6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of March, 2006

Commission File No. 001-04226

KERZNER INTERNATIONAL LIMITED

(Translation of Registrant’s Name into English)

Coral Towers, Paradise Island, The Bahamas

(Address of Principal Executive Office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F        X                                Form 40-F   

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _________

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _________

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes                             No      X    

If “yes” is marked, indicate below this file number assigned to the registrant in connection with Rule 12g-3-2(b): _________

This Current Report on Form 6-K is incorporated by reference into (i) the Registration Statement on Form F-3/A filed on August 23, 2004, File No. 333-117110, (ii) the Registration Statement on Form F-3 filed on May 23, 2002, File No. 333-88854, (iii) Form S-8 filed on December 10, 2004, File No. 333-121164, (iv) Form S-8 filed on October 11, 2002, File No. 333-100522, (v) Form S-8 filed on December 7, 2000, File No. 333-51446 and (vi) Form S-8 filed on December 17, 1996, File No. 333-1540.

PROPOSED MERGER AND RELATED TRANSACTIONS

On March 20, 2006, Kerzner International Limited (the “Company”) and an investor group which is being led by the Company’s Chairman, Sol Kerzner and its Chief Executive Officer, Butch Kerzner, issued a press release announcing that they had entered into a definitive agreement under which the Company will be acquired by the investor group. The investor group also includes Istithmar PJSC (“Istithmar”), which is a significant shareholder of the Company, Whitehall Street Global Real Estate Limited Partnership 2005, Colony Capital, LLC, Providence Equity Partners, Inc. and The Related Companies, L.P., which is affiliated with one of the Company’s Directors. The press release is attached as exhibit 99.1.

(A) MERGER AGREEMENT

Under the agreement and plan of merger (the “Merger Agreement”) with K-Two Holdco Limited, a Bahamian international business company (“Parent”), and K-Two SubCo Limited, a Bahamian international business company and wholly-owned subsidiary of Parent (“Merger Sub”), Merger Sub will merge with and into the Company (the “Merger”), with the Company as the surviving corporation. At the effective time of the Merger, each outstanding ordinary share of the Company (other than shares held in treasury or owned by Parent, Merger Sub or any wholly-owned subsidiary of the Company that will be canceled and by holders who vote against the Merger and properly elect to exercise dissenters’ rights under Bahamian law), including restricted shares, will be converted into the right to receive U.S. $76.00 in cash.

In accordance with the Merger Agreement, the Company and the advisors to a special committee of the Company’s board of directors, working under the supervision of the special committee will actively solicit superior proposals during the next 45 days. In the event the Merger Agreement is terminated, in order for the Company to enter into a superior transaction arising during the 45 day solicitation period, the investor group will receive a break-up fee of 1% of the equity value of the transaction (approximately $30 million). The Kerzners (as described below) and Istithmar have agreed to cooperate in this solicitation process. There can be no assurance that the solicitation of superior proposals will result in an alternative transaction.

The transaction is expected to close in mid-2006 and is subject to certain terms and conditions customary for transactions of this type, including the receipt of financing and regulatory approvals. The transaction also requires approval of the Merger Agreement by the Company’s shareholders. The Kerzners (as described below) and Istithmar, which together own approximately 24% of the Company’s ordinary shares, have agreed to vote in favor of the transaction. Upon completion of the transaction, the Company will become a privately held company and its common stock will no longer be traded on The New York Stock Exchange.

The Merger Agreement contains certain termination rights for the Company and Parent and Merger Sub and further provides that, upon termination of the Merger Agreement under specified circumstances, the Company may be required to pay a break-up fee.

(B) COOPERATION AGREEMENT

Concurrently with the Merger Agreement, on March 20, 2006, the Company entered into an agreement (the “Cooperation Agreement”) with Mr. Solomon Kerzner and Mr. Howard Kerzner, pursuant to which Messrs. Kerzner have agreed, among other things, to cooperate in the Company’s solicitation of superior proposals during the next 45 days and, in the event of a superior transaction, to provide certain transitional services to the acquiring party for a period of up to six months.

(C) VOTING AGREEMENT

Concurrently with the Merger Agreement, on March 20, 2006, the Company entered into an agreement (the “Voting Agreement”) with Mr. Solomon Kerzner, Mr. Howard Kerzner and World Leisure Group Limited (collectively, the “Holders”), pursuant to which the Holders have agreed, among other things, to vote in favor of the Merger Agreement and, in the event of certain all-cash acquisitions, to vote in favor of the superior transaction.

The foregoing descriptions of the Merger Agreement, the Cooperation Agreement and the Voting Agreement are qualified in their entirety by reference to the full text of the Merger Agreement, the Cooperation Agreement and the Voting Agreement, copies of which are attached hereto as exhibits 2.1, 10.1 and 10.2.

* * *

ADDITIONAL INFORMATION

In connection with the proposed transaction, the Company will prepare and mail a proxy statement to its shareholders. In addition, certain participants in the proposed transaction will prepare and mail to the Company’s shareholders a Schedule 13E-3 transaction statement. These documents will be filed with or furnished to the SEC. Shareholders are urged to read these materials and other material filed with or furnished to the SEC carefully when they become available, as they will contain important information about the Company, the proposed transaction and related matters. In addition to receiving the proxy statement and Schedule 13E3 transaction statement by mail, shareholders also will be able to obtain these documents, as well as other filings containing information about the Company, the proposed transaction and related matters, without charge, from the SEC's website (http://www.sec.gov) or at the SEC’s public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. In addition, these documents can be obtained, without charge, by contacting the Company at the following address and/or phone number:

Kerzner International Limited

Coral Towers

Paradise Island, The Bahamas,

+1.242.363.6018

This information will also be available at the Company’s website at www.kerzner.com.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 20, 2006	KERZNER INTERNATIONAL LIMITED
	By:	/s/ Richard M. Levine
		Name:     Richard M. Levine Title:       Executive Vice President & General Counsel

EXHIBIT LIST

Exhibit	Description
1.1	Agreement and Plan of Merger, dated as of March 20, 2006, among Kerzner International Limited, K-Two Holdco Limited and K-Two Subco Limited.
10.1	Cooperation Agreement, dated as of March 20, 2006, among Kerzner International Limited, Mr. Solomon Kerzner and Mr. Howard Kerzner.
10.2	Voting Agreement, dated as of March 20, 2006, among Kerzner International Limited, Mr. Solomon Kerzner, Mr. Howard Kerzner and World Leisure Group Limited.
99.1	Press Release on March 20, 2006 — Kerzner International Enters into Agreement for Sale to Investor Group.

EX-2.1

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

KERZNER INTERNATIONAL LIMITED,

K-TWO HOLDCO LIMITED

AND

K-TWO SUBCO LIMITED

MARCH 20, 2006

TABLE OF CONTENTS

              Page

ARTICLE I	DEFINITIONS	2
Section 1.1.	Definitions	2
Section 1.2.	Terms Generally	9
ARTICLE II	THE MERGER	9
Section 2.1.	The Merger	9
Section 2.2.	Conversion of Securities	10
Section 2.3.	Payment of Cash for Merger Shares	11
Section 2.4.	Treatment of Company Options, Company SARs and Company RSUs	13
ARTICLE III	THE SURVIVING CORPORATION	14
Section 3.1.	Memorandum of Association	14
Section 3.2.	Articles of Association	14
Section 3.3.	Directors and Officers	15
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE COMPANY	15
Section 4.1.	Corporate Existence and Power	15
Section 4.2.	Corporate Authorization	15
Section 4.3.	Governmental Authorization	16
Section 4.4.	Non-Contravention	16
Section 4.5.	Capitalization	17
Section 4.6.	Company Subsidiaries and Joint Ventures	17
Section 4.7.	Reports and Financial Statements	18
Section 4.8.	Undisclosed Liabilities	19
Section 4.9.	Disclosure Documents	19
Section 4.10.	Absence of Certain Changes or Events	19
Section 4.11.	Litigation	19
Section 4.12.	Taxes	20
Section 4.13.	ERISA	20
Section 4.14.	Compliance With Laws	21
Section 4.15.	Finders’ Fees	21
Section 4.16.	Opinion of Financial Advisor	22
Section 4.17.	Anti-Takeover Provisions	22
ARTICLE V	REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB	22
Section 5.1.	Corporate Existence and Power	22

Section 5.2.	Corporate Authorization	22
Section 5.3.	Governmental Authorization	22
Section 5.4.	Non-Contravention	23
Section 5.5.	Disclosure Documents	23
Section 5.6.	Finders’ Fees	23
Section 5.7.	Financing	23
Section 5.8.	Equity Rollover Commitments	24
Section 5.9.	Parent and Merger Sub	25
Section 5.10.	Voting Arrangements	25
ARTICLE VI	CONDUCT OF BUSINESS PENDING THE MERGER	25
Section 6.1.	Conduct of the Company and Subsidiaries	25
Section 6.2.	Conduct of Parent and Merger Sub	27
Section 6.3.	No Control of Other Party’s Business	28
ARTICLE VII	ADDITIONAL AGREEMENTS	28
Section 7.1.	Shareholder Meeting; Proxy Material	28
Section 7.2.	Reasonable Best Efforts	29
Section 7.3.	Access to Information	31
Section 7.4.	Solicitation	31
Section 7.5.	Director and Officer Liability	35
Section 7.6.	Takeover Statutes	36
Section 7.7.	Public Announcements	36
Section 7.8.	Employee Matters	37
Section 7.9.	Financing	38
Section 7.10.	Debt Tender Offers	40
Section 7.11.	Confidentiality Agreements	41
Section 7.12.	Management	41
Section 7.13.	Vesting of Company Equity Awards	42
ARTICLE VIII	CONDITIONS TO THE MERGER	42
Section 8.1.	Conditions to the Obligations of Each Party	42
Section 8.2.	Conditions to the Obligations of Parent and Merger Sub	43
Section 8.3.	Conditions to the Obligations of the Company	43
ARTICLE IX	TERMINATION	44
Section 9.1.	Termination	44
Section 9.2.	Termination Fee	45
Section 9.3.	Effect of Termination	47
ARTICLE X	MISCELLANEOUS	47
Section 10.1.	Notices	47

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Section 10.2.	Survival of Representations and Warranties	48
Section 10.3.	Expenses	48
Section 10.4.	Amendment	48
Section 10.5.	Waiver	48
Section 10.6.	Successors and Assigns	49
Section 10.7.	Governing Law	49
Section 10.8.	Counterparts; Effectiveness; Third Party Beneficiaries	49
Section 10.9.	Severability	49
Section 10.10.	Entire Agreement	49
Section 10.11.	Jurisdiction	50
Section 10.12.	Authorship	51
Section 10.13.	Remedies	51

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of this 20th day of March, 2006 by and among Kerzner International Limited, an international business company incorporated under the laws of the Commonwealth of The Bahamas (the “Company”), K-Two Holdco Limited, an international business company incorporated under the laws of the Commonwealth of The Bahamas (“Parent”), and K-Two Subco Limited, an international business company incorporated under the laws of the Commonwealth of The Bahamas and a direct wholly-owned subsidiary of Parent (“Merger Sub”).

RECITALS

A. The parties intend that Merger Sub be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent (the “Surviving Corporation”). The name of the Surviving Corporation shall be Kerzner International Limited.

B. The Board of Directors of the Company, acting upon the unanimous recommendation of the Special Committee, has (i) determined that the Merger and this Agreement are fair to and in the best interests of the Company and its shareholders, (ii) approved this Agreement and (iii) resolved to recommend that shareholders of the Company approve this Agreement.

C. The Board of Directors of Merger Sub has unanimously approved this Agreement.

D. Certain existing shareholders of the Company desire to contribute Ordinary Shares to Parent immediately prior to the Effective Time in exchange for shares of capital stock of Parent.

E. The Company, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe certain conditions to the Merger, as set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, intending to be legally bound, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1.Definitions.  For purposes of this Agreement, the following terms have the respective meanings set forth below:

“6 ¾ Notes Indenture” has the meaning set forth in Section 7.10.

“6 ¾% Notes” has the meaning set forth in Section 7.10.

“Acceptable Confidentiality Agreement” has the meaning set forth in Section 7.4(g)(i).

“Affiliate” means, with respect to any Person, any other Person, directly or indirectly, controlling, controlled by, or under common control with, such Person. For purposes of this definition, the term “control” (including the correlative terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the Preamble.

“Articles of Merger” has the meaning set forth in Section 2.1(b).

“Authorized Agent” has the meaning set forth in Section 10.11(c).

“Business Day” means any day other than the days on which banks in New York, New York or The Bahamas are not required or authorized to close.

“Certificate” has the meaning set forth in Section 2.2(c).

“Closing” has the meaning set forth in Section 2.1(d).

“Closing Date” has the meaning set forth in Section 2.1(d).

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the Preamble.

“Company Acquisition Proposal” has the meaning set forth in Section 7.4(g)(ii).

“Company Benefit Plan” has the meaning set forth in Section 4.13(a).

“Company Disclosure Letter” has the meaning set forth in the preamble to Article IV.

“Company Employees” means any current, former or retired employee, officer, consultant, independent contractor or director of the Company or any of its Subsidiaries.

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“Company Equity Awards” means Company Options, Company Restricted Shares, Company SARs and Company RSUs.

“Company Joint Venture” means, with respect to the Company, any corporation or other entity (including partnerships, limited liability companies and other business associations and joint ventures) in which the Company, directly or indirectly, owns an equity interest that does not have voting power under ordinary circumstances to elect a majority of the board of directors or other person performing similar functions but in which the Company has rights with respect to the management of such Person.

“Company Options” means outstanding options to acquire Ordinary Shares from the Company granted to Company Employees under the Company Stock Plans or otherwise.

“Company Proxy Statement” means the proxy statement relating to the approval of the Merger by the Company’s shareholders prepared in accordance with applicable Law and including the information required to be included in the Schedule 13E-3.

“Company Restricted Shares” has the meaning set forth in Section 2.2(f).

“Company RSU” means an outstanding restricted stock unit with respect to one Ordinary Share granted to a Company Employee under a Company Stock Plan or otherwise.

“Company SARs” means outstanding stock appreciation rights with respect to Ordinary Shares granted to Company Employees under the Company Stock Plans or otherwise.

“Company SEC Reports” has the meaning set forth in Section 4.7(a).

“Company Securities” has the meaning set forth in Section 4.5(b).

“Company Shareholder Meeting” has the meaning set forth in Section 7.1(a).

“Company Stock Plans” means the Griffin Gaming & Entertainment, Inc. 1994 Stock Option Plan (as amended on May 10, 1996), the Sun International Limited 1997 Stock Option Plan, as amended, the Company 2000 Stock Option Plan, the Company 2003 Stock Incentive Plan and the Company 2005 Stock Incentive Plan.

“Compensation” has the meaning set forth in Section 7.8(a).

“Confidentiality Agreements” has the meaning set forth in Section 7.4(g)(i).

“Contract” has the meaning set forth in Section 4.4.

“Convertible Notes” has the meaning set forth in Section 4.5(b).

“Convertible Notes Indenture” has the meaning set forth in Section 7.10.

“Cooperation Agreement” means the Cooperation Agreement dated as of the date hereof among the Company, HBK and SK.

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“Current Employee” has the meaning set forth in Section 7.8(a).

“Current Policies” has the meaning set forth in Section 7.5(a).

“Damages” has the meaning set forth in Section 7.5(a).

“Debt Financing” has the meaning set forth in Section 5.7.

“Debt Financing Commitments” has the meaning set forth in Section 5.7.

“Debt Tender Offers” has the meaning set forth in Section 7.10.

“Disbursing Agent” has the meaning set forth in Section 2.3(a).

“Disinterested Director” means a member of the Board of Directors of the Company who (i) has no direct or indirect interest in Parent, whether as an investor or otherwise, (ii) is not a representative of any Person or entity who has any such interest in Parent and (iii) is not otherwise affiliated with Parent.

“Dissenting Ordinary Shares” has the meaning set forth in Section 2.2(d).

“DOJ” has the meaning set forth in Section 7.2(b).

“Effective Time” has the meaning set forth in Section 2.1(b).

“Employee Benefit Plan” has the meaning set forth in Section 3(3) of ERISA.

“Employment Agreement” means any employment, severance, retention, termination, indemnification, change in control or similar agreement between the Company or any of its Subsidiaries, on the one hand, and any current or former employee of the Company or any of its Subsidiaries, on the other hand.

“End Date” has the meaning set forth in Section 9.1(b)(i).

“Equity Financing” has the meaning set forth in Section 5.7.

“Equity Financing Commitments” has the meaning set forth in Section 5.7.

“Equity Rollover Commitments” has the meaning set forth in Section 5.8.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Excluded Party” has the meaning set forth in Section 7.4(b).

“Financing” has the meaning set forth in Section 5.7.

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“Financing Commitments” has the meaning set forth in Section 5.7.

“FTC” has the meaning set forth in Section 7.2(b).

“Gaming Authority” means any Governmental Authority with regulatory control or jurisdiction over casino or other gaming activities and operations.

“Gaming Law” means, with respect to any Person, any Law governing or relating to any current or contemplated casino or other gaming activities and operations of such Person and its Affiliates.

“GAAP” means United States generally accepted accounting principles.

“Governmental Authority” means any nation or government or any agency, public or regulatory authority, instrumentality, department, commission, court, arbitrator, ministry, tribunal or board of any nation or government or political subdivision thereof, in each case, whether foreign or domestic and whether national, supranational, federal, tribal, provincial, state, regional, local or municipal.

“HBK” means Mr. Howard B. Kerzner.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“IBCA” means the International Business Companies Act, 2000 of the Commonwealth of The Bahamas, as amended.

“Indentures” has the meaning set forth in Section 7.10.

“Insurance Amount” has the meaning set forth in Section 7.5(a).

“Interim Investors Agreement” has the meaning set forth in Section 6.2.

“Istithmar” means Istithmar PJSC, a public joint stock company incorporated under the laws of Dubai, United Arab Emirates.

“Istithmar Equity Rollover Commitment” has the meaning set forth in Section 5.10.

“KINA” has the meaning set forth in Section 7.10.

“Law” means applicable, statutes, common laws, rules, ordinances, regulations, codes, licensing requirements, orders, judgments, injunctions, writs, decrees, licenses, governmental guidelines or interpretations having the force of law, permits, rules and bylaws, in each case, of a Governmental Authority.

“Liens” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset.

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“Material Adverse Effect on the Company” means a material adverse effect on the assets or liabilities, business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole;provided, however, that in no event shall any of the following, alone or in combination, be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been, a Material Adverse Effect on the Company: (A) any fact, change, development, circumstance, event, effect or occurrence (an “Effect”) in general economic or political conditions or in the financial or securities markets, (B) any Effect generally affecting, or resulting from general changes or developments in, the industries in which the Company and its Subsidiaries operate, (C) any failure to meet internal or published projections, forecasts or revenue or earnings predictions for any period (provided that the underlying causes of such failures shall not be excluded), (D) any change in the price or trading volume of the Ordinary Shares in and of itself (provided that the underlying causes of such changes shall not be excluded), or (E) any Effect that is demonstrated to have resulted from the announcement of the Merger, or the identity of Parent or any of its Affiliates as the acquiror of the Company, except, in the case of clauses (A) and (B), to the extent such Effects referred to therein would be reasonably likely to have a materially disproportionate impact on the assets or liabilities, business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, relative to other industry participants.

“Merger” has the meaning set forth in the Recitals.

“Merger Consideration” has the meaning set forth in Section 2.2(c).

“Merger Shares” has the meaning set forth in Section 2.2(c).

“Merger Sub” has the meaning set forth in the Preamble.

“Merger Sub Ordinary Shares” means the ordinary shares of Merger Sub, par value $0.001 per share.

“New Financing Commitments” has the meaning set forth in Section 7.9(c).

“Notes” has the meaning set forth in Section 7.10.

“No-Shop Period Start Date” has the meaning set forth in Section 7.4(a).

“Ordinary Shares” means ordinary shares, par value $0.001 per share, of the Company.

“Other Antitrust Laws” means any Law enacted by any Governmental Authority relating to antitrust matters or regulating competition.

“Parent” has the meaning set forth in the Preamble.

“Parent Expenses” has the meaning set forth in Section 9.2(d).

“Parent Plan” has the meaning set forth in Section 7.8(b).

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“Permits” means any licenses, franchises, permits, certificates, consents, approvals or other similar authorizations of, from or by a Governmental Authority (including any Gaming Authority) possessed by or granted to or necessary for the ownership of the material assets or conduct of the business of the Company or its Subsidiaries.

“Permitted Liens” means (i) Liens for Taxes, assessments and governmental charges or levies not yet due and payable or that are being contested in good faith and by appropriate proceedings; (ii) mechanics’, carriers’, workmen’s, repairmen’s, materialmen’s or other Liens or security interests that secure a liquidated amount that are being contested in good faith and by appropriate proceedings; or (iii) leases, subleases and licenses (other than capital leases and leases underlying sale and leaseback transactions); (iv) Liens imposed by applicable Law; (v) pledges or deposits to secure obligations under workers’ compensation Laws or similar legislation or to secure public or statutory obligations; (vi) pledges and deposits to secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary course of business; (vii) easements, covenants and rights of way (unrecorded and of record) and other similar restrictions of record, and zoning, building and other similar restrictions, in each case that do not adversely affect in any material respect the current use of the applicable property owned, leased, used or held for use by the Company or any of its Subsidiaries; (viii) Liens the existence of which are specifically disclosed in the notes to the consolidated financial statements of the Company included in any Company SEC Report filed prior to the date of this Agreement; and (x) any other Liens that do not secure a liquidated amount, that have been incurred or suffered in the ordinary course of business and that would not, individually or in the aggregate, have a material effect on the Company or the ability of Parent to obtain the Debt Financing.

“Person” means any individual, corporation, company, limited liability company, partnership, association, trust, joint venture or any other entity or organization, including any government or political subdivision or any agency or instrumentality thereof.

“Preference Shares” has the meaning set forth in Section 4.5(a).

“Proceeding” has the meaning set forth in Section 4.11.

“Recommendation” has the meaning set forth in Section 7.1(a).

“Recommendation Withdrawal” has the meaning set forth in Section 7.4(d).

“Replacement Policies” has the meaning set forth in Section 7.5(a).

“Representatives” has the meaning set forth in Section 7.4(a).

“Requisite Shareholder Vote” has the meaning set forth in Section 4.2(a).

“Restraint” has the meaning set forth in Section 8.1(c).

“Schedule 13E-3” means a Rule 13e-3 Transaction Statement on Schedule 13E-3 relating to the Merger and the other transactions contemplated hereby.

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“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Side Letter” has the meaning set forth in Section 10.10.

“SK” means Mr. Solomon Kerzner.

“Special Committee” means a committee of the Company’s Board of Directors, the members of which are not affiliated with Parent or Merger Sub and are not members of the Company’s management, formed for the reasons set forth in the resolution establishing such committee.

“Subsidiary”, with respect to any Person, means any other Person of which the first Person owns, directly or indirectly, securities or other ownership interests having voting power to elect a majority of the board of directors or other persons performing similar functions (or, if there are no such voting interests, 50% or more of the equity interests of the second Person).

“Subsidiary Securities” has the meaning set forth in Section 4.6(b).

“Superior Proposal” has the meaning set forth in Section 7.4(g)(iii).

“Superior Proposal Effective Time” has the meaning set forth in Section 7.13.

“Surviving Corporation” has the meaning set forth in the Recitals.

“Takeover Statute” has the meaning set forth in Section 4.17.

“Tax” means (i) all U.S. Federal, state, local, foreign and other taxes (including withholding taxes), fees and other governmental charges of any kind or nature whatsoever, together with any interest, penalties or additions imposed with respect thereto, (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability or joint and several liability for being a member of an affiliated, consolidated, combined or unitary group for any period, and (iii) any liability for the payment of amounts described in clause (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to pay or indemnify any other Person.

“Tax Return” means any return, declaration, report, statement, information statement or other document filed or required to be filed with respect to Taxes, including any amendments or supplements to any of the foregoing.

“Termination Fee” means $88,920,000, except (i) in the event that any third party has made a bona fide Company Acquisition Proposal on or before the No-Shop Period Start Date, which Company Acquisition Proposal then constituted, or could have reasonably been expected to result in, a Superior Proposal, and this Agreement is terminated by the Company pursuant to Section 9.1(c)(ii) in order to enter into a definitive agreement with respect to a

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Company Acquisition Proposal with such third party or (ii) in the case of Section 9.2(c) only, in the event the Company Acquisition Proposal with respect to which a definitive agreement is ultimately entered into or consummated is not at a price per Ordinary Share in excess of the Merger Consideration, in which cases Termination Fee shall mean $29,640,000.

“Voting Agreement” has the meaning set forth in Section 5.10.

“WLG” means World Leisure Group Limited, a company incorporated under the laws of the British Virgin Islands.

Section 1.2.Terms Generally.  The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, unless the context expressly provides otherwise. All references herein to Sections, paragraphs, subparagraphs, clauses, Exhibits or Schedules shall be deemed references to Sections, paragraphs, subparagraphs or clauses of, or Exhibits or Schedules to this Agreement, unless the context requires otherwise. Unless otherwise expressly defined, terms defined in this Agreement have the same meanings when used in any Exhibit or Schedule hereto, including the Company Disclosure Letter. Unless otherwise specified, the words “herein”, “hereof”, “hereto” and “hereunder” and other words of similar import refer to this Agreement as a whole (including the Schedules and Exhibits) and not to any particular provision of this Agreement. The term “or” is not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. Any Contract, instrument or Law defined or referred to herein or in any Contract or instrument that is referred to herein means such Contract, instrument or Law as from time to time amended, modified or supplemented, including (in the case of Contracts or instruments) by waiver or consent and (in the case of Laws) by succession of comparable successor Laws and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.

ARTICLE II

THE MERGER

Section 2.1.The Merger. 

(a) At the Effective Time, in accordance with the IBCA, and upon the terms and subject to the conditions set forth in this Agreement, Merger Sub shall be merged with and into the Company, at which time the separate existence of Merger Sub shall cease and the Company shall survive the Merger as a wholly-owned subsidiary of Parent.

(b) On the Closing Date, the Company and Merger Sub shall file articles of merger (the “Articles of Merger”) meeting the requirements of the IBCA with the Registrar of Companies of the Bahamas. The Merger shall become effective at such time as the Articles of Merger are registered by the Registrar of Companies of the Bahamas, or at such later time as the Company and Merger Sub may agree and specify in the Articles of Merger (such time as the Merger becomes effective, the “Effective Time”).

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(c) The Merger shall have the effects set forth in the applicable provisions of the IBCA. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all property, rights, privileges, immunities, powers, franchises, licenses and authority of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions and duties of each of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions and duties of the Surviving Corporation.

(d) The closing of the Merger (the “Closing”) shall take place (i) at the offices of Simpson Thacher & Bartlett LLP located in New York, New York, as soon as reasonably practicable (but in any event, no later than the second Business Day) after the day on which the last condition to the Merger set forth in Article VIII is satisfied or validly waived (other than those conditions that by their nature cannot be satisfied until the Closing Date, but subject to the satisfaction or valid waiver of such conditions) (provided, that if all the conditions set forth in Article VIII shall not have been satisfied or validly waived on such day, then the Closing shall take place on the first Business Day on which all such conditions shall have been or can be satisfied or shall have been validly waived) or (ii) at such other place and time or on such other date as the Company and Parent may agree in writing (the actual date of the Closing, the “Closing Date”).

Section 2.2.Conversion of Securities. At the Effective Time, pursuant to this Agreement and by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holders of the Ordinary Shares:

(a) Each Ordinary Share held by the Company as treasury stock or otherwise owned by Parent, Merger Sub or any wholly-owned Subsidiary of the Company immediately prior to the Effective Time (including Ordinary Shares acquired by Parent immediately prior to the Effective Time pursuant to the Equity Rollover Commitments), if any, shall be canceled and retired and shall cease to exist, and no payment or distribution shall be made or delivered with respect thereto.

(b) Each Merger Sub Ordinary Share issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid and non-assessable ordinary share, par value $1.00 per share, of the Surviving Corporation.

(c) Each Ordinary Share (including any Company Restricted Shares) issued and outstanding immediately prior to the Effective Time (other than Ordinary Shares to be canceled pursuant to Section 2.2(a) and Dissenting Ordinary Shares), automatically shall be canceled and converted into the right to receive $76.00 in cash, without interest (the “Merger Consideration”), payable to the holder thereof upon surrender of the certificate formerly representing such Ordinary Share (a “Certificate”) in the manner provided in Section 2.3. Such Ordinary Shares (including any Company Restricted Shares), other than those canceled pursuant to Section 2.2(a) and Dissenting Ordinary Shares, sometimes are referred to herein as the “Merger Shares.”

(d) Notwithstanding any provision of this Agreement to the contrary, if required by the IBCA (but only to the extent required thereby), Ordinary Shares that are issued and outstanding immediately prior to the Effective Time (other than Ordinary Shares to be canceled pursuant to Section 2.2(a)) and that are held by holders of such Ordinary Shares who have not

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voted in favor of the approval of this Agreement or consented thereto in writing and who have properly exercised dissenters’ rights with respect thereto in accordance with, and who have complied with, Section 83 of the IBCA (the “Dissenting Ordinary Shares”) will not be convertible into the right to receive the Merger Consideration, and holders of such Dissenting Ordinary Shares will be entitled to receive payment of fair value of such Dissenting Ordinary Shares in accordance with the provisions of such Section 83 unless and until any such holder fails to perfect or effectively withdraws or loses its rights to dissent and payment under the IBCA. If, after the Effective Time, any such holder fails to perfect or effectively withdraws or loses such right, each of such holder’s Dissenting Ordinary Shares will thereupon be treated as if they had been converted into, at the Effective Time, the right to receive the Merger Consideration and have become exchangeable therefor, without any interest thereon. At the Effective Time, any holder of Dissenting Ordinary Shares shall cease to have any rights with respect thereto, except the rights provided in Section 83 of the IBCA and as provided in the previous sentence. The Company will give Parent (i) notice of any written objections or elections to dissent and (ii) the opportunity to participate in and direct all negotiations and proceedings with respect to such notices and demands for payment. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for payment of fair value or settle any such demands.

(e)If between the date of this Agreement and the Effective Time the number of outstanding Ordinary Shares is changed into a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split-up, combination, exchange of shares or the like, other than pursuant to the Merger, the amount of Merger Consideration payable per Ordinary Share shall be correspondingly adjusted.

(f)Each Ordinary Share outstanding immediately prior to the Effective Time subject to vesting or other lapse restrictions pursuant to the Company Stock Plans and any applicable restricted stock award agreements (collectively, the “Company Restricted Shares”) shall, by virtue of this Agreement and, without further action of the Company, Parent, Merger Sub or the holder of such Company Restricted Shares, vest and become free of such restrictions immediately prior to the Effective Time and shall be canceled, retired and shall cease to exist and shall be converted into the right to receive the Merger Consideration in accordance with Section 2.2(c).

(g)The Company Options, Company SARs and Company RSUs outstanding immediately prior to the Effective Time shall be treated as provided in Section 2.4.

(h)For the avoidance of doubt, the parties acknowledge and agree that the contribution of Ordinary Shares (including Company Restricted Shares, if any) to Parent pursuant to the Equity Rollover Commitments shall be deemed to occur immediately prior to the Effective Time and prior to any other above-described event.

Section 2.3.Payment of Cash for Merger Shares.

(a) Prior to the Closing Date, Parent shall designate a bank or trust company that is reasonably satisfactory to the Company to serve as the disbursing agent for the Merger Consideration and payments in respect of the Company Options, Company SARs and Company

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RSUs, unless another agent is designated as provided in Section 2.4(a) (the “Disbursing Agent”). Promptly after the Effective Time, Parent will cause to be deposited with the Disbursing Agent cash in the aggregate amount sufficient to pay the Merger Consideration in respect of all Merger Shares outstanding immediately prior to the Effective Time plus any cash necessary to pay for Company Options, Company SARs and Company RSUs outstanding immediately prior to the Effective Time pursuant to Section 2.4. Pending distribution of the cash deposited with the Disbursing Agent, such cash shall be held in trust for the benefit of the holders of Merger Shares, Company Options, Company SARs and Company RSUs outstanding immediately prior to the Effective Time and shall not be used for any other purposes; provided, however, that Parent may direct the Disbursing Agent to invest such cash in (i) obligations of or guaranteed by the United States of America or any agency or instrumentality thereof, (ii) money market accounts, certificates of deposit, bank repurchase agreement or banker’s acceptances of, or demand deposits with, commercial banks having a combined capital and surplus of at least $500,000,000, or (iii) commercial paper obligations rated P-1 or A-1 or better by Standard & Poor’s Corporation or Moody’s Investor Services, Inc. Any profit or loss resulting from, or interest and other income produced by, such investments shall be for the account of Parent.

(b)As promptly as practicable after the Effective Time, the Surviving Corporation shall send, or cause the Disbursing Agent to send, to each record holder of Merger Shares as of immediately prior to the Effective Time a letter of transmittal and instructions for exchanging their Merger Shares for the Merger Consideration payable therefor. The letter of transmittal will be in customary form and will specify that delivery of Certificates will be effected, and risk of loss and title will pass, only upon delivery of the Certificates to the Disbursing Agent. Upon surrender of such Certificate or Certificates to the Disbursing Agent together with a properly completed and duly executed letter of transmittal and any other documentation that the Disbursing Agent may reasonably require, the record holder thereof shall be entitled to receive the Merger Consideration payable in exchange therefor, without interest. Until so surrendered and exchanged, each such Certificate shall, after the Effective Time, be deemed to represent only the right to receive the Merger Consideration, and until such surrender and exchange, no cash shall be paid to the holder of such outstanding Certificate in respect thereof.

(c)If payment is to be made to a Person other than the registered holder of the Merger Shares formerly represented by the Certificate or Certificates surrendered in exchange therefor, it shall be a condition to such payment that the Certificate or Certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Disbursing Agent any applicable stock transfer taxes required as a result of such payment to a Person other than the registered holder of such Merger Shares or establish to the satisfaction of the Disbursing Agent that such stock transfer taxes have been paid or are not payable.

(d)After the Effective Time, there shall be no further transfers on the stock transfer books of the Company of the Ordinary Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation, Parent or the Disbursing Agent, such shares shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Article II.

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(e)If any cash deposited with the Disbursing Agent remains unclaimed twelve months after the Effective Time, such cash shall be returned to Parent or the Surviving Corporation upon demand, and any holder who has not surrendered such holder’s Certificates for the Merger Consideration payable in respect thereof prior to that time shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration. Notwithstanding the foregoing, none of Parent, Merger Sub, the Company, the Surviving Corporation or the Disbursing Agent shall be liable to any holder of Certificates for an amount paid to a public official pursuant to any applicable unclaimed property laws. Any amounts remaining unclaimed by holders of Certificates as of a date immediately prior to such time that such amounts would otherwise escheat to or become property of any Governmental Authority shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation on such date, free and clear of any claims or interest of any Person previously entitled thereto.

(f)No dividends or other distributions with respect to capital stock of the Surviving Corporation with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate, including Dissenting Ordinary Shares.

(g)Except as provided in Section 2.2(a), from and after the Effective Time, the holders of Ordinary Shares (other than Dissenting Ordinary Shares) outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Ordinary Shares, other than the right to receive the Merger Consideration as provided in this Agreement.

(h)       In the event that any Certificate has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, in addition to the posting by such holder of any bond in such reasonable amount as the Surviving Corporation or the Disbursing Agent may direct as indemnity against any claim that may be made against the Surviving Corporation or the Disbursing Agent with respect to such Certificate, the Disbursing Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration in respect thereof entitled to be received pursuant to this Agreement.

(i)Parent, Surviving Corporation and the Disbursing Agent shall be entitled to deduct and withhold from the Merger Consideration otherwise payable hereunder any amounts required to be deducted and withheld under any applicable Tax Law. To the extent any amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder from whose Merger Consideration the amounts were so deducted and withheld.

Section 2.4.Treatment of Company Options, Company SARs and Company RSUs.

(a) As of the Effective Time, each Company Option and each Company SAR that is outstanding immediately prior to the Effective Time will be canceled and extinguished, and the holder thereof will be entitled to receive an amount in cash equal to the product of (i) the number of Ordinary Shares subject to such Company Option or Company SAR and (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Company Option or Company SAR, without interest. All payments with respect to canceled Company Options and canceled Company SARs shall be made by the Disbursing Agent (or

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such other agent reasonably acceptable to the Company as Parent shall designate prior to the Effective Time) as promptly as reasonably practicable after the Effective Time from funds deposited by or at the direction of Parent for the purpose of paying such amounts in accordance with Section 2.3(a).

(b)As of the Effective Time, each Company RSU that is outstanding immediately prior to the Effective Time will be canceled and extinguished, and the holder thereof will be entitled to receive an amount in cash equal to the Merger Consideration, without interest. All payments with respect to canceled Company RSUs shall be made by the Distributing Agent (or such other agent reasonably acceptable to the Company as Parent shall designate prior to the Effective Time) as promptly as reasonably practicable after the Effective Time from funds deposited by Parent for the purpose of paying such amounts in accordance with Section 2.3(a).

(c)Prior to the Effective Time, the Company and Parent will adopt such resolutions and take such other commercially reasonable actions as are reasonably necessary in order to effectuate the actions contemplated by Section 2.2(f) and this Section 2.4, without paying any consideration or incurring any debts or obligations on behalf of the Company or the Surviving Corporation, provided that such resolutions and actions shall expressly be conditioned upon the consummation of the Merger and the other transactions contemplated hereby and shall be of no effect if this Agreement is terminated.

(d)Parent, the Surviving Corporation and the Disbursing Agent (or such other agent designated pursuant to Section 2.4(a) or Section 2.4(b) hereof), shall be entitled to deduct and withhold from any amounts to be paid hereunder in respect of Company Options, Company SARs and Company RSUs amounts required to be deducted and withheld under any applicable Tax Law. To the extent any amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of Company Options, Company SARs or Company RSUs from whose payments in respect of Company Options, Company SARs or Company RSUs the amounts were so deducted and withheld.

ARTICLE III

THE SURVIVING CORPORATION

Section 3.1.Memorandum of Association. The memorandum of association of the Company, as amended to read in its entirety as the memorandum of association of Merger Sub as in effect immediately prior to the Effective Time, shall be the memorandum of association of the Surviving Corporation until thereafter amended in accordance with the terms thereof and as provided by applicable Law.

Section 3.2.Articles of Association. The articles of association of the Company, as amended to read in its entirety as the articles of association of Merger Sub as in effect immediately prior to the Effective Time shall be the articles of association of the Surviving Corporation until thereafter amended in accordance with the terms thereof and as provided by applicable Law.

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Section 3.3.Directors and Officers. From and after the Effective Time, (i) the directors of Merger Sub at the Effective Time shall be the directors of the Surviving Corporation and (ii) the officers of the Company at the Effective Time (other than those who Parent determines shall not remain as officers of the Surviving Corporation) shall be the officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified in accordance with applicable Law.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except (x) as set forth in the corresponding sections or subsections of the disclosure letter delivered to Parent and Merger Sub by the Company concurrently with entering into this Agreement (the “Company Disclosure Letter”) (it being understood that any information set forth in a particular section or subsection of the Company Disclosure Letter shall be deemed to be disclosed in each other section or subsection thereof to which the relevance of such information is reasonably apparent) or (y) as may be disclosed in the Company SEC Reports filed prior to the date of this Agreement, the Company hereby represents and warrants to Parent and Merger Sub that:

Section 4.1.Corporate Existence and Power. Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the laws of its jurisdiction (with respect to jurisdictions that recognize the concept of good standing). Each of the Company, its Subsidiaries and, to the knowledge of the Company, the Company Joint Ventures has all corporate or similar powers and authority required to own, lease and operate its respective properties and to carry on its business as now conducted. Each of the Company and its Subsidiaries is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such qualification necessary, except where the failure to be so licensed or qualified has not had, and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any Company Joint Venture, is in violation of its organizational or governing documents in any material respect.

Section 4.2.Corporate Authorization.

(a) The Company has full corporate power and authority to execute and deliver this Agreement and to consummate the Merger and the other transactions contemplated hereby and to perform each of its obligations hereunder. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Merger and the other transactions contemplated hereby have been duly and validly authorized by the Board of Directors of the Company. Except for the approval of this Agreement by a simple majority of the Ordinary Shares present, in person or by proxy, at a meeting of Company shareholders called for such purpose (the “Requisite Shareholder Vote”), no other corporate proceedings on the part of the Company are necessary to approve this Agreement or to consummate the Merger or the other transactions contemplated hereby. The Board of Directors of the Company, acting upon the unanimous recommendation of the Special Committee, at a duly held meeting has (i) determined that the Merger and this Agreement are fair to and in the best

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interests of the Company and its shareholders, (ii) approved the Merger, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, and (iii) resolved to recommend that the Company shareholders approve this Agreement and directed that such matter be submitted for consideration of the shareholders of the Company at the Company Shareholder Meeting.

(b)This Agreement has been duly and validly executed and delivered by the Company and, assuming the due and valid execution and delivery of this Agreement by Parent and Merger Sub, constitutes a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally and general equitable principles.

Section 4.3.Governmental Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation of the Merger by the Company do not require any consent, approval, authorization or permit of, action by, filing with or notification to any Governmental Authority, other than (i) the filing of the Articles of Merger; (ii) compliance with the applicable requirements of the HSR Act or the applicable Other Antitrust Laws of jurisdictions other than the United States; (iii) filings with, and approvals by, Gaming Authorities specified in Section 4.3(iii) of the Company Disclosure Letter; (iv) compliance with the applicable requirements of the Exchange Act including the filing of the Schedule 13E-3; (v) compliance with the rules and regulations of the New York Stock Exchange; (vi) compliance with any applicable foreign or state securities or Blue Sky laws; and (vii) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not (A) be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company or (B) prevent or materially delay the consummation of the Merger or the Company’s ability to observe and perform its material obligations hereunder.

Section 4.4.Non-Contravention. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Merger and the other transactions contemplated hereby do not and will not (i) contravene or conflict with the organizational or governing documents of the Company or any of its Subsidiaries or Company Joint Ventures; (ii) assuming compliance with the matters referenced in Section 4.3 and the receipt of the Requisite Shareholder Vote, contravene or conflict with or constitute a violation of any provision of any Law binding upon or applicable to the Company or any of its Subsidiaries or Company Joint Ventures or any of their respective properties or assets; (iii) require the consent, approval or authorization of, or notice to or filing with any third party with respect to, result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in the loss of benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of any right or obligation of the Company or any of its Subsidiaries, or result in the creation of any Lien on any of the properties or assets of the Company or its Subsidiaries under any loan or credit agreement, note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation (each, a “Contract”) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or its or any of their respective properties or assets are bound, except in the case of clauses (ii) and (iii) above, which would not (A) be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company or (B) prevent

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or materially delay the consummation of the Merger or the Company’s ability to observe and perform its material obligations hereunder.

Section 4.5.Capitalization.

(a) The authorized share capital of the Company is $350,000 divided into 250,000,000 Ordinary Shares and 100,000,000 Preference Shares, par value $0.001 per share (the “Preference Shares”). As of February 28, 2006, there were (i) 36,718,698 Ordinary Shares issued and outstanding (including 1,041,446 outstanding Company Restricted Shares) and no Preference Shares issued and outstanding and (ii) outstanding Company Options to purchase an aggregate of 2,533,382 Ordinary Shares, with a weighted average exercise price of $35.20per share. All outstanding Ordinary Shares are duly authorized, validly issued, fully paid and non-assessable, and are not subject to and were not issued in violation of any preemptive or similar right, purchase option, call or right of first refusal or similar right.

(b) Except as set forth in Section 4.5(a) and except for 922,853 Ordinary Shares reserved for issuance upon conversion of the Company’s 2.375% Convertible Senior Subordinated Notes due 2024 (the “Convertible Notes”) and 4,604,856 Ordinary Shares reserved for issuance pursuant to the Company Stock Plans, as of February 28, 2006, there have not been reserved for issuance, and there are no outstanding (i) shares of capital stock or other voting securities of the Company; (ii) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company; (iii) Company Options or other rights or options to acquire from the Company, or obligations of the Company to issue, any shares of capital stock, voting securities or securities convertible into or exchangeable for shares of capital stock or voting securities of the Company; or (iv) equity equivalent interests in the ownership or earnings of the Company or other similar rights in respect of the Company (the items in clauses (i) through (iv) collectively, “Company Securities”). There are no outstanding obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any Company Securities. There are no preemptive rights of any kind which obligate the Company or any of its Subsidiaries to issue or deliver any Company Securities. There are no shareholder agreements, voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party or by which it is bound relating to the voting or registration of any shares of capital stock of the Company or preemptive rights with respect thereto.

(c) Other than the issuance of Ordinary Shares upon exercise of Company Options or Company SARs or upon conversion of the Convertible Notes, from February 28, 2006 to the date of this Agreement, the Company has not declared or paid any dividend or distribution in respect of any Company Securities, and neither the Company nor any Subsidiary of the Company has issued, sold or repurchased any Company Securities, and their respective Boards of Directors have not authorized any of the foregoing.

(d) No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which Company shareholders may vote are outstanding.

Section 4.6.Company Subsidiaries and Joint Ventures.  (a)  Section 4.6 of the Company Disclosure Letter sets forth all Company Joint Ventures. All equity interests of any

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Subsidiary of the Company held by the Company or any other Subsidiary of the Company are validly issued, fully paid and non-assessable (to the extent such concepts are applicable) and were not issued in violation of any preemptive or similar rights, purchase option, call, or right of first refusal or similar rights. All such equity interests in Subsidiaries held by the Company or any Subsidiary of the Company are free and clear of any Liens or any other limitations or restrictions on such equity interests (including any limitation or restriction on the right to vote, pledge or sell or otherwise dispose of such equity interests) other than Permitted Liens. All equity interests of the Company Joint Ventures held by the Company or any Subsidiary of the Company are free and clear of any Liens other than Permitted Liens.

(b) There have not been reserved for issuance, and there are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of any Subsidiary of the Company; (ii) rights or options to acquire from the Company or its Subsidiaries, or obligations of the Company or its Subsidiaries to issue, any shares of capital stock, voting securities or securities convertible into or exchangeable for shares of capital stock or voting securities of any Subsidiary of the Company; or (iii) equity equivalent interests in the ownership or earnings of any Subsidiary of the Company or other similar rights in respect of any Subsidiary of the Company (the items in clauses (i) through (iii) collectively, “Subsidiary Securities”). There are no outstanding obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any Subsidiary Securities. There are no preemptive rights of any kind which obligate the Company or any of its Subsidiaries to issue or deliver any Subsidiary Securities. There are no shareholder agreements, voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party or by which it is bound relating to the voting or registration of any shares of capital stock of any Subsidiary of the Company or preemptive rights with respect thereto.

Section 4.7.Reports and Financial Statements.

(a) The Company has filed all forms, reports, statements, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed by it with the SEC since January 1, 2003 (all such forms, reports, statements, certificates and other documents filed with or furnished to the SEC since January 1, 2003, with any amendments thereto, collectively, the “Company SEC Reports”), each of which, including any financial statements or schedules included therein, as finally amended prior to the date hereof, has complied as to form in all material respects with the applicable requirements of the Securities Act and Exchange Act as of the date filed with the SEC. None of the Company’s Subsidiaries is required to file periodic reports with the SEC. None of the Company SEC Reports contained, when filed with the SEC and, if amended, as of the date of such amendment, any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to the Company SEC Reports. To the knowledge of the Company, none of the Company SEC Reports is the subject of ongoing SEC review, outstanding SEC comment or outstanding SEC investigation.

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(b) Each of the consolidated financial statements of the Company and its Subsidiaries included (or incorporated by reference) in the Company SEC Reports (including the related notes and schedules, where applicable) fairly present (subject, in the case of the unaudited statements, to normal year-end auditing adjustments, none of which are expected to be material in nature or amount) the results of the consolidated operations and changes in shareholders’ equity and consolidated financial position of the Company and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth. Each of such consolidated financial statements (including the related notes and schedules, where applicable) complied, as of the date of filing, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC applicable thereto and each of such financial statements (including the related notes and schedules, where applicable) were prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) consistently applied during the periods involved, except in each case as indicated in such statements or in the notes thereto.

Section 4.8.Undisclosed Liabilities. Except (i) for those liabilities that are fully reflected or reserved against on the consolidated balance sheet of the Company included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2004, (ii) for liabilities incurred in the ordinary course of business consistent with past practice since December 31, 2004, which are not material taken as a whole, or (iii) for liabilities that have been discharged or paid in full prior to the date hereof in the ordinary course of business consistent with past practice, neither the Company nor any of its Subsidiaries has incurred any material liability of any nature whatsoever (whether absolute, accrued or contingent or otherwise and whether due or to become due), and to knowledge of the Company there is no existing condition, event or circumstances that could reasonably be expected to result in any such material liability in the future, except in any such case as contemplated by this Agreement.

Section 4.9.Disclosure Documents. The Schedule 13E-3 and the Company Proxy Statement will not, at the date it is filed with the SEC (in the case of the Schedule 13E-3), at the date it is first mailed to shareholders of the Company (in the case of the Company Proxy Statement) or at the time of the Company Shareholder Meeting (other than as to information supplied by Parent, Merger Sub or any of their Affiliates, for inclusion therein), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Company will cause the Company Proxy Statement, the Schedule 13E-3 and all related SEC filings to comply as to form in all material respects with the requirements of the Exchange Act applicable thereto and any other applicable Law as of the date of such filing. No representation is made by the Company with respect to statements made in the Company Proxy Statement or the Schedule 13E-3 based on information supplied by Parent, Merger Sub or their Affiliates specifically for inclusion therein.

Section 4.10.Absence of Certain Changes or Events. Since December 31, 2004, no change, circumstance, event or effect has occurred which has had or would be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company.

Section 4.11.Litigation. Except as publicly disclosed in the Company SEC Reports filed with or furnished to the SEC prior to the date hereof, neither the Company nor any

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of its Subsidiaries is a party to any, and there are no pending or, to the Company’s knowledge, threatened, legal, administrative, arbitral or other material proceedings, claims, actions or governmental or regulatory investigations (a “Proceeding”) of any nature against the Company or any of its Subsidiaries or challenging the validity or propriety of the transactions contemplated by this Agreement, except for any Proceeding which (i) has not had or would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company or (ii) would prevent or materially delay the consummation of the Merger or the Company’s ability to observe and perform its obligations hereunder. Neither the Company nor any of its Subsidiaries or any of their businesses or properties are subject to or bound by any injunction, order, judgment, decree or regulatory restriction of any Governmental Authority specifically imposed upon the Company, any of its Subsidiaries or their respective properties or assets, except for any injunction, order, judgment, decree or regulatory restriction which (i) has not had or would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company or (ii) would prevent or materially delay the consummation of the Merger or the Company’s ability to observe and perform its obligations hereunder.

Section 4.12.Taxes. Except as have not had or would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company:

(a) all Tax Returns required to be filed by the Company or any of its Subsidiaries have been properly prepared and timely filed, and all such Tax Returns (including information provided therewith or with respect thereto) are true, correct and complete;

(b) the Company and its Subsidiaries have fully and timely paid all Taxes (whether or not shown to be due on the Tax Returns referred to in Section 4.12(a)) other than Taxes that are not yet due and payable or that are being contested in good faith;

(c) no audit or other proceeding by any taxing authority is pending or, to the knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries;

(d) there are no Tax sharing agreements (or similar agreements) to which the Company or any of its Subsidiaries is a party to or by which the Company or any of its Subsidiaries is bound (other than agreements exclusively between or among the Company and its Subsidiaries).

Section 4.13.ERISA.

(a) Each Employee Benefit Plan (other than any multiemployer plan within the meaning of ERISA Section 3(37)) and all stock purchase, stock option, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation and other material employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA, whether formal or informal, oral or written, legally binding or not, under which any Company Employee has any present or future right to benefits, maintained or contributed to by the Company or any of its Subsidiaries or under which the Company or any of its Subsidiaries has any present or future liability (the “Company Benefit Plans”) has been operated, funded and administered in compliance with its terms, the terms of

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any applicable collective bargaining agreement and with all applicable requirements of Law, including ERISA and the Code, except as would not subject the Company or any of its Subsidiaries to any liability that has had or would be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company. Except as has not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company, none of the Company, any of its Subsidiaries, any officer of the Company or any of its Subsidiaries or any Company Benefit Plan that is subject to ERISA, or, to the knowledge of the Company, any trust created thereunder or any trustee or administrator thereof, has engaged in a nonexempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code). Except as has not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company, no “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA and Section 412 of the Code (whether or not waived)) has occurred with respect to any Company Benefit Plan.

(b)Except in the ordinary course of business or as required by applicable Law, since December 31, 2005, there has been no amendment to any Company Benefit Plan that would increase materially the expense to the Company or any of its Subsidiaries of maintaining such plan above the level of the expense incurred by the Company or its Subsidiaries therefor for the most recent fiscal year. Except as contemplated by this Agreement, the execution of this Agreement and the consummation of the transactions contemplated hereby will not (either alone or together with any other related event) (i) result in any material payment by the Company or any of its Subsidiaries to any Company Employee of any money or other property under any Company Benefit Plan or Company Stock Plan or (ii) result in the accelerated vesting or funding through a trust or otherwise of a material amount of compensation or benefits under any Company Benefit Plan or Company Stock Plan, in each case, whether or not such payment would constitute a “parachute payment” within the meaning of Section 280G of the Code.

Section 4.14.Compliance With Laws.

(a) The Company and each of its Subsidiaries is, and at all times has been, in compliance with all Laws (including Gaming Laws) applicable to the Company, its Subsidiaries and their respective businesses and activities, except for such noncompliance that has not had, and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company.

(b) The Company and each Subsidiary of the Company has and maintains in full force and effect, and is in compliance with, all Permits and all orders from Governmental Authorities necessary for the Company and each Subsidiary to carry on their respective businesses as currently conducted and currently proposed to be conducted, except as has not had, and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company.

Section 4.15.Finders’ Fees. No agent, broker, investment banker, financial advisor or other firm or person except J.P. Morgan Securities Inc. is or will be entitled to any broker’s or finder’s fee or any other similar commission or fee in connection with any of the

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transactions contemplated by this Agreement. The Company has disclosed to Parent all material terms of the engagement of J.P. Morgan Securities Inc., including the amount of such fees and any right of first offer or other “tail” provisions.

Section 4.16.Opinion of Financial Advisor. J.P. Morgan Securities Inc. has delivered to the Special Committee, an opinion to the effect that, as of the date of this Agreement, the consideration to be received by holders of Ordinary Shares (other than SK, HBK and Istithmar and their Affiliates and any other holder who will contribute Ordinary Shares to Parent) in the Merger is fair, from a financial point of view, to such holders.

Section 4.17.Anti-Takeover Provisions. The Board of Directors of the Company has taken all necessary action so that any takeover, anti-takeover, moratorium, “fair price”, “control share” or other similar Law enacted under any Law applicable to the Company (each, a “Takeover Statute”) do not, and will not, apply to this Agreement, the Merger or the other transactions contemplated hereby. The Company does not have any shareholder rights plan in effect.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub hereby jointly and severally represent and warrant to the Company that:

Section 5.1.Corporate Existence and Power.  Each of Parent and Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of The Bahamas and has all corporate power and authority required to execute and deliver this Agreement and to consummate the Merger and the other transactions contemplated hereby and to perform each of its obligations hereunder.

Section 5.2.Corporate Authorization. The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Merger and the other transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Parent and Merger Sub. Except for the approval of this Agreement by Parent, as the sole shareholder of Merger Sub (which shall have occurred prior to the Effective Time), no other corporate proceedings other than those previously taken or conducted on the part of Parent or Merger Sub are necessary to approve this Agreement or to consummate the other transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming the due and valid execution and delivery of the Agreement by the Company, constitutes a legal, valid and binding agreement of Parent and Merger Sub, respectively, enforceable against Parent and Merger Sub in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally and general equitable principles.

Section 5.3.Governmental Authorization. The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Merger and other transactions contemplated by this Agreement do not require

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any consent, approval, authorization or permit of, action by, filing with or notification to any Governmental Authority, other than (i) the filing of the Articles of Merger; (ii) compliance with the applicable requirements of the HSR Act or the applicable Other Antitrust Laws of jurisdictions other than the United States; (iii) filings with, and approvals by, Gaming Authorities specified in Section 4.3(iii) of the Company Disclosure Letter, (iv) compliance with the applicable requirements of the Exchange Act including the filing of the Schedule 13E-3; (v) compliance with any applicable foreign or state securities or Blue Sky laws; and (vi) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not be reasonably likely to adversely effect in any material respect, or prevent or materially delay, the consummation of the Merger or Parent’s or Merger Sub’s ability to observe and perform its material obligations hereunder.

Section 5.4.Non-Contravention. The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Merger and the other transactions contemplated hereby do not and will not (i) contravene or conflict with the organizational or governing documents of Parent or Merger Sub, (ii) assuming compliance with the items specified in Section 5.3, contravene, conflict with or constitute a violation of any provision of any Law binding upon or applicable to Parent or Merger Sub or any of their respective properties or assets, or (iii) require the consent, approval or authorization of, or notice to or filing with any third party with respect to, result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default), or give rise to any right of termination, cancellation, amendment or acceleration of any right or obligation of Parent or Merger Sub or to a loss of any material benefit to which Parent or Merger Sub is entitled under any Contract.

Section 5.5.Disclosure Documents. None of the information supplied or to be supplied by Parent or Merger Sub or any of their Affiliates specifically for inclusion in the Company Proxy Statement or Schedule 13E-3 will, at the date it is filed with the SEC (in the case of the Schedule 13E-3), at the date it is first mailed to shareholders of the Company (in the case of the Company Proxy Statement), or at the time of the Company Shareholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

Section 5.6.Finders’ Fees. No agent, broker, investment banker, financial advisor or other firm or person except Deutsche Bank AG and Groton Partners LLC is or will be entitled to any broker’s or finder’s fee or any other similar commission or fee in connection with any of the transactions contemplated by this Agreement.

Section 5.7.Financing. Parent has delivered to the Company true and complete copies of (i) the commitment letter with respect to the senior secured credit facilities, dated as of the date hereof, among Parent, Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc. and Goldman Sachs Credit Partners L.P. and the commitment letter with respect to the senior subordinated bridge facility, dated as of the date hereof, among Parent, Deutsche Bank AG Cayman Islands Branch and Goldman Sachs Credit Partners L.P. (collectively, the “Debt Financing Commitments”), pursuant to which the lenders party thereto committed, subject to the terms thereof, to lend the amounts set forth therein (the “Debt Financing”), and (ii) the equity

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commitment letters, dated as of the date hereof, from (A) Istithmar , (B) Whitehall Street Global Real Estate Limited Partnership 2005, Whitehall Street International Real Estate Limited Partnership 2005, Whitehall Street Global Employee Fund 2005, L.P. and Whitehall Street International Employee Fund 2005 (Delaware), L.P., (C) Colony Investors VII L.P. , (D) Providence Equity Offshore Partners V L.P. and (E) The Related Companies, L.P. (the “Equity Financing Commitments” and together with the Debt Financing Commitments, the “Financing Commitments”), pursuant to which such parties have committed, subject to the terms thereof, to invest the cash amounts set forth therein (the “Equity Financing” and together with the Debt Financing, the “Financing”). Prior to the date of this Agreement, (i) none of the Financing Commitments has been amended or modified, and (ii) the respective commitments contained in the Financing Commitments have not been withdrawn or rescinded in any respect. As of the date of this Agreement, the Financing Commitments are in full force and effect. The only conditions precedent to the obligations of the lenders and other Persons committing pursuant to the Financing Commitments to make the Financing available to Parent or its Affiliates are those contemplated by the terms of the Financing Commitments. As of the date hereof, assuming the accuracy of the Company’s representations and warranties contained herein, neither Parent, Merger Sub nor any direct investor in Parent has any knowledge that any event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Parent, Merger Sub or any direct investor in Parent under any term or condition of the Financing Commitments or otherwise be reasonably likely to result in any portion of the Financing contemplated thereby to be unavailable. As of the date hereof, assuming the accuracy of the Company’s representations and warranties contained herein, neither Parent, Merger Sub nor any of the direct investors in Parent has any reason to believe that it will be unable to satisfy on a timely basis any term or condition to be satisfied by it and contained in the Financing Commitments. Parent, Merger Sub and their respective Affiliates have fully paid any and all commitment fees or other fees required by the terms of the Financing Commitments to be paid on or before the date of this Agreement. Assuming the accuracy of the Company’s representations and warranties contained herein, the proceeds from the Financing constitute all of the financing required to be provided by Parent for the consummation of the Merger and other transactions contemplated by this Agreement.

Section 5.8.Equity Rollover Commitments. Parent has delivered to the Company true and complete copies of the equity rollover letters, dated as of the date hereof, from (i) WLG, SK and HBK and (ii) Istithmar (the “Equity Rollover Commitments”), pursuant to which such parties have committed to contribute to Parent that number of Ordinary Shares set forth in such letters for shares of capital stock of Parent immediately prior to the Effective Time. As of the date of this Agreement, the Equity Rollover Commitments are in full force and effect. The only conditions precedent to the obligations of (i) WLG, SK or HBK or (ii) Istithmar under the Equity Rollover Commitments are those contemplated by the terms of the Equity Rollover Commitments. As of the date hereof, assuming the accuracy of the Company’s representations and warranties contained herein, neither Parent, Merger Sub nor any direct investor in Parent (or, in the case of WLG, SK or HBK) has any knowledge that any event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach under any term or condition of the Equity Rollover Commitments or otherwise be reasonably likely to result in any portion of the commitments contemplated thereby to be unavailable. As of the date hereof, assuming the accuracy of the Company’s representations and warranties contained herein, neither Parent, Merger Sub nor any direct investor in Parent (or, in

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the case of WLG, SK or HBK) has any reason to believe that (i) WLG, SK or HBK or (ii) Istithmar will be unable to satisfy on a timely basis any term or condition to be satisfied by it and contained in the Equity Rollover Commitments.

Section 5.9.Parent and Merger Sub. Each of Parent and Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby and prior to the Effective Time will have engaged in no other business activities and will have incurred no liabilities or obligations other than as contemplated herein, including in connection with arranging the Financing. As of March 20, 2006, there were 10 ordinary shares of Merger Sub outstanding, representing the only shares of Merger Sub outstanding and entitled to vote on the Merger.

Section 5.10.Voting Arrangements. Other than the voting agreement dated the date hereof among the Company, WLG, SK and HBK (the “Voting Agreement”) and the equity rollover letters, dated as of the date hereof, from Istithmar (the “Istithmar Equity Rollover Commitment”), no direct or indirect equity investor in Parent or Merger Sub, or any Affiliate thereof (other than the Company or any of its Subsidiaries), is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of any Ordinary Shares it owns beneficially (determined for the purposes of this paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) or of record in respect of the Merger or any transaction involving a Company Acquisition Proposal or Superior Proposal or any other transactions contemplated hereby or thereby.

ARTICLE VI

CONDUCT OF BUSINESS PENDING THE MERGER

Section 6.1.Conduct of the Company and Subsidiaries. Except for matters (x) set forth in Section 6.1 of the Company Disclosure Letter or as otherwise contemplated by or specifically provided in this Agreement, or (y) consented to in writing by Parent, from the date hereof until the Effective Time, the Company shall, and shall cause its Subsidiaries to, conduct their respective businesses in the ordinary and usual course consistent with past practice. Without limiting the generality of the foregoing, and except for matters set forth in Section 6.1 of the Company Disclosure Letter or as otherwise contemplated by or specifically provided in this Agreement, without the prior written consent of Parent (which consent shall not be unreasonably withheld or delayed), the Company shall not, and shall not permit its Subsidiaries to:

(a) propose or adopt any change in its organizational or governing documents;

(b) merge or consolidate the Company or any of its Subsidiaries with any Person;

(c) sell, lease or otherwise dispose of a material amount of assets or securities, including by merger, consolidation, asset sale or other business combination (including formation of a Joint Venture);

(d) redeem, repurchase, prepay, defease, cancel, incur or otherwise acquire, or modify in any material respect the terms of, indebtedness for borrowed money or assume, guarantee or endorse or otherwise become responsible for, whether directly, contingently or

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otherwise, the obligations of any Person, other than the incurrence, assumption or guarantee of indebtedness in the ordinary course consistent with past practice, including any borrowings under the existing credit facilities of the Company and its Subsidiaries to fund working capital needs, and such other actions taken in the ordinary course of business consistent with past practice;

(e) offer, place or arrange any issue of debt securities or commercial bank or other credit facilities that could be reasonably expected to compete with or impede the Debt Financing or cause the breach of any provisions of the Debt Financing Commitments or cause any condition set forth in the Debt Financing Commitments not to be satisfied;

(f) make any material loans, advances or capital contributions to, acquisitions or licenses of, or investments in, any other Person, except as required by existing contracts;

(g) authorize any capital expenditures in excess of $10,000,000 per project or related series of projects of $50,000,000 in the aggregate, other than expenditures necessary to maintain existing assets in good repair and expenditures contemplated by the Company’s 2006 budget and approved development plans, as delivered to Parent prior to the date hereof;

(h) pledge or otherwise encumber shares of capital stock or other voting securities of the Company or any of its Subsidiaries;

(i) mortgage or pledge any of its material assets, tangible or intangible, or create, assume or suffer to exist any Lien thereupon (other than Permitted Liens);

(j) enter into or amend any Contract with any executive officer, director or other Affiliate of the Company or any of its Subsidiaries or any Person beneficially owning 5% or more of the Ordinary Shares;

(k) (i) split, combine or reclassify any Company Securities or Subsidiary Securities or amend the terms of any Company Securities or Subsidiary Securities, (ii) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of Company Securities or Subsidiary Securities other than a dividend or distribution by a wholly owned Subsidiary of the Company to its parent corporation in the ordinary course of business, (iii) issue or offer to issue any Company Securities or Subsidiary Securities, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire, any Company Securities or Subsidiary Securities, other than in connection with (A) the exercise of Company Options or Company SARs or conversion of the Convertible Notes, (B) the withholding of Company Securities to satisfy tax obligations with respect to Company Equity Awards, (C) the acquisition by the Company of Company Securities in connection with the forfeiture of Company Equity Awards, (D) the acquisition by the Company of Company Securities in connection with the net exercise of Company Options in accordance with the terms thereof, and (E) the issuance of Company Securities as required to comply with any Company Benefit Plan or Employment Agreement as in effect on the date of this Agreement;

(l) except (i) as required pursuant to existing written agreements or any Company Benefit Plan, Employment Agreement or collective bargaining agreement in effect on

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the date hereof, (ii) as effected in the ordinary course of business or (iii) as required by applicable Law (including Section 409A of the Code), (A) adopt, amend or terminate any Company Benefit Plan or enter into or amend any collective bargaining agreement or any Employment Agreement with any officer or director of the Company, except for entry into Employment Agreements with persons who are not executive officers or directors to the extent necessary to replace a departing employee or fill an existing vacancy, (B) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Benefit Plan or (C) increase in any manner the compensation or fringe benefits of any officer or director of the Company by an amount in excess of $1,000,000 in the aggregate;

(m) settle or compromise any litigation, or release, dismiss or otherwise dispose of any claim or arbitration, other than settlements or compromises of litigation, claims or arbitration that do not exceed $10,000,000 in the aggregate and do not involve any material injunctive or other non-monetary relief or impose material restrictions on the business or operations of the Company;

(n) make or change any material Tax election, or settle or compromise any material Tax liability of the Company or any of its Subsidiaries, agree to an extension of the statute of limitations with respect to the assessment or determination of Taxes of the Company or any of its Subsidiaries, file any amended Tax Return with respect to any material Tax, enter into any closing agreement with respect to any Tax or surrender any right to claim a Tax refund;

(o) make any change in financial accounting methods or method of Tax accounting, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except insofar as may have been required by a change in GAAP or Law;

(p) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger and consolidations, mergers or reorganizations solely among wholly owned Subsidiaries of the Company), or a letter of intent or agreement in principle with respect thereto;

(q) take any action that is intended to or would result in any of the conditions to effecting the Merger set forth in Sections 8.1 and 8.2 becoming incapable of being satisfied;

(r) take any action or fail to take any action which would, or would be reasonably likely to, individually or in the aggregate, prevent, materially delay or materially impede the ability of the Company to consummate the Merger or the other transactions contemplated by this Agreement; or

(s) authorize, agree or commit to do any of the foregoing.

Section 6.2.Conduct of Parent and Merger Sub. Each of Parent and Merger Sub agrees that, from the date hereof to the Effective Time, it shall not (i) take any action (including by way of amendment to the Interim Investors Agreement dated as of the date hereof among Parent and the investors named therein (the “Interim Investors Agreement”) that is

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intended to or would result in any of the conditions to effecting the Merger set forth in Sections 8.1 and 8.3 becoming incapable of being satisfied; or (ii) take any action or fail to take any action which would, or would be reasonably likely to, individually or in the aggregate, prevent, materially delay or materially impede the ability of Parent and Merger Sub to consummate the Merger or the other transactions contemplated by this Agreement. Parent has provided to the Company a summary of the material provisions of the Interim Investors Agreement relating to “Gaming/HSR Approvals” and “Remedies”.

Section 6.3.No Control of Other Party’s Business. Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations. Prior to the Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries respective operations.

ARTICLE VII

ADDITIONAL AGREEMENTS

Section 7.1.Shareholder Meeting; Proxy Material.

(a) The Company shall (i) take all action necessary to duly call, give notice of, convene and hold a meeting of its shareholders (the “Company Shareholder Meeting”) for the purpose of obtaining the approval of this Agreement by the Company shareholders in accordance with applicable Law as promptly as reasonably practicable after the SEC confirms that it has no further comments on the Schedule 13E-3, (ii) use reasonable best efforts to solicit the approval of this Agreement by the Company shareholders, and (iii) except to the extent that the Board of Directors of the Company (acting through the Special Committee, if such committee still exists) shall have withdrawn or modified its approval or recommendation of this Agreement as permitted by Section 7.4, include in the Company Proxy Statement the recommendation of the Board of Directors of the Company that the shareholders of the Company approve this Agreement (the “Recommendation”).

(b) In connection with the Company Shareholder Meeting, the Company will (i) as promptly as reasonably practicable prepare the Company Proxy Statement and the Schedule 13E-3 and file, jointly with Parent and Merger Sub, the Schedule 13E-3 with the SEC as promptly as reasonably practicable, (ii) respond as promptly as reasonably practicable to any comments received from the SEC with respect to such filing and will provide copies of such comments to Parent and Merger Sub promptly upon receipt and copies of proposed responses to Parent and Merger Sub a reasonable time prior to filing to allow meaningful comment, (iii) as promptly as reasonably practicable prepare and file (after Parent and Merger Sub have had a reasonable opportunity to review and comment on) any amendments or supplements necessary to be filed in response to any SEC comments or as required by Law, (iv) use its reasonable best efforts to have the SEC confirm that it has no further comments on the Schedule 13E-3 and will thereafter mail to its shareholders as promptly as reasonably practicable the Company Proxy Statement and all other customary proxy or other materials for meetings such as the Company

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Shareholder Meeting (provided that the Company shall be under no obligation to mail the Company Proxy Statement to its shareholders prior to the No-Shop Period Start Date), (v) to the extent required by applicable Law, as promptly as reasonably practicable prepare, file and distribute to the Company shareholders any supplement or amendment to the Company Proxy Statement and the Schedule 13E-3 if any event shall occur which requires such action at any time prior to the Company Shareholder Meeting, and (vi) otherwise use reasonable best efforts to comply with all requirements of Law applicable to the Company Shareholder Meeting and the Merger. Parent and Merger Sub shall cooperate with the Company in connection with the preparation of the Company Proxy Statement and the preparation and filing of the Schedule 13E-3, including promptly furnishing the Company upon request with any and all information as may be required to be set forth in the Company Proxy Statement and the Schedule 13E-3 under applicable Law. The Company will provide Parent and Merger Sub a reasonable opportunity to review and comment upon the Company Proxy Statement and the Schedule 13E-3, or any amendments or supplements thereto, prior to mailing the Company Proxy Statement to its shareholders and filing the Schedule 13E-3 with the SEC.

Section 7.2.Reasonable Best Efforts. (a)  Subject to the terms and conditions of this Agreement, each party will use its reasonable best efforts to take, or cause to be taken, all actions, to file, or cause to be filed, all documents and to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement, including preparing and filing as promptly as practicable all documentation to effect all necessary filings, consents, waivers, approvals, authorizations, Permits or orders from all Governmental Authorities (including Gaming Authorities) or other Persons and, in the case of Parent, using reasonable best efforts to enforce any remedies available to Parent in the Interim Investors Agreement. In furtherance and not in limitation of the foregoing, each partyhereto agrees to make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by this Agreement as promptly as practicable after the date hereof (and in any event within 10 Business Days) and to make, or cause to be made, the filings and authorizations required under the Other Antitrust Laws of jurisdictions other than the United States as promptly as reasonably practicable after the date hereof and to supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to the HSR Act or the Other Antitrust Laws of jurisdictions other than the United States and use its reasonable best efforts to take or cause to be taken all other actions necessary, proper or advisable consistent with this Section 7.2 to cause the expiration or termination of the applicable waiting periods, or receipt of required authorizations, as applicable, under the HSR Act or the Other Antitrust Laws of jurisdictions other than the United States as soon as practicable; provided that in no event shall any shareholder of Parent, or any Affiliate of any shareholder of Parent, be required to take any action with respect to any portfolio company or agree to undertake any divestiture or restrict its conduct with regard to any business other than the business of the Company and its Subsidiaries. Without limiting the foregoing, the parties shall request and shall use reasonable best efforts to obtain early termination of the waiting period under the HSR Act.

(b) Each of Parent and Merger Sub, on the one hand, and the Company, on the other hand, shall, in connection with the efforts referenced in Section 7.2(a) to obtain all requisite approvals and authorizations for the transactions contemplated by this Agreement, use its reasonable best efforts to (i) cooperate in all respects with each other in connection with any

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filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party; (ii) keep the other party reasonably informed of any communication received by such party from, or given by such party to, the Federal Trade Commission (the “FTC”), the Antitrust Division of the Department of Justice (the “DOJ”) or any other Governmental Authority and of any communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby; and (iii) permit the other party to review any communication given by it to, and consult with each other in advance of any meeting or conference with, the FTC, the DOJ or any other Governmental Authority or, in connection with any proceeding by a private party, with any other person, and to the extent permitted by the FTC, the DOJ or such other applicable Governmental Authority or other person, give the other party the opportunity to attend and participate in such meetings and conferences.

(c) In furtherance and not in limitation of the covenants of the parties contained in Sections 7.2(a) and (b), if any objections are asserted with respect to the transactions contemplated hereby under any Law or if any suit is instituted (or threatened to be instituted) by the FTC, the DOJ or any other applicable Governmental Authority or any private party challenging any of the transactions contemplated hereby as violative of any Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby, each of Parent, Merger Sub and the Company shall use its reasonable best efforts to resolve any such objections or suits so as to permit consummation of the transactions contemplated by this Agreement, including in order to resolve such objections or suits which, in any case if not resolved, would reasonably be expected to prevent, materially impede or materially delay the consummation of the Merger or the other transactions contemplated hereby, including selling, holding separate or otherwise disposing of or conducting its business in a manner which would resolve such objections or suits or agreeing to sell, hold separate or otherwise dispose of or conduct its business in a manner which would resolve such objections or suits or permitting the sale, holding separate or other disposition of, any of its assets or the assets of its Subsidiaries or the conducting of its business in a manner which would resolve such objections or suits so long as such actions, individually or in the aggregate, do not have, and would not be reasonably likely to have, a Material Adverse Effect on the Company; provided, however, that the Company may expressly condition any such sale, holding separate or other disposal, and any agreement to take any such action or to conduct its business in any manner, upon the consummation of the Merger and the other transactions contemplated hereby; and provided further, however, that in no event shall any shareholder of Parent, or any Affiliate of any shareholder of Parent be required to take any action with respect to any portfolio company or agree to undertake any divestiture or restrict its conduct with regard to any business other than the business of the Company and its Subsidiaries.Without excluding other possibilities, the transactions contemplated by this Agreement shall be deemed to be materially delayed if unresolved objections or suits delay or would reasonably be expected to delay the consummation of the transactions contemplated hereby beyond the Termination Date.

(d) Subject to the obligations under Section 7.2(c), in the event that any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by a Governmental Authority or private party challenging the Merger or any other transaction contemplated by this Agreement, or any other agreement contemplated hereby, each of Parent, Merger Sub and the Company shall cooperate in all respects with each other and use its

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respective reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement.

(e) Notwithstanding anything to the contrary in this Agreement, in connection with obtaining any approval or consent from any person with respect to the Merger, (i) without the prior written consent of Parent (which shall not be unreasonably withheld or delayed), none of the Company or any of its Subsidiaries shall pay or commit to pay to such person whose approval or consent is being solicited any cash or other consideration, make any commitment or incur any liability or other obligation due to such person and (ii) no party or its Affiliates shall be required to pay or commit to pay to such person whose approval or consent is being solicited any cash or other consideration, make any commitment or to incur any liability or other obligation (provided, however, that such party shall give the other parties hereto the opportunity to make such payments).

Section 7.3.Access to Information. (a) Subject to applicable Law, the Company will provide and will cause its Subsidiaries and its and their respective Representatives to provide Parent and Merger Sub and their respective authorized Representatives, during normal business hours and upon reasonable advance notice (i) such access to the offices, properties, books and records of the Company and such Subsidiaries (so long as such access does not unreasonably interfere with the operations of the Company) as Parent or Merger Sub reasonably may request and (ii) all documents that Parent or Merger Sub reasonably may request. Notwithstanding the foregoing, Parent, Merger Sub and their Representatives shall not have access to any books, records, documents and other information (i)  to the extent that books, records, documents or other information is subject to the terms of a confidentiality agreement with a third party (provided that the Company shall use its reasonable best efforts to obtain waivers under such agreements or implement requisite procedures to enable reasonable access without violating such agreement), (ii)  to the extent that the disclosure thereof would result in the loss of attorney-client privilege, (iii)  to the extent required by applicable Law (provided that the Company shall use its reasonable best efforts to enable the provision of reasonable access without violating such law) or (iv) to the extent relating to pricing or other matters that are highly sensitive if the exchange of such books, records, documents or other information (or portions thereof), as reasonably determined by the Company’s counsel, would be reasonably likely to result in antitrust difficulties for the Company (or any of its Affiliates). The parties will make appropriate substitute arrangements under circumstances in which the restrictions of the preceding sentence apply. All information exchanged pursuant to this Section 7.3(a) shall be subject to the Confidentiality Agreements and the confidentiality agreement dated February 5, 2006, among WLG, SK and HBK and the Company.

(b) No investigation by any of the parties or their respective Representatives shall affect the representations or warranties of the other set forth herein.

Section 7.4.Solicitation.  (a) Notwithstanding any other provision of this Agreement to the contrary, during the period beginning on the date of this Agreement and continuing until 11:59 p.m. (EST)

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on May 4, 2006 (the “No-Shop Period Start Date”), the Company and its Subsidiaries and their respective officers, directors, employees, consultants, agents, advisors, affiliates and other representatives (“Representatives”) shall have the right (acting under the direction of the Special Committee) to: (i) initiate, solicit and encourage, whether publicly or otherwise, Company Acquisition Proposals (as hereinafter defined), including by way of providing access to non-public information pursuant to (but only pursuant to) one or more Acceptable Confidentiality Agreements (as hereinafter defined); provided that the Company shall promptly provide to Parent and Merger Sub any material non-public information concerning the Company or its Subsidiaries that is provided to any Person given such access which was not previously provided to Parent and Merger Sub (subject to the right of the Company to withhold such portions of documents or information to the extent relating to pricing or other matters that are highly sensitive if the exchange of such information (or portions thereof), as reasonably determined by the Company’s counsel, would be reasonably likely to result in antitrust difficulties for the Company (or any of its Affiliates)); and (ii) enter into and maintain discussions or negotiations with respect to Company Acquisition Proposals or otherwise cooperate with or assist or participate in, or facilitate any such inquiries, proposals, discussions or negotiations or the making of any Company Acquisition Proposal.

(b) Subject to Section 7.4(c), from the No-Shop Period Start Date until the Effective Time or, if earlier, the termination of this Agreement in accordance with Article IX, none of the Company, the Company’s Subsidiaries nor any of their respective Representatives shall, directly or indirectly, (A) initiate, solicit or encourage (including by way of providing information) the submission of any inquiries, proposals or offers that constitute or may reasonably be expected to lead to, any Company Acquisition Proposal or engage in any discussions or negotiations with respect thereto or otherwise cooperate with or assist or participate in, or facilitate any such inquiries, proposals, discussions or negotiations, or (B) approve or recommend, or propose to approve or recommend, a Company Acquisition Proposal or enter into any merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement or share exchange agreement, option agreement or other similar agreement providing for or relating to a Company Acquisition Proposal or enter into any agreement or agreement in principle requiring the Company to abandon, terminate or fail to consummate the transactions contemplated hereby or breach its obligations hereunder or propose or agree to do any of the foregoing. Subject to Section 7.4(c) and except with respect to any Company Acquisition Proposal received prior to the No-Shop Period Start Date with respect to which the requirements of Section 7.4(c) can be satisfied from and after the No-Shop Period Start Date (an “Excluded Party”) (provided, that any Excluded Party shall cease to be an Excluded Party for all purposes under this Agreement at such time as the Company Acquisition Proposal made by such party fails to satisfy the requirements of Section 7.4(c)), on the No-Shop Period Start Date, the Company shall immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with any Persons conducted theretofore by the Company, its Subsidiaries or any Representatives with respect to any Company Acquisition Proposal and shall use its (and will cause its Representatives to use their) reasonable best efforts to require the other parties thereto to promptly return or destroy in accordance with the terms of such agreement any confidential information previously furnished by the Company, the Company’s Subsidiaries or their respective Representatives thereunder.

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(c) Notwithstanding anything to the contrary contained in Section 7.4(b), if at any time following the No-Shop Period Start Date and prior to obtaining the Requisite Shareholder Vote, (i) the Company has otherwise complied in all material respects with its obligations under this Section 7.4 and the Company has received a written Company Acquisition Proposal from a third party that the Board of Directors of the Company (acting through the Special Committee, if such committee still exists, or otherwise by resolution of a majority of its Disinterested Directors) believes in good faith to be bona fide and (ii) the Board of Directors of the Company (acting through the Special Committee, if such committee still exists, or otherwise by resolution of a majority of its Disinterested Directors) determines in good faith, after consultation with its independent financial advisors and outside counsel, that such Company Acquisition Proposal constitutes or could reasonably be expected to result in a Superior Proposal, then the Company may (A) furnish information with respect to the Company and its Subsidiaries to the Person making such Company Acquisition Proposal and (B) participate in discussions or negotiations with the Person making such Company Acquisition Proposal regarding such Company Acquisition Proposal; provided, that the Company (x) will not, and will not allow Company Representatives to, disclose any non-public information to such Person without entering into an Acceptable Confidentiality Agreement, and (y) will promptly provide to Parent and Merger Sub any material non-public information concerning the Company or its Subsidiaries provided to such other Person which was not previously provided to Parent and Merger Sub (subject to the right of the Company to withhold such portions of documents or information to the extent relating to pricing or other matters that are highly sensitive if the exchange of such information (or portions thereof), as reasonably determined by the Company’s counsel, would be reasonably likely to result in antitrust difficulties for the Company (or any of its Affiliates)). Notwithstanding anything to the contrary contained in Section 7.4(b), the Company shall be permitted prior to obtaining the Requisite Shareholder Vote to take the actions described in clauses (A) and (B) above with respect to any Excluded Party. From and after the No-Shop Period Start Date, the Company shall promptly (within one Business Day) notify Parent and Merger Sub in the event it receives a Company Acquisition Proposal from a Person or group of related Persons other than an Excluded Party, including the material terms and conditions thereof and the identity of the party making such proposal or inquiry, and shall keep Parent and Merger Sub reasonably apprised as to the status and any material developments, discussions and negotiations concerning the same. Without limiting the foregoing, from and after the No-Shop Period Start Date, the Company shall promptly (within one Business Day) notify Parent and Merger Sub orally and in writing if it determines to begin providing information or to engage in negotiations concerning a Company Acquisition Proposal received on or after the No-Shop Period Start Date from a Person or group of related Persons other than an Excluded Party pursuant to this Section 7.4(c).

(d) Neither the Board of Directors of the Company nor any committee thereof shall directly or indirectly (i) withdraw or modify in a manner adverse to Parent or Merger Sub, or publicly propose to withdraw or modify in a manner adverse to Parent or Merger Sub, the Recommendation or (ii) take any other action or make any other public statement in connection with the Company Shareholder Meeting inconsistent with such Recommendation; provided, that at any time prior to obtaining the Requisite Shareholder Vote, if the Company receives a Company Acquisition Proposal which the Board of Directors of the Company (acting through the Special Committee, if such committee still exists, or otherwise by resolution of a majority of its Disinterested Directors) concludes in good faith constitutes a Superior Proposal, then the

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Board of Directors of the Company (acting through the Special Committee, if such committee still exists, or otherwise by resolution of a majority of its Disinterested Directors) may withdraw or modify its Recommendation in a manner adverse to Parent and Merger Sub (“Recommendation Withdrawal”) if such Board of Directors determines in good faith (after consultation with outside counsel) that failure to take such action would violate its fiduciary duties under applicable Law.

(e) Nothing contained in this Section 7.4 or elsewhere in this Agreement shall prohibit the Company from (i) taking and disclosing to its shareholders a position contemplated by Rule 14d-9 and 14e-2(a) promulgated under the Exchange Act or (ii) making any disclosure to the Company’s shareholders if, in the good faith judgment of the Board of Directors (acting through the Special Committee, if such committee still exists, or otherwise by resolution of a majority of its Disinterested Directors), after receipt of advice from its outside legal counsel, failure so to disclose would be inconsistent with disclosure requirements under applicable Law; provided, any such disclosure made pursuant to clause (i) or (ii) (other than a “stop, look and listen” letter or similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act) shall be deemed to be a Recommendation Withdrawal unless the Board of Directors of the Company (acting through the Special Committee if such committee still exists) expressly reaffirms in such disclosure its recommendation in favor of the approval of this Agreement.

(f) The Company agrees that any violations of the restrictions set forth in this Section 7.4 by any Representative of the Company or any of its Subsidiaries, shall be deemed to be a breach of this Section 7.4 by the Company.

(g) As used in this Agreement, the term:

(i) “Acceptable Confidentiality Agreement” means a confidentiality and standstill agreement that contains provisions that are no less favorable in the aggregate to the Company than those contained in the confidentiality agreements (A) dated February 7, 2006 between Colony Capital Acquisitions, LLC and the Company, (B) dated February 23, 2006, between The Related Company, L.P. and the Company, (C) dated February 7, 2006, between Providence Equity Partners Inc. and the Company and (D) dated February 7, 2006, between Whitehall Street Global Real Estate Limited Partnership 2005 and the Company (the “Confidentiality Agreements”), provided, however, that an Acceptable Confidentiality Agreement may include provisions that are less favorable in the aggregate to the Company than those contained in the Confidentiality Agreements, so long as the Company offers to amend the Confidentiality Agreements concurrently with execution of such Acceptable Confidentiality Agreement to include substantially similar provisions for the benefit of the parties thereto;

(ii) “Company Acquisition Proposal” means any inquiry, proposal or offer from any Person or group of Persons other than Parent, Merger Sub or their respective Affiliates relating to any direct or indirect acquisition or purchase (whether in a single transaction or a series of transactions) of a business or businesses that constitutes 30% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, or 30% or more of any class or series of Company Securities or Subsidiary

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Securities, any tender offer or exchange offer that if consummated would result in any Person or group of Persons beneficially owning 30% or more of any class or series of Company Securities or Subsidiary Securities, or any merger, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company (or any Subsidiary or Subsidiaries of the Company whose business or businesses constitute(s) 30% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole);

(iii) “Superior Proposal” means a Company Acquisition Proposal, which was not obtained in violation of this Section 7.4, and which the Board of Directors of the Company (acting through the Special Committee, if such committee still exists, or otherwise by resolution of a majority of its Disinterested Directors) in good faith determines, would, if consummated, result in a transaction that is more favorable from a financial point of view to the shareholders of the Company (in their capacities as shareholders) than the transactions contemplated hereby (x) after receiving the advice of its financial advisor (who shall be a nationally recognized investment banking firm), (y) after taking into account the likelihood of consummation of such transaction on the terms set forth therein (as compared to the terms herein) and (z) after taking into account all appropriate legal (with the advice of outside counsel), financial (including the financing terms of any such proposal), regulatory or other aspects of such proposal; provided that for purposes of the definition of “Superior Proposal”, the references to “30% or more” in the definition of Company Acquisition Proposal shall be deemed to be references to “a majority” and the definition of Company Acquisition Proposal shall only refer to a transaction or series of transactions (i) directly involving the Company (and not exclusively its Subsidiaries) or (ii) involving a sale or transfer of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole.

Section 7.5.Director and Officer Liability.

(a) From and after the Effective Time, the Surviving Corporation shall comply with all of the Company’s and its respective Subsidiaries’ obligations to indemnify and hold harmless (including any obligations to advance funds for expenses) (i) the present and former officers and directors thereof against any and all costs or expenses (including reasonable attorneys’ fees and expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative (“Damages”), arising out of, relating to or in connection with any acts or omissions occurring or alleged to occur prior to or at the Effective Time to the extent provided under the Company’s or such Subsidiaries’ respective organizational and governing documents or agreements in effect on the date hereof, including the approval of this Agreement, the Merger or the other transactions contemplated by this Agreement or arising out of or pertaining to the transactions contemplated by this Agreement; and (ii) such persons against any and all Damages arising out of acts or omissions in connection with such persons serving as an officer, director or other fiduciary in any entity if such service was at the request or for the benefit of the Company or any of its Subsidiaries. For a period of six years after the Effective Time, the Surviving Corporation shall cause to be maintained in effect the current policies of officers’ and directors’ liability insurance maintained

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on the date hereof by the Company and its respective Subsidiaries (the “Current Policies”); provided, however, that the Surviving Corporation may, and in the event of the cancellation or termination of such policies shall, substitute therefor policies with reputable and financially sound carriers providing at least the same coverage and amount and containing terms and conditions that are no less favorable to the covered persons (the “Replacement Policies”) in respect of claims arising from facts or events that existed or occurred prior to or at the Effective Time under the Current Policies; provided, further, however, that in no event will the Surviving Corporation be required to expend annually in excess of 300% of the annual premium currently paid by the Company under the Current Policies (the “Insurance Amount”) (in which event, the Surviving Corporation shall obtain as much comparable insurance as available for the Insurance Amount); provided, further, however, that in lieu of the foregoing insurance coverage, Parent may direct the Company to purchase “tail” insurance coverage that provides coverage no less favorable than the coverage described above, provided that the Company shall not be required to pay any amounts in respect of such coverage prior to the Closing.

(b) This Section 7.5 shall survive the consummation of the Merger and is intended to be for the benefit of, and shall be enforceable by, present or former directors or officers of the Company or its Subsidiaries, their respective heirs and personal representatives and shall be binding on the Surviving Corporation and its successors and assigns. In the event that the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all its properties and assets to any person (including by dissolution), then, and in each such case, Parent shall cause proper provision to be made so that the successors and assigns of the Surviving Corporation assume and honor the obligations set forth in this Section 7.5.

(c) The agreements and covenants contained herein shall not be deemed to be exclusive of any other rights to which any such present or former director or officer is entitled, whether pursuant to Law, contract or otherwise. Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries or their respective officers, directors and employees, it being understood and agreed that the indemnification provided for in this Section 7.5 is not prior to or in substitution for any such claims under any such policies.

Section 7.6.Takeover Statutes. The parties shall use their respective reasonable best efforts (i) to take all action necessary so that no Takeover Statute is or becomes applicable to the Merger or any of the other transactions contemplated by this Agreement and (ii) if any such Takeover Statute is or becomes applicable to any of the foregoing, to take all action necessary so that the Merger and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such Takeover Statute on the Merger and the other transactions contemplated by this Agreement.

Section 7.7.Public Announcements. Except with respect to any Recommendation Withdrawal or any action taken by the Company or its Board of Directors pursuant to, and in accordance with, Section 7.4, so long as this Agreement is in effect, the

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parties will consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except for any press release or public statement as may be required by applicable Law, court process or any listing agreement with the New York Stock Exchange, will not issue any such press release or make any such public statement without the consent of the other parties (not to be unreasonably withheld or delayed).

Section 7.8.Employee Matters.

(a) Without limiting any additional rights that any Company Employee employed by the Company or any of its Subsidiaries at the Effective Time (“Current Employee”) may have under any Company Benefit Plan, Employment Agreement or collective bargaining agreement, Parent shall cause the Surviving Corporation and each of its Subsidiaries, for the period commencing at the Effective Time and ending on the first anniversary thereof, to maintain for each Current Employee (i) base salary or hourly wage rate, target cash bonus opportunities under annual programs and commissions, but excluding equity and equity equivalents (collectively, “Compensation”), that in the aggregate is no less favorable than, and (ii) welfare benefits that in the aggregate are no less favorable than, in the case of the foregoing clauses (i) and (ii), the Compensation and benefits maintained for and provided to such Current Employee immediately prior to the Effective Time; provided, however, that, subject to the obligations set forth in this Section 7.8, nothing herein shall (A) prevent the amendment or termination of any Company Benefit Plans in accordance with their respective terms, or (B) interfere with the Surviving Corporation’s right or obligation to make such changes as are necessary to conform with applicable Law. Nothing in this Section 7.8 shall limit the right of Parent, the Surviving Corporation or any of their Subsidiaries to terminate the employment of any Current Employee at any time in a manner consistent with any applicable contractual obligations and any applicable employee benefit plans.

(b) As of and after the Effective Time, Parent will, or will cause the Surviving Corporation to, give each Current Employee full credit for purposes of eligibility to participate and vesting (but not for benefit accrual purposes, except for purposes of vacation and severance) under any Employee Benefit Plans and any other employee compensation and incentive plans, benefit (including vacation) plans, programs, policies and arrangements, in each case maintained for the benefit of Current Employees as of and after the Effective Time by Parent, its Subsidiaries or the Surviving Corporation (each, a “Parent Plan”) for such Current Employee’s service prior to the Effective Time with the Company and its Subsidiaries and their predecessor entities, to the same extent such service is recognized by the Company or its Subsidiaries immediately prior to the Effective Time. With respect to each Parent Plan that is a “welfare benefit plan” (as defined in Section 3(1) of ERISA), Parent or its Subsidiaries shall (i) cause there to be waived any pre-existing condition or eligibility limitations or exclusions and actively-at-work requirements with respect to the Current Employees and their eligible dependents and (ii) give effect, for the year in which the Closing occurs, for purposes of satisfying any deductible and maximum out-of-pocket limitations, to claims incurred and amounts paid by, and amounts reimbursed to, Current Employees and their eligible dependents under similar plans maintained by the Company and its Subsidiaries in which such Current Employees and their eligible dependents participated immediately prior to the Effective Time.

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(c) From and after the Effective Time, Parent will cause the Surviving Corporation and all of their Subsidiaries to assume and honor, in accordance with their respective terms, (i) each existing employment, change in control, severance and termination plan, policy or agreement of or between the Company or any of its Subsidiaries, on the one hand, and any officer, director or employee of that company, on the other hand, (ii) each equity-based plan, program or agreement and each bonus plan, program or agreement and (iii) all obligations pursuant to existing benefit restoration plans, equity-based plans, programs or agreements, bonus plans, programs or agreements, bonus deferral plans, vested and accrued benefits under any employee benefit plan, program or arrangement of the Company or its Subsidiaries and similar employment compensation and benefit arrangements and agreements in effect as of the Effective Time, in the case of each of the foregoing clauses (i), (ii) and (iii), to the extent legally binding on the Company or any of its Subsidiaries.

(d) The provisions of this Section 7.8 are for the sole benefit of the parties to this Agreement and nothing herein, expressed or implied, is intended or shall be construed to confer upon or give to any person (including for the avoidance of doubt any Company Employees), other than the parties hereto and their respective permitted successors and assigns, any legal or equitable or other rights or remedies (with respect to the matters provided for in this Section 7.8) under or by reason of any provision of this Agreement.

Section 7.9.Financing.(a)  Prior to the Effective Time, the Company shall provide, and shall cause its Subsidiaries to, and shall use its reasonable best efforts to cause their respective Representatives, including legal and accounting, to, provide all cooperation reasonably requested by Parent in connection with the Financing and the other transactions contemplated by this Agreement, including (i) participation in a reasonable number of 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 the Financing, (iii) executing and delivering any pledge and security documents, other definitive financing documents, or other certificates, legal opinions or documents as may be reasonably requested by Parent (including a certificate of the chief financial officer of the Company or any Subsidiary with respect to solvency matters and consents of accountants for use of their reports in any materials relating to the Debt Financing) and otherwise reasonably facilitating the pledging of collateral, in each case effective on or after the Effective Time, (iv) furnishing Parent and its Financing sources with financial and other pertinent information regarding the Company as may be reasonably requested by Parent, including all financial statements and financial data of the type required by Regulation S-X and Regulation S-K under the Securities Act and of type and form customarily included in private placements under Rule 144A of the Securities Act in respect of foreign private issuers (as such term is defined under the Exchange Act), to consummate the offering of debt securities contemplated by the Debt Financing Commitments, (v) using reasonable best efforts to obtain accountants’ comfort letters, legal opinions, surveys and title insurance as reasonably requested by Parent, (vi) using its commercially reasonable efforts to provide monthly financial statements (excluding footnotes) within 25 days of the end of each month prior to the Closing Date, (vii) taking all actions reasonably necessary to (A) permit the prospective lenders involved in the Financing to evaluate the Company’s current assets, cash management and accounting systems, policies and procedures relating thereto for the purpose of establishing collateral arrangements

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and (B) effective on or after the Effective Time, establish bank and other accounts and blocked account agreements and lock box arrangements in connection with the foregoing, and (viii) taking all corporate actions reasonably necessary to permit the consummation of the Debt Financing and to permit the proceeds thereof to be made available to the Company (it being understood that (A) to the greatest extent practicable, the actions contemplated by this Section 7.9(a)(viii) shall not be required to be taken until immediately prior to the Closing and that prior to the taking of such actions, any current member of the Board of Directors may resign and (B) if such member of the Board of Directors resigns, the failure of any such director to take any such action shall not constitute a failure to satisfy a condition to Closing). Parent shall, promptly upon request by the Company, reimburse, or cause its Affiliates to reimburse, the Company for all reasonable and documented out-of-pocket costs incurred by the Company or its Subsidiaries in connection with such cooperation. The Company hereby consents to the use of its and its Subsidiaries’ logos in connection with the Debt Financing, provided that such logos are used solely in a manner that is not intended to nor reasonably likely to harm or disparage the Company or the reputation or goodwill of the Company and its marks.

(b) Parent shall use its reasonable best efforts to arrange the Debt Financing on the terms and conditions described in the Debt Financing Commitments as promptly as practicable on the terms and conditions described in the Debt Financing Commitments, including using reasonable best efforts to (i) negotiate definitive agreements with respect thereto on the terms and conditions contained therein or on other terms no less favorable to Parent and Merger Sub and (ii) to satisfy on a timely basis all conditions applicable to Parent in such definitive agreements that are within its control. In the event that all conditions applicable to the Financing Commitments (other than in connection with the Debt Financing, the availability or funding of any of the Equity Financing) have been satisfied in Parent’s good faith judgment, Parent shall use its reasonable best efforts to cause the lenders and the other Persons providing such Financing to fund the Financing required to consummate the Merger on the Closing Date (including by taking enforcement action to cause such lenders and other Persons providing such Financing to fund such Financing). In the event any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Debt Financing Commitments, Parent shall use its reasonable best efforts to arrange to obtain alternative financing from alternative sources on terms no less favorable, taken as a whole, to Parent and Merger Sub (as determined in the reasonable judgment of Parent) as promptly as practicable following the occurrence of such event. Parent and Merger Sub shall keep the Company reasonably apprised of material developments relating to the Financing.

(c) Parent shall not agree to any amendments or modifications to, or grant any waivers of, any condition or other material provision under the Financing Commitments without the consent of the Company if such amendments, modifications or waivers would impose new or additional conditions or otherwise amend, modify or waive any of the conditions to the receipt of the Financing in a manner that would be reasonably likely to cause any material delay in the satisfaction of the conditions set forth in Article VIII. Notwithstanding anything in this Agreement to the contrary, one or more Debt Financing Commitments may be superseded at the option of Parent and Merger Sub after the date hereof but prior to the Effective Time by new debt financing commitments (the “New Financing Commitments”) which replace existing Debt Financing Commitments; provided, that the terms of the New Financing Commitments shall not (A) impose new or additional conditions to the receipt of the Financing as set forth in the Debt

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Financing Commitments in any material respect or (B) be reasonably likely to cause any material delay in the satisfaction of the conditions set forth in Article VIII. In such event, the term “Financing Commitments” as used herein shall be deemed to include the Financing Commitments that are not so superseded at the time in question and the New Financing Commitments to the extent then in effect.

(d) In no event shall Parent or any of its Affiliates (which for purposes of this Section 7.9(d) shall be deemed to include each 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) (i) award any agent, broker, investment banker, financial advisor or other firm or Person except Deutsche Bank AG and Groton Partners LLC any financial advisory role on an exclusive basis (or until the No-Shop Period Start Date, any additional firm or Person on a non-exclusive basis), or (ii) engage any bank or investment bank or other provider of financing other than Deutsche Bank AG and its Affiliates and Goldman Sachs Credit Partners and its Affiliates on an exclusive basis (or otherwise on terms that could reasonably be expected to prevent such provider from providing or seeking to provide financing to any third party in connection with a transaction relating to the Company or its Subsidiaries), in the case of clauses (i) and (ii) in connection with the Merger or the other transactions contemplated hereby, provided, however, that following the No-Shop Period Start Date, Parent may engage one additional provider of debt financing and one additional financial advisor, in each case, on an exclusive basis. Until the No-Shop Period Start Date, neither Parent nor any of its Affiliates shall seek or obtain any equity commitments or equity financing in respect of the Merger or any of the other transactions contemplated hereby, or provide any information in respect thereof to any potential investor in Parent, or any of Parent’s or any such investor’s financing sources or potential financing sources or other Representatives who have not been provided any such information prior to the date hereof, other than as set forth in the Equity Financing Commitments, as in effect on the date hereof. Notwithstanding the foregoing, Parent and its Affiliates can take any of the actions otherwise prohibited by the preceding sentence with respect to up to an aggregate of $50 million of equity investments or equity financing to entities or persons who (i) are not principally involved in the private equity business or (ii) other than SK, HBK, Istithmar and their respective Affiliates, are not required to file a Schedule 13G or Schedule 13D under the Exchange Act as of the date of this Agreement but without giving effect to the transactions contemplated hereby. No action shall be taken pursuant to the immediately preceding sentence that would violate Section 7.12 of this Agreement. Parent shall cause its Affiliates to comply with the foregoing covenant.

Section 7.10.Debt Tender Offers. As soon as reasonably practicable after the No-Shop Period Start Date, the Company shall, and with respect to the 6 ¾% Notes shall cause Kerzner International North America, Inc. (“KINA”) to, commence offers to purchase and related consent solicitations with respect to all of the outstanding aggregate principal amount of the Company’s and KINA’s 6 ¾% Senior Subordinated Notes due 2015 (the “6 ¾% Notes” and, together with the Convertible Notes, the “Notes”) and the Convertible Notes on such terms and conditions as are reasonably acceptable to Parent and the Company (including the related consent solicitations, collectively, the “Debt Tender Offers”) and Parent shall assist the Company in connection therewith. Promptly following the expiration date of the consent solicitations, assuming the requisite consents are received, the Company shall execute supplemental indentures to (i) the Indenture, dated as of September 22, 2005, among the Company, the

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guarantors named therein and The Bank of New York Trust Company, N.A., as trustee (the “6 ¾% Notes Indenture”) and (ii) the Indenture, dated as of April 5, 2004, between the Company and The Bank of New York Trust Company, N.A., as trustee (the “Convertible Notes Indenture” and, together with the 6 ¾ Notes Indenture, the “Indentures”), reflecting the amendments to such indentures consented to in the Debt Tender Offers, which supplemental indentures shall become operative concurrently with the Effective Time, and shall use its reasonable best efforts to cause the trustees under the Indentures to promptly enter into such supplemental indentures, as applicable. The Company shall provide, and shall cause its Subsidiaries to, and shall use its reasonable best efforts to cause their respective Representatives to, provide all cooperation requested by Parent in connection with the Debt Tender Offers. The closing of the Debt Tender Offers shall be conditioned on the occurrence of the Closing, and the parties shall use their reasonable best efforts to cause the Debt Tender Offers to close on the Closing Date. Concurrent with the Effective Time, and in accordance with the terms of the Debt Tender Offers, Parent shall cause the Surviving Corporation to accept for purchase and purchase the Notes properly tendered and not properly withdrawn in the Debt Tender Offers and provide to the Surviving Corporation cash in an amount sufficient to fund such purchase, including any applicable premiums, and all related fees and expenses. Parent shall reimburse, or cause its Affiliates to reimburse, the Company for its reasonable out-of-pocket fees and expenses (including any consent fees paid but only to the extent consented to by Parent) incurred pursuant to this Section 7.10. The Debt Tender Offers and other actions taken in connection therewith shall be conducted in accordance with the terms of the applicable Indentures and all applicable rules and resolutions of the SEC and other applicable Laws. Notwithstanding anything to the contrary contained in this Agreement, prior to the Effective Time, neither the Company nor any of its Subsidiaries shall be required to (i) make any cash expenditures or (ii) take any action that could obligate the Company or any of its Subsidiaries to repurchase any Notes or incur any additional obligations to the holders of the Notes prior to the consummation of the Debt Tender Offers.

Section 7.11.Confidentiality Agreements. Parent acknowledges on behalf of its Affiliates and each investor in Parent party to any Confidentiality Agreement or the confidentiality agreement dated February 5, 2006, among SK, HBK, WLG and the Company that such Affiliates and investors continue to be bound by such Confidentiality Agreements (including any “standstill” provisions therein), and the parties hereto acknowledge and agree that this Agreement does not in any manner modify or limit the Company’s or such Affiliate’s rights under such agreements. For purposes of Sections 7.11 and 7.12 of this Agreement, Parent acknowledges that it is an affiliate of WLG for purposes of the Registration Rights and Governance Agreement dated July 3, 2001 among, inter alia, the Company and WLG.

Section 7.12.Management. In no event shall Parent or any of its Affiliates (which for purposes of this Section shall be deemed to include each direct investor in Parent) enter into any arrangements with any member of the Company’s management or any other Company Employee (other than SK or HBK) on terms that prohibit or restrict such member of management or such Company Employee from discussing, negotiating or entering into any arrangements with any third party in connection with a transaction relating to the Company or its Subsidiaries or seek to do so. Parent shall cause its Affiliates to comply with the foregoing covenant.

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Section 7.13.Vesting of Company Equity Awards. As promptly as practicable (and in any event within 15 days from the date of this Agreement), the Company shall take such actions as may be reasonably required to irrevocably amend the terms of the Company Equity Awards to provide that to the extent that a “change of control” (as defined in the applicable Company Stock Plan or in any applicable agreement, notice or letter evidencing the grant of a Company Equity Award) shall occur with respect to any Company Equity Awards as a result of the consummation of a Superior Proposal that results in the termination of this Agreement, any such Company Equity Awards that are unvested as of the effective time of such Superior Proposal (the “Superior Proposal Effective Time”) shall become fully vested (and, in the case of Company Options and Company SARs, immediately exercisable in full) and all restrictions on such Company Equity Awards shall lapse, in each case not later than the earlier to occur of (a) the expiration of the six-month period immediately following such Superior Proposal Effective Time and (b) a holder's Qualifying Termination (as defined in the applicable Company Stock Plan), provided that (1) such Company Equity Awards are still outstanding at (and have not terminated prior to) the relevant time, and were not terminated at the Superior Proposal Effective Time in consideration for the payment of any amount required pursuant to the provisions of the applicable Company Stock Plan (including Section 14(a)(ii) of the Company 2003 Stock Incentive Plan or the Company 2005 Stock Incentive Plan, as applicable) or any applicable agreement, notice or letter evidencing the grant of such Company Equity Award, (2) such Company Equity Awards have not yet become fully vested or exercisable prior to the relevant time and (3) such amendments shall expressly be conditioned upon the consummation of a Superior Proposal that results in the termination of this Agreement and shall be of no effect if such Superior Proposal is not consummated.

ARTICLE VIII

CONDITIONS TO THE MERGER

Section 8.1.Conditions to the Obligations of Each Party. The obligations of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction of the following conditions:

(a) Shareholder Approval. This Agreement shall have been approved by the Requisite Shareholder Vote.

(b) Regulatory Approval. (i) Any applicable waiting period under the HSR Act (and any extension thereof) relating to the Merger shall have expired or been terminated, (ii) approval of the Financing by The Central Bank of The Bahamas shall have been obtained and (iii) all other required approvals of any Governmental Authority (including any Gaming Authority) set forth on Annex A hereto shall have been obtained or any applicable waiting period thereunder shall have been terminated or shall have expired, in each case, without any requirement to take any action, or agree to take any action, or agree to any conditions or restrictions in connection with obtaining the foregoing that would be reasonably likely to have a Material Adverse Effect on the Company, and except, in the case of clause (iii), if failure to obtain such approval or failure of such waiting period to terminate or expire would not be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company.

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(c) No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other judgment or order issued by any court or agency of competent jurisdiction or other Law (each, a “Restraint”) shall be in effect which prohibits, restrains or renders illegal the consummation of the Merger or which otherwise would be reasonably likely to have a Material Adverse Effect on the Company (provided, that prior to asserting this condition, the party asserting this condition shall have used its reasonable best efforts (in the manner contemplated by Section 7.2) to prevent the entry of any such Restraint and to appeal as promptly as possible any judgment that may be entered).

Section 8.2.Conditions to the Obligations of Parent and Merger Sub.

The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or valid waiver of the following further conditions:

(a) Representations and Warranties. Subject to the preamble to Article IV, the representations and warranties (i) set forth in Section 4.5 shall be true and correct in all material respects as of the date of this Agreement and as of the Effective Time as if made at and as of such time and (ii) set forth in Article IV, other than those described in clause (i) above, shall be true and correct (without giving effect to any qualification as to “materiality” or “Material Adverse Effect” set forth therein) as of the date of this Agreement and as of the date of the Effective Time as if made at and as of such time, except in the case of this clause (ii) where the failure to be so true and correct, individually and in the aggregate, has not had, and would not be reasonably likely to have, a Material Adverse Effect on the Company, provided in each case that representations made as of a specific date shall be required to be so true and correct subject to such qualifications) as of such date only. Parent and Merger Sub shall have received a certificate signed by a senior officer of the Company attesting to the foregoing.

(b) Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations, and complied in all material respects with the agreements and covenants, required to be performed by or complied with by it hereunder. Parent and Merger Sub shall have received a certificate signed by a senior officer of the Company attesting to the foregoing.

(c) Financing. The Debt Financing shall be available for borrowing on the Closing Date on the terms and conditions set forth in the Debt Financing Commitments, or upon terms and conditions that are no less favorable, in the aggregate, to Parent and Merger Sub (as determined in the reasonable judgment of Parent).

Section 8.3.Conditions of the Obligations of the Company. The obligation of the Company to consummate the Merger is subject to the satisfaction or valid waiver of the following further conditions:

(a) Representations and Warranties. The representations and warranties of Parent and Merger Sub contained in this Agreement that are qualified as to materiality shall be true and correct as of date of this Agreement and as of the Effective Time as if made at and as of such time and those which are not so qualified shall be true and correct in all material respects as of date of this Agreement and as of the Effective Time as if made at and as of such time,

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provided that representations made as of a specific date shall be required to be true as of such date only. The Company shall have received a certificate signed by a senior officer of Parent and Merger Sub attesting to the foregoing.

(b) Performance of Obligations of Parent and Merger Sub. Each of Parent and Merger Sub shall have performed in all material respects all obligations, and complied in all material respects with the agreements and covenants, required to be performed by or complied with by it hereunder. The Company shall have received a certificate signed by a senior officer of Parent and Merger Sub attesting to the foregoing.

ARTICLE IX

TERMINATION

Section 9.1.Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any prior approval of this Agreement by the shareholders of the Company):

(a) by mutual written consent of the Company, on the one hand, and Parent and Merger Sub, on the other hand;

(b) by either the Company or Parent, if:

(i) the Effective Time shall not have occurred on or before December 31, 2006 (the “End Date”) unless the failure of the Effective Time to occur by such date is principally the result of, or caused by, the failure of the party seeking to exercise such termination right to perform or observe any of the covenants or agreements of such party set forth in this Agreement;

(ii) if any Restraint having the effect set forth in Section 8.1(c) shall be in effect and shall have become final and nonappealable; provided, however, that the right to terminate this Agreement pursuant to this Section 9.1(b)(ii) shall not be available to any party whose breach of any provision of this Agreement is the principal cause of or resulted in the application or imposition of such Restraint; or

(iii) at the Company Shareholder Meeting or any adjournment thereof at which this Agreement has been voted upon, the Company shareholders fail to approve this Agreement by the Requisite Shareholder Vote;

(c) by the Company, if:

(i) a breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement shall have occurred which would cause any of the conditions set forth in Sections 8.3(a) or (b) not to be satisfied, and such breach is incapable of being cured by the End Date; provided, however, that the Company is not then in material breach of this Agreement;

(ii) at any time after the date of this Agreement and prior to obtaining the Requisite Shareholder Vote, the Company receives a Company Acquisition Proposal and

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the Board of Directors (acting through the Special Committee if such committee still exists, or otherwise by resolution of a majority of its Disinterested Directors) shall have concluded in good faith that such Company Acquisition Proposal constitutes a Superior Proposal; provided, however, that the Company shall not terminate this Agreement pursuant to the foregoing clause unless: (A) the Company shall have complied in all material respects with Section 7.4 of this Agreement; (B) the Company concurrently pays the Termination Fee payable pursuant to Section 9.2(a); and (C) the Board of Directors of the Company concurrently approves, and the Company concurrently enters into, a definitive agreement with respect to such Superior Proposal; or

(iii) at any time prior to the No-Shop Period Start Date, the Cooperation Agreement is breached in a manner that materially impairs the Company’s ability to take the actions described in Section 7.4(a) of this Agreement, and the breaching party has been given reasonable notice of such breach and a reasonable opportunity to cure such breach prior to the No-Shop Period Start Date;

(d) by Parent or Merger Sub, if:

(i) a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement shall have occurred which would cause any of the conditions set forth in Section 8.2(a) or (b) not to be satisfied, and such breach is incapable of being cured by the End Date; provided, however, that neither Parent nor Merger Sub is then in material breach of this Agreement;

(ii) the Board of Directors of the Company or any committee thereof (A) shall have effected a Recommendation Withdrawal, or publicly proposed to effect a Recommendation Withdrawal, or (B) shall have approved or recommended to the shareholders of the Company a Company Acquisition Proposal other than the Merger, or shall have resolved to effect the foregoing; or

(iii) the Company shall have willfully and materially breached the terms of Section 7.4 of this Agreement in any respect adverse to Parent and Merger Sub.

Section 9.2.Termination Fee. (a)  In the event that this Agreement is terminated by the Company pursuant to Section 9.1(c)(ii) or by Parent pursuant to Section 9.1(d)(ii)(B) or Section 9.1(d)(iii), then the Company shall pay to Parent the Termination Fee, at or prior to the time of termination in the case of a termination pursuant to Section 9.1(c)(ii) or as promptly as possible (but in any event within four Business Days) following termination of this Agreement in the case of a termination pursuant to Section 9.1(d)(ii)(B) or Section 9.1(d)(iii).

(b) In the event that this Agreement is terminated by Parent pursuant to Section 9.1(d)(ii)(A) and, at any time after the date of this Agreement and prior to the event giving rise to Parent’s right to terminate this Agreement under Section 9.1(d)(ii)(A), a Company Acquisition Proposal shall have been publicly announced or otherwise communicated or made known to any executive officer or director of the Company (or any person shall have publicly announced, or communicated or made known a bona fide intention, whether or not conditional, to make a Company Acquisition Proposal), then the Company shall pay to Parent the Termination Fee as promptly as

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possible (but in any event within four Business Days) following termination of this Agreement.

(c) In the event that this Agreement is terminated by Parent or the Company pursuant to Section 9.1(b)(iii) under circumstances in which the obligations under the Voting Agreement and the Istithmar Equity Rollover Commitment to vote in favor of the Merger Agreement have been satisfied in all material respects, and, at any time after the date of this Agreement and prior to the Company Shareholder Meeting, a Company Acquisition Proposal shall have been publicly announced or otherwise communicated or made known to any executive officer or director of the Company (or any person shall have publicly announced, or communicated or made known a bona fide intention, whether or not conditional, to make a Company Acquisition Proposal) prior to the Company Shareholder Meeting, and, if within 12 months after such termination, the Company or any of its Subsidiaries enters into a definitive agreement with respect to, or consummates, any Company Acquisition Proposal (whether or not the same as that originally announced or consummated), then the Company shall pay to Parent the Termination Fee, less the amount of any Parent Expenses previously paid to Parent by the Company, on the date of such execution or consummation (provided that solely for purposes of this Section 9.2(c), the term “Company Acquisition Proposal” shall have the meaning set forth in the definition of Company Acquisition Proposal contained in Section 7.4 except that all references to 30% shall be deemed references to 50%).

(d) In the event that this Agreement is terminated by Parent or the Company pursuant to Section 9.1(b)(iii) (or could have been terminated under such section) under circumstances in which (i) the obligations under the Voting Agreement and Istithmar Equity Rollover Commitment to vote in favor of the Merger Agreement have been satisfied in all material respects and (ii) the Termination Fee is not then payable pursuant to this Section 9.2, then the Company shall pay to Parent as promptly as possible (but in any event within four Business Days) following receipt of an invoice therefor all of Parent’s and Merger Sub’s actual and reasonably documented out-of-pocket fees and expenses (including reasonable legal fees and expenses) actually incurred by Parent, Merger Sub and their respective Affiliates on or prior to the termination of this Agreement in connection with the transactions contemplated by this Agreement, which amount shall not be greater than $12,000,000 (“Parent Expenses”); provided that the existence of circumstances which could require the Termination Fee subsequently to become payable pursuant to Section 9.2(c) shall not relieve the Company of its obligations to pay the Parent Expenses pursuant to this Section 9.2(d); and provided,further that the payment by the Company of Parent Expenses pursuant to this Section 9.2(d) shall not relieve the Company of any subsequent obligation to pay the Termination Fee pursuant to Section 9.2(c) except to the extent indicated in such Section 9.2(c).

(e) Any amount that becomes payable pursuant to Section 9.2(a), 9.2(b), 9.2(c) or 9.2(d) shall be paid by wire transfer of immediately available funds to an account designated by Parent.

(f) The Company acknowledges that the agreements contained in this Section 9.2 are an integral part of the transactions contemplated by this Agreement, that without these agreements Parent and Merger Sub would not have entered into this Agreement, and that any amounts payable pursuant to this Section 9.2 do not constitute a penalty. If the Company fails to

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pay Parent any amounts due to Parent pursuant to this Section 9.2 within the time periods specified in this Section 9.2, the Company shall pay the costs and expenses (including reasonable legal fees and expenses) incurred by Parent in connection with any action, including the filing of any lawsuit, taken to collect payment of such amounts, together with interest on such unpaid amounts at the prime lending rate prevailing during such period as published in The Wall Street Journal, calculated on a daily basis from the date such amounts were required to be paid until the date of actual payment.

Section 9.3.Effect of Termination. If this Agreement is terminated pursuant to Section 9.1, this Agreement shall forthwith become null and void and there shall be no liability or obligation on the part of the Company, Parent, Merger Sub or their respective Subsidiaries or Affiliates hereunder, except (i) Sections 7.3(a)(last sentence), 7.11, 7.13, 9.2, 9.3, 10.1, 10.3, 10.6, 10.11 and 10.13 will survive the termination hereof and (ii) with respect to any liabilities for Damages incurred or suffered as a result of the willful and material breach by any other party of any of its representations, warranties, covenants or other agreements set forth in this Agreement.

ARTICLE X

MISCELLANEOUS

Section 10.1.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 Parent or Merger Sub, to:

K-Two Holdco Limited

Coral Towers

Paradise Island

Attention: Giselle M. Pyfrom

Fax: +1 242 363 2767

with copies (which shall not constitute notice) to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Attention: David J. Sorkin

                    Sean D. Rodgers

Fax: (212) 455-2502

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

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with a copy (which shall not constitute notice) to:

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, NY 10019

Attention: Philip A. Gelston

                   Sarkis Jebejian

Fax: (212) 474-3700

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Attention: Kenneth M. Schneider

Fax: 212-757-3990

or such other address or facsimile number as such party may hereafter specify by notice to the other parties hereto. Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the facsimile number specified above and electronic confirmation of transmission is received or (ii) if given by any other means, when delivered at the address specified in this Section 10.1.

Section 10.2.Survival of Representations and Warranties. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, except for those covenants and agreements contained herein and therein which by their terms apply in whole or in part after the Effective Time and then only to such extent.

Section 10.3.Expenses. Except as otherwise expressly provided in Sections 7.9, 7.10 and 9.2, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense.

Section 10.4.Amendment. This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors (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) at any time prior to the Effective Time, whether before or after approval of this Agreement by the Company shareholders; provided, however, that, after approval of this Agreement by the Company shareholders, no amendment may be made which under applicable Bahamanian Law requires the further approval of the shareholders of the Company without such further approval. This Agreement may not be amended except by an instrument in writing signed by the parties hereto.

Section 10.5.Waiver. At any time prior to the Effective Time, any party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) subject to the requirements of applicable law, waive compliance with any of the agreements or conditions for the benefit of such party contained herein, provided, that for so long as the Special Committee exists, the Company may

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not take any such action unless previously authorized by the Special Committee, or otherwise such action shall be taken by resolution of a majority of its Disinterested Directors. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. The failure of any party to assert any rights or remedies shall not constitute a waiver of such rights or remedies.

Section 10.6.Successors and Assigns. 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 (and any purported assignment without such consent shall be void and without effect), except that Parent may assign all or any of its rights and obligations hereunder to any direct or indirect wholly-owned Subsidiary of Parent; provided, however, that no such assignment shall relieve the assigning party of its obligations hereunder.

Section 10.7.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (except that the IBCA shall apply to the Merger).

Section 10.8.Counterparts; Effectiveness; Third Party Beneficiaries. 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. This Agreement shall become effective only when actually signed by each party hereto and each such party has received counterparts hereof signed by all of the other parties hereto. No provision of this Agreement is intended to or shall confer upon any Person other than the parties hereto any rights or remedies hereunder or with respect hereto, except as otherwise expressly provided in Section 7.5. Notwithstanding the immediately preceding sentence, following the Effective Time the provisions of Article II shall be enforceable by holders of Ordinary Shares, Company Options, Company SARs or Company RSUs.

Section 10.9.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 10.10.Entire Agreement. This Agreement, together with the Company Disclosure Letter, the Cooperation Agreement, the Voting Agreement, the Istithmar Equity Rollover Commitment (but only with respect to those provisions relating to the voting of Ordinary Shares) and the letter, dated as of the date hereof, from Istithmar to the Company (the “Side Letter”), constitute the entire agreement of the parties hereto with respect to its subject matter and supersedes all oral or written prior or contemporaneous agreements and understandings among the parties with respect to such subject matter. None of the parties shall

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be liable or bound to any other party in any manner by any representations, warranties or covenants relating to such subject matter hereof except as specifically set forth herein, in the Company Disclosure Letter, the Cooperation Agreement, the Voting Agreement or the Side Letter.

Section 10.11.Jurisdiction.

(a) Each party irrevocably submits to the jurisdiction of (i) any Delaware State court, and (ii) 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 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 10.11 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 10.11 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 10.11. 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.

(b) 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 10.11.

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(c) Parent and Merger Sub each agree that within 5 Business Days from the date hereof, each shall appoint The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware (or such other Person reasonably acceptable to the Company), as its authorized agent (the “Authorized Agent”) upon whom process may be served in any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby which may be instituted in any Delaware State court or any Federal court of the United States sitting in the State of Delaware and (ii) agrees that service of process upon such Authorized Agent shall be deemed in every respect effective service of process upon Parent or Merger Sub, as applicable, in any such suit or proceeding.

(d) The Company (i) hereby appoints Kerzner International North America, Inc., 1000 South Pine Island Road, Suite 800, Plantation, FL 33324-3907, as its authorized agent upon whom process may be served in any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby which may be instituted in any Delaware State court or any Federal court of the United States sitting in the State of Delaware and (ii) agrees that service of process upon KINA shall be deemed in every respect effective service of process upon Parent or Merger Sub, as applicable, in any such suit or proceeding. The Company hereby represents and warrants that KINA has accepted such appointment and has agreed to act as such agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid.

Section 10.12.Authorship. The parties agree that the terms and language of this Agreement were the result of negotiations between the parties and their respective advisors and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation.

Section 10.13.Remedies.  (a)  Notwithstanding any other provision of this Agreement (including Section 9.2 and Section 9.3), the parties hereto agree 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). It is accordingly agreed that in the event of a breach or threatened breach of this Agreement, the other parties hereto 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 they are entitled at law or in equity. Each party hereto 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 any other party hereto.

(b) Notwithstanding any other provision of this Agreement, Parent and Merger Sub shall have no right to seek monetary damages against the Company for breaches of representations and warranties contained in Article IV of this Agreement to the extent that any of the certificates delivered to the Company by SK, HBK, Mr. Richard Levine and Mr. John

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Allison as of the date hereof were false in any respect related to the representation or warranty which was breached.

[signature page follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories 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

K-TWO HOLDCO LIMITED
By:	/s/ Howard B. Kerzner
	Name:  Howard B. Kerzner
	Title:     President

K-TWO SUBCO LIMITED
By:	/s/ Howard B. Kerzner
	Name:  Howard B. Kerzner
	Title:    President

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ANNEX A

Gaming Board, Commonwealth of The Bahamas (PEL Casino License) and the approval of any directors of the Company who will remain directors of the Surviving Corporation who have not been previously vetted and approved by the Bahamas Gaming Authority (i.e., Stephen Ross).

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EX-10.1

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.

[The remainder of this page is blank]

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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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EX-10.2

Exhibit 10.2

VOTING AGREEMENT

This VOTING 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”), Howard B. Kerzner (“HBK”) and World Leisure Group Limited, a company incorporated under the laws of the British Virgin Islands (“WLGL”, and together with SK and HBK, the “Holders”).

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, and K-Two 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, the Holders beneficially own 3,795,794 Ordinary Shares (excluding Company Restricted Shares) (collectively, together with any Ordinary Shares subsequently acquired, the “Subject Shares”);

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 the Holders agree, and the Holders have 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

VOTING

Section 1.1. Agreement to Vote. (a) At the Company Shareholder Meeting (or any adjournment or postponement thereof) or in any other circumstances upon which a vote, consent or other approval (including a written consent) with respect to the Merger Agreement, the Merger or any other transaction contemplated by the Merger Agreement is sought, the Holders shall vote or execute consents with respect to (or cause to be voted or consents to be executed with respect to) all Subject Shares beneficially owned as of the applicable record date in favor of the approval of the Merger Agreement, the Merger and any other transaction contemplated by the Merger Agreement.

(b) 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 Superior Alternative Transaction (as defined below), at a meeting of Company shareholders (or any adjournment or postponement thereof) called to seek the approval of a Superior Alternative Transaction Proposal in connection with such Superior Alternative Transaction by shareholders of the Company or in any other circumstances upon which a vote, consent or other approval (including a written consent) with respect to a Superior Alternative Transaction Proposal in connection with such Superior Alternative Transaction is sought, the

Holders shall vote, or execute consents with respect to, (or cause to be voted or consents to be executed with respect to) all Subject Shares beneficially owned as of the applicable record date in favor of such Superior Alternative Transaction Proposal. In the event any Superior Alternative Transaction is structured as a tender or exchange offer, the Holders will (i) accept such offer with respect to all the Subject Shares and tender or exchange, as applicable, all the Subject Shares pursuant to such offer and (ii) not withdraw any Subject Shares tendered pursuant to such offer.

Section 1.2. Further Assurances. Each Holder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further consents, documents and other instruments as the Company may reasonably request for the purpose of effectively carrying out the transactions contemplated by this Agreement.

Section 1.3. Transfers. (a) Until the earlier of (i) the obtaining of the Requisite Shareholder Vote and (ii) the termination of the Merger Agreement in accordance with its terms (the “Voting Period”), the Holders shall not except as contemplated by this Section 1.3, sell, transfer, pledge, assign or otherwise dispose of (including by gift) (collectively, “Transfer”), or enter into any Contract, option or other arrangement (including, without limitation, any profit sharing arrangement) with respect to the Transfer of, any Subject Shares to any Person other than pursuant to the Merger. Notwithstanding the foregoing, the Holders may Transfer any Subject Shares to any of their respective Affiliates controlled by SK or HBK (“Affiliate Transferee”), provided that the effectiveness of any such Transfers shall be conditioned on the transferee agreeing in writing to be bound by the provisions of this Agreement in a form reasonably satisfactory to the Company.

(b) From and after the Voting Period, the Holders may Transfer any Subject Shares to any Affiliate Transferee or any other Person, provided that the effectiveness of any such Transfers shall be conditioned on the transferee agreeing to be bound by the provisions of this Agreement in a form reasonably satisfactory to the Company.

Section 1.4. Voting Arrangements. Except for this Agreement, the Holders shall not enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to any Subject Shares and shall not commit or agree to take any of the foregoing actions.

Section 1.5. Representations. The Holders represent and warrant to the Company that the Subject Shares collectively represent all Ordinary Shares owned beneficially (determined for the purposes of this paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) or of record by any Holder or by a trust of which any Holder is a trustee. Collectively, the Holders have the sole right to vote the Subject Shares, and none of the Subject Shares is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of the Subject Shares, except as contemplated by this Agreement. No trust of which a Holder is a trustee requires the consent of any beneficiary to the execution and delivery of this Agreement or to the consummation of the transactions contemplated hereby.

Section 1.6. Definitions. For purposes of the foregoing:

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(a) “Superior Alternative Transaction” means a Superior Proposal pursuant to which all Ordinary Shares outstanding immediately prior to the consummation of such transaction shall be purchased for or be converted into an amount in cash equal to no less than the sum of (x) the Merger Consideration and (y) $2.00. For the avoidance of doubt, a Superior Alternative Transaction Proposal shall not include a Superior Proposal effected other than in a single transaction or a series of related transactions, the consummation of each of which is expressly conditioned on the consummation of each other related transaction, and all of which are in fact consummated concurrently. In the event that a Superior Proposal is effected in a series of related transactions, any amendment, modification or waiver of any of the conditions that the consummation of each such transaction is expressly conditioned on the consummation of each other related transaction or of the requirement that such transactions are consummated concurrently shall be approved in writing in advance by each of SK and HBK.

(b) “Superior Alternative Transaction Proposal” means any proposal to approve a Superior Alternative Transaction (or any proposal to approve a definitive agreement relating thereto) at a meeting of Company shareholders or in any other manner (by written consent or otherwise).

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 the Holders, 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.

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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 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

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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.

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.

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 pursuant to Section 9.1(c)(ii) thereof in order for the Company to enter into a definitive agreement with respect to a Superior Alternative Transaction. In the event that the Requisite Shareholder Approval is obtained, this Agreement shall terminate automatically without any further action on the part of the parties hereto.

Section 2.11.      Enforcement. Each Holder 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 any Holder 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 Holder 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

WORLD LEISURE GROUP LIMITED
By:	/s/ Solomon Kerzner
	Name:  Solomon Kerzner

SOLOMON KERZNER
	/s/ Solomon Kerzner

HOWARD B.  KERZNER
	/s/ Howard B. Kerzner

6

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

KERZNER ENTERS INTO AGREEMENT

FOR SALE TO INVESTOR GROUP

PARADISE ISLAND, Bahamas - March 20, 2006 - Kerzner International Limited (NYSE: KZL) (the “Company”), through its subsidiaries a leading international developer and operator of destination resorts, casinos and luxury hotels,and an investor group which is being led by the Company’s Chairman, Sol Kerzner and its Chief Executive Officer, Butch Kerzner, today announced that they have entered into a definitive agreement under which the Company will be acquired by the investor group for $76.00 in cash per outstanding ordinary share. The investor group also includes Istithmar PJSC (“Istithmar”), which is a significant shareholder of the Company, Whitehall Street Global Real Estate Limited Partnership 2005, Colony Capital LLC, Providence Equity Partners, Inc. and The Related Companies, L.P., which is affiliated with one of the Company’s Directors. The aggregate transaction value, including the assumption of $599 million of net debt as of December 31, 2005, is approximately $3.6 billion.

The Board of Directors of the Company, upon the unanimous recommendation of a Special Committee of Directors formed to evaluate the terms of the transaction, has approved the merger agreement. The Special Committee, which includes representatives of two significant shareholders that are not affiliated with the investor group, negotiated the price and other terms of the merger agreement with the assistance of its financial and legal advisors.

In accordance with the merger agreement, the Company and the Special Committee’s advisors, working under the supervision of the Special Committee will actively solicit superior proposals during the next 45 days. The Kerzners and Istithmar have agreed to cooperate in this solicitation process.

In the event the merger agreement is terminated, in order for the Company to enter into a superior transaction arising during the 45-day solicitation period, the investor group will receive a break-up fee of 1% of the equity value of the transaction (approximately $30 million). In addition, in the event of a superior transaction, Sol and Butch Kerzner have agreed to provide certain transitional services to the acquiring party for a period of six months and, in the event of certain all-cash acquisitions, to vote in favor of the superior transaction. The Company noted that there can be no assurance that the solicitation of superior proposals will result in an alternative transaction. The Company does not intend to disclose developments with respect to the solicitation process unless and until its Board of Directors has made a decision.

“We believe that the acquisition by the investor group represents an excellent opportunity for the Company’s shareholders, and in addition, we will be actively soliciting other offers to ensure that value is maximized for all of our shareholders,” said Eric Siegel, Chairman of the Special Committee of the Board of Directors.

FOR IMMEDIATE RELEASE

“We are delighted to be able to move forward with this transaction. The Company remains fully committed to all of its current development and expansion plans as scheduled, including our Phase III expansion on Paradise Island and our joint ventures in Dubai and Morocco. Furthermore, our entire team remains focused on and committed to developing an outstanding proposal in connection with one of the two casino licenses to be issued by the Government of Singapore,” said Butch Kerzner, Chief Executive Officer of the Company. “My father’s and my confidence in the business is reflected by the fact that we will increase our ownership interest in the Company to about 25% upon the completion of this transaction. Throughout this process, it will remain business as usual for all of our operations and we anticipate that all employees, including the existing management team, will retain their current positions after our transaction closes.”

The transaction is expected to close in mid-2006 and is subject to certain terms and conditions customary for transactions of this type, including the receipt of financing and regulatory approvals. Deutsche Bank Securities Inc. and Goldman Sachs Credit Partners have provided commitments to the investor group for the debt portion of the financing for the transaction.

The transaction also requires approval of the merger agreement by the Company’s shareholders. The Kerzners and Istithmar, which together own approximately 24% of the Company’s ordinary shares, have agreed to vote in favor of the transaction. Upon the completion of the transaction, Sol Kerzner will remain Chairman of the Company and will continue to oversee the development and construction of the Company’s projects, and Butch Kerzner will remain Chief Executive Officer. The Company will schedule a special meeting of its shareholders for the purpose of obtaining shareholder approval. Upon completion of the transaction, the Company will become a privately held company and its common stock will no longer be traded on The New York Stock Exchange.

J.P. Morgan Securities Inc. is serving as financial advisor and Cravath, Swaine & Moore LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are serving as legal advisors to the Special Committee of the Company’s Board of Directors. Deutsche Bank AG and Groton Partners LLC are serving as financial advisors and Simpson Thacher & Bartlett LLP is serving as legal advisor to the investor group.

Additional Information

The Company will furnish to the Securities and Exchange Commission (the “SEC”) a report on Form 6-K regarding the transaction, which will include the merger agreement and related documents. All parties desiring details regarding the transaction are urged to review these documents, which are available at the SEC’s website at http://www.sec.gov.

In connection with the proposed transaction, the Company will prepare and mail a proxy statement to its shareholders. In addition, certain participants in the proposed transaction will prepare and mail to the Company’s shareholders a Schedule 13E-3 transaction statement. These documents will be filed with or furnished to the SEC. Shareholders are urged to read these materials and other material filed with or furnished to the SEC carefully when they become available, as they will contain important information about the Company, the proposed transaction and related matters. In addition to receiving the

FOR IMMEDIATE RELEASE

proxy statement and Schedule 13E3 transaction statement by mail, shareholders also will be able to obtain these documents, as well as other filings containing information about the Company, the proposed transaction and related matters, without charge, from the SEC's website (http://www.sec.gov) or at the SEC’s public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. In addition, these documents can be obtained, without charge, by contacting the Company at the following address and/or phone number:

Kerzner International Limited

Coral Towers

Paradise Island, The Bahamas

+1.242.363.6018

This information will also be available at the Company’s website at www.kerzner.com.

This announcement is neither a solicitation of proxy, an offer to purchase nor a solicitation of an offer to sell any securities.

About The Company

Kerzner International Limited (NYSE: KZL), through its subsidiaries, is a leading international developer and operator of destination resorts, casinos and luxury hotels. The Company's flagship brand is Atlantis, which includes Atlantis, Paradise Island, a 2,317-room, ocean-themed destination resort located on Paradise Island, The Bahamas. Development of a major expansion on Paradise Island is currently underway and will include a 600-room, all-suite luxury hotel and a significant enhancement of Atlantis's water-based attractions. The Company is extending its Atlantis brand globally with the development of Atlantis, The Palm, Dubai, an approximately 1,500-room, water-themed resort expected to open in late 2008, currently being constructed on The Palm, Jumeirah, a multi-billion dollar leisure and residential development in Dubai. In its gaming segment, the Company developed and receives certain income derived from Mohegan Sun in Uncasville, Connecticut, which has become one of the premier casino destinations in the United States. In its luxury resort hotel business, the Company manages ten resort hotels primarily under the One&Only brand. The resorts, featuring some of the top-rated properties in the world, are located in The Bahamas, Mexico, Mauritius, the Maldives and Dubai. For more information concerning the Company and its operating subsidiaries, visit www.kerzner.com.

This press release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties which are described in the Company's public filings with the U.S. Securities and Exchange Commission.

FOR IMMEDIATE RELEASE

About Istithmar

Istithmar PJSC is a major investment house based in the United Arab Emirates focusing on private equity, real estate and other alternative investments. Established in 2003, Istithmar was created with the key mission of earning exceptional returns for its investors while maintaining due regard for risk.

Istithmar, which means investment in Arabic, applies global expertise with local insights to coordinate the appraisal and implementation of various opportunities. Istithmar’s ‘I’ investment philosophy is based around three core principles -- Ideas, Inquiry & Integrity -- sets the foundation for the firm which has a broad portfolio of highly successful companies in markets from North America to Europe to Asia to the Middle East.

Established with an initial investment capital pool of $2 billion, Istithmar has, to date, invested in 30 companies deploying approximately $1 billion in equity capital. It currently focuses its activities in four industry verticals - Consumer, Financial Services, Industrial and Real Estate.

About Whitehall

The Whitehall Street Real Estate Funds are Goldman, Sachs & Co.'s primary real estate investment vehicle. Goldman Sachs manages the Whitehall Funds and is also Whitehall’s largest investor. Since 1991, Whitehall has invested approximately $16 billion of equity in real estate and other derivative investments with a gross cost basis of approximately $50 billion. Its investments have been made in 20 countries and include interests in real estate assets, portfolio companies, non-performing loans, mezzanine loans and other related products.

About Colony Capital

Founded in 1991 by Chairman and Chief Executive Officer Thomas J. Barrack Jr., Colony is a private, international investment firm focusing primarily on real estate-related assets and operating companies. At the completion of this transaction, Colony will have invested more than $20 billion in over 8,000 assets through various corporate, portfolio and complex property transactions.

Colony Capital is headquartered in Los Angeles, with offices in Beirut, Boston, Hawaii, Hong Kong, London, Madrid, New York, Paris, Rome, Seoul, Shanghai, Singapore, Taipei, and Tokyo.

About Providence Equity Partners

Providence Equity Partners Inc. is a global private investment firm specializing in equity investments in media and entertainment, communications and information companies around the world. The principals of Providence Equity manage funds with over $9 billion in equity commitments and have invested in more than 80 companies operating in over 20 countries since the firm's inception in 1990. Providence Equity is headquartered in Providence, Rhode Island and also has offices in New York and London.

FOR IMMEDIATE RELEASE

About The Related Companies

The Related Companies, L.P. was founded in 1972 by Chairman and CEO Stephen M. Ross. Related is headquartered in NewYork City. To date, Related has developed or acquired real estate assets worth over $10 billion with another $7 billion currently in development. A fully integrated privately owned firm with divisions in development, acquisitions, financial services, property management, marketing and sales, Related is synonymous with architectural and service excellence, and has significant developments, partners and affiliates in Miami, Chicago, Boston, Los Angeles and San Francisco. Related’s historic development of the 2.8 million square foot Time Warner Center has transformed Columbus Circle into one of New York City’s premier destinations and has significantly increased the value of commercial and residential property in the surrounding neighborhoods.

Company Contacts:

Investors

Omar Palacios

+1.242.363.6018

Email: Omar.Palacios@kerzner.com

Media

Lauren Snyder

+1.242.363.6018

Email: Lauren.Snyder@kerzner.com

Judith Wilkinson / Laura Smith

Joele Frank, Wilkinson Brimmer Katcher

+1.212.355.4449

OR

Investor Group Contacts:

Steve Lipin / Robert Mead

Brunswick Group

+1.212.333.3810