additional amountwithin the time periods set out in the Conditions. If a Certificateholder fails to exercise its option tosubscribe for any such additional QPO Shares when completing its Exercise Notice, it shall lose itssubscription right in respect of such additional shares.

There may be limited time for Certificateholders to open the necessary securities account toreceive QPO Shares and/or obtain access to any preliminary offering document

As the timing and nature of a Qualifying Public Offering are uncertain, the Issuer can give noassurances as to how much advance notice can be given to each Certificateholder of a proposedQualifying Public Offering, where the relevant settlement accounts are to be opened and the processrequired to open such accounts. None of the Issuer, Dubai World or any Co-Obligor is under anyobligation to provide Certificateholders with copies of any initial, preliminary or final offeringdocument in respect of the Qualifying Public Offering. Accordingly Certificateholders may have toobtain copies of such initial, preliminary or final offering document as part of the overall publicQualifying Public Offering process. As this may be time consuming, Certificateholders may havelimited time during which they can make an informed decision as to whether or not to exercise theirrights to subscribe for QPO Shares.

Certificateholders may not know the QPO Share Price at the time they exercise their option tosubscribe for QPO Price

Certificateholders are required to exercise their option to subscribe for and pay for QPO Shares priorto the QPO Pricing Date and therefore will not know the QPO Share Price, the number of QPOShares to be issued or the final size of the Qualifying Public Offering at the time of exercise and

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payment. There is no obligation on any of the Issuer, Dubai World or any Co-Obligor to provideCertificateholders with an indicative share price prior to the QPO Pricing Date.

Look Back Option

Only Certificateholders holding Certificates on the Redemption Date (the Relevant Holders) shall beentitled to exercise the Look Back Option during the Look Back Period. There can be no assurancethat a Qualifying Public Offering will be undertaken at any time during the Look Back Option andRelevant Holders will face the same uncertainties, and risks set out above in respect of any QPOShares due to be delivered to Relevant Holders at any time during the Look Back Period.

Certain additional risks

Suitability of Investment

The Certificates are complex financial instruments and may not be a suitable investment for allinvestors.

Each potential investor in the Certificates must determine the suitability of that investment in lightof its own circumstances. In particular, each potential investor should:

(a) have sufficient knowledge and experience to make a meaningful evaluation of the Certificates,the merits and risks of investing in the Certificates and the information contained in thisOffering Circular;

(b) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context ofits particular financial situation, an investment in the Certificates and the impact theCertificates will have on its overall investment portfolio;

(c) have sufficient financial resources and liquidity to bear all of the risks of an investment in theCertificates or where the currency for principal is different from the potential investor’scurrency;

(d) understand thoroughly the terms of the Certificates and be familiar with the behaviour of anyrelevant indices and financial markets; and

(e) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios foreconomic and other factors that may affect its investment and its ability to bear the applicablerisks.

Risks relating to UAE

Each of the Issuer, Dubai World and each Co-Obligor has the majority of its assets in the UAE andaccordingly its business may be affected by the financial, political and general economic conditionsprevailing from time to time in the UAE and/or the Middle East generally (see “Political, Economicand Related Considerations” below). Investors are advised to make, and will be deemed by theManagers, the Issuer, Dubai World and the Co-Obligors to have made, their own investigations inrelation to such factors before making any investment decisions in relation to the Certificates.

Investors should also be aware that these markets are subject to greater risks than more developedmarkets, including in some cases significant legal, economic and political risks. Accordingly,investors should exercise particular care in evaluating the risks involved and must decide forthemselves whether, in the light of those risks, their investment is appropriate. Generally,investment is only suitable for sophisticated investors who fully appreciate the significance of therisk involved.

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UAE Bankruptcy Law

In the event of Dubai World’s, a Co-Obligor’s or the Issuer’s insolvency, UAE bankruptcy law may (tothe extent it is held applicable to either a corporation formed by decree (in the case of Dubai World)or a limited liability company (in the case of a Co-Obligor) or an offshore company incorporated inthe Jebel Ali Free Zone (in the case of the Issuer)) adversely affect Dubai World’s, the Co-Obligors’and/or the Issuer’s ability to perform their respective obligations under the Transaction Documents.There is little precedent to predict how claims by or on behalf of the Certificateholders would beresolved, and therefore there can be no assurance that Certificateholders will receive repayment oftheir claims in full or at all.

Enforcing foreign judgments in Dubai

Under current Dubai law, the courts are unlikely to enforce an English judgment without re-examining the merits of the claim and may not observe the choice by the parties of English law asthe governing law of the transaction.

Judicial precedents in Dubai have no binding effect on subsequent decisions. In addition, courtdecisions in Dubai are generally not recorded. These factors create greater judicial uncertainty.

Under applicable Dubai law, no debt or obligation owing from the Ruler or the Government of Dubaimay be recovered by laying hold, attachment, sale in auction, or taking possession in any other legalaction of the Ruler’s or the Government’s properties and assets whether or not a final judgment isissued in respect of such debt or obligation. References in the law to the Government of Dubaiinclude its departments and any other establishment or public authority and so would include DubaiWorld and each Co-Obligor and may include the Issuer. It is not possible to give any assurance as towhether any waivers of immunity from suit, execution, attachment or other legal process by theIssuer and the Co-Obligors are valid and binding under the laws of, and applicable in, Dubai. Inaddition, it is possible that any such waiver could be revoked.

Change in law

The structure of the issue of the Certificates is based on English law, UAE law and administrativepractice in effect as at the date of this Offering Circular. No assurance can be given as to the impactof any possible change to English law, UAE law or administrative practice after the date of thisOffering Circular, nor can any assurance be given as to whether any such change could adverselyaffect the ability of the Issuer to make payments and/or make deliveries under the Certificates.

Considerations relating to the non-recognition of declarations of trust under the laws of Dubai

UAE law does not recognise the concept of trust or beneficial interests. Accordingly, there is nocertainty that the terms of the Declaration of Trust or the Look Back Option Declaration of Trustwould be enforced by the Courts of Dubai. However, the obligations of each of the Issuer under theAgency Declaration to act on behalf of the Certificateholders in accordance with their instructions(given in accordance with the terms and conditions of the Certificates) are enforceable as a matterof contract under UAE law. The Issuer is empowered to carry out such instructions of theCertificateholders in relation to the Transaction Documents and the Look Back Option TransactionDocuments by reason of being a counterparty to the Transaction Documents and Look Back OptionTransaction Documents and a beneficiary of the Purchase Undertaking.

Foreign exchange movements may adversely affect the Issuer’s, Dubai World’s and each Co-Obligor’s profitability

Each of the Issuer, Dubai World and each Co-Obligor maintains its accounts, and reports its results,in AED. The UAE dirham has been ‘pegged’ at a fixed exchange rate to the US dollar since 22nd

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November, 1980. Each of the Issuer, Dubai World and each Co-Obligor is exposed to the potentialimpact of any alternation to, or abolition of, this foreign exchange ‘peg’.

Political, Economic and Related Considerations

The UAE has enjoyed significant economic growth and relative political stability. There can be noassurance that such growth or stability will continue. Moreover, while the UAE government’spolicies have generally resulted in improved economic performance, there can be no assurance thatsuch level of performance can be sustained. Each of Dubai World and each Co-Obligor may also beadversely affected generally by political and economic developments in or affecting the UAE.

No assurance can be given that the UAE government will not implement regulations or fiscal ormonetary policies, including policies, regulations, or new legal interpretations of existingregulations, relating to or affecting taxation, interest rates or exchange controls, or otherwise takeactions which could have a material adverse effect on the business, financial condition, results ofoperations or prospects of Dubai World and each Co-Obligor.

The business of Dubai World and each Co-Obligor may be affected if there are geo-political eventsthat prevent each from delivering its services. It is not possible to predict the occurrence of eventsor circumstances such as or similar to a war or the impact of such occurrences and no assurance canbe given that any of Dubai World or each Co-Obligor would be able to sustain its current profit levelsif such events or circumstances were to occur. A general downturn or instability in certain sectorsof the UAE or regional economy could have an adverse effect on the business, financial condition,results of operations or prospects of Dubai World and each Co-Obligor.

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USE OF PROCEEDS

The proceeds of the issue of the Certificates, being US$3,520,000,000 will be used by the Issuer topurchase the Sukuk Assets in accordance with the terms of the Purchase Agreement.

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THE ISSUER

Nakheel Development Limited was incorporated in the Jebel Ali Free Zone under registration no.OF2684 as a Free Zone company with limited liability on 9 November 2006 in accordance with JebelAli Free Zone Offshore Companies Regulations 2003 issued in accordance with Dubai Laws Nos. 1and 4 of 2001, with its registered office at PO Box 17000, Dubai, United Arab Emirates.

The authorised share capital of the Issuer is 1 AED divided into 1 shares with a par value of 1 AED.

The directors of the Issuer and their principal occupations are as follows:

Director Principal Occupation1111 1111111112

Sultan Ahmed Bin Sulayem Executive Chairman

Chris O’Donnell Chief Executive Officer

Saad Abdul Razak Banker

Saad uz Zaman Banker

The Issuer has no employees and will have no employees as at the Closing Date. The objects of theIssuer, as set out in its Memorandum of Association, includes issue of the Certificates, execution ofthe Transaction Documents to which it is a party and other agreements necessary for theperformance of its obligations under the transactions contemplated thereby and undertakeactivities pursuant to or that are not inconsistent with the terms and conditions of the Certificates.

The share is held on trust by Maples Finance Limited (the Share Trustee) on the terms of adeclaration of trust (the Share Declaration of Trust) under which the Share Trustee holds the shareon trust for charity. It is not anticipated that any distributions from the trust will be made prior tothe end of the Look Back Period (as defined herein). The Share Trustee may not dispose of the shareprior to the end of the Look Back Period. After the end of the Look Back Period, it is anticipated thatthe Issuer shall be liquidated and any remaining assets of the Issuer after payment of all outstandingcreditors of the Issuer shall be distributed to the Share Trustee. After deduction of the ShareTrustee’s fees and expenses, any remaining funds shall be distributed to charity pursuant to theterms of the Share Declaration of Trust.

The Share Trustee is a company incorporated in the Cayman Islands and regulated as a trustcompany pursuant to the Bank and Trust Companies Act of the Cayman Islands.

The Share Trustee has no beneficial interest in and derives no benefit other than its fees (if any) foracting as Share Trustee from its holding of the Share.

Pursuant to the terms of its Memorandum of Association and the Transaction Documents, the Issuermay not issue and has not issued any securities other than the Certificates or otherwise incurindebtedness, other than in connection with the Transaction Documents.

The fiscal year of the Issuer will end on 31 December of each year, beginning in 2007. As at theClosing Date, Ernst & Young had been appointed as auditors of the Issuer.

Other than as described above, the Issuer does not have any loan, capital, borrowings or contingentliabilities and has not changed its equity capital.

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TERMS AND CONDITIONS OF THE CERTIFICATES

The following is the text of the Terms and Conditions of the Certificates which (subject to completionand amendment and save for the text in italics) will be endorsed on each Certificate in definitive form(if issued) and will be attached and (subject to the provisions thereof) apply to the Global Certificate:

PART A

Each of the US$3,520,000,000 Trust Certificates (Sukuk al-Ijara) with subscription rights due 2009(the Certificates) represents an undivided beneficial ownership of the Trust Assets held on trust forthe holders of such Certificates pursuant to a declaration of trust (the Declaration of Trust) dated14 December 2006 (the Closing Date) made between Nakheel Development Limited (the Issuer, andin its capacity as trustee, the Trustee) and the Co-Obligors. Each Certificate entitles the holder tosubscribe for QPO Shares on a Qualifying Public Offering in accordance with Part B of theseConditions.

Pursuant to an Agency Declaration dated the Closing Date made by the Issuer (the AgencyDeclaration), the Issuer is also acting as agent for and on behalf of Certificateholders. EachCertificateholder by its acquisition and holding of a Certificate agrees to the appointment of theIssuer as its agent pursuant to the terms of the Agency Declaration.

Payments and any delivery relating to the Certificates will be made pursuant to a Paying AgencyAgreement dated the Closing Date (the Agency Agreement) made between the Issuer, DeutscheBank AG, London Branch as transaction administrator (in such capacity, the TransactionAdministrator), Deutsche Bank AG, London Branch as principal paying and exchange agent (in suchcapacity, the Principal Paying and Exchange Agent and, together with any further or other payingand exchange agents appointed from time to time in respect of the Certificates, the Paying andExchange Agents), Deutsche Bank AG, London Branch as transfer agent (in such capacity, theTransfer Agent and, together with any further or other transfer agents appointed from time to timein respect of the Certificates, the Transfer Agents), Deutsche Bank AG, London Branch asreplacement agent (in such capacity, the Replacement Agent and, together with any further orother replacement agents appointed from time to time in respect of the Certificates, theReplacement Agents), Deutsche Bank AG, London Branch as calculation agent (in such capacity, theCalculation Agent) and Deutsche Bank Luxembourg S.A. as registrar (in such capacity, theRegistrar). References to the Transaction Administrator, the Principal Paying and Exchange Agent,the Paying and Exchange Agents, the Transfer Agents, the Replacement Agents and the CalculationAgent shall include any successors thereto in each such capacity.

The Trustee will, subject to the provisions of the Declaration of Trust, only act upon the instructionsof the Certificateholders in carrying out the activities of the Trust. To facilitate the giving of suchinstructions by the Certificateholders, it is a term of the Certificates that Deutsche Bank AG, LondonBranch is appointed as transaction administrator pursuant to a transaction administration deedbetween, among others, the Issuer, the Trustee, the Co-Obligors, the Security Agent, the Guarantorand the Transaction Administrator dated on or about the Closing Date (the TransactionAdministration Deed) to act as agent for the Certificateholders and be solely entitled to provideinstructions to the Trustee on their behalf. The Certificateholders will have no direct recourseagainst the Trustee and Certificateholders may only act through the Transaction Administrator. TheTransaction Administrator shall be entitled on or after the occurrence of a Dissolution Event toreceive from the application of the moneys standing to the credit of the Transaction Account itsproperly incurred fees, costs, charges and expenses for acting as agent for the Certificateholders inaddition to the payment or satisfaction of any Liability incurred (or expected to be incurred) by theTransaction Administrator ahead of any distribution to Certificateholders. By subscribing forinterests in the Certificates, the Certificateholders irrevocably appoint the TransactionAdministrator to act as their agent on the terms set out in the Transaction Administration Deed.

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Pursuant to a security agency agreement (the Security Agency Agreement) dated the Closing Dateand made between the Issuer and Dubai Islamic Bank PJSC as security agent (in such capacity theSecurity Agent) the Security Agent shall hold the benefit of the security constituted by theMortgages for the benefit of the Certificateholders.

The statements in these Conditions include summaries of the detailed provisions of the Declarationof Trust, the Transaction Administration Deed, the Agency Agreement, the other TransactionDocuments and the Look Back Transaction Documents. In these Conditions, capitalised terms shallhave the meanings given in Condition 23. In addition, (and unless the context requires otherwise)words and expressions defined and rules of construction and interpretation set out in theDeclaration of Trust shall, unless defined herein or unless the context otherwise requires, have thesame meanings herein. Copies of the Transaction Documents are available for inspection byCertificateholders during normal business hours at the specified offices of the Paying and ExchangeAgent. The Certificateholders are entitled to the benefit of, are bound by, and are deemed to havenotice of, all the provisions of the Declaration of Trust, the Transaction Administration Deed, theSecurity Agency Agreement, the Agency Declaration and the Agency Agreement applicable tothem.

Each Certificateholder, by its acquisition and holding of its interest in a Certificate, shall be deemedto authorise and direct the Trustee to apply the sums paid by it in respect of its Certificates topurchase the Sukuk Assets under the Purchase Agreement, and to enter into each TransactionDocument and Look Back Option Transaction Document to which it is a party, subject to the termsand conditions of the Declaration of Trust and these Conditions and acting in its capacity as agentand trustee for the Certificateholders.

1 Form, Denomination, Title and Description

1.1 Form and Denomination

The Certificates are issued in registered form in principal amounts of US$100,000 andintegral multiples of US$1,000 in excess thereof. A Certificate will be issued to eachCertificateholder in respect of its registered holding of Certificates. Each Certificate will benumbered serially with an identifying number which will be recorded on the relevantCertificate and in the register (the Register) of Certificateholders which the Issuer will causeto be kept by the Registrar.

1.2 Title

The Registrar will maintain the Register in respect of the Certificates in accordance with theprovisions of the Agency Agreement. In these Conditions, Certificateholder and, in relationto a Certificate, holder means the person in whose name such Certificate is from time to timeregistered in the Register (or in the case of a joint holding, the first named thereof). Title tothe Certificates passes only by registration in the register of Certificateholders kept by theRegistrar. The registered holder of any Certificate will (except as otherwise required by law)be treated as its absolute owner for all purposes (whether or not any payment thereon isoverdue and regardless of any notice of ownership, trust or any interest or any writing on,or the theft or loss of, the certificate issued in respect of it) and no person will be liable forso treating the holder of any Certificate.

2 Transfers of Certificates and Issue of Certificates

2.1 Transfers

Subject to Conditions 2.4 and 2.5, and the limitations as to transfer of title set out inCondition 1.2, a Certificate may be transferred by depositing the certificate issued in respectof that Certificate, with the enclosed form of transfer duly completed and signed, at thespecified office of any of the Transfer Agents together with such evidence as the Registrar

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or (as the case may be) such Transfer Agent may reasonably require to prove the title of thetransferor and the individuals who have executed the forms of transfer. The Issuer will at alltimes maintain a Transfer Agent having its specified office in London for so long as theCertificates are listed on Dubai International Financial Exchange and the rules for DubaiInternational Financial Exchange so require.

For so long as the Certificates are held in the Clearing Systems, Certificates shall be subject tofurther restrictions on transfer (as described in Condition 22.4) following the exercise by aCertificateholder of its Subscription Rights.

2.2 Delivery of New Certificates

2.2.1 Each new Certificate to be issued upon a transfer of a Certificate will, within fivebusiness days of receipt by the relevant Transfer Agent of the duly completed form oftransfer provided at the offices of the Transfer Agent, be mailed by uninsured mail atthe risk of the holder entitled to the Certificate to the address specified in the form oftransfer.

2.2.2 Where some but not all of the Certificates in respect of which a Certificate is issued areto be transferred, a new Certificate in respect of the Certificates not so transferred will,within five business days of receipt by the relevant Transfer Agent of the originalCertificate, be mailed by uninsured mail at the risk of the holder of the Certificates notso transferred to the address of such holder appearing on the register ofCertificateholders or as specified in the form of transfer.

2.2.3 For the purposes of this Condition 2.2, business day shall mean a day on which banksare open for business in the city in which the specified office of the Transfer Agentwith whom a Certificate is deposited in connection with a transfer is located.

2.3 Formalities Free of Charge

Registration of transfers of Certificates will be effected without charge by or on behalf of theIssuer or any Transfer Agent but upon payment (or the giving of such indemnity as the Issueror any Transfer Agent may reasonably require) by the transferee in respect of any tax orother governmental charges which may be imposed in relation to such transfer.

2.4 Transfers after Transfer Record Date

Transfers of the Certificates effected during the period starting at the opening of businesson the seventh day prior to a due date for payment of a Periodic Distribution Amount, orSukuk Redemption Amount in respect of the Certificates or, in each case, if such day is nota Business Day, the next following Business Day (a Transfer Record Date) and ending on theapplicable due date itself may be registered in the usual way, but all payments in respect ofthe Certificates in such period shall continue to be made to such persons as are registered asCertificateholders at the opening of business on the relevant Transfer Record Date.

2.5 Regulations

All transfers of Certificates and entries on the Register will be made subject to the detailedregulations concerning transfer of the Certificates scheduled to the Declaration of Trust. Acopy of the current regulations will be mailed (free of charge) by the Registrar to anyCertificateholder who requests in writing a copy of the regulations.

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3 Status and Limited Recourse

3.1 Status

Each Certificate evidences an undivided beneficial ownership of the Trust Assets and rankspari passu, without any preference, with the other Certificates.

3.2 Limited Recourse

3.2.1 The proceeds of the Trust Assets are the sole source of payment on the Certificatesand, on the occurrence of a Qualifying Public Offering, the QPO Shares (if any) held inthe Custody Account (if any) are the sole source of deliveries to ExercisingCertificateholders. The Certificates do not represent an interest in or obligation fromany other source of any of the Issuer, the Guarantor, the Co-Obligors, the Trustee, theTransaction Administrator, the Security Agent, the Registrar, any of the Agents or anyof their affiliates. Accordingly, Certificateholders will have no recourse to any assets ofany of the Issuer, the Guarantor or the Co-Obligors (to the extent each fulfils all of itsobligations under the relevant Transaction Documents to which it is a party) or to anyassets of the Trustee, the Security Agent, the Registrar, any of the Agents, theTransaction Administrator or any of their respective affiliates or other assets inrespect of any shortfall in the expected amounts from the Trust Assets.

3.2.2 Delivery of all QPO Shares held in the Custody Account and the net proceeds of therealisation of, or enforcement with respect to, the other Trust Assets may not besufficient to make all deliveries and/or payments due in respect of the Certificates. If,following delivery of such shares and/or distribution of such proceeds, there remainsa shortfall in shares to be delivered and/or payments due under the Certificates,subject to Condition 14, no Certificateholder will have any claim against any of theIssuer, the Guarantor or the Co-Obligors (to the extent each fulfils all of its obligationsunder the relevant Transaction Documents to which it is a party) or against theTrustee, the Transaction Administrator or the Security Agent or any of theirrespective affiliates or other assets in respect of such shortfall and any unsatisfiedclaims of Certificateholders shall be extinguished. In particular, no Certificateholderwill be able to petition for, or join any other person in instituting proceedings for, thereorganisation, liquidation, winding up or receivership of any of the Issuer, theGuarantor, or the Co-Obligors (to the extent that each fulfils all of its obligations underthe relevant Transaction Documents to which it is a party), or any of the Trustee, theTransaction Administrator or the Security Agent or any of their respective affiliates asa consequence of such shortfall or otherwise.

3.3 Agreement

3.3.1 By purchasing Certificates, each Certificateholder agrees that, notwithstandinganything to the contrary contained herein or in any other Transaction Document:

(a) no payment of any amount and/or delivery of QPO Shares whatsoever shall bemade by any of the Issuer, the Trustee or the Trust or any of their respectiveagents on their behalf except to the extent either funds or, as the case may be,QPO Shares are available therefor from the Trust Assets and that no recourseshall be had for the payment of any amount or delivery of any QPO Shares duehereunder or under any other Transaction Document, whether for the paymentof any fee or other amount hereunder or any other obligation or claim arisingout of or based upon the Declaration of Trust or any other TransactionDocument, against any of the Issuer, the Trustee, the Guarantor, the Co-Obligors or the Trust to the extent the Trust Assets have been exhausted

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following which all obligations of the Issuer, the Trustee, the Guarantor, the Co-Obligors and the Trust shall be extinguished;

(b) prior to the date which is one year and one day after the date on which allamounts owing or delivery of all QPO Shares due by the Issuer under theTransaction Documents and the Look Back Transaction Documents to which itis a party have been paid or, as the case may be, delivered in full, it will notinstitute against, or join with any other Person in instituting against the Issuer,the Trustee or the Trust, any bankruptcy, reorganisation, arrangement orliquidation proceedings or other proceedings under any bankruptcy or similarlaw.

By subscribing for or acquiring the Certificates, Certificateholders acknowledge that theirsole recourse will be to the proceeds of the Trust Assets and access to those assets islimited as set forth in Condition 10 and Condition 14. Certificateholders acknowledge that,in certain circumstances, the Trust Assets may be insufficient to fund expecteddistributions to Certificateholders and, taken as a whole, may have a value less than thatof the principal amount of the Certificates. The Certificateholders acknowledge that norecourse may be had for the payment of any amount owing in respect of the Certificatesagainst the Issuer, the Trustee (other than against the Trust Assets) or the Trust in respectof any shortfall (to the extent each fulfils all of its obligations under the relevantTransaction Documents to which it is a party). In addition, subject to Condition 10 andCondition 14, no Certificateholder will be able to petition for, or join any other person ininstituting proceedings for, the winding up of the Trust or directly against a Co Obligor orGuarantor as a consequence of such shortfall or otherwise to the extent each fulfils all ofits obligations under the relevant Transaction Documents to which it is a party.

4 Trust and Agency

4.1 Summary of the Trust and Agency

The Issuer will act as agent and trustee for and on behalf of Certificateholders pursuant tothe Agency Declaration and the Declaration of Trust.

The Issuer will enter into a purchase agreement (the Purchase Agreement) dated theClosing Date with Nakheel Holdings-1 LLC (the Seller). Pursuant to the Purchase Agreement,the Seller will grant to the Issuer the leasehold interest in the Property a term of fifty (50)years (as more particularly specified in the Purchase Agreement) (the Sukuk Assets). TheIssuer will lease the Sukuk Assets to Nakheel Holdings-2 LLC (the Lessee) pursuant to a leaseagreement (the Lease Agreement) dated the Closing Date between the Issuer and theLessee.

The Issuer shall appoint Nakheel Holdings-2 LLC as servicing agent (the Servicing Agent)pursuant to a servicing agency agreement (the Servicing Agency Agreement). The ServicingAgent shall, in its capacity as servicing agent, maintain Insurances and be responsible for allproperty taxes (other than those imposed by law against a lessee or tenant) and majormaintenance and structural repair in respect of the Sukuk Assets.

Pursuant to the purchase undertaking (the Purchase Undertaking) dated the Closing Dategranted by Nakheel Holdings-2 LLC (the Purchase Undertaking Obligor) in favour of theIssuer, the Purchase Undertaking Obligor shall undertake to purchase all of the Issuer’sinterest in the Sukuk Assets at the Exercise Price on the relevant exercise date following theissue of a notice under the Purchase Undertaking from the Issuer, which shall be served byor on behalf of the Issuer on the Purchase Undertaking Obligor either (a) within theprescribed period prior to the Scheduled Redemption Date or (b) following the occurrenceof a Dissolution Event (in the form prescribed by the terms of the Purchase Undertaking, the

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Exercise Notice), and the Sukuk Assets shall be sold to the Purchase Undertaking Obligor onthe relevant exercise date by way of a separate sale agreement.

Pursuant to the sale undertaking (the Subscription Rights Sale Undertaking) dated on orabout the Closing Date granted on the Closing Date by Nakheel Holding-2 LLC (the QPOObligor) in favour of the Issuer, the QPO Obligor shall procure the sale and delivery of QPOShares to the Issuer in the circumstances described therein so that the Issuer can perform itsobligations under Condition 22.

Each of Nakheel Holdings-1 LLC, Nakheel Holdings-2 LLC and Nakheel Holdings-3 LLC(together, the Co-Obligors and each a Co-Obligor) will enter into a guarantee (the Co-Obligor Guarantee) whereby they jointly and severally guarantee the obligations, whetherpayment or otherwise, of each other under the Transaction Documents.

In order to secure the payment obligations of the Co-Obligors under the TransactionDocuments, Nakheel Holdings-1 LLC shall grant:

(a) on or about the Closing Date, two fully perfected mortgages, free from any securityinterest and encumbrance, (the Mortgages) over the Property in favour of the SecurityAgent to hold the same as security agent for and on behalf of the Issuer as agent forthe Certificateholders; and

(b) on or before the date falling sixty (60) days after the Closing Date, a share pledge (theShare Pledge) over not less than 156,402,856 shares in Nakheel PJSC in favour of theIssuer.

Dubai World (as guarantor, the Guarantor) shall on the Closing Date grant a guarantee infavour of the Issuer of the payment obligations of the Co-Obligors under the TransactionDocuments (the Dubai World Guarantee).

Pursuant to a sale undertaking (the Sukuk Assets Sale Undertaking) dated the Closing Dategranted by the Issuer to Nakheel Holdings-1 LLC, the parties agree that the Sukuk Assetsmay, in certain circumstances, be sold back to Nakheel Holdings-1 LLC with a payment inkind by Nakheel Holdings-1 LLC in the form of similar assets. Consequently thecorresponding property subject to the Mortgages may be released from the securityconstituted by the Mortgages subject always to the grant of a mortgage in favour of theSecurity Agent (as defined below) over the property forming the subject matter of thepayment in kind.

Pursuant to the Declaration of Trust, the Issuer will declare a trust in favour of theCertificateholders over (a) its title to the Sukuk Assets, (b) all of its rights, title, interest andbenefit, present and future, in, to and under the Security Documents and the otherTransaction Documents (other than in relation to any representations given to the Issuer byany of the Guarantor or Co-Obligors under or pursuant to the Transaction Documents or anyother documents entered into in connection with the issue of the Certificates), (c) all moniesstanding to the credit of the Transaction Account, (d) the Insurances and (e) all proceeds ofthe foregoing (together, the Trust Assets). All payments by the Co-Obligors to the Issuerunder each Transaction Document (as defined below) to which it is party will be depositedinto an account of the Trustee maintained, among other things, for such purpose (theTransaction Account).

The Purchase Agreement, the Lease Agreement, the Servicing Agency Agreement, thePurchase Undertaking, the Declaration of Trust, the Agency Declaration, the AgencyAgreement, the Subscription Rights Sale Undertaking, the Sukuk Assets Sale Undertaking,the Certificates, the Transaction Administration Deed, the Mortgages, the Share Pledge, theDubai World Guarantee, the Co-Obligor Guarantee, the Security Agency Agreement and anyother agreements and documents designated as such by the Issuer, the Co-Obligors andDubai World are collectively referred to as the Transaction Documents.

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4.2 Application of Proceeds from Trust Assets

Pursuant to the Declaration of Trust, the Trustee holds the Trust Assets for and on behalf ofthe Certificateholders. On each Periodic Distribution Date, or a Redemption Date, theTrustee shall apply the monies standing to the credit of the Transaction Account in thefollowing order of priority:

(a) first, to pay the Transaction Administrator an amount equal to any sum payable to iton account of its properly incurred fees, costs, charges and expenses and the paymentor satisfaction of any Liability incurred (or expected to be incurred) by the TransactionAdministrator pursuant to the Transaction Administration Deed, if any, arising on orafter the occurrence of a Dissolution Event;

(b) second, to the Principal Paying and Exchange Agent for application in or towardspayment pari passu and rateably of all Periodic Distribution Amounts due (and anyother amounts contemplated by Conditions 6.1 or, as the case may be, 6.2, if any) butunpaid;

(c) third, only if such payment is made on the Redemption Date, for application in ortowards payment pari passu and rateably of the Final Distribution Amount and theAdditional Distribution Amount (if any) (and any other amounts contemplated byConditions 6.1 or, as the case may be, 6.2, if any) due on the Redemption Date;

(d) fourth, only if such payment is made on the Redemption Date, for application in ortowards payment pari passu and rateably of the Sukuk Redemption Amount (to theextent not already paid under paragraphs (b) and (c) of this Condition 4.2) due on theRedemption Date;

(e) fifth, only if such payment is made on a Redemption Date, in payment of the surplus(if any) to the Issuer.

The Principal Paying and Exchange Agent shall apply all monies or shares, as the case maybe, received towards the payments or deliveries, as the case may be, set forth above.

4.3 Late Payment Amounts Received

If the Issuer and/or the Trustee receives any amounts as late payment amounts under theLease Agreement, then the Issuer will notify each Certificateholder of the aggregate amountso received and shall apply such amounts to The Red Crescent Society as contemplated bythe Lease Agreement.

4.4 Subscription Rights

The Certificateholders shall have the right to subscribe for QPO Shares on a Qualifying PublicOffering in accordance with Condition 22.

5 Periodic, Final and Additional Distribution Amounts

5.1 Periodic Distribution Amounts, Periodic Distribution Dates and Additional DistributionAmounts

5.1.1 Subject to Condition 4.2 and Condition 10, the Trustee shall instruct the PrincipalPaying and Exchange Agent to distribute to each Certificateholder pro rata (byreference to the proportion that the aggregate principal amount of suchCertificateholder’s Certificates bears to the Sukuk Issue Amount at such time) on eachPeriodic Distribution Date, a distribution amount equal to the Periodic DistributionAmount due and payable on such Periodic Distribution Date.

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5.1.2 In addition, a final distribution amount (the Final Distribution Amount) in US dollarsshall be payable to Certificateholders pro rata (by reference to the proportion that theaggregate principal amount of such Certificateholder’s Certificates bears to the SukukIssue Amount outstanding at such time) in respect of the Certificates on theRedemption Date, calculated as follows :

FDA = SIA x (QY x fifty per cent. (50%)) x (n/360)

Where:

FDA means the Final Distribution Amount

n means the number of days for the period from (and including) the ClosingDate to, (but excluding) the Redemption Date, calculated on the basis of a yearof 360 days with twelve 30-day months

QY means the QPO Yield


The resultant figure shall be rounded to the nearest US$0.01, with US$0.005 beingrounded upwards.

5.1.3 An additional distribution amount (the Additional Distribution Amount) may bepayable in accordance with this Condition 5.1.3 on the Redemption Date. If:

(a) no Qualifying Public Offering has initially closed seven days prior to theRedemption Date then an Additional Distribution Amount in US dollars shall bepayable and shall be calculated as follows:

ADA = SIA x two per cent. (2%) x (n/360) ; or

(b) a Qualifying Public Offering has initially closed seven days prior to theRedemption Date and the Aggregate Value of Attributed Subscription Rights onthe Redemption Date is greater than zero but less than the MaximumAttributable Subscription Rights Value then the Additional Distribution Amountin US dollars shall be payable and shall be calculated as follows:

ADA = SAPA x SY x (n/360)

Where, in each case:

ADA means the Additional Distribution Amount

n means the number of days for the period from (and including) theClosing Date to, but excluding the payment date corresponding to theRedemption Date, calculated on the basis of a year of 360 days withtwelve 30-day months.

SIA means Sukuk Issue Amount

SAPA means the Short QPO Aggregate Amount

SY means Short QPO Yield

For the avoidance of doubt, if the Aggregate Value of Attributed SubscriptionRights on the Redemption Date is equal to the Maximum AttributableSubscription Rights Value, no Additional Distribution Amount shall be payable.

5.1.4 The Additional Distribution Amount (if any), the Final Distribution Amount, anyunpaid Periodic Distribution Amount, any amount payable on any Periodic

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Distribution Date any other additional amounts payable by or on behalf of the Issuerunder these Conditions shall be calculated by the Calculation Agent and shall be paidto each Certificateholder pro rata (by reference to the proportion that the aggregateprincipal amount of such Certificateholder’s Certificates bears to the Sukuk IssueAmount at that time).

5.2 Publication

The Principal Paying and Exchange Agent will cause each Periodic Distribution Amount,Final Distribution Amount or Additional Distribution Amount, as the case may be,determined by the Calculation Agent, to be notified to the other Agents and each listingauthority, stock exchange and/or quotation system (if any) on which the Certificates are atsuch time admitted to listing, trading and/or quotation as soon as practicable after suchdetermination.

5.3 Notifications etc.

All notifications, opinions, determinations, certificates, calculations, quotations anddecisions given, expressed, made or obtained for the purposes of this Condition 5 by theCalculation Agent will (in the absence of manifest error) be binding on the Trustee, theAgents and the Certificateholders.

5.4 Cessation of Accrual

No further amounts will be payable on any Certificate from and including its due date forredemption unless, upon due presentation, payment in respect of the Certificate isimproperly withheld or refused or unless default is otherwise made in respect of payment, inwhich event such amounts payable on the Certificate shall continue to accrue as providedherein.

6 Redemption

6.1 Scheduled Redemption

Unless previously redeemed, the Certificates shall be redeemed in full by the Issuer on theScheduled Redemption Date by payment of the Sukuk Issue Amount, the Final DistributionAmount and the Additional Distribution Amount (if any) to each Certificateholder pro rata(by reference to the proportion that the aggregate principal amount of suchCertificateholder’s Certificates bears to the Sukuk Issue Amount at such time), and the Trustwill thereafter be dissolved.

In the event that payment of the Sukuk Issue Amount, Final Distribution Amount, AdditionalDistribution Amounts (if any) and any accrued (but unpaid) Periodic Distribution Amounthas not been paid in full when due (for whatever reason), additional amounts shall accrue atthe aggregate of the QPO Yield and the Short QPO Yield on a daily basis (calculated on thebasis of 12 months of 30 days each) and be payable on the date such unpaid amount is made.

6.2 Dissolution Event – Early Redemption

Following the occurrence of a Dissolution Event, the Certificates may, subject to Condition13, be redeemed in full on the Early Redemption Date by payment of the Sukuk IssueAmount, the Final Distribution Amount and the Additional Distribution Amount (if any)together with any accrued but unpaid Periodic Distribution Amount to eachCertificateholder pro rata (by reference to the proportion that the aggregate principalamount of such Certificateholder’s Certificates bears to the Sukuk Issue Amount at suchtime), and the Trust will thereafter be dissolved.

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In the event that payment of the Sukuk Issue Amount, Final Distribution Amount, AdditionalDistribution Amounts (if any) and any accrued (but unpaid) Periodic Distribution Amounthas not been paid in full when due (for whatever reason), additional amounts shall accrue atthe aggregate of the QPO Yield and the Short QPO Yield on a daily basis (calculated on thebasis of 12 months of 30 days each) and be payable on the date such unpaid amount is made.

7 Covenants

7.1 Covenants of the Issuer

The Issuer has covenanted in the Declaration of Trust that, among other things, for so longas any Certificate is outstanding, it shall not, without the consent of the TransactionAdministrator given in accordance with the provisions of the Transaction AdministrationDeed:

(a) incur any indebtedness in respect of borrowed money whatsoever, or give anyguarantee or indemnity in respect of any obligation of any person (other than underor pursuant to any of the Transaction Documents) or issue any shares (or rights,warrants or options in respect of shares or securities convertible into or exchangeablefor shares) other than those in issue as at the Closing Date;

(b) secure any of its present or future indebtedness for borrowed money by any lien,pledge, charge or other security interest upon any of its present or future assets,properties or revenues (other than those arising by operation of law if any) (other thanunder or pursuant to any of the Transaction Documents);

(c) sell, transfer, assign, participate, exchange, or pledge, mortgage, hypothecate orotherwise encumber (by security interest, lien (statutory or otherwise), preference,priority or other security agreement or preferential arrangement of any kind or naturewhatsoever or otherwise), any part of its title to any of the Trust Assets or any interesttherein except pursuant to any Transaction Document (or permit such to occur orsuffer such to exist);

(d) use the proceeds of the issue of the Certificates for any purpose other than ascontemplated in the Transaction Documents;

(e) subject to Condition 17, amend or agree to any amendment of any of the TransactionDocuments or Look Back Transaction Documents to which it is a party or to itsconstitutional documents;

(f) exercise its option under either the Purchase Undertaking or Subscription Rights SaleUndertaking except in its capacity as Trustee;

(g) act as trustee in respect of any trust other than the Trust or the trust constituted bythe Look Back Option Declaration of Trust, or in respect of any parties other than theCertificateholders and/or act as agent for any trust arrangement (other than the Trustor the trust constituted by the Look Back Option Declaration of Trust);

(h) have any subsidiaries or employees;

(i) redeem any of its shares or pay any dividend or make any other distribution to itsshareholders;

(j) put to its directors or shareholders (i) any resolution for or appoint any liquidator forits winding up or (ii) any resolution for the commencement of any other bankruptcyor insolvency proceedings with respect to it; or

(k) enter into any contract, transaction, amendment, obligation or liability other than theTransaction Documents and Look Back Option Transaction Documents and any

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subscription agreement or ancillary document connected to the issue of theCertificates or as expressly permitted or required thereunder or engage in anybusiness or activity other than:

(i) as provided for or permitted in the Transaction Documents;

(ii) the ownership, management and disposal of the Trust Assets as provided in theTransaction Documents;

(iii) as provided for or permitted in the Look Back Option Transaction Documents;and

(iv) such other matters which are incidental thereto.

8 Calculation Agent

8.1 Appointment

The Issuer shall procure that so long as any of the Certificates remains outstanding thereshall at all times be a Calculation Agent to undertake all necessary calculations and/ordeterminations for the purposes of calculating the relevant amounts due to be paid and/ordelivered on the Certificates provided that the Issuer may terminate the appointment of suchCalculation Agent in accordance with the provisions of the Agency Agreement. All suchcalculations shall be undertaken in respect of each US$1,000 in principal amount ofCertificates. In the event of the appointed office of any bank being unable or unwilling tocontinue to act as the Calculation Agent or failing duly to determine the amount due to bepaid or delivered on any Periodic Distribution Date or the Redemption Date, the Issuer shallappoint the London office of another major bank engaged in the London interbank marketto act in its place. The Calculation Agent may not resign its duties or be removed without asuccessor having been appointed.

8.2 Determinations binding

Any determination made by the Calculation Agent shall (in the absence of manifest error)be final and binding on the Issuer, the Trustee, the Transaction Administrator, the Co-Obligors, the Guarantor, the Certificateholders and the other Agents. The Calculation Agentmay consult on any matter any legal or other adviser selected by it and it shall not be liablein respect of anything done or omitted to be done relating to that matter in good faith inaccordance with that adviser’s opinion.

9 Payment

9.1 Payments in Respect of Certificates

9.1.1 Subject to Condition 9.2, payment of any Periodic Distribution Amount, Sukuk IssueAmount, Final Distribution Amount, Additional Distribution Amount (if any) and/orany other additional amounts payable by or on behalf of the Issuer under theseConditions (together the Sukuk Payments) will be made on the relevant due date forpayment by the Principal Paying and Exchange Agent by wire transfer in same dayfunds to the registered account of each Certificateholder. Payment of any Sukuk IssueAmount, Final Distribution Amount and/or Additional Distribution Amount (if any),and any unpaid Periodic Distribution Amount (due on any Early Redemption Date)and any other additional amounts payable by or on behalf of the Issuer under theseConditions will only be made against surrender of the relevant Certificate at thespecified office of any of the Paying and Exchange Agents.

9.1.2 For the purposes of this Condition 9, a Certificateholder’s registered account meansthe US dollar account maintained by or on behalf of it with a bank that processes

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payments in US dollars, details of which appear on the Register at the close of businesson the second Business Day before the due date for payment and a Certificateholder’sregistered address means its address appearing on the Register at that time.

9.2 Payments subject to applicable laws

Payments of any Sukuk Payments are subject in all cases to any fiscal or other laws andregulations applicable in the place of payment, but without prejudice to the provisions ofCondition 11.

9.3 Payment only on a Business Day

9.3.1 Where payment of any Sukuk Payments is to be made by transfer to a registeredaccount, payment instructions (for value the due date or, if that is not a Business Day,for value the first following day which is a Business Day) will be initiated by thePrincipal Paying and Exchange Agent, on the date for payment or if later and inrespect of payments of the Sukuk Issue Amount, Final Distribution Amount and/orAdditional Distribution Amount (if any), any unpaid Periodic Distribution Amount(due on any Early Redemption Date) and any other additional amounts payable by oron behalf of the Issuer under these Conditions on the Business Day on which therelevant Certificate is surrendered at the specified office of a Paying Agent.

9.3.2 Certificateholders will not be entitled to any Sukuk Payments or other payment for anydelay after the due date in receiving the amount due if the due date is not a BusinessDay, if, where appropriate, the relevant Certificateholder is late in surrendering itsCertificate (if required to do so).

9.3.3 In this Condition 9.3, Business Day means a day on which commercial banks in Dubai,London and New York are open for general business and, in the case of presentationof a Certificate, in the place in which the Certificate is presented.

9.4 Agents

The names of the initial Agents and their initial specified offices are set out at the end ofthese Conditions. The Issuer reserves the right at any time to vary or terminate theappointment of any Agent and to appoint additional or other Agents provided that (i) it will,for so long as the Certificates are listed on Dubai International Financial Exchange and therules of Dubai International Financial Exchange so require, notify the exchange of anychange of Agent and subsequently the market via CANDI (Corporate Action NewsDisclosures for Issuers), and (ii) the Issuer will ensure that it maintains a Paying Agent in aMember State of the European Union that will not be obliged to withhold or deduct taxpursuant to European Council Directive 2003/48/EC or any law implementing or complyingwith, or introduced in order to conform to such Directive. Notice of any termination orappointment and of any changes in specified offices will be given to Certificateholderspromptly by the Issuer in accordance with Condition 16.

10 Dissolution of Trust

10.1 Scheduled Dissolution

Unless the Certificates have been previously redeemed in full (and the Trust has beendissolved after such redemption) or in part following the occurrence of a Dissolution Event,the Certificates will be redeemed in full by the Issuer on the Scheduled Redemption Date bypayment of the Sukuk Issue Amount, the Final Distribution Amount, the AdditionalDistribution Amount (if any) (and all other amounts due and payable by or on behalf of theIssuer under these Conditions) in accordance with Condition 6.1 and the Trust will only bedissolved following such payment in full.

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10.2 Dissolution following a Dissolution Event

Subject to Condition 13, the Certificates shall be redeemed in full by the Issuer on the EarlyRedemption Date by payment of the Sukuk Issue Amount, the Final Distribution Amount, theAdditional Distribution Amount (if any) together with any accrued but unpaid PeriodicDistribution Amount (and all other amounts due and payable by or on behalf of the Issuerunder these Conditions) in accordance with Condition 6.2.

10.3 Interest in Trust Assets

Upon payment in full of the amounts contemplated by Conditions 10.1 and 10.2, theCertificates shall cease to represent interests in the Trust Assets and no further amountsshall be payable in respect thereof.

10.4 Cancellation

All Certificates which are redeemed will forthwith be cancelled and accordingly may not beheld, reissued or sold.

11 Taxation

All payments in respect of the Certificates shall be made without withholding or deduction for, oron account of, any present or future taxes, levies, duties, fees, assessments or other charges ofwhatever nature, imposed or levied by or on behalf of a Relevant Jurisdiction and all charges,penalties or similar liabilities with respect thereto (Taxes), unless the withholding or deduction ofsuch Taxes is required by law. In such event, and (a) in respect of any Periodic Distribution Amount,the Lessee will be required pursuant to the terms of the Lease Agreement to pay the Issuer, (b) inrespect of all payments due on any Redemption Date, the Purchase Undertaking Obligor will berequired pursuant to the terms of the Purchase Undertaking to pay to the Issuer, and (c) where theIssuer is required to make such withholding or deduction, the Issuer will be required to pay inrespect of the Certificates, additional amounts (which amounts will be applied in respect of theCertificates), so that the full amount which otherwise would have been due and payable under theCertificates is received by parties entitled thereto, except that no such additional amount shall bepayable by the Issuer in relation to any payment in respect of any Certificate:

(a) presented for payment by or on behalf of a holder who is liable for such Taxes in respect ofsuch Certificate by reason of having some connection with any Relevant Jurisdiction otherthan the mere holding of such Certificate; or

(b) presented for payment by or on behalf of a holder who would not be liable or subject to thewithholding or deduction by making a declaration of non-residence or other similar claimfor exemption to the relevant tax authority; or

(c) presented for payment more than 30 days after the Relevant Date except to the extent thata holder would have been entitled to such additional amount on presenting the same forpayment on the last day of the period of 30 days assuming, whether or not such is in fact thecase, that day to have been a Business Day; or

(d) presented for payment where such withholding or deduction is imposed on a payment to anindividual and is required to be made pursuant to the European Council Directive2003/48/EC or any law implementing or complying with, or introduced in order to conformto, such Directive; or

(e) presented for payment by or on behalf of a Certificateholder who would be able to avoidsuch withholding or deduction by presenting the relevant Certificate to another PayingAgent in a Member State of the European Union.

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12 Prescription

12.1 Certificates will become void unless presented for payment within a period of 10 years (inthe case of the Sukuk Issue Amount) and a period of five years (in the case of PeriodicDistribution Amounts, Final Distribution Amounts, Additional Distribution Amounts (if any)and any other amounts payable by or on behalf of the Issuer under these conditions) fromthe Relevant Date in respect of the Certificates, subject to the provisions of Condition 9.

12.2 In this Condition 12, Relevant Date means the date on which the relevant payment firstbecomes due but, if the full amount of the money has not been received by the Trustee onor before the due date, means the date on which the full amount having been so received,notice to that effect has been given to the Certificateholders by the Trustee in accordancewith Condition 16.

13 Dissolution Events

13.1 The occurrence of any of the following events shall constitute a Dissolution Event:

(a) the Issuer fails to pay any Periodic Distribution Amount or the Sukuk RedemptionAmount or deliver QPO Shares or any Excess Exercise Amount on the relevant duedate and such default continues unremedied for a period of 14 days; or

(b) the Issuer defaults in the performance or observance of any of its other materialobligations under or in respect of the Declaration of Trust, the Agency Agreement orthe Transaction Administration Deed and (except in any case where the failure isincapable of remedy when no continuation or notice as is hereinafter mentioned willbe required) such default remains unremedied for 30 days after written notice thereof,addressed to the Issuer by the Trustee, has been delivered to the Issuer; or

(c) an Event of Default occurs under the Lease Agreement and is continuing; or

(d) at any time it is or will become unlawful for the Issuer to perform or comply with anyof its obligations under the Transaction Documents to which it is a party or any of theobligations of the Issuer under the Transaction Documents to which it is a party arenot, or cease to be, legal, valid, binding and enforceable; or

(e) (i) the Issuer becomes insolvent or is unable to pay its debts as they fall due; (ii) anadministrator or liquidator of the whole or substantially the whole of the undertaking,assets and revenues of the Issuer is appointed (or application for any suchappointment is made); (iii) the Issuer takes any action for a readjustment or defermentof any of its obligations or makes a general assignment or an arrangement orcomposition with or for the benefit of its creditors or declares a moratorium in respectof any of its indebtedness or any guarantee of any indebtedness given by it; or (iv) theIssuer ceases or threatens to cease to carry on all or substantially the whole of itsbusiness (otherwise than for the purposes of or pursuant to an amalgamation,reorganisation or restructuring whilst solvent); or

(f) an order or decree is made or an effective resolution is passed for the winding up,liquidation or dissolution of the Issuer; or

(g) any event occurs which under the laws of the United Arab Emirates or the Emirate ofDubai has an analogous effect to any of the events referred to in paragraphs (e) and(f) above.

13.2 Upon the occurrence of a Dissolution Event set out in (a) to (g) above, the Trustee shall givenotice of the occurrence of such Dissolution Event to the Transaction Administrator and theCertificateholders in accordance with Condition 16.

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13.3 The Transaction Administrator in its sole discretion may, and if so requested in writing bythe holders of at least 25 per cent. (25%) in aggregate principal amount of such Certificatesthen outstanding, or if so directed by an Extraordinary Resolution shall (subject in each caseto being indemnified and/or secured to its satisfaction) instruct the Trustee to, or if theTrustee so decides in its discretion, the Trustee may, give notice to all the holders of suchCertificates in accordance with Condition 16 that the Certificates are immediately due andpayable on the date specified in such notice and that the Trust is to be dissolved on the dayafter the last outstanding Certificate has been redeemed in full and all payments and/ordeliveries in respect hereof have been satisfied in full.

13.4 Upon the occurrence of a Total Loss, the Trustee shall give notice of the occurrence of suchTotal Loss to the Transaction Administrator and Certificateholders in accordance withCondition 16 and notify them that the Certificates will become due and payable on the datefalling thirty (30) days after the occurrence of the Total Loss.

Following a Total Loss, the Issuer will have recourse to:

(a) the Insurances procured by the Servicing Agent under the Servicing AgencyAgreement for an amount equal to the aggregate of the Sukuk Issue Amount; and

(b) the Servicing Agent for an amount equal to the Total Loss Shortfall Amount.

14 Enforcement and Exercise of Rights

14.1 Upon the occurrence of a Dissolution Event, to the extent that the amounts payable inrespect of the Certificates have not been paid and/or QPO Shares have not been delivered infull in accordance with these Conditions following the occurrence of a Qualifying PublicOffering, the Trustee shall (acting on behalf of the Certificateholders) take one or more ofthe following steps:

(a) take enforcement action against the Purchase Undertaking Obligor for all amountsdue to be paid under the Purchase Undertaking;

(b) take enforcement action against the QPO Obligor for all QPO Shares to be deliveredunder the Subscription Rights Sale Undertaking;

(c) take enforcement action against the Servicing Agent for all amounts due to be paidunder the Servicing Agency Agreement;

(d) take any action to enforce any of the Security Documents;

(e) make a claim under the Dubai World Guarantee;

(f) make a claim under the Co-Obligor Guarantee;

(g) take any action to recover any Excess Exercise Amount due;

(h) take such other steps as the Trustee may consider necessary to recover amounts dueand/or deliverable to the Certificateholders.

14.2 Upon the occurrence of a Dissolution Event, to the extent that the amounts payable inrespect of the Certificates have not been paid and/or QPO Shares have not been delivered infull on the due date, the Transaction Administrator may in accordance with the TransactionAdministration Deed, in the name of the Trustee and acting on behalf of theCertificateholders, take one or more of the following steps, only if it shall be indemnifiedand/or secured to its satisfaction pursuant to the terms of the Transaction AdministrationDeed:

(a) take enforcement action in the name of the Trustee against the Purchase UndertakingObligor for all amounts due to be paid under the Purchase Undertaking;

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(b) take enforcement action in the name of the Trustee against the QPO Obligor for allQPO Shares to be delivered under the Subscription Rights Sale Undertaking;

(c) take enforcement action in the name of the Trustee against the Servicing Agent for allamounts due to be paid under the Servicing Agency Agreement;

(d) take any action to enforce any of the Security Documents;

(e) make a claim under the Dubai World Guarantee;

(f) make a claim under the Co-Obligor Guarantee; and

(g) take any action to recover any Excess Exercise Amount due.

14.3 Notwithstanding Condition 14.1 or Condition 14.2, no enforcement action against thePurchase Undertaking Obligor under the Purchase Undertaking may be taken following theoccurrence of a Dissolution Event arising solely as a result of the Servicing Agent’s failure topay the Total Loss Shortfall Amount when due under the Servicing Agency Agreement.

14.4 The Trustee shall not be bound to take any action to realise any of the Trust Assets on orafter the occurrence of any Dissolution Event unless directed to do so by the TransactionAdministrator (as contemplated by Condition 13.3).

14.5 The Transaction Administrator (acting as agent on behalf of the Certificateholders) shall notbe bound in any circumstances including, but not limited to, in accordance with thisCondition 14 to instruct the Trustee to take any action in relation to the Trust Assets and/ortake any action unless directed or requested to do so (i) by an Extraordinary Resolution or(ii) in writing by the holders of at least twenty five per cent. in aggregate principal amountof the Certificates then outstanding and in either case then only if it shall be indemnifiedand/or secured to its satisfaction.

14.6 No Certificateholder shall be entitled to proceed directly against, or to provide instructionsto, the Trustee to pursue any claim arising under the Trust Assets or the Certificates or toenforce the performance of any provisions of any of the Transaction Documents exceptthrough the agency of the Transaction Administrator. Under no circumstances shall theTrustee or the Transaction Administrator have any right to cause the sale or otherdisposition of any of the Trust Assets except pursuant to the Purchase Undertaking, theSubscription Rights Sale Undertaking and the Security Documents, and the sole right of theTrustee and the Transaction Administrator against the Co-Obligors and the Guarantor shallbe to enforce the obligation of the Purchase Undertaking Obligor to pay the Exercise Pricethereunder and/or enforce the Security Documents in respect thereof and/or make claimagainst any of the Co-Obligors under the Co-Obligor Guarantee and/or against theGuarantor under the Dubai World Guarantee and/or enforce the obligation of the ServicingAgent to pay any Total Loss Shortfall Amount.

14.7 Conditions 14.1, 14.2, 14.3, 14.4, 14.5 and 14.6 are subject to this Condition 14.7. Afterenforcing and distributing or realising the Trust Assets and distributing the net proceeds ofthe Trust Assets in accordance with Condition 4.2, the obligations of the TransactionAdministrator and the Trustee in respect of the Certificates shall be satisfied and noCertificateholder may take any steps against the Transaction Administrator or the Trusteeto recover any sums in respect of the Certificates and the right to receive any such sumsunpaid shall be extinguished. In particular, no Certificateholder shall be entitled in respectthereof to petition or to take any other steps for the winding-up of the Issuer or theTransaction Administrator or the Trustee, nor shall any of them have any claim in respect ofthe Trust Assets of any other trust established by the Trustee.

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15 Replacement of Certificates

Should any Certificate be lost, stolen, mutilated, defaced or destroyed it may be replaced at thespecified offices of the Replacement Agents upon payment by the claimant of the expenses incurredin connection with the replacement and on such terms as to evidence and indemnity as the Trusteemay reasonably require. Mutilated or defaced Certificates must be surrendered or an indemnitygiven before replacements will be issued.

16 Notices

16.1 All notices to Certificateholders will be valid if posted to them by first class pre-paidregistered post (or its equivalent) or (if posted to an overseas address) by airmail at theirrespective addresses in the Register. The Issuer shall also ensure that notices are duly givenor published in a manner which complies with the rules and regulations of any stockexchange on which the Certificates are for the time being listed and, so long as theCertificates are listed on the Dubai International Financial Exchange and the rules of DubaiInternational Financial Exchange so require, set out on the Issuer’s webpage (if any) andnotified to the market through CANDI. Any notice shall be deemed to have been given onthe seventh day after being so mailed or on the date of publication or, if so published morethan once or on different dates, on the date of the first publication.

16.2 Notices to be given by any Certificateholder shall be given in writing and given by lodgingthe same (together with the relevant Certificates) with the Registrar and any relevant Agent.

17 Meetings of Certificateholders, Modification, Waiver, Authorisation and Determination

17.1 It is a term of the Certificates that the Transaction Administrator shall act as agent of theCertificateholders for the purposes of providing instructions to the Trustee in accordancewith the terms of the Transaction Administration Deed. No Certificateholder may directlyprovide instructions to the Trustee.

17.2 The Transaction Administrator and/or the Trustee may convene meetings ofCertificateholders to consider any matter affecting their interests, including the modificationor abrogation by Extraordinary Resolution of these Conditions or the provisions of theDeclaration of Trust or any other Transaction Documents. The quorum at any meeting forpassing an Extraordinary Resolution will be two or more Certificateholders, proxies orrepresentatives holding or representing more than half in aggregate principal amount of theCertificates for the time being outstanding, or at any adjourned such meeting two or moreCertificateholders, proxies or representatives present whatever the principal amount of theCertificates held or represented by him or them. To be passed, an Extraordinary Resolutionrequires a majority in favour consisting of not less than three quarters of the persons votingon a show of hands or, if a poll is demanded, a majority of not less than three quarters of thevotes cast on such poll or at an adjourned meeting not less than one quarter. AnExtraordinary Resolution duly passed at any meeting of Certificateholders will be binding onall holders of the Certificates, whether or not they are present at the meeting and whetheror not voting.

Provided however that any proposal to:

(a) reduce the amount of the Periodic Distribution Amount, Final Distribution Amount,Additional Distribution Amount, Sukuk Issue Amount, any other amount payable byor on behalf of the Issuer under these Conditions or, as the case may be Total LossShortfall Amount payable in accordance with these Conditions and/or reduce theValue of the Subscription Rights arising under these Conditions;

(b) change the date of the Scheduled Redemption Date or any Periodic Distribution Date;and/or

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(c) change the quorum required at a meeting or the majority required to pass anExtraordinary Resolution,

may only be sanctioned at a meeting of the Certificateholders by an ExtraordinaryResolution. The quorum at any such meeting will be two or more Certificateholders, proxiesor representatives holding or representing more than seventy five per cent. in aggregateprincipal amount of the Certificates for the time being outstanding, or at any adjourned suchmeeting two or more Certificateholders, proxies or representatives present holding orrepresenting more than twenty five per cent. (25%) in aggregate principal amount of theCertificates for the time being outstanding.

In addition, a resolution in writing signed by or on behalf of all Certificateholders who for thetime being are entitled to receive notice of a meeting of Certificateholders will take effect asif it were an Extraordinary Resolution. Such a resolution in writing may be contained in onedocument or several documents in the same form, each signed by or on behalf of one ormore Certificateholders.

17.3 The Trustee may agree to and the Transaction Administrator may, on behalf of theCertificateholders, consent to a request made by the Issuer and direct the Trustee to agree,in each case without the consent or sanction of the Certificateholders, to any modificationof, or to the waiver or authorisation of any breach or proposed breach of, any of theseConditions or any of the provisions of the Declaration of Trust and/or the TransactionAdministration Deed, or the Trustee may determine, without any such consent as aforesaid,that any Dissolution Event or Potential Dissolution Event shall not be treated as such, whichin any such case is not, in the opinion of the Trustee (with the prior consent of theTransaction Administrator), materially prejudicial to the interests of Certificateholders orthe Trustee may agree, without any such consent as aforesaid, to any modification which, inits opinion, is of a formal, minor or technical nature or to correct a manifest error.

17.4 In connection with the exercise by it of any of its trusts, powers, authorities and discretions(including, without limitation, any modification, waiver, authorisation, determination orsubstitution), the Trustee or, as the case may be, the Transaction Administrator (in eachcase, acting on behalf of the Certificateholders) shall have regard to the general interests ofCertificateholders as a class but shall not have regard to any interests arising fromcircumstances particular to individual Certificateholders (whatever their number) and, inparticular but without limitation, shall not have regard to the consequences of any suchexercise for individual Certificateholders or groups of Certificateholders (whatever theirnumber) resulting from their being for any purpose domiciled or resident in, or otherwiseconnected with, or subject to the jurisdiction of, any particular territory or any politicalsubdivision thereof and neither the Trustee nor the Transaction Administrator shall beentitled to require, nor shall any Certificateholder be entitled to claim, from the Trustee, theTransaction Administrator or any other person any indemnification or payment in respectof any tax consequence of any such exercise upon individual Certificateholders except to theextent provided in Condition 11.

17.5 Any modification, abrogation, waiver, authorisation, determination or substitution shall bebinding on Certificateholders and any modification, abrogation, waiver, authorisation,determination or substitution shall be notified by the Trustee (unless the TransactionAdministrator otherwise agrees) to Certificateholders as soon as practicable thereafter inaccordance with Condition 16.

18 Indemnification and Liability of the Trustee and the Transaction Administrator

18.1 The Declaration of Trust contains provisions for the indemnification of the Trustee and theTransaction Administration Deed contains provisions for the indemnification of theTransaction Administrator, in each case in certain circumstances and for relief fromresponsibility, including provisions relieving each of them from taking action unless

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indemnified and/or secured to its satisfaction, in particular, in connection with the exerciseof any of its rights in respect of the Trust Assets.

18.2 The Trustee shall in no circumstances take any action to realise any of the Trust Assets onor after the occurrence of a Dissolution Event unless directed to do so either by theTransaction Administrator or in accordance with Condition 14. Subject thereto, the Trusteewaives any right to be indemnified by Certificateholders in circumstances where the TrustAssets are insufficient therefor.

18.3 The Transaction Administration Deed also contains provisions pursuant to which no directoror officer of the Transaction Administrator or of any holding, affiliated or associatedcompany of the Transaction Administrator shall be precluded from underwriting theCertificates with or without a commission or other remuneration, or from purchasing orotherwise acquiring, holding, dealing in or disposing of any notes, certificates, bonds,debentures, shares or securities whatsoever or from being interested in any contract ortransaction or from accepting and holding the office of trustee or administrator for theholders of any other securities, and in any case neither the Transaction Administrator norany director or officer of the Transaction Administrator shall be liable to theCertificateholders for any profit made by it or him thereby or in connection therewith.

18.4 The Transaction Administrator and the Trustee (solely in its capacity as such) make norepresentation and assume no responsibility for the validity, sufficiency or enforceability ofthe obligations of any of the Lessee, the Co-Obligors, the Guarantor, the Servicing Agent orthe Purchase Undertaking Obligor under any Transaction Document to which it is a partyand shall not under any circumstances have any liability or be obliged to account toCertificateholders in respect of any payment which should have been made by any of theLessee, the Co-Obligors, the Guarantor or the Purchase Undertaking Obligor as the case maybe, but is not so made, and shall not in any circumstances have any liability arising from theTrust Assets other than as expressly provided in these Conditions, the Declaration of Trustor the Transaction Administration Deed.

18.5 The Transaction Administrator and the Trustee shall not be liable in respect of any loss ortheft of the Trust Assets or any cash or for failure in any obligation to insure the Trust Assets(except as set out in the Transaction Documents) or any cash or for any claim arising fromthe fact that the Trust Assets or any cash are held by or on behalf of the Trustee or ondeposit or in an account with any depositary or clearing system or are registered in the nameof the Trustee or its nominee, unless such loss or theft arises as a result of the fraud, wilfuldefault or gross negligence of the Transaction Administrator or the Trustee.

19 Currency Indemnity

The Issuer agrees to indemnify each Certificateholder against any loss incurred by such holder as aresult of any judgment or order being given or made for any amount due under such Certificate andsuch judgment or order is expressed and paid in a currency (the Judgment Currency) other than USdollars and as a result of any variation as between (a) the rate of exchange at which the US dollar isconverted into the Judgment Currency for the purpose of such judgment or order and (b) the rateof exchange at which the holder on the date of payment of such judgment or order is able topurchase US dollars with the amount of the Judgment Currency actually received by the holder. Thisindemnification will constitute a separate and independent obligation of the Issuer and will continuein full force and effect notwithstanding any such judgment or order as aforesaid. The term rate ofexchange includes any premiums and costs of exchange payable in connection with the purchase of,or conversion into, US dollars.

20 Contracts (Rights of Third Parties) Act 1999

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 toenforce any term of these Conditions, but this does not affect any right or remedy of any personwhich exists or is available apart from that Act.

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21 Governing Law and Submission to Jurisdiction

21.1 The Declaration of Trust, the Agency Agreement, the Transaction Administration Deed, theDubai World Guarantee, the Co-Obligor Guarantee and the Certificates are governed by, andwill be construed in accordance with, English law.

21.2 The Issuer has in the Declaration of Trust irrevocably and unconditionally agreed for thebenefit of the Trustee and Certificateholders that the courts of England are to have non-exclusive jurisdiction to settle any disputes which may arise out of or in connection with theDeclaration of Trust or the Certificates and that accordingly any suit, action or proceedingsarising therefrom or in connection therewith (together referred to as Proceedings) may bebrought in the courts of England.

21.3 The Issuer has in the Declaration of Trust irrevocably and unconditionally waived and agreednot to raise any objection which it may have now or subsequently to the laying of the venueof any Proceedings in the courts of England and any claim that any Proceedings have beenbrought in an inconvenient forum and has further irrevocably and unconditionally agreedthat a judgment in any Proceedings brought in the courts of England shall be conclusive andbinding upon the Issuer and may be enforced in the courts of any other jurisdiction. Nothingin this Condition 21 shall limit any right to take Proceedings against the Issuer in any othercourt of competent jurisdiction, nor shall the taking of Proceedings in one or morejurisdictions preclude the taking of Proceedings in any other jurisdiction, whetherconcurrently or not.

21.4 The Issuer has in the Declaration of Trust irrevocably and unconditionally appointed anagent for service of process in England in respect of any Proceedings and has undertakenthat in the event of such agent ceasing so to act it will appoint such other person as theTrustee may approve as its agent for that purpose. In the event that no such replacementagent for service of process in England has been appointed by the Issuer within 14 days, theTrustee shall have the power to appoint, on behalf of and at the expense of the Issuer, areplacement agent for service of process in England.

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PART B

22 Subscription Rights

22.1 Each Certificate provides the holder the right (the Subscription Right) to subscribe for QPOShares at the QPO Exercise Price on each Qualifying Public Offering that is launched prior toredemption of the Certificates subject to and as provided by this Condition 22. For thepurposes of this Condition 22, a Qualifying Public Offering shall be deemed to be launchedwhen the initial, preliminary, pathfinder or other equivalent offering document is publishedand/or made available to potential investors in connection with that Qualifying PublicOffering.

22.2 The rights of Certificateholders in aggregate to subscribe for QPO Shares issued in anyQualifying Public Offering shall be limited:

(a) to an aggregate number of QPO Shares equal to thirty per cent. (30%) of theaggregate number of QPO Shares to be issued in that Qualifying Public Offering(subject always to Condition 22.14); and

(b) so that the aggregate Value of the Subscription Rights in all Qualifying PublicOfferings launched after the Closing Date and prior to the Redemption Date includingthe Value of the Subscription Rights in that Qualifying Public Offering does not exceedin aggregate US$880,000,000 (being twenty five per cent. (25%) of the Sukuk IssueAmount).

Pursuant to the Subscription Rights Sale Undertaking, the QPO Obligor shall, as soonreasonably practicable following the publication of any or all of the information set out inparagraphs (a) to (i) below in connection with the relevant Qualifying Public Offering(whether following the publication or issue of any intention to float announcement(howsoever described), initial, preliminary, pathfinder, other equivalent offering document inconnection with a Qualifying Public Offering or otherwise) and, in any event no later thantwelve (12) QPO Business Days prior to the relevant QPO Pricing Date, provide the Issuer andthe Transaction Administrator with the following:

(a) a copy of any intention to float announcement (howsoever described), initial,preliminary, pathfinder or other equivalent offering document for such QualifyingPublic Offering and, in the case of any offering document and to the extent notprohibited by law, where, and from whom, copies of such offering documents may beobtained;



(d) the proposed QPO Pricing Date;


(f) the Indicative QPO Size and (if available) the Indicative QPO Share Price and theIndicative Number of QPO Shares;

(g) the stock exchange on which the QPO Shares are to be listed and the clearing systemthrough which the QPO Shares will be cleared;

(h) the details of the account to which payments to the QPO Obligor for the QPO Sharesare to be made;

(i) any applicable selling restrictions relating to the issue of such QPO Shares andcorresponding certifications that will be required from Certificateholders in order to

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participate in the relevant Qualifying Public Offering and any other informationrequired by law or in connection with the relevant Qualifying Public Offering.

22.3 In respect of any Qualifying Public Offering, the Issuer undertakes to each Certificateholderthat as soon as reasonably practicable and, in any event, no later than eleven (11) QPOBusiness Days prior to the QPO Pricing Date for that Qualifying Public Offering, it will notify(in accordance with Condition 16) each Certificateholder and the Transaction Administratorof:

(a) the publication of any intention to float announcement (howsoever described) and/orany initial, preliminary, pathfinder or other equivalent offering document (howsoeverdescribed) for such Qualifying Public Offering and, to the extent not prohibited by law,where, and from whom, copies of such offering documents may be obtained;



(d) the proposed QPO Pricing Date;


(f) the Indicative QPO Size and (if available) the Indicative QPO Share Price and theIndicative Number of QPO Shares;

(g) the stock exchange on which the QPO Shares are to be listed and the clearing systemthrough which the QPO Shares will be cleared;

(h) the Indicative Subscription Price per US$1,000 in principal amount of Certificate;

(i) the Exercise Period and the Final Exercise Date;

(j) the account details to which payments for the QPO Shares shall be paid by ExercisingCertificateholders; and

(k) any applicable selling restrictions relating to the issue of such QPO Shares andcorresponding certifications that will be required from Certificateholders in order toparticipate in the relevant Qualifying Public Offering and any other informationrequired by law or in connection with the relevant Qualifying Public Offering (togetherthe Required Certifications).

The Issuer or the Transaction Administrator shall be under no obligation to provide copiesof any initial, preliminary or final offering document in respect of the relevant QualifyingPublic Offering to any Certificateholder if so to do so would breach any applicable law orregulation. In addition, a Certificateholder may only obtain copies of any such initial,preliminary or final offering document if it has given the applicable Required Certificationsto the person from whom it requests such offering document. Certificateholders shall benotified by the Issuer (in accordance with Condition 16) at the time of the relevantQualifying Public Offering how such Required Certifications are to be made.

The Issuer may serve one or more notices under this Condition 22. To the extent that suchnotification provides details of the clearing systems through which the QPO Shares are to besettled, then each Certificateholder that wishes to exercise its Subscription Right should ensurethat it has a relevant account or takes steps to open such an account on or before the FinalExercise Date. The Issuer may also elect to forward certification cards to Certificateholderswhich must be duly completed and returned to the Principal Paying and Exchange Agent ifsuch holders wish to receive the relevant initial, preliminary, pathfinder or other equivalentoffering document from the Issuer.

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22.4 A Certificateholder wishing to subscribe for QPO Shares (an Exercising Certificateholder)shall at its own expense at any time during the Exercise Period and, in any event, prior to5:00 p.m. (London time) on the Final Exercise Date deliver a duly completed notice (the QPOExercise Notice) to the specified office of the relevant Paying and Exchange Agent or Payingand Exchange Agents (being in every case an office outside of the United States of America).The QPO Exercise Notice shall be delivered in the then current form obtainable from thePaying and Exchange Agent and shall include the following:

(a) the name, address, telephone and fax details of the Exercising Certificateholder and, ifrelevant, the details of the custodian through which it holds its Certificate orCertificates;

(b) the aggregate principal amount of Certificates held by the ExercisingCertificateholder;

(c) the indicative aggregate amount (denominated in the currency of the relevantQualifying Public Offering) of Subscription Rights that the Exercising Certificateholderwishes to exercise, which shall be equal to the product of the Indicative SubscriptionPrice and the principal amount of Certificates (on the basis of a holding of not lessthan US$100,000 and integral multiples of US$1,000 in excess thereof) held by thatCertificateholder for which it wishes to exercise the Subscription Right, divided by1,000 (such amount, the Indicative Exercise Amount);

(d) details of the account to which the QPO Shares are to be delivered (being an accountin the settlement system stipulated in the relevant notice (given by the Issuer pursuantto Condition 22.3) that is capable of receiving the relevant QPO Shares);

(e) an irrevocable confirmation from the Exercising Certificateholder as to whether itexercises its rights to subscribe for Further QPO Shares (in proportion to theSubscription Rights exercised by it in the Qualifying Public Offering) if theSubscription Price is greater than the Indicative Subscription Price. If an ExercisingCertificateholder fails to give such an instruction, it shall not be entitled to subscribefor any Further QPO Shares; and

(f) a certification that the Certificateholder complies with the Required Certifications.

For so long as the Certificates are held in the Clearing Systems, the Certificateholder shall givean irrevocable instruction to the Clearing Systems:

(i) to debit the Indicative Exercise Amount from the Exercising Certificateholder’s or itsrelevant custodian’s account on the QPO Business Day immediately preceding the QPOPricing Date; and

(ii) to block a principal amount of Certificates equal to the principal amount of Certificatesin respect of which the Exercising Certificateholder is exercising its Subscription Rights(such Certificates, the Blocked Certificates) in the relevant Clearing Systems accountuntil the QPO Pricing Date.

Following service of a QPO Exercise Notice, an Exercising Certificateholder will not be able totransfer its Blocked Certificates in the Clearing Systems. Such Certificates shall remain blockedin the relevant Clearing System account until the QPO Pricing Date.

22.5 A QPO Exercise Notice, once delivered to the relevant Paying and Exchange Agent, shall beirrevocable. If the Principal Paying and Exchange Agent determines (in its absolutediscretion) that an Exercising Certificateholder has failed either to duly complete its QPOExercise Notice or serve the QPO Exercise Notice on or before the Final Exercise Date, suchQPO Exercise Notice shall be deemed not to have been delivered to the relevant Paying andExchange Agent.

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In addition (and for the avoidance of doubt):

(a) if an Exercising Certificateholder fails to state in its QPO Exercise Notice that it wishesto subscribe for its proportion of Further QPO Shares in the relevant Qualifying PublicOffering, it shall forfeit any rights to subscribe for such Further QPO Shares; and

(b) the Value of Subscription Rights with respect to any Qualifying Public Offering shallbe calculated on the basis of the final QPO Size, irrespective of the number of FurtherShares that are subscribed for by Exercising Certificateholders.

22.6 As a condition precedent to the rights of an Exercising Certificateholder to receive the QPOShares corresponding to its Subscription Rights, each Exercising Certificateholder shall pay(or procure the payment of) its Indicative Exercise Amount to or to the order of the PrincipalPaying and Exchange Agent (on behalf of the Issuer) by not later 5:00 p.m. (London time) onor before the QPO Business Day immediately preceding the QPO Pricing Date.

Until the Issuer is required to pay such moneys to the QPO Obligor pursuant to theSubscription Rights Sales Undertaking, such moneys shall be held by (or on behalf of) theIssuer on trust for the Exercising Certificateholders.

22.7 As soon as reasonably practicable and in any event, no later than the Business Day followingthe QPO Pricing Date, the Issuer shall notify the Transaction Administrator and eachExercising Certificateholder of:

(a) the final aggregate number of QPO Shares to be issued in connection with the relevantQualifying Public Offering and the final QPO Size;

(b) the QPO Share Price;

(c) the QPO Exercise Price;

(d) the Subscription Price per US$1,000 in principal amount of Certificates;

(e) the Additional Exercise Amount (if any) per US$1,000 in principal amount ofCertificates; and

(f) the Excess Exercise Amount (if any) per US$1,000 in principal amount of Certificate.

22.8 If the Subscription Price per US$1,000 in principal amount of Certificates is greater than theIndicative Subscription Price per US$1,000 in principal amount of Certificates by five percent. (5%) or more, each Exercising Certificateholder that has elected in its QPO ExerciseNotice to subscribe for Further QPO Shares (as contemplated by Condition 22.4(e)) shall berequired to make an additional subscription payment (the Additional Exercise Amount)corresponding to the difference between the Exercise Amount and the Indicative ExerciseAmount paid in accordance with Condition 22.6.

For the avoidance of doubt, Exercising Certificateholders shall not be entitled to exerciseSubscription Rights in respect of any over-allotment option of fifteen per cent. (15%) or lessof the total initial nominal amount of QPO Shares exercised in connection with suchQualifying Public Offering, and consequently the exercise of any such over-allotment optionshall be disregarded when calculating any Additional Exercise Amount.

As a condition precedent to an Exercising Certificateholder’s rights to receive its pro rataentitlement to any Further QPO Shares corresponding to its Subscription Rights, anExercising Certificateholder shall pay (or procure the payment of) the Additional ExerciseAmount due by it to or to the order of the Principal Paying and Exchange Agent on behalfof the Issuer by not later than 5:00 p.m. (London time) on or before the seventh QPOBusiness Day following the QPO Pricing Date. Fifty per cent. (50%) of such Further QPOShares shall be delivered to the relevant Exercising Certificateholders on the Deferred

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Delivery Date contemplated by Condition 22.11(b), and the remaining Further QPO Sharesshall be delivered on the Deferred Delivery Date contemplated by Condition 22.11(c).

22.9 Where the Indicative Subscription Price per US$1,000 in principal amount of Certificates isgreater than the Subscription Price per US$1,000 in principal amount of Certificates by fiveper cent. (5%) or more, the Issuer shall, as soon as possible following the QPO Pricing Date,and in any event no later than the QPO Closing Date, return to each relevant ExercisingCertificateholder the excess amount paid by such relevant Exercising Certificateholder (theExcess Exercise Amount) corresponding to the difference between the Indicative ExerciseAmount paid in accordance with Condition 22.6 and the Exercise Amount.

22.10 The number of QPO Shares to be delivered to each Exercising Certificateholder (theDeliverable QPO Shares, subject to the receipt by the Principal Paying and Exchange Agentof the relevant Indicative Exercise Amount and, if any, the relevant Additional ExerciseAmount) shall be equal to the number of QPO Shares that may be purchased with theIndicative Exercise Amount and, as the case may be, the Additional Exercise Amount soreceived at the QPO Exercise Price.

Failure by any Exercising Certificateholder to make payment of the Additional ExerciseAmount in full on or before the seventh QPO Business Day following the QPO Pricing Dateshall result in the forfeiture of that Exercising Certificateholder’s rights to subscribe forand/or receive its corresponding proportion of Further QPO Shares, but shall not prejudicethat Exercising Certificateholder’s rights to subscribe for and/or receive all Deliverable QPOShares corresponding to the Indicative Exercise Amount paid by it.

22.11 The Issuer shall deliver to each Exercising Certificateholder:

(a) thirty four per cent. (34%) of the Deliverable QPO Shares corresponding to theIndicative Exercise Amount on the QPO Closing Date;

(b) thirty three per cent. (33%) of the Deliverable QPO Shares corresponding to theIndicative Exercise Amount on the day falling one month after the QPO Closing Date,or, if such day is not a QPO Business Day, the immediately succeeding QPO BusinessDay; and

(c) thirty three per cent. (33%) of the Deliverable QPO Shares corresponding to theIndicative Exercise Amount on the day falling two months after the QPO Closing Date,or, if such day is not a QPO Business Day, the immediately succeeding QPO BusinessDay.

22.12 The QPO Shares shall:

(a) be admitted to listing and freely tradeable (to the extent permitted by the relevantstock exchange) on an International Stock Exchange and be in compliance with alllisting and admission requirements of such stock exchange;

(b) not be issued or delivered in violation of the pre-emptive rights of any holder of QPOShares;

(c) be duly and validly authorised, fully-paid and not be subject to calls for further funds;

(d) if in the form of shares, rank pari passu with the outstanding ordinary shares in thecapital of the QPO Company and, if in the form of any other security conferring theright to convert, exchange or subscribe for shares, such shares shall rank pari passuwith the outstanding ordinary shares in the capital of the QPO Company,

and, in each case, there will be no restrictions upon the voting or (solely in respect of theLock-up Shares during the Lock-up Period) transfer of any QPO Shares whether pursuant tothe constitutional documents of the QPO Company, any law or any agreement to which the

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Issuer, the Co-Obligors, the QPO Company or its holding company is a party or otherwiseunless any such restriction on transfer is imposed or required by the mandatory rules of thestock exchange upon which the QPO Shares are listed, or such restriction is otherwise inaccordance with the selling restrictions applicable to the relevant Qualifying Public Offering.

22.13 The Issuer shall be required to pay any and all stamp, transfer, registration and other taxesand other duties (if any) to Certificateholders in accordance with these Conditions which areimposed in connection with the delivery (or other disposition) to such Certificateholder ofany QPO Share pursuant to these Conditions.

22.14 No fraction of a QPO Share shall be delivered under these Conditions. If the QPO Share Priceis US$25 or more, any fraction of a QPO Share subscribed will be rounded up to the nearestwhole multiple of QPO Share. If the QPO Share Price is less than US$25, then:

(a) any fraction of a QPO Share subscribed of one half or more will be rounded up to thenearest whole multiple of QPO Share; and

(b) any fraction of a QPO Share subscribed of less than one half will be rounded down tothe nearest whole multiple of QPO Share.

22.15 If the QPO Shares to be delivered are:

(a) in uncertificated form, all such QPO Shares, as the case may be, shall be delivered toeach Exercising Certificateholder through the relevant clearing system to theCertificateholder’s securities account specified in the relevant QPO Exercise Notice onthe relevant Delivery Date;

(b) in certificated form, a certificate in respect thereof shall be dispatched by mail free ofcharge (but uninsured and at the risk of the person entitled thereto) to the relevantExercising Certificateholder as it may direct in the relevant QPO Exercise Notice on therelevant Delivery Date.

22.16 Each Exercising Certificateholder shall be entitled to all dividends and other income anddistributions in respect of all Lock-up Shares, paid or made during the Lock-up Period thatshall have been received by the Issuer at least one QPO Business Day prior to each DeferredDelivery Date. All such amounts shall be paid to the relevant Exercising Certificateholder (netof all taxes, withholdings, fees or expenses) on the relevant Deferred Delivery Date. Any suchdividends or other income or distributions received by the Issuer on or following the QPOBusiness Day prior to the relevant Deferred Delivery Date shall be paid to the relevantExercising Certificateholder (subject to any applicable taxes, withholdings, fees or expenses)on or before the fifth QPO Business Day after receipt thereof.

For the purposes of the Conditions, each Exercising Certificateholder shall following the QPOClosing Date be deemed to be the holder of record of the corresponding Lock-up Shares andFurther QPO Shares, if any, due to it. Accordingly, the Issuer shall notify such ExercisingCertificateholders (in accordance with Condition 16) promptly (and, in any event, within fiveQPO Business Days) of becoming aware of any proposed voting in relation to such sharesduring the Lock-up Period and shall use it reasonable endeavours to ensure that the exerciseof such voting rights shall be exercised at the direction of the relevant ExercisingCertificateholders.

22.17 If, at any time when the transfer or delivery to any Certificateholder of any Deliverable QPOShares is required, such transfer or delivery would, in the reasonable opinion of the Issuer(based on a legal opinion issued by one or more law firms of international repute selected bythe Issuer with the consent of the Transaction Administrator), be unlawful under the laws ofany applicable jurisdiction or contrary to any official declaration, order, directive orregulation in any applicable jurisdiction, the Issuer will repay any amount paid by such

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Certificateholder in respect of its rights to subscribe for such QPO Shares, and suchCertificateholder will lose its rights to receive such QPO Shares.

22.18 If, in its reasonable opinion, the Issuer determines that the delivery of Deliverable QPOShares cannot be effected (for whatever reason, other than by failure of a Certificateholderto provide a duly completed notice or comply with any of the stated requirements orcertifications for receipt of the QPO Shares) in the manner contemplated by this Condition22, the Issuer shall notify the Transaction Administrator, the Principal Paying and ExchangeAgent and the other Agents, and the Transaction Administrator, the Principal Paying andExchange Agent, the other Agents (as relevant) and the Issuer shall use their reasonableendeavours to agree such commercially reasonable alternative delivery arrangements thatwould, in all material respects, have a similar effect to those provided in this Condition 22.

22.19 If the Transaction Administrator, the Principal Paying and Exchange Agent the other Agents(as relevant) and the Issuer having made their reasonable endeavours fail to agree suchcommercially reasonable alternative delivery arrangements, the Transaction Administrator,the Principal Paying and Exchange Agent and the other Agents (as relevant) shall be underno liability to the Certificateholders or any other person in consequence thereof.

22.20 Pursuant to the Subscription Rights Sale Undertaking, the QPO Obligor shall deliver suchaggregate number of QPO Shares to the Issuer in order for the Issuer to satisfy its obligationsto deliver the QPO Deliverable Shares to the Exercising Certificateholders in accordance withthese Conditions.

22.21 Where a Qualifying Public Offering is launched prior to the Scheduled Redemption Date butthe QPO Closing Date for such Qualifying Public Offering occurs after the ScheduledRedemption Date, Certificateholders shall be entitled to subscribe for QPO Shares ascontemplated above, except that each Exercising Certificateholder shall be required to payan additional amount (equal to the Look Back Amount corresponding to the aggregateprincipal amount of Certificates for which it is exercising its Subscription Rights) to theIssuer on payment of the corresponding Indicative Exercise Price.

Look Back Option

(a) If on the Redemption Date the Aggregate Value of the Subscription Rights is less thanthe Maximum Attributable Subscription Rights Value, the Issuer and the QPO Obligorshall use their reasonable endeavours to ensure that the Relevant Holders shall, in thecircumstances set out in the Look Back Option Declaration of Trust and the Look BackOption Sale Undertaking, have the option to subscribe for QPO Shares if any QualifyingPublic Offering is initially settled during the Look Back Period.

(b) Pursuant to the terms of the Look Back Option Sale Undertaking granted on or beforethe Closing Date by the QPO Obligor in favour of the Issuer, the QPO Obligor shallundertake that it shall subject to the terms of the Look Back Option Declaration of Trustprocure the sale of QPO Shares to the Issuer (or to its order) and procure the deliveryof the QPO Shares to exercising Relevant Holders, in each case on the terms moreparticularly described therein. Condition 22.18 and 22.19 shall apply where delivery ofthe QPO Shares cannot be effected.

(c) The maximum value of QPO Shares that the Relevant Holders shall be able to subscribefor in the Look Back Period shall be equal to the Look Back Attributable SubscriptionRights Value. The rights of Relevant Holders to subscribe for QPO Shares during theLook Back Period shall be determined in accordance with Condition 22.2 (mutatismutandis).

(d) Following the occurrence of a Qualifying Public Offering the Issuer shall make theequivalent notifications to Relevant Holders as contemplated by Condition 22.3,

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Condition 22.7, and Relevant Holders shall exercise their right to receive such QPOShares by completing a QPO Exercise Notice in accordance with Condition 22.4 andmaking payment of the Indicative Exercise Amount and, if applicable, the AdditionalExercise Amount in accordance with Condition 22.6 and 22.8.

(e) In connection with the exercise of its Subscription Rights, each Relevant Holder shall berequired to pay an additional amount (equal to the Look Back Amount correspondingto the aggregate principal amount of Certificates for which it is exercising itsSubscription Rights) to the Issuer on payment of the corresponding Indicative ExercisePrice.

(f) Pursuant to the terms of the Look Back Option Declaration of Trust, the Issuer declaresthat it holds its rights under the Look Back Option Sale Undertaking on trust for eachRelevant Holder. For the avoidance of doubt, the Look Back Option Sale Undertakingshall not constitute part of the Trust Assets.

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PART C

23 Definitions

In these Conditions:

Additional Distribution Amount shall have the meaning given to such term in Condition 5.1.3.

Additional Exercise Amount shall have the meaning given to such term in Condition 22.8.

Adjusted QPO Aggregate Amount means the amount calculated as follows:

APA = ASR / 0.25

Where:

APA means the Adjusted QPO Aggregate Amount

ASR means the Aggregate Value of Attributed Subscription Rights

Agent means each of the Principal Paying and Exchange Agent, the Paying and Exchange Agents,the Transfer Agents and the Calculation Agent.

Aggregate Value of Attributed Subscription Rights means the aggregate of the Value of theSubscription Rights in respect of each Qualifying Public Offering which has been launched andinitially closed prior to the Redemption Date.

Business Day means (except where otherwise defined) a day on which commercial banks andforeign exchange markets settle payments and are open for general business (including dealings inforeign exchange and foreign currency deposits) in London, Dubai and (if a payment in US dollarsis required to be made on such day) New York City.

Capital Stock means, with respect to any person, any and all shares, interests, participations or otherequivalents (however designated, whether voting or non-voting) of such person’s equity, includingany preferred stock of such person, whether now outstanding or issued after the date hereof,including without limitation, all series and classes of such Capital Stock.

Certificateholder shall have the meaning given to such term in Condition 1.2.

Clearing Systems means Euroclear Bank S.A./N.V. and Clearstream Banking, société anonyme.

Co-Obligor shall have the meaning given to such term in Condition 4.1.

Co-Obligor Guarantee shall have the meaning given to such term in Condition 4.1.

Custody Account means any custody, nominee or escrow account opened and maintained in thename of the Issuer (for and on behalf of the Exercising Certificateholders) with a local agent or otherintermediary for the purposes of effecting the delivery of QPO Shares to an ExercisingCertificateholder.

Deferred Delivery Date means each date for the delivery of Deliverable QPO Shares in accordancewith Condition 22.11(b) and Condition 22.11(c).

Deliverable QPO Shares shall have the meaning given to such term in Condition 22.10.

Delivery Date means each date for the delivery of QPO Shares in accordance with Condition 22.11.

Dissolution Event shall have the meaning given to such term in Condition 13.

Dollar Exchange Rate means the relevant quoted foreign exchange rate as of 12pm (London time)for conversion of the currency in which the QPO Shares are denominated into United States dollarsdetermined by the Calculation Agent on the relevant date.

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Dubai World means Dubai World, a public corporation established under Dubai Law No.3 of 2006.

Dubai World Guarantee shall have the meaning given to such term in Condition 4.1.

Early Redemption Date means the date on which the Certificates became due and payable inaccordance with Conditions 13.3 and 13.4.

Event of Default shall have the meaning given to such term in the Lease Agreement.

These events of default are defined as any of the events or circumstances set out below:

(a) Non-payment/non-delivery: The Lessee, any of the Nakheel Holdings Group or the Guarantorfails to pay any amount (including, without limitation, Rental) payable, or fails to deliver QPOShares deliverable, pursuant to this Agreement or any other Transaction Document on thedue date for payment thereof and such default continues unremedied for a period of 14 days;or

(b) Breach of other obligations: Any of the Nakheel Holdings Group or the Guarantor defaults inthe performance or observance of any of its other material obligations under or in respect ofany Transaction Document to which it is a party and (except in any case where the failure isincapable of remedy when no continuation or notice as is hereinafter mentioned will berequired) such default remains unremedied for 30 days after written notice thereof, addressedto the Lessee by the Lessor, has been delivered to the Lessee; or

(c) Repudiation: Any of the Nakheel Holdings Group or the Guarantor repudiates or challengesthe valid, legal, binding and enforceable nature of any or any part of a Transaction Documentto which it is a party or does or causes to be done any act or thing evidencing an intention torepudiate or challenge the valid, legal, binding and enforceable nature of any TransactionDocument to which it is a party; or

(d) Illegality: at any time it is or will become unlawful for any of the Nakheel Holdings Group orthe Guarantor to perform or comply with any or all of its obligations under the TransactionDocuments to which it is party or any of the obligations of any of the Nakheel Holdings Groupor the Guarantor under the Transaction Documents to which it is a party are not, or cease tobe legal, valid, binding and enforceable; or

(e) Cross default: Any Indebtedness of any of the Nakheel Holdings Group, Nakheel World or theGuarantor becomes due and payable prior to the stated maturity thereof (other than at theoption of the debtor) or any of the Nakheel Holdings Group, Nakheel World or the Guarantorshall fail to make any payment when due in respect of any Indebtedness of any of the NakheelHoldings Group, Nakheel World or the Guarantor at the expiration of any grace periodoriginally applicable thereto, unless the aggregate amount of the Indebtedness relating to allthe above events is less than US$25,000,000 (or its equivalent in any other currency); or

(f) Failure to take action etc: Any action, condition or thing at any time required to be taken,fulfilled or done in order to ensure that the obligations under each Transaction Document ofany of the Nakheel Holdings Group or the Guarantor are legal, valid, binding and enforceable,is not taken, fulfilled or done; or

(g) Change of control: The Government of Dubai ceases to maintain, directly or indirectly, fullownership of the Guarantor; or

(h) Status of Guarantor: At any time, the Guarantor ceases to be a “public corporation”constituted by Decree of the Emirate of Dubai; or

(i) Insolvency etc: (i) any of the Nakheel Holdings Group, Nakheel World or the Guarantorbecomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator orliquidator of any of the whole or any part of the undertaking, assets and revenues of any ofthe Nakheel Holdings Group, Nakheel World or the Guarantor is appointed (or application for

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any such appointment is made), (iii) any of the Nakheel Holdings Group, Nakheel World or theGuarantor commences any negotiations or takes any action for a general adjustment ordeferment of any of its obligations or makes a general assignment or an arrangement orcomposition with or for the benefit of its creditors or declares a moratorium in respect of anyof its Indebtedness or any guarantee of any Indebtedness given by it or (iv) any of the Co-Obligors, Nakheel World, Nakheel PJSC or the Guarantor ceases or threatens to cease to carryon all or any substantial part of its business; or

(j) Winding up etc: An order or decree is made or an effective resolution is passed for thewinding up, liquidation or dissolution of any of the Nakheel Holdings Group, Nakheel World orthe Guarantor (other than in the case of a solvent winding-up of any Subsidiary of NakheelPJSC); or

(k) Analogous event: Any event occurs which has an analogous effect to any of the eventsreferred to in paragraphs (i) and (j) above.

The relevant terms are defined in the Lease Agreement.

Excess Exercise Amount shall have the meaning given to that term in Condition 22.9.

Exercise Amount means an amount calculated as follows:

EA = IEA x [SP/ISP]

Where:EA means Exercise Amount

IEA means Indicative Exercise Amount

SP means Subscription Price

ISP means Indicative Subscription Price

Exercise Period means, in respect of the exercise of Subscription Rights in respect of any QualifyingPublic Offering, the period commencing on the date specified by the Issuer in accordance withCondition 22.3 (being a date no fewer than five (5) QPO Business Days prior to the Final ExerciseDate) and expiring at 5:00pm (London time) on the Final Exercise Date.

Exercise Price shall have the meaning given to that term in the Purchase Undertaking.

Exercising Certificateholder shall have the meaning given to such term in Condition 22.4.

Extraordinary Resolution shall have the meaning given to such term in the Declaration of Trust.

Final Distribution Amount shall have the meaning given to such term in Condition 5.1.2.

Final Exercise Date means, in respect of the exercise of Subscription Rights in respect of anyQualifying Public Offering, the date falling four (4) QPO Business Days prior to the QPO Pricing Datefor that Qualifying Public Offering.

Further QPO Shares means the further QPO Shares that are available for subscription by ExercisingCertificateholders in the event that the final QPO Size is greater than the Indicative QPO Size and/oras a result of movements in the Dollar Exchange Rate the Value of the Subscription Right (and hencethe entitlement of each Exercising Certificateholder) increases, in each case such number of QPOShares equal to the aggregate Additional Exercise Amount (due by all Exercising Certificateholders)divided by the QPO Exercise Price and rounded in accordance with Condition 22.14.

Guarantor shall have the meaning given to such term in Condition 4.1.

holder shall have the meaning given to such term in Condition 1.2.

Indicative Exercise Amount shall have the meaning given to that term in Condition 22.4.

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Indicative Number of QPO Shares means, in respect of any Qualifying Public Offering, either theindicative number of QPO Shares to be offered in the relevant Qualifying Public Offering or, wherea range is given, details of that range.

Indicative QPO Exercise Price means, in respect of any Qualifying Public Offering, the amount(denominated in the currency of the QPO Shares) equal to ninety five per cent. (95%) of theIndicative QPO Share Price.

Indicative QPO Share Price means, in respect of any Qualifying Public Offering, either the indicativeshare price of the relevant QPO Shares or, where a share price range is given, details of that range.

Indicative QPO Size means, in respect of any Qualifying Public Offering, either the indicative size (interms of amount proposed to be raised) of the relevant Qualifying Public Offering or, where a sizerange is given, the top end of that range.

Indicative Subscription Price means the amount calculated as follows:

ISP = 1,000 x [A x 0.95/B]

Where:

ISP means the Indicative Subscription Price.

A means the product of thirty per cent. (30%) and the Indicative QPO Size converted, ifnecessary into US dollars at the Dollar Exchange Rate on the QPO Business Day immediatelypreceding the date of notification; provided always that if the aggregate Value of theSubscription Rights in all Qualifying Public Offerings launched and initially closed after theClosing Date (including the Value of the Subscription Rights in the Qualifying Public Offeringbeing contemplated) exceeds the Maximum Attributable Subscription Rights Value, “A”shall be the amount (in US dollars) equal to the Maximum Attributable Subscription RightsValue less the aggregate Value of the Subscription Rights in all Qualifying Public Offerings(other than the Qualifying Public Offering being contemplated) launched and initially closedafter the Closing Date.

B means the Sukuk Issue Amount.

Insurances means insurance of the Sukuk Assets against Total Loss from any conventional ortakaful insurer.

International Stock Exchange means any internationally recognised market or any recognisedmarket within any member state of the Gulf Co-operation Council (as may be determined by theTransaction Administrator), which shall, for the avoidance of doubt, include each of the DubaiInternational Financial Exchange (DIFX), the Dubai Financial Market (DFM), the Abu DhabiSecurities Market (ADSM), the Kuwait Stock Exchange, the Stock Exchange of Hong Kong Limited,Singapore Exchange Limited (SGX), and the London Stock Exchange.

Judgment Currency shall have the meaning given to such term in Condition 19.

Lease Agreement shall have the meaning given to such term in Condition 4.1.

Lessee shall have the meaning given to such term in Condition 4.1.

Lessor shall have the meaning given to such term in Condition 4.1.

Liability means any loss, damage, cost, charge, claim, demand, expense, judgment, action,proceeding or other liability whatsoever (including, without limitation, in respect of taxes, duties,levies, imposts and other charges) and including any value added tax or similar tax charged orchargeable in respect thereof and legal fees and expenses properly incurred on a full indemnitybasis.

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Lock-up Period means the period beginning on the QPO Closing Date and ending on the QPOBusiness Day falling 2 months after the QPO Closing Date.

Lock-up Shares means the QPO Shares to be delivered to Certificateholders pursuant to Condition22.11(b) and Condition 22.11(c).

Look Back Amount means an amount in US dollars calculated as follows:

[A – B] / SIA

Where:

A means the Additional Distribution Amount that would have been due on the RedemptionDate had all previous Qualifying Public Offerings both before and after the Redemption Date(but excluding the relevant Qualifying Public Offering) initially launched and closed prior tothe Redemption Date

B means the Additional Distribution Amount that would have been due on the RedemptionDate had all Qualifiyng Public Offerings both before and after the Redemption Date (andincluding the relevant Qualifying Public Offering) initially launched and closed prior to theRedemption Date


Look Back Attributable Subscription Rights Value means an amount (in US dollars) equal to thedifference between the Maximum Attributable Subscription Rights Value and the Aggregate Valueof Attributed Subscription Rights.

Look Back Option means the option of each Relevant Holder to subscribe for QPO Shares on theterms more particularly described in the Look Back Option Transaction Documents.

Look Back Option Agency Declaration means the agency declaration granted by the Issuer on theClosing Date in respect of the Look Back Option.

Look Back Option Declaration of Trust means the declaration of trust entered into by the Issuer andthe QPO Obligor on the Closing Date in respect of the Issuer’s rights under the Look Back OptionSale Undertaking.

Look Back Option Sale Undertaking means the sale undertaking dated the Closing Date wherebythe QPO Obligor provides the Issuer with an irrevocable undertaking in respect of the sale of QPOShares during the Look Back Period.

Look Back Option Transaction Documents means the Look Back Option Sale Undertaking, the LookBack Option Declaration of Trust, the Look Back Option Agency Declaration and any otheragreements and documents designated as such by the Issuer and the Co-Obligors.

Look Back Period means the period commencing on the Redemption Date and terminating on thedate falling twelve (12) months thereafter.

Maximum Attributable Subscription Rights Value means US$880,000,000.

Mortgages shall have the meaning given to such term in Condition 4.1.

Nakheel Group means Nakheel PJSC and its Subsidiaries at the relevant time.

over-allotment option means, in respect of any Qualifying Public Offering, the option (which maybe exercisable at any time after the QPO Pricing Date) granted by the QPO Company in favour ofthe managers of the Qualifying Public Offering to increase the size of such Qualifying PublicOffering, and require the QPO Company to issue further QPO Shares, to cover any over-allotments.

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Periodic Distribution Amount means, in respect of each Periodic Distribution Date, an amount inUS dollars equal to the product of:

(a) the Sukuk Issue Amount;

(b) the QPO Yield x fifty per cent. (50%);

(c) (n/360);

and rounding the resultant figure to the nearest US$0.01, US$0.005 being rounded upwards.

Where:

n means the number of days in the relevant period from (and including) the Closing Date forthe first distribution period and the Periodic Distribution Date of the preceding period forsubsequent periods to (but excluding) the next Periodic Distribution Date, calculated on thebasis of a year of 360 days with twelve 30-day months.

Periodic Distribution Date means the 14 June and 14 December in each year commencing on 14June 2007.

Person means any individual, company, corporation, firm, partnership, joint venture, undertaking,association, organisation, trust, state or agency of a state, in each case whether or not being aseparate legal entity but it does not include the subsidiaries of the Issuer that are wholly or majorityowned, directly or indirectly, by it.

Potential Dissolution Event means any event which, with the giving of notice, lapse of time,determination of materiality or fulfilment of any other applicable condition (or any combination ofany of the foregoing) would constitute a Dissolution Event.

Proceedings shall have the meaning given to such term in Condition 21.2.

Property means the land and property as more particularly identified in the Purchase Agreement.

Purchase Undertaking shall have the meaning given to such term in Condition 4.1.

Purchase Undertaking Obligor shall have the meaning given to such term in Condition 4.1.

QPO Business Day means (except where otherwise defined) a day on which commercial banks andforeign exchange markets settle payments and are open for general business (including dealings inforeign exchange and foreign currency deposits) in London, Dubai and the financial centre wherethe primary listing of the Qualifying Public Offering is to occur.

QPO Closing Date means for any Qualified Public Offering, the date on which the initial settlementoccurs for the relevant QPO Shares.

QPO Company means, at any time, any member of the Nakheel Group.

QPO Exercise Price means the amount (denominated in the currency of the QPO Shares) equal toninety five per cent. (95%) of the QPO Share Price.

QPO Exercise Notice shall have the meaning given to such term in Condition 22.4.

QPO Obligor shall have the meaning given to such term in Condition 4.1.

QPO Pricing Date means the date that the QPO Share Price is determined in the relevant QualifyingPublic Offering.

QPO Share means each share (including any Global Depository Receipts, American DepositoryReceipts or other depository receipts) and each mandatory exchangeable or convertible bond,rights or warrants issued in connection with a Qualifying Public Offering.

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QPO Share Price means the subscription price set at pricing of the relevant Qualifying PublicOffering for each QPO Share.

QPO Size means in respect of any Qualifying Public Offering the product of the QPO Share Price andthe number of QPO Shares issued in that Qualifying Public Offering (including for the avoidance ofdoubt any Further QPO Shares).

QPO Yield means 6.345 per cent. per annum.

Qualifying Public Offering means any primary or secondary equity offering of all or part of theauthorised or issued share capital by any member of the Nakheel Group at such time (whether ornot in existence at the Closing Date) (including in the form of Global Depositary Receipts, AmericanDepositary Receipts or other depositary receipts, any offering of mandatory exchangeable orconvertible bonds, warrants and rights issues), in each case listed on any International StockExchange. For the avoidance of doubt, any option (which may be exercisable at any time after theQPO Pricing Date) granted by the QPO Company in favour of the managers of the Qualifying PublicOffering to increase the size of such Qualifying Public Offering by fifteen per cent. (15%) or less tocover any over-allotments shall not be deemed to form part of or constitute a separate QualifyingPublic Offering.

Redemption Date means the earlier to occur of the Scheduled Redemption Date and the EarlyRedemption Date.

Register shall have the meaning given to such term in Condition 1.1.

Relevant Date shall have the meaning given to such term in Condition 12.2.

Relevant Holder means each person that is a Certificateholder as at the Redemption Date asconfirmed (a) if the Certificates are, at such time, represented by a Global Certificate held on behalfof a clearing system, from records of such clearing system, or (b) otherwise by reference to theRegistrar.

Relevant Jurisdiction means the United Arab Emirates or any political subdivision or any authoritythereof or therein having power to tax.

Required Certifications shall have the meaning given to such term in Condition 22.3.

Scheduled Redemption Date means 14 December 2009.

Security Documents means the Share Pledge, the Mortgages and any other documents oragreements designated as such by the Issuer, the Transaction Administrator and any of DubaiWorld, Nakheel Holdings-1 LLC, Nakheel Holdings-2 LLC and Nakheel Holdings-3 LLC.

Share Pledge shall have the meaning given to such term in Condition 4.1.

Short QPO Aggregate Amount means the amount calculated as follows:

SAPA = SIA – APA

Where:

APA means the Adjusted QPO Aggregate Amount

SAPA means the Short QPO Aggregate Amount


Short QPO Yield means the rate per annum, calculated as follows:

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(a) if the Aggregate Value of Attributed Subscription Rights on the Redemption Date is less thantwelve point five per cent. (12.5%) of the Sukuk Issue Amount, an amount equal to two percent. (2%) per annum;

(b) if the Aggregate Value of Attributed Subscription Rights on the Redemption Date is equal toor more than twelve point five per cent. (12.5%) but less than twenty five per cent. (25%) ofthe Sukuk Issue Amount, an amount equal to one point two five per cent. (1.25%) perannum; and

(c) if the Aggregate Value of Attributed Subscription Rights on the Redemption Date is equal totwenty five per cent. (25%) of the Sukuk Issue Amount, an amount equal to zero per cent.(0%) per annum.

Subscription Price means the amount in US dollars calculated as follows:

SP = 1,000 x [A x 0.95/B]

Where:

SP means the Subscription Price

A means the product of thirty per cent. (30%) and the QPO Size converted, if necessary, intoUS dollars at the Dollar Exchange Rate on the QPO Business Day immediately preceding theQPO Pricing Date; provided always that if the aggregate Value of the Subscription Rights inall Qualifying Public Offerings launched and initially closed after the Closing Date (includingthe Value of the Subscription Rights in the Qualifying Public Offering being contemplated)exceeds the Maximum Attributable Subscription Rights Value, “A” shall be the amount (inUS dollars) equal to the Maximum Attributable Subscription Rights Value less the aggregateValue of the Subscription Rights in all Qualifying Public Offerings (other than the QualifyingPublic Offering being contemplated) launched and initially closed after the Closing Date.


Subscription Right shall have the meaning given to such term in Condition 22.1.

Subscription Rights Sale Undertaking shall have the meaning given to such term in Condition 4.1.

Subsidiary means, with respect to any Person:

(a) any corporation, association, partnership or other business entity of which more than 50 percent. of the total voting rights of its Capital Stock is at the time owned or controlled directlyby such Person, or by such Person and one or more Subsidiaries of such Person or by one ormore Subsidiaries of such Person;

(b) any partnership in which such Person or a Subsidiary of such Person is, at the time, a generalpartner; or

(c) any other Person in which such Person, one or more Subsidiaries of such Person, or suchPerson and one or more Subsidiaries of such Person, directly or indirectly, at the date ofdetermination thereof has (x) over a 50 per cent. ownership interest or (y) the power to elector direct the election of a majority of the directors, members of the Board of Directors orother governing body of such Person and, in respect of each Co-Obligor, shall includeNakheel PJSC and each of its Subsidiaries

Sukuk Assets shall have the meaning given to such term in Condition 4.1.

Sukuk Assets Sale Undertaking shall have the meaning given to such term in Condition 4.1.

Sukuk Issue Amount means US$3,520,000,000.

Sukuk Payments shall have the meaning given to such term in Condition 9.1.1.

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Sukuk Redemption Amount means the aggregate of:

(a) the Sukuk Issue Amount;

(b) any amount that is due (but unpaid) under Condition 5.1.1;

(c) any amount that is due (but unpaid) under Condition 5.1.2;

(d) the Additional Distribution Amount, if any; and

(e) any other amount that is due (but unpaid) under Condition 6.1 or, as the case may be,Condition 6.2.

Taxes shall have the meaning given to such term in Condition 11.

Total Loss means (a) the total loss or destruction of, or damage to the whole of the Sukuk Assets(b) any event or occurrence that renders the whole of the Sukuk Assets permanently unfit for anyeconomic use and (but only after taking into consideration the proceeds of any Insurances receivedby the Issuer and the period of time required to reinstate the assets) the repair or remedial work inrespect thereof is uneconomical.

Total Loss Shortfall Amount means the amount, if any, by which the aggregate of the Sukuk IssueAmount exceeds the Insurance proceeds which have been credited to the Transaction Account onor before the thirty first (31st) day after Total Loss has occurred.

Transaction Account shall have the meaning given to such term in Condition 4.1.

Transaction Documents shall have the meaning given to such term in Condition 4.1.

Transfer Record Date shall have the meaning given to such term in Condition 2.4.

Trust shall have the meaning given to such term in Condition 4.1.

Trust Assets shall have the meaning given to such term in Condition 4.1.

US$ and US dollars means United States dollars, being the legal currency for the time being of theUnited States of America.

Value of the Subscription Rights means, in relation to any Qualifying Public Offering, twenty fiveper cent. (25%) of the QPO Size (converted if necessary into US dollars at the Dollar Exchange Rateon the QPO Business Day prior to the QPO Pricing Date).

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GLOBAL CERTIFICATE

The Global Certificate contains the following provisions which apply to the Certificates in respect ofwhich they are issued whilst they are represented by the Global Certificate, some of which modify theeffect of the Conditions of the Certificates. Terms defined in the Conditions of the Certificates havethe same meaning in the paragraphs below.

Holders

For so long as all of the Certificates are represented by the Global Certificate and the GlobalCertificate is held on behalf of Euroclear or Clearstream, Luxembourg, each person (other thananother clearing system) who is for the time being shown in the records of Euroclear or Clearstream,Luxembourg (as the case may be) as the holder of a particular aggregate principal amount of suchCertificates (each, a Holder) (in which regard any certificate or other document issued by Euroclearor Clearstream, Luxembourg (as the case may be) as to the aggregate principal amount of suchCertificates standing to the account of any person shall be conclusive and binding for all purposes)shall be treated as the holder of such aggregate principal amount of such Certificates (and theexpression Certificateholders and references to holding of Certificates and to holder of Certificatesshall be construed accordingly) for all purposes other than with respect to payments on suchCertificates, the right to which shall be vested, as against the Issuer and the Trustee solely in theCommon Depositary for the relevant clearing system (the Common Depositary) in accordance withand subject to the terms of the Global Certificate. Each Holder must look solely to Euroclear orClearstream, Luxembourg, as the case may be, for its share of each payment made to the CommonDepositary.

Cancellation

Cancellation of any Certificate following its redemption by the Issuer will be effected by reductionin the aggregate principal amount of the Certificates in the register of Certificateholders and by theannotation of the appropriate schedule to the Global Certificate.

Payments

Payments of all amounts in respect of Certificates represented by the Global Certificate will be madeupon presentation or, if no further payment falls to be made in respect of the Certificates, againstpresentation and surrender of the Global Certificate to or to the order of the Registrar or such otherAgent as shall have been notified to the holder of the Global Certificate for such purpose.

Distributions of amounts with respect to book-entry interests in the Certificates held throughEuroclear or Clearstream, Luxembourg will be credited, to the extent received by the Registrar, tothe cash accounts of Euroclear or Clearstream, Luxembourg participants in accordance with therelevant system’s rules and procedures.

A record of each payment and delivery made will be endorsed on the appropriate schedule to theGlobal Certificate by or on behalf of the Registrar and shall be prima facie evidence that paymenthas been made.

Notices

So long as all the Certificates are represented by the Global Certificate and the Global Certificate isheld on behalf of a clearing system, notices to Certificateholders may be given by delivery of therelevant notice to that clearing system for communication by it to entitled Certificateholders insubstitution for notification as required by the Conditions of the Certificates except that, so long asthe Certificates are listed on any stock exchange, notices shall also be published in accordance withthe rules of such stock exchange. Any such notice shall be deemed to have been given to theCertificateholders on the third day after the day on which such notice is delivered to the relevantclearing systems.

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Level: 13 – From: 0 – Tuesday, December 12, 2006 – 4:11 pm – mac5 – 3586 Section 05 : 3586 Section 05Level: 13 – From: 0 – Tuesday, December 12, 2006 – 4:11 pm – mac5 – 3586 Section 05 : 3586 Section 05

Registration of Title

Registration of title to Certificates in a name other than that of the Common Depositary will not bepermitted unless Euroclear or Clearstream, Luxembourg, as appropriate, notifies the Issuer that it isunwilling or unable to continue as a clearing system in connection with the Global Certificate, andin each case a successor clearing system approved by the Trustee is not appointed by the Issuerwithin 90 days after receiving such notice from Euroclear or Clearstream, Luxembourg. In thesecircumstances title to a Certificate may be transferred into the names of holders notified by theCommon Depositary in accordance with the Conditions of the Certificates, except that Certificatesin respect of Certificates so transferred may not be available until 21 days after the request fortransfer is duly made.

The Registrar will not register title to the Certificates in a name other than that of the CommonDepositary for a period of seven calendar days preceding the due date for any payment of aDistribution Amount in respect of the Certificates.

Transfers

Transfers of book-entry interests in the Certificates will be effected through the records of Euroclearor Clearstream, Luxembourg and their respective participants in accordance with the rules andprocedures of Euroclear or Clearstream, Luxembourg and their respective direct and indirectparticipants, as more fully described under Clearance and Settlement.

Subscription Rights

For so long as all of the Certificates are represented by a Global Certificates and the GlobalCertificates is held on behalf of Euroclear or Clearstream, Luxembourg and in connection with theexercise Subscription Rights, each Certificateholder shall be required, when serving a QPO ExerciseNotice to give an irrevocable instruction to Euroclear or, as the case may be, Clearstream,Luxembourg:

(a) to debit the Indicative Exercise Amount from the Exercising Certificateholder's account on theQPO Business Day immediately preceding the QPO Pricing Date; and

(b) to block a principal amount of Certificates (equal to the principal amount of Certificates inrespect of which the Exercising Certificateholder is exercising its Subscription Rights) (suchCertificates, the Blocked Certificates) in the relevant account until the QPO Pricing Date.

Following service of a QPO Exercise Notice, an Exercising Certificateholder will not be able totransfer its Blocked Securities in the accounts of either Euroclear or Clearstream, Luxembourg. SuchCertificates shall remain blocked in the relevant account until the corresponding QPO Pricing Date.

Definitive Certificates

Interests in the Global Certificate will be exchangeable or transferable, as the case may be, forCertificates in definitive form (Definitive Certificates) upon the occurrence of an Exchange Event.For these purposes, Exchange Event means that (i) a Dissolution Event has occurred and iscontinuing or (ii) the Issuer has been notified that both Euroclear and Clearstream, Luxembourghave been closed for business for a continuous period of 14 days (other than by reason of holiday,statutory or otherwise) or have announced an intention permanently to cease business or have infact done so and no successor clearing system is available. In any such event, the Issuer will issueDefinitive Certificates (in exchange for the whole of the Global Certificate) within 45 days of theoccurrence of the relevant Exchange Event upon presentation of the Global Certificate by the personin whose name the Global Certificate is registered in the register kept by the Registrar in respect ofthe Certificates at the offices of the Principal Paying and Exchange Agent on any day (other than aSaturday or Sunday) on which banks are open for business in the city in which the Registrar has itsoffice.

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DUBAI WORLD BUSINESS DESCRIPTION

Overview

Dubai World was established by decree of His Highness Sheikh Mohammed Bin Rashid Al Maktoum,the Ruler of Dubai and Prime Minister of the United Arab Emirates, as a public corporation pursuantto Law No. 3 of 2006 (issued on 2 March 2006) and is wholly owned by the Government of Dubai.

Dubai World was established to be the holding company through which the Government of Dubaiholds its interests in certain companies currently under common management control. Dubai Worldis wholly owned by the Government of Dubai but (like all companies created by Government ofDubai decree) it does not have an issued share capital.

As Dubai World is a newly established corporation, the relevant companies and businesses are beingtransferred to its ownership over time. The current intention is that the principal businesses that areor will be transferred to Dubai World will be those commercial enterprises that were run by TheCorporate Office (the TCO), an unincorporated arm of the Government of Dubai led by SultanAhmed Bin Sulayem. Entities that are currently run by TCO include Ports, Customs and Free ZoneCorporation (PCFC), Dubai Ports Authority and Jebel Ali Free Zone Authority. It is the currentintention that the commercial businesses associated with these entities will be brought under DubaiWorld’s ownership, whether through a transfer of companies or businesses and the regulatoryfunctions of these entities will continue to remain outside the Dubai World Group.

Group Structure Summary

At the date of this Offering Circular, the principal operating businesses held by the Government ofDubai through Dubai World include Nakheel PJSC, Limitless LLC and Istithmar PJSC and theirrespective subsidiaries. These are the only subsidiaries of Dubai World that have material assets asat the date of this Offering Circular.

Each of Nakheel PJSC, Limitless LLC and Istithmar PJSC share the same Chairman, but on a day-to-day basis they operate independently from each other within the commercial arena and each followdifferent strategies:

• Nakheel PJSC and its subsidiaries operate in the real estate sector in Dubai;

• Istithmar PJSC is an investment company and invests in four industry sectors, both in Dubaiand also internationally; and

• Limitless LLC, is a real estate developer investing in the international market, whilstdeveloping a limited number of real estate projects in Dubai.

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Group Structure Chart

Note: this group structure diagram outlines the principal operating subsidiaries held by Dubai Worldand is a simplified representation of the current legal structure of the Dubai World Group. Pleasealso note that Dubai World’s interests in Nakheel World LLC, Istithmar PJSC and Limitless LLC areheld through other group holding companies. This is primarily to comply with legal requirementsunder Dubai law that require PJSC companies to have three shareholders and LLC companies to havetwo shareholders.

Apart from Nakheel World LLC, the other shareholder in each of the Co-Obligors is Dubai WorldHoldings Limited, which is a holding company incorporated in the Jebel Ali Free Zone as an offshorecompany and wholly owned direct subsidiary of Dubai World.

Management

The Chairman of Dubai World is Sultan Ahmed Bin Sulayem, who was appointed by decree No. 4 of2006 (issued on 2 March 2006 issued by the Ruler of Dubai).

Sultan Ahmed Bin Sulayem is also Chairman of PCFC, Chairman of Nakheel PJSC, Chairman of P&FWorld, Chairman of Tejari.com (an electronic business to business marketplace), Chairman ofIstithmar PJSC and Chairman of Dubai Multi Commodities Centre (DMCC). He also sits on Dubai’sExecutive Committee.

The other members of the Dubai World Board of Directors are Jamal Majid Bin Thaniah who is alsoChief Executive Officer of Port and Free Zone World, Ahmed Butti Ahmed who is also also DirectorGeneral of Dubai Customs, Saeed Ahmed Saeed who is also Chief Executive Officer of Limitless LLC,Chris O’Donnell who is also Chief Executive Officer of Nakheel, Saad Abdul Razak who is also ChiefExecutive Officer of Dubai Islamic Bank PJSC, David Rutledge who is also Chief Executive Officer ofDubai Multi Commodities Centre, David Jackson who is also Chief Executive Officer of Istithmar PJSC,Geoff Taylor who is also Chief Executive Officer of Dubai Dry Docks, Alan Rogers who is also ChiefExecutive Officer of Istithmar Real Estate, Omar Hijazi who is also Chief Executive Officer of

Governmentof Dubai

DUBAI WORLD

NakheelWorld LLC

IstithmarPJSC

LimitlessLLC

NakheelHoldings-1

LLC

NakheelHoldings-2

LLC

NakheelHoldings-3

LLC

NakheelPJSC

100%

100%

99%

33.4% 33.3% 33.3%

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Tejari.com, Suleiman H. Al Mazroui, Khulood Al Rostamani and Maryam Sharaf who is also ChiefFinancial Officer of Dubai World.

The Dubai World Board is committed to adopting an appropriate corporate governance frameworksuitable for a holding company of this nature. A series of committees may be established includingan Investment Committee, a Nomination and Remuneration Committee and a Human ResourcesCommittee. However, as at the date of this Offering Circular, none of these committees has beenformally established and their creation and function is subject to further discussion of the DubaiWorld board.

Shared Services

Dubai World operates some shared services for its group, including information technology (theInformation Technology Centre) and payroll processing.

Relationship with the Government

The Government does not guarantee any indebtedness or any other liability of Dubai World or anymember of the Group.

In addition, there is no day-to-day involvement of the Government of Dubai in the management ofDubai World, which operates independently of the Government of Dubai.

Limitless LLC

Limitless LLC (Limitless) was incorporated in Dubai in July 2005 and is Dubai World’s internationalreal estate development arm. Limitless’ strategy is to carry out the planning of large-scale urbandevelopment projects, waterfront developments and large mixed-use projects. Limitless aims toform partnerships with providers of real estate services including asset, property and facilitymanagers.

Whilst it is expected that Limitless’ growth strategy will target real estate developmentopportunities outside Dubai, it is developing two projects in Dubai as at the date of this OfferingCircular.

Limitless’ current portfolio consists of multiple projects across a number of markets. The announcedprojects include: (i) an estimated US $12 billion development cost, 70 million square foot, mixed usedevelopment codenamed “Project A”; (ii) a 25,000 hectare waterfront development in Karachi as ajoint initiative with the Government of Pakistan with phase one of the development involving ananticipated US$20 billion investment; and (iii) a strategic mixed use waterfront development inQingdao, China.

In addition, other current pipeline projects include projects in Russia, China, the United Kingdom,India and other Gulf Cooperation Council countries, each project ranging from US$1billion to overUS$20 billion total development investment.

In addition, Limitless is providing development services for two further large-scale Dubai projects: a830 hectare mixed-use development named Jumeirah Village and a 300 hectare residentialdevelopment named International City.

Saeed Ahmed Saeed is the Chief Executive Officer of Limitless. Mr Saeed was formerly ManagingDirector, Projects, for Nakheel with responsibility for developments including The Palm, Jumeirah,The Palm, Jebel Ali, The Palm, Deira and The World.

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Istithmar PJSC

Istithmar PJSC (Istithmar) is an alternative investment house based in the United Arab Emirates. Itis 100 per cent owned by Dubai World. Istithmar was established in 2003 with the key mission ofearning exceptional returns for its investors while maintaining due regard for risk.

Istithmar, which means “investment” in Arabic, applies global expertise with local insights tocoordinate the appraisal and implementation of various opportunities. Istithmar follows what itdescribes as its ‘I’ investment philosophy based around three core principles – Ideas, Inquiry &Integrity – and this sets the foundation for the firm which has a broad portfolio of companies inmarkets from North America to Europe to Asia to the Middle East.

Istithmar’s investment portfolio comprises over 50 companies with premium assets within financialservices, consumer, industrial and real estate sectors, in addition to investing in hedge funds, listedequities and alternative investment projects. The company’s equity investment exceeds US$2.6billion across markets ranging from North America to the Far East.

Sultan Ahmed Bin Sulayem is the Chairman of Istithmar. David Jackson is the Chief Executive Officerand also a member of the board of Dubai World.

Legal Information

The powers of Dubai World are set out in Law No. 3 of 2006. These include establishing subsidiaries,financing projects (including giving guarantees), granting security (and approving financings andsecurity given by subsidiary companies) and dealing in land (investing in, selling, letting on lease,purchasing, managing and developing real property and lands). However, at the present time, DubaiWorld has no material assets of its own, other than interests in subsidiaries.

The principal purpose of Dubai World being granted the statutory powers pursuant to Law No. 3 of2006 was to avoid directly burdening the Government of Dubai with operational matters relating toentities owned through Dubai World. However, the Government of Dubai maintains some controlover Dubai World through the Chairman of Dubai World, who is appointed by the Ruler of Dubai.

Unlike other Government of Dubai entities, Dubai World and its subsidiaries are not bound byprovisions of Dubai law that prohibit such entities from entering into documentation governed bylaw other than Dubai law and/or submitting to arbitration proceedings where the forum is outsideDubai. (By an Order issued on 6 February 1988 by HH Sheikh Maktoum Bin Rashid Al Maktoum, thethen Crown Prince and Deputy Ruler of Dubai, Dubai law shall apply to any contract entered into bythe Government of Dubai, its departments or establishments and the contract shall not stipulate theapplication of any foreign law nor for the seat of any arbitration to be outside Dubai. Any provisionsto the contrary in the contract are void and not binding.) Accordingly Dubai World and itssubsidiaries can enter into contracts governed by laws other than Dubai law.

As an independent legal entity, under the Dubai World decree, Dubai World is empowered to sueand be sued under the relevant laws of Dubai law.

Dubai World is exempt from Government of Dubai taxes and charges including registration chargespayable by obligors in respect of mortgages.

Treasury

Dubai World will maintain a limited number of bank accounts for the purpose of meeting itsfinancial obligations, which will include the wages of a small number of employees and its day to dayadministrative costs. This illustrates the different function of Dubai World in comparison with mostother decree companies owned by the Government of Dubai, such as PCFC and Emirates Airline, thatare fully functioning businesses in their own right.

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Dubai World and its subsidiaries continue to make use of a group treasury function provided byPCFC (but operated by Dubai World), that operates a group treasury function for all former entitiesrun by TCO.

Future Developments

As at the date of this Offering Circular, the Government of Dubai’s ports business (branded as DPWorld) is held by PCFC. However, it is the intention of the Government of Dubai that the portsoperating companies become part of the Dubai World group. Dubai World expects this to happenwithin six months of the date hereof, provided all documentation and approvals are in place.Following the restructuring, the ports operating companies will become subsidiaries of Port & FreeZone World.

In the event that the ports business becomes part of the Dubai World Group, Dubai World may berequired to become a co-obligor (with PCFC) under a US$3.5 billion sukuk issue that was raised forthe benefit of the ports business in January 2006.

Port & Free Zone World

Port and Free Zone World FZE (P&F World) was established in March 2006 as the wholly ownedsubsidiary of Dubai World to be an intermediate holding company for the group’s interests in theport and free zone sectors, namely DP World and Economic Zone World FZE (EZ World).

Sultan Bin Sulayem is the Chairman of the P&F World Board of Directors and Jamal Majid BinThaniah is P&F World’s Chief Executive Officer.

DP World

DP World owns, operates and manages marine terminals around the world. It was formed inSeptember 2005 with the integration of the Dubai Ports Authority and DPI Terminals. With theacquisition of the P&O group in 2006, P&O Ferries, specialist vessel company P&O Maritime Servicesand property company P&O Estates also became part of the DP World group.

It is currently intended that, following a group reorganisation, P&F World will be the holdingcompany for the DP World group of companies.

As at December 2006, DP World is one of the leading marine terminal operators in the world withthe widest network of any of its competitors, with 51 terminals across 24 countries and fivecontinents. DP World has a global capacity of around 50 million TEUs (twenty foot equivalentcontainer units) and about 34,000 employees.

Mohammed Sharaf is the Chief Executive Officer and Sultan Ahmed Bin Sulayem is the Chairman.

Economic Zone World

EZ World is a wholly owned subsidiary of P&F World and was established in March 2006. It isintended that EZ World through newly formed subsidiaries will enter into agreements to operateand manage a number of free zones and economic zones in existence or currently underdevelopment in Dubai.

In particular, JAFZ Management Company FZE, a wholly owned subsidiary of EZ World, is expectedto be granted the right to operate and manage Jebel Ali Free Zone pursuant a long-term concessionarrangement with Jebel Ali Free Zone Authority.

JAFZA International FZE, the international free zone management arm of the Jebel Ali Free Zone, iscurrently a wholly owned subsidiary of EZ World.

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Dubai Drydocks

Dubai Drydocks is a purpose built ship repair, conversion and new building yard located next to PortRashid. It is intended that Dubai Drydocks will ultimately come under the management of DubaiWorld.

Dubai Multi Commodities Centre and Dubai Maritime City

It is currently intended that newly formed subsidiaries of Dubai World will enter into agreements tooperate and manage the DMCC and Dubai Maritime City (DMC).

DMCC was formed as a free zone in May 2002 as a centre for trading in and exchangingcommodities with a view to increasing the value and volume of traded commodities in and throughDubai by the development of industry specific infrastructure.

DMC is currently under formation as a new free zone constructed as a purpose built maritime clusteron reclaimed land situated next to the existing Port Rashid with the intention of establishing Dubaias a centre for maritime activity.

Financial Information

As at 30 June 2006, Dubai World’s material subsidiaries were Nakheel, Istithmar and Limitless, andtheir respective subsidiaries.

Dubai World is not required to, and does not prepare or publish audited accounts under United ArabEmirate (UAE) law. However, the following table shows consolidated unaudited financialinformation for Dubai World, based on the management accounts for its material subsidiaries as at30 June 2006.

Unaudited Consolidated Management Accounts for Dubai World at 30 June 2006:

Total Assets AED 112,597,000,000 Representing at least 95% of Dubai World’sTotal Assets (on a consolidated basis)

Total Liabilities AED 31,952,000,000 Representing at least 95% of Dubai World’sTotal Liabilities (on a consolidated basis)

Total Revenue (6 months) AED 369,106,000 Representing at least 80% of Dubai World’saggregate Total Revenue (on a consolidatedbasis)

Notes:

1. The consolidated accounts are based on the unaudited consolidated management accountsfor Nakheel and Istithmar PJSC and Limitless LLC as at 30 June 2006.

2. Contingent liabilities have not been included.

3. The figures for Total Assets and Total Liabilities have been rounded to the nearest million andthe figure for Total Revenue has been rounded to the nearest thousand.

As at 30 June 2006, Dubai World itself did not have either any material indebtedness or any materialcontingent liabilities.

Ongoing Disclosure of Financial Information

Under existing UAE and Dubai law, there is no legal requirement for Dubai World to publish financialstatements and the current intention of the management of Dubai World is that no audited financialstatements will be produced for Dubai World.

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Employees

Dubai World is currently in the process of recruiting staff. It is anticipated that there will beapproximately 20 individuals employed by Dubai World performing group management andadministrative related functions such as legal treasury, investment and finance roles.

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CO-OBLIGOR GROUP – BUSINESS DESCRIPTION

Overview

Nakheel Co LLC (Nakheel) was incorporated on 22 February 2003 as a limited liability companypursuant to the Federal Companies Law with registration number 61841. On incorporation, Nakheelissued 1,000,000 shares of AED 100 each. This amount excludes the proposed increase of capital ofAED 70,000,000,000 referred to in Nakheel’s consolidated balance sheet at 30 June 2006 and anyproposed increase in share capital issued in the context of the offering of the Sukuk. Nakheel iswholly owned by three holding companies: Nakheel Holdings-1 LLC (Nakheel Holdings 1), NakheelHoldings-2 LLC (Nakheel Holdings 2) and Nakheel Holdings-3 LLC (Nakheel Holdings 3), which inturn were originally each owned by members of the Dubai ruling family. Ownership of NakheelHoldings 1, Nakheel Holdings 2 and Nakheel Holdings 3 was subsequently transferred to NakheelWorld LLC. Nakheel converted to a joint stock company with effect from 7 December 2006.

Headline Financial Data for 2006

Below is some key headline financial data extracted from the unaudited 2006 interim condensedconsolidated financial statements for Nakheel and its subsidiaries. For more detailed informationplease refer to the complete interim condensed consolidated financial statements on page F-1.

AED’000Total assets ...................................................................................................................................... 106,368,760Total liabilities ................................................................................................................................ 36,933,263Total equity...................................................................................................................................... 69,435,497Loss for the period ........................................................................................................................ (98,758)Net cash used in operating activities ........................................................................................ (1,957,386)

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Legal Structure

Legal Structure diagram

The legal structure of the Co-Obligor Group is as set out in the diagram below:

Note: This diagram reflects the majority shareholding of the Co-Obligor Group and their date of establishment/incorporation.The 1% shareholders not depicted are Nakheel Group entities and are ultimately wholly owned (directly or indirectly) byDubai World. The Nakheel subsidiaries are not wholly owned by Nakheel primarily to comply with legal requirements underDubai law that require PJSC companies to have three shareholders and LLC companies to have two shareholders. Pleasenote that the legal structure of Nakheel may change as a result of ongoing reorganisations.

Gardens CoLLC

30/4/2003

The PalmJumeirahCo LLC

19/3/2003

Palm JebelAli Co LLC

19/3/2003

Palm IslandFZE

12/8/2000

Dubai PalmDevelopers

LLC

24/6/2001

Palm DeiraLLC

1/12/2004

The WorldLLC

1/12/2004

CommunitycorpLLC

19/7/2006

PropertycorpLLC

19/7/2006

DiscoveryGardens

LLC

5/03/2006

NakheelHoldings 1

LLC

13/7/2004

NakheelWorld LLC23/7/2006

Dubai World

2/3/2006

NakheelHoldings 2

LLC

13/7/2004

NakheelHoldings 3

LLC

13/7/2004

NakheelInternational

Realty LLC

24/12/2005

Ibn BattutaMall LLC

17/05/2005

Lost CityLLC

1/12/2004

Nakheel PJSC7/12/2006

JumeirahVillage

LLC

1/12/2004

InternationalCityLLC

10/5/2004

DubaiWaterfront

LLC

30/7/2005

99%99%

100% 99%

99%99%99%99%99%

99%

33.4% 33.3%

99%

99%

33.3%

99% 99% 99% 99% 99% 99% 99%

The TrumpMarina

ResidencesLLC

24/12/2005

The TrumpPlazaLLC

24/12/2005

PalmMonorail

LLC

24/12/2005

PalmGateway

Towers LLC

24/12/2005

99%99%99%99%

JumeirahHorizons

LLC

29/1/2005

JumeirahIslands

LLC

19/3/2003

99%

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Nakheel World LLC

Nakheel World LLC (Nakheel World) was incorporated on 23 July 2006 as a limited liability companypursuant to the Federal Companies Law (trade license number 583991). At registration, NakheelWorld had an issued capital of AED 300,000. Sultan Ahmed Bin Sulayem is the Executive Chairmanof Nakheel World. As at the date of this Offering Circular, Nakheel World is 99 per cent owned byDubai World and 1 per cent owned by Dubai World Holdings Limited. Dubai World Holdings Limitedis wholly, directly owned by Dubai World. Nakheel World holds directly all of the shares of each ofNakheel Holdings 1, Nakheel Holdings 2 and Nakheel Holdings 3. Nakheel World is a holdingcompany although it owns a portion of the land area of the Dubai Waterfront project.

Nakheel Holdings-1 LLC

Nakheel Holdings 1 was incorporated on 13 July 2004 as a limited liability company pursuant to theFederal Companies Law with registration number 68878. Its Executive Chairman is Sultan AhmedBin Sulayem and as at the date of this Offering Circular, Nakheel Holdings 1 owns 33.4% of Nakheel’sissued share capital. Nakheel Holdings 1’s only assets are its investment in Nakheel, the freeholdinterest in the Property and its 33.4% share of the combined receivable of AED 7,649,233,000representing shareholder’s current account in Nakheel Co LLC. Nakheel Holdings 1 has no othermaterial assets or liabilities. Nakheel Holdings 1 does not have a board of directors, and as an LLC,is not required to have one.


Nakheel Holdings 2 was incorporated on 13 July 2004 as a limited liability company pursuant to theFederal Companies Law with registration number 68883. Its Executive Chairman is Sultan AhmedBin Sulayem and as at the date of this Offering Circular, Nakheel Holdings 2 owns 33.3% of Nakheel’sissued share capital. Nakheel Holdings 2’s only assets are its investment in Nakheel and its 33.3%share of AED 7,649,233,000 representing shareholder’s current account in Nakheel Co LLC. NakheelHoldings 2 has no other material assets or liabilities. Nakheel Holdings 2 does not have a board ofdirectors, and as an LLC, is not required to have one.


Nakheel Holdings 3 was incorporated on 13 July 2004 as a limited liability company pursuant to theFederal Companies Law with registration number 68879. Its Executive Chairman is Sultan AhmedBin Sulayem and as at the date of this Offering Circular, Nakheel Holdings 3 owns 33.3% of Nakheel’sissued share capital. Nakheel Holdings 3’s only assets are its investment in Nakheel and its 33.3%share of AED 7,649,233,000 representing shareholder’s current account in Nakheel Co LLC. NakheelHoldings 3 has no other material assets or liabilities. Nakheel Holdings 3 does not have a board ofdirectors, and as an LLC, is not required to have one.

Accounting Information:

Nakheel Holdings 1, Nakheel Holdings 2 and Nakheel Holdings 3 are passive holding companies anddo not, and are not required to, produce audited financial statements. Full accounting informationis not available in respect of these entities.

As at 30 June 2006:

Nakheel Holdings 1 had an authorised paid up capital of AED 3,000,000. It owns 33.4 per cent. ofNakheel Co LLC. Nakheel Holdings-1 LLC owned the DWF South and Crescent land within DubaiWaterfront, valued at AED 15,500,000,000 in accordance with valuation report of Jones Lang Lasalledated 31 October 2006.

Nakheel Holdings 2 had an authorised paid up capital of AED 3,000,000 it owns 33.3 per cent. ofNakheel Co LLC.

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Nakheel Holdings 3 had an authorised paid up capital of AED 3,000,000. It owns 33.3 per cent. ofNakheel Co LLC.

In addition, as at 30 June 2006, Nakheel Holdings 1, Nakheel Holdings 2 and Nakheel Holdings 3 hada combined receivable of AED 7,649,233,000, representing shareholder’s current account inNakheel Co LLC.

Other than as described above, as at 30 June 2006, none of Nakheel Holdings 1, Nakheel Holdings 2and Nakheel Holdings 3 had any liabilities (including contingent liabilities) or held any assets, otherthan ownership interests in Istithmar PJSC and Limitless LLC, which were subsequently transferredfrom Nakheel Holdings 1, Nakheel Holdings 2 and Nakheel Holdings 3 to Istithmar World LLC,Istithmar Holdings 1 Limited, Istithmar Holdings 2 Limited, Limitless World LLC, Limitless Holdings1 Limited and Limitless Holdings 2 Limited on 1 July 2006.

Also, subsequent to 30 June 2006, Nakheel Holdings 1 LLC has drawn down US$1,500,000,000 undera bridge financing facility with its bankers. This facility is guaranteed by Dubai World.

Strategy

The development of real estate projects in Dubai is part of the plan of His Highness SheikhMohammed Bin Rashid Al Maktoum, the Ruler of Dubai and Prime Minister of the UAE, to diversifyDubai’s economic base and to grow Dubai’s tourism industry substantially. Nakheel manages itsproperty portfolio with the aim of delivering shareholder value by developing properties in Dubaiwhich are attractive to the diverse demographic mix of Dubai’s fast growing population. To achievethis objective, the strategy of Nakheel is fourfold:

(i) to capitalise on its large land bank in Dubai of over two billion square feet to develop bold andinnovative developments such as The Palm Jumeirah, The Palm Jebel Ali, Dubai Waterfront,The Palm Deira, and The World which together will emerge as one of the largest collection ofwaterfront developments in the world, adding over 1,000 kilometres of coastline to Dubai andpotentially hosting over three million people when complete;

(ii) to develop the Nakheel brand by consistently delivering value to its customers;

(iii) to develop its property asset management business to provide servicing of Nakheelapartments and villas, servicing of the communities and to own and manage Nakheelproperties; and

(iii) to build a first-class organisation with a quality management team, real estate expertise andknow-how and corporate governance, management systems and processes.

Nakheel develops properties within Dubai only. As part of its strategy to develop properties withinDubai, Nakheel also constructs and operates some of the infrastructure for its projects such as roads,bridges, tunnels and utilities.

Nakheel’s land bank was gifted either to Nakheel or to its shareholders over time by the Governmentof Dubai. The most recent gift of land to the Nakheel Group was a transfer of a plot of landpertaining to Jebel Ali Village in July 2006.

Nakheel has two focuses: one as a “Master Developer” and the other as a “Developer”. As MasterDeveloper, Nakheel develops land plots and sells these to sub-developers. Nakheel’s role is relatedmainly to land reclamation (if an offshore project) and construction of infrastructure such as roads,bridges, tunnels and utilities (power, water, sewerage and telecom network). The sub-developersare bound to construct on these plots based on detailed development control guidelines issuedupfront by Nakheel that usually set out the permitted type of development, density, built up area,elevations, setbacks, timeframe for commencement, timeline for completion of construction andother issues.

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As a Developer, Nakheel designs, markets, constructs and operates real estate projects. Nakheel isexposed to marketing, construction and operations risk as a Developer. The Palm, Jumeirah bestillustrates the above roles. As Master Developer, Nakheel has sold plots for developments of hotelsand apartments on the trunk and crescent. As Developer, Nakheel is constructing, and has sold, theShoreline Apartments, Garden Homes and the Signature Villas. Elsewhere in its property portfolio,Nakheel has also maintained some properties that it has developed as investment properties fromwhich it earns revenue.

Management and Organisational Structure

The organisational structure of Nakheel is as set out in the diagram below:

Like the majority of LLCs in the UAE, Nakheel did not have, and was not required to have, a Boardof Directors. In contemplation of its conversion to PJSC, a Board of Directors was selected inSeptember 2006. Its members are Sultan Ahmed Bin Sulayem, Khaled Al Kamda, Ahmed BinSulayem, Saeed Ahmed Saeed and Chris O’Donnell.

Executive Chairman

• Sultan Ahmed Bin Sulayem is the Executive Chairman of Nakheel and Executive Chairman ofNakheel’s subsidiaries and was appointed upon incorporation of Nakheel.

Other Directors

• Khaled Al Kamda: Mr Al Kamda holds a Bachelors degree in Electrical Engineering from theFlorida Institute of Technology, and a Masters degree in Business Administration from theCranfield School of Management, United Kingdom. Mr Al Kamda started his career withEmirates Airline in 1985 as Assistant Manager of Information Technology. He was thenappointed Senior General Manager of Emirates Airline in 1992. Currently he is the Senior VicePresident of Corporate Development for the Emirates Group (which includes Emirates Airlineand Dnata). During Mr. Kamda’s career, he has been Chairman of the Board of Airline

Board of DirectorsSultan Bin SulayemKhaled Al Kamda

Ahmed Bin SulayemSaeed Ahmed Saeed

Chris O’Donnell

CEOChris O’Donnell

Procurement,Construction,

Contracts, PalmGateway and

Palm Monorail

Marwan AlQamzi

Design

Abdul RahmanKalantar

Finance & IT

Kar TungQuek

Sales,Marketing,Customer

Service andSotheby’s

Manal Shaheen

HRAdministration

Facilities

CedricMackellar

Development

Robert Lee

Real Estate andAsset

ManagementGroup

Nick Green

CompanySecretary &

General Counsel

DavidNicholson

Projects

GeneralManagers

(*)

(*) Projects’ General Managers:– Palm Jumeirah– Palm Deira/Deira Corniche– Dubai Waterfront and The Palm, Jebel Ali– Jumeirah Islands, Jumeirah Village, Jumeirah Parks– Lost City/Jebel Ali Village– Discovery Gardens– International City– The World– Dubai Promenade

Chris O’Donnell (Ad Interim)Adnan Al NaqiMatt JoyceYousuf KazimMohammed RashedFahad Al HaidanRashid Al HelliHamza MustafaAhmed Obaid

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Representatives and a board member representing Emirates Airline in the Arab Air CarriersOrganisation. Mr Al Kamda is also the Vice Chairman of the Board of Directors of Tamweeland is currently the Chairman of Emirates Hotels and Resorts LLC and Dubai Express FreightWorks. He is also a member of the Board of Directors of Dubai Islamic Bank.

• Ahmed Bin Sulayem: Mr Bin Sulayem holds a Bachelors degree in Business Administrationfrom the California State University in San Bernardino. Mr Bin Sulayem is a board member atthe Dubai Gold and Commodities Exchange (DGCX). Mr Bin Sulayem has been the ChiefOperating Officer of the DMCC since its inception and has spearheaded the success of theDMCC in Dubai’s commodity market. Prior to joining the DMCC in 2002, Mr. Bin Sulayem wasa Director of Asteco Property Management LLC. Currently, Mr Bin Sulayem is also the DeputyChairman of the Dubai Diamond Exchange.

• Saeed Ahmed Saeed: Mr Saeed is the Chief Executive Officer of Limitless LLC. Before joiningLimitless Mr Saeed was the Managing Director (Projects) of Nakheel and helped launchprojects such as The Palm, Jumeirah, The Palm, Jebel Ali, The Palm, Deira and The World.

• Chris O’Donnell: Mr O’Donnell is the Chief Executive Officer of Nakheel and joined thecompany in July 2006. Mr O’Donnell holds a Business Diploma in Real Estate Management andis a fellow at the Australian Institute of Company Directors and the Australian PropertyInstitute. Mr O’Donnell has over 30 years’ experience in the property industry across a broadrange of areas, including construction, project management, development management,funds management and asset management. Prior to joining Nakheel, Mr O’Donnell spent fiveyears as the Managing Director of Investa Property Group in Australia and held other seniorexecutive positions with prominent Australian organisations including Lend Lease, Leightonand Westpac Banking Corporation. He was appointed as Director of the Green BuildingCouncil of Australia in 2004 and during that year, was recognised by the New South WalesGovernment Department of Energy Utilities and Sustainability by being named as the GreenGlobe Ambassador.

Chief Financial Officer

• Kar Tung Quek is the Chief Financial Officer of Nakheel and joined in April 2006. Mr Quektrained as a Chartered Accountant with Peat, Marwick Mitchell and Co in Glasgow, UnitedKingdom and worked in the public accounting profession for nine years before leaving for thecommercial sector. Mr Quek is a member of the Institute of Chartered Accountants ofScotland and is a Fellow of the Institute of Certified Public Accountants of Singapore. He holdsa Bachelor of Science degree in Naval Architecture and Ocean Engineering from GlasgowUniversity, United Kingdom, a Master in Business Administration (Distinction) degree fromManchester University, United Kingdom, and a Master in Technology (KnowledgeEngineering) degree from the Institute of Systems Science, National University of Singapore.Before joining Nakheel, Mr Quek played a key role in floating the Initial Public Offering of theRaffles City Complex, and the Suntec Real Estate Investment Trust where he was the ChiefExecutive Officer, in Singapore. Mr Quek has also been the Chief Financial Officer of severalmajor Singapore-based property and hospitality groups including Raffles Holdings Limited,First Capital Corporation Limited and Pidemco Land Pte Ltd. Mr. Quek was also activelyinvolved in pioneering the development of the Singapore Financial and Commodity FuturesMarkets in his capacity as the Deputy Chief Executive Officer of the Singapore InternationalMonetary Exchange (Simex) and the General Manager of the Singapore Commodity Exchange(SICOM).

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Key Departments Within Nakheel

Procurement, Construction and Contracts

Procurement, Construction and Contracts is responsible for purchasing materials directly, tenderingcontracts (in conjunction with the business units), awarding contracts and processing claims andvariations for the entire Nakheel Group.

A tendering process is managed by Procurement, Construction and Contracts in order to awardcontracts in order to give tenderers a fair opportunity to compete in procurement and to ensuretransparency in the procurement process. A proper audit trail of the procurement process ismaintained through a document control system.

Design

The Design group is a multidisciplinary engineering, urban planning and architectural group whichprovides high-level design and design review services across Nakheel projects. This group is theholder of group-wide learning for use across all its projects. Nakheel’s intention is to employ themost appropriate external engineers/consultants for the design group to assist with managing thedesign advisors, particularly in the early design phase of projects.

The Design group also interacts with governmental bodies, regulators and utility providers; obtainslicences for projects; obtains land deeds and secures services for these projects.

As part of the Design group, the Nakheel Interiors section designs and oversees the development ofthe inner part of properties being developed. The department has a dedicated, specialised andexperienced team in interior design and provides design services to group projects to ensure bestpractice design principles are applied across all of Nakheel’s projects. The group serves as a centralpoint of knowledge to be shared with all Nakheel projects.

Finance and Information Technology

Within the Finance and Information Technology department, the Finance part of the departmentprovides corporate planning and research services, management accounting services, sharedservices, financial accounting services, treasury and finance policies. The Information Technologypart of the department manages all of Nakheel’s information technology requirements includinginformation technology strategy, project implementation, information technology operations andworks closely with the Information Technology Centre that is operated by Dubai World for thebenefit of its group.

Sales, Marketing, Customer Service

Sales, Marketing and Customer Service is responsible for marketing, branding, events and publicrelations within Nakheel. It has the aim of promoting the Nakheel brand and all Nakheeldevelopments. Sales, Marketing and Customer Service has a dedicated sales force that handles allenquiries for new property sales, provides sales administration services (issue of contracts, transferof properties and other sales back office matters), handles customer complaints and addressescustomer inquiries through a specialised call centre.

Human Resources Administration Facilities

Human Resources manages the recruitment, compensation, organisational development, trainingand related administrative matters such as salary administration, health insurance and vacations foremployees. Human Resources is also responsible for the general administration of the Nakheelfacilities, offices, security, transport and logistics.

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Development

Development is responsible for new project development at Nakheel. The department initiates thedevelopment process through all its stages, from idea generation through design, schematic andlaunch. The department is involved in the early stages of project development until the design andfeasibility is prepared, reviewed and approved, after which the project is handled by a generalmanager for completion.

Real Estate Asset Management Group

The Real Estate Asset Management Group is a newly created department within Nakheel and isresponsible for managing all Nakheel residential investment properties. The Real Estate AssetManagement Group has been established with three main objectives: (i) the management of masterplanned communities which includes the master plan declaration; (ii) property management whichincludes leasing, strata management and commercial services (repairs, maintenance, replacementetc); and (iii) investment management which entails management of the Nakheel investmentproperties which will be leased and the Real Estate Asset Management Group will ensure that yieldand value are maximised.

PropertyCorp LLC (PropertyCorp) and Community Corp LLC (CommunityCorp) are newly formedsubsidiaries of Nakheel and both derive from the Real Estate and Asset Management Group.

It is expected that Propertycorp will undertake property management activities for Nakheel’s rentalproperties and will lease out Nakheel’s investment properties to tenants and also manage therequirements of those properties (for example maintenance and payment of outgoings). It isexpected that CommunityCorp will undertake community management activities for Nakheel’scommunities, including the collection of community service charges, services and facilitiesmanagement (for example arranging refuse collection, security, repairs and maintenance ofinfrastructure).

Company Secretary and General Counsel

The Company Secretary and General Counsel department is involved in all legal matters at Nakheeland ensures the company’s actions comply with the letter and spirit of the law. The legal team,supervised by the General Counsel, review all legal agreements prior to their sign-off and constantlyworks to identify and manage any significant legal risk that may arise in the future.

Business Unit Heads

Business Unit Heads are responsible for delivering all aspects of each project including cost, qualityand schedule. Depending on the size of the project, a project may have a General Manager, whooversees the project.

Dubai World Support

On a day-to-day basis, Nakheel operates as an independent economic unit, however, aside from theInformation Technology Centre that is operated by Dubai World for the benefit of its subsidiaries,Dubai World also operates certain administrative services for its subsidiaries including payrollprocessing.

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Employees

As at 31 December Nakheel had approximately the number of employees set forth below:

Year Number of employees*111111111122

2003 ........................................................................................................................................................ 2382004 ........................................................................................................................................................ 4842005 ........................................................................................................................................................ 5392006** .................................................................................................................................................... 701

* note these figures represent the consolidated number of employees across the Nakheel Group** as at 30 June 2006

Business Details

Nakheel’s Project Development Process

The Nakheel project development process is underpinned by a management structure that isdesigned to facilitate empowerment and assure clear project accountability. The ownership of anysignificant development project is vested with a General Manager who is accountable for thesuccessful development of the project. A Project Control Group comprising of the Chief ExecutiveOfficer, the Chief Financial Officer, the Director of Marketing and Sales, and the DevelopmentDirector meets with the respective General Managers on a monthly basis to ensure satisfactorydevelopment and progress of all projects. In addition, the Nakheel Development function providesdevelopment and advisory support to the General Managers.

In order to mitigate planning and development risks, Nakheel adopts a systematic approach to theidentification and development of projects within its land bank as is summarised in the diagrambelow.

(i) Idea Generation – at this early stage, vision and mission statements for the proposed projectare developed. In addition, third party consultants who can advise Nakheel on the project areselected from a list of pre-qualified consultants. Advice on the feasibility of the project andcosts of construction is sought. Project site information such as plot size and site condition isalso prepared. Advice is sought from relevant experts on the nature of the particular proposeddevelopment on general market conditions, pricing assumptions and marketability. Theoutcome of the stage is a “White Paper” that sets out the vision statement for the project ingeneral terms. On the basis of the White Paper, a pre-development budget and a pre-development expenditure request is submitted to the Chief Executive Officer for approval.

(ii) Concept – a development brief and preliminary feasibility study are prepared at this stage.Third party consultants are engaged and design programs and charettes (consultations withall stakeholders such as supervisory bodies, designers and architects) are initiated. Preliminarynegotiations with utility providers take place at this stage and infrastructure requirements for

Development Process – Nakheel

IdeaGeneration Concept Schematic Tender Construction Operation

White Paper&

Predevelop-ment Budget

ProjectApprovalRequest

ProjectLaunch

TenderReport and

BindingReport withKey Users

Commission-ing

& UserHandover

WelcomePackage &

ProjectSummary

Report

PHASE:

RESULT:

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the project are determined. Preliminary market studies are also conducted. Finally, a businessplan is prepared for approval of the Chief Financial Officer, the Director of Marketing andSales, the Director of Procurement, the Development Director and the Chief Executive Officer.At the concept planning stage, a project will be subject to change or cancellation as theproject’s master planning develops.

(iii) Schematic – more detailed feasibility studies are carried out and early commitments by keyusers are sought. A revised budget is prepared and Nakheel’s marketing strategy for theproject is developed. Only at this point is a project considered to be launched.

(iv) Tender – all necessary regulatory approvals and “No Objection Commitments” are obtainedfrom relevant authorities. Tenders are issued to potential contractors and potentialcontractors are evaluated according to the skill set required for the particular project. Amarketing or leasing plan is implemented. The feasibility of the project is continuallyreviewed.

(v) Construction – tenders are awarded by the Nakheel Procurement, Construction and Contractsdepartment. Construction of the project starts at this stage. Variances in time, scope andquantities are monitored. Mechanical, electrical and plumbing fit-out, testing andcommissioning arrangements are all monitored by the Nakheel Procurement, Constructionand Contracts department and a clear handover procedure is specified. As a result, operationsand maintenance documents are generated and handover from contractors begins.

(vi) Operation – the project moves into operation at this final stage and any defects are closelymonitored and addressed during the liability period which varies from project to project. Aproject summary report is submitted to the Chief Executive Officer.

Key contracts

As at the date of this Offering Circular, the largest five contracts signed by Nakheel are listed below.The aggregate value of these contracts is approx AED 20.2 billion (not including the value of rocksupply and other variations in reclamation contracts).

Project Title Package description Name of Company111111111111 111111111111111 1111111111111344

The Palm, Deira Van Oord Gulf FZE and BelhasaSix Construct Co. LLC (JV)

Reclamation and Rock Works Jan De Nul Dredging Ltd

The World Breakwater and reclamation Van Oord Gulf FZE

Shimizu Corporation

Car Park Podium and Towers TAISEI Corporation

Progress payments are generally made for Nakheel contracts. Final payment is only made tocontractors after: (i) contractor’s notification of completion is received and verified; (ii) thecompletion of final inspection by a Nakheel consultant; (iii) inspections are completed byconsultants, project managers and Nakheel representatives to establish substantial completion anda “Taking over Certificate” (TOC) is issued (the TOC allows some issues to be addressed andincomplete works to be carried out later with a time limit); and (iv) payment is signed off by theHead of Procurement, and Contracts. Typically the TOC entitles the contractor to 95 per cent. oftheir due amounts under the contract. The balance of the due amount is then paid by Nakheel aftertwelve months of the issuance of the TOC or after issuance of a “Defects Liability Certificate” (DLC).

The Palm, Jumeirah –Gateway Project

Construction of MarinaApartments

The Palm, Jumeirah –Marina Apartments andTown Houses

Dubai WaterfrontDevelopment

Dredging, Reclamation,Breakwater Construction

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Both the TOC and the DLC are signed off by the employer’s representative as named in the contractbetween the contractor and Nakheel.

Nakheel has also signed key strategic contracts with Palm District Cooling and Palm Water, whichare both subsidiaries of Dubai World. Palm District Cooling produces and distributes chilled waterfor air conditioning of residential and commercial developments. Palm Water designs, builds, ownsand operates sewage treatment plants as well as building, owning and operating sewage andirrigation networks. Palm District Cooling and Palm Water charge tenants in return for the servicesrendered. Palm District Cooling and Palm Water are related entities to Nakheel, however thecontracts under which they provide their services are on arm’s-length terms.

Some of Nakheel’s developments are being constructed on land that is being reclaimed from the sea.For this purpose, Nakheel has entered into contracts with recognised experts such as Van Oord GulfFZE and Jan De Nul Dredging Ltd. While these contractors operate in a specialist field, Nakheel doesnot foresee any material issues regarding the ability of existing contractors to comply with theirobligations under their contracts.

Health, Safety and Environment

The Environmental, Health and Safety Department (EHS) is a subsidiary of PCFC and is theindependent regulatory body that oversees the environmental, health and safety compliance ofNakheel. EHS policies for each project must be complied with and the Nakheel Executive Chairmanmust sign off that Nakheel has adopted and adhered to EHS policies for each project and projectmanagers must sign off that all EHS policies have been complied with in each decision made on eachproject.

(i) Health and Safety

The EHS is responsible for monitoring the health and safety compliance of Nakheel’s projects. Foreach of these projects, the EHS inspects both the physical conditions of the site, such as personnelprotective equipment, work at heights and confined spaces, and procedural issues such ascertification, fire procedures, first aid procedures and training registers. EHS has powers to suspendcontractors from work and impose fines should they not follow policies with respect to health andsafety. The EHS also tracks and reports monthly key performance indicators on the projects, such asnumber of workers, “loss time incidents“, lost days, first aid accidents and “near misses”. The EHSsite personnel inspects Nakheel’s project developments on a weekly basis and third party developerson a monthly basis.

(ii) Environment

Nakheel has a dedicated Environmental Department and is committed to developing propertieswhich assure the long-term sustainability of the environment. Nakheel’s Environment Departmenthas three core functions:

• environmental planning – organising and ensuring environmental base studies andundertaking environmental impact assessments for each project;

• research and monitoring – researching solutions to environmental issues and monitoring theenvironmental performance of each of Nakheel’s developments; and

• environmental compliance – monitoring and ensuring that each project is being constructedwithin the appropriate regulations and best practices.

Environmental considerations are taken into account during the development process, fromconcept development right through to occupation and operation. Nakheel adheres to DubaiMunicipality environmental protection regulations and federal environmental laws. In addition,Nakheel has introduced, and continued to develop, system strategies and practices that improve

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environmental sustainability by addressing the areas of waste management, environmentalprotection, resource conservation and adoption of environmentally friendly technologies whereverpossible. Nakheel also complies with the Equator Principles which provide an industry approach forfinancial institutions in determining, assessing and managing environmental and social risk inproject financing. Under the Equator Principles, a bank undertakes to provide loans only to thoseprojects whose sponsors can demonstrate to the satisfaction of the bank their ability and willingnessto ensure that projects are developed in a socially responsible manner and according to soundenvironmental management practices. This includes, amongst other things, that environmentalimpact assessments should be prepared for every project meeting specified economic,environmental and social screening criteria, and the preparation, implementation and monitoring ofan environmental management plan (Nakheel uses World Bank Environmental Departmentguidelines which are guidelines applied by the World Bank Group to projects it finances) forprojects.

As at the date of this Offering Circular, no material environmental issues have occurred at any ofNakheel’s projects, and no material environmental claims have been made or asserted againstNakheel.

Project Details

The total area of land owned by Nakheel and its subsidiaries is approximately 2 billion square feet.Nakheel undertakes two types of projects: development property projects for sale and investmentproperty projects to be retained to earn revenue. All projects by Nakheel and its subsidiaries areundertaken on land owned by them.

Nakheel generally conducts its project development operations through its subsidiaries.

The following map illustrates the location of the various real estate developments undertaken byNakheel in Dubai. The map is not to scale.

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Project Details – Development Properties

Key Development Data

The following table sets forth the approximate key data of the development properties undertakenby Nakheel as of 30 June 2006:

Stage of Site Area Built up Area % Sold % Project name Sector Development* (ft2) (ft2) BUA**** Completed****

11111122 12111112 21111112 21111112 21111112 22111111

Concept/Palm, Jumeirah ........................................ Mixed-use Construction** 44,933,000 45,327,000 73% 22%Jebel Ali Village ........................................ Mixed-use Concept 12,631,000 19,816,000 0% 0%

Concept / Operation

Jumeirah Islands ...................................... Residential (Themed Villas) 3,415,000 8,060,000 50% 25%Palm, Jebel Ali .......................................... Mixed-use Construction 102,413,000 122,690,000 20% 8%Dubai Promenade.................................... Mixed-use Concept 1,765,000 5,863,000 0% 1%Lost City .................................................... Mixed-use Concept 60,088,000 57,970,000 0% 0%Jumeirah Park and Jumeirah Village ...................................... Residential Construction 79,457,000 157,236,000 24% 1%

Concept / Construction (for portion

that has been launched

(“Madinat-Dubai Waterfront*** .............................. Mixed-use Al-Arab”)) 1,338,700,000 1,168,389,000 10% 0%The World ................................................ Mixed-use Construction 100,241,000 - 6% 65%

Concept and reclamation

Palm, Deira................................................ Mixed-use of land 466,124,000 434,026,000 1% 2%International City .................................. Mixed-use Construction 107,464,000 137,476,000 35% 25%Discovery Gardens

Residential Construction 17,961,000 13,471,000 26% 28%Ibn Battuta Phase 2 ................................ Mixed-use Concept 4,319,000 11,069,000 0% 0%

21111112 21111112 21111112 22111111

Total ...................................................... 2,339,511,000 2,181,393,000 12% 6%21111112 21111112 21111112 2211111121111112 21111112 21111112 22111111

* Stage of development according to Nakheel’s Project Development Process as outlined above.** Trump Tower, Village Centre, Golden Mile 3, Jumeirah Pointe, Tip Plots F&P Villas, Frond N Villas and Shoreline Hotel are all

at Concept stage, Marina Apartments, Gateway Towers, Shoreline Apartments, Villas and Hotel Plots are at ConstructionStage.

*** The land comprising the Dubai Waterfront Project is owned by three entities. Nakheel Holdings-1 LLC owns approximately659,600,000 square feet of the site area of the project. Nakheel World LLC owns approximately 39,500,000 square feet ofthe site area of the project and the Dubai Waterfront LLC owns approximately 639,600,000 square feet of the site area.

**** % sold is based on total built up area (BUA) sold as at June 30, 2006 relative to the built up area for the whole project. %completed is based on the certified cost of the project as at June 30, 2006 relative to the total estimated cost of the project.

Sales and Collections

The following table sets out the key sales and collections data of development properties that werelaunched as at 30 June, 2006:

Total Sales Collections OutstandingValue (AED (AED %

Project (AED Millions) Millions) Millions) Collected11111 11111 11111 11111

The Palm, Jumeirah........................................................................ 9,876 7,348 2,528 74%Jumeirah Islands.............................................................................. 1,545 1,417 128 92%The Palm, Jebel Ali ........................................................................ 6,946 901 6,045 13%Jumeirah Village ............................................................................ 5,201 1,016 4,185 20%Dubai Waterfront .......................................................................... 9,065 1,847 7,218 20%The World ........................................................................................ 1,377 727 650 53%The Palm, Deira .............................................................................. 895 131 764 15%International City .......................................................................... 4,808 3,312 1,496 69%Discovery Gardens ........................................................................ 2,772 829 1,943 30%

11111 11111 11111 11111

Total .................................................................................................. 42,485 17,528 24,957 41%11111 11111 11111 1111111111 11111 11111 11111

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Palm, Jumeirah

Palm Jumeirah Co LLC is developing the Palm, Jumeirah. The Palm Jumeirah Co LLC wasincorporated on 19 March 2003 and its Executive Chairman is Sultan Ahmed Bin Sulayem. As at thedate of this Offering Circular, The Palm Jumeirah Co LLC has legal title to the land making up thePalm, Jumeirah.

The Palm, Jumeirah is a man-made island attached to the shore by a bridge and constructed in theform of a trunk, with a crown of 17 fronds and a surrounding crescent island (the back of whichforms the breakwater). The Palm, Jumeirah is zoned into 3 main areas:

The Crescent consists of 40 plots which have been sold to developers for the establishment of hotelsand resorts. Amongst the projects being developed, is Atlantis, The Palm, being developed byKerzner International Limited and Istithmar PJSC that will include a 1,500-room resort and watertheme park. Atlantis, The Palm will be located at the centre of the Crescent.

The Fronds are residential and include the townhouses and the villas, which will be developed byNakheel.

The Trunk is being developed for mixed use. The right-hand side will have 20 apartment buildingswith approximately 2,400 apartments that is being constructed by Nakheel. The left side of thetrunk comprises plots for sale to developers of hotels and retail units and the “Golden Mile”. TheGolden Mile is a joint venture of IFA Hotels and Resorts of Kuwait and Istithmar PJSC to developapproximately 200,000 square feet of retail space and approximately 800 apartments in 10buildings. The trunk will also be the site of the Village Centre, a mixed-use project comprisingapartments and a mall to be developed by Nakheel.

The Palm Monorail will serve as the transit system between the Gateway Station at the trunk of ThePalm Jumeirah and the Atlantis Station on the crescent, calling at two intermediate stations. Themonorail is estimated to transport approximately 2,000 to 3,000 people on and off The Palm,Jumeirah every hour, and is projected to transport approximately 43,200 return passengers per day.Work on the project was started in March 2006. Palm Monorail LLC is developing the Palm Monorail.

The Monorail’s mechanical and electrical system and monorail vehicles will be engineered,manufactured and commissioned by Hitachi Ltd. The Marubeni Corporation is working with a jointventure between the Ohbayashi Corporation and Oriental Construction for civil and building workto develop the Monorail. Ohbayashi Corporation has already been working on the Dubai MetroProject, while Oriental Construction has extensive experience in the construction of monorailstructures. The Palm Monorail project will be driverless, although an attendant will be on board atall times. Nippon Signal will deliver the automatic train operation control system, while automaticfare collection manufacturers OMRON will provide the smart card ticketing system.

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The following table sets forth the approximate key development data of the developmentsundertaken by Nakheel on The Palm, Jumeirah as at 30 June 2006:

Site Built Up Project Name Sector Area (ft2) Area (ft2)

11112 11112 11112

Palm Jumeirah11112 11112 11112

Total .................................................................................................. Mixed Use 44,933,000 45,327,00011112 11112 1111211112 11112 11112

On The Palm, Jumeirah, the Palm Jumeirah Co LLC has the following projects under development:The Trump International Hotel and Tower, the Marina Apartments, the Golden Mile 3, the VillageCentre, Jumeirah Pointe, Gateway Towers, Shoreline Apartments, Villas, Hotel Plots, Tip Plots F andP Villas, Frond N Villas and the Shoreline Hotel.

(i) Trump Tower

The Trump International Hotel and Tower, The Palm, Jumeirah, is the centrepiece of the island andis expected to be a 60 storey mixed-use hotel and residential property. It is being developed byNakheel based on an association with Donald Trump’s Trump Organisation.

The Trump Tower building is expected to consist of approximately 310 hotel rooms, 80 servicedapartments and 375 residential apartments. Each residence is expected to have access to hotelservices and amenities.

The following table sets out the approximate key development data of the Trump Tower Residencesas at 30 June 2006:


11112 11112 11112

Trump Tower .................................................................................. Mixed-Use* 562,000 1,574,000

* Comprising of residential, apartments and hotel

(ii) Marina Apartments

The Marina Apartments are a residential complex located at the tip of the trunk on The Palm,Jumeirah. It is expected to consist of six residential towers that rest on two landscaped podiumsfaced with marinas. Each tower is expected to have approximately 15 storeys and, together, morethan 900 apartments. The project has already been launched and as of 30 June 2006, 37 per cent ofthe units in the Marina Apartments had been sold as part of a staged sale strategy.

The following table sets forth the approximate key development data of the Marina Apartments asat 30 June 2006:


112112 112112 112112

Marina Apartments ........................................................................ Residential 855,000 3,103,000

(iii) Village Centre

Village Centre is expected to be a mixed-use development comprising at the date of this OfferingCircular of residential apartments, serviced apartments and retail space. Village Centre will belocated at the centre point of the north tip of The Palm, Jumeirah’s trunk.

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The following table sets forth the approximate key development data of the Village Centre as at 30June 2006:


11112 11112 11112

Village Centre .................................................................................. Mixed-use* 889,000 2,299,000

* Comprising of residential, apartments, retail and possibly a hotel

(iv) Golden Mile 3

The Golden Mile 3 is a mixed use, retail and commercial offices development located betweenGolden Mile 2 and Village Centre, on the trunk of The Palm, Jumeirah. The Golden Mile 3development will include seven floors of office space, double-level penthouse offices, four parkinglevels and a promenade consisting of retail elements.

The following table sets forth the approximate key development data of the Golden Mile 3 as at 30June 2006:


11112 11112 11112

Golden Mile 3 .................................................................................. Mixed-use** 41,000 401,000

** Comprising of office and retail

(v) Jumeirah Pointe

Jumeirah Pointe will be developed as a complex of villas on the five most northerly fronds of ThePalm, Jumeirah.

The following table sets forth the approximate key development data of the residential componentof Jumeirah Pointe as at 30 June 2006:


131112 113112 111312

Jumeirah Pointe .............................................................................. Residential* 3,219,000 1,250,000

* Comprising of villas and apartments

(vi) Gateway Towers

Gateway Towers are located at the extreme northern area of the Trunk. The development consistsof the building of a podium and three towers of which two are planned to offer office space and onefor residential purposes. These components are expected to increase the density of the trunk andwill contribute to the diversification of real estate uses of the trunk.

The following table sets forth the approximate key development data of Gateway Towers as at 30June 2006:


131112 113112 111312

Residential Gateway Towers.............................................................................. and Office 22,000 5,337,000

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(vii) Shoreline Apartments

The Shoreline Apartments development is a residential project located on the east side of the PalmJumeirah Trunk. The project consists of approximately 2,450 one, two and three bedroomapartments and 80 penthouses. Five clubhouses form an integral part of the development and offera combination of retail outlets and entertainment facilities. The vast majority of Apartments havebeen sold and handover of the Apartments began in December 2006.

The following table sets forth the approximate key development data of the Shoreline Apartmentsas at 30 June 2006:


131112 113112 111312

Shoreline Apartments.................................................................... Residential 1,872,000 4,460,000

(viii) Villas

Villas are located on the Fronds of the Palm and are of three types: Signature Villas, Garden Homes,and Canal Cove Town Homes. A total of approximately 1,350 units are located on The Palm andevery Signature and Garden Home Villa features a private beach and a swimming pool. The vastmajority of the Villas have been sold and handover of the Villas began in December 2006.

The following table sets forth the approximate key development data of the Villas as at 30 June2006:


131112 113112 111312

Villas .................................................................................................. Residential 11,057,000 7,060,000

(ix) Hotel Plots

Hotel plots have been sold to private developers and construction has begun on a number of theseplots. The Plots will house a number of hotels and apartment buildings.


131112 113112 111312

Hotel Plots ........................................................................................ Mixed-use 24,451,000 18,457,000

(x) Tip Plots F and P Villas

Nine villas will be developed on the tips of fronds F and P on the Palm, Jumeirah. Each Villa will haveits own swimming pool and private beach.

The following table sets forth the approximate key development data of the Tip Plots Villas as at 30June 2006:


131112 113112 111312

Tip Plots F and P Villas .................................................................. Residential 232,000 101,000

(xi) Frond N Villas

The Frond N Villas project features 89 signature villas and a number of additional villas with privatebeaches.

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The following table sets forth the approximate key development data of the Frond N Villas as at 30June 2006:


131112 113112 111312

Frond N Villas .................................................................................. Residential 1,152,000 654,000

(xii) Shoreline Hotel

The Shoreline Hotel is located along the east shoreline of the Trunk of the Palm, Jumeirah and is ata preliminary concept stage.

The following table sets forth the approximate key development data of the Shoreline Hotel as at 30June 2006:


131112 113112 111312

Shoreline Hotel .............................................................................. Mixed-use 582,000 630,000

Jebel Ali Village

The Jebel Ali Village is being developed by Lost City LLC and will take the form of a mixed-use realestate development primarily composed of residential units, office space and retail. Thedevelopment site is located immediately adjacent to Ibn Battuta Mall and parallel to Sheikh ZayedRoad. The development is in close proximity to The Gardens, Discovery Gardens and the Lost City.The Lost City LLC was incorporated on 1 December 2004 and its Executive Chairman is SultanAhmed Bin Sulayem.

The following table sets forth the approximate key development data of the Jebel Ali Village as at30 June 2006:


131112 113112 111312

Jebel Ali Village................................................................................ Mixed-use**12,631,000 19,816,000

** Comprising apartments, office, retail and hotel

Jumeirah Islands

Jumeirah Islands LLC is developing Jumeirah Islands. Jumeirah Islands LLC was incorporated on 19March 2003 and its Executive Chairman is Sultan Bin Ahmed Sulayem. As at the date of this OfferingCircular, Nakheel has legal title to the land being used for the Jumeirah Islands project.

Jumeirah Islands is located on the eastern side of Sheikh Zayed Road and lies in close proximity toDubai Media City, Dubai Internet City and other real estate developments undertaken by Nakheelsuch as Discovery Gardens, Jumeirah Village, Lost City and The Ibn Battuta Shopping Mall.

The development involves the construction of themed villas, luxury villas, a club-house, variousapartments and retail space. All 736 themed villas have been sold and their tenants had substantiallymoved in as at 30 June 2006.

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The following table sets forth the approximate key development data of the Jumeirah Islands as at30 June 2006:


131112 113112 111312

Jumeirah Islands .............................................................................. Mixed-use** 3,415,000 8,060,000

** Comprising villas, apartments, and retail

Palm, Jebel Ali

The Palm Jebel Ali Co LLC is providing the development management services of the Palm, Jebel Ali.The Palm Jebel Ali Co LLC was incorporated on 19 March 2003 and its Executive Chairman is SultanAhmed Bin Sulayem. As at the date of this Offering Circular, The Palm Jebel Ali Co LLC has legal titleto the land making up the Palm, Jebel Ali.

The Palm, Jebel Ali is planned to be in the form of a palm tree, with a trunk, 17 fronds radiating froma central spine and a surrounding crescent island (the back of which forms the breakwater). ThePalm, Jebel Ali will be composed of primarily five zones:

The Crown is envisaged as a high-density precinct with a range of land uses including resort hotels,high-rise apartments, retail developments and some office space.

The Crescent is planned as a medium to high-rise residential area with a community focus. As such,provision has been made for community facilities and open space.

The Trunk is a mixed-use zone located close to the mainland. Development is planned to includehigh-rise apartments, service apartments, hotels, office and retail space, a major theme park andrecreational open space. It is expected to feature beaches on both sides of the trunk and a centralcanal waterway.

The Fronds are planned to be low-density residential developments and will feature signature villasand garden homes with beach frontages.

The Spine is envisaged to be medium density residential developments and will feature Canal Covetown homes.

The following table sets forth the approximate key development data of the Palm Jebel Ali as at 30June 2006:


131112 113112 111312

Palm, Jebel Ali .................................................................................. Mixed-use 102,413,000 122,690,000

Dubai Promenade

Nakheel is developing Dubai Promenade and as at the date of this Offering Circular has legal title tothe land upon which Dubai Promenade is being developed. The Dubai Promenade development isexpected to be of mixed-use consisting of nine residential towers, two hotels, serviced apartments,an office tower and an art/cultural centre. The design of the project is still under process. DubaiPromenade is being developed in part to increase the provision of infrastructure on Dubai’s currentshoreline.

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The following table sets forth the approximate key development data of the Dubai Promenade as at30 June 2006:


131112 113112 111312

Dubai Promenade .......................................................................... Mixed-Use* 1,765,000 5,863,000

* Comprising residential, office and hotel

The Lost City

The Lost City LLC is developing The Lost City which is a residential development inspired by citiesin Arabian history. As at the date of this Offering Circular, Nakheel has legal title to the land uponwhich the Lost City is being developed.

The Lost City development is situated in Jebel Ali, at the intersection of the Ibn Battuta InterchangeRoad and Emirates Road in Dubai, lying adjacent to Nakheel’s other real estate developments, IbnBattuta Mall and Discovery Gardens. The Lost City plan has been developed to create opportunitiesfor families to live and play within traditional-style neighbourhoods, with a strong emphasis onaccess to shops, schools, work places and parklands within the development. The development hasbeen structured into four themed villages providing for a diversity of land uses.

The following table sets forth the approximate key development data of the Lost City as at 30 June2006:


131112 113112 111312

Lost City ............................................................................................ Mixed-use* 60,088,000 57,970,000

* Comprising residential, office and commercial

Jumeirah Village and Jumeirah Park

Jumeirah Village LLC was incorporated on 1 December 2004 and its Executive Chairman is SultanAhmed Bin Sulayem. Nakheel has the legal title to the land upon which the project is beingdeveloped. Jumeirah Village LLC is developing the Jumeirah Village project and Jumeirah Park LLC(currently under formation) is developing the Jumeirah Park project.

The Jumeirah Village project consists of villas, townhouses and plots. The project encompassesconstructed villas, townhouses, amenities and commercial areas. The project also consists of plotsthat are intended to be developed by developers. The project is expected to be handed over inDecember 2008.

This is intended to be a self sustained community. The project is divided into villas and mid-riseapartments. The Jumeirah Park community is intended to combine housing as well as green spacesand family orientated amenities. In total, it is expected that approximately 2,800 villas will bedeveloped themed around three architectural styles (heritage, legacy and regional). The project willinclude several facilities such as a mosque, retail space, a police station and recreational features.Sales of the first two phases of Jumeirah Park villas were offered for sale to the public on 6September 2006 and all released properties were successfully sold out on the same day.

Additionally, plots of land are being sold to private developers over which mixed-use developmentswill be built, which consist of retail and commercial areas.

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The following table sets forth the approximate key development data of Jumeirah Village andJumeirah Park as at 30 June 2006:

Site Built Up Project name Sector Area (ft2) Area (ft2)

1122112 1122112 1122112

Jumeirah Park ........................................................................ Residential 20,205,000 10,258,000Jumeirah Village Town Houses and Villas ...................... Residential 9,757,000 5,387,000Jumeirah Village Plots ........................................................ Mixed-use 46,718,000 139,511,000Jumeirah Village Apartments ............................................ Residential 2,777,000 2,080,000

1122112 1122112

Total ........................................................................................ 79,457,000 157,236,0001122112 11221121122112 1122112

Dubai Waterfront

Dubai Waterfront LLC is developing the proposed Dubai Waterfront, a landside development as wellas a series of man-made islands is located along the maritime border of Dubai and Abu Dhabi. DubaiWaterfront LLC was incorporated on 30 July 2005 and its Executive Chairman is Sultan Ahmed BinSulayem. As at the date of this Offering Circular, the land comprising the Dubai Waterfront Projectis owned by three entities. Nakheel Holdings 1 owns approximately 659,600,000 square feet of theland area of the project. Nakheel World LLC owns approximately 39,500,000 square feet of the landarea of the project and the Dubai Waterfront LLC owns approximately 639,600,000 square feet ofthe project.

The proposed Dubai Waterfront Islands are planned to accommodate developments and areconnected to the mainland by a series of bridges.

The landside developments of Dubai Waterfront North and Dubai Waterfront South will encompassvarious land uses including mixed-use, commercial, residential and public amenities. These landsidedevelopments form the main component of the entire project and are intended to serve as thegateway to the proposed Arabian Canal which, if developed, will run near to the border of Dubai andAbu Dhabi and through the Dubai Waterfront developments.

Dubai Waterfront is located in the Jebel Ali district of Dubai and is located at the coastal-south-western end of Dubai. The land has been ascribed on the basis of an affection plan that includeswaterlines that define certain boundaries for the site area within the Arabian Gulf.

Positioned between Dubai and Abu Dhabi, the proposed Dubai Waterfront Islands development isdesigned to consolidate economic and strategic initiatives planned to turn the immediate area intoa major city providing homes and employment for over 1.7 million people. The subject developmentwill be adjacent to the proposed major expansion of Jebel Ali Port. The Jebel Ali airport, an adjacentfree-trade zone port, and numerous leisure and tourist amenities, as at the date of this OfferingCircular, are planned to be developed within the surrounding area.

The following table sets forth the approximate key development data of the Dubai Waterfront as at30 June 2006:

Site Built Up Project name Sector Area (ft2) Area (ft2)

11222112 11222112 11222112

Dubai Waterfront................................................ Mixed-Use 1,338,700,000 1,168,389,000

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The World

The World LLC is developing The World project. The World LLC was incorporated on 1 December2004 and its Executive Chairman is Sultan Ahmed Bin Sulayem. As at the date of this OfferingCircular, The World LLC has legal title to the land that makes up The World.

The World will consist of approximately 300 islands positioned to form the shape of the world map.Prices for the islands depend on the size and location and target a new and unique market in Dubai.To further enhance the privacy and security of these islands the only mode of transport to them willbe via water. The islands have been approved for both private and commercial use including ashotels and resorts. The design of the entire project incorporates two protective breakwaters on theouter perimeters to provide shelter from long and cross-shore waves. The outer breakwater will bea submerged reef and the inner breakwater will be above water. The islands will range from 150,000square feet to 450,000 square feet in size, with the average island measuring approximately 300,000square feet.

The islands are being offered for sale on a freehold basis to selected investors only. Investors willhave the freedom to create their own developments on the islands for private or commercial use.

The following table sets forth the approximate key development data of The World as at 30 June2006:

Site Project Name Sector Area (ft2)

111112 111112

The World............................................................................................................ Mixed-use 100,241,000

Palm, Deira

The Palm Deira LLC is developing the Palm, Deira. The Palm Deira LLC was incorporated on 1December 2004 and its Executive Chairman is Sultan Ahmed Bin Sulayem. As at the date of thisOffering Circular, The Palm Deira LLC has title to the land being developed.

The Palm, Deira was launched in November 2004, and initially the development will concentrate onthe Central North and South Islands. The program is intended to develop waterfront communitieson the Deira side of Dubai. This is expected to be a mixed-use development comprising of officespace, retail, residential and lodging components. The project will add several marinas andapproximately 114 kilometres of beach line to Dubai. The Palm, Deira program is composedprimarily of two projects:

The Palm, Deira consisting of the Crescent, the Crown, the Spine, the Fronds (11 fronds in total) andthe Trunk.

The Deira Corniche consisting of the four islands (North, Central and South). The reclamation of theCorniche started in late 2003 and as at 30 June 2006, 31 per cent of the land has been reclaimed.

The following table sets forth the approximate key development data of The Palm, Deira as at 30June 2006:


131112 113112 111312

Palm Deira.............................................................................. Mixed-use 466,124,000 434,026,000

International City

International City LLC is developing the International City project. International City LLC wasincorporated on 10 May 2004 and its Executive Chairman is Sultan Ahmed Bin Sulayem. As at thedate of this Offering Circular, International City LLC has legal title to the land upon which theInternational City project is being developed.

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The International City project comprises of several subprojects in various stages of design andconstruction.

The Large and Medium Residential Neighbourhood is planned to consist of low-level apartmentbuildings that will be developed by Nakheel. The buildings are designed based on several countrythemes including Italy, Spain, Morocco, Persia, Greece, China, England, Russia and France.Developers have the flexibility to convert the apartments into two bedroom flats.

The Central Business District will consist of developed plots for sale to independent developers. Theowners have the flexibility to develop their own projects. It is planned that there will be eleven-storey office and residential blocks with retail outlets on the ground floors and basement carparking.

The Forbidden City is designed as a replica of the Forbidden City in China. Spread overapproximately 240,000 square metres, this replica will accommodate residential and retail outletsas well as gardens, museums and performance courts. A Central Court is planned to include apagoda that will house a Chinese restaurant.

The Lakeside Residential district will be made up of one and two bedroom apartments with a lakeview.

International City Phase 2 and 3 are plots of land being developed for sale to private developers.Phase 2 and 3 will include various residential, commercial and mixed-use developments.

The following table sets forth the approximate key development data of the development propertycomponent of International City as at 30 June 2006:


1123112 1123112 1123112

International CityApartment Buildings ...................................................................... Residential 20,706,000 15,084,000Forbidden City.................................................................................. Residential 4,451,000 8,614,000Lakeside Residential........................................................................ Residential 2,444,000 5,866,000Phase 2&3 ........................................................................................ Mixed Use 78,696,000 106,745,000Central Business District ................................................................ Mixed-Use 1,167,000 1,167,000

1123112 1123112

Total .................................................................................................. 107,464,000 137,476,0001123112 11231121123112 1123112

Discovery Gardens

Discovery Gardens LLC is developing the Discovery Gardens project. Discovery Gardens LLC wasincorporated on 5 March 2006 and its Executive Chairman is Sultan Ahmed Bin Sulayem. As at thedate of this Offering Circular, The Gardens Co LLC has legal title to the land upon which theDiscovery Gardens project is situated.

Discovery Gardens is situated along Sheikh Zayed Road and lies in close proximity to Dubai MediaCity, Dubai Internet City and other real estate developments undertaken by Nakheel such asJumeirah Islands, Jumeirah Lake Towers, Lost City, Jumeirah Village and The Ibn Battuta ShoppingMall. Its location in Jebel Ali places it at the heart of “new Dubai” as the city grows west along thecoast.

The development consists of apartment buildings comprising of six themed communities. DiscoveryGardens will be a self-contained residential community with shopping amenities, a mosque, joggingand cycling trails, community swimming pools, football and tennis courts and close proximity to thenew Ibn Battuta Shopping Mall. Furthermore, 30 per cent of the total area of the project has beenreserved for greenery.

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The following table sets forth the approximate key development data of the development propertycomponent of the Discovery Gardens as at 30 June 2006:


131112 113112 111312

Apartment Buildings .................................................................... Residential 17,961,000 13,471,000

Ibn Battuta Phase 2

Ibn Battuta Phase 2 is intended to be developed by Ibn Battuta Mall LLC. Ibn Battuta Mall LLC wasincorporated on 17 May 2005 and its Executive Chairman is Sultan Ahmed Bin Sulayem.

Ibn Battuta Phase 2 is a mixed-use development comprising various hotel, office, retail,entertainment and residential components.

The following table sets forth the approximate key development data of the development propertycomponent of Ibn Battuta Phase 2 as at 30 June 2006 which is subject to further valuation:


131112 113112 111312

Ibn Battuta Phase 2 ...................................................................... Mixed-use 4,319,000 11,069,000

Delivery Dates of Properties

Purchasers of Nakheel development properties have final dates for handover of Nakheel propertiesin their purchase contracts. For the Palm, Jumeirah and Palm, Jebel Ali projects, the final dates maybe extended by the vendor for any delay in construction or for any other matter which is outside thevendor’s control. The purchaser has no contractual right for compensation for any such delay. Thepurchaser’s sole right in the event of extension of the delivery date beyond the final date that iscontractually provided for is for the purchaser to terminate the contract and the vendor to returnthe instalments aid to date by the purchaser together with interest. As a result, there is a risk thatNakheel is not able to be comply with the handover dates. However, in practice, in the currentmarket conditions and for current projects, the likelihood of a customer exercising this right is verylow as the market value of the properties tend to be much higher than when the purchaser initiallypurchased the Nakheel property.

In all other projects, the vendor has the right to extend the date of handover by up to twelve months.There is no explicit contractual right of termination and repayment of instalments with interest.However, this would be likely to be the right of the purchaser at law in the event of the finalcompletion date not being complied with. In such circumstances, a purchaser may be entitled toadditional compensation.

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Project Details – Investment Properties

The following table sets forth the approximate key development data of the investment propertiesundertaken by Nakheel as of 30 June 2006:

GrossStage of Site Area Leaseable

Develop-Project name Sector ment* (ft2) Area (ft2) Occupancy

11111 11111 11111 11111 11111

Under Discovery Gardens .............................................. Residential Construction 15,145,000 10,151,000 Development

Under International City ................................................ Residential Construction 6,851,000 4,991,000 DevelopmentIbn Battuta Mall .................................................. Retail Operation 4,353,000 1,184,000 98%Dragon Mart ........................................................ Mixed-use Operation 4,221,000 2,729,000 60%Gardens Furnished Apartments ...................... Residential Operation 567,000 837,000 100%Garden View Villas.............................................. Residential Operation 2,152,000 878,000 0%

11111 11111 11111 11111 11111

Total ...................................................................... 33,289,000 20,770,00011111 11111 11111 11111 1111111111 11111 11111 11111 11111

* Stage of development according to Nakheel’s Project Development Process as outlined above.

Discovery Gardens

Discovery Gardens LLC is developing the Discovery Gardens project. The project has been describedabove.

The following table sets forth the approximate key development data of the investment propertycomponent of Discovery Gardens as at 30 June 2006:

Gross Site Area Leaseable No.

Project Name Sector (ft2) Area (ft2) of Units 112111 112111 111211 121111

Investment Properties ............................................ Residential 15,145,000 10,151,000 10,515

International City

International City LLC is developing the International City project. The project has been describedabove.

The following table sets forth the approximate key development data of the investment propertycomponent of International City:



Investment Properties ............................................ Residential 6,851,000 4,991,000 6,227Studios ........................................................................ Residential 2,508Large Studios.............................................................. Residential 301 Bedroom .................................................................. Residential 1,960Large 1 Bedroom ...................................................... Residential 264Shops............................................................................ Retail 1,465

Ibn Battuta Mall

Ibn Battuta Mall LLC and Gardens Co LLC developed the Ibn Battuta Mall. As at the date of thisOffering Circular, The Gardens Co LLC has legal title to the land upon which the Ibn Battuta Mall issituated. The Ibn Battuta Mall is managed by Istithmar Retail Corporation (a subsidiary of Istithmar).

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The Ibn Battuta Mall exhibits six themed shopping zones to reflect the Arab explorer Ibn Battuta’stravels through Andalusia, Tunisia, Egypt, Persia, India and China and consists of a range of outletsfrom specialty shops to fashion and home wares outlets, restaurants, a hypermarket and cinemas.Retail zoning has been allocated to the Mall and will be divided into four sections: FamilyConvenience, Major Department Stores, Up-Market Brands and Lifestyles and Entertainment World.

The following table sets forth the approximate key development data of Ibn Battuta Mall:



Ibn Battuta Mall ........................................................ Retail 4,353,000 1,184,000 300

Dragon Mart

Nakheel developed the Dragon Mart development which consists of the Dragon Mart, warehousesand residential units. As at the date of this Offering Circular, International City Co LLC has legal titleto the land on which Dragon City was developed.

The 150,000 square metre dragon-shaped structure has approximately 3,950 shops engaged in thewholesale and retail trade of a variety of Chinese products including home appliances, stationery,office appliances, communication and acoustic equipments, lamps, household items, buildingmaterials, furniture, toys, machinery, garments, textiles, footwear and general merchandise. DragonMart also has coffee shops, conference rooms, a business centre and offers parking space for over2,500 cars. The mall is divided into 7 districts and offers an array of high quality facilities for visitorsand traders alike.

The Dragon Mart complex also includes eight warehouses, located 200 metres behind the DragonMart, with a total area of approximately 30,000 square metres. One of the warehouses has coldstorage facilities.

The Dragon Mart complex also has 25 residential buildings located within 200 metres of the DragonMart. This includes lower cost accommodation in the form of 1,840 fully furnished studios and oneand two bedroom apartments and retail space on the ground floor.

The following table sets forth the key development data of the Dragon Mart complex as at 30 June2006:



Dragon Mart .............................................................. Mixed-Use* 4,221,000 2,729,000 5,800

* Comprising of retail and residential

Gardens Furnished Apartments

The Gardens Furnished Apartments are located off Sheikh Zayed Road next to Ibn Battuta Mall. Asat the date of this Offering Circular, the land upon which the development is situated is owned byThe Gardens Co LLC and is made up of a total of 1,526 units. The Gardens Furnished Apartmentsare located within eight high density buildings built over ten levels together with basement level carparking accommodation. Four out of the eight buildings also accommodate ground floor retailaccommodation comprising a total of 29 separate retail suites. The Gardens Co LLC signed a leaseagreement with Jumeirah International LLC on 31 May 2005 to lease the entire project for a periodof five years. The contract commenced on 3 October 2005. Jumeirah International uses the premisesto house a number of its employees as per the agreement with The Gardens Co. LLC.

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The following table sets forth the key development data of the Gardens Furnished Apartments as at30 June 2006:



Gardens Furnished Apartments ............................ Residential 567,000 837,000 1,526

Garden View Villas

The Garden View Villas were developed by Nakheel and are located on a hillside location overlookingthe Gardens Development and Ibn Battuta Mall off of Sheikh Zayed Road. The Garden View Villas areall two storey semi-detached three or four bedroom properties.

The following table sets forth the approximate key development data of the development propertycomponent of Garden View Villas as at 30 June 2006:

Plot Built UpProject Name Sector Area Area (ft2)

11112 11112 11112

Garden View Villas.......................................................................... Residential 2,152,000 878,000

Competition

Dubai

The Dubai real estate development market is highly competitive. Nakheel’s principal competitors inDubai include Emaar Properties PJSC (Emaar Properties) and Dubai Holding LLC (and its subsidiariesincluding Dubai Properties and Sama Dubai LLC) and a number of privately held sub-developers.

Emaar Properties

Emaar was established in Dubai by decree in 1997 as a public joint stock company and was listed onthe Dubai Financial Market in March 2000. The Government of Dubai holds approximately 32% ofEmaar’s shares. Like Nakheel, Emaar was gifted land by the Government of Dubai. Emaar operatesboth in Nakheel’s market in Dubai and internationally. Its main developments include EmiratesLiving, the Dubai Marina, Arabian Ranches, Emaar Towers, the Burj Dubai all of which are located inDubai, and other projects in India, Saudi Arabia (including the King Abdullah Economic City),Morocco and Pakistan. Emaar recently acquired John Laing Homes, a U.S. company.

Dubai Properties

Dubai Properties is a part of Dubai Holding Group. Dubai Holding is an umbrella organisation madeup of 20 companies operating in eleven sectors which include, in addition to property development,media, finance, tourism, hotels, energy, communications and manufacturing. As in the case ofNakheel, Dubai Holding was gifted its land bank. Dubai Properties’ portfolio of projects includesDubai Healthcare City, the expansions at Dubai Media City and Dubai Internet City and the JumeirahBeach Residence. Dubai Properties is the developer of Business Bay, which will be built on a 64million square feet area along a new extension of the Dubai Creek and the ‘The Villa’ developmentat Dubailand spread over 29 million square feet.

Sama Dubai

Sama Dubai is part of Dubai Holding. Sama Dubai was formed when Dubai Holding consolidated itsreal estate entities in 2006. Its stated purpose is to develop premium real estate around the worldby acquiring and partnering with premier real estate related businesses globally. Sama Dubaioperates both in Nakheel’s market in Dubai and internationally. Sama Dubai manages local, regionaland global assets on both a direct or indirect basis and its products include: mixed use towers,

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industrial parks, marinas, resorts and spas, self-contained urban developments, residentialcommunities, mega malls and business parks. Sama Dubai’s current projects include The Lagoons inDubai, Doha Tower in Qatar, Salam Beach Resort and Spa in Bahrain and Oman and Amwaj Resortin Morocco.

Other

In addition to the larger developers such as Emaar and Dubai Holding, there are a number of smallerreal estate developers that compete with Nakheel in the Dubai market. These smaller developersinclude Union Properties PJSC which has developed The Green Community and the CreeksideResidence; Tameer Holding which has developed the Princess Village, the Dana 1 and Dana 2projects in International City and Al-Amira Tower in Sharjah; Dubai Pearl Inc, part of the OmnixGroup, which is developing the Dubai Pearl and ETA Star Properties LLC, the property developmentarm of the ETA Ascon Group, which has built various towers in Dubai Marina, Jumeirah Lake Towersand Business Bay.

Litigation

Nakheel is not aware of any material proceedings other than two current disputes arising fromconstruction claims, neither of which are larger than AED 20,000,000.

Insurance

Nakheel currently has project specific insurance for all of its projects through Arab Orient Insurance,Royal & Sun Alliance, Oman Insurance, National General Insurance, Alliance Insurance, QatarInsurance Company and Aman Insurance. These policies include the following types of insurance:contractor’s all risks insurance, property all risks insurance, public liability insurance, third partyinsurance for motor vehicles and loss of income insurance.

Land Reclamation

Nakheel is using land reclamation techniques to build The Palm, Jumeirah, The Palm, Deira, ThePalm, Jebel Ali, the Dubai Waterfront Islands and The World. Building on reclaimed land is notunprecedented, it has been done throughout the world from large portions of Holland to Osaka inJapan. The challenge for Nakheel is in the scale of these projects which is unprecedented. Forexample, The Palm, Jumeirah required more than 94 million cubic metres of sand and seven milliontons of rock in its reclamation process. No concrete has been involved in the creation of The Palm,Jumeirah – sand is exclusively used for land reclamation, while large rocks are used to form thebreakwater. Land reclamation techniques involved in developing The Palm, Jumeirah has involvedaddressing issues such as a need to create a breakwater to protect the sand from the strong currentsand “shamal” winds of the Arabian Gulf; protecting the quality of the water surrounding The Palms;“settling”, densifying and condensing the sand to ensure the security of the projects built upon ThePalms and dredging to remove silt, thus increasing strength of The Palms. The reclamation processof The Palm, Jumeirah has involved extensive surveying on land and underwater, laboratory andtheoretical tests including wave generator tests and tidal flow simulation and studying the erosioneffects of the Palms.

Financing Strategy

The Nakheel Group continually evaluates financing options available to it. These options includepotential public offerings of shares in Nakheel Group companies, which could include an offering ofshares in Nakheel PJSC or one of its subsidiaries. However, the Nakheel Group will adopt thefinancing options that they consider to be in their best interests at any particular time.

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Recent Developments

Jumeirah Park Villas

Sales of the first phase of Jumeirah Park villas were offered to the public on 6 September 2006 andall released properties (more than 900 villas) were successfully sold on the same day.

The Palm, Jumeirah

The delivery of certain properties on The Palm, Jumeirah had a contractual original completion dateof May 2006, with an extension for delivery provided for until November 2006. On 25 October 2006,Nakheel further extended the delivery date to ensure the infrastructure of The Palm, Jumeirah wascomplete and to ensure the quality of the villas was satisfactory. Such extension was well within thebounds of the contractual arrangements Nakheel has with purchasers of villas. As a result, ownersof the affected Palm, Jumeirah properties had the contractual option of selling their villa back toNakheel for the original sale price, plus interest. However, as at December 2006, not one owner hadtaken up the offer.

The first phase of handover of the villas started in December 2006 with 500 unit handovers planned.The phased handover is planned to continue until June 2007.

Garden View Villas

The Garden View Villas have been subject to a certain design issue that has affected the wholedevelopment. As a result Nakheel has carried out minor rectification to the majority of the villas, andmore involved rectification for a small portion of the villas. Nakheel has put into place systems toensure that such design issues do not occur again.

Nakheel Occupational Health and Safety Department

Nakheel, working with PCFC Environmental Health and Safety (EHS), recently announced theformation of the Nakheel Occupational Health and Safety Department. The new department intendsto form a team of health and safety professionals within Nakheel that will be responsible for allmatters relating to environmental, health and safety compliance across the Nakheel portfolio ofprojects, reporting to EHS. The Nakheel team reports to the Chief Executive Officer. EHS will remainthe relevant regulatory authority. A phased transition is intended with Nakheel Occupational Healthand Safety becoming responsible for monitoring health and safety performance of Nakheelappointed contractors, health and safety training for Nakheel staff and both managing anddeveloping Nakheel's health and safety procedures and health and safety corporate strategy.

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LEGISLATION OF UAE (AS APPLICABLE IN THE EMIRATE OF DUBAI) RELATING TO LAND AND REAL PROPERTY

Please note that laws relating to land and real property vary from emirate to emirate: this sectiondeals only with United Arab Emirates (UAE) law as applicable in the Emirate of Dubai, and is not aUAE wide summary. Laws also differ for certain of the free zones (including the Dubai InternationalFinancial Centre)1 within each of those emirates, and free zone legislation is therefore not includedwithin the scope of this summary.

General

The following are the types of real property ownership available under the laws of the UAE,applicable to Nakheel in Dubai (although not all of these types of ownership are available toeveryone in all areas in Dubai):

Outright Ownership

Until very recently legal title in real property in Dubai has only been capable of being owned by UAEnationals and other Gulf Cooperation Council (GCC) nationals under certain conditions. Law No (7)of 2006 concerning Real Property Registration in the Emirate of Dubai (the Property Law) waspassed in March 2006 and published in the official gazette in April 2006 and provides that the rightto own real property in the Emirate of Dubai shall be restricted to UAE and GCC nationals and tocompanies owned in full by them as well as to public joint stock companies. Non-UAE nationals maybe granted the right to freehold ownership or usufruct/leasehold rights over real property for aperiod not exceeding 99 years, in designated areas of the Emirate of Dubai. These exact areas havebeen defined pursuant to Regulation No (3) of 2006 (the Designated Areas), and include variousNakheel developments such as Dubai Waterfront, The Palm, Jumeirah and The Palm, Jebel Aliamongst others.

Historically, outright ownership of real property in Dubai has either been classified as “freehold”ownership or “gifted/granted” land obtained pursuant to a gift or grant from the Ruler of Dubai.The Dubai Orders gifting/granting the relevant land can impose restrictions on gifted/granted realproperty being disposed of without the consent from the Ruler (through a “no hindrance ofdisposal” certificate) and mortgages may only be obtained for finance that is being used toconstruct a building (i.e. construction costs). The land gifted/granted to Nakheel does not howeverhave any such restrictions.

There are also additional provisions in relation to co-ownership of real property in the UAE CivilCode, as well as references to sectional ownership and division of the use of property by way of time(i.e. time shares). These provisions contain a number of restrictions in relation to each partner’s co-ownership of the real property in question, for example, restrictions on a co-owner of property incommon from disposing of his share in that property without the consent of the other co-owner ifthe property has been blended and merged.

Usufruct

A usufruct combines features of absolute ownership with features of a lease. It gives the usufructarythe right to sell and mortgage an interest resembling a leasehold interest, in that its term is for alimited period and remains subject to the specific purpose and use for which the usufruct wasgranted.

Unlike a leasehold interest, a usufruct is a real right, or a property right, in that it attaches itself tothe land and therefore any registered purchaser of the underlying freehold interest takes title to theinterest subject to, and will be bound by, the terms of the registered usufruct.

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1 Free zones are defined geographical areas normally creating an “offshore” status for operations within them, and are (inthe main) governed by their own separate legal systems.

To the knowledge of Nakheel, the Dubai Lands Department has not to date registered a usufructright against an underlying freehold title. The Property Law does however provide that a usufructright may be registered by the Dubai Lands Department once the implementing regulationsgoverning registration have been passed.

Musataha

As with a usufruct, a musataha is also a real or property right which is provided for in the Civil Code.It is limited to 50 years and is akin to an outright ownership right (albeit for a limited period). Thisis known as a ground development lease and gives the holder surface or support rights over the landand which allows the holder of the right to be the outright owner of the buildings they constructedduring the period of the musataha for the period of the musataha. It also enables the rights in theland to be mortgaged.

As with usufructs, to the knowledge of Nakheel, the Dubai Lands Department has not to dateregistered a musataha, but it is expected that a musataha right may be registered by the DubaiLands Department once the implementing regulations governing registration pursuant to theProperty Law have been passed.

Leases

Traditionally leases have not been viewed as real or property rights in Dubai. Instead they have beenviewed as unregistered personal contractual rights binding as between the parties as opposed tobeing attached to the land in question. However, it may be that leases in the Designated Areas canbecome true real or property rights attaching to the title to the underlying land throughregistration, although the formal registration regulations setting out the mechanics and processesfor such registrations are still to be issued by the Dubai Lands Department. The Property Law doesimpose certain limits on leases for certain classes of lessees, for example, non-UAE nationals will onlybe able to register leases in the Designated Areas (and for a maximum period of 99 years).

In the absence of registration, a lessee would need to look to the Civil Code for his rights on sale ofthe property.2 In practice, eviction of an existing tenant by the Dubai Rents Committee (which hasjurisdiction over such matters) may prove extremely difficult to obtain.

Further, there was a recent Dubai Order which limits rent increases to 15 per cent. (15%) perannum. This Order expires at the end of 2006, but it is anticipated that a similar limit will bemaintained. The Rent Committee is authorised to handle the enforcement of this and any futureOrder.

Legal Developments Affecting Real Property

As mentioned above, the Property Law was passed in March 2006, providing an enabling law thatcreates a framework within which a complete property ownership law for Dubai can be built. Themain features of the Property Law are:

• Foreign ownership: non-UAE national purchasers are now able to own land outright or aleasehold interest in land (not exceeding ninety nine (99) years) in the Designated Areas. Inaddition, GCC and UAE nationals now have an unfettered ability to purchase land anywhere inDubai.

• Registration of title: the Property Law clearly sets out that non-UAE nationals, for the firsttime, can register their property rights in Designated Areas at the Dubai Lands Department.Prior to the law coming into force, “ownership rights” for foreigners were essentially a series

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2 Article 795 of the Civil Code provides that (1) if the real property that is leased is sold without the consent of the lessee,the sale shall be effective as between the seller and the buyer, but shall not affect the rights of the lessee; and (2) if thelessee consents to or affirms the sale, the sale shall be effective as against him and he shall be bound to deliver possessionof the real property unless he has paid the rent in advance, in which case he shall have the right to retain the real propertyuntil he recovers the equivalent of rent in respect of the balance for the period for which he has not had the enjoyment ofthe real property.

of contractual rights contained within the purchase agreement with the developer and werenot capable of being registered.

• Guarantee of title: a “guarantee” of title is provided for in the Property Law. The register ofreal property to be established by the Lands Department will be paramount and is deemed tobe conclusive evidence of ownership of land throughout Dubai. There is no need to lookbehind the register. The guarantee does not however go as far as some other countries (i.e.UK, New Zealand) where registration serves not only as a guarantee of title but is also coupledwith a statutory right of compensation in the event that an error has been made which resultsin competing claims against the property in question.

• Registration and enforcement of securities (i.e. mortgages): while not providing a statutoryright of enforcement or a power of sale on default (see below for comment in this respect),the Property Law provides that mortgages can be attached to all titles if land is subdivided ormerged. Statutory “self-help” remedies, such as non-judicial foreclosure and power of sale, donot currently exist and were not introduced by the Property Law. See below for furthercomment in relation to enforcement of mortgages.

Registration of Rights to Immovable Property

It is compulsory to enter on the register at the Dubai Lands Department any acts that create,transfer, vary or terminate a real property right. Such acts shall not be valid unless they are enteredin the register. This is new legislation enacted as part of the Property Law. As a result, furtherregulations and rules are expected on this matter in the coming months.

There is no publicly searchable real property register in Dubai, although the Property Law specifiesthat any party having an interest, the judicial entities or any experts appointed by them and thecompetent authorities may inspect the documents maintained in the register and obtain certifiedcopies. In addition, given the recent developments in the land regime in Dubai, the reliability of theregister is at the current time largely untested.

Land and Real Property Taxation

In Dubai there are currently no taxes payable on movement of land, but the Dubai LandsDepartment, has to date registered the transfer of land, collecting 0.5 per cent of the purchase pricefrom the seller and one point five per cent. (1.5%) of the purchase price from the purchaser afterthe application is submitted.

There is also an annual payment of five per cent. (5%) of the rent paid in respect of a residentialproperty or 0.5 per cent payable on the value of a non-rental residential property to the DubaiMunicipality by non-UAE nationals.

Mortgages

In Dubai security is available over land and, in some circumstances, buildings separately.

Land

Under the Civil Code it is possible to take security by way of mortgage over real property in the UAE.The debtor retains ownership and possession of the land and the lender secures the land pursuantto a written mortgage deed. A mortgage over land is perfected by registration in the lands register.Such registration constitutes notice to third parties and affords priority to the mortgagee from thedate of registration. The mortgagee is entitled to have its debt satisfied out of the proceeds of thereal property mortgaged. Once registered, a mortgage is not lifted or removed from the registeruntil the mortgagor makes a formal application for its deregistration.

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Leasehold interests generally cannot be mortgaged in Dubai, although Dubai World, the Issuer andthe Co-Obligors understand that leasehold interests in certain developments have been registeredand mortgages of these interests registered at the Lands Department.

Buildings

It is possible to create a security interest over buildings separately from the underlying freehold landwhere the land is held pursuant to a musataha. There is however no recognised method ofperfecting such security interest at present, given that musatahas are not yet able to be registeredat the Lands Department. There are also practical problems with enforcement of a security interestover a building, especially where the secured building is situated on land, which is not mortgaged tothe same lender. Generally security in respect of buildings is limited to security over relatedinsurances or, if the building generates leasehold income (i.e. rent), security over the receivables(each by way of assignment).3

Perfection of security over real property

A mortgage granted over real property must be perfected by entering into a mortgage agreement,completing an application form and registering the mortgage agreement in the lands register at theLands Department. Only the interests of a lender licensed by the central bank may be registered. Assuch, a non-licensed lender will be prohibited from taking the steps necessary to perfect certainsecurity interests in real property (where registration is required). A possible (but as yet untestedbefore the UAE Courts) way of non-UAE licensed banks or persons deriving the benefit of suchmortgage could be to appoint a UAE licensed bank to act as a security agent who would act for alllenders on any enforcement of the security in the UAE.

Enforcement of security over real property

There are no statutory rights of enforcement or power of sale remedies pursuant to UAE law, andno security can be enforced in the UAE without obtaining a court order. If a court ordersenforcement of any security interest it will organise the sale of the secured asset by public auction.

The UAE Civil Procedure Law provides that the proceeds of any such sale shall be distributed inaccordance with the order of priority of holders of preferential debts and holders of “restrictiverights” in accordance with the order of priority set out under UAE law, namely: (1) preferential debts(being judicial costs of preserving and selling the property, government taxes, employee salaries,lessor’s rental payments, amounts due to registered contractors), (2) secured creditors (for examplemortgages) followed by (3) unsecured creditors (for example judgment creditors).

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3 Although this is not strictly speaking security over the building itself, rather security over rights attaching to the building.

OVERVIEW OF THE UNITED ARAB EMIRATES

The UAE is a federation of seven emirates made up of Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Qaywan, Fujairah and Ras Al-Khaima. Formerly known as the Trucial States, it was a Britishprotectorate until they achieved independence in December 1971 and merged to form the UnitedArab Emirates. Each emirate has a local government headed by the Ruler of the emirate. There is afederal government which is headed by the President. Each emirate enjoys significant autonomyand has its own budget. The federal budget is principally funded by Abu Dhabi.

Location

The UAE is situated along the south-eastern tip of the Arabian Peninsula bordered by Saudi Arabiato the west and south, and extends to the west coast of the Arabian Gulf from the base of the Qatarpeninsular to Ras Al-Khaimah in the north, and across the Musandam peninsula to the Gulf of Omanin the east, covering an area of 83,699 sq. km. The UAE, with over 700 kilometres of coastline, hasseaports located in both the Arabia Gulf and the Gulf of Oman, which has helped to establish it as aleading trading hub.

Political Overview

The original Constitution of the UAE was initially provisional and provided the legal framework forthe Federation. The Constitution was made permanent pursuant to a constitutional amendment inDecember 1996 (which also confirmed Abu Dhabi as the permanent capital of the UAE Federation).

The major principle adopted by the Constitution was that jurisdiction for enacting substantivelegislation was confined to the Federal Government, but the local governments of the sevenemirates were authorised to regulate those matters that were not the subject of legislation by theFederal Government. Consequently, the individual emirates have exclusive jurisdiction in certainmatters, including those relating to municipal work and natural resources.

The Constitution provided for the establishment of the Supreme Council of the Rulers of all theemirates as the foremost authority in the Federation and a Council of Ministers as the executivebranch of the Federation.

The Federation is governed by the Supreme Council of the Rulers. This is the highest federalgoverning body and consists of the rulers of the seven emirates. The Supreme Council elects fromits own membership the President and the Vice President (for renewable five-year terms). Decisionsrelating to substantive matters are decided by a majority vote of five emirates, provided that thevotes of both Dubai and Abu Dhabi are included in that majority, but matters that are purelyprocedural are decided by a simple majority vote.

Policy decisions of the Supreme Council are implemented by the Federal Council of Ministers,sometimes referred to as the Cabinet. Upon the approval of the Supreme Council, the Presidentappoints the Prime Minister and the Federal Council of Ministers to assume the country’s executiveauthority. Based in Abu Dhabi, the Cabinet is headed by the Prime Minister and consists of theDeputy Prime Minister and a number of Ministers. These Ministers are normally selected (for nofixed term) by the approval of the Supreme Council on the recommendation of the Prime Minister.

The Constitution defines the responsibilities of the Cabinet, which include the issuing of regulations,the preparation of draft laws and the drawing up of the annual federal Budget. Although most ofthe Federal Government ministries are based in Abu Dhabi, many also maintain offices in Dubai.

The Federal Government is entrusted with the task of enacting legislation regulating the principaland central aspects of the Federation such as foreign affairs, defence, security, the federal judicialsystem, federal finance and loans and civil aviation. Federal matters are regulated through a numberof specially created federal ministries which include the Ministries of Foreign Affairs, Defence,

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Justice, Finance and Industry and Economy and Commerce. The responsibility for the armed forcesin Dubai has, within the past 3 years, been transferred to the federal authorities.

The Federal National Council is composed of forty members of the national community who arerecommended by the Ruler of each emirate. Each emirate appoints members for a particularnumber of seats, with a large proportion of members coming from Abu Dhabi and Dubai (with eightmembers each). The members represent the UAE as a whole rather than their individual emirates.

Although the Federal National Council does not have any legislative powers, it is responsible for,among other things, considering and reviewing draft federal laws or bills before they are submittedto the President and the Supreme Council for consideration and subsequent enactment. The FederalNational Council can monitor and debate Government policy but has no power of veto oramendment and cannot initiate any legislation itself.

There are three primary sources or types of law in the UAE: federal laws and decrees, local laws andSharia. The secondary form of law is trade custom or practice. In the absence of federal legislationon areas specifically reserved to federal authority, the Ruler or local government will apply his or itsown rules, regulations and practices. As is its right under the Constitution, Dubai, like the emirate ofRas Al Khaimah, has elected to maintain its own court system, separate from that of the Federation,and the courts of Dubai have sole jurisdiction to hear cases brought in Dubai. Although both federaland Dubai courts have a similar three-tier structure (Court of First Instance, Court of Appeal andCourt of Cassation/Supreme Court), Dubai has retained complete autonomy over its courts in allmatters, which includes the appointment of judges. In accordance with the Constitution, however,the Dubai courts will first apply federal law where this exists and, in its absence, the laws of Dubai.

Economic Overview

The UAE is the third largest economy in the Arab world after Saudi Arabia and Egypt. Though it hasa more diversified economy than most of the other countries in the Gulf Co-operation Council (GCC)region, its wealth is largely based on oil and gas. The UAE has approximately 10 per cent. of provenglobal oil reserves, which generate approximately one-third of the UAE’s gross domestic product(GDP) and approximately one-half of export earnings.

The performance of the UAE economy during 2003 and 2004 was very strong. GDP is estimated tohave reached US$90 billion in 2004. In addition to record oil prices, the major contribution to GDPgrowth was from construction, manufacturing, tourism and the service sectors. The stock marketsreflected the general confidence in the economy and the market capitalisation of listed stocksincreased 50 per cent. in 2004 to reach US$69 billion.

Around 70 per cent of UAE fiscal revenues come from oil, making government finances vulnerableto the vagaries of the oil price. Deficits have been a constant feature of public finance since 1986but have been financed by investment income rather than borrowings. The use of oil revenues tobuild up a large stock of overseas assets has been a long running fiscal policy and has given the UAEa healthy net asset position of around 15 per cent of GDP.

Abu Dhabi is the richest and largest of the seven emirates and the city of Abu Dhabi is also thecapital of the federation. During his long presidency of the UAE until his death in November 2004,H.H. Sheikh Zayed Bin Sultan Al-Nahyan, Ruler of Abu Dhabi, oversaw massive investment in theinfrastructure of the UAE, which has transformed the country. H.H. Sheikh Zayed has beensucceeded by his son, H.H. Sheikh Khalifa Bin Zayed Al-Nahyan as President of the UAE.

Credit Rating

Moody’s Investors Service, Inc. recognised the strong performance and growing strength of the UAEeconomy by upgrading the long-term foreign currency rating bonds and bank deposits to A-1 fromA-2 and the short-term foreign currency rating to Prime-1 from Prime-2.

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Membership of International Organisations

The UAE has ratified several international treaties and is a member of various organisationsincluding, inter alia, the United Nations, the Arab League, the Arab Gulf Cooperation Council, theOrganisation of Islamic Countries, the Organisation of Arab Petroleum Exporting Countries, theOrganisation of Petroleum Exporting Countries, the World Health Organisation, the InternationalMonetary Fund, the International Organisation for Industrial Development, the World TradeOrganisation, and Asia-Pacific Economic Cooperation.

The UAE enjoys good relations with the other states in the GCC. However, it does have alongstanding territorial dispute with Iran over three islands in the Gulf and, as such, is not immuneto the political risks that have overshadowed the region.

The Emirate of Dubai

Dubai started as a pearl and fishing village some time in the first half of the 18th century. From the1850’s until the formation of the UAE, the British were the dominant influence in the region, andeach emirate entered into a separate treaty with them. The emirates were then collectively knownas the Trucial States or Sheikhdoms and the area was generally known as the Trucial Coast. TheSheikhdoms were each led by a sheikh, who usually belonged to the most influential tribe in thatarea.

The growth of Dubai began in the early part of the nineteenth century when members of the BaniYas tribe, led by Sheikh Maktoum Bin Butti, left Abu Dhabi and migrated north to found anindependent Sheikhdom in the area now known as Dubai.

As the 19th century unfolded, Dubai, split by a 14 kilometres long creek, which led into a naturalharbour, established itself as a flourishing centre for the import and re-export of merchandise (theentrepôt trade). If entrepôt trade was the first and most important pillar of Dubai’s economicactivity, the second was pearling. Offshore from Dubai and Abu Dhabi, the waters were rich withpearl beds. However, the Great Depression of the 1930s and the emergence of artificial pearls in1929 dented Dubai’s prosperity.

To counter the loss of economic activity from the decline in pearling, Dubai enticed traders fromIndia and Iran to establish their business. Traders, attracted by Dubai’s liberal policies, especially itslower taxes on foreigners compared to its neighbours, made it their base and Dubai was quicklyestablished as a leading centre for trade in gold bullion, textiles and consumer durables.

In the 1930s and 1940s, oil was discovered in Kuwait, Qatar and Saudi Arabia—adding to thatalready found in Iran, Iraq and Bahrain. In 1958, oil was found off the shore of Abu Dhabi and, in1966, oil was first discovered by the Dubai Petroleum Company at Fateh, which lies 92 kilometresoff the coast of Dubai. As the primary regional trading hub, Dubai was well placed to capitalise onthe upswing in Middle East business activity that came with oil exports. Over the years, oil revenueshave been used to create and develop the economic and social infrastructure of Dubai.

Dubai is, after the Emirate of Abu Dhabi, the largest emirate in the UAE, and is situated on the westcoast of the UAE in the south western part of the Arabian Gulf. It covers an area of 3,885 sq.kilometres and lies approximately at longitude 55 degrees East and latitude 25 degrees North.Except for a tiny enclave in the Hajar Mountains at Hatta, the Emirate of Dubai comprises onecontiguous block of territory.

Dubai’s strategic position at the crossroads between the East and West has helped establish it as aleading trading and services hub between the Far East and Europe.

Dubai’s economy is more diversified and dynamic than that of Abu Dhabi and it is one of the mostimportant commercial centres in the Middle East, with growing banking, tourism and real estatesectors. However, with only a fraction of the fossil fuel reserves of Abu Dhabi, it has gradually

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reduced its dependency on oil and gas revenues. The Government of Dubai continues to investheavily in the infrastructure of the emirate and its economic development.

All powers of government in Dubai are vested in the Ruler. The various departments and other armsof the Government and their respective executives operate under the powers and responsibilitiesspecifically delegated to them from time to time by the Ruler. Laws of Dubai are passed by Decreeof the Ruler. The present Ruler is H.H. General Sheikh Mohammed bin Rashid Al Maktoum, who isalso Chairman of Dubai’s Executive Council.

In Dubai, there are various local government bodies charged with regulating and administering locallaw and policy, including the Dubai Department of Economic Development, Dubai Municipality andthe Department of Civil Aviation.

The population of Dubai was estimated at 1,204,000 at the end of 2003 and 1,306,000 at the end of2004. Approximately eighty per cent. (80%) of the population is estimated to be non-UAE nationals,mainly drawn from the Indian subcontinent, Europe and other Arab countries. Approximately 73%(2005 estimate) of the population is estimated to be male and 26% (2005 estimate) female,reflecting the large male expatriate workforce.

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SUKUK ASSETS

The Sukuk Assets consist of the leasehold interest for a term of fifty (50) years of the land identifiedas plot numbers 422 and 391 at the Dubai Lands Department and known as DWF South andCrescent Lands within Dubai Waterfront as more particularly identified in the Valuation Report atAppendix 2.

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THE TRUST ASSETS

Pursuant to the Declaration of Trust, the Issuer will declare that it will hold the Trust Assets upontrust absolutely for the holders of the Certificates pro rata according to the principal amount ofCertificates held by each Certificateholder in accordance with the Declaration of Trust and theConditions.

Trust Assets means the Sukuk Assets, certain of the Issuer’s rights, title, interest and benefit, presentand future, in, to and under, the Transaction Documents (to which it is a party) acting in its capacityas agent and trustee for the Certificateholders (other than in relation any representation given tothe Issuer by the Co-Obligors or the Guarantor under or pursuant to Trasaction Documents), theInsurances, all monies standing to the credit of the Transaction Account and all proceeds of theforegoing.

The Declaration of Trust is governed by English law and is subject to the non-exclusive jurisdictionof the English courts. The laws of the Emirate of Dubai and (to the extent applicable in the Emirateof Dubai) the federation of the UAE (UAE law) do not recognise the concept of trust or beneficialinterests and, accordingly, there is no certainty that the terms of the Declaration of Trust would beenforced by the courts of Dubai. The concept of agency is, however, recognised under UAE law. (SeeRisk Factors above).

Sukuk Assets

The Sukuk Assets consist of the leasehold interest in all land, buildings and other property known asDWF South and Crescent Lands at Dubai Waterfront as more particularly described in Sukuk Assets.

Purchase Agreement

Pursuant to the Purchase Agreement, Nakheel Holdings 1 as Seller will sell the Sukuk Assets to theIssuer. The proceeds received by the Issuer from the issuance and sale of the Certificates will be usedto pay the purchase price of the Sukuk Assets.

Lease Agreement

Pursuant to the terms of a Lease Agreement dated the Closing Date between the Issuer as Lessorand Nakheel Holdings 2 as Lessee, the Lessee agrees to lease the Sukuk Assets. The Lease willcommence on the Closing Date and shall terminate on the Redemption Date, unless terminatedearlier. The Lease shall comprise six consecutive periods of six months each (each a Lease Period).The first Lease Period shall commence on the Closing Date and each of the five subsequent leaseperiods shall commence on the day immediately following the end of the previous Lease Period.

Under the terms of the Lease Agreement, the Lessee will agree that the Lessor shall not under anycircumstances be liable to the Lessee or to any third party for any cost, claim, demand, loss, injury,damage or expense of any kind or nature caused directly or indirectly by, or out of, the use of anypart or the whole of the Sukuk Assets. The Lessee will agree to fully reimburse, compensate and saveharmless the Lessor and its directors, officers, employees and duly appointed representativesagainst all and any such costs, claims, demands, losses, damages and expenses.

The rental payments for each Lease Period (the Rental) shall in respect of each Lease Period be:

(a) a fixed rental of US$55,836,000; and

(b) all amounts owed by the Lessor to the Servicing Agent under the Servicing AgencyAgreement in each case applicable to that Lease Period.

If payment of any amount that is due and payable in accordance with the Lease Agreement (theOutstanding Sum) is not made to the Lessor in full on its due date for payment, the Lesseeirrevocably undertakes to pay the Lessor a late payment in respect of the period from, and including,

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the due date for settlement to, but excluding, the date of full settlement, calculated on a daily basisas the product of (a) one per cent. (1%) per annum, (b) the Outstanding Sum on the basis of 12months of 30 days each. Any late payment charges received by the Lessor shall be paid (on behalfof the Lessee) to The Red Crescent Society, being the charity of the Lessee’s choice.

Under the Lease Agreement, each of the events or circumstances set out in paragraphs (a) to (k)below, inclusive, is an Event of Default.

(a) Non-payment / non-delivery: The Lessee, any of the Nakheel Holdings Group or theGuarantor fails to pay any amount (including, without limitation, Rental) payable, or fails todeliver QPO Shares deliverable, pursuant to this Agreement or any other TransactionDocument on the due date for payment thereof and such default continues unremedied for aperiod of 14 days; or

(b) Breach of other obligations: Any of the Nakheel Holdings Group or the Guarantor defaults inthe performance or observance of any of its other material obligations under or in respect ofany Transaction Document to which it is a party and (except in any case where the failure isincapable of remedy when no continuation or notice as is hereinafter mentioned will berequired) such default remains unremedied for 30 days after written notice thereof, addressedto the Lessee by the Lessor, has been delivered to the Lessee; or

(c) Repudiation: Any of the Nakheel Holdings Group or the Guarantor repudiates or challengesthe valid, legal, binding and enforceable nature of any or any part of a Transaction Documentto which it is a party or does or causes to be done any act or thing evidencing an intention torepudiate or challenge the valid, legal, binding and enforceable nature of any TransactionDocument to which it is a party; or

(d) Illegality: at any time it is or will become unlawful for any of the Nakheel Holdings Group orthe Guarantor to perform or comply with any or all of its obligations under the TransactionDocuments to which it is party or any of the obligations of any of the Nakheel Holdings Groupor the Guarantor under the Transaction Documents to which it is a party are not, or cease tobe, legal, valid, binding and enforceable; or

(e) Cross default: Any Indebtedness of any of the Nakheel Holdings Group, Nakheel World or theGuarantor becomes due and payable prior to the stated maturity thereof (other than at theoption of the debtor) or any of the Nakheel Holdings Group, Nakheel World or the Guarantorshall fail to make any payment when due in respect of any Indebtedness of any of the NakheelHoldings Group, Nakheel World or the Guarantor at the expiration of any grace periodoriginally applicable thereto, unless the aggregate amount of the Indebtedness relating to allthe above events is less than US$25,000,000 (or its equivalent in any other currency); or

(f) Failure to take action etc: Any action, condition or thing at any time required to be taken,fulfilled or done in order to ensure that the obligations under each Transaction Document ofany of the Nakheel Holdings Group or the Guarantor are legal, valid, binding and enforceable,is not taken, fulfilled or done; or

(g) Change of control: The Government of Dubai ceases to maintain, directly or indirectly, fullownership of the Guarantor; or

(h) Status of Guarantor: At any time, the Guarantor ceases to be a “public corporation”constituted by Decree of the Emirate of Dubai; or

(i) Insolvency etc: (i) any of the Nakheel Holdings Group, Nakheel World or the Guarantorbecomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator orliquidator of any of the whole or any part of the undertaking, assets and revenues of any ofthe Nakheel Holdings Group, Nakheel World or the Guarantor is appointed (or application forany such appointment is made), (iii) any of the Nakheel Holdings Group, Nakheel World or theGuarantor commences any negotiations or takes any action for a general adjustment or

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deferment of any of its obligations or makes a general assignment or an arrangement orcomposition with or for the benefit of its creditors or declares a moratorium in respect of anyof its Indebtedness or any guarantee of any Indebtedness given by it or (iv) any of the Co-Obligors, Nakheel World, Nakheel PJSC or the Guarantor ceases or threatens to cease to carryon all or any substantial part of its business; or

(j) Winding up etc: An order or decree is made or an effective resolution is passed for thewinding up, liquidation or dissolution of any of the Nakheel Holdings Group, Nakheel Worldor the Guarantor other than in the case of a solvent winding up of any Subsidiary of NakheelPJSC; or

(k) Analogous event: Any event occurs which has an analogous effect to any of the eventsreferred to in paragraphs (i) and (j) above.


Board of Directors means, with respect to any person who is a body corporate, the board ofdirectors of such person or any duly authorised committee thereof.

Capital Stock means, with respect to any person, any and all shares, interests, participations or otherequivalents (however designated, whether voting or non-voting) of such person’s equity, includingany preferred stock of such person, whether now outstanding or issued after the date hereof,including, without limitation, all series and classes of such Capital Stock.

Nakheel Group means Nakheel and its Subsidiaries at the relevant point in time.

Nakheel Holdings Group means Nakheel Holdings-1 LLC, Nakheel Holdings-2 LLC and NakheelHoldings-3 LLC and their respective Subsidiaries, in any capacity under the Transaction Documents.

Nakheel World means Nakheel World LLC.

Subsidiary means, with respect to any person:

(a) any corporation, association, partnership or other business entity of which more than 50 percent. of the total voting rights of its Capital Stock is at the time owned or controlled directlyby such person, or by such person and one or more Subsidiaries of such person or by one ormore Subsidiaries of such person; or

(b) any partnership in which such person or a Subsidiary of such person is, at the time, a generalpartner; or

(c) any other person in which such person, one or more Subsidiaries of such person, or suchperson and one or more Subsidiaries of such person, directly or indirectly, at the date ofdetermination thereof has (x) over a 50 per cent. (50%) ownership interest or (y) the powerto elect or direct the election of a majority of the directors, members of the Board of Directorsor other governing body of such person,

and, in respect of each Co-Obligor, shall include Nakheel PJSC and each of its Subsidiaries.

Servicing Agency Agreement

Under the terms of the Servicing Agency Agreement, the Lessee, in its capacity as the Lessor’sservicing agent (in this capacity the Servicing Agent) shall be responsible, on behalf of the Lessor,for the following in respect of the Sukuk Assets:

(a) Major Maintenance and Structural Repair: all structural repair and major maintenance(including doing such acts or things and taking such steps to ensure that the Sukuk Assetssuffer no damage, loss or diminution in value) whether in whole or in part (excluding allrepairs, modifications, replacements, acts, maintenance and upkeep works reasonablyrequired for the general use and operation of the Sukuk Assets or to keep, repair, maintain

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and preserve the Sukuk Assets in good order, state and condition) without which the SukukAssets could not be reasonably and properly used by the Lessee;

(b) Proprietorship Taxes: payment of all Taxes in relation to the Sukuk Assets by law imposed,charged or levied against a proprietor, but excluding all Taxes that are by law imposed,charged or levied against a lessee or a tenant;

(c) Insurances: insuring the Sukuk Assets against Total Loss upon the terms and subject to theconditions set out below:

(i) ensure that any such insurance against Total Loss:

(aa) shall be for an insured amount, at all times, at least equal to the full reinstatementvalue of the Sukuk Assets. The Servicing Agent, having regard to its covenant tofully maintain the value of the Sukuk Assets, shall ensure that the fullreinstatement value of the Sukuk Assets is not less than US$3,520,000,000 at anytime; and

(bb) is provided by a reputable insurer and one which is at all times in good financialstanding (having full regard to paragraph (aa) above);

(ii) make such enquiries and obtain such assurances as it deems fit to ensure thatparagraph (i)(bb) above is, and shall at all times be, fully complied with;

(iii) ensure that such insurance is otherwise satisfactory to ensure compliance with theServicing Agent’s obligations under the Servicing Agency Agreement;

(iv) diligently make and pursue any claim under such insurance;

(v) ensure that nothing is done or omitted to be done which is contrary to the terms of anysuch insurance, or which might result in such insurance being restrained, repudiated,vitiated, cancelled, made void or voidable, or otherwise become prejudiced or impaired;and

(vi) ensure that in the event of a Total Loss occurring all such insurance proceeds are paidin US Dollars directly into the Transaction Account by no later than the 30th day afterTotal Loss occurring and the insurer will be directed accordingly. If any such insuranceamounts are not paid into the Transaction Account by the 30th day after Total Lossoccurring due to any default on the part of the Servicing Agent, the Servicing Agentshall be responsible for such insurance amounts.

Clause 5.2 of the Servicing Agency Agreement provides that the Servicing Agent will be, and shallat all times remain, fully responsible, if the insurer’s failure to pay arises as a result of any failure byit to strictly comply with its insurance obligations under Clause 5 of the Servicing AgencyAgreement. If, following a Total Loss, Clause 5.1 of the Servicing Agency Agreement is not compliedwith and as a result the amount credited to the Transaction Account pursuant to paragraph (iv)above (if any) is less than US$3,520,000,000 (the difference between US$3,520,000,000 and theamount credited to the Transaction Account being the Total Loss Shortfall Amount), the ServicingAgent irrevocably and unconditionally undertakes to pay (in same day, freely transferable, clearedfunds) the Total Loss Shortfall Amount directly into the Transaction Account by no later than closeof business in London on the 31st day after Total Loss has occurred. Thereafter and subject to theServicing Agent’s strict compliance with Clause 5.2(b) of the Servicing Agency Agreement anyinsurance proceeds received from such insurer shall be for the Servicing Agent’s sole account.


Total Loss means the total loss or destruction of, or damage to the whole of the Sukuk Assets or anyevent or occurrence that renders the whole of the Sukuk Assets permanently unfit for any economic

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use and (but only after taking into consideration the proceeds of any Insurances received by theLessor) the repair or remedial work in respect thereof is wholly uneconomical.

Purchase Undertaking

Under the Purchase Undertaking, Nakheel Holdings 2 undertakes as Purchase Undertaking Obligorthat upon the Issuer exercising its option to oblige the Purchase Undertaking Obligor to purchaseall of the Issuer’s interest in the Sukuk Assets, the Purchase Undertaking Obligor will buy all of theIssuer’s interest in the Sukuk Assets in their then current condition on an “as is” basis (without anywarranty express or implied as to condition, fitness for purpose, suitability for use or otherwise andif any warranty is implied by law, it shall be excluded to the full extent permitted by law) from theIssuer at the Exercise Price. The Issuer may exercise the option:

(a) at any time prior to the Scheduled Redemption Date only following the occurrence of aDissolution Event which is continuing by delivering an Exercise Notice to the PurchaseUndertaking Obligor; or

(b) by no later than 7 Business Days prior to the Scheduled Redemption Date (regardless ofwhether or not a Dissolution Event has occurred which is continuing on that date) bydelivering an Exercise Notice to the Purchase Undertaking Obligor.

If the Purchase Undertaking Obligor fails to pay the Exercise Price on the date specified in theExercise Notice, the Issuer or failing whom, the Transaction Administrator shall be entitled toenforce any of the Mortgages and/or the Share Pledge and/or make demand on the Guarantorunder the Dubai World Guarantee and/or the Co-Obligors under the Co-Obligor Guarantee andapply the net enforcement proceeds in satisfaction of all or part of the Purchase UndertakingObligor’s obligations under the Purchase Undertaking.

If the Purchase Undertaking Obligor fails to settle all or part of the Exercise Price that is due inaccordance with the Purchase Undertaking (the Outstanding Exercise Price), the PurchaseUndertaking Obligor shall irrevocably and unconditionally (without the necessity for any notice orany other action) take on lease the Sukuk Assets from the Issuer (and act as servicing agent inrespect to the Sukuk Assets) with effect from the day immediately following the due date forpayment of the Outstanding Exercise Price on the terms and conditions, mutatis mutandis, of theLease Agreement and the Servicing Agency Agreement, but with Rental being due and payable ona daily basis and calculated as the product of (a) the Outstanding Exercise Price and (b) theaggregate of the QPO Yield and the Short QPO Yield, on the basis of a year of 12 months of 30 dayseach.

The obligations of the Purchase Undertaking Obligor under the Purchase Undertaking constitutes adirect, unconditional and unsubordinated obligation of such Purchase Undertaking Obligor whichwill at all times rank pari passu with all other unsecured and unsubordinated obligations of suchPurchase Undertaking Obligor, save for such obligations as may be preferred by provisions of lawthat are both mandatory and of general application.

Share Pledge

In order to secure the payment obligations of the Co-Obligors under the Transaction Documents,Nakheel Holdings 1 shall grant a fully perfected pledge within sixty (60) days of the Closing Date(the Share Pledge) in favour of the Issuer over not less than 156,402,856 shares of Nakheel PJSC(representing not less than eighteen point eight nine per cent. (18.89%) of all the issued shares ofNakheel PJSC at the time of granting the Share Pledge).

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Co-Obligor Guarantee

The Co-Obligors shall grant a guarantee (the Co-Obligor Guarantee) in favour of the Issuer underwhich they shall each irrevocably and unconditionally guarantee the payment, delivery and otherobligations of each other under the Transaction Documents.

Under the Co-Obligor Guarantee, the Co-Obligors have entered into the following covenants:

Ownership of Nakheel

Each Co-Obligor covenants that:

(a) for the period prior to the first QPO Pricing Date in respect of any QPO of Nakheel, the Co-Obligors shall maintain direct or indirect full ownership and control of Nakheel; and

(b) for the period following the first QPO Pricing Date in respect of any QPO of Nakheel until theCertificates have been redeemed in full, the Co-Obligors shall maintain, directly, not less thanmajority ownership of Nakheel.

Limitation on Financial Indebtedness

Each Co-Obligor shall not, and each Co-Obligor shall procure that each Additional Co-Obligor GroupCompany shall not, directly or indirectly, create, incur, issue, assume, guarantee or otherwisebecome directly or indirectly liable, contingently or otherwise, with respect to (collectively, incur)any Financial Indebtedness other than:

(a) Financial Indebtedness arising under or in connection with the Purchase Undertaking, LeaseAgreement, the Co-Obligor Guarantee or the other Transaction Documents to which it is aparty;

(b) in addition, Financial Indebtedness in the aggregate among all Co-Obligors not exceedingUS$1,000,000,000 at any time provided always that:

(i) at the time of incurring such Financial Indebtedness, no Event of Default shall haveoccurred (and be continuing) or would occur as a consequence of incurring suchFinancial Indebtedness; and

(ii) such Financial Indebtedness may not include any Co-Obligor Excluded FinancialIndebtedness;

(c) in addition and solely with respect to the Purchase Undertaking Obligor, FinancialIndebtedness incurred upon redemption of the Certificates provided always that the proceedsof such Financial Indebtedness shall be used solely by the Purchase Undertaking Obligor tomake payments due by it under the Purchase Undertaking.

Each Co-Obligor shall procure that no member of the Nakheel Group shall incur any FinancialIndebtedness other than Permitted Financial Indebtedness.

Asset Sales

Each Co-Obligor will not, and each Co-Obligor shall procure that each Additional Co-Obligor GroupCompany will not, directly or indirectly, enter into any Asset Sale unless:

(a) the gross sales proceeds or consideration received by such Co-Obligor is at least equal to theFair Market Value of the assets sold or disposed of; and

(b) in the case of any Asset Sale of an asset with a book value (as determined by reference to themost recently available financial statements of such Co-Obligor, prepared in accordance withInternational Financial Reporting Standards, or such other international financial reportingstandards as may be adopted, from time to time by such Co-Obligor) that exceeds

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US$200,000,000 (or its equivalent in the applicable currency), the determination as towhether such Asset Sale complies with (a) above shall be made by an Independent Appraiser.

Each Co-Obligor shall procure that no member of the Nakheel Group will, directly or indirectly, enterinto any Asset Sale of any Capital Stock of any Subsidiary or of any of its other property or assets,in each case with a book value (as determined by reference to the Relevant Accounts) that exceedsUS$200,000,000 (or its equivalent in the applicable currency) unless the gross sales proceeds orconsideration received by such Person is at least equal to the Fair Market Value of the assets sold ordisposed of, in each case as determined by an Independent Appraiser.

In addition, each Co-Obligor shall procure that the aggregate book value (as determined byreference to the Relevant Accounts) of all assets sold, transferred or otherwise disposed of at anytime after the Closing Date by any member of the Nakheel Group in Asset Sales for consideration atless than Fair Market Value shall not exceed twenty per cent. of the then consolidated total assetsof Nakheel at the time of any such proposed Asset Sale.

Loans

None of the Co-Obligors shall, and shall procure that no member of the Co-Obligor Group shall,make any loans or grant any credit to or for the benefit of any person, other than:

(a) in the normal course of its day-to-day real estate and development activities;

(b) loans from one Co-Obligor to another Co-Obligor or to Nakheel or to any of Nakheel’s whollyowned, direct or indirect Subsidiaries;

(c) loans from any member of the Nakheel Group to any Co-Obligor, or to Nakheel or to any ofNakheel’s wholly owned, direct or indirect Subsidiaries;

(d) loans from any Co-Obligor or any member of the Co-Obligor Group to the Guarantor,provided always that such loans are on arm’s length terms and are repayable on demand.

Dividends and share redemption

Each Co-Obligor undertakes that it shall not return or redeem any shareholder capital which is inthe form of Capital Stock.

Each Co-Obligor undertakes that it shall not:

(a) declare, make or pay any dividend (or interest on any unpaid dividend, whether in cash or inkind or from any reserve account or otherwise); or

(b) return or repay any shareholder or proprietary loans (including, without limitation,repayments of interest, principal, fees or costs in respect of any such shareholder orproprietary loans),

unless the Nakheel Available Accumulated Distributable Profits at such time exceedUS$4,000,000,000 (or its equivalent in AED) for the relevant year.

Negative Pledge

Each Co-Obligor undertakes that it shall not, and shall procure that each Additional Co-ObligorGroup Company shall not, create or permit to subsist any Security Interest upon the whole or anypart of its present or future assets or revenues (including uncalled capital) to secure anyIndebtedness of any Person, other than any Permitted Security Interest, without, in the case of eachCo-Obligors:

(a) at the same time or prior thereto securing equally and rateably therewith its obligations underthe Transaction Documents to which it is, in whatever capacity, a party; or

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(b) providing such other Security Interest for the obligations of the Co-Obligors under theTransaction Documents as may be approved by the Issuer (with the prior written consent ofthe Transaction Administrator).

Restrictions on the Grant of Security

Each Co-Obligor shall procure that no member of the Nakheel Group shall create or permit tosubsist any Security Interest, other than any Permitted Nakheel Security Interest, upon the whole orany part of its present or future assets or revenues (including uncalled capital) to secure anyIndebtedness of any Third Party.

Insurance

Each of the Co-Obligors shall, and shall procure that each member of the Co-Obligor Group shall,obtain and maintain insurance with an insurer or insurers of sufficient standing against such lossesand risks and in such amounts as are customary in the businesses (or substantially similarbusinesses) in which they are engaged in the jurisdiction where they operate; provided that if suchmember of the Co-Obligor Group can remedy any failure to comply with the above within 30 days,this covenant shall be deemed not to have been breached.

Financial Information

Each Co-Obligor undertakes that it shall deliver to the Issuer, with a copy to the TransactionAdministrator:

(a) the consolidated audited annual financial statements of Nakheel prepared in accordance withInternational Financial Reporting Standards, or such other international financial reportingstandards as may be adopted from time to time by Nakheel consistently applied with thecorresponding financial statements for the preceding period, within 180 days of the end ofthe financial year to which such statements relate; and

(b) the consolidated semi-annual (or other interim) unaudited financial statements of Nakheel ineach case (subject to a limited review of its auditors) prepared in accordance withInternational Financial Reporting Standards, or such other international financial reportingstandards as may be adopted from time to time by Nakheel consistently applied with thecorresponding financial statements for the preceding period, within 120 days of the end ofthe period to which such statements relate.

Each Co-Obligor shall also provide the Issuer and the Transaction Administrator within fourteen(14) days following written request by the Transaction Administrator with a certificate (suchcertificate, a compliance certificate) signed by the Manager, or a duly authorised signatoryappointed by the Manager, of such Co-Obligor stating that, to the best of the signing person’sknowledge, there did not exist and had not existed since the relevant date of the previous certificate(or, in the case of the first certificate, the date hereof) any Event of Default or Potential Event ofDefault (or, if an Event of Default or Potential Event of Default shall have occurred, describing allsuch Events of Default or Potential Events of Default of which he may have knowledge), providedalways that each Co-Obligor shall not be required to give more than one compliance certificate inany twelve-month period.

Share Pledge

Each of the Co-Obligors undertakes that, as soon as practicable and in any event on or before thedate falling sixty (60) days after the Closing Date, it shall procure that all the issued share capital ofNakheel is fully paid up and capitalised at not less than AED 82,790,729,200.

Nakheel Holdings 1 undertakes that, as soon as practicable and in any event following the stepsreferred to above but on or before the date falling sixty (60) days after the Closing Date, it shall

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grant a fully perfected share pledge in favour of the Issuer over not less than 156,402,856 shares ofNakheel (representing not less than eighteen point eight nine per cent. (18.89%) of all of the issuedshares of Nakheel at the time of granting the Share Pledge) and procure that such Share Pledge isnoted in the share register of Nakheel.


Additional Co-Obligor Group Company means, at any time, any Subsidiary of each Co-Obligorwhich is not a member of the Nakheel Group.

Applicable Financial Indebtedness means, at any time, the aggregate of:

(a) all scheduled principal repayments in respect of any Financial Indebtedness of the NakheelGroup which fall due in the immediately succeeding twelve month period; and

(b) an amount equal to fifteen per cent. of all scheduled principal repayments in respect of anyFinancial Indebtedness of the Nakheel Group falling due after the immediately succeedingtwelve month period.

Asset Sale means any sale, lease, sale and lease-back, transfer or other disposition by any memberof the Co-Obligor Group of all or any of the legal or beneficial interest in either any Capital Stock ofany Subsidiary or any other property or assets of such member of the Co-Obligor Group (either inone transaction or in a series of related transactions, at the same time or over a period of time) toany Person who is not a member of the Co-Obligor Group at such time.

Board of Directors means, with respect to any Person who is a body corporate, the board ofdirectors of such Person or any duly authorised committee thereof.

Capital Stock means, with respect to any Person, any and all shares, interests, participations or otherequivalents (however designated, whether voting or non-voting) of such Person’s equity, includingany preferred stock of such Person, whether now outstanding or issued after the date hereof,including, without limitation, all series and classes of such Capital Stock.

Co-Obligor Excluded Financial Indebtedness means any guarantee or indemnity granted by any Co-Obligor in respect of any Financial Indebtedness of any Person who is not a member of the Co-Obligor Group.

Co-Obligor Group means the Co-Obligors and the respective direct or indirect Subsidiaries of eachCo-Obligor at the relevant point in time.

Co-Obligor Guarantee has the meaning given to such term in the Conditions.

EBITDA means, in relation to any period, the annualised consolidated operating profit of Nakheelfor that period (which, for the avoidance of doubt, is calculated before taxation and Total FinancialIndebtedness Costs) but adjusted to the extent necessary to exclude:

(a) any share of the profit or loss of any associated company, associated undertaking or jointventure and any income from any other fixed asset investments;

(b) any amounts written off the value of investments; and

(c) extraordinary and exceptional items, including realised and unrealised exchange gains andlosses and any revaluation gains or losses on any assets, in each case which do not relate toordinary trading activities,

but adding back amounts charged in the period in respect of the depreciation or amortisation oftangible and intangible fixed assets, all as interpreted and calculated in accordance with theRelevant Accounts but using the accounting principles and standards adopted by Nakheel for thepreparation of the Relevant Accounts for the twelve months ended 31 December 2005.

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Fair Market Value means, with respect to any Capital Stock, asset or property, the sale value thatwould be paid in an arm’s-length transaction between an independent, informed and willing sellerunder no compulsion to sell and an independent, informed and willing buyer under no compulsionto buy.

Financial Indebtedness means any indebtedness for or in respect of:

(a) moneys borrowed;

(b) any amount raised by acceptance under any acceptance credit facility;

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes,debentures, loan stock or any similar instrument;

(d) the amount of any liability in respect of any lease or hire purchase contract which would betreated as a finance or capital lease in accordance with the accounting standards, policies andprocedures published from time to time by the International Accounting StandardsCommittee or any equivalent successor body acceptable (acting reasonably) to the Agent;

(e) receivables sold or discounted (other than any receivables to the extent they are sold on anon-recourse basis);

(f) any amount raised under any other transaction (including any forward sale or purchaseagreement, sale and leaseback agreement or any Sharia compliant financing) having thecommercial effect of a borrowing;

(g) to the extent not otherwise included in this definition, the amount of any liability in respectof any repurchase or put option arrangement entered into in connection with anysecuritisation transaction;

(h) any counter indemnity obligation in respect of a guarantee, indemnity, bond, standby ordocumentary letter of credit or any other instrument issued by a bank or financial institution;and

(i) the amount of any liability in respect of any guarantee or indemnity for any of the itemsreferred to in paragraphs (a) to (h) above,

provided always that any indebtedness in respect of deposits made by potential or actual purchasersof real estate of any member of the Nakheel Group in the ordinary course of its day to day real estateand development activities shall not constitute Financial Indebtedness.

full ownership and control means in respect of one Person (the First Person) and another Person(the Second Person):

(a) the ownership of and control by the First Person of all the issued Capital Stock of the SecondPerson (whether by way of legal or beneficial ownership, or by way of any voting trust orother agreement to which the First Person and the Second Person are party or subject); and

(b) the right of the First Person to appoint or remove either the Chairman of the Second Person(if the Second Person is the Guarantor), all Managers of the Second Person (if the SecondPerson is a limited liability company incorporated under the laws of the Emirate of Dubai) or,in all other cases, all of the Board of Directors of the Second Person.

Indebtedness means any indebtedness in respect of any Person on any date (and withoutduplication) for or in respect of:

(a) any Financial Indebtedness of such Person;

(b) the amount of any liability of such Person to pay the deferred and unpaid purchase price ofproperty, assets or services, which purchase price is due more than 90 days after the earlier

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of the date of placing such property in service or taking delivery and title thereof or thecompletion of such services;

(c) the principal component or liquidation preference of all obligations of such Person withrespect to the redemption, repayment or other repurchase of any preferred stock;

(d) all indebtedness of any other Person secured by a Security Interest granted by such Person onany of its asset (the value of which, for these purposes, shall be determined by reference tothe balance sheet in respect of the latest available audited accounts of the Person providingthe Security Interest) of such Person, whether or not such indebtedness is assumed by suchPerson;

(e) all indebtedness of other Persons guaranteed by such Person to the extent such Indebtednessis guaranteed by such Person;

(f) the amount of any liability in respect of any guarantee or indemnity for any of the itemsreferred to in paragraphs (a) to (e) above.

Independent Appraiser means any independent investment bank, independent accounting firm,independent firm of property surveyors or independent firm of appraisers, in each case ofinternational standing selected by either the Issuer or the Guarantor with the prior consent of theTransaction Administrator, such consent not to be unreasonably withheld.

majority ownership means in respect of one Person (the First Person) and another Person (theSecond Person) the ownership of and control by the First Person of more than 50 per cent. of theissued Capital Stock of the Second Person (whether by way of legal or beneficial ownership, or byway of any voting trust or either agreement to which First Person and the Second Person are partyor subject).

majority ownership and control means in respect of one Person (the First Person) and anotherPerson (the Second Person):

(a) the ownership of and control by the First Person of more than 50 per cent. of the issuedCapital Stock of the Second Person (whether by way of legal or beneficial ownership, or byway of any voting trust or either agreement to which First Person and the Second Person areparty or subject); and

(b) the right of the First Person to appoint or remove a majority of the Board of Directors of theSecond Person.

Manager means any person appointed as the manager of any limited liability company incorporatedin the Emirate of Dubai.

Nakheel Available Accumulated Distributable Profits means, at any time, the accumulated, realisedprofits of Nakheel (so far as not previously utilised by distribution or capitalisation including, for theavoidance of doubt, accumulated distributable profits from prior financial years not distributed) lessits accumulated, realised losses (so far as not previously written off in a reduction or areorganisation of capital duly made) and available for distribution as dividends under applicablelaws and regulations, as interpreted and calculated in accordance with the Relevant Accounts.

Nakheel Excluded Financial Indebtedness means any guarantee or indemnity granted by anymember of the Nakheel Group in respect of any Financial Indebtedness of any Person who is not amember of the Nakheel Group.

Permitted Financial Indebtedness means at the relevant point in time:

(a) Financial Indebtedness of any member of the Nakheel Group in existence at the Closing Date;

(b) any future Financial Indebtedness incurred by any member of the Nakheel Group providedthat, when taken together with all existing Financial Indebtedness (other than Project Finance

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Indebtedness permitted under paragraph (c) of this definition), the aggregate of all suchFinancial Indebtedness of the Nakheel Group (on a consolidated basis and, for the avoidanceof doubt, not including any intra-group indebtedness) at such time does not exceedUS$6,500,000,000;

(c) any future Project Finance Indebtedness of any member of the Nakheel Group provided that,when taken together with all existing Project Finance Indebtedness, the aggregate of all suchProject Finance Indebtedness of the Nakheel Group, at such time, does not exceedUS$1,000,000,000; and

(d) in addition to any Financial Indebtedness permitted under paragraph (b), any future FinancialIndebtedness incurred by any member of the Nakheel Group where, after giving effect to theincurrence of such Financial Indebtedness:

(i) the ratio of EBITDA to Applicable Financial Indebtedness shall exceed 2:1;

(ii) the ratio of Total Liabilities to Tangible Net Worth shall not exceed 0.85:1; and

(iii) the ratio of Total Financial Indebtedness to Tangible Net Worth shall not exceed 0.5:1,

Provided always that in the case of paragraphs (b), (c) and (d):

(x) no Financial Indebtedness may be incurred if an Event of Default has occurred and iscontinuing, or would occur as a result of the incurrence of such Financial Indebtedness; and

(y) any such Financial Indebtedness may not include any Nakheel Excluded FinancialIndebtedness.

Permitted Nakheel Security Interest means any Security Interest existing on the Closing Date whichhas been granted by Nakheel in favour of Law Debenture Overseas (No.1) Limited (in its capacity assecurity trustee acting on behalf of the holders of the US$350,000,000 floating rate secured notesdue 2014 issued on 6 May 2005 by Ensec Home Finance Pool 1, Ltd.) over US$350,000,000 of cashor other eligible US dollar denominated obligations and securities.

Permitted Security Interest means:

(a) any Security Interest securing the payment obligations arising under any of the TransactionDocuments;

(b) any Security Interest created by the operation of a reservation of title clause contained in avendor’s or supplier’s standard terms and conditions of sale in respect of goods acquired byany Co-Obligor in the ordinary course of its business;

(c) any Security Interest existing on the Closing Date;

(d) any rights of set-off or netting arising in the ordinary course of banking transactions providedthat the Security Interest is limited to the assets which are the subject of the relevanttransactions

(e) any Security Interest granted over assets in connection with the purchase or lease of suchassets to secure the payment of the purchase price or lease price or any indebtedness incurredto finance the acquisition or lease of such asset, provided that no such Security Interest shallextend to any other property or assets of the Co-Obligors;

(f) any Security Interest on any property or assets of any Person existing at the time such Personis acquired, merged or consolidated with or into any Co-Obligor and not created incontemplation of such event; provided that no such Security Interest shall extend to any otherproperty or assets of such Person or to any other property or assets of any Co-Obligor;

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(g) any Security Interest existing on any property or assets prior to the acquisition thereof by anyCo-Obligor and not created in contemplation of such acquisition; provided that no suchSecurity Interest shall extend to any other property or assets or any property or assets of theCo-Obligors and the aggregate principal amount of all indebtedness secured on such propertyor assets shall not exceed the acquisition cost of such property or assets;

(h) any extension, renewal or replacement of any Security Interest described in clauses (a) to (g)above, provided that (i) such extension, renewal or replacement shall be no more restrictivein any material respect than the original Security Interest, (ii) the amount of Indebtednesssecured by such Security Interest is not increased and (iii) if the property or assets securingthe Indebtedness subject to such Security Interest are changed in connection with suchrefinancing, extension or replacement, the Fair Market Value of such property or assets is notincreased; and

(i) any Security Interest arising solely by operation of law which is discharged within 45 days ofarising.

Person means any individual, corporation, partnership, joint venture, association, joint stockcompany, trust, unincorporated organisation, limited liability company or government or agency, orpolitical subdivision thereof, or other entity.

Project Finance Indebtedness means any Financial Indebtedness of any member of the NakheelGroup, the proceeds of which are used for the acquisition, construction or development of anyproject provided always that:

(a) any Security Interest given by Nakheel or, as the case may be, its Subsidiary is limited solelyto the assets of the project;

(b) the Person(s) providing the Financial Indebtedness expressly agrees to limit its recourse to theproject financed, and the revenues derived from such project as the principal source ofrepayment for such Financial Indebtedness; and

(c) there is no other recourse to Nakheel or, as the case may be, its Subsidiary in respect of anydefault or shortfall under such financing.

Relevant Accounts means, at any time, the most recently available consolidated audited financialstatements of Nakheel, prepared in accordance with International Financial Reporting Standards, orsuch other international financial reporting standards as may be adopted, from time to time byNakheel.

Security Interest means any mortgage, pledge, security interest, encumbrance, lien or charge of anykind (including, without limitation, any conditional sale or other title retention agreement or leasein the nature thereof, any sale with recourse against the seller or any affiliate of the seller, or anyagreement to give any security interest) securing any obligation of any Person.

Subsidiary means, with respect to any Person:

(a) any corporation, association, partnership or other business entity of which more than 50 percent. of the total voting rights of its Capital Stock is at the time owned or controlled directlyby such Person, or by such Person and one or more Subsidiaries of such Person or by one ormore Subsidiaries of such Person;

(b) any partnership in which such Person or a Subsidiary of such Person is, at the time, a generalpartner; or

(c) any other Person in which such Person, one or more Subsidiaries of such Person, or suchPerson and one or more Subsidiaries of such Person, directly or indirectly, at the date ofdetermination thereof has (x) over a 50 per cent. ownership interest or (y) the power to elector direct the election of a majority of the directors, members of the Board of Directors or

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other governing body of such Person and, in respect of each Co-Obligor, shall include Nakheeland each of its Subsidiaries.

Tangible Net Worth means, on any date, the aggregate amount of the paid up share capital ofNakheel (other than shares which are expressed to be redeemable) plus amounts standing to thecredit of the share premium account and any capital redemption reserves plus or minus theaggregate amount standing in Nakheel’s capital and reserves (on a consolidated basis) as shown inthe Relevant Accounts.

Third Party means any Person who is not a member of the Nakheel Group or under the direct orindirect full ownership and control of Nakheel.

Total Financial Indebtedness means, at any time, the aggregate of all Financial Indebtedness of theNakheel Group (without double counting).

Total Financial Indebtedness Costs means, in respect of any period, all interest, commissions,periodic fees and other financing charges accrued or accreted by any of the Nakheel Group duringthat period (including the interest element payable under any finance lease, any finance costs orcharges incurred under any Sharia compliant financing transaction and all amounts payable whichare classified as finance charges in respect of financial instruments classified as liabilities inaccordance with International Financial Reporting Standards, or such other international financialreporting standards as may be adopted, from time to time, by Nakheel).

Total Liabilities means the consolidated total liabilities of Nakheel as set out in the “Total Liabilities”line item (or equivalent) in the Relevant Accounts.

Mortgages

In order to secure the payment obligations of the Co-Obligors under the Transaction Documents,Nakheel Holdings 1 (the Mortgagor) shall grant two fully perfected mortgages, free from anysecurity interest and encumbrance, on or about the Closing Date in favour of the Security Agentover the Property (which, at the time of granting the mortgages, shall be free from encumbrances,security and third party interests).

Pursuant to the Sukuk Assets Sale Undertaking, Nakheel Holdings 1 may substitute the mortgagedassets on up to four separate occasions on the terms described more particularly therein.

Dubai World Guarantee

Dubai World shall grant a guarantee in favour of the Issuer on the Closing Date (the Dubai WorldGuarantee) under which the Guarantor shall irrevocably and unconditionally guarantee thepayment obligations of the Co-Obligors under the Transaction Documents.

The obligations of the Guarantor under the Dubai World Guarantee constitute an unsecured, direct,unconditional and unsubordinated obligation of the Guarantor which will at all times rank pari passuwith all other unsecured and unsubordinated obligations of the Guarantor, save for such obligationsas may be preferred by provisions of law that are both mandatory and of general application.

Under the Dubai World Guarantee, the Guarantor has entered into the following covenants:

Ownership of Nakheel World, the Co-Obligors and Nakheel

The Guarantor covenants that:

(a) it shall maintain, directly or indirectly, full ownership and control of each Co-Obligor; and

(b) it shall maintain direct indirect majority ownership and control of Nakheel World.

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The Guarantor covenants to procure that Nakheel World shall maintain direct or indirect fullownership and control of each Co-Obligor.

Negative Pledge

The Guarantor shall not create or permit to subsist any Security Interest (other than any SecurityInterest arising under any of the Transaction Documents) upon the whole or any part of:

(a) the Guarantor’s shareholding in Nakheel World; and

(b) Nakheel World’s shareholding in any of the Co-Obligors.

Subscription Rights Sale Undertaking

Pursuant to the terms of the Sale Undertaking, Nakheel Holdings 2 (the QPO Obligor) shallundertake to procure the sale and delivery to the Issuer (or to its order) of QPO Shares in order toenable the Issuer to comply with its obligations under Condition 22.

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TAXATION

The following is a general description of certain tax considerations relating to the Certificates. It doesnot purport to be a complete analysis of all tax considerations relating to the Certificates. Prospectivepurchasers of Certificates should consult their tax advisers as to the consequences under the tax lawsof the country of which they could be resident for any tax purposes and the tax laws of the UnitedArab Emirates of acquiring, holding and disposing of Certificates and receiving payments in respectof Periodic Distribution Amounts and/or other amounts under the Certificates. This summary is basedupon laws, decrees, rulings, administrative practice and judicial decisions as in effect on the date ofthis Offering Circular and is subject to any change in law that may take effect after such date andwhich could have retroactive effect. As no information currently exists on the nature or identity of anyQPO Shares to be delivered pursuant to the Subscription Rights Sale Undertaking, the followingsummary does not purport to address any potential tax considerations relating to the acquisition,delivery, holding and/or disposal of any QPO Shares. Prospective purchasers of the Certificates areadvised to consult their own tax advisers as to the possible overall tax consequences of the acquisition,delivery, holding and/or disposal of any QPO Shares.

Dubai Taxation

The following summary of the anticipated tax treatment in the UAE in relation to the paymentsunder the Certificates is based on the taxation law and practice in force at the date of this OfferingCircular, and does not constitute legal or tax advice and prospective investors should be awarethat the relevant fiscal rules and practice and their interpretation may change. Prospectiveinvestors should consult their own professional advisers on the implications of subscribing for,buying, holding, selling, redeeming or disposing of Certificates and the receipt of any paymentsin respect of any Periodic Distribution Amounts and/or amounts under the Certificates anddistributions (whether or not on a winding-up) with respect to such Certificates under the laws ofthe jurisdictions in which they may be liable to taxation.

There is currently in force in the Emirates of Abu Dhabi and Dubai legislation establishing a generalcorporate taxation regime (the Abu Dhabi Income Tax Decree 1965 (as amended) and the DubaiIncome Tax Decree 1969 (as amended)). The regime is however not enforced save in respect ofcompanies active in the hydrocarbon industry, some related service industries and branches offoreign banks operating in the United Arab Emirates. It is not known whether the legislation will orwill not be enforced more generally or within other industry sectors in the future. Under currentlegislation, there is no requirement for withholding or deduction for or on account of UAE, AbuDhabi or Dubai taxation in respect of payments of accrued return or principal on debt securities(including payments in respect of Periodic Distribution Amounts and/or amounts under theCertificates).

The Constitution of the UAE specifically reserves to the Federal Government of the UAE the right toraise taxes on a Federal basis for purposes of funding its budget. It is not known whether this rightwill be exercised in the future.

The United Arab Emirates has entered into “Double Taxation Arrangements” with a number ofcountries, but these are not extensive in number.

United Kingdom Taxation

The following paragraphs are based on the Issuer’s, Dubai World’s and the Co-Obligors’understanding of United Kingdom law and H.M. Revenue & Customs published practice as at thedate hereof. They describe the United Kingdom withholding tax treatment of payments under theCertificates, certain aspects of United Kingdom income and corporation tax and the extent towhich United Kingdom stamp duty and stamp duty reserve tax may be payable on the issue,transfer and redemption of the Certificates.

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The comments made below do not deal with other United Kingdom tax aspects of acquiring,holding or disposing of Certificates. Those comments are made on the basis of the followingassumptions, that:

(a) the Issuer is not resident in the United Kingdom for any tax purpose or incorporated in theUnited Kingdom;

(b) no register of the Certificates is kept in the United Kingdom by or on behalf of the Issuer;

(c) no payment to the Certificateholders, including any payment in respect of any DistributionAmount, has a United Kingdom source for United Kingdom tax purposes;

(d) the management of the Trust Assets is not under the day-to-day control of theCertificateholders and any other person who participates in relation to the Trust Assets; and

(e) the Trust Assets do not include interests in land situated in the United Kingdom.

Those comments relate only to the position of persons who are absolute beneficial owners of theCertificates.

The following is a general guide and should be treated with appropriate caution.Certificateholders who are in any doubt as to their tax position should consult their professionaladvisers. Certificateholders who may be liable to taxation in jurisdictions other than the UnitedKingdom in respect of their acquisition, holding or disposal of the Certificates are particularlyadvised to consult their professional advisers as to whether they are so liable (and if so under thelaws of which jurisdictions), since the following comments relate only to certain United Kingdomtaxation aspects in respect of the Certificates. In particular, Certificateholders should be awarethat they may be liable to taxation under the laws of other jurisdictions in relation to payments inrespect of the Certificates even if such payments may be made without withholding or deductionfor or on account of taxation under the laws of the United Kingdom.

United Kingdom Withholding Tax

Payments in respect of Periodic Distribution Amounts, the Final Distribution Amount, the AdditionalDistribution Amount (if any) and the Sukuk Issue Amount will be payable without withholding ordeduction for or on account of United Kingdom tax.

Information Reporting

Certificateholders should note that where any payment in respect of any Periodic DistributionAmount, Final Distribution Amount, Additional Distribution Amount (if any) or Sukuk Issue Amountis paid to them (or to any person acting on their behalf) in respect of the Certificates by the Issuer,or paid by any person in the United Kingdom acting on behalf of the Issuer (a paying agent), or isreceived by any person in the United Kingdom acting on behalf of the relevant Certificateholder(other than solely by clearing or arranging the clearing of a cheque) (a collecting agent), then theIssuer, the paying agent or the collecting agent (as the case may be) may, in certain cases, berequired to supply to the H.M. Revenue & Customs details of the payment and certain detailsrelating to the Certificateholder (including the Certificateholder’s name and address). Theseprovisions will apply whether or not the payment has been paid subject to withholding or deductionfor or on account of United Kingdom income tax and whether or not the Certificateholder is residentin the United Kingdom for United Kingdom taxation purposes. Where the Certificateholder is not soresident, the details provided to H.M. Revenue & Customs may, in certain cases, be passed by H.M.Revenue & Customs to the tax authorities of the jurisdiction in which the Certificateholder isresident for taxation purposes.

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United Kingdom Tax on Income

Certificateholders who are resident in the United Kingdom for United Kingdom tax purposes will besubject to United Kingdom income tax or corporation tax on the payment of Periodic DistributionAmounts, the Final Distribution Amount and the Additional Distribution Amount (if any) or on theunderlying income of the Trust. Such Certificateholders may also be liable to income tax, capitalgains tax or to corporation tax on a disposal of their Certificates.

United Kingdom Stamp Duty (Stamp Duty) and Stamp Duty Reserve Tax (SDRT)

No Stamp Duty or SDRT is payable on the issue, transfer or redemption of a Certificate and noStamp Duty or SDRT is payable on the issue of the Certificates for the common depositary forEuroclear and/or Clearstream, Luxembourg. Any instrument transferring a Certificate on the sale ofthe Certificate which is executed in the United Kingdom or which (if not executed in the UnitedKingdom) relates to any matters or thing done or to be done in the United Kingdom will bestampable at 0.5 per cent. of the sale consideration.

Stamp Duty and/or SDRT may be payable in connection with the subscription for QPO Sharesdepending upon the nature of the QPO Shares.

EU Savings Directive

Under EC Council Directive 2003/48/EC on the taxation of savings income, Member States arerequired to provide to the tax authorities of another Member State details of payments of interest(or similar income, which may include Periodic Distribution Amounts and Final Distribution Amountand Additional Distribution Amount, if any) paid by a person within its jurisdiction to an individualresident in that other Member State. However, for a transitional period, Belgium, Luxembourg andAustria are instead required (unless during that period they elect otherwise) to operate awithholding system in relation to such payments (the ending as of such transitional period beingdependent upon the conclusion of certain other agreements relating to information exchange withcertain other countries). A number of non-EU countries and territories including Switzerland haveadopted similar measures (a withholding system in the case of Switzerland) with effect from thesame date.

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CLEARANCE AND SETTLEMENT

The information set out below is subject to any change in or reinterpretation of the rules,regulations and procedures of Euroclear or Clearstream, Luxembourg currently in effect. Theinformation in this section concerning such clearing systems has been obtained from sources thatthe Issuer believes to be reliable, but none of the Issuer, Dubai World, the Co-Obligors or theManagers take any responsibility for the accuracy of this section. The Issuer, Dubai World and theCo-Obligors only take responsibility for the correct extraction and reproduction of the informationin this section. Investors wishing to use the facilities of any of the Clearing Systems are advised toconfirm the continued applicability of the rules, regulations and procedures of the relevant ClearingSystem. None of the Issuer, Dubai World, the Co-Obligors and any other party to the AgencyAgreement will have any responsibility or liability for any aspect of the records relating to, orpayments made on account of, beneficial ownership interests in the Certificates held through thefacilities of any Clearing System or for maintaining, supervising or reviewing any records relating tosuch beneficial ownership interests.

Clearing Systems

Euroclear and Clearstream, Luxembourg each hold securities for their customers and facilitate theclearance and settlement of securities transactions by electronic book-entry transfer between theirrespective account holders. Euroclear and Clearstream, Luxembourg provide various servicesincluding safekeeping, administration, clearance and settlement of internationally traded securitiesand securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal withdomestic securities markets in several countries through established depositary and custodialrelationships. Euroclear and Clearstream, Luxembourg have established an electronic bridgebetween their two systems across which their respective participants may settle trades with eachother. Euroclear and Clearstream, Luxembourg customers are world-wide financial institutions,including underwriters, securities brokers and dealers, banks, trust companies and clearingcorporations. Indirect access to Euroclear and Clearstream, Luxembourg is available to otherinstitutions that clear through or maintain a custodial relationship with an account holder of eithersystem.

Registration and Form

Book-entry interests in the Certificates will be represented by the Global Certificate registered in thename of a common depositary for Euroclear and Clearstream, Luxembourg. Beneficial ownership ofbook-entry interests in the Global Certificate will be held through financial institutions as direct andindirect participants in Euroclear and Clearstream, Luxembourg.

The aggregate holdings of book-entry interests in the Global Certificate in Euroclear andClearstream, Luxembourg will be reflected in the book-entry accounts of each such institution.Euroclear or Clearstream, Luxembourg, as the case may be, and every other intermediate holder inthe chain to the beneficial owner of book-entry interests in the Global Certificate will be responsiblefor establishing and maintaining accounts for their participants and customers having interests inthe book-entry interests in the Global Certificate. The Registrar will be responsible for maintaininga record of the aggregate holdings of the Global Certificate registered in the name of a nominee forEuroclear and Clearstream, Luxembourg and/or, if individual Certificates are issued in the limitedcircumstances described under the Global Certificate, holders of Certificates represented by thoseindividual Certificates. The Principal Paying and Exchange Agent will be responsible for ensuringthat payments received by it from the Issuer for holders of book-entry interests in the GlobalCertificate holding through Euroclear and Clearstream, Luxembourg are credited to Euroclear orClearstream, Luxembourg, as the case may be.

The Issuer will not impose any fees in respect of holding the Global Certificate; however, holders ofbook-entry interests in the Global Certificate may incur fees normally payable in respect of themaintenance and operation of accounts in Euroclear or Clearstream, Luxembourg.

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Clearance and Settlement Procedures

Initial Settlement

Upon their original issue, the Certificates will be in global form represented by the Global Certificate.Interests in the Global Certificate will be in uncertified book-entry form. Purchasers holding bookentry interests in the Global Certificate through Euroclear and Clearstream, Luxembourg accountswill follow the settlement procedures applicable to conventional Eurobonds. Book-entry interests inthe Global Certificate will be credited to Euroclear and Clearstream, Luxembourg participants’securities clearance accounts on the business day following the Closing Date against payment (valuethe Closing Date).

Secondary Market Trading

Because the purchaser determines the place of delivery, it is important to establish at the time oftrading of any Certificates where both the purchaser’s and seller’s accounts are located to ensurethat settlement can be made on the desired value date.

Trading between Euroclear and/or Clearstream, Luxembourg participants

Secondary market trading between Euroclear participants and/or Clearstream, Luxembourgparticipants will be settled using the procedures applicable to conventional Eurobonds in same-dayfunds.

General

Neither of Euroclear and Clearstream, Luxembourg is under any obligation to perform or continueto perform the procedures referred to above, and such procedures may be discontinued at any time.

None of the Issuer, the Trustee or any of their agents will have any responsibility for theperformance by Euroclear or Clearstream, Luxembourg or their respective participants of theirrespective obligations under the rules and procedures governing their operations or thearrangements referred to above.

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SUBSCRIPTION AND SALE

Each of the managers named in the table below (each a Manager and together the Managers) have,pursuant to a Subscription Agreement dated 12 December 2006 (as subsequently amended),severally agreed with the Issuer, subject to the satisfaction of certain conditions, to subscribe for theCertificates for the principal amount of Certificates set opposite its name in the table below at theissue price of 100.00 per cent. of their principal amount. The Co-Obligors have agreed to pay to theManagers certain commissions for acting in such capacity. In addition, the Co-Obligors have agreedto reimburse the Managers for certain of their expenses in connection with the issue of theCertificates. The Subscription Agreement entitles the Managers to terminate it in certaincircumstances prior to payment in respect of the Certificates being made to the Issuer.

FaceManagers Amount

1111

(US$)Barclays Bank PLC .......................................................................................................................... 1,760,000,000Dubai Islamic Bank PJSC .............................................................................................................. 1,760,000,000

1111

Total .................................................................................................................................................. 3,520,000,00011111111

United States

The Certificates and any QPO Shares to be delivered under them have not been and will not beregistered under the Securities Act and may not be offered or sold within the United States exceptpursuant to an exemption from, or in a transaction not subject to, the registration requirements ofthe Securities Act. The Managers have represented that that they have not offered or sold, andagreed that they would not offer or sell, any Certificates constituting part of its allotment within theUnited States except in accordance with Rule 903 of Regulation S. Accordingly, neither they, theiraffiliates, nor any persons acting on their behalf have engaged or will engage in any directed sellingefforts with respect to the Certificates. Terms used in this paragraph have the meanings given tothem by Regulation S.

United Kingdom:

Each Manager has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or causeto be communicated an invitation or inducement in connection with the Certificates topersons to whom such an invitation or inducement can lawfully be communicated or causedto be communicated under applicable United Kingdom law (including Section 21 and Section238 of the FSMA); and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect toanything done by it in relation to the Certificates in, from or otherwise involving the UnitedKingdom.

United Arab Emirates

Each Manager has represented and agreed that the Certificates have not been and will not beoffered, sold or publicly promoted or advertised by it in the United Arab Emirates other than incompliance with laws applicable in the United Arab Emirates governing the issue, offering and saleof securities.

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Bahrain

Each Manager has represented, warranted and undertaken that it has not offered and will not offer,Certificates to the Public (as defined in Articles 162-146 of the Commercial Companies Law (decreeLaw No. 21/2001) of Bahrain) in Bahrain.

Kuwait

Each Manager has represented and agreed that no marketing or sale of the Certificates may takeplace in Kuwait unless the same has been duly authorised by the Kuwait Ministry of Commerce andIndustry pursuant to the provisions of Law No. 31/1990 and the various ministerial regulationsissued thereunder.

Saudi Arabia

Any investor in the Kingdom of Saudi Arabia or who is a Saudi person (a Saudi Investor) whoacquires Certificates pursuant to the offering should note that the offer of Certificates is an exemptoffer under sub-paragraph (3) of paragraph (a) of Article 16 of the “Offer of Securities Regulations”as issued by the board of the Capital Market Authority resolution number 2-11-2004 dated 4October 2004 and amended by Resolution of the Board of the Capital Market Authority resolutionnumber 1-33-2004 dated 21 December 2004 (the KSA Regulations). The Certificates may beoffered to no more than 60 Saudi Investors and the minimum amount payable by each SaudiInvestor must not be less than Saudi Riyal (SR) 1 million or an equivalent amount. The offer ofCertificates is therefore exempt from the public offer of the KSA Regulations, but is subject to thefollowing restrictions on secondary market activity:

(a) a Saudi Investor (the transferor) who has acquired Certificates pursuant to this exempt offermay not offer or sell Certificates to any person (referred to as a transferee) unless the price tobe paid by the transferee for such Certificates equals or exceeds SR 1 million,

(b) if the provisions of paragraph (a) cannot be fulfilled because the price of the Certificates beingoffered or sold to the transferee has declined since the date of the original exempt offer, thetransferor may offer or sell the Certificates to the transferee if their purchase price during theperiod of the original exempt offer was equal to or exceeded SR 1 million,

(c) if the provisions of (a) and (b) cannot be fulfilled, the transferor may offer or sell Certificatesif he/she sells his entire holding of Certificates to one transferee,

(d) the provisions of paragraphs (a), (b) and (c) shall apply to all subsequent transferees of theCertificates.

Qatar

Each of the Managers has represented and warranted that this Offering Circular is only intended tobe distributed to persons who are not Retail Customers (as such term is defined in the QFCRegulatory Authority Interpretation and Application Rulebook, Glossary of Defined Terms).

Singapore

This Offering Circular has not been registered as a prospectus with the Monetary Authority ofSingapore under the Securities and Futures Act (SFA) and the Certificates are offered by the Issuerpursuant to exemptions invoked under Sections 304 and 305 of the SFA. Accordingly, each of theManagers has represented and agreed that it has not offered or sold and that it will not offer or selland Certificates or cause such Certificates to be made the subject of an invitation for subscriptionor purchase, nor will it circulate or distribute this Offering Circular or any other document ormaterial in connection with the offer or sale, or invitation for subscription or purchase, of theCertificates, whether directly or indirectly, to the public or any member of the public in Singapore

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other than (i) to an institutional investor or other person specified in Section 304 of the SFA, or (ii)pursuant to, and in accordance with the conditions, of any other applicable provision of the SFA.

Hong Kong

Each Manager has represented and agreed that:

(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document,the Certificates other than (i) to persons whose ordinary business is to buy or sell shares ordebentures (whether as principal or agent); or (ii) in other circumstances which do not resultin the document being an offer to the public within the meaning of the Companies Ordinance(Cap. 32) the (CO); or (iii) to “professional investors” within the meaning of the Securities andFutures Ordinance (Cap. 571) (the SFO) and any rules made under the SFO; or (iv) in othercircumstances which do not result in the document being a “prospectus” which do notconstitute an offer to the public within the meaning of the CO; and

(b) it has not issued or had in its possession for the purposes of issue, and will not issue or havein its possession for the purposes of issue (in each case whether in Hong Kong or elsewhere),any advertisement, invitation or document relating to the Certificates, which is directed at, orthe contents of which are likely to be accessed or read by, the public in Hong Kong (except ifpermitted to do so under the laws of Hong Kong) other than with respect to the Certificateswhich are or are intended to be disposed of only to persons outside Hong Kong or only to“professional investors” within the meaning of the SFO and any rules made under the SFO.

Malaysia

Each Manager has acknowledged that the offer of the Certificates in Malaysia can only be made toinvestors specified in Schedules 2, 3 and 5 of the Securities Commission Act 1993 (i.e. sophisticatedinvestors, e.g. unit trust schemes, licensed dealers, closed-end funds, fund managers, licensedfinancial institutions, license offshore banks, licensed insurance companies, corporations with totalnet assets exceeding ten million Malaysian ringgit or its equivalent in foreign currencies, statutorybodies and pensions funds).

Italy

Each Manager has acknowledged and agreed that no prospectus has been nor will be published inItaly in connection with the offering of the Certificates and that such offering has not been clearedby the Italian Securities Exchange Commission (Commissione Nazionale per le Societe e la Borsa)nor by the Bank of Italy pursuant to Italian securities legislation and, accordingly, has representedand agreed that the Certificates may not and will not be offered, sold or delivered, nor may or willcopies of the Certificates or any other document relating to the Certificates or the offering thereofbe distributed in Italy.

Dubai International Financial Centre

This Offering Circular relates to an Exempt Offer in accordance with the Offered Securities Rules ofthe Dubai Financial Services Authority (DFSA). It is intended for distribution only to persons of atype specified in those rules. It must not be delivered to, or relied on by, any other person. The DFSAhas no responsibility for reviewing or verifying any documents in connection with Exempt Offers.The DFSA has not approved this document nor taken steps to verify the information set out in it andhas no responsibility for it. The securities to which this document relates may be illiquid and/orsubject to restrictions on their resale. Prospective purchasers of the securities offered shouldconduct their own due diligence on the securities. If you do not understand the contents of thisdocument you should consult an authorised financial adviser.

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General

No action has been or will be taken in any jurisdiction by the Managers, the Issuer, Dubai World orthe Co-Obligors that would permit a public offering of the Certificates, or possession or distributionof the Offering Circular or any other offering or publicity material relating to the Certificates, in anycountry or jurisdiction where action for that purpose is required. Each Manager will comply, to thebest of its knowledge and belief, with all applicable laws and regulations in each jurisdiction in whichit acquires, offers, sells or delivers Certificates or has in its possession or distributes the OfferingCircular or any such other material, in all cases at its own expense.

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GENERAL INFORMATION

Authorisation

1. The issue of the Certificates is authorised under the constitutional documents of the Issuer.The entry into by Dubai World of the Transaction Documents to which it is a party was dulyauthorised by a resolution of the Chairman of Dubai World on 12 November 2006. The entryinto by each Co-Obligor of the Transaction Documents to which it is a party was dulyauthorised by the Executive Chairman of each Co-Obligor on 12 November 2006. The Issuer,the Co-Obligors and Dubai World have obtained all necessary consents, approvals andauthorisations in connection with the issuance of the Certificates and entry into of theTransaction Documents to which each is a party.

Listing

2. Application has been made to list the Certificates on the Dubai International FinancialExchange. The anticipated date for listing the Certificates shall be on or about the ClosingDate.

Clearing Systems

3. The Certificates have been accepted for clearance through Euroclear and Clearstream,Luxembourg. The ISIN for the Certificates is XS0277553052. The Common Code for theCertificates is 027755305.

No Significant Change and No Litigation

4. Except as disclosed in this Offering Circular, since 31 December 2005 (the last day of thefinancial period in respect of which the most recent audited financial statements of NakheelPJSC have been prepared) there has been no significant change in the financial condition ofNakheel PJSC and since that date, no material adverse change in the trading position ofNakheel PJSC.

5. There has been no significant change in the financial or trading position or results ofoperations of the Issuer since its date of incorporation.

6. Except as disclosed in this Offering Circular, there has been no significant change in thefinancial or trading position or results of operations of Dubai World since its date ofincorporation.

7. Except as disclosed in this Offering Circular, there has been no significant change in thefinancial or trading position or results of operations of any of the Co-Obligors since the dateof their incorporation.

8. None of the Issuer, Dubai World and the Co-Obligors is involved in any litigation, arbitrationor administrative proceedings (and the best of the knowledge and belief of Issuer, the Co-Obligors and Dubai World, no proceedings against them are pending or threatened) whichmay have, or have had in the twelve months preceding the date of this Offering Circular, amaterial adverse effect on its financial position.

Accounts

7. The first financial year of the Issuer will end on 31 December 2006. The Issuer has nosubsidiaries.

8. Dubai World and the Co-Obligors are not required to, and do not, prepare or publish financialstatements under UAE law.

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9. So long as any of the Certificates remains outstanding, copies of the following documents willbe available in English for inspection and obtainable free of charge, during normal businesshours on any weekday (excluding public holidays) from the registered office of the Issuer andfrom the specified office of the Trustee:

(a) the constitutional documents of the Issuer, the Co-Obligors and Dubai World;

(b) the most recently publicly available audited financial statements of the Issuer (if any);

(c) the most recently publicly available audited financial statements of Nakheel PJSC,beginning with the financial statements for the years ended 31 December 2003, 2004and 2005 and the respective auditor’s report thereon;

(d) the most recently publicly available interim financial statements (if any) of NakheelPJSC;

(e) Purchase Agreement;

(f) Lease Agreement;

(g) Servicing Agency Agreement;

(h) Purchase Undertaking (and any sale agreement entered into thereunder);

(i) Sukuk Assets Sale Undertaking;

(j) Share Pledge;

(k) Mortgages (and any replacement mortgage);

(l) Co-Obligor Guarantee;

(m) Dubai World Guarantee;

(n) Subscription Rights Sale Undertaking;

(o) Security Agency Agreement;

(p) Declaration of Trust;

(q) Agency Declaration;

(r) Transaction Administration Deed;

(s) Agency Agreement;

(t) the pronouncement dated 11 December 2006 issued on behalf of the ShariaSupervisory Board of Dubai Islamic Bank PJSC (the Board) together with summarydetails of the members of the Board (as of the date of the Pronouncement) and theirrelevant expertise.

In addition, so long as any of the Certificates remain outstanding, a copy of the valuationreport dated 31 August 2006 prepared by Jones Lang LaSalle is available from DubaiWaterfront LLC (contact: [email protected]).

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APPENDIX 1 – FINANCIAL STATEMENTS OF NAKHEEL CO LLC

Contents

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Consolidated unaudited interim financial statements for the six months ended 30 June 2006.......................................................................................................................................... F-1

Consolidated audited financial statements for the year ended 31 December 2005 .......... F-9



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APPENDIX 2 – VALUATION REPORT

This section contains Jones Lang LaSalle’s summary Valuation Report relating to the propertyknown as DWF South and Crescent Lands, within Dubai Waterfront (also referred to in this OfferingCircular as the Property). It has been provided for information purposes to show potentialCertificateholders the basis on which the plot of land that is proposed to be subject to theMortgages was selected. Your attention is directed, in particular, to the basis on which the reportwas prepared by Jones Lang LaSalle and the definitions, assumptions, explanations andqualifications set out therein.

The valuation included in the Valuation Report should not be taken as an indication of the proceedsthat could be achieved from the sale of the Property on enforcement of the Mortgages. In addition,the use of different assumptions or valuation models may result in differences in the valuation of theProperty. The assumptions used by the Co-Obligor’s and Dubai World’s management in developingthe Property may differ in certain material respects from those used in the Valuation Report.

The Valuation Report is to be read in direct conjunction with Jones Lang LaSalle’s full report dated31 August 2006. A copy of this report is available from Dubai Waterfront LLC (contact:[email protected]).

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The Issuer

Nakheel Development LimitedLevel 47, Emirates Towers

Sheikh Zayed RoadPO Box 17000

Dubai, United Arab Emirates

The Co-Obligors

Nakheel Holdings-1 LLC, Nakheel Holdings-2 LLC and Nakheel Holdings-3 LLCPO Box 17777


The Guarantor

Dubai WorldLevel 47, Emirates Towers

Sheikh Zayed RoadPO Box 17000


Principal Paying and Exchange Agent, Transaction Administrator, Transfer Agent, Replacement Agent and Calculation Agent

Deutsche Bank AG, London BranchWinchester House

1 Great Winchester StreetLondon EC2N 2DB, England

Registrar

Deutsche Bank Luxembourg S.A.2 Boulevard Konrad Adenauer

L-1115 Luxembourg

Legal Advisers

To the Managers as to the laws To the Issuer, the Co-Obligors and Dubai Worldof England as to the laws of England

Denton Wilde Sapte LLP Clifford Chance LLPOne Fleet Place 10 Upper Bank Street

London EC4M 7WS, England London E14 5JJ, England

To the Managers as to the laws To the Issuer, the Co-Obligors and Dubai Worldof Dubai as to the laws of Dubai

Denton Wilde Sapte LLP Clifford Chance LLP26th Floor API World Tower 3rd Floor, The Exchange Building

Sheikh Zayed Road Dubai International Financial CentrePO Box 1756 PO Box 9380

Dubai, United Arab Emirates Dubai, United Arab Emirates

To the Issuer and Share Trustee as to the laws of the Cayman Islands

Maples and Calder5th Floor, The Exchange Building

Dubai International Financial CentrePO Box 119980, DubaiUnited Arab Emirates


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