SECOND SUPPLEMENTAL SHAREHOLDER AGREEMENT
SECOND SUPPLEMENTAL SHAREHOLDER AGREEMENT (the "Agreement") made as
of January 23, 1998, 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" 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 of 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);
WHEREAS, F-Jotan is the owner of the 1,329,357 shares of the Series A
Preferred Stock of the Company as of the date hereof;
WHEREAS, SHC Acquisition Corp., a wholly-owned Subsidiary of the
Company, has merged with and into Southland Holding Company, with
Southland Holding Company surviving and assuming all the obligations of
SHC Acquisition Corp. under the Original Purchase Agreement. On July 31,
1997, all of the subsidiaries of Southland Holding Company and Atlantic
Bag & Paper Company, a Subsidiary of the Company, merged with and into
Southland Holding Company (which concurrently changed its name to
Southland Container Packaging Corp.), with the result that Southland
Container Packaging Corp.("Southland"), as of July 31, 1997, had no
Subsidiaries;
WHEREAS, the Company, Southland, Rice and the Southland Purchasers
have entered into that certain Note Purchase Agreement, dated as of
February 28, 1997, as amended by Amendment No. 1, dated as of August 19,
1997 and Amendment No. 2, dated as of November 6, 1997 (the "Note
Agreement");
WHEREAS, the Company entered into that certain First
Supplemental Preferred Stock and Warrant Purchase Agreement dated as of
September 10, 1997, by and among the Company, Rice, Southland Purchasers,
F-Jotan, and the Shareholder (the "First Supplemental Purchase Agreement")
and the Company is, as of the date hereof, entering into the Second
Supplemental Preferred Stock Purchase Agreement (the "Second Supplemental
Purchase Agreement", the First Supplemental Purchase Agreement and the
Preferred Stock and Warrant Purchase Agreement dated as of February 28,
1997, as the same may be further supplemented, modified, amended or
restated from time to time, collectively being called the "Purchase
Agreement");
WHEREAS, the Company and the Shareholder have entered into a
Shareholder Agreement, dated as of February 28, 1997 (the "Original
Shareholder Agreement"), with each Purchaser and F-Jotan and the First
Supplemental Shareholder Agreement dated as of September 10, 1997 (the
"First Supplemental Shareholder Agreement," together with the Original
Shareholder Agreement and this Agreement the "Shareholder Agreement"), by
and Company, Rice, F-Southland, FF-Southland and F-Jotan and each of the
Shareholders who are signatories to the respective agreements; and
WHEREAS, Rice is willing to purchase $250,000 (the "Purchase Price")
of Series B Preferred Stock, to enable the Company to make certain
payments to certain minority interests as more fully described in the
Second Supplemental Purchase Agreement; and
WHEREAS, the parties hereto desire to amend and confirm portions of
the Original Shareholder Agreement (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 Shareholder, and the Company, intending
to be legally bound, agree as follows:
Article I
Definitions
All terms used in this Agreement will have the meanings ascribed to
them in the Purchase Agreement unless otherwise specifically defined in
this Agreement.
For purposes of Articles II and VII of this Agreement only, the term
"Holder" (as defined in the Purchase Agreement) shall also mean and
include F-Jotan and the term "Registrable Securities" shall mean and
include the Series A Preferred Stock and the Common Stock issuable upon
conversion of the Series A Preferred Stock.
Article II
Waiver Certain Preemptive Rights of the Holders
2.01 Preemptive Right Waiver. The Company will not issue or sell any
New Securities without SECOND complying with this Article II of the
Original Shareholder Agreement; provided, however, that for purposes of
this Agreement and the Purchase Agreement, each such Holder hereby waives
its preemptive rights with respect to the issuance of the Second Supple-
mental Preferred Shares.
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 herein with full application to the Second Supplemental
Warrant and the Second Supplemental Preferred Shares (it being agreed that
such securities shall treated in all respects as Capital Stock).
Accordingly, the Supplemental Preferred Shares shall be treated as if such
securities were issued on the Original Closing Date and are Registrable
Securities hereunder and under the Original Shareholder Agreement for all
purposes.
Article IV
Conditions
The obligations of each Purchaser to effect the transactions
contemplated by this Agreement are subject to the following conditions:
4.01 Purchase Agreement Conditions. All of the conditions precedent
to the obligations of the Purchaser under the 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 Purchaser and its counsel, and each Purchaser and its
counsel will have received copies (executed or certified as may be
appropriate) of all documents, instruments, and agreements that such
Purchaser or its counsel may request in connection with the consummation
of such transactions.
Article V
Miscellaneous
5.01 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 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 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.
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. The Shareholder Agreement, the Other Agreements,
the First Supplemental Warrant (as defined in the First Supplemental
Purchase Agreement ) and all other Warrants and the Purchase Agreement
constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all previous written, and
all previous or contemporaneous oral, negotiations, understandings,
arrangements, and agreements. This Agreement may not be amended or
supplemented except by a writing signed by Company, the Shareholder, and
each Holder.
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: The Southland Purchasers
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
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
with courtesy copies to: F-Jotan
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.
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 SECOND 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, 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 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.
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 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.
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 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 5.17 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 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,
(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 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 Original Shareholder Agreement. Except as
amended and supplemented hereby, the Original Shareholder Agreement and
the First 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 SECOND above written.
COMPANY:
JOTAN, INC.
BY: /s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
Vice President and Chief Financial
Xxxxxx
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: /s/ Xxxxxxx X. Xxxxxxxx
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
1,250 Shares of Second Supplemented
Series B Preferred Stock
None Shares of Common Stock
2,515,203 Warrant A-1 Shares
9,581,726 Warrant A-2 Shares
3,620,473 First Supplemental Warrant
A-2 Shares
F-JOTAN, L.L.C.
By: Franklin Street/Fairview Capital,
L.L.C., its manager
By: Franklin Capital, L.L.C.,
its manager
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx,
Manager
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
OWNED ON CLOSING DATE:
1,329,357 Shares of Series A
Convertible Preferred Stock
None Shares of Common Stock
None Other Equity Interests
THE SOUTHLAND PURCHASERS:
F-SOUTHLAND, L.L.C.
By: Franklin Street/Fairview Capital,
L.L.C., its manager
By: Franklin Capital, L.L.C,
its manager
By: /s/ Xxxxx X. Xxxxxxx
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: /s/ Xxxxx X. Xxxxxxx
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:
/s/ Shea E. Xxxxx
Xxxx X. Xxxxx
OWNED ON CLOSING DATE:
950,000 Shares of Common Stock Owned
on Closing Date
33,000 Common Stock Options
__________________________________________________________________________
__________________________________________________________________________
SECOND SUPPLEMENTAL SHAREHOLDER AGREEMENT
JOTAN, INC.
the "Company"
the Shareholders as set forth on the signature pages hereof
the "Shareholder"
and
Rice Partners II, L.P.,
the "Purchaser"
and
F-Jotan, and
F-Southland L.L.C. and FF-Southland, L.P.,
January 10, 1997
__________________________________________________________________________
__________________________________________________________________________
