AMENDED AND RESTATED SECOND
SUPPLEMENTAL SHAREHOLDER AGREEMENT
AMENDED AND RESTATED SECOND SUPPLEMENTAL SHAREHOLDER AGREEMENT (the
"Agreement") made as of April 14, 1998, by and among JOTAN, INC., a
Florida corporation (the "Company"), RICE PARTNERS II, L.P., a Delaware
limited partnership ("Rice" or "Purchaser"), 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"), F-JOTAN, L.L.C., a North Carolina
limited liability company ("F-Jotan") and the shareholder named on the
signature pages hereto the "Shareholder").
W I T N E S S E T H:
WHEREAS, 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 (reflecting the departure of Xxxxx Xxxxxxxx on December 31,
1997 from employment at the Company and the termination of his options to
purchase up to 275,000 of the Company's Common Stock) but not reflecting
the issuance of a certain "Priority Warrant" in connection with the
Priority Note Agreement dated as the date hereof, among Rice, the Company
and Southland Container Packaging Corp.;
WHEREAS, F-Jotan is the owner of the 1,435,705 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 Preferred Stock and Warrant Purchase
Agreement dated as of February 28, 1997, by and among Rice, the Southland
Purchasers, the Company and F-Jotan (the "Preferred Stock and Warrant
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, Amendment No. 2, dated as of November 6, 1997 and Amendment No. 3,
dated as of the date hereof (the "Original Note Agreement");
WHEREAS, the Company entered into (i) the Preferred Stock and Warrant
Purchase Agreement, (ii) that certain First Supplemental Preferred Stock
and Warrant Purchase Agreement, dated as of September 10, 1997 (the "First
Supplemental Purchase Agreement"), (ii) that certain Second Supplemental
Preferred Stock Purchase Agreement, dated as of January 23, 1998 (the
"Second Supplemental Purchase Agreement") and (iii) that certain Amended
and Restated Second Supplemental Preferred Stock and Warrant Purchase
Agreement, dated as of the date hereof (or the "Restated Second
Supplemental Purchase Agreement"), each by and among the Company, Rice,
Southland Purchasers, F-Jotan, and the Shareholder (such restated
agreement together with the First Supplemental Purchase Agreement, the
Second Supplemental Purchase Agreement and the Original Purchase
Agreement, as the same may be further supplemented, modified, amended or
restated from time to time, collectively being called the "Other Purchase
Agreements");
WHEREAS, the Company, Rice, the Southland Purchasers, F-Jotan and the
Shareholder have entered into (i) that certain Shareholder Agreement,
dated as of February 28, 1997 (the "Original Shareholder Agreement"), (ii)
that certain First Supplemental Shareholder Agreement, dated as of
September 10, 1997 (the "First Supplemental Shareholder Agreement"), (iii)
that certain Second Supplemental Shareholder Agreement", dated as of
January 23, 1998 (the "Second Supplemental Shareholder Agreement"), (the
Original Shareholder Agreement, the First Supplemental Shareholder
Agreement, the Second Supplemental Shareholder Agreement and this
Agreement are collectively called the "Other Shareholder Agreements");
WHEREAS, concurrently with entering into the Second Supplemental
Shareholder Agreement, Rice purchased $250,000 (the "Purchase Price") of
Series B Preferred Stock, which enabled the Company at that time to make
certain payments to certain minority interests;
WHEREAS, in connection with making additional financial
accommodations to the Company, the parties desire to amend and restate the
Second Supplemental Purchase Agreement to provide for the issuance of the
Second Supplemental Warrant (as defined in the Restated Second
Supplemental Purchase Agreement) to Rice, on the terms set forth in the
Restated Second Supplemental Purchase Agreement, in consideration of
investing such Purchase Price in the Second Supplemental Preferred Shares
(as defined in the Restated Second Supplemental Purchase Agreement) and
for making such additional financial accommodations to Southland; and
WHEREAS, the parties hereto also desire to amend and confirm portions
of the Other Shareholder Agreements, (as amended and confirmed hereby,
this "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 Southland Purchasers, F-Jotan, 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 Other Purchase Agreements 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 Other Purchase Agreements) 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
Waiver Certain Preemptive Rights of the Holders
2.01 Preemptive Right Waiver. The Company will not issue or sell any
New Securities without first complying with Article II of the Original
Shareholder Agreement; provided, however, that for purposes of this
Agreement and the Other Purchase Agreements, each of the Southland
Purchasers and F-Jotan hereby waives its preemptive rights with respect to
the issuance of the Second Supplemental Preferred Shares and the Second
Supplemental Warrant.
Article III
Confirmation and Incorporation of Original Shareholder Agreement
3.01 Original Shareholder Agreement Provisions Incorporated into this
Agreement. Except as set forth above, all other provisions of the
Original Shareholder Agreement are hereby confirmed as if incorporated
herein at length, with full application to the Second Supplemental Warrant
and the Second Supplemental Preferred Shares (it being agreed that such
securities shall be treated in all respects as Capital Stock).
Accordingly, the Second Supplemental Preferred Shares and the Second
Supplemental Warrant shall be treated as if such securities were issued on
March 4, 1997 and are Registrable Securities hereunder and under the
Original Shareholder Agreement for all purposes.
Article IV
Conditions
The obligations of Rice, the Southland Purchasers, F-Jotan and the
Company to effect the transactions contemplated by this Agreement are
subject to the following conditions:
4.01 Restated Second Supplemental Purchase Agreement Conditions. All
of the conditions precedent to the obligations of the Purchaser under the
Restated Second Supplemental Purchase Agreement will have been satisfied
in full or waived.
4.02 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 of Rice, the Southland Purchasers, F-Jotan and the
Company and their respective counsel, and each of Rice, the Southland
Purchasers, F-Jotan and the Company and their respective counsel will have
received copies (executed or certified as may be appropriate) of all
documents, instruments, and agreements that Rice, the Southland
Purchasers, F-Jotan and the Company or their respective counsel may
request in connection with the consummation of such transactions.
Article V
Miscellaneous
5.01 Indemnification. In addition to any other rights or remedies to
which each of Rice, the Southland Purchasers, F-Jotan 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 of Rice, 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, 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 Restated Second
Supplemental Purchase Agreement, or the Other Purchase Documents (each as
defined in Section 11.1 of the Original Note Agreement together with all
supplements and amendments to each such agreement or document as of the
date hereof) 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 Rice, the Southland Purchasers and F-Jotan 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 of Rice, the Southland Purchasers and F-Jotan
of its interests in, or the repayment of its loans to, the Company.
5.02 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.
5.03 Integration. This Agreement, the Restated Second Supplemental
Purchase Agreement, the Original Note Agreement, the Other Purchase
Agreements, the Other Shareholder Agreements and all documents,
agreements, notes and instruments executed in connection therewith
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, F-
Jotan and each Holder.
5.04 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.
5.05 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.
5.06 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
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 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.
Fax: (000) 000-0000
If to the Company, at: Jotan, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: President
Fax: (000) 000-0000
If to the Shareholder, at: Address of such Shareholder beneath the
name of such Shareholder on the signature
pages of this Agreement
If to the Southland
Purchasers: Address of such Southland Purchasers under their
respective names 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 parties listed above 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 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.
5.07 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.
5.08 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.
5.09 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 hereof, 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.
5.10 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.
5.11 Counterparts. This Agreement may be executed in any number of
counterparts, which will individually and collectively constitute one
agreement.
5.12 Other Business. It is understood and accepted that Rice,
Southland Purchasers, 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.
5.13 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.
5.14 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.
5.15 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 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.
5.16 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.
5.17 Confidentiality. Each Holder and F-Jotan agrees to keep
confidential any information delivered by the Company to such Holder and
F-Jotan under this Agreement that the Company clearly indicates in writing
to be confidential information; provided, however, that nothing in this
Section 5.17 will prevent such Holder and F-Jotan from disclosing such
information (a) to any Affiliate of such Holder or F-Jotan or any actual
or potential purchaser, participant, assignee, or transferee of such
Holder's or F-Jotan's rights or obligations hereunder that agrees to be
bound by the terms of this Section 5.17, (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 or F-Jotan, (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 or F-Jotan, (f) in connection with the exercise of any remedy
under this Agreement, or (g) to the certified public accountants for such
Holder and F-Jotan. The Company agrees that such Holder and F-Jotan will
be presumed to have met its obligations under this Section 5.17 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.
5.18 Confirmation of Other Shareholder Agreements.
Except as amended and supplemented hereby, the Original Shareholder
Agreement, the First Supplemental Shareholder Agreement and the Second
Supplemental Shareholder Agreement, shall remain in full force and effect,
and, as so amended and supplemented, such agreements are hereby confirmed
in their entirety.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
COMPANY:
JOTAN, INC.
BY:______________________________________
Xxxxxx 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
1,125 Shares of Second Supplemental
Series B Preferred Stock
15,717,402 Shares of Common Stock
8,475,638 Second Supplemental Warrant
A-3 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: ________________________________
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:
1,435,705 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: ________________________________
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 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:_____________________________________
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 Redeemable
Preferred Stock
None Shares of Common Stock
359,315 Warrant C-1 Shares
1,197,716 Warrant C-2 Shares
SHAREHOLDER:
________________________________________
Xxxx X. Xxxxx
OWNED ON CLOSING DATE:
950,000 Shares of Common Stock Owned
on Closing Date
33,000 Common Stock Options
