EXHIBIT 3
AMENDMENT AGREEMENT NO. 2, dated as of May 23, 2006, (this "Amendment")
to the Rights Agreement, dated as of January 20, 1997, as amended by the
Amendment Agreement dated October 20, 1998 (the "Rights Agreement"), between THE
ENSTAR GROUP, INC., a Georgia corporation (the "Company"), and AMERICAN STOCK
TRANSFER & TRUST COMPANY, a New York corporation (the "Rights Agent").
WITNESSETH:
WHEREAS, the Company desires to enter into an Agreement and Plan of
Merger, to be dated on or around May 23, 2006, among Castlewood Holdings
Limited, a Bermuda company ("Castlewood"), CWMS Subsidiary Corp., a Georgia
corporation and a direct wholly-owned subsidiary of Castlewood ("Merger Sub"),
and the Company, pursuant to which Merger Sub will merge (the "Merger") with and
into the Company; and
WHEREAS, pursuant to its authority under Section 26 of the Rights
Agreement, the Board of Directors of the Company, on May 21, 2006, has
authorized and approved the Amendment to the Rights Agreement set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Amendment of the Rights Agreement. The Rights Agreement is
hereby amended pursuant to Section 26 thereof as follows:
(a) The definition of "Exempt Person" set forth in Section 1(o) of the
Rights Agreement is amended by changing the period at the end of clause (iv)
thereof to a semi-colon, adding the word "and" immediately after the semi-colon
and adding a new clause (v) as follows:
"(v) Castlewood Holdings Limited, a Bermuda company
("Castlewood"), CWMS Subsidiary Corp., a Georgia corporation
and a direct wholly-owned subsidiary of Castlewood ("Merger
Sub"), Flowers, Xxxxxx X. Xxxxxx and Xxxx X. Xxxx, or any of
their Affiliates or Associates, or any group including one or
more of them that may be deemed to be formed, in each case by
virtue of the execution or delivery of, performance under or
consummation of any one or more transactions (each a
"Permitted Event" and collectively, the "Permitted Events")
contemplated by (1) the Agreement and Plan of Merger, dated as
of May 23, 2006, among the Company, Castlewood and Merger Sub,
as amended from time to time (the "Merger Agreement"),
pursuant to which Merger Sub will be merged (the "Merger")
with and into the Company, with the Company as the surviving
corporation, (2)
the Recapitalization Agreement, dated as of May 23, 2006,
among Castlewood, the Company and the other parties named
therein, as amended from time to time (the "Recapitalization
Agreement"), (3) the Support Agreement, dated as of May 23,
2006, among Castlewood and certain stockholders signatory
thereto, as amended from time to time (the "Support
Agreement"), and (4) any other agreement entered into in
connection with the Merger, as amended from time to time
(together with the Merger Agreement, the Recapitalization
Agreement and the Support Agreement, the "Merger Transaction
Documents")."
(b) The definition of "Stock Acquisition Date" set forth in Section
1(bb) of the Rights Agreement is amended by adding a provision at the end
thereof as follows:
"and provided, further, that a Stock Acquisition Date shall
not be deemed to have occurred upon (1) the execution of any
of the Merger Transaction Documents, (2) the acquisition of
beneficial ownership of Common Stock of the Company
contemplated by the Merger Transaction Documents, (3) the
consummation of any one or more of the Permitted Events, (4)
the first public announcement of any such acquisition or
Permitted Event, or (5) the communication to the Company of
any notice with respect to any such acquisition or Permitted
Event."
(c) Section 3(a) of the Rights Agreement is amended by adding the
following sentence immediately after the first sentence thereof:
"Notwithstanding anything in this Rights Agreement to the
contrary, neither the acquisition of beneficial ownership of
Common Stock of the Company pursuant to the Merger Transaction
Documents or the Merger nor the consummation of any one or
more of the Permitted Events shall be deemed to constitute or
result in the occurrence of a Distribution Date."
(d) Section 3(d) of the Rights Agreement is amended by adding the
following at the end thereof:
"At the Effective Time (as defined in the Merger Agreement),
and in accordance with the terms and conditions of the Merger
Agreement, by virtue of the Merger and without any action on
the part of any holder thereof, all Rights issued and
outstanding immediately prior to the Effective Time shall
cease to be outstanding and shall be canceled and retired, and
each certificate which immediately prior to the Effective Time
represented any such Rights shall thereafter represent
only the right to receive the Merger Consideration (as defined
in the Merger Agreement) with respect to such Rights formerly
represented thereby."
(e) Section 11(a)(ii) of the Rights Agreement is amended by changing
the period at the end of the last sentence thereof to a semi-colon and adding a
provision at the end thereof as follows:
"; provided, further, that, notwithstanding anything in this
Rights Agreement to the contrary, neither the acquisition of
beneficial ownership of Common Stock of the Company pursuant
to the Merger Transaction Documents or the Merger nor the
consummation of any one or more of the Permitted Events shall
be deemed to constitute or result in the occurrence of a
Section 11(a)(ii) Event, a "distribution", as used in Section
11(c), or an action prohibited by clauses (i), (ii) or (iii)
of Section 11(n)."
(f) Section 13(a) of the Rights Agreement is amended by adding the
following at the end of the first sentence thereof immediately prior to the
period:
"; provided, further, that, notwithstanding anything in this
Rights Agreement to the contrary, neither the acquisition of
beneficial ownership of Common Stock of the Company pursuant
to the Merger Transaction Documents or the Merger nor the
consummation of any one or more of the Permitted Events shall
be deemed to constitute or result in the occurrence of a
Section 13 Event or a "transaction referred to in" Section 13,
as used in Section 13(d)."
Section 2. The Rights Agreement. The Rights Agreement is hereby
reaffirmed in all respects and shall remain in full force and effect in
accordance with its terms except as amended by this Amendment.
Section 3. Governing Law. This Amendment, the Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State; provided, however, that the
rights and obligations of the Rights Agent shall be governed by the laws of the
State of New York (or state of incorporation of any successor Rights Agent).
Section 4. Counterparts. This Amendment may be signed 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 5. Descriptive Headings. Descriptive headings of the several
sections of this Amendment are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first written above.
Attest: THE ENSTAR GROUP, INC.
By: /s/ XXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXX
------------------------- -------------------------
Name: Xxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxx
Title: Treasurer & Controller Title: Chairman and CEO
Attest: AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: /s/ XXXXX XXXXXX By: /s/ XXXXXXX X. XXXXXX
------------------------- -------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary Title: Vice President
[Signature Page for Amendment Agreement No. 2]
