EXHIBIT 10.25
MANAGEMENT AGREEMENT
This Agreement is made, entered into and effective as of January 1,
2003, by and between ATLANTIS PLASTICS, INC., a Florida corporation (the
"Company"), and TRIVEST PARTNERS, L.P., a Florida limited partnership or its
successors (the "Manager")
In consideration of the premises and the respective mutual agreements,
covenants, representations and warranties contained in this Agreement, the
parties agree as follows:
1. Manager. The Company hereby desires to retain the Manager and
the Manager accepts such retention 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 and unless as otherwise indicated by the Board, 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 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 partner's,
employee's, officer's, director's, affiliate's or associate's 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 Investment Opportunities.
(a) Subject to the other provisions of this
Section 5.2(a), the Manager, its partners, officers, directors, and affiliates
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 same line of business as the Company and its subsidiaries
(such lines of business are limited to molded plastic products comparable to
those produced by the Company's Molded Products Division and plastic film
products comparable to those produced by the Company's Custom & Institutional
Films Division and the Company's Stretch Division & Institutional Division and
any other additional line of business related to the foregoing which the Company
designates to the Manager as an additional business) (collectively, the
"Designated Line of Business"). The restrictions set forth in the preceding
sentence shall not apply, and the Manager shall be entitled to, directly or
indirectly, 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 "Competing 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 Competing 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 in this
Section 5.2(a). The Company expressly acknowledges and agrees that the
restrictions set forth in the first sentence of this Section 5.2(a) do not apply
to Plassein International Corp. and its subsidiaries and Jet Industries, Inc.
and its subsidiaries if such opportunity for investment, management or provision
of services originates from persons who are affiliated with Manager principally
through their relationship as officers of Plassein International Corp. or Jet
Industries, Inc. (or one of their respective subsidiaries). The Company
acknowledges and agrees that nothing contained in the Section 5.2(a) shall in
any way limit or contravene the obligations of the Manager set forth in Section
5.4(c) of that certain Limited Partnership Agreement of Trivest Fund III, L.P.
(the "Fund"), dated as of January 3, 2000 (as amended, the "Fund III Partnership
Agreement"), whereby the Manager is obligated to disclose any
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corporate opportunity in excess of $2,000,000 that the General Partner seeks to
pursue outside of the Fund, and that the approval of the L.P. Advisory Committee
(as defined in the Fund III Partnership Agreement) will be required before the
General Partner may proceed with any such proposed transaction outside the Fund.
(b) The Manager shall use its reasonable best
efforts to identify and bring to the attention of the Company acquisition
candidates in and 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
$650,000 ("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
increase from the previous year in the U.S. Department of Labor, Bureau of Labor
Statistics, revised Consumer Price Index for All Urban Consumers, U.S. City
Average, All Items, with the first such adjustment to occur as of January 1,
2004. If the U.S. Department of Labor ceases to prepare this 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, 2003 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 $29,000,000 (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, then 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
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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.
(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
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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, 2007, unless terminated earlier in
accordance with the provisions of this Agreement.
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, partners, 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 Changes in Senior Management of Manager. Currently,
the Manager is a limited partnership with Trivest Partners, Inc., a Florida
corporation, as the General Partner, and the following limited partners: Xxxxxx
Partners, Inc., a Florida corporation, Xxxx X. Xxxxxxxxx, Xxxx X. Xxxxxx, Xxxxx
X. XxXxxxxx and Xxxxx Xxxxxxxxxx, Xx. (and together with their successors,
assigns and any additional limited partners, each a "Limited Partner" and
collectively, the "Limited Partners"). The Board may terminate the Manager's
engagement under this Agreement, upon 90 days prior notice, in the event that
(x) Xxxx X. Xxxxxx shall cease to be actively engaged in the Manager's business
and (y) at least three (3) of the Limited Partners are no longer Limited
Partners of the Manager.
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)
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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.
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, gross negligence or bad faith of the Manager. In no event shall the
Manager be responsible for indirect, special or consequential damages.
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 partners, 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 attorneys' 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. Except as otherwise contemplated herein,
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, such consent not to be unreasonably
withheld.
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 Partners, L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: General Partner
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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.
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.
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.
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By: __________________________________
Xxxxxxx X. Xxxx
President and Chief Executive Officer
TRIVEST PARTNERS, L.P.
By: TRIVEST PARTNERS, INC.
By: __________________________________
Xxxx X. Xxxxxx
President and Chief Executive Officer
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