Cooperation Agreement


    Exhibit
      10.1

     

    
 

    COOPERATION
      AGREEMENT

     

    This
      COOPERATION AGREEMENT (this “Agreement”),
      dated
      as of March 20, 2006, is entered into by and among Kerzner International
      Limited, an international business company incorporated under the laws of The
      Commonwealth of The Bahamas (the “Company”),
      Solomon Kerzner (“SK”)
      and
      Howard B. Kerzner (“HBK”).

     

    WHEREAS,
      concurrently with the execution and delivery of this Agreement, the Company
      has
      entered into an Agreement and Plan of Merger (as may be amended from time to
      time, the “Merger
      Agreement”)
      with
      K-Two Holdco Limited (“Parent”),
      and
      K-2 Subco Limited (“Merger
      Sub”),
      dated
      as of the date hereof, pursuant to which, upon the terms and subject to the
      conditions set forth therein, Merger Sub will merge with and into the Company,
      with the Company as the surviving corporation;

     

    WHEREAS,
      as a condition to the willingness of the Company to enter into the Merger
      Agreement, and as an inducement and in consideration therefor, the Company
      has
      required that each of SK and HBK agree, and each of SK and HBK has agreed,
      to
      enter into this Agreement.

     

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual premises, covenants
      and agreements contained in this Agreement, the parties intending to be legally
      bound, hereby agree as follows:

     

    ARTICLE
      I

    COOPERATION

     

    Section
      1.1.    Company
      Acquisition Proposals. Each of SK and HBK will
      cooperate with and support, and not take any action intended to, or which would
      be reasonably likely to, frustrate, delay or impede, the Company’s and its
      Representative’s efforts to initiate, solicit and encourage, whether publicly or
      otherwise, Company Acquisition Proposals and any discussions or negotiations
      in
      connection therewith in accordance with the Merger Agreement. In
      furtherance and not in limitation of the foregoing, such cooperation shall
      include (i) participation in meetings, presentations, due diligence
      sessions and other sessions with Persons or groups that have indicated an
      interest in making a Company Acquisition Proposal and the Representatives and
      financing sources of such Persons (collectively, “Potential Acquirors”),
      (ii) assistance in preparation of solicitation materials, offering
      documents and similar documents to be used in connection with such efforts,
      (iii) in accordance with the terms of the Merger Agreement, promptly providing
      Potential Acquirors with access to all financial and other information
      concerning the Company or its Subsidiaries that the Company and its
      Representatives determine to provide to Potential Acquirors, including any
      and
      all information, confidential or otherwise, which has been provided to any
      Potential Co-Investor (as defined in the confidentiality
      agreement dated February 5, 2006 among the Company, SK, HBK and World Leisure
      Group Limited (“WLG”) (the “WLG Confidentiality Agreement”)) or
      any other direct
      or
      indirect investor or potential investor in Parent, or any of WLG’s, Parent’s or
      any such investor’s financing sources or potential financing sources or other
      Representatives (collectively, the “Investing Parties”), in each case in
      connection with the evaluation, consideration and 

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    negotiation
      of the Merger, the Merger Agreement and the transactions contemplated thereby
      (including, without limitation, the financing thereof), whether or not relating
      to pricing or other matters that are highly sensitive and whether or not
      provided to any Investing Parties prior to, on or after the date hereof
      (provided that notwithstanding the foregoing, neither SK nor HBK shall be
      under any obligation to provide Potential Acquirors with access to any notes,
      analyses, compilations, interpretations or other similar documents prepared
      by
      them (other than in their capacity as officers of the Company) or by
      Representatives of Parent or Parent’s Affiliates (other than the Company)) and
      (iv) cooperating and assisting in obtaining any consents, waivers, approvals
      and
      authorizations for and in connection with any Company Acquisition Proposal.
      

     

    Section
      1.2.    Cooperation
      with Acquiring Party. In the event that the Merger Agreement is terminated
      by the Company pursuant to Section 9.1(c)(ii) thereof in order for the Company
      to enter into a definitive agreement with respect to a Company Acquisition
      Proposal (the “Alternative Transaction Agreement”): 

     

    (a)    Transitional
      Services.
      Each of
      SK and HBK will agree, to the extent the party making the Company Acquisition
      Proposal (the “Acquiring
      Party”)
      requests him to do so, at the discretion of the Acquiring Party, (i) to continue
      to perform his management functions consistent with past practice or (ii) to
      provide exclusive consulting services (on a full time or part time basis as
      determined by the Acquiring Party), in either case, for cash compensation at
      least equal to one-half of the annual cash compensation (including target bonus)
      in effect for all of fiscal year 2006 from the date on which the Company
      consummates the transactions contemplated by the Alternative Transaction
      Agreement (the “Transitional
      Services Start Date”)
      through the six-month anniversary of the consummation of the applicable Company
      Acquisition Proposal (the “Transitional
      Services End Date”).
      Notwithstanding the foregoing, in the event of a Partial Sale (as defined
      below), SK and HBK shall only be required to provide the services contemplated
      by this paragraph to the entity that owns Atlantis, Paradise Island. A “Partial
      Sale” shall mean any Superior Proposal which is effected in more than a single
      transaction.

     

    (b)    Transaction
      Cooperation.
      Each of
      SK and HBK will, solely in their capacity as officers and directors of the
      Company, cooperate with and support and not take any action intended to, or
      which would be reasonably likely to, frustrate, delay or impede, the Company’s,
      the Acquiring Party’s and their respective Representatives’ efforts to
      consummate the transactions contemplated by the Alternative Transaction
      Agreement. In furtherance and not in limitation of the foregoing, such
      cooperation shall include (i) participation in meetings, presentations,
      road shows, due diligence sessions and sessions with rating agencies, (ii) 
assisting with the preparation of materials for rating agency presentations,
      offering documents, private placement memoranda, bank information memoranda,
      prospectuses and similar documents required in connection with any financing,
      (iii) executing and delivering any certificates as may be reasonably
      requested by the Company, (iv) promptly providing the Acquiring Party and its
      respective Representatives with access to all financial and other information
      concerning the Company or its Subsidiaries that the Company or its
      Representatives determine to provide to the Acquiring Party and its
      Representatives, (v) reasonably cooperating and assisting in obtaining any
      consents, waivers, approvals and authorizations for and in connection with
      such
      transactions and (vi) reasonably cooperating in connection with any filing
      or
      submission and in connection with any investigation or other inquiry, including
      any proceeding initiated by a private party or Governmental Authority.


     

     


    
      
        
        

      

      
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    (c)    Non-competition.
      Each of
      SK and HBK agrees that, during the period from the Transitional Services Start
      Date through his respective Transitional Services End Date and during his
      respective Noncompete Period (as defined below), he will not, directly or
      indirectly, (i) engage in any Competitive Business (as defined below) for his
      own account, (ii) enter the employ of, or render any services to, any person
      or
      entity engaged in any Competitive Business, (iii) acquire a financial interest
      in, or otherwise become actively involved with, any person or entity engaged
      in
      any Competitive Business, directly or indirectly, as an individual, partner,
      shareholder, officer, director, principal, agent, trustee or consultant, or
      (iv)
      interfere with business relationships (whether formed before or after the
      Transitional Services Start Date) between the Company and customers or suppliers
      of, or consultants to, the Company. For purposes of this Section 1.2(c), 1.2(d)
      and Section 1.5(a), the Company shall be construed to include the Company and
      its Subsidiaries and controlled Affiliates. Notwithstanding the foregoing,
      each
      of SK and HBK may, directly or indirectly own, solely as an investment: (i)
      securities of any person engaged in the business of the Company which are
      publicly traded on a national or regional stock exchange or on the
      over−the−counter market if he (A) is not a controlling person of, or a member of
      a group which controls, such person and (B) does not, directly or indirectly,
      own 3% or more of any class of securities of such person; (ii) certain passive
      investments in real estate opportunity funds that were separately disclosed
      to
      the Board of Directors of the Company in writing as of August 4, 2005 in
      connection with the Restricted
      Stock Agreement dated as of August 4, 2005 between the Company and HBK (the
      “Restricted
      Stock Agreement”);
      and
      (iii) passive investments in investment funds, the primary investment purpose
      of
      which is other than investing in gaming facilities or Destination Resorts (as
      defined below). 

     

    (d)    Non-solicitation.
      Each of
      SK and HBK agrees that during the period from the Transitional Services Start
      Date through his respective Transitional Services End Date and for a period
      of
      12-months thereafter (or, in the event the Acquiring Party does not request
      SK
      or HBK to serve the Company as contemplated by Section 1.2(a), for such
      non-serving Person, the period from the date of consummation of the transactions
      contemplated by the Alternative Transaction Agreement to the 12-month
      anniversary thereof), he will not, directly or indirectly, (i) solicit, or
      directly or indirectly hire, any person who is an employee of or exclusive
      consultant then under contract with the Company or who was an employee of or
      exclusive consultant under contract with the Company within the six-month period
      immediately preceding such employee’s or consultant’s solicitation or hiring,
      directly or indirectly, by SK or HBK, or (ii) encourage to cease to work with
      the Company any person who is an employee of or consultant under contract with
      the Company (whether or not exclusive), in each case without the Company’s
      written consent. 

     

    (e)    Acknowledgements.
      It is
      expressly understood and agreed that although SK, HBK and the Company consider
      the restrictions contained in Sections 1.2(b) and (c) to be reasonable, if
      a
      judicial determination is made by a court of competent jurisdiction that the
      time or territory or any other restriction contained in this Agreement is an
      unenforceable restriction against SK or HBK, as applicable, such provision
      of
      this Agreement shall not be rendered void but shall be deemed amended to apply
      as to such maximum time and territory and to such maximum extent as such court
      may judicially determine or indicate to be enforceable. Alternatively, if any
      court of competent jurisdiction finds that any restriction contained in this
      Agreement is unenforceable, and such restriction cannot be amended so as to
      make
      it 

     


    
      
        
        

      

      
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    enforceable,
      such finding shall not affect the enforceability of any of the other
      restrictions contained herein.

     

    Section
      1.3.    Effect
      on Existing Arrangements. In the event that SK or HBK is requested by the
      Acquiring Party to enter into the arrangements contemplated by Section 1.2(a),
      upon consummation of the applicable Company Acquisition Proposal, such
      arrangements shall supersede any arrangements with SK or HBK, as applicable,
      with respect to such matters then in existence. Subject to the foregoing
      sentence, each of SK and HBK acknowledges
      that he and his Affiliates continue to be bound by all existing agreements
      between them and the Company, including the Registration Rights and Governance
      Agreement dated July 3, 2001, the Restricted Stock Agreement and the WLG
      Confidentiality Agreement, and that this Agreement does not in any manner modify
      or limit the Company’s or their rights under such agreements. This Agreement is
      not intended to limit in any manner any fiduciary or other duties that SK or
      HBK
      may have to the Company or its shareholders in his capacity as an officer or
      director of the Company or otherwise.

     

    Section
      1.4.    Conditions
      to Obligations. Notwithstanding anything to the contrary contained in this
      Agreement, neither SK nor HBK shall be under any obligations under Section
      1.2
      of this Agreement unless the Alternative Transaction Agreement provides that
      all
      Company Restricted Shares, Company Options, Company SARs and Company RSUs
      granted to or held by SK, HBK or any other entities on their behalf will be
      treated in the same manner as provided in Sections 2.2(f) and 2.4 of the Merger
      Agreement.

     

    Section
      1.5.    Definitions.
      For
      purposes of the foregoing:

     

    (a)    “Competitive
      Business”
means
      any business, in any form, which owns, operates or manages any Destination
      Resort or gaming facility (i) located in the United Arab Emirates or (ii)
      otherwise (A) within 50 miles of any Destination Resort or gaming facility
      owned
      or operated or managed, in whole or in part, by the Company, or (B) within
      50
      miles of any proposed Destination Resort or proposed gaming facility with
      respect to which SK or HBK, as applicable, has actual knowledge that the Company
      is actively engaging in significant activities intended to result in owning
      or
      operating or managing such a facility, in each case at any time from the date
      of
      this Agreement through the Transition Services End Date; provided
      that in
      the event of a Partial Sale, “Competitive Business” shall be limited for each
      separate ongoing entity to (and each ongoing entity’s right to enforce the
      provisions of Section 1.2(c) of this Agreement shall be limited to) the
      Destination Resorts or gaming facilities described in clauses (ii)(A) and
      (ii)(B) above which are owned by such ongoing entity and in the case of clause
      (i) above to the ongoing entity which owns the Company’s project in the United
      Arab Emirates. 

     

    (b)    “Destination
      Resort”
means
      a
      self−contained luxury resort having more than 1,500 hotel rooms with superior
      restaurant, sports, entertainment and shopping facilities.

     

    (c)    “Noncompete
      Period”
means
      (i) with respect to SK, the period from his Transitional Services End Date
      (or,
      in the event the Acquiring Party does not request SK to serve the Company as
      contemplated by Section 1.2(a), the Transitional Services Start Date) through
      the six-month anniversary thereof, and (ii) with respect to HBK, the period
      from
      his Transitional 

     


    
      
        
        

      

      
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    Services
      End Date (or, in the event the Acquiring Party does not request HBK to serve
      the
      Company as contemplated by Section 1.2(a), the Transitional Services Start
      Date)
      through the 12-month anniversary thereof.

     

    ARTICLE
      II

    MISCELLANEOUS

     

    Section
      2.1.    Defined
      Terms. Capitalized terms that are used but not otherwise defined herein
      shall have the respective meanings ascribed to them in the Merger
      Agreement.

     

    Section
      2.2.    Notices.
      All
      notices, requests and other communications to any part hereunder shall be in
      writing (including facsimile or similar writing) and shall be
      given:

     

    if
      to SK
      or HBK, to:

     

    c/o
      Kerzner International Limited 

    Coral
      Towers

    Paradise
      Island

    Attention:
      Giselle M. Pyfrom 

    Fax:
      +1
      242 363 2767 

    


    if
      to the
      Company, to:

     

    Kerzner
      International Limited 

    730
      Fifth
      Avenue -- Fifth Floor

    New
      York,
      New York 10019

    Attention:
      Richard Levine 

    Fax:
      (212) 659-5196

    


    Section
      2.3.    Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Delaware.

     

    Section
      2.4.    Jurisdiction.
      Each
      party irrevocably submits to the jurisdiction of (a) any Delaware State court,
      and (b) any Federal court of the United States sitting in the State of Delaware,
      solely for the purposes of any suit, action or other proceeding between any
      of
      the parties hereto arising out of this Agreement or any transaction contemplated
      hereby. Each party agrees to commence any suit, action or proceeding relating
      hereto either in any Federal court of the United States sitting in the State
      of
      Delaware or, if such suit, action or other proceeding may not be brought in
      such
      court for reasons of subject matter jurisdiction, in any Delaware State court.
      Each party irrevocably and unconditionally waives any objection to the laying
      of
      venue of any suit, action or proceeding between any of the parties hereto
      arising out of this Agreement or any transaction contemplated hereby in (i)
      any
      Delaware State court, and (ii) any Federal court of the United States sitting
      in
      the State of Delaware, and hereby further irrevocably and unconditionally waives
      and agrees not to plead or claim in any such court that any such suit, action
      or
      proceeding brought in any such court has been brought in an inconvenient forum.
      Each party further irrevocably consents to the service of process out of any
      of
      the aforementioned courts in any such suit, action or other proceeding by the
      mailing of copies thereof by registered 

     


    
      
        
        

      

      
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    mail
      to
      such party at its address set forth in this Agreement, such service of process
      to be effective upon acknowledgment of receipt of such registered mail; provided
      that nothing in this Section 2.4 shall affect the right of any party to serve
      legal process in any other manner permitted by law. The consent to jurisdiction
      set forth in this Section 2.4 shall not constitute a general consent to service
      of process in the State of Delaware and shall have no effect for any purpose
      except as provided in this Section 2.4. The parties agree that a final judgment
      in any such suit, action or proceeding shall be conclusive and may be enforced
      in other jurisdictions by suit on the judgment or in any other manner provided
      by law. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
      MAY
      ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
      ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
      WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
      LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
      OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
      ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
      HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
      THE
      EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY
      UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH
      PARTY
      MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER
      INTO
      THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
      IN
      THIS SECTION 2.4.

     

    Section
      2.5.    Severability.
      If
      any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced by virtue of any law, or due to any public policy, all other
      conditions and provisions of this Agreement shall nevertheless remain in full
      force and effect so long as the economic or legal substance of the transactions
      contemplated hereby is not affected in any manner materially adverse to any
      party. Upon such determination that any term or other provision is invalid,
      illegal or incapable of being enforced, the parties hereto shall negotiate
      in
      good faith to modify this Agreement so as to effect the original intent of
      the
      parties as closely as possible in an acceptable manner so that the transactions
      contemplated hereby are fulfilled to the extent possible.

     

    Section
      2.6.    Assignment.
      The
      provisions of this Agreement shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns, provided that
      no
      party may assign, delegate or otherwise transfer any of its rights or
      obligations under this Agreement without the consent of the other parties hereto
      (it being understood that no such consent shall be required for the Company
      to
      assign its rights and obligations hereunder in connection with consummating
      any
      Company Acquisition Proposal). 

     

    Section
      2.7.    Counterparts.
      This
      Agreement may be executed in separate counterparts, each of which shall be
      deemed an original and both of which shall constitute one and the same document.
      This Agreement may be executed by facsimile signatures and in any number of
      counterparts, each of which shall be an original, with the same effect as if
      the
      signatures thereto and hereto were upon the same instrument.

     

     


    
      
        
        

      

      
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    Section
      2.8.    Entire
      Agreement. This Agreement constitutes the entire agreement between the
      parties hereto with respect to the subject matter hereof and may be amended
      only
      in a writing executed by the parties to be bound thereby. 

     

    Section
      2.9.    Amendment.
      This Agreement may not be amended except by an instrument in writing signed
      by
      the parties hereto (in the case of the Company, acting through the Special
      Committee, if such committee still exists, or otherwise by resolution of a
      majority of its Disinterested Directors).

     

    Section
      2.10.       Termination
      of Agreement.
      This
      Agreement may be terminated: (i) by the mutual written consent of the parties
      hereto or (ii) by any party if the Merger Agreement is terminated for any reason
      whatsoever other than by the Company in accordance with Section 9.1(c)(ii)
      thereof. In the event that the Requisite Shareholder Approval is obtained,
      this
      Agreement shall terminate without any further action on the part of the parties
      hereto.

     

    Section
      2.11.   Enforcement.
      Each of SK and HBK agrees that irreparable damage would occur, damages would
      be
      difficult to determine and would be an insufficient remedy and no other adequate
      remedy would exist at law or in equity, in each case in the event that any
      of
      the provisions of this Agreement were not performed in accordance with their
      specific terms or were otherwise breached (or any party hereto threatens such
      a
      breach). Accordingly,
      it is agreed that in the event of a breach or threatened breach of this
      Agreement by SK or HBK the
      Company (and its successors and assigns) shall be entitled to an injunction
      or
      injunctions to prevent breaches of this Agreement and to enforce specifically
      the terms and provisions of this Agreement, in addition to any other remedy
      to
      which such party is entitled at law or in equity. Each of SK and HBK irrevocably
      waives any defenses based on adequacy of any other remedy, whether at law or
      in
      equity, that might be asserted as a bar to the remedy of specific performance
      of
      any of the terms or provisions hereof or injunctive relief in any action brought
      therefor by the Company.

     

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    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first written above.

     

     

     

    
      	 	 	 
	 	KERZNER
              INTERNATIONAL LIMITED
	 	 	 
	 	By:  	 
/s/
              Eric
              Siegal
	 	Name: 
Eric
              Siegal
	 	Title: 
              Chairman of the Special Committee


    

    
       

      
         

        
          	 	 	 
	 	SOLOMON
                  KERZNER
	 	 	 
	 	  
/s/
                  Solomon Kerzner


        

        
           

           

          
            	 	 	 
	 	HOWARD
                    B.
                    KERZNER
	 	 	 
	 	  
/s/
                    Howard
                    B. Kerzner


          

          
             

          

        

      

    

    
       

       

       

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