EXHIBIT 10.1
MANAGEMENT AGREEMENT
This Agreement is made and entered into as of January 1, 1998, by and
between ATLANTIS PLASTICS, INC., a Florida corporation (the "COMPANY"), and
TRIVEST, INC., a Delaware corporation or its successors (the "MANAGER").
PRELIMINARY STATEMENTS:
A. The Manager and the Company are parties to that certain Fourth
Amended and Restated Management Agreement, dated as of October 19, 1992 (the
"PRIOR AGREEMENT").
B. The Prior Agreement terminated on December 31, 1997 and the Company
desires to continue to engage the services of the Manager on the terms and
subject to the conditions contained in this Agreement.
In consideration of the premises and the respective mutual agreements,
covenants, representations and warranties contained in this Agreement, the
parties agree as follows:
AGREEMENT:
1. CONTINUATION OF MANAGER. The Company continues the engagement of the
Manager and the Manager accepts such continuation on the terms and conditions
provided in this Agreement as the sole and exclusive manager and consultant of
the Company's business, including without limitation, the business of the
Company's subsidiaries, as well as any other corporations or entities now
existing or hereafter formed or acquired by the Company or any of its
subsidiaries to engage in any business. The Manager's duties hereunder shall
include, but shall not be limited to, identifying executive personnel for the
Company (including a President, a Chief Financial Officer and such additional
officers approved by the Board of Directors of the Company (the "Board")), whose
compensation shall be the responsibility of the Company.
2. BOARD OF DIRECTORS SUPERVISION. The activities of the Manager to be
performed under this Agreement shall be subject to the supervision of the Board
to the extent required by applicable law or regulation and subject to reasonable
policies not inconsistent with the terms of this Agreement adopted by the Board
and in effect from time to time. Where not required by applicable law or
regulation, the Manager shall not require the prior approval of the Board to
perform its duties under this Agreement.
3. AUTHORITY OF MANAGER. Subject to any limitations imposed by
applicable law or regulation, the Manager shall render management, consulting
and financial services to the Company and its subsidiaries which services shall
include advice and assistance concerning any and all aspects of the operations,
planning and financing of the Company and its subsidiaries as needed from time
to time. In addition, the Manager shall render advice and expertise in
connection with an acquisition
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program for the Company and shall from time to time bring to the attention of
the Company and its subsidiaries, such investment and business opportunities as
the Manager, in its sole discretion, deems appropriate.
4. REIMBURSEMENT OF EXPENSES; INDEPENDENT CONTRACTOR. All obligations
or expenses incurred by the Manager in the performance of its duties under this
Agreement shall be for the account of, on behalf of, and at the expense of the
Company and/or its subsidiaries, as the case may be. The Manager shall not be
obligated to make any advance to or for the account of the Company (or any
subsidiary) or to pay any sums, except out of funds held in accounts maintained
by the Company (or a subsidiary) nor shall the Manager be obligated to incur any
liability or obligation for the account of the Company or any subsidiary without
assurance that the necessary funds for the discharge of such liability or
obligation will be provided. The Manager shall be an independent contractor, and
nothing contained in this Agreement shall be deemed or construed (i) to create a
partnership or joint venture between the Company and/or any subsidiary of the
Company and the Manager, or (ii) to cause the Manager to be responsible in any
way for the debts, liabilities or obligations of the Company or any of its
subsidiaries, or any other party, or (iii) to constitute the Manager or any of
its employees as employees, officers, or agents of the Company or any of its
subsidiaries.
5. OTHER ACTIVITIES OF MANAGER; INVESTMENT OPPORTUNITIES.
5.1 GENERAL. The Company and its subsidiaries acknowledge and agree
that the Manager shall not devote the Manager's (or any employee, officer,
director, affiliate or associate of the Manager) full time and business efforts
to the duties of the Manager specified in this Agreement, but only so much of
such time and efforts as the Manager reasonably deems necessary. The Company and
its subsidiaries further acknowledge and agree that the Manager and its
affiliates are engaged in the business of investing in, acquiring and/or
managing businesses for the Manager's own account, for the account of the
Manager's affiliates and associates and for the account of other unaffiliated
parties, and plans to continue to be engaged in such business (and any other
business or investment activities) during the term of this Agreement. No aspect
or element of such activities shall be deemed to be engaged in for the benefit
of the Company or any of its subsidiaries nor to constitute a conflict of
interest. The Manager shall be required to bring only such investments and/or
business opportunities to the attention of the Company and its subsidiaries as
the Manager, in its sole discretion, deems appropriate.
5.2 DESIGNATED LINE OF BUSINESS; NEW BUSINESS SEGMENTS; PROHIBITED
LINES OF BUSINESS.
(a) Subject to the provisions of the last sentence of this
Section 5.2(a), the Manager, its officers, directors, and affiliates (other than
the Company and its subsidiaries) shall not invest in, acquire, manage, or
otherwise provide services (including acquisition or investment banking
services) with respect to, any firm, corporation, partnership or other entity
principally engaged in business activities in the plastics industry (the
"DESIGNATED LINE OF BUSINESS"). The
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restriction contained in the preceding sentence shall apply to and be binding
upon the Manager regardless of whether the Board elects to pursue or not to
pursue any investment opportunity related to the Designated Line of Business
which is brought to the attention of the Company, by the Manager or otherwise;
PROVIDED, HOWEVER, that one or more affiliates of the Manager shall be entitled
to invest in, acquire, manage and/or otherwise provide services (including
acquisition or investment banking services) with respect to, any firm,
corporation, partnership or other entity engaged in the Designated Line of
Business (a "PLASTICS ENTITY"), if (i) prior to undertaking such investment,
management or provision of services, information (including business and
financial information in reasonable detail) regarding the Plastics Entity,
together with the material terms of the proposed contract or transaction, are
disclosed to the Board, and (ii) the Board (and at least a majority of the
disinterested members thereof) authorizes such contract or transaction and
expressly waives the prohibition otherwise imposed by this Section 5.2(a).
(b) The Company acknowledges that it has no present intention
to acquire substantially all of the assets of or a controlling interest in any
firm, corporation, partnership or other entity which is not engaged in the
Designated Line of Business (a "NEW BUSINESS SEGMENT"). In the event the Board
shall determine to make such an acquisition and shall so notify the Manager in
writing, then any such New Business Segment shall be deemed to be a Designated
Line of Business for purposes of this Agreement; provided, however, that in the
event the Manager shall, at the time of such notification, (i) own a controlling
interest in, manage, or otherwise provide services (including Acquisition or
investment banking services) with respect to, or (ii) have a binding commitment
to invest in, acquire, manage, or otherwise provide services (including
acquisition or investment banking services) with respect to, any New Business
Segment, for its own account or on behalf of any person other than the Company,
and shall so notify the Board in writing, then such New Business Segment shall
not be deemed to be a Designated Line of Business.
(c) Notwithstanding any provision of this Section 5.2 which
may be to the contrary, the Manager, its officers, directors and affiliates
shall be entitled to make investments in (i) securities of the Company, or (ii)
no more than 5% of any class of securities of any corporation, partnership or
other entity engaged in a Designated Line of Business, which securities are
listed and registered on a national securities exchange or which are quoted on
the NASDAQ Interdealer Quotation System.
(d) The Manager shall use its reasonable best efforts to
identify and bring to the attention of the Company acquisition candidates
engaged in the Designated Line of Business.
6. COMPENSATION OF MANAGER.
6.1 MANAGEMENT FEE. During the term of this Agreement, the
Manager will receive annually with respect to the management of the business
operations of the Company, a cash consulting and management fee in the amount of
$750,000 ("BASE COMPENSATION"). The Base Compensation will be paid to the
Manager by the Company in advance in equal quarterly installments. The Base
Compensation will be adjusted annually during the term hereof to reflect any
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increase from the previous year in the consumer price index, with the first such
adjustment to occur as of January 1, 1999. For purposes of this Agreement, the
consumer price index to be used will be the "Consumer Price Index for Miami
Urban Consumers", published by the United States Department of Labor, Bureau of
Labor Statistics. If the U.S. Department of Labor ceases to prepare a consumer
price index, and there is no successor, then an equivalent index will be used,
prepared by an agency of the U.S. Government, or by a responsible financial
periodical of recognized authority, to be selected by mutual agreement of the
Company and the Manager. If the parties are unable to agree upon a successor,
the parties will refer the choice of a successor to arbitration in Miami,
Florida in accordance with the rules of the American Arbitration Association,
which determination will be final. The parties will share equally the cost of
arbitration.
6.2 ADDITIONAL BUSINESS OPERATIONS. If the Company or its
subsidiaries acquire or enter into any additional business operations after the
date of this Agreement (each an "Additional Business"), the Board and the
Manager will, prior to the acquisition or prior to entering into the business
operations, in good faith, determine whether and to what extent the Base
Compensation should be increased as a result thereof. Any increase will be
evidenced by a written supplement to this Agreement signed by the Company and
the Manager.
6.3 INCENTIVE COMPENSATION.
(a) As additional compensation, beginning with the
Company's fiscal year ending December 31, 1998 and continuing for each fiscal
year during which this Agreement is in effect, the Manager will be entitled to
an annual incentive compensation payment in an amount equal to 1% of the
Company's EBITDAM for such year, provided that EBITDAM for such year is greater
than $20,000,000 (the "INCENTIVE COMPENSATION"). Any Incentive Compensation
payable with respect to any such fiscal year shall be paid by the Company to the
Manager within 75 days after the end of such fiscal year; PROVIDED, HOWEVER,
that the Compensation Committee of the Board may approve the payment of an
estimated amount of Incentive Compensation (the "ESTIMATED INCENTIVE
COMPENSATION") with respect to any such fiscal year in such installments as such
Committee shall deem appropriate. In the event that the Estimated Incentive
Compensation (if any) paid to the Manager with respect to any such fiscal year
is greater than the actual amount of Incentive Compensation that is finally
determined to have been payable with respect to such fiscal year, than the
Manager shall promptly repay the amount of such excess to the Company. In the
event that the Estimated Incentive Compensation (if any) paid to the Manager
with respect to any such fiscal year is less than the actual amount of Incentive
Compensation that is finally determined to have been payable with respect to
such fiscal year, than the Company shall promptly pay the amount of such
deficiency to the Manager.
(b) Notwithstanding any provision hereof which may be
to the contrary, in the event any Incentive Compensation with respect to any
fiscal year of the Company is paid prior to the issuance of the Company's
regularly prepared financial statements for such fiscal year, any amount paid
shall be subject to increase or decrease based upon the results of such
financial statements.
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(c) For purposes of this Section 6.3, "EBITDAM" means
the Company's earnings before net interest expense, income taxes, depreciation,
amortization and any compensation incurred by the Company to the Manager
hereunder.
(d) In the event that the Manager's engagement
hereunder is terminated pursuant to Section 8.1 or Section 8.3 below, then
notwithstanding the fact that the Manager is not engaged by the Company through
the end of the fiscal year in which such termination occurs, the Manager shall
be entitled to receive the Incentive Compensation that would have otherwise been
payable to it had it been engaged hereunder through the end of such fiscal year,
pro rated based upon the number of days elapsed in such year through the
effective date of such termination. In the event that the Manager's engagement
hereunder is terminated pursuant to Section 8.4 below, then the amount (if any)
of Incentive Compensation to be paid to the Manager in respect of the number of
days elapsed in the fiscal year in which such termination occurs through the
effective date of such termination will be determined through good faith
negotiations between the Board and the Manager. If the Board and the Manager are
unable to agree upon the amount of Additional Incentive Compensation, the
Additional Incentive Compensation amount will be determined by arbitration in
Miami, Florida in accordance with the rules of the American Arbitration
Association, which determination will be final. The parties will share equally
the cost of arbitration.
6.4 ADDITIONAL INCENTIVE COMPENSATION. As additional
compensation, the Manager will be entitled to a one-time fee with respect to the
acquisition or disposition of any business operation by the Company or its
subsidiaries introduced or negotiated by the Manager or its affiliates or with
respect to any other transaction not in the ordinary course of business,
including any public or private debt or equity financing or unusual efforts
extended or results obtained by the Manager on behalf or for the benefit of the
Company or its subsidiaries ("ADDITIONAL INCENTIVE COMPENSATION"). The
Additional Incentive Compensation will be paid at the closing of any such
transaction. The amount of any Additional Incentive Compensation will be
determined through good faith negotiations between the Board and the Manager. If
the Board and the Manager are unable to agree upon the amount of Additional
Incentive Compensation, the Additional Incentive Compensation amount will be
determined by arbitration in Miami, Florida in accordance with the rules of the
American Arbitration Association, which determination will be final. The parties
will share equally the cost of arbitration.
6.5 COMPANY'S RIGHT TO ENGAGE OTHER FINANCIAL ADVISORS.
Notwithstanding any provision of this Agreement which may be to the contrary,
the Manager acknowledges and agrees that the Company may from time to time
engage the services of financial advisors in addition to the Manager in
connection with certain acquisitions, dispositions and financing transactions
if, in the judgment of the Board, such engagement is in the best interest of the
Company and its shareholders.
7. TERM. This Agreement shall commence as of the date hereof and shall
remain in effect until December 31, 2002, unless terminated earlier in
accordance with the provisions of this Agreement.
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8. TERMINATION.
8.1 BY SHAREHOLDER ACTION. The Board may terminate the
Manager's engagement under this Agreement at any time upon a majority vote of
all of the then outstanding voting shares of capital stock of the Company at the
time of such vote (including capital stock held by the Manager, its officers,
directors and affiliates, each of whom shall be entitled to vote).
8.2 UPON BREACH. Either the Company or the Manager may
terminate the Manager's engagement under this Agreement in the event of the
breach of any of the material terms or provisions of this Agreement by the other
party, which breach is not cured within 10 business days after notice of the
same is given to the party alleged to be in breach by the other party. In the
event this Agreement is terminated by the Manager because of the breach of any
of the material terms or provisions hereof by the Company, the Manager shall be
entitled to recover damages from the Company and shall not be required to
mitigate or reduce damages by seeking or undertaking other management
arrangements or business opportunities.
8.3 CHANGE IN SENIOR MANAGEMENT OF MANAGER. The Board may
terminate the Manager's engagement under this Agreement, upon 90 days prior
notice, in the event that Xxxx X. Xxxxxx (or a successor to Xxxx X. Xxxxxx
acceptable to the Board) shall cease to serve as an executive officer of the
Manager or shall otherwise cease to be actively engaged in the Manager's
business.
8.4 CHANGE OF CONTROL. The Board may terminate the Manager's
engagement under this Agreement, by written notice to the Manager, in the event
that (i) the Board shall approve the sale of all, or substantially all, of the
Company's consolidated assets in any single transaction or series of related
transactions, (ii) there shall occur a sale or issuance, or series of related
sales or issuances, of the Company's voting securities in any single transaction
or series of related transactions which results in any person or group of
affiliated persons (other than the holders of the Company's voting securities as
of the date of this Agreement and affiliates of such holders) owning (on a
fully-diluted basis) voting securities of the Company representing (at the time
of such sale or issuance or such series of sales and/or issuances) a majority of
the ordinary voting power to elect directors of the Company or (iii) the Board
shall approve any merger or consolidation of the Company with or into another
corporation (regardless of which entity is the surviving corporation) if, after
giving effect to such merger or consolidation, the holders of the Company's
voting securities (on a fully-diluted basis) immediately prior to the merger or
consolidation own voting securities of the surviving or resulting corporation
representing less than a majority of the ordinary voting power to elect
directors of the surviving or resulting corporation (on a fully-diluted basis).
Any termination of the Manager's engagement pursuant to clause (i) or clause
(iii) of this Section 8.4 shall be effective upon the date the transaction
described therein is consummated. Any termination of the Manager's engagement
pursuant to clause (ii) of this Section 8.4 shall be effective upon the date
specified in the written notice of termination delivered to the Manager.
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9. STANDARD OF CARE. The Manager (including any person or entity acting
for or on behalf of the Manager) shall not be liable for any mistakes of fact,
errors of judgment, for losses sustained by the Company or any subsidiary or for
any acts or omissions of any kind, unless caused by intentional misconduct of
the Manager engaged by the Manager in bad faith.
10. INDEMNIFICATION OF MANAGER. The Company and its present and future
subsidiaries agree to indemnify and hold harmless the Manager and its present
and future officers, directors, affiliates, employees and agents ("INDEMNIFIED
PARTIES") to the fullest extent permitted by corporate law as if any of the
Indemnified Parties were an officer or director to the Company and/or its
subsidiaries. The Company and its subsidiaries agree to reimburse the
Indemnified Parties on a monthly basis for any cost of defending any action or
investigation (including attorney's fees and expenses) subject to an undertaking
from such Indemnified Party to repay the Company or its subsidiaries if such
party is determined not to be entitled to such indemnity.
11. NO ASSIGNMENT. Neither party shall assign, transfer or convey any
of its rights, duties or interest under this Agreement, nor shall it delegate
any of the obligations or duties required to be kept or performed by it
hereunder without the prior written consent of the other party.
12. NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Company: Atlantis Plastics, Inc.
0000 Xxx Xxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
If to the Manager: Trivest, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Either party hereto may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Either
party hereto may change the address to which notices, requests, demands, claims
and other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
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13. SEVERABILITY. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or enforceable, shall not be affected thereby, and each term
and provision of this Agreement shall be valid and be enforced to the fullest
extent permitted by law.
14. NO WAIVER. The failure of the Company or the Manager to seek
redress for any violation of, or to insist upon the strict performance of, any
term or condition of this Agreement shall not prevent a subsequent act by the
Company or the Manager, which would have originally constituted a violation of
this Agreement by the Company or the Manager, from having all the force and
effect of any original violation. The failure by the Company or the Manager to
insist upon the strict performance of any one of the terms or conditions of the
Agreement or to exercise any right, remedy or elections herein contained or
permitted by law shall not constitute or be construed as a waiver or
relinquishment for the future of such term, condition, right, remedy or
election, but the same shall continue and remain in full force and effect.
Except as the Company's rights of termination are limited herein, all rights and
remedies that the Company or the Manager may have at law, in equity or otherwise
upon breach of any term or condition of this Agreement, shall be distinct,
separate and cumulative rights and remedies and no one of them, whether
exercised by the Company or the Manager or not, shall be deemed to be in
exclusion of any other right or remedy of the Company or the Manager.
15. ENTIRE AGREEMENT; CERTAIN TERMS. This Agreement contains the entire
agreement between the parties hereto with respect to the matters herein
contained and supersedes all prior agreements between the parties hereto with
respect to such matters. Any agreement hereafter made shall be ineffective to
effect any change or modification to this Agreement, in whole or in part, unless
such agreement is in writing and signed by the party against whom enforcement of
the change or modification is sought.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without reference to the laws
of any other state.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly exercised by their authorized representatives as of the date first above
written.
ATLANTIS PLASTICS, INC.
By: ____________________________
Xxxxxxx X. Xxxx
President and Chief Executive Officer
TRIVEST, INC.
By: ____________________________
Xxxx X. Xxxxxx
President and Chief Executive Officer
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