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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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TABLE OF CONTENTS
Article I Definitions..................................................
Article II. Holders' Preemptive Rights...................................
2.01 Preemptive Right.............................................
2.02 Notice to Holders............................................
2.03 Allocation of Unsubscribed New Securities....................
2.04 [Expiration].................................................
Article III Dilution Fee................................................
Article IV Put Option...................................................
4.01 Grant of Option..............................................
4.02 Put Price....................................................
4.03 Exercise of Put Option.......................................
4.04 Certain Remedies.............................................
4.05 Closing......................................................
4.06 Certain Rights Regarding Puts By Rice........................
Article V Call Option..................................................
5.01 Grant of Option..............................................
5.02 Call Price...................................................
5.03 Exercise of Call Option......................................
5.04 Call Option Closing..........................................
Article VI First Refusal and Co-Sale Rights............................
6.01 Rights of Co-Sale...........................................
6.02 Method of Electing Sale; Allocation of Sales................
6.03 Sales to Related Parties....................................
Article VII Liquidity..................................................
7.01 Required Registration.......................................
7.02 Incidental Registration.....................................
7.03 Form S-3 Registrations......................................
[7.04. Rule 144 Availabi
7.05 Registration Procedures.....................................
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7.06 Allocation of Expenses......................................
7.07 Listing on Securities Exchange............................
7.08 Holdback Agreements.......................................
7.09 Rule 144..................................................
7.10 Rule 144A.................................................
7.11 Take Along................................................
7.12 Limitation on Subsequent Registration Rights..............
7.13 Exchange Rights...........................................
Article VIII Directors...................................................
8.01 Voting Agreement............................................
8.02 Board of Directors...........................................
Article IX Representations and Warranties; Covenants
9.01 Representations and Warranties and Covenants of the
Company [and the Shareholder]...............................
9.02 Representations and Warranties of the Purchaser............
Article X Conditions.................................................
10.01 Note Agreement and Purchase Agreement Conditions............
10.02 Proceedings
Article XI Miscellaneous
11.01 Indemnification.............................................
11.02 Default....................................................
11.03 Integration..................................................
11.04 Headings....................................................
11.05 Severability................................................
11.06 Notices......................................................
11.07 Successors..................................................
11.08 Remedies......................................................
11.09 Survival...................................................
11.10 Fees........................................................
11.11 Counterparts................................................
11.12 Other Business................................................
11.13 Choice of Law.................................................
11.14 Nominees for Beneficial Owners ...............................
11.15 Fiduciary Duties..............................................
11.16 Duties Among Holders...........................................
11.17 [Confidentiality]..............................................
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11.18 [Termination].................................................
Page iii
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:
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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
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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
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(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
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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
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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
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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
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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
Page 8
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
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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
Page 10
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;
Page 11
(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 Holder'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.
Page 12
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
Page 13
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 Holder 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
Page 14
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.
Page 15
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 Rice 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 Rice.
(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.
Page 16
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.
Page 17
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
Page 18
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: Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
Page 19
If to the Company, at: Jotan, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: President
Fax: (000) 000-0000
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
with courtesy copies to: Xxxxxx & Bird, L.L.P.
One Atlanta Center
0000 X. Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx
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
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 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
Page 20
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
Page 21
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
Holder'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 Holder 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
Page 22
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.
Page 23
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
COMPANY:
JOTAN, INC.
BY:......................................
NAME:....................................
TITLE:...................................
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: President
Fax: (000) 000-0000
Page 24
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
Redeemable Preferred Stock
None Shares of Common Stock
2,515,203 Warrant A-1 Shares
9,581,726 Warrant A-2 Shares
Page 25
F-JOTAN, L.L.C.
By: Franklin Street/Fairview Capital, L.L.C.,
its manager
By: Franklin Capital, L.L.C.,
its manager
By:
Xxxxxxxx X. Xxxxxxxx,
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
Page 26
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:
Xxxxxxxx X. Xxxxxxxx,
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
Page 27
FF-SOUTHLAND, L.P.
By: FSFC Associates, L.P.,
Its general partner
By: Franklin Capital, L.L.C.,
Its general partner
By: ......................
Xxxxxxxx X. Xxxxxxxx,
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
Page 28
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 Common Stock Options
Page 29
ANNEX A
