EXHIBIT 3
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Registration Rights Agreement
December 18, 1998
J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sir:
This will confirm that in order to induce J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an
individual resident of the State of New York ("Flowers"), to consummate the
transactions contemplated under that certain Investment Agreement, dated as of
October 20, 1998, by and between The Enstar Group, Inc., a Georgia corporation
("Enstar"), and Flowers (the "Investment Agreement"), and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged
and confirmed, Enstar covenants and agrees with Flowers as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
"Registration Expenses" means the expenses so described in
Section 8(a) of this Agreement.
"Registration Shares" means the shares of Common Stock issued to
Flowers as contemplated in the Investment Agreement (as adjusted in
accordance with Section 10 of this Agreement) for so long as the
certificates representing such shares bear the legend set forth in
Section 2(a) of this Agreement or any other shares of Common Stock owned
or acquired by Flowers, except for any such shares acquired in violation
of the covenants and agreements contained in Section 5.2 of the
Investment Agreement.
"Selling Expenses" means the expenses so described in Section
8(a) of this Agreement.
In addition to the foregoing defined terms, any capitalized terms used
herein without definition shall have the meanings ascribed to such terms in the
Investment Agreement.
2. Legend.
(a) Each certificate representing the Registration Shares will be
stamped or otherwise imprinted with a legend substantially in the following
form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SHARES
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES AND OTHER JURISDICTIONS, AND IN THE CASE OF A
TRANSACTION EXEMPT FROM REGISTRATION, UNLESS ENSTAR HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE
SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.
Each certificate issued upon exchange or transfer of any such
Registration Shares will bear the legend set forth in this Section 2(a), except
that such certificate will not bear such legend (and Enstar will cause such
legend to be removed) if (i) such transfer is made pursuant to an effective
registration statement under the Securities Act, or (ii) Enstar is provided with
an opinion of counsel reasonably satisfactory to Enstar to the effect that such
transfer of the Registration Shares may be effected without registration under
the Securities Act or applicable state securities laws and other jurisdictions
and that the transferee (other than an affiliate of Enstar) would be entitled to
transfer such securities in a public sale without registration under the
Securities Act.
(b) In addition, each certificate issued upon exchange or transfer of
such Registration Shares will bear the legend set forth in this Section 2(b) for
so long the transfer restrictions in Section 4.6 of the Investment Agreement
shall be in effect with respect to such shares:
IN ADDITION, THE TRANSFER OF THE SHARES IS RESTRICTED
UNDER SECTION 4.6 OF AN INVESTMENT AGREEMENT, DATED AS OF
OCTOBER 20, 1998, BETWEEN ENSTAR AND BUYER. A COPY OF THIS
AGREEMENT IS ON FILE AT ENSTAR'S PRINCIPAL OFFICE.
3. Demand Registration.
(a) At any time during the period beginning on the expiration of the
transfer restrictions set forth in Section 4.6 of the Investment Agreement,
Flowers may request on not more than three (3) occasions that Enstar register
the Registration Shares under the Securities Act for public sale (the "Demand
Rights"). Any such Demand Rights request must be in writing signed by Flowers
and must designate the specific number of Registration Shares proposed to be
sold by Flowers in such public offering and the proposed plan of distribution
for the Registration Shares.
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(b) Notwithstanding anything to the contrary set forth in this
Section 3, Enstar shall have no obligation hereunder to: (i) register
Registration Shares if such registration involves 500,000 or fewer Registration
Shares or (ii) maintain the effectiveness of any registration statement filed
pursuant to this Section 3 for a period of time exceeding the Distribution
Period (as defined in Section 5(g) below).
(c) Enstar shall be entitled in its sole discretion to delay the
filing of the registration statement covering such Registration Shares for a
period of up to 90 days from the date of receipt of the request for Demand
Rights if its Board of Directors determines in good faith that such a delay is
in the best interests of Enstar and its shareholders; provided that Enstar shall
not have the right to exercise such discretion to delay such filing more than
once in any 365-day period.
(d) Notwithstanding anything to the contrary set forth in this
Section 3, if Flowers exercises a Demand Right and subsequently informs Enstar
in writing that (i) he desires to withdraw such registration or (ii) he is
unable to sell in excess of 50% of the Registration Shares covered by such
registration statement due to a deterioration in market conditions or other bona
fide reason, and Flowers reimburses Enstar for all Registration Expenses
incurred by Enstar in connection with such terminated registration, then Flowers
shall be deemed not to have exercised the Demand Right under this Agreement and
shall be permitted to exercise such right again in accordance with the terms of
Section 3(a) of this Agreement.
(e) If a registration effected pursuant to this Section 3 involves a
firm commitment underwritten public offering, Flowers shall have the sole right
to select the managing underwriters, subject to the approval of Enstar (such
approval not be unreasonably withheld or delayed).
4. Incidental Registration. If at any time following the Closing Date
Enstar proposes to register any Common Stock under the Securities Act (other
than on Forms ▇-▇, ▇-▇ or any other form which does not permit registration of
securities by Flowers for sale to the public for cash) in connection with the
proposed offer and sale for cash either for its own account or on behalf of any
holder of Common Stock, it will give written notice to Flowers of its intention
to do so. Upon the written request of Flowers, given within five business days
after receipt of any such notice, to register any of the Registration Shares,
Enstar will use its reasonable best efforts to cause the Registration Shares as
to which registration has been so requested to be included in the shares of
Common Stock to be covered by the registration statement proposed to be filed by
Enstar, all to the extent required to permit the sale or other disposition by
Flowers (in accordance with its written request) of such Registration Shares so
registered. If a registration effected pursuant to this Section 4 involves a
firm commitment
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underwritten public offering, Enstar shall have the sole right to select the
managing underwriters. The managing underwriters for such offering shall have
the authority to reduce the number of Registration Shares to be included in such
registration if and to the extent they are of the opinion (a copy of which shall
be delivered to Flowers), that inclusion of such Registration Shares would
materially adversely affect the marketing of the Common Stock to be sold under
such offering. Any such reduction or cutback in the shares included in any such
offering shall be effected in accordance with the following priorities:
(a) First, the managing underwriters shall exclude shares ("Piggyback
Shares") of Common Stock included in such registration by shareholders
(including Flowers) by virtue of incidental or piggyback registration rights
(but not demand registration rights) granted to such shareholders, which
exclusion shall be effected on a pro rata basis based upon the number of shares
of Common Stock so requested to be registered in such offering by all such
shareholders proposing to sell Piggyback Shares; and
(b) Second, and only to the extent necessary and after the exclusion of
all Piggyback Shares, the managing underwriters shall exclude shares of Common
Stock included in such registration by Enstar and any shareholder of Enstar who
shall have exercised a demand registration right in connection with such
offering, which exclusion shall be effected on a pro rata basis based upon the
number of shares of Common Stock proposed to be registered on behalf of Enstar
and on behalf of any such holder of demand registration rights.
Notwithstanding anything to the contrary contained in this Section 4, if
there is a firm commitment underwritten public offering of Common Stock pursuant
to which Flowers has incidental registration rights under this Section 4 and
Flowers elects to sell Registration Shares in connection with such underwritten
public offering, Flowers shall enter into an agreement (the "Lockup Agreement"),
pursuant to which Flowers shall refrain from selling any Registration Shares
(other than Registration Shares included in such Registration) then owned by
Flowers during the period of distribution of Common Stock by such underwriters
and for a period of ninety days following the effective date of such
registration; provided, however, that Flowers shall be required to enter into
the Lockup Agreement if, and only if, directors and executive officers of Enstar
enter into an agreement similar to the Lockup Agreement.
5. Registration Procedures. If and whenever Enstar is required by the
provisions of Section 3 or 4 of this Agreement to effect the registration of any
of the Registration Shares under the Securities Act, Enstar shall, as
expeditiously as practical:
(a) prepare and file with the SEC a registration statement on the
applicable form with respect to such
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Registration Shares and use its reasonable best efforts to cause such
registration statement to become and remain effective for the Distribution
Period, but no longer, and to promptly notify Flowers of when such registration
statement and any amendment to such registration statement becomes effective,
and to provide Flowers with reasonable access to any written comments received
from the SEC in connection with such registration and any written responses to
such registration statement and any stop order received from the SEC in
connection with such registration statement;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to keep such registration statement
effective for the Distribution Period, but no longer, and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registration Shares covered by such registration statement;
(c) furnish to Flowers such number of copies of the registration
statement and the prospectus included in such registration statement (including
each preliminary prospectus) as he may reasonably request in order to facilitate
the public sale or other disposition of the Registration Shares covered by such
registration statement;
(d) use its reasonable best efforts to register or qualify the
Registration Shares covered by such registration statement under the securities
or blue sky laws of such jurisdictions as Flowers or, in the case of an
underwritten public offering, the managing underwriters, shall reasonably
request; provided, however, that Enstar shall not for any purpose be required to
qualify to do business as a foreign corporation in any jurisdiction where it is
not so qualified;
(e) immediately notify Flowers (if selling Registration Shares under
such registration statement) and each underwriter, at any time when a prospectus
relating to such registration statement is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus contained in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements in such
registration statement not misleading in the light of the circumstances then
existing and prepare a supplement to or an amendment to such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
Registration Shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated in such
registration statement or necessary to make the statements in such registration
statement not misleading in the light of the circumstances then existing;
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(f) use its reasonable best efforts to furnish, at the request of
Flowers, on the date that Registration Shares are delivered to the underwriters
for sale pursuant to such registration: (i) an opinion dated such date of
counsel representing Enstar in connection with such registration, addressed to
the underwriters or broker(s) and to Flowers, stating that such registration
statement has become effective under the Securities Act and that (A) to the best
knowledge of such counsel, no stop order suspending the effectiveness of such
registration statement has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Securities Act, (B) the
registration statement, the related prospectus, and each amendment or supplement
of such registration statement or prospectus, comply as to form in all material
respects with the requirements of the Securities Act and the applicable rules
and regulations of the SEC under the Securities Act (except that such counsel
need express no opinion as to the financial statements and the other financial
and statistical data contained or incorporated by reference in such registration
statement or prospectus) and (C) to such other effects as may reasonably be
requested by counsel for the underwriters or broker(s), and (ii) a letter dated
such date from the independent public accountants retained by Enstar, addressed
to the underwriters or broker(s) and to Flowers, stating that they are
independent public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of Enstar
included or incorporated by reference in the registration statement or the
prospectus, or any amendment or supplement of such registration statement or
prospectus, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such letter)
with respect to the registration in respect of which such letter is being given
as such underwriters may reasonably request, or if not an underwritten public
offering, such matters as are customarily covered in such a letter; and
(g) make available for inspection by Flowers, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by Flowers or an underwriter,
all financial and other records, pertinent corporate documents and properties of
Enstar, and cause Enstar's officers, directors and employees to supply all
information reasonably requested by Flowers, an underwriter, attorney,
accountant or agent in connection with such registration statement.
The period of distribution (the "Distribution Period") of Registration
Shares in a firm commitment underwritten public offering shall be deemed to
extend until, but not beyond, such time as each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of
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Registration Shares in any other registration shall extend until, but not
beyond, the earlier of the sale of all Registration Shares covered by such
registration or forty-five (45) days following the effective date of the
registration statement utilized in connection with such registration under the
Securities Act. Enstar shall have the right to deregister with the SEC any
Registration Shares which remain unsold at the conclusion of any Distribution
Period.
6. Flowers' Cooperation. In connection with each registration pursuant
to Sections 3 and 4 of this Agreement, Flowers shall furnish in writing to
Enstar and any underwriter participating in such offering such information with
respect to itself and the proposed distribution by it as is reasonably necessary
in order to assure compliance with federal and applicable state securities laws.
7. Underwriting Agreement. In connection with each registration
pursuant to Section 3 or 4 of this Agreement covering an underwritten public
offering, Enstar and Flowers agree to enter into a written agreement with the
managing underwriters in such form and containing such provisions as are
customary in the securities business for such an arrangement between major
underwriters and companies of Enstar's size and investment stature; provided,
however, that such agreement shall not contain any such provision applicable to
Enstar or Flowers which is inconsistent with the provisions of this Agreement.
8. Expenses.
(a) All expenses incurred by Enstar in connection with the
registration contemplated by Sections 3 and 4 of this Agreement, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for Enstar, fees
of the National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, reasonable fees and expenses of Flowers' counsel
and expenses applicable to the sale of Registration Shares, but excluding any
Selling Expenses, are called "Registration Expenses" in this Agreement. All
underwriting discounts, selling commissions and brokerage fees applicable to the
sale of the Registration Securities, are in this Agreement called "Selling
Expenses."
(b) Enstar will pay all Registration Expenses in connection with
each registration statement filed pursuant to Section 3 or 4 of this Agreement.
All Selling Expenses in connection with any registration statement filed
pursuant to Section 3 or 4 of this Agreement shall be borne by Flowers in
proportion to the number of Registration Shares sold or proposed to be sold by
Flowers in such registration in relation to the total number of shares sold or
proposed to be sold by all parties under such registration statement.
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9. Indemnification.
(a) In the event of a registration of any of the Registration Shares
under the Securities Act pursuant to Section 3 or 4 of this Agreement, Enstar
will indemnify and hold harmless Flowers, each underwriter of Registration
Shares under such registration, if any, each broker, dealer or any other similar
person acting on behalf of Flowers and each other person, if any, who controls
any of the foregoing persons within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which any of
the foregoing persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect of
this Agreement) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registration Shares were registered under the Securities Act
pursuant to Section 3 or 4 of this Agreement, any preliminary prospectus or
final prospectus contained in such registration statement, or any amendment or
supplement of this Agreement, or arise out of or are based upon the omission or
alleged omission to state in such registration statement a material fact
required to be stated in such registration statement or necessary to make the
statements in such registration statement not misleading, and will reimburse
Flowers, each such underwriter, broker, dealer or other person acting on behalf
of Flowers and each such controlling person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
Enstar will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by Flowers, such underwriter, broker,
dealer or other person acting on behalf of Flowers or such controlling person in
writing specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Registration Shares
under the Securities Act pursuant to Section 3 or 4 of this Agreement, Flowers
will indemnify and hold harmless Enstar and each person, if any, who controls
Enstar within the meaning of the Securities Act, each officer of Enstar who
signs the registration statement, each director of Enstar, each underwriter and
each person who controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint or several, to
which Enstar or such officer or director or underwriter or controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect of such losses,
claims, damages or liabilities) arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
conformity with information pertaining to Flowers, furnished in writing to
Enstar
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by Flowers specifically for use in such registration statement or prospectus;
provided, however, that the liability of Flowers under this Agreement shall be
limited to the proportion of any such loss, claim, damage, liability or expense
which is equal to the proportion that the public offering price of shares sold
by Flowers under such registration statement bears to the total public offering
price of all securities sold under such registration statement, but not to
exceed the net proceeds received by Flowers from the sale of Registration Shares
covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this
Agreement of notice of the commencement of any action, such indemnified party
shall, if a claim in respect of such action is to be made against the
indemnifying party under this Agreement, notify the indemnifying party in
writing of such claim, but the omission so to notify the indemnifying party as
provided in this Agreement shall not relieve the indemnifying party of its
obligations under this Section 9 except to the extent that the omission results
in a failure of actual notice to the indemnifying party and such indemnifying
party is damaged solely as a result of the failure to give notice. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement of such action, the indemnifying
party shall be entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense of such action with counsel satisfactory to
such indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense of such
action, the indemnifying party shall not be liable to such indemnified party
under this Section 9 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense of such action other than
reasonable costs of investigation and of liaison with counsel so selected;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded based upon advice of counsel that there may be
reasonable defenses available to it which are different from or additional to
those available to the indemnifying party or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests of the
indemnifying party, then the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of such
separate counsel and other reasonable expenses related to such participation to
be reimbursed by the indemnifying party as incurred.
(d) Notwithstanding the foregoing, in any such action, any
indemnified party shall have the right to retain its own counsel, but the fees
and disbursements of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party shall have failed to retain counsel for
the
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indemnified person as aforesaid or (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such counsel.
It is understood that the indemnifying party shall not, in connection with any
action or related actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such jurisdiction to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment.
(e) If the indemnification provided for in paragraphs (a) and (b) of
this Section 9 is unavailable or insufficient to hold harmless an indemnified
party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions referred to in such paragraphs, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party, as a result of such losses,
claims, damages, liabilities or actions in such proportion as appropriate to
reflect the relative fault of Enstar, on the one hand, and Flowers, on the
other, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or actions as well as any other relevant
equitable considerations, including the failure to give the notice required
under such paragraphs. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact relates to information supplied by Enstar, on the one hand, or Flowers, on
the other hand, and to the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Enstar and Flowers agree that it would not be just and equitable if
contributions pursuant to this paragraph were determined by pro rata allocation
(even if Flowers were treated as one entity for such purpose) or by any other
method of allocation which did not take account of the equitable considerations
referred to above in this paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
actions referred to above in this paragraph, shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph, Flowers shall not be required
to contribute any amount in excess of the amount, if any, by which the total
price at which the Registration Shares sold by Flowers was offered to the public
exceeds the amount of any damages which they have otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11 (f) of the Securities Act) is entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation.
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(f) The indemnification of underwriters provided for in this Section
9 shall be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters. To the extent Enstar agrees to provide
such underwriters with indemnification rights which differ in substance from the
rights offered Flowers in this Section 9, then the indemnification of Flowers in
such underwriting shall at Flowers' request be modified to conform to such terms
and conditions.
10. Changes in Common Stock. To the extent that there are any changes
in Common Stock by way of stock split, stock dividend, combination or
reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions of this Agreement, as may be required, so that the rights and
privileges granted to Flowers under this Agreement shall continue with respect
to the Registration Shares as so changed.
11. Rule 144 Matters. For so long as Flowers holds Registration Shares
and this Agreement has not terminated pursuant to Section 12 of this Agreement
and Enstar remains a public company under applicable securities laws, Enstar
agrees to exercise reasonable good faith efforts to:
(a) Make and keep public information generally available, as those
terms are defined in Rule 144 under the Securities Act, at all times subsequent
to the Closing Date;
(b) File with the SEC in a timely manner reports and other documents
required of Enstar under the Securities Act and the Exchange Act to be so filed;
and
(c) Furnish to Flowers, so long as Flowers owns any Registration
Shares, promptly upon a written request for the same:
(i) A written statement by Enstar that it has complied
with the reporting requirements of Rule 144 under the Securities
Act; and
(ii) Such other information as may be reasonably
requested by Flowers to enable Flowers to avail himself of any rule
or regulation of the SEC which permits the sale of securities
without registration under the Securities Act.
12. Effectiveness. Notwithstanding anything to the contrary set forth in
this Agreement, Enstar shall not be required to effect any registration of the
Registration Shares hereunder during such time as all the Registration Shares
acquired by Flowers on the Closing Date pursuant to the Investment Agreement may
be sold to the public pursuant to Rule
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144(k) (or any similar successor provision) under the Securities Act; provided,
however, that the foregoing shall not affect the parties obligations under
Sections 8 and 9 of this Agreement, which Sections shall continue to be
effective.
13. Representations and Warranties of Enstar and Flowers.
(a) Enstar represents and warrants to Flowers as follows:
(i) Enstar has the corporate power and authority to
execute and deliver this Agreement and perform its obligations
hereunder. The execution and delivery of this Agreement and the
performance by Enstar of its covenants and agreements hereunder
have been duly and validly authorized by the Board of Directors;
and neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (A)
conflict with or result in any breach of any provision of the
articles of incorporation or bylaws of Enstar or (B) violate,
conflict with or result in a default (or any event which, with
notice or lapse of time or both, would constitute a default) under,
or give rise to any right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of
any material agreement or obligation to which Enstar is a party or
by which Enstar or any of its assets may be bound.
(ii) This Agreement has been duly executed and
delivered by Enstar and constitutes a valid and binding agreement
of Enstar, enforceable against Enstar in accordance with its terms,
except that (A) such enforcement may be subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or
other laws, now or hereafter in effect, relating to or limiting
creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(b) Flowers represents and warrants to Enstar as follows:
(i) Flowers is an individual resident of the State of
New York and Flowers has the capacity to execute and deliver this
Agreement and perform his obligations hereunder, and no other
actions on the part of Flowers are necessary to permit the
execution, delivery and performance of this Agreement by Flowers or
the consummation of the transactions so contemplated by Flowers;
and neither the execution and
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delivery of this Agreement nor the consummation of the transactions
contemplated hereby will violate, conflict with or result in a
default (or any event which, with notice or lapse of time or both,
would constitute a default) under, or give rise to any right of
termination, cancellation or acceleration under, any of the terms,
conditions or provisions of any material agreement or obligation to
which Flowers is a party or by which Flowers or any of his assets
may be bound.
(ii) This Agreement has been duly executed and
delivered by Flowers and constitutes a valid and binding agreement
of Flowers, enforceable against Flowers in accordance with its
terms, except that (A) such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or
limiting creditors' rights generally, and (B) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
14. Miscellaneous.
(a) From time to time after the Closing Date, at the reasonable
request of the other party hereto and at the expense of the party so requesting,
each of the parties hereto shall execute and deliver to such requesting party
such documents and take such other action as such requesting party may
reasonably request in order to consummate more effectively the transactions
contemplated hereby.
(b) All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and may be given by any of the following methods: (i) personal
delivery; (ii) facsimile transmission; (iii) registered or certified mail,
postage prepaid, return receipt requested; or (iv) overnight delivery service.
Notices shall be sent to the appropriate party at its address or facsimile
number given below (or at such other address or facsimile number for such party
as shall be specified by notice given hereunder):
If to Flowers, to:
J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to Enstar, to:
The Enstar Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address or (iii) in the case of a facsimile
transmissions upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
(c) Should any provision of this Agreement for any reason be
declared invalid or unenforceable, such decision shall not affect the validity
or enforceability of any of the other provisions of this Agreement, which
remaining provisions shall remain in full force and effect and the application
of such invalid or unenforceable provision to Persons or circumstances other
than those as to which it is held invalid or unenforceable shall be valid and
enforced to the fullest extent permitted by law.
(d) This Agreement and all of the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned, directly or
indirectly, including, without limitation, by operation of
14
law, by any party hereto without the prior written consent of the other parties
hereto.
(e) This Agreement is solely for the benefit of Enstar, and its
successors and permitted assigns, with respect to the obligations of Flowers
under this Agreement, and for the benefit of Flowers, and his successors and
permitted assigns, with respect to the obligations of Enstar, under this
Agreement. Except as set forth in the next sentence, this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right. In addition, and
whether or not any express assignment shall have been made, the provisions of
this Agreement which are for the benefit of Flowers shall also be for the
benefit of and be enforceable by any subsequent holder of any Registration
Shares, subject to all the provisions herein.
(f) Each of Enstar and Flowers agrees as follows:
(i) Enstar and Flowers shall attempt in good faith to
resolve promptly any dispute, controversy or claim under or in
connection with this Agreement by negotiations. If any such
dispute, controversy or claim should arise, the parties or
representatives of each such party shall meet at least once to
attempt to resolve the matter. Any such representative may request
the other representatives to meet within 14 days after delivery of
written notice to the others of any such dispute, controversy, or
claim, at a mutually agreed time and place.
(ii) If the matter has not been resolved pursuant to
negotiations within 60 days after the first meeting of the
representatives (which period may be extended by mutual agreement),
the matter shall be settled exclusively by arbitration (except as
provided in Section 14(f)(v)) conducted by three arbitrators in
accordance with the provisions of the Federal Arbitration Act (9
U.S.C. Sections 1-16), and in accordance with the Center for Public
Resources, Inc.'s Rules (the "Rules for Arbitration") for
Non-Administered Arbitration of Business Disputes. The three
arbitrators shall be selected as follows: one arbitrator shall be
selected by Enstar, one arbitrator shall be selected by Flowers and
one arbitrator shall be selected by the other two arbitrators. All
arbitrators shall be individuals: (A) who meet the qualifications
set forth in Rule 7 of the Rules of Arbitration, (B) who are
attorneys or retired judges and (C) who have past experience in
settling complex litigation involving claims relating to securities
and mergers and acquisitions. The arbitration of such matters in
controversy, including the determination of any amount of damages,
shall be final and binding upon
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Enstar and Flowers to the maximum extent permitted by law. No such
Person shall seek, and no arbitrator shall be authorized to award,
any punitive damages relating to any matter arbitrated. This
Agreement to arbitrate is irrevocable.
(iii) Any arbitration proceedings shall be conducted
in Atlanta, Georgia or at such other location as Enstar and Flowers
may agree.
(iv) Any arbitration award under this Section 14(f)
shall be final and binding, and judgment may be entered on such
award by any court having jurisdictions upon application of Enstar
or Flowers.
(v) Any party to an arbitration proceeding under this
Section 14(f) shall be entitled to be reimbursed by the other
parties for its costs and expenses incurred in connection with the
arbitration proceeding, including reasonable attorneys' fees, to
the extent determined by the arbitrators. The arbitrators shall
assess the costs of the arbitration proceeding, including their
fees, to the parties to the proceeding in such proportions as the
arbitrators consider reasonable under the circumstances.
(vi) Notwithstanding anything else in this Section
14(f) to the contrary, Enstar and Flowers shall be entitled to seek
any equitable remedies available under the governing law from any
court of competent jurisdiction, and the order or judgment of any
such court shall be binding in any arbitration proceeding pursuant
to this Section 14(f).
(g) This Agreement and other documents referred to herein or
delivered pursuant hereto which form a part hereof constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof.
(h) This Agreement shall be governed by and construed in accordance
with the laws of the State of Georgia (regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof) as to
all matters, including but not limited to matters of validity, construction,
effect, performance and remedies.
(i) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
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(j) This Agreement may be amended, modified or supplemented at any
time by written agreement of Enstar and Flowers. Any failure of Enstar or
Flowers to comply with any term or provision of this Agreement may be waived,
with respect to Flowers, by Enstar and, with respect to Enstar, by Flowers, by
an instrument in writing signed by or on behalf of the appropriate party, but
such waiver or failure to insist upon strict compliance with such term or
provision shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure to comply.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this Agreement
shall be binding between Enstar and Flowers.
Very truly yours,
THE ENSTAR GROUP, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President
and CEO
AGREED TO AND ACCEPTED
AS OF THE DATE FIRST
ABOVE WRITTEN.
J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
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