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SHAREHOLDER AGREEMENT
JOTAN, INC.
the "Company"
the Shareholders as set forth on the signature pages hereof
the "Shareholder"
and
[*]
Rice Partners II, L.P.
and
F-Jotan
the "Purchaser"
February __, 1997
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SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (the "Agreement") made as of February 28, 1997, by
and among JOTAN, INC., a Florida corporation (the "Company"), the SHAREHOLDERS
of the Company listed on the signature pages hereof (individually and
collectively, as the context requires, the "Shareholder"), RICE PARTNERS II,
L.P., a Delaware limited partnership ("Rice"), and F-SOUTHLAND, L.L.C., a
North Carolina limited liability company ("F-Southland"), FF-SOUTHLAND , L.P.,
a Delaware limited partnership ("FF-Southland" and together with F-Southland,
the "Southland Purchasers", which, together with Rice are individually and
collectively, as the context requires, referred to herein as the "Purchaser"),
F-JOTAN, L.L.C., a North Carolina limited liability company ("F-Jotan") and
each of the shareholders named on the signature pages hereto (individually and
collectively, as the context requires, the "Shareholder").
W I T N E S S E T H:
WHEREAS, each Shareholder owns beneficially and of record the number of
shares or share equivalents, set forth under the signature of such Shareholder
on this Agreement of the issued and outstanding capital stock of the Company;
WHEREAS, F-Jotan, which is the owner of the 1,329,357 shares of the
Series A Preferred Stock of the Company as of the date hereof, will acquire
certain rights and benefits herein and in the Purchase Agreement (as defined
below) in consideration of terminating certain of its existing contractual
rights in respect of the Company as more fully described in Section 11.18 of
this Agreement;
WHEREAS, the Company has entered into a Note Purchase Agreement (the
"Note Agreement") dated of even date with this Agreement with the Purchaser;
WHEREAS, the Company, each Purchaser, F-Jotan and the Shareholder have
entered into a Preferred Stock and Warrant Purchase Agreement (the "Purchase
Agreement") dated of even date with this Agreement with the Purchaser;
WHEREAS, the Purchaser is willing to enter into and consummate the
transactions contemplated by the Note Agreement only if, among other things,
the Company and the Shareholder enter into, and perform under, this Agreement
and the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser, the
Shareholder, and the Company, intending to be legally bound, agree as follows:
Article I
Definitions
All terms used in this Agreement will have the meanings ascribed to them
in the Purchase Agreement unless otherwise specifically defined in this
Agreement.
For purposes of Articles II and VII of this Agreement only, the term
"Holder" (as defined in the Purchase Agreement) shall also mean and include F-
Jotan and the term "Registrable Securities" shall mean and include the Series
A Preferred Stock and the Common Stock issuable upon conversion of the Series
A Preferred Stock.
Article II
Holders' Preemptive Rights
2.01 Preemptive Right. The Company will not issue or sell any New
Securities without first complying with this Article II. The Company hereby
grants to each Holder the preemptive right to purchase, pro rata, all or any
part of the New Securities that the Company may, from time to time, propose to
sell or issue. In the event New Securities are offered or sold as part of a
unit with other New Securities, the preemptive right granted by this Article
II will apply to such units and not to the individual New Securities composing
such units. Each Holder's pro rata share for purposes of Article II is the
ratio that the number of shares of Common Stock issuable to such Holder upon
exercise of its Warrant and, in the case of F-Jotan, the number of shares of
Common Stock issuable upon conversion of its Series A Preferred Stock, plus
the number of shares of Common Stock that are Issued Warrant Shares or, in the
case of F-Jotan, converted Series A Preferred Stock, owned by such Holder
immediately prior to the issuance of the New Securities, bears to the sum of
(x) the total number of shares of Common Stock then outstanding, plus (y) the
number of shares of Common Stock issuable upon (1) exercise of all Warrants
and (2) the conversion of the Series A Preferred Stock then outstanding.
2.02 Notice to Holders. In the event the Company proposes to issue or
sell New Securities, it will give each Holder written notice of its intention,
describing the type of New Securities and the price and terms upon which the
Company proposes to issue or sell the New Securities. Each Holder will have
fifteen (15) days from the date of receipt of any such notice and such
information as the Holders may reasonably request to facilitate their
investment decision to agree to purchase up to its respective pro rata share
of the New Securities for the price (valued at Fair Market Value for any
noncash consideration) and upon the terms specified in the notice by giving
written notice to the Company stating the quantity of New Securities agreed to
be purchased.
2.03 Allocation of Unsubscribed New Securities. In the event a Holder
fails to exercise such preemptive right within such fifteen (15) day period,
the other Holders, if any, will have an additional five (5) day period to
purchase such Holder's portion not so agreed to be purchased in the same
proportion in which such other Holders were entitled to purchase the New
Securities (excluding for such purposes such nonpurchasing Holder).
Thereafter, the Company will have ninety (90) days to sell the New Securities
not elected to be purchased by the Holders at the same price and upon the same
terms specified in the Company's notice described in Section 2.02. In the
event the Company has not sold the New Securities within such ninety (90) day
period, the Company will not thereafter issue or sell any New Securities
without first offering such securities in the manner provided above.
Article III
Dilution Fee
In the event that, during the term of the Warrants, the Company pays any
cash dividend or makes any cash distribution to any holder of any class of
its Capital Stock with respect to such Capital Stock, each Holder of the
Warrants will be entitled to receive in respect of its Warrant a dilution fee
in cash (the "Dilution Fee") on the date of payment of such dividend or
distribution, which Dilution Fee will be equal to the difference between (a)
the highest amount per share paid to any class of Capital Stock times the
number of Issued Warrant Shares then owned by such Holder plus the number of
Issuable Warrant Shares then owned by such Holder, and (b) the amount of such
dividend or distribution otherwise paid to such Holder as a result of its
ownership of Common Stock. This provision shall not apply to the payment of
cash dividends on the Series B Preferred Stock.
Article IV
Put Option
4.01 Grant of Option. The Company hereby grants to each Holder an
option to sell to the Company, and the Company is obligated to purchase from
each Holder under such option (the "Put Option"), all (or such portion as is
designated by any such Holder pursuant to Section 4.03 below) of the Put
Shares, subject to Section 4.06 below. The Put Option will be effective at
any time or times after the eighth (8th) anniversary of the date of this
Agreement, or at any time or times after the occurrence of any of the
following events (the "Put Option Period"):
(a) the payment or prepayment of all indebtedness, liabilities
and obligations owing by the Company to the Purchaser under the Note
Agreement;
(b) (i) a material change in the ownership in the Company other
than by Rice and the Southland Purchasers (for purposes of this
subsection a "change of ownership" means the circumstance that F-Jotan
shall own, directly or indirectly, five percent (5%) (subject to
adjustments therein as contemplated in Section 2.08(a) (ii) and (iii) of
the Purchase Agreement) less than (A) the Registrable Securities so
owned by such party on the Closing Date or (B) the number of shares of
issued and outstanding voting stock of the Company (without giving
effect to the issuance of any shares of Common Stock under the Warrants)
so owned by such party on the Closing Date, or (ii) Rice shall not have
the legal right or ability, directly or through its Subsidiaries, to
elect a majority of the members of the board of directors of the
Company); or
(c) except as permitted by the Senior Loan Agreement as in effect
on the date hereof, a merger, consolidation, share exchange, or similar
transaction involving the Company or sale in one or more related
transactions of all or a substantial portion of the assets, business, or
revenue or income generating operations of the Company or any
substantial change in the type of business conducted by the Company; or
(d) after the occurrence and during the continuance of an Event
of Default (as defined in the Note Agreement) pursuant to Sections
8.1(a), (b), (f) or (h) of the Note Agreement or any failure of the
Company in any material respect to perform any of its obligations
hereunder or under the Purchase Agreement; provided, however, that the
Put Option Period will continue with respect to such Event of Default or
other failure, even after the same has been cured, if notice of exercise
of the Put Option by such Holder is provided pursuant to this Article IV
during the continuance of such Event of Default or such other failure,
as the case may be.
The Company's obligations under this Article IV and the notes issued
pursuant to Section 4.04 hereof are subject to the provisions of the Senior
Subordination Agreement (as defined in Section 11.1 of the Note Agreement).
4.02 Put Price. In the event that any Holder exercises the Put Option,
the price (the "Put Price") to be paid to each such Holder pursuant to this
Agreement will be cash in the sum of the amount determined by multiplying the
higher of (a) the Book Value or (b) the Fair Market Value per share of Common
Stock as of the end of the month immediately preceding the date notice is
given of the exercise of the Put Option pursuant to Section 4.03 times the
number of shares of Common Stock for which the Put Option is being exercised
by such Holder plus the higher of (a) the Book Value or (b) the Fair Market
Value of the Other Securities issuable upon exercise of the portion of the
Warrants subject to the Put Option; provided, however, the Fair Market Value
(as opposed to the Book Value) shall only be utilized in determining such Put
Price if, for the thirty (30) consecutive days prior to the exercise of the
Put Option, the Common Stock has been trading on a national securities
exchange as its primary market (as contemplated in clause (a) of the
definition of Closing Price) with an average trading volume of at least
150,000 shares per day and an average market capitalization of the Company of
at least $50,000,000 (calculated on the basis of the product of (i) the
number of shares of registered Common Stock outstanding on the date of
determination and (ii) the reported closing prices of Common Stock quoted on
such exchange over the period of thirty (30) days prior to the date of
determination).
4.03 Exercise of Put Option. The Put Option may be exercised during
the Put Option Period with respect to all or any portion of the Put Shares.
Such option shall be exercised by such Holder giving notice to the Company and
each other Holder during the Put Option Period of the Holder's election to
exercise the Put Option, and the date of the Put Option Closing, which will be
not less than fifteen (15) nor more than ninety (90) days after the date of
such notice. The Company will provide each Holder desiring to exercise its
Put Option the name and address of each other Holder. Notwithstanding the
foregoing, if a Holder receives such notice of another Holder's exercise of
such other Holder's Put Option, the Holder receiving such notice may elect to
exercise its Put Option and designate a Put Option Closing simultaneous and
pari passu with that of such other Holder.
4.04 Certain Remedies. In the event that the Company defaults in its
obligation to purchase all or any portion of the Put Shares upon exercise of
the Put Option, in addition to any other rights or remedies of each Holder,
the unpaid portion of the Put Price will bear interest at the highest rate
permitted by applicable law. The Company will, upon the request of any
Holder, execute and deliver to such Holder a promissory note in form and
substance satisfactory to such Holder evidencing such obligation.
4.05 Put Option Closing. The closing for the purchase and sale of all
or such portion of the Put Shares as to which the Holder has notified the
Company of its intention to exercise the Put Option, will take place at the
office of the Company on the date specified in such notice of exercise (a "Put
Option Closing"). At any Put Option Closing, to the extent applicable, the
Holder of the Put Shares will deliver the certificate or certificates
evidencing the Put Shares being purchased, duly endorsed in blank. In
consideration therefor, the Company will deliver to the Holder the Put Price,
which will be payable in cash.
4.06 Limitations on Puts. No Holder other than Rice may, without the
prior written consent of Rice, exercise its Put Option unless and until Rice
shall also exercise its Put Option under this Article IV. Rice shall have the
right, but not the obligation, if it does exercise its Put Option under this
Article IV, to require each other Holder, on twenty (20) days prior written
notice to such Holder, to exercise such Holder's Put Option on a pro rata
basis, with respect to all of the shares of Put Shares then owned, directly or
indirectly, by such Holder, on the same terms and at the same Put Option
Closing to be set forth in such notice.
Article V
Call Option
5.01 Grant of Option. Each Holder hereby severally grants to the
Company an option to require such Holder to sell to the Company, and each
Holder is obligated to sell to the Company under this option (the "Call
Option"), all (but not less than all) of its Warrant and its Warrant Shares.
The Call Option will be effective after the sixth (6th) anniversary of the
date of this Agreement (the "Call Option Period").
5.02 Call Price. In the event that the Company exercises the Call
Option, the exercise price to be paid in cash to each Holder will be equal to
the Put Price determined in accordance with Section 4.02, except that the Call
Option will be exercised with respect to all of the Warrants and all Warrant
Shares, and will be increased by an amount in cash equal to any Excess
Consideration received within one hundred eighty (180) days following the
exercise of the Call Option due to an Adjustment Event.
5.03 Exercise of Call Option. The Call Option may be exercised during
the Call Option Period with respect to all of the Warrants and the Warrant
Shares of the Holders, by the Company giving notice to each Holder during the
Call Option Period of the election of the Company to exercise the Call Option,
and the date of the Call Option Closing (as defined below), which in all
events will be within at least ten (10) days after the date of such notice.
5.04 Call Option Closing. The closing for the purchase and sale of all
of the Warrants and Warrant Shares that the Company has elected to purchase
under this Agreement, will take place at the office of the Company, on the
date specified in such notice of exercise (the "Call Option Closing"). At the
Call Option Closing, the Holders of the Warrants will deliver the Warrants and
the certificate or certificates representing the Warrant Shares, duly endorsed
in blank. In consideration therefor, the Company will deliver to each Holder
the purchase price, which will be payable in immediately available funds.
Article VI
First Refusal; and Co-Sale Rights
6.01 Rights of Co-Sale. In the event that any Shareholder intends to
sell or transfer, directly or indirectly, any shares of any class of Capital
Stock held by it to any Person other than a Related Party, each Holder will
have the right to participate in such sale or transfer on the terms set forth
in this Article VI; provided, however, none of the provisions of this
Agreement will apply to any sale by a Shareholder of shares of Capital Stock
in a bona fide underwritten public offering under the Securities Act, so long
as all Holders have had an opportunity to participate in such offering
pursuant to the registration rights under this Agreement.
6.02 Method of Electing Sale; Allocation of Sales. No sale or transfer
by any Shareholder of any shares of Capital Stock will be valid unless the
transferee of such Capital Stock first agrees in writing to be bound by the
same terms and conditions that apply to the Shareholder under this Agreement
and the Purchase Agreement. In addition, before any shares of Capital Stock
held, directly or indirectly, by any Shareholder may be sold or transferred to
a Person other than a Related Party, the Shareholder (as such, the "Selling
Shareholder") will comply with the following provisions:
(a) The Selling Shareholder will deliver or cause to be
delivered a written notice (the "Notice of Sale") to each Holder and F-
Jotan at least fifteen (15) days prior to making any such sale or
transfer. The Company agrees to provide the Selling Shareholder with a
list of the names and addresses of each such Holder and F- Jotan for
such purpose. The Notice of Sale will include (i) a statement of the
Selling Shareholder's bona fide intention to sell or transfer; (ii) the
name and address of the prospective transferee (the "Buyer"); (iii) the
number of shares of Capital Stock of the Company to be sold or
transferred; (iv) the terms and conditions of the contemplated sale or
transfer; (v) the purchase price in cash that the Buyer will pay for
such shares of Capital Stock; (vi) the expected closing date of the
transaction; and (vii) such other information as the Holders may
reasonably request to facilitate their decision as to whether or not to
exercise the rights granted by this Article VI.
(b) Any Holder receiving the Notice of Sale may elect to
participate in the contemplated sale or transfer by exercising either
(i) its right of first refusal to purchase such Capital Stock pursuant
to Section 6.02(c) or (ii), its right to co-sell its Capital Stock
pursuant to Section 6.02(d). Either of such rights may be exercised in
the sole discretion of the Holder by delivering a written notice (an
"Election Notice") to the Company and the Selling Shareholder within
fifteen (15) days after receipt of such Notice of Sale stating the
election of the Holder to exercise either its right of first refusal
pursuant to Section 6.02(c) or its right of co-sale pursuant to Section
6.02(d).
(c) Each Holder may elect to treat the Notice of Sale as an
irrevocable offer to sell to the Holder up to its pro rata share
(determined in a manner consistent with Article II, and including the
pro rata share of Capital Stock not purchased by other Holders) of the
number of shares of Capital Stock proposed to be sold to the Buyer on
the same per share terms and conditions as stated in the Notice of Sale.
Such offer will remain open for a period of fifteen (15) days from
delivery to the Shareholder of the Election Notice. Within such fifteen
(15) day period, the Holder may elect to accept such offer in whole or
in part by delivering to the Selling Shareholder written notice of its
irrevocable election to accept such offer. If the Holder irrevocably
accepts such offer, the closing of the purchase and sale will occur on
or before the twentieth (20th) business day following delivery of the
notice of acceptance. At such closing, the Holder will deliver the
consideration payable to the order of the Selling Shareholder, against
delivery by the Selling Shareholder of the Capital Stock being so
purchased, free and clear of all liens, claims, and encumbrances, other
than this Agreement, endorsed in good form for transfer to the Holder or
its designees. If a Holder does not accept such offer within the
fifteen (15) day period specified above, the offer to such Holder will
be deemed to have been rejected, and the Selling Shareholder, subject to
Section 6.02(d), will be free to sell or transfer such Capital Stock not
purchased by the Holders to the Buyer on the same terms set forth in the
Notice of Sale within ninety (90) days of the expiration of such fifteen
(15) day period. If the sale to the Buyer is not so consummated, the
terms of this Article VI will again be applicable to any sale or
transfer of Capital Stock by the Shareholder.
(d) Each Holder may elect to sell or transfer in the
contemplated transaction up to the total of the number of shares of
Capital Stock then held by it (including the Issuable Warrant Shares).
Promptly after the receipt of an Election Notice exercising such right,
the Selling Shareholder will use its best efforts to cause the Buyer to
amend its offer so as to provide for the Buyer's purchase, upon the same
terms and conditions as those contained in the Notice of Sale, of all of
the shares of Capital Stock (including the Issuable Warrant Shares)
elected to be sold (the "Co-Sell Shares") in such Election Notices. In
the event that the Buyer is unwilling to amend its offer to purchase all
of the Co-Sell Shares in addition to the shares of Capital Stock
described in the related Notice of Sale, if the Selling Shareholder
desires to proceed with the sale, the total number of shares that such
Buyer is willing to purchase will be allocated to the Selling
Shareholder and each Holder having given an Election Notice exercising
its right pursuant to this Section 6.02(d) (the "Co-Sellers") in
proportion to the aggregate number of shares of Capital Stock (including
Issuable Warrant Shares) held by each such Person; provided, however,
that no such Person will be so allocated a number of shares greater than
the number of shares that it has sought to sell to such Buyer in the
related Notice of Sale or Election Notice. All Capital Stock sold or
transferred by the Selling Shareholder and the Co-Sellers with respect
to a single Notice of Sale under Section 6.02(b) will be sold or
transferred to the Buyer in a single closing on the terms described in
such Notice of Sale, and each such share will receive the same per share
consideration. In the event that the Buyer for whatever reason,
declines to purchase any shares from any Holder delivering an Election
Notice, then (x) the Selling Shareholder will not be permitted to sell
or transfer any shares of Capital Stock to such Buyer and (y) the shares
of Capital Stock of the Selling Shareholder that were to have been sold
or transferred to the Buyer will be subject to the Holders' right of
first refusal pursuant to Section 6.02(c) for a period of fifteen (15)
days thereafter on the terms and conditions that the Buyer would have
purchased such shares of Capital Stock from the Selling Shareholder had
it not declined to purchase shares from the Co-Seller under this Section
6.02(d).
6.03 Sales to Related Parties. No sale or transfer of shares of
Capital Stock by the Shareholder to a Related Party will be subject to the
provisions of Section 6.02; provided, however, that such Related Party first
agrees to assume the obligations of the Shareholder (without relieving the
Shareholder of any obligations under this Agreement) under this Agreement with
respect to the shares of Capital Stock thereby acquired by it and to be bound
by the same terms and conditions that apply to the Shareholder under this
Agreement and the Purchase Agreement in a written instrument in a form and
substance satisfactory to the Holders.
6.04 Limitations on Co-Sales; F-Jotan Participation.
(a) Notwithstanding the foregoing, no Holder other than Rice
may, without the prior written consent of Rice, exercise its rights to
co-sell all or any part of its Capital Stock under this Article VI
unless and until Rice shall have been given any notice described in
Section 6.01 hereof (the "co-sale notice") prior to or concurrently with
any other Holder and shall have been given at least ten (10) days from
receipt of the co-sale notice to consult with the other Holders about
consummating the contemplated sale of their respective Capital Stock on
a pro rata basis.
(b) During such consultations, each Holder shall use reasonable
efforts to inform F-Jotan whether such Holder intends to offer its Co-
Sell Shares for sale; and, as soon as practicable, such Holder shall
advise F-Jotan in writing if it determines not to sell all of the Co-
Sale Shares which it is entitled to so sell (such shares to not be sold,
the "Opt-Out Shares") under this Article VI. F-Jotan shall then be
afforded the opportunity to sell a portion of its shares of Capital
Stock to the extent of such Opt-Out Shares as though F-Jotan is a Holder
under this Article IV with respect thereto and solely for the purposes
contemplated in this Section 6.04(b);
6.05 Termination. This Article VI shall terminate solely with respect
to any Shareholder who is an employee of the Company on the first day of the
month next following the date that the Company terminates the employment of
such Shareholder, as such an employee, without cause.
Article VII
Liquidity
7.01 Required Registration. At any time, Rice may, upon not more than
two (2) occasions, make a written request to the Company requesting that the
Company effect the registration of a certain number of Registrable Securities
pro rata for the accounts of Rice and the Southland Purchasers based upon the
respective number of Registrable Securities held by them. If and when Rice
makes any such request for registration, it shall use its best efforts to also
have included therein the Registrable Securities held by F-Jotan; provided,
however, that if the managing underwriter or underwriters, if any, of the
offering of the Registrable Securities for which registration has been
demanded by Rice advises the Holders that the success of the offering would be
materially and adversely affected by the inclusion of Registrable Securities
of F-Jotan, then the amount of securities to be registered for the accounts of
the Holders shall be reduced first by reducing the Registrable Securities of
F-Jotan to be so included in such registration and then by reducing pro rata
the Registrable Securities held by Rice and the Southland Purchasers.
Notwithstanding the first sentence of this Section 7.01, the Southland
Purchasers or F-Jotan may, by such a written request, exercise any such demand
that Rice has not so requested for the benefit of Rice and the Southland
Purchasers under this Section 7.01 on the earliest date to occur (the "Cut-Off
Date") of (i) the date that Rice no longer owns, directly or indirectly, any
beneficial or other equity interest in respect of the Capital Stock of the
Company, (ii) the date which is one hundred eighty (180) days after all of
Rice's Issuable Warrant Shares have been duly registered to permit disposition
thereof in the public equity markets, and (iii) March 1, 2002. F-Jotan may,
upon not more than one (1) occasion, make an independent written request to
the Company requesting that the Company effect the registration of a certain
number of Registrable Securities; provided, however, that the Cut-Off Date
shall have occurred prior to making such request.
After receipt of any such a request, the Company will, as soon as
practicable, notify all Holders of such request and use its best efforts to
effect the registration of all Registrable Securities that the Company has
been so requested to register by Rice or F-Jotan for sale, all to the extent
required to permit the disposition (in accordance with the intended method or
methods thereof) of the Registrable Securities so registered. In no event
will any Person other than a Holder be entitled to include any shares of
Capital Stock in any registration statement filed pursuant to this Section
7.01.
7.02 Incidental Registration. If the Company at any time proposes to
file on its behalf or on behalf of any of its security holders a registration
statement under the Securities Act on any form (other than a registration
statement on Form S-4 or S-8 or any successor form unless such forms are being
used in lieu of or as the functional equivalent of, registration rights) for
any class that is the same or similar to Registrable Securities, it will give
written notice setting forth the terms of the proposed offering and such other
information as the Holders may reasonably request to all holders of
Registrable Securities at least thirty (30) days before the initial filing
with the Commission of such registration statement, and offer to include in
such filing such Registrable Securities as any Holder may request. Each
Holder of any such Registrable Securities desiring to have Registrable
Securities registered under this Section 7.02 will advise the Company in
writing within thirty (30) days after the date of receipt of such notice from
the Company, setting forth the amount of such Registrable Securities for which
registration is requested. The Company will thereupon include in such filing
the number of Registrable Securities for which registration is so requested,
and will use its best efforts to effect registration under the Securities Act
of such Registrable Securities.
Notwithstanding the foregoing, if the managing underwriter or
underwriters, if any, of such offering deliver a written opinion to each
Holder of such Registrable Securities that the success of the offering would
be materially and adversely affected by the inclusion of the Registrable
Securities requested to be included, then the amount of securities to be
offered for the accounts of Holders will be reduced first by reducing the
Registrable Securities of F-Jotan to be registered in such offering and second
pro rata (according to the Registrable Securities proposed for registration)
to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
underwriter or underwriters; provided, however, that if securities are being
offered for the account of other Persons as well as the Company, then with
respect to the Registrable Securities intended to be offered by Holders, the
proportion by which the amount of such class of securities intended to be
offered by Holders is reduced will not exceed the proportion by which the
amount of such class of securities intended to be offered by such other
Persons (other than the Company) is reduced.
7.03 Form S-3 Registrations. In addition to the registration rights
provided in Sections 7.01 and 7.02 above, if at any time the Company is
eligible to use Form S-3 (or any successor form) for registration of secondary
sales of Registrable Securities, Rice or, after the Cut-Off Date, any Holder
of Registrable Securities may request in writing that the Company register
shares of Registrable Securities on such form. Upon receipt of such request,
the Company will promptly notify all holders of Registrable Securities in
writing of the receipt of such request and each such Holder may elect (by
written notice sent to the Company within thirty (30) days of receipt of the
Company's notice) to have its Registrable Securities included in such
registration pursuant to this Section 7.03. Thereupon, the Company will, as
soon as practicable, use its best efforts to effect the registration on Form
S-3 of all Registrable Securities that the Company has so been requested to
register by such Holder for sale. The Company will use its best efforts to
qualify and maintain its qualification for eligibility to use Form S-3 for
such purposes.
7.04 Rule 144 Availability. Notwithstanding the foregoing, the Company
will not be obligated to register any Registrable Securities as to which
counsel acceptable to the Holders renders an opinion in form and substance
satisfactory to the Holders to the effect that such Registrable Securities are
freely saleable without limitation as to volume, manner of sale, or otherwise
under Rule 144 under the Securities Act.
7.05 Registration Procedures. In connection with any registration of
Registrable Securities under this Article VII, the Company will, as soon as
practicable:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become and remain
effective until the earlier of such time as all Registrable Securities
subject to such registration statement have been disposed of or the
expiration of one hundred eighty (180) days.
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all Registrable
Securities covered by such registration statement until the earlier of
such time as all of such Registrable Securities have been disposed of or
the expiration of one hundred eighty (180) days (except with respect to
registrations effected on Form S-3 or any successor form, as to which no
such period shall apply);
(c) furnish to each Holder such number of copies of the
registration statement and prospectus (including, without limitation, a
preliminary prospectus) in conformity with the requirements of the
Securities Act (in each case including all exhibits) and each amendment
or supplement thereto, together with such other documents as any Holder
may reasonably request;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as each Holder reasonably requests, and do such
other acts and things as may be reasonably required of it to enable such
holder to consummate the disposition in such jurisdiction of the
securities covered by such registration statement;
(e) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
securities holders, as soon as practicable, an earnings statement
covering the period of at least twelve months beginning with the first
month after the effective date of such registration statement, which
earnings statement will satisfy the provisions of Section 11(a) of the
Securities Act;
(f) provide and cause to be maintained a transfer agent and
registrar for Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement;
(g) if requested by the underwriters for any underwritten
offering of Registrable Securities on behalf of a Holder of Registrable
Securities pursuant to a registration requested by Rice under Section
7.01, the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain such
representations and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting agreements with
respect to secondary distributions, including, without limitation,
provisions with respect to indemnities and contribution as are
reasonably satisfactory to such underwriters and the Holders; the
Holders on whose behalf Registrable Securities are to be distributed by
such underwriters will be parties to any such underwriting agreement and
the representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters, will
also be made to and for the benefit of such Holders of Registrable
Securities; and no Holder of Registrable Securities will be required by
the Company to make any representations or warranties to or agreements
with the Company or the underwriters other than reasonable and customary
representations, warranties, or agreements regarding such Holder, such
Holder's Registrable Securities, such ▇▇▇▇▇▇'s intended method or
methods of disposition, and any other representation required by law;
(h) furnish, at the written request of any Holder, on the date
that such Registrable Securities are delivered to the underwriters for
sale pursuant to such registration, or, if such Registrable Securities
are not being sold through underwriters, on the date that the
registration statement with respect to such Registrable Securities
becomes effective, (i) an opinion in form and substance reasonably
satisfactory to such Holders, and addressing matters customarily
addressed in underwritten public offerings, of the counsel representing
the Company for the purposes of such registration (who will not be an
employee of the Company and who will be satisfactory to such Holders),
addressed to the underwriters, if any, and to the selling Holders; and
(ii) a letter (the "comfort letter") in form and substance reasonably
satisfactory to such Holders, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and
to the selling Holders making such request (and, if such accountants
refuse to deliver the comfort letter to such Holders, then the comfort
letter will be addressed to the Company and accompanied by a letter from
such accountants addressed to such Holders stating that they may rely on
the comfort letter addressed to the Company); and
(i) during the period when the registration statement is
required to be effective, notify each selling Holder of the happening of
any event as a result of which the prospectus included in the
registration statement contains 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 therein not misleading, and prepare a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
It will be a condition precedent to the obligation of the Company to
take any action pursuant to this Article VII in respect of the Registrable
Securities that are to be registered at the request of any Holder of
Registrable Securities that such Holder furnish to the Company such
information regarding the Registrable Securities held by such Holder and the
intended method of disposition thereof as is legally required in connection
with the action taken by the Company. The managing underwriter or
underwriters, if any, for any offering of Registrable Securities to be
registered pursuant to Section 7.01 or 7.03 will be selected by the Holders of
a majority of the Registrable Securities being so registered.
7.06 Allocation of Expenses. Except as provided in the following
sentence, the Company will bear all expenses arising or incurred in connection
with any of the transactions contemplated by this Article VII, including,
without limitation, (a) all expenses incident to filing with the National
Association of Securities Dealers, Inc.; (b) registration fees; (c) printing
expenses; (d) accounting and legal fees and expenses; (e) expenses of any
special audits or comfort letters incident to or required by any such
registration or qualification; and (f) expenses of complying with the
securities or blue sky laws of any jurisdictions in connection with such
registration or qualification. Each Holder will severally bear the expense of
its underwriting fees, discounts, or commissions relating to its sale of
Registrable Securities.
7.07 Listing on Securities Exchange. If the Company lists any shares
of Capital Stock on any securities exchange or on the National Association of
Securities Dealers, Inc. Automated Quotation System or similar system, it
will, at its expense, list thereon, maintain and, when necessary, increase
such listing of, all Registrable Securities.
7.08 Holdback Agreements.
(a) If any registration pursuant to Section 7.02 is in
connection with an underwritten public offering, each Holder of
Registrable Securities agrees, if so required by the managing
underwriter, not to effect any public sale or distribution of
Registrable Securities (other than as part of such underwritten public
offering) during the period beginning seven (7) days prior to the
effective date of such registration statement and ending on the one
hundred eightieth (180th) day after the effective date of such
registration statement; provided, that each Shareholder and each Person
that is an officer, director, or beneficial owner of five percent (5%)
or more of the outstanding shares of any class of Capital Stock enters
into such an agreement.
(b) The Company and the Shareholder agree (i) not to effect any
public sale or distribution during the period seven (7) days (or such
longer period as may be prescribed by Rule 10b-6 under the Exchange Act)
prior to the effective date of the registration statement employed in
any underwritten public offering and ending on the one hundred eightieth
(180th) day after any such registration statement contemplated by
Sections 7.01 or 7.03 has become effective, except as part of such
underwritten public offering pursuant to such registration statement and
except pursuant to securities registered on Forms S-4 or S-8 of the
Commission or any successor forms, and (ii) use their best efforts to
cause each holder of its equity securities or any securities convertible
into or exchangeable or exercisable for any of such securities, in each
case purchased from the Company at any time after the date of this
Agreement (other than in a public offering), to agree not to effect any
such public sale or distribution of such securities during such period.
7.09 Rule 144. At all times, the Company will take such action as any
Holder may reasonably request, all to the extent required from time to time to
enable such Holder to sell shares of Registrable Securities without
registration pursuant to and in accordance with (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation adopted by the Commission. Upon the request of any
Holder of Registrable Securities, the Company will deliver to such ▇▇▇▇▇▇ a
written statement as to whether it has complied with such requirements.
7.10 Rule 144A. The Company agrees that, upon the request of any
Holder or any prospective purchaser of a Warrant or Warrant Shares designated
by a Holder, the Company will promptly provide (but in any case within fifteen
(15) days of a request) to such Holder or potential purchaser, the following
information:
(a) a brief statement of the nature of the business of the
Company and any Subsidiaries and the products and services they offer;
(b) the most recent consolidated balance sheets and profit and
losses and retained earnings statements, and similar financial
statements of the Company for such part of the two preceding fiscal
years prior to such request as the Company has been in operation (such
financial information will be audited, to the extent reasonably
available); and
(c) such other information about the Company, any Subsidiaries,
and their business, financial condition, and results of operations as
the requesting Holder or purchaser of such Warrants requests in order to
comply with Rule 144A, as amended, and the antifraud provisions of the
federal and state securities laws.
The Company hereby represents and warrants to any such requesting Holder and
any prospective purchaser of Warrants or Warrant Shares from such Holder that
the information provided by the Company pursuant to this Section 7.10 will not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
7.11 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company will not, without the prior written
consent of the Holders, enter into any agreement with any holder or
prospective holder of any securities of the Company that would allow such
holder or prospective holder (a) to include such securities in any
registration filed under Section 7.01, unless under the terms of such
agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that the inclusion of its securities
will not reduce the amount of the Registrable Securities of the Holders that
is included or (b) to make a demand registration that could result in such
registration statement being declared effective prior to the effectiveness of
the first registration statement effected under Section 7.01 or within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 7.01.
7.12 Exchange Rights. At the option of any Holder, any such Holder may
exchange its Warrant or Warrant Shares for fully paid and nonassessable shares
(calculated as to each exchange to the nearest one-thousandth (1/1000) of a
share and rounded upward) of common stock of any Affiliate or Subsidiary of
the Company that on the date of receipt of the Exchange Notice has a class of
capital stock registered under section 12 of the Exchange Act or within one
year and 120 days will have a class of capital stock so registered (not
subject to an effective stock pledge to an agent for the benefit of the Senior
Lenders) (such Affiliate or Subsidiary will be referred to in this Agreement
as the "Exchange Company" and the common stock of such Affiliate or Subsidiary
will be referred to in this Agreement as "Exchange Common Stock"). Each
$1,000 worth of Warrants or Warrant Shares (valued at Fair Market Value on the
date the Exchange Notice was sent), will be exchangeable for $1,000 worth of
Exchange Common Stock (valued at Fair Market Value on the date that the
Exchange Notice was sent). To exchange Warrants or Warrant Shares into
Exchange Common Stock, the Holder will surrender at the principal office of
the Exchange Company the Warrants or certificate or certificates evidencing
the Warrant Shares duly endorsed or assigned to the Company, and give written
notice to the Company at such office that it elects to exchange such Warrants
or Warrant Shares (the "Exchange Notice"). Warrants or Warrant Shares will be
deemed to have been exchanged immediately prior to the close of business on
the day of the surrender for exchange in accordance with the foregoing
provisions, and the Person or Persons entitled to receive the Exchange Common
Stock issuable upon any such exchange will thereupon be treated for all
purposes as the record holder or holders of the Exchange Common Stock. As
promptly as practicable on or after the exchange date, the Exchange Company
will issue and deliver a certificate or certificates for the number of full
shares of Exchange Common Stock issuable upon exchange to the Person or
Persons entitled to receive such shares. Upon exchange of any Issued Warrant
Shares, the Company will pay or make with respect to Issued Warrant Shares any
dividends or other distributions that have been declared on the Warrant Shares
in kind or cash, as the case may be. If any Holder exchanges its Warrants or
Warrant Shares for shares of Exchange Common Stock pursuant to this Section
7.12, such Holder will have all of the rights set forth in this Article VII,
except that for the purposes of this Article VII the term "Company" will refer
instead to the Exchange Company and the term "Registrable Securities" will
refer to the shares of Exchange Common Stock held by such Holder.
7.13 Other Rights. The Company will not grant to any person any
registration rights without the consent of the Holders.
Article VIII
Directors
8.01 Voting Agreement. To ensure compliance with this Article VIII,
each of the Shareholder, Rice, the Southland Purchasers and F-Jotan hereby
irrevocably covenants and agrees to vote, or give or withhold consent with
respect to, all shares of Capital Stock now owned or later acquired by each of
them, all in accordance with the terms of this Article VIII. A counterpart of
this Agreement will be deposited with the Company at its principal place of
business or registered office and will be subject to the same right of
examination by a shareholder of the Company, in person or by agent or
attorney, as are the books and records of the Company.
8.02 Board of Directors. (a) So long as the provisions of this
Article VIII remain in effect, each (now or hereafter) party to this Agreement
other than Rice will, at the request of Rice or its designees, vote, or give
or withhold consent with respect to, all shares of Capital Stock now owned or
later acquired by such party so that at all times each and every individual
designated by Rice or its respective designees in accordance with (and subject
to the limitations in) Section 4.11 of the Purchase Agreement will be a
director of the Company; provided, however, that ▇▇▇▇ will not have any
obligation to designate or cause any individual to serve on the board of
directors of the Company. No director designated by Rice or its designee may
be removed without the prior written consent of ▇▇▇▇.
(b) So long as the provisions of this Article VIII remain in
effect, each (now or hereafter) party to this Agreement other than the
Southland Purchasers will, at the request of the Southland Purchasers or
its designee, vote, or give or withhold consent with respect to, all
shares of Capital Stock now owned or later acquired by such party so that
at all times the one individual designated by the Southland Purchasers or
their respective designee in accordance with Section 4.11 of the Purchase
Agreement (which may be F-Jotan or its designee) will be a director of the
Company; provided, however, that the Southland Purchasers will not have
any obligation to designate or cause any individual to serve on the board
of directors of the Company. No director designated by the Southland
Purchasers or its designee may be removed without the prior written
consent of the Southland Purchasers and F-Jotan.
(c) Any Purchaser or F-Jotan may, at any time, terminate its
rights under this Article VIII by providing written notice of such
termination to the Company.
8.03 Termination. The obligations contained in this Article VIII shall
terminate, solely with respect to any Shareholder who is an employee of the
Company, on the first day of the month next following the date that the
Company terminates the employment of such Shareholder, as such an employee,
without cause.
Article IX
Representations and Warranties; Covenants
9.01 Representations and Warranties and Covenants of the Company and
the Shareholder. Each of the representations and warranties set forth in
Section 3.01 of the Purchase Agreement and each of the covenants set forth in
Article IV of the Purchase Agreement are hereby restated and incorporated by
reference in this Agreement as though set forth in this Agreement, and is made
by the Company and the Shareholder as made in the Purchase Agreement for the
benefit of each Purchaser.
9.02 Representations and Warranties of the Purchaser. Each of the
representations and warranties of each Purchaser set forth in Section 3.02 of
the Purchase Agreement is hereby restated and incorporated by reference in
this Agreement as though set forth in this Agreement for the benefit of the
Company and the Shareholder.
Article X
Conditions
The obligations of each Purchaser to effect the transactions
contemplated by this Agreement are subject to the following conditions:
10.01 Note Agreement and Purchase Agreement Conditions. All of the
conditions precedent to the obligations of each Purchaser under the Note
Agreement and the Purchase Agreement will have been satisfied in full or
waived.
10.02 Proceedings. All proceedings taken in connection with the
transactions contemplated by this Agreement, and all documents necessary to
the consummation thereof, will be reasonably satisfactory in form and
substance to each Purchaser and its counsel, and each Purchaser and its
counsel will have received copies (executed or certified as may be
appropriate) of all documents, instruments, and agreements that such Purchaser
or its counsel may request in connection with the consummation of such
transactions.
Article XI
Miscellaneous
11.01 Indemnification. In addition to any other rights or remedies to
which each Purchaser and the Holders may be entitled, the Company and the
Shareholder (solely with respect to the representations and warranties made by
him herein) severally but not jointly agree to and will indemnify and hold
harmless each Purchaser, the Holders, and their Affiliates and their
respective successors, assigns, officers, directors, managers, employees,
attorneys, and agents (individually and collectively, an "Indemnified Party")
from and against any and all losses, claims, obligations, liabilities,
deficiencies, diminutions in value, penalties, causes of action, damages,
out-of-pocket costs, including, without limitation, all such costs of
directors of the Company incurred in performing duties or services for or on
behalf of the Company, reasonable attorneys' fees, and expenses (including,
without limitation, costs and expenses of investigation and defense,
attorneys' fees and expenses) including, without limitation, those arising out
of the contributory negligence of any Indemnified Party, that any Indemnified
Party may suffer, incur, or be responsible for, arising or resulting from, to
the extent applicable, any misrepresentation, breach of warranty, or
nonfulfillment of any agreement made by or on the part of the Company or made
by the Shareholder (solely with respect to the representations and warranties
made by him herein) under this Agreement, the Purchase Agreement, or the other
Purchase Documents, the Acquisition Agreement (each as defined in Section 11.1
of the Note Agreement) or under any other agreement to which the Company or
the Shareholder is a party in connection with the transactions contemplated by
this transaction, or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished by the Company to
the Purchaser or the Holders under this Agreement. The foregoing
indemnification includes any such claims, actions, damages, costs and expenses
incurred by reason of the contributory negligence of the Person to be
indemnified, but excludes any of the same incurred by reason of such Person's
gross negligence or willful misconduct and shall survive the expiration of
this Agreement or the irrevocable sale by each Purchaser of its interests in,
or the repayment of its loans to, the Company.
11.02 Default. It is agreed that a violation by any party of the terms
of this Agreement cannot be adequately measured or compensated in money
damages, and that any breach or threatened breach of this Agreement by a party
to this Agreement would do irreparable injury to the nonbreaching party. It
is, therefore, agreed that in the event of any breach or threatened breach by
a party to this Agreement of the terms and conditions set forth in this
Agreement, the nondefaulting party will be entitled, in addition to any and
all other rights and remedies that it may have in law or in equity, to apply
for and obtain injunctive relief requiring the defaulting party to be
restrained from any such breach, or threatened breach or to refrain from a
continuation of any actual breach.
11.03 Integration. This Agreement, the Note Agreement and the Purchase
Agreement constitute the entire agreement among the parties with respect to
the subject matter hereof and thereof and supersede all previous written, and
all previous or contemporaneous oral, negotiations, understandings,
arrangements, and agreements. This Agreement may not be amended or
supplemented except by a writing signed by Company, the Shareholder, and each
Holder.
11.04 Headings. The headings in this Agreement are for convenience and
reference only and are not part of the substance of this Agreement.
References in this Agreement to Sections and Articles are references to the
Sections and Articles of this Agreement unless otherwise specified.
11.05 Severability. The parties to this Agreement expressly agree that
it is not their intention to violate any public policy, statutory or common
law rules, regulations, or decisions of any governmental or regulatory body.
If any provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such policy, rule,
regulation, or decision, the provision, section, sentence, word, clause, or
combination thereof causing such violation will be inoperative (and in lieu
thereof there will be inserted such provision, sentence, word, clause, or
combination thereof as may be valid and consistent with the intent of the
parties under this Agreement) and the remainder of this Agreement, as amended,
will remain binding upon the parties to this Agreement, unless the inoperative
provision would cause enforcement of the remainder of this Agreement to be
inequitable under the circumstances.
11.06 Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration, or other communication be given to or
served upon any of the parties by another, such notice, demand, request,
consent, approval, declaration, or other communication will be in writing and
will be deemed to have been validly served, given, or delivered (and "the date
of such notice" or words of similar effect will mean the date) five (5) days
after deposit in the United States mails, certified mail, return receipt
requested, with proper postage prepaid, or upon receipt thereof with written
acknowledgment of receipt (whether by non-certified mail, telecopy, telegram,
express or hand delivery, or otherwise), whichever is earlier, and addressed
to the party to be notified as follows:
If to the Rice, at: Address of Rice beneath the name of Rice on the
signature pages of this Agreement
If to F-Jotan, at: Address of F-Jotan beneath the name of F-Jotan
on the signature pages of this Agreement
with courtesy copies to: ▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to the Company, at: Jotan, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with courtesy copies to: Wyrick, ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with courtesy copies to: ▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
One Atlanta Center
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Shareholder, at: Address of such Shareholder beneath the
name of such Shareholder on the signature pages of this Agreement
or to such other address as each party may designate for itself by like
notice. Notice to any Holder other than the Purchaser will be delivered as
set forth above to the address shown on the stock transfer books of the
Company or the Warrant Register unless such ▇▇▇▇▇▇ has advised the Company in
writing of a different address to which notices are to be sent under this
Agreement.
Failure or delay in delivering the courtesy copies of any notice,
demand, request, consent, approval, declaration, or other communication to the
persons designated above to receive copies of the actual notice will in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration, or other communication.
No notice, demand, request, consent, approval, declaration, or other
communication will be deemed to have been given or received unless and until
it sets forth all items of information required to be set forth therein
pursuant to the terms of this Agreement.
11.07 Successors. This Agreement will be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns;
provided, however, that no sale, assignment or other transfer by any party to
this Agreement of any of its Capital Stock or rights hereunder to another
Person will be valid and effective unless and until the transferee or assignee
first agrees in writing to be bound by the terms and conditions of this
Agreement and the Purchase Agreement, and the agreements and instruments
related hereto and thereto, in a form and substance reasonably satisfactory to
the Company.
.
11.08 Remedies. The failure of any party to enforce any right or remedy
under this agreement, or to enforce any such right or remedy promptly, will
not constitute a waiver thereof, nor give rise to any estoppel against such
party, nor excuse any other party from its obligations under this Agreement.
Any waiver of any such right or remedy by any party must be in writing and
signed by the party against which such waiver is sought to be enforced.
11.09 Survival. All warranties, representations, and covenants made by
any party in this Agreement or in any certificate or other instrument
delivered by such party or on its behalf under this Agreement will be
considered to have been relied upon by the party to which it is delivered and
will survive the Closing Date, regardless of any investigation made by such
party or on its behalf. All statements in any such certificate or other
instrument will constitute warranties and representations under this
Agreement.
11.10 Fees. Any and all fees, costs, and expenses, of whatever kind and
nature, including attorneys' fees and expenses, incurred by the Holders in
connection with the defense or prosecution of any actions or proceedings
arising out of or in connection with this Agreement will, to the extent
provided in this Agreement, be borne and paid by the Company within ten (10)
days of demand by the Holders.
11.11 Counterparts. This Agreement may be executed in any number of
counterparts, which will individually and collectively constitute one
agreement.
11.12 Other Business. It is understood and accepted that each
Purchaser, the Holders, and their Affiliates have interests in other business
ventures that may be in conflict with the activities of the Company and that
nothing in this Agreement will limit the current or future business activities
of such parties whether or not such activities are competitive with those of
the Company. The Company and the Shareholder agree that all business
opportunities available to them in any field substantially related to the
business of the Company will be pursued exclusively through the Company.
11.13 Choice of Law. THIS AGREEMENT WILL BE DEEMED TO HAVE BEEN MADE IN
JACKSONVILLE, FLORIDA AND WILL BE INTERPRETED AND THE RIGHTS OF THE PARTIES
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO
AND THE INTERNAL LAWS OF THE STATE OF FLORIDA APPLICABLE TO AN AGREEMENT
EXECUTED, DELIVERED AND PERFORMED THEREIN WITHOUT GIVING EFFECT TO THE CHOICE-
OF-LAW RULES THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION
OF THE SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
11.14 Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner of such Registrable
Securities, the beneficial owner of Registrable Securities may, at its
election, be treated as the Holder of such Registrable Securities for purposes
of any request or other action by any Holder or Holders of Registrable
Securities pursuant to this Agreement or any determination of any number or
percentage of shares of Registrable Securities held by any Holder or Holders
of Registrable Securities contemplated by this Agreement. If the beneficial
owner of any Registrable Securities so elects, the Company may require
assurances reasonably satisfactory to it of such owner's beneficial ownership
of such Registrable Securities. In no event will a Holder be required to
exercise its Warrant as a condition to the registration of such Warrant or
Registrable Securities thereunder.
11.15 Fiduciary Duties. The Company acknowledges and agrees that, for
so long as any Warrant is outstanding and regardless of whether the Holder has
exercised any portion of this its Warrant, (a) the officers and directors of
the Company will owe the same duties (fiduciary and otherwise) to the Holder
as are owed to a stockholder of the Company and (b) the Holder will be
entitled to all rights and remedies with respect to such duties or that are
otherwise available to a stockholder of the Company under the Florida General
Corporation Law, as amended from time to time.
11.16 Duties Among Holders. Each Holder agrees that no other Holder
will by virtue of this Agreement be under any fiduciary or other duty to give
or withhold any consent or approval under this Agreement or to take any other
action or omit to take any action under this Agreement, and that each other
Holder may act or refrain from acting under this Agreement as such other
Holder may, in its discretion, elect.
11.17 Confidentiality. Each Holder agrees to keep confidential any
information delivered by the Company to such Holder under this Agreement that
the Company clearly indicates in writing to be confidential information;
provided, however, that nothing in this Section 11.17 will prevent such Holder
from disclosing such information (a) to any Affiliate of such Holder or any
actual or potential purchaser, participant, assignee, or transferee of such
▇▇▇▇▇▇'s rights or obligations hereunder that agrees to be bound by the terms
of this Section 11.17, (b) upon order of any court or administrative agency,
(c) upon the request or demand of any regulatory agency or authority having
jurisdiction over such Holder, (d) that is in the public domain, (e) that has
been obtained from any Person that is not a party to this Agreement or an
Affiliate of any such party without breach by such Person of a confidentiality
obligation known to such Holder, (f) in connection with the exercise of any
remedy under this Agreement, or (g) to the certified public accountants for
such Holder. The Company agrees that such ▇▇▇▇▇▇ will be presumed to have met
its obligations under this Section 11.17 to the extent that it exercises the
same degree of care with respect to information provided by the Company as it
exercises with respect to its own information of similar character.
11.18 Termination and Release of Prior F-Jotan Agreements. F-Jotan, the
Company and the Investors (as defined below) hereby agree that, for good and
valuable consideration, receipt of which is hereby acknowledged, including
obtaining the rights set forth hereinabove and in the other Purchase
Documents, each of them hereby terminates, as of the date hereof, all of its
rights, remedies, indemnities, benefits, priorities and privileges, howsoever
described, in respect of the Company under the Prior Series A Documents and
forever releases the Company, as of the date hereof, from all obligations to
it thereunder. The "Prior Series A Documents" shall mean and refer to (i)
that certain Series A Convertible Preferred Stock Purchase Agreement, dated as
of May 16, 1996, among the Company, F-Jotan and the Investors listed in
Exhibit A to such agreement (the "Investors"), (ii) that certain Investors
Rights Agreement, dated as of May 16, 1996, among the Company, the holders of
the Series A Convertible Preferred Stock and the Investors, (iii) that certain
Stockholder Agreement, dated as of May 16, 1996, among the Company, the
holders of the Company's common stock listed on the signature pages to such
agreement and the Investors, and (iv) all agreements, instruments, documents
and certificates, including Stock Certificate Pa-1 For 1,265,823 Shares Of
Series A Preferred, executed and delivered and/or filed in connection
therewith, including without limitation, the Articles of Amendment of the
Restated Articles of Incorporation of the Company dated May 15, 1996.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
COMPANY:
JOTAN, INC.
BY:_______________________________
NAME:_____________________________
TITLE:____________________________
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
RICE:
RICE PARTNERS II, L.P.
By: Rice Capital Group IV, L.P.,
Its general partner
By: RMC Fund Management, L.P.,
Its general partner
By: Rice Mezzanine Corporation,
Its general partner
By:_________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Managing Director
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
OWNED ON CLOSING DATE:
None Shares of Series A
Convertible Preferred Stock
40,000 Shares of Series B
Redeemable Preferred Stock
None Shares of Common Stock
2,515,203 Warrant A-1 Shares
9,581,726 Warrant A-2 Shares
F-JOTAN, L.L.C.
By: Franklin Street/Fairview Capital, L.L.C.,
its manager
By: Franklin Capital, L.L.C.,
its manager
By:___________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Manager
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
OWNED ON CLOSING DATE:
1,329,357 Shares of Series A
Convertible Preferred Stock
None Shares of Common Stock
None Other Equity Interests
THE SOUTHLAND PURCHASERS:
F-SOUTHLAND, L.L.C.
By: Franklin Street/Fairview Capital, L.L.C.,
its manager
By: Franklin Capital, L.L.C,
its manager
By:_______________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Manager
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
OWNED ON CLOSING DATE:
None Shares of Series A
Convertible Preferred Stock
5,000 Shares of Series B
Redeemable Preferred Stock
None Shares of Common Stock
359,315 Warrant B-1 Shares
1,197,716 Warrant B-2 Shares
FF-SOUTHLAND, L.P.
By: FSFC Associates, L.P.,
Its general partner
By: Franklin Capital, L.L.C.,
Its general partner
By:_________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Manager
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
OWNED ON CLOSING DATE:
None Shares of Series A
Convertible Preferred Stock
5,000 Shares of Series B
Redeemable Preferred Stock
None Shares of Common Stock
359,315 Warrant C-1 Shares
1,197,716 Warrant C-2 Shares
SHAREHOLDER:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
___________________________________
OWNED ON CLOSING DATE:
None Shares of Common Stock
Owned on Closing Date
275,000 Common Stock Options
▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________________
OWNED ON CLOSING DATE:
950,000 Shares of Common Stock
Owned on Closing Date
33,000 Common Stock Options