<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER 0-07477
THE ENSTAR GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
GEORGIA 63-0590560
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
</TABLE>
401 MADISON AVENUE
MONTGOMERY, ALABAMA 36104
(Address of principal executive offices)
(334) 834-5483
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES [X] NO [ ]
The number of shares of Registrant's Common Stock, $.01 par value per
share, outstanding at August 6, 1999 was 5,265,729.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THIS FORM 10-Q AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY THE
ENSTAR GROUP, INC. OR MEMBERS OF ITS MANAGEMENT TEAM CONTAIN STATEMENTS WHICH
MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933, AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, 15 U.S.C.A. SECTIONS 77Z-2 AND 78U-5
(SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF
OR CURRENT EXPECTATIONS OF THE ENSTAR GROUP, INC. AND MEMBERS OF ITS MANAGEMENT
TEAM, AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE
INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-
LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING
STATEMENTS ARE SET FORTH IN THE SAFE HARBOR COMPLIANCE STATEMENT FOR
FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 TO THIS FORM 10-Q, AND ARE
HEREBY INCORPORATED BY REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE
OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE
OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER
TIME.
i
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE ENSTAR GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------- ------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 63,403 $ 12,826
Certificates of deposit..................................... 3,560 53,424
Other....................................................... 506 724
Investment in B-Line LLC.................................... 956 1,007
Property and equipment, net................................. 36 36
-------- --------
Total assets...................................... $ 68,461 $ 68,017
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities.................... $ 355 $ 529
Deferred liabilities........................................ 220 174
Other....................................................... 376 370
-------- --------
Total liabilities................................. 951 1,073
-------- --------
Shareholders' equity:
Common stock ($.01 par value; 55,000,000 shares
authorized, 5,708,080 and 5,707,920 shares issued at
June 30, 1999 and December 31, 1998, respectively)..... 57 57
Additional paid-in capital................................ 183,191 183,201
Note receivable, net of discount of $739 and $973 at June
30, 1999 and December 31, 1998, respectively........... (14,261) (14,027)
Accumulated deficit....................................... (95,667) (96,477)
Treasury stock, at cost (442,351 shares).................. (5,810) (5,810)
-------- --------
Total shareholders' equity........................ 67,510 66,944
-------- --------
Total liabilities and shareholders' equity........ $ 68,461 $ 68,017
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE> 4
THE ENSTAR GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
Investment income............................... $ 1,077 $ 561 $ 2,147 $ 2,731
Litigation income, net.......................... 246 70 245 70
General and administrative expenses............. (722) (476) (1,529) (1,215)
Interest expense................................ (3) (47) (6) (93)
---------- ---------- ---------- ----------
Income before income taxes...................... 598 108 857 1,493
Income taxes.................................... (36) -- (47) (40)
---------- ---------- ---------- ----------
Net income...................................... $ 562 $ 108 $ 810 $ 1,453
========== ========== ========== ==========
Weighted average shares outstanding............. 5,265,729 4,146,853 5,265,710 4,251,402
========== ========== ========== ==========
Weighted average shares outstanding -- assuming
dilution...................................... 5,336,331 4,211,913 5,329,704 4,300,205
========== ========== ========== ==========
Net income per common share..................... $ 0.11 $ 0.03 $ 0.15 $ 0.34
========== ========== ========== ==========
Net income per common share -- assuming
dilution...................................... $ 0.11 $ 0.03 $ 0.15 $ 0.34
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE> 5
THE ENSTAR GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------- ----------------
1999 1998 1999 1998
---- ------ ----- -------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net income................................................. $562 $ 108 $810 $1,453
Other comprehensive income:
Unrealized gains on investment in First Union............ -- 1,771 -- 8,526
Less: reclassification adjustment for gains included in
net income............................................ -- -- -- (2,818)
---- ------ ---- ------
Other comprehensive income................................. 0 1,771 0 5,708
---- ------ ---- ------
Comprehensive income....................................... $562 $1,879 $810 $7,161
==== ====== ==== ======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 6
THE ENSTAR GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------
JUNE 30, JUNE 30,
1999 1998
-------- --------
(DOLLARS IN
THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 810 $1,453
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation........................................... 7 7
Amortization of goodwill............................... 50 --
Accretion of discount on note receivable............... (234) --
Gain on sale of First Union common stock............... -- (2,818)
Loss on call option transactions....................... -- 1,127
Changes in assets and liabilities:
Accounts payable and accrued liabilities............... (174) 67
Other.................................................. 271 91
------- ------
Net cash provided by (used in) operating
activities....................................... 730 (73)
------- ------
Cash flows from investing activities:
Proceeds from sale of First Union common stock............ -- 5,125
Proceeds from sale of call options........................ -- 363
Repurchases of call options sold.......................... -- (902)
Purchases of certificates of deposit...................... (2,438) (4,902)
Maturities of certificates of deposit..................... 52,302 4,778
Purchase of property and equipment........................ (7) (2)
------- ------
Net cash provided by investing activities......... 49,857 4,460
------- ------
Cash flows from financing activities:
Common stock issuance costs............................... (10) --
Proceeds from note payable................................ -- 1,311
Repayment of note payable................................. -- (1,724)
Purchase of treasury stock................................ -- (4,335)
------- ------
Net cash used in financing activities............. (10) (4,748)
------- ------
Increase (decrease) in cash and cash equivalents............ 50,577 (361)
Cash and cash equivalents at the beginning of the period.... 12,826 700
------- ------
Cash and cash equivalents at the end of the period.......... $63,403 $ 339
======= ======
Supplemental disclosures of cash flow information:
Interest paid............................................. $ -- $ 17
======= ======
Income taxes paid......................................... $ 48 $ 48
======= ======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 7
THE ENSTAR GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: GENERAL
The consolidated financial statements of The Enstar Group, Inc. (the
"Company") are unaudited and, in the opinion of management, include all
adjustments consisting solely of normal recurring adjustments necessary to
fairly state the Company's financial condition and results of operations for the
interim period. The results of operations for the three and six months ended
June 30, 1999 are not necessarily indicative of the results to be expected for
the full year. These statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1998 included in
the Company's Form 10-K as filed with the Securities and Exchange Commission on
March 29, 1999 under the Securities Exchange Act of 1934, as amended. Certain
prior year amounts have been reclassified in the financial statements to conform
with the current year presentation.
NOTE 2: INVESTMENT IN B-LINE
In November 1998, the Company made an investment in B-Line LLC ("B-Line").
B-Line is a privately owned company based in Seattle, Washington that provides
services to credit card issuers and other holders of similar receivables.
The Company invested $950,000 in membership units of B-Line, representing
approximately 8.77% of the then outstanding units of B-Line. The Company also
purchased a one-year warrant to acquire additional B-Line units, with an
aggregate exercise price of $950,000. Other investors also purchased membership
units and warrants in B-Line. If the Company and the other investors with
outstanding B-Line warrants and options were to exercise those warrants and
options, the Company would own approximately 13.89% of B-Line.
The Company's investment in B-Line is accounted for under the equity
method. In addition, legal and professional fees of approximately $15,000
incurred in the purchase of the Company's investment were capitalized as a part
of the original cost. Approximately $803,000 of the original $950,000 investment
was recorded as goodwill and is being amortized over a period of 10 years.
NOTE 3: SHAREHOLDERS' EQUITY
(a) Common Stock -- In January 1999, the Company issued 160 shares of its
common stock to qualified former shareholders in accordance with the terms of
its reorganization plan. It was determined by the Company that these former
shareholders had submitted a complete Certification of Ownership in a timely
manner.
(b) Additional Paid-in Capital -- In February 1999, additional legal fees
of $10,000 were incurred by the Company in relation to the sale of 1,158,860
newly issued shares of the Company's common stock to J. Christopher Flowers in
December 1998. In accordance with generally accepted accounting principles,
these fees were charged to equity in the first quarter of 1999.
NOTE 4: LEGAL PROCEEDINGS
On February 11, 1997, fifteen former shareholders of the Company filed a
lawsuit against the Company. The complaint, which deals with actions occurring
prior to the Company's filing for bankruptcy in 1991, alleges that the Company
along with its then principal officers and others defrauded the plaintiffs in
violation of the Alabama Securities Act and other Alabama statutory provisions.
The plaintiffs seek compensatory damages in the amount of their alleged losses
of approximately $2.0 million and unspecified punitive damages. The Company
filed a motion to dismiss and/or for summary judgement on March 17, 1997. The
motion filed by the Company contends that the claims asserted are barred by the
applicable statutes of limitations. The motion is still pending before the
court. In the event the plaintiffs' claims are not dismissed pursuant to the
5
<PAGE> 8
THE ENSTAR GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company's motion, the Company intends to contest the plaintiffs' claims
vigorously. The Company cannot, however, reasonably predict the outcome of this
lawsuit.
NOTE 5: INVESTMENT INCOME
Investment income for the three and six months ended June 30, 1999 and 1998
is made up of the following components:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ------------------------
1999 1998 1999 1998
---------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Gain on sale of First Union common
stock................................. -- -- -- $ 2,818,000
Gain (loss) on call option
transactions.......................... -- $ 47,000 -- (1,127,000)
Dividend and interest income............ $1,077,000 514,000 $2,147,000 1,040,000
---------- -------- ---------- -----------
Total investment income....... $1,077,000 $561,000 $2,147,000 $ 2,731,000
========== ======== ========== ===========
</TABLE>
6
<PAGE> 9
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Shareholders of
The Enstar Group, Inc.:
We have reviewed the accompanying consolidated balance sheet of The Enstar
Group, Inc. and subsidiary as of June 30, 1999, and the related consolidated
statements of income, comprehensive income and cash flows for the three-month
and six-month periods ended June 30, 1999 and 1998. These financial statements
are the responsibility of The Enstar Group, Inc. and subsidiary's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Enstar Group, Inc. and
subsidiary as of December 31, 1998 and the related consolidated statements of
income, comprehensive income, shareholders' equity and cash flows for the year
then ended (not presented herein); and in our report dated March 15, 1999, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1998 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ DELOITTE & TOUCHE LLP
July 27, 1999
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
The Company's assets, aggregating approximately $68.5 million at June 30,
1999, consisted primarily of cash, cash equivalents and certificates of deposit.
The Company is currently engaged in the active search for one or more
operating businesses. This search occupies substantially all of the time of the
Company's senior officers. The Company's officers and directors have made
efforts to identify suitable acquisition targets, however, such efforts have not
resulted to date in any definitive agreements with respect to the acquisition of
any business or company. With the exception of various expenses incurred in
connection with the Company's search for an operating company, its only needs
are to fund normal operating expenses. In the event the Company fails to acquire
an operating business within a reasonable period of time, the Company will
consider other alternatives, including, but not limited to, liquidation of the
Company.
Financial Condition
The Company had total assets of $68.5 million at June 30, 1999 compared to
$68.0 million at December 31, 1998.
Results of Operations
The Company reported net income of $562,000 and $810,000 for the three and
six month periods ended June 30, 1999, compared to net income of $108,000 and
$1,453,000 for the same periods in the prior year. The changes in net income
from the three and six month periods ended June 30, 1999 compared to the same
periods in the prior year are primarily a result of changes in the components of
investment income and, in 1999, increased general and administrative expenses.
Investment income was approximately $1.1 million and $2.1 million for the
three and six months periods ended June 30, 1999, respectively, compared to
approximately $561,000 and $2.7 million for the same periods in the prior year.
During the first quarter of 1998, the Company recorded a gain on the sale of
101,939 shares of First Union common stock of $2.8 million net of losses on call
option transactions of approximately $1.2 million. In addition, the Company had
interest and dividend income of approximately $526,000 in the first quarter of
1998. Investment income for the three months ended June 30, 1998 primarily
consisted of interest and dividend income of approximately $514,000. Investment
income for the three and six month periods ended June 30, 1999 consisted almost
entirely of interest income. Since the sale of the Company's remaining holdings
in First Union common stock during the year ended December 31, 1998, the Company
has invested primarily in interest bearing accounts and certificates of deposit.
General and administrative expenses were $722,000 and $1.5 million for the
three and six month periods ended June 30, 1999, respectively, compared to
$476,000 and $1.2 million for the same periods in 1998. In addition to normal
operating expenses, general and administrative expenses include legal and
professional fees as well as travel expenses incurred in connection with the
Company's search for an operating company. Most variances in general and
administrative expenses can be attributed to the number of potential acquisition
candidates the Company locates as well as the degree of interest the Company may
have in such candidates. The stronger the interest in a candidate, the more
rigorous financial and legal due diligence the Company will incur with respect
to that candidate. During 1999, the Company incurred an increase in general and
administrative expenses as a direct result of intensive evaluation of several
potential acquisition candidates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to some market risk from changes in interest rates,
but the Company does not believe the risk is material. The Company had cash and
cash equivalents of approximately $63.4 million in interest bearing accounts
(interest at floating rates) and approximately $3.6 million of short-term
certificates of deposit (interest at fixed rates) at June 30, 1999. Although
interest rate changes would affect the fair value of the Company's certificates
of deposits, the weighted average original term of certificates held by the
8
<PAGE> 11
Company at June 30, 1999 was approximately 9 months. The short-term nature of
these certificates limits the Company's risk of changes in the fair value of
these certificates. The Company also had a full recourse note receivable at June
30, 1999, classified as a reduction of equity. The $15.0 million note bears
interest at a fixed rate of 4.06% per annum, requires quarterly interest
payments, and matures in December 2000. The note was recorded at a discount so
as to yield a current market rate of interest as of the date of issuance of the
note.
PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 11, 1997, fifteen former shareholders of the Company filed a
lawsuit against the Company in the Circuit Court of Montgomery County, Alabama
styled Peter N. Zachary, et al. v. The Enstar Group, Inc., Case No.
CV-97-257-Gr. The complaint, which deals with actions occurring prior to the
Company's filing for bankruptcy in 1991, alleges that the Company along with its
then principal officers and others defrauded the plaintiffs in violation of the
Alabama Securities Act and other Alabama statutory provisions. The plaintiffs
seek compensatory damages in the amount of their alleged losses of approximately
$2 million and unspecified punitive damages. The complaint is virtually
identical to a complaint brought by these plaintiffs against the Company's
former chairman, former president and others in December 1991, during the
pendency of the Company's bankruptcy case and prior to the confirmation of the
Company's Second Amended Plan of Reorganization, as modified (the
"Reorganization Plan"). The plaintiffs allege that the United States Bankruptcy
Court for the Middle District of Alabama (the "Bankruptcy Court") issued an
order on January 15, 1997, allowing them to litigate their claims against the
Company. The Bankruptcy Court's order actually held that the plaintiffs could
not bring a late claim against the Company in its bankruptcy case and then went
on to state that because of facts relating to these particular plaintiffs, they
were not bound by the provisions of the Reorganization Plan and their claims
were not subject to discharge under the Bankruptcy Code. On March 17, 1997, the
Company filed a motion to dismiss and/or for summary judgment in response to the
complaint on the basis that the claims asserted are barred by the applicable
statute of limitations. The motion is still pending before the court. In the
event the plaintiffs' claims are not dismissed pursuant to the Company's motion,
the Company intends to contest the plaintiffs' claims vigorously. The Company
cannot, however, reasonably predict the outcome of this litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on May 20, 1999.
Matters voted upon at the meeting and the number of votes cast for, against or
withheld, are as follows:
(1) To consider and act upon a proposal to elect the following nominee
to be a Director:
<TABLE>
<CAPTION>
VOTES
NOMINEE VOTES FOR WITHHELD
- ------- --------- --------
<S> <C> <C>
Nimrod T. Frazer*........................................... 4,520,795 173,784
</TABLE>
- ---------------
* Elected to hold office until the 2002 annual meeting of shareholders.
In addition to Mr. Frazer, the continuing directors are T. Whit Armstrong,
T. Wayne Davis, J. Christopher Flowers and Jeffrey S. Halis. Messrs. Armstrong
and Davis' terms expire in the year 2000 while Messrs. Flowers and Halis' terms
expire in the year 2001.
(2) To appoint Deloitte & Touche LLP as independent auditors for the
year ended December 31, 1999. Votes cast were: 4,649,679 for, 26,456
against and 18,444 abstentions.
9
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
REFERENCE
NUMBER DESCRIPTION OF EXHIBITS
- --------- -----------------------
<C> <S> <C>
2.1 -- Second Amended Plan of Reorganization of the Company,
effective as of June 1, 1992 (incorporated by reference to
Exhibit 2.1 to the Amendment No. 2 to Registration Statement
on Form 10, dated March 27, 1997).
2.2 -- Amended Modification to Second Amended Plan of
Reorganization of the Company, confirmed on August 24, 1993
(incorporated by reference to Exhibit 2.2 to the Amendment
No. 2 to Registration Statement on Form 10, dated March 27,
1997).
2.3 -- Agreement and Plan of Merger, dated as of December 31, 1996
(incorporated by reference to Exhibit 2.3 to the Amendment
No. 2 to Registration Statement on Form 10, dated March 27,
1997).
3.1 -- Articles of Incorporation of the Company, as amended on June
10, 1998 (incorporated by reference to Exhibit 3.1 to the
Quarterly Report on Form 10-Q, dated August 4, 1998).
3.2 -- Bylaws of the Company, as amended on May 20, 1999.
4.1 -- Rights Agreement between the Company and American Stock
Transfer & Trust Company, as Rights Agent, dated as of
January 20, 1997 (incorporated by reference to Exhibit 4.1
to the Amendment No. 2 to Registration Statement on Form 10,
dated March 27, 1997).
4.2 -- Amendment Agreement dated as of October 20, 1998, to the
Rights Agreement dated as of January 20, 1997 between the
Company and American Stock Transfer & Trust Company
(incorporated by reference to Exhibit 10.2 to the Current
Report on Form 8-K dated October 20, 1998).
27.1 -- Financial Data Schedule. (For SEC Use Only).
99.1 -- The Enstar Group, Inc. Private Securities Litigation Reform
Act of 1995 Safe Harbor Compliance Statement For
Forward-Looking Statements (incorporated by reference to
Exhibit 99.1 to the Annual Report on Form 10-K, dated March
29, 1999).
99.2 -- Notice of Pending Distribution of New Common Stock in The
Enstar Group, Inc. (incorporated by reference to Exhibit
99.1 to the Amendment No. 2 to Registration Statement on
Form 10, dated March 27, 1997).
99.3 -- Modified Order on Proposed Distribution to Equity Security
Holders by the United States Bankruptcy Court for the Middle
District of Alabama (incorporated by reference to Exhibit
99.2 to the Amendment No. 2 to Registration Statement on
Form 10, dated March 27, 1997).
</TABLE>
(b) Reports on Form 8-K
There were no reports filed on Form 8-K for the quarter ended June 30,
1999.
10
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE ENSTAR GROUP, INC.
By: /s/ CHERYL D. DAVIS
------------------------------------
Cheryl D. Davis
Chief Financial Officer, Vice
President
of Corporate Taxes, Secretary
(Authorized Officer)
(Principal Financial Officer)
Date: August 6, 1999
11
<PAGE> 1
THE ENSTAR GROUP, INC.
BYLAWS
ARTICLE I
SHAREHOLDERS
Section 1. ANNUAL MEETINGS. The annual meeting of the shareholders of
this Corporation for the election of directors, and for the transaction of such
other business as may properly come before the meeting, shall be held at the
principal business office of this Corporation, or at such other place within or
without the State of Georgia as may be designated from time to time, on the
third Thursday in May in each year, at 10:00 o'clock in the morning, or, in the
event that the same shall fall upon a legal holiday, then upon the next
succeeding business day. However, failure to hold the annual meeting at the
designated time or to elect a sufficient number of directors to conduct the
business of the Corporation shall not affect otherwise valid corporate acts or
work a forfeiture or dissolution of the Corporation except as may be otherwise
specifically provided by law. If the annual meeting for election of directors
is not held on the date designated therefor, the directors shall cause the
meeting to be held as soon thereafter as may be convenient. The annual meeting
may be called prior to the designated time, in which event each shareholder of
record shall be notified as provided in Article I, Section 3, of these Bylaws.
Section 2. NOTICE OF ANNUAL MEETING. Notice of any annual meeting of
the shareholders of this Corporation shall be given in writing, personally or
by mail, by the Secretary to each shareholder of record not less than ten (10)
nor more than sixty (60) days before such meeting. The notice shall state the
place, date and hour of such meeting and, if special action is to be taken,
such notice also shall state the special action which is proposed to be taken.
If notice of the annual meeting is mailed, it shall be deemed to have been
given when deposited in the United States mail, postage prepaid, directed to
the shareholder at his address as it appears on the records of the Corporation.
Section 3. SPECIAL MEETING. A special meeting of the shareholders of
this Corporation may be called at any time by the Chairman, or by the written
request of a majority of the Board of Directors; but such special meetings may
not be called by any other person or persons except as may be required by the
Georgia Business Corporation Code. Such meeting may be held at any time and at
any place within or without the State of Georgia, which time and place
<PAGE> 2
shall be specified in such request. No business other than that specified in
the notice of the meeting shall be transacted.
Section 4. NOTICE OF SPECIAL MEETING. Notice of any special meeting of
the shareholders of this Corporation shall be given in writing, personally or
by mail, by the Secretary to each shareholder of record not less than ten (10)
nor more than sixty (60) days before such meeting. The notice shall state the
place, date and hour of such meeting, and such notice also shall state the
purpose or purposes for which the meeting is called. If notice of a special
meeting is mailed, it shall be deemed to have been given when deposited in the
United States mail, postage prepaid, directed to the shareholder of record at
his address as it appears on the records of the Corporation.
Section 5. WAIVER OF NOTICE. Any shareholder entitled to notice
pursuant to these Bylaws may waive notice, either of the annual or any special
meeting of the shareholders, before or after the time stated in such notice. A
waiver of notice in writing signed by the shareholder entitled to such notice
shall be equivalent to the giving of such notice. Neither the business to be
transacted nor the purpose of any regular or special meeting of shareholders
need be specified in any such written waiver of notice. Attendance of a
shareholder at a shareholders' meeting shall constitute waiver of notice of
such meeting except when the shareholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened.
Section 6. ACTION WITHOUT MEETING. Any action required to be, or which
may be, taken at a meeting of the shareholders, may be taken without a meeting
if written consent, setting forth the actions so taken, shall be signed by
persons who would be entitled to vote at a meeting those shares having voting
power to cast not less than the minimum number (or numbers, in the case of
voting by classes) of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote were present and
voted; except that, such written consent shall not be valid unless (i) the
consenting shareholders have been furnished the same materials, that pursuant
to the Georgia Business Corporation Code, would have been required to be sent
to shareholders in a notice of a meeting at which the proposed action would
have been submitted to the shareholders for action, including notice of any
applicable dissenters' rights as provided in Section 14-2-1320 of the Georgia
Business Corporation Code, or (ii) the written consent contains an express
waiver of the right to receive the material otherwise required to be furnished.
Pursuant to the Georgia Business Corporation Code, notice shall be given within
ten (10) days of the taking of corporate action without a meeting by
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less than unanimous consent to those shareholders on the record date whose
shares were not represented on the written consent.
Section 7. QUORUM. A quorum for the transaction of business at any
annual or special meeting of shareholders shall exist when the holders of a
majority of the outstanding shares entitled to vote are represented either in
person or by proxy at such meeting. If a quorum is present, the affirmative
vote of the majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders, unless a
greater vote is required by law, by the Articles of Incorporation or by these
Bylaws. When a quorum is once present to organize a meeting, the shareholders
present may continue to do business at the meeting or at any adjournment
thereof notwithstanding the withdrawal of enough shareholders to leave less
than a quorum. The holders of a majority of the voting shares represented at a
meeting, whether or not a quorum is present, may adjourn such meeting from time
to time.
Section 8. VOTING. Each shareholder of this Corporation shall be
entitled to one vote, in person or by proxy, for each share standing in the
name of such shareholder on the books of this Corporation. There shall be no
voting of treasury shares allowed. No shares shall be voted at any meeting of
shareholders or counted in determining the total number of outstanding shares
at any given time if the consideration for such shares has not been fully paid
to the Corporation.
Section 9. VOTING RIGHTS OF FIDUCIARIES, PLEDGORS AND JOINT OWNERS OF
STOCK.
(a) Persons holding stock in a fiduciary capacity shall be entitled to
vote the shares so held. Persons whose stock is pledged shall be entitled to
vote, unless in the transfer by the pledgor on the books of the Corporation he
has expressly empowered the pledgee to vote thereon, in which case only the
pledgee or his proxy may represent such stock and vote thereon.
(b) If shares or other securities having voting power stand of record
in the names of two or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants in common, tenants by the entirety or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, unless the Secretary of the Corporation is given
written notice to the contrary and is furnished with a copy of the instrument
or order appointing them or creating the relationship wherein it is so
provided, their acts with respect to voting shall have the following effect:
(1) If only one vote, his act binds all;
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(2) If more than one vote, the act of the majority so voting binds
all;
(3) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionally, or any person voting the shares, or a beneficiary, if any, may
apply to such court as may have jurisdiction to appoint an additional person to
act with the persons so voting the shares, which shall then be voted as
determined by a majority of such persons and the person appointed by the court.
If the instrument so filed shows that any such tenancy is held in unequal
interests, a majority or even-split for the purposes hereof shall be a majority
or even-split in interest.
Section 10. PROXIES. A shareholder may vote either in person or by
proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. No proxy shall be voted or acted upon after eleven (11)
months from its date, unless the proxy provides for a longer period. A
shareholder may execute a writing authorizing another person or persons to act
for such shareholder as proxy. Execution may be accomplished by the shareholder
or such shareholder's authorized officer, director, employee or agent signing
such writing or causing such person's signature to be affixed to such writing
by any reasonable means including, but not limited to, by facsimile signature.
In addition, a shareholder may authorize another person or persons to act for
such shareholder as proxy by transmitting or authorizing the transmission of a
telegram, cablegram, telecommunication, telephone call, or other means of
electronic transmission, including, without limitation, communication via the
Internet, to the person who will be the holder of the proxy or to a proxy
solicitation firm, proxy support service organization or like agent duly
authorized by the person who will be the holder of the proxy to receive such
transmission or communication. The Board of Directors shall develop such
policies and procedures as it deems necessary to ensure that such methods of
transmitting or communicating a shareholder's proxy are reliable and that
information can be submitted with such transmission or communication to verify
that the proper authorization was granted by the shareholder granting the
proxy.
Section 11. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATES. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders
for any purpose, the Board of Directors of the Corporation may fix in advance a
date as the record date for any such determination, such date in any case to be
not more than seventy (70) days prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken.
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Section 12. LIST OF SHAREHOLDERS ENTITLED TO VOTE. After fixing a
record date for a meeting, the Secretary of the Corporation shall prepare and
make, or cause to be prepared and made, from the stock ledger of the
Corporation, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order and showing the address of each
shareholder and the number of shares registered in the name of each
shareholder. This list shall be produced and kept open at the time and place of
the meeting. In the absence of objection by any shareholder, failure to comply
with the requirements of this Section shall not affect the validity of any
action taken at the meeting. If the Corporation refuses to allow a shareholder,
his agent, or his attorney to inspect the shareholders' list at the meeting,
the superior court of the county where the Corporation's registered office is
located, on application of the shareholder, may summarily order the inspection
at the Corporation's expense and may postpone the meeting for which the list
was prepared until the inspection is complete.
ARTICLE II
DIRECTORS
Section 1. NUMBER, QUALIFICATION AND ELECTION. The business, affairs,
and property of this Corporation shall be managed by a board of directors. The
number of directors of the Corporation shall be no less than three (3) and no
more than fifteen (15). The number of directors serving on the Board shall be
decreased or increased only by a majority vote of the directors; provided,
however, that any increase or decrease in the number of directors shall be
apportioned among the classes provided for herein, so as to make all such
classes as nearly equal in number as possible. The Board of Directors shall be
divided into three classes, as nearly equal in number as the then total number
of directors constituting the whole Board, with the term of office of one class
expiring each year.
At the annual meeting of shareholders in 1997, directors in the first
class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected to
hold office for a term expiring at the second succeeding annual meeting, and
directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Subject to the foregoing, at
each annual meeting of shareholders the successors to the class of directors
whose term shall then expire shall be elected to hold office for a term
expiring at the third succeeding annual meeting.
The Board of Directors shall nominate candidates to serve as members
of the Board of Directors, and the directors shall be elected by a plurality of
the votes cast by the shares entitled to
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vote in the election at an annual meeting of the shareholders at which a quorum
is present. Any shareholder entitled to vote for the election of directors may
submit to the Board of Directors nominations for the election of directors only
by giving written notice (such notice to include a statement of the
qualifications of the nominee) to the Secretary of the Corporation at least
sixty (60) days but not more than ninety (90) days prior to the annual meeting
of shareholders at which directors are to be elected, unless such requirement
is waived in advance of the meeting by the Board of Directors.
Each director shall hold office until his or her successor shall have
been duly elected and qualified, or until the death, resignation or removal of
such director in the manner herein provided. Directors need not be
shareholders. The Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by the statute,
the Articles of Incorporation, or by these Bylaws, directed or required to be
exercised or done by the shareholders. The age limit for Directors who are not
full-time employees of the Corporation shall be seventy (70) years. Directors
turning seventy (70) years of age and who are not full-time employees of the
Corporation may continue to serve until the annual meeting of the shareholders
next following their seventieth (70th) birthday. No such Director who is not a
full-time employee of the Corporation shall be eligible for nomination and
election to serve as a Board member following his seventieth (70th) birthday.
Section 2. VACANCIES AND REMOVAL. If the office of any director shall
become vacant between annual meetings by reason of death, resignation or
disqualification, or by reason of an increase in the number of directors, the
remaining directors may, by a majority vote, though less than a quorum of the
Board of Directors, elect a director to fill such vacancy, and any director so
elected shall hold office until the next annual meeting of the shareholders,
and until his successor shall have been duly elected by the shareholders. Any
director may resign at any time upon written notice to the Corporation. The
shareholders may remove a director only with cause.
Section 3. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held immediately following the annual meeting of the
shareholders, provided that the failure to hold the annual meeting shall not
work a forfeiture or otherwise affect valid corporate acts. The Board of
Directors may by resolution provide for the time and place of such regular
meetings and no notice of such regular meetings need be given.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called at any time by the President or by two (2) members of
the Board of Directors. Notice of any special
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meeting of the Board of Directors shall be given in writing, personally or by
mail, or by telephone or telegraph to each director not less than two (2) days
before such meeting. The notice shall state the time, place and the purpose or
purposes for which the meeting is called. If notice of a special meeting is
mailed, it shall be deemed to have been given when deposited in the United
States mail, addressed to the director at his last known post office address.
Section 5. WAIVER OF NOTICE. Notice of any meeting of the Board of
Directors may be waived either before or after the time stated in such notice.
A waiver of notice in writing signed by the director entitled to such notice
shall be equivalent to the giving of such notice. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of directors
need be specified in any such written waiver of notice. Attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called
or convened.
Section 6. PLACE OF MEETINGS. All regular and special meetings of the
Board of Directors shall be held at the principal office of this Corporation,
or at such other place or places within or without the State of Georgia, as
said Board may designate. Members of the Board of Directors may participate in
a meeting of such Board by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation by such means shall constitute
presence in person at a meeting.
Section 7. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors, or any committee thereof,
may be taken without a meeting if a consent in writing, setting forth the
actions so taken, shall be signed by all directors entitled to vote with
respect to the subject matter thereof. Such consent shall have the same force
and effect as a unanimous vote of the directors, and may be stated as such in
any writing or document. Such written consent shall be filed with the minutes
of proceedings of the Board.
Section 8. QUORUM. A majority of the directors of this Corporation
shall constitute a quorum for the transaction of business at any regular or
special meeting of the Board of Directors. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors, unless the act of a greater number is required by the
Georgia Business Corporation Code, the Articles of Incorporation or by these
Bylaws.
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Section 9. VOTING. At all meetings of the Board of Directors each
director shall have one vote.
Section 10. COMPENSATION. Directors shall have authority to fix the
compensation to be paid for their services as directors. Nothing shall preclude
any director from serving the Corporation in any other capacity as an officer,
agent or otherwise, and receiving compensation therefor.
Section 11. TELEPHONE CONFERENCE MEETINGS. Unless the Articles of
Incorporation provide otherwise, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board or committee by means of telephone conference or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section 11 shall constitute presence in person at such meeting.
ARTICLE III
COMMITTEES
Section 1. DESIGNATION OF COMMITTEES. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. No member of any committee shall continue to be a
member of it after he ceases to be a director of the Corporation. The Board of
Directors shall have the power at any time to increase or decrease the number
of members of any committee, to fill vacancies on it, to remove any member of
it and to change its functions or terminate its existence.
Section 2. POWERS OF COMMITTEES. The Board of Directors, by resolution
adopted by majority of all the directors, may designate from among its members
an Executive Committee, and/or other committees, each composed of two or more
directors, which may exercise such authority as is delegated by the Board of
Directors, provided that no committee shall have the authority of the Board of
Directors to (i) approve or propose to shareholders any action that the Georgia
Business Corporation Code requires to be approved by the shareholders, (ii)
fill vacancies on the Board of Directors or on any of its committees, (iii)
amend the Articles of Incorporation of the Corporation pursuant to Section
14-2-1002 of the Georgia Business Corporation Code, (iv) adopt, amend, or
repeal the Bylaws of the Corporation, or (v) approve a plan of merger not
requiring shareholder approval.
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Section 3. MEETINGS. Meetings of such committees, regular or special,
may be held either within or without the State of Georgia. Regular meetings may
be established by resolution of the Board of Directors, and no notice shall be
required thereof. Special meetings of the committees shall be called at the
request of any member of the committee and shall be held upon notice delivered
personally or by mail, telephone or telegraph, within two (2) days of the
meeting. Notice may be waived in writing either before or after the time of the
meeting. Attendance of any member of a committee shall constitute waiver of
notice of the meeting. Any committee designated by the Board may participate in
a meeting of such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such means shall
constitute presence in person at such meeting.
Section 4. RECORD OF PROCEEDINGS. Any committee established by the
resolution of the Board of Directors shall keep minutes of its acts and
proceedings. These minutes shall be submitted to the next succeeding meeting of
the Board of Directors for approval, but failure to submit or to receive
approval of such minutes shall not invalidate any action taken upon
authorization contained in them.
Section 5. QUORUM. A majority of any committee established by the
Board of Directors shall be necessary to constitute a quorum for the
transaction of any business. The act of a majority of the members present at a
meeting at which a quorum is present shall be the act of such committee.
Section 6. COMPENSATION. The Board of Directors may vote to pay the
members of any committee established by it such compensation as it deems proper
for the performance of the duties required of such members of the committee.
ARTICLE IV
OFFICERS
Section 1. ELECTION AND APPOINTMENT. At the first meeting of the Board
of Directors after the annual meeting of the shareholders, the directors shall
choose a President, a Secretary and a Treasurer, and may choose a Chairman of
the Board and such other officers and assistant officers as the Corporation
from time to time may need, none of whom need be directors, except the Chairman
of the Board. Any two offices or more may be held by one person. All of said
officers shall hold office until the first meeting of the Board of Directors
following the next annual meeting of the shareholders and until their
respective successors shall be duly elected and shall qualify; provided,
however, that a majority of the whole Board may authorize an employment
contract with an
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employee or an officer which may extend beyond the term of one year. If any
vacancy occurs among the above offices, such vacancy may be filled for the
remainder of the term by the Board of Directors at a regular or special meeting
thereof, and any officer so selected shall hold office until his successor
shall be duly elected and shall qualify.
Section 2. SUSPENSION AND REMOVAL. Any officer of the Corporation
appointed by the Board of Directors may be removed or suspended by a majority
vote of the Board of Directors at any time, with or without cause, or, if any
employment contract with the officer is in effect, in accordance with the terms
of such contract. Any agent or employee appointed or employed by the President
may be removed or discharged or suspended by him at any time, with or without
cause.
Section 3. POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD. The
Chairman of the Board of Directors shall give general supervision and direction
to the affairs of the Corporation, subject to the direction of the Board of
Directors. The Chairman shall have the authority to execute contracts,
mortgages, agreements or instruments under the seal of the Corporation. He
shall preside at all meetings of the shareholders.
Section 4. POWERS AND DUTIES OF THE PRESIDENT. The President shall be
in charge of the day-to-day affairs of the Corporation, subject to the
direction of the Board of Directors and the Chairman. The President shall have
the authority to execute contracts, mortgages, agreements or instruments under
the seal of the Corporation. The President shall preside at meetings of the
shareholders in the absence of the Chairman and shall act in the case of
absence or disability of the Chairman
Section 5. POWERS AND DUTIES OF THE VICE PRESIDENTS. The Vice
Presidents of this Corporation, if there shall be any, shall generally assist
the President and shall perform such duties as may be assigned by the Board of
Directors. In the event of death, resignation, absence or inability to act of
the President, the Vice Presidents, if there shall be any, in the order
determined by the Board of Directors, shall assume and discharge pro tempore
the powers and duties of the President of this Corporation.
Section 6. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall be
ex officio secretary of the Board of Directors. He shall keep the minutes of
all meetings of the Board of Directors and shareholders. He shall have charge
of the corporate books and records. He shall keep in safe custody the seal of
this Corporation and, when authorized by the Board of Directors, shall affix
the seal to any instrument requiring the same. He shall be authorized to sign
certificates of stock with other authorized officers of the Corporation. He
shall keep accounts of stock
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registered and transferred in the manner prescribed by law. He shall give and
serve all notices to the shareholders and directors, except that notice for
special meetings of directors called at the request of two (2) directors, as
provided in Section 4 of Article II of these Bylaws, may be issued by such
directors. In general, he shall perform all the duties incident to his office.
Section 7. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall
have the care and custody of and be responsible for all the funds, securities,
evidences of indebtedness and other valuable documents of the Corporation, and
deposit all such funds in the name of the Corporation in such banks or trust
companies or other depositories, or in such safe deposit vaults as the Board of
Directors may designate. The Treasurer shall render a statement of the
condition of the finances of the Corporation at each regular meeting of the
Board of Directors and at such other times as shall be required of him, and a
full financial report at the annual meeting of the shareholders. The Treasurer
shall keep at the office of the Corporation full and accurate books of account
of all its business and transactions and such other books of account as the
Board of Directors may require, and shall exhibit the same to any directors of
the Corporation upon application therefor. In general, he shall perform all the
duties incident to his office.
Section 8. ASSISTANT OFFICERS. The Board of Directors may elect one
or more assistants to any officer, and any such assistant shall exercise the
duties of his office in the absence of the officer whom he has been elected to
assist.
Section 9. OTHER DUTIES AND AUTHORITY. Each officer, employee and
agent of the Corporation shall have such other duties and authority as may be
conferred upon him by the Board of Directors or delegated to him by the
Chairman of the Board of Directors.
Section 10. RETURNS AND STATEMENTS. It shall be the duty of each
officer of this Corporation to make and file any and all returns, reports,
lists or statements required by law to be made and filed by him, and to make
full report to the Board of Directors respecting the affairs of the Corporation
in his charge whenever he may be requested to do so.
Section 11. COMPENSATION. The salaries of all officers shall be fixed
by the Board of Directors, and the fact that any officer is a director shall
not preclude him from receiving a salary or from voting upon the resolution
providing the same.
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ARTICLE V
STOCK
Section 1. PREEMPTIVE RIGHTS. No shareholder shall have the
preemptive right to subscribe for or purchase any shares or other
securities issued by the Corporation.
Section 2. STOCK CERTIFICATES. The shares of stock of the Corporation
shall be represented by certificates in such form as shall be approved by the
Board of Directors. Certificates of stock shall be signed by the Chairman of
the Board, or by the President or a Vice President, and by the Secretary or
Treasurer, or Assistant Secretary or Assistant Treasurer, and shall be sealed
with the corporate seal (which may be a facsimile engraved or printed upon the
certificate). Unless the Board of Directors shall determine to the contrary,
any or all such signatures may be facsimile, even though the signature of a
transfer agent or registrar, if any, is also facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such an officer, transfer agent
or registrar at the date of its issue.
Section 3. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint a transfer agent or agents and a registrar for the stock of the
Corporation. The transfer agent shall be in charge of the issue, transfer and
cancellation of shares of stock and shall countersign all stock certificates,
which countersignatures may be by facsimile unless the Board of Directors
determines to the contrary. The transfer agent shall maintain stock transfer
books, which shall include a record of the shareholders, with their names and
addresses and the number of shares held by each. The transfer agent shall
prepare voting lists for meetings of shareholders, produce and keep open these
lists at meetings and perform such other duties as may be delegated by the
Board of Directors of the Corporation. Shareholders shall give notice of
changes of their addresses to the transfer agent. The registrar shall be in
charge of preventing the over issue of shares, shall register all stock
certificates and perform such other duties as may be delegated by the Board of
Directors. The transfer agent and registrar may be one and the same person,
corporation or other entity.
Section 4. TRANSFER OF STOCK. The Corporation shall register a stock
certificate presented to it for transfer if the certificate is properly
endorsed by the holder of record or by his duly authorized attorney, and the
signature of such person or persons has been guaranteed by a national banking
association or by a
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member of the New York, American or Midwest stock exchanges, and reasonable
assurance is given that such endorsements are effective. In order to register a
stock certificate for transfer, the Corporation shall have no notice of any
adverse claims or shall have discharged any duty to inquire into any such
claims.
Section 5. LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation
shall issue a new stock certificate in the place of any certificate previously
issued if the holder of record of the certificate (1) makes proof in affidavit
form that it has been lost, destroyed or wrongfully taken; (2) requests the
issue of a new certificate before the Corporation has notice that the old
certificate has been acquired by a purchaser for value in good faith and
without notice of any adverse claim; (3) gives bond in such form, and with
surety or sureties, with fixed or open penalty, as the Corporation may direct,
to indemnify the Corporation, the transfer agent and registrar against any
claim that may be made on account of the alleged loss, destruction or theft of
a certificate; and (4) satisfies any other reasonable requirements imposed by
the Corporation. When a certificate has been lost, apparently destroyed or
wrongfully taken, and the holder of record fails to notify the Corporation
within a reasonable time after he has notice of it, and the Corporation
registers a transfer of the shares represented by this certificate before
receiving notification, the holder of record is precluded from making any claim
against the Corporation.
Section 6. RECORD HOLDERS. The Corporation shall be entitled to treat
the holder of record of any share or shares of its capital stock as the holder
in fact thereof and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, save as expressly
provided by the laws of Georgia.
ARTICLE VI
PERSONAL LIABILITY OF DIRECTORS; INDEMNIFICATION
Section 1. LIABILITY OF DIRECTORS. No director of the Corporation
shall be liable to the Corporation or its shareholders for monetary damages for
breach of duty of care or other duty as a director, other than liability (i)
for any appropriation, in violation of his duties, of any business opportunity
of the Corporation, (ii) for acts or omissions which involve intentional
misconduct or a knowing violation of law, (iii) for the types of liability set
forth in Section 14-2-832 of the Georgia Business Corporation Code, or (iv) for
any transaction from which the director derived an improper personal benefit.
If the Georgia Business Corporation Code is hereafter amended to authorize the
further limitation or elimination of the liability of a director,
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then the liability of a director of the Corporation shall be limited or
eliminated to the fullest extent permitted by the amended Georgia Business
Corporation Code. Any repeal or modification of this Section 1 shall be
prospective only, and shall not adversely affect any limitation or elimination
of the personal liability of a director of the Corporation existing at the time
of such repeal or modification.
Section 2. AUTHORITY TO INDEMNIFY: THIRD PARTY ACTIONS. Every person
now or hereafter serving as a director or officer of the Corporation and any
and all former directors and officers shall be indemnified and held harmless by
the Corporation from and against any and all loss, cost, liability and expense
that may be imposed upon or incurred by him in connection with or resulting
from any threatened, pending, or completed claim, action, suit, or proceeding
(other than an action by or in the right of the Corporation), whether civil,
criminal, administrative, or investigative, whether formal or informal, in
which he may become involved, as a party or otherwise, by reason of his being
or having been a director or officer of the Corporation, or arising from his
status as such, or that he is or was serving at the request of the Corporation
as a director, officer, employee, partner, trustee or agent of another
corporation, limited liability company, partnership, limited partnership,
limited liability partnership, joint venture, trust, employee benefit plan, or
other enterprise, regardless of whether such person is acting in such capacity
at the time such loss, cost, liability or expense shall have been imposed or
incurred. As used herein, the term "loss, cost, liability and expense" shall
include, but shall not be limited to, any and all costs, expenses (including
attorneys' fees and disbursements), judgments, penalties, fines, and amounts
paid in settlement incurred in connection with any such claim, action, suit or
proceeding if such person acted in good faith and, while acting in an official
capacity as a director or officer, acted in a manner he reasonably believed to
be in the best interests of the Corporation, and, in all other cases, acted in
a manner he reasonably believed was not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, if such
person had no reasonable cause to believe his conduct was unlawful. The
termination of any claim, action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in a
manner which meets the standard described in the immediately preceding
sentence. If any such claim, action, suit or proceeding is settled (whether by
agreement, plea of nolo contendere, entry of judgment or consent, or
otherwise), the determination in good faith by the Board of Directors of the
Corporation that such person acted in a manner that met the standards set forth
in this Section 2, shall be necessary and sufficient to justify
indemnification. If the Georgia Business Corporation Code is hereafter amended
to expand the minimum
- 14 -
<PAGE> 15
statutory indemnification rights for directors and officers, then the
indemnification rights of directors and officers of the Corporation granted
pursuant to this Section 2 shall be construed to provide such minimum
indemnification rights to the fullest extent permitted by the amended Georgia
Business Corporation Code. Any repeal or modifications to this Section 2 shall
be prospective only, and shall not adversely affect any indemnification rights
of an officer or director of the Corporation existing at the time of such
repeal or modification.
Section 3. AUTHORITY TO INDEMNIFY: DERIVATIVE ACTIONS. The Corporation
shall indemnify and hold harmless any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact he is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, partner, employee, trustee or agent of another corporation,
limited liability company, partnership, limited partnership, limited liability
partnership, joint venture, trust, employee benefit plan, or other enterprise,
against expenses (including attorneys' fees and disbursements), judgments and
any other amounts now or hereafter permitted by applicable law actually and
reasonably incurred by him or in connection with the defense or settlement of
such action or suit; except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the Corporation unless the director or officer has not been
adjudged liable or subject to injunctive relief in favor of the Corporation (i)
for any appropriation, in violation of his duties, of any business opportunity
of the Corporation; (ii) for acts or omissions which involve intentional
misconduct or a knowing violation of law; (iii) for the types of liability set
forth in Code Section 14-2- 832; or (iv) for any transaction from which he
received an improper benefit and in the event the foregoing conditions are not
met, then only to the extent that the court in which such action or suit was
brought or another court of competent jurisdiction shall determine upon
application, that despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which the court shall deem proper. Any repeal
or modifications to this Section 3 shall be prospective only, and shall not
adversely affect any indemnification rights of an officer or director of the
Corporation existing at the time of such repeal or modification.
Section 4. ADVANCEMENT OF EXPENSES. Expenses incurred in any claim,
action, suit or proceeding may be paid or reimbursed by the Corporation in
advance of the final disposition of such claim, action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt from the
director or officer of (i) a written affirmation of his good faith belief that
he has met
- 15 -
<PAGE> 16
the relevant standard of conduct set forth under Section 14-2-851 of the
Georgia Business Corporation Code, or that the proceeding involves conduct for
which liability has been eliminated under a provision of the Articles of
Incorporation of the Corporation(as authorized by Section 14-2-202(b)(4) of the
Georgia Business Corporation Code),and (ii) his undertaking to repay such
amount if it ultimately shall be determined that such director or officer is
not entitled to be indemnified by the Corporation.
Section 5. DETERMINATION OF INDEMNIFICATION RIGHTS. Except as ordered
by a court, the Corporation may not indemnify a director or officer under this
Article unless authorized hereunder and a determination has been made in the
specific case that indemnification of the director or officer is permissible
under the circumstances because he has met the relevant standard of conduct set
forth in either Section 2 or Section 3 hereof. The determination shall be made
(i) if there are two or more disinterested directors, by the Board of Directors
by a majority vote of all the disinterested directors (a majority of whom shall
for such purposes constitute a quorum), or by a majority of the members of a
committee of two or more disinterested directors appointed by such a vote; (ii)
by special legal counsel: (a) selected in the manner prescribed in clause (i)
of this sentence; or (b) if there are fewer than two disinterested directors,
selected by the Board of Directors (in which selection directors who do not
qualify as disinterested directors may participate); or (iii) by the
shareholders, but shares owned by or voted under the control of a director who
at the time does not qualify as a disinterested director may not be voted on
the determination.
Section 6. NON-EXCLUSIVE RIGHT OF INDEMNIFICATION. The foregoing
rights of indemnification and advancement of expenses shall not be deemed
exclusive of any other rights to which those indemnified may be entitled, and
the Corporation may provide additional indemnity and rights to its directors,
officers, employees or agents.
Section 7. INSURANCE. The Corporation may purchase and maintain
insurance, at its expense, on behalf of an individual who is or was a director,
officer, employee or agent of the Corporation or who, while a director,
officer, employee or agent of the Corporation, is or was serving at the request
of the Corporation, as a director, officer, partner, trustee, employee, or
agent of another corporation, limited liability company, partnership, limited
partnership, limited liability partnership, joint venture, trust, employee
benefit plan, or other enterprise, against liability asserted against or
incurred by him in any such capacity or arising from his status as a director,
officer, employee or agent, whether or not the Corporation would have power to
indemnify him against the same liability under this Article.
- 16 -
<PAGE> 17
Section 8. MISCELLANEOUS. The provisions of this Article VI shall
cover claims, actions, suits and proceedings, civil or criminal, whether now
pending or hereafter commenced and shall be retroactive to cover acts or
omissions or alleged acts or omissions which heretofore have taken place. In
the event of death of any person having the right of indemnification or
advancement of expenses under the provisions of this Article, such rights shall
inure to the benefit of his heirs, executors, administrators and personal
representatives. If The Enstar Group, Inc., a Delaware corporation, is merged
into the Corporation, then the directors, officers, employees and agents
thereof shall be entitled to the same indemnification rights as directors,
officers, employees and agents of the Corporation are entitled under these
Bylaws. If any part of this Article VI should be found to be invalid or
ineffective in any proceeding, the validity and effect of the remaining
provisions shall not be affected.
ARTICLE VII
BUSINESS COMBINATIONS
WITH INTERESTED SHAREHOLDERS
Pursuant to Section 14-2-1133 of the Georgia Business Corporation
Code, the Corporation hereby affirmatively elects that the provisions of
Sections 14-2-1131 through 14-2-1133 of the Georgia Business Corporation Code
specifically shall apply to the Corporation. Nothing in this Article VII shall
be deemed as prohibiting or restricting a merger of the Corporation's present
parent company (The Enstar Group, Inc., a Delaware corporation) with and into
the Corporation.
ARTICLE VIII
MISCELLANEOUS
Section 1. CORPORATE SEAL. The directors shall provide a suitable
corporate seal, which seal may contain the following words:
THE ENSTAR GROUP, INC.
CORPORATE SEAL
GEORGIA
Section 2. CONTRACTS, ETC. The Board of Directors may authorize any
officer or officers, agent or agents, employee or employees to enter into any
contract or other instrument on behalf of this Corporation, and such
authorization may be general or confined to specific instances. Except as
herein provided, or as authorized by the Board of Directors, no officer, agent
or employee, other than the President, Vice President, Secretary or Treasurer,
shall have any power or authority to bind this
- 17 -
<PAGE> 18
Corporation by any contract or engagement, or to pledge its credit or to render
it liable, for any purpose or for any amount.
Section 3. DEPOSITS, CHECKS AND DRAFTS. All checks and drafts or funds
of this Corporation shall be deposited from time to time to the credit of this
Corporation in such banks or trust companies or to other depositories, as the
Board of Directors may from time to time designate. All checks shall be drawn
out of the regular checkbooks of this Corporation and upon the stub of each
such check, or upon the file copy of the check retained by the Corporation, the
purpose and amount for which the same is drawn shall be specified. All checks,
notes, drafts, bills of exchange, acceptances or other orders for the payment
of money or other evidences of the indebtedness of the Corporation shall be
signed as shall from time to time be designated by resolution of the Board of
Directors.
Section 4. DIVIDENDS. The directors may from time to time declare
dividends upon the outstanding shares of stock from any source permitted under
the Georgia Business Corporation Code as and when the Board of Directors deems
expedient. Before declaring any dividend, there may be reserved out of the
accumulated profits such sum or sums as the directors from time to time in
their discretion think proper for working capital, or as a reserve fund to meet
contingencies, or for equalizing dividends, or for such other purposes as, in
the opinion of the directors, are conducive to the interest of the Corporation.
ARTICLE IX
AMENDMENT OF BYLAWS
Except for the provisions of Article VII hereof which may only be
amended as provided in Part 3 of Article 11 of the Georgia Business Corporation
Code, the Board of Directors shall have the power to alter, amend or repeal the
Bylaws of the Corporation at any annual meeting, or at a special meeting called
for that purpose by the affirmative vote of a majority of all of the directors
then in office, or by action of the Board taken by unanimous written consent in
lieu of a meeting.
- 18 -
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED FINANCIAL STATEMENTS CONTAINED IN ITS REPORT ON FORM 10-Q
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 63,403
<SECURITIES> 3,560
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 106
<DEPRECIATION> 70
<TOTAL-ASSETS> 68,461
<CURRENT-LIABILITIES> 355
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0
0
<COMMON> 57
<OTHER-SE> 67,453
<TOTAL-LIABILITY-AND-EQUITY> 68,461
<SALES> 0
<TOTAL-REVENUES> 2,392
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<INCOME-PRETAX> 857
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