EXHIBIT 1
Preferred Stock & Warrant Purchase Agreement
FIRST SUPPLEMENTAL PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT
FIRST SUPPLEMENTAL PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (this
"Agreement") made as of September 10, 1997, by and among JOTAN, INC., a
Florida corporation (the "Company"), RICE PARTNERS II, L.P., a Delaware
limited partnership ("Rice" or the "Purchaser"), 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"), F-JOTAN, L.L.C., a North Carolina limited
liability corporation ("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, Rice, the Southland Purchasers, F-Jotan and the Shareholder
named on the signature pages thereof, executed and delivered the Preferred
Stock and Warrant Purchase Agreement, dated as of February 28, 1997 (the
"Original Purchase Agreement");
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 is the owner of the 1,329,357 shares of the Series A
Preferred Stock of the Company as of the date hereof;
WHEREAS, SHC Acquisition Corp., a wholly-owned Subsidiary of the
Company, has merged with and into Southland Holding Company, with Southland
Holding Company surviving and assuming all the obligations of SHC Acquisition
Corp. under the Original Purchase Agreement. On July 31, 1997, all of the
subsidiaries of Southland Holding Company and Atlantic Bag & Paper Company, a
Subsidiary of the Company, merged with and into Southland Holding Company
(which concurrently changed its name to Southland Container Packaging Corp.),
with the result that Southland Container Packaging Corp. ("Southland"), as of
July 31, 1997, had no Subsidiaries;
WHEREAS, the Company, Southland, Rice and the Southland Purchasers have
entered into that certain Note Purchase Agreement, dated as of February 28,
1997, as amended by Amendment No. 1, dated as of August 19, 1997 (the "Note
Agreement");
WHEREAS, the Company and the Shareholder have entered into a Shareholder
Agreement, dated as of February 28, 1997 (the "Shareholder Agreement"), with
the Purchaser, the Southland Purchasers and F-Jotan; and
WHEREAS, on June 23, 1997, Rice unconditionally committed to the Senior
Lender (as defined in the Note Agreement) and FF-Southland committed to the
Senior Lender subject to certain approvals, to purchase up to $2,625,000 (the
"Purchase Price") of Series B Preferred Stock, in cash (the "Cove Acquisition
Investment"), in connection with the acquisition by the Southland Holding
Company (now known as Southland Container Packaging Corp.) of certain of the
assets of Cove Container Corporation (the "Cove Acquisition");
WHEREAS, such commitment requires that the proceeds of such purchase
shall be used by the Company to repay the Senior Lender a like amount advanced
on June 23, 1997 by the Senior Lender under the Senior Loan Agreement on
behalf of the Company to enable the Company to pay the purchase price of the
Cove Acquisition;
WHEREAS, although Rice is willing to enter into and consummate the
transactions contemplated hereby upon the due issuance of its Warrants and
Preferred Stock (as defined below) against the payment of the Purchase Price,
FF-Southland did not receive appropriate approvals for its portion of such
purchase transaction.
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, F-
Jotan, the Shareholder, and the Company, intending to be legally bound, agree
as follows:
Article I
Definitions
As used in this Agreement, all capitalized terms have the meanings
indicated in the Original Purchase Agreement unless otherwise defined herein.
Any such term used in the Original Purchase Agreement, but not defined herein,
shall be interpreted to cover all corresponding terms used herein and relating
to the Warrants and Series B Preferred Stock to be issued pursuant to this
Agreement, as if such terms were set forth at length herein and applied to the
transactions contemplated hereby.
Agreement. This First Supplemental Preferred Stock and Warrant Purchase
Agreement.
Closing Date. With respect to this Agreement, as of September 10, 1997.
Cove Acquisition. This term is defined in the Preamble.
Cove Acquisition Investment. This term is defined in the Preamble.
First Supplemental Documents. This Agreement, the First Supplemental
Series B Preferred Stock, the First Supplemental Warrant and the First
Supplemental Shareholder Agreement and the transactions and documents,
instruments, certificates and agreements contemplated thereby.
First Supplemental Preferred Shares. Shares of Series B Preferred Stock
(but not any Series A Preferred Stock) to be issued to the Purchaser
hereunder in connection with the Cove Acquisition Investment upon
payment of the applicable purchase price therefor.
First Supplemental Series B Preferred Stock. Series B Preferred Stock
to be issued to the applicable Purchaser hereunder in connection with
the Cove Acquisition Investment upon payment of the applicable Purchase
Price therefor.
First Supplemental Warrant. The First Supplemental Warrant A-2 to be
issued concurrently with the issuance of the First Supplemental Series B
Preferred Stock hereunder in connection with the Cove Acquisition
Investment.
First Supplemental Warrant A-2. The First Supplemental Warrant A-2,
dated September 10, 1997, to be issued by the Company hereunder to Rice
in connection with the Cove Acquisition Investment.
Note Agreement. This term is defined in the preamble and includes the
Note Purchase Agreement, dated as of February 28, 1997, as amended by
Amendment No. 1, dated as of August 19, 1997, among the Company and
First Supplemental Warrant, and all documents evidencing indebtedness
thereunder or otherwise related to the Note Agreement, as the same may
be further amended from time to time, and any refinancing, refunding or
replacements of the indebtedness under the Note Agreement.
Original Closing Date. The Closing Date with respect to the Original
Purchase Agreement, which occurred as of February 28, 1997 with respect
to the originally issued Warrants and Preferred Shares under the
Original Purchase Agreement and March 4, 1997 with respect to the
initial funding.
Purchaser. For purposes of the First Supplemental Documents, Rice; and
for purposes of the Original Purchase Agreement and the transactions
contemplated thereby, Rice and the Southland Purchasers.
Purchase Price. This term is defined in the preamble.
Preferred Stock or Series B Preferred Stock. For purposes of this
Agreement (except where the context requires a reference to this
Agreement and the Original Purchase Agreement), the First Supplemental
Series B Preferred Stock.
Shareholder Agreement. This term is defined in the preamble and
includes the First Supplemental Shareholder Agreement, dated as of the
date hereof, between the Company, the Shareholder, F-Jotan, the
Southland Purchasers and the Purchaser in substantially the form
attached to this Agreement as Annex A and incorporated in this Agreement
by reference.
Southland. This term is defined in the Preamble.
Warrants. For purposes of this Agreement (except where the context
requires a reference to this Agreement and the Original Purchase
Agreement), the First Supplemental Warrant.
Warrant Shares. For purposes of this Agreement (except where the
context requires a reference to this Agreement and the Original Purchase
Agreement), the Issued Warrant Shares and the Issuable Warrant Shares
relating to the First Supplemental Warrant.
Article II
The Warrants and the Preferred Shares
2.01 The Warrants and the Preferred Shares. On the Closing Date,
Rice agrees to purchase from the Company at the purchase price set forth
below, and the Company agrees to issue to Rice, all in accordance with the
terms and conditions of this Agreement:
(a) a First Supplemental Warrant A-2 (relating to the Series B
Preferred Stock) in substantially the form attached to this Agreement as
Annex B and incorporated in this Agreement by reference to purchase, at
a purchase price of $100, the number of shares of Common Stock set forth
beneath the name of Rice on the signature page of this Agreement for
such Warrant A-2; and
(b) 13,125 shares of Series B Preferred Stock, at a purchase
price of $200 per share (for a total of $2,625,000) having the rights,
restrictions, privileges, and preferences set forth in the articles of
amendment of the Company's articles of incorporation attached to the
Original Purchase Agreement as Annex H (the "Certificate").
The Company has, on or before the Closing Date, duly authorized the Series B
Preferred Stock being purchased and sold pursuant to the terms of this
Agreement by duly filing the Certificate with the Secretary of State of the
State of Florida. On the Closing Date, the Company will deliver to Rice a
certificate evidencing and representing the shares of Series B Preferred Stock
issued to such Purchaser, which certificate shall be issued in such
Purchaser's name or in the name of its designee.
2.02 Legend. The Company will deliver to the Purchaser on the Closing
Date one or more certificates representing each of (i) First Supplemental
Warrant A-2, and (ii) the First Supplemental Series B Preferred Stock,
purchased by Rice in such denominations as such Purchaser requests. Such
certificates will be issued in such Purchaser's name or, subject to compliance
with transfer and registration requirements under applicable Federal and state
securities laws, in the name or names of its respective designee or designees.
It is understood and agreed that the certificates evidencing the Warrants will
bear the following legends:
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION
WITH THE DISTRIBUTION HEREOF. THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, INCLUDING, WITHOUT
LIMITATION, THE NORTH CAROLINA SECURITIES ACT, AS AMENDED, THE TEXAS
SECURITIES ACT OF 1957, AS AMENDED, AND THE GEORGIA SECURITIES ACT OF
1973, AS AMENDED, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES
LAWS."
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE
SUBJECT TO THE TERMS AND PROVISIONS OF A PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT AND A SHAREHOLDER AGREEMENT, EACH DATED AS OF
FEBRUARY 28, 1997, BY AND AMONG JOTAN, INC. (THE "COMPANY"), RICE
PARTNERS II, L.P., F-SOUTHLAND, L.L.C. AND FF-SOUTHLAND, L.P., F-JOTAN,
L.L.C. AND THE OTHER PARTIES LISTED ON THE SIGNATURE PAGES TO SUCH
SHAREHOLDER AGREEMENT (AS SUCH AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED,
AMENDED, OR RESTATED FROM TIME TO TIME, THE "AGREEMENTS"). COPIES OF
THE AGREEMENTS ARE AVAILABLE AT THE EXECUTIVE OFFICES OF THE COMPANY."
It is further understood and agreed that the certificates evidencing the First
Supplemental Series B Preferred Stock will bear substantially the same as the
following legends:
"THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
OR FOR SALE IN CONNECTION WITH THE DISTRIBUTION HEREOF. THESE SHARES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS, INCLUDING, WITHOUT LIMITATION, THE NORTH
CAROLINA SECURITIES ACT, AS AMENDED, THE TEXAS SECURITIES ACT OF 1957,
AS AMENDED, AND THE GEORGIA SECURITIES ACT OF 1973, AS AMENDED, AND MAY
NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH
ACT AND ALL APPLICABLE STATE SECURITIES LAWS."
"THESE SHARES ARE SUBJECT TO THE TERMS AND PROVISIONS OF A PREFERRED
STOCK AND WARRANT PURCHASE AGREEMENT AND A SHAREHOLDER AGREEMENT, EACH
DATED AS OF FEBRUARY 28, 1997, BETWEEN JOTAN, INC. (THE "COMPANY"), RICE
PARTNERS II, L.P., F-JOTAN, L.L.C., AND F-SOUTHLAND, L.L.C., FF-
SOUTHLAND, L.P. AND THE OTHER PARTIES LISTED ON THE SIGNATURE PAGES TO
SUCH SHAREHOLDER AGREEMENT (AS SUCH AGREEMENTS MAY BE SUPPLEMENTED,
MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE "AGREEMENTS").
COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE EXECUTIVE OFFICES OF THE
COMPANY."
2.03 Exercise Price. The Exercise Price per share will be $0.01 for
each share of Common Stock covered by the Warrants; provided, however, that in
no event the aggregate Exercise Price for all of the shares of Common Stock
covered by the First Supplemental Warrant A-2 exceed $100.00, whether as a
result of any change in the par value of the Common Stock or Other Securities,
as a result of any change in the number of shares purchasable as provided in
this Article II, or otherwise; provided, further, that such limitation of the
aggregate Exercise Price will have no effect whatsoever upon the amount or
number of Warrant Shares for which the Warrants may be exercised.
2.04 Exercise of Warrants. Each of the Warrants may be exercised at
any time or from time to time on or after the Closing Date until the tenth
(10th) anniversary of the Original Closing Date (March 4, 2007), on any day
that is a Business Day, for all or any part of the number of Issuable Warrant
Shares purchasable upon its exercise. In order to exercise its Warrant, in
whole or in part, the Holder will comply with the applicable provisions in
Section 2.04 of the Original Purchase Agreement as if such provisions were
incorporated herein at length.
2.05 Stock Legend. Without limiting the provisions of Section 2.02
hereof, the First Supplemental Warrant and the First Supplemental Preferred
Shares have not been registered under the Securities Act or qualified under
applicable state securities laws. Accordingly, unless there is an effective
registration statement and qualification respecting the First Supplemental
Warrant or the First Supplemental Preferred Shares, as the case may be, under
the Securities Act or under applicable state securities laws, the First
Supplemental Preferred Shares and, at the time of exercise of a First
Supplemental Warrant, any stock certificate issued pursuant to the exercise of
a First Supplemental Warrant will bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES
LAWS, INCLUDING, WITHOUT LIMITATION, THE NORTH CAROLINA SECURITIES ACT,
AS AMENDED, THE TEXAS SECURITIES ACT OF 1957, AS AMENDED, AND THE
GEORGIA SECURITIES ACT OF 1973, AS AMENDED, AND (B) ARE SUBJECT TO THE
TERMS OF AND PROVISIONS OF A PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT AND A SHAREHOLDER AGREEMENT, EACH DATED AS OF FEBRUARY 28,
1997 AMONG JOTAN, INC. (THE "COMPANY"), RICE PARTNERS II, L.P., F-
SOUTHLAND, FF-SOUTHLAND, L.P., F-JOTAN, L.L.C. AND THE OTHER PARTIES
LISTED ON THE SIGNATURE PAGES OF SUCH SHAREHOLDER AGREEMENT (AS SUCH
AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME
TO TIME, THE "AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT
THE OFFICES OF THE COMPANY."
All shares of Capital Stock of the Company subject to the Shareholder
Agreement will bear a legend to such effect.
2.06 Original Purchase Agreement Provisions Incorporated into this
Agreement. Except as set forth above, all other provisions in Article II of
the Original Purchase Agreement shall be incorporated herein as if set forth
at length herein with full application to the First Supplemental Warrant and
the First Supplemental Preferred Shares; and all such Warrants and Preferred
Shares issued pursuant to this Agreement shall be included in all adjustment
and other calculations under Section 2.08 of the Original Purchase Agreement
relating to all Warrants and Preferred Shares issued as of the Original
Closing Date under the Original Purchase Agreement as if the First
Supplemental Warrant and the First Supplemental Preferred Shares were issued
on the Original Closing Date; provided, however, that as a result of the
issuance of securities contemplated by the First Supplemental Documents, there
will be no adjustments under Section 2.08 of the Original Purchase Agreement
(despite the issuance of the First Supplemental Warrant and the First
Supplemental Preferred Stock to Rice).
Article III
Representations and Warranties
3.01 Representations and Warranties of the Company and the Shareholder.
The Company and the Shareholder severally and not jointly represent and
warrant to the Southland Purchasers, the Purchaser and F-Jotan that:
(a) The Company is a corporation duly organized and existing and
in good standing under the laws of its state of incorporation and is
qualified or licensed to do business in all other countries, states, and
jurisdictions the laws of which require it to be so qualified or
licensed. The Company has no Subsidiaries (other than Southland) or
debt or equity investment in any Person. Giving effect to the
transactions contemplated herein, the Shareholder owns beneficially and
of record the number of shares in the aggregate of the issued and
outstanding capital stock or stock equivalents of the Company on a fully
converted and diluted basis as of the Closing Date set forth under the
signature of such Shareholder on this Agreement, all being free and
clear of all liens, claims and encumbrances. Other than the Southland
Purchasers, the Purchaser and F-Jotan, and, except any other stock
issuable under any employee or director stock plan which constitutes
Permitted Stock, no Person has any rights, whether granted by the
Company or any other Person, to acquire any portion of the equity
interest of the Company or the assets of the Company.
(b) Each of the Company and the Shareholder has, and at all
times that this Agreement is in force will have, the right and power,
and is duly authorized, to enter into, execute, deliver, and perform
this Agreement, the Shareholder Agreement, and, in the case of the
Company, the First Supplemental Warrant, and the officers of Company
executing and delivering this Agreement, the Shareholder Agreement, and
the First Supplemental Warrant are duly authorized to do so. This
Agreement, the Shareholder Agreement, and the First Supplemental Warrant
have been duly and validly executed, issued, and delivered and
constitute the legal, valid, and binding obligations of Company and the
Shareholder, enforceable in accordance with their respective terms.
(c) The execution, delivery, and performance of this Agreement,
the Shareholder Agreement, and the First Supplemental Warrant will not,
by the lapse of time, the giving of notice, or otherwise, constitute a
violation of any applicable provision contained in the charter, bylaws,
or organizational documents of the Company or contained in any
agreement, instrument, or document to which the Company or the
Shareholder is a party or by which any of them is bound.
(d) As of the Closing Date, the authorized capital stock of the
Company consists of (i) 40,000,000 shares of Common Stock, of which
5,679,411 shares are issued and outstanding and (ii) 10,000,000 shares
of Preferred Stock, of which 1,329,357 shares of Series A Preferred
Stock are issued and outstanding and of which 63,125 shares of Series B
Preferred Stock are issued and outstanding. An aggregate of at least
3,620,473 shares of Common Stock are reserved for issuance on exercise
of the First Supplemental Warrant; and notwithstanding Section 3.01(d)
of the Original Purchase Agreement, 15,210,990 shares of Common Stock
have been reserved for issuance of all other Warrants (issued as of the
Original Closing Date of February 28, 1997). All of the issued and
outstanding shares of Common Stock are, and upon issuance and payment
therefor in accordance with the terms of this Agreement, all of the
outstanding First Supplemental Series B Preferred Stock will be, validly
issued, fully paid and nonassessable. The Common Stock and First
Supplemental Preferred Shares have been offered, issued, sold, and
delivered by Company free from preemptive rights, rights of first
refusal, antidilution rights, cumulative voting rights or similar rights
(except as otherwise provided in the Original Purchase Agreement, this
Agreement, the Shareholder Agreement or in the powers, designations,
rights and preferences of the Preferred Stock contained in the
Certificate) and in compliance with applicable federal and state
securities laws. Except pursuant to this Agreement and the Certificate
and except for the Original Purchase Agreement, the Permitted Stock, the
Company is not obligated to issue or sell any Capital Stock, and, except
for this Agreement and the Shareholder Agreement, neither the Company
nor the Shareholder is party to, or otherwise bound by, any agreement
affecting the voting of any Capital Stock. Except for the Shareholder
Agreement, the Company is not, nor will it be, a party to, or otherwise
bound by, any agreement obligating it to register any of its Capital
Stock.
(e) The First Supplemental Preferred Shares and the shares of
Common Stock and other consideration issuable on exercise of the First
Supplemental Warrant have been duly and validly authorized and reserved
for issuance and, when issued in accordance with the terms of this
Agreement or the First Supplemental Warrant, as the case may be, will be
validly issued, fully paid, and nonassessable and free of preemptive
rights, rights of first refusal, or similar rights.
(f) All other representations and warranties set forth in the
Original Purchase Agreement are true and correct as of the date hereof,
giving effect to the transactions contemplated hereby.
3.02 Representations and Warranties of the Purchaser. Rice represents
and warrants to the Company, F-Jotan, the Southland Purchasers and the
Shareholder:
(a) It is a limited partnership, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
(b) It has the right and power and is duly authorized to enter
into, execute, deliver, and perform this Agreement and the Shareholder
Agreement, and its officers, managers or agents executing and delivering
this Agreement and the Shareholder Agreement are duly authorized to do
so. This Agreement and the Shareholder Agreement have been duly and
validly executed, issued, and delivered and constitute the legal, valid,
and binding obligation of such Purchaser, enforceable in accordance with
their respective terms.
(c) It (i) is an "accredited investor," as that term is defined
in Regulation D under the Securities Act; (ii) has such knowledge,
skill, and experience in business and financial matters, based on actual
participation, that it is capable of evaluating the merits and risks of
an investment in the Company and the suitability thereof as an
investment for the Purchaser; (iii) has received and reviewed all such
financial and other information and records of the Company as it
considered necessary or appropriate in deciding whether to purchase the
First Supplemental Preferred Shares and the First Supplemental Warrant
and any securities issuable upon exercise of the First Supplemental
Warrant, and the Company and the Shareholder have made available to it
the opportunity to ask questions of, and to receive answers and to
obtain additional information from, representatives of the Company and
the Shareholder; (iv) all such additional information has been provided
to and reviewed by it; and (v) it has the ability to bear the economic
risks of losing its entire investment in the First Supplemental
Preferred Shares and the First Supplemental Warrant and any securities
issuable upon exercise of such Warrants.
(d) Except as otherwise contemplated by this Agreement and the
Shareholder Agreement, the Purchaser is acquiring its First Supplemental
Series B Preferred Stock, the First Supplemental Warrant and any
securities issuable upon exercise of the First Supplemental Warrant for
investment for its own account and not with a view to any distribution
thereof in violation of applicable securities laws.
(e) It agrees that the certificates representing its Preferred
Shares, the First Supplemental Warrant, and any Issued Warrant Shares
will bear the legends referenced in this Agreement or the Original
Purchase Agreement, as the case may be, and such Preferred Shares,
Warrants or securities issuable upon exercise of such Warrants and
pursuant to the Shareholder Agreement, as the case may be, will not be
offered, sold, or transferred in the absence of registration or
exemption under applicable securities laws.
(f) It is not acquiring the First Supplemental Preferred Shares
or the First Supplemental Warrant or any securities issuable upon
exercise of such Warrants based upon any representation, oral or
written, by the Company or the Shareholder or any representative of the
Company or the Shareholder with respect to the future value of, income
from, or tax consequences relating to, such Preferred Shares or the
Warrants or securities issuable upon exercise of such Warrants, but
rather upon an independent examination and judgment as to the prospects
of the Company. Further, it acknowledges that no federal or state
administrative entity responsible for securities registration or
enforcement has made any recommendation or endorsement of such Preferred
Shares or such Warrants or any securities issuable upon exercise of such
Warrants or any findings as to the fairness of an investment in the
Preferred Shares of such Warrants or any securities issuable upon
exercise of such Warrants.
(g) It has no current contract, undertaking, agreement,
arrangement or understanding with any Person to sell, transfer, grant
any participation in, or otherwise distribute any of the First
Supplemental Preferred Shares, the First Supplemental Warrant or any
securities issuable upon exercise of the First Supplemental Warrant to
any Person.
Article IV
Covenants
4.01 Original Purchase Agreement Covenants Incorporated Into This
Agreement. The Company will comply with all with all covenants in Article IV
of the Original Purchase Agreement as set forth herein at length.
4.02 Payment of Senior Agent. The Company covenants and agrees that it
shall provide written direction to the Purchaser to pay proceeds of the
Purchase Price of $2,625,000 on the Closing Date to the Senior Agent in
repayment of the "Acquisition Loan" (as defined in the Senior Loan Agreement)
made in the same amount by the Senior Lenders to Southland to complete the
Cove Acquisition.
Article V
Conditions
The obligations of the Purchaser to effect the transactions contemplated
by this Agreement are subject to the following conditions precedent:
5.01 Material Change. There will have occurred no material adverse
change in the business, prospects, results of operations, or condition,
financial or otherwise, of the Company.
5.02 Shareholder Agreement. The Company, F-Jotan, the Southland
Purchasers and the Shareholder will have entered into the Shareholder
Agreement with Purchaser.
5.03 Representations and Agreements. Each representation and warranty
of the Company and the Shareholder set forth in this Agreement will be true
and correct in all material respects when made and as of the Closing Date, and
the Company and the Shareholder will have fully performed all their covenants
and agreements set forth in this Agreement in all material respects.
5.04 Proceedings; Consents. All proceedings taken in connection with
the transactions contemplated by this Agreement, and all documents necessary
to the consummation of this Agreement, will be satisfactory in form and
substance to the Purchaser and its counsel, and the Purchaser and its counsel
will have received certificates of compliance and copies (executed or
certified as may be appropriate) of all documents, instruments, and agreements
that the Purchaser or its counsel reasonably may request in connection with
the consummation of such transactions. All consents of any Person necessary
to the consummation of the transactions contemplated by this Agreement and the
Shareholder Agreement will have been received, be in full force and effect,
and not be subject to any onerous condition.
5.05 Reservation of Common Stock. The Purchaser will have received
evidence satisfactory to the Purchaser that the Company has reserved a
sufficient number of shares of Common Stock for the Purchaser to exercise the
Warrants.
5.06 Government Filings. All filings under (a) the Xxxx-Xxxxx-Xxxxxx
Act and (b) all applicable state and federal securities laws, rules and
regulations shall have been made and all requirements in connection therewith
shall have been met by the Company, the Purchaser and the Shareholder.
Article VI
Miscellaneous
6.01 Indemnification. In addition to any other rights or remedies to
which the Purchaser and the Holders may be entitled, the Company and the
Shareholder (solely with respect to the representations and warranties made by
him) severally and not jointly agree to and will indemnify and hold harmless
the Purchaser, the Southland Purchasers and F-Jotan, 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, penalties, causes of action, damages, costs, and
expenses (including, without limitation, costs of investigation and defense,
attorneys' fees, and expenses), including, without limitation, those arising
out of the contributory negligence of any Indemnified Party, that the
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 covenant or agreement on the part of the
Company or the Shareholder (solely with respect to the representations and
warranties made by him) under this Agreement, the Shareholder Agreement, or
under any other agreement to which the Company or the Shareholder is a party
in connection with this transaction, or from any misrepresentation in or
omission from any certificate or other instrument furnished or to be furnished
to the Purchaser or the Holders under this Agreement.
6.02 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 nondefaulting 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.
6.03 Integration. This Agreement, the Original Purchase Agreement, the
Other Agreements, the First Supplemental Warrant and all other Warrant, and
the Shareholder Agreement (as amended and confirmed as of the date hereof)
constitute the entire agreement between 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.
6.04 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.
6.05 Severability. The parties to this Agreement expressly agree that
it is not the intention of any of them 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, unless the inoperative provision would
cause enforcement of the remainder of this Agreement to be inequitable under
the circumstances.
6.06 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
addressed to the party to be notified as set forth below. Notices shall be
deemed to have been validly served, given or delivered (and "the date of such
notice" or words of similar effect shall mean the date) five (5) days after
deposit in the United States mails, certified mail, return receipt requested,
with proper postage prepaid, or upon actual receipt thereof with written
acknowledgment of receipt (whether by noncertified mail, telecopy, telegram,
facsimile, express delivery, hand delivery or otherwise), whichever is
earlier.
If to Rice, at: Address of Rice beneath the name of Rice on the
signature pages of this Agreement
with courtesy copies to: Xxxxxx Xxxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
FAX: 000-000-0000
If to the Southland
Purchasers, at: Address of the Southland Purchasers
beneath the name of the Southland
Purchasers on the signature pages of this
Agreement
with courtesy copies to: Wyrick, Robins, Xxxxx & Xxxxxx, L.L.P.
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Xx.
Facsimile: (000) 000-0000
F-Jotan
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: Wyrick, Robins, Xxxxx & Xxxxxx, L.L.P.
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Xx.
Facsimile: (000) 000-0000
the Southland Purchasers
If to the Company, at: Jotan, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: President
Fax: 000-000-0000
If to the Shareholder, Address of such Shareholder beneath
his/her name 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 Holder 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 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.
6.07 Successors. This Agreement will be binding upon and inure to the
benefit of the parties and their respective successors and 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 Shareholders Agreement, and the agreements and instruments related
hereto and thereto, in a form and substance reasonably satisfactory to the
Company.
6.08 Remedies. The failure of any party to enforce any right or remedy
under this Agreement, or promptly to enforce any such right or remedy, 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.
6.09 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.
6.10 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 be borne and paid by
the Company within ten (10) days of demand by the Holders.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, which will individually and collectively constitute one
agreement.
6.12 Other Business. It is understood and accepted that the Purchaser,
F-Jotan, the Southland Purchasers, 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 that may be available to
such parties in any field substantially related to the business of the Company
will be pursued exclusively through the Company.
6.13 Choice of Law. THIS AGREEMENT 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.
6.14 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.
6.15 Waiver of Jury Trial. AFTER REVIEWING THIS SECTION 6.15 WITH ITS
COUNSEL, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY, F-
JOTAN, THE PURCHASER, THE SOUTHLAND PURCHASERS AND EACH SHAREHOLDER HEREBY
KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY, IRREVOCABLY AND EXPRESSLY WAIVE
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY DOCUMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF THE COMPANY, F-
JOTAN, THE PURCHASER, THE SOUTHLAND PURCHASERS AND EACH SHAREHOLDER IN THE
NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT HEREOF OR THEREOF. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE PURCHASER TO PURCHASE THE WARRANTS AND
PREFERRED STOCK FROM THE COMPANY.
6.16 Continuation of Directors' and Officers' Insurance and
Indemnification. For a period of two (2) years from March 4, 1997, the
Company shall maintain in effect $1,000,000 of directors' and officers'
insurance for the benefit of directors serving in the capacity of directors of
the Company immediately prior to the Closing Date. Such insurance shall be
provided to the extent that (a) such insurance remains commercially available,
(b) the Company may purchase substantially similar coverage as exists at the
Closing Date and (c) such insurance may be obtained at a reasonable cost to
the Company not to exceed $30,000 per annum. The Company shall also retain, in
effect for the same period, those written indemnification provisions that
exist in the articles of incorporation or bylaws of the Company on such date
for the benefit of such directors (or other written provisions reasonably
equivalent thereto in effect on the Closing Date that are acceptable to
Purchaser). All such insurance and indemnifications shall apply only to the
actual period of service of each director.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
COMPANY:
JOTAN, INC.
BY:______________________________
Xxxxx Xxxxxxxx
Vice President and Chief
Financial Officer
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: President
Fax: (000) 000-0000
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: Xxxxxxx X. Xxxxxxxx
Its: Managing Director
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
OWNED ON CLOSING DATE:
None Shares of Series A
Convertible Preferred
Stock
40,000 Shares of Series B
Preferred Stock
13,125 Shares of First
Supplemental Series B
Preferred Stock
None Shares of Common Stock
2,515,203 Warrant A-1 Shares
9,581,726 Warrant A-2 Shares
3,620,473 First Supplemental
Warrant A-2 Shares
F-JOTAN, L.L.C.
By: Franklin Street/Fairview Capital,
L.L.C., its Manager
By: _____________________________
Xxxxx X. Xxxxxxx, Manager
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
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: ____________________________
Xxxxx X. Xxxxxxx, Manager
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
OWNED ON CLOSING DATE:
None Shares of Series A
Convertible Preferred
Stock
5,000 Shares of Series B
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: _____________________________
Xxxxx X. Xxxxxxx,
Manager
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
OWNED ON CLOSING DATE:
None Shares of Series A
Convertible Preferred
Stock
5,000 Shares of Series B
Preferred Stock
None Shares of Common Stock
359,315 Warrant C-1 Shares
1,197,716 Warrant C-2 Shares
SHAREHOLDER:
Xxxxx Xxxxxxxx
_______________________________
OWNED ON CLOSING DATE:
None Shares of Common Stock
Owned on Closing Date
275,000 Common Stock Options
Xxxx X. Xxxxx
________________________________
OWNED ON CLOSING DATE:
950,000 Shares of Common Stock
Owned on Closing Date
33,000 Other Equity Interests
ANNEX A
[Shareholder Agreement]
ANNEX B
[First Supplemental Warrant A-2]
