EXHIBIT 99.2
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SUPPORT AGREEMENT
DATED AS OF MAY 23, 2006
AMONG
CASTLEWOOD HOLDINGS LIMITED
J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AND
▇▇▇▇ ▇. ▇▇▇▇
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SUPPORT AGREEMENT
This SUPPORT AGREEMENT, dated as of May 23, 2006 (this "Agreement"), is
among Castlewood Holdings Limited, a Bermuda company ("Parent"), and certain
stockholders signatory hereto (each a "Stockholder", and collectively, the
"Stockholders").
RECITALS
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, CWMS Subsidiary Corp., a Georgia corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and The Enstar Group, Inc., a Georgia
corporation (the "Company"), are entering into an Agreement and Plan of Merger
(as the same may from time to time be amended, modified, supplemented or
restated, the "Merger Agreement"; capitalized terms used herein without
definition shall have the respective meanings ascribed to them in the Merger
Agreement) pursuant to which Merger Sub will be merged with and into the Company
(the "Merger") upon the terms and subject to the conditions set forth therein;
WHEREAS, each Stockholder is the owner of the number of shares of common
stock, par value $0.01 per share, of the Company (the "Company Common Stock")
set forth opposite such Stockholder's name on Exhibit A attached hereto (the
"Existing Subject Shares", and all Existing Subject Shares owned by the
Stockholders, together with any other shares of capital stock of the Company
acquired by the Stockholders after the date hereof and during the term of this
Agreement, collectively, the "Subject Shares"); and
WHEREAS, as an essential condition and inducement to their willingness to
enter into the Merger Agreement, Parent and Merger Sub have required that the
Stockholders enter into this Agreement and the Stockholders have agreed to do
so.
NOW, THEREFORE, to induce Parent and Merger Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties, covenants and agreements
set forth in this Agreement, and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE I
VOTING OF SUBJECT SHARES
Section 1.1 Agreement to Vote. From the date hereof until the termination
of this Agreement in accordance with Section 5.1, except to the extent waived in
writing by Parent, at any meeting of the stockholders of the Company, however
called, or at any adjournment thereof, or in connection with any written consent
of the stockholders of the
Company or in any other circumstances upon which a vote, consent or other
approval of all or some of the stockholders of the Company is sought, each
Stockholder shall vote (or cause to be voted) all of its Subject Shares (a) in
favor of (i) adoption of the Merger Agreement, (ii) approval of the Merger and
(iii) approval of the other transactions contemplated by the Merger Agreement
and (b) against (i) any Takeover Proposal other than as contemplated by the
Merger Agreement and (ii) any other transaction or proposal involving the
Company or any of its Subsidiaries that would prevent, nullify, materially
interfere with or delay the Merger Agreement, the Merger and the other
transactions contemplated by the Merger Agreement. Each Stockholder further
agrees not to commit or agree to take any action inconsistent with the
foregoing.
Section 1.2 IRREVOCABLE PROXY. SOLELY FOR THE PURPOSE OF VOTING IN
ACCORDANCE WITH SECTION 1.1 OF THIS AGREEMENT, EACH STOCKHOLDER HEREBY
IRREVOCABLY GRANTS TO AND APPOINTS ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇ ▇'▇▇▇▇, IN THEIR
RESPECTIVE CAPACITIES AS OFFICERS OF PARENT, AND ANY INDIVIDUAL WHO SHALL
HEREAFTER SUCCEED TO ANY SUCH OFFICE OF PARENT, AND EACH OF THEM INDIVIDUALLY,
THE STOCKHOLDER'S PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION),
FOR AND IN THE NAME, PLACE AND STEAD OF THE STOCKHOLDER, TO REPRESENT AND VOTE
(BY VOTING AT ANY MEETING OF THE STOCKHOLDERS OF THE COMPANY OR BY WRITTEN
CONSENT IN LIEU THEREOF) WITH RESPECT TO THE SUBJECT SHARES OWNED OR HELD BY
SUCH STOCKHOLDER REGARDING THE MATTERS REFERRED TO IN SECTION 1.1 (IF, BUT ONLY
IF, SUCH STOCKHOLDER FAILS TO VOTE AS SET FORTH IN SECTION 1.1) UNTIL THE
TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 5.1, TO THE SAME EXTENT
AND WITH THE SAME EFFECT AS THE STOCKHOLDER MIGHT OR COULD DO UNDER APPLICABLE
LAW, RULES AND REGULATIONS. THE PROXY GRANTED PURSUANT TO THIS SECTION 1.2 IS
COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE. EACH STOCKHOLDER WILL TAKE
SUCH FURTHER ACTION AND EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO
EFFECTUATE THE INTENT OF THIS PROXY. EACH STOCKHOLDER HEREBY REVOKES ANY AND ALL
PREVIOUS PROXIES OR POWERS OF ATTORNEY GRANTED WITH RESPECT TO ANY OF THE
SUBJECT SHARES OWNED OR HELD BY SUCH STOCKHOLDER REGARDING THE MATTERS REFERRED
TO IN SECTION 1.1.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each Stockholder, severally and not jointly, represents and warrants to
Parent (as to such Stockholder only) as follows:
Section 2.1 Authority. The Stockholder has the requisite power and
authority to enter into this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by the
Stockholder.
Section 2.2 No Conflicts; Required Filings and Consents. Neither the
execution and delivery of this Agreement nor compliance with the terms hereof by
the Stockholder will (a) violate, conflict with or result in a breach, or
constitute a default under any provision of, any trust agreement, loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement binding the
Stockholder or its properties or assets or (b) except for filings with the SEC
and the applicable requirements of state securities or "blue sky" laws, state
takeover laws and the pre-merger notification requirements of the HSR Act,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, prevent or
materially delay the performance by the Stockholder of any of its obligations
under this Agreement.
Section 2.3 Ownership of the Subject Shares. The Stockholder is the record
or beneficial owner of its Existing Subject Shares, free and clear of any
mortgage, lien, pledge, charge, encumbrance, security interest or other adverse
claim. As of the date hereof, the Stockholder does not own, of record or
beneficially, any shares of outstanding capital stock of the Company other than
its Existing Subject Shares. The Stockholder has (a) sole power of disposition,
(b) sole voting power (to the extent such securities have voting power) and (c)
sole power to demand dissenter's or appraisal rights, in each case with respect
to all of its Existing Subject Shares and with no restrictions on such rights.
None of the Stockholder's Existing Subject Shares is subject to any agreement,
arrangement or restriction with respect to the voting of such Existing Subject
Shares, except as contemplated by this Agreement. There are no agreements or
arrangements of any kind, contingent or otherwise, obligating the Stockholder to
Transfer or cause to be Transferred any of its Existing Subject Shares, and no
Person has any contractual or other right or obligation to purchase or otherwise
acquire any of such Existing Subject Shares.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to each Stockholder as follows:
Section 3.1 Authority. Parent has all requisite power and authority to
enter into this Agreement and to perform its obligations hereunder. This
Agreement has been duly authorized, executed and delivered by Parent.
Section 3.2 No Conflicts; Required Filings and Consents. Neither the
execution and delivery of this Agreement nor compliance with the terms hereof by
Parent will (a) violate, conflict with or result in a breach, or constitute a
default under any provision of, any trust agreement, loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement binding on Parent or
Parent's property or assets or (b) require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity, except
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not, individually or in the
aggregate, prevent or materially delay the performance by Parent of any of its
obligations under this Agreement.
ARTICLE IV
ADDITIONAL COVENANTS OF THE STOCKHOLDERS
Section 4.1 No Transfer of Subject Shares. Each Stockholder agrees, while
this Agreement is in effect, not to (i) sell, transfer, assign, grant a
participation interest in or option for, pledge, hypothecate or otherwise
dispose of or encumber (each, a "Transfer"), or enter into any agreement,
contract or option with respect to the Transfer of, any of its Subject Shares,
other than pursuant to the Merger Agreement, (ii) grant any proxies or powers of
attorney, deposit any of its Subject Shares into any voting trust or enter into
any voting arrangement, whether by proxy, power of attorney, voting agreement or
otherwise, with respect to any of its Subject Shares, other than pursuant to
this Agreement, (iii) take any other action that would make any representation
or warranty of the Stockholder contained herein untrue or incorrect or have the
effect of preventing or disabling the Stockholder from performing its
obligations under this Agreement or (iv) commit or agree to take any of the
foregoing actions. Notwithstanding the foregoing, the restriction on Transfers
set forth in clause (i) of the preceding sentence shall not apply to a Transfer
(a) to a trust under which distributions may be made only to such Stockholder or
his or her immediate family members, (b) to a charitable remainder trust, the
income from which will be paid to such Stockholder during his or her life, or
(c) to a corporation, partnership, limited liability company or other entity,
all of the equity interests in which are held by such Stockholder and his or her
immediate family members, provided in the case of the foregoing clauses (a) -
(c) that such Stockholder has
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sole record ownership and control of the entity referred to and such entity
agrees to be bound by this Agreement.
Section 4.2 Additional Securities.
(a) In the event any Stockholder becomes the legal or beneficial
owner of (i) any additional shares of capital stock or other securities of
the Company, (ii) any securities which may be converted into or exchanged
for such shares or other securities or (iii) any securities issued in
replacement of, or as a dividend or distribution on, or otherwise in
respect of, such shares or other securities (collectively, "Additional
Securities"), then the terms of this Agreement shall apply to any of such
Additional Securities and such Additional Securities shall be considered
Subject Shares for purposes hereof.
(b) Each Stockholder agrees that this Agreement and the obligations
hereunder shall attach to the Subject Shares and shall be binding upon any
Person to which legal or beneficial ownership of the Subject Shares shall
pass, whether by operation of law or otherwise, including, without
limitation, the Stockholder's heirs, guardians, administrators or
successors and their respective successors or assigns. Notwithstanding any
Transfer of the Subject Shares, the transferor shall remain liable for the
performance of all obligations of such transferor under this Agreement.
Section 4.3 Stockholder Capacity. Each Stockholder enters into this
Agreement solely in its respective capacity as the record and beneficial owner
of its Subject Shares. Nothing contained in this Agreement shall limit the
rights and obligations of any Stockholder in its respective capacity as a
director or officer of the Company, and the agreements set forth herein shall in
no way restrict any director or officer of the Company in the exercise of his or
her fiduciary duties as a director or officer of the Company.
ARTICLE V
MISCELLANEOUS
Section 5.1 Termination. This Agreement shall terminate upon the earlier
of (a) the Effective Time, (b) the date on which the Board of Directors of the
Company has effected a Change in the Company Recommendation pursuant to the
Merger Agreement and at least two (2) of the three (3) Stockholders have elected
by written notice to Parent to terminate this Agreement; provided, that the
first Stockholder electing to terminate this Agreement in accordance with this
subsection shall continue to be fully bound by all of the provisions of this
Agreement unless and until a second Stockholder elects to terminate this
Agreement in accordance with this subsection, (c) the termination of the Merger
Agreement in accordance with its terms and (d) January 31, 2007. Upon
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termination of this Agreement in accordance with this Section 5.1, this
Agreement shall become null and void and of no effect with no liability on the
part of any party hereto; provided, however, that no such termination shall
relieve any party from liability for any breach hereof prior to such
termination.
Section 5.2 Non-Survival. None of the representations, warranties,
covenants and other agreements in this Agreement, including any rights arising
out of any breach of such representations, warranties, covenants and other
agreements, shall survive the Effective Time.
Section 5.3 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York, without giving effect to
its principles and rules of conflict of laws to the extent such principles or
rules would require the application of the law of another jurisdiction.
Section 5.4 Jurisdiction. Each of the parties hereto consents to submit
itself to the personal jurisdiction of the United States District Court for the
Southern District of New York or any court of the State of New York located in
such district in the event any dispute arises out of this Agreement or any of
the transactions contemplated by this Agreement.
Section 5.5 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF THIS AGREEMENT.
Section 5.6 Specific Performance. Each Stockholder acknowledges and agrees
that (a) the covenants, obligations and agreements of the Stockholder contained
in this Agreement relate to special, unique and extraordinary matters, (b)
Parent is and will be relying on such covenants, obligations and agreements in
connection with entering into the Merger Agreement and the performance of
Parent's obligations under the Merger Agreement and (c) a violation of any of
the covenants, obligations or agreements of the Stockholder contained in this
Agreement will cause Parent irreparable injury for which adequate remedies are
not available at law. Therefore, each Stockholder agrees that Parent shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post bond) as a court of competent jurisdiction may
deem necessary or appropriate to restrain the Stockholder from committing any
violation of such covenants, obligations or agreements.
Section 5.7 Amendment, Waivers, etc. Neither this Agreement nor any term
hereof may be amended other than by an instrument in writing signed by Parent
and each Stockholder. No provision of this Agreement may be waived, discharged
or terminated other than by an instrument in writing signed by the party against
whom the enforcement of such waiver, discharge or termination is sought.
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Section 5.8 Assignment; No Third Party Beneficiaries. This Agreement shall
not be assignable or otherwise transferable by a party without the prior consent
of the other parties, and any attempt to so assign or otherwise transfer this
Agreement without such consent shall be void and of no effect. This Agreement
shall be binding upon the respective heirs, successors, legal representatives
and permitted assigns of the parties hereto. Nothing in this Agreement shall be
construed as giving any Person, other than the parties hereto and their heirs,
successors, legal representatives and permitted assigns, any right, remedy or
claim under or in respect of this Agreement or any provision hereof.
Section 5.9 Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such costs and expenses.
Section 5.10 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for in this Agreement shall be in
writing and shall be deemed validly given upon personal delivery or one day
after being sent by overnight courier service or by telecopy (so long as for
notices or other communications sent by telecopy, the transmitting telecopy
machine records electronic conformation of the due transmission of the notice),
at the following address or telecopy number, or at such other address or
telecopy number as a party may designate to the other parties:
(A) if to Parent to:
Castlewood Holdings Limited
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
18 Queen Street
▇▇▇▇▇▇▇▇ ▇▇ JX
Bermuda
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇'▇▇▇▇
with a copy to:
Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
One ▇▇▇▇▇ Square
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▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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(B) if to the Stockholders to:
J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
The ▇▇▇▇▇▇▇▇ House
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
Debevoise & ▇▇▇▇▇▇▇▇ LLP
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
Section 5.11 Severability. If any term or provision of this Agreement is
held to be invalid, illegal, incapable of being enforced by any rule of law, or
public policy, or unenforceable for any reason, it shall be adjusted rather than
voided, if possible, in order to achieve the intent of the parties hereto to the
maximum extent possible. In any event, the invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction.
Section 5.12 Integration. This Agreement, the Merger Agreement and the
Parent Recapitalization Agreement constitute the full and entire understanding
and agreement of the parties with respect to the subject matter hereof and
supersede all other prior understandings or agreements among the parties
relating to the subject matter hereof.
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Section 5.13 Section Headings. The article and section headings of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
Section 5.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and date first above written.
CASTLEWOOD HOLDINGS LIMITED
By: /s/ ▇.▇. ▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and CEO
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By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Director
EXHIBIT A
TO SUPPORT AGREEMENT
Certain Stockholders
Number of Number of Shares
Shares of Percentage of of Percentage of
Name of Company Total Outstanding Company Total Beneficially
Stockholder Common Shares of Common Stock Owned Shares of
Stock Company Beneficially Company
Owned and Common Stock* Owned Common Stock+
Outstanding
---------------- ----------- ----------------- ---------------- ------------------
▇. ▇▇▇▇▇▇▇▇▇▇▇ 1,221,555 21.27% 1,226,070 21.33%
Flowers
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 305,001 5.31% 435,001 7.41%
▇▇▇▇ ▇. ▇▇▇▇ 200,000 3.48% 450,000 7.51%
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* Calculated by dividing the number of shares owned and outstanding by
5,742,909 shares outstanding.
+ Calculated by dividing the number of shares beneficially owned by the sum
of 5,742,909 shares outstanding and the options and/or deferred units held
by such Stockholder.
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