EXHIBIT 10.5
May 23, 2006
T. Xxxx Xxxxxxxxx
T. Xxxxx Xxxxx
The Enstar Group, Inc.
The Xxxxxxxx House
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Reference is made to the transactions (the "Transactions") contemplated by
(i) the Agreement and Plan of Merger (the "Merger Agreement"), dated as of May
23, 2006, among Castlewood Holdings Limited, a Bermuda company ("Castlewood"),
The Enstar Group, Inc., a Georgia corporation ("Enstar") and CWMS Subsidiary
Corp., a Georgia corporation and (ii) the Recapitalization Agreement, dated as
of May 23, 2006, among Castlewood, Enstar and the other parties named on the
signature pages thereto. Capitalized terms used herein without definition have
the meanings given to them in the Merger Agreement.
1. Purchase of Shares. Subject to the terms and conditions of this letter
agreement (the "Agreement") and conversion of Company Common Stock into ordinary
shares, par value $1.00 per share, of Castlewood ("Ordinary Shares"), Castlewood
agrees to purchase from each of T. Xxxx Xxxxxxxxx and T. Xxxxx Xxxxx (each, a
"Seller"), at the request of either such Seller, respectively, up to the number
of Ordinary Shares held by such Seller that are required to provide sufficient
cash proceeds for such Seller to pay (i) the federal and local income tax
resulting from the exercise by such Seller of up to 25,000 options for the
common shares of Enstar on May 23, 2006 (the "Purchase Option Shares") and (ii)
the federal and local income taxes and self-employment taxes resulting from the
sale and transfer of the Purchase Option Shares (together with the Purchase
Option Shares, the "Purchased Shares"); provided that in no event shall
Castlewood be required to repurchase under this letter agreement more than
25,000 Ordinary Shares held by each such Seller. For purposes of the preceding
clauses (i) and (ii), federal and local income taxes shall be calculated at the
highest income tax rates applicable to a person residing in such person's state
of residence. Each Seller shall notify Castlewood of the date such Seller wishes
to sell any Purchased Shares such Seller holds (the "Purchase Date"); provided,
however, that the Purchase Date shall be within a 30-day period beginning
January 15, 2007. Castlewood agrees to purchase the Purchased Shares at a price
equal to the average of the closing bid and asked price for Ordinary Shares on
NASDAQ on the Purchase Date (the "Purchase Price").
2. Delivery of Shares; Payment. Each Seller will deliver to Castlewood on
the Purchase Date the Purchased Shares represented by certificates duly endorsed
in blank or other valid instruments of transfer. Castlewood will deliver the
Purchase Price to the Seller by wire transfer of immediately available funds to
a previously designated account of such Seller within three business days of the
Purchase Date.
3. Miscellaneous. Any attempted or purported assignment by any of the
parties hereto or by operation of law of this Agreement or any of the rights,
interests or obligations hereunder shall be null and void and of no effect
whatsoever. 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. This Agreement
may be executed in one or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
party, it being understood that all parties need not sign the same counterpart.
Each party agrees that it shall take all such actions as may be reasonably
requested by the other party to effect the purposes of this Agreement.
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Please acknowledge your agreement with the foregoing by countersigning this
letter agreement in the space provided below, whereupon it will be a binding
agreement among us.
Very truly yours,
CASTLEWOOD HOLDINGS LIMITED
By: __________________________________
Name: X. X. Xxxxxx
Title: Chief Financial Officer
Agreed as of the date
first written above:
_______________________________
T. Xxxx Xxxxxxxxx
_______________________________
T. Xxxxx Xxxxx
