COOPERATION AGREEMENT
Exhibit
10.1
This
COOPERATION AGREEMENT (this “Agreement”),
dated
as of March 20, 2006, is entered into by and among Xxxxxxx International
Limited, an international business company incorporated under the laws of The
Commonwealth of The Bahamas (the “Company”),
Xxxxxxx Xxxxxxx (“SK”)
and
Xxxxxx X. Xxxxxxx (“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
4
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:
x/x
Xxxxxxx Xxxxxxxxxxxxx Xxxxxxx
Xxxxx
Xxxxxx
Xxxxxxxx
Xxxxxx
Attention:
Xxxxxxx X. Xxxxxx
Fax:
x0
000 000 0000
if
to the
Company, to:
Xxxxxxx
International Limited
000
Xxxxx
Xxxxxx -- Xxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxxx
Fax:
(000) 000-0000
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.
| XXXXXXX INTERNATIONAL LIMITED | ||
| By: | /s/ Xxxx Xxxxxx | |
| Name: Xxxx Xxxxxx | ||
| Title: Chairman of the Special Committee | ||
| XXXXXXX XXXXXXX | ||
| /s/ Xxxxxxx Xxxxxxx | ||
| XXXXXX X. XXXXXXX | ||
| /s/ Xxxxxx X. Xxxxxxx | ||
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