EXHIBIT 2.2
RECAPITALIZATION AGREEMENT
This RECAPITALIZATION AGREEMENT, dated as of May 23, 2006 (this
"Agreement"), is made and entered into by and among Castlewood Holdings Limited,
a Bermuda company (the "Company"); The Enstar Group, Inc., a Georgia
corporation, ("Enstar"); Trident II, L.P., a Cayman Islands limited partnership
("Trident"); Xxxxx & XxXxxxxx Capital Professionals Fund, L.P., a Cayman Islands
limited partnership ("CPF"), Xxxxx & McLennan Employees' Securities Company,
L.P., a Cayman Islands limited partnership ("ESC", and, together with CPF, the
"Trident Funds"); Xxxxxxx X. Xxxxxxxxx ("DS"), Xxxx X. X'Xxxx ("POS"), Xxxxxxxx
X. Xxxxxx ("NAP", and, together with DS and POS, the "Company Principals"); R&H
Trust Co. (NZ) Limited, a New Zealand company, as trustee of The Left Trust, a
trust duly formed under the laws of the British Virgin Islands, and R&H Trust
Co. (BVI) Ltd., a British Virgin Islands company, as trustee of (a) The Right
Trust, a trust duly formed under the laws of the British Virgin Islands, (b) The
Elbow Trust, a trust duly formed under the laws of the British Virgin Islands,
and (c) The Hove Trust, a trust duly formed under the laws of the British Virgin
Islands (collectively, together with DS, the "Company Principal Shareholders");
and certain other members of the Company signatory hereto (the "Employee
Shareholders", and together with the Company Principals, the Company Principal
Shareholders, Enstar, Trident and the Trident Funds, the "Shareholders"; and,
together with the Company, the "Parties" and each a "Party").
WHEREAS, the Company, CWMS Subsidiary Corp., a Georgia corporation and a
direct wholly-owned subsidiary of the Company ("Merger Sub"), and Enstar have
entered into a Merger Agreement, dated as of the date hereof (as amended,
supplemented or otherwise modified, the "Merger Agreement"), which provides,
among other things, for the merger (the "Merger") of Merger Sub with and into
Enstar, with Enstar continuing as the surviving corporation; capitalized terms
used herein without definition shall have the respective meanings ascribed to
them in the Merger Agreement;
WHEREAS, in connection with the Merger, the Parties wish to provide for
(i) certain repurchases of shares of the Company, (ii) a change in the Company's
name and authorized share capital as described on Exhibit A attached hereto (as
so changed, the "Amendments to the Memorandum of Association") and the amendment
and restatement of the Company Bye-Laws (as so amended, the "Amended and
Restated Bye-Laws") in the form attached hereto as Exhibit B, (iii) a
recapitalization of the Company pursuant to which outstanding shares will be
exchanged for newly created shares (the "Recapitalization"), (iv) the
designation of members of the Board of Directors of the Company immediately
following the Merger, (v) the purchase by the Company from BI International ("BI
International") of the shares of B.H. Acquisition Ltd., a Bermuda company
("BHAL"), beneficially owned by BI International (the "BHAL Shares"), and (vi)
certain other matters.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
conditions set forth herein, the Parties agree as follows:
Section 1. Events at Closing. At the Closing but immediately prior to the
Effective Time (the "Recapitalization Time"), the Parties shall cause the
following events to occur, or such events shall occur automatically pursuant to
the terms hereof, as the case may be:
(a) Repurchase of Class B Shares. The Company shall purchase pro rata in
accordance with their holdings from Trident and the Trident Funds, and Trident
and the Trident Funds shall sell to the Company, 1,797.555 Class B Shares (as
defined in the Amended and Restated Bye-Laws of the Company as in effect as of
the date hereof (the "Company Bye-Laws")). Trident and the Trident Funds shall
(i) assign, transfer, convey and deliver such Class B Shares to the Company free
and clear of all Liens and (ii) deliver to the Company certificates representing
such Class B Shares duly endorsed or accompanied by stock powers duly executed.
Such Class B Shares shall be cancelled by the Company and may not be reissued.
In exchange for such Class B Shares, the Company shall pay at the
Recapitalization Time in cash the aggregate amount of $20,000,000 to Trident and
the Trident Funds by wire transfer of immediately available funds to an account
designated by Trident. The Company shall pay such amount pro rata in proportion
to the number of Class B Shares held by each of Trident and the Trident Funds.
(b) Payment to the Company. Enstar shall pay in cash the aggregate amount
of $5,076,000 to the Company by wire transfer of immediately available funds to
the account designated by the Company.
(c) Payment to Key Executives. The Company shall pay in cash the aggregate
amount of $5,076,000 to DS, NAP, POS, Xxxxx Xxxxxxx ("DG"), Xxxxx Xxxxxxx ("DH")
and Xxxxx Xxxxx ("DR") by wire transfer of immediately available funds to the
accounts designated by such person in the following amounts: $2,969,868 to DS;
$989,956 to NAP; $989,956 to POS; $11,550 to DG; $20,624 to DH; and $94,046 to
DR.
(d) Amendment of Constitutive Documents. The Company shall cause (i) the
Amendments to the Memorandum of Association to be filed with the Bermuda
Registrar of Companies pursuant to The Companies Act 1981 of Bermuda and (ii)
the Amended and Restated Bye-Laws to become effective and to supersede the
Company Bye-Laws.
(e) Exchange of Class B Shares. Trident and the Trident Funds shall (i)
assign, transfer, convey and deliver all remaining outstanding Class B Shares
held by them (after giving effect to the repurchase of Class B Shares from
Trident and the Trident Funds pursuant to Section 1(a) of this Agreement) to the
Company free and clear of all Liens and (ii) deliver to the Company certificates
representing such Class B Shares duly endorsed or accompanied by stock powers
duly executed. Such Class B Shares will then
2
be cancelled by the Company and may not be reissued. In exchange for such Class
B Shares, the Company shall issue and deliver to Trident and the Trident Funds
at the Recapitalization Time certificates representing 2,082,236 ordinary
shares, par value $1.00 per share, of the Company (the "Ordinary Shares"). The
Company shall issue such Ordinary Shares pro rata in proportion to the number of
Class B Shares held by each of Trident and the Trident Funds immediately prior
to such exchange.
(f) Exchange of Class A Shares. Immediately following the exchanges of
shares referred to in Sections 1(e), (g) and (h) hereof, but immediately prior
to the Effective Time, Enstar shall (i) assign, transfer, convey and deliver all
outstanding Class A Shares (as defined in the Company Bye-Laws) held by it to
the Company free and clear of all Liens and (ii) deliver to the Company
certificates representing such Class A Shares duly endorsed or accompanied by
stock powers duly executed. Such Class A Shares will then be cancelled by the
Company and may not be reissued. In exchange for such Class A Shares, the
Company shall issue and deliver to Enstar certificates representing 2,972,892
non-voting convertible ordinary shares, par value $1.00 per share, of the
Company (the "Non-Voting Convertible Ordinary Shares").
(g) Exchange of Class C Shares. The Company Principal Shareholders, DG, DH
and DR shall (i) assign, transfer, convey and deliver all outstanding Class C
Shares (as defined in the Company Bye-Laws and including all Class C-1 Shares,
Class C-2 Shares, Class C-3 Shares and Class C-4 Shares) held by them to the
Company free and clear of all Liens and (ii) deliver to the Company certificates
representing such Class C Shares duly endorsed or accompanied by stock powers
duly executed. Such Class C Shares will then be cancelled by the Company and may
not be reissued. In exchange for such Class C Shares, the Company shall issue
and deliver to the Company Principal Shareholders, DG, DH and DR certificates
representing 3,636,612 Ordinary Shares. The Company shall issue such Ordinary
Shares pro rata in proportion to the number of Class C Shares held by each such
shareholder immediately prior to such exchange.
(h) Exchange of Class D Shares. The Employee Shareholders shall (i)
assign, transfer, convey and deliver all outstanding Class D Shares (including
all Class D-1 Shares , Class D-2 Shares, Class D-3 Shares, Class D-4 Shares and
Class D-5 Shares of the Company, as defined in the Company Bye-Laws) held by
them to the Company free and clear of all Liens and (ii) deliver to the Company
certificates representing such Class D Shares duly endorsed or accompanied by
stock powers duly executed. The Company shall use its best efforts to cause any
holders of Class D Shares that are not Parties to comply with the preceding
sentence. In each case, such Class D Shares will then be cancelled by the
Company and may not be reissued. In exchange for such Class D Shares, the
Company shall issue and deliver to the Employee Shareholders and the other
holders of Class D Shares certificates representing a total of 420,577 Ordinary
Shares. The Company shall issue such Ordinary Shares pro rata in proportion to
the number of Class D Shares held by each such Employee Shareholder and other
holders of Class D
3
Shares immediately prior to such exchange. Subject to alternative arrangements
that may be established pursuant to Section 8(i) hereof, to the extent that the
Class D Shares to be surrendered and cancelled pursuant to this Section 1(h) are
"Immature Class D Shares", as defined in the Company Bye-Laws, an entity
designated by the Company and Enstar shall either hold and/or have the right to
purchase the Ordinary Shares issued upon the exchange thereof for $0.001 per
share from the holder thereof if the holder's employment with the Company or any
of its subsidiaries is terminated prior to the time such Immature Class D Shares
would have become Mature Class D Shares (as defined in the Company Bye-Laws) had
they still been held by such holder. The entity designated by the Company and
Enstar pursuant to the immediately preceding sentence must exercise this right
within 60 days of such termination.
(i) No Fractional Shares. No certificates or scrip representing fractional
Ordinary Shares or Non-Voting Convertible Ordinary Shares shall be issued in
respect of Class A Shares, Class B Shares, Class C Shares or Class D Shares.
Notwithstanding any other provision of this Agreement, each holder of Class A
Shares, Class B Shares, Class C Shares or Class D Shares exchanged pursuant
hereto who would otherwise have been entitled to receive a fraction of an
Ordinary Share or Non-Voting Convertible Ordinary Share shall receive, in lieu
thereof, cash in an amount equal to the product of (i) such fractional part of
an Ordinary Share or a Non-Voting Convertible Ordinary Share, as applicable,
multiplied by (ii) the average closing price for an Ordinary Share as reported
on Nasdaq for the five trading days immediately following the Recapitalization
Time.
(j) Effect of Recapitalization. From and after the Recapitalization Time,
(i) all Class A Shares, Class B Shares, Class C Shares and Class D Shares shall
be cancelled and shall no longer be deemed to be outstanding and shall no longer
have the status of such respective classes of capital stock of the Company, (ii)
all rights of the holders of such shares shall cease, except for the right to
receive Ordinary Shares or Non-Voting Convertible Ordinary Shares, if any,
pursuant to this Agreement, and (iii) prior to surrender for exchange,
certificates representing such shares shall be deemed to represent the number of
Ordinary Shares or Non-Voting Convertible Ordinary Shares, if any, into which
they are exchangeable pursuant to this Agreement.
(k) Termination of Certain Agreements. Effective as of the Effective Time,
the Share Purchase and Capital Commitment Agreement dated as of October 1, 2001,
among the Company, Enstar, Trident, the Trident Funds, the Company Principals,
the Company Principal Shareholders and the other members of the Company party
thereto (as amended, supplemented or otherwise modified, the "Share Purchase and
Capital Commitment Agreement"), and the Agreement Among Members dated as of
November 29, 2001, among the Company, Enstar, Trident, the Trident Funds, the
Company Principals, the Company Principal Shareholders and the other members of
the Company party thereto (as amended, supplemented or otherwise modified, the
"Agreement Among Members") shall automatically terminate and become null and
void and of no further
4
force or effect, and there shall be no further rights or obligations arising out
of such agreements on the part of any party thereto. Each party thereto hereby
irrevocably and unconditionally releases, settles, cancels, acquits, discharges,
and acknowledges to be fully satisfied, any and all claims, contractual or
otherwise, demands, costs, rights, causes of action, charges, debts, Liens,
promises, obligations, complaints, losses, damages and any liability of whatever
kind or nature, whether known or unknown, arising under the terms of such
agreements effective upon such termination.
Section 2. Board of Directors. Effective upon the Effective Time, the
Company and the Shareholders shall cause the Board of Directors of the Company
to consist of the following members: T. Xxxx Xxxxxxxxx, Xxxx X. Xxxxxxx, Xxxxxxx
X. Xxxx, T. Xxxxx Xxxxx, J. Xxxxxxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxx X. Xxxx,
Xxxx X'Xxxx, Xxxxxxxx Xxxxxx and Xxxxxxx X. Xxxxxxxxx; provided, that if, prior
to Closing, any such individual is not willing or able to serve as a director,
such individual shall be replaced by an individual nominated by the majority of
the remaining directors. Such individuals shall be members of the Board of
Directors of the Company until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Company's Memorandum of Association and the Amended and
Restated Bye-Laws. As a condition to a director named in the first sentence of
this Section 2 (or an agreed upon replacement) serving on the Board of Directors
of the Company, such person will have entered into prior to the Recapitalization
Time an indemnity agreement with the Company substantially in the form attached
hereto as Exhibit C.
Section 3. BHAL Share Purchase. At the Recapitalization Time, BI
International shall, or shall cause its nominee holder Pembroke Company Limited
to, (i) assign, transfer, convey and deliver the BHAL Shares to the Company or
another Person designated by the Company free and clear of all Liens and (ii)
deliver to the Company or such other Person certificates representing the BHAL
Shares duly endorsed or accompanied by stock powers duly executed. In
consideration for such BHAL Shares, the Company or such other Person shall pay
at the Recapitalization Time an aggregate amount in cash equal to $6,200,167 to
BI International by wire transfer of immediately available funds to the account
designated by BI International.
Section 4. Representation and Warranties of the Company. The Company
represents and warrants to the other Parties, as of the date hereof and as of
the Closing, as follows:
(a) Shares. All issued and outstanding shares of the capital stock of the
Company are, and when the Ordinary Shares and the Non-Voting Convertible
Ordinary Shares are issued in connection with the Recapitalization, such shares
will be, duly authorized, validly issued, fully paid and non-assessable and free
and clear of any Liens or preemptive rights. The Company has reserved a
sufficient number of Ordinary Shares for issuance upon conversion of all of the
Non-Voting Convertible Ordinary Shares. There
5
are no Class E Shares outstanding. The holders of the Class D Shares as of the
date of this Agreement who are Parties hold, in aggregate, 94.9% of the Class D
Shares outstanding as of the date of this Agreement. The Parties who have agreed
to vote pursuant to Sections 8(g) and 8(i)(ii) hold sufficient voting power to
effect the transactions contemplated by this Agreement, including without
limitation the transactions required by Section 8(i)(ii).
(b) Authority. The Company has all requisite corporate power and authority
to enter into this Agreement and, subject to the consents and approvals
identified in Section 4(d), to perform all of its obligations hereunder. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(c) No Conflicts. Neither the execution, delivery or performance of this
Agreement nor the compliance with the terms hereof by the Company will conflict
with the constitutive documents of the Company or result in any breach of, or
constitute a default under, any Law applicable to the Company or any of its
properties or assets or any contract, agreement or instrument to which the
Company is a party or by which it or any of its properties or assets is bound.
Except for this Agreement, the Merger Agreement, the AICP, the Company Bye-Laws,
the Agreement Among Members and as set forth on Schedule 4(c) attached hereto,
there are no agreements or arrangements of any kind, contingent or otherwise,
obligating the Company to sell, transfer, assign, grant a participation interest
in or option for, hypothecate or otherwise dispose of or encumber any shares of
its capital stock, and no Person has any contractual or other right or
obligation to purchase or otherwise acquire any shares of the Company's capital
stock from the Company.
(d) No Consent or Approval Required. Except for the filing of the
Amendments to the Memorandum of Association pursuant to Section 1(d) hereof, the
approval of the Bermuda Monetary Authority of the BHAL Share Purchase and the
issuance of Ordinary Shares and Non-Voting Convertible Ordinary Shares pursuant
to this Agreement, the adoption and approval of this Agreement and the
transactions contemplated hereby by the members of the Company, and the receipt
of the permits, consents, approvals or authorizations of, or declarations to, or
filings with, the Persons identified on Exhibit D attached hereto, no permit,
consent, approval or authorization of, or declaration to, or filing with, any
Person is required for the valid authorization, execution, delivery or
performance by the Company of this Agreement.
Section 5. Representations and Warranties of the Shareholders. Each
Shareholder, severally and not jointly, represents and warrants to the other
Parties, as of the date hereof and as of the Closing, as follows:
6
(a) Authority. The Shareholder (other than any Shareholder that is an
individual) has all requisite corporate (or similar) power and authority to
enter into this Agreement and to perform all of its obligations hereunder. This
Agreement has been duly authorized, executed and delivered by the Shareholder
and constitutes a legal, valid and binding obligation of the Shareholder,
enforceable against the Shareholder in accordance with its terms.
(b) No Conflicts. Neither the execution, delivery or performance of this
Agreement nor the compliance with the terms hereof by the Shareholder will
conflict with the organizational or constitutive documents of the Shareholder
(if the Shareholder is not an individual) or result in any breach of, or
constitute a default under, any Law applicable to the Shareholder or any of its
properties or assets or any contract, agreement or instrument to which the
Shareholder is a party or by which it or any of its properties or assets is
bound.
(c) No Consent or Approval Required. No permit, consent, approval or
authorization of, or declaration to, or filing with, any Person is required for
the valid authorization, execution, delivery or performance by the Shareholder
of this Agreement.
(d) Ownership of Shares. The Shareholder is the record and beneficial
owner of the capital stock of the Company set forth opposite such Shareholder's
name on Exhibit E attached hereto, if any (the "Company Shares"), and has good
and marketable title to such Company Shares, free and clear of any Liens. The
Shareholder does not own, of record or beneficially, any shares of capital stock
of the Company other than the Company Shares set forth opposite such
Shareholder's name on Exhibit E, if any. The Shareholder has sole power of
disposition and sole power to demand dissenter's or appraisal rights with
respect to all of its Company Shares and with no restrictions on such powers and
rights. Except for this Agreement, the Company Bye-Laws, the Agreement Among
Members and subscription agreements, which, if entered into after the date of
this Agreement, shall be reasonably acceptable to Enstar, pursuant to which any
holder of Class D Shares acquired such shares, there are no agreements or
arrangements of any kind, contingent or otherwise, obligating the Shareholder to
sell, transfer, assign, grant a participation interest in or option for,
hypothecate or otherwise dispose of or encumber any Company Shares, and no
Person has any contractual or other right or obligation to purchase or otherwise
acquire any Company Shares from such Shareholder.
(e) Investment Purpose. The Shareholder is acquiring any Ordinary Shares
and/or Non-Voting Convertible Ordinary Shares under this Agreement solely for
its own account for investment and not with a view to, or for sale in connection
with, any distribution thereof in any transaction or series of transactions that
would be in violation of the securities laws of the United States or any state
thereof or of any foreign securities laws. The Shareholder will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
any Ordinary Shares or Non-Voting Convertible Ordinary Shares acquired pursuant
to this Agreement (or solicit any offers to buy,
7
purchase or otherwise acquire or take a pledge of such Ordinary Shares or
Non-Voting Convertible Ordinary Shares) or any interest therein or any rights
relating thereto, except in compliance with the Securities Act of 1933, as
amended and the rules and regulations of the Securities and Exchange Commission
thereunder (the "Act") and all applicable state securities or "blue sky" laws
and all applicable foreign securities laws.
(f) Accredited Investor. The Shareholder is an "accredited investor" as
such term is defined in Rule 501(a) under the Act.
Section 6. Additional Representations and Warranties of Trident Regarding
BHAL Shares. Trident represents and warrants to the Company, as of the date
hereof and as of the Closing, that: (i) Pembroke Company Limited is the record
and BI International is the beneficial owner of, and BI International and
Pembroke Company Limited have good and marketable title to, the BHAL Shares,
free and clear of any Liens; (ii) BI International does not own, of record or
beneficially, any shares of capital stock of BHAL other than the BHAL Shares;
(iii) Trident and its Affiliates through their ownership of BI International
have sole power of disposition with respect to all of the BHAL Shares and with
no restrictions on such rights, except with respect to BI International, where
Pembroke Company Limited is the record owner of the BHAL Shares; and (iv) except
for this Agreement and the Bye-Laws of BHAL, there are no agreements or
arrangements of any kind, contingent or otherwise, obligating BI International
to sell, transfer, assign, grant a participation interest in or option for,
hypothecate or otherwise dispose of or encumber any of the BHAL Shares, and no
Person has any contractual or other right or obligation to purchase or otherwise
acquire any of the BHAL Shares.
Section 7. Restrictive Legend. Each Shareholder acknowledges that the
certificate or certificates representing the Ordinary Shares or the Non-Voting
Convertible Ordinary Shares issued pursuant to the Recapitalization, as the case
may be, shall bear an appropriate legend, which will include, without
limitation, the following language:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, AS SPECIFIED IN THE RECAPITALIZATION
AGREEMENT OF THE ISSUER DATED AS OF MAY 23, 2006 (THE
"RECAPITALIZATION AGREEMENT"), COPIES OF WHICH ARE ON FILE AT THE
OFFICE OF THE ISSUER AND WILL BE FURNISHED WITHOUT CHARGE TO THE
HOLDER OF SUCH SHARES UPON WRITTEN REQUEST, AND MAY NOT BE OFFERED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS SUCH OFFER, SALE,
8
ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS IN
COMPLIANCE WITH THE RECAPITALIZATION AGREEMENT."
Upon the one year anniversary of the Effective Time, the legends set forth above
shall be removed and the Company shall issue a certificate without such legends
to the holder of any security upon which it is stamped, provided, however, that
the Company shall not be required to remove the first legend stated above if the
holder of such security is at such time an affiliate of the Company (as defined
in Rule 144 under the Act) until the sale of such security has been registered
under the Act or such security is sold pursuant to Rule 144 or Rule 145 under
the Act or another available exemption under the Act. Each Shareholder agrees to
sell all securities, including those represented by a certificate from which the
legend has been removed, pursuant to an effective registration statement or in
compliance with an exemption from the registration requirements of the Act. In
the event the first legend stated above is removed from any security and
thereafter the effectiveness of a registration statement covering such security
is suspended or the Company determines that a supplement or amendment thereto is
required by applicable securities laws, then upon reasonable advance notice to
the applicable Shareholder(s), the Company may require that the above legend be
placed on any such security that cannot then be sold pursuant to an effective
registration statement or under Rule 144 or Rule 145 under the Act or another
available exemption under the Act and the applicable Shareholder(s) shall
cooperate in the prompt replacement of such legend.
Section 8. Covenants of the Parties.
(a) Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each Party shall use its reasonable best efforts, without limitation,
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under this Agreement, the Merger Agreement
and applicable Laws to consummate the transactions contemplated herein and in
the Merger Agreement, including making or obtaining (i) the approval of the
Bermuda Monetary Authority of the BHAL Share Purchase and the issuance of
Ordinary Shares and Non-Voting Convertible Ordinary Shares pursuant to this
Agreement, (ii) the consents and approvals of the members of the Company to this
Agreement, the transactions contemplated hereby and the other matters set forth
in Section 8(g), (iii) the permits, consents, approvals or authorizations of, or
declarations to, or filings with, the Persons identified on Exhibit D and (iv)
all other permits, consents, approvals or authorizations of, or declarations to,
or filings with, any Person that are required for the valid authorization,
execution, delivery or performance by the Parties of this Agreement and by the
parties to the Merger Agreement of the Merger Agreement.
(b) Further Assurances. Without further consideration, each Party shall
execute and deliver or cause to be executed and delivered such additional
documents and
9
instruments and take all such further action as may be reasonably necessary or
desirable to effect the matters contemplated herein or in the Merger Agreement.
(c) Consent and Waiver. Each Party hereby consents to the consummation of
the transactions contemplated by this Agreement and waives any requirements,
restrictions or obligations under the Share Purchase and Capital Commitment
Agreement or the Agreement Among Members arising out of the transactions
contemplated hereby. Each Party hereby waives any dissenter's, appraisal or
similar rights such party may have in respect of the transactions contemplated
by this Agreement or the Merger Agreement.
(d) Release of Directors. Effective at the Effective Time, each Party
waives and releases each person who is a director or officer of the Company on
the date of this Agreement or becomes a director or officer of the Company at
any time between the date of this Agreement and the Recapitalization Time from
all actions, claims and liabilities of any nature, in law or equity, known or
unknown, and whether or not heretofore asserted, which such Party, as
applicable, has or hereafter may have against any of such director or officer
for any actions or omissions in respect of this Agreement, the Merger Agreement
or the transactions contemplated hereby or thereby; provided, that the foregoing
shall not be construed as a waiver or release of any action, claim or liability
based on fraud, bad faith or intentional misconduct.
(e) Nasdaq Listing. The Company shall use its reasonable best efforts to
cause all Ordinary Shares to be issued in the Recapitalization to be approved
for listing on the Nasdaq, subject to official notice of issuance, prior to the
Recapitalization Time.
(f) Section 16 Matters. The Company shall, prior to the Recapitalization
Time, take all such reasonable steps as may be required and are consistent with
applicable law and regulations to cause any disposition of Class B Shares or
acquisitions of Ordinary Shares in the transactions contemplated by this
Agreement by each Person who is, or at the time of any such transaction may
reasonably be deemed to be, subject to the requirements of Section 16 of the
Exchange Act with respect to the Company, to be exempt from Section 16(b) of the
Exchange Act under Rule 16b-3 promulgated under the Exchange Act.
(g) Company Meeting of Shareholders; Vote. The Company shall duly take all
necessary, proper and advisable action to call, give notice of, convene and hold
a meeting of its shareholders on a date as soon as reasonably practicable (the
"Company Shareholders Meeting") for the purpose of obtaining the vote of the
shareholders of the Company for the adoption and approval of this Agreement and
the transactions contemplated hereby, including without limitation any
transactions required by Section 8(i)(ii). The Company Shareholders Meeting will
be held within 30 days of the date hereof or at such later time as the Company
and Enstar may agree in writing. From the date hereof until the termination of
this Agreement, except to the extent waived in writing by Enstar, at any meeting
of the shareholders of the Company, however called, or at any
10
adjournment thereof, or in connection with any written consent of the
shareholders of the Company or in any other circumstances upon which a vote,
consent or other approval of all or some of the shareholders of the Company is
sought, each Party shall vote (or cause to be voted) all of its Class A Shares,
Class B Shares, Class C Shares and Class D Shares, if any, as the case may be,
in favor of (i) adoption of this Agreement and the Merger Agreement, (ii)
approval of the Recapitalization and the Merger and (iii) approval of the other
transactions contemplated by this Agreement and the Merger Agreement, including
without limitation any transactions required by Section 8(i)(ii). From the date
hereof until the termination of this Agreement, each Party further agrees not to
commit or agree to take any action inconsistent with the foregoing.
(h) IRREVOCABLE PROXY. SOLELY FOR THE PURPOSE OF VOTING IN ACCORDANCE WITH
SECTION 8(G) OF THIS AGREEMENT, EACH SHAREHOLDER HEREBY IRREVOCABLY GRANTS TO
AND APPOINTS XXXXXX X. XXXXXX AND XXXX X. XXXX, IN THEIR RESPECTIVE CAPACITIES
AS OFFICERS OF ENSTAR, AND ANY INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO ANY
SUCH OFFICE OF ENSTAR, AND EACH OF THEM INDIVIDUALLY, THE SHAREHOLDER'S PROXY
AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION), FOR AND IN THE NAME,
PLACE AND STEAD OF THE SHAREHOLDER, TO REPRESENT AND VOTE (BY VOTING AT ANY
MEETING OF THE SHAREHOLDERS OF THE COMPANY OR BY WRITTEN CONSENT IN LIEU
THEREOF) WITH RESPECT TO ALL OF THE SHARES OWNED OR HELD BY SUCH SHAREHOLDER
REGARDING THE MATTERS REFERRED TO IN SECTION 8(G) (IF, BUT ONLY IF, SUCH
SHAREHOLDER FAILS TO VOTE AS SET FORTH IN SECTION 8(G)) UNTIL THE TERMINATION OF
THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS, TO THE SAME EXTENT AND WITH THE
SAME EFFECT AS THE SHAREHOLDER MIGHT OR COULD DO UNDER APPLICABLE LAW, RULES AND
REGULATIONS. THE PROXY GRANTED PURSUANT TO THIS SECTION 8(H) IS COUPLED WITH AN
INTEREST AND SHALL BE IRREVOCABLE. EACH SHAREHOLDER WILL TAKE SUCH FURTHER
ACTION AND EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE
INTENT OF THIS PROXY. EACH SHAREHOLDER 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 SHAREHOLDER REGARDING THE MATTERS REFERRED TO IN SECTION
8(H). NOTWITHSTANDING THE FOREGOING, THIS SECTION 8(H) SHALL NOT APPLY TO THE
EXTENT IT IS INCONSISTENT WITH APPLICABLE BERMUDA LAW; PROVIDED, THAT, TO THE
EXTENT ANY PROVISION OF THIS SECTION 8(H) DOES NOT APPLY AS A RESULT OF THIS
SENTENCE, THE SHAREHOLDERS SHALL USE THEIR BEST EFFORTS TO ENTER INTO AN
ALTERNATIVE ARRANGEMENT THAT ACCOMPLISHES THE ESSENTIAL
11
INTENT AND PURPOSE OF THIS SECTION 8(H) AND IS CONSISTENT WITH APPLICABLE
BERMUDA LAW.
(i) Class D Holders.
(i) The Company shall use reasonable efforts to cause each holder of
Class D Shares that is not a Party to become a Party with all the same
rights and obligations as if such holder had been a Party on the date
hereof. If any holder of Class D Shares has not become a Party prior to
the Company Shareholders Meeting, the Company and the other Parties shall,
at the Company Shareholders Meeting, take such actions as may be necessary
to cause all of the outstanding Class A Shares, Class B Shares, Class C
Shares and Class D Shares to be exchanged (upon satisfaction of the
conditions set forth in this Agreement) for the consideration contemplated
to be exchanged for such shares in Section 1. Such actions may include
amending the Bye-Laws to allow the Company to redeem Class D Shares for
the same consideration as holders of Class D Shares would have received
under this Agreement and carrying out such redemption (a "Bye-Law
Amendment and Redemption") or taking such actions, including a merger,
share conversion or other action, as may result in all Class D Shares
being cancelled, provided that any action taken shall comply with
applicable law and, except in the case of a Bye-Law Amendment and
Redemption, shall be reasonably acceptable to Enstar and Trident. Within
seven days after the date of this Agreement, the Company shall issue to
Xxxx Xxxx a sufficient number of Class D Shares so that the holders of
Class D Shares who are Parties shall hold in excess of 95% of the Class D
Shares outstanding. Prior to issuing any other Class D Shares to any
person or entity that is not a Party, the Company shall require such
person to become a Party with all the same rights and obligations as if
such holder had been a Party on the date hereof.
(ii) Prior to Closing, the Company shall either establish (i) an
entity with the sole purpose of exercising any of the rights set forth in
the last two sentences of Section 1(h) with respect to Ordinary Shares
issued in exchange for Immature Class D Shares (if the shares are held in
custody by the Company) or to hold the Immature Class D Shares (if the
shares will not be held in custody by the Company), or (ii) at the option
of Enstar, alternative arrangements in order to accomplish a similar
administrative ease for exercising such rights and to provide assurance
that such Ordinary Shares are outstanding under relevant law. The Company
shall use its reasonable best efforts to cause holders of the Immature
Class D Shares to cooperate with such arrangements. The Company shall use
its reasonable best efforts to obtain letter agreements from all holders
of its Class D Shares who are not Parties establishing restrictions on
transfer of the Ordinary Shares they receive in the Recapitalization for a
period of one year that are substantially the same as those set forth in
Section 13 of this Agreement.
12
(j) Letter Agreement. Enstar shall not amend or agree to amend, modify or
waive the requirements of the letter agreement (the "Letter Agreement") executed
and delivered by the directors of Enstar on May 23, 2006 restricting their
ability to transfer, among other things, Ordinary Shares for one year following
the Effective Time without the prior written consent of the Company, Trident and
two of the three Company Principals.
Section 9. Benefit Plans of the Company. Effective upon, but subject to,
consummation of the Merger, the Company shall (i) terminate its annual incentive
compensation plan currently in effect for calendar year 2006 and reverse any and
all accruals made in respect thereof without payment of any amounts relating
thereto and (ii) establish an annual incentive compensation plan (the "AICP")
the terms of which will be subject in each case to the approval of the
Compensation Committee of the Company's Board of Directors. It is anticipated by
the Parties that, with respect to services to be performed in each of calendar
years 2006 through 2010, the AICP shall permit eligible employees to share in a
bonus pool, which, the Parties anticipate will represent, in the aggregate, 15%
of the Company's consolidated net after-tax profits and from which the Parties
anticipate distributions shall be made in cash, Ordinary Shares, other
securities of the Company, or the right to acquire Ordinary Shares or other
securities of the Company, in such amounts per employee and in such form as
shall be determined by the Compensation Committee of the Company's Board of
Directors. The Company shall submit an employee benefits plan or plans relating
to any such equity compensation to the shareholders of the Company for approval
prior to the Effective Time. The Board of Directors of the Company shall
determine whether and, if so, on what terms and conditions, the AICP shall
continue in effect with respect to calendar years after 2010.
Section 10. Conditions to Each Party's Obligations. The obligation of each
Party to consummate the transactions contemplated hereby is subject to the
satisfaction of the following conditions:
(a) No Injunctions or Restraints, Illegality. No laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order, judgment, decision, opinion or decree
issued by a court or other Governmental Entity of competent jurisdiction in the
United States, the European Union or Bermuda shall be in effect, having the
effect of making the transactions contemplated hereby illegal or otherwise
prohibiting consummation of the transactions contemplated hereby.
(b) Consents and Approvals. Except for the filing of the Amendments to the
Memorandum of Association pursuant to Section 1(d) hereof, all permits,
consents, approvals or authorizations of, or declarations to, or filings with,
any Person that are required for the valid authorization, execution, delivery or
performance by the Parties of this Agreement shall have been made or obtained,
except for those the failure of which to be made or obtained, individually or in
the aggregate, would not reasonably be expected
13
to have a Material Adverse Effect on the Company and its Subsidiaries, taken
together after giving effect to the Merger.
(c) Conditions to Effect the Merger. Each of the conditions to closing
under Article VI of the Merger Agreement shall have been satisfied or waived by
the parties entitled to waive such condition, other than the condition relating
to the Company Recapitalization and any condition that by its nature is to be
fulfilled at the Closing under the Merger Agreement, and each of the parties to
the Merger Agreement shall be prepared to consummate the Merger.
(d) Tax Opinion. Debevoise & Xxxxxxxx LLP shall have delivered to Enstar,
Trident and the Trident Funds, prior to the Recapitalization Time on the Closing
Date, a written opinion addressed to each such Person and dated as of such date,
substantially in the form attached hereto as Exhibit F, to the effect that the
Recapitalization will qualify as a reorganization under Section 368(a)(1)(E) of
the Code.
(e) Shareholder Consent. The Company shall have received at the Company
Shareholder Meeting, or any adjournment thereof, the requisite consent of its
members to this Agreement and the transactions contemplated hereby.
Section 11. Additional Conditions to the Obligation of the Shareholders to
Effect the Recapitalization. In addition to those conditions set forth in
Section 10 hereof, the obligation of each Shareholder to consummate the
transactions contemplated hereby is subject to each of the representations and
warranties of the Company set forth in Section 4 hereof being true and correct
as of the date hereof and as of the Closing in all material respects and the
Company having performed or complied in all material respects (and in the case
of Sections 8(e) and 8(f), in all respects) with all agreements and covenants
required to be performed by it under this Agreement at or prior to the
consummation of the transactions contemplated hereby.
Section 12. Additional Conditions to the Obligation of the Company. In
addition to the conditions set forth in Section 10 hereof, the obligation of the
Company to consummate the transactions contemplated hereby is subject to each of
the representations and warranties of the Shareholders set forth in Sections 5
and 6 hereof being true and correct as of the date hereof and as of the Closing
in all material respects and the Shareholders having performed or complied in
all material respects with all agreements and covenants required to be performed
by the Shareholders under this Agreement at or prior to the consummation of the
transactions contemplated hereby.
Section 13. Transfer Restrictions. Except as provided in regards to the
Initial Request in Section 1(a) of the Registration Rights Agreement (as defined
below), each Shareholder agrees not to 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, or commit or
14
agree to take any of the foregoing actions with respect to, any of its Class A
Shares, Class B Shares, Class C Shares or Class D Shares prior to Closing or any
of its Ordinary Shares or Non-Voting Convertible Ordinary Shares for a period of
one year following the Effective Time; provided that the foregoing restriction
shall not apply to a Transfer (i) to the Company, (ii) following the Effective
Time, other than in the case of an Employee Shareholder, to another Party other
than an Employee Shareholder or to any party to the Letter Agreement, (iii) to a
trust under which distributions may be made only to such Shareholder or his or
her immediate family members, (iv) to a charitable remainder trust, the income
from which will be paid to such Shareholder during his or her life, (v) to a
corporation, partnership, limited liability company or other entity, all of the
equity interests in which are held, directly or indirectly, by such Shareholder
and his or her immediate family members, or (vi) in connection with a tender
offer, merger, amalgamation, recapitalization, reorganization or similar
transaction involving the Company, provided in the case of the foregoing clauses
(iii) - (v) that such Shareholder has sole, ultimate control of the entity
referred to and such entity agrees to be bound by this Agreement. Any attempt by
the Shareholder, directly or indirectly, to offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any of the Ordinary Shares or the Non-Voting
Convertible Ordinary Shares, or any interest therein, or any rights relating
thereto, without complying with the provisions of this Agreement, shall be void
and of no effect.
Section 14. Registration Rights. Concurrently with the Closing, the
Company and certain shareholders of the Company listed therein shall enter into
a registration rights agreement in the form of Exhibit G attached hereto (the
"Registration Rights Agreement"), pursuant to which, on the terms and conditions
thereto, certain shareholders of the Company as provided for therein will be
granted registration rights with respect to the Ordinary Shares received by or
issuable to them as provided for therein.
Section 15. Miscellaneous.
(a) Termination. This Agreement shall terminate upon the earlier of the
termination of the Merger Agreement in accordance with its terms and the
termination of the Support Agreement pursuant to Section 5.1(b), (c) or (d)
thereof. Upon termination of this Agreement in accordance with this Section
15(a), this Agreement shall become null and void and of no further force or
effect with no liability on the part of any Party; provided, that such
termination shall not relieve any Party from any liability arising from a
willful breach of this Agreement.
(b) Fees and Expenses. Whether or not, in each case, the Merger or any of
the transactions contemplated herein are consummated, all fees and expenses
incurred in connection with this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby shall be paid by the Party
incurring such fees and expenses; provided, that the Company shall reimburse all
reasonable out-of-pocket fees and expenses incurred in connection with this
Agreement, the Merger Agreement and the transactions contemplated hereby and
thereby by the holders of the Class B Shares, the
15
Class C Shares and the Class D Shares; provided, further, that the reimbursement
for the holders of the Class B Shares shall be subject to a cap of $150,000.
(c) Non-Survival. None of the representations or warranties in this
Agreement, including any rights arising out of any breach of such
representations or warranties shall survive the Effective Time.
(d) Enforcement. The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Parties 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 any court of the United States
located in the State of New York, this being in addition to any other remedy to
which they are entitled at law or in equity.
(e) 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.
(f) Jurisdiction. Each of the Parties 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.
(g) 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.
(h) Amendment, Waivers, etc. Neither this Agreement nor any term hereof
may be amended other than by an instrument in writing signed by each of the
Company, Enstar, Trident, the Company Principals and the Company Principal
Shareholders; provided, that this Agreement may not be amended in a manner that
materially and adversely affects the rights or obligations of the Employee
Shareholders without the approval by holders of a majority of the Company Shares
held by the Employee Shareholders. 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; provided, that the majority in interest of the Company Principal
Shareholders may waive, discharge or terminate any condition set forth herein to
the obligations of the Company Principal Shareholders and the Employee
Shareholders.
16
(i) Assignment; No Third Party Beneficiaries. This Agreement shall not be
assignable or otherwise transferable by a Party without the prior consent of the
Company, Enstar and the Company Principals, 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. Nothing in this
Agreement shall be construed as giving any Person, other than the Parties 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.
(j) 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 confirmation 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:
(i) if to the Company to:
Castlewood Holdings Limited
X.X. Xxx XX 0000
Xxxxxxx Xxxxx, 0xx Xxxxx
18 Queen Street
Xxxxxxxx XX JX
Fax: (000) 000-0000
Attention: Xxxx X'Xxxx
with a copy to:
Drinker Xxxxxx & Xxxxx LLP
One Xxxxx Square
00xx xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
(ii) if to Enstar to:
The Enstar Group, Inc.
The Xxxxxxxx House
000 Xxxxxxx Xxxxxx
00
Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxx
with a copy to:
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, Xx., Esq.
(iii) if to Trident or the Trident Funds to:
Trident II, L.P.
c/o Stone Point Capital LLC
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Principal and General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Xxxx X. Xxxxx, Esq.
(iv) if to DS, POS, NAP, the Company Principal Shareholders or the
Employee Shareholders to:
Xxxx X' Xxxx
18
Allegro Insurance & Risk Management Ltd.
Burnaby Xxxxxxxx
00 Xxxxxxx Xxxxxx
Xxxxxxxx, XX00
Xxxxxxx
Fax: (000) 000-0000
Attention: Xxxx X'Xxxx
with a copy to:
Drinker Xxxxxx & Xxxxx LLP
One Xxxxx Square
00xx xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
(k) Interpretation. When a reference is made in this Agreement to Sections
or Exhibits, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
(l) 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 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.
(m) Entire Agreement. This Agreement, including the Exhibits and schedules
attached hereto, the Merger Agreement and the Confidentiality 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.
(n) 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.
19
(o) 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.]
20
IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by
their respective duly authorized officers as of the date first above written.
CASTLEWOOD HOLDINGS LIMITED
By: /s/ X. X. XXXXXX
-----------------------------------
Name: X. X. Xxxxxx
Title: Chief Financial Officer
THE ENSTAR GROUP, INC.
By: /s/ XXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and CEO
TRIDENT II, L.P.
By: Trident Capital II, L.P.
Its sole general partner
By: DW Trident GP, LLC, a general partner
By: /s/ XXXXX XXXXXXX
----------------------------------
Name: Xxxxx Xxxxxxx
Title: Principal
XXXXX & XxXXXXXX CAPITAL
PROFESSIONALS FUNDS, L.P.
By: Stone Point Capital LLC,
as manager
By: /s/ XXXXX XXXXXXX
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Principal
XXXXX & XxXXXXXX EMPLOYEES'
SECURITIES COMPANY, L.P.
By: Xxxxx & XxXxxxxx XX I, Inc.,
Its sole general partner
By: Stone Point Capital LLC, its attorney-in-fact
By: /s/ XXXXX XXXXXXX
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Principal
XXXXXXX X. XXXXXXXXX
/s/ XXXXXXX X. XXXXXXXXX
-------------------------------------
XXXX X. X'XXXX
/s/ XXXX X. X'XXXX
--------------------------------------
XXXXXXXX X. XXXXXX
/s/ XXXXXXXX X. XXXXXX
--------------------------------------
The COMMON SEAL of R&H TRUST CO. (NZ) LIMITED, as
trustee of THE LEFT TRUST was hereunto affixed in
the presence of
By:/s/ BRYCE X. X. XXXXX
-----------------------------------
Name: Bryce X. X. Xxxxx
Title: Director
By:/s/ XXXX X. XXXXXXXX
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Director
[Affixed Seal]
The COMMON SEAL of R&H TRUST CO. (BVI) LTD.,
as trustee of THE RIGHT TRUST was hereunto
affixed in the presence of
By: /s/ XXXXX STEEL
---------------------------------
Name: Xxxxx Steel
Title: Director
By: /s/ XXXXXXX XXXXXX
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director
[Affixed Seal]
The COMMON SEAL of R&H TRUST CO. (BVI) LTD.,
as trustee of THE ELBOW TRUST was hereunto affixed
in the presence of
By: /s/ XXXXX STEEL
---------------------------------
Name: Xxxxx Steel
Title: Director
By: /s/ XXXXXXX XXXXXX
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director
[Affixed Seal]
The COMMON SEAL of R&H TRUST CO. (BVI) LTD.,
as trustee of THE HOVE TRUST was hereunto affixed
in the presence of
By: /s/ XXXXX STEEL
---------------------------------
Name: Xxxxx Steel
Title: Director
By: /s/ XXXXXXX XXXXXX
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director
[Affixed Seal]
XXXXX XXXXXX
/s/ XXXXX XXXXXX
--------------------------------------
XXXX XXXXXXXXX
/s/ XXXX XXXXXXXXX
--------------------------------------
XXXXX GIVEN
/s/ XXXXX GIVEN
--------------------------------------
XXXXX XXXXXXX
/s/ XXXXX XXXXXXX
--------------------------------------
XXXXX XXXXXXX
/s/ XXXXX XXXXXXX
--------------------------------------
XXXXXXX XXXXXX
/s/ XXXXXXX XXXXXX
--------------------------------------
XXX XXXXXXX
/s/ XXX XXXXXXX
--------------------------------------
XXXXXX XXXXXXXXX
/s/ XXXXXX XXXXXXXXX
--------------------------------------
XXXXX XXXXXXXXXX
/s/ XXXXX XXXXXXXXXX
--------------------------------------
XXXXX XXXXX
/s/ XXXXX XXXXX
--------------------------------------
XXXXXX XXXXX
/s/ XXXXXX XXXXX
--------------------------------------
XXXX XXXXXX
/s/ XXXX XXXXXX
--------------------------------------
XXXXXX XxXXXXXXXX
/s/ XXXXXX XxXXXXXXXX
--------------------------------------
XXXX XXXX
/s/ XXXX XXXX
--------------------------------------
Schedule 4(c)
1. Subscription agreements reasonably acceptable to Enstar to be entered into
by the Company and certain employees with respect to the issuance of up to
198 Class D Shares. Other than the issuance of such shares, the preceding
sentence does not constitute an exception to the representations.
Notwithstanding anything herein to the contrary, at no time shall the
Company permit the parties to this Agreement to hold fewer than 80% of the
Class D Non-Voting Ordinary Shares and at no time shall the Company permit
the number of holders of such shares to be greater than 35.
EXHIBIT A
The Company's name shall be changed to Enstar Group Limited.
The Company's authorized share capital shall be increased to US$156,000,000,
divided into 100,000,000 ordinary shares, par value US$1.00 per share, 6,000,000
non-voting convertible ordinary shares, par value US$1.00 per share, and
50,000,000 preference shares, par value US$1.00 per share.
EXHIBIT B
FORM OF
SECOND AMENDED AND RESTATED
BYE-LAWS OF
ENSTAR GROUP LIMITED
(FORMERLY KNOWN AS CASTLEWOOD HOLDINGS LIMITED)
TABLE OF CONTENTS
INTERPRETATION
1. Definitions
SHARES
2. Power to Issue Shares
3. Power of the Company to Purchase its Shares
4. Rights Attaching to Shares
5. Calls on Shares
6. Prohibition on Financial Assistance
7. Forfeiture of Shares
8. Share Certificates
9. Fractional Shares
REGISTRATION OF SHARES
10. Register of Members
11. Registered Owner Absolute Owner
12. Transfer of Registered Shares
13. Transmission of Registered Shares
ALTERATION OF SHARE CAPITAL
14. Power to Alter Capital
15. Variation of Rights Attaching to Shares
DIVIDENDS AND CAPITALISATION
16. Dividends
17. Power to Set Aside Profits
18. Method of Payment
19. Capitalisation
MEETINGS OF MEMBERS
20. Annual General Meetings
21. Special General Meetings
22. Requisitioned General Meetings
23. Notice
24. Giving Notice
25. Postponement or Cancellation of General Meeting
26. Attendance and Security at General Meetings
27. Quorum at General Meetings
28. Chairman to Preside
29. Voting on Resolutions
30. Power to Demand Vote on Poll
31. Voting by Joint Holders of Shares
32. Instrument of Proxy
33. Representation of Corporate Member
34. Adjournment of General Meeting
35. Written Resolutions
36. Directors' Attendance at General Meetings
DIRECTORS AND OFFICERS
37. Election of Directors
38. Classes of Directors
39. Term of Office of Directors
40. Alternate Directors
41. Removal of Directors
42. Vacancy in the Office of Director
43. Remuneration of Directors
44. Defect in Appointment of Director
45. Directors to Manage Business
46. Powers of the Board of Directors
47. Register of Directors and Officers
48. Officers
49. Appointment of Officers
50. Duties of Officers
51. Remuneration of Officers
52. Conflicts of Interest
53. Indemnification and Exculpation of Directors and Officers
MEETINGS OF THE
BOARD OF DIRECTORS
54. Board Meetings
55. Notice of Board Meetings
56. Participation in Meetings by Telephone
57. Quorum at Board Meetings
58. Board to Continue in Event of Vacancy
59. Chairman to Preside
60. Written Resolutions
61. Validity of Prior Acts of the Board
CORPORATE RECORDS
62. Minutes
63. Place Where Corporate Records Kept
64. Form and Use of Seal
ACCOUNTS
65. Books of Account
66. Financial Year End
AUDITS
67. Annual Audit
68. Appointment of Auditors
69. Remuneration of Auditors
70. Duties of Auditors
71. Access to Records
72. Financial Statements
73. Distribution of Auditors Report
74. Vacancy in the Office of Auditor
VOLUNTARY WINDING-UP AND
DISSOLUTION
75. Winding-Up
CHANGES TO CONSTITUTION
76. Changes to Bye-laws
77. Discontinuance
CERTAIN SUBSIDIARIES
78. Voting of Subsidiary Shares
79. Bye-laws or Articles of Association of Certain Subsidiaries
ENSTAR GROUP LIMITED Page 1
INTERPRETATION
1. DEFINITIONS
1.1 In these Bye-laws, the following words and expressions shall, where
not inconsistent with the context, have the following meanings,
respectively:
Act the Companies Xxx 0000 as amended from time
to time;
Auditor includes an individual or partnership;
Board the board of directors appointed or elected
pursuant to these Bye-laws and acting by
resolution in accordance with the Act and
these Bye-laws or the directors present at a
meeting of directors at which there is a
quorum;
Company the company for which these Bye-laws are
approved and confirmed;
Director a director of the Company;
Group the Company and every company and other
entity which is for the time being
controlled by or under common control with
the Company (for these purposes, "control"
means the power to direct management or
policies of the person in question, whether
by means of an ownership interest or
otherwise);
Member the person registered in the Register of
Members as the holder of shares in the
Company and, when two or more persons are so
registered as joint holders of shares, means
the person whose name stands first in the
Register of Members as one of such joint
holders or all of such persons, as the
context so requires;
ENSTAR GROUP LIMITED Page 2
notice written notice as further provided in these
Bye-laws unless otherwise specifically
stated;
Officer any person appointed by the Board to hold an
office in the Company;
Register of Directors the register of directors and
and Officers officers referred to in these Bye-laws;
Register of Members the register of members referred to in these
Bye-laws;
Resident Representative any person appointed to act as resident
representative and includes any deputy or
assistant resident representative; and
Secretary the person appointed to perform any or all
of the duties of secretary of the Company
and includes any deputy or assistant
secretary and any person appointed by the
Board to perform any of the duties of the
Secretary.
1.2 In these Bye-laws, where not inconsistent with the context:
(a) words denoting the plural number include the singular number
and vice versa;
(b) words denoting the masculine gender include the feminine and
neuter genders;
(c) words importing persons include companies, associations or
bodies of persons whether corporate or not;
(d) the words:
(i) "may" shall be construed as permissive; and
(ii) "shall" shall be construed as imperative; and
(e) unless otherwise provided herein, words or expressions defined
in the Act shall bear the same meaning in these Bye-laws.
ENSTAR GROUP LIMITED Page 3
1.3 In these Bye-laws expressions referring to writing or its cognates
shall, unless the contrary intention appears, include facsimile,
printing, lithography, photography, electronic mail and other modes
of representing words in visible form.
1.4 Headings used in these Bye-laws are for convenience only and are not
to be used or relied upon in the construction hereof.
SHARES
2. POWER TO ISSUE SHARES
2.1 Subject to these Bye-laws and to any resolution of the Members to
the contrary, and without prejudice to any special rights previously
conferred on the holders of any existing shares or class of shares,
the Board shall have the power to issue any unissued shares of the
Company on such terms and conditions as it may determine.
2.2 Without limitation to the provisions of Bye-law 4, subject to the
provisions of the Act, any preference shares may be issued or
converted into shares that (at a determinable date or at the option
of the Company or the holder) are liable to be redeemed on such
terms and in such manner as may be determined by the Board (before
the issue or conversion).
3. POWER OF THE COMPANY TO PURCHASE ITS SHARES
The Company may purchase its own shares in accordance with the provisions
of the Act on such terms as the Board shall think fit. The Board may
exercise all the powers of the Company to purchase all or any part of its
own shares in accordance with the Act.
4. RIGHTS ATTACHING TO SHARES
4.1 At the date these Bye-laws are adopted, the share capital of the
Company shall be divided into three classes: (i) 100,000,000
ordinary shares of par value US$1.00 each (the "Common Shares"),
(ii) 6,000,000 non-voting convertible ordinary shares of par value
US$1.00 each (the "Non-Voting Convertible Common Shares") and (iii)
50,000,000 preference shares of par value US$1.00 each (the
"Preference Shares").
ENSTAR GROUP LIMITED Page 4
4.2 The holders of Common Shares shall, subject to the provisions of
these Bye-laws (including, without limitation, the rights attaching
to Preference Shares):
(a) be entitled to one vote per share;
(b) be entitled to such dividends as the Board may from time
to time declare on a pari passu basis with the
Non-Voting Convertible Common Shares;
(c) in the event of a winding-up or dissolution of the
Company, whether voluntary or involuntary or for the
purpose of a reorganisation or otherwise or upon any
distribution of capital, be entitled to the surplus
assets of the Company on a pari passu basis with the
Non-Voting Convertible Common Shares; and
(d) generally be entitled to enjoy all of the rights
attaching to shares.
4.3 The holders of Non-Voting Convertible Common Shares shall, subject
to the provisions of these Bye-laws (including, without limitation,
the rights attaching to Preference Shares):
(a) be entitled to such dividends as the Board may from time to
time declare on a pari passu basis with the Common Shares;
(b) in the event of a winding-up or dissolution of the Company,
whether voluntary or involuntary or for the purpose of a
reorganisation or otherwise or upon any distribution of
capital, be entitled to the surplus assets of the Company on a
pari passu basis with the Common Shares; and
(c) generally be entitled to enjoy all of the rights attaching to
Common Shares, but shall not be entitled to vote.
Each Non-Voting Convertible Common Share shall be automatically
converted into one Common Share, subject to any necessary
adjustments for any share splits, dividends, recapitalizations,
consolidations or similar transactions occurring in respect of the
Common Shares or the Non-Voting Convertible Common Shares after the
date of the adoption of these Bye-laws, immediately prior to any
transfer by the registered holder of such Non-Voting Convertible
Common Share, whether or not for value, except for transfers to a
nominee or
ENSTAR GROUP LIMITED Page 5
Affiliate of such holder in a transfer that will not result in a
change of beneficial ownership (as determined under Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) or to a person that
already holds Non-Voting Convertible Common Shares.
4.4 The Board is authorised to provide for the issuance of the
Preference Shares in one or more series, and to establish from time
to time the number of shares to be included in each such series, and
to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations, or
restrictions thereof (and, for the avoidance of doubt, such matters
and the issuance of such Preference Shares shall not be deemed to
vary the rights attached to the Common Shares or the Non-Voting
Convertible Common Shares or, subject to the terms of any other
series of Preference Shares, to vary the rights attached to any
other series of Preference Shares). The authority of the Board with
respect to each series shall include, but not be limited to,
determination of the following:
(a) the number of shares constituting that series and the
distinctive designation of that series;
(b) the dividend rate on the shares of that series, whether
dividends shall be cumulative and, if so, from which date or
dates, and the relative rights of priority, if any, of the
payment of dividends on shares of that series;
(c) whether that series shall have voting rights, in addition to
the voting rights provided by law, and if so, the terms of
such voting rights;
(d) whether that series shall have conversion or exchange
privileges (including, without limitation, conversion into
Common Shares), and, if so, the terms and conditions of such
conversion or exchange, including provision for adjustment of
the conversion or exchange rate in such events as the Board
shall determine;
(e) whether or not the shares of that series shall be redeemable
or repurchaseable, and, if so, the terms and conditions of
such redemption or repurchase, including the manner of
selecting shares for redemption or repurchase if less than all
shares are to be redeemed or repurchased, the date or dates
upon or after which they shall be redeemable or
repurchaseable, and the amount per share payable in case of
redemption or repurchase,
ENSTAR GROUP LIMITED Page 6
which amount may vary under different conditions and at
different redemption or repurchase dates;
(f) whether that series shall have a sinking fund for the
redemption or repurchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(g) the right of the shares of that series to the benefit of
conditions and restrictions upon the creation of indebtedness
of the Company or any subsidiary, upon the issue of any
additional shares (including additional shares of such series
or any other series) and upon the payment of dividends or the
making of other distributions on, and the purchase, redemption
or other acquisition by the Company or any subsidiary of any
issued shares of the Company;
(h) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the Company, and the relative rights of priority, if
any, of payment of shares of that series; and
(i) any other relative participating, optional or other special
rights, qualifications, limitations or restrictions of that
series.
4.5 Any Preference Shares of any series which have been redeemed
(whether through the operation of a sinking fund or otherwise) or
which, if convertible or exchangeable, have been converted into or
exchanged for shares of any other class or classes shall have the
status of authorised and unissued Preference Shares of the same
series and may be reissued as a part of the series of which they
were originally a part or may be reclassified and reissued as part
of a new series of Preference Shares to be created by resolution or
resolutions of the Board or as part of any other series of
Preference Shares, all subject to the conditions and the
restrictions on issuance set forth in the resolution or resolutions
adopted by the Board providing for the issue of any series of
Preference Shares.
4.6 At the discretion of the Board, whether or not in connection with
the issuance and sale of any shares or other securities of the
Company, the Company may issue securities, contracts, warrants or
other instruments evidencing any shares, option rights, securities
having conversion or option rights, or obligations on such terms,
conditions and other provisions as are fixed by the Board,
ENSTAR GROUP LIMITED Page 7
including, without limiting the generality of this authority,
conditions that preclude or limit any person or persons owning or
offering to acquire a specified number or percentage of the issued
Common Shares, other shares, option rights, securities having
conversion or option rights, or obligations of the Company or
transferee of the person or persons from exercising, converting,
transferring or receiving the shares, option rights, securities
having conversion or option rights, or obligations.
4.7 (a) The voting power of all shares is hereby adjusted (and shall
be automatically adjusted in the future) to the extent
necessary so that there is no 9.5% U.S. Shareholder or 9.5%
Direct Foreign Shareholder Group. The Board shall implement
the foregoing in the manner provided herein; provided, that
the foregoing provision and the remainder of this Bye-law 4.7
shall not apply in the event that one Member of the Company
owns greater than 75% of the issued and outstanding shares of
the Company.
(b) The Board shall from time to time, including prior to any time
at which a vote of Members is taken, take all reasonable
steps, including those specified in Bye-law 4.9, necessary to
ascertain, through communications with Members or otherwise,
whether there exists, or will exist at the time any vote of
Members is taken, a Tentative 9.5% U.S. Shareholder or a
Tentative 9.5% Direct Foreign Shareholder Group.
(c) In the event that a Tentative 9.5% U.S. Shareholder exists,
the aggregate votes conferred by shares held by a Member and
treated as Controlled Shares of that Tentative 9.5% U.S.
Shareholder shall be reduced to the extent necessary such that
the Controlled Shares of the Tentative 9.5% U.S. Shareholder
will constitute 9.5% of the voting power of all shares. In
applying the previous sentence where shares held by more than
one Member are treated as Controlled Shares of such Tentative
9.5% U.S. Shareholder, the reduction in votes shall apply to
such Members in descending order according to their respective
Attribution Percentages, provided, that in the event of a tie,
the reduction shall apply first to the Member whose shares are
Controlled Shares of the Tentative 9.5% U.S. Shareholder by
virtue of the Tentative 9.5% U.S. Shareholder's economic
interest in (as opposed to voting control with respect to)
such shares. The adjustments of voting power described in this
Bye-law shall apply repeatedly until there is no 9.5% U.S.
Shareholder. The Board of Directors may deviate from any of
the principles described in this Bye-law and determine that
shares held by a Member shall carry different voting rights as
it determines appropriate (1) to avoid the existence of any
9.5% U.S. Shareholder or (2) to
ENSTAR GROUP LIMITED Page 8
avoid adverse tax, legal or regulatory consequences to the
Company, any subsidiary of the Company, or any other Member or
its affiliates. For the avoidance of doubt, in applying the
provisions of Bye-laws 4.7 through 4.10, a share may carry a
fraction of a vote.
(d) Immediately after completing the adjustment of voting power
provided for in Bye-law 4.7(c), in the event that a Tentative
9.5% Direct Foreign Shareholder Group exists, the aggregate
votes conferred by shares held by the Tentative 9.5% Direct
Foreign Shareholder Group shall be reduced to the extent
necessary to cause such Shareholder or Shareholders to no
longer constitute a 9.5% Direct Foreign Shareholder Group.
(e) "9.5% Direct Foreign Shareholder Group" means a shareholder
that is not a U.S. Person or a group of commonly controlled
shareholders that are not U.S. Persons, in either case who
owns shares that constitute more than nine and one-half
percent (9.5%) of the voting power of all shares of the
Company and that are attributable to a U.S. Person under
Section 958 of the Code.
(f) "Attribution Percentage" shall mean, with respect to a Member,
the percentage of the Member's shares that are treated as
Controlled Shares of a Tentative 9.5% Shareholder.
(g) "Controlled Shares" in reference to any person means all
shares of the Company directly, indirectly or constructively
owned by such person as determined pursuant to Section 958 of
the Code.
(h) "9.5% U.S. Shareholder" means a "United States person" as
defined in the Code (a "U.S. Person") whose Controlled Shares
constitute more than nine and one-half percent (9.5%) of the
voting power of all shares of the Company and who would be
generally required to recognize income with respect to the
Company under Section 951(a)(1) of the Code, if the Company
were a controlled foreign corporation as defined in Section
957 of the Code and if the ownership threshold under Section
951(b) of the Code were 9.5%.
(i) "Tentative 9.5% U.S. Shareholder" means a U.S. Person that,
but for adjustments to the voting rights of shares pursuant to
Bye-laws 4.7 through 4.8, would be a 9.5% U.S. Shareholder.
(j) "Tentative 9.5% Direct Foreign Shareholder Group" means a
shareholder that is not a U.S. Person or a group of commonly
controlled shareholders that are not U.S. Persons
ENSTAR GROUP LIMITED Page 9
that, but for adjustments to the voting rights of shares
pursuant to Bye-laws 4.7 through 4.8, would be a 9.5% Direct
Foreign Shareholder Group.
4.8 In addition to the provisions of Bye-law 4.7, any shares shall not
carry any right to vote to the extent that the Board of Directors
determines, in its reasonable discretion, that it is necessary that
such shares should not carry the right to vote in order to avoid
adverse tax, legal or regulatory consequences to the Company, any
subsidiary of the Company, or any other Member or its affiliates,
provided, that no adjustment pursuant to this sentence shall cause
any person to become a 9.5% U.S. Shareholder or a 9.5% Direct
Foreign Shareholder Group.
4.9 Prior to any date on which Members shall vote on any matter, the
Board of Directors shall (a) retain the services of an
internationally recognized accounting firm or organization with
comparable professional capabilities in order to assist the Company
in applying the principles of Bye-laws 4.7 through 4.10, (b) obtain
from such firm or organization a statement describing the
information obtained and procedures followed and setting forth the
determinations made with respect to Bye-laws 4.7 through 4.10 and
(c) notify each Member of the voting power conferred by its shares
determined in accordance with Bye-laws 4.7 through 4.10.
4.10 (a) Subject to the provisions of this Bye-law 4.10, the Company
shall have the authority to reasonably request from any
Member, and such Member shall promptly provide to the Company,
such information as the Company may reasonably request for the
purpose of (i) determining whether any Member's voting rights
are to be adjusted pursuant to Bye-laws 4.7 though 4.10, (ii)
determining whether the Company would realize any income that
would be included in the income of any Member (or any interest
holder, whether direct or indirect, of any Member) by
operation of Section 953(c) of the Code and (iii) determining
whether the Company or any of its subsidiaries would be
entitled to the benefits of a tax treaty.
(b) Any information provided by each Member to the Company
pursuant to this Bye-law 4.10 shall be deemed "confidential
information" (the "Confidential Information") and shall be
used by the Company solely for the purposes contemplated by
this Bye-law 4.10 (except as otherwise may be required by
applicable law or regulation). The Company shall hold such
Confidential Information in strict confidence and shall not
disclose any Confidential Information that it receives, except
(i) to the U.S. Internal Revenue Service
ENSTAR GROUP LIMITED Page 10
(the "Service") if and to the extent the Confidential
information is required by the Service, (ii) to any outside
legal counsel or accounting firm engaged by the Company to
make determinations pursuant to Bye-laws 4.7 though 4.10,
(iii) to directors, officers and employees of the Company and
(iv) as otherwise required by law or regulation. The Company
shall take measures reasonably practicable to provide for the
continued confidentiality of the Confidential Information and
shall grant the persons referred to in the preceding clauses
(ii) and (iii) access to the Confidential Information only (x)
to the extent necessary, as appropriate, to allow them to
assist the Company in any analysis required pursuant to
Bye-laws 4.7 through 4.10, (y) to determine whether the
Company would realize any income that would be included in the
income of any Member (or any interest holder, whether direct
or indirect, of any Member) by operation of Section 953(e) of
the Code and (z) to determine whether the Company or any of
its subsidiaries would be entitled to the benefits of a tax
treaty. Prior to granting access to the Confidential
Information to any such persons, the Company shall inform them
of the information's confidential nature and of the provisions
of this Bye-law 4.10 and shall require them to abide by all
the provisions hereof. For the avoidance of doubt, the Company
shall be permitted to disclose to the Members and others the
relative voting percentages of the Members after application
of Bye-laws 4.7 though 4.10. At the written request of a
Member, the Confidential Information of such Member shall be
destroyed or returned to such Member after the later to occur
of (i) such Member no longer being a Member or (ii) the
expiration of the applicable statute of limitations with
respect to any Confidential Information obtained for purposes
of engaging in any tax related analysis.
(c) The Company shall (i) notify a Member of the existence, terms
and circumstances surrounding any request made to the Company
to disclose any Confidential Information provided by or with
respect to such Member and, prior to such disclosure, shall
permit, if practicable, such Member a reasonable period of
time to seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Bye-law
4.10, and (ii) if, in the absence of a protective order, such
disclosure is required in the reasonable opinion of counsel to
the Company, the Company shall make such disclosure without
liability hereunder; provided that the Company shall use
commercially reasonable efforts to furnish only that portion
of the Confidential Information that is legally required,
shall give such Member notice of the information to be
disclosed as far in advance of its disclosure as practicable
and, upon the reasonable request of such Member and at its
expense, shall use commercially reasonable efforts to ensure
that confidential treatment will be accorded to all such
disclosed information.
ENSTAR GROUP LIMITED Page 11
(d) The Board may rely in good faith exclusively on the analysis,
deliberation, reports and other communications of those
persons specified in Bye-law 4.10(b) with respect to the
collection, disclosure or use of the Confidential Information,
including, but not limited to (i) determining whether the
Company would realize any income that would be included in the
income of any Member (or any interest holder, whether direct
or indirect, of any Member) by operation of Section 953(c) of
the Code or implementing any provisions of these Bye-laws and
(ii) determining whether the Company or any of its
subsidiaries would be entitled to the benefits of a tax
treaty.
(e) If any Member fails to respond to a reasonable request for
information by the Company pursuant to Bye-law 4.10(a) within
seven business days of such request, or submits incomplete or
inaccurate information in response to such a reasonable
request, the Directors may in their reasonable discretion
(after considering the circumstances described in any response
to the request by the Member and providing the Member with a
cure period of such length as the Board may reasonably
determine under the circumstances) determine that such
Member's shares shall carry no voting rights in which case
such shares shall not carry any voting rights until otherwise
determined by the Directors in their reasonable discretion.
(f) Any holder of shares that is a corporation, partnership,
limited liability company or other entity or a U.S. Person
shall give notice to the Company within ten days following the
date that such holder acquires actual knowledge that it is the
owner of Controlled Shares that constitute 9.5% or more of the
voting power of all shares.
(g) Notwithstanding the foregoing, no Member shall be liable to
any other Member or the Company for any losses or damages
resulting from such Member's failure to respond to, or
submission of incomplete or inaccurate information in response
to, a request under subparagraph (a) of this Bye-law or from
such Member's failure to give notice under subparagraph (b) of
this Bye-law.
5. CALLS ON SHARES
5.1 The Board may make such calls as it thinks fit upon the Members in
respect of any monies (whether in respect of nominal value or
premium) unpaid on the shares allotted to or held by such Members
(and not made payable at fixed times by the terms and conditions of
issue) and, if a call is not paid on or before the day appointed for
payment thereof, the Member may at the discretion of the Board be
liable to pay the Company interest on the amount of such call at
such
ENSTAR GROUP LIMITED Page 12
rate as the Board may determine, from the date when such call was
payable up to the actual date of payment. The Board may
differentiate between the holders as to the amount of calls to be
paid and the times of payment of such calls.
5.2 Any sum which by the terms of allotment of a share becomes payable
upon issue or at any fixed date, whether on account of the nominal
value of the share or by way of premium, shall for all the purposes
of these Bye-laws be deemed to be a call duly made and payable, on
the date on which, by the terms of issue, the same becomes payable,
and in case of non-payment all the relevant provisions of these
Bye-laws as to payment of interest, costs, charges and expenses,
forfeiture or otherwise shall apply as if such sum had become
payable by virtue of a call duly made and notified.
5.3 The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
5.4 The Company may accept from any Member the whole or a part of the
amount remaining unpaid on any shares held by him, although no part
of that amount has been called up.
6. PROHIBITION ON FINANCIAL ASSISTANCE
The Company shall not give, whether directly or indirectly, whether by
means of loan, guarantee, provision of security or otherwise, any
financial assistance for the purpose of the acquisition or proposed
acquisition by any person of any shares in the Company, but nothing in
this Bye-law shall prohibit transactions permitted under the Act.
7. FORFEITURE OF SHARES
7.1 If any Member fails to pay, on the day appointed for payment
thereof, any call in respect of any share allotted to or held by
such Member, the Board may, at any time thereafter during such time
as the call remains unpaid, direct the Secretary to forward such
Member a notice in writing in the form, or as near thereto as
circumstances admit, of the following:
Notice of Liability to Forfeiture for Non-Payment of Call
Enstar Group Limited (the "Company")
You have failed to pay the call of [amount of call] made on the [ ]
day of [ ], 20[ ], in respect of the [number] share(s) [number in
figures] standing in your name in the Register of Members of the
ENSTAR GROUP LIMITED Page 13
Company, on the [ ] day of [ ], 20[ ], the day appointed for payment
of such call. You are hereby notified that unless you pay such call
together with interest thereon at the rate of [ ] per annum computed
from the said [ ] day of [ ], 20[ ] at the registered office of the
Company the share(s) will be liable to be forfeited.
Dated this [ ] day of [ ], 20[ ]
------------------------------------------------
[Signature of Secretary] By Order of the Board
7.2 If the requirements of such notice are not complied with, any such
share may at any time thereafter before the payment of such call and
the interest due in respect thereof be forfeited by a resolution of
the Board to that effect, and such share shall thereupon become the
property of the Company and may be disposed of as the Board shall
determine.
7.3 A Member whose share or shares have been forfeited as aforesaid
shall, notwithstanding such forfeiture, be liable to pay to the
Company all calls owing on such share or shares at the time of the
forfeiture and all interest due thereon.
7.4 The Board may accept the surrender of any shares which it is in a
position to forfeit on such terms and conditions as may be agreed.
Subject to those terms and conditions, a surrendered share shall be
treated as if it had been forfeited.
8. SHARE CERTIFICATES
8.1 Every Member shall be entitled to a certificate under the seal of
the Company (or a facsimile thereof) specifying the number and,
where appropriate, the class of shares held by such Member and
whether the same are fully paid up and, if not, specifying the
amount paid on such shares. The Board may by resolution determine,
either generally or in a particular case, that any or all signatures
on certificates may be printed thereon or affixed by mechanical
means.
8.2 The Company shall be under no obligation to complete and deliver a
share certificate unless specifically called upon to do so by the
person to whom the shares have been allotted.
ENSTAR GROUP LIMITED Page 14
8.3 If any share certificate shall be proved to the satisfaction of the
Board to have been worn out, lost, mislaid, or destroyed the Board
may cause a new certificate to be issued and request an indemnity
for the lost certificate if it sees fit.
9. FRACTIONAL SHARES
The Company may issue its shares in fractional denominations and deal with
such fractions to the same extent as its whole shares and shares in
fractional denominations shall have in proportion to the respective
fractions represented thereby all of the rights of whole shares including
(but without limiting the generality of the foregoing) the right to vote,
to receive dividends and distributions and to participate in a winding-up.
REGISTRATION OF SHARES
10. REGISTER OF MEMBERS
10.1 The Board shall cause to be kept in one or more books a Register of
Members and shall enter therein the particulars required by the Act.
10.2 The Register of Members shall be open to inspection at the
registered office of the Company on every business day, subject to
such reasonable restrictions as the Board may impose, so that not
less than two hours in each business day be allowed for inspection.
The Register of Members may, after notice has been given in
accordance with the Act, be closed for any time or times not
exceeding in the whole thirty days in each year.
11. REGISTERED HOLDER ABSOLUTE OWNER
The Company shall be entitled to treat the registered holder of any share
as the absolute owner thereof and accordingly shall not be bound to
recognise any equitable claim or other claim to, or interest in, such
share on the part of any other person.
12. TRANSFER OF REGISTERED SHARES
12.1 An instrument of transfer shall be in writing in the form of the
following, or as near thereto as circumstances admit, or in such
other form as the Board may accept:
ENSTAR GROUP LIMITED Page 15
Transfer of a Share or Shares
Enstar Group Limited (the "Company")
FOR VALUE RECEIVED....................[amount], I, [name of
transferor] hereby sell, assign and transfer unto [transferee] of
[address], [number] of shares of the Company.
DATED this [ ] day of [ ], 20[ ]
Signed by: In the presence of:
-------------------------- --------------------------
Transferor Witness
Transferee Witness
-------------------------- --------------------------
12.2 Such instrument of transfer shall be signed by or on behalf of the
transferor and transferee, provided that, in the case of a fully
paid share, the Board may accept the instrument signed by or on
behalf of the transferor alone. The transferor shall be deemed to
remain the holder of such share until the same has been transferred
to the transferee in the Register of Members.
12.3 The Board may refuse to recognise any instrument of transfer unless
it is accompanied by the certificate in respect of the shares to
which it relates and by such other evidence as the Board may
reasonably require to show the right of the transferor to make the
transfer.
12.4 The joint holders of any share may transfer such share to one or
more of such joint holders, and the surviving holder or holders of
any share previously held by them jointly with a deceased Member may
transfer any such share to the executors or administrators of such
deceased Member.
12.5 The Board may in its absolute discretion and without assigning any
reason therefor refuse to register the transfer of a share which is
not fully paid. The Board shall refuse to register a transfer unless
all applicable consents, authorisations and permissions of any
governmental body or agency in Bermuda have been obtained. If the
Board refuses to register a transfer of any share the Secretary
shall, within three months after the date on which the transfer was
lodged with the Company, send to the transferor and transferee
notice of the refusal.
12.6 Shares may be transferred without a written instrument if
transferred by an appointed agent or otherwise in accordance with
the Act.
ENSTAR GROUP LIMITED Page 16
12.7 (a) The Directors may decline to register any transfer of shares
if it appears to the Directors, in their reasonable
discretion, after taking into account, among other things, the
limitation on voting rights contained in these Bye-laws, that
any non-de minimis adverse tax, regulatory or legal
consequence to the Company, any subsidiary of the Company, or
any other holder of shares or its Affiliates would result from
such transfer (including if such consequence arises as a
result of any such U.S. Person owning Controlled Shares that
constitute 9.5% or more of the value of the Company or the
voting shares of the Company (but subject to the provisions of
Bye-laws 4.7 through 4.10)). The Directors shall have the
authority to reasonably request from any holder of shares, and
such holder of shares shall provide, such information as the
Directors may reasonably request for the purpose of
determining whether any transfer should be permitted.
(b) Subject to any applicable requirements of the Nasdaq National
Market or other quotation system or exchange, the Directors
(a) may decline to register any transfer of shares, unless (i)
a written opinion from counsel reasonably acceptable to the
Company shall have been obtained to the effect that
registration of such shares under the U.S. Securities Act of
1933, as amended, is not required or (ii) an effective
registration statement under the U.S. Securities Act of 1933,
as amended, is in place covering the shares to be transferred
and (b) shall decline to register any transfer of shares if
the transferee shall not have been approved by applicable
governmental authorities if such approval is required in
respect of such transfer.
(c) If the Board refuses to register a transfer of any share the
Secretary shall, within ten business days after the date on
which the transfer was lodged with the Company, send to the
transferor and transferee notice detailing the nature of the
refusal.
13. TRANSMISSION OF REGISTERED SHARES
13.1 In the case of the death of a Member, the survivor or survivors
where the deceased Member was a joint holder, and the legal personal
representatives of the deceased Member where the deceased Member was
a sole holder, shall be the only persons recognised by the Company
as having any title to the deceased Member's interest in the shares.
Nothing herein contained shall release the estate of a deceased
joint holder from any liability in respect of any share which had
been jointly
ENSTAR GROUP LIMITED Page 17
held by such deceased Member with other persons. Subject to the
provisions of the Act, for the purpose of this Bye-law, legal
personal representative means the executor or administrator of a
deceased Member or such other person as the Board may, in its
reasonable discretion, decide as being properly authorised to deal
with the shares of a deceased Member.
13.2 Any person becoming entitled to a share in consequence of the death
or bankruptcy of any Member may be registered as a Member upon such
evidence as the Board may deem sufficient or may elect to nominate
some person to be registered as a transferee of such share, and in
such case the person becoming entitled shall execute in favour of
such nominee an instrument of transfer in writing in the form, or as
near thereto as circumstances admit, of the following:
Transfer by a Person Becoming Entitled on Death/Bankruptcy of a Member
Enstar Group Limited (the "Company")
I/We, having become entitled in consequence of the
[death/bankruptcy] of [name and address of deceased/bankrupt Member]
to [number] share(s) standing in the Register of Members of the
Company in the name of the said [name of deceased/bankrupt Member]
instead of being registered myself/ourselves, elect to have [name of
transferee] (the "Transferee") registered as a transferee of such
share(s) and I/we do hereby accordingly transfer the said share(s)
to the Transferee to hold the same unto the Transferee, his or her
executors, administrators and assigns, subject to the conditions on
which the same were held at the time of the execution hereof; and
the Transferee does hereby agree to take the said share(s) subject
to the same conditions.
DATED this [ ] day of [ ], 20[ ]
Signed by: In the presence of:
---------------------------------- -------------------------
Transferor Witness
---------------------------------- -------------------------
Transferee Witness
13.3 On the presentation of the foregoing materials to the Board,
accompanied by such evidence as the Board may require to prove the
title of the transferor, the transferee shall be registered as a
Member. Notwithstanding the foregoing, the Board shall, in any case,
have the same right to
ENSTAR GROUP LIMITED Page 18
decline or suspend registration as it would have had in the case of
a transfer of the share by that Member before such Member's death or
bankruptcy, as the case may be.
13.4 Where two or more persons are registered as joint holders of a share
or shares, then in the event of the death of any joint holder or
holders the remaining joint holder or holders shall be absolutely
entitled to the said share or shares and the Company shall recognise
no claim in respect of the estate of any joint holder except in the
case of the last survivor of such joint holders.
13.5 If the Directors in their reasonable discretion determine that share
ownership by any person may result in a non-de minimis adverse tax,
legal or regulatory consequence to the Company, any subsidiary of
the Company, or any other holder of shares or its Affiliates
(including if such consequence arises as a result of any such U.S.
Person owning Controlled Shares that constitute 9.5% or more of the
value of the Company or the voting shares of the Company (but
subject to the provisions of Bye-laws 4.7 through 4.10)), the
Company will have the option but not the obligation to repurchase or
assign to a third party the right to purchase the minimum number of
shares held by such person which is necessary to eliminate such
non-de minimis adverse tax, legal or regulatory consequence at a
price determined in the good faith discretion of the Directors to
represent such shares' fair market value; provided, that (a) if the
shares are not traded on a quotation system or securities exchange
in or outside the United States, the fair market value per share
shall be determined by the Directors without a minority discount and
without a liquidity discount or (b) if the shares are traded on a
quotation system or securities exchange, the fair market value per
share shall be determined by the Directors based on the average of
the last sales price per share or if there is none, the average of
the bid and asked price per share, without a minority discount and
without a liquidity discount, in each case for the eight business
days prior to the repurchase date. If a Member disagrees with any
price so determined by the Board, the fair market value per share
will be determined by an independent appraiser retained by the
Company at its expense and reasonably acceptable to such Member.
ALTERATION OF SHARE CAPITAL
14. POWER TO ALTER CAPITAL
ENSTAR GROUP LIMITED Page 19
14.1 The Company may if authorised by resolution of the Members increase,
divide, consolidate, subdivide, change the currency denomination of,
diminish or otherwise alter or reduce its share capital in any
manner permitted by the Act.
14.2 Where, on any alteration or reduction of share capital, fractions of
shares or some other difficulty would arise, the Board may deal with
or resolve the same in such manner as it thinks fit.
15. VARIATION OF RIGHTS ATTACHING TO SHARES
If, at any time, the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the
terms of issue of the shares of that class) may, whether or not the
Company is being wound-up, be varied with the consent in writing of the
holders of three-fourths of the issued shares of that class or with the
sanction of a resolution passed by a majority of the votes cast at a
separate general meeting of the holders of the shares of the class at
which meeting the necessary quorum shall be two persons at least holding
or representing by proxy one-third of the issued shares of the class. The
rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided
by the terms of issue of the shares of that class, be deemed to be varied
by the creation or issue of further shares ranking pari passu therewith.
DIVIDENDS AND CAPITALISATION
16. DIVIDENDS
16.1 The Board may, subject to these Bye-laws and in accordance with the
Act, declare a dividend to be paid to the Members, in proportion to
the number of shares held by them, and such dividend may be paid in
cash or wholly or partly in specie in which case the Board may fix
the value for distribution in specie of any assets. No unpaid
dividend shall bear interest as against the Company.
16.2 The Board may fix any date as the record date for determining the
Members entitled to receive any dividend.
16.3 The Company may pay dividends in proportion to the amount paid up on
each share where a larger amount is paid up on some shares than on
others.
ENSTAR GROUP LIMITED Page 20
16.4 The Board may declare and make such other distributions (in cash or
in specie) to the Members as may be lawfully made out of the assets
of the Company. No unpaid distribution shall bear interest as
against the Company.
17. POWER TO SET ASIDE PROFITS
The Board may, before declaring a dividend, set aside out of the surplus
or profits of the Company, such sum as it thinks proper as a reserve to be
used to meet contingencies or for equalising dividends or for any other
purpose.
18. METHOD OF PAYMENT
18.1 Any dividend or other monies payable in respect of a share may be
paid by cheque or warrant sent through the post directed to the
address of the Member in the Register of Members (in the case of
joint Members, the senior joint holder, seniority being determined
by the order in which the names stand in the Register of Members),
or by direct transfer to such bank account as such Member may
direct. Every such cheque shall be made payable to the order of the
person to whom it is sent or to such persons as the Member may
direct, and payment of the cheque or warrant shall be a good
discharge to the Company. Every such cheque or warrant shall be sent
at the risk of the person entitled to the money represented thereby.
If two or more persons are registered as joint holders of any shares
any one can give an effectual receipt for any dividend paid in
respect of such shares.
18.2 The Board may deduct from the dividends or distributions payable to
any Member all monies due from such Member to the Company on account
of calls or otherwise.
18.3 Any dividend and or other monies payable in respect of a share which
has remained unclaimed for 7 years, or such other period of time as
may be required pursuant to the listing standard of the Nasdaq
National Market or such other quotation system or exchange
applicable to the Company's shares from the date when it became due
for payment shall, if the Board so resolves, be forfeited and cease
to remain owing by the Company. The payment of any unclaimed
dividend or other moneys payable in respect of a share may (but need
not) be paid by the Company into an account separate from the
Company's own account. Such payment shall not constitute the Company
a trustee in respect thereof.
ENSTAR GROUP LIMITED Page 21
18.4 The Company shall be entitled to cease sending dividend cheques and
warrants by post or otherwise to a Member if those instruments have
been returned undelivered to, or left uncashed by, that Member on at
least two consecutive occasions, or, following one such occasion,
reasonable enquiries have failed to establish the Member's new
address. The entitlement conferred on the Company by this Bye-law
18.4 in respect of any Member shall cease if the Member claims a
dividend or cashes a dividend cheque or warrant.
19. CAPITALISATION
19.1 The Board may resolve to capitalise any sum for the time being
standing to the credit of any of the Company's share premium or
other reserve accounts or to the credit of the profit and loss
account or otherwise available for distribution by applying such sum
in paying up unissued shares to be allotted as fully paid bonus
shares pro-rata (except in connection with the conversion of shares
of one class to shares of another class) to the Members.
19.2 The Board may resolve to capitalise any sum for the time being
standing to the credit of a reserve account or sums otherwise
available for dividend or distribution by applying such amounts in
paying up in full partly paid or nil paid shares of those Members
who would have been entitled to such sums if they were distributed
by way of dividend or distribution.
MEETINGS OF MEMBERS
20. ANNUAL GENERAL MEETINGS
The annual general meeting of the Company shall be held in each year
(other than the year of incorporation) at such time and place as the
President or the Chairman or the Board shall appoint.
21. SPECIAL GENERAL MEETINGS
The President or the Chairman or the Board may convene a special general
meeting of the Company whenever in their judgment such a meeting is
necessary.
ENSTAR GROUP LIMITED Page 22
22. REQUISITIONED GENERAL MEETINGS
The Board shall, on the requisition of Members holding at the date of the
deposit of the requisition not less than one-tenth of such of the paid up
share capital of the Company as at the date of the deposit carries the
right to vote at general meetings of the Company, forthwith proceed to
convene a special general meeting of the Company and the provisions of the
Act shall apply.
23. NOTICE
23.1 At least ten days' notice of an annual general meeting shall be
given to each Member entitled to attend and vote thereat, stating
the date, place and time at which the meeting is to be held, that
the election of Directors will take place thereat, and as far as
practicable, the other business to be conducted at the meeting.
23.2 At least ten days' notice of a special general meeting shall be
given to each Member entitled to attend and vote thereat, stating
the date, time, place and the general nature of the business to be
considered at the meeting.
23.3 The Board may fix any date as the record date for determining the
Members entitled to receive notice of and to vote at any general
meeting of the Company.
23.4 A general meeting of the Company shall, notwithstanding that it is
called on shorter notice than that specified in these Bye-laws, be
deemed to have been properly called if it is so agreed by (i) all
the Members entitled to attend and vote thereat in the case of an
annual general meeting; and (ii) by a majority in number of the
Members having the right to attend and vote at the meeting, being a
majority together holding not less than 95% in nominal value of the
shares giving a right to attend and vote thereat in the case of a
special general meeting.
23.5 The accidental omission to give notice of a general meeting to, or
the non-receipt of a notice of a general meeting by, any person
entitled to receive notice shall not invalidate the proceedings at
that meeting.
ENSTAR GROUP LIMITED Page 23
24. GIVING NOTICE
24.1 A notice may be given by the Company to any Member either by
delivering it to such Member in person or by sending it to such
Member's address in the Register of Members or to such other address
given for the purpose. For the purposes of this Bye-law, a notice
may be sent by letter mail, courier service, cable, telex,
telecopier, facsimile, electronic mail or other mode of representing
words in a legible form.
24.2 Any notice required to be given to a Member shall, with respect to
any shares held jointly by two or more persons, be given to
whichever of such persons is named first in the Register of Members
and notice so given shall be sufficient notice to all the holders of
such shares.
24.3 Save as provided by Bye-law 24.4, any notice shall be deemed to have
been served at the time when the same would be delivered in the
ordinary course of transmission and, in proving such service, it
shall be sufficient to prove that the notice was properly addressed
and prepaid, if posted, at the time when it was posted, delivered to
the courier or to the cable company or transmitted by telex,
facsimile, electronic mail, or such other method as the case may be.
24.4 Mail notice shall be deemed to have been served seven days after the
date on which it is deposited, with postage prepaid, in the mail of
any member state of the European Union, the United States, or
Bermuda.
24.5 The Company shall be under no obligation to send a notice or other
document to the address shown for any particular Member in the
Register of Members if the Board considers that the legal or
practical problems under the laws of, or the requirements of any
regulatory body or stock exchange in, the territory in which that
address is situated are such that it is necessary or expedient not
to send the notice or document concerned to such Member at such
address and may require a Member with such an address to provide the
Company with an alternative acceptable address for delivery of
notices by the Company.
25. POSTPONEMENT OR CANCELLATION OF GENERAL MEETING
The Chairman or the President may, and the Secretary on instruction from
the Chairman or the President shall, postpone or cancel any general
meeting called in accordance with the provisions of these Bye-laws
ENSTAR GROUP LIMITED Page 24
(other than a meeting requisitioned under these Bye-laws) provided that
notice of postponement or cancellation is given to each Member before the
time for such meeting. Fresh notice of the date, time and place for the
postponed or cancelled meeting shall be given to the Members in accordance
with the provisions of these Bye-laws.
26. ATTENDANCE AND SECURITY AT GENERAL MEETINGS
26.1 Members may participate in any general meeting by means of such
telephone, electronic or other communication facilities as permit
all persons participating in the meeting to communicate with each
other simultaneously and instantaneously, and participation in such
a meeting shall constitute presence in person at such meeting.
26.2 The Board may, and at any general meeting, the chairman of such
meeting may, make any arrangement and impose any requirement or
restriction it or he considers appropriate to ensure the security of
a general meeting including, without limitation, requirements for
evidence of identity to be produced by those attending the meeting,
the searching of their personal property and the restriction of
items that may be taken into the meeting place. The Board is, and at
any general meeting, the chairman of such meeting is, entitled to
refuse entry to a person who refuses to comply with any such
arrangements, requirements or restrictions.
27. QUORUM AT GENERAL MEETINGS
27.1 At any general meeting of the Company two or more persons present in
person throughout the meeting and representing in person or by proxy
in excess of 50% of the total issued voting shares in the Company
shall form a quorum for the transaction of business.
27.2 If within half an hour from the time appointed for the meeting a
quorum is not present, then, in the case of a meeting convened on a
requisition, the meeting shall be deemed cancelled and, in any other
case, the meeting shall stand adjourned to the same day one week
later, at the same time and place or to such other day, time or
place as the Secretary may determine. If the meeting shall be
adjourned to the same day one week later or the Secretary shall
determine that the meeting is adjourned to a specific date, time and
place, it is not necessary to give notice of the adjourned meeting
other than by announcement at the meeting being adjourned. If the
Secretary shall determine that the meeting be adjourned to an
unspecified date, time or place, fresh notice
ENSTAR GROUP LIMITED Page 25
of the resumption of the meeting shall be given to each Member entitled to
attend and vote thereat in accordance with the provisions of these
Bye-laws.
28. CHAIRMAN TO PRESIDE
Unless otherwise agreed by a majority of those attending and entitled to
vote thereat, the Chairman, if there be one, and if not the President,
shall act as chairman at all meetings of the Members at which such person
is present. In their absence, the Deputy Chairman or Vice President, if
present, shall act as chairman and in the absence of all of them a
chairman shall be appointed or elected by those present at the meeting and
entitled to vote.
29. VOTING ON RESOLUTIONS
29.1 Subject to the provisions of the Act and these Bye-laws, any
question proposed for the consideration of the Members at any
general meeting shall be decided by the affirmative votes of a
majority of the votes cast in accordance with the provisions of
these Bye-laws and in the case of an equality of votes the
resolution shall fail.
29.2 No Member shall be entitled to vote at a general meeting unless such
Member has paid all the calls on all shares held by such Member.
29.3 At any general meeting a resolution put to the vote of the meeting
shall, in the first instance, be voted upon by a show of hands and,
subject to any rights or restrictions for the time being lawfully
attached to any class of shares and subject to the provisions of
these Bye-laws, every Member present in person at such meeting and
every person holding a valid proxy at such meeting shall have one
vote for each share entitled to vote at the meeting of which such
person is the holder or for which such person holds a proxy and
shall cast such vote by raising his or her hand.
29.4 At any general meeting if an amendment shall be proposed to any
resolution under consideration and the chairman of the meeting shall
rule on whether the proposed amendment is out of order, the
proceedings on the substantive resolution shall not be invalidated
by any error in such ruling.
29.5 At any general meeting a declaration by the chairman of the meeting
that a question proposed for consideration has, on a show of hands,
been carried, or carried unanimously, or by a particular
ENSTAR GROUP LIMITED Page 26
majority, or lost, and an entry to that effect in a book containing the
minutes of the proceedings of the Company shall, subject to the provisions
of these Bye-laws, be conclusive evidence of that fact.
30. POWER TO DEMAND A VOTE ON A POLL
30.1 Notwithstanding the foregoing, a poll may be demanded by any of the
following persons:
(a) the chairman of such meeting; or
(b) at least three Members present in person or represented by
proxy; or
(c) any Member or Members present in person or represented by
proxy and holding between them not less than one-tenth of the
total voting rights of all the Members having the right to
vote at such meeting; or
(d) any Member or Members present in person or represented by
proxy holding shares in the Company conferring the right to
vote at such meeting, being shares on which an aggregate sum
has been paid up equal to not less than one-tenth of the total
sum paid up on all such shares conferring such right.
30.2 Where a poll is demanded, subject to any rights or restrictions for
the time being lawfully attached to any class of shares and subject
to the provisions of these Bye-laws, every Member present in person
at such meeting and every person holding a valid proxy at such
meeting shall have one vote for each share entitled to vote at the
meeting of which such person is the holder or for which such person
holds a proxy and such vote shall be counted by ballot as described
herein, or in the case of a general meeting at which one or more
Members are present by telephone, in such manner as the chairman of
the meeting may direct and the result of such poll shall be deemed
to be the resolution of the meeting at which the poll was demanded
and shall replace any previous resolution upon the same matter which
has been the subject of a show of hands. A person entitled to more
than one vote need not use all his votes or cast all the votes he
uses in the same way.
30.3 A poll demanded for the purpose of electing a chairman of the
meeting or on a question of adjournment shall be taken forthwith and
a poll demanded on any other question shall be taken in
ENSTAR GROUP LIMITED Page 27
such manner and at such time and place at such meeting as the
chairman (or acting chairman) of the meeting may direct and any
business other than that upon which a poll has been demanded may be
proceeded with pending the taking of the poll.
30.4 Where a vote is taken by poll, each person present and entitled to
vote shall be furnished with a ballot paper on which such person
shall record his vote in such manner as shall be determined at the
meeting having regard to the nature of the question on which the
vote is taken, and each ballot paper shall be signed or initialed or
otherwise marked so as to identify the voter and the registered
holder in the case of a proxy. At the conclusion of the poll, the
ballot papers shall be examined and counted by a committee of not
less than two Members or proxy holders appointed by the chairman for
the purpose and the result of the poll shall be declared by the
chairman.
31. VOTING BY JOINT HOLDERS OF SHARES
In the case of joint holders, the vote of the senior who tenders a vote
(whether in person or by proxy) shall be accepted to the exclusion of the
votes of the other joint holders, and for this purpose seniority shall be
determined by the order in which the names stand in the Register of
Members.
32. INSTRUMENT OF PROXY
32.1 A Member may appoint a proxy by (a) an instrument appointing a proxy
in writing in substantially the following form or such other form as
the Board may determine from time to time:
Proxy
Enstar Group Limited (the "Company")
I/We, [insert names here], being a Member of the Company with
[number] shares, HEREBY APPOINT [name] of [address] or failing him,
[name] of [address] to be my/our proxy to vote for me/us at the
meeting of the Members to be held on the [ ] day of [ ], 200[ ] and
at any adjournment thereof. (Any restrictions on voting to be
inserted here.)
Signed this [ ] day of [ ], 20[ ]
---------------------------------
Member(s)
ENSTAR GROUP LIMITED Page 28
or (b) such telephonic, electronic or other means as may be approved
by the Board from time to time.
32.2 The appointment of a proxy must be received by the Company at the
registered office or at such other place or in such manner as is
specified in the notice convening the meeting or in any instrument
of proxy sent out by the Company in relation to the meeting at which
the person named in the appointment proposes to vote, and an
appointment of proxy which is not received in the manner so
permitted shall be invalid.
32.3 A Member who is the holder of two or more shares may appoint more
than one proxy to represent him and vote on his behalf.
32.4 The decision of the chairman of any general meeting as to the
validity of any appointment of a proxy shall be final.
33. REPRESENTATION OF CORPORATE MEMBER
33.1 A corporation which is a Member may, by written instrument,
authorise such person or persons as it thinks fit to act as its
representative at any meeting of the Members and any person so
authorised shall be entitled to exercise the same powers on behalf
of the corporation which such person represents as that corporation
could exercise if it were an individual Member, and that Member
shall be deemed to be present in person at any such meeting attended
by its authorised representative or representatives.
33.2 Notwithstanding the foregoing, the chairman of the meeting may
accept such assurances as he thinks fit as to the right of any
person to attend and vote at general meetings on behalf of a
corporation which is a Member.
34. ADJOURNMENT OF GENERAL MEETING
34.1 The chairman of any general meeting at which a quorum is present may
with the consent of Members holding a majority of the voting rights
of those Members present in person or by proxy (and shall if so
directed by Members holding a majority of the voting rights of those
Members present in person or by proxy), adjourn the meeting.
ENSTAR GROUP LIMITED Page 29
34.2 In addition, the chairman may adjourn the meeting to another time
and place without such consent or direction if it appears to him
that:
(a) it is likely to be impracticable to hold or continue that
meeting because of the number of Members wishing to attend who
are not present; or
(b) the unruly conduct of persons attending the meeting prevents,
or is likely to prevent, the orderly continuation of the
business of the meeting; or
(c) an adjournment is otherwise necessary so that the business of
the meeting may be properly conducted.
34.3 Unless the meeting is adjourned to a specific date, place and time
announced at the meeting being adjourned, fresh notice of the date,
place and time for the resumption of the adjourned meeting shall be
given to each Member entitled to attend and vote thereat in
accordance with the provisions of these Bye-laws.
35. WRITTEN RESOLUTIONS
35.1 Subject to the following, anything which may be done by resolution
of the Company in general meeting or by resolution of a meeting of
any class of the Members may, without a meeting and without any
previous notice being required, be done by resolution in writing
signed by, or in the case of a Member that is a corporation whether
or not a company within the meaning of the Act, on behalf of, all
the Members who at the date of the resolution would be entitled to
attend the meeting and vote on the resolution.
35.2 A resolution in writing may be signed by, or in the case of a Member
that is a corporation whether or not a company within the meaning of
the Act, on behalf of, all the Members, or all the Members of the
relevant class thereof, in as many counterparts as may be necessary.
35.3 A resolution in writing made in accordance with this Bye-law is as
valid as if it had been passed by the Company in general meeting or
by a meeting of the relevant class of Members, as the case may be,
and any reference in any Bye-law to a meeting at which a resolution
is passed or to Members voting in favour of a resolution shall be
construed accordingly.
ENSTAR GROUP LIMITED Page 30
35.4 A resolution in writing made in accordance with this Bye-law shall
constitute minutes for the purposes of the Act.
35.5 This Bye-law shall not apply to:
(a) a resolution passed to remove an auditor from office before
the expiration of his term of office; or
(b) a resolution passed for the purpose of removing a Director
before the expiration of his term of office.
35.6 For the purposes of this Bye-law, the date of the resolution is the
date when the resolution is signed by, or in the case of a Member
that is a corporation whether or not a company within the meaning of
the Act, on behalf of, the last Member to sign and any reference in
any Bye-law to the date of passing of a resolution is, in relation
to a resolution made in accordance with this Bye-law, a reference to
such date.
36. DIRECTORS ATTENDANCE AT GENERAL MEETINGS
The Directors of the Company shall be entitled to receive notice of,
attend and be heard at any general meeting.
DIRECTORS AND OFFICERS
37. ELECTION OF DIRECTORS
37.1 The Board shall consist of such number of Directors being not less
than five Directors and not more than such maximum number of
Directors, not exceeding fifteen Directors, as the Board may from
time to time determine. A majority of the Board shall consist of
Directors who are not residents of the United Kingdom or
Switzerland. Subject to the Companies Act and these Bye-laws, the
Directors shall be elected or appointed by the Company by resolution
and shall serve for such term as the Company by resolution may
determine, or in the absence of such determination, until the
termination of the next annual general meeting following their
appointment. All Directors, upon election or appointment (except
upon re-election at an annual general meeting) must provide written
acceptance of their appointment, in such form as the
ENSTAR GROUP LIMITED Page 31
Board may think fit, by notice in writing to the Company's
registered office within thirty (30) days of their appointment.
37.2 The Board may propose any person for election as a Director and may
from time to time establish procedures to receive nominations from a
Member of persons for election as Directors. Only persons who are
proposed or nominated in accordance with this Bye-law shall be
eligible for election as Directors.
37.3 Where the number of persons validly proposed for re-election or
election as a Director is greater than the number of Directors to be
elected, the persons receiving the most votes (up to the number of
Directors to be elected) shall be elected as Directors, and an
absolute majority of the votes cast shall not be a prerequisite to
the election of such Directors.
37.4 At any general meeting the Board may fill any vacancy left unfilled
at such general meeting.
38. CLASSES OF DIRECTORS
The Directors shall be divided into three classes designated Class I,
Class II and Class III. Each class of Directors shall consist, as nearly
as possible, of one third of the total number of Directors constituting
the entire Board.
39. TERM OF OFFICE OF DIRECTORS
Each Director shall serve for a term ending on the date of the third
annual general meeting of shareholders next following the annual general
meeting at which such Director was elected, provided, that (i) Directors
initially designated by the Board as Class I Directors shall serve for an
initial term ending on the date of the first annual general meeting of
Members next following the effectiveness of their designation as Class I
Directors, (ii) Directors initially designated by the Board as Class II
Directors shall serve for an initial term ending on the date of the second
annual general meeting of Members next following the effectiveness of
their designation Class II Directors, and (iii) Directors initially
designated by the Board as Class III Directors shall serve for an initial
term ending on the date of the third annual general meeting of Members
next following the effectiveness of their designation as Class III
Directors. If the number of Directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of
Directors in each class as nearly equal as possible,
ENSTAR GROUP LIMITED Page 32
and any Director of any class elected to fill a vacancy shall hold office
for a term that shall coincide with the remaining term of the other
Directors of that class, but in no case shall a decrease in the number of
Directors shorten the term of any Director then in office. A Director
shall hold office until the annual general meeting for the year in which
his term expires, subject to his office being vacated pursuant to Bye-law
42.
40. ALTERNATE DIRECTORS
There shall be no alternate Directors, and no Member or Director shall
have a right to designate any person to attend meetings of the Board or
Board committees as a non-voting observer, except with the concurrence of
a majority of the Board or committee members in attendance at such
meeting.
41. REMOVAL OF DIRECTORS
41.1 Subject to any provision to the contrary in these Bye-laws, the
Members entitled to vote for the election of Directors may, at any
special general meeting convened and held in accordance with these
Bye-laws, remove a Director, only with cause, by the affirmative
vote of Members holding at least a majority of the total combined
voting power of all issued and outstanding Common Shares after
giving effect to any reduction in voting power acquired under
Bye-laws 4.7 and 4.8, provided that the notice of any such meeting
convened for the purpose of removing a Director shall contain a
statement of the intention so to do and be served on such Director
not less than 14 days before the meeting and at such meeting the
Director shall be entitled to be heard on the motion for such
Director's removal.
41.2 If a Director is removed from the Board under the provisions of this
Bye-law, the Members may fill the vacancy at the meeting at which
such Director is removed. In the absence of such election or
appointment, the Board may fill the vacancy.
41.3 For the purpose of Bye-law 41.1, "cause" shall mean a conviction for
a criminal offence involving dishonesty or engaging in conduct which
brings the Director or the Company into disrepute and which results
in material financial detriment to the Company.
ENSTAR GROUP LIMITED Page 33
42. VACANCY IN THE OFFICE OF DIRECTOR
42.1 The office of Director shall be vacated if the Director:
(a) is removed from office pursuant to these Bye-laws or is
prohibited from being a Director by law;
(b) is or becomes of unsound mind or dies; or
(c) resigns his office by notice in writing to the Company.
42.2 Subject to Bye-law 41.2, the Board shall have the power to appoint
any person as a Director to fill a vacancy on the Board occurring as
a result of the death, disability, disqualification or resignation
of any Director or as a result of an increase in the size of the
Board as permitted by these Bye-laws.
43. REMUNERATION OF DIRECTORS
The remuneration (if any) of the Directors shall be deemed to accrue from
day to day and shall be determined by the Board or a committee thereof.
The Directors may also be paid all travel, hotel and other expenses
properly incurred by them in attending and returning from the meetings of
the Board, any committee appointed by the Board, general meetings of the
Company, or in connection with the business of the Company or their duties
as Directors generally.
44. DEFECT IN APPOINTMENT OF DIRECTOR
All acts done in good faith by the Board or by a committee of the Board or
by any person acting as a Director shall, notwithstanding that it be
afterwards discovered that there was some defect in the appointment of any
Director or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed
and was qualified to be a Director.
45. DIRECTORS TO MANAGE BUSINESS
The business of the Company shall be managed and conducted by the Board.
In managing the business of the Company, the Board may exercise all such
powers of the Company as are not, by statute or by
ENSTAR GROUP LIMITED Page 34
these Bye-laws, required to be exercised by the Company in general meeting
subject, nevertheless, to these Bye-laws and the provisions of any
statute.
46. POWERS OF THE BOARD OF DIRECTORS
The Board may:
(a) appoint, suspend, or remove any manager, secretary, clerk,
agent or employee of the Company and may fix their
remuneration and determine their duties;
(b) exercise all the powers of the Company to borrow money and to
mortgage or charge its undertaking, property and uncalled
capital, or any part thereof, and may issue debentures,
debenture stock and other securities whether outright or as
security for any debt, liability or obligation of the Company
or any third party;
(c) appoint one or more Directors to the office of managing
director or chief executive officer of the Company, who shall,
subject to the control of the Board, supervise and administer
all of the general business and affairs of the Company;
(d) appoint a person to act as manager of the Company's day-to-day
business and may entrust to and confer upon such manager such
powers and duties as it deems appropriate for the transaction
or conduct of such business;
(e) by power of attorney, appoint any company, firm, person or
body of persons, whether nominated directly or indirectly by
the Board, to be an attorney of the Company for such purposes
and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Board) and for
such period and subject to such conditions as it may think fit
and any such power of attorney may contain such provisions for
the protection and convenience of persons dealing with any
such attorney as the Board may think fit and may also
authorise any such attorney to sub-delegate all or any of the
powers, authorities and discretions so vested in the attorney.
Such attorney may, if so authorised under the seal of the
Company, execute any deed or instrument under such attorney's
personal seal with the same effect as the affixation of the
seal of the Company;
ENSTAR GROUP LIMITED Page 35
(f) procure that the Company pays all expenses incurred in
promoting and incorporating the Company;
(g) delegate any of its powers (including the power to
sub-delegate) to a committee appointed by the Board which may
consist partly or entirely of non-Directors, provided that
every such committee shall conform to such directions as the
Board shall impose on them and provided further that the
meetings and proceedings of any such committee shall be
governed by the provisions of these Bye-laws regulating the
meetings and proceedings of the Board, so far as the same are
applicable and are not superseded by directions imposed by the
Board;
(h) delegate any of its powers (including the power to
sub-delegate) to any person on such terms and in such manner
as the Board may see fit;
(i) present any petition and make any application in connection
with the liquidation or reorganisation of the Company;
(j) in connection with the issue of any share, pay such commission
and brokerage as may be permitted by law; and
(k) authorise any company, firm, person or body of persons to act
on behalf of the Company for any specific purpose and in
connection therewith to execute any agreement, document or
instrument on behalf of the Company.
47. REGISTER OF DIRECTORS AND OFFICERS
The Board shall cause to be kept in one or more books at the registered
office of the Company a Register of Directors and Officers and shall enter
therein the particulars required by the Act.
48. OFFICERS
The Officers shall consist of a President and a Vice President or a
Chairman and a Deputy Chairman, a Secretary and such additional Officers
as the Board may determine all of whom shall be deemed to be Officers for
the purposes of these Bye-laws.
ENSTAR GROUP LIMITED Page 36
49. APPOINTMENT OF OFFICERS
The Board shall appoint a President and Vice President or a Chairman and
Deputy Chairman. The Secretary (and additional Officers, if any) shall be
appointed by the Board from time to time.
50. DUTIES OF OFFICERS
The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to
them by the Board from time to time.
51. REMUNERATION OF OFFICERS
The Officers shall receive such remuneration as the Board may determine.
52. CONFLICTS OF INTEREST
52.1 Any Director, or any Director's firm, partner or any company with
whom any Director is associated, may act in any capacity for, be
employed by or render services to the Company and such Director or
such Director's firm, partner or company shall be entitled to
remuneration as if such Director were not a Director. Nothing herein
contained shall authorise a Director or Director's firm, partner or
company to act as Auditor to the Company.
52.2 A Director who is directly or indirectly interested in a contract or
proposed contract or arrangement with the Company shall declare the
nature of such interest as required by the Act.
52.3 Following a declaration being made pursuant to this Bye-law, and
unless disqualified by the chairman of the relevant Board meeting, a
Director may vote in respect of any contract or proposed contract or
arrangement in which such Director is interested and may be counted
in the quorum for such meeting.
53. INDEMNIFICATION AND EXCULPATION OF DIRECTORS AND OFFICERS
53.1 The Directors, Secretary and other Officers (such term to include
any person appointed to any committee by the Board) for the time
being acting in relation to any of the affairs of the Company, any
subsidiary thereof and the liquidator or trustees (if any) for the
time being acting in relation to any of the affairs of the Company
or any subsidiary thereof and every one of them,
ENSTAR GROUP LIMITED Page 37
and their heirs, executors and administrators, shall be indemnified
and secured harmless out of the assets of the Company from and
against all actions, costs, charges, losses, damages and expenses
which they or any of them, their heirs, executors or administrators,
shall or may incur or sustain by or by reason of any act done,
concurred in or omitted in or about the execution of their duty, or
supposed duty, or in their respective offices or trusts, and none of
them shall be answerable for the acts, receipts, neglects or
defaults of the others of them or for joining in any receipts for
the sake of conformity, or for any bankers or other persons with
whom any moneys or effects belonging to the Company shall or may be
lodged or deposited for safe custody, or for insufficiency or
deficiency of any security upon which any moneys of or belonging to
the Company shall be placed out on or invested, or for any other
loss, misfortune or damage which may happen in the execution of
their respective offices or trusts, or in relation thereto, provided
that this indemnity shall not extend to any matter in which any of
such persons is found, in a final judgment or decree not subject to
appeal, to have committed fraud or dishonesty. Each Member agrees to
waive any claim or right of action such Member might have, whether
individually or by or in the right of the Company, against any
Director or Officer on account of any action taken by such Director
or Officer, or the failure of such Director or Officer to take any
action in the performance of his duties with or for the Company or
any subsidiary thereof, provided that such waiver shall not extend
to any matter in respect of any fraud or dishonesty which may attach
to such Director or Officer.
53.2 The Company may purchase and maintain insurance for the benefit of
any Director or Officer of the Company against any liability
incurred by him under the Act in his capacity as a Director or
Officer of the Company or indemnifying such Director or Officer in
respect of any loss arising or liability attaching to him by virtue
of any rule of law in respect of any negligence, default, breach of
duty or breach of trust of which the Director or Officer may be
guilty in relation to the Company or any subsidiary thereof.
MEETINGS OF THE BOARD OF DIRECTORS
54. BOARD MEETINGS
The Board may meet for the transaction of business, adjourn and otherwise
regulate its meetings as it sees fit, provided any such meetings shall
occur in Bermuda. Subject to the provisions of these Bye-
ENSTAR GROUP LIMITED Page 38
laws, a resolution put to the vote at a meeting of the Board shall be
carried by the affirmative votes of a majority of the votes cast and in
the case of an equality of votes the resolution shall fail.
55. NOTICE OF BOARD MEETINGS
The Chairman or a majority of the Directors may, and the Secretary on the
requisition of such Directors shall, at any time summon a meeting of the
Board upon at least five days' prior notice, stating the date, place and
time at which the meeting is to be held. Notice of a meeting of the Board
shall be deemed to be duly given to a Director if it is given to such
Director verbally (in person or by telephone) or otherwise communicated or
sent to such Director by post, cable, telex, telecopier, facsimile,
electronic mail or other mode of representing words in a legible form at
such Director's last known address or any other address given by such
Director to the Company for this purpose.
56. PARTICIPATION IN MEETINGS BY TELEPHONE
Directors may participate in any meeting of the Board by means of such
telephone, electronic or other communication facilities as permit all
persons participating in the meeting to communicate with each other
simultaneously and instantaneously, provided, that no Director may
participate by telephone, electronic or other communication facilities
from the United Kingdom, the United States or Switzerland, and
participation in such a meeting shall constitute presence in person at
such meeting.
57. QUORUM AT BOARD MEETINGS
The quorum necessary for the transaction of business at a meeting of the
Board shall be a majority of the Directors.
58. BOARD TO CONTINUE IN THE EVENT OF VACANCY
The Board may act notwithstanding any vacancy in its number but, if and so
long as its number is reduced below the number fixed by these Bye-laws as
the quorum necessary for the transaction of business at meetings of the
Board, the continuing Directors or Director may act for the purpose of (i)
summoning a general meeting of the Company; or (ii) preserving the assets
of the Company.
ENSTAR GROUP LIMITED Page 39
59. CHAIRMAN TO PRESIDE
Unless otherwise agreed by a majority of the Directors attending, the
Chairman, if there be one, and if not, the President shall act as chairman
at all meetings of the Board at which such person is present. In their
absence the Deputy Chairman or Vice President, if present, shall act as
chairman and in the absence of all of them a chairman shall be appointed
or elected by the Directors present at the meeting.
60. WRITTEN RESOLUTIONS
A resolution signed by all the Directors, which may be in counterparts,
shall be as valid as if it had been passed at a meeting of the Board duly
called and constituted, such resolution to be effective on the date on
which the last Director signs the resolution.
61. VALIDITY OF PRIOR ACTS OF THE BOARD
No regulation or alteration to these Bye-laws made by the Company in
general meeting shall invalidate any prior act of the Board which would
have been valid if that regulation or alteration had not been made.
CORPORATE RECORDS
62. MINUTES
The Board shall cause minutes to be duly entered in books provided for the
purpose:
(a) of all elections and appointments of Officers;
(b) of the names of the Directors present at each meeting of the
Board and of any committee appointed by the Board; and
(c) of all resolutions and proceedings of general meetings of the
Members, meetings of the Board, and meetings of committees
appointed by the Board.
63. PLACE WHERE CORPORATE RECORDS KEPT
Minutes prepared in accordance with the Act and these Bye-laws shall be
kept by the Secretary at the registered office of the Company.
ENSTAR GROUP LIMITED Page 40
64. FORM AND USE OF SEAL
64.1 The seal of the Company shall be in such form as the Board may
determine. The Board may adopt one or more duplicate seals for use
in or outside Bermuda.
64.2 The seal of the Company shall not be affixed to any instrument
except attested by the signature of a Director and the Secretary or
any two Directors, or any person appointed by the Board for that
purpose, provided that any Director, Officer or Resident
Representative, may affix the seal of the Company attested by such
Director, Officer or Resident Representative's signature to any
authenticated copies of these Bye-laws, the incorporating documents
of the Company, the minutes of any meetings or any other documents
required to be authenticated by such Director, Officer or Resident
Representative.
ACCOUNTS
65. BOOKS OF ACCOUNT
65.1 The Board shall cause to be kept proper records of account with
respect to all transactions of the Company and in particular with
respect to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt and expenditure
relates;
(b) all sales and purchases of goods by the Company; and
(c) all assets and liabilities of the Company.
65.2 Such records of account shall be kept at the registered office of
the Company, or subject to the provisions of the Act, at such other
place as the Board thinks fit and shall be available for inspection
by the Directors during normal business hours.
66. FINANCIAL YEAR END
The financial year end of the Company may be determined by resolution of
the Board and failing such resolution shall be 31st December in each year.
ENSTAR GROUP LIMITED Page 41
AUDITS
67. ANNUAL AUDIT
Subject to any rights to waive laying of accounts or appointment of an
Auditor pursuant to the Act, the accounts of the Company shall be audited
at least once in every year.
68. APPOINTMENT OF AUDITORS
68.1 Subject to the provisions of the Act, at the annual general meeting
or at a subsequent special general meeting in each year, the Members
shall appoint an independent representative of the Members to serve
as the registered independent accounting firm that acts as Auditor
of the accounts of the Company.
68.2 The Auditor may be a Member but no Director, Officer or employee of
the Company shall, during his continuance in office, be eligible to
act as an Auditor of the Company.
69. REMUNERATION OF AUDITORS
The remuneration of the Auditor shall be fixed by the Audit Committee of
the Board or in such manner as the Members may determine.
70. DUTIES OF AUDITORS
70.1 The financial statements provided for by these Bye-laws shall be
audited by the Auditor in accordance with generally accepted
auditing standards. The Auditor shall make a written report thereon
in accordance with generally accepted auditing standards.
70.2 The generally accepted auditing standards referred to in this
Bye-law may be those of a country or jurisdiction other than Bermuda
or such other generally accepted auditing standards as may be
provided for in the Act. If so, the financial statements and the
report of the Auditor shall identify the generally accepted auditing
standards used.
ENSTAR GROUP LIMITED Page 42
71. ACCESS TO RECORDS
The Auditor shall at all reasonable times have access to all books kept by
the Company and to all accounts and vouchers relating thereto, and the
Auditor may call on the Directors or Officers of the Company for any
information in their possession relating to the books or affairs of the
Company.
72. FINANCIAL STATEMENTS
Subject to any rights to waive laying of accounts pursuant to the
provisions of the Act, financial statements as required by the Act shall
be laid before the Members in general meeting.
73. DISTRIBUTION OF AUDITORS REPORT
The report of the Auditor shall be submitted to the Members in general
meeting.
74. VACANCY IN THE OFFICE OF AUDITOR
If the office of Auditor becomes vacant by the resignation or death or the
Auditor, or by the Auditor becoming incapable of acting by reason of
illness or other disability at a time when the Auditor's services are
required, the vacancy thereby created shall be filled in accordance with
the Act.
VOLUNTARY WINDING-UP AND DISSOLUTION
75. WINDING-UP
If the Company shall be wound up the liquidator may, with the sanction of
a resolution of the Members, divide amongst the Members in specie or in
kind the whole or any part of the assets of the Company (whether they
shall consist of property of the same kind or not) and may, for such
purpose, set such value as he deems fair upon any property to be divided
as aforesaid and may determine how such division shall be carried out as
between the Members or different classes of Members. The liquidator may,
with the like sanction, vest the whole or any part of such assets in the
trustees upon such trusts for the benefit of the Members as the liquidator
shall think fit, but so that no Member shall be compelled to accept any
shares or other securities or assets whereon there is any liability.
ENSTAR GROUP LIMITED Page 43
CHANGES TO CONSTITUTION
76. CHANGES TO BYE-LAWS
No Bye-law shall be rescinded, altered or amended and no new Bye-law shall
be made until the same has been approved by a resolution of the Board and
by a resolution of the Members.
77. DISCONTINUANCE
The Board may exercise all the powers of the Company to discontinue the
Company to a jurisdiction outside Bermuda pursuant to the Act.
CERTAIN SUBSIDIARIES
78. VOTING OF SUBSIDIARY SHARES
Notwithstanding any other provision of these Bye-laws to the contrary, if
the Company or a Subsidiary of the Company, as the case may be, is
required or entitled to vote at a general meeting of any direct or
indirect subsidiary of the Company, the Directors shall refer the subject
matter of any vote regarding the appointment, removal or remuneration of
directors to the Members of the Company on a poll (subject to Bye-laws 4.7
through 4.10) and seek authority from the Members for the Company's or the
Subsidiary's, as the case may be, corporate representative or proxy to
vote in favour of the resolution proposed by the subsidiary. The Directors
shall cause the Company's or the Subsidiary's, as the case may be,
corporate representative or proxy to vote the Company's or the
Subsidiary's shares in the subsidiary (with respect to a resolution
covered by the foregoing sentence) pro rata to the votes received at the
general meeting of the Company, with votes for or against the directing
resolution being taken, respectively, as an instruction for the Company's
or the Subsidiary's, as the case may be, corporate representative or proxy
to vote the appropriate proportion of its shares for and the appropriate
proportion of its shares against the resolution proposed by the
subsidiary.
79. BYE-LAWS OR ARTICLES OF ASSOCIATION OF CERTAIN SUBSIDIARIES
The Board in its discretion shall require that the Bye-laws or Articles of
Association of each subsidiary of the Company, organized under the laws of
a jurisdiction outside the United States of America, shall contain
provisions substantially similar to Bye-law 78. The Company shall enter
into agreements with each such subsidiary, as reasonably necessary, to
effectuate or implement this Bye-law.
EXHIBIT G
FORM OF REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of [ ], 2006 (this
"Agreement"), is made among CASTLEWOOD HOLDINGS LIMITED, a Bermuda company (the
"Company"), TRIDENT II, L.P., a Cayman Islands limited partnership, XXXXX &
XxXXXXXX CAPITAL PROFESSIONALS FUND, L.P., a Cayman Islands limited partnership
("CPF"), XXXXX & McLENNAN EMPLOYEES' SECURITIES COMPANY, L.P., a Cayman Islands
limited partnership (collectively, "Trident"), J. XXXXXXXXXXX XXXXXXX ("JCF"),
XXXXXXX X. XXXXXXXXX ("DS") and the other shareholders of the Company set forth
on the Schedule of Shareholders attached hereto (collectively, together with
Trident, JCF and DS, the "Shareholders").
A. The Company is a party to a Merger Agreement, dated as of May 23, 2006,
with The Enstar Group, Inc., a Georgia corporation ("Enstar"), CWMS Subsidiary
Corp., a Georgia corporation and a direct wholly-owned subsidiary of the Company
("Merger Sub") (as amended, supplemented or otherwise modified, the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of Merger Sub with and into Enstar, with Enstar continuing as the surviving
corporation, and the issuance by the Company of ordinary shares, par value $1.00
per share, of the Company (the "Ordinary Shares") to the shareholders of Enstar
pursuant to the Merger, the closing of which (the "Closing") shall take place on
the date hereof, concurrently with the execution of this Agreement.
B. The Company and the Shareholders have entered into a Recapitalization
Agreement, dated as of May 23, 2006 (as amended, supplemented or otherwise
modified, the "Recapitalization Agreement"), which provides, among other things,
for the exchange of the outstanding shares of the Company for newly created
Ordinary Shares and non-voting convertible ordinary shares, par value $1.00 per
share, of the Company (the "Non-Voting Convertible Ordinary Shares") at the
Closing but immediately prior to the date and time the Merger becomes effective.
C. The Company has agreed to provide the registration rights set forth in
this Agreement.
D. Capitalized terms used in this Agreement and set forth in Section 10
are used as defined in Section 10. Capitalized terms used in this Agreement
without definition shall have the respective meanings assigned to them in the
Merger Agreement.
Now, therefore, the parties hereto agree as follows:
1. Demand Registrations.
(a) Requests for Registration. At any time following the one (1) year
anniversary of the date hereof, each of Trident, JCF and DS (each, a "Requesting
Holder") shall respectively be entitled to make requests in writing that the
Company effect the registration of all or any part of the Registrable Securities
held by such Holder (a "Registration Request"). Trident shall be entitled to
make three (3) such Registration Requests, JCF shall be entitled to make two (2)
such Registration Requests, and DS shall be entitled to make two (2) such
Registration Requests. Notwithstanding the foregoing, at one time following the
date that is ninety (90) days after the date hereof and prior to the one (1)
year anniversary of the date hereof, Trident may exercise one (1) of its
Registration Requests; provided that such Registration Request shall not be for
more than 750,000 Registrable Securities on the date of such request (after
giving effect to any subsequent stock split, combination, recapitalization or
similar transaction) (the "Initial Request"); provided, further, that Trident
shall give the Company at least 30 days prior written notice of its intent to
exercise the Initial Request. As promptly as reasonably practicable after its
receipt of any Registration Request, other than the Initial Request, but in any
event within seven (7) days of such request, the Company will give written
notice of such request to all other Holders, and will use its reasonable best
efforts to register, in accordance with the provisions of this Agreement, all
Registrable Securities that have been requested to be registered by the Holder
in the Registration Request or by any other Holders by written notice to the
Company given within ten (10) Business Days after the date the Company has given
such Holders notice of the Registration Request; provided, that the Company will
not be required to effect a registration pursuant to this Section 1(a) unless
the aggregate number of shares proposed to be registered constitutes at least
the lesser of (x) 25% of the total number of Registrable Securities held by the
Requesting Holder on the date hereof (or 15% in the case of an Initial Request)
or (y) 10% of the total number of Registrable Securities held by all Holders on
the date hereof, or if the total number of Registrable Securities then
outstanding is less than such amount, all of the Registrable Securities then
outstanding. The Company will not be obligated to effect any registration
pursuant to this Section 1(a) more than once in any nine (9) month period;
provided that the request for a registration that immediately follows the
registration pursuant to the Initial Request may be as soon as six (6) months
following such earlier registration. Notwithstanding anything contained herein
to the contrary, the Company will not include in the Initial Request any
securities other than Registrable Securities owned by Trident without Trident's
prior written consent. Except if expressly prohibited by applicable law, the
Company will pay all Registration Expenses incurred in connection with any
registration pursuant to this Section 1.
(b) Limitation on Demand Registrations. A request for registration will
not constitute the use of a Registration Request pursuant to Section 1(a) if (i)
the Requesting Holder and the Required Holders determine in good faith to
withdraw (prior to the effective date of the Registration Statement relating to
such request) the proposed registration, (ii) the Registration Statement
relating to such request is not declared effective within ninety (90) days of
the date such registration statement is first filed with the SEC, (iii) prior to
the sale of at least 90% of the Registrable Securities included in the
registration relating to such request, such registration is adversely affected
by any stop
2
order, injunction or other order or requirement of the SEC or other governmental
agency, quasi-governmental agent or self-regulatory body or court for any reason
and the Company fails to have such stop order, injunction or other order or
requirement removed, withdrawn or resolved to the Holders of a majority of
Registrable Securities included in such registration statement reasonable
satisfaction within thirty (30) days of the date of such order, (iv) more than
20% of the Registrable Securities requested by the Requesting Holder to be
included in the registration are not so included pursuant to Section 1(e);
provided, that, notwithstanding the foregoing, the Requesting Holder shall
nonetheless be permitted to include the number of Registrable Securities that
the underwriter permits to be included in such registration, (v) the conditions
to closing specified in any underwriting agreement or purchase agreement entered
into in connection with the registration relating to such request are not
satisfied (other than as a result of a material breach thereunder by the
Requesting Holder), or (vi) the Company did not provide Full Cooperation in the
case of an underwritten offering. Notwithstanding the foregoing but except if
expressly prohibited by applicable law, the Company will pay all Registration
Expenses in connection with any request for registration pursuant to Section
1(a) regardless of the application of this provision.
(c) Restrictions on Demand Registrations. The Company may postpone for a
reasonable period of time, not to exceed ninety (90) days, the filing or the
effectiveness of a Registration Statement for a Demand Registration if the
Company furnishes to the Holders a certificate signed by the Chief Executive
Officer of the Company stating that the Board of Directors of the Company has
determined that such Demand Registration is reasonably likely to have a material
adverse effect on any proposal or plan by the Company to engage in any
acquisition of assets or any merger, amalgamation, consolidation, tender offer
or similar transaction, or otherwise would have a material adverse effect on the
business, assets, operations, prospects or financial condition of the Company;
provided, that the Company may not effect such a postponement more than once in
any 360-day period. If the Company so postpones the filing or the effectiveness
of a Registration Statement, the Requesting Holder will be entitled to withdraw
such request and, if such request is withdrawn, such registration request will
not count as a Registration Request for the purposes of Section 1(a). Except if
expressly prohibited by applicable law, the Company will pay all Registration
Expenses incurred in connection with any such non-completed registration.
(d) Selection of Underwriters. If the Requesting Holder intends to
distribute the Registrable Securities covered by its Registration Request by
means of an underwritten offering, the Requesting Holder will so advise the
Company as a part of the Registration Request, and the Company will include such
information in the notice sent by the Company to the other Holders with respect
to such Registration Request. In such event, the Holders of a majority of the
Registrable Securities being so registered will have the right to select the
investment banker(s) and manager(s) to administer the offering, subject to the
Company's approval which will not be unreasonably withheld,
3
conditioned or delayed. If the offering is underwritten, the right of any Holder
to registration pursuant to this Section 1 will be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise agreed by the
Required Holders), and each such Holder will (together with the Company and the
other Holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting. In connection with each
underwritten Demand Registration, the Company shall cause there to be Full
Cooperation.
(e) Priority on Demand Registrations. The Company will not include in any
underwritten registration pursuant to Section 1(a) any securities that are not
Registrable Securities without the prior written consent of both Holders of a
majority of the Registrable Securities included in such Registration Statement
and the Requesting Holder. If the managing underwriter advises the Company that
in its opinion the number of Registrable Securities (and, if permitted
hereunder, other securities requested to be included in such offering) exceeds
the number of securities that can be sold in such offering without adversely
affecting the marketability of the offering, including the price at which the
securities can be sold, the Company will include in such offering the maximum
number of securities that in the opinion of such underwriters can be sold
without adversely affecting the marketability of the offering, including the
price at which the securities can be sold, which securities will be so included
in the following order of priority: (i) first, securities the Company proposes
to sell, provided that the Company shall not be entitled to such first priority
hereunder if such first priority has applied at any time during the 18 month
period preceding the relevant Registration Request, in which case clause (iii)
below shall apply to securities the Company proposes to sell; (ii) second,
Registrable Securities, pro rata among the respective Holders thereof
participating in such registration on the basis of the aggregate number of
Registrable Securities owned by each such Holder on the date of such request or
in such other manner as they may agree; and (iii) third, any other securities of
the Company that have been requested to be so included. Notwithstanding the
foregoing, no employee of the Company or any subsidiary thereof will be entitled
to participate, directly or indirectly, in any such registration to the extent
that the managing underwriter (or, in the case of an offering that is not
underwritten, a nationally recognized investment banking firm) determines in
good faith that the participation of such employee in such registration would
adversely affect the marketability or offering price of the securities being
sold in such registration; provided, however, that this sentence shall not apply
to any registration initiated by a Registration Request made by DS.
(f) Other Registration Rights. Except as provided in this Agreement, the
Company will not grant to any holder or prospective holder of any securities of
the Company registration rights with respect to such securities which are senior
to or otherwise conflict in any material respect with the rights granted
pursuant to this Section
4
1 without the prior written consent of either each of the Requesting Holders or
of the Required Holders and, for such time as Trident owns at least 20% of the
Registrable Securities it owns as of the date hereof, Trident; provided, that
the foregoing shall not prevent the Company from granting additional demand or
piggy back registration rights that are pari passu with the rights set forth in
this Agreement, and any dilution of the registration rights herein resulting
from any such pari passu rights shall not be deemed to conflict with the rights
set forth herein.
2. Piggyback Registrations.
(a) Right to Piggyback. At any time after the date hereof, whenever the
Company proposes to register Ordinary Shares (other than a registration pursuant
to Section 1(a) (as a result of the piggyback registration rights related to
such registration being set forth in Section 1(a)), a registration on Form S-4
or a registration relating solely to employee benefit plans), whether for its
own account or for the account of one or more securityholders of the Company,
and the registration form to be filed may be used for the registration or
qualification for distribution of Registrable Securities, the Company will give
prompt written notice to all Holders of its intention to effect such a
registration and will include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within fifteen (15) days after the date of the Company's notice (a
"Piggyback Registration"). Any Holder that has made such a written request may
withdraw its Registrable Securities from such Piggyback Registration by giving
written notice to the Company and the managing underwriter, if any, on or before
the fifth (5th) day prior to the anticipated effective date of such Piggyback
Registration. The Company may terminate or withdraw any registration initiated
by it and covered by this Section 2 prior to the effectiveness of such
registration, whether or not any Holder has elected to include Registrable
Securities in such registration, and except for the obligation to pay
Registration Expenses pursuant to Section 2(c) the Company will have no
liability to any Holder in connection with such termination or withdrawal. A
Piggyback Registration shall not be considered a Demand Registration for
purposes of Section 1 of this Agreement.
(b) Underwritten Registration. If the registration referred to in Section
2(a) is proposed to be underwritten, the Company will so advise the Holders as a
part of the written notice given pursuant to Section 2(a). In such event, the
right of any Holder to registration pursuant to this Section 2 will be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting, and each
such Holder will (together with the Company and the other Holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Company. If any Holder disapproves of the terms of the
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the managing underwriter.
5
(c) Piggyback Registration Expenses. Except if expressly prohibited by
applicable law, the Company will pay all Registration Expenses in connection
with any Piggyback Registration, whether or not any registration or prospectus
becomes effective or final.
(d) Priority on Primary Registrations. If a Piggyback Registration relates
to an underwritten primary offering on behalf of the Company, and the managing
underwriters advise the Company that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold without adversely affecting the marketability of the offering, including
the price at which such securities can be sold, the Company will include in such
registration the maximum number of securities that in the opinion of such
underwriters can be sold without adversely affecting the marketability of the
offering, including the price at which such securities can be sold, which
securities will be so included in the following order of priority: (i) first,
the securities the Company proposes to sell, (ii) second, the Registrable
Securities requested to be included in such registration, pro rata among the
Holders of such Registrable Securities on the basis of the number of Registrable
Securities so requested to be included therein owned by each such Holder or in
such other manner as they may agree, and (iii) third, other securities requested
to be included in such registration. Notwithstanding the foregoing, any employee
of the Company or any subsidiary thereof will not be entitled to participate,
directly or indirectly, in any such registration to the extent that the managing
underwriter (or, in the case of an offering that is not underwritten, a
nationally recognized investment banking firm) will determine in good faith that
the participation of such employee in such registration would adversely affect
the marketability or offering price of the securities being sold in such
registration.
(e) Priority on Secondary Registrations. If a Piggyback Registration
relates solely to an underwritten secondary registration on behalf of other
holders of the Company's securities, and the managing underwriters advise the
Company that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold without adversely
affecting the marketability of the offering, including the price at which such
securities can be sold, the Company will include in such registration the
maximum number of securities that in the opinion of such underwriters can be
sold without adversely affecting the marketability of the offering, including
the price at which such securities can be sold, which securities will be so
included in the following order of priority: (i) first, the securities requested
to be included therein by the holders requesting such registration and the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such securities and Registrable Securities on the basis of
the number of securities so requested to be included therein owned by each such
holder or in such other manner as they may agree, and (ii) second, other
securities requested to be included in such registration. Notwithstanding the
foregoing, any employee of the Company or any subsidiary thereof will not be
entitled to participate, directly or indirectly, in any such registration to the
6
extent that the managing underwriter (or, in the case of an offering that is not
underwritten, a nationally recognized investment banking firm) will determine in
good faith that the participation of such employee in such registration would
adversely affect the marketability or offering price of the securities being
sold in such registration.
(f) Other Registrations. If the Company files a Registration Statement
with respect to Registrable Securities pursuant to Section 1 or Section 2, and
if such registration has not been withdrawn or abandoned, the Company will not
file or cause to be effected any other registration of any of its equity
securities or securities convertible or exchangeable into or exercisable for its
equity securities under the Securities Act (except on Form S-4 or S-8 or any
successor or similar forms), whether on its own behalf or at the request of any
holder or holders of such securities, until a period of at least one hundred
eighty (180) days have elapsed from the effective date of the effectiveness of
such Registration Statement.
3. Registration Procedures. Subject to Section 1(c), whenever the Holders
of Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use its reasonable best
efforts to effect the registration and sale of such Registrable Securities in
accordance with the intended method of disposition thereof. Without limiting the
generality of the foregoing, the Company will, as expeditiously as possible:
(a) prepare and (within forty five (45) days after the end of the
period within which requests for registration may be given to the Company
pursuant hereto) file with the SEC a Registration Statement with respect
to such Registrable Securities, make all required filings with the
National Association of Securities Dealers and thereafter use its
reasonable best efforts to cause such Registration Statement to become
effective; provided, that before filing a Registration Statement or any
amendments or supplements thereto, the Company will furnish to one firm of
counsel selected by the Holders in accordance with Section 4(b) copies of
all such documents proposed to be filed, which documents will be subject
to review of such counsel at the Company's expense. Unless such counsel
earlier informs the Company that it has no objections to the filing of
such Registration Statement, amendment or supplement, the Company will not
file such Registration Statement, amendment or supplement prior to the
date that is five Business Days from the date that such counsel received
such document. The Company will not file any Registration Statement or
amendment or post-effective amendment or supplement to such Registration
Statement to which such counsel will have reasonably objected in writing
on the grounds that such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act or of the
rules or regulations thereunder. The Company shall not permit any person
acting on behalf of the Company to use any free writing prospectus (as
defined in Rule 405 under the Securities Act) in connection with
7
any registration statement covering Registrable Securities, without the
prior consent of the Holders named in such registration statement, such
consent not to be unreasonably withheld or delayed;
(b) prepare and file with the SEC such amendments and supplements to
such Registration Statement as may be necessary to keep such Registration
Statement effective for a period of either (i) not less than six (6)
months or, if such Registration Statement relates to an underwritten
offering, such longer period as in the opinion of counsel for the
underwriters a prospectus is required by law to be delivered in connection
with sales of Registrable Securities by an underwriter or dealer or (ii)
such shorter period as will terminate when all of the securities covered
by such Registration Statement have been disposed of in accordance with
the intended methods of disposition by the Holder or Holders thereof set
forth in such Registration Statement (but in any event not before the
expiration of any longer period required under the Securities Act), and to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement until
such time as all of such securities have been disposed of in accordance
with the intended methods of disposition by the Holder or Holders thereof
set forth in such Registration Statement;
(c) furnish to each Holder of the Registrable Securities being sold
such number of copies, without charge, of such Registration Statement,
each amendment and supplement thereto, including each preliminary
prospectus, final prospectus, all exhibits and other documents filed
therewith and such other documents as such Holder may reasonably request
including in order to facilitate the disposition of the Registrable
Securities owned by such Holder;
(d) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions as any Holder reasonably requests and do any and all
other acts and things that may be necessary or reasonably advisable to
enable such Holder to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such Holder (provided, that the
Company will not be required to (i) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but
for this subsection, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) use its reasonable best efforts to cause all Registrable
Securities covered by such Registration Statement to be registered with or
approved by such other governmental agencies, authorities or
self-regulatory bodies as may be necessary or reasonably advisable in
light of the business and operations of the
8
Company to enable the Holder or Holders thereof to consummate the
disposition of such Registrable Securities in accordance with the intended
method or methods of disposition thereof;
(f) immediately notify each Holder of such Registrable Securities
being sold and any underwriter(s), at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
occurrence of any event which will have the result that, the prospectus
contains an untrue statement of a material fact or omits to state any fact
necessary to make the statements therein not misleading in the light of
the circumstances under which they were made, and, as promptly as
practicable, prepare and furnish to such Holder and underwriter(s) a
reasonable number of copies of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made;
(g) notify each Holder of any Registrable Securities being sold and
covered by such Registration Statement (i) when the prospectus or any
prospectus supplement or post-effective amendment has been filed and, with
respect to such Registration Statement or any post-effective amendment,
when the same has become effective, (ii) of any request by the SEC for
amendments or supplements to such registration statement or to amend or to
supplement such prospectus or for additional information and (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of such
registration statement or the initiation of any proceedings for any of
such purposes;
(h) use its reasonable best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed or, if no similar
securities issued by the Company are then listed on any securities
exchange, use its reasonable best efforts to cause all such Registrable
Securities to be listed on the Nasdaq;
(i) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration
Statement;
(j) enter into such customary agreements (including underwriting
agreements with customary provisions) and take all such other actions as
the Requesting Holder, Holders of a majority of Registrable Securities
included in such Registration Statement or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities (including, without limitation, effecting a
share split or a combination of shares);
9
(k) make available for inspection by any Holder of the Registrable
Securities being sold, any underwriter participating in any disposition
pursuant to such Registration Statement and any attorney, accountant or
other agent retained by any such Holder or underwriter, all financial and
other records, pertinent corporate documents and documents relating to the
business of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such Holder, underwriter, attorney, accountant or agent
in connection with such Registration Statement; provided, that each Holder
will, and will use its commercially reasonable efforts to cause each such
underwriter, accountant or other agent to enter into a customary
confidentiality agreement in form and substance reasonably satisfactory to
the Company; provided further, that such confidentiality agreement will
not contain terms that would prohibit any such Person from complying with
its obligations under applicable law or Nasdaq rules.
(l) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day
of the Company's first full calendar quarter after the effective date of
the Registration Statement, which earnings statement will satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(m) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or ceasing trading of any
securities included in such Registration Statement for sale in any
jurisdiction, use its reasonable best efforts promptly to obtain the
withdrawal of such order;
(n) enter into such agreements and take such other actions as the
Holders of the Registrable Securities being sold or the underwriters
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities, including, without limitation, preparing for
and participating in such number of "road shows" and all such other
customary selling efforts as the underwriters reasonably request in order
to expedite or facilitate such disposition;
(o) obtain one or more comfort letters, addressed to the Holders of
the Registrable Securities being sold (and, if such registration includes
an underwritten public offering to the underwriters of such offering),
signed by the Company's independent public accountants in customary form
and covering such matters of the type customarily covered by comfort
letters;
10
(p) provide legal opinions of the Company's outside counsel,
addressed to the Holders of the Registrable Securities being sold (and, if
such registration includes an underwritten public offering, to the
underwriters of such offering), with respect to the Registration Statement
and prospectus in customary form and covering such matters of the type
customarily covered by legal opinions of such nature;
(q) furnish to any Holder of the Registrable Securities being sold
such information and assistance as such Holder may reasonably request in
connection with any "due diligence" effort which such Holder deem
appropriate; and
(r) use its reasonable best efforts to take or cause to be taken all
other actions, and do and cause to be done all other things, necessary or
reasonably advisable to effect the registration of such Registrable
Securities contemplated hereby.
The Company agrees not to file or make any amendment to any Registration
Statement with respect to any Registrable Securities, or any amendment of or
supplement to the prospectus used in connection therewith, that refers to any
Holder covered thereby by name, or otherwise identifies such Holder as the
holder of any securities of the Company, without the consent of such Holder,
such consent not to be unreasonably withheld or delayed, unless and to the
extent such disclosure is required by law.
The Company represents and warrants that no Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading (except that the Company makes no representation or warranty with
respect to information relating to any Holder furnished in writing to the
Company by or on behalf of the Holder specifically for inclusion therein).
The Company may require each Holder of Registrable Securities as to which any
registration is being effected to furnish the Company with such information
regarding such Holder and pertinent to the disclosure requirements relating to
the registration and the distribution of such securities as the Company may from
time to time reasonably request in writing.
4. Registration Expenses.
(a) Except as otherwise provided for herein, all expenses incidental to
the Company's performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees (including SEC registration
and National Association of Securities Dealers filing fees), fees and expenses
of compliance with
11
securities or blue sky laws, word processing, duplicating and
printing expenses, messenger and delivery expenses, transfer agent's and
registrar's fees, cost of distributing prospectuses in preliminary and final
form, as well as any supplements thereto, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
and other Persons retained by the Company (all such expenses, "Registration
Expenses"), will be borne by the Company. In addition, the Company will, in any
event, pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expenses of any annual audit or quarterly review, the expenses of
any liability insurance and the expenses and fees for listing the securities to
be registered on each securities exchange or automatic quotation system on which
similar securities issued by the Company are then listed (including the Nasdaq).
Notwithstanding the foregoing, all Selling Expenses will be borne by the holders
of the securities so registered pro rata on the basis of the number of their
shares so registered.
(b) In connection with each registration pursuant to Section 1 and each
Piggyback Registration, the Company will reimburse the Holders of the
Registrable Securities covered by such registration or qualification for the
reasonable fees and disbursements of one law firm, who will be chosen by the
Holders of a majority of the Registrable Securities being so registered.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless, and hereby does
indemnify and hold harmless, each Holder, its affiliates and their respective
officers, directors and partners and each Person who controls such Holder
(within the meaning of the Securities Act) against, and pay and reimburse such
holder, affiliate, director, officer or partner or controlling person for any
losses, claims, damages, expenses, liabilities, joint or several, to which such
holder or any such affiliate, director, officer or partner or controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon (i)
any untrue or alleged untrue statement of material fact contained in any
Registration Statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto, or any "issuer free writing prospectus" (as
defined in Securities Act Rule 433), (ii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of any rule or regulation promulgated under the Securities Act , the
Exchange Act, the National Association of Securities Dealers or any state
securities laws applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, and the
Company will pay and reimburse such Holder and each such affiliate, director,
officer, partner and controlling person for any legal or any other expenses
actually and reasonably incurred by them in connection with
12
investigating, defending or settling any such loss, claim, liability, action or
proceeding; provided, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage, expense, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged omission,
made in such Registration Statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, or in any application, in
reliance upon, and in conformity with, written information prepared and
furnished to the Company by such Holder expressly for use therein or by such
Holder's failure to deliver, to the extent required by law and except to the
extent such failure results from a failure by the Company to comply with Section
3(f), a copy of the Registration Statement or prospectus or any amendments or
supplements thereto after the Company has furnished such Holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company, if requested, will indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to at least the same extent as provided above
with respect to the indemnification of the Holders.
(b) In connection with any Registration Statement in which a Holder is
participating, each such Holder will furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
such Registration Statement or prospectus and will indemnify and hold harmless
the Company, its directors and officers, each other Person who controls the
Company (within the meaning of the Securities Act) and each underwriter (to the
extent required by such underwriter) against any losses, claims, damages,
expenses, liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof), joint or several, to which the Company or any
such director or officer, any such underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities, actions or proceedings arise out of or are based upon (i)
any untrue or alleged untrue statement of material fact contained in the
Registration Statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or in any application or (ii) any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is made in such Registration Statement, any such
prospectus or preliminary prospectus or any amendment or supplement thereto, or
in any application, in reliance upon and in conformity with written information
prepared and furnished to the Company by such Holder expressly for use therein,
and such Holder will reimburse the Company and each such director, officer,
underwriter and controlling Person for any legal or any other expenses actually
and reasonably incurred by them in connection with investigating, defending or
settling any such loss, claim, liability, action or proceeding; provided, that
the obligation to indemnify and hold harmless will be individual and several to
each Holder and will be limited to the amount of net proceeds received by such
Holder from the sale of Registrable Securities pursuant to such Registration
Statement.
13
(c) Any Person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made by the indemnified party
without its prior written consent (but such consent will not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim. Failure to give
prompt written notice shall not release the indemnifying party from its
obligations hereunder except to the extent that such indemnifying party is
materially prejudiced as a result of such failure to give notice.
(d) The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the registration and sale of any securities
by any Person entitled to any indemnification hereunder and the expiration or
termination of this Agreement.
(e) If the indemnification provided for in this Section 5 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, will contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other hand in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party will be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount any Holder will be obligated to
contribute pursuant to this Section 5(e) will be limited to an amount equal to
the net proceeds to such Holder of the Registrable Securities sold pursuant to
the registration statement which gives rise to such obligation to contribute
(less the aggregate amount of any damages which the Holder has otherwise been
required to pay in respect of such loss,
14
claim, damage, expense, liability or action or any substantially similar loss,
claim, damage, expense, liability or action arising from the sale of such
Registrable Securities).
6. Participation in Underwritten Registrations.
(a) No Holder may participate in any registration hereunder that is
underwritten unless such Holder (i) agrees to sell its Registrable Securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any over-allotment or "green shoe" option
requested by the managing underwriter(s); provided, that no Holder will be
required to sell more than the number of Registrable Securities that such Holder
has requested the Company to include in any registration), (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) cooperates with the Company's reasonable
requests in connection with such registration or qualification (it being
understood that the Company's failure to perform its obligations hereunder,
which failure is caused by such Holder's failure to cooperate, will not
constitute a breach by the Company of this Agreement). Notwithstanding the
foregoing, no Holder will be required to agree to any indemnification
obligations on the part of such Holder that are materially greater than its
obligations pursuant to Section 6(b).
(b) Each Holder that is participating in any registration hereunder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in subsection 3(f) above, such Holder will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
Registration Statement until such Holder receives copies of a supplemented or
amended prospectus as contemplated by such Section 3(f). In the event the
Company gives any such notice, the applicable time period during which a
Registration Statement is to remain effective will be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to this Section 6(b) to and including the date when each Holder of a
Registrable Security being sold and covered by such Registration Statement will
have received the copies of the supplemented or amended prospectus contemplated
by Section 3(f).
7. Rule 144 and 144A Reporting.
(a) With a view to making available the benefits of certain rules and
regulations of the SEC which may permit the sale of restricted securities to the
public without registration, the Company agrees to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, and
15
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting
requirements.
(b) For purposes of facilitating sales pursuant to Rule 144A, so long as
the Company is not subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, each Holder and any prospective purchaser of such Holder's
securities will have the right to obtain from the Company, upon request of the
Holder prior to the time of sale, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed as such
Holder or prospective purchaser may reasonably request in availing itself of any
rule or regulation of the SEC allowing such Holder to sell any such securities
without registration, including the Company's most recent quarterly balance
sheet and profit and loss and retained earnings statements, and similar
financial statements for the two preceding fiscal years (the financial
statements to be audited to the extent reasonably available).
(c) Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with the foregoing
information requirements.
8. Lock Up Agreements. In consideration for the Company agreeing to its
obligations under this Agreement, each Holder agrees in connection with any
registration of the Company's securities (whether or not such Holder is
participating in such registration) upon the request of the Company and the
underwriters managing any underwritten offering of the Company's securities, not
to effect (other than pursuant to such registration) any public sale or
distribution of Registrable Securities, including, but not limited to, any sale
pursuant to Rule 144 or Rule 144A, or make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities,
any other equity securities of the Company or any securities convertible into or
exchangeable or exercisable for any equity securities of the Company without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time (not to exceed 90 days) beginning on the effective date
of such registration as the Company and the underwriters may specify; provided,
that nothing herein will prevent any Holder that is a partnership or corporation
from making a distribution of Registrable Securities to the partners or
shareholders thereof that is otherwise in compliance with applicable securities
laws, so long as such distributees agree to be so bound. The Company agrees to
use its reasonable best efforts to work with the underwriters to limit any
lock-up period under this Section 8 to the minimum number of days that the
underwriters consider advisable.
9. Term. This Agreement will be effective as of the date hereof and will
continue in effect thereafter until the earliest of (a) its termination by the
consent of the Required Holders and each of the Requesting Holders (but only if
such Requesting
16
Holder, as the case may be, holds any Registrable Securities at such time) or,
in each case, their respective successors in interest, (b) the date on which no
Registrable Securities remain outstanding and (c) the dissolution, liquidation
or winding up of the Company.
10. Defined Terms. Capitalized terms when used in this Agreement have the
following meanings:
"Business Day" means any day, except a Saturday, Sunday or legal holiday
on which banking institutions in The City of New York are authorized or
obligated to close.
"Full Cooperation" means, in connection with any underwritten offering,
where, in addition to the cooperation otherwise required by this
Agreement, (a) members of senior management of the Company (including the
chief executive officer and chief financial officer) reasonably cooperate
with the underwriter(s) in connection therewith and make themselves
reasonably available to participate in "road-shows" and other customary
marketing activities in such locations (domestic and foreign) as
reasonably recommended by the underwriter(s) (including one-on-one
meetings with prospective purchasers of the Registrable Securities) and
(b) the Company prepares preliminary and final prospectuses for use in
connection therewith containing such additional information as reasonably
requested by the underwriter(s) (in additional to the minimum amount of
information required by law, rule or regulation).
"Fully Marketed Underwritten Offering" means an underwritten offering in
which there is Full Cooperation.
"Holder" means any holder of outstanding Registrable Securities who is a
party to this Agreement or to whom the benefits of this Agreement have
been validly assigned.
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or department or agency thereof.
"Register," "registered" and "registration" refers to a registration
effected by preparing and filing a Registration Statement in compliance
with the Securities Act, and the declaration or ordering of the
effectiveness of such Registration Statement, and compliance with
applicable state securities laws of such states in which Holders notify
the Company of their intention to offer Registrable Securities.
17
"Registrable Securities" means (i) any Ordinary Shares issued pursuant to
the Merger, (ii) any Ordinary Shares issued pursuant to the
Recapitalization Agreement, (iii) any Ordinary Shares issued upon
exercise, exchange or conversion of any options, restricted stock units or
other rights to acquire Ordinary Shares that are issued in connection with
the Merger or the Recapitalization Agreement, or (iv) any equity
securities issued or issuable with respect to the securities referred to
in the foregoing clauses (i) through (iii) by way of conversion, exercise
or exchange thereof or share dividend or share split or in connection with
a combination of shares, recapitalization, reclassification, merger,
amalgamation, arrangement, consolidation or other reorganization. As to
any particular securities constituting Registrable Securities, such
securities will cease to be Registrable Securities when (x) they have been
effectively registered or qualified for sale by prospectus filed under the
Securities Act and disposed of in accordance with the Registration
Statement covering them or (y) they have been sold to the public through a
broker, dealer or market maker pursuant to Rule 144 or Rule 145 or other
exemption from registration under the Securities Act. For purposes of this
Agreement, a Person will be deemed to be a holder of Registrable
Securities whenever such Person has the right to acquire directly or
indirectly such Registrable Securities (upon conversion, exercise or
exchange in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected.
"Registration Expenses" has the meaning set forth in Section 4.
"Registration Request" has the meaning set forth in Section 1(a).
"Registration Statement" means the prospectus and other documents filed
with the SEC to effect a registration under the Securities Act.
"Required Holders" means Shareholders holding in the aggregate 50% or more
of the outstanding Registrable Securities.
"Rule 144" means Rule 144 under the Securities Act or any successor or
similar rule as may be enacted by the SEC from time to time, as in effect
from time to time.
"Rule 144A" means Rule 144A under the Securities Act or any successor or
similar rule as may be enacted by the SEC from time to time, as in effect
from time to time.
"Selling Expenses" means all underwriting discounts, selling commissions
and transfer taxes applicable to the sale of Registrable Securities
hereunder.
18
11. Miscellaneous.
(a) No Inconsistent Agreements. Subject to Section 1(f), the Company will
not hereafter enter into any agreement with respect to its securities that is
more favorable or is inconsistent or conflicts with or violates the rights
granted to the holders of Registrable Securities in this Agreement.
(b) Adjustments Affecting Registrable Securities. The Company will not
take any action, or permit any change to occur, with respect to its securities
which would materially and adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
or qualification for sale by prospectus undertaken pursuant to this Agreement or
which would adversely affect the marketability of such Registrable Securities in
any such registration or qualification (including, without limitation, effecting
a share split or a combination of shares).
(c) Remedies. The parties hereto agree and acknowledge that money damages
may not be an adequate remedy for any breach of the provisions of this Agreement
and that any party hereto will have the right to equitable relief, including
specific performance and injunctive relief, in addition to all of its other
rights and remedies at law or in equity, to enforce the provisions of this
Agreement.
(d) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and the Required Holders; provided, that in the
event that such amendment or waiver would treat a Holder or group of Holders in
a manner different from any other Holders, then such amendment or waiver will
require the consent of such Holder or the Holders of a majority of the
Registrable Securities of such group adversely treated.
(e) Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided, that a Holder may not assign or otherwise transfer
its rights or obligations under this Agreement to any other Person without the
prior written consent of the Company.
(f) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
19
(g) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and the
same Agreement.
(h) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(i) Governing Law. This Agreement and the rights and duties of the parties
hereto hereunder shall be governed by and construed in accordance with laws of
the State of New York, without giving effect to its principles or rules of
conflict of laws to the extent such principles or rules are not mandatorily
applicable by statute and would require or permit the application of the laws of
another jurisdiction.
Any suit, action or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby may be brought in any federal or state court
located in the County and State of New York, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereinafter have to the laying of the venue of any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 12(l) shall be deemed
effective service of process on such party.
EACH OF THE PARTIES HERETO HERBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(j) Further Assurances. Each of the parties hereto shall execute such
documents and other papers and perform such further acts as may be reasonably
required or advisable to carry out the provisions of this Agreement and the
transactions contemplated hereby.
(k) Organizational Documents. Notwithstanding anything to the contrary
herein, all applicable provisions of the Company's Bye-Laws and Memorandum of
Association (the "Organizational Documents") shall apply to this Agreement and
any actions taken hereunder as if set forth herein, and any conflict between the
Organizational Documents and this Agreement shall be resolved in favor of the
provisions of the Organizational Documents. The Company shall not amend or
restate the Organizational
20
Documents at any time in a manner that would conflict in any material respect
with this Agreement, except to the extent required by applicable law. If any
conflict between this Agreement and the Organizational Documents interferes in
any material respect with the exercise of any Registration Request or other
right or remedy hereunder, the Company shall use its reasonable best efforts to
facilitate the exercise of such Registration Request or other right or remedy
without conflict with the Organizational Documents.
(l) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be to the Company and the Shareholders in the manner set forth
in the Recapitalization Agreement at the addresses set forth in the
Recapitalization Agreement and on the Schedule of Shareholders attached hereto
(or at such other address or telecopy number as a party may designate to the
other parties).
(m) Entire Agreement. This Agreement together with the Organizational
Documents contains the entire agreement among the parties hereto with respect to
the subject matter hereof and supersedes and replaces all other prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof.
(n) No Waivers. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
[Remainder of this page left intentionally blank.]
21
IN WITNESS WHEREOF, the undersigned have set their hands and seals as of
the above date.
CASTLEWOOD HOLDINGS LIMITED
By:________________________________________
Name:
Title:
J. XXXXXXXXXXX XXXXXXX
___________________________________________
XXXX X. XXXX
___________________________________________
XXXXXX X. XXXXXX
___________________________________________
TRIDENT II, L.P.
By: Trident Capital II, L.P.
Its sole general partner
By: DW Trident GP, LLC, a general partner
By:________________________________________
Name:
Title:
22
XXXXX & XxXXXXXX CAPITAL
PROFESSIONALS FUND, L.P.
By: Stone Point Capital LLC, as manager
By:________________________________________
Name:
Title:
XXXXX & XxXXXXXX EMPLOYEES'
SECURITIES COMPANY, L.P.
By: Xxxxx & XxXxxxxx XX I, Inc.
Its sole general partner
By: Stone Point Capital LLC, its attorney-
in-fact
By:________________________________________
Name:
Title:
XXXXXXX X. XXXXXXXXX
___________________________________________
XXXX X. X'XXXX
___________________________________________
XXXXXXXX X. XXXXXX
___________________________________________
T. XXXX XXXXXXXXX
___________________________________________
23
T. XXXXX XXXXX
___________________________________________
XXXXXXX X. XXXX
___________________________________________
XXXX X. XXXXXXX
___________________________________________
The COMMON SEAL of R&H TRUST
CO. (BVI) LTD., as trustee of THE
RIGHT TRUST was hereunto affixed
in the presence of
By:________________________________________
Name:
Title:
The COMMON SEAL of R&H TRUST CO.
(NZ) LIMITED, as trustee of THE
LEFT TRUST was hereunto affixed
in the presence of
By:________________________________________
Name:
Title:
The COMMON SEAL of R&H
TRUST CO. (BVI) LTD., as trustee
of THE ELBOW TRUST was hereunto
affixed in the presence of
24
By:________________________________________
Name:
Title:
The COMMON SEAL of R&H
TRUST CO. (BVI) LTD., as trustee of
THE HOVE TRUST was hereunto affixed
in the presence of
By:________________________________________
Name:
Title:
XXXXX XXXXXX
___________________________________________
XXXX XXXXXXXXX
___________________________________________
XXXXX GIVEN
___________________________________________
XXXXX XXXXXXX
___________________________________________
25
XXXXX XXXXXXX
___________________________________________
XXXXXXX XXXXXX
___________________________________________
26
XXX XXXXXXX
___________________________________________
XXXXXX XXXXXXXXX
___________________________________________
XXXXX XXXXXXXXXX
___________________________________________
XXXXX XXXXX
___________________________________________
XXXXXX XXXXX
___________________________________________
XXXX XXXXXX
___________________________________________
27
XXXX XXXX
___________________________________________
XXXXXX XxXXXXXXXX
___________________________________________
28
Schedule of Shareholders
Name Address and Telecopy Number
----------------------------------------- ----------------------------------
The Enstar Group, Inc.
J. Xxxxxxxxxxx Xxxxxxx
Xxxx X. Xxxx
Xxxxxx X. Xxxxxx
T. Xxxx Xxxxxxxxx
T. Xxxxx Xxxxx
Xxxxxxx X. Xxxx
Xxxx X. Xxxxxxx
Trident II, X.X.
Xxxxx & McLennan Capital
Professionals Fund, X.X.
Xxxxx & XxXxxxxx Employees' Securities
Company, L.P.
Xxxxxxx X. Xxxxxxxxx
R&H Trust Co. (BVI) Ltd., as trustee of
The Right Trust
R&H Trust Co. (NZ) Limited, as trustee of
The Left Trust
R&H Trust Co. (BVI) Ltd., as trustee of
The Elbow Trust
R&H Trust Co. (BVI) Ltd., as trustee of
The Hove Trust
Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxx Xxxxxxx
Xxxxx Xxxxx
Xxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxx Given
Xxxxx Xxxxxxxxxx
Xxxx Xxxx
Xxxxxx XxXxxxxxxx
2
